Volume 64, No. 3 March 2008
Listen to the rhetoric on "health care reform," with its
"progressive" tilt. How often do reformers use words such as
"excellence," "breakthrough," "optimal," or "innovative"? And how
often do they refer to the need to eliminate "disparities," offer
universal "basic" coverage, and put the brakes on life-saving or
enhancing technology, and the fetters on capitalism?
Some still call for the cliched "level playing field" the
situation under a nomocracy or disinterested government, which
applies the rule of law without regard to outcome. But a complex
regulatory regime is inevitably rigged in favor of preferred
players. One may complain about a particular outcome, but today,
writes Joseph Sobran, most politicians and voters are unthinking
teleocrats, who want government directed toward achieving a
desired outcome (FGF 1/24/08).
Reformers' goals include "standardization of treatment"
one reason to promote electronic records (JAMA
2008;299: 507-509). They'd like to reduce physicians' performance
to one summary score (N Engl J Med 2007;357:2649-2652),
and to eliminate "wide variations in practice patterns" with both
over- and undertreatment (N Engl J Med 2008;358:549-
Redistribution v. Creation
Reformers want to shift funds from subspecialists to
generalists, from profit centers such as cardiac catheterization
labs to loss centers such as emergency rooms, and of course from
the rich to the poor. Cost shifting to patients is considered
objectionable (ibid.), while government routinely shifts costs
onto the private sector. According to the Minnesota Hospital
Association, underfunding from government programs such as
Medicare and Medicaid exceeded $1.3 billion in 2006.
The "sliding scale" helps to cancel the effect of income
differentials, by forcing the "haves" to pay more. For example,
participant fees in the Healthy San Francisco (HSF) program range
from $0 to $675 per quarter. Those whose income is 500% of the
federal poverty level pay $450; those who earn $1 more than that
pay $675 a tax of $900/y on that $1. The HSF provides "universal
access" to services offered within the enrollee's "medical home"
(N Engl J Med 2008:258:327-329).
Self-insured people with a high income also have to pay
more in absolute terms before they get a tax deduction for
medical expenses. The threshold of 7.5% of adjusted gross income
is up from 5.5% in 1983 and 3% before 1983.
It is apparently assumed that wealth and medical services
are natural resources that renew themselves automatically, at
least within certain limits. Reformers overlook the need for
work and the role of "disparities" in providing an
incentive to work. As Sean Parnell of Heartland Institute points
out, few people in the upper income brackets work less than 50
hr/wk. Welfare pays the equivalent of an $8/hr job, up to as much
as $36,400 pre-tax wage equivalent in Hawaii, according to a 1995
report by the Cato Institute. For legal residents, the work/
welfare disparity may be negative or insufficiently positive.
In physics, disparities as in pressure or temperature are
necessary for work to occur. The state of complete equality is
known as the heat death of the universe.
In place of natural incentives, reformers would substitute
other driving forces (rewards and punishments), such as the
"levers" in use by the British National Health Service
(JAMA 2007;298:1445-1447). Tellingly, the strategy for
gaining support, as outlined in a 1993 memo from Hillary Clinton
to Jay Rockeller, emphasized selling the concepts, not the
Would proposed universal systems actually bring about the
desired equality? National health insurance in Canada and Britain
may have caused more inequality than otherwise would have
existed. Among the nonelderly white population, low-income
Canadians are 22% more likely to be in poor health than their
American counterparts (John Goodman, NCPA Health Alert 11/26/07).
Reformers are puzzled that the U.S. system has not
collapsed, despite the "incontestable consensus" that it ought
to. The "nonsystem" with its stubborn localism, voluntarism,
privatism, and federalism has an "eerie stability." Reformers
need to work around "formidable medical-cultural continuities" to
bring about "real change" (N Engl J Med 358;325-327).
One barrier is fiscal. California's anticipated $14 billion
budget deficit may have killed Gov. Schwarzenegger's proposed $14
billion Massachusetts-style plan. Frustrated state reformers look
to Washington, D.C., which does not suffer from the states'
constitutional handicaps: the requirement to balance their
budgets, and their inability to print money.
