AAPS NEWS

Volume 66, no. 5, May 2010

IT�S NOT OVER

There is exultation in Washington, D.C., about finally overcoming 60 years of opposition to compulsory health insurance, a.k.a. socialized medicine. The triumph, however, could be short-lived, and storm troopers Obama, Reid, and Pelosi could experience the same outcome as Dan Rostenkowski did in 1989, when Americans learn that they are not being given anything, but rather forced to buy something that is costly, coercive, and repugnant.

Checks and balances remain: the courts, the States, the ballot box�and, ultimately, citizen noncooperation.

Enjoin

On March 26, AAPS became the first medical organization to file suit (see p. 3), asking the Court to enjoin enforcement of the insurance mandates as unconstitutional.

The Patient Protection and Affordable Care Act (PPACA) acknowledges [�1501(a)(2)(G)] that mandates are necessary for �creating effective health insurance markets in which...products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.� Jonathan Gruber writes: �Without the...mandate, fundamental...reform is impossible, and we cannot cover the majority of the uninsured (NEJM 12/24/09).

This will soon be demonstrated since requirements that will drive up premiums are taking effect soon. These include first-dollar coverage of �preventative services,� very broadly defined; new taxes on medical equipment and drugs; and elimination of lifetime caps, not itself so expensive but involving substantial compliance costs. Insurers will have to send out mid-term rate increases and new plan documents to 160 million Americans, a substantial unplanned cost (CPR # 215, 3/30/10).

When asked whether he believed it was constitutional for Congress to pass a law requiring people to buy health insurance, Rep. Peter DeFazio (D-OR) replied, �Well, um, I�m not a lawyer. That�s why we have courts�. Congress often passes laws that are of dubious or questionable constitutionality.�

We�ll see whether judges will have the courage to keep their oath to uphold the Constitution, though Congressmen have not.

Repeal

While 55% of the public wants ObamaCare repealed, and Rep. Ron Paul, M.D. (R-TX) has already introduced the End the Mandate Act, H.R. 4995, many consider repeal to be a futile exercise because, even if passed, Obama would veto it. Statists hope and expect that it will quickly become impossible to take away a huge new entitlement. In 2014, everyone in the U.S. making up to $90,000/yr will begin to receive a subsidy (CPR 4/9/10). And already the �stakeholders� are becoming entrenched.

�Virtually all the interested parties are quickly positioning themselves as supporters of successful implementation��even if they opposed the bill, writes Christopher Jennings (NEJM 4/15/10). They know that the implementing agencies can make a huge positive or negative difference to their interests. Still, there�s the possibility that PPACA will turn out to be an albatross.

And, as Rep. John Dingell (R-MI) told Paul Smith of WJR, �it takes a long time to do the necessary administrative steps that have to be taken...to control the people.�

Defund

As Oregon congressional candidate Art Robinson points out, the House of Representatives can achieve effective repeal of government programs by simply refusing to fund them.

Implementation�as in giving precise meaning to terms and figuring out how to calculate income-based subsidies�will be complex, controversial, and costly, note Henry Aaron and Robert Reischauer (NEJM 4/8/10), who remember 1989.

The funding has to come from somewhere. And the government will not be able to �squeeze another $1.2 trillion over ten years from a tiny sliver of taxpayers who already pay more than half of all individual taxes� (WSJ 3/30/10). The monthly budget deficit reached a record $220.9 billion in February, reported the National Inflation Association. Even 100% of all Americans� income would not be enough to balance the budget. The �extend and pretend� strategy eventually means insolvency.

Withdraw

�Resistance is not futile,� writes former senator Phil Gramm. �As Gandhi once explained, 40,000 British troops cannot force 300 million Indians to do what they will not do� (WSJ 3/26/10).

A sign on the door of Scottsdale, AZ, dermatologist Joseph Scherzer has made national news: �If you voted for Obamacare, be aware these doors will close before it goes into effect�.unless Congress or the courts repeal the bill� (Daily Caller 4/14/10).

It�s a matter of morality and honor, he said. �I choose not to continue to be a physician if Government would control my actions. There is no room for conflicts of interest�.�

Physicians, patients, and states are considering self-reliance, instead of asking how they can stay on the plantation.

�Resolve to serve no more, and you are at once freed,� wrote �tienne de la Bo�tie in 1549. Without support, the tyrant falls.

If there is a silver lining in ObamaCare�s tightening noose of government dependency, writes George Will, it is the word �Thermidor.� That�s the name of the month in the French Revolutionary calendar in which Robespierre fell.

Medicare NPI Revalidation Trap

When the demand for revalidation is received, you are required to sign an open-ended contract to obey all Medicare rules�apparently both present and future.

