AAPS News April 2017 – Ryan Fails; What Next?


House Speaker Ryan pulled his ObamaCare substitute after 18 principled members of the Freedom Caucus refused to cave to pressure from congressional leaders and the White House. The American Health Care Act (AHCA) fell far short of oft-repeated Republican politicians’ promises to repeal the Affordable Care Act (ACA). There was said to be no “deal” and “no Plan B” —although at the time of this writing, there are reports that the repeal effort will be revived.

Ryan said that ACA is failing and must be replaced, pledging that the GOP bill would “ensure vital protections for patients with pre-existing conditions.” Two words, however, spell doom for any affordable replacement, writes John Merline (IBD 3/14/17, http://tinyurl.com/kpmvw85): guaranteed issue.

In states that adopted it in the 1990s, guaranteed issue destabilized the individual market, resulting in fewer insurers, higher premiums, and less competition. Most repealed the laws or substantially weakened the rules. ACA ignored this experience, and also reaped “guaranteed failure.” AHCA would likely be worse.

AHCA was written behind closed doors and rushed through committees on a short deadline. Public support was thin: only 17%. The main response to conservative criticism was that it was phase 1 of a three-phase process. It did not repeal destructive regulations, but HHS Secretary Tom Price would deal with many of them (phase 2), and Democrat opposition would diminish to allow the 60-vote threshold to be overcome later (phase 3).

AHCA reshuffles ACA’s penalty structure—remember that not getting an incentive is the equivalent of paying a penalty. Winners and losers will be different, but still picked by government.

While revised community-rating rules would lessen the burden on young, healthy persons, the increase in premiums of older, sicker persons to a level that is fairer from an actuarial standpoint was dubbed the “age tax” by AARP.

The individual mandate/penalty/tax would be replaced by a government-prescribed 30% premium surcharge, for one year only, for gaps in coverage, which arguably hits the poor harder but would not eliminate incentives for gaming the system. Benefit and premium structure could still not be competitively determined by the market (i.e. voluntary exchanges or “deals”).

Under congressional budget rules, the inclusion of “tax credits” makes it impossible to repeal ACA’s community-rating price controls, writes Michael Cannon. CBO reportedly projected that with repeal of the regulations, the cost of insurance would fall so much that more people would claim the tax credits, increasing the federal deficit and running afoul of the rules. Those who did not buy insurance would incur more income tax liability, which is more coercive than the individual mandate because the IRS has more tools to collect owed taxes (http://tinyurl.com/z3lqek9). [So, it appears that either the insurer gets more money, since it gets the credit, or the government does.]

Phase 2 of the “three-pronged” strategy, to repeal regulations by executive action, would leave the statutory basis intact, so everything could be reinstated with a change in HHS Secretary or President. Secretary Price said he would uphold the law as written, including the mandate, but referred to the 1,442 times ACA states that the Secretary “shall” or “may.”

Price would not say whether the Administration would continue to fund the cost-sharing payments to insurers challenged in the lawsuit brought by the House of Representatives (http://tinyurl.com/kug9bur). The allegedly illegal reimbursements for cost-sharing reductions, projected to amount to $7 billion this year, are still being paid. If Trump does not drop the appeal, he will be fighting his own party in court. Congress could appropriate funding in the continuing resolution due Apr 28. Insurers who wish to sell insurance in 2018 have a deadline for rate filings: Jun 21 for federal exchanges (http://tinyurl.com/mjnwvnp).

From Under the Rubble

President Trump stated: “I have been saying for years that the best thing is to let Obamacare explode.” But then he wants to make “one unified deal” with the Democrats “for a great healthcare plan for the people.” But built on what foundation, made of what building materials, and paid for with what?

In this mid-seventies book of essays by six Soviet dissidents, Aleksandr Solzhenitsyn wrote about the need for “repentance.”

Are there moral failures at the root of ObamaCare? Addiction to the fruits of legal plunder? Shirking of responsibility to provide for one’s own needs and bear the consequences of one’s own imprudent decisions? A desire to rule over others?

