Medicaid: Compliance with Eligibility Requirements

Finance, Subcommittee on Health Care, Medicaid:  Compliance with Eligibility Requirements, October 30, 2019

An adequate income removes the incentive to cheat. We suggest a $20 per hour minimum wage for workers and stipends for students. No worker is ever kept on shift absent workload, regardless of wage. No high wage worker is allowed to go home when customers are waiting. It is why overtime pay exists. No one should have to work for nothing, to be paid with only an expanded refundable child tax credit. This will end the need for the term “working poor.”

Students from ESL to Ph.D. (regardless of migration status) who are employed will be covered by the plan that the employer participates in, or through a public option, a single-payer plan or under a subsidy to training providers under the plan that covers their workers. Medicaid or a public option will be available to anyone who falls through the cracks, even without pre-registration. The latter will be federally funded but managed by state and local case workers in governmental or charitable settings.

 Medicaid compliance should not be an issue. In our proposal, Medicaid will be for those individuals who have nowhere else to go. Medicaid spending for Seniors and the disabled will be shifted to the federal government into a new Medicare Part E. This will save state budgets in the out-years (as would including base funding of pensions to Social Security, with appropriate asset transfers).

 Adopting a single-payer option, particularly Medicare for All, removes the need for any compliance as to eligibility. Please see Attachment One for our previous comments on these options.

There has been discussion of a wealth tax to pay for any such plan. We believe that any such tax should be reserved for paying down the debt. Please see Attachment Two for our prior comments on why this is essential for high income taxpayers. The usual ratio of income taxes to gross debt is $6 to $9 of debt liability for every dollar if tax paid. The current ratio is $13.

Rather than a wealth tax, which is both complicated and inappropriate for funding current operations, the creation of tax prepayment bonds will quickly pay down the debt and avoid future interest costs. Adopting this solution requires achieving a balanced budget for all other expenditures.

Paying for any health insurance subsidy should be accomplished by a long-term funding stream; preferably one collected from employers. Payroll taxes for this purpose are regressive. A better tool is the subtraction value added tax laid out as part of our standard tax plan. The Subtraction Value-Added Tax (S-VAT) is an employer paid Net Business Receipts Tax. It will be used as a vehicle for tax expenditures including health care (if a private coverage option is maintained), veterans' health care for non-battlefield injuries, educational costs borne by employers in lieu of taxes as either contributors, for employee children or for workers (including ESL and remedial skills) and an expanded child tax credit.

An adequate CTC  discourages abortion, and as such enactment must be scored as a must pass in voting rankings by pro-life organizations (and feminist organizations as well). An inflation adjustable credit should reflect the cost of raising a child through the completion of junior college or technical training. To assure child subsidies are distributed, S-VAT will not be border adjustable.

Employer-based taxes, such as a subtraction VAT or payroll tax, will provide an incentive to avoid health care taxation by providing such care. Employers who fund catastrophic care or operate nursing care facilities would get an even higher benefit, with the proviso that any care so provided be superior to the care available through Medicaid or Medicare for All. Making employers responsible for most costs and for all cost savings allows them to use some market power to get lower rates.

This proposal is probably the most promising way to arrest health care costs from their current upward spiral – as employers who would be financially responsible for this care through taxes would have a real incentive to limit spending in a way that individual taxpayers simply do not have the means or incentive to exercise.

Ultimately, employer taxation should be replaced with employer provided care as part of a cooperative system which has members control production, distribution finance, consumption and retirement savings. There should be many such cooperatives. A state-run entity would produce corruption.

The S-VAT can be used for personal accounts in Social Security, provided that these accounts are insured through an insurance fund for all such accounts, that accounts go toward employee-ownership rather than for a subsidy for the investment industry. Both employers and employees must consent to a shift to these accounts, which will occur if corporate democracy in existing ESOPs is given a thorough test. So far it has not.

S-VAT funded retirement accounts will be equal dollar credited for every worker. They also have the advantage of drawing on both payroll and profit, making it less regressive.

Our previous comments on how employee ownership would work is found in Attachment Three.

