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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 65, No. 8 August 2009


Readers of Fyodor Dostoyevsky's great novel The Brothers Karamazov may recall the Grand Inquisitor's apology for totalitarianism. The basic concepts could well apply to radical "healthcare reform," especially with the current tendency to conflate morality, health, and civic duty (Orient JM, The Grand Inquisitor and the role of the state in medical economics. Perspect Biol Med 1981;25:20-38).

After decades of thwarted efforts to achieve a government takeover, the Obama plan is gaining support, even from a "chorus of presumed conservatives," writes Republican House Policy Committee Chairman Thaddeus G. McGotter (R-MI). And the Grand Inquisitor is "breaking his half-a-millennium media silence from eternal damnation" to join in (American Spectator July/August 2009).

When Jesus Christ returned for a brief visit to Seville, where heretics were being burned by the hundreds, and went about healing the sick and raising a dead little girl, the Inquisitor promptly had Him arrested.

"Why hast Thou come to hinder us?" he demanded. The inquisitors and the church were striving to correct His work:

"For fifteen centuries we have been wrestling with Thy freedom, and now it is ended and over for good."

Freedom is too heavy a burden for the masses. McGotter writes: "The wizened wag then subtly positioned Republicans as the party of 'no' in the health care debate by deriding its plans for patient-centered health care: 'They have saved but themselves while we have saved all.'"

The Obama plan matches the Inquisitor's strategy for subjugating weak, rebellious humans, for their own good: using the three powers that Christ rejected when they were offered by the Tempter: Miracle, Mystery, and Authority.

The government is to be seen as the supplier of the necessities of life the current focus is on "health care," but the idea is the same as in the Inquisitor's example:

"Receiving bread from us, they will see clearly that we take the bread made by their hands from them, to give it to them, without any miracle. They will see that we do not change the stones to bread, but in truth they will be more thankful for taking it from our hands than for the bread itself."

People will be glad to turn over all their secrets, and to accept the authority's decisions, for "it will save them from the great anxiety and terrible agony they endure at present in making a free decision for themselves."

The Inquisitor's key tactic, McGotter reminds us, is "to deceive them once more...for we must...never cease to lie."

While there is still much suffering to be endured on the way to the final objective, "we shall triumph and shall be Caesars, and then we shall plan the universal happiness of man." For only when freedom is vanquished is it possible to begin to think of happiness for mankind.

Lessons from the New Deal

As today's miracleworkers contemplate a New New Deal, it's worth reviewing the history of the last one: for example, the idea of taxing the rich, which caused enormous damage. Under the new 1935 law, a man could see three-quarters of his profits seized by the income tax, while he had to bear any losses himself. Capital for new ventures dried up (Amity Shlaes, The Forgotten Man: a New History of the Great Depression, 2007).

One difference between then and now was the serious, heavyweight political opposition that FDR faced. When he proposed forcing all 150,000 U.S. physicians to become officers in the U.S. Public Health Service, the AMA took notice. "[B]y now [the doctors] understood that once Roosevelt made a project his, he would not give up unless someone stopped him," Shlaes writes.

Then there was the weekly magazine Social Justice, edited by the "Radio Priest," Fr. Charles Coughlin, who recanted his early support for FDR. He reached 40 million people a week by radio, and had a print circulation of more than a million. His magazine could be reprinted nearly verbatim today, changing only a few names and dates, writes Paul Likoudis (Chronicles, June 2009).

A Dec. 18, 1939, article, "Stabilization Fund Is Still a Mystery: Who Wrote Law, or Why...," revealed that all the gold in America, after its confiscation in 1934, had been surrendered to the member banks of the Federal Reserve!

The magazine also showed that the New Deal made the federal government the creator and owner of the 117 largest corporations in America, unconstrained by basic economics.

