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Volume 3 Number 4 25 April 2011
SC Roll Call Voting
Roll call voting became a reality in South Carolina at 11:30 AM on Tuesday 12 April when Governor Haley signed the bill in the lobby of the statehouse. Three years of work by Governor Haley and TEA Party workers have gone into this bill, which requires roll call votes on everything destined to become law or affect state finances.
New York Times Quotation of the Day"We want to see real structural, cultural-type changes tied to this debt ceiling. We're not interested in a one-off kind of savings, or anything small."
10 April 2011
From the Editor
This newsletter is published as events warrant. Subscribers receive an email when updates are published. The email is very brief and contains a link to the new edition. If you have news, pictures. links or comments please let me know. Note that the link on the Resources page now includes a way to check out the voting records of members of the SC legislature.
J.R. Wilt, Editor and Publisher
Two very similar bills, S 414 and H 3407, have been introduced into the SC Legislature that are called School Choice bills. The bills would set up Scholarship Organizations for the purpose of providing scholarships to private schools. Donors to these organizations, both individuals and corporations, would be given tax credits in the amount of the donation. Note that these are not deductible charitable contributions, which are already allowed under the law, but tax credits.
The rationale for this approach is that private school tuition in South Carolina runs about $5000 per year, while the state spends about $11500 per student. At first blush the state saves $6500 per year for each student that switches from public to private school. This does not actually happen; if a student switches from public to private school, neither the state nor the local school district will reduce spending, the cost per student simply rises. For this approach to make sense it must be accompanied by a reform of the financing for public education.
Interestingly enough, on 4 April the US Supreme Court ruled on a challenge to a similar system in Arizona that taxpayers do not have standing to sue the state for such disbursements of tax money.
Arguments that the scholarship system amounts to government support for religious education were not persuasive to the Supreme Court. The fundamental reason for this is that the system relies on tax credits rather than vouchers. It is thus not the government disbursing taxpayer funds, but taxpayers allocating how they want their money spent.
Governor Haley is on record that she will sign school choice legislation if a bill comes to her desk. SC State Superintendent of Education Mick Zais responded positively to a query on the subject.
The SC Senate Education Committee voted to table S 414 in mid April. Senator Robert W. Hayes, (R - 15th District - York), a member of the Education Committee, held a meeting on 25 April to explain his vote to table S 414. Senator Hayes expressed several reservations concerning S 414, primary among these being that there is a report from the Council of Economic Advisers that the program will cost the state money. In response to questions from the standing room only audience of 80 or so, Senator Hayes agreed to make the CEA report public. Reservations to the effect that the bill would not benefit those who need it most (low income students stuck in failing schools) were shown to be without basis.
We owe Senator Hayes a debt of thanks for his willingness to hold a public meeting on this issue and explain the difficulties as seen in the Senate and for agreeing to make the CEA report public.
Lobbying with Tax Money
Four bills are presently in the Legislature that would forbid using taxpayer funds to influence legislation, S 259, S 82, H 3175 and H 4081. These bills are very similar and share a common failing - they apply only to the state. This prohibition needs to extend to all levels of government. Such use of tax money to influence legislation has been illegal at the Federal level
Medicare ReformThe Republican Medicare Reform proposal suffers from a major defect that must be repaired, probably at no cost to the Federal Government. The present Medicare law relies on a panel of physicians to set the amount that Medicare will pay for each medical procedure or hospital service. The law also provides that no medical practitioner or organization needs to accept Medicare, but those that do must accept the amount that Medicare will pay for any procedure or service as full payment for that procedure or service. Accepting Medicare reimbursement as part payment and billing the patient for the difference is forbidden.
A third essential provision of the Medicare law is that medical practitioners and organizations must obtain informed consent from Medicare patients before providing a service that is not covered by Medicare.
These three provisions of the Medicare law protect the old and vulnerable from the predatory billing practices followed by most hospitals and serve as the only real restraint on the cost of medicine in the United States. They must be preserved in any changes to the system.
If Medicare is to be shifted from the Federal Government to private insurance, this should be done the way it was with Medicare supplemental insurance. The new Medicare Law must define the insurance programs that may be offered as eligible for government subsidies. The three fundamental protections for the old must be included in all these programs; i.e., the existing board must continue to define what these programs will pay medical providers for medical services, medical organizations accepting these insurance must agree to accept the payment approved by the Medicare board as full payment for the bill, and medical providers must obtain informed consent from the Medicare insured before providing any service not covered by Medicare. Insurance companies participating in the program can compete on price, service, etc. as the providers of Medicare supplement insurance do now.
Predatory billing by medical organizations is the leading cause of personal bankruptcy in the United States. Hospitals are a leading offender. Medicare often settles these predatory bills for less than twenty five cents on the dollar. Patients covered by private health insurance file for bankruptcy because private insurance organizations have neither the clout nor the motivation to negotiate the required discounts from hospitals.
The field of medicine is undergoing fundamental change as hospitals assume role formerly held by physicians. Modern hospitals regard physicians as employees or contractors and patients as customers. They are run by MBAs and are often owned by publicly traded corporations.
Initially hospitals were service organizations providing care under the direction of attending physicians in private practice. They served as vehicles to own equipment and provide services used in common by groups of physicians, were often organized on a charitable, nonprofit basis and run by a nonprofit board and the physicians that used them. They were thus responsible to the physicians that used them and the community that supported them. Compassion and charity were hallmarks of their operation and served to keep costs low..
As medical care grew in its ability to solve problems and became more expensive, medical insurance came into being. Insurance companies have customers, provide a service and expect to make a profit. Patients are a cost to insurance companies, while customers are a source of revenue. Insurance companies are motivated by the desire to earn a profit, and thus seek to maximize revenues from customers and minimize costs by controlling benefits to patients.
Quality control in the system is provided by a complex system of qualification procedures run generally by physicians, which seek to keep unskilled individuals from providing services, and the tort law system. The unpredictability of the tort law system has led to the need for another type of insurance, malpractice insurance. For malpractice insurers, physicians are customers, a source of revenue, and and patients and their tort lawyers are a source of cost.
This complex system of organizations, medical insurance companies, malpractice insurance companies, hospitals, drug companies, device manufacturers and providers (mainly physicians) has generally one source of revenue - purchasers of health insurance. The Federal and State Governments are insurers to the extent that they provide health insurance in the form of Medicare and Medicade. All pressures in the system press to increasing the cost to purchasers of health insurance except for the Federal and State governments, which are motivated to keep costs low. There are no sources of pressure to keep the cost of medical care or health insurance down other than the Governments.