Tag Archives: Lobbying

How the Health Insurance Industry is Using Disinformation to Take Over and Defraud Medicare

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Dave Kingsley

Corporate Greed in the Post-Truth Age

    Most Americans have never heard of the Better Medicare Alliance[1] – a Washington, D.C. think tank and front group for big health insurers such as UnitedHealth, Aetna, and Humana.  Also, the 2023 Super Bowl TV audience didn’t know who paid for a commercial at halftime claiming that President Biden had plans to “cut Medicare.” The ad included a message urging viewers to call the White House and “tell President Biden not to cut Medicare,”[2] but they – the TV viewers – didn’t know who was asking them to do it. Football fans had to be perplexed.  Medicare beneficiaries were most likely upset and worried by what they saw and heard.

    The ad, funded by Better Medicare Alliance, was a lie.  The truth is that President Biden had no intention and no plan to cut Medicare.  Contrary to what the ad claimed, he was planning to claw back $4.7 billion from UnitedHealth and other insurers for defrauding the program through false billing practices.  One illegal practice health insurers utilize to add unearned value to their Medicare Advantage (MA) reimbursement is called “upcoding.” Because sicker patients are reimbursed at a higher rate, the trick is to find ways to lie about how sick a patient is – to make them look sicker than they are.[3]

    MA beneficiaries tend to be healthier than Traditional Medicare (TM) beneficiaries.  Nevertheless, research indicates that when individuals move from TM to MA, their costs to the program increase.  The important point is that “total Medicare payments to MA plans in 2024 (including rebates that finance extra benefits) are projected to be $83 billion higher than if MA enrollees were enrolled in FFS Medicare.”  Furthermore, payments to MA plans average an estimated 122 percent of what Medicare would have expected to spend on MA enrollees if they were in FFS Medicare.”[4]

    After the Biden Administration’s proposal to recoup stolen money from MA insurers and prevent further fraud, the health insurance industry threw a conniption fit and went into overdrive.  The Super Bowl ad was only one tactic (costing eight figures, it was super expensive).  In addition, they sent their army of lobbyists crawling all over the Washington, D.C. beltway threatening and bribing legislators.  HHS backed down.  The cheating continues and costs the seniors of America – indeed all wage earners – hundreds of billions from their payroll deductions, premiums, co-pays, and nearly $200 out of every Social Security check.

Pulling Back the Curtain on the Washington D.C. Policy Planning Network:  What is the Better Medicare Alliance & Who is Behind It?

    The insidious thing about think tanks set up inside the Washington, D.C. beltway is that they enlist the aid of seemingly legitimate advocates and scholars.  It is hard to know if the advocates and scholars are merely naïve or whether they are self-serving. Perhaps unwitting would be a kinder word. For instance, the Better Medicare Alliance board consists of Dennis Borel, Executive Director of Texans with Disabilities, Caroline Coats, Humana, Inc., Daniel Dawes, Meharry Medical College, Mary Beth Dawes, Former Congresswoman (President & CEO), Joneigh Kaldhun, CVS Health, Dan Lowenstein, Visiting Nurse Service, NY, Richard Migliori, UnitedHealth, Elena Rios, National Hispanic Medical Association, and Kenneth Thorpe, Emory University.

    The organizational structure of these industry front groups is a form of disinformation itself. On the board are big players in the MA industry – Humana, CVS, and UnitedHealth.  Interspersed with the representatives of these health insurance behemoths are executives and professionals from organizations with an ostensible mission to improve society in some manner.

    By placing their imprimatur on an industry lobbying group, NGOs, nonprofits with a stated humanitarian cause, and universities  are participating in a duplicitous tactic to confuse the public about the real purpose of nefarious industry think tanks like Better Medicare Alliance. Their support for various entities with a mission to preserve and strengthen the medical-industrial complex helps divert funds needed for care into the coffers of executives and shareholders.

Privatizing Medicare was Supposed to Reduce Costs and Give Beneficiaries More Choice:  It Hasn’t Worked Out that Way.

    MA is a creature of the Medicare Modernization Act of 2003. The right-wing of American politics accomplished a coup by setting Medicare on the road to privatization.  Currently over 50% of all beneficiaries have selected it over Traditional Medicare ™.  Federal policy is unfortunately driving Seniors into MA by allowing manipulative practices such as low premiums and a few benefits not available to TA beneficiaries.  Seniors are being led like lemmings into the arms of the insurance industry by disinformation and deceit. Organizations like the AARP in partnership with health insurers like UnitedHealth are the Pied Pipers.  

    MA is one of the most serious threats to the health and well-being of American seniors.  It robs money from care and transfers it into the pockets of investors and executives.  Many beneficiaries are happy with low premiums and add-ons not available under traditional Medicare such as Silver Sneakers plus some dental and vision care.  I can understand why many people who have it are pleased with their coverage.  It works for healthier beneficiaries until it doesn’t.      

    If MA beneficiaries should incur a costly service that is not in network, their assets could be wiped out.  Some retirees have no choice in the matter.  If their company or institution includes health insurance as a retirement benefit, it is most likely MA. Furthermore, I can’t blame anyone who is trying to avoid the premiums for supplemental coverage under traditional Medicare.  Avoiding bankruptcy and depletion of assets through a catastrophic sickness makes perfect sense for TA beneficiaries. But the supplemental insurance is a heavy burden that could be avoided if the Medicare program weren’t diverting so much funding to MA (see discussion below).

Seniors and People with Disabilities Would not be Struggling as Much If Big Health Insurance were not Stealing from Them.

