Volume 65, No. 1 January 2009
On Pearl Harbor Day, Dec 7, 2008, the Associated Press
announced that Obama was determined not to repeat the mistakes
that doomed the Clinton health care plan in 1993, such as a
protracted campaign that allowed the opposition to mobilize.
Instead, the Obama team plans to move fast, seize momentum, and
not let go.
“We need to be on the offense,” said former South Dakota
senator Tom Daschle, the presumptive new Secretary of Health and
Human Services (HHS).
Instead of presenting a 1,500-page target, Obama will leave
details to be filled in say by Daschle’s new Health Care Fed.
Unlike the exclusive Clinton health care task force, which
met for months, the Obama process will be “inclusive.” Anybody
can express concerns and experiences, in house parties held
between Dec 15 and Dec 30, and the Obama transition team will
gather up the input and post it on www.change.gov. With a claim
of public support, a bill can roll through Congress and be signed
soon after Obama’s Inauguration.
The author is likely to be Sen. Ted Kennedy (D-MA), who is
holding meetings from his sickbed. He wants the final achievement
of nationalized medicine beaten down in the U.S. since 1900 to be
In his book Critical: What We Can Do About the Health
Care Crisis, Daschle notes that Democrat-controlled
government failed twice, under Truman and Clinton, to “guarantee
health care to every American.” They underestimated the strength
of the “special-interest lobbyists” arrayed against them led by
doctors in Truman’s time, and insurance companies in Clinton’s.
The triumph of Republicans in the mid-term elections of 1946 and
1994 then killed their hopes.
Now the Maginot Line has been breached or circumvented; the
heavy artillery is pointed in the wrong direction. The AMA has
virtually endorsed the Democrats’ principles. Harry and Louise,
stars of the television ads that helped defeat Clinton, are on
the side of “reform” this time.
In his Call to Action: Health Reform 2009, Senate
Finance Committee Chairman Max Baucus (D-MT) writes: “The
nation’s healthcare stakeholders are signaling that they are
ready and willing to engage in serious and comprehensive reform
of the health system in crisis.”
The AMA, soon to see its cash cow of CPT codes replaced with
the ICD-10, wants to write the standards and the price-control
formulas. And what could be better for the insurance industry
than a federal law forcing everyone to buy its product, however
overpriced or undesired?
This is not about the uninsured. This is about the $2.3
trillion that flows through the system. “Reform” controlling that
money is essential “over the long haul to deal with our long-term
fiscal challenges.” This means using “coverage” as the lever for
controlling and limiting the practice of medicine.
How Will We Pay for It?
It is obvious that rolling back tax cuts for the “rich”
cannot bring in enough money for the massive “investments.” Now
that trillions of dollars of private assets have simply
evaporated, tax revenues will plummet. Promised savings from
electronic records and prevention won’t occur for 10 years if
ever. For now, we have borrowing and “spreading the wealth.”
Obama said, “We can’t worry, short term, about the budget
deficit.” House Majority Leader Steny Hoyer (D-MD) acknowledged
that a pay-go-compliant policy is not feasible in the short term
for healthcare overhaul (The Hill 11/19/08).
Total Treasury borrowing for fiscal 2009 is likely to be at
least $1.5 trillion. As foreigners, representing 94% of new
buyers of U.S. government bonds since 2004, at some point will
stop lending to prop up a shrinking economy, Japanese economists
are calling for “Obama bonds” denominated in yen. This would
reduce the currency risks for Japanese and Chinese buyers, said
Masaki Fukui of Mizuho Corporate Bank. It’s been done before:
“Carter bonds,” denominated in German marks and Swiss francs,
were sold in the 1970s during the oil crisis (Asia Times
There are ominous signs: the Baltic Dry Index, the cost of
moving raw materials by sea, plunged 98% in 2 months. Cargo is
sitting on docks because finance is not available for shipping
it. Thailand is planning to barter rice for oil (Daily
Kos 11/12/08). In an attempt to unfreeze credit, the U.S.
has pledged $7.7 trillion, half the value of everything produced
in the nation in 2007 (Bloomberg.com 11/25/08). It
The Treasury is selling bills at zero interest, as traders
seek a safe haven (Bloomberg.com 12/10/08). But the cost
of insuring against a Treasury default went up sharply in
September, suggesting that U.S. credit has a limit (Barron’s
The “confluence of forces” that helped pass Medicare and the
Great Society in 1965, notes Daschle, included the “deepening
confidence that sustained economic growth, steadily increasing
affluence seemed now an enduring and irreversible reality of
American life.” Americans didn’t need to worry about the creation
of wealth, which would continue automatically, but how best to
apply our riches to improve lives.
