A ruling of the U.S. Supreme Court in mid-January will deprive young doctors and hospitals of badly needed funds that could hurt the future of medical education and squeeze hospital budgets–money that could better be used providing charity care, as the American Hospital Association (AHA) put it. The Department of Health and Human Services (HHS) is on its own course to hobble medicine.
The AHA estimates a cost of at least $700 million annually to 5,008 community hospitals because of the Supreme Court’s ruling. Namely, that full-time medical residents in training are employees, not students, and therefore are subject to Social Security and Medicare taxes, known as FICA. Because medical residents will have to pay 7.65 percent in FICA tax, the hospitals where they work will have to match the 7.65 percent tax for each young doctor in residency training. Close to 200,000 medical residents are in hospitals across the country. The Obama Administration has calculated greedily that Social Security taxes for medical residents can bring the Treasury as much as $700 million a year, according to an ABC News story.
The highest court upheld the validity of Treasury Department regulations that excluded any medical resident from being treated as a student for payroll tax purposes if he or she is employed full time—works at least 40 hours a week. Medical residents notoriously work as much as 80 hours a week.
Many teaching hospitals and the American Hospital Association, as well as the Mayo Foundation, had filed briefs claiming the typical three years a young doctor spends in residency are educational and instructional. Medical residency training is required to practice medicine in the U.S. Hospitals argued that patient care and services furnished by medical residents provided education and training under the supervision of experienced physicians and that the clinical work they do includes lectures, written materials, and participation in conferences.
It seems more than a coincidence that the Obama administration’s Treasury Department regulation and interpretation of the IRS code was destined to bring in at least $1.4 billion in more revenue when you count the FICA tax on both medical residents and hospitals.
Times have been hard enough for our nation’s hospitals. Like many in the U.S., Gainesville, FL Shands Healthcare System shut down two years ago. Tight credit, higher borrowing cost, and a jump in poor patients not paying their bills, was at root. More hospital are closing—from impoverished Newark, NJ to well-off Beverly Hills, CA.– with more closings and mergers coming, according to industry consultants. Rural hospitals are the most endangered species. Hospitals employ more than five million people. They report that donations and investment returns are down, technology costs are up, and emergency rooms are jammed. ObamaCare, if it continues, would make matters worse.
ObamaCare already has stopped construction of 45 hospitals nationwide. Physician Hospitals of America said last month that construction had to cease or “they would not be able to bill Medicare for treatments.” Section 6001 of the ObamaCare law effectively bans new physician-owned hospitals (POHs) from starting up and bars existing ones from expanding, according to a Politico story Jan. 3, hardly the best way to promote more choice in health care. Dr. Michael Russell, president of Physicians of America—which filed suit to stop the building ban from going into effect—is quoted as saying, “There are so many regulations [in ObamaCare] and they are so onerous and intrusive that we believe the section [Section 6001] was deliberately designed so no physician-owned hospital could successfully comply.” He is correct, because Senate lawmakers struck a deal with the AMA to support the pending health law if they cut the legs out from under their competition, the doctor-owned hospitals.
This past fall, Health and Human Services (HHS) had launched a major fool-the-public program to sell ObamaCare in the face of growing opposition. A happy-days brochure was sent to every household with a Medicare recipient, $3 million was spent on TV commercials that skirted the truth about the health law. And a guide for journalists was provided to make sure the “correct” story was told. Since then, HHS has confirmed its clear attempt to influence what Americans read online by buying a link on Google. If you type in “ObamaCare,” the first link that comes up is a government site extolling government control of health care—a site bought with your tax dollars. Facebook, Twitter, blogs, and webcasts also are used to propagandize the public.
While House Republicans explore how ObamaCare can be shredded, some may still have not discovered how HHS already has moved ahead with costly regulations. Kaiser EDU.com notes that $19 billion has been allocated for Health Information Technology (IT) regulations. The bureaucracy to implement the program and impose mandates and provide grants to doctors and hospitals that toed the line on electronic medical records was not scheduled to begin until 2012. But Secretary Sebelius put a series of regulations into effect to start early.
A busy lady, this Kathleen Sebelius. As Carl Rove points out in a Wall Street Journal op-ed last month, the HHS Secretary is hastily granting waivers to companies that provided employees “mini-med” health coverage. Some companies said they would have to drop these plans because they couldn’t meet the health law’s requirement that 85 percent of premium income be spent on medical expenses. So, by early December, Sebelius had granted 222 waivers, including to 43 union organizations. The AARP, which helped get ObamaCare enacted, is exempt from the new law’s $500,000 cap on executive compensation. AARP’s last CEO was paid over $1.5 million. But business executives “are discouraged from contributing to the President’s opponents,” Rove wrote.
While the Supreme Court’s rules are based on law, the administration rules are based on the age-old dirty game that rewards friends and punishes enemies. The Obama dministration has perfected it.
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