Way back in August, when I sent out the first edition of this newsletter, I said to stay tuned because I was working on a big article that I hoped would publish soon.
It took another six months (that tends to happen in journalism), but that article is finally out. It’s an in-depth investigation of LHC Group, one of the country’s largest home health care companies. With the help of a generous grant from the Fund for Investigative Journalism, I interviewed several current and former employees, read thousands of pages of court documents, and obtained a bunch of health inspections and labor complaints.
The picture that emerges is of a corporation that has used every measure available to maximize profits at the expense of both employees and patients. In an effort to squeeze as much money as possible out of a labor-intensive, low-margin business, LHC has stiffed workers of just compensation and endangered the elderly and infirm people entrusted to its care.
You can read the article to learn more, but I want to expand here on something that I didn’t flesh out in the actual piece.
As people get old, they start to need help doing stuff like going to the bathroom and cleaning up around the house. Sometimes they develop injuries or illnesses that require frequent medical attention. Many of them enter nursing homes or assisted-living facilities, but a growing number are instead receiving this “long-term care” in their own homes, either because they don’t want to live in a nursing home or because they can’t afford to do so.
In this country we have two huge social programs, Medicare and Medicaid, that pay for healthcare of elderly and low-income people. These two programs together pay for more than half of all home health care in the United States, which means that companies like LHC Group get most of their revenue from the federal government. The company hires a nurse to provide care to an old person and then the company reimburses Medicare for the “episode.”
Medicare and Medicaid also pay for things like prescription drugs, but the pricing system is different for home health care. When it comes to drugs and hospital care, the drugmakers and hospitals have a big role in determining the price of the services, and the government does not negotiate those prices, which is part of why we pay so much for healthcare. When it comes to home health care, though, Medicare and Medicaid have both established a fee scale for how much an “episode” of care ought to cost.
It turns out that this pricing scale for home health care is on the low side, so low in fact that it is very difficult for a company like LHC Group to take home a sizable profit. Now, the main cost that a company like LHC Group has to deal with is the cost of labor: yes, the company has to pay rent on its offices, and buy supplies, but the main cost is paying the nurses and aides. As you can imagine, when the company wants to make more money, the first thing it does is start skimping on wages and cutting corners. It’s that business strategy that leads to the things I describe in the article.
There’s another side of this, though. Medicare is an enormous social program, accounting for 15 percent of all federal government spending and close to four percent of the total GDP of the United States. The program receives millions of claims for reimbursement every year, and fewer than five percent of those claims are audited, which means that there is vast potential for fraud, i.e. a company billing the government for services it didn’t perform. This fraud has over the past few decades become endemic to the program itself, and home health care is no exception: the biggest home health companies have all settled huge lawsuits over Medicare fraud, and LHC faces several of those lawsuits.
Finally, Medicare is in financial trouble, or at least a lot of people think so. As many millions of people age into retirement and need of medical help—the number of total claimants will increase from 50 to 80 million between 2010 and 2030—they are emptying out the general tax fund that pays for elder healthcare. The program may become technically insolvent by as early as 2026, and spending is expected to more than double by 2043. You probably already get annoyed when your employer takes a chunk out of your paycheck for Medicare, so it’s going to be difficult to fill this gap with tax revenues alone. To that end, Congress has already instituted cuts to payment rates for skilled nursing facilities, and more cuts may be on the horizon.
We talk a lot about how this country is a gerontocracy, how old people have all the political power, but it is almost alarming how little political attention is paid to this crisis. In the next few decades, tens of millions of people will need long-term medical care, and the main program that pays for that care is underfunded and rife with fraud. It is not getting our seniors the care they deserve. Furthermore, the pay rates are already so low as to make home health care one of the worst-paying major jobs, and home health workers are mostly women of color and undocumented women, groups with very little political power.
This also raises serious questions about the challenges of a transition to a single-payer healthcare system, or Medicare for All as it’s known. If the government were to start negotiating drug prices, and if it could eliminate the administrative costs of private insurance, then it would get more bang for each taxpayer’s buck, which might alleviate some funding concerns. Nevertheless, the partial version of this system that currently exists has serious problems, and fraud is not the least of them—if the feds were spending $1.9 trillion on single-payer healthcare every year, private businesses would have every incentive to defraud them. I understand that the advent of Modern Monetary Theory has made people wave off the deficit issue, but when it comes to a huge social program financed by tax revenues, it’s not as easy as printing more money.
I don’t—obviously—have a solution for all this, but it’s worth thinking about just how little attention these problems have received in mainstream politics. For more in-depth looks at the issue, you can read these articles in Bloomberg and The Atlantic. The writer Rachel Cohen has also done a lot of great reporting on the issue.
What I’ve Been Writing
Here’s my investigation of LHC Group and the for-profit home health care industry. (The New Republic)
I also wrote about The New Yorker’s climate change coverage and the future of climate journalism. Trying to do more book reviews, they’re fun. (The Baffler)
And my most recent column on the rightwing media is about their attempts to redirect blame for the Capitol insurrection onto Big Tech. (The New Republic)
What I’ve Been Reading
Books
Sara and I are three-quarters through War and Peace. It’s marvelous, everything a work of fiction should be. I already want to read it again.
Before that, I read Shuggie Bain (good), Olive Kitteridge (eh), and Under the Volcano (not my cup of tea, but I can appreciate the prose).
I can’t wait to read the new Hitchens biography, or Patricia Lockwood’s new novel. Meanwhile, everyone I trust has been lukewarm on Fake Accounts.
Articles
Hazel V. Carby on the shortcomings of Isabel Wilkerson’s Caste. (LRB)
Olivia Nuzzi on Madison Cawthorn, Nicholson Baker on the lab-leak theory, read cum grano salis. (NY Mag)
A town in Wyoming saved by wind energy, a town in Alberta killed by the Keystone XL cancellation. (High Country News, Bloomberg)
Good piece on Tom Gores, the Detroit Pistons owner, whose private equity firm owns the notorious prison telecom company Securus. (Detroit Free Press)
Reddit’s mania for EVs led to a stock run on some random SPAC called CCIV; meanwhile, another SPAC seems to have suckered investors into an emergency-room extortion scheme? (WSJ, Hindenburg Research, h/t my friend Brad Cohn)
The improbable rise and fall of Ample Hills Creamery, Brooklyn’s “it” ice cream shop. I always liked that place, shows how much I know. (Marker)
Revelations from Tony Blinken’s college newspaper articles. Ambitious people should know better than to write for the Harvard Crimson. (Politico)
A wonderful one-year-later retrospective on the bungled Iowa caucus. (Buzzfeed)
Climate anxiety is already ruining lives. I genuinely don’t think there’s any benefit to thinking the way the subject of this article thinks. (ProPublica)
The Coming Care Crisis
I would take another look at LHC Group. They are operating in the same way as these multiple lawsuits state. One may question their actual profitability in regards to the multiple acquisitions and their business model of reducing staff and increasing referrals. Their turnover rate of staff is one of the worst in the industry-patients are not getting the care they are entitled to. United Healthcare should be very concerned about LHC’s business practices specifically in light of their upcoming acquisition of LHC.