The Affordable Care Act (ACA or ObamaCare) has essentially destroyed the individual market for medical insurance, and is well on the way to eliminating employer-provided health plans. As Jonathan Gruber revealed, this is an intended though deceitfully concealed consequence.
The attack did not, however, start with ACA. In 1965, more than half of U.S. seniors had private insurance. President Johnson destroyed this market overnight to assure the success of “his” program. In the early 1990s, AAPS past president Lois Copeland, M.D., visited a number of CEOs of insurance companies, looking for products seniors could buy to replace Medicare. There are none.
The basic problem goes much deeper. The U.S. has replaced individual responsibility with collective guilt, voluntary risk-sharing with government dependency, and private contracts with government mandates and unbounded litigation. How did it happen? Greg Scandlen explains: “a flood of Supreme Court decisions between 1937 and 1944 completely reordered American society and the Constitution itself.”
Constitutional Limits on Federal Power Shredded in 7 Years
“Franklin Delano Roosevelt’s Supreme Court…began with Social Security, went on to eliminate freedom of contract, expand the Commerce Clause, and redefine the meaning of insurance, all in the service of the Progressive movement to put an elite bureaucracy in charge of all economic activity in the United States.”
The precedents established then, including Wickard v. Filburn (AAPS News, September 2013), still hold. Insurance was for the first time defined as commerce in 1944, in United States v. South-Eastern Underwriters Association (AAPS News, April 2012). This overturned the contrary understanding established in the 1869 case Paul v. Virginia and repeatedly reaffirmed. Stare decisus,, which now protects progressive precedents, was called reactionary in 1937. Although Congress immediately exempted the business of insurance from antitrust law (McCarran-Ferguson Act), Congress has repeatedly used South-Eastern Underwriters to regulate insurance.
This is one reason why ACA can prevent Americans from buying coverage that excludes contraception. Another is that after 1937, the Roosevelt Court eliminated virtually any limitation on the government’s power to violate contracts. The “affected with a public interest” doctrine trumped Article 1, Section 10, which states that “No State shall…pass any…Law impairing the Obligation of Contracts….” This doctrine also means that doctors or businesses cannot use contracts to reliably protect themselves from unlimited tort liability. And it enables price controls, which Scandlen calls the malignancy that is destroying U.S. medicine.
Why No One in the World Has Health Insurance
Plans that provide “universal coverage” by “health insurance” can do no more than limit the financial impact of health-related events. They do not affect the actual losses caused by injury or illness, writes Tomas Philipson (Forbes 11/8/14). The only prospect for true health insurance, in the sense of reducing risk to health, is medical innovation.
Expanded public coverage of medical costs usually has a negative effect on innovation. As government becomes the dominant purchaser, it demands deep price cuts, reducing potential returns to innovators (ibid.). Or government may block access through utilization controls or regulations that may suppress a method entirely or make the cost prohibitive.
For example, the cost of developing a new medicine is now $2.6 billion, 2.5 times higher than the 2003 estimate, according to the Tufts Center for the Study of Drug Development. By a different method, Forbes editor Matthew Herper came up with an estimate of $5 billon in R&D costs.
Access to care that is of good quality even by current standards is also in jeopardy, Scandlen writes. Even if ACA disappears, deterioration in the quality of care Americans receive will continue, because of price controls that began at the time of World War II. The costly Resource-Based Relative Value Scale monstrosity has a particularly destructive effect on quality. If applied to baseball, a winning major-league pitcher would receive as much as a minor-league rookie.
Damages from price controls include a projected shortage of 91,000 physicians by 2020. “Without access to physicians and hospitals, insurance is as worthless as a free pass to a full parking lot,” Scandlen points out.
The nation’s largest insurer—Medicaid, with 66 million beneficiaries—pays on average rates 66% of Medicare, and more than one-third of physicians do not participate. The equal-access provision requires, as a condition of federal funding, that payments be high enough to enlist enough providers to assure that goods and services are as available to Medicaid beneficiaries as to the general population. No enforcement regulations exist, however, and Chief Justice John Roberts says that HHS, not the courts, should be the sole enforcement authority (NEJM 12/18/14).
Real insurance companies are required to have enough reserves to pay their liabilities. Government, instead, has accumulated massive unfunded liabilities (the fiscal gap) as high as $222 trillion. The Congressional Budget Office (CBO) stopped posting the second set of books, the Alternative Fiscal Scenario. Government is like mistletoe, writes Simon Black: a parasite that can drain its host until it dies.
