Healthcare in Arkansas….the bottom line.

bottom line

Medicare-Medicaid (history)

Medicare, a 1965 amendment to the 1935 Social Security Act signed by President Franklin D. Roosevelt, was created as a federal program to pay for the medical needs of elderly and retired Americans funded into a savings trust account from their own payroll deductions (and employer match) during their working life.

Like Social Security, the total amount put in by the average person (and employer) is far less than what is being spent on the retired employee’s behalf today.[i]  This fact alone leaves a federal deficit which if continued will make both Social Security and Medicare unsustainable.[ii]  It appears reasonable to assume this will be the lynchpin for one of three things to occur on the federal level:

  1. Raise payroll deductions/taxes significantly on EVERYONE!
  2. Reduce benefits/raise age of use significantly.
  3. Create an even bigger national debt which will necessarily bankrupt the nation.



Medicaid was established in 1965 simultaneously with Medicare, funded with federal and state tax dollars as a welfare program for extremely poor and needy people whose needs appeared much greater than charity was expected to meet.[iii]  The matching dollars for this welfare come solely from the federal and state tax revenues based on formulas. [iv]  Arkansas currently pays 30% toward the traditional welfare costs while the federal government’s match is 70%.  For the most part, traditional Medicaid is defined as those who qualified before 2014 Obamacare when the recipients included children (of parents), disabled (definition has broadened significantly lately[v] creating another problem and subject for a later day), and women with children (and no husband in most cases).


Medicaid Expansion (Obamacare)

Expansions of the welfare program under Obamacare, like Arkansas has done with the “Private Option” (or to whatever new name your state government will call it[vi]) is a concept in which we dramatically expanded a failed program (to include one-third of our Arkansas population on welfare) by including all but basically the hard working Arkansas income taxpayers. By creative math and extreme projections, it is being sold, rebranded, and re-sold to the voters as an unavoidable expense for which someone else pays. What it is, in reality, is an interim step to single payer or socialized medicine whereas everybody gets healthcare (a perceived path to pay for what will be actually delivered in ever decreasing services).

In order to get a sense of the explosion in costs, below is a chart from the Heritage Foundation in which spending on the Medicaid Expansion is reflected from 2013-2023. [vii]  And guess what—MEDICAID IS ALSO NOT SUSTAINABLE. [viii]

Medicaid graph

Consider These Issues

Uncompensated Care (the excuse)

Uncompensated care is one of the single largest excuses given by our politicians to retain Medicaid Expansion.[ix]  In August of this year, Governor Hutchinson claimed if we continue Medicaid Expansion (the Private Option) it would save Arkansas $361.5 million in uncompensated care between 2014 and 2023.

Many Arkansas hospital board members echo this same claim as though the public is blind to their explosive building projects.  Review a report written by The Arkansas Project noting large hospital profits even during our latest economic recession.[x]

But what is uncompensated care?

It is essentially an amount of money claimed by medical providers that they say they are left owed based on services they have provided to patients.  They claim it is money they should be paid but are not able to collect.   It has nothing to do with actual losses incurred by a provider due to expenses exceeding revenues.

Now to really get it–one must understand the three main subtypes of this phrase—and then draw your conclusions.  Uncompensated care is made up of:

  1. Charity Care: This is the loss (where actual costs exceed income) voluntarily absorbed by a provider as the result of the provider choosing to render a service for free to a needy person. This is pursuant to a providers’ (hospital’s) free-will mission statement.  See Methodist Healthcare or Baptist Health Care Systems.[xi]  The Arkansas Project report mentioned above states that, although nearly impossible to pin down, charity care is about 21%[xii] of the overall “uncompensated care” number sited by Arkansas hospitals pursuant to their own government reporting.
  2. Undercompensated Medicaid/Medicare Services: This is the difference between what it costs the provider (hospital) out of pocket to provide the service and what the payor (government) will pay (and likewise what the provider has pre-contracted/agreed to accept) for delivering the services. According to The Arkansas Project this compensated amount for care as dictated by the government was about 89 cents on a dollar of actual costs and thus makes up 11%[xiii] of the overall “uncompensated care” number sited by Arkansas hospitals.