    For seniors and disabled Americans to lose nearly $200 per month of their Social Security and choose between a large payout for supplemental or the risk of bankruptcy, is an injustice when privatized healthcare is stealing hundreds of billions of Americans’ tax dollars, payroll deductions, and hard-earned money through out-of-pocket expenses. The Physicians for a National Health Program (PNHP) has estimated that MA overcharged taxpayers by a minimum of 22% or $88 billion and potentially up to 35% for a total of $131 billion in 2022. If the high end of the estimate were correct, all of Part B premiums ($131 billion in 2022) or Part D premiums ($126 billion in 2022) could be covered by excessive corporate extraction of funds from Medicare.[5]  

    UnitedHealth is noting $25 billion in cash and cash equivalents on its 2023 balance sheet, CVS has noted $12 billion, and Humana is noting $5 billion. They have multiples of these amounts in long-term and short-term investments; they spend hundreds of billions on stock buybacks, dividends, and board and executive compensation. By digging into their assets, the cash rich health insurance business would be able to charge fair prices and stop their criminal behavior without much of a dent in a reasonable return on their investments.

In this Dark Age of Plutocracy, the Superrich & Corporations are Lying and Blaming Government & Ordinary Americans for Poor Healthcare and Excess Expenditures

     Americans earning wages and salaries are being subjected to a corporate network of disinformation and gaslighting.  President Biden is blamed for cutting Medicare when he is in fact attempting to protect the program.  The growing elderly population is blamed for federal debt and deficits when Medicare and Social Security have little impact on the federal budget (SS has none and over half of MC is paid through payroll deductions, premiums, and co-pays).  The nursing home industry blames taxpayers for failing to provide them with enough money to adequately care for the elderly and disabled patients in their beds while they spin a false hardship narrative.

    The Medical-Industrial Complex has established a network of front groups with a duplicitous message of doing good for Americans and has enlisted the aid of do-gooder nonprofits, universities, and individuals. This system and its apparatchiks aren’t all that clever.  Their organizational tactics are rather easy to discern.  The problem is that it is happening stealthily behind the scenes in Washington, D.C. and the 50 state capitals. The media is ignoring it. We intend to expose it and encourage everyone we can to join us in that endeavor.

[1] https://bettermedicarealliance.org/

[2] You can see the ad here: https://www.ispot.tv/ad/2UHG/better-medicare-alliance-cutting-medicare-thats-nuts.

[3] Reed Abelson & Margot Sanger-Katz (2023), “Biden Plan to Cut Billions in Medicaid Fraud Ignites Lobbying Frenzy,” https://w.w.w.nytimes.com/2023/03/22/health/medicare-insurance-fraud.html?searchResultPosition=1.

[4] Medicare Payment Advisory Commission (MDPAC), 2024, p. March 2024 Report to the Congress: Medicare Payment Policy – MedPAC

[5] Physicians for a National Health Program, (2023), Our Payments their Profits: Quantifying Overpayments in the Medicare Advantage Program. MA Overpayment Report (pnhp.org)

Philanthropic Foundations, Quasi-governmental Science Organizations, and Universities Often Act as Corporate Shills: How the Industrial Complexes Work.

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Dave Kingsley

President Eisenhower’s Warning

    In his 1961 farewell speech, President Eisenhower recognized danger in the development and growth of a new phenomenon in U.S. economic and political history – a permanent, massively funded, and rapidly growing complex of government agencies, military-related industries, and universities.[1]  His prescient concern was that we would pay for and get more defense than we need; that the military establishment would grow beyond reason and purpose; and that the Pentagon would become a vehicle for special interest power and enrichment – which indeed it has.

    A decade after Eisenhower’s warning about a mushrooming defense network, Barbara and John Ehrenreich suggested that an emerging medical-industrial complex was to healthcare what  the military-industrial complex was to defense.[2] In 1980, the late Arnold Relman, M.D., editor of the New England Journal of Medicine, stated that “The most important development of the day is the recent, relatively unheralded rise of a huge new industry that supplies healthcare services for profit.”[3]

    Industrial complexes like healthcare and defense have proliferated over the past few decades.  We have witnessed the growth of financial services, fossil fuel, agricultural, and a host of other industrial complexes.  These systems are not static.  Rather, they are dynamic, steady state, adaptive, social systems in a constant process of elaboration and complexification.[4]  Consequently, in Washington, D.C., and state capitals these elaborate, special interest networks have become horrifyingly powerful and effective – like nothing seen before. Indeed, this unprecedented facet of U.S. history is a major threat to future generations.  Unfortunately, it is hidden from the public and rarely discussed in the mainstream media.

The Policy Planning Network[5]: A Granular Understanding of “Industrial Complexes.”

    Politicians initiate legislation but not policy.  Rather, they respond to policy proposals from institutions representing special interests.  Agglomerations of these special interests working on policy are always complex systems of interactions between foundations, non-profit entities, e.g. think tanks, for-profit corporations, and powerful individuals.  In general, organizations such as the Brookings Institute, the Cato Institute, the Johan A. Hartman Foundations, the Commonwealth Fund, the National Association of Realtors, the Chamber of Commerce, the Heritage Foundation, the American Enterprise Institute, and the National Bureau of Economic Research are major players in policy percolating through special interest channels at the national level.

    Industries have their own self-serving propaganda organs and armies of lobbyists in the mix of interactions leading to policy proposals.  For instance, the real estate industry is represented by the National Association of Realtors, the pharmaceutical industry by Big Pharma, Hospitals by the American Hospital Association, Wall Street by a hoard of financial-services associations, and so on and so forth – there are too many to count.  When an issue is favorable to conservative causes or private enterprise (not necessarily capitalistic though), the Chamber of Commerce will weigh in with its immense financial resources.

    Some of these powerful entities like the John A. Hartman Foundation and the Commonwealth Fund[6] hold forth as “do gooder” organizations with no other mission than the public good.  With vast amounts of wealth pouring into their foundations, they have piled up huge amounts of capital on their balance sheets.  Since, they are required to dispense only 5% of their revenue to individuals and organizations related to their ostensible missions, they have in fact become status quo maintenance organizations and investment firms looking for optimal returns. Furthermore, they serve the interests of private wealth by ensuring that policy remains from the center to the center right. Major foundations are intent on ensuring that policy is not transformative, will not threaten the status quo, and will not upset the current distribution of wealth and power.

