Volume 64, No. 9 September 2008
ABOUT THE POWER
Franklin Delano Roosevelt remarked that his programs
"created powers which in other hands would be dangerous."
Since then, in the name of compassion, safety, protecting
the vulnerable, achieving fairness, and other alleged good
intentions, the powers have expanded vastly along with the
revenues and the debt of the federal government.
The real motive, suggested Fred Kilbourne in a 2007 address
to the American Academy of Actuaries, is politicians' lust for
power, "an aphrodisiac beside which the love of money is but a
meager coin." (See www.concernedactuaries.com).
Money and power are of course inextricably intertwined. With
money, one can buy power, and with power, one can appropriate
money. And if the money runs out, what then?
The greatest counterfeiting operation in history,
fictionalized in the Academy Award-winning film Die
Falscher (The Counterfeiters), used forgers
imprisoned in the Sachsenhausen concentration camp. The initial
plan to destabilize the British economy by dropping bank notes
from aircraft was not carried out, but the fake currency was used
to finance strategic imports and to pay German agents. From 1942
to 1945, the Germans forged more pound notes than all the
reserves in the Bank of England, 132,000,000 pounds, equal to about 15%
of the notes in circulation and enough to cast suspicion on all
of England's paper currency. Ironically, some of the notes passed
through a Jewish money launderer bought war materiel for the
nascent Israeli army and helped bring exiles to Palestine.
The Bank of England detected the existence of the notes
because, as late as the 1940s, every banknote it issued was
recorded in large leather-bound ledgers as a liability of the
bank. A clerk noticed that one of the notes had already been
paid off, according to the record.
Hitler's propaganda minister, Josef Goebbels, feared that
the plan might be turned against Germany's own fragile finances
by the Allies. In fact, Churchill and Roosevelt considered
counterfeiting the enemy's currency, but rejected the idea
(Lawrence Malkin, Krueger's Men: the Secret Nazi Counterfeit
Plot and the Prisoners of Block 19).
The Stability of the Dollar
Though a profound embarrassment to the Bank of England, the
Nazi counterfeiters ultimately did not sink the British pound:
but the Kaiser's army and Hitler's bombs did, said Richard W.
Fisher, President and CEO of the Federal Reserve Bank of Dallas,
speaking to the Commonwealth Club of California on May 28.
England had to liquidate its international reserves to pay off
the costs of the Great Wars.
Now, Fisher said, the United States is launching fiscal
bombs against itself. He warns of an impending "frightful storm"
owing to untethered government debt. He estimates unfunded
entitlement obligations as $99.9 trillion.
To fund this obligation today would take $1.3 million from
every family of four, or 25 times the average family income. To
fund it by cutting spending over time, we would have to cut 97%
of federal discretionary spending, including defense, in
perpetuity, assuming a stable GNP.
Kilbourne (op. cit.) estimates the aggregate excess of
promises over provision at $75 trillion, which he terms the real
national debt (RND). That is more than five times the GNP. He
warns of the "upcoming actuarial collapse of the country" a
process more insidious than that from an earthquake or windstorm,
but more like that from termite damage.
The termites, he says, are the past several generations of
politicians whose monument to themselves is a $75 trillion
termite mound of debt "that will enslave the next several
generations as surely as two plus two doesn't equal five."
"It is not compassionate to finance your programs by
stealth, selling into unsustainable debt those least
able to help themselves, the children of America."
The Growing Mound
Because the termite mound is a present value, Kilbourne
says, it grows without being fed, merely by the passage of time.
But remember that, as Jarvis Farley wrote 65 years ago in "An
Approach to the Philosophy of Social Insurance," "a decision on
any proposal for government control of medicine requires
recognition of the certainty of increased cost." For the first
two-thirds of the 20th century, medical care averaged less than
5% of GNP, but began its upward march to 15% or more after the
passage of Medicare. Even if some procedures or delivery methods
are made illegal, the 15% of GNP will go up: "expanded medical
services will be promised to more people, or the votes won't be
there to be bought."
The key to tight control over medical decisions the
interoperable electronic record requires a huge "investment."