The Obama economic plan doesn’t address wealth creation,
only job creation such as to install computers, change
lightbulbs, and insulate school buildings. Containing health
“costs” (spending) is part of economic recovery.
The Other Kennedy
Daschle rewrites history in saying that Medicare was
strongly supported by John F. Kennedy. In fact, Medicare was
going down to defeat until Kennedy was shot. His last words on
the subject, notes Dr. Edward Annis, were that Americans would be
hearing from the doctors.
Are We Separate and Unequal?
The new health-care engineers want to eliminate disparities.
But the dangers of nationalized, one-size-fits-all care are shown
in an article about diversity science, writes Craig Cantoni (see
Peter Huber, City Journal, Autumn 2008).
“Life is unfair…. Washington can’t help. The Fourteenth
Amendment doesn’t guarantee equal protection at the pharmacy.
No…discrimination-banning law, no promise that someone else
will pay, will ensure that a drug that suits others will suit
your genetic profile also.”
Some drugs target genes that track sex, race, or ethnicity;
“their FDA licenses affirm truths unmentionable in polite society
and approve conduct illegal in every other sphere of commerce and
Government and managed-care schemes, however, favor the
cheapest drugs that serve the biochemical mainstream.
The drugs that survive clinical trials involve huge, indis-
criminately assembled crowds. Or biochemical markers permit
dishonest researchers to stack the deck with patients most likely
to benefit from the drug being tested.
Our biochemical diversity, Huber maintains, means that
patients and doctors need more discretion, not less, and that we
need decentralization of information, authority, and economic
interest: more diversity, disparity, and dispersion not less.
The Cost of ICD-10
The new coding system that doctors and hospitals may soon be
required to use has ten times as many codes as are now in use.
Instead of one code for angioplasty, there are 1,170. CMS
estimates the switch will cost $1.64 billion over 15 years.
Initially, it will result in a 10% increase in rejected claims
(Jane Zhang, Wall St J 11/11/08).
According to an Oct 8, 2008, analysis by Nachimson Advisors,
the learning curve will be steep, as the code set is not a simple
substitution. The total cost impact would range from $83,000 for
a small practice to $2.7 million for a large practice, including
staff training, business-process analysis, changes to superbills,
changes to information technology, additional documentation, and
cash flow disruption.
Public Support. Although public support for
Massachusetts reform is said to be increasing, the people most
affected are the least supportive. Only 37% of those affected by
the individual mandate support it, as opposed to 62% not
affected. Of those directly affected, 60% say the law is hurting
them, while only 22% say it is helping. While 51% say health care
costs have gone up, only 14% say they have gone down
Access. Since 340,000 of 600,000 uninsured patients got
coverage, waits for primary-care appointment lengthened in some
cases to more than a year (NY Times 4/5/08). Some
practices are resorting to group appointments (AAPS News of the
Day 12/3/08). While the percentage of uninsured dropped from 13%
to 7% in 1 yr, the percentage reporting a usual source of care
increased only from 86.5% in 2006 to 88.7% in 2007, and the
number who had a doctor visit in the previous year went from
80.0% to 81.6% (Scandlen 7/9/08). Next year, the state is cutting
payments to physicians and hospitals by 3%-5%, which will
decrease access even more (CPR #156).
Medicare Buy-in, Anyone?
