Blog No. 13 Are They Socialists?

TAMPA --- Hard right conservatives have been delighted that we have now replaced that “Socialist” President Obama” with our new “Capitalist” President Trump.

Now, Speaker Paul Ryan, Majority Leader Mitch McConnell and Trump are talking about cutting back healthcare benefits, and increasing defense spending.

Repeal and Replace the Affordable Care Act (ACA), and increase the Pentagon budget. That’s the latest mantra. More for guns, less for butter.

Republicans won the 2016 election. They’re now in charge. So, what’s their plan to contain spiraling medical entitlement costs?

Will the Trumpers get the doctors and drug companies to reduce their hyper-inflationary spending and get in line with the rest of the economy? Last year, in 2016, the US economy grew 2.3 percent. But, spending on healthcare, curtailed by the ACA, still went up 10.2 percent. That’s 5X the overall economy.

Don’t want socialized medicine? Think free markets will cure this problem? OK, should we end Medicare and Medicaid? After all, it’s socialism, right?

Don’t kid yourself; Medicare and Medicaid are here to stay. They won’t kill them. It just won’t happen. And while these Social Entitlement Programs may be a talking point for talking heads, in reality they are an essential element in the US economy and are critical to millions of people.

If they end Medicare and Social Security, tens of millions of seniors would rise up. They’d take Mitch McConnell and Paul Ryan right out of their beds in the dead of night of and tar and feather them; senior voters would blast elected officials and cause The Second American Revolution so fast, your head would spin.

Turnover of Congress would be at an all-time high if Social Security was cut. An entire new wave of political populism would dwarf the current movement if Medicare were shut down.

Let’s go back to Blog No. 12’s Federal budget pie charts. Entitlements, mostly comprised of Social Security, Medicare and Medicaid, make up 25 percent of the 2016 Federal Budget. In fact, Healthcare is now about 10 percent of the US Economy overall, according to the OMB, and it’s growing faster than virtually any other segment of the economy. And it’s easy to understand why.

Having had the opportunity to visit some sick relatives in multiple Florida hospital facilities last week, even with amazing new technology, you can see how labor- intensive medicine has become. It’s a 24-hour business; it’s stressful, patients are demanding, many are in pain, sick and often badly depressed. Don’t get me wrong, they have their victories, too, but overall, being a healthcare worker is a tough job.

For example, take Tampa General Hospital.

Founded in the early 1927, today Tampa General is a big, modern city hospital with 1,018 beds. And, Tampa, an NFL city, is a top 30 US market. So, it’s a big-time medical complex in the thriving downtown area of a growing Sunbelt city. As the town’s primary hospital, it handles thousands of patients each year. Its emergency room is among the busiest in Florida.

I spent five days at Tampa General Hospital last week visiting my dad, who has been ill. Here’s a partial list of the different types of employees I met during my visit:

Doctors, Practice Specialists, nurses, physician’s assistants, wheelchair drivers, physical therapists, pharmacists, security personnel, cooks, commissary workers, food servers, bed pan cleaners, janitors, radiology techs, billing clerks, social workers, administrative personnel, receptionists, front desk personnel, parking attendants, groundskeepers, shuttle bus drivers, police, ambulance drivers, helicopter pilots, lab technicians, speech therapists, lab techs, gardeners and more.

For those I left off the list, I apologize. I met a lot of people during a stressful week who were kind, attentive and doing their best for our family. They are really great folks, working hard, as a team, doing their jobs. And there’s no doubt, the angels are on their side.

But the jobs, and the costs, of maintaining and running such a place are daunting. TGH has 6,715 employees. It’s a 24-hour, 365-day-a year-business. The annual operating budget is now close to $1.2 billion. A non-profit corporation, TGH still managed in 2015 to eek out a narrow profit of less than $54 million.

In 2015, TGH’s board and management team worked hard to contain costs, and overall only increase the total operating budget by 5.4%, well below the national average of 10.5%, according to US News and World Report. This despite a $65 million cut in state subsidies. Bottom line, TGH is a modern, well-managed, high-volume facility, ranked as a Top-50 hospital by US News and World Report.

A couple more footnotes on TGH, it managed to contain staff salaries and costs to the tune of 6.5% in its most recent reported quarter. But, real estate and facility costs are up 21%. It’s CEO resigned at the end of 2016 after three tough years on the job. And, labor issues and facility modernization costs continue to be an on-going concern. And, again, it’s well run.

