Monthly Archives: May 2025

The Medicaid Solution: End It, Don’t Mend It!

Posted on by
2

By:

Dave Kingsley

Why Do We Have Character Tests for Medicaid Eligibility and Not for Any Other Government Subsidized Healthcare?

     Medicaid is a $trillion-dollar program that has become a cash cow for the likes of UnitedHealth, Centene, Molina, Aetna, and Humana.  At the same time, it has always been a badge of shame for the lowest income Americans needing care.  Rules, regulations, and government oversight of the program are applied in the harshest of ways to poor people needing healthcare but not to the corporations responsible for widespread fraud and abuse.

   Unlike major corporations funneling $billions in undeserved compensation to executives and generous returns to investors, Americans needing healthcare but too poor to qualify for other federally subsidized programs must prove to a state government that they are poor enough and of good enough character to get Medicaid.  The stigma and harshness heaped on applicants and beneficiaries varies from state to state.  For instance, the pious, holier-than-thou, Christian governor of Arkansas has been on a crusade to ferret out people in her state who, in her view, are unworthy of life saving medical care.

Who Deserves Quality Medical Care – or Any Medical Care for that Matter?

    The concept of the “deserving poor” versus the “undeserving poor” has been integral in societal assistance for the economically unfortunate from the very beginning of North American colonization.  Poverty has always been and still is considered a character flaw.  It was just last week that I heard Mehmet Oz – the new overlord of Medicare and Medicaid – pontificate about – as he put it – “Abled bodied men,” who should not get Medicaid benefits if they are not suitably employed.

    Most ordinary, non-superrich, Americans probably can’t conceive of the $trillions in government benefits handed to the wealthiest among us without a scintilla of concern about character.  Think about a young, unemployed, able-bodied male who inherits $30 million from his parents.  He will pay no taxes on that inordinate sum of money that he can use for his pleasure – and for concierge medicine.  Maybe he is of good character, looking for work or contributing as best he can to society.  Conversely, he may be into jet setting and partying without any intention of doing anything positive for society.  However, the medical profession won’t consider any of that if he needs medical care.

    The legislature in the State of Kansas, near where I live and do a considerable amount of work, refuses to expand the Medicaid program under the Affordable Care Act.  Cross-wearing Christians in the state legislature believe that it’s some kind of a sin for the government to help poor people. They don’t give second thought to the massive subsidization of agri-corporations, tax write-downs for the oil and gas industry, etc.  They don’t seem to be concerned about the millions of acres of corn subsidized by the federal government at 50 cents per bushel while rich farmers and agri-corps irrigate it with water from the people’s Ogallala Aquifer, which is being depleted by such craziness.

    There are countless instances of government benefits provided without concern for the worthiness of the beneficiaries.  I grew up with farmers who loved the Soil Bank because they could let land lie fallow and collect a payment from the government.  These farmers, with few exceptions, thought then and think now that welfare in the form of assistance to poor mothers for food, clothing and shelter is despicable. 

Medicaid is an Inferior Healthcare Program Conceived by Southern Segregationists in the 1960s.

    Medicaid is the handiwork of post-Reconstructionist Southern Democrats.  Their sole purpose was to keep black people from getting medical care.[1]  They were able to engineer and codify into law a unique American concept known as “indigent medical care.”  The 1960 Kerr-Mills Act, ensured that the U.S. would have second-class medicine for the “needy” or “indigent,” and that state governments would have dominance over it.

    Senators and Congressmen from the former Confederate States left the Democratic Party in the 1970s.  Their political heirs in the current Republican dominated legislature and executive branch are now in the process of passing legislation that will further tilt the U.S. tax system in favor of the wealthy.  They are attempting to enhance corporate and superrich tax advantages on the back of people needing medical care – medical care that the least fortunate amongst us can only get from Medicaid.