In an Aug 21, 1939, essay, Minnesota Sen. Henrik Shipstead lamented that 79% of the $3 billion doled out to the Home Owners' Loan Corporation went to banks instead of foreclosed homeowners and farmers. Then North Dakota Sen. Lynn Frazier explained that Congress was to blame for financial troubles by allowing private bankers to control the money supply. And Rep. Jerry Voorhis (D- CA), Nixon's first political victim, wrote that an economic system built on usury was destroying the nation.

By banning Social Justice from the mail in 1942, the U.S. Post Office "put the hopes, beliefs, and opinions of nearly half, perhaps more, of Americans into the dustbin of history."

The new Great Nationalizer is not channeling one aspect of FDR: the "we have nothing to fear but fear itself" attitude. Rather, in invoking fearsome crises from economic meltdown to global climate catastrophe, he is following the Grand Inquisitor's counsel:

"They will become timid and will look to us and huddle close to us in fear, as chicks to the hen. They will marvel at us and will be awestricken before us, and will be proud at our being so powerful and clever."

The Pattern

Writer Turner Catledge laid out Roosevelt's pattern in detail. First, the early "idea" period, when the President or associates outlined a rough form of what was to be attempted. There followed the "selling" to promote it to the others; the "method" stage for developing the modus operandi; finally the "publicity" stage when the idea was announced to the public and submitted to Congress (Shlaes, op. cit., p 357).


About the AMA

In December 2008, the AMA had 236,153 members, of whom 20% were students and 13% residents; thus, about 157,000 were practicing physicians about 17% of some 900,000 eligible practitioners, compared with about 22% in 2004. About 50% of medical students were AMA members in 2008, compared with 59% in 2004.

The founder of Sermo suggests that the biggest risk to U.S. physicians is the AMA. In an online July survey, 75% of some 4,000 respondents said they were not AMA members; 89% said they did not believe the AMA speaks for them; 91% said the AMA does not accurately reflect their opinion as physicians. Only 17% said they were aware that, according to the AMA's 2008 annual report, more than 85% of its more than $282 million annual revenue comes from sources other than membership dues (www.sermo.com).


Competitiveness and the Tax Wedge

A major argument for a government takeover of medicine is the contribution of employer-owned health insurance to labor costs. However, tax funding would simply convert insurance costs into a bigger tax wedge. The portion of employee costs that goes directly to government to fund health and other social welfare costs is: Germany, 52%; France, 49.3%; Italy, 46.5%; UK, 32.8%; Canada, 31.3%; U.S., 30.1%; Japan, 29.5%; Korea, 20.3%. This helps to explain why Europe has had higher unemployment and slower growth for 30 years.

One way to increase competitiveness would be to cut the corporate tax rate; the U.S. has the second highest rate in the industrialized world (Wall St J 6/17/09).


Massachusetts Considers Universal Capitation

Although capitation was roundly rejected by physicians and patients in the 1990s, Massachusetts is thinking of bringing it back under a new name, "global payment." The costs of "universal coverage" having escalated out of control, the Special Commission on the Health Care Payment System is looking to its "most powerful lever," payment reform. The whole nation needs the same change, the commission thinks.

By 2015, fee-for-service payment could be a relic of the past. All payers, including Medicare and Medicaid, would split a per-member fee between hospitals and physicians in provider networks, with the amount determined in part by the "quality" of care delivered. Even self-insured employers would be required to participate. A special commission will see that the program is designed to avoid past problems with capitation.

"It's going to be threatening to many physicians," said Massachusetts Medical Society president Mario Motta. A 100% global-payment system may not be ideal, he said; there's no reason not to adopt a hybrid (AM News 6/1/09).


Putting Doctors on a Budget

The White House also likes the capitation idea.

At the AMA meeting, Obama told doctors: "You entered this profession to be healers. Now, that starts with reforming the way we compensate our providers doctors and hospitals. We need to bundle payments so you aren't paid for every single treatment you offer a patient with a chronic condition..., but instead paid well for how you treat the overall disease."