Sen. Baucus suggests “temporarily” allowing persons to buy
into Medicare starting at age 55, while the proposed Exchange is
being created. For those concerned about “underinsurance,”
consider that Medicare beneficiaries spend more than 20% of their
incomes on medical care. Additionally, as Linda Gorman points
out, Medicare imposes essentially unlimited financial risk on its
beneficiaries; hence the need for supplemental insurance. There
is no stop loss, and you are liable for 20% of everything. After
150 days in the hospital, you have to leave and are not eligible
for another period of care for 60 days. If you have severe
illness or injuries, too bad: days 61-90 cost $256/da; days 91-
150, $512/day; and thereafter you pay everything.
The Effects of Uninsurance
Death. The assertion that 18,000 people (recently
increased to 22,000) die each year for lack of insurance is based
on a series of reports funded by the Robert Wood Johnson
Foundation and reported by the Institute of Medicine. The IOM
conducted no original research but analysed 139 observational
studies, only seven of which were adjusted for income, writes
Greg Scandlen. The figure 18,000 appears only once, in Appendix
D, which explains the convoluted methodology for calculating it.
Relying on a single questionable study, which estimates a higher
overall mortality of 25% for being uninsured, it multiplies the
death rate for the insured by 125%, to get 18,000. Incidentally,
Medicaid beneficiaries frequently have far worse health outcomes
than uninsured patients. David Hogberg points out other flaws,
including failure to consider confounding variables such as
smoking and education level that affect both health and insurance
status (American Spectator 9/22/08).
Cost Shifting. Debunking the free-rider myth, William
Snyder notes that the uninsured paid for $30 billion of their own
medical costs out of pocket in 2007. According to a California
HealthCare Foundation study, of uninsured residents with income
at least twice poverty, 50% received medical care in the past
year for which they were charged; 80% paid in full, and another
10% were paying in installments. About 8% received pro bono care
(Wall St J 11/21/08).
The increasing demand for emergency services is often blamed
on the uninsured. An examination of 127 medical articles showed
that six assumptions reflecting the conventional wisdom about the
uninsured were either not supported by evidence, or were equally
true of insured patients. Uninsured patients are under–
represented in the ED for primary-care visits. The marginal cost
of an ED visit is perhaps overstated and may be less than the
cost of keeping a primary-care clinic open for after-hours care
(Newton MF et al. JAMA 2008;300:1914-1924).
Feb 6-7, 2009. Workshop, board meeting, Dallas, TX.
Sep 30-Oct 3, 2009. 66th annual meeting, Nashville, TN.
AAPS Asks Supreme Court to Review Poliner
In an amicus brief supporting Dr. Lawrence Poliner’s
Petition for Writ of Certiori, AAPS writes: “Physicians who
defend life, advance innovation, or stand up for patients, are
intimidated, threatened, and often destroyed by self-serving
wrongdoing by administrators, competitors, and adversaries.”
An error in a previous Ninth Circuit decision, argues AAPS,
is permitting an epidemic of sham peer review. The courts have
turned the qualified immunity under the Health Care Quality
Improvement Act (HCQIA) into virtual absolute immunity, with
catastrophic consequences for medicine.
A discussion of the Fifth Circuit decision in Poliner v.
Texas Health Systems, and Dr. Poliner’s
explanation of medical issues in his case, are published in
the winter issue of the Journal of American
Physicians and Surgeons.
Human Rights Watch
Freedom of thought, speech, religion, and
conscience are being threatened by “human rights”
In testimony before the U.S. Congress’s
bipartisan human rights caucus, journalist Ezra Levant
asked that Canada be placed on the watch list for human
rights abuses. He had been subjected to government
persecution for 900 days for his political and religious
views after publishing an article on the riots that
followed Danish publication of a cartoon of Mohammed.
Since then, Maclean’s, Canada’s largest
news magazine, was sued in three different tribunals.
“Canada’s human rights commissions secular
government organizations are prosecuting religious
fatwas,” he writes. There are 14 such organizations in
Canada, with an annual budget of $200 million. “It’s an
industry, and it needs social strife to stay in business.”
Even those who ultimately win can never recover legal
costs: “The process is the punishment.”
Ontario is committed to a huge expansion of its
kangaroo courts. An even more significant advance has
been proposed by the College of Physicians and Surgeons
of Ontario (CPSO), to target physicians who allow moral
conscience to stand in the way of performing state-
sanctioned medical procedures: abortions, helping same-
sex couples produce children, etc.