Recent legislation proposes $560 million in grants and loans.
What Is to Be Done?
This is the title of the famous book by Lenin, whose answer
was to "put an end to the third period," otherwise known as the
moderate socialists. The equivalent in America would be to skip
the suggestions of the AMA, or even Physicians for a National
Health Program, and go straight to expropriation of wealth, show
trials, and concentration camps.
Kilbourne hopes that instead we will carry out the needed
pest control, starting with overcoming the "actuarial ignorance"
of Americans. Each actuary needs to educate 20,000 people, he
says. And each AAPS member about 200 doctors and 75,000 patients
"in whatever pitiful remnant of the future remains."
It appears that the AMA is taking us to a third-party-payer-
dominated system that will result in substantial monopsony powers
for a few favored companies, writes David McKalip, M.D. Current
AMA policy appears call for a system that would: (1) Mandate
insurance for all; (2) Provide publicly financed subsidies to
those with incomes below a certain level to purchase insurance,
funded by those with incomes above a certain level; (3) Have no
real control over the cost of insurance; (4) Offer few to no real
consumer choices; (5) Use "value-based purchasing" of services
through third parties using Physician Consortium for Performance
Improvement (PCPI) and other measures; (6) Insert politics into
all medical care; (7) Kick out good doctors; and (8) Result in
lower quality, higher cost, waiting lines, rationing, cookbook
medicine, early death, and longer disability.
Alieta Eck, M.D., echoes AAPS in advocating that we: (1) Get
the government out of medicine; (2) Get the government out of
health insurance, with its mandates and edicts to insure
"fairness." People should be held responsible for their own
bills, she writes. For protecting their assets, they should be
allowed to purchase the insurance of their choice, including
across state lines. Free or low-cost clinics can provide for the
poor; she notes that the federal government provides free
professional liability insurance for such clinics. Local
governments can fund a safety net without federal interference.
AMA 2007 Financial Report
Total assets: $520.6 million.
Revenue: $289.5 million. Major sources are:
Publications: $71.0 million (JAMA, Archives,
AM News: including advertising, subscriptions,
Database products: $46.7 million (includes credentialing products
Books and products: $67.8 million, up $4.8 million from 2006
(includes reimbursement products such as CPT codes,
workshops, and licensed data files)
Insurance agency: $35.5 million
Dues: $46.4 million, down $1.8 million from 2006
Grants, other: $11.7 million
Government, $1.4 million. Projects include electronic health
records, chronic care, and quality measures; Robert Wood
Johnson Foundation, $915,000, for disparities in healthcare,
and underage and college drinking. Industry-supported
educational funding, mostly from pharmaceutical companies,
Accountable Care Systems (ACS)
Most physicians "still" practice alone or in small groups.
"Comprehensive health care reform will require proposals that
both expand coverage and redesign the delivery system so as to
achieve greater value for the increased investment." An ACS would
"assume responsibility for patients across providers...and
settings." It would need "strong leadership, governance, and
enough [aggregated] patients...to support information technology
and case management systems" (JAMA 2008;300:95-97).
* * *
"Higgledy piggledy, Senator Kennedy, promises everything
voters may wish; but if his programs are unactuarial, can he
provide with two loaves and five fish [sic.]?"--
Who Profits from Smoking Bans?
Smoking bans based on dubious evidence about "second-hand
smoke" have cost family-owned businesses and private clubs
billions of dollars in potential revenue, according to Opponents
of Ohio Bans. Meanwhile, profits for Johnson & Johnson (JNJ),
manufacturer of Nicoderm CQ and Nicorette, increased 40% in the
first quarter of 2008. There is an emerging, multi-billion dollar
market for long-term nicotine maintenance (ScienceDaily
The Robert Wood Johnson Foundation awarded nearly $450
million in grants to entities involved in anti-tobacco education
and advocacy. RWJF owns $2.3 billion of JNJ stock. As a tax-
exempt entity, RWJF pays only 1% tax on capital gains or
dividends from its investments.
