Category Archives: economics

AAPS, Obama & socialized medicine

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Last month AAPS members voted unanimously to re-affirm the AAPS Resolution to Oppose a Single-Payer Medical System.

In that resolution, AAPS urges all physicians to oppose a government-controlled or single-payer plan as harmful to patients, and therefore inconsistent with a high standard of medical ethics.

Presidential nominee Sen. Barack Obama has proposed an ambitious plan to restructure America’s health care sector — a plan some have called “socialized medicine.” Many others reject that label.

In the newest Cato Institute Briefing Paper, Cato director of health policy studies Michael F. Cannon argues, “Reasonable people can disagree over whether Obama’s health plan would be good or bad. But to suggest that it is not a step toward socialized medicine is absurd.”

Cato Institute Briefing Paper #108
Introduction:

“Democratic presidential nominee Sen. Barack Obama (IL) has proposed an ambitious plan to restructure America’s health care sector. Rather than engage in a detailed critique of Obama’s health care plan, many critics prefer to label it ‘socialized medicine.’

“Is that a fair description of the Obama plan and similar plans? Over the past year, prominent media outlets and respectable think tanks have investigated that question and come to a unanimous answer: no.

“Reasonable people can disagree over whether Obama’s health plan would be good or bad. But to suggest that it is not a step toward socialized medicine is absurd….”

READ THE ANALYSIS

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Massive pork bill passed by unconstitutional process to “rescue” economy

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According to the U.S. Constitution, all revenue bills must originate in the U.S. House of Representatives. How then did the massive bill to make taxpayers buy all kinds of toxic debt originate in the U.S. Senate?

It only appears that way. For purposes of our lawmakers, “it”—that is the shell bill wrapped around the “rescue” package—did come from the House. Apparently, any bill previously passed by the House will serve. This one was a bill requiring “mental health parity,” H.R. 1424, originally sponsored by Rep. Patrick Kennedy (D-RI) and pushed through as the shell bill by Sen. Edward Kennedy (D-MA). That is an insurance mandate that forces employers and insurers who offer mental health benefits to more than 50 workers to provide them on par with medical benefits. There can be no higher deductibles or copayments for mental health benefits, or stricter limits on physician visits (Kevin Freking, LA Times 10/2/08).

Starting out as a 3-page bill, the package rapidly expanded to 442 pages, despite a promise by Sen. Chuck Schumer not to “Christmas-tree” the bill. It got decorated even more after the House rejected it in response to an outpouring of rage from constituents.

In a tape played on talk radio, Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, said his mail was running about 50:50. “Fifty percent no, and 50% hell no.” Incumbents have a lot of explaining to do, especially if they switched their votes from “no” to “yes.”

Possible rationales: The stock market plunge after the “no” vote. Disaster aid to states struck by summer storms. A one-year patch for middle-class families facing a sting from the alternative minimum tax. More students able to finish college if a credit crunch on college loans is forestalled. Increasing FDIC insurance from $100,000 to $250,000. Tax credits for “alternative” energy. A really good speech by Joe Knollenberg (R-MI) about how he was willing to pay the price of getting this important thing done.

The biggest single switch was in the Congressional Black Caucus. Thirteen members of the CBC switched from “no” to “yes”; many had heard from Barack Obama. Both presidential candidates strongly endorsed the bill.

“When I woke up this morning, I had real peace that this was the right thing to do,” said Rep. Mike Conaway (R-TX), a certified public accountant (Patrick O’Connor, Politco.com 10/4/08).

Among the switchers was Rep. John Boehner (R-OH), the hero of conservatives credited with the initial rejection. Apparently because of the addition of $150 billion in “sweeteners” to the $700 billion bailout, he called on Republicans to vote for the modified bill.

Among the least well-known features of the bill is a provision that makes IRS authority to conduct undercover operations permanent. IRS agents can, for example, run an extended sting operation disguised as an accounting firm. The bill also empowers the IRS to share personal tax returns with any federal agency investigating suspected “terrorist” activity.

