Tag Archives: MALDISTRIBUTION OF WEALTH

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

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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.

MEDICAID:  AN AMERICAN MEDICAL CARE DISGRACE

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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.

UnitedHealth Corporation is Piling Up Cash & Buying Back Stock. But the American Peoples’ Health for Which they are Paid to Improve is Deteriorating

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The Basics of UnitedHealth Financial Performance in 2022

With revenues of $324.2 billion in 2022, UnitedHealth (UH) is the fifth largest corporation in the United States (behind Walmart, Amazon, Apple, and CVS Health). Practically all of UH business is related to tax-funded health care such as Medicare and Medicaid. As one of the largest players in the move toward Medicare and Medicaid managed care, this company has had phenomenal growth in the past two decades (as have CVS Health and Centene Corporation).

UH revenue increased by 26% between 2020 and 2022 (from $257.1 billion to $324.2 billion). The company’s 2022 balance sheet notes $23.4 billion in cash and cash equivalents – an increase of $2 billion over 2021.

Capital Resources & Uses of Liquidity: No Indication of Allocation to Employee Wages & Working Conditions, R&D, or Improved Care

The Company’s 10-K states that “Increased cash flows provided by operating activities were primarily driven by changes in working capital accounts and increased net earnings.” (page 28). Given UH’s massive revenues from government expenditures and a robust operating margin of 8.8%, taxpayers, need to be aware of how the company’s surplus capital is allocated. Like any corporation, UH has debt obligations but expects to finance those from current operations. So, accumulated capital is available for other purposes.

On page 78, the 10-K indicates that he board of directors (which includes Washington, D.C. policy maven and healthcare influencer Gail Wilensky – see below) authorized expenditures of $7 billion for common stock repurchases in addition to $5 billion in 2021 and $4.5 billion in 2020. So, the company pumped up its share price during COVID-era by repurchases of stock totaling $16.5 billion.

In addition to a 2022 stock repurchase of $7 billion, UH increased the company’s quarterly cash dividend $5.80 per share to $6.60 per share. With 950 million share outstanding, approximately $6.27 billion in cash was paid to shareholders. Over 20% of the stock is owned by three asset management firms – Vanguard (8.44%), BlackRock (7.4%) and FMR LLC (5.165) – indeed, Institutional investors/asset managers own the bulk of the equities market. Retail investors own less than 10% of the equities traded on U.S. exchanges.

Stock Buy Backs Were Illegal in the U.S. Until 1982. They Should Still be Illegal – Especially When They Are Repurchased With Earnings From Tax Funded Medical Care

Stock repurchases are a thinly veiled form of stock manipulation and insider trading. Furthermore, this form of financialization of corporate activity benefits a small number of very wealthy Americans but is damaging to the overall economy. Earnings passed through to shareholders without retaining cash for employees, R&D, and long term investment puts downward pressure on economic growth and wages and fuels maldistribution of wealth, which has reached crisis proportions in the U.S.

Taxpayers have a right to fairness and equity in the use of capital earned through tax funded healthcare. They must demand that stock repurchases stop. Furthermore, the people of the U.S. have a right to a fair allocation of excess cash earned through healthcare for which they are taxed.

Board Members & Executives Should Be Held Accountable: It’s Not Their Money

Until the early 1980s, executives were compensated mostly in the form of salaries. As executive and board compensation has evolved, salary is now a small part of corporate compensation. Most executives and board members receive pay in the form of stock options and incentive stock awards. Philosophically, executives merit compensation if they enhance shareholder value and corporate financial success. As this philosophy has taken hold in the U.S. over the past 40 years, these rewards have become disconnected from productivity.

The boards and executives of healthcare corporations are focused on earnings and cash flow in the short term – not on reinvestment of excess earnings in long term improvement in the health of the U.S. population. As a matter of fact, life expectancy has been declining in the U.S. Although most states have contracted with these mammoth corporations to improve the cost and output of Medicaid systems, there is no substantial evidence that is happening. Furthermore, Medicaid, the poor peoples’ medicine they are charged with improving, is still stigmatizing and dehumanizing.

