Tuesday, July 21, 2009

Another disastrous NHS hospital

And the boss escapes without any retribution

Deaths at Broadmoor high security hospital and other institutions will be linked to management failures in a highly critical report this week. Executives at West London Mental Health NHS Trust failed to investigate promptly “serious untoward incidents”, including patient suicides, meaning that staff were unable to learn lessons that might have prevented further deaths, an inquiry by the Care Quality Commission (CQC) is expected to conclude.

The trust’s chief executive, Simon Crawford, left on Friday to take up a job at the health authority NHS London.

Services at the trust have been under scrutiny since 2004 when Peter Bryan, a cannibalistic killer awaiting trial for murder, was transferred to a medium-security ward, where he killed Richard Loudwell, another inmate.

That incident is the subject of another report, to be published next month. The report into the West London Mental Health NHS Trust was triggered after complaints from families and patient groups. An official risk assessment report by NHS London issued West London Mental Health Trust with a “red” alert rating over its governance last month.

NHS London said of Mr Crawford’s move: “Discussions have taken place between Simon Crawford and the trust and they both agreed that the time was right for Simon to move on and it would be helpful for his own development to have experience in another sector.”

His departure echoes those at Mid Staffordshire and Maidstone and Tunbridge Wells hospital trusts, where executives left before critical findings were published. Katherine Murphy, of the Patients Association, said that it was disgusting that chief executives appeared to be “jumping before they were pushed”. “This is a reward for failure approach,” she said. “Poor and sloppy governance of trusts leads to appalling patient care and unnecessary deaths.”

In a separate report, the CQC reported on how patients detained under the Mental Health Act in England were treated. The review, published on behalf of the former Mental Health Act Commission, found evidence of “worrying and poorly documented practices” surrounding control and restraint, patients at risk of suicide being left unmonitored and under-18s and women being transferred inappropriately to adult or mixed-sex units.


NHS is a bottomless pit for taxpayer funds

More and more bureaucrats have to be fed

The National Health Service is facing “the biggest financial crisis in its history” requiring tax rises or large cuts to other government departments just to maintain its budget, a report predicts. Spending on the NHS has doubled in a decade to more than £106 billion for next year, but the NHS needs to brace itself for a funding freeze that could last for six years, two leading think-tanks say.

The report, by the King’s Fund and Institute for Fiscal Studies (IFS), suggests that even under the most optimistic funding scenario, the NHS will struggle to meet people’s healthcare needs without significantly increasing its productivity after 2011.

Both Gordon Brown and David Cameron have promised “real-terms growth” in NHS funding, or at least no cuts to the health budget in real terms if they win the next election. But these promises would inevitably result in hard decisions, such as cuts to other Whitehall budgets or an increase in tax over the period to 2017, the report says.

Over the next spending review period, from 2011-12 to 2013-14, the budget across all spending departments, including the NHS, could reduce in real terms by an average of 2.3 per cent each year, according to the IFS. These cuts could be restricted if taxes were increased, the authors of the report say. Limiting other departmental cuts to 2 per cent a year, while freezing the NHS budget over the next spending review period would require additional revenue of about £10.6 billion — equivalent to an extra £340 per family.

If, as seems likely, the NHS has at least three or four years of low or zero growth, it will be the first time in its history that it has had to go for such a long period with rising demand and little or no new money, the report says. But even if the NHS budget is not cut in real terms, future funding is likely to fall short of the population’s healthcare needs by more than £30 billion.

John Appleby, chief economist at the King’s Fund, said: “Everybody knows that the financial forecast is going to be bad, but we’ve tried to put some numbers on this and figure out where the cuts might come. Our analysis shows that the NHS is facing the most significant financial challenge in its history.”