The most earth-shattering provisions in the bill lay the foundations for an economy-killing carbon tax like the “cap-and-tax” system that is now destroying European industry, observes Matthew Vadum (Capital Research Center 10/2/08). On Oct 2, while Americans were focused on the threat of a credit meltdown, House Democrats released principles for an aggressive plan to cap greenhouse gas emissions, which could cost even more than the failed $6.7 trillion Lieberman-Warner Climate Security Act, writes Marc Morano, communications director for Senate Environment and Public Works Committee Inhofe staff.

The $700 trillion that the Treasury is now authorized to hold in “troubled assets” is piled on top of other recent bailouts. These include: $29 billion for Bear Stearns financing; $200 billion for Fannie Mae and Freddie Mac nationalization; $85 billion for AIG; $300 billion for Federal Housing Administration rescue bill; and much more, for a total of more than $1.8 trillion, or more than $17,000 for every American household, writes Declan McCullagh (Politics and Law 10/3/08).

As Congress and the President celebrate “dealing with” the problem, Treasury Secretary Paulson, with his selected associates, is planning to move quickly to buy distressed assets. What is his experience in valuing assets? Paulson, remember, was formerly head of Goldman Sachs and, simultaneously, the Nature Conservancy. He presided over the donation of 680,000 acres of land in Tierra del Fuego, Chile, to the Wildlife Conservation Society without ever assessing the area’s potential value for timber, oil, or metals, in order that Goldman Sachs shareholders could know the true value of the giveaway (Vadum, op. cit.) (Also see Fred Lucas, “In Goldman Sachs We Trust: How the Left’s Favorite Bank Influences Public Policy, Foundation Watch, October 2008.)

Carbon emissions trading is the biggest potential moneymaker for Goldman Sachs.

Who will be competing to unload assets on the U.S. taxpayer? Gov. Arnold Schwarzenegger already has his hand out for California, which has been shut out of credit markets and could run out of cash by the end of the month. Many foreign banks are also on the verge of the abyss.

The stock market fell further after the bailout, as did the dollar. The focus has now shifted to the fallout and to the question of whether the latest, biggest bailout will succeed in containing the panic.

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Government funding breeds conformity, says surgery professor

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If you want government funding, there are certain ideas that you dare not question, stated Donald W. Miller, M.D., University of Washington professor of surgery, a member of AAPS.

Miller’s views are similar to those expressed in 2005 by another UW professor, Gerald Pollack, whose work on muscle contraction has challenged the reigning view in his field. Pollock said that science has become a “culture of believers,” The rule is “just keep it safe and get your funding.”

Pollack noted that breakthroughs in science were fairly common 50 years ago, citing Linus Pauling in molecular biology, Jonas Salk in vaccines, Richard Feynman in physics, and James Watson and Francis Crick in the study of DNA. “Where are the heroes of the past 30 years?”

He believes that Einstein’s challenge of orthodoxy would probably fail in today’s grant system. Granting committees demand that a scientist predict what he will be able to accomplish in year one, year two, etc. This amounts to “an implicit admission that no breakthroughs are to be anticipated.”

If science is likened to a skeleton, the grant system sets out to pay a multitude of scientists to add a tiny bit of flesh. But what if the skeleton itself is misdesigned? In the past, science was recognized to progress by overthrowing the “dominant paradigm.” Today, defenders of the dominant paradigm are probably sitting on the grants committee.

Today’s orthodoxy holds, according to Miller, that global warming is caused by humans, AIDS is caused by the human immunodeficiency virus, heart disease is caused by saturated fats, and cancer is caused by mutations. It also holds that radiation, cigarette smoke, and other toxins are dangerous in proportion to their strength, no matter how small the dose. If you want to test a contrary belief, you won’t get funded.

Miller predicts that at some point a major belief like one of these will come tumbling down. “And when it’s acknowledged, a lot of other science will be called into question” (Bruce Ramsey, Seattle Times 3/19/08).

Dr. Miller will speak at the AAPS annual meeting in Phoenix, Sep 11-13.