In fact, as Star Parker pointed out, the government doesn't
really have any money. Not even the federal government. Now,
there is the terrifying prospect that Americans as a whole don't
have any money either: see Figure 2, p 4 of the enclosed
September 2007 issue of Access to Energy. This shows the
world currency price of American dollars divided by the price of
gold the ratio has dropped 87% since 2001.
Pay for performance, a "fundamental change...that could
transform how healthcare is delivered more than the current
prospective payment system and managed care plans," could become
in its next generation pay for outcome (HealthLeaders
Media 1/21/08). And what is likely to be the desired outcome
for retiring baby boomers?
One definition of "to level" is "to equalize in height,
rank, quality, etc." Another, "to knock to the ground, demolish, "
could be the effect of "healthcare reform" on America.
- U.S. Treasury bills and bonds could be downgraded from AAA
to junk status, warned Moody's. Using the ordinary accounting
standards required of private business, the U.S. government is
bankrupt. The annual deficit is $4 trillion, not $200 billion as
reported, if future obligations are included. There is no
possibility that the current debt of $60 trillion, which includes
current and future obligations such as Medicare, Social Security,
and pensions, will be paid. "So our elected officials see no
reason to avoid increasing the debt," writes Arthur Robinson
(Access to Energy, August 2007). "Failing to pay $60
trillion or $100 trillion what's the difference?"
- U.S. non-borrowed banking reserves went from $37
billion to $199 million in the past month,
according to the Federal Reserve Board website. Banks are having
to borrow from the Fed. "Simply put, the U.S. banking system has
no reserves," writes Paul Lamont (www.financialsense.com
- The U.S. personal savings rate has been negative since the
second quarter of 2005. It was -1.1% in 2006, compared to 2.2% in
1999-2004, 4.6% in 1993-1998, and 8.6% in 1950-1992. The decrease
could stem in part from the surge in energy prices, which is also
beginning to impact food prices, especially as food is being
burned as fuel (ethanol). Concerns are overstated, said the
Federal Reserve Bank of New York in May 2007 (www.newyorkfed.org).
- The Gold Anti-Trust Action Committee (GATA) charges that the
U.S. government is engaging in international swaps and other
market manipulations to suppress the price of gold, writes Jerome
Corsi (WND 1/25/08). Corsi also reports allegations that
the Fed is using repurchase agreements to depress the stock
market, in an effort to cushion the pernicious effects of its
money printing (WND 2/5/08).
The Final Outcome?
While politicians and candidates promise universal care,
they don't reveal the truth about how it will happen, states Ron
Panzer of the Hospice Patients Alliance. "Dark Hospice is the
'final solution' to the Social Security mess looming with the
baby boomers," he writes. Mandatory enrollment means "limited
treatment options and yes, mandatory death when it
serves the purpose of those in power." While some hospices are
faithful to their original humanitarian mission, others are
carrying out what Panzer calls the "royal 'bait and switch' con
of the century." He believes thousands are being killed by
treatment denial; placement of non-terminal patients in hospice
and labeling them "terminal"; intentional use of nonsanitary
procedures and failure to treat the resulting infections;
deliberate dehydration; and intentional overdosages of opioids,
sedatives, and paralytic agents. While an "angel of death" is
occasionally prosecuted, law enforcement agencies routinely
disregard reports by relatives who think a loved one was killed
"Socialized medicine is 'good' because of 'universal
coverage.' Overlooked are the 15,000 deaths in France during the
August 2003 heat wave. Health workers...were away at the
seashore.... The poor and elderly had 'universal coverage' with
six feet of dirt."
David Stolinsky, M.D. Stolinsky.com
Colorado Proposes More Cost Shifting
Colorado's Blue Ribbon Commission on Health Care Reform
cites the unfairness of cost shifting to pay for uncompensated
care as a rationale to force people to buy insurance. The result
of its proposals: more cost shifting, write Linda Gorman and R.