In 2002, Sir Derek Wanless published a landmark report that set out the funding projections needed to maintain “solid progress” in the NHS, Mr Appleby said. The projections assumed improvements in health-related lifestyle behaviour and increased productivity in the NHS. “But even if spending is maintained or increases slightly, funding would still fall short of the solid progress mark by between £6.4 billion and £32.4 billion by 2016-17 at today’s prices,” he said. “This is equivalent to between 6 per cent and 31 per cent of the entire NHS budget.”

Part of the shortfall could, in principle, be filled by increasing productivity in the NHS. To do this, over the period from 2011-2017, the NHS would need to make gains of between £3.9 billion and £8.2 billion per year. This is equivalent to improvements of 3.7 to 7.7 per cent per year.

But the Office for National Statistics estimates that average productivity between 1997 and 2007 has fallen each year by 0.4 per cent on average, while private sector productivity growth averages about only 2 per cent a year.

“The service has enjoyed unprecedented increases in funding since the turn of the century, but those days will soon be over,” Mr Appleby said. “That is why it is crucial that the service does all it can over the next two years to prepare itself for the financial freeze that will take hold over the two coming spending review periods.”

Niall Dickson, the chief executive of the King’s Fund, said: “The scale of what is about to hit the healthcare system is unprecedented. It would be a grave mistake to underestimate the challenge ahead.”


A Reckless Congress

Democrats want to ram through one of the greatest raids on private income and business in American history

Say this about the 1,018-page health-care bill that House Democrats unveiled this week and that President Obama heartily endorsed: It finally reveals at least some of the price of the reckless ambitions of our current government. With huge majorities and a President in a rush to outrun the declining popularity of his agenda, Democrats are bidding to impose an unrepealable European-style welfare state in a matter of weeks.

Mr. Obama's February budget provided the outline, but the House bill now fills in the details. To wit, tax increases that would take U.S. rates higher even than most of Europe. Yet even those increases aren't nearly enough to finance the $1 trillion in new spending, which itself is surely a low-ball estimate. Meanwhile, the bill would create a new government health entitlement that will kill private insurance and lead to a government-run system.

Hyperbole? That's what people said when we warned about this last fall in "A Liberal Supermajority," but even we underestimated the ideological willfulness of today's national Democrats. Consider only a few of the details:

A huge new income surtax. The bill's main financing comes from another tax increase on top of the increase already scheduled for 2011 under Mr. Obama's budget. The surtax starts at one percentage point for adjusted gross income above $350,000 in 2011, rising to two points in 2013; a 1.5 point surtax at incomes above $500,000, rising to three in 2013; and a whopping 5.4 percentage points in 2011 and beyond on incomes above $1 million.

This would raise the top marginal federal tax rate back to roughly 47% or 48%, if you include the Medicare tax and the phase-out of certain deductions and exemptions. With the current top rate at 35%, this would be the largest rate increase outside the Great Depression or world wars.

The average U.S. top combined state-federal marginal tax rate would hit about 52%. This would be higher than in all but three (Denmark, Sweden, Belgium) of the 30 countries measured by the OECD. According to the nearby table compiled by the Heritage Foundation, taxpayers in at least five U.S. states would pay higher marginal rates even than Sweden. South Korea, which Democrats worry is stealing American jobs, would be able to grab even more as its highest rate is a far more competitive 38.5%.

House Democrats say they deserve credit for being honest about the tax increases needed to fund their ambitions. But then they also claim that this surtax would raise $544 billion in new revenue over 10 years. America's millionaires aren't that stupid; far fewer of them will pay these rates for very long, if at all. They will find ways to shelter income, either by investing differently or simply working less. Small businesses that pay at the individual rate will shift to pay the 35% corporate rate. When the revenue doesn't materialize, Democrats will move to soak the middle class with a European-style value-added tax.

Phony numbers. Democrats will have to come up with something, because even the surtax puts their bill at least $300 billion short of honest financing. The public insurance "option" doesn't even begin until 2013 and the costs are heavily weighted toward the later years, but the tax hikes start in 2011. So under Congress's 10-year budget window, the House bill is able to pay for seven years of spending with nine years of taxes. Andy Laperriere of the ISI Group estimates the bill would add $95 billion to the deficit in 2019 alone.

