What about the (newborn) children? CUT!

Ah, Texas Republicans may get into the business of helping doctors and hospitals choose life -- or not, because it costs too much. The Texas Tribune:

An unlikely battlefield in Texas’ budget war is a hushed pink-and-blue hospital nursery, where 1- and 2-pound babies bleat like lambs under heating lamps and neonatal nurses use tiny rulers to measure limbs no bigger than fingers.

State health officials, searching for solutions to Texas’ multibillion-dollar budget shortfall, have set their sights on these neonatal intensive care units, or NICUs, which they fear are being overbuilt and overused by hospitals eager to profit from the high-cost care — and by doctors too quick to offer pregnant mothers elective inductions and Caesarean sections before their babies are full term.

The Texas Health and Human Services Commission (HHSC), under the gun to find cost savings in the state’s huge Medicaid program, suggested last month it could save $36.5 million over the next biennium by better managing which babies end up in NICUs, curbing so-called convenience C-sections and refusing to finance elective inductions before the 39th week of pregnancy.

“When we look at the data, it indicates that, yes, there is overutilization of NICUs — more babies are being put in NICUs than need to be in NICUs,” said HHSC Commissioner Tom Suehs, adding that two of his own grandchildren were put in Texas hospital NICUs in the last two years, even though they were healthy and their deliveries were uncomplicated.

Wait a minute. You meant to tell me that the corporate hospitals are maximizing their profit opportunities on the backs of both sick AND healthy newborn babies?

No one could have predicted that.

Lawmakers are not ready to say with certainty that Texas has a NICU overutilization problem, though their comments suggest it. “We are seeing some trends that are a bit troubling,” said State Rep. Lois Kolkhorst, R-Brenham, who has filed legislation to create a commission to study NICU use. Added Sen. Jane Nelson, R-Flower Mound: “We don’t want to reduce services, but we need to combat inefficient, unnecessary use.”

Nor will most hospitals admit to a NICU problem. Couple Texas’ high birth rate, low health insurance coverage and limited prenatal care with the growth of in vitro fertilization, multiple-baby births and so-called geriatric — or past the age of 35 — pregnancies, hospital administrators say, and you have a full NICU. “The services exist because they fill a need,” said Amanda Engler, spokeswoman for the Texas Hospital Association.

"Problem? What problem?" said the doctor/administrator/stockholder.

The data suggests NICU beds may not be proliferating due to natural demand alone. Births in Texas are up nearly 18 percent since 1998, according to state health statistics. Meanwhile, the number of NICU beds in Texas hospitals has surged roughly 84 percent, to 2,510 in 2009 from 1,365 in 1998.

State health officials are not shy in suggesting there is a profit motive at play for hospitals. The average routine delivery costs Medicaid $2,500, according to state records; the average NICU stay costs $45,000.

Elective procedures like inducing labor prior to 39 weeks of gestation or delivering a baby via C-section at the mother’s request are only contributing to complications that send babies to the NICU, these health officials say. In 1998, C-sections made up 23.8 percent of Medicaid births, state data shows; more than a decade later, they made up 35 percent. In 2009 alone, 137 Medicaid-covered newborns suffered complications resulting from elective inductions, according to state health officials, costing the Texas Medicaid program $1.6 million.

Simple solution (to a conservative mind): deport all the Ill Eagles, especially the pregnant ones, magically solving ALL the state's budget problems. Instantly.

Dr. Charles T. Hankins, a longtime neonatologist at Texas Children’s Hospital in Houston and an associate professor of pediatrics at the Baylor College of Medicine, suggested there is a far more nuanced motive than pure profit. Hospitals — hard hit by low reimbursement rates and high malpractice costs for routine obstetric care — are simply looking for ways to make up the difference. “A lot of facilities realize if they had a Level 3 nursery, they could help offset their costs,” he said.

He thinks the NICU boom is often driven less by hospitals than by obstetricians, who do their residency training in facilities with NICUs and cannot imagine not having one available for their patients. “The doctors want their patients to be happy, and the hospital administrators want to keep the doctors happy,” he said.