Fiscal Facts
- Borrowing to Pay Debt: Between Oct 1 and Nov 25, the U.S. Treasury took in a record $341,5912,000. To finance ongoing government spending and roll over maturing debt, the Treasury had to issue $1 trillion in new debt (cnsnews.com 11/28/14).
- Redistribution: The bottom three income quintiles (60% of U.S. households) are net recipients of means-tested transfer payments. Average net federal tax rates (tax paid minus transfers received) ranged from –35% in the lowest quintile to +19% in the top quintile, based on CBO figures.
- Role of Government: The primary function of the federal government is now taking money from some people and giving it to others. More than 70% of federal spending goes to “dependence-creating programs”; there are now 80 different means-tested programs. Much of the money is now borrowed (Michael Snyder, James Cook Market Update, mid-October 2014). The cost does not count laws that require citizens to help others, such as minimum wages, mandatory benefits, and rent control (William Voegeli, Imprimis, October 2014).
- Currency Fundamentals: Capital ratio (net assets/total balance sheet): U.S. Federal Reserve, 1.26%; Russian central bank, 12.5%. Gold reserves/money supply: Fed, 0%; Russia, 6.2%. Cash reserves/debt: U.S. 0.34%; Ukraine, 14.2% (Simon Black).
- The 1950s path to accumulate wealth by hard work, savings, and entrepreneurship is gone, owing to inflation and over-regulation, Black writes. Capitalism is replaced by a new feudalism.
Immigration Facts
According to the Center for Immigration Studies, there were 41.3 million immigrants living in the U.S. in July 2013, the highest number ever recorded, and the highest percentage of the population (13.1%) since 1921. Today’s immigrant population is double that of 1990 and quadruple that of 1970. Though the U.S. has less than 5% of the world’s population, 20% of all international immigrants live here. About 20% of all Americans now speak a language other than English at home, including nearly half of California schoolchildren (Tom Piatak, Chronicles, December 2014).
Obama’s unilateral executive action on immigration will make hundreds of thousands of illegal immigrants eligible for federal transfer payments, primarily the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). These refundable tax credits may give workers a tax “refund” that is larger than their tax liability. The IRS paid out $63 billion in EITC benefits in 2013 and $26.6 billion in ACTC credits. At least 24% were estimated to be “improper payments” (fraud). An illegal immigrant “willing to pay a fair share of taxes” may mean “willing to accept an assistance check,” writes Byron York (Washington Examiner 12/11/14).
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“Progress means getting nearer to the place you want to be. And if you have taken a wrong turning, then to go forward does not get you any nearer. If you are on the wrong road, progress means doing an about-turn and walking back to the right road; and in that case the man who turns back soonest is the most progressive man.”
C.S. Lewis, Mere Christianity
Flashback: Capitalism, the Ultimate Lifesaver
In 1921, Dr. Frederick Banting and medical student Charles Best isolated, refined, and showed the effectiveness of insulin in animal studies at the University of Toronto. They presented their findings at a research conference. Although academia discouraged patenting discoveries, Eli Lilly persuaded Banting and Best to patent their formula so it could be standardized and safely manufactured. Insulin was on the market within 18 months of Banting’s breakthrough, at a tiny fraction of today’s R&D cost.
“We need to break Eroom’s Law,” writes Steve Forbes. It is the obverse of Moore’s Law, which postulates that the computing power of an integrated circuit doubles every 18 to 24 months. In contrast, the real cost of bringing a new drug to market—from R&D to FDA approval—has been doubling every nine years (Forbes 12/10/14).
Massachusetts Passes Anti-MOC Resolution
At its December 2014 meeting of the House of Delegates, the Massachusetts Medical Society became the 14th state medical society to pass a strong resolution in opposition to proprietary Maintenance of Certification. The full text is posted here: http://aapsonline.org/resolutions/a-10-20-MA-no-moc.pdf.
Young doctors, practicing doctors, university scholars, and others wishing to assert their professional competence independent of the ABMS and ABIM testing industry won an important victory, thanks to a sustained effort. They share tactical advice at http://tinyurl.com/m6fgvue.
Premium-Months Instead of Dollars?
To help humans comprehend the vastness of the universe, German astronomer Friedrich Bessel came up with a time measure for distance: how long it would take for light to travel that distance. Simon Black suggests describing U.S. government debt in terms of the time it would take to pay it off: the number of years working at the average wage, now about $45,000. The current public debt of about $18 trillion could be expressed as 398 million work-years.