�I rewrote the contract and mailed it one day later. Medicare notified me on Mar 8 that it had revoked my provider number retroactive to Feb 4,� writes dermatologist Richard Swint, M.D., of Paris, TX. �You are at a decision point. Do you surrender, or join a rebellion against socialism? This happens one brave doctor at a time. Nationalized/socialized medicine is unconstitutional enslavement of doctors.�

�Socialism is evil greed, not charity. I will not participate.�

Exemptions and Refusals

There�s a miracle on p. 327 (or 330), writes AAPS director Alieta Eck, M.D., of Somerset, NJ. Health-sharing groups continuously in existence since Dec 31, 1999, such as Christian Brotherhood Newsletter, Christian Care Medi-share, and Samaritan Ministries, are exempt from the federal mandates of ObamaCare, and their members will not be required to buy insurance. These groups may accept new members.

Adherents of certain religious groups are exempt from the mandates. These apparently include Muslims, Amish, and Native Americans, who have established tenets against insurance.

Many Americans may calculate that, with guaranteed issue, they are better off paying penalties than buying coverage. Massachusetts insurers have been hit with such gaming. Harvard Pilgrim reported that 40% of new enrollees stayed fewer than 5 months and ran up costs 600% higher than expected (WSJ 4/9/10).

Market chaos reigns in Massachusetts. The Division of Insurance rejected 235 of 274 proposed rate increases�by nonprofit companies, incidentally. New policies cannot be issued because there are no approved rates (Boston Globe 4/4/10; 4/7/10).

HSAs Survive, for the Moment

Earlier proposals that would have eliminated options such as Health Savings Accounts were defeated. PPACA disallows use of the HSA for OTC drugs, increases the tax penalty for non-qualified expenses to 20%, and limits employee contributions to $2,500/year. The worst feature for high-deductible health plans is the high medical-loss ratio requirement. This provision favors first dollar coverage. Fixed costs are obviously a lower fraction of a higher premium (see http://hsaconsultingservices.com).

Margaret Emmons, M.D., R.I.P.

Recruited to join AAPS in 1971 by her medical school classmate Robert Jaggard, anesthesiologist Margaret Emmons was an outspoken exponent of private medicine, even when it made her tiresome to administrators or colleagues. She modeled personal attention to patients in all phases of care. In her household, which included four children, the Eleventh Commandment was �Thou shalt not participate in Medicare or Medicaid,� said her son Robert Emmons, M.D., a psychiatrist and AAPS member since high school. She died Jan 16, at age 86, leaving a legacy of fidelity.

Actuarial Predictions

In 1965, Medicare outgo was predicted to be $9,061 million by 1990, while the actual experience was $66,997 million, or 639% greater. Robert J. Myers, who was chief actuary of the Social Security Administration from 1947-1970, writes that a more realistic procedure would be to use percentage of taxable payroll, adjusted for greater benefits. Using these and other adjustments, actual experience was only 165% of the estimate. Noting that this is much better, he writes: �Nonetheless, the only thing for me to do now is commit hari-kari!� (The Actuary, February 1994).

Massachusetts universal coverage adopted in 2006 was supposed to cost taxpayers $88 million/year, writes state treasurer Timothy P. Cahill. Since then, total health care costs have exceeded $4,000 million. MassCare has survived this �fiscal train wreck� only because of repeated bailouts by the federal government. �Who will bail out America if we implement a similar program?� he asks (WSJ 3/25/10).

PPACA and the States

PPACA unloads much of the fiscal responsibility for increasing insurance coverage onto the States, and increased funding, despite expanding the �Cornhusker Kickback� to other States, is only temporary. The requirement to extend Medicaid to anyone with income below 133% of federal poverty will swell Medicaid rolls by more than 50% in some states (NEJM 4/8/10). To the extent that this crowds out private coverage, states will also lose revenue. A 2% premium tax on private policies brought in $6.5 billion in revenue in 2008 (John R. Graham, PRI 3/23/10).

State budgets are in dire straits. Tax revenues have plunged $87 billion, an 11% decline from last year, while more people need services (Center on Budget and Policy Priorities 3/8/10).

This situation will worsen if ObamaCare kills 700,000 jobs, as predicted by Americans for Prosperity.

State and local governments face some $2.3 trillion in debt, largely from underfunded employee pension plans. The amount has increased by a factor of 2.3 since 1994 (mybudget360.com).

States could also face a wave of lawsuits if a change in the definition of �medical assistance� (�2304) wipes out decades of court precedent by making States liable for goods and services themselves, rather than just for paying providers, writes Alan Levine, Louisiana Secretary of Health and Hospitals. Medicaid directors worry that they could be sued every time a patient has difficulty accessing a service because of the inadequate payment rates they offer (David Hogberg, investors.com 4/8/10).