The White House is looking at the Prometheus project, funded by a $6 million Robert Wood Johnson Foundation grant, which will calculate coverage for 80,000 workers in Rockford, IL. For example, it might put $20,750/yr for a heart patient into the common pot, and doctors and hospitals will efficiently "coordinate" care. Assuming they follow the guidelines, they get to keep the change, if any is left. No more perverse incentives this is not like DRGs (Time 7/6/09).


Infant Mortality

Higher U.S. infant mortality is largely a reporting artifact. According to the WHO "Neonatal and Perinatal Mortality Country, Regional, and Global Estimates," underestimation in developed countries may vary between 20% and 40%. See www.who.int/making_pregnancy_safer/publications/neonatal.pdf, especially section 4.4. Also:

  • Keirse MJ. Lancet 1984;1(8387):1166-1169.
  • Cartlidge PH, Stewart JH. Lancet 1995;346:486-488.
  • Howell EM, Blondel B. Am J Public Health 1994;84:850-852.
  • Sepkowitz S. Int J Epidemiol 1995;24:583-588.
  • Mueller M, et al. Swiss Med Wkly 2005;135:433-439.
  • Doornbos JP, et al. Am J Obstet Gynecol 1987;156:1183-1187.
  • Cihak RJ. NewsMax, Mar 10, 2005.


Nominating Committee Report

The Nominating Committee, chaired by Robert J. Cihak, M.D., presents the following slate:

President-elect: Lee Hieb, M.D., Logan, IA

Secretary: Charles McDowell, Jr., M.D., Johns Creek, GA

Treasurer: R. Lowell Campbell, M.D., Corsicana, TX

Directors: Richard Amerling, M.D., New York, NY; Alieta Eck, M.D., Somerset, NJ; W. Daniel Jordan, M.D., Atlanta, GA; Tamzin Rosenwasser, M.D., Lafayette, IN; G. Keith Smith, M.D., Oklahoma City, OK.


AAPS Calendar

Jul 16, Doctors' Tea Party, Wichita, KS.
Aug 7, Independent Practice Workshop, San Diego, CA.
Aug 13, Doctors declare independence, Oklahoma City, OK.
Sep 30-Oct 3, 2009. 66th annual meeting, Nashville, TN.
Sep 15-18, 2010. 67th annual meeting, Salt Lake City, UT.

Court Strategy

During the "year of prosecutions" (1934), Roosevelt sought to establish the need for national intervention to root out "corruption," and the constitutionality of imposing rules on wages and the conduct of business for example, the poultry business, which FDR wanted to transfer to the public sector.

In cases like those of former treasury secretary Mellon (a rich capitalist), Belcher (who paid timber workers less than the minimum), and Schechter (kosher poultry butchers), "prosecution became easier if they revised the rules of the game." The government tried to impose new standards on behavior that was legal at the time (Shlaes, op. cit., p 205).


States May Try to Nullify Nationalized Medicine

The Arizona state legislature has referred to the November 2010 ballot a proposed state constitutional amendment that would guarantee the right to pay privately for medical care, and to choose not to participate in any health care system. The amendment, called the Health Care Freedom Act, is a revision of a ballot initiative that failed by just 0.5% of the vote in 2008, after the managed-care industry spent millions to defeat it. Apparently, there was fear that Medicaid recipients might try to opt out; Arizona was the first state to funnel all Medicaid through selected managed-care plans. The amendment would make it illegal to pass an employer or individual mandate to purchase insurance or a "single payer" plan. Nearly all Democrats voted against it.

Indiana, Minnesota, New Mexico, North Dakota, and Wyoming are considering similar initiatives.

If any succeed, a federalism challenge to national "health- care reform" could result. The Tenth Amendment was the roadblock that stopped some initial New Deal programs. Law professor Paul Bender of Arizona State University states there is a striking similarity between today's Supreme Court justices and the "Nine Old Men" who stymied FDR in the 1930s. Both seem to share the belief that the balance of power has shifted too far away from the states (FoxNews 6/29/09).