    In reality, these powerful players in Washington policy making are tax shelters for superrich individuals and their families who desire to keep their vast wealth out of the hands of the IRS and to maintain considerable control over public policy.  The most influential foundations typically solicit financiers and corporate executives to sit on their boards.  Representatives of labor, consumers, and the poor are not found on the boards of dominant special interest influencers in Washington, and the policy they induce reflects that fact.   

A Case Study of the Policy Planning Network: Commissions, Think Tanks, and Trade Associations that Help Keep So Many Institutionalized Elderly and Disabled “Nursing Home Patients” in Dire Conditions.

    How does a nation deal with the embarrassment of indecent and inhumane treatment of the elderly and disabled in government funded institutions run by private industry?  Recent and ongoing history tells us that the Nation’s elected representatives and agency heads have passed the problem off to foundations, think tanks, trade associations, and quasi-governmental science entities (i.e., to industrial complexes). 

    For instance, the incredible incompetence and indifference to prevention and infection control in nursing homes before and during COVID was referred to the Mitre Corporation – a shadowy Washington entity with roots in military intelligence and other defense activities. The John A. Hartman Foundation initiated a commission by the National Academies of Science, Engineering & Medicine (NASEM)[7] in 2020.

    Consequently, we’ve had two nursing home commissions in very recent history: the NASEM Commission and the Mitre Corporation Commission, both of which glossed over the nastier side of the industry, which is the dominant side.  Neither commission covered any territory that would result in holding the industry accountable for substandard worker treatment and pay, overall low quality of care, excess extraction of funds for shareholders, unsavory, unethical, far too often criminal owners, and problematic financial reports. 

    To the contrary, the commissions seemed sympathetic to the industry’s false claims of financial hardship and lack of government support.  Indeed, the Mitre Commission concluded that the industry needed more help in the form of personal protection equipment and other government assistance.  The industry’s excuses for the deaths of 200 employees and 2000 patients were never questioned by either commission.

Whitewashing & Window Dressing[8] the Inhumane Treatment of Disabled and Elderly Americans.

   The NASEM Commission has been institutionalized as the Moving Forward Coalition – a think tank funded by the John A. Hartman Foundation. The two nursing home commissions and the subsequent MFC are basically “tweaking-organizations,” which propose changes at the margins without a serious threat to the status quo.  Furthermore, The American Healthcare Association (AHCA) and LeadingAge (LA) – the well-funded and powerful nursing home trade associations –  and other private industry representatives appear to have a dominant position in the organization.  Special interests dominate the steering committee and are represented on all the other MFC committees.[9]

    Advocates and scholars serving on the two major commissions and the MFC tend to be passive and compliant with the industry’s self-serving wankery. The systemic problems of corruption and commoditizing of human beings for the sake of cash flow are ignored while the committee members engage in pretentious noodling over meaningless technical issues and “pie in the sky” ideas that will not be implemented.[10]  

    Like most major philanthropic corporations, the John A. Hartman Foundation is a vehicle for tax avoidance and superrich control over public policy.[11] The Mitre Corporation board is primarily a mix of current and former military intelligence officials and for-profit corporation managers and executives[12] with a displaced mission to grow their organization and enhance their power. 

    Interestingly, it is very easy to find the bios of the Mitre board members, which are on their website, but finding the bios of the John A. Hartman Foundation board takes some work.  Although board members’ names are listed on the JAH website, their bios are not. However, one can safely say that consumer, poverty,  and labor representatives are notably absent from these types of foundation boards.

Summary

    Important policy affecting the rights and welfare of the American people is generally generated in an interrelated system of foundations, special interest think tanks, trade associations, advocacy groups, and former high level government officials.  The money and power behind this policy planning network is controlled by super-rich individuals/families and corporations for the purpose of protecting their wealth and maintaining control over government policy. 

    The power wielded by the American power elite through their lavishly funded network in Washington and state capitals is unrecognized by the media and hidden from public view. This system will not change without exposure initiated by scholars and honesty from those who willingly participate in it. 

    The corruption and deceit in the making of policy – including nursing home and healthcare policy – is pervasive and intensifying.  Extensive system change begins with exposure.  The Tallgrass Economics blog and the nonprofit Center for Health Information and Policy have a mission to expose policymaking on behalf of the rich and powerful at the expense of ordinary Americans.  We will be discussing do gooder foundations, think tanks, trade associations, and advocates who assist them in policy contrary to the best interests of the public.

[1] https://www.archives.gov/milestone-documents/president-dwight-d-eisenhowers-farewell-address

[2] https://www.nybooks.com/articles/1970/12/17/the-medical-industrial-complex/

[3] https://www.nejm.org/doi/full/10.1056/NEJM198010233031703

[4] See Walter Buckley, (1960) Sociology & Modern Systems Theory

[5] Professor G. William Domhoff, an acolyte of C. Wright Mills described the major foundations, think tanks, trade associations, and other entities and individuals initiating policy on behalf of corporations and the wealthy as “the policy planning network.” See, G. William Domhoff (2010), Who Rules America: Challenges to Corporate and Class Dominance, pp. 85-115.

[6] The Commonwealth Fund board includes a representative from UnitedHealth and Margaret Hamburg, former FDA Commissioner in the Obama Administration among a bevy of board members from investment banks, private equity, and other for-profit businesses.  Dr. Hamburg also serves on the board of a pharmaceutical company for which she receives compensation in the amount of $500,000 per year.

[7] Seventy percent of NASEM funding is from government agencies while 30% is from private sources.  The NASEM reputation has been sullied due to funding and influence from industries with a stake in the outcome of its commission studies.  For instance, the Sackler’s donated $19 million to the agency prior to a study on opiates. In 2011, Purdue Pharma and the Sackler’s were rewarded with a study that minimized the danger of opioid pharmaceuticals of the type manufactured and distributed by Purdue Pharma, see e.g.: https://www.nytimes.com/2023/04/23/health/sacklers-opioids-national-academies-science.html  In contacting NASEM for the purpose of determining how individuals were selected for their nursing home commission, I found them to be removed from public purview and operating behind a veil of secrecy.  I could find out absolutely nothing.