Allan Jensen in a minority report. Taxpayers who have health
insurance would be forced to subsidize families of four making up
to $82,600/y, many of whom pay for their own care now. More would
also be forced onto Medicaid, which generates far more cost
shifting than the uninsured do. The report, available at www.i2i.org, is probably
applicable in your state also.
Medicaid payment covers only the marginal cost, which
applies to the last unit of production, Gorman explains. It
doesn't work to apply this to 30 50% of production because
somebody has to pay the overhead. In Massachusetts, all funds
that went to hospitals for disproportionate share payments for
uncompensated care went to pay for Medicaid losses.
For-profit hospitals may do less cost shifting, Gorman
writes. Instead, based on limited data mostly from California,
they apparently reduce service intensity. There is some evidence
that this does affect morbidity and mortality.
The proposed Colorado "basic health plan" would load up on
cheap primary care, but includes only $25,000 for hospital care
and a $50,000 lifetime maximum. Making this plan mandatory "is a
tacit admission that consumers would not buy it by choice,"
writes Steve Hyde in Rocky Mountain News (Consumer
Power Report 1/25/08).
It is a fallacy to assume that increasing the size of the
insurance pool necessarily decreases costs, Gorman notes.
Expanding insurance can increase costs by bringing higher risks
into the pool. The increase in utilization alone, from insuring
the uninsured, would raise costs 3 5%, according to estimates by
Mark Litow. That doesn't include bureaucratic costs. "Under
programs like Medicaid that are designed to look like insurance,"
Gorman writes, "overhead has got to be larger because so much
paper flies around and so many consultants are hired to do this
The promised savings from reduced uncompensated care in
Massachusetts haven't materialized (ibid.). The state is
negotiating with the federal government to cover half of the
higher-than-expected costs. In opposing the Schwarzenegger plan,
which was modeled on the Romney plan, California unions argued
that workers would be forced to divert funds from more pressing
needs for coverage whose price and quality they could not
control. That's exactly what is happening in Massachusetts,
writes Shikha Dalmia (Wall St J 1/31/08). The uninsured
who don't qualify for government help might well find it cheaper
to pay the penalty up to half the price of a standard policy:
that is, pay to remain uninsured. "This is legalized extortion:
AAPS Files Amicus in D.C. Gun Ban Case
In an amicus brief opposing those filed by the American
Public Health Association (APHA) and the American Academy of
Pediatrics (AAP) in District of Columbia et al. v. Dick
Anthony Heller, AAPS points out the bias and fraud in
reports frequently cited to support gun control.
"The attempt to shroud political gun control arguments in
the white coat of physicians and public health officials is
utterly baseless, and constitutional law should not be influenced
by it," writes Andrew Schlafly in the AAPS brief.
APHA and AAP consider only the harms inflicted by firearms,
while neglecting the undeniable benefits of self-defense and
deterrence against crime, terrorism, and tyranny.
"The same logic underlying their briefs' approach to gun
control could be used to insist on a ban on automobiles and
swimming pools...." It could also be applied to vaccines, leading
to "the false conclusion that all vaccination programs are
harmful because all vaccines have some side effects."
Guns are primarily defensive weapons, and "the gun is the
best protector for the weak and vulnerable in society because it
removes any advantage held by a stronger aggressor," AAPS argues.
"Guns are not pathogens, and the loss of lives from guns is not a
public health phenomenon.... Vaccines could be taken as a public
health analogy for guns."
The AAPS brief is posted at www.aapsonline.org.
FSMB Wants Unfettered Record Access
Despite a number of losses in court, the Maryland State
Board of Physicians continues to appeal its case against
psychiatrist Harold Eist, M.D., who delayed releasing patient
records, citing a belief that patient consent was required.
Although he eventually released the records and was exonerated of
charges that he had violated the Medical Practice Act by
providing substandard care, the Board has relentlessly pursued
the charge of failure to cooperate with its investigation. In an
amicus brief supporting the State, the Federation of State
Medical Boards (FSMB) argues: "If upheld...this case would set
precedent for health care providers and patients to object to
disclosure of PHI [protected health information] to not just the
regulatory boards, but to all governmental agencies." HIPAA,
notes FSMB, specifically states that agencies engaged in health
oversight activities do not need patient permission or even
notification to obtain PHI when authorized by law.