    For obvious reasons, it has always been easy to politically bully poor people and, of course, poor black people are easiest of all to bully. We should also remember that the Southern States are not the only racist states.  Furthermore, Medicaid in any state will be a second-class medical care program with inordinate amounts of fraud on the part of the companies contracting to provide services. Nevertheless, had there been no history of slavery, Jim Crow, and the ongoing institutional racism they have wrought, the U.S. healthcare system would look a lot more like our peer countries in Asia and Europe (where everyone has equal access to one national, medical care program).

It is Time to Get Honest and Give Everyone Equitable Access to Quality Medical Care

    Medicaid is a disgraceful medical charade with roots in the incomprehensible cruelty of slavery and its aftermath.  There is of course what critical race theory dubs intersectionality – white-, Hispanic-, Asian-, Native-poor people are caught up in it also.  The results are these: poor black men will have 12 years less life to live than rich white men, the life expectancy of whites with a high school education or less has gone into reverse, black men die of cancer at a rate double any other demographic group, patients in hospitals on Medicaid are sicker, cost more, and stay longer than patients on any other payer system – just to list a few of the consequences of healthcare discrimination.

    There has never been a time in American history when the rich lived longer with better health.  On the other hand, there has never been a time when the bottom half of wealth holders and earners experienced a declining life expectancy and worse health outcomes compared to the fortunate upper classes.

    The right wing and the medical industry are using a clever tactic by keeping us all bogged down in a fight over tweaking, improving, expanding a system that will never be anything other than means-tested, welfare medicine.  Poor people’s medicine is and always will be inherently poor medicine.  As long as the program exists, there will be an immoral distinction between the worthy and unworthy in the U.S. medical care system. 

    My question to the medical profession is this: “How do you square medical ethics with denial of care because a person can’t afford to pay or because some bureaucrat deems them unworthy?”  I’m not berating individual doctors – I’m asking the medical profession, “Where in the hell have you been?”  There are many good physicians that are in the fight to change the corrupt, discriminatory medical system.  But this very powerful profession itself has a shameful track record in standing up for the human dignity of all people needing medical assistance.

End it! Don’t Mend It!

    So, I say, the only solution to this American healthcare disgrace called Medicaid is “End it! Don’t Mend it.” Give everyone equal access to equitable healthcare.  Fighting over nuances in a program unworthy of the fight keeps a white, college educated, advocacy enterprise going and ensures that the system itself won’t change.  I see verbal assaults on bad nursing home chains, and on private equity in the hospital/nursing home industry, and other such ongoing battles as nothing more than a futile game of whack a mole that will be never ending. I’ve been playing that game. And I’m tired of it.  The nursing home industry is fine with the game as is every other sector of the healthcare industry feasting off of government largesse like we could hardly imagine a half century ago. 

[1] My interest in Medicaid research has been on systems analysis rather than the litany of bad acts by bad providers such as is the tenor of Mary Adelaide Mendelson’s wonderful and productive work Tender Loving Greed, which is a classic in the study of fraud and abuse in the nursing home industry.  Systems research is focused on how systems originate, develop over time, and are politically maintained.  The concept of “sensitive dependence on initial conditions” is critical for understanding why poor and African Americans are treated differently – and inequitably – in the healthcare system (See for instance, Walter Buckley, Sociology & Modern Systems Theory). For the best validation of the racist roots of Medicaid, see: Jill Quadagno, One Nation Uninsured: Why the U.S. Has No National Health Insurance; Gerard W. Byouchuk, National Health Insurance in the United States & Canada; and, Robert & Rosemary Stevens, Welfare Medicine in America: A Case Study of Medicaid.

Do You Know Where the Taxes You Pay for Medicaid Are Going?

Posted on by

By:

Dave Kingsley

A Medicaid Disgrace:  Nursing Home Companies Make Big Bucks Off of Poor Peoples’ Medical Care

    Medicaid expenditures by Federal and State governments are approaching $1 trillion per year. All of it has been privatized with hundreds of billions of public dollars funneled into the nursing home industry alone.  That’s unfortunate because tax paying Americans pay dearly for privatized government services.  While healthcare accounts for about one-fifth of U.S. GDP, peer countries spend half to one-third of that amount on much fairer and more effective government-administered healthcare systems.

