The Medical Industrial Complex

I have spent an hour as often as possible watching the Idaho Joint Finance Appropriations Committee (JFAC) proceedings. Without making comments about the process of setting a budget, the absolute disconnect between economic reality and public policy is astonishing. During the course of the political pandemic all fifty States have seen a surplus in their budgets. Federal spending that in 2020 was 20% of GDP has increased to a projected 40% according to numbers from Phil Gramm and Mike Solon and the American Enterprise Institute. In a final desperate effort to put government instead of families and businesses at the center of American life, the “hooks” that the Federal government have put into the State budget process will be increasingly difficult for legislators to extricate themselves from. Why have a State government?

During the Medicaid Expansion debate in Idaho economists from BSU and several public policy wonks with deep ties to government agencies opined that Medicaid would create jobs and increase productivity in the local economy. The economic models deployed by “the experts” always fail to consider the opportunity costs of not keeping that money in the private sector for businesses and individuals to invest and consume. Numerous economists including Thomas Sowell and Art Laffer have shown that the return on investment (ROI) in the private sector is twice that what the public sector can realize. Five years after the implementation of the Affordable Care Act (ACA) —Obama Care, with the increasing regulations that have forced physicians from private practice into a corporate practice setting, the productivity of a single physician that had practiced 55 hours/week has gone down by 15% as they work fewer hours but also see fewer patients/hour. In an article by Dr. Guy DE Lorefice a family practitioner a self-employed Family Practitioner worked 26.9 work week relative values (w(wRVU))—a common measure used to evaluate productivity more than an employed physician, in line with the 15% lost productivity sited above.

This doesn’t consider the economic incentives and signaling that government programs create when they intrude into the labor market. When government gives people things, they are supposed to work for they often produce less or even stop working. This doesn’t even account for fraud in so many government programs and the corruption that occurs between government agencies and the private sector.

I know most about the effects of government programs and the economic impacts on the Medical Industrial complex. We are all called upon to be stewards of scarce resources, but the conditions of stewardship often control the efficiency of how scarce resources are allocated. Jonathan Ingram and Hayden Dublois in an FGA Research study found that 39% of Medicaid payments in Idaho are fraudulent—false claims by patients, false coding and billing by providers are the primarily sited causes. Almost 40%! There was little questioning of our “stewards of resources” from the Idaho Department of Health and Welfare (DHW) at JFAC this week regarding this fraud.

The promise that government investment based on “enlightened political motives” proves to be more efficient than private investment has once again proven to be false.  Again, Idaho legislators have proven that they refuse to be accountable for the policies that are making our State Government more dependent on Federal inputs. Just see what happens to the Medicaid State budget of $4billion, half coming from Federal transfers, when the 90/10 Medicaid match changes to 80/20. Will 40% fraudulent payments increase to 50%?

When the money is yours to allocate, but not earned by you, who is responsible for the fraud? When does one stop being a steward and when does one become part of the conspiracy? Who is supplicant and who is benefactor in the convoluted transactions that occur between taxpayers (who also pay ever higher insurance premiums), the Feds who send money to the States, to our politicians and government commissars in Idaho who reallocate those monies to providers—hospital systems and insurance companies—who see an expanding market for their services— paid for by many who aren’t eligible for subsidies? Do they care as long as they get paid? And who is at the top of the food chain?  The provider of services—health care and insurance, or those who receive campaign contributions and are lobbied by special interests paid for by providers and carriers?

The issues to be addressed in our May Primary and in the November General Election are issues of cronyism, collusion, and corruption. Corruption doesn’t have to be illegal to be devastating to an economy—especially to those paying the bill—We The People.

Would it be wrong to ask our politicians to renounce campaign contributions from the special interests who finance so many of their campaigns and who they are charged with regulating? Can we all say—CONFLICT OF INTEREST? Please!

What about passing legislation that requires any profit or non-profit that receives over $100million of transfer payments to present to the people of Idaho via their legislators (“The ultimate Stewards of our resources”) an annual signed partner’s audit. State agencies that are conduits for these payments should also be required to undergo a signed partner’s independent audit from a private auditor.

Or do we just keep on marching in lockstep to the “beat” of the expert politicians and government bureaucrats and the “tune of not so benevolent carnivores” at the top of the food chain.  When the food supply runs out, they will end up eating each other. It is called consolidation and then socialization and that will be even less productive and cost even more. Just look what happened as the Feds took over patient care as Covid evolved—can we all say Monoclonal antibodies? Look what happened with Medicaid Expansion. The only people that benefited are those at the top of the “Medical Food Chain”. Not doctors or nurses or patients, but CEOs and administrators and middle managers. How productive does one have to be to make $10million/year? And what is the (ROI) of a campaign contribution to a politician to keep the food chain moving along. A look at campaign finance information may tell part of the story. A look at who pays the fees for public officials to attend The Governor’s Cup may tell another part. How many of us make those kinds of contributions and how many of us get our fees paid for at The Governor’s Cup?

Finally—where is the mainstream Idaho media in reporting this? Are they supplicant to the politicians who are benefactors of their “fake news”, or are the roles reversed, and is the press in an agency position when they protect our so called “government servants” and those in “The Medical Industrial Complex”?