In short, TGH is really not that different than many major medical facilities across the US. It’s problems are perhaps somewhat more stressed by the sheer population growth of the Tampa Bay area versus say Detroit, Omaha, Kansas City or Cleveland, where flat-to-negative population growth tied to spiraling equipment and technology costs are becoming a more acute issue.

TGH is a pretty typical example of a big American city hospital. We can look at other data, but there’s a reason major marketing companies use Tampa as a test market, it closely aligns with US spending and consumer trends. In short, it’s a very typical American city. So extrapolating the national healthcare cost crises using TGH and Tampa isn’t far fetched. If anything, with its moderate climate and fairly inexpensive cost of living, Tampa has a disproportionate number of seniors. But otherwise, the numbers are pretty average.

No matter how well TGH is run, its costs are going to continue to increase. Similarly, Federal entitlements and healthcare costs will likewise continue to escalate. Here’s one key reason why: The baby boomer population bulge.

Today the baby boomer generation has started to retire. Those born after World War II (technically, baby boomers are defined as those Americans born between 1948 and 1965) represent about 13.25% of the overall US Population according to 2010 US Census data. There were about 41 million Americans who were 65 and older six years ago. The overall US population at the time was estimated at 302 million. All those numbers continue to grow, with now estimates of a US population in 2016 of about 315 million, and a senior population closer to 52 million. In fact, seniors represent the fastest growing segment of our population.

Here’s a link to the Census data:

https://www.census.gov/prod/cen2010/briefs/c2010br-09.pdf

The boomers are getting older and unfortunately, as they age they’re getting sick, and now starting to die. And they’re running up the tab all along the way. With the average age of a patient’s life extended to now over 80 years, senior care is a major component of TGH’s revenues.

Almost all US Citizens who are patients over 65 at TGH avail themselves of Medicare benefits, according to the TGH finance staff. For senior critical care patients, Medicare covers 100 percent of costs up to about 100 days, they told me. It then covers 80 percent of therapy and overall medical costs for 20 days. If you have supplemental insurance, such as AARP, it will generally cover the other 20 percent for those 20 days. After that, extended care nursing homes offer different cost schedules, but again, many patients switch to Medicaid at that point. Still, the vast majority of senior patients are utilizing Medicare and Medicaid insurance to pay for their medical costs. (Note: the focus here is on senior entitlements. General population data is also a major component in Social Security and Medicare expenditures).

Senior costs can vary, but if they are admitted, and have some form of surgical procedure, the average admitted patient spends about $2,213 per day at TGH. With 1,036 beds (and I didn’t see a whole lot of empty beds during the five days I visited there), TGH is running at about $23 million in revenues per week. (The delta in overall revenue is tests, outpatient services, emergency care and ancillary clinical costs, or about 1/3 of overall revenues). The overall revenue analysis is for all patients, not just seniors. A lot of babies, as an example, are born at TGH facilities each year. Its neo-natal unit is said to be excellent.

But back to Medicare --- millions of Americans and their employers pay for Social Security and Medicare through their payroll deductions. My dad paid his share over his 60-year working career. So, he’s rightfully entitled to avail himself of a system he’s been putting cash into for nearly his entire lifetime.

But the ugly truth is that the money Dad paid into Social Security and Medicare, his investment, is a small percentage of the actual costs he’s incurred since he retired. Without Social Security and Medicare, he couldn’t come close to covering his medical bills. I’m not going to get too personal here, but his healthcare costs have far exceeded his investment in the social systems available to him.

And he’s not alone.

Is Dad a socialist? He’d be mad if you called him that. He worked hard on Wall Street and in the financial community most of his adult life. He was a great salesman in the early days of IT Services, and believed, deeply in the American financial markets, and the American dream. He is a capitalist, pure and simple.

But if you take away his social benefits now, he’d be ruined.

As the new administration gears up to work with Congress to “repeal and replace” our social systems, perhaps some more thoughtful planning might be good.

As I said, the senior patients at TGH, and across America, are often in pain, suffering, and in need of care and attention.

Now is not the time to pull the rug out from under them.

If anything, it’s the time to be tender and give them all the support we can, Socialists, Capitalists, and everyone in between.

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