Nursing Homes: the business of taking care of our loved ones

My great-aunt Mabel and me. 2017 Author's Photo.

My great aunt has been in the nursing home for nearly a decade. Her retirement yields a little over $5,000 a month (post tax). The nursing home monthly bill is $7,000. We've finally depleted all invests, annuities, and other assets and will be making the move to Medicaid.

I find it amazing that in Delta County, where the cost of living is the lowest in the state and the aides, cooks, and most of the support staff earn minimum wage, and through all this, a monthly bill is over $7,000! All this gets you a twin bed in a shared room where they provide one shelf for personal affects and tell you not to hang family photos, repaint, or other change the sterile institutional white room. My brother's sub had more personal space than these nursing homes.

With an occupancy rate of say 50, this is $350,000 per month or $4.2 million per year, plus an additional million in subsidies for providing ageing care services in the rural areas. The institution is a non-profit, so there aren't really any taxes to worry about, which begs the question of how in the world is so expensive?

What is even more amazing is that the nursing home is subsidised directly by state and federal government and the facilities themselves are at least 25+ years old, so it's not like the price point reflects a modern state of the art facility.

Lesson learnt: Don't worry about saving. Take that expensive trip. Deplete the cash reserves. If you have any inkling you'll end up in a nursing home, you won't need to worry about a will, as the only thing you'll pass on is a burial bill.

Hopefully no one interprets this rant the wrong way. The ability to make your loved ones a little bit comfortable at the end of life is worth everything you have. No one should ever expect, nor be given anything in life. You earn your way, by starting out with nothing, immediately going in debt, climbing out and becoming a successful member of society. That is the American Dream.

In many ways, inheritance is a corruption on society. It passes on the successes on one generation to another, only the receiving generation was not the creator of success, but merely a beneficiary. By removing the grit and hard work, and the sweat and blood, we create a lazy, privileged, and unmotivated culture.

Yet, the debt that is piled on now days is hard to overcome: rising costs for higher education, unaffordable health insurance with high deductibles, the cost of health care itself is through the roof (don't get ill or injured), being able to save for a down payment on a house is more challenging, as the cost of living pretty much eats up a month's income. Even regulatory barriers make entering many business markets a challenge.

At what point in time are the masses unable to pay their debts and earn their way? Schemes that deplete wealth, especially the middle class, should be very worrisome. Until the cost/income ratio is able to balance a bit, any help families can provide to one another is essential to creating members to society who will be able to pay their own way.

Legal Perspective: Does repealing ACA violate International law?

UN Headquarters in Geneva, Switzerland.
2017/UN photo

Through the journalism of Dana Milbank, in a recent Washington Post column, the world became aware of a secret memo sent from the UN to the US which declared the provisions of the Affordable Care Act to be protected under international law and that repeal would violate US commitments under international agreements.

The argument is based on a 2 February 2017, five-page, confidential memo sent from the Office of the UN High Commissioner on Human Right in Geneva to the US Department of State in Washington, DC. The memo expresses “serious concerns” about the prospective loss of health insurance coverage for nearly 30 million Americans. The memo goes on to urge the US Government to take “all necessary interim measures [. . .] to prevent the alleged violations”. As if the Commission’s memo wasn’t clear enough, there is a bold threat that if the “allegations” of loss of health coverage are proved accurate, then the person(s) responsible for failing to prevent said loss are guaranteed to be held accountable.

The memo was written by Dr Dainius Puras, Special Rapporteur on the Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, cites three specific areas of treaty law as grounds for why repealing the ACA would constitute a violation of public international law.

First is that Article 25 of the Universal Declaration of Human Rights “establishes everyone’s right to a standard of living adequate for the health and well-being, including food, medical care and necessary social services.”

Next, Dr Puras cites Article 5(e) of the International Convention on the Elimination of All Forms of Racial Discrimination, ratified by the United States in 1994, calls on states to “guarantee the right of everyone,” including “the rights to public health, medical care, social security and social services” without regard to race or color.