RWJF has now pledged $500 million in grants for anti-obesity
campaigns; JNJ stands to profit through its Splenda brand of
Although no one advocates smoking or obesity, there is a
money trail to follow in coercive measures purportedly intended
to improve public health. "Tobacco control is the best marketing
strategy pharmaceutical dollars can buy" (Market Watch.-
com 7/23/08). Drug companies spent nearly $60 billion on
promotion in 2004 (ScienceDaily 1/7/08).
Stages of Inflation
According to Ludwig von Mises in The Theory of Money and
Credit, in stage one people restrict their spending, waiting
for prices to fall. In stage two, people discover that the
inflation of the money supply will continue, and begin to stock
up on things they think they will need in a year or two.
"When government official start complaining about hoarding,
that's a sign the whole country is in stage two," writes Richard
Maybury (Early Warning Report, August 2008).
In stage three, when the catastrophic end of inflation is
close, the housewife buys a table she knows she will never need,
rather than hold onto scraps of paper called money.
Recently, Europeans have been trading dollars for top-
quality items, such as luxury European cars. Dealers are booked
months ahead (WSJ 6/12/08). The government of Abu Dhabi
bought the Chrysler building in Manhattan. Tata Motors of India
bought Ford's Jaguar and Land Rover divisions (WSJ
6/1/08). "They're buying the crown jewels," says Maybury.
Meanwhile, without considering inflation, a family physician
in New Orleans reported that Medicare payments have dropped 10%
since 2005 (CPR 7/11/08).
Aug 27, 2008. Dr. Huntoon speaks on sham peer review,
Lake County Medical Society, Wickliffe, OH.
Sep 9-13, 2008. 65th annual meeting, Phoenix, AZ.
Sep 30-Oct 3, 2009. 66th annual meeting, Nashville, TN.
Extortion Victim Excluded from Medicare
After local police and district attorney told him they could
do nothing about threats of violence, Dr. Henry L. Gupton of
Tennessee finally gave in to threats against him and his family
and wrote prescriptions for Ritalin. He was then prosecuted for
Medicaid fraud for prescribing unnecessary drugs, and pleaded
nolo contendere to one count. Other counts were dismissed because
the prosecutor believed the threats had been genuine. Even though
the record was expunged, he was excluded from Medicare, Medicaid,
and all other federal health programs for 5 years. A federal
district court upheld the exclusion (Gupton v. Leavitt,
E.D. Tenn., No. 3:07-cv-00185).
Judge Robert Leon Jordan found that "it is the admission of
a criminal act, that is the conviction, that is important."
The penalty was found not to violate the Excessive Fines
provision of the Eighth Amendment: "The value of the unnecessary
prescriptions is not the issue; the result would be the same even
if there was no monetary value to the prescriptions," Judge
"Rather, balancing the protection of beneficiaries and the
federal [funds] against any potential loss of income to Dr.
Gupton shows that there is no disproportionate fine being imposed
on Dr. Gupton by the exclusion."
The due process clause of the Fifth Amendment was not
violated; the prescriptions were indisputably written. The Tenth
Amendment argument that HHS interfered with the express goal of
the State of Tennessee to resolve the issue so Dr. Gupton could
continue to practice was rejected on the basis that Dr. Gupton
could continue to see anyone who could afford to pay him (BNA's
News from the Front: War Against Doctors
1. The Centers for Medicare and Medicaid Services (CMS) is
appealing many administrative law judge (ALJ) decisions that
support doctors against recovery audit contractors (RACs).
2. Compliance programs need to be reviewed if there is an
organizational change, such as the election of new directors,
experts say. The compliance officer needs to be a full-time
position, and all compliance activities should be documented.
3. By October, all Medicare reimbursements paid through the
CMS integrated financial system are to be subjected to continuous
levy to collect unpaid taxes. Providers are estimated to owe the
tax collector about $4 billion.
4. Since 1986, lawsuits filed under the False Claims Act
have brought in $20 billion. Still more billions could be
recovered if proposed amendments in H.R. 4854 pass, extending the
FCA to all claims submitted to anyone using government funds,
including independent contractors. This would "virtually
guarantee a dramatic increase in parasitic lawsuits," said
attorney Peter B. Hutt II (BNA's HCFR 7/2/08).