With this explanation you may ask why has the provider (hospital/doctor/nursing home) agreed to take less than their known out of pocket actual costs to provide the services?  That is a good question.

Consider–when in business it may be a good strategy to guarantee that 89% of your costs to expand a building or pay administrative or pay fixed costs will be paid by one group of clients upon which you can rely if the difference can be made up with increasing the price for services paid by others.

Now, that takes us from the idea of actual “costs” to “charges.”

  1. Bad Debt/Cost vs Charge: There is only one other piece to the total make up of “uncompensated care.” Add up all other amounts “charged” and not paid; it is often referred to as “bad debt”—uncollectable billings!    The Arkansas Project recites this figure to be approximately 68% of Arkansas’ claimed “uncompensated care.”  But what does that mean?

Does this mean that any number given to us by the hospitals or state government as their “uncompensated care” are the actual expenses in excess of revenue or is it actually lost profits which are based upon something more similar to “see what the market will bear” or “lost opportunity costs if I could have been selling gold which I had inherited.”

You tell us what you think.  Look at the following along with a site from the Arkansas Hospital Association when explaining how hospitals bill:[xiv]

  1. “Cost” is the actual cost incurred to provide the service or the amount the provider is actually “out of pocket.”
  2. “Charge” is the customary amount that would have been charged to regular (non-government, not poor) customers or “list price”. In some cases such as with private doctors, those amounts may vary and depend upon amounts contracted with private pay insurance companies—what the market will bear—so to speak.  With a hospital that amount may continue to remain a mystery no matter how many times you “google” the question, review their Federal Form 990’s or sit on their Boards.  Do not believe us—review your own experiences.

**Example: You go to the emergency room with a small cut. The doctor stitches it up and slaps a band aid on it, then you leave without paying.

Cost = band aid $1.25, Stitches kit $12.50, supplies $6.75, labor $28.00

Or $48.50 in actual out of pocket cost to the hospital.

Charge = Standard list price for visit and supplies $7.50 for band aid,

$75.00 for stitch kit, etc…… (You have read the bills before!) for a       total of $475.81 for the visit!! Not a true measure of the “loss.”

This is a claim of a $475.81 loss for uncompensated care rather than the true loss of $48.50, which is why the uncompensated care loss is not factual and meant to inflate and exaggerate the problem. (Remember, it is this kind of math that reports potentially 68% of the total uncompensated losses claimed by Arkansas hospitals.)

Conclusion:  We would offer for your consideration that the figures for “uncompensated care” burdened by our hospitals and state taxpayers often cited by politicians and providers are dramatically overstated for self-serving reasons.


Insurance companies (new government partner)

Private (or not so much any longer) companies that naturally endorse any and all ways to increase revenues. It is of little concern where the money comes from; and as long as they can persuade the public by clever accounting and public relations campaigns, they will take all they can from the increasing public funding of health care dollars. Have you ever seen one insurance company champion less public funding?  BCBS revenues strangely increased about 43% after expanding Medicaid this past year!


Hospitals (a physical proof text)

Hospitals are a blessing and a need for most all of us, and we are naturally emotionally tied to their existence. That being said, by simple observation and the understanding that they are truly businesses too, it is natural and obvious that cutting costs and efficiency is not a driving factor in their operations. You can argue that it should not be either, but I submit that unchecked, the costs will continue to soar well beyond any government’s ability to pay for them.

FullSizeRender (2)Common sense dictates that if the occupancy rates are declining (approaching <55% of beds utilized)[xv] why are most hospitals and other health care facilities building and expanding in most parts of the state? We all like the opulence of a resort or other public place, but do hospitals require the palatial facilities we are beginning to see?  Is the management and administrations siphoning off the income as it is with many businesses and most government and governmentally overregulated operations?  The unholy alliance between schools, emergency services, and hospitals driving costs up or down?


Managed Care (was this the original goal?)