Each year, recipients are forced to run an administrative gauntlet of humiliating and frustrating reapplication that is much different than anything higher SES Americans experience in application for entitled health care. It appears that heart disease, poor prenatal care, diabetes, drug addiction, and other major chronic and acute diseases have not been reduced by Medicaid managed care. Nor is there evidence that a massive shift of U.S. healthcare dollars to corporations will lower the outrageous per capita cost of healthcare.

Despite failure to improve the overall healthcare of Americans, corporate boards continue to reward executives with lavish salaries and shareholders with high dividends. They justify that on financial grounds – not on success in improving overall health of the people.

Concentrated Wealth Leads Inevitably to Concentrated Power: Connecting Dots Inside the Washington, D.C. Beltway

Corporations are vying in the Washington, D.C. maze of politics, lobbying, and corruption to capture as much of the trillions in Medicaid, Medicare, Obamacare, and other forms of government healthcare expenditures. They can pay for the influence they need in chasing ever increasing expenditures for healthcare.

I noticed that one Gail Wilensky, PhD is a UH board member. This caught my attention because Dr. Wilensky is a very influential policy maven about town in Washington. She has a very thick resume consisting of scholarly publications, served as a chair of MedPAC, held other high level government positions, and is generally a highly respected healthcare influencer. However, she receives about a half million in compensation per year as a UH board member and has accumulated over 51,000 shares of UH stock, which closed at $481.90 today (3/27/2023). Hence, the stock that she hasn’t sold and is still holding is worth about $24.6 million.

Dr. Wilensky also serves on the board of Quest Diagnostics and a smaller healthcare corporation (ViewRay). The following is her biography appearing on the Quest Diagnostics website:

“Dr. Wilensky, is a Senior Fellow at Project HOPE, an international non-profit health foundation, which she joined in 1993. From 2008 through 2009, Dr. Wilensky served as President of the Defense Health Board, an advisory board in the Department of Defense. From 1997 to 2001, she was the chair of the Medicare Payment Advisory Commission. From 1995 to 1997, she chaired the Physician Payment Review Commission. In 1992 and 1993, Dr. Wilensky served as a deputy assistant to the President of the United States for policy development relating to health and welfare issues. From 1990 to 1992, she was the administrator of the Health Care Financing Administration where she directed the Medicare and Medicaid programs. Dr. Wilensky is a director of UnitedHealthcare Group and ViewRay, Inc. She served as a director of Manor Care Inc. from 1998 until 2009, Gentiva Health Services, Inc. from 2000 until 2009, Cephalon Inc. from 2002 to 2011 and SRA International, Inc. from 2005 to 2011. Dr. Wilensky also served as a Commissioner of the World Health Organization’s Commission on the Social Determinants of Health and as the Non-Department Co-Chair of the Defense Department’s Task Force on the Future of Military Health Care. She has been a director of Quest Diagnostics since January 1997. Dr. Wilensky has extensive experience, including in strategic planning, as a senior advisor to the U.S. government and private enterprises regarding healthcare issues and the operation of the U.S. healthcare system.”

Dr. Wilensky is merely one example, one individual among the ethically challenged thousands, caught up in the government-to-corporation-to government loop. Going from Senate staffer to the Senate Finance committee and on to K Street and a lobbying job for Big Pharma, United Health, or some other powerful Wall Street entity has become normalized. The American people are paying the price for the consequent maldistribution of power and wealth in taxes and poor health. The poor pay more.