AAPS Calendar

June 25-26. Workshop, board of directors meeting, Atlanta, GA.
Sept. 15-18. 67th annual meeting, Salt Lake City, UT.
Sept. 28-Oct. 1, 2011. 68th annual meeting, Atlanta, GA.

ACTION OF THE MONTH

Assess your practice and your insurance options. How can you become more independent yourself�and support patients and colleagues who have rejected third-party shackles?

Lawsuits Challenge PPACA Constitutionality

On Mar 26, AAPS filed suit in the U.S. District Court for the District of Columbia (AAPS v. Sebelius, et al. No. 1:10-cv-00499-RMC), asking for the following relief:

Vacate the provisions in the Social Security Program Operations Manual System (POMS) that require AAPS members and their patients to participate in Medicare Part A as a condition for receiving Social Security benefits.

Vacate the insurance purchasing mandates in PPACA.

Enjoin promulgation of federal insurance standards.

Declare PPACA unenforceable in its entirety because it lacks a severability clause and cannot be funded without the mandates.

Order Secretary Sebelius and Commissioner Astrue to submit to the Court an accounting on the solvency of Medicare and Social Security, respectively.

AAPS writes that �many patients prefer to avoid Medicare� because the quality of care is better...outside� the program. Additionally, physicians prefer to operate outside Medicare because of its restrictions on the practice of medicine.

Although mandates do not take effect until 2014, the addition of major new costs then is lowering the value of businesses today.

Nothing in the U.S. Constitution authorizes the federal government to set the acceptable terms of health insurance. By forcing up premiums generally, federal standards represent a regulatory taking, without just compensation, in violation of the 5th Amendment, AAPS argues.

Defendant Sebelius knowingly stated that PPACA would reduce the federal deficit, when she knows the opposite is true in reality, without the unrealistic assumptions that the Congressional Budget Office (CBO) was compelled to make. In PPACA, Congress purports to cut half a trillion dollars from Medicare. This program faces fiscal insolvency; the Secretary has a fiduciary duty to implement federal programs properly, and Americans need an honest accounting (www.aapsonline.org/hhslawsuit).

The American Health Legal Foundation is providing funding for this lawsuit.

Actions by States and Others

The Commonwealth of Virginia filed suit in the Eastern District of Virginia (civil action No. 3:10CV188), noting a collision between PPACA and the recently passed statute that protects Virginians against mandatory insurance. The Supremacy Clause does not apply because PPACA is unconstitutional, argues Attorney General Kenneth Cuccinelli. Permitting the government to require purchase of any goods or services would deprive the Commerce Clause of any meaningful limit.

Florida and a number of other states filed suit in the Northern District of Florida, challenging the tax penalty as an unlawful capitation or direct tax, the imposition of unfunded mandates on the State, and the conversion of the voluntary federal-state partnership in Medicaid into a compulsory top-down federal program.

Others filing suit include: Thomas More Law Center (Eastern District of Michigan), which includes a complaint about being force to pay for abortion; New Jersey Physicians, Inc. (District of New Jersey); and Judicial Watch (District of Columbia), which asks the Court to order compliance with the Freedom of Information Act request for documents related to closed-door meetings on health care reform in January 2010.

It�s Not the Oath of Hippocrates

In a perspective on �concierge� physicians, Michael Stillman, M.D., of Boston University, expresses surprise about the neutrality of the medical community toward this concept. He states that limiting one�s practice to several hundred wealthy patients �undermines this tenet of our profession,� as each of us has vowed to �treat without exception all who seek [our] ministrations� (Ann Intern Med 3/16/10).

This phrase is taken from �The Hippocratic Oath (Modern Version), � 1995, developed under the leadership of Dr. Joseph R. Stanton for the Value of Life Committee of the Catholic Bioethics Center. Stillman omits the clause that immediately follows this impossible promise: �so long as the treatment of others is not compromised thereby.� This qualifier not only seems to void the promise, but to subjugate one�s solicitude for one�s patient to the collective good. Kenneth Feucht and Byron Calhoun criticize this oath for lack of clarity and for introduction of indefinable concepts including �beneficence� and patient automony (J Biblical Ethics Med vol. 10, no. 2)�which are reminiscent of the Physician Charter on Professionalism. The 1995 oath is in several respects foreign to if not contrary to the Oath of Hippocrates.

Convicted Oncologist Survives Suicide Attempt

Ronald Poulin, M.D., 61, the only private oncologist serving his area in Virginia, sits in a county jail being �processed.� He spent his retirement account on his defense, and all his assets have been seized to pay a fine of nearly $800,000. Triumphant U.S. attorney Neil MacBride stated that Dr. Poulin �lied to get more money for his services than he deserved, and now he is going to spend 63 months in prison for that greed.� For a time, a newspaper linked to a real estate agent�s posting of photos from his home. Dr. Poulin explained that he had inadvertently miscoded some level-3 visits and administration of partial vials of chemotherapeutic agents (�fraud�), and tried to correct errors in some charts (�obstruction of justice�). After his conviction, he went to his office and attempted suicide with intravenous drugs. He was on life support for 2 weeks in the intensive care unit.

