Healthcare Reform Begins With The United States Government

Government Healthcare BusinessThe road to Affordable Health Care and Beyond for ALL Americans begins with our federal government where all healthcare policy is enacted and regulated. Every house needs a good solid foundation and will come crashing down eventually if it is not build upon one.  Spending extravagantly on a poorly constructed house is a waste of our taxpayer money.  Our government needs to reduce inefficiencies and the total cost of health care spending in its own programs and facilities before demanding the same from other members of HICUP (BB Brigade acronym for those who are engaged in the business of health care in the USA) and individual patients.

Government’s involvement in health care has a long history with major pieces of legislation interspersed with many smaller ones along the way. The U.S. Department of Health and Human Services (HHS) is our government’s principal agency for “protecting the health of all Americans and providing essential human services, especially for those who are least able to help themselves”.  With every new piece of legislation, HHS bureaucrats are tasked with writing and then micromanaging the regulations that “interpret” the laws into actionable items. Vague, special-interest laden legislation creates faulty regulations in constant need of micromanaged tweaks and audits. Day-to-day operations of running the programs are subcontracted to private, third-party groups that include Medicare Administrative Contractors (MAC), Zone Program Integrity Contractors (ZPIC), Recovery Audit Contractor (RAC), Program Safeguard Contractors (PSCs),  Medicaid Integrity Contractors (MICs), etc.

Because our federal government is budgeted by “programs”, the bureaucrat’s first priority is to maintain individual program integrity. As a result, programs are rarely consolidated or reevaluated for relevance or efficiency.  Individual Americans are provided with government-subsidized health care benefits based on the “program(s)” for which they qualify.

In 1965, the enactment of Medicare and Medicaid legislation propelled our government into the major player role in our healthcare industry. By making the government the primary health insurer for all Americans over the age of 65 and select groups of the poor, they became the largest, single, health insurer in the United States. The disabled (people under 65 with certain disabilities and diseases) were added beneficiaries in 1973.

In 2010, Obamacare, the largest healthcare reform law since Medicare/Medicaid, expanded and grew our government’s healthcare bureaucracy to new heights.  In addition to the expansion of Medicaid, HHS has had to roll out the new Health Insurance Marketplaces (also called “the exchange”) for uninsured individuals. Five years after passage of Obamacare and our government is still in the process of implementing, amending, and “tweaking” individual aspects of the law. In FY 2013, the budget for HHS was $874 billion (representing 30% of the $2.919 trillion national health spending in that year).

Our government directly administers many government-sponsored health coverage programs, maintains its own healthcare facilities (with medical personnel staffing), and provides taxpayer-subsidies to private health insurance plans (for both employer-sponsored and Health Insurance Marketplace plans). Eligibility for one (or more) programs and/or healthcare facility use is subgroup specific (elderly, poor, veterans, etc). I have outlined the major areas of government healthcare involvement in the tables below:

Taxpayer-subsidized Government Health Care Programs

Government ProgramsDescriptionApprox. Number of People Served in 2013
Approx. Cost to 2013 Federal Budget
MedicareHealth care insurance for people over 65 and the disabled of all ages52.3 million$518.6 billion
MedicaidHealth care insurance for the poor59 million
$265.4 billion
($192.5 billion states)
Children's Health Insurance Program
Health care insurance for children in families with incomes too high to qualify for Medicaid, but can't afford private coverage5.9 million
$9.2 billion
($4.0 billion states)
Federal Health Insurance MarketplacesCreates a private health insurance exchange for individuals and small businesses in states where one does not exist8.0 million (2014)$6.25 billion (grants to states and federal costs in 2014)

Taxpayer-subsidized Government Health Care Facilities

Government-Run Health Care FacilitiesDescriptionApprox. Number of People Served in 2013 Approx. Cost to 2013 Federal Budget
Veterans Health Administration (VHA)Health care facilities for veterans that include about 150 hospitals, 1400 community-based outpatient clinics, living centers, Vet Centers, and domiciliaries facilities.8 million$55 billion
Military Treatment Facilities (MTF)Health care facilities for military employees with 56 hospitals, 361 clinics, 249 dental clinics, and 254 veterinary facilities9.6 million$50 billion
Indian Health Service (IHS) FacilitiesHealth care for American Indians with 620 hospitals, health centers, and health stations2.2 million$4.3 billion

Taxpayer-subsidized Government Employee Health Insurance Plans

Health Insurance for Government Employees DescriptionApprox. Number of People Served in 2013Approx. Cost to 2013 Federal Budget
FEHBPPrivate health insurance coverage for federal employees, and their dependents , retirees, with over 250 plans8.2 million$47 billion
Tricare (Dept of Defense) Medical care, dental care, and prescription drug coverage to service members, retirees, and their eligible family members9.6 million$52.5 billion

