AAPS News January 2012 - ObamaCare: More Power Means More Corruption

Volume 68, no. 1 January 2012

Once big government reaches a critical mass, it may be impossible to turn back. It picks the winners and the losers.

The elite in both parties have accepted the premises of the welfare state, central planning, and fiat currency—and in medicine, third-party payment. Being contrary to the laws of economics (human nature), these ideas are historical losers, leading always and everywhere to corruption, oppression, poverty, and death.

Beware of the “repeal and replace” mantra—the result might simply be a reshuffling of special interest groups, the temporary winners, while Americans lose their Republic.

Craig Cantoni suggests a frightening analogy: “Unfortunately, voters are now like capos in a Mafia family. Knowing that the other party, or family, is headed by a ruthless don, they feel they have no choice but to elect an even more ruthless don to protect their family from being plundered by the other family.” This has been the pattern throughout history, he notes, as republics “morphed into empires and then into theft rings.”

Republican and Industry Complicity

Republicans and Democrats, or industry (including the AMA) and government may do a lot of mutual finger-pointing, but the current system is based on bipartisan legislation and on public-private partnerships (a.k.a. fascism). These include the private fiscal intermediaries that administer the Medicare program, and the managed-care companies that use Medicaid as a cash cow.

The sustained growth rate (SGR), the prime target of multi-million dollar AMA lobbying efforts, is from a bipartisan (Clinton-Gingrich) deal. The Texas Medical Association, in ads reminiscent of Al Gore’s scary cartoons with greenhouse gas villains beating up on poor Mr. Sun, feature a little girl’s voice worrying about how Big Bad SGR Man is going to hurt her grandma (http://tinyurl.com/8x5ez4n). In the background we see mathematical formulas and the weird equation “beets + clock = wagon,” reminiscent of the logic behind the resource-based relative value scale (RB-RVS), implemented through AMA’s lucrative coding monopoly and secretive “RUC” committee.

Leading Republican Presidential contenders Newt Gingrich and Mitt Romney are trying to distance themselves from ObamaCare, but both are big-idea, big-government men (“visionaries”) and have some inconvenient history.

Gingrich was speaker when a large part of the Clinton Plan was enacted under the title of the Health Insurance Portability and Accountability Act (HIPAA), with the disclosure (“privacy”) and transaction code sets provisions needed for a national electronic database. Out of Congress, as a non-lobbyist, he denounced the Obama “stimulus” package—except for the $19 billion for promoting use of electronic medical records. After the bill passed, his consultancy, the Center for Health Transformation (CHT), joined two of its clients, Allscripts and Microsoft, in a nationwide tour encouraging doctors and hospitals to purchase their products with the new federal dollars. Gingrich says he opposes Obama’s individual mandate, but he supported a “must-carry” provision in 2009. In 2008, he called for a “comparative effectiveness institute,” but later reversed his position, calling such research “the road to dehumanizing, bureaucratic health care rationing.” CHT’s clients include major insurers and drug manufacturers (NY Times 12/16/11). Freddie Mac and Fannie Mae paid some $2 million for “strategic advice.”

Mitt Romney says we should “repeal the bad, and keep the good” in ObamaCare. The good parts are like RomneyCare, which, he claims, allows people to buy insurance on the Exchange for “very low rates” because of the large insurance pool (http://tinyurl.com/7lowzt5). Employer-sponsored premiums in Massachusetts are the highest in the nation ($15,000/y for family coverage), but more than half the newly insured pay nothing. Spending on subsidies doubled between 2007 and 2009, but Romney boasts that he did not increase taxes. “Fees” are not taxes.

Romney’s reputation for business prowess is based on the huge profits earned by Bain Capital, a private equity firm, despite bankruptcies and job losses in some of the companies it purchased and loaded up with debt (Washington Post 12/14/11).

What about Medicare?
The bipartisan Wyden-Ryan plan for Medicare reform has been hailed as a “breakthrough” by Gingrich. Romney criticized the turnaround, since Gingrich had previously called Ryan’s plan an example of “right-wing social engineering.” In 1995, Gingrich said that competition would make Medicare “wither on the vine.” Lyndon Johnson thought so too, and cancelled private plans.

Wyden-Ryan has been called a “huge boost to Mitt Romney” because his ideas on competitive bidding by private insurers have been similar (Forbes 12/14/11). Though the ends are supposedly different, the means are very similar to ObamaCare: a heavily subsidized and regulated (“level”) playing field. Recall that Wyden’s end is universal leveling (AAPS News, February 2007).