[8] “Window Dressing” is used as a verb transitive in this context rather than as a noun – as in “they are window dressing an injustice.”

[9] https://movingforwardcoalition.org/committees/

[10] For instance, the effects of replacing “resource utilization groups” (RUGs) with a “patient driven payment” (PDPM), a major issue  in pervasive over billing practices, has been taken up by the JAH and MFC. This is a technical argument beyond the grasp of legislators, the lay public, and journalists that will do very little to stop the industry rip off and will certainly not improve the lives of patients.

[11] For an in depth analysis of major charitable organizations and the superrich, see:  David Wagner (2000), What’s Love Got to Do with It? A Critical Look at American Charity, pp. 89-115.

[12] https://www.mitre.org/who-we-are/our-people/our-leadership

Kansas City Public Television & the Damaging Consequences of Nursing Home Misinformation

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Dave Kingsley

Cavalier Distribution of Unsupportable Financial Information Causes Physical Harm and Shorter Lives

     Kansas City Public Television (KCPT) is presenting an upcoming program entitled “The State of Aging in Kansas City.”  The program as advertised includes a panel discussion and a documentary film. I was shocked to see false claims by the American Health Care Association –  the industry lobby – included in the promotional material for the program.  For instance, the promo repeats AHCA falsehoods that “nearly 60% of nursing homes are operating at a financial loss” and that “Nearly three of every four facilities are concerned about closure due to staffing shortages.” 

    This is blatantly false information and serves to shield the industry from responsibility for widespread neglectful care of patients while investors are earning robust returns. It is obvious that KCPT has given the for-profit nursing home industry a major amount of influence in the development of their promotional material without fact checking the industry’s financial claims or consulting with credible scholars and advocates engaged in nursing home research. 

    Any widespread distribution of nursing home financial misinformation is a devastating blow to efforts at significant reform of the Medicaid and Medicare funded skilled nursing business. Therefore, patients in poorly run nursing homes continue to experience unnecessary pain, discomfort, and shortened lives because of lobbyists’ propaganda.

    The industry’s bogus hardship claim is a primary barrier to changing the despicable way elderly and disabled patients are treated in so many long-term care facilities.  The AHCA has immense resources to spread a false narrative –– with $128 million in 2021 revenue (https://www.aha.org/system/files/media/file/2022/11/2021-aha-form-990.pdf) and affiliates in all 50 states.  Hence, the “we can’t afford to do better” defense serves to undermine serious demands by advocates for stricter regulation and an increase in the quality of care.

    Public television has unwittingly placed its imprimatur on industry propaganda.  There is scant evidence that the nursing home industry is experiencing widespread loss.  Conversely, an abundance of available evidence suggests that historically and during COVID, the nursing home business has been and remains highly lucrative.

Responsible Journalism and Integrity Requires a Correction by KCPT

    Apparently, “The State of Aging in Kansas City” will kick off with a town hall & panel discussion on September 5th.  The town hall and a documentary will be shown on KCPT on September 14th.  Although I was consulted by the independent filmmaker about a year ago who asked that I meet with him to discuss nursing home finance.  I did that on a couple of occasions, but I did not know exactly what his project was about.  He did say that he was working on a documentary for public television.  I didn’t think much about it until I saw the promo and his name attached to the documentary.

       The filmmaker told me he had nothing to do with the promotional material and directed me to the person who was responsible for it.  I sent that person – who will also MC the townhall meeting –  a lengthy email explaining the problems with the information in his promo to which I attached couple of articles that I had authored with my colleague Charlene Harrington, Professor Emeritus at the University of California, San Francisco.  His response was, in my view, terse and dismissive.

    I have not seen the documentary and cannot speak to its contents.  Hopefully, it will help the public with an understanding of the issues facing patients, families, advocates, scholars, and legislators in understanding how we can arrive at a fair return to investors for an acceptable level of care.  At this time, we cannot do that because of the raw, rank, political power of the nursing home, hospital, real estate, and finance industries (i.e., medical industrial complex) inside the Washington, D.C. beltway and the 50 state capitols.

    For those of us who spend a good proportion of our waking hours in an attempt to counter industry propaganda and provide objective, scientific information, public television misinformation, dispensed to its widespread viewing audience, is like a kick in the solar plexus. It is very difficult to overcome corporate falsehoods in this post-truth era, but it is psychologically devastating when the hard work in attempting to do that is undermined by local public television.

Government Oversight of Medicaid: The Shift of Power from Federal Agencies to State Agencies has Been a Disaster for Poor Americans’ Health

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Dave Kingsley

Dismantling of the Federal Administrative State

    President Ronald Reagan said this at a press conference in 1986: “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’” This might have seemed funny at the time but by 2008 when lax federal governmental oversight of the financial services industry led to economic collapse or when in 2020 a deteriorated public health system led to a raging COVID epidemic, the people of America were screaming back to the government these five desperate words: “For God’s sake help us!”

    President Reagan’s quip was a continuation and acceleration of devolution of power from the federal government to the states that began during the Nixon administration. Consequently, the far-right dream of dismantling the federal administrative state has led to funneling federal grants to states as block grants rather than grants-in-aid, which meant less federal control over how states regulated federal-state funded programs such as Medicaid and welfare in general.   

    Some states are more enlightened than other states in how they administer welfare programs.  But during the Clinton Administration, the mistaken notion that people needing assistance for their daily needs – including medical care – would benefit from some tough love like denial of any services after a few years of receiving it.  Aid to Families with Dependent Children (AFDC a grant-in-aid program) became Temporary Aid for Needy Families (TANF – a block granted program with a much more stigmatizing moniker).  By the late 1990s, President Clinton was declaring that “the era of big government is over” – seven very unfortunate words.

    The idea that poor people down on their luck needed some federal assistance for survival was warped into a philosophy that help from the government would induce dependency and that administrative barriers to assistance and forcing people off of aid would somehow be character building.  As has happened since the era of industrialization began, poor people were more intently looked at as irresponsible and the cause of their own plight.  By the turn of the Century, this philosophy had become de rigueur – even in states given to a more empathetic and compassionate approach to the less fortunate (which could be any of us).