5. Private payers are joining in government fraud dragnets
by deploying special investigations units (SIUs), which may go
"under cover," posing as a member (MCA 7/28/08).
Tip of the Month: Increasingly, the goal of hospitals
appears to be to deprive physicians of any due process
whatsoever. One method is to talk a doctor into resigning, with
the promise that he won't be reported to the National
Practitioner Data Bank (NPDB). In one case, a physician took the
hospital CEO at his word. Shortly thereafter, the hospital
reported him to the NPDB. Since the promise was not in writing,
the CEO will probably deny having made it. The doctor had been
accused of doing "too many" of a kind of case that no one else in
the area did, and of being "disruptive." By resigning, he waived
his right to any peer-review hearing or appeal. Taking the case
to court would be an uphill struggle; the hospital would probably
just say, "Look, he did it voluntarily." In any event, the law
requires hospitals to report if physicians resign while under
investigation. This applies even if the physician has not been
notified of an ongoing investigation.
Fifth Circuit Overturns Poliner Victory
A rare case of sham peer review to make it to a jury
verdict, which initially pegged damages at $366 million,
Lawrence R. Poliner v. Texas Health Systems was
overturned by the Fifth Circuit Court of Appeals (No. 06-11235).
The Court held that failure to comply with medical staff bylaws
does not defeat a peer reviewer's right to immunity from damages
under the Health Care Quality Improvement Act (HCQIA). While
acknowledging that this immunity "may work harsh outcomes in
certain circumstances," the Court held that these were outweighed
by the "systemwide benefit of robust peer review in rooting out
incompetent physicians, protecting patients, and preventing
malpractice." Physicians still had access to the courts to
"assure procedural protections," and that, the Court felt,
"strikes the balance of remedies essential to Congress' objective
of vigorous peer review."
See AAPS News, October
2004, May 2006.
Doctor Persists; Quest Caves on NPI
As an AAPS member persistently pointed out, it is Quest
Diagnostics that is providing laboratory services and collecting
payment for them; he only orders them. He provided copies of the
regulation concerning noncovered entities (see www.aapsonline.org/npi/npi-letter.pdf); he
complained that the lab was engaging in willful and arbitrary
discrimination based on an unnecessary rule that harms the
delivery of patient care.
After repeatedly harassing the doctor and refusing to
process orders for Medicare beneficiaries, Quest finally assigned
him a special identification number for submitting his claims.
This is a great victory; Quest is the largest clinical lab in the
world. The physician can now tell other vendors he will take his
business elsewhere if they do not do the same.
At an Apr 17, 2007, CMS roundtable on the NPI, a software
vendor asked about a physician who didn't have and never planned
to get an NPI. Clients want to be able to "flip a setting" to use
a legacy number for such physicians.
Karen Trudel said that "there are a number of reasons why
[HIPAA noncovered] providers should have NPIs.... [W]e
will be...increasing...our outreach efforts to those providers to
recommend that they do obtain an NPI [emphasis added]."
Kathy Simmons said: "If you did have someone who was not a
covered entity, the alternative to reporting the NPI is reporting
their taxpayer identification number which if you're a small
provider might be your social security number. If I was going to
be secretive or not want to use my NPI, I'd prefer to keep my
social security number or my employer identification number more
secret than an NPI. So, you know that might be another reason why
they'd want to get one so that they don't have to be giving out
those other numbers [sic.].
The full transcript can be found at http://cms.hhs.gov by searching on
"NPI, HIPAA non covered, Trudel."
The Little Train That Could. Police thought they had
discovered a one-way track that nasty hospitals were using to
"dump" homeless persons onto the street. Further investigation
revealed the other half of the story: a scheme to recruit Skid
Row residents for a free ride to the hospital, where they got
three hots and a cot, then dump them back on the street for a
time, until they were picked up again. At the head of the train
was a powerful locomotive called "universal care and assignment
of benefits," fueled by an unlimited energy source called
"taxpayer money." Participants in the scheme were allegedly
receiving up to $20,000 per month in kickbacks from the hospitals
for delivering between 30 and 50 patients. FBI agents arrested
the City of Los Angeles Hospital CEO and a Skid Row health
assessment center operator (Buffalo News 8/7/08).