Both Herman Cain and Rick Perry called Medicare unconstitutional, at least at some point (http://tinyurl.com/73olpny). AAPS life member Ron Paul, M.D., takes this position consistently. He favors allowing young people to opt out and exercise their right to care for themselves, while protecting those who are dependent on the system (http://tinyurl.com/67mczdr). Others have forgotten: more power means more corruption.


Redistribution: an Old Idea

“Woe to those who devise wickedness and work evil upon their beds! When the morning dawns, they perform it, because it is in the power of their hand. They covet fields, and seize them; and houses, and take them away; they oppress a man and his house, a man and his inheritance” (RSV, Micah 1:1-2). Relevant words from Micah, Luther’s translation: Hurenlohn (whore’s wages); Lügenprediger (liar-preacher).


Redistribution to Government


Government Is Itself a Special Interest

Since the recession started, there has been a 1% increase in private employment, and a 15% increase in government employment. The number of federal employees earning more than $100,00 per year has doubled. The average total compensation package for a worker in the private sector is $61,000, and in the federal government, $123,000. Of the voting electorate, 16% are employed by the government, and counting spouses and other dependents, 32% are unlikely to vote for spending cuts (see governmentgonewild.org, tinyurl.com/3kvkmen).



Former AMA president and HMO executive Nancy Nielsen is now senior advisor to the CMS Innovation Center, which will give hospitals and doctors “an opportunity to begin to learn how to get paid for care differently.”

♦ ♦ ♦

“Rulers have become owners…. We are less their subjects than their wards, pupils, or domestic animals. There is nothing left of which we can say to them, ‘Mind your own business.’ Our whole lives are their business.” “The new society [is creating] membership in a debased modern sense—a massing together of persons as if they were pennies or counters.”
Joseph Sobran, quoting C.S. Lewis


Ron Paul’s “Plan to Restore America”

Rep. Ron Paul (R-TX) voted against the Ryan plan, saying that it didn’t cut anything. Paul has presented a full plan to balance the budget within 3 years, cutting $1 trillion in the first year. It would abolish the departments of Energy, Housing and Urban Development, Commerce, Education, and Interior, and return most spending to 2006 levels. It would repeal ObamaCare and cancel all onerous regulations previously issued by executive order. For the complete plan, see http://bit.ly/tzfPlj.

Dr. Paul warns that if we don’t cut spending, Medicare will end, not because of him, but because of the nation’s bankruptcy.


Tavenner Would Continue Berwick’s Policies

Although Donald Berwick, M.D., is stepping down as head of CMS rather than face a confirmation hearing, his deputy Marilyn Tavenner is fully committed to his policies and to implementing ObamaCare, including the Independent Payment Advisory Board (IPAB), the Medicare rationing agency. A former nurse, Tavenner worked her way up to a position as senior executive in her 25 years with Hospital Corporation of America (HCA) (tinyurl.com/7mrs5uh). During her tenure, HCA settled the “largest health care fraud case in U.S. history.” Allegations included cost report fraud and payment of kickbacks to physicians (Dept. of Justice press release 6/26/03).

Tavenner is endorsed by the AMA, House Majority Leader Eric Cantor, and groups representing hospitals and insurers. She made $23,500 in political contributions between 1998 and 2011, more than the last five CMS administrators combined. Her congressman (Cantor) and hospital association PACs were among the recipients (tinyurl.com/7aw2ytn).


You Can’t Keep Your Plan; It’s Gone

ObamaCare is wreaking havoc in insurance markets as the massive new regulatory load drives companies out, writes Chris Jacobs of the Republican Policy Committee, citing the Galen Institute. Examples: The American Enterprise Group will stop offering non-group policies in more than 20 states. Empire Blue Cross/Blue Shield will eliminate plans covering 20,000 businesses in New York State. Nearly 10% of Indiana’s carriers have withdrawn because of medical loss ratio requirements. Cigna is dropping coverage of small businesses in 16 states. In Utah, Humana is ending its participation in the state’s Exchange, leaving only three carriers that participate. Principal Financial Group’s decision to stop offering health insurance will impact 840,000 people.


AAPS Calendar

Jan 20-21, 2012. Workshop, board meeting, Las Vegas, NV.
May 18-19, 2012. Workshop, board meeting, near Newark, NJ.
Oct 4-6, 2012. 69th annual meeting, San Diego, CA.



Ask Congress about disenrolling from Medicare and allowing patients to collect their own benefits by filing CMS 1490S.
See http://tinyurl.com/89ux2da.


AAPS Files Motion to Intervene in Florida et al.