The problem is that diagnosing the need for neonatal care can be subjective, Hankins said. If a hospital wants to increase its NICU census, providers can admit more infants or lengthen their stays — and parents generally trust those assessments. And he said there is no state oversight, either of admission and discharge best practices, or of how NICUs advertise themselves. Some hospitals convert Level 2 NICU beds to Level 3 NICU beds with little to no increase in infrastructure or technology, he said, and no one challenges the designation.

NO state oversight?

State health officials acknowledge that the NICU designation is up to the hospital and is not reviewed by the state. “Hospitals are willing to work together to accomplish the optimal care for these babies,” Hankins said, but added that they need proper guidance to do so.

Some state lawmakers question what Texas’ Medicaid program has been doing, if not offering this guidance. The growth in NICU beds — much of it along the Texas-Mexico border, which has the youngest population in the state, and in suburban hospitals outside of Houston, Dallas and San Antonio — comes despite years of improvements in prenatal care for mothers on Medicaid, the joint state-federal health program that covers more than half of Texas births.

"One of the tenets of Medicaid has long been better prenatal care, and less babies needing NICUs,” said Sen. Bob Deuell, R-Greenville, a family practice doctor who, in a recent Senate hearing, suggested the cost savings health officials are looking for may not be ample in the delivery room.

Even as I post this, Austin legislators are meeting to discuss the ending of Medicaid in Texas -- because it costs too much, of course -- and replacing it with some state version done on the cheap. Exempting veterans' care; that will remain paid for by the feds. Which saves Texas money. *faceplant*

But Dr. Frank Mazza, vice president and chief patient safety officer for the Seton Family of Hospitals, said state health officials are on the right path in considering birth inefficiencies. When Seton made the almost unheard-of move in 2005 of prohibiting elective inductions before 39 weeks — part of a system-wide effort to improve perinatal safety — the number of babies admitted to the NICU fell off dramatically. The hospital’s revenue from them also dropped by 95 percent, to $186,000 per year from roughly $4.5 million per year.

“We should have in Texas the safest health care and the most cost-effective health care,” Mazza said. “By keeping babies out of the NICU, you accomplish both.”

Still, even Mazza acknowledged that if his own wife were having a baby today, he would choose a hospital with all the bells and whistles. “Of course I’d want her in a hospital with a NICU,” he said, “with the latest and greatest technology.”

I just can't wait to see how all this turns out. How about you?

Sunday Funnies

Super Moon Rising -- tonight

Astrologer Richard Nolle coined the term “Super Moon” 30 years ago to describe the extra large full moon rising tonight. It will be something special – a great look at the “biggest” moon in 20 years.

“Super Moon” describes a new or full moon occurring at the same time the Moon comes within 90 percent of its closest approach to Earth in a given orbit. It’s an event that happens 4-6 times a year, but according to a NASA Science News story, tonight's full moon will nearly coincide with the Moon's arrival at the closest point in its orbit around the Earth, resulting in the largest visible full moon in North America in two decades.

"The last full moon so big and close to Earth occurred in March of 1993," Geoff Chester of the U.S. Naval Observatory in Washington D.C.  said in the recent NASA Science News story. "I'd say it's worth a look."

Officially, a “Super Moon” is called a  "perigee moon."

"The full moon of March 19th occurs less than one hour away from perigee – a near-perfect coincidence that happens only 18 years or so," added Chester.

Full moons vary in size because of the moon’s oval shape, according to the article. The moon is an ellipse with one side [perigee] about 50,000 km closer to Earth than the other [apogee]. Perigee moons appear about 14 percent larger and 30 percent brighter than non-perigee moons – if the weather cooperates.

No earthquakes, tsunamis, or nuclear accidents should result, although that Mayan calendar thing still kinda freaks me out.

The mortgage interest deduction: for or against?

This is the kind of topic I really enjoy discussing: one which I don't have a strong feeling about (while others do); one which I can agree with the arguments on each side; and one which the usual liberal/conservative pros and cons don't easily apply.