What else is stopping Congress from adopting Ann Coulter’s plan: “Congress passes a law, pursuant to its constitutional power to regulate interstate commerce, that says: In America, it shall be legal to sell health insurance on the free market. This law supersedes all other laws, taxes, mandates, coverage requirements, regulations or prohibitions, state or federal.” Others could buy coverage for sex-change operations, infertility treatment, or drug rehab,  but not paid for by Ann’s premiums. She just wants coverage for things like broken bones, cancer, and heart disease.

“Until the welfare program is decoupled from the insurance market, nothing will work”  (http://tinyurl.com/kma227g).

Freedom works when people refrain from lying and stealing. The Swamp inverts morality, while it tries to replace sound economics with corrupt, costly diktats in the name of “fairness.”


Obama and Ryan v. Competition

For bringing costs down and quality up, nothing is as important as competition. Between 1998 and 2016 prices for medical services in the U.S. increased more than 100%, while hospital-related services increased 177%, vs. a 47% increase in consumer prices in general. However, the average increase for elective cosmetic procedures, mostly determined in a competitive market, was only 32% (http://tinyurl.com/je4hwbc).

What Obama and Ryan call a “market” is a “bureaucratic clearing house where provider cartels attempt to maximize their billings and insurers attempt to minimize what they certify for payment,” writes David Stockman.

The main reason the Freedom Caucus balked on RyanCare, according to Jeffrey Tucker of the Foundation for Economic Education, is that it failed to address the core problem of the existing system: the lack of genuine competition. That does not mean opposing teams struggling for control, but an institutional setting in which the well-being of producers depends on serving the consumer. “The restoration of competition will discover for us things we do not know about service provision: treatments, plans, new institutional arrangements, new forms of insurance, new methods for serving the public” (http://tinyurl.com/ldbdrec).

One effect of ACA or AHCA is to drive out competition from other forms of payment. In effect, subsidies to insurers punish direct payment of doctors. Under AHCA, uninsured families would miss out on up to $14,000 worth of insurance and leftover HSA deposits if they continued to skip the middleman. The 625,000 self-paying members of health-sharing ministries would probably not be exempt from the premium penalty if they decided to buy insurance (http://tinyurl.com/kd3l4b7).

Physician groups, hospitals, and health systems have more power to exploit the public than trusts ever did. Busting the medical trusts will require “creative destruction” (WSJ 3/1/17).


Economic Vitals

  • Cash on Hand: To stay below the debt ceiling the U.S. government has been burning through cash. As of Mar 13, Google had more cash reserves ($75 billion) than the U.S. government ($34 billion, vs. $384 billion on Jan 20) (http://tinyurl.com/m6rx5jw).
  • Jobs: The only growth sector in the jobs market over the last 15 years is the heath, education, and social services (HES) Complex—because of $5 trillion/yr in direct government outlays and tax expenditures. Goods-producing jobs are down 19% (19.4 vs. 24.6 million) since 2000 (David Stockman’s Contra Corner 3/13/17).
  • $4 Trillion Fiscal Hole: About 90% of the $4.1 trillion in spending is off-limits: $900 billion in defense and Trump domestic priorities; $300 billion in interest; $2.1 trillion for Medicare, Medicaid, and Social Security; $380 billion for military and civilian pensions, veterans entitlements, earned income tax credits, and unemployment insurance. Only a small corner of the Swamp is accessible to drainage without touching entitlements (Stockman’s 3/29/17).


“Tocqueville shrewdly observed that in democracies the passion for equality flattens everything down to the same dull mediocrity. Men will even cede exceptional power to the state to do the flattening…. You can have equality or liberty, but not both; as you can thirst for equality or justice, but not both.”

Anthony Esolen, Chronicles, November 2016


AMA et al. Join “Climate Change” Consortium

Perhaps not coincidentally, soon after the election of Donald Trump a previously unknown group called the Medical Society Consortium on Climate and Health launched an initiative to get physicians to communicate with patients about the alleged threats of “climate change” and to tell the patients to “vote for elected leaders that will act to cut climate pollution,” taking advantage of  the patient-physician relationship. The consortium claims to represent 400,000 physician, who belong to organizations whose top officials voted to join, including AMA, AAFP, IDSA, ACP, AAP, and ACOG (https://medsocietiesforclimatehealth.org/).