Then there's yesterday's testimony, from Congressional Budget Office (CBO) Director Doug Elmendorf, that ObamaCare's cost "savings" are an illusion. Mr. Obama claims government can cover more people and pay less to do it. But Mr. Elmendorf told the Senate Finance Committee that "In the legislation that has been reported we don't see the sort of fundamental changes that would be necessary to reduce the trajectory of federal spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health-care costs."

Further on the public plan: "It raises the amount of activity that is growing at this unsustainable rate."

No matter, Speaker Nancy Pelosi is whisking the bill through House committees even before CBO has had a chance to score it in detail. As Wisconsin Republican Paul Ryan put it to us, "We will not have read it, and we will not have a score of it, but we will have passed it out of committee."

A new payroll tax. Unemployment is at 9.5% and rising, but Democrats will nonetheless impose a new eight percentage point payroll tax on employers who don't provide health insurance for employees. This is on top of the current 15% payroll tax, and in addition to a new 2.5-percentage point tax on individuals who don't buy health insurance. This means that any employer with more than $400,000 in payroll would have to pay at least 25% above the salary to hire someone. Result: Many fewer new jobs, with a higher structural jobless rate, much as Europe has experienced as its welfare states have expanded.

Other new taxes, including an as yet undetermined levy on private health plans. This tax, which Democrats say could raise $100 billion or so, would make it even harder for private plans to compete with the government plan, which would already benefit from government subsidies and lower capital costs. For good measure, the House bill also gets the ball rolling on tax increases on foreign-source corporate income.

We could go on, and we will in coming days. But the most remarkable quality of this health-care exercise is its reckless disregard for economic and fiscal reality. With the economy still far from a healthy recovery, and the federal fisc already nearly $2 trillion in deficit, Democrats want to ram through one of the greatest raids on private income and business in American history. The world is looking on, agog, and wondering why the United States seems intent on jumping off this cliff.


Health bill would deliver pre-Reagan tax rates

Small-business owners are warning that the economy would suffer under a health care bill proposed by House Democrats, which would drive tax rates for high-income taxpayers to levels not seen since before President Reagan's tax reform of 1986.

The top federal income tax rate, which Mr. Reagan and a bipartisan Congress lowered from 50 percent to 28 percent, would reach 45 percent in 2011 if Congress and President Obama enact the surtaxes that are part of the health care reform plan that House Democrats announced Tuesday.

Small-business owners, who would take a direct hit from the surtaxes, expressed dismay over the proposal, saying it would force them to curtail hiring and reduce wages amid the worst recession in a generation. "If they institute a 5 percent surtax on income, it will have a severe impact on small businesses that are already hurting," said Michael Fredrich, whose Wisconsin company, MCM Composites, molds plastic parts. "We run maybe three days a week, sometimes four days a week, sometimes zero days," he said. "I can tell you that at some point, people ... running a small business are just going to say, 'To hell with it.' "

Not everybody is worried about the proposed tax's impact on business. "Most small businesses are small and would be completely unaffected by the surtax on high-income people," said Chuck Marr, director of federal tax policy at the liberal Center on Budget and Policy Priorities (CBPP).

Polls show most Americans support raising taxes on the rich. However, the last time Democrats pursued that agenda in 1993, when they raised the top federal income tax rate from 31 percent to 39.6 percent, they lost their congressional majorities in both chambers the next year. The current top federal income tax rate, established under President George W. Bush, is 35 percent.

Throughout his presidential campaign, Mr. Obama pledged to restore President Clinton's top income tax rates of 36 percent and 39.6 percent. About 2.2 percent of filers with small-business income would be affected by this proposal to allow the top two marginal tax rates to return to pre-Bush levels after 2010, when the 2001 tax cuts are scheduled to expire, Mr. Marr said.

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