Taxpayer-subsidized Private Health Insurance Tax Breaks 

Private Health Insurance SubsidiesDescriptionApprox. Number of People Served in 2013Approx. Cost to 2013 Federal Budget
Private employer-sponsored health insuranceExclusion of premiums from income and payroll taxes for health insurance coverage for employees149- 169 million$250 billion reduction in tax revenues
Health Insurance MarketplacesIndividuals: Provides premium tax credits and cost sharing reduction subsidies for people making less than 400% of FPL
Small businesses: Small Business Health Care Tax Credit
7.9 million (2014)$45 billion (est. 2014)

These tables are not complete, and I invite the public to improve upon the information I have gathered so far.  I created these tables to give me the big picture of government health care involvement.  They are not meant to identify the layers of governmental bureaucracy and contractors involved, nor the many subsidies given to private members of HICUP (e.g., payments to Federally Qualified Health Centers (FQHC) and to hospitals for physician residencies) associated with each program.

Three separate agencies maintain medical facilities for select groups of Americans–HHS, Department of Veterans Affairs, and Department of Defense.  Under the HHS umbrella, the Indian Health Service (IHS) provides health care to American Indians who largely live in remote places where poverty is great and medical staffing is often less than adequate. Because medical providers are free to seek higher incomes and profits elsewhere, a shortage of medical staff is always a problem in these locations. The Veterans Health Administration (VHA) provides direct medical care for veterans in its facilities, and administers several other healthcare programs for veterans and eligible relatives.  The Department of Defense runs healthcare programs and military healthcare facilities for current and former military personnel (uniformed service members and National Guard/Reservists) as well as various eligible groups associated with them.  Health services for these select groups of Americans have expanded (and contracted) over the years as funding dictated. Where the individual states share costs with the federal government (i.e. Medicaid and CHIP), the generousness of the healthcare benefits (and who is eligible) varies across state lines even after Obamacare reforms.

Our government does not require that individual Americans only partake of one taxpayer-subsidized healthcare program.  Many Americans qualify for multiple programs (an over 65 year old might qualify for VHA, TriCare, Medicare, and even Medicaid simultaneously). Astute beneficiaries can often pick and chose healthcare programs to minimize out of pocket expenses and maximize asset protections.

Our government has many examples of overlapping programs.  It runs two separately administered programs to help “poor” elderly Americans pay for long term health care costs; namely, the Veteran’s Aid & Attendance Program (for “poor” veterans and their survivors only) and the Medicaid Title XIX Program (for all “poor” elderly Americans) .  The VHA maintains different eligibility rules for maximum income and asset allowed than does CMS.  In addition, the VHA program allows for greater wealth transfer before qualifying.   Why aren’t “poor” veterans and their survivors simply treated like all “poor” Americans when it comes to eligibility for nursing home benefits?   Do we need a separate veteran’s bureaucracy to handle this benefit when one under CMS already exists and functions much more efficiently?

Bottom Line

By placing the government healthcare programs into tabular form, I see many overlapping functions and programs.  Dividing Americans into healthcare “programs” with different benefits and costs serves to treat some subgroups more generously than others.  I think that taxpayer-subsidized money should be used for basic health care and should be distributed according to financial need (for which there is one universal definition) first and evenly among the rest.  What do you think?  How can we help our government become more efficient and start the ball rolling for Affordable Health Care and Beyond for ALL Americans?

Data for the table comes from the following sources:

U.S. Department of Health and Human Services, 2014 CMS Statistics

Smith, Jessica C. and Medalia, Carla (Issued September 2014) “Health Insurance Coverage in the United States: 2013” United States Census Bureau

Department of Health & Human Services, 2014 Actuarial Report On The Financial Outlook For Medicaid

Reports & Evaluations

Congressional Justifications, Indian Health Service,

Evaluation of the TriCare Program: Access, Cost, and Quality, Fiscal Year 2014 Report To Congress

Final Report to the Secretary of Defense:  Military Health System Review, August 2014

Rae, M; Claxton, G; Panchal, N; and Levitt, L; Tax Subsidies for Private Health Insurance, October 27, 2014, The Henry J. Kaiser Family Foundation

Mach, A.L.and Redhead, C.S., Federal Funding for Health Insurance Exchanges, October 29, 2014; Congressional Research Service

Health Insurance Marketplace: Summary Enrollment For the Initial Annual Open Enrollment Period, May 1, 2014; Office of the Assistant Secretary For Planning and Evaluation

Addendum to Health Insurance Marketplace: Summary Enrollment For the Initial Annual Open Enrollment Period, May 1, 2014; Office of the Assistant Secretary For Planning and Evaluation

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