AAPS News July 2012 - Cash, Catastrophic Insurance, & Charity
Jun 14, 2012
Volume 68, no. 7 July 2012
Access to medical care requires three “C’s,” as AAPS past president Lee Hieb, M.D., explained to John Stossel: cash, catastrophic insurance, and charity (http://tinyurl.com/6t67dxh).
Cash: the Right to Life, Liberty, and Property
“Who would want to have to pay cash?” someone asked Frank Lobb, author of The Great Health Care Fraud.
“Who are you to deny me the right?” replied Lobb.
The discussion about the “right” to receive care at someone else’s expense diverts attention from the fact that the liberty to use your own property to extend your own life is in peril.
Without this right, patients and physicians are fully under the control of the payer. Medicare and Medicaid beneficiaries are forbidden by law to express their values by paying a bit extra for medical services. Physicians are not allowed to obtain the revenue that would enable them to serve more poor people by accepting a higher fee from willing affluent patients. In managed-care contracts, physicians often relinquish the right to be paid if “covered” services are denied: a fact that insurers try hard to conceal.
Leftist political theory holds that central control allocates services on the basis of need rather than ability to pay. In reality, the result is JurassicParkCare, writes Katie Kieffer. Doctors go extinct; patients go untreated (http://tinyurl.com/cd8syw8).
More physicians are shunning Medicaid and Medicare patients. More than one-fourth of physicians see no Medicaid patients at all. Unrecoverable accounts receivables from managed care are even more important to many than Medicare cuts, and more physicians are likely to cancel their contracts (David J. Gibson, Featured Articles, www.MedicalTuesday.net).
In a free market, competition and direct payment put downward pressure on prices while bringing supply and demand into balance. The cash price can be much lower as there is no claims filing cost. Dr. Hieb stated that in her orthopedics practice in Arizona, she had seven employees, five of them for billing insurers.
But doesn’t cash payment discriminate against the poor? If this left-wing theory is correct, John Goodman argues, we should expect to see huge inequalities in the ownership of goods sold in the market, but fairly equal consumption in education and medical care. The exact opposite is true (http://tinyurl.com/7doxhhw).
In a rational system that followed the principles of insurance, there would be no need to specify “catastrophic,” as all true insurance is a voluntary contract to share the financial risk of severe misfortunes. “Social insurance” is not voluntary, confers no contractual rights, and is not confined to finances or large losses.
Initially, Medicare was only supposed to pay bills. Now we read that “the government must change how it delivers health care” (Washington Post 6/5/12, http://tinyurl.com/6pnhvv9).
The Affordable Care Act (ACA) virtually outlaws catastrophic (“bare bones”) insurance; imposes more mandates, although “there is nothing more wasteful than first-dollar health insurance coverage” (http://tinyurl.com/6wwvsjq); and sets up machinery for rationing care of the seriously ill.
The safety net of last resort has always been, and still is charity. New Jersey Medicaid spending is bankrupting the state, and the program refers many of its beneficiaries to Zarephath Health Center (http://www.zhcenter.org), founded by AAPS president Alieta Eck, M.D., and her husband John Eck, M.D. AAPS had its most recent board of directors meeting at ZHC.
Staffed by about 100 volunteers and open 12 hours per week, the clinic sees some 400 patients per month.
Another New Jersey AAPS member, ophthalmologist Jeffrey Liegner, M.D., has opened a charity clinic in space provided by Moose Lodge 432 (http://freeclinicnewton.org), featured in the New Jersey Herald 6/9/12 (http://tinyurl.com/6lwwpec).
Both Dr. Eck and Dr. Liegner spoke about their clinics at our May 18 town hall (video at http://tinyurl.com/8xqh4rs).
These physicians feel inspired to do more to help their suffering neighbors, in striking contrast to the goals of the American Board of Internal Medicine (ABIM) Foundation: to reduce testing (http://choosingwisely.org/) and to articulate “the professional responsibilities of physicians, including...advocating for a just and cost-effective distribution of finite resources” (Christine Cassell, M.D., and James Guest, J.D., JAMA 5/2/12).