Lastly, Article 12 of the International Covenant on Economic, Social and Cultural Rights, under which states have “the core obligation to ensure the right of access to health facilities, goods and services on a non-discriminatory basis, especially for vulnerable or marginalized groups.” The agreement was signed but not ratified by the US, which is still “obliged to refrain from acts that would defeat the covenant’s object or purpose, in conformity with Article 18 of the Vienna Convention on the Law of Treaties.”

When I worked in the diplomatic world, I was taught that the epithet “serious concerns” is kind of like saying “we are so f—ng angry right now that we are ready to fly in a start shooting someone!!” Couple this language with the bold threat of “guarantee the accountability of any person responsible” for the loss of health coverage and now you have a complete cease and desist demand with scathing undertones.

Making demands and threats is not good diplomacy. The UN, through the said declaration, convention, and covenant, has reiterated that the aspirational standard of living includes not only includes food and shelter, but access to medical care and social security and other social services. This is agreeable, but it is a long stretch to say health care is a universal human right.

UN Council on Human Rights Chamber.
2017/UN photo.

What are human rights? According to the UN Human Rights Office of the High Commissioner, “Human rights are rights inherent to all human beings, whatever our nationality, place of residence, sex, national or ethnic origin, colour, religion, language, or any other status. We are all equally entitled to our human rights without discrimination.”

The principle of universal rights was first emphasized in the 1948 Universal Declaration on Human Rights, which lists free speech, freedom from fear and want, and the freedom to rebel against tyranny and oppression if freedoms are not protected by rule of law as values recognized the by the international community. Other core values listed are the dignity and worth of the individual human life, equality between men and women, and the promotion of better standards of life.

Within the Declaration are listed the articles, which resemble the US’ Bill of Rights and a few later amendments. They include right to due process under law, right of a speedy and fair trial, prohibition on slavery, prohibition against torture and inhuman punishment, right of privacy, right to have a nationality, right to flee persecution and seek asylum, right to movement, right to marry and have a family life, right to own property, freedom of thought, conscience and religion, freedom of expression and opinion, right to assemble and associate, right to work and seek employment, et cetera.  

In addressing Dr Puras’ Article 25 Human Rights claim, he stopped shy of reading the entire clause, which indicates that “right of a standard of living adequate for health and well-being” can mean many clean air, pure water, transparency about what is in food and drugs, adequate law enforcement, etc. However, the clause goes on to read that the right to adequate food, clothing, housing, medical care, social security in the event of circumstances beyond the individual’s control, such as disability, widowhood, old age, or sickness.

It is pretty safe to say that the Declaration on Human Rights may be broadly interpreted to suit a person’s needs, falls short in declaring universal affordable health insurance a human right. The Declaration makes clear an obligation on nations to take care of citizens who have fallen through the cracks – the disabled, sick, old, and widowed. The connecting factor between these groups is that they cannot contribute to the economic output of a nation.

Dr Puras’ memo fails to consider the notion that repealing the ACA might actually make health insurance in American more affordable and more accessible. There would have to be some tweaks to the law, but certainly allowing consumers to buy across state lines and to allow insurers to offer a la carte plans would reduce the cost.

Considering healthcare costs for the US are three times the OECD average currently (OECD health statistics 2016), the idea of affordable healthcare being only tied to insurance premiums is absurd economics.

The average self-employed Colorado family with a special needs child could expect to pay in 2016 around $50,000 in health insurance premiums. According to the US Census ACS survey, the 2015 real median household income in Colorado was just under $64,000. Assuming that family pays 20% in taxes, that leaves about $1,000 (after health insurance) for rent/mortgage, food, water, clothing, transportation, leisure activities, etc.

According to the Economist, Americans in the lowest 20% of income are 15.5% better off, whereas all other income decile are worse off by 0.3-1.1%. It seems tough to put a number to Americans being worse or better under the ACA, as there are many moving parts, such as Medicaid Expansion, which would have most certainly helped the lowest 20%.

