AAPS News – Oct 2007


Volume 63, No. 10 October 2007


The flawed assumptions underlying most “health care reform”
are plainest in the plan put forth by John Edwards.

Not only does his plan require that everybody be
covered. “It requires that everybody get preventive care,”
Edwards told a crowd in Iowa. “If you are going to be in the
system, you can’t choose not to go to the doctor for 20 years.
You have to go in and be checked and make sure that you are OK.”

His plan would cover preventive, chronic, long-term, and
mental health care. “The whole idea is a continuum of care,
basically from birth to death,” he said (www.foxnews.com).

As Kansas Medical Society president Richard Warner, M.D.,
notes, “since we are all subsidizing each other’s care through
universal coverage, we have the right to demand… responsibility
of everyone. And so the good of the whole gradually takes
precedence over freedom for the individual.”

Squaring the Circle

Edwards is for “strong, bold steps, not incremental steps
and half measures.” This appears to be an explicit rejection of
the Clinton back-up plan, which began to be implemented soon
after the defeat of the Clinton Health Security Act. Great chunks
of this “failed” legislation were imported verbatim into
“Republican” legislation at the federal and state level. We have
the criminalization of medicine (HIPAA), SCHIP (“Kids First”),
prescription drug coverage by Medicare, quality-reporting
initiatives, a managed-competition model (the Massachusetts
Connector), and more mandates to cover preventive care. Everyone
seems to agree that the situation is worse than in 1993, not
better. Edwards apparently believes that if each small step takes
us downhill, one giant leap combining the small steps will jolt
us up to a higher level.

The U.S. has fewer physicians, nurses, and hospital beds per
capita than the average industrialized nation, says Edwards.
Though the doctors and nurses are excellent, they render
suboptimal care almost half the time, he believes, and nearly a
third of patients experience medical mistakes or delayed lab
results. The answer: jam the system with healthy people getting
check-ups; multiply data collection duties; penalize errors or
noncompliance by reduced payment or nonpayment.

Insurance and medical services are increasingly unafford-
able. Even Edwards recognizes the problem with forcing people to
buy something they can’t afford. So he’ll delay the purchasing
requirements until affordability is achieved despite expanded
coverage mandates. If costs go up, the only way to make a product
affordable to nonaffluent people is to force somebody else to pay
for it. Edwards’s method is tax credits.

Although businesses can be compelled to “contribute,” they
cannot be forced to survive. Thus, the “single payer” total
government takeover moves ever closer. Edwards’s “Health Care
Markets” would offer a choice of a public insurance plan modeled
after Medicare: “Over time, the system may evolve toward a
single-payer approach if individuals and businesses prefer the
public plan.” The Medicare model, writes Jacob S. Hacker of Yale
and the New America Foundation, is the “not-so-secret weapon in
the campaign for affordable health care for all” (N Engl J
2007;357:733-735). Of course, once govern-ment dictates
benefits and price, and mandates purchase, all benefits of a
private system are lost, and it’s a very small step to a public
administrator, writes Greg Scandlen.

Even Fortune magazine seems to be siding with
Edwards, Obama, and Clinton. “Well, suppose I told you there was
a way to square this circle, courtesy of a $500 billion tax hike
that would save the economy?” That’s the amount business spends
each year on health benefits. Call it government, or call it
something else, “what does it matter?” (Matt Miller 3/28/07).

Making the irrational number a rational one,
simply by calling it such, is stunning enough. But what can be
said of summing up $70 trillion in unfunded Medicare liabilities,
the Medicaid expenditures that are bankrupting states, insurance
costs that are sinking businesses, uncompensated care, and
individual bankruptcies and getting fiscal solvency?


When someone spoke approvingly of the North Carolina system
for enforcing purchase of automobile liability insurance sending
a deputy with a screwdriver to remove license plates if coverage
lapses Dr. Alieta Eck asked: “What will they come and unscrew if
people don’t get health insurance?” Shall we pass laws
threatening to bankrupt or jail people who choose to buy housing,
food, clothing, or transportation before they buy health
insurance? Linda Gorman notes that at least we have the duty to
show that such a proposal would cost less than the current
system. No such analysis has been done.