"This is really a question of who will control health care decisions: patients and their doctors, or government," said Phoenix orthopedic surgeon Eric Novack, M.D.


The Year of the Auditor

Claims to federal programs will face even more pre- and post-payment scrutiny, with a new joint effort by HHS and the Dept of Justice, the Health Care Fraud Prevention and Enforcement Action team (HEAT). This team will use information collected by others, such as Recovery Audit Contractors (RACs), to coordinate enforcement ramifications.

While awaiting your first contact with RACs, you'd better implement a comprehensive tracking system for your dealings with them; miss a deadline, and you're done.

There may be a softer approach this year as systems are tested, but "then it will get aggressive really fast," warns attorney Jennifer O'Brien.

And immediately start doing due diligence to return overpayments. "There's no need for a false statement to create a violation [of the False Claims Act]," states Ankur Goel.

You can also be accused of fraud if you miss a rule change by ignoring carrier updates there is no need to prove a deliberate intent to defraud (MCA 1/29/09).

RACs are allowed to extrapolate from a sample of 30 claims to a whole year's worth. One ambulance company was found to have made an error in 26 of 30 claims. CMS will recoup the amount extrapolated to 94% of claims for the year from future payments, ensuring the company's demise.

Unlike even IRS auditors, RACs get bonuses based on how much they "recover."

"Whatever you do, don't get a victim mentality," advises Pamela Moore (Physicians Practice, June 2009). "CMS and RACs aren't out to get you. Neither is the Obama Administration." It's just the "bizarre system we ourselves have built." We of course want our tax dollars to be spent well, she says.


Is This Efficiency?

The Medicare system's vaunted low "administrative" costs apparently do not include the amount allegedly lost to fraud. A single issue of BNA's Health Care Fraud Report contains reports of a Phoenix physician who paid $525,000 to settle false billing allegations; an indictment for $50 million in false claims billed by infusion clinics and physical and occupational therapists in Detroit; an alleged $22 million Florida scheme by - home health agencies to bribe beneficiaries to submit false claims; an alleged $100 million five-state scheme involving store-front medical clinics; a $3.5 million settlement with an Oklahoma orthopedist; and many more (HCFR 7/1/09).


Is There an Obligation to Participate in Research?

The standard view has been that being a subject in biomedi- cal research is like donating blood: laudable but not obligatory. G. Owen Schaefer, Ezekiel Emanuel, and Alan Wertheimer, of the Dept. of Bioethics, National Institutes of Health, argue that there is a prima facie obligation to participate in biomedical research, unless there is a good reason not to. Research produces a public good that everyone has access to. We need at least 16 million more individuals to participate in research trials each year. Paying taxes is not enough. "The situation is in some ways analogous to a wartime call to arms in which not just money but soldiers...are needed."

Even though participation is morally obligatory, "there should still be insistence that the participant provide informed consent to do so." And there is still a right to withdraw from a trial without penalty, even if withdrawal is wrong. Still.

The right for individuals to decide what happens to their body can be inferred from the right to privacy in the U.S. Constitution, and is explicit in the European Convention on Human Rights. It can justly be overridden, the authors argue, in some circumstances, such as when society compels people to be vaccinated. "But the need for biomedical research today does not qualify as such an extraordinary circumstance" (JAMA 2009;302:67-72). Perhaps tomorrow it will.

And everyone of course will have to participate in comparative effectiveness research. The new rationale is timely.


New Accounting Requirements for EHRs

The HIPAA Privacy Rule currently provides that covered entities must provide an accounting for disclosures of protected health information on request, except those made for treatment, payment, or health care operations. Section 13405(c) of the new statute removes this exception for electronic health records (Pima County Medical Society seminar 4/22/09).