AAPS has filed a motion for leave to intervene in the case filed by Florida and 25 other states against ObamaCare, currently pending before the U.S. Supreme Court. Intervention would avoid the possibility that jurisdiction to resolve the constitutional issues might be denied on the basis of the Anti-Injunction Act (AIA). This Act limits the ability of federal courts to consider challenges to taxes; the government is arguing that the “penalty” for not purchasing insurance is actually a “tax,” despite vigorous denials by Congress before the Patient Protection and Affordable Care Act (PPACA) passed. AAPS and its member physicians would have no alternative remedy to challenge a tax that affects patients, and hence its claims are unaffected by the AIA.

While most of the more than 30 cases filed against PPACA claim that Congress exceeded its constitutional authority, the Constitution also limits the authority of the federal courts, write Timothy Stoltzfus Jost, J.D., and Mark A. Hall, J.D. (NEJM 10/20/11).

AAPS argues that PPACA’s unprecedented federal intrusion into private medical care is having a significant impact now, especially on cash practices.

The motion is posted at http://bit.ly/aaps-hhs-fl. Legal work is supported by the American Health Legal Foundation.

Other medical associations are absent from this critical Supreme Court case.


Court to Rehear Abortion Informed Consent Case

The U.S. Court of Appeals for the Eighth Circuit has agreed to rehear a case that struck down a South Dakota law requiring that women contemplating abortion be advised of an increased risk of suicide. The American Association of Pro-Life Obstetricians and Gynecologists (AAPLOG) filed an amicus brief urging the Court to take the extraordinary step of reconvening en banc in the leading abortion case in the nation.

The original panel ruled 2:1 against the constitutionality of the law, with Judge Raymond Gruender strongly dissenting. He wrote that “even the evidence relied on by Planned Parenthood acknowledges a significant, known statistical correlation between abortion and suicide.” Use of the term “risk” does not imply certainty about causality. To meet its burden of showing a suicide advisory to be unconstitutionally misleading or irrelevant, Planned Parenthood would have to show that abortion had been ruled out as a statistically significant causal factor in post-abortion suicides.

Judge Gruender noted that Planned Parenthood relies on a 2008 report of a six-member task force of the American Psychological Association (APA) for a critique of evidence showing an increased risk of suicide. So do Allan Templeton, M.D., and David A. Grimes, M.D., in a prominent recent “Clinical Practice” article that concludes that “the patient can be reassured that the best evidence indicates no long-term psychological harm...associated with abortion” (NEJM 12/8/11). (Grimes is an unpaid plaintiff in a challenge to a North Carolina abortion law, a paid expert witness in malpractice cases involving abortion, and editor of a National Abortion Federation textbook on abortion.)

“The Court does not explain by what authority the APA has become the sole arbiter of the discussion,” Judge Gruender writes.

Soon after the panel’s decision, in a meta-analysis of studies of abortion and mental health published between 1995 and 2009, researchers conclude that in women having abortions risk of mental-health problems is increased by 81%, and risk of suicidal behavior by 155% (Br J Psychiatry 2011;199:180-186).


Head in the Sand on SIUs

Most physicians seem to be unaware of special investigations units (SIUs) run by private payers. These use data mining, undercover sting operations, and information culled from hotlines, disgruntled former employees, and other sources. The National Health Care Anti-Fraud Association (NHCAA) estimates that $75 billion to $250 billion is lost to health care fraud each year, and that fraud is increasing against private payers (MPCA 11/14/11).

“Third-party payment is taken to be a license to steal,” states AAPS executive director Jane M. Orient, M.D. AAPS has long stated that direct payment by patients greatly diminishes both incentives and opportunities for dishonesty.


Massive Fraud (“Leverage”)

When MF Global collapsed, the Chicago Mercantile Exchange did not intervene, knowing that there is not enough money in the system to backstop all the other firms if failures begin to cascade, writes Jason Hamlin (James Cook Market Update, late November 2011). Other firms are not as exposed as MFG, whose leverage may have exceeded 100:1, but likely will not be able to meet collateral calls. Gerald Celente complained that his six-figure MFG gold investment account was completely looted by Chapter 11 bankruptcy trustees.

“Morgan Stanley admitted in court recently that they charged their clients storage fees on silver they didn’t have,” writes James Cook (ibid.). “Their defense was that everybody does it.”


HIPAA Security Audits

Some 150 covered entities will be chosen by an unknown method to undergo a detailed audit of security practices in a pilot project. Audits are expected to be burdensome and intrusive, rather like the “nightmare” IRS audits in the 1990s, when taxpayers had to produce birth certificates or passports for their listed dependents. Figuring out “best practices” for each type of entity is expected to be a “daunting process” (MPCA 11/28/11).


Class 1 EHR Device Recall

On Oct 18, the FDA announced the recall of the Infinity Acute Care System Monitoring Solution because it may cause serious health consequences, including death. Its weight-based drug dosage calculator may recommend incorrect values, including a drug dosage up to 10 times the indicated amount. The product is described as a “networked solution system used to monitor a patient’s vital signs and therapy, control alarms, review Web-based diagnostic images, and access patient records.”