Cooperatives and other companies who hire their own doctors and pharmacists, whether as part of a cooperative purchase program or as an offset to a single-payer program (whether it is Single Payer Catastrophic or Medicare for All) will need no eligibility compliance function. All members will be This modality, as well as use of a subtraction VAT generally, ends the need for 1099 employment.

Attachment One - Hearing on Pathways to Universal Health Coverage, June 12, 2019 
Attachment Two – The Debt, The Future is Calling: It Wants a Refund, 2019

Attachment Three 

A. Employee-Ownership, March 7, 2019 

B. Hearing on the 2016 Social Security Trustees Report 

Treating Substance Misuse in America: Scams, Shortfalls, and Solutions

Finance, Treating Substance Misuse in America:  Scams, Shortfalls, and Solutions, October 24, 2019

Opioids 

This national pandemic has been gaining strength for a long time, starting in rural America and expanding nationally. Any family can be victimized by this scourge. It is now magnified by the ability to get even stronger versions through the Internet from Chinese suppliers.

Recent information lays the blame for much of the opioid crisis on the manufacturer and its owners. I am sure we all hope that the bankruptcy judge assigned to the Purdue Pharmaceutical case can find a way to claw back the funds looted from the company prior to expected legal actions.

Bankruptcy Law 

Bankruptcy should not be used to reward the guilty. Allow me to provide a scenario from comments to the Ways and Means Subcommittee on Oversight on how the tax code subsidizes hate crimes, held on September 19, 2019.

While the First Amendment precludes content regulation, that does not prevent the Southern Poverty Law Center from suing them into obscurity. The problem is that the same characters simply pop-up on YouTube (sometimes literally), overnight. One solution is to change bankruptcy law to make obligations follow successor companies. This would also be helpful in labor and tort cases (especially the extant case against Purdue Pharma).

Mandating Treatment 

Treatment modalities need to be improved to fight this crisis. They should have been long ago. Access to both initial and continuing treatment is vital to both addition and mental health care, as addiction can often uncover pre-existing psychiatric conditions. Even for non-alcoholics, once addiction has been turned on by opioids, the patient can never drink safely again and even moderate or heavy drinking previously will have to end, along with any medicinal effect it had.

For initial treatment, the question is not just access for willing patients, but mandated treatment for the unwilling. The liberalization of commitment laws in the 1970s has likely gone too far. Our first clue was mental patients, especially veterans, living on the street. Even when forced into treatment, taking a sober breath in a few days, treatment plan or no, resulted in release and resumption of the previous lifestyle. This is not freedom or health.

State laws or one overarching federal standard must make it easier for families, police, doctors and social service agencies to begin mandatory treatment, with the outcome being assignment to medical care if required and housing beyond shelter space if not already possessed. While some will not need the latter, those who do, especially our nation’s seniors, disabled and veterans, should not be sent back to the cold.

Early addiction after-care with an HMO provided two sessions a week after partial hospitalization. Medicare and Medicaid should as well. If relapse is detected during this period, the addiction specialist should be empowered (and the patient funded) to go back into treatment, possibly in a more intense setting than originally. The therapist should be similarly empowered, even with patients with long-term sobriety.

Synergies Provided by Employee Ownership 

Companies who hire their own doctors and pharmacists, whether as part of a cooperative purchase program or as an offset to a single-payer program (whether it is Single Payer Catastrophic or Medicare for All) have an advantage in providing treatment. Their health plans would be much less likely to prescribe their employees into drug misuse and could more effectively monitor abuse when it occurred.  This purchasing and monitoring would also include franchise and 1099 employees brought into employee status.  Community is the best solution to recovery. The community most important to most is work.

Attachment One - Tax Reform, Center for Fiscal Equity, September 13, 2019
Attachment Two  
A. Employee-Ownership, March 7, 2019   
B. Hearing on the 2016 Social Security Trustees Report 

Investing in the U.S. Health System by Lowering Drug Prices, Reducing Out of Pocket Costs, and Improving Medicare Benefits

Ways and Means, Investing in the U.S. Health System by Lowering Drug Prices, Reducing Out of Pocket Costs, and Improving Medicare Benefits, October 17, 2019

Lowering Drug Prices

Medicare Part D, Medicaid, Single Payer Catastrophic, the Public Option as an addition to Obamacare and Medicare for All share of the same drug pricing problems, the inability to bargain with drug companies for better prices. The Department of Veterans Affairs and private insurance have lower prices through negotiation, but not nearly low enough.