How Have States Handled their Increasing Power?

    So, how have states done with the power devolved to them?  Not well.  As an example, consider the prior authorization of Medicaid that I wrote about in my last blog post.  The HHS, OIG had this to say in their recently released report:  “most State Medicaid agencies reported that they did not routinely review the appropriateness of a sample of MCO denials of prior authorization requests, and many did not collect and monitor data on these decisions.”  This seems like very familiar state regulatory behavior to me.  Having reviewed thousands of nursing home cost reports, I have yet to see one properly filled out (in accordance with GAAP/FSAB accounting principles and federal regulations).  Indeed, they are loaded with deceit, misinformation, and what is either profound ignorance or fraud.  And yet auditing at the state level appears to be practically nonexistent.

    There is no point in using nursing home cost reports for research except to raise issues of state incompetence, lack of oversight capacity, and corporate ability to game the system. The same can be said about the giant insurance corporations contracting with states as MCOs.  Indeed, Anthem’s highest MCO denial rate was 34%.  Molina, one of the largest providers had denial rates that ranged from 17% to 41%.  Aetna, Centene, and UnitedHealth denial rates were 5% to 29%, 3% to 23%,  and 7% to 27% respectively.

    The States with the highest rates of denial are Georgia (34%), Michigan (32%), California (29%), Mississippi (27%), New Jersey (27%), Virginia (26%), and Wisconsin (25%).  One can only imagine how difficult and frustrating it is for physicians and Medicaid patients in these states to obtain needed medical care.  None of these states used denial data for oversight.

There is Nothing Funny about Government Help:  We Need it Badly!

    My colleagues and I spend our working hours attempting to ferret out information from states regarding Medicaid outcomes data.  To quote Warren Buffet, “It’s like getting red meat out of a tiger cage.”  But we have been communicating with staff – including auditors – in the OIG’s office and will continue that communication.  Our mission is to fight the state/federal barriers to public information.

    The Medicaid program is nominally a $900 billion federal/state expenditure.  But with tax expenditures (i.e., tax subsidies) for corporations in the business, it is a much larger expenditure in federal and state budgets combined than that. Furthermore, nursing home corporations and the giant insurance corporations contracting as MCOs are extracting immense amount of tax dollars without a correlative investment in a loyal, career-oriented work force, and a medical services infrastructure that welcomes and benefits the people eligible to receive it. 

    Centene, UnitedHealth, and the other large providers are lavishing obscene compensation packages on executives and board members (CEOs are usually receiving about $20 to $24 million per year); they have billions of dollars sitting on their balance sheets, they are paying robust dividends to their shareholders (most of which are asset managers such as Vanguard, BlackRock, and State Street, handling pension, insurance, and sovereign wealth funds); and they have devoted billions to capturing government through lax lobbying and election financing.

    No matter how objective and scientific researchers like to be, this is all about politics.  It’s about what goes on inside the D.C. beltway and in state capitols.  Anyone who thinks they can be politically neutral, purely professional, and outside of politics is sadly mistaken.  Making CMS do its job is a political task and will take political organizing.  The same can be said about making state agencies do their job.  You cannot work within the system and change it that way. 

THE HEALTH CARE INDUSTRY:  CONCENTRATED WEALTH INEVITABLY TRANSFORMS INTO CONCENTRATED POWER

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It is estimated that healthcare expenditures in the United States have grown to twenty percent of GDP.  In 2022, the Bureau of Economic Analysis indicated that U.S. GDP had grown to $25.46 trillion (https://www.bea.gov/news/2023/gross-domestic-product-fourth-quarter-and-year-2022).  Hence, we can assume that in 2022, approximately $5 trillion was expended for U.S. healthcare.

In the taxpayer funded, privatized, medical care system in the United States, the growth of corporations with revenues from Medicare, Medicaid, Obamacare, and other tax subsidized healthcare (e.g., employer provided health insurance) has been astounding. The size and number of healthcare related corporations listed on the Fortune 500 top 30 in 2020 compared to 2000 is a reflection of the dominance and power of companies such as UnitedHealth, CVS, McKesson, Cardinal Health, and others appearing in the 2022 Fortune 500 top 30.

As the table below indicates, absolutely no healthcare related corporation was ranked among the top 30 corporations in revenue in 2000. In a mere two decades, nine of the 30 largest U.S. companies were in some facet of the medical/healthcare sector. Note the following corporations in the table and their Fortune 500 2022 ranking: CVS Health (4), UnitedHealth Group (5), McKesson (9), Amerisource Bergen (10), Cigna (12), Cardinal Health (15), Walgreen/Boots Alliance (18), Elevance Health (20), Centene Corporation (26).

Given the money in politics and decreasing capacity of government agencies to monitor and hold corporate behemoths accountable, the growth of health/medical related enterprises should be alarming. These are not capitalist enterprises. Rather, they are government sponsored enterprises much like Fannie Mae and Freddie Mac and should be regulated as such.

Furthermore, money is power and much of the “inside the Washington, D.C. beltway” activity related to studies, commissions, and general policymaking involving academics and other professionals has been rigged through power politics to insure the perpetuation and preservation of the participants – hence, preservation of the status quo. Let’s take the nonprofit Better Medicare Alliance as an example. This front group has roped in scholars, professional associations, and other duped entities in a cooperative effort to sell Medicare Advantage to the public on behalf of the industry.

Currently, the Biden Administration is attempting to reduce Medicare Advantage billing fraud that will save the Medicare Trust Fund billions. That legitimate and laudable effort on the President’s part was attacked in an ad during the last Super Bowl. The ad was paid for by Better Medicare Alliance. Check out this outfit’s “ally list” and its list of “scholars.” Conflicts of interest involving scholarship, corporate board service, and coopting of scientific institutions by superrich foundations with Wall Street leaning board members should be exposed along with a network of think tanks presenting a charade for the purpose of enhancing revenue from government programs.