The Economist also reported that in the first quarter of 2017, American household income reached its highest level since the 2007-08 Financial Crisis began. Considering the ACA was signed into law by Pres Obama on 23 March 2010, it is hard to say how much improvement, if any, the law made since American’s earnings ratcheted down and health care and education costs began raising prices astronomically.

Recently I visited Connect for Health Colorado, Colorado’s health insurance marketplace, after plugging in my age, and a few key health stats (note, under the ACA you cannot be turned down for a pre-existing condition, but your premium can increase) and the lowest monthly quote I received was $750! Multiplied by 12 to see a full year’s cost and the number is $9,000! In 2016-17, the penalty for not having health insurance is 2.5 percent of income or $695, whichever is greater. Economically speaking, it is cheaper to pay the penalty, and then quickly enroll in an exchange plan if my health takes a dramatic turn for the worse.

Dr Puras then uses the International Convention on the Elimination of All Forms of Racial Discrimination as grounds that repealing the ACA would unjustly discriminate against some people. Having the ACA in place unjustly discriminates against the middle class and the way the ACA targets self-employed persons is particularly disturbing. Assuming Medicaid Expansion stays in place, it is a tough argument to say that repealing the ACA is discriminatory.

The last part of Dr Puras’ legal authority is the International Covenant on Economic, Social and Cultural Rights, which the US signed, but has not ratified, thus its bindingness is persuasive only. The key argument is over “access to health facilities.” In the US, if you are injured or in need of medical attention, you will receive it at the nearest hospital, with top facilities, highly skilled doctors and nurses, and never will you be discriminated against on the basis of race, economic status, lack of health insurance, religion, sex, gender, political persuasion, et al. The reason is the adherence to the Hippocratic Oath, which is a core principle in American medicine and treatment. If you are unable to pay, the local government will pick up the tab, with reimbursements coming from the state level. This is not the preferred way of doing business and the medical provider will want to work out a payment plan, but at no point in time was access to health facilities denied before or after the ACA.

Under UN General Assembly Resolution A/67/L.36 (6 Dec 2012), affordable universal healthcare became part of the UN's Post-Millennium Development Goals. The resolution is a way to hold member states accountable if they fail to comply. The Commission on Human Rights is charged with overseeing compliance, since spending on healthcare is treated as a fundamental human right. Poorer states may rely on foreign states for financial assistance.

A major problem with basing interpretation and authority on UN General Assembly resolutions is that the United Nations doesn’t consider UNGA resolutions to be legally binding.

Further, United States courts traditionally have not considered UNGA resolutions to be authoritative sources of international law, unless the resolution merely restates legal principles that could be verified by reference to recognised sources such as customary international law, treaties, and judicial decisions.

Even as some US courts are more receptive now days to UNGA resolutions, there is a danger here, as many UNGA resolutions contradict treaties, other resolutions, member state’s constitutions, and member state’s domestic law.

Quick example: UNGA Resolutions 339 A and B - Delegations voted in favour of both resolutions which called for maintaining a UN Command on the North/South Korean border and dissolving the UN Command and remove all foreign troops from South Korea.

Only 58 out of 200+/- nations have a form of affordable universal health care hardly constitutes sufficient state practice to establish customary international law (other element required is opinion juris, which is the belief that practice is legally obliged).

Even if affordable health care is deemed a right under treaty or convention, enforcement will be a problem.

It seems that if the UN is so concerned about the domestic affairs of nations, they should fund and provide the services they are desirous of compelling.

At a time when nations are ever more sceptical of large International organisations, perhaps flaming the dissatisfaction is inimical diplomacy.