Opposition to the Three C’s
A revealing insight into the vested interests that oppose price transparency, cost sharing, and charity is offered inadvertently by Donald Berwick, M.D., and Andrew Hackbarth, M.Phil.:
“Instantaneously reducing health care waste at the theoretically accessible scale—that is, 20% or more of total health care costs—is neither practical nor, from the standpoint of economic stability, desirable.” What about people whose jobs became unnecessary? Or hospitals with “stranded capital”? (JAMA 4/11/12). To save them, the bloodletting must continue.
Then there is the health insurance industry, which has a $160 billion interest in the individual mandate and the Medicaid expansion (Bloomberg 5/25/12). “Health equity” is about the money.
Historical Precedents for Price ControlsThe central planner’s main tool for trying to constrain spending—price controls—has been employed for 40 centuries, starting with Hammurabi around 1790 B.C. During Rome’s socialist interlude, in 301 A.D., Emperor Diocletian issued an edict setting maximum prices and wages for all important goods and services.
Diocletian warned that the barbarians were at the gates, and individual liberty had to be shelved until collective liberty was secure. Taxation rose to such heights that people lost the incentive to work or earn, and competing legions of lawyers labored to find devices to evade taxes or to prevent tax evasion. The currency was debased by mass minting of low-value coins.
Rome managed to last another 150 years after Diocletian, but long-term economic consequences were dire. Thousands of Romans fled, seeking refuge with the barbarians. The government issued decrees binding the peasant to the land and the worker to his shop until all their taxes and debts were paid—one of the origins of medieval serfdom (http://tinyurl.com/87sk726).
Student Loans: Government’s Largest AssetStudents owe the federal government more than $450 billion, an exponential increase from $93 billion in 2008. This totals nearly 35% of the funds available on the assets side of the U.S. Flow of Funds (http://tinyurl.com/7jatd4s). Private loans total even more. These loans cannot be discharged by bankruptcy. Are today’s students headed for serfdom?
The Written Word v. Information Technology (IT)In commemorating the death of Ray Bradbury, whose literary career spanned 73 years, Bruce Walker writes: “He bemoaned our addiction to this drowning of the individual mind in the buzzing of the hive.” Mass communication has replaced the solitary acts of reading and writing. The explosion of information technology places many in a constant network of talking points and gossip.
But it is in the written word that the heritage of our civilization is preserved. The Nazis burned books; the Soviets burned even more books. Totalitarianism never produces good books. “There is no leftist counterpart to Thomas Sowell or C.S. Lewis or Ayn Rand or Alexander Solzhenitsyn.”
“The destruction of every record of the past is indispensable to totalitarianism holding power” (American Thinker 6/11/12, http://tinyurl.com/87s9qkc). George Orwell recognized this in 1984, and Rod Serling in the classic Episode #65 of The Twilight Zone, broadcast in 1961. In a totalitarian society, “logic is an enemy, and truth is a menace.” Thus, the librarian, “The Obsolete Man,” must be condemned to death.
Ray Bradbury, Fahrenheit 451, 1950, http://amzn.to/M8OD0f
Physicians Reflect on ITRecounting his troublesome experience with the electronic health record (EHR), Craig Wax, D.O., writes: “Fortunately, our office manager insisted that we print out all data and maintain paper charts…. Doing so cost us time, money, and aggravation, but it kept our data safe” (http://tinyurl.com/bwne6m2).
David Cossman, M.D., writes that at his hospital, there have been 400 casualties of the EHR: physicians who quit rather than take the training. The EHR has the inherent capacity to make mistakes no human ever could, he states. It is a productivity drain of tsunami proportions. Its purpose is “the final extinction of what health planners always believed to be the primary impediment to rational health policy…: you and me.”
EHRs will achieve the dehumanization of medicine. Cossman was taught in his surgical training to make human contact with a patient every time he entered a room: sit on the bed, push the dinner tray a little closer, touch the patient in some way. Now this brings a stern rebuke from the nurse epidemiologist (who is, however, not concerned about the germs on the computer keyboard).