FORTUNE 500 RANKINGS:  2000 & 2022
RANK
(2000)		CORPORATIONREVENUE*RANK (2022)CORPORATIONREVENUE*
1General Motors18.91Walmart572.8
2Walmart16.72Amazon469.8
3Exxon Mobile16.43Apple366.8
4Ford Motor Co16.34CVS Health292.1
5General Electric11.25UnitedHealth Group287.6
6IBM8.86Exxon-Mobile285.6
7Citigroup Inc8.27Berkshire Hathaway276.1
8AT&T6.28Alphabet257.6
9Phillip Morris Inc6.29McKesson238.2
10The Boeing Company5.810AmerisourceBergen214.0
11Bank of America5.111Costco195.9
12SBC Communications4.912Cigna174.1
13** 13AT&T168.9
14The Kroger Co4.514Microsoft168.1
15State Farm Insurance4.415Cardinal Health162.5
16Sears, Roebuck, & Co4.116Chevron162.5
17AIG4.117Home Depot151.2
18Enron4.018Walgreens/Boots Allian.148.6
19Teachers Insurance & Annuity3.919Marathon Petroleum141.0
20Compaq Computers3.820Elevance Health138.6
21Home Depot3.821Kroger137.9
22Lucent3.822Ford Motor Co136.3
23Procter & Gamble3.723Verizon133.6
24Hewlett-Packard3.724J.P. Morgan Chase127.2
25MCI World Com3.725General Motors127.0
26Fannie Mae3.726Centene126.0
27K Mart3.627Meta118.0
28Texaco3.628ComCast116.4
29Merrill-Lynch3.529Phillips 66114.9
30Mogan Stanley Dean Witter3.430Valero Energy108.3
* In Billions of dollars. **#Number 13 not noted on Fortune 500 list.

A right-wing religious PAC just received a $1.6 billion donation, and the medical-industrial complex will now be a whole lot harder to fight.

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Dave Kingsley

Leonard Leo and the Marble Freedom Trust

As head of the Federalist Society, Leonard Leo has had a major role in picking Catholic right-wing Supreme Court justices such as Alito, Roberts, Kavanaugh, and Barrett.  Leo is himself a fanatic, right-wing, Catholic who has no respect for the separation of church and state.  This brand of Catholicism works well with the Christian Nationalist Movement[1] that cuts across most fanatical, fundamentalist, Protestant sects.  

Although the Federalist Society is an organization for the promotion of legal conservatism and includes a variety of far-right believers in a sort of faux libertarianism and assorted other rightwing philosophies, Leo has locked in the Notre Dame law school theocrats as a powerhouse in the grooming and promotion of suitable candidates for future government legal positions and jurists.

Barre Seid, a Chicago industrialist, and ardent libertarian, has donated his entire company – Tripp Lite – to the Marble Freedom Trust, a 501(c)(4) political entity controlled by Leonard Leo.  The Marble Freedom Trust sold the company to the Eaton Corporation for $1.6 billion. This intersection of radical, libertarian, industrialists and the assortment of theocratic movements does not bode well for those of us who are working to deindustrialize healthcare, and other government functions.  The religious right shares many values of super-rich, self-proclaimed libertarians such as the Koch brothers. They believe that wealthy industrialists are godly insofar as they either share or are willing to tolerate the Christian Nationalist value system.

History has taught us that major religious institutions and industrialists are willing to accommodate regimes and politicians that serve their interests no matter how corrupt, anti-democratic, and debasing to the public interest.  The Supreme Court’s decision in Citizens United has already placed corporate political activities in a protective bubble.  We can look for corporations threatened with movements for reform to look to the current lopsided court and politicians on the make to protect their interests.

Therefore, Marble Freedom Trust money will be directed toward politicians and court actions that place property over people, profit over health, capital over labor, and the super-rich over the broad mass of citizens.  This will make changing a life-shorting, inhumane nursing home system far more difficult.  Gouging the public for life-saving medications and denial of medical care to the uninsured will be difficult to end. Let’s face it, we cannot ignore politics in our quest for social justice. 

[1] Christian Nationalism has been studied and reported on by journalist Katherine Stewart.  In her book, The Power Worshippers, she discusses this movement’s belief that the U.S. is a Christian Nation, and that the U.S. should be ruled in accordance with what they consider “Christian values.”  The values they endorse include are anti-gay, anti-democratic, pro-super wealthy, and freedom from government, except when they want to leverage government for imposing their radical beliefs on the rest of society.

The “medical industrial complex” is not capitalism, so let’s change the narrative.

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Dave Kingsley

Genuine Capitalist Enterprises are Not Operating in Anti-Competitive, Government Rigged, Systems.

As a proponent of capitalism, I resent the U.S. privatized, government-funded, health care system and the implication that it is a suitable representative of a capitalist system.  It is not.  The system of nursing homes, hospitals, and clinics through which patients pass for care is a financialized[1], corrupt, rigged, system.  Furthermore, some services important to society should not be industrialized under the farcical notion that return on capital will drive quality care.

Reformers have failed to create a narrative to defeat the financiers’ mantra that privatizing appropriate government services will increase quality and productivity.  History has taught us a very clear lesson:  industrialization and privatization of medical care and a host of other government services are unproductive and lead to excess extraction of capital, lower productivity, and reduction of innovation and reinvestment.

You Can’t Shame the Shameless

There is an unfounded belief that exposing bad operators in sensational mainstream media articles will force a change for the better in nursing homes and hospitals.  The misguided view that the medical-industrial complex will be moved by horror stories reminds me of an old T-Shirt in my closet with the following silkscreened on it: “We Don’t Care, We Don’t Have to Care, We’re EXXON.”  You could substitute the words medical-industrial complex, The American Health Care Association (AHCA), Ensign Group,” Welltower Corporation, Centene, United Health, and thousands of other corporate associations and entities for EXXON on such a T-Shirt.