Thoughts on Economics: Coke Index & the free market

Perhaps living in the city of Adam Smith, who wrote the Wealth of Nations in 1776, the year my forefathers signed their names to a declaration to King George III declaring their intentions to sever ties with the colonizing power, has sparked an interest in economics and the interaction with law. Prior to Christmas 2010 I was in Marrakesh, Morocco and met four students from Malaysia, who, were finishing their degrees in London, respectfully in medicine, economics and international trade. Our conversation on a train ride to Rabat sparked my interest in the Coke Index, which was promulgated in the affirmative by two of the four. First, I will explain the index and then contemplate UK tax law with a comparison to the health care. This latter point was prompted by recent discussions with fellow course mates about the Republicans in the US House of Representatives voting last week to repeal “Obamacare” (US National Health Care Act (H.R. 676)), which is the American version of socialized medicine, signed into law by President Obama in 2010 and set to take effect in 2014.

The Coke Index is a variation of PPP (purchasing power parity), an economic theory of long term equilibrium exchange rates is based on the relative price levels in two different countries. The theory has an absolute and a relative model. In the former, the purchasing power of different currencies is equalized for a given good. Whereas the latter is the difference between the prices, in say a can of Coke, between country A and B. The difference in the inflation rates will be more or less equal to the percentage of appreciation or depreciation in the exchange rate. The Coke Index can therefore give you an on-the-ground indication of the “real exchange rate”, because you know that a can of Coke costs $0.50 in Denver and 5dirhams in Marrakesh. According to XE.com the exchange rate is $1.00 = 0.12149 Moroccan dirham, so the “real exchange rate” is actually a little worse than quoted, as the can of Coke actually cost $0.61. Where the Coke Index breaks-down and becomes subject to volatility is in the arena of non-traded goods and services, in other words, I could have purchased a haircut for the same value as a can of Coke or hired a driver for a similar price. The Economist popularized the “Big Mac Index”, which I personally reject as the magazine is a bit too pretentious and arrogant for my tastes, though it is the exact same principle. Both the Coke and Big Mac Index are criticised in developing countries because those two goods are seen as luxury items. Coke is less so, as it is found even in the most rural of regions – according to Jessica Stern’s book, Terror in the Name of God, members of al-Qaida and the Taliban always served Coke as an aperitif. All this said, a 1,5 litre bottle of water in Marrakesh cost me the equivalent of £0.04 – a bit shocking since a similar bottle would cost between £0.34 and £0.65 in Edinburgh! I still drank a lot of Coke, because a medical doctor (single & female) I befriended said Coke kills any bugs which might have been on the Moroccan food – good advice – I didn’t get sick!

In regards to tax law in the UK, I have been reaking Tolley's Yellow Tax Handbook 2010-11 and Revenue Law: Principles and Practice. These books, along with lectures indicate the UK-US comparison is actually not that much differnt as far as revenue collected per capita, The US still has over-all lower taxes, but not by as great a differnce as existed in the 1980s. The textbook authors seem to insinuate Americans perceive themselves as paying fewer taxes and receiving fewer benefits, though the lecturer of the course commented that Americans contribute slightly less (when considering federal and state income tax, plus sales tax and property taxes), but receive tremendously fewer benefits. I almost stood up and said, “I’d gladly pay minimal taxes and receive limited equivalents.” Though I can tell my Republican ideology doesn’t exactly flow with the average Brit. The largest tax increase in American history was signed into law by President Obama in 2010 - the National Health Care Act - which binds all citizens into a single federal scheme (in my opinion usurping the concept of dual-federalism and the autonomy of the states) Europeans love the concept of 'free health care' (though if they thought about it, they are paying for it and even if it is less than most American insurance plans, the quality of service, expertise and facilities are considerably behind the US). Take all the factor which create value and Americans have BMW plans compared (using the auto analogy) Vespas in the UK. Cost wise, there should be a more affordable plan, but it should also carry a linear equivalence as far as value. I wouldn’t expect to buy a real BMW at a Vespa price, nor would I suspect the showrooms look similar. Yet both should take me from point A to B. I also dared to say that the free market should guide these prices and services, not the government – I was called a few cute and short names for what seem to be rather reasonable ideas. Much of my reasoning comes from observing how my fellow law students act at an “open-bar”, as opposed to a “cash-bar”. They’re sloshed in the former instance and reasonable in the latter (mind you, they’re British, students and in the faculty of law – all of which have high drinking propensities).