The Free Market Is the Morally Right Way

Confounding the social justice warriors and their pretense of virtue, David McKalip, M.D., writes: “Interference in the patient-physician relationship and the centrally planned medical economy itself violates Catholic teachings, harms patients and doctors, and creates morally evil outcomes and economic structures (Linacre Q 2016, http://tinyurl.com/kntatu2). He observes that doctors are coerced into becoming rationing agents of the state, and patients are deprived of a sound free market for the purchase of health insurance at the lowest cost.


Flashback: Entitlements in Rome

Originally intended to alleviate the suffering of the poor, Rome’s free bread program had expanded from feeding 40,000 citizens in 71 B.C. to 320,000 under Augustus—about one-third of the population. When grain shipments were late, near-riots ensued. Officials debauched the currency. A measure of wheat that cost 6 drachmas in the first century A.D. cost 2 million drachmas after 344 A.D. Faced with increasing pressures on the border, Rome could not fully fund the army (Charles Hugh-Smith, James Cook Market Update, early April 2016). [The U.S. Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) had about 500,000 recipients when started in 1965, 3 million by 1969, and 44 million in 2016 (http://tinyurl.com/l7g2he2).]

Another major source of unrest in Rome was the government’s inability to pay retired legionnaires’ pensions, which became an unfunded entitlement. The inventor of retirement pensions in the 5th century B.C. also experienced the first pension crisis. OECD nations, which include the U.S., now have a combined pension shortfall of $78 trillion, more than the size of the world’s economy (http://tinyurl.com/msnot7a).


AAPS Calendar

June 9. Thrive Not Just Survive XXVI, Cincinnati, OH.

June 10. Board of Directors; KY chapter meeting, Cincinnati, OH.

Oct 5-7. 74th annual meeting, Tucson, AZ.

Oct. 3-6, 2018. 75th annual meeting, Indianapolis, IN.


ABIM Claims Against “Dr. Jimmy” Dismissed

On March 16, U.S. District Court Judge Katharine S. Hayden dismissed copyright infringement claims made in American Board of Internal Medicine v. Jaime Salas-Rushford, M.D. (AAPS News, June 2016). The Judge ruled that the suit was barred under the statute of limitations and denied ABIM’s assertion that its claim was timely under the discovery rule. She writes: “ABIM ultimately wants the impossible: the right, first, not to sue an alleged wrongdoer within the applicable time period and then, for no equitable reason, to take that decision back and sue him after the applicable time period expires.” For hearing transcript and opinion see: https://www.doctorsjustice.com/single-post/2017/03/16/One-Step-Closer-to-Justice.

Dr. Salas-Rushford’s counterclaim against ABIM, its insurance companies, Pearson Education Inc., Christine Cassel, Richard Baron, and others can now proceed.


Doctor Wins in Sham Peer Review Case

Dr. Miguel Gomez III of Houston was awarded $6.4 million in damages by a jury, which found that Memorial Hermann Health Systems defamed his reputation in an effort to protect its business from competition. Dr. Gomez was considered a star surgeon—until he decided to move his lucrative practice to Houston Methodist West. Memorial Hermann launched a sham peer review, in which Gomez alleged that it manipulated data on the outcome of his surgeries in order to claim his patients were more likely to die. He contends that the hospital used a “whisper campaign” to keep his patients from following him to Methodist.

It is unusual for such cases to go to trial because Texas law allows doctors access to confidential peer review data only if they can show the process was used to quash competition or discriminate. Gomez had to go all the way to the Texas Supreme Court before he could get the confidential records.

While finding that the hospital engaged in a conspiracy to keep doctors from referring patients to Gomez, the jury determined that the conduct did not unreasonably constrain the overall medical market in Houston (Houston Chronicle 3/30/17, http://tinyurl.com/kgbo7cl). Unfortunately, failure to prevail on the anti-trust claim deprived the physician of triple damages and attorney fees, said AAPS general counsel Andrew Schlafly.