Nursing home and hospital corporations don’t care about the shaming they deserve because politicians in federal and state legislatures have their backs.  Furthermore, they have captured the agencies charged with regulating them.  The Center for Medicare & Medicaid Services, and 50 state agencies are dominated by the industry and their well-financed lobbying organizations (not to mention the FDA, the FTC, the CFTC, etc.).  You can shame private equity as a business model, scurrilous operators, low wages/salaries, understaffing, and other outrageous practices, but financiers in the healthcare business are, for the most part, shameless. 

For at least a decade, I have been urging advocates to form a narrative and political strategy.  Playing rope, a dope with an industry that has a very well devised, effective, and well-funded narrative will change nothing.  The nursing home industry has a narrative based on falsehoods, which are comprised of frames related to the hardships endured by noble businessmen and investors.  Frames in which the industry purports to be suffering from low Medicare/Medicaid reimbursement, and low net income (profits) are blatantly false and misleading.  Regardless of how unbelievable the frames comprising industry propaganda, they are never seriously challenged by the constellation of nonprofit and government entities representing the elderly.  Furthermore, do-gooder commissions charged with studies of nursing homes, hospitals, and other health care subsystems generally whitewash and paper over the unethical, inhumane, and anti-democratic nature of the entire medical-industrial complex.[2]

Let’s Get Technical

I propose that advocates create frames that can be integrated into and support this narrative: “The privatized U.S. healthcare system is not fair, capitalistic, or ethical.”  Frames accusing industrialists of manipulation of markets, financial machinations, pay offs/bribes to legislators, and covering up corruption through well-funded lobbying entities such as the AHCA (nursing home lobby) are necessary but risky for professionals who want to go along to get along.

Industry moguls and their minions in government know from 70 years of history that their propagandistic efforts work well. They have been able to convince the public that privatized, for profit, services are better than non-profit and government services.  This mantra has gained traction and is embedded deeply in the American zeitgeist.  It will take a concerted effort across a broad array of nonprofit advocacy organizations to destroy a narrative based on industry lies and complex financial maneuvers.

However, before advocates can suitably frame messages for the media and legislators, a considerable amount of research, data collection, and analysis must be undertaken.  Data and evidence related to “rent seeking,”[3] “net operating income,” and “cash flow,” is necessary for debunking the “low net,” “thin margins,” and other hardship frames of the industry.  The nursing home system must be unraveled and explained as a network of capital flows from taxpayers and other sources through Real Estate Investment Trusts (REITs), private equity firms, LLCs/LLPs, and C-Corporations.

It is necessary to show how excessive capital flows through nursing homes and hospitals to investors and executives.  REITs have been existing under the radar and never discussed at legislative hearings (See my blog post: “Real Estate Investment Trusts (REITs) are Big Players in the Nursing Home Industry:  That Should Concern All of Us” February 13, 2021).  We must recognize how the entry of private equity and REITs around 2000 literally transformed the industry.

Advocacy research must include data from cost reports submitted by facilities to CMS and state agencies.  Falsehoods in these reports are pervasive.  Nevertheless, it is important to organize the data to make a case and support our frames pertaining to corruption and excessive extraction of capital at the expense of care.

We Are on It!

A team of people across the U.S. have come together to initiate solid, evidence-based, research.  With some help from the LTCCC and a lot of volunteer work, a group of us have been organizing data from cost reports and digging into financial machinations, ownership, and the flow of capital from various sources (including taxpayers) to investors, executives, and family wealth. 

We want to direct attention to more than horrendous examples of nursing home abuse and neglect.  The industry justifies poor care with a well-honed, richly funded, propaganda campaign. We should not respond to their “woe is me pleas for increased funding.”  Rather we should follow the money and make the trail available to legislators and journalists that we know will utilize it (think Senator Elizabeth Warren).  I don’t want to engage them in their claim that investors in the nursing home industry are suffering.  My only response to that is investors are not stupid.  If returns were no good in public-funded, skilled nursing care, investors would be investing somewhere else. 

[1] By labeling the system “financialized,” I mean that financial maneuvering for extracting cash takes precedence over increased productivity and quality of services.  Shareholder value is the primary mission of most healthcare private corporations.  Stakeholders are of secondary importance.  Often stakeholders suffer for the sake of enhancing and protecting shareholders’ interests.

[2] While COVID was surging in the Spring of 2020, CMS convened an “independent” commission the management of which was outsourced to the Mitre Corporation.  The report of this commission was a whitewash and papered over general neglect by the nursing home industry which resulted in 200,000 patient and employee deaths.  Contrary to suggesting accountability for lack of infection control and no preparation for a pandemic that scientists had been warning about for decades, the final report recommended more financial assistance for the industry.  Recently, a commission under the auspices of the National Academy of Sciences, Engineering, and Medicine (NASEM) in operation for a number of years entitled “National Imperative to Improve Nursing Home Quality” issued a report of their work. This commission tiptoed around the corruption, deceit, and excessive extraction of capital at the expense of quality care.

[3] “Rent seeking” has evolved in the field of economics to describe corporate efforts to extract wealth without a correlative increase in the production of goods and services.  The nursing home, finance, real estate, lobby is constantly hectoring legislators for an increase in reimbursement without any real, scientific, evidence that the cash flow and return on their investment is inadequate.

Liberals & Democrats Need to Change the Conversation: Too Much of Our Federal Medical Care Funding is Flowing to the Wealthy

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Dave Kingsley

Rogue Corporations Scamming the System

You may have never heard of Centene Corporation. But we need to talk about this company which derives most of its revenue from Medicaid – medical care for the poor. With revenue of $111 billion in 2020, it is 24th on the Fortune 500 ranking of corporations (by size of revenues). CEO Michael Neidorff earned $25 million last year – among the five or six highest paid executives in corporate America. Not bad for “welfare medicine.”

Compensation for the top four Centene executives and the board of directors totaled $64 million in 2020. The board includes former congressmen Tommy Thompson (also former head of HHS) and Richard Gephardt. Two very powerful former members of congress.

So, what exactly does this company do for Medicaid? It is known as a “managed care organization” or MCO. The idea underlying the MCO concept is that private, for-profit corporations can do a better and more economical job of managing government funded medical care than government employees. Evidence overwhelmingly points in the other direction but the myth nevertheless persists.