Is it Constitutional for government to force people to buy a
product from a private company or is simply being alive a
privilege comparable to holding a drivers license? Governments
use force to collect taxes which are supposed to be for
public benefit. Those who think that insurance is
supposed to provide for their private medical care need
to remember that. What happens when a person’s life becomes a
public liability?

Politicians will give lip service to quality but they
mainly mean equality, at least for the masses. There is
only one way to level a Gaussian: down. Edwards states: “Fifty
years after Brown v. Board of Ed, America still has two
school systems, separate and unequal.” Does he mean public and
private? Like the AMA, he deplores “health care disparities.” Is
the ultimate goal to make all education, and all medicine,

Indeed, will every aspect of our lives be a public concern?
Is there any logical limit to our duty to be healthy, or to
“contribute” to the health care of others?

Truth in Taxes

If health insurance premiums are “skyrocketing,” how do we
describe the tax burden?

The average 1970s family with two children and a stay-at-
home mom had an inflation-adjusted income of $38,700, out of
which came $5,310 in mortgage payments, $5,140 in car expenses,
$1,030 for health insurance, and $9,288 (24%) in income taxes,
leaving $17,932 in discretionary income.

The typical 2000s family has two earners and a 75% higher
income of $67,800, with higher expenses: $9,000 for mortgage
payments, $8,000 for two cars, $1,650 for health insurance,
$9,670 for full-time day care and $22,374 (33%) in income taxes.
Discretionary income has decreased to $17,045.

The progressive tax code means that the second earner’s
income is taxed at a much higher marginal rate. The tax bill
increased by $13,086 a whopping 140%, while the percentage of
income devoted to mortgage, automobiles, and health insurance
actually fell (Zywicki T, Wall St J 8/14/07).

Michael Cannon estimates, apparently by different methods,
that in 2007 the average family of four will pay $25,000, or
nearly 30% of its income, for health insurance: $11,000 for its
own coverage, usually through an employer, and $14,000 in taxes
to fund insurance for the elderly and the poor. Even the
“private” spending occurs in an economy with socialist features.
The government largely controls production, consumption, and the
terms of exchange. Also, the government has put almost everyone
in the position of spending other people’s money, so there is
little incentive to economize (www.tcsdaily.com 9/6/07).

What would the tax burden be for universal coverage? The
plan passed by the Wisconsin senate, but blocked in the house,
could have raised state taxes to 20% of the average family’s
income (Wall St J 7/24/07).

U.S. Senate Proposals

Two Senate bills would give refundable tax credits to people
who buy insurance: S. 1874, Every American Insured Health Act, by
Sen. Richard Burr (R-NC), and S. 1875, Healthy Tax Reform Act, by
Sen. Jim DeMint (R-SC). Shared features: a guaranteed-issue
mandate; no relief from state mandates; no purchase of insurance
across state lines; price controls; continued unfair tax
treatment of health insurance. The Joint Tax Committee has scored
S. 1874 as an $800 billion tax increase on those who get
employer-provided insurance. For a discussion of S. 334, Healthy
Americans Act by Sen. Ron Wyden (D-OR), see AAPS News, February 2007.

President Bush, Sen. Jon Kyl (R-AZ), and candidates Guiliani
and Romney favor a capped “standard deduction” for health
insurance. While some people with gold-plated plans would see a
slight tax increase, 80% of Americans insured by employers would
get a tax cut before counting potential wage increases if
employers got out of the health benefits business.

Refundable tax credits, on the other hand, would impose a
tax increase on two-thirds of today’s taxpayers, while adding as
many as 12 million to the ranks of the nearly half of Americans
who now pay no federal income tax. This would make future
marginal tax increases politically easier to pass. This new
entitlement, virtually impossible to repeal, would constitute a
huge wealth transfer from middle and upper-middle-income families
to subsidize insurance for low earners (Wall St J

Nominating and Resolutions Committee Reports

The Nominating Committee, chaired by Lawrence Huntoon, M.D.,
presents the following slate:

President Elect: Mark Kellen, M.D., Rockford, IL;

Secretary: Charles McDowell, Jr., M.D., Alpharetta, GA;

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

Directors: Claud A. Boyd, Jr., M.D., Augusta, GA; John H.
(Tim) Boyles, Jr., M.D., Centerville, OH; Robert J. Cihak, M.D.,
Brier, WA; Richard O. Dolinar, M.D., Phoenix, AZ; and Dennis K.
Gabos, M.D., Pittsburgh, PA.