Centene Corporation’s Annual Financial Report Indicates That Poverty is Profitable for Investors

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The Biggest Player in Poverty Medicine Had a Banner Year in 2022

    Among all U.S. corporations, Centene Corporation is ranked 20th in revenue. It is also a major player in the Medicaid Managed Care business.  The other leading corporations contracting with states in the $800 billion Medicaid program include United Health, Aetna/CVS, Anthem, and Molina. Most states have moved or will be moving to managed care and contracting with an MCO.  The big five have approximately half of that business now.  It is likely that the Medicaid MCO market will become increasingly concentrated and oligopolistic over the next few years.

    Centene can be said to be solely in the Medicaid managed care business.  According to its recently released annual 10-K report to the Securities and Exchange Commission, 97% of Centene 2022 revenues of $144 billion were derived from Medicaid and Medicare contracting – practically all of it from Medicaid.  The company’s cash flow statement notes $6.3 billion net cash from operating activities, which is a major indicator of “profitability.”  However, that is not the whole story regarding enhancement and protection of shareholder value.

Taking Care of Shareholders by Keeping Stock Price Propped Up

    Cash and cash equivalents on Centene’s balance sheet increased from $10.8 billion in 2020 – the early stages of the ongoing COVID pandemic – to $12.7 billion at the end of 2022. Taxpayers need to ask questions about how that hoard of cash is allocated.  I have tracked the company’s stock since late November of 2021 when the equities market began to tank.  It closed at $73.77 on November 29, 2021 and has been quite resilient despite the market decline since that time – trading in the high $70s and $80s.

    The strength of Centene’s stock price is most likely due to a $3 billion stock buyback. In 2022, the company’s board “authorized increases to the Company’s existing stock repurchase program, including $3.0 billion in June 2022 and an additional $2.0 billion in December 2022.” (see page, 34 of 10-K*).  With those increases, the Company was authorized to repurchase up to $6.0 billion.

    Stock repurchases, which are thinly disguised forms of stock manipulation/insider trading, were unfortunately deregulated during the Clinton Administration.  This financial maneuver benefits only shareholders and executives and does nothing for long-term investment in workers, R&D, patient quality, and other productive activities.  The benefits for executives and board members who have been awarded generous stock options involve strategies for exercising their right to sell stock based on insider knowledge (of which the public is unaware).

    Since the financial deregulation allowing loose rules about stock buybacks a corporate buyback frenzy has been underway. Free money handed out by the Federal Reserve from 2008 until Fed Chair Powell reversed course to quell inflation pumped $trillions into speculative finance, much of which was borrowed for stock repurchase. Consequently, the U.S. economy has been damaged and wealth has become increasingly maldistributed by the diversion of cash to a wealthy few that could be reinvested in long-term growth benefitting employees and overall economic growth. It seems to me to be the height of governmental irresponsibility to not regulate this kind of activity on the part of corporations which are rewarded for managing poor peoples’ health care.

Politically Powerful Board Members & Executive Board Compensation

    The revolving door from government to business is starkly obvious on the Centene board, which includes two powerful former congressmen – Tommy Thompson and Richard Gephardt. Mr. Thompson is also a former Secretary of Health and Human Services.  The Centene Proxy Statement for 2022 has not been issued to the public yet (we expect to see it within a month).  However, the 2021 Proxy Statement indicates that Mr. Thompson’s compensation in cash and stock totaled $403,046.  Mr. Gephardt’s compensation totaled $426,923.  The fine print below the compensation table states that both Mr. Thompson’s and Mr. Gephardt’s compensation included use of the company aircraft and other perks.

Executive Compensation

    The late Michael Neidorff had been Chief Executive and Chairman of the Board in 2019, 2020, and 2021 with compensation for those years of $26.4 million, $24.9 million, and $20.6 million respectively.  His replacement, Sarah M. London joined the board in 2021 as vice chairman and received 2021 compensation of $15.2 million.  The seven top executives received a total of $80 million in compensation in 2021.

Conclusion

    Medicaid expenditures in the U.S. will reach $1 trillion within the next few years.  Along with expenditure on military activities, this poverty program will remain one of the two biggest programs funded by U.S. income tax payers.  With expansion of Medicaid under the Affordable Care Act, we anticipate that growth of tax-funded  poverty medical care will be rapid in the years ahead.  This raises the question of evaluation of these expenditures and public discourse about the quality of care.