Monopoly and monopsony power in both the hospital and pharmaceutical industries already control costs. Such cost control enriches CEOs. There is little increased profit to shareholders, who will be paid a normal profit regardless of cost control. Negotiation will aim to reduce these profit margins, but it will be hard to hit the target. For drug pricing, reforming patent law and funding increased enforcement to prevent rebranding to avoid price loss to generics is absolutely essential.

Drug makers point to the need for basic research to their price levels, especially orphan drugs which will never make a profit due to both  high development costs and the cost of small batch manufacturing. They claim that this drives the need to raise drug prices for mature drugs to subsidize the orphans. The other reality is that some hikes are undertaken because no one can stop them.

The solution for high development and testing cost is for NIH and the FDA to own the rights to orphan drugs and to contract out research and development costs as it does basic research, as well as testing and production.

Pharma would still make reasonable profit, but the government would eat the risk and sometimes reap the rewards. NIH/FDA might even break even in the long term, especially if large volume drugs which were developed with government grants must pay back a share of basic research costs and the attached profits, as well as regulatory cost.

Whether drug manufactures would welcome or fear such a development is hard to say. Holding a hearing on such a proposal would certainly be interesting.

Reducing Out of Pocket Costs

Welfare economics tells us that a negative effect on insurance is the lack of price discipline. Insured consumers simply have no incentive to shop around. If no one had insurance, prices would reflect supply and demand. This is the logic behind a shift to catastrophic insurance with supplemental Health Savings Accounts, along with Flexible Spending Accounts or a variant, Medical Lines of Credit.

Catastrophic insurance could be provided on a single payer basis, with deductible thresholds tied to income. If adequate economic protections are added, the discipline that the market provides evaporates and we are left with yet another tax subsidy for high income tax payers. Such subsidies require either higher tax rates (which may not be a bad thing if they discourage rent-seeking at the expense of workers) or a higher debt.

The national debt, both public and trust fund, is made possible by the ability to tax high income individuals. The implication is that the liability for the debt is not distributed on a per capita basis. Instead, it must be borne by the children and grandchildren of those who most benefited from the TCJA. The current ratio is $13 of debt liability for every dollar of taxes owed. See Attachment Two for more explanation. Our recent calculations show that a normal debt to income tax ratio of $6 to $9.

Funding, as well as price controls, is the key issue to lowering out of pocket costs for existing Medicare, other government programs and suggested reforms. With enough funding, we can eliminate all out of pocket costs, as Medicare for All seeks to do.
Improving Medicare Benefits

As we have noted in previous congressional comments, as well as Attachment One. Under Medicare for All proposals, it is assumed that insurance rates and copayments will be reduced to Medicare levels. Payments to Physicians will continue under Medicare rates. The doughnut hole in Medicare Part D, which was decreased under the Affordable Care Act, would vanish. There is no one right answer on decreasing prices for beneficiaries. We address funding options in Attachment Three, which lays out our Tax Reform proposals.

Our debt problems will be addressed using the income surtax on salaries and the asset value added tax on non-salaried income and gains from assets. The invoice VAT will fund all health spending under Medicare, etc., that does not include the option for employers to substitute or increase services or provide direct funding for workers and retirees. The latter will be funded by the subtraction VAT.

Medicaid spending for Seniors and the disabled will be shifted to the federal government into a new Medicare Part E. This will save state budgets in the out-years (as would including base funding of pensions to Social Security, with appropriate asset transfers).

Our tax plan suggests a $20 per hour *minimum wage for workers and stipends for students. No one should have to work for nothing, to be paid with only a child tax credit, This will end the need for the term “working poor.” Students from ESL to Ph.D. (regardless of migration status) who are employed will be covered by the plan that the employer participates in, through a public option, a single-payer plan or under a subsidy to training providers under the plan that covers their workers. Medicaid or a public option will be available to anyone who falls through the cracks, even without pre-registration. The latter will be federally funded but managed by state and local case workers in governmental or charitable settings.