“The hospital’s attempts to ruin a physician who tries to leave  are fairly typical,” stated Dr. Lawrence Huntoon, chairman of the AAPS Committee to Combat Sham Peer Review.


Technology Pitfalls

  • Third-party Recording: People doing recordings on their smartphones in a medical facility may inadvertently record persons who don’t want to show up in someone’s video or photo. A facility that failed to stop an unconsented recording could be liable under HIPAA or state privacy laws (MPCA March 2017).
  • Denial-of-Service Attacks: DoS attacks are on the rise and could pose a bigger threat than ransomware. Even HVAC systems with network capabilities—as to permit remote adjustments—can be vulnerable. And if lax cyber security allows a data breach, the facility could be subjected to aggressive, punitive HIPAA enforcement; settlements doubled in 2016 compared with 2015 (ibid.)


Gender Discrimination Claims Can Proceed

Despite an injunction by Judge Reed O’Connor in Franciscan Alliance v. Burwell, which prevents HHS from pursuing enforcement of gender “antidiscrimination” rules—say against a physician who declines to perform “gender reassignment” surgery, there is still a risk of civil lawsuits, as for alleged employment discrimination against transgenders (Med Pract Compliance Alert, March 2017).


Cures Act Waives Informed Consent

Tucked into the 800-page act is §3024: “Clinical testing of investigational medical devices and drugs no longer requires the informed consent of the subjects if the testing poses no more than minimal risk to the subjects and includes safeguards.”

The government will define “minimal risk.” There is worry that vaccines might be included, perhaps administered by means other than injection, although in the past vaccines have been regarded as being of more than minimal risk. One may also ask: How do you know you are part of an experimental trial if there is no need for a consent form? (http://tinyurl.com/le57qas).


Tip of the Month:  Physicians report receiving letters from Inovalon thanking them for their “cooperation and assistance with providing chart documentation to assist Independence Blue Cross in meeting documentation requirements of [HHS].” HHS “requires Commercial HIX plans…to submit detailed documentation pertaining to each Commercial HIX enrollee in a specific format on an ongoing basis.” The letter states that Inovalon is a “Business Associate,” and providers can lawfully send the information under the HIPAA Privacy Rules. Providers are “kindly asked” to send the requested information by fax or FedEx by Feb 21 (the letter was stamped “received” on Mar 31).

The letter artfully obscures the difference between what is permissive, and what is required. Physicians who are “in-network” with an insurance company may be required by their contract to submit this data.  But we are not aware of any general obligation to send patient data, independent of an insurance contractual requirement or federal rules that attach to taking federal money through Medicare or Medicaid. Physicians need to read the contracts they sign. Patients need to be aware that they may waive their right to privacy by seeing a physician who “takes insurance.”


Financing the Opioid Epidemic

In 2013, more Americans died from drug overdoses, largely opioids, than from traffic fatalities or guns. In one 3-month period, 11% of all Ohioans were prescribed an opioid. In 2015, nearly half of the 7 million American working-age male labor-force dropouts were taking pain medicine daily. How do they afford it? Oxycontin is not cheap. For a $3 Medicaid co-pay, addicts can get pills priced at thousands of dollars—and then sell them for as much as $10,000 on the street.

“In 21st century America, ‘dependence on government’ has thus come to take on an entirely new meaning,” writes Nicholas Eberstadt (Commentary 2/15/17, http://tinyurl.com/jozdv95).

More than one-fifth of all civilian men between 25 and 55 years of age are Medicaid beneficiaries. Social welfare is financing the death of work—and the increasing appetite for drugs.



ObamaCare Destroyed HSAs. Years ago I purchased a high-deductible health plan (HDHP) accompanied by a Health Savings Account (HSA). The premiums were quite a bit lower than managed-care plans with nearly first-dollar coverage. Those with HDHP assume more risk themselves and are much more cost conscious, lowering the risk to the insurer. But as Independent Health informed me, ACA requires health insurers to use Single Risk Pool Rating, transferring the risks of the liberal spenders in Silver and Gold plans onto the more frugal purchasers of Bronze plans. My premiums shot skyward. So while HSAs are allowed to exist, ACA destroyed the financial benefit of choosing them—consistent with the ObamaCare agenda to destroy freedom.