    My initial foray into availability of state and federal data regarding the effectiveness and regulation of MCOs leaves me with considerable doubt about what taxpayers and legislators know about outsourcing medical care for poor people.  It is not difficult for me to uncover the inordinate executive compensation packages, stock buyback information, and financial performance metrics reported by major providers.  However, medical and ethical, questions arise regarding the justification for cash out to investors and executives given the care provided.  I will be sharing my research pertaining to Medicaid expenditures on this blog in the weeks, months, and years ahead. 

*The Centene 10-K can be accessed at https://investors.centene.com/all-filings?cat=1.

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.

The Medical-Financial-Industrial Complex & the Maldistribution of Wealth in the United States

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Dave Kingsley

Introduction

In the previous post, my colleague Kent Comfort presented a case study pertaining to the disappearance of middle-class wealth into the Medical-Financial-Industrial complex black hole.  Even frugal, hardworking individuals who believe they have saved enough for retirement often find their assets depleted quickly due to high-cost, industrial medicine.  In this and future posts, we will be explaining how wealth is being maldistributed in the United States and how the government-funded industrial-medical system is helping to drive wealth from the bottom 90% to the top 1%.

The shift in wealth and the influence of U.S. medicine on the flow of assets from the lower socio-economic classes to the wealthiest class is a threat to the economic system and socio-cultural stability.  According to the PEW Research Foundation, “The wealth divide among upper-income families and middle- and lower-income families is sharp and rising (https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality).

Since the 2008 economic crash, most of the growth in U.S. family/individual net wealth has gone to the upper 5 percent.  The share of U.S. wealth owned by the bottom 90 percent of the population fell from 33 percent to 23 percent.  Wealth of the top 1% increased from 30 to 40 percent (https://equitablegrowth.org/the-distribution-of-wealth-in-the-united-states-and-implications-for-a-net-worth-tax/). This macroeconomic factor not only an economic injustice, it is a threat to the U.S. capitalistic system and democracy.

You pay taxes, premiums, and out of pocket expenses to fund large reimbursements to insurers, providers, and vendors, i.e., the insurance, hospital, medical device, pharmaceutical, nursing home, and other ancillary medical services industries. And yet, health care in the United States can bankrupt you.  Indeed, many people have been bankrupted through exorbitant hospital and nursing home costs. 

If the money you would like to leave to your heirs disappears in the U.S. industrial medical system, you would probably like to know where it goes.  It doesn’t go back to the Medicare, Medicaid, Obamacare, and VA programs ostensibly paying for your treatment.  Those programs are replenished through federal and state taxes – with the heaviest burden falling on the middle and lower classes.

So where, other than treatment, does all that money you pay in taxes and spend out of pocket for health care go?  The simple answer is, it goes to shareholders in one form or other.  In the 1970s and 80s, the country decided that private enterprise, operating in a “free market,” would be the most efficient and effective medical care delivery system.  What we got was an inefficient, ineffective, corrupt, and far too expensive industrial medicine system that funnels your hard-earned assets into the pockets of high-net-worth individuals and ultra-rich individuals and families.

From Your Family to Their Family:  How Laws Have Been Engineered to Keep Upper Income Wealth Growing While Everyone Else’s Continues to Shrink

Wealthy individuals despise two things: taxes and inflation. In fact, Leona Helmsley was jailed for telling an ugly truth: “We don’t pay taxes, the little people pay taxes.”  By little people, she meant most of us who are not rich.  Hence, the wealthy purchase politicians that protect their wealth from inflation and taxes – “purchased politicians” include practically all elected legislators in both parties. 