*No worker is ever kept on shift absent workload, regardless of wage. No high wage worker is allowed to go home when customers are waiting. It is why overtime pay exists.

Attachment One - Hearing on Pathways to Universal Health Coverage, June 12, 2019 

Attachment Two – The Debt, The Future is Calling: It Wants a Refund, 2019

Attachment Three- Tax Reform, Center for Fiscal Equity, September 13, 2019

Policy Options to Improve Economic Resiliency

House Budget: Strengthening Our Fiscal Toolkit: Policy Options to Improve Economic Resiliency, October 16, 2019 - 10:00am

The Committee backgrounder is absolutely correct. We are quite certain how the witnesses will respond to it. Our comments will address what is missing, the role that increased taxation can have as part of the fiscal toolkit.

The Tax Cut and Jobs Act has done nothing for the economy, despite claims to the contrary. Its main goal, increasing plant and equipment investment, is impossible to achieve through the asset inflation it was designed to spur. Real growth in Gross Domestic Product has come from the Balanced Budget Act of 2018. It will be continued by the recent passage of the Bipartisan Budget Act of 2019. Both of these create enough of a deficit to allow bond purchases to offset, at least in part, the asset inflation that the TCJA was designed to produce. 

The budget legislation has added certainty to the budget process, yet even then a foolhardy President was able to shut down parts of the government to fund a border wall. That he blinked first is a testament to bipartisanship. It also shows that bipartisanship is not enough. Process reform is needed. We have addressed the foregoing previously. These discussions are repeated in the attachments on the TCJA and the Budget Process.

It would have been better to have simply increased taxes to correct underfunding designed to offset making the Bush Tax Cuts permanent for the bottom 98%. It makes little sense to cut taxes on the same economic strata we must then borrow from, at interest (which is also debt financed). While such borrowing adds safety to retirement portfolios for the middle class, it is mainly another subsidy to the wealthy. 

The irony is that the national debt, both public and private, is backed by the ability to tax high income individuals. The implication is that the liability for the debt is not distributed on a per capita basis. Instead, it must be borne by the children and grandchildren of those who most benefited from the TCJA. 

The current ratio is $13 of debt liability for every dollar of taxes owed. See our third attachment for more explanation. Our recent calculations show that a normal dent to income tax ratio of 6 to 9. 

Tax revenue is too low to sustain our current debt load. The fault is not increased spending. It is decreased revenue caused by tax cuts for the wealthy and secular stagnation as the result of rent seeking by CEOs whose taxes are too low to discourage such behavior. 

Higher taxes on the wealthy are beneficial to the economy, now and in the next recession, because they take money out of asset inflation in the savings sector and can then be used to increase spending on the elements of GDP: government purchases, household consumption, net exports and plant and equipment investment (which is not part of asset speculation, as supply side economists falsely assert) . See our attachment on tax reform to see the essential items in our fiscal tool kit.

A recession is inevitable, as monetary policy is fueling asset speculation while fiscal policy is not. The current speculative toy is crypto-currency, especially Bitcoin. Bitcoin is starting to attract poor people. Coin collection machines now allow being paid in Bitcoin rather than in store credit or cash. Criminals also love it too. It is being sold as a way to invest and grow rich. There is even a fancy name for it: quantum finance. 

The differential between wage taxes and capital gains taxes, as well as quantitative easing by central banks are the air which fills these bubbles until they burst. Dealer claims that Bitcoin has big rises and smaller crashes simply proves the point that we are dealing with a legal Ponzi scheme. When the top of the food chain cashes out and everyone else realizes that they own a worthless product.


I suggest holding hearings as soon as possible to deflate this cancer before it kills the economy.

Attachment One – TCJA 

Attachment Two – The Budget Process 

Attachment Three – The Debt 

Attachment Four - Tax Reform, Center for Fiscal Equity, September 13, 2019