We will soon be sold the concept of managed care in Arkansas. It will promise less government control, more choices, and less cost. Just what we all wish to hear, right?  Well how easy is that to sell? That is until we see the actual effect and the math. What is being sold is the fact that government has failed to manage this area of control over our most basic need and a private entity (really? How private can the totally regulated and operated industry be?) will be paid according to a government created formula to totally take on the management of the people’s health services and outcomes. Although this sounds attractive, the profit motive and the regulatory constraints that govern this industry will produce only similar result at best, a higher ultimate taxpayer burden, and a shield from mismanagement at all levels. We will all be treated as statistical entities by an ever more distant medical community (not their choice for the most part), and there will be less choice and accountability than ever before. Does “too big to fail” come to mind when Lehman Bro’s is to be replaced by Anthem or Blue Cross?  Do we have to again even ask—“Is government the answer?”


Government in Medicine (a near take-over)

When government totally regulates and requires services provided and the legal system exploits every mistake for those who pay or not pay for those services, the outcome is anything but unpredictable. We have allowed the highest levels of government control over our most private and intimate needs we have as citizens. Personal responsibility and free market choices for services and the choice to support with charity have been ripped from our hands and are being used for manipulating public opinion with emotion and fear to enable and embolden all levels of government to extract and direct one of the largest streams of dollars for corporate welfare and control in the history of our nation. This will not end well if not checked, as it has been in almost all other southern states.


Decision Point (for us all)

We must decide whether to blindly follow and absorb the endless stream of government and industry propaganda, partial truths, and creative statistics pushed on us from those who will benefit financially and with increased power OR….come to our senses, think for ourselves, soberly investigate, and apply our God given common sense and stop the madness of this runaway government healthcare alliance that will surely take us to the socialist utopia many would have us adopt. The math does not work at any level when presented honestly.  And people will find the best solution, mostly devoid of government, if allowed and informed.  Take up your task to resist this hard sale—vote in these upcoming elections….do not give up.

Do not give up your liberty, please. The decision is still yours!







Article states: “Somewhere around 30 years ago, the economy started changing in some fundamental ways. There are now millions of Americans who do not have the skills or education to make it in this country.

Politicians pay lip service to this problem during election cycles, but American leaders have not sat down and come up with a comprehensive plan.

In the meantime, federal disability programs became our extremely expensive default plan. The two big disability programs, including health care for disabled workers, cost some $260 billion a year.

People at the Social Security Administration, which runs the federal disability programs, say we cannot afford this. The reserves in the disability insurance program are on track to run out in 2016, Steve Goss, the chief actuary at Social Security, told me.

Goss is confident that Congress will act to keep disability payments flowing, probably by taking money from the Social Security retirement fund. Of course, the retirement fund itself is on track to run out of money by 2035.

Goss and his colleagues have worked out a temporary fix under which the retirement and disability funds will both run out of money by 2033. He says he hopes the country will have come up with a better plan by then.”

[vi] Governor Hutchinson’s letter to Health Care Task Force dated October 27, 2015 suggests “Arkansas Works.”


[viii]  “Though the federal government picks up 100 percent of expansion through 2016, it gradually drops support to 90 percent by 2020. Medicaid already takes up the largest share of strained state budgets. At this time the federal government pays 57 percent, on average, of Medicaid costs, and states pick up the rest.  

[22 states currently not expanded Medicaid.] Deparle said she thinks that all states will eventually expand Medicaid, and will do so in less than 10 years. Gail Wilensky , former administrator at the Centers for Medicare and Medicaid Services under President George H.W. Bush, agrees. “I assume they will have gotten over it one way or another,” she said.

Michael Leavitt, a former governor of Utah who was the secretary of the Department of Health and Human Services under President George W. Bush, said other parts of state budgets have suffered because of Medicaid costs. [emphasis added] He pointed to the correlation between environmental outcomes and public health, for which he says states cannot show as much investment because of Medicaid.

[ix] In August  2015 Governor Hutchinson claims Medicaid Expansion will save the state $361.5 million from SY 2014-2023 in uncompensated care—whatever that means!!

[x] (page 2)


[xii] (page 5)

[xiii] (page 5)

[xiv] (a website set up by AR Hospital Association to understanding the billing practice—good luck.)