Hiding the Decline in Massachusetts

This is pretty scary.  From the Massachusetts state treasurer, the state health care system (essentially the model for the current version of Obamacare) is going bankrupt, and only huge cash infusions from the Federal government are hiding the full disaster.

"If President Obama and the Democrats repeat the mistake of the health insurance reform here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years," Cahill said in a press conference in his office.

Echoing criticism leveled by congressional Republicans in recent weeks, Cahill said, "It is time for the president, the Democratic leadership, to go back to the drawing board and come up with a new plan that does not threaten to bankrupt this country."

[T]he state's health insurance law"¦Cahill said, "has nearly bankrupted the state."

Cahill said the law is being sustained only with the help of federal aid, which he suggested that the Obama administration is funneling to Massachusetts to help the president make the case for a similar plan in Congress.

"The real problem is the sucking sound of money that has been going in to pay for this health care reform," Cahill said. "And I would argue that we're being propped up so that the federal government and the Obama administration can drive it through" Congress.

The Democrats have no good ideas for controlling Medicare costs after a government takeover.  If they did, they would have already implemented these ideas on Medicare or in Massachusetts.  Their only plan is price controls and rationing.  Here is an example of price controls hitting a wall in Medicare:

Walgreens drugstores across the state won't take any new Medicaid patients, saying that filling their prescriptions is a money-losing proposition "” the latest development in an ongoing dispute over Medicaid reimbursement....

In a news release, Walgreens said its decision to not take new Medicaid patients stemmed from a "continued reduction in reimbursement" under the state's Medicaid program, which reimburses it at less than the break-even point for 95 percent of brand-name medications dispensed to Medicaid patents....

Washington was reimbursing pharmacies 86 percent of a drug's average wholesale price until July, when it began paying them just 84 percent. While pharmacies weren't happy about the reimbursement reduction, the Department of Social and Health Services said that move was expected to save the state about $10 million.

Then in September came another blow. The average wholesale price is calculated by a private company, which was accused in a Massachusetts lawsuit of fraudulently inflating its figures. The company did not admit wrongdoing but agreed in a court settlement to ratchet its figures down by about 4 percent.

So the Government is reimbursing retailers at 80% of wholesale costs.  Even forgetting their overhead,  Walgreens was asked to sell dollar bills to the government for 80 cents.

What both stories have in common are government health plans that are subsidized from the outside:  The Feds are pouring money into Massachusetts and money is sucked out of the private medical side to subsidize Medicare.  But what happens when there is only one system, when there is nothing outside of it to subsidize it?  What are they counting on to save them?

  • zero wolf

    so buy land in texas. where do you think the mass. refugees will head for when they quit the state? why, the same place the good folks in michigan and illinois and indiana and joizey and california and ohio et al are heading.

    only one thing to do with dumbasses who crapped where they ate and made their states uninhabitable: *exploit* them.

  • IgotBupkis

    > only one thing to do with dumbasses who crapped where they ate and made their states uninhabitable: *exploit* them.

    I dunno, there's always the lead poisoning solution.

  • Bob Smith

    so buy land in texas. where do you think the mass. refugees will head for when they quit the state?

    Please keep them out of Texas, thank you very much. They'll stupidly vote Democrat just like they did in Massachusetts and screw up Texas too.

  • http://nomayo.mu.nu Stephen Macklin

    "What are they counting on to save them?"

    I believe they are counting on the resulting decrease in population resulting from rationed care to save them a ton of money.

  • Judge Fredd

    "Stephen Macklin:

    “What are they counting on to save them?”

    I believe they are counting on the resulting decrease in population resulting from rationed care to save them a ton of money."

    They're taking the GEICO commercial to the next outlandish extreme.

  • Greg

    Your post nicely explains why some of us laugh when we here Gov figures for any program, but especially health care. Based on all the other Gov plans out there I'm guessing that the numbers we're being given are wildly below the reality.

  • epobirs

    Remember the heat wave that killed off approximately 15,000 elderly French people in nursing homes a few years ago? I wonder if any bureaucrat has calculated how much money they've saved on the care of those people if they'd just had air conditioning in those facilities. When I look at the big elder care liabilities looming over most developed nations, I cannot help but think a plot to kill off the elderly is the next hot conspiracy theory.

    This article should make anyone pause to wonder what things will be like in a couple of decades:
    http://www.city-journal.org/2010/20_1_birthrates.html

  • IgotBupkis

    Greg, it's not even that complex. They rigged the bill to force the CBO to use its own rules to defacto lie about the costs --

    A former director of the CBO descibes how their "surplus" of 138 billion is actually, when you REALLY examine it, a deficit of $562 billion:

    The Real Arithmetic of Health Care Reform