My experience with Medicare dates to 1970 when I began working for a CPA firm.
I took an immediate liking to auditing hospitals and nursing homes. Included with the audit and financial statements, we were responsible for preparing the annual Medicare cost report.
At the time, the report was simple and not more than a dozen pages. Medicare paid costs for those patients treated in the hospital. In Arkansas, Medicare patients were often 50% of the patient load in the hospitals. This translates to the hospitals receiving cost for 50% of their patients.
So, how is a hospital supposed to make a profit?
The answer is increased charges to insurance and private pay patients. Therefore, from the start of the Medicare program, hospital charges were increased in order to have sufficient income to continue operations.
The first Medicare report was in 1966, and I was able to look at one client’s file. A very simple calculation (total hospital cost divided by total inpatient days = cost per patient day; multiply that by Medicare patients treated = Medicare reimbursement).
Over the years since 1966, Medicare reimbursement rules were changed to reduce cost. This was done in order to reduce the amount Medicare had to pay, based on the Medicare premiums paid to the government.
Some of the cost reductions I remember were for televisions and elevator music. These were considered "not directly related to patient care" and therefore had to be deducted from patient cost. There were many more cost reductions. Some were just as ridiculous as the televisions and elevator music.
Every time cost was disallowed, hospital charges had to be increased for all patients to cover the loss for Medicare patients.
Currently, the Medicare cost report has grown to be very thick and complicated. The cost report included cost allocations on a spreadsheet for all hospital departments, allowing for other ways to reduce Medicare cost.
The increases in hospital charges are mostly due to the Medicare program, despite what you may have heard. I bring this up because of the current talk about a "single-payer" healthcare system proposed by some members of Congress.
Get ready for a disaster.
Let's take our country back from the bureaucrats and politicians. With an Article V Convention of States, the people and the states can restore our system of government to the Founders' vision.
A Convention of States can propose constitutional amendments that limit the power and jurisdiction of the federal government, mandate term limits for federal officials, and impose fiscal restraints on Congress.
With these amendments in place, the feds will be forced to operate within their constitutional box, no matter which party is in charge.