    It is important that we expose the excessive extraction of government funds from Medicaid by private companies and some nonprofit entities engaged in Medicaid contracting with states.  Corporations such as Centene, UnitedHealth, Aetna, Humana and Molina have captured the bulk of primary, preventative, and acute care Medicaid contracts.  They have an incentive to deny care and control their networks to keep their costs low. In upcoming posts, I will cover that facet of Medicaid.

    Nursing home Medicaid contracting involves a conglomeration of LLCs, Real Estate Investment Trusts, Public Corporations, sole proprietorships, nonprofits, and private equity owned chains. It is a big industry with net patient revenue of approximately $200 billion.  This does not include earnings from real estate, dietary services, labor contracting, and other services sold by parent/holding companies to the nearly 15,000 nursing home facilities in the U.S.  For instance, in 2022, the total cost of dietary services noted as expenses in cost reports totaled $12 billion. This is a money maker because parent companies buy in bulk, negotiate a favorable deal, and charge their facilities – the state contracting entities – full price.

If You Have Seen One Nursing Home Chain, You Have Seen One Nursing Home Chain. 

    The nursing home industry is comprised of diverse legal, and financial structures run by a variety of characters and investing entities.  Some of the characters have become quite notorious for accumulating great wealth while providing appalling care.  A couple of the better-known investor/owners with unsavory reputations are Ephram Lahasky and Forrest Preston.  Lahasky’s name appears in our research on ownership all over the United States.  He’s been denied a license to operate by the state of Vermont and has been sued by the Attorney General of New York.  Preston is the sole owner of one of the largest chains in the U.S. – The Life Care Centers of America. Both of these guys continue to run substandard nursing homes unabated. There are plenty others that are somewhat less noticeable but just as bad or worse.

    Infamous operators aside, documents available regarding publicly listed companies provide the best insight into the industry’s extraction of taxpayers’ dollars that could otherwise be applied to decent and humane care as opposed to the warehousing care that is pervasive in the highly profitable nursing home business. There are financial advantages to companies listed on a stock exchange.  Capital is available from investors through the sale of stock.  If the stock price increases, so does the availability of capital for expansion, return to shareholders, and executive compensation. 

In the right business, stock becomes attractive, appreciates, and provides a nice return.  The nursing home business is the right business because taxpayers guarantee revenue and ensure robust net incomes that are shielded from ordinary business cycles and economic crises such as caused by the COVID pandemic.

The Ensign Group: $4.2 Billion in Medicaid & Medicare Nursing Home Business Per Year

    The Ensign Group is one of the largest nursing home chains in the U.S. It is listed on the NASDAQ. The advantage of publicly listed companies to the taxpayers is transparency.  Public companies are required to file financial statements with the Securities & Exchange Commission.   CMS data and financial reports submitted to the SEC by the Ensign Group suggests that outstanding returns do not equate with high quality care.

As information from Ensign’s latest SEC 10K and Proxy Statements and data from the CMS ProviderInfo file suggests, this $4.2 billion corporation is making a handsome return on very poor-quality service. CMS Nursing Home Care Compare rates facilities on a scale of 1 to 5 with 1 being the lowest on a variety of factors such as nursing hours of care per resident day, turnover, patient care overall, and so forth. Of the 268 Ensign affiliated facilities in the July 2024 ProviderInfo file, 22% were rated 1 and 32% were rated 2 – only 1.5% were rated 5. So, over half of this company’s facilities are rated at the bottom in quality while their investors and executives are richly rewarded.

In view of Ensign’s appallingly low performance on care ratings, let’s look at the following financial data they reported to the SEC: (1) return on shareholder value, (2) stock repurchase, (3) cash on the balance sheet, (4) executive pay, and (5) net cash provided by operating activities. It is important to keep in mind that approximately half of the 56 million shares of stock are owned by three asset management firms BlackRock, Vanguard, and State Street.