Fraud Dragnet Enhanced

In 2008, more than 580 health care fraud defendants were convicted. PPACA extends penalties as to persons who know of but fail to report an overpayment; increases civil penalties to $50,000 per item; lowers the government�s burden of proof; greatly increases the burden for proving compliance; wipes out a requirement to demonstrate intent to violate the antikickback statute (AKS); and defines any claims involving an AKS violation as a false or fraudulent claim. Previously voluntary, a compliance plan containing certain core elements will be mandatory for enrollment in Medicare, Medicaid, and SCHIP (BNA�s HCFR 4/7/10).

Be aware that managed care organizations might change codes on claims, for risk-adjustment purposes (see CMS Manual System Pub. 100-16, �111). The doctor and the fraud squad could be looking at different sets of data.

Doctors may �quickly become beggars,� with lower payments and unclear rules. They �may be driven from the industry or...opt out of Medicare and Medicaid� (BNA�s HCFR 3/24/10).

Correspondence

Red Flags Rule. Here�s another reason for physicians to opt for a third-party-free practice, and collect full payment at the time of service. After four postponements, the Federal Trade Commission�s Red Flags Rule will be enforced in medical practices starting June 1. Any practice that engages in billing is considered a �creditor� and must implement written policies to prevent identity theft (AAPS News, May 2009, www.ftc.gov).
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

There�s Hope. The main problem I have in negotiating prices with physicians is that the office staff often has no idea whether their cash price is less than their network price. It�s a lot to keep track of, so one can�t blame them. What is really annoying is that they sometimes are so far out of it that they seem surprised that I would want to pay cash. One receptionist told me it was illegal for them to accept cash because they participate in Medicare. I politely protested, and the doctor straightened her out. One more person is now better informed about cash payment.

Cost Shifting. In 1971, the normal major medical deductible was $100, and the average monthly premium for an individual was $15. Today, the average deductible is $500 (5 times more) and the monthly premium $350 (23 times more). The radical shift of payment from patient to third party has inevitably fueled increases in costs along with the entitlement mentality. This is not sustainable.
Frank Timmins, Dallas, TX

Medicare Fraud. Senator Coburn is correct that there is a lot of fraud in the Medicare program, but he is incorrect about the percentage: it is 100%, and all resides in the federal government. It is fraud to refuse to pay legitimate claims; to refuse to honor two CPT codes just because they occurred on the same day; to delete certain CPT codes from payment; to pay hospitals at different rates than ambulatory surgery centers; to rule that physicians can�t use their own facilities to provide cost-effective services. Price controls are not only fraudulent but unconstitutional.
Kenneth Christman, M.D., Dayton, OH

Growth Spurt. ObamaCare will probably promote tremendous growth in direct practice and concierge care, as has the similar plan in Massachusetts by forcing primary doctors out of practice and lengthening lines at the ER. In Amherst alone, 20 primary doctors in a town of 35,000 closed their doors in the past 3 years; a physician who is converting her financially upside-down practice to concierge hopes to bring some of them back.
Thomas LaGrelius, M.D., Torrance, CA

Repeal Happens. In June 1988, the Medicare Catastrophic Act passed 328-72 in the House, and 86-11 in the Senate. Yet in November 1989, it was repealed by voice vote.
John R. Graham, Pacific Research Institute

Another Bubble. ObamaCare is not unlike the Clinton Administration�s requiring Fannie and Freddie to make mortgages available to credit-unworthy customers, setting the stage for the housing bubble. Expect an insurance bubble to pop in about 8 years.
Doug Andrews, Chicago, IL

Hooray for Obamacare. The dawn of critical illness insurance has started in the U.S. Those who can afford CI will use it to access global health care. Those who can�t will settle for what their political masters give them. I�m going to get rich helping people access quality medical care�elsewhere.
Edward Dee Hinds, C.L.U.

Physicians Choosing to Work for Hospitals. Salaried employed doctors will be easier for the government to control. The government prefers to ration care at arm�s length by threatening doctors with fines for not following the government�s protocols for treatment and referral�to maintain plausible deniability.
Joseph Scherzer, M.D., Scottsdale, AZ

Bankruptcy in Four. The Massachusetts state treasurer says it will take 4 years for ObamaCare to bankrupt the nation. His state may face a $4 billion budget shortfall. The Connector is a second Medicaid program. Premiums up, hospitals bankrupt, no competition, healthcare soaks up entire state budget. Listen up!
Marcy Zwelling-Aamot, M.D., Los Alamitos, CA