So, to help people better understand the advantage of direct payment, how about giving prices in premium-months? If your insurance is going up to $900/month, the cost of a $10,000 operation is 11.1 premium-months. For paying that much to an insurance company, how much medical care do you receive in an average year? And what is the residual value of a lapsed policy?
AAPS Calendar
Jan 9, 2015. Thrive, Not Just Survive XXI and
Jan 10, 2015. Board of directors meeting, New Orleans, LA.
Oct 1-3, 2015. 72nd annual meeting, St. Louis, MO.
ACTION OF THE MONTH
Watch out for the “Interstate Medical Licensure Compact,” a devious back-door way to bring MOC/MOL to your state. See alert to Missouri physicians here: http://www.moaaps.org/compact.
Flashback: Shrinking Our Rights
On Sep 22, 1994, Joseph Sobran wrote about a Catholic couple accused of violating civil rights by refusing to rent to an unmarried couple. “The rights of religion and property are on the wane,” he noted. “We now intuitively understand ‘civil rights’ as a synonym for coerced association…. It seems that bad rights, like bad money, crowd out the good.”
Like Scandlen (see p 1), Sobran traced the critical change in government to the New Deal. “It was then that the federal government ceased to depend on delegations of power through the Constitution. It became something new in America, though very old elsewhere: a self-enlarging entity….”
“As things now stand, the Tenth Amendment might as well say: ‘The enumeration in the Constitution of certain powers shall not be construed to deny any other powers the federal government may choose to assume.’”
Proposed Anti-torture Law in Australia
In 2008, the “Communists” (the Australian Labor Party and the now-collapsed “Greens”) in the Victoria Parliament enacted a law that permits abortion right up until birth, writes Lord Christopher Monckton (WND 10/12/14).
“The campaign to kill babies has long been part of the Communist program to delegitimize, demoralize and depopulate the West…. The dismal regime of hatred personified that killed 100 million in the 20th century bids fair to do the same—this time by abortion—in the 21st…. However, I have a plan.”
The United Nations—which was, after all, founded to try to prevent the recurrence of atrocities such as the Holocaust—has enacted an international convention on torture, to which Australia is a signatory. That convention prohibits the discriminatory infliction of pain or suffering on any person with the consent or acquiescence of public officials. The offense is one not merely of strict but of absolute liability. No governmental immunities may be pleaded, nor may the accused plead that the prosecution cannot prove intent. If torture has occurred, and the public official in question connived at it, that public official is guilty as charged.
The Australian Parliament in Canberra passed an Act prohibiting torture in 2010. The Rise Up Australia Party is about to write to all candidates in the Victorian state parliamentary elections asking them to give first priority to enacting a bill obliging abortionists to give every baby marked for death, from 17 weeks’ gestation onward, an anesthetic first, or face 20 years’ imprisonment.
Injecting an anesthetic will be a reminder that the abortionist is about to kill a sentient human being, perhaps “an incentive to bring child-killing profiteers and the legislators who indulge them to their senses,” Monckton suggests. Perhaps we can then bring the autogenocide to an end.
DOJ to Expand Criminal Investigations
The Department of Justice has implemented new procedures whereby qui tam actions or referral from any source for civil, regulatory, or administrative remedies will also receive an early evaluation for possible criminal prosecution. In announcing the new policy, Assistant Attorney General Leslie Caldwell showcased her division’s 95% conviction rate (BNA HCFR 10/29/14).
Medicare Ramps Up Anti-fraud Rules
Although practicing physicians struggle to cope with complex rules and penurious payments, the program is apparently still a fertile field for multi-million dollar frauds. New “program integrity” efforts (BNA HCFR 12/10/14) include :
- Denying Enrollment: CMS can deny or revoke enrollment of providers or suppliers previously affiliated with any organization that has unpaid Medicare debts or has been terminated from Medicare. The purpose is to prevent “bad actors” from re-enrolling. CMS can also revoke enrollment if a managing employe has had a state or federal felony conviction within the past 10 years, or if billing patterns don’t meet CMS requirements.
- H.R. 5780: This bipartisan bill introduced Dec 2 would strip Social Security numbers from Medicare cards and authorize consideration of a smart-card format. It would also increase incentive payments participants in the Senior Medicare Patrol.
- Made-up Rules: According to the American Hospital Association, the Office of Inspector General has been assessing overpayments based on extrapolation from reviews of short stays, inventing requirements that do not exist, such as a valid signed physician order for inpatient admission.
