Tuesday, September 29, 2009

Hospitals in for $200 Billion Windfall Profits per Year from Health Reform.

I am amazed at the low profile the AHA (American Hospital Association) has been taking in the debate over health care reform. Think back you have heard and seen ads from every other sector but Hospitals, yet hospitals are 31% of the cost of medical care in the USA. Why have they been so quiet? Maybe they have a good reason to take a low profile. Maybe they don't want politicians and the public to realize they will be in for as much as $100-200 billion dollar windfall profits.

When you examine a major change think about who are the biggest losers and winners both before and after the change. This will help you understand the rhetoric or lack of it. Currently the hospital are, along with the uninsured patients, the biggest losers. The pharmaceutical and insurance industry the biggest. Using figures from Iowa from 2006, in a survey by the State Health Department, the states hospitals reported their expenses on unreimbursed indigent (uninsured) care. In Iowa the hospital spent $600,000,000 on care to the uninsured that was not reimbursed. This was not what they would have billed, but their actual expenses. They made this up by offsetting costs to those with private insurance. They still operated in the black. You cannot say they made a profit since they are non-profit. However many executives received large salaries and bonuses and many hospitals did expensive capital investments. This was in the face of $600 million write off. Amazing!!!

Well let us snap our finger and let every uninsured have insurance. Lets also say that this insurance will reimburse hospitals at the same rate (so they are competitive with private insurance) as private insurance. This rate is double or more over the reimbursement rate of Medicare or Medicaid. So the hospitals in Iowa will instead of writing off $600 million will be getting a check for $1.2 Billion. This is a swing on their ledger of $1.8 Billion. Now Iowa has a population of about 3,000,000 or one percent (1%) of the population of the entire country. So, if the number can be expanded to the entire country the hospitals of the United States will have as much as $180 Billion windfall profit each and every year.

$180 Billion is enough to pay f0or the cost of even the more expensive House bill for two years. So what I'm saying is that the hospitals will not be doing any more work (they are doing it now as charity) but will be making $180 Billion each year for no further work. Why not give them only $90 Billion windfall (they should be very happy with this) and pay for the entire system.

Please tell me where my logic is flawed.

Thursday, September 24, 2009

Everyone Can Afford College. All Can Go.

We have a crisis in higher education. Like health care the cost of a college education is increasing at more then twice the rate of inflation, while the money available for scholarships and grants is shrinking. Many cannot attend the college of their choice or attend at all. Private Universities tend to get a disproportionate number of upper middle class to upper class students rather then the best students. I have given this a lot of thought and see a rational plan to solve this. First let me say not everyone should or needs to go to college, but some would benefit from a technical training and this covers that also. Read on to see the plan.

Society and our country benefits by having a more educated workforce and a educated class that can develop new inventions or processes. The person getting an education benefits from added earning potential. Also more lower income and middle income students will be able to attend better schools and not be worried about affording school or being saddled with burdensome debt. Many people will go into teaching or nursing since they will not need to find high paying jobs to pay off college debt. Keep reading the plan is coming.

The individual will benefit from this plan because of increased earning potential. US Census Bureau report shows that: '$4.4 million Estimated lifetime earnings of professional (i.e., medical, law, dentistry and veterinary medicine) degree-holders. This compares with $3.4 million for those with Ph.D.s, $2.5 million for master’s degree-holders, $2.1 million for those with bachelor’s degrees, $1.2 million for high school graduates and $1.0 million for high school dropouts'. Also the individual will be able to go to the best school they qualify with economic resources being no barrier and massive debt will be no barrier to taking the job they want rather then the job they need to pay off their debt. Here comes the plan.

Here is the plan. I will give the numbers to justify it below. The plan is simple students will apply to the colleges they want without concern for the cost. They will be accepted on their qualifications not the ability of their parents to afford it or the desire of the students to go into massive debt. After finishing school, graduate school and any required internships or residencies to complete their training they will pay back the loan this program gives them. They will pay back 0.75- 1.5% of their net income for each year of school they attend for 10 years. i.e. someone going to only four years of school will pay 3-6% of their income (net not gross) for ten years while those doing Medical School will pay 12% of their income for 10 years after they finish their residencies. These percentages are first guesses it may be slightly higher or lower. The final number will have inflation built in so once you fund the first four years the program will pay for itself.

Lets look at some numbers. There are approximately 5,000,000 in each grade level although only 3,000,000 graduate high school (2 million do not, see their lifetime earning potential above, I will present a plan to improve drop out levels in future blog). There are roughly 2,500,000 students entering college each year but there are 18,000,000 in colleges and universities at all levels including college, professional schools and graduate schools. 14,000,000 are in public institutions and 4,000,000 are in private. The total cost of those(14m) in public institutions is 250 billion dollars or $17,000 per student (room, board and expenses averaged of all levels) and those (4M) in private schools is 150 billion dollars or $37,000 per student. Whether private or public the students pay (via loans, scholarships, parent contribution and work study) all but $10,000. So of the 400 billion dollars spent each year on higher education $140B is paid by government, $40B by endowment funds of private universities and colleges and $210B by the student (using: loans; parents contribution, scholarships and work study). Once the program is in place and up and running it will be self supporting. This will mean that local, state and federal government will save $140B yearly or $1.4 trillion over ten years after the first four years and people start repaying loans. Both private and public schools will be able to use the money saved to improve the faculty (both pay and quality) and to improve facilities ( to accommodate the increased number of students that will be attending).

When the program starts those already in school can participate and reimburse the program at 2% each year for ten years of their net income. The repayment will be handled on the persons tax returns.

The beauty of this is that the job a person obtains and therefor the income is based upon the education they get and the field they pick. By setting reimbursement to your income if you decide to go into a low paying job you reimburse less and if you decide to go into a higher paying job you reimburse more. The individual decides. Two people with the same degree may go into opposite ends of the pay schedule.

After eight years there will be approximately 28 million (this number could be almost double if more students go to college then would have) that will be paying back into the program with an average income of $75,000(assuming a combination of those in professions and in trades, with more data this number could be precisely calculated) paying roughly 15% each (averaging those that do just bachelors and those that do graduate or professional degrees) or 315 billion dollars and thus close to self sustaining.

Any one could elect not to be part of the program but they will then need to pay full room/board/tuition of $37,000 yearly at private school and $19,000 at a public school.

This is a first approximation kind of a back of envelope calculation. I want lots of comments and criticism and if you know a college administrator please forward it to them. also to any state or federal legislators.

Tuesday, September 22, 2009

Sorry I haven't posted in three weeks.

Those of you friends with me on facebook (www.facebook.com/alan.koslow) know I had a full three weeks. Two Guinness world record attempts. Brunch with Al Franken and Senator Harkin. Presenting at annual Gala for Am. Diabetes Association, Attending worlds largest SciFi convention and Chairing Blood Drive (we had 2628 units of blood donated and after splitting them we had 6300 transfusable units), Preparing for Step Out the annual walk for Diabetes (this Saturday), Attending Get Motivated Seminar (amazing list of speakers and I was on stage dancing to compete for trip), my two radio shows and over a dozen board meetings. All in the last three weeks. I started another Blog devoted to my Weight reduction http://weightloss-skepticdoctor.blogspot.com/. I am making a commitment to post a new Blog at least weekly if not twice a week.