“Human rights,” explains David Warren, “have
been ideologized, and collectivized. They now belong to
groups, exclusively, and include principally the right not
to be ‘offended’ by the existence of an individual with a
mind of his own” (Ottawa Citizen
To enforce political agendas, data miners in
Britain have plans to acquire extensive intimate
information by interrogating children. A giant new
database called Contact Point is to go live in January.
One suppressed University of York study found it could
take a whole day to enter the data on one child.
Legitimate child protection is being hampered,
while decent parents are terrorized. Already, an
increasingly rigid state rejects potentially loving foster or
adoptive parents because they smoke or hold politically
incorrect (Christian) views. Parents are advised to teach
their children to reject the questionnaire (Eileen
Fairweather, Daily Mail 12/7/08).
“The budget should be
balanced, the Treasury should be refilled, public debt
should be reduced, the arrogance of officialdom should be
tempered and controlled, and the assistance to foreign lands
should be curtailed, lest Rome become bankrupt.”
Cicero, 55 B.C.
Taking New Patients in Canada: All or
Because universal access to healthcare has been
enshrined as a human right, a physician who accepts some
patients and not others may find himself before a human-
rights tribunal. And he could have a difficult time
defending himself, even if a patient was declined for what
seemed to be legitimate practice-management issues, said
Dr. John Gray, executive director of the Canadian
Medical Practice Association.
In Ontario, the primary battlefield, as few as
10% of physicians are accepting new patients. “Doctors
flummoxed by the prohibition on screening may simply
close their practice entirely to entrants, CPSO worried”
(Medical Post 10/14/08).
Hospitals Exert Control Via ED
A very common tactic used by hospitals to gain
control over a physician’s office practice is to use ED
mandates, writes Dr. Lawrence Huntoon, Chairman of
the AAPS Committee to Combat Sham Peer Review. The
hospital can put a financial squeeze on independent
physicians who “stubbornly refuse” to become hospital
employees by referring large numbers of nonpaying
patients with minor complaints to their office for next-
day follow-up. It doesn’t matter how inappropriate the
referrals are. The physician’s career may be ended if he
declines to provide care outside his area of expertise or if
he does provide the care, and the hospital later cites him
for providing services he wasn’t qualified to perform.
Always err on the side of calling in a consult in such
situations, suggests Dr. Huntoon.
Tip of the Month: There is a trend in
contracts allowing hospital administrators and staffing
agencies to terminate physicians without due process.
Physicians have been fired for raising quality of care
issues. Staffing agencies call this “employment at will,”
and it is perfectly legal. Read your contracts, and beware!
The American Academy of Emergency Medicine has
posted a petition concerning this practice at www.aaem.org/dueprocess/petition/.
Train your staff how to respond if auditors or
federal agents come knocking. They are under no
obligation to talk; but if they do talk, they must tell the
truth. Advise them to ask for the agent’s ID; and tell
them whom to call.
Free-Market Malpractice Alternative
Today, if you die in surgery, your heirs have
two options: sue, and get compensated if and only if the
court determines that malpractice occurred; or take the
Suppose you could sign a contract in which you
waive your right to sue, and the hospital agrees to pay $1
million if you die, no questions asked. Searching the web,
you discover that another hospital offers $2 million; it
can do that, for the same premium for episode-specific
insurance, because your chance of dying there is only half
as high. In such a system, insurers would become true
monitors of safety. Bad doctors or hospitals would get
priced out of the market and vanish. High quality would
become the norm. Patients would get compensated,
regardless of the cause of the injury. And trial lawyers
would have to earn an honest living. For more details, see
National Center for Policy Analysis, www.ncpa.org.
Financing Universal Coverage.
Intensive mining of electronic claims will be a tool of
choice in financing unsustainable government programs.
Physicians who participate in these programs will never
be sure the money they have earned is theirs to keep.
