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Comments on Senate Bill Patient Freedom Act of 2017 as sent to Senator Bill Cassidy

March 29, 2017

I appreciate your sending me a letter and a link to your health care Reform Bill, the “Patient Freedom Act of 2017”. I have read the bill and hope, we the people, can work on this together.

My comments will address three points:

1.The use of tax credits and tax refunds or other bureaucratic means to finance health care or other entitlement expenses  creates a “bureaucratic loop” as compared to directly taxing with enough Revenue to pay expenses.

2. The idea of reducing costs through insurance company competition, I believe does not work.

3. The concept of insurance does not fit the mixed pool of sick and healthy people. People with various exiting conditions have certain future expenses that someone has to pay for.

A quick reading of the “Patient Freedom Act of 2017”, shows 25 of the first 30 pages contain “Roth HSA” and or “Internal Revenue Code”. These frequent words reflect the preoccupation with a bill that will be revenue neutral i. e. the bill will favor or disfavor groups via tax credits of one form or another. I will define this as a “bureaucratic loop”, as a process that passes through the tax code with some goal to take more or less money from one group and pass it to another.

In simple accounting, only the totals, revenues and expenses, matter. At home I earn money and spend it as I feel best. I have a budget with some rainy day money. The federal government is not so simple. The tax system tries to change my behavior by thousands of “kick backs”- lower tax rates for capital gains, deductibles for home loan interest, payments for having more children, earned income “tax credits”, to subsidize low minimum wages for the business owners, and on and on. So the Roth HSA is more of the same. The poor people have no idea what a Roth HSA is.

ALL ACTIONS OF CONGRESS IN THIS NEW ERA, SHOULD PROCEED AFTER TAX REFORM AND ENTITLEMENT REFORM THAT MAKES THE BUDGET MORE LIKE WE HAVE TO DO AT HOME. NOW DEFENSE SPENDING COMES STRAIGHT FROM REVENUES WITHOUT ASKING PARTICULAR GROUPS TO PAY MORE.
2. The current mix of insurance companies and healthcare providers operate within a group of government rules that put payment amounts for every procedure in the health care database .  As profit making companies, they can work through the allowed payments and generate revenue by having more procedures that may have marginal benefit for the patient, while having good revenue. I will not call this deceptive, I will call it working within the system that the federal bureaucracy has created.

I will try to define a case in point and hope that your staff can actually access the data for this case. (On request I can provide their social security numbers.) To begin, we never received any bills so we have no idea of the total that Medicare paid out before John’s death at age 87 and Jane’s death at age 93. We did the best we could to help them through their last years.

Uncle John eventually died due to Alzheimer’s. Along the way doctors frequently recommended that he go and stay at a place called Oceans. He also was given increasing amounts of drugs. Each year John was kept at Oceans for the number of months that were covered then he was sent back home. The last two years, we finally kept him back home and we paid for 24 hour a day monitoring, he never got any better from his visits to Oceans.

My Aunt Jane had had a stroke. She very much hoped to walk again. She wished to go to physical therapy and she did. We felt she had very little chance of walking again; nevertheless, she wanted to go and under the government funded allowances she would go five to six months until the annual benefit was played out and then she would not go anymore. Of course, she never walked again.

This is an example of the government putting pots of money out there that can then be drawn down by the health care provider with uncertain benefits for the patient. This is definitely not a way to control cost and get value for the money spent.

3. On page 20, line 12 the “Patient Freedom Act of 2017” gets back to the idea of forming risk based pools as a way to get insurance companies to price their plans and compete as a path to lower costs.

My take! At any given time, the population has healthy, sick, very sick, and terminal people. Insurance spreads risk over a group of people with fairly similar risk of needing a payment from the pool of collections. If you are young and well, the chance of you needing a $1million treatment is so small that you could be insured for peanuts. At the very sick and terminal end, paying the bill is not a game of chance, it is a certain need for treatment and we can estimate the funds needed for each disease.

As the baby boomers age, the sick, very sick and terminal population will increase. I believe the “portfolio” of more and more advanced medical treatments can be estimated to reach higher and higher costs. The price tag for these treatments will depend on the degree of treatments that health care providers encourage the aged population to undergo. My guess is that the per patient cost and the number of patients will each rise by as much as 100% in the next ten years. The only reasonable answer is to “cap” the total price tag. The dread capping of costs is needed over all entitlement programs which defy budgeting.
So in summary, I do not believe that a Roth HSA or other means to add into the accounting and the transfer back of taxpayer money is the right way to go. I also believe that the solution has to come from cutting cost and not having endless fee for service procedures. Managed Care can be funded from taxpayer revenues for everyone who does not buy insurance. This would allow cost estimates and budgeting. For those who have the money they can pay for whatever coverage they want. If their health care fails they can join the poor people in the Managed Care group.

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