$100 Invested in Ensign in 2019 was worth $296 at the end of 2024.

The Ensign Groups 10K touts the company’s cumulative stockholder return from 2019 through 2024 per $100 invested in 2019. The chart below indicates that Ensigns outperformed the NASDAQ Composite and peer companies. A $100 dollar in 2019 was worth $296.63 in 2024.

Stock buybacks drain money from production/service and raises the price of stock.

Ensign noted in its financial report that it invested $20,000,000 in a stock buyback in 2024. Stock buybacks raise the price of the stock and enrich shareholders and executives. Money that could be reinvested in business operations and improved care is extracted for the purpose of rewarding investors. Investors have indeed been quite positive toward Ensign stock. When the market tanked in November of 2021 due to COVID and the Federal Reserve’s monetary tightening, Ensign stock was selling at $75 per share. Today it is trading at over $140 per share.

Don’t believe industry propaganda – nursing homes are not “running on a thin margin.”

Ensign’s 2024 cash flow statement notes net cash from operating activities of $324 million. Their balance sheet indicates cash and cash equivalents of close to a half billion dollars ($464,598 million).

Executives are richly rewarded for impressive financial performance and disgraceful performance on their contract with taxpayers. Five top executives’ compensation totaled $110 million over 3 years.

As the table below demonstrates, the compensation of Ensign’s five corporate executives totaled nearly $110 million over the past three years. It is notable that actual salary for all of the top executives/officers are less than $1 million while their total compensation ranges from $4 to over $11 million per year. Corporations receive a tax advantage for keeping executive salary below $1 million and putting the bulk on stock awards, stock options, bonuses, and perks. Therefore executives have an incentive to keep costs (services) low and poor while increasing shareholder value.

Summary

Data pertaining to one large nursing home chain only scratches the surface of the financial reality of privatized, government sponsored, healthcare in America. The initial purpose of Medicaid was to keep states in control of government funded medical care for poor people. Throughout the 1940s, 50s, and 60s, bigoted Southern Democrats had outsized legislative power to block a single payer, universal healthcare system managed by the federal government. Their goal was to keep African Americans in an inferior position. They were able in the 1940s to include a segregation clause in the Hill-Burton Hospital Survey & Construction program and block President Truman’s plan for single-payer, universal medical care.

After Truman’s fight for equitable healthcare along the lines of programs adopted by European governments and countries with advancing economies in Asia, the Democrats gave up and went along with a “Rube Goldberg” government healthcare system designed to discriminate against black Americans and enhance the power of states over the federal government in the realm of medical care. Consequently, American government sponsored medicine became divided along race and class lines. That did not stop venal politicians from pouring increasing amounts of taxpayer dollars into Medicaid and turning it into a cash cow for their corporate patrons.

Note: The Ensign Groups 10K and Proxy Statements can be found here: The Ensign Group, Inc. – Financials – SEC Filings. The CMS ProviderInfo file is available on the CMS website or through a request to dkingsley@tallgrasseconomics.org.

MEDICAID:  AN AMERICAN MEDICAL CARE DISGRACE

Posted on by

By: 

Dave Kingsley

Everyone But the Totally Uninsured Receives Government Subsidized Medical Care. Only the Poor are Stigmatized

    Practically all medical care in the U.S. is subsidized by federal and state governments – mostly by the federal government.  The taxes to pay for these subsidies are collected from workers’ paychecks, sales taxes on what they buy, and property taxes that are paid by homeowners or added into rent/lease payments. And yet, it is only Medicaid, a medical care program for the poor, that is stigmatized. But the poor pay taxes too. Indeed, a disproportionate share of taxes.

    The biggest tax subsidy is awarded to companies providing health insurance for their employees.  When companies can write down their federal income taxes, they are actually getting money from the government – they are legally allowed to keep money that they owe the government.  That is why these “breaks” are called tax expenditures.