“Data mining was a significant contributor to [the] $215
million recovery goal required by CMS contract with
New York for 2008,” according to a presentation at a
Health Care Compliance Conference at the Univ. of
Data miners will be monitoring nearly
everything physicians do, including off-label prescribing
and “providers not meeting minimum standards.” The
latter include : “never events not reimbursable New York
Medicaid 2008; unreported adverse events;…condition of
participation failures (structure); drug outcomes in
populations and facilities.”
The Medicaid Office of Inspector General in NY
boasts 500 employees. Medicaid Integrity Contractors, the
state equivalent of RACs, will be coming in 2010. The
HHS OIG Work Plan Goals for 2009 will target pain
Lawrence R. Huntoon, M.D., Ph.D., Lake
A Never Event. Heart failure, liver
failure, respiratory failure, kidney failure: when organs
stop working, people die. Pressure ulcers should be
thought of as skin failure yet they have been defined as
“never events” along with wrong-side surgery. Would you
classify heart failure as a never event?
Christopher Reeve died of complications from
pressure ulcers. Did he not get the best medical care
money could buy?
Russell Faria, D.O., Kent, WA
Consumption Down. In the past year,
hospital admissions are down 2%, physician visits down
1.5%, and prescriptions down 2%. This has never
happened before. In bad economies, medical consumption
goes up, as people rush to get services before they get laid
off and lose their coverage. I think that with consumer-
driven health care, people are choosing to preserve their
own money, rather than overconsuming services they
don’t really need. Some commentators call this a crisis, as
if every doctor’s visit were essential to life.
Greg Scandlen, Heartland Institute
What Works? Researchers salivating for
individual-level data from electronic records have
apparently not considered that the quality of the data
depends on the honesty of the coding. Never mind that
the UK has all kinds of data corruption going on to fake
compliance with government waiting-list targets.
The people who came up with the ICD-10 want
central control over every nook and cranny of medicine.
Linda Gorman, Ph.D., Independence
Institute, Golden, CO
Patients Are Stupid. Pete Stark (D-CA)
said: “Individuals, without the technical knowledge
needed for sound medical decision-making, could never
bargain as effectively as these large buyers [CMS, DoD,
unions, employers, etc.]. Shifting more cost and
responsibility to the consumer as a strategy for reform or
cost-containment is useless.” Translation: people are too
stupid to adjust, learn, and manage their own affairs.
Everyone needs enlightened bureaucrats to see to their
needs. This is the theme of socialist thought regardless of
Frank Timmins, Dallas, TX
Complexity. I suspect ill intent
whenever a reader is supposed to be led to the conclusion
that something is complicated. Einstein’s writings, despite
the irreducible complexity of relativity, are as easy as they
can be made to be, and convey the undertone that the
concept is supposed to be understandable. If health-care
economics and fixed-cost allocations are hard to
understand, someone wants them to be. Patchwork
compli-cations permit legal retaliation by selective
enforcement, and complicated balance sheets conceal
things like cost shifting.
Edward Harshman, M.D., Thomaston,
Documentation. The implied message
from bureaucrats is that medical records are to be
generated, in essence, for the sake of the record. The
means have become the goal or they even overshadow
the goal. The record is seen as more important than the
actual clinical encounter. There is a method in this
madness. Those who benefit from withholding care
benefit from any procedure that slows down patient flow.
The incredibly labor-intense process of documentation in
complex cases also encourages physicians to screen out
complex cases, or to undercode and thus be underpaid.
Walter Borg, M.D., Lafayette, LA
The Myth of the Right Answer. This
was one of my brief reminders to students and residents
during my many years in academic medicine. Many in
government believe that medicine is more like auto
mechanics, leading to strong expectations of perfection.
We who live in medicine know that there is often more
than one right answer and that these change about every
5 years. This makes government control dangerous, and
puts down the need for physician judgment.
Donald C. Whitenack, M.D., Boise,
A Marketing Opportunity? I haven’t
been able to sell much critical illness insurance, which
pays a lump sum on certain diagnoses, in California, but
there’s a big market in Canada. If the U.S. turns to
government-run healthcare, a lot of people might buy it
so they can get treatment offshore.
Edward Dee Hinds, C.L.U., Paso Robles,