Humana, Cigna, and other corporations have jumped into the MCO business. Let’s face it, the $600 billion+ Medicaid budget has opened opportunities for corporations to rake off untold billions for wealthy investors, executives, and board members, while poor people in states that have expanded Medicaid are humiliated through character tests such as proof they aren’t taking drugs, or too lazy to look for a job. Poor people in Arkansas for instance are facing administrative road blocks and state bureaucracies that see their role as keeping people from receiving benefits.

I’m certain that wealthy executives and investors are enjoying their concierge medicine while poor people can’t get treatment for an abscessed tooth, screening for cancer, diabetes, or medical care that most of us take for granted. This is what the Democrats and liberals need to be screaming about – not means testing and making people prove they are worthy of medicine taken for granted by every citizen in most affluent countries. No doubt, progressives in the U.S. House of Representatives are doing just that. However, silence on this issue from most senators and congresspersons on the Democratic side of aisle is deafening. Forget the now cruel Republican Party. There is no hope there.

This is Not the Democratic Party’s Finest Hour

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Dave Kingsley

Democrats Have Both House of Congress & A President’s Proposed Budget We Badly Need: And They Are Blowing It!

Last night I heard an interview with Texas Congressman Henry Cuellar – a Democrat – in which he said that he’s insisting on “means testing” for eligibility in President Biden’s proposed medical care and other programs benefitting ordinary Americans. I’ve heard Senators Manchin and Sinema say the same thing. In other words, people needing child care, medical care, and home based care must prove they are worthy of receiving government assistance to see a doctor, have a place for their child while they work, or need assistance to stay in their home and out of a nursing home.

If past is prologue, this means that American citizens in many states badly needing these humane programs must suffer the humiliation of proving that they are not taking drugs, looking for work if they are unemployed, and too poor to buy these services on their own. This is an anti-worker, anti-people attitude that Democrats need to lose.

As someone who spends a lot of my waking hours researching finances of corporations benefitting from privatized, taxpayer funded, medical programs, I can say with certainty that corporate executives and investors are becoming fabulously wealthy by diverting an excessive amount of Medicare and Medicaid revenue into family and individual trusts for the purpose of avoiding taxes. They undergo no universal character test and yet fraud committed by low and middle income people pales in comparison to what clever CPAs are able scam out of the system on behalf of their high net worth clients.

It is interesting that so many Democrats think that spending a piddly few trillion on its non-rich citizens is excessive in a nation with a $25 trillion economy and a federal budget providing trillions in tax benefits to its wealthiest citizens. In a government funded, privatized health care system, corporations and wealthy investors and their families are able to capture trillions they don’t deserve through dark money and an ability to fund political campaigns.

If conservative Democrats think that catering to the wealthy and demeaning the wage/salary workers of this country is a formula for success, they are delusional. Furthermore, they are weakening a president with a program crucial for staving off crises the likes of which we can’t imagine. This country, this economy, this planet cannot sustain the perverse, toxic, corrupt form of economics and politics exhibited by medical care, agriculture, finance, real estate, energy, and other industrial sectors – it is not capitalism, rather it is a corrupt, debauched economic system in which government and businesses collude at the expense of the public.

Executive Compensation for CEO’S of Major Nursing Home Chains did not Decline Significantly During 2020: For Most, it Increased by a Significant Amount

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    The nursing home lobby operating in Washington and state capitals is continuing its long running financial hardship campaign.  An article in the latest issue of Provider (the main propaganda organ for the industry) claims that COVID presented such a serious financial blow to providers that enhanced financial assistance from government would be the only way to implement needed substantive reform. The reform needed, according to the article, is due to increasing demand in long term care services (Patrick Connole, “COVID Challenges Bring Opportunity for Systemic Changes,” June 2020, 9-10).

    The article states that “With the majority of nursing homes already operating on razor-thin margins, the cost of making improvement will not be possible without financial assistance.”  Perhaps the razor thin margins to which the author is referring apply to the LLC listed as the owner and not to all the other LLCs such as the property LLC, the management LLC, the rehab LLC, the medical transport LLC, etc.  Certainly, holding companies and REITs have not fared badly at all during 2020 and the height of the COVID pandemic.[i]

    One would think that the entities at the top of the financial food chain would have taken a major hit and pared back their CEO pay considerably if the razor thin margins at some point in the flow of capital diminished shareholder value.  However, as the table below suggests, CEO pay for major nursing home operator/real estate chains listed on a public exchange were either enhanced by a large amount over 2019 and 2018 or remained steady.

    The above table does not display the proportion of total pay that is due to an “incentive bonus.”  Nevertheless, in cases where a major increase year over year appears for an executive, a large amount is for performance, which one must assume is financial performance.  The loss of life throughout the companies overseen by the executives in the table was a historical first for institutionalized U.S. populations.  An estimated 132,000 to 140,000 people in the care of these CEOs unnecessarily lost their lives.

    The government funded companies headed by CEOs at issue in this blog post are increasingly powerful players in taxpayer subsidized long-term and skilled nursing. In blog posts ahead, I will be discussing the growth of their power and influence.  For instance, the ManorCare property sold off by the private equity firm The Carlyle Group is now owned by Welltower and operated through a Welltower-Pro-Medica joint venture.

In the future, I will be blogging about the convoluted ownership structures in the nursing home industry and the complexification of that facet of the business due to the creativity of corporate lawyers and financial experts. Without exposing the financial trickery employed by providers, the public will be victimized by falsehoods of lobbying groups such as the AHCA/NCAL and others.

NOTE: The data in this post were derived from proxy statements filed with the Securities & Exchange Commission. In the future, I will be discussing compensation for board members and other officers/executives of major LTC/SKn corporations.

[i] Kingsley DE, Harrington C. COVID-19 had little financial impact on publicly traded nursing home companies. J Am Geriatr Soc. 2021;1–4. https://doi. org/10.1111/jgs.1728