Reform = Payment Cuts. Physicians who are increasingly being squeezed financially and coerced into becoming dependent on hospital contracts may have another major problem if Obama gets his way on "healthcare reform." In the past, government programs have provided disproportionately high payments to hospitals, while cutting physician payment to bare bones. In a weekly radio address, Obama called for cutting $313 billion in Medicare and Medicaid payment over 10 years, $106 billion coming specifically from hospitals. He cleverly promised not to slow Medicare payments to physicians. Hospitals, however, will surely cut payments to their dependent physicians. Then, those physicians will have lost not only their ability to practice according to their own best judgment, but their financial well-being also.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Chronic Disease. If patients in the U.S. are sicker with chronic disease, what about the possibility that they survived the initial onslaught and manage to live with the problem thanks to good care? How do you reduce the number with chronic disease? Don't treat them, and let them die.
Linda Gorman, Ph.D., Independence Institute, Golden, CO


Uninsured in Canada. Uninsured Canadians must pay cash before treatment in an emergency room or walk-in clinic. The ER will not refer patients to a specialist, and walk-in clinics don't like to do that either. You are better off being uninsured in America. The uninsured in Canada are the neediest: homeless people and those so poor they don't pay taxes. Socialism always hurts the neediest first.
Ralph Weber, C.L.U., Paso Robles, CA


Innovation. Without third-party payment for many services, there would be a more tiered marketplace with varied options and cost differences. We see this happening with blood tests, for example, www.mymedlab.com, which offers customer choice, with user-friendly information and data storage. Many of my clients have gotten an MRI for $250 paid from their HSA, instead of $1,800 using insurance, which might have cost them much more after denials or deductibles and copayments. Sometimes the MRI would have been deemed medically unnecessary or outside the guidelines.

A business model that requests prepayment, has prices one- third of conventional, and uses machines bought from facilities that are installing a newer model, is a viable market niche. It is unconscionable that legislators, provider lobbyists, or anyone else would stand in the way of this model.
Janet Michaud, Manhattan Beach, CA


Health Status Insurance. In a real sense, health insurance isn't insurance at all, but an artificial product of unwise taxation and regulatory policies. It is different in many ways from other forms of casualty insurance. University of Chicago professor John Cochrane has proposed an ingenious solution: two premiums for two types of insurance. The first is for a year's worth of insurance for a healthy person. The second covers the risk of a change in health status that could increase premiums in future years it would pay the added premium. www.john-goodman-blog.com/rational-health-insurance/#more- 2851.
John Goodman, Ph.D., Dallas, TX


Independence. I pray that there is a growing intolerance of the progressive loss of our rights and freedoms. As John Locke said, it is not only right but morally necessary to revolt when the social contract is broken.... [We must rise up and demand] the preservation...of...rights...that come not from government but are an endowment from our creator.... Personal responsibility and creativity along with a dogged insistence on our personal freedom is the only answer.... The government has no right to confiscate our time, work product, or property, intellectual or other. In the end the people of America will be much less free and much poorer and sicker if something is not done to stop this insane socialization of America.
Carl W ("Rick") Lentz III, M.D., Daytona Beach, FL


Value-based Purchasing. Many, perhaps one-third, of the uninsured children who are eligible for SCHIP were on the program in the past year. People who know about the program, and know how to enroll, fail to re-enroll because it isn't worth the trouble. There is no value even when it is free.
Greg Scandlen, Heartland Institute


A Backwards Approach. We are approaching the problem from the wrong direction, based on bad assumptions. Insurance is unaffordable because of oligopolies, mandates, community rating, and guaranteed issue. If the cost was lower, and it was a valuable product, 90% of Americans would buy it. Sadly, many think that affordability means someone giving them money to buy an over-priced product, or a central planner artificially controlling the price. Government should have no role in defining insurance. It should be an indemnity product against financial risk, rarely used. "Universal coverage" is a fool's errand. Mandates will make things worse; I guarantee that a federal mandate to buy insurance will lead to a federal mandate for doctors to take that insurance. The answer is a true competitive market, with 300 million Americans shopping for products they want and can afford. That will drive down prices better than any central planning approach.
David McKalip, M.D., St. Petersburg, FL