Cossman reminds us that HAL, the onboard computer in 2001: a Space Odyssey, mutinied, and threw the spaceship and crew back in time to the planet of the apes (General Surgery News, May 2012, http://tinyurl.com/8xtkom7).
The absence of EHR at the Surgery Center of Oklahoma is part of the marketing strategy, writes G. Keith Smith, M.D. Confidentiality and refusal to implement the government’s rationing tool, along with price and quality, should be considered in deciding where to seek care. Smith reminds us of the importance of knowing history. The principle of today’s “reform” is best expressed in German, he thinks: “Das Wohl des Staates überwiegt die Rechte des Einzelnen” [the good of the state outweighs the rights of the individual] (http://tinyurl.com/86n2ylh).
German Doctors Apologize for Nazi AtrocitiesOn May 23, 2012, 67 years after the Nuremberg trials, the German Medical Association (Bundesärztekammer), at a meeting in Nuremberg, unanimously approved a declaration recognizing the guilt of German physicians who perpetrated Nazi atrocities. Contrary to popular belief, physicians were not compelled to kill or experiment on prisoners, but did so willingly. Prominent representatives of professional societies or universities participated. Physicians asked victims for forgiveness, and stated that these events should serve as an admonition in the present and in the future (http://tinyurl.com/7rsegb7).
AAPS CalendarJuly 30. Dinner, conference with Frank Lobb and Andy Schlafly, on hazards in insurance contracts, near New York City.
Oct 4-6. 69th annual meeting, San Diego, CA.
ACTION OF THE MONTHParticipate in AAPS social networking. “Like” us on Facebook, “follow” us on Twitter, “share” and “tweet” our articles and videos. Don’t let the Left own this powerful medium.
Massachusetts MaximaDiocletian called his edict a maxima; Massachusetts is working toward a “global budget”—which is not price controls, just “an incentive for physicians to be more parsimonious.” One-fifth of Massachusetts patients are now cared for under this “new form of accountable care,” and the goal is to include all state employees and Medicaid recipients by 2014 (ModernHealthcare.com 5/18/12).
The transition to the global budgeting idea of controlling both price and volume is a response to rising costs after the enactment of ACA-style “reform.” In FY 2012, healthcare will consume 54% of the state’s budget, up from 49% in FY 2009. Premiums for individual plans purchased through the Commonwealth Choice connector increased 57%, from $175 in 2007 to $275 in 2012. There is concern about potential spillover, such as cost shifting onto the fee-for-service sector (NEJM 4/26/12).
Since squeezing the balloon in one place seems to make it expand in another, the new idea is to put it in a rigid box.
John Goodman reports serious access problems (http://tinyurl.com/6vcg3td). Only 53% of internists accept MassHealth (Medicaid); only 43% accept Commonwealth Care (state-subsidized plans); and 35% accept Commonwealth Choice (non-subsidized plans).
Financial analyst Mish Shedlock published a report from a world-traveling correspondent. “The health care in Massachusetts is so distanced from reality it’s awe inspiring. There is no such thing as a cash price, or cash discount. The prices and services rendered have almost no correlation…. The ‘socialized’ system in MA is now extremely overloaded.” In contrast, “Health care in other parts of the world is much, much cheaper. You can pay cash for everything…. A brain MRI at a luxurious five-star hospital in Bangkok... is only $50 (http://tinyurl.com/77k24c6).
In 1993, Stuart Altman and Alan Cohen discussed a national global budget (Health Affairs 1993).
Is Crony Capitalism Unconstitutional?Scandals are breaking out about the back-room deals made to ram the ACA through Congress. A cache of email messages between the Administration and drug industry lobbyists was uncovered by House Republicans. The provision permitting drug importation was removed, and amounts that the industry would be asked to “contribute,” as through mandatory rebates on Medicare Part D, were limited to $80 billion, later increased to $100-125 billion. In return, drugmakers led by Pfizer paid for $150 million worth of favorable advertising and spent $70 million on two 50(c)(4) front groups, Health Economy Now and Americans for Stable Quality Care (WSJ 6/12/12, http://tinyurl.com/dywqrqh).