Recently some folks at SaveMyMID.com have been asking me to blog on the issue, so I encouraged them to submit a guest post. As background, know that Rep. Gary Miller of California is sponsoring legislation to protect the mortgage interest tax deduction, and in 2007 Rep. John Dingell (D-MI) proposed a bill to repeal it. Miller is not only as solid a right-winger as the Right could hope for, he's also a shady developer from way back. CREW even lists him as one of Congress' most corrupt members. (The only Texan that makes their list is Pete Sessions, which is amazing in its own right.) Dingell, 84, is one of Congress' oldest and longest-serving  members, was the chair of the House Energy and Commerce committee when the Dems were still the majority, and survived a tough challenge last November to earn a 28th term. That makes this his 55th year in the House of Representatives (but who's counting).

Dingell's legislation in 2007 would have phased out the MID as part of his "carbon tax" reform package:

The phase-out schedule (begins) with houses of 3,000 square feet, which would lose 15 percent of their deductions, and ending with houses of 4,200 square feet and larger, which would receive no deductions at all.

“In order to address the issues of climate change, we must address the come forth of consumption -- we do that by making consumption more expensive,” Dingell said.

Then along came the housing market bust, of course, and in the interest of reviving the economy talk of the MID went away. But Obama's budget revives and expands it, particularly on the wealthy, who are still building large homes despite the Great Crash of 2010 2008.

The Obama administration hopes to tap the rich to help pay for its ambitious programs. Specifically, that would include slashing mortgage interest deductions for high-income taxpayers.

The proposal would cap at 28% the tax break for itemized deductions.

That would leave people in higher marginal tax brackets of 33% and 35% - the wealthiest Americans -- with a smaller benefit from the deduction of mortgage interest, state and local taxes and other items such as charitable contributions.

The move is projected to raise $318 billion over 10 years and fits nicely with the president's campaign pledge to increase taxes only for families earning more than $250,000. Few, if any middle-income homeowners are in tax brackets of more than 28%.

Dean Baker, co-director of the Center for Economic and Policy Research, a D.C. think tank, said he was impressed with this part of the budget plan.

"It's a no-brainer for economists," he said. "Why have taxpayers been [in effect] subsidizing home payments for the highest income people in the country?"

Preserving the MID is favored by a host of historically conservative special-interest groups like the National Association of Realtors.

Here's the argument SaveMyMID sent me.

Contrary to assertions by some economists, the income tax deductions for mortgage interest and real estate taxes primarily benefit middle class taxpayers with incomes between $50,000 and $200,000, according to the findings of a study by the National Association of Home Builders. Taxpayers earning less than $200,000 pay 43 percent of all income taxes. However, they receive 68 percent of the total benefit of the mortgage interest deduction and 77 percent of the total benefit of the real estate tax deduction.

Moreover, larger benefits go to larger households and families, such as those with children. And as a share of household income, larger benefits are collected by families with less than $200,000 income, indicating that these tax rules make the tax system more progressive. Ever since the federal income tax was introduced in 1913, the government has used the tax code to encourage homeownership. Now, as a result of the effort to reduce the federal deficit, the mortgage interest deduction is under fire. Proposed changes to the tax code would have a dramatic impact on homeowners and would significantly reduce the value of this deduction.

Suppose a home owner paying $10,000 in mortgage interest in a year faces a marginal tax rate of 25 percent and, to keep things simple, has enough other itemized deductions that they would itemize regardless of the mortgage interest deduction. For that homeowner, the mortgage interest deduction is worth approximately 25 percent times $10,000 or $2,500 in reduced taxes paid. With a 12 percent tax credit, the homeowner’s tax benefit would be reduced to $10,000 times 12 percent or $1,200.

Moreover, if other proposals affecting housing-related deductions went into effect, home owners would not be able to deduct their state and local property taxes or the interest on any home equity loan they might have and they would pay higher tax on a principal residence when sold.

Here let's add some additional remarks from various online conversations (too many to properly credit, I'm afraid) ...

Next time a right-winger complains about entitlements, ask him or her to not take the mortgage deduction on their taxes.

A liberal responds:

FWIW this is a deal-breaker for me. I will probably vote against anybody who supports repealing the mortgage deduction.

OTOH, the mortgage deduction doesn't meet the definition of an "entitlement", just like social security doesn't. Neither are entitlements. I believe that as part of our social safety net, we SHOULD have some entitlements, however... the mortgage deduction is not an entitlement in the first place.

Sure sounds like you are treating it like it is.

Nope. Here's the distinction.