Nurses in a conference room at an unnamed hospital were overheard complaining about a non-recalled electronic health record system. “Just because you put an order in the computer doesn’t mean a drug gets started. It won’t get started until the next ‘cycle’ so you never know whether the patient ever got the first dose or not.” But see the book Paper Kills by Gingrich’s CHT.



Be Careful What You Ask For. The AMA is so focused on “replacing the flawed SGR” that it seems to have forgotten that it could be replaced by something worse. All the “bundled payment” initiatives are based on discounted fees. The chances of the physician making up the loss on “shared savings” are slim to none. The plan to pay specialists less so as to pay primary-care physicians more is likely to involve a decrease in total payments. I suspect that the AMA understands the possible consequences but is on board with both the bundling and the specialty/primary care redistribution scheme, likely on a quid-pro-quo basis.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Disparity. Medicare Part A pays 40% more for comparable services than Part B. Under Part B, physicians can ill afford to cover hospitals for government-covered and non-paying patients without being paid by the hospital at market rates. Often hospitals refuse to do this even though they are tax-exempt and receive federal grants and subsidies in addition to 40% higher fees. The 27% SGR cut exclusively affects Part B. With the cuts and the increased complexity from “meaningful use” and CPT-10, Medicare rates will not cover costs in my otolaryngology practice. Note that the first major hits in the 2012 CMS final rule on physician fees will be in “old people specialties” such as oncology, cardiology, urology, and audiology.
Michael Riesberg, M.D., Pensacola, FL


How Government Grows. It has been a very long process of people seeking favors. The emblematic picture was the people who hung out in the lobby of the Willard Hotel waiting for President Grant to walk over from the White House for a bourbon and cigar so they could talk to him about appointments to federal jobs. Hence the origin of the term “lobbyist.” It didn’t take politicians long to realize that favors created loyal supporters who would help you get reelected. The more goodies you hand out, the bigger you need government to be. The bigger the government, the more favors to be offered. In medicine, favors were given to allopathic physicians over all others first through state licensing, and next through shutting down all but a few favored medial schools through the Flexner report. This created a medical cartel and branded all others as quacks. The issue is not whether the others were or were not quacks, but whether it was appropriate to use the power of government to banish some and reward others. The exact same thing has happened in every sphere of our lives. Today, the government is our master and no one else matters a whit.
Greg Scandlen, Hagerstown, MD - http://healthblog.ncpa.org/author/gscandlen/


Why Does Our State Need an Exchange? Because the feds say so? I keep reading that our state government officials want no part of a federally designed health insurance exchange, but plan to do one at the state level. This is like a pouting child telling his parent that he is going to take his medicine because he wants to, not because the parent has demanded it. The result is the same.

Is this the best we can do? How about, “We not only refuse your money to set up this exchange, but we refuse to set one up. Go ahead and try to impose one and see what happens.”

The federal government is out of control, led by a pharaoh-like executive. I think it is time for the states to really push back against these bullies, not just by joining other states in lawsuits. What is plan B? What do our state leaders plan to do when the federal courts declare that this federal law has to be obeyed (seriously…they work for the federal government)? As Walter Williams writes, decent people should not obey immoral laws. For guidance on immorality, he cites Frederic Bastiat’s criterion: “See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.” As Lysander Spooner noted, “natural rights are inalienable, and can no more be surrendered to government—which is but an association of individuals— than to a single individual.”

The time to lead, not follow, has arrived.
G. Keith Smith, M.D., Oklahoma City, OK - http://blog.surgerycenterok.com


Whose Debt? It isn’t my debt or “our” debt. It is U.S. government debt. The U.S. government is just going to have to shrink its spending to match its revenues. People in the U.S. government do not want to see that happen. Layoffs are for the little people.
Linda Gorman Ph.D., Independent Institute, Golden, CO


A Shortage of Primary Care? Direct-pay practices, with physicians setting their own fees, could soon repair the shortage of primary physicians. Senior doctors might stay in practice 5 to 10 years longer. If they were able to make a decent living, many specialists would do primary care. I know a pathologist, an endocrinologist, and a cardiologist who happily do excellent primary care. A patient who can afford a cable TV subscription can afford to pay a retainer for primary care (the average is $150/month). The potential savings from avoiding unnecessary hospitalizations, ER visits, advanced imaging studies, expensive drugs, and redundant consultations could more than pay the costs. Direct payment by patients is essential for proper market function. Involvement by third parties in medical decision-making is the cause of our problems. Patient empowerment would revolutionize the system.
Thomas LaGrelius, M.D., Torrance, CA