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


Is Restoring a Free Market Possible? It was almost a certainty that ObamaCare would not be replaced or reformed enough to restore a free market because the government has been chipping away at a consumer market in medical care/insurance for at least 75 years.  It’s as if a vandal had chipped away on Michelangelo’s statue of David and left behind a badly marred chunk of unrecognizable marble. To get to a market in medical care that’s the equivalent of the market for food and other necessities requires undoing government policies that started in the 1940s. It is foolish of the Republicans to think they can do a restoration in one congressional or presidential term (http://tinyurl.com/lwodapz).

Craig Cantoni, Scottsdale, AZ


We Need an Individual Market. I watched everything described in the IBD article (see p 1) happen in the 1990s when working with the late J. Patrick Rooney to build Medical Savings Insurance Company. I wish he were still here to convince congressional leaders of the folly of guaranteed issue! We must have a viable, affordable individual insurance market to convince the “young invincibles”  to willingly participate. The ObamaCare mandate was a failure; rates went up by at least 500% for this critical group.  Without them there is no future for voluntary purchase of health insurance. If they don’t establish the habit when 95% of them could buy a fully underwritten policy for $50-$100 a month instead of the $500 they have to pay now, they will probably never participate. The Ryan bill paid lip service to this issue with half measures that wouldn’t work.  The individual underwritten market creates the standard. Fully underwritten individual insurance, always significantly less expensive than group policies, puts pressure on the group market to keep premiums down or lose customers.

Thomas LaGrelius, M.D., Torrance, CA


Does U.S. Pay Too Much for Too Little? A graph of life expectancy vs. “health” expenditures (http://tinyurl.com/jzrxszt) appears to show that the U.S. spends much more than other countries for inferior results in life expectancy. But Americans do not spend that much on themselves for health or medical care. We predominantly give it to third parties—government and insurers—then attempt to wrestle back from them the care we think we deserve. Some blame profits. But profits drive wealth creation, which benefits the less fortunate far more than wealth redistribution does. The attempt to arbitrarily fix profits drives cronyism. The creation of an elite authority to police profits wrests power from millions of little hands into the palms of a few—paradoxically depriving the “lesser” people the most.

Rocky Bilhartz, M.D., bilhartzmd.com/?p=4102


Why Not Eight Justices? Both “liberals” and “conservatives” want to have a majority of Justices on the U.S. Supreme Court. But there is a case to be made for an even number of Justices. Should a momentous decision hinge on a single appointment? With eight Justices, an earthshaking decision would require a five-to-three majority. Perhaps opinions would be less political.

Howard Hayden, Ph.D., Pueblo West, CO


HealthCare as a Right. Ironically, only when government declares “healthcare” to be a right does it become a finite, deniable, delayed, rationed entity that could work against your needs or will.

Donald Gehrig, M.D., St. Paul, MN


Left Behind. Secretary Price was quoted by CNN as saying that we can’t just repeal ObamaCare because that would “leave many Americans behind.” What about the Americans that ObamaCare left behind, who lost insurance they could afford, who are paying a fine rather than buy unusable insurance they can’t afford, and who lost doctors and hospitals they trusted to narrow networks?

Jane Hughes, M.D., San Antonio, TX


Insurance Deadbeats. In a single weekend, a six-doctor urology practice got 20 denials, a $50,000 revenue loss. Before ACA, this had happened only once or twice a  year. All 20 patients were checked for insurance eligibility before they came in for treatment. The practice is required by contract to collect only the co-pay and bill the insurer. The insurer refused to pay, saying patients had failed to pay their premiums. Had the practice known of the lapse, patients would have been treated as self-pay. Many patients said they had paid, and some could prove it, but the insurance company claimed to have lost the record.

Marni Jameson Carey, Association of Independent Doctors

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