The near-term cost amounted to less than 1% of drug-company revenue, with the possibility of a substantial upside, writes Avik Roy. Closing the Medicare “donut hole” could bring $20 billion in extra drug spending between 2010 and 2019. This cost-sharing feature is probably the main reason why Part D spent 30% less money than the Congressional Budget Office originally projected (Forbes 5/23/12, http://tinyurl.com/7qhmr8b).
“It’s politics,” said Robert Reich. Corrupt business as usual, but is it unconstitutional?
Following the method used by AAPS in AAPS v Clinton, Larry Klayman of Freedom Watch has filed suit against the Administration, alleging that secret meetings with Planned Parenthood, drugmakers, AARP, the U.S. Chamber of Commerce, and other private groups violated the Federal Advisory Committee Act (FACA). Klayman states the committee is likely to continue to meet, even if the U.S. Supreme Court finds the ACA unconstitutional in whole or in part, concerning the implementing regulations. The White House has refused to divulge information about negotiations over the ACA, claiming various executive privileges (WorldNetDaily 6/9/12, http://tinyurl.com/7eu5kcm).
It may violate FACA, but is it unconstitutional?
Stayed in the district court for the D.C. District, pending a decision by the U.S. Supreme Court, the AAPS lawsuit against the ACA, filed 3 days after the Act was signed, makes an argument not included in the other cases (http://tinyurl.com/86hjmjj):
The Fifth Amendment prohibits the taking of private property for public use without just compensation and includes an equal-protection component against federal discrimination that parallels the Equal Protection Clause of the Fourteenth Amendment.The AAPS argument applies both to the individual and employer mandates. Forcing insurance premiums for low-risk individuals to go up, in order to subsidize high-risk individuals, constitutes a regulatory taking, AAPS contends. Alternately, the Act’s mandates violate the Due Process Clause as compelled contracts and an undue burden on liberty.
AAPS v. Sebelius also challenges the imposition of Medicare rules on non-Medicare providers and the requirement that beneficiaries forgo Social Security benefits to disenroll from Medicare Part A. It also alleges that federal officers have breached their fiduciary duties by allowing Social Security and Medicare to face insolvency and asks the Court to demand an accounting.
Is Medicaid Unconstitutional?The most important issue before the U.S. Supreme Court may not be the individual mandate, but rather the Medicaid expansion, writes Timothy Stoltzfus Jost, J.D. A finding that the expansion is unconstitutional “could threaten all federal spending programs that set minimum participation standards.” Federal courts have yet to declare a law unconstitutional under the coercion theory. Wthdrawal of all Medicaid funding from a noncompliant state would be judicially reviewable, contended Justice Breyer (NEJM 5/3/12, http://tinyurl.com/6o9to3f).
Striking the Medicaid expansion would mean a huge loss for U.S. health insurers: $356 billion in revenue over 10 years—almost as much as they expect to gain from ACA’s minimum coverage requirement and tax credits (ibid.).
States were warned from the beginning that Congress reserved the right to make changes to Medicaid, and incremental changes have been accepted. A contract between private parties that suggested that one party could unilaterally change the terms at any time might be unenforceable, write I. Glenn Cohen and James Blumstein (NEJM 1/12/12), although managed care seems to get away with such contracts routinely.
Two-thirds of Medicaid beneficiaries are enrolled in managed-care plans now. Many states seek to enroll more, especially the costliest recipients, the elderly and disabled. New York would like to enroll all recipients into managed care, on a mandatory basis, under a global budget, writes John Iglehart (NEJM 1/12/12).
With Medicaid, none of the 3 C’s are allowed.