To be considered, Resolutions must be submitted to AAPS
in writing no later than September 28

Historical Note: Organizing Principle for Reform

The Clinton Plan and much of its progeny in both national
and state proposals was based on an ingenious 1930s idea called
“corporatism,” which was highly praised even in Britain and
America. Features include a National Health Board; regional
alliances; centrally planned budgets, prices, and
“collaboration…between the various categories of producers in
each branch of productive activity.” All “selfish interests” had
to be subordinated to the national interest. One advisor to the
model plan was Fausto Pitigliani apologist for Mussolini.

Did the trains run on time? The system was actually an
“unmitigated economic disaster” (DiLorenzo TJ, Wall St J
10/26/93). In 1935, The Economist characterized the
system as a “new and costly bureaucracy from
which…industrialists …put into practice the worst kind of
monopolistic practices at the expense of the little fellow who is
squeezed out….”

In the 1930s, it was “as if everyone just assumed that we
had to have either fascism or socialism, and that the one option
that was ruled out was laissez-faire.” FDR, “who
imagined himself capable of astonishing feats of price settings
and economy boosting” applied the old tricks of printing money
and threatening people with guns, writes Llewellyn Rockwell. “It
was the old despotism brought back in pseudoscientific guise”
(Free Market July/August 2007). Have we learned yet?

Verner S. Waite, M.D., R.I.P.

A tireless advocate for justice in peer review, Verner S.
Waite, M.D., died Aug 17. Dr. Waite, a general surgeon, was a
member of AAPS since 1987. He spoke personally to more than
10,000 physicians who had been targets of sham peer review. The
$559,000 judgment he was awarded for slander was used to found
the Semmelweis Society, under the guiding principle that peer
review should be done with clean hands.

AAPS Calendar

Oct 10-13. 64th annual meeting, Cherry Hill, NJ.

Sep 9-13, 2008. 65th annual meeting, Phoenix, AZ.

Doctor Can Sue for Retaliation and Libel

Nearly 10 years after government harassment began,
neurologist Taj Becker, M.D., of St. George, UT, has won a
remarkable victory in the U.S. Circuit Court of Appeals for the
Tenth Circuit (Becker v. Kroll et al. 05-4070, 05-4096).

Starting in 1998, Becker was investigated by the Medicaid
Fraud Control Unit (AAPS News, July
). In an interview in Salt Lake City (300 mi from home)
that turned into an impromptu settlement conference, Utah
Assistant Attorney General J. Denis Kroll demanded $107,000 to
avoid criminal prosecution for upcoding. Becker maintained her
innocence and refused to settle. After an independent expert
reviewed Becker’s records without her knowledge and determined
that her coding was appropriate, Kroll reduced the demand to
$49,605 and showed her a draft criminal complaint seeking
$646,000. When Becker stood firm, Kroll filed a civil complaint
asking for $25,000 plus investigative costs, dropping it 2 weeks

Becker then complained to state officials about MFCU’s
unprofessional conduct and bullying tactics. Felony charges were
filed against Becker on the same day that her husband testified
before a state legislative committee about the alleged
prosecutorial abuses. Shortly before this, oversight of MFCU had
been transferred from the Dept. of Public Safety to the Attorney
General because of political pressure from rural doctors
complaining of mistreatment by MFCU.

In 2002, Becker sued Kroll and other officials in federal
district court, which granted summary judgment in favor of all
defendants. Becker appealed.

In its July 19 ruling, the Court recognized that
prosecutorial tactics such as withholding exculpatory evidence,
failure to document interviews, and publishing statements on the
internet worded so as to make Becker appear guilty although found
innocent would, if true as alleged, “fail the most obvious
standards of proper conduct.” Still, they weren’t egregious
enough to violate substantive due process or to constitute
malicious prosecution:

The conduct alleged “must do more than show that the
government actor intentionally or recklessly caused injury to the
plaintiff by abusing or misusing government power…[I]t must
demonstrate a degree of outrageousness and a magnitude of
potential or actual harm that is truly conscience shocking.”