All that is needed, states FSMB, is for a complaint to name
a licensee and contain an allegation that, if true, would violate
the Medical Practice Act. It need not be credible.
Tip of the Month: In a breach-of-contract case brought
by an orthopedic surgeon (Scott v. Beth Israel Medical
Center), a New York court ruled that e-mail communication
between a physician and his attorney may be discoverable in
litigation, even when marked "privileged and confidential"
( N.Y.S.2d , 2007 WL 3053351). The communications occurred over
the hospital's server, and because they violated written policy
prohibiting personal use of hospital computers, the physician and
the attorney were deemed to have waived the attorney-client
privilege. Moral: be sure to learn and abide by the rules if
using the hospital or clinic's computer for communications (Kern
Augustine Conroy & Schoppman, StatLaw Update 2007 Medical
Society Bulletin Counties of Erie and Chautauqua, winter
Provider Identity Theft
If someone gets hold of a physician's number and bills
Medicare with it, the physician "could be at risk for submitting
false claims," stated an attorney with Fox Rothschild in
Pittsburgh. If you suspect fraudulent use of your number, call
your carrier and request a list of your current practice
locations and of your utilization for a specific time period.
Also keep a record of referred services or items of equipment so
you can identify legitimate claims. If your provider
number is inactive for four quarters, CMS will deactivate
it (MCA 1/28/08).
Operation Whack a Mole
Under an agreement with the federal government, New York
State must recover a minimum of $644 million from the Medicaid
program. The government is using data mining to identify
"aberrances," and providers are advised to use similar methods of
analysis internally (BNA's HCFR 1/30/08).
Every dollar invested in data-mining software is estimated
to return $13 (Neurology Today, October 2007). The
government has also hired mercenaries known as "Program Safeguard
Contractors." States that have their own false claims acts
meeting certain standards get a share of the proceeds.
Neurologists who offer in-office procedures are especially
likely to be whacked, writes New York neurologist Lawrence
Huntoon, M.D., Ph.D. "What better way for the government to 'save
money'?" he asks. Failure to collect a copayment or to document a
single element in Medicare E&M guidelines could lead to
prosecution; the conviction rate is about 80%. Outliers who use
higher level codes will be treated as outlaws.
"The name of the operation lets physicians know where they
stand," observes Dr. Huntoon. "It's like comments a few years ago
that pain management physicians would be treated like the
Keeping Attorneys Out of Your Life
Plaintiffs frequently allege that physicians did not return
calls. Calls from a land line leave no record thus, you might
want to return calls from your cell phone. To document what was
said, you could use a call-in transcription service or a separate
voicemail on your office telephone for transcription of after-
hours messages (Medical Justice News Bulletin 1/8/08).
Are Risk Retention Groups a Way Out?
To keep New York physicians from bolting to avoid 15 20%
liability insurance premium increases in each of the next 5
years, legislation is expected to mandate that physicians be
covered by a company licensed to operate in New York. According
to correspondence from its CEO, NY physicians are "free to obtain
comprehensive medical malpractice coverage from J.M. Woodworth
RRG [Risk Retention Group], Inc. at competitive rates without
fear of increases imposed by state regulation or legislative acts
to protect traditional carriers."
RRGs are governed by federal statute, which requires
regulation by the state of domicile Nevada, in the case of R.G.
Woodworth. There are 147 RRGs providing malpractice coverage in
the U.S., and 34 are registered in New York.
"A possible challenge based on the Supremacy Clause in the
U.S. Constitution might be forthcoming," suggests Dr. Huntoon, if
NY tries to override the federal law.
Aiming for the Middle. For a mere $299 you can purchase
a book to see where your practice is on the E/M Bell Curve. The
special software will let you know when you are straying into
dangerous end-of-the-curve territory. It will lead to more
middle-of-the-curve gaming. Physicians can make sure they are not
submitting "too many" level 4 or 5 codes whether they are
warranted or not. It is probably cheaper for the physician to
downcode to stay in the middle of the curve rather than incurring
the horrendous expense of having to defend against an accusation
of Medicare fraud or a demand for refunds by insurers. The more
physicians congregate toward the middle of the curve, the greater
the risk of audit for physicians toward the end of the curve.