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Nonsmoking, persons of normal weight have highest lifetime medical costs; Japan passes anti-flab law

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Politicians and others usually list the funding of prevention and chronic disease management programs as a key method of achieving cost containment. Smoking and obesity are most frequently mentioned as risk factors to target. In the long run, however, removing these risk factors would probably increase medical costs—even assuming that preventive interventions cost nothing.

Using a simulation model, researchers found that never-smokers of normal weight actually incurred higher lifetime medical costs than obese nonsmokers. Smokers of normal weight had the lowest costs. Life years gained through prevention are not lived in full health. Reduction of risky behavior resulted in substituting expensive, chronic diseases of aging for cheap, lethal ones.

Healthy living is still a good thing, researchers conclude, considering that “the aim of health care is not to save money but to save people from preventable suffering and death” (van Ball PHM, et al., PLoS Medicine 2008;5(2):e29).

The Japanese Ministry of Health, however, believes that a new law to reduce waistlines will rein in ballooning medical costs. Companies and local governments are now required to measure the waistlines of all persons between the ages of 40 and 74 as part of their annual checkups. If the target of a 10% reduction in the number of overweight people in 4 years, and 25% in 7 years, is not met, the national government will impose penalties on the companies or local governments.

Japanese are not noted for being overweight. But a flower-shop owner who got measured during an aggressive special check-up campaign was dismayed to learn that his waist measured 33.6 inches, 0.1 inch over the limit. The average for white American men is 39 inches.

“Strikeout,” said the defeated flower-shop owner .

Critics say that more than half of all Japanese men will be considered overweight. They think the campaign will encourage overmedication and ultimately increase medical costs (NY Times 6/13/08).

Childhood obesity is a major funding area for the Robert Wood Johnson Foundation (RWJF). Based on a World Bank study, RWJF claims obesity costs 12% of the U.S. healthcare budget. Tens of millions of dollars worth of studies on obesity have found, among other things, that poor minorities are more likely to be fat than wealthy whites, and that there are three times as many supermarkets in wealthy neighborhoods as in poor ones, and four times as many in white neighborhoods as in black ones. Proposed interventions to reduce both fat and disparities are not spelled out.

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Retirees projected to need $225,000 per couple for medical costs

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According to an annual study released by Fidelity Investments, a couple retiring this year will need about $225,000 to cover lifetime medical costs. The study assumes no employer-sponsored retiree coverage. It includes Medicare premium payments, copayments, and deductibles, as well as out-of-pocket prescription drug costs.

The figure has increased 4.7% since 2007. Fidelity’s first study in 2002 found that a couple needed $160,000 in savings to fund medical costs in retirement. Given current levels of savings, 6 in 10 retirees are “at risk” of not being able to maintain their standard of living (Eileen Alt Powell, Associated Press 3/6/08).

The very first cause listed for the rising costs, notes Dr. Lawrence Huntoon, is “the cost of a doctor’s visit”—expected Medicare fee cuts notwithstanding. Other causes are stated to include increased utilization, new technology, and increasing incidence of chronic diseases such as diabetes.

The study assumes, apparently, that Medicare will somehow be able to continue current premiums and benefits.

The federal government projects that by 2017, consumers and taxpayers will spend more than $4 trillion on medical care, $1 of every $5 spent, with the amount increasing at nearly three times the rate of inflation. The percentage paid by federal and state governments is projected to increase from 46% in 2006 to 49% over the next decade.

“Medicare, on its current course, is not sustainable,” testified Health and Human Services Secretary Michael Leavitt (Kevin Freking, Associated Press 2/26/08).

Neither John McCain, Hillary Clinton, nor Barack Obama listed dealing with the coming crisis in financing retirees’ medical care among their stated goals, according to the Kaiser Family Foundation. Obama calls for “expanded public insurance.”

The AMA’s National Health Care Policy Agenda also fails to mention this problem. It simply calls for Congress and the next Administration to “permanently replace the flawed payment formula.” Nor does the AMA allude to the problem in its ten questions for candidates.

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