The Court, however, did rule for Becker on two key issues.
It reversed the district court’s dismissal of the First Amendment
retaliation and related conspiracy claims, remanding it for
further discovery. It also remanded the defamation claim for a
jury trial.

This is a very significant victory, stated AAPS General
Counsel Andrew Schlafly. Government immunity is a huge barrier to
overcome. In an AAPS amicus brief, he writes:

Physicians should be able to care for indigent patients
on the Medicaid program without being subjected to
arbitrary and unjustified raids of their offices and
baseless criminal prosecutions. It is already difficult
enough to persuade physicians to accept the meager
reimbursements under Medicaid without adding the risk
of a baseless and vindictive prosecution. Preservation
of professional integrity requires some legal
accountability for retaliatory or malicious

Indeed, as Medicaid expands, fewer doctors are willing to
accept enrollees (Wall St J 7/19/07).

[See www.aapsonline

Malicious Convictions

Four men who had been framed by the FBI for a 1965 murder
were awarded $100 million in compensation for 30 years of
wrongful imprisonment. While most coverage of the story described
the case as a bizarre exception, Richard Moran contends that it
is all too common (NY Times 8/2/07).

Moran’s study of 124 exonerations of death row inmates in
the U.S. found that 80 of the so-called wrongful convictions
resulted not from good-faith errors but from intentional,
willful, malicious prosecutions. Knowing use of a lying witness,
failure to turn over exculpatory evidence, or the manufacture or
destruction of evidence to further a prosecution are violations
of the law. The convictions should be called “unlawful,” Moran

“A crucial part of the problem lies in the hearts and souls
of those whose job it is to uphold the law.”

More Perjury in Rottschaefer Case

Bernard Rottschaefer, M.D., now in prison on charges related
to prescribing pain medication, has filed another appeal with the
U.S. Court of Appeals for the Third Circuit. Evidence that a star
prosecution witness lied about his trading drugs for sex (AAPS
, March 2006) was not enough to
get him a new trial. But in the civil cases filed against him by
witnesses in the criminal trial, it has also been proved that all
five lied in saying that they did not have a medical need for
medications and that the medications did not medically benefit

During the trial, U.S. Attorney Mary Beth Buchanan and her
subordinates played up the sex-for-drugs angle both in public and
in the courtroom. Clearly, there was no financial gain as
Rottschaefer was getting $6/month for three patients and
$22/month for the others. When it was clear that these
allegations were false, Buchanan said the trial was only about
lack of a legitimate medical reason for the analgesic
prescriptions. Now that those arguments have also been refuted by
new evidence, her latest brief goes back to sex.

Four of the five witnesses were facing criminal charges of
their own, and received reductions in charges or sentences
because of their testimony. Yet the jury was explicitly told that
there were no testimony-for-leniency deals.

If the prosecutors knew about this evidence, they are guilty
of prosecutorial misconduct. If not, they were duped by the five
women essentially the same crime for which they convicted Dr.
Rottschaefer, writes Randy Balko. None of the women have been
charged with perjury (Fox News 8/28/07).

What does it take to shock the American conscience?

Punitive Claims Reviews May Be Resurrected

A “quality improvement” bill introduced by Sen. Max Baucus
(D-MT) and Sen. Charles Grassley (R-IA) would create a new group
of largely unregulated contractors called Medicare Provider
Review Organizations (MPROs). Claims review activities now
carried out by Quality Improvement Organizations (QIOs) would be
turned over to the MPROs, which would not be burdened with the
need to maintain good working relationships with physicians.

“They used to call [the PROs] the Medicare police,” said
Jonathan Sugarman, M.D., M.P.H., of Qualis Health. “Now maybe
it’s the Medicare militia.” PROs were called the “most hated
program in HHS” (Glendinning D, AM News 8/27/07).