Sick patients will need to be avoided because they cannot be
served within the middle of the curve.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY
The "Medical Home." This is an instructive concept
illustrating the politics of the destruction of private medicine.
The difference between "a medical home" and "my doctor" is very
important. The medical home is a PR rebranding effort to turn a
gatekeeper into something warm and fuzzy that envelopes one like
the education blob. Running the term through PubMed yields 233
hits, and few empirical studies. The modern version goes back to
a 1988 article in the Hawaii Medical Journal. Then
there's "Integrated School Health Center: a New Medical Home." A
2007 abstract by WC Livingood in Fam Community Health
finally tells the truth: "the concept has strong philosophical
foundations, but the science...is not as well developed." "Logic
models" and "mixed method design" provide "systematic and
rigorous approaches to observation while retaining the
complexity," which tends to be lost with randomized controlled
trials that control and reduce the number of variables. I think
this means there isn't any empirical support, so we'll rebrand
the philosophy, call it logic, and try getting the public to pay
for more pork.
Linda Gorman, Independence Institute, Golden, CO
Republican Socialism. Mandating individual insurance is
the latest Republican fad, from Massachusetts to California,
displaying woeful ignorance and hubris. They are saying, "I will
tell you what to do, and you have a 'personal responsibility' to
do it." In fact, those who refuse to purchase insurance are
sending a valuable signal: the product is not worth purchasing.
Only 12% of respondents to a J.D. Powers survey said they trust
their "health plan" to deliver reliable information. Many plans
are bloated with waste, delivering $0.45 in services per $1
premium. We need innovation, not mandates.
Greg Scandlen, Consumers for Health Care Choices
The Tax Burden Counts. Using the most conservative
estimates for the cost of collecting taxes, Ben Zycher has shown
that the excess burden of a universal Medicare program would be
twice as high as the administrative costs of universal private
John Goodman, Ph.D., NCPA Health Alert 11/26/07
Obstructing Quality. Increased trade in services
combined with technology could do wonders for medicine. But this
cannot be achieved through greater government control. When
European kids wanted to send pictures with their cell phones,
billions of euros were invested, and they got what they wanted.
But when Europeans want more and better medical care, and are
ready to pay more, the state prevents them from doing it.
Ernest J. White, WAR Report 9/14/07
Obligations. Contrary to common assertions, as in
Wyden's Healthy Americans act and a Colorado reform proposal,
health care is not a societal obligation. In America, the
societal obligation is to limit government and defend the liberty
to live unencumbered by a government that redistributes wealth to
enable politicians to be re-elected.
David McKalip, M.D., St. Petersburg, FL
Mergers Circumvent Antitrust. I think that UnitedHealth
Care buys up very small competitors because individually the
acquisitions are too small to alarm the Dept. of Justice
antitrust division. Attempts to acquire a large competitor would
draw scrutiny; the large number of small acquisitions has the
same anticompetitive result in the long run.
Donna Kinney, Texas Medical Association
Practice Swapping. Vacationing Canadians told us that
some surgeons get around provincial limitations on the number of
procedures they may do in a calendar year by trading practices
with a surgeon in another province in the middle of a year,
fulfilling their quota twice each year. Waiting lists may be
shorter than they otherwise might be as physicians figure out
ingenious ways to get their work done.
Alieta Eck, M.D., Somerset, NJ
Financial Security. How many people know that the
liabilities for Social Security and Medicare only extend
contractually for the next two years? With pay-as-you-go
financing, what else can you reasonably expect? The Social
Security Act contains a clause that expressly reserves to
Congress the right to alter, amend, or repeal any provision of
the Act. People covered by it can rely on it with complete
assurance that they will be compelled to contribute regularly to
Don Levit, CLU, ChFC, Sugar Land, TX