Shareholders in the industrial medical system tend to be high-net-worth individuals ($30 million or more in assets) or ultra-rich families worth hundreds of millions and billions. Inordinately complex federal and state tax laws have complexified corporate and individual finances, which works to the advantage of owners and shareholders.  For instance, throughout the past few decades, the state of South Dakota has amended its trust laws and has become a haven for wealthy individuals and families seeking trust laws that protect their wealth from inheritance and other forms of taxation.

It future posts, we will be taking a deeper dive into how Medicaid and Medicare funds are fueling the flow of wealth up the SES ladder.  For instance, more of those funds are flowing into family trusts than people realize.  In fact, the amount of nursing home ownership by family trusts is extensive and unnoticed by the public.  We will expose which chains are funneling a considerable amount of revenue into family and individual trusts.

How The U.S. Medical System Transfers Working Class Wealth to the 1%: A Case Study

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By:

Kent Comfort

Mary’s Story: This Could Be You!

Mary Beacher has just retired after four decades of working for a large regional printing company as a type setter. She went to work for this company two months after graduating from high school. It was the best employer in her town, and she counted her lucky stars that she was able to secure a job there. And she worked hard to be a dependable model employee.

When she first started working for the company, they had an employee pension plan that the company paid into on behalf of all workers. In the 1980s, that pension plan converted into a 401k account for each individual employee, with their pension accruals transferring over to this new financial instrument. Mary did not understand the nuances of this. She just trusted her employer to look out for her retirement nest egg when she would reach that time. Mary would receive a statement annually that showed the value of her personal retirement fund. And her excitement grew every year after about 30 years had passed, because the amount it had grown was very impressive to her.

When retirement day finally came, Mary learned she had just over $500,000 waiting for her to fund her way of life. She had always made a very modest salary, and she was not a financial expert in any way, so this seemed like more money than she could ever imagine she would need to support her modest lifestyle. She had no plans for moving away from the small community she had always lived in. Almost everyone that mattered to her lived there. Where would she go?

Three years into her new leisurely life, Mary had the misfortune of experiencing some serious health problems. Since she lived alone and her only daughter lived far away with her own family, Mary did not have any family close by to provide care and support, and she was not able to look after herself because of her ailment. Her doctor recommended she look into skilled nursing care at a local nursing home that was owned by a national chain. Her doctor’s reasoning was that since the facility was owned by a huge company, it must be safe. He had heard occasional complaints from families of residents, but nothing that alarmed him. As elderly folks are commonly inclined, she took her doctor’s advice and allowed herself to become a resident, hopefully for only a short while until her health improved and she could go back home.

Mary’s health did not improve. Some would say the primary reason for this was the environment she was in was depressing and she felt like no one was really watching out for her or cared about her. And sadly, she was more right than wrong about this feeling.

The biggest shock came when she learned that the monthly cost of her staying in this facility was over $10,000. She no longer had health insurance from her employer after she retired. She was enrolled with Medicare, but she was not eligible for coverage from that source because her case was not about rehabilitation. She was a skilled nursing client. She discovered she would have to foot the bill for her care on her own until all her funds were exhausted. Then she would qualify for Medicaid in her state because she could claim to be in a state of poverty at that point.

And that is the story about how the Mary Beachers all over America have their entire personal wealth extracted through health industry policies, all of which are legal. Mary’s personal wealth did not go into government accounts. It went into the accounts of the large, very wealthy corporations that own the senior care properties all over the country. And that money then flows to a very small number of wealthy families who own these corporations. Due to very favorable tax laws and policies, these families pay a lower percentage of taxes than Mary did when she was earning her salary at the printing company!

So, let’s recap Mary’s situation. Her hard-earned personal wealth, from four decades of being a trusted and loyal employee at a local printing plant, in a very short time period was transferred entirely to a wealthy family through the legal policies of the American health services system.

And this could happen to you as long as our policies and systems remain as they are today. But that is not the end of the story….

See: The Medical-Financial-Industrial Complex & the Maldistribution of Wealth in the United States by Dr. David Kingsley on this blog site.