The Standard of Care. One of the most common tactics
hospitals use in sham peer review is misrepresentation of the
standard of care. A hospital frequently hires an expert witness
who has a legitimate difference of opinion with the targeted
physician. The expert then claims that his way of doing things is
the standard of care, and the targeted physician is thus
practicing substandard medicine. If sued for sham peer review,
the hospital suddenly recognizes the existence of legitimate
differences of professional opinion, but wants the court to defer
to the defendants’ view and not substitute its judgment for that
of the hospital.

Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

The Assembly Line Model. I am troubled by frequent
reference to the Toyota model as a method for improving medical
care. The defective parts in the assembly line, which is made
perfect by permitting “no variation,” would be equivalent to the
patient who refuses to get well. At Toyota, they throw out the
bad parts and improve the process. But the primary care doctor is
still left with the refractory patient. The Toyota model may heal
the factory but not the sickest patients.

Gerald Y. Yorioka, Everett, WA

Endangered Patients. Does the federal rule saying that
Medicare won’t pay for mistakes mean that if the hospital makes
an error and you need care, no one will pay? Sounds like the
“shoot, shovel, and shut up” incentive created by the Endangered
Species Act.

Linda Gorman, Independence Institute, Golden, CO

Complications. On CSPAN, former CMS head Mark McClellan
and Ken Thorpe of the Partnership to Fight Chronic Disease
extolled the ability of “preventative medicine” to solve our
financial problems. It sounded as “complications” and
“unnecessary care” were the result of not following the
preventative plan. So, Doctor, if your patient gets a “compli-

cation” (would that include peripheral neuropathy, nephropathy,
myocardialinfarction, retinopathy?), you failed to prevent it.
Why should you deserve to be paid?

David McKalip, M.D., St. Petersburg, FL

Priorities. In Europe, old people increasingly receive
less care than young people do. In the U.S., the situation is the
reverse. In America, the bulk of government medical expenditures
goes to those over age 65, while in Europe most government
expenditures are for those under 65. European doctors have warned
us of “economic euthanasia.”

Ernest J. White, Alexandria, VA

No Equality. The best way to improve quality in
medicine is the same economic formula that has allowed Western
culture to create the highest standard of living for the greatest
proportion of the population in human history. We must concede
that everyone is not going to get equal medical care at the
margins. But as a result of those who can and do finance the
extraordinary for their own benefit, everyone will eventually be
better off. Call it trickle-down benefits.

If we don’t admit that there will be inequality, and that
that is a good thing, we will have to continue to try to defend
free markets against those who claim the high ground with the
presumption that any system not absolutely blind to economic
reality is inherently evil. In that case, the anecdotes will
defeat us, given the powerful media and the deviousness of

Frank Timmins, Dallas, TX

Ruling Physicians. The steps for controlling the entire
medical community: 1. Identify common-sense, frequent practices
such as accepting cash payment, treating a family member or a
friend, “casual” prescriptions and lab orders, “off-label” uses
of medications, or respecting patient privacy. 2. Label those
practices first as “unethical,” then as torts, and finally
crimes. 3. Enforce the rules very selectively on an “as needed”
basis. Everyone without exception could be found guilty.

Walter Borg, Lafayette, LA

Gouging the Uninsured. In New Jersey, the uninsured are
billed 4 to 10 times the cost of their hospital care because
hospitals are making up for underpayment by Medicare (which pays
85% of the cost), Medicaid (which pays 73%), and insurers that
“negotiate” for heavily discounted rates. Insurance ought to be a
way to cover the real costs of care, not a way to get discounted
care on the backs of those who do not have such a privilege.
Expecting the uninsured to pay more sounds like Mafia talk: “You
pay protection money, or you face severe consequences.” The real
irony is that many of the uninsured, faced with such huge bills,
apply for “charity care” and pay nothing. Taxpayers bear the
brunt; hospitals close.

Alieta Eck, M.D., Piscataway, NJ

excerpted from Home News Tribune Online

Counterproductive. Medicare actually encourages
unnecessary care via its payment schedule while discouraging
personal care, an important quality-of-life service for the
elderly. It seems that Medicare has absolutely no redeeming
upside from a social or economic perspective when compared with
any other options. Why would anyone have a problem with providing
real incentives for general physicians to opt out of Medicare?
It’s a horrible way for a highly qualified professional to earn a

Richard A. Matthews, CEBS, Royal Oak, MI

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