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY
Following the Money. When I was interested in AMA
finances a few years ago, I decided the data suggested that it
had a bigger financial stake in maintaining the current system
and pushing for more government control than it did in protecting
physicians (see p 2). Looking at the grants reported in 2006,
we're not seeing a lot of consumer-directed health care the
Feds, Commonwealth, and Robert Wood Johnson. The usual suspects.
Which explains why the AMA is focused on the usual things health
disparities, physician communications, Cover the Uninsured Week,
badgering smokers, underage drinking, assessing the nation's
health literacy, etc., rather than protecting individual
physicians, improving actual medical care for actual patients,
and doing something about costs in medical care and training
(which would require a look at deregulation and a reduction in
general government interference). I'm thinking that the data show
that the AMA is just one more organization that has been captured
by the Left.
Linda Gorman, Ph.D., Independence Inst., Golden, CO
PQRI. The Physician Quality Reporting Initiative is really
not reporting, it is Pay for Performance (P4P). To "report" a
behavior, you have to "perform" the behavior. And it takes more
effort to report not performing the behavior. The
current PQRI amounts to giving physicians a bribe (about $0.25
per visit by my calculation) to act a certain way. Accepting
money to perform a certain way conflicts directly with the AMA
code of ethics. Further, when did "cookbook medicine" go from
being a derogatory term to acceptance as "quality medicine"? This
is another step in eroding respect for physicians, since
nonphysicians can follow a cookbook. Physicians' expertise is
needed to determine who needs nonstandardized care.
Stephen R. Levinson, M.D., Easton, CT
Do We Ever Learn? The liberal argument of promoting
mandated prevention to lower costs was used decades ago to
promote employment-based insurance. The result: costs have more
than tripled the rate of inflation since individuals lost the
ownership of their insurance plan.
Roger Beauchamp, D.D.S., Escanaba, MI
Maintenance of Certification; EMRs. I'm in the
miserable process of recertifying. Numerous vendors are eager to
sell the credit hours needed to study for the test which is
taken at a center where examinees sit at computer terminals and
are monitored, at a cost of $1,500. Who profits? The American
Psychiatric Association. It sells the self-study based on a 2004
book that lauds nefazodone, which is no longer on the market. How
do patients benefit when doctors forget current information to
learn now out-dated information to pass the test? It will get
worse when we need patient evaluations as from angry dementia
patients whom I advised to quit driving.
A VA emergency physician tells me he cannot give verbal
orders because the computer system doesn't allow it. He has to
log into the system for every order. Only recently did he manage
to change the blocks that required him to do smoking, depression,
mammography, lipid, alcohol, lifestyle, and traumatic brain
injury screening before he could order emergency medications or
Martha Leatherman, M.D., San Antonio, TX
Electronic Records. Your commentary entitled "EMR a
Non-consented Experiment" is one of the best statements I have
read concerning problems with the EMR. When in private practice,
I spent several hundred hours developing a system, only to have
it fail. My current employer has the VA system. Since we had
excellent technical support, we were able to avoid problems in
the study by Koppel that you cited, and I believe the net effect
was positive. However, I do not believe our experience is common,
nor can it be reproduced in a smaller clinical setting. EMR is
clearly an experiment on a national level, with
potentially terrible outcomes for patient care and safety. It is
tiresome to hear physicians blamed for "resisting change" as if
we were backward-thinking technophobes. Could it be we have tried
it and found it disappointing?
Curtis Harris, M.D., J.D., Ada, OK
Medical Home. As a solo family physician, I have always
coordinated specialist care and provided a place where patients
can be seen the same day. Putting a new name of "medical home" on
it changes nothing. No one, however, cares enough to pay for it.
P4P won't even repay the physician for the expense and time to
fill out the required paperwork.
Everest A. "Tad" Whited, M.D., Pflugerville, TX