CorrespondenceCheese in the Medicaid Mousetrap. Secretary Sebelius has credited ObamaCare with a proposed rule that would bring Medicaid primary care fees in line with Medicare. CMS acting administrator Marilyn Tavenner said that the payment increase would help prepare primary care physicians for “increased enrollment as the healthcare law is implemented.” Note that the increase is good for only two years even if the U.S. Supreme Court upholds the law. Physicians who take the bait may be trapped in the circumstance that they will take on more patients that they will have to care for at a loss when fees are cut—or face accusations of abandonment.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY
Insurance Is Not Commerce. Insurance is not a good or service that crosses state lines; it is a contract to pay certain costs in exchange for premiums. And contracts are governed by state law. Auto insurance is entirely regulated by states, which have long since figured out how to allow affordable coverage that is portable across state lines. Unfortunately, in 1944 the U.S. Supreme Court ruled in U.S. v South-Eastern Underwriters’ Association that the Constitution’s Commerce Clause applied to insurance. The Supreme Court could remove Congress’s ability to continue harming health insurance by overturning that decision. If Congress eliminated the tax code’s discrimination against individually owned insurance, there would be no need for Congress to regulate private health insurance (http://tinyurl.com/79pcgct).
John Graham - http://www.pacificresearch.org/
Federal Takeover Centers. The exchanges are the key to ObamaCare and national health care and should be resisted, not established. More than $1 billion has been spent to establish these in every state. HHS is pushing states to pursue parallel paths to set up a “state” exchange and a federally facilitated exchange. They want the infrastructure for control so it is in place regardless of the Supreme Court’s decision. Every exchange must follow the federal rules, and once established may be impossible to undo.
Twila Brase, St. Paul, MN - http://www.cchfreedom.org/
Over 75? Stay Well or Die. My Canadian cousins are being introduced to pre-kindergarten economics: if prices don’t ration medical care, government will. As of 2013, patients over 75 in Ontario will receive major procedures only if approved by an Ethics Council—meeting during normal business hours. Already, patients who would have previously received dialysis are no longer being accepted. They will die soon.
Robert P. Gervais, M.D., Mesa, AZ
The Giant Hospital Bill (GHB). The GHB, which is enabled by the preferential tax treatment of employer-owned insurance, benefits many special interests. It maximizes the uncompensated care scam. It helps maintain the fictitious “not for profit” status of the hospital. It scares individuals into large groups, increasing profits for insurers. It maximizes re-pricing revenue. By providing evidence of the rising cost of medical care, it justifies higher and higher premiums, and thus higher commissions for brokers.
Hiding true costs is critical for maintaining a command economy. Price transparency is essential for a free-market economy (http://tinyurl.com/7k8xxud).
G. Keith Smith, M.D., Oklahoma City, OK - http://surgerycenterofoklahoma.tumblr.com/
The Real Women’s Issues. The most important economic and sociologic change of the past half century—the entry of women into the labor force—is completely at odds with tax law. The highest tax rates are paid by women wage earners. For example, when a woman leaves home to enter the labor market, she will be taxed at her husband’s rate, even if she earns only the minimum wage. All things considered, a woman in a middle-income household working full-time in a minimum-wage job can expect to keep only 32¢ of each dollar she earns (http://tinyurl.com/c8v45a8).
John Goodman, Ph.D. - http://www.ncpa.org/
Newspeak. The article “The Clinical Integration of Quality” (Ohio Medicine, issue 2, 2012) shows that OSMA has abandoned the professional status of medicine to sloganeers of third-party comrades to whom “quality” means “record keeping their way.” To them, “quality” also means “documentation is the care.” The medical record is now more important than the patient, and busy doctors engage the computer and the charts more than the patients, creating a massive, unnecessary, corrupt medical record industry that imposes pseudo-medical supervision.
Samuel A. Nigro, M.D., Cleveland Heights, OH
Ask the Right Question. The 2012 reformers asked two questions: (1) How can we reduce the uninsured rate to zero? (2) How can we decrease total healthcare spending? The right question is: How do we reduce the price of medical care?
Dave Racer, St. Paul, MN - http://www.cohronline.com/
Insurance Does Not Equal Care. Insurance equals an expensive reimbursement process. More millions of people having insurance does not mean they have access to care if most physicians will not accept its restrictions.
Craig Wax, D.O., Mullica Hill, NJ - http://healthisnumberone.com/