I made an important INVESTMENT decision based on the deduction. I would have made a different investment decision (a different mortgage, house etc.) if it wasn't there. The mortgage interest deduction is no more an entitlement than the lower tax rate for capital gains vs. income is. It's about trade-offs, and if they change the rules in the middle of the game, I call foul. If they changed the rule for all NEW mortgages, that would be different.

It's not an entitlement, it's a tax incentive based on one type of investment vs. another.

More along that vein.

The mortagage deduction should be repealed.

It is corporate welfare for the banking and real estate industry. It causes the prices of houses to be inflated beyond their worth ("Look at all the money you will save by taking the mortgage deduction!"). If the deduction were eliminated the houses would come down in price because people would not be tricked into taking loans which they can't afford. Get rid of it.

Wrong on two points.

First, it doesn't help banks at all; they charge the same interest rate whether you deduct interest from your taxable income or not. It does help a potential homeowner by lowering the net cost of owning a home. Second point, I don't see how people are being "tricked" into taking out loans they can't afford and why would a bank want that? If you can't afford your home loan and default on it, then the bank has to foreclose on the house and they'll probably lose a lot of money. If you're too dumb to make an intelligent decision about whether you can afford a mortgage, you shouldn't be borrowing money -- period.

Brokers/originators don't care if the loan is repaid or not. Fees/commissions for the mortgage originator are paid upfront with the closing costs. True, the mortgage lender suffers from a default. But by that time the originator is long gone from the transaction.

So what? The bank makes the final decision about whether to lend the money.

Based on what the originator tells them (my note: more accurately, the information collected by the originator, furnished by the borrower. Which could be manipulated by either/both for a favorable outcome). No investor intentionally bought bad paper. It was all funneled through secondary markets, changing hands several times before being bundled and sold as securities for investors. Hence the culprits had plausible deniability for passing the bad paper. In the end they stuck the bill to the US taxpayer.

Maybe the banks did crappy due diligence or maybe the originator committed fraud. The fix for those problems is not to bail out the banks and the securities firms and to prosecute fraud if and where it occurred. That is unrelated to whether mortgage interest should be deductible for the borrower.

I just can't argue with any of this so far. Here's something else.

The mortgage crisis is separate from the tax issue.

The former results from a system that placed rewards upon certain transactions without sufficient oversight to ensure that impropriety wasn't taking place. Such as an accurate rating of mortgage backed securities. And our legislative history of allowing large corps to privatize profits while socializing losses.

Interest deduction on taxes was originally intended to prevent the money from being taxed twice. Once by the Payee and again by the Lender. During the Reagan administration the rules were changed, and most loan interest was no longer tax deductible. The exception being the 'Interest on Primary Residence' and a secondary residence. Then the tax lawyers found ways to start incorporating home improvement loans into mortgages and others went further, selling HILs with the pitching of buying big-ticket items with the money.

Going back to the pre-Reagan view IMO is the right choice. Let everyone get the deduction for interest and avoid paying tax twice on the interest.

Finally, some of this.

Sorry chum, but us poor folks who are holding on to our homes by the finger nails use the mortgage interest deduction tax. Sure, it's only a little over $2,000 per year that I'm saving from adding to my income taxes, but every little bit helps.

If they change it, lots of middle class folks will see a HUGE tax increase.

You'd have to phase it out over time because people who bought their home calculated that into the decision, and you have to give them enough time to make a change. And in this housing environment, selling or refinancing is very tough for the middle class.

A wealthy family will have no problem restructuring their debt.

There are several classic confrontations inherent in the MID conversation, from economic vs. enviromental and tax cut vs. tax increase as well as the social and class concerns.

So is the mortgage deduction regressive, as some would seem to suggest? Do you favor it or oppose it? Are you a homeowner or not (or a Realtor or a banker or a lender, for that matter)?

FTR I am not a homeowner and never have been. I HAVE worked as a loan originator and my wife as a banker, mostly as an originator herself, though she has the experience of a big bank's deliberations in loan approval. I think I quite clearly see the pros and cons of both sides and lean in favor of reducing and/or phasing out mortgage interest deductions, most particularly on larger more expensive homes (as well as taxpayers). But I'm capable of being swayed by almost any argument.

What's yours? Please post it in the comments.