    Indeed, the $251 billion in tax write downs for corporations providing health insurance is the largest tax expenditure by far.[1] Furthermore, this deduction is a transfer of wealth from lower income Americans (who earn their employee benefits) to wealthier classes who increase their assets from equities and compensation in the healthcare industry.  In costing labor, employers trade benefits for wages.  In fact, in many negotiations in which I was on the negotiating team, we often settled wage disputes by offering to “sweeten the health insurance package.”

    The poor pay more than their fair share of taxes that keep governments running.  In the U.S. taxes on capital have been continuously reduced while at the same time taxes on consumption and labor have increased. This puts the heaviest burden on the lowest income groups and  lightens higher income groups’ tax load.  Nevertheless, Medicaid recipients are treated like freeloaders and “lesser thans” while everyone receiving other forms of subsidized healthcare are considered solid, upstanding Americans by politicians blaming poor people and the elderly for budget deficits.

“What We Do unto the Least of These”

    Capitalist America as it has evolved can be harsh and unforgiving for the unfortunate, which could be any of us.  With job loss, we can find ourselves struggling to keep a roof over our head and food on the table.  At the very least we could lose our health insurance.  The Affordable Care Act is not affordable for the unemployed.  If you live in a state that has not expanded Medicaid, i.e., has not made residents with incomes below 120% of poverty eligible for Medicaid, you must have children and be in extreme poverty to qualify.  If not, you will not be eligible for any healthcare program.

    Let’s say a person lives in a state that has expanded Medicaid.  And let’s say that person lives in a so-called “red state” like Arkansas or Missouri.  The governors and legislators of those states will humiliate them and create administrative barriers to establishing eligibility for no other reason than they assume they are a cheater until they prove otherwise.  These legislatures are dominated by pious Christians who despise poor people despite their prophet’s admonishment “what you do unto the least of these; you do unto me.”  It is easy to bully poor people for the purpose of impressing constituents with bravado about controlling wasteful spending.

    The poor are despised by right-wing politicians and a large portion of Christian America. Certainly, we don’t see the powerful Christian Church Industry – otherwise known as “faith based” institutions – closing ranks to take up the cause of their less fortunate brethren. Their prophet did that but for the most part they seem reticent about exerting their influence.

Transfer of Wealth from the Poor to the Wealthy

    Conservatives claim that poverty in the U.S. is far lower than officially measured by the federal government due to transfer in the form of welfare such as Medicaid, child tax credits, and the Earned Income Tax Credit.  There are several problems with the conservative wealth transfer argument. First, the poor struggle day-to-day to survive due to paltry benefits and continued threats of loss of those benefits and actual loss due to administrative complexities that are hard to navigate in a hostile political environment. 

    Second, transfers to the poorest of the poor are paltry compared to the transfers to the upper classes in the form of such mechanisms as capital gains write downs, untaxed cash flow, earnings on unrealized gains, and investments in tax free municipal bonds – to name a few “loopholes” for the rich. The hypocrisy of politicians claiming to save “we the people” money by bullying poor people on Medicaid is palpable in legislatures these days.  Congresswoman Vicki Hartzler of Missouri is a wealthy owner of an Agri Corp that receives hundreds of thousands of dollars in undeserved federal farm subsidies.  Nevertheless, she is a loud voice for clamping down on benefits for the voiceless, the powerless, and the defenseless who need those benefits for their health and often for their very survival.

WATCH FOR UPCOMING BLOG POSTS:

“Lucrative Medicaid Funded Nursing Home Care”

“Finding the Roots of Medicaid in the History of Slavery & Jim Crow”

“Corporate Medical Care Benefits:  The Privatization of Medicaid”

“The Poor as a Government Healthcare Class:  A Uniquely American Idea”

“The Injustice of the ‘120% of Poverty Gap’ in States That Have Not Expanded Medicaid”

[1] Tax Expenditures | U.S. Department of the Treasury.  Other big tax expenditures include the mortgage interest deduction, and a variety of corporate real estate write downs, including depreciation.  There is no doubt that the tax codes are a major factor in the maldistribution of wealth.