Executive Non-order
Obama’s Executive Order promising that the tax dollars of pro-life Americans would not be used to pay for abortions or for any health plan that includes coverage for abortion—essential to collect the last few votes needed to pass ACA—was a sham. At the time, Cecile Richards, the head of Planned Parenthood, dismissed it as a “symbolic gesture,” writes Steven Mosher of the Population Research Institute.
In August 2014, the California Department of Managed Health Care suddenly ordered insurance companies to immediately insert surgical and RU-486 abortion coverage into all of their plans, regardless of what they had promised plan sponsors. Although this action is in clear violation of federal law—the Weldon Amendment—the only mechanism for enforcement is filing a complaint with Obama’s HHS, which will simply ignore it. On Sep 30, the California Catholic Conference filed a civil rights complaint.
Mosher also notes that it is nearly impossible for subscribers to find out whether a plan covers abortion on demand.
AAPS Files Petition for Writ of Certiorari
The case that AAPS filed challenging ACA, 3 days after it was signed into law, is now being appealed to the U.S. Supreme Court. This case, AAPS v. Burwell, also challenges the rule that seniors must repay all Social Security benefits previously received in order to prospectively opt out of Medicare Part A, and seeks to invalidate requirements that physicians submit themselves to certain Medicare requirements and to enroll into the Provider Enrollment, Chain and Ownership System (“PECOS”) as a condition to refer Medicare-eligible patients for Medicare-covered services such as x-rays, oxygen, and blood tests. The case seeks to invalidate both individual- and employer-based penalties in ACA.
All briefs are posted at http://larryjoseph.com/dockets/AAPSvSebelius.html.
Correspondence
May Doctors Help Veterans and Their Families? In 2013, Fox and Friends reported that the Navy SEAL who killed Bin Laden, retired after 16 years of service, could not get insurance. It was suggested that doctors might treat him free, in thanks for his service. Given difficulties with VA, many doctors might be willing to help pro bono. But when a Virginia endocrinologist publicly offered discounted care to military families, inspired by a N.Y. power company that offers financial aid to active-duty military families, government officials said that doctors who did this could face stiff fines. And when more than half the physicians in Manatee County (Fla.) offered to waive co-pays for CHAMPUS families, officials said that was illegal, and would not be tolerated—even though the nearest military hospital where dependents could get free care was more than 50 miles away (AM News 2/25/91).
The government is more interested in prosecuting physicians for “fraud” than in helping those who risk their lives for our country. Government tyranny requires maintaining control at all times. Going outside the government’s program to provide free care is seen as a challenge to government control.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY
Who Designed ObamaCare? Since the time of FDR, the Democrat Party has been a collection of special-interest groups. But once in a while Democrats do something that is purely ideological and for which there is virtually no special-interest support. In the first two years of the Obama presidency, Democrats controlled both houses of Congress, and they had a filibuster-proof majority in the Senate. It was a perfect opportunity to satisfy the ideological goals of their left-wing base. But no reform is possible without the support of the core special-interest constituencies. So we got national health reform completely designed by special interests! The uninsured had absolutely no input into the design of ACA. It was totally designed by people who were already insured and who had an economic interest in making sure health reform was good for them (Forbes 11/28/14).
John Goodman, Ph.D., Dallas, TX
No Money for Care. After ACA my patients are complaining about lack of coverage for medications, deductibles, non-approved studies, etc. People have to spend thousands of dollars for something that might happen to them, yet they are left without the money to pay for care they actually need! It is so twisted for the insurance industry to appropriate thousands for no immediate services while people lack the means to pay for immediate needs.
Mark Mecikalski, M.D., Tucson, AZ
In Defense of Gruber. Jonathan Gruber felt little constraint in making the various statements that have been trumpeted by conservative media because most of what he said was completely unremarkable in health policy circles. He expressed truths that few people want to hear. 1) Workers pay for their benefits, including the 40% Cadillac tax. 2) Only a very stupid population would have believed Obama’s promises. 3) Mandated benefits are a tax on all policyholders. 4) You can’t cover everyone and charge everyone the same without a mandate.
Greg Scandlen, Consumers for Health Care Choices
Compromise. House Minority Leader Steny Hoyer accused Republicans of following Ayn Rand’s advice that “compromise is always evil” and warned that a Republican Congress would only lead to more gridlock and partisanship. In reality, compromise usually is evil. And neither Harry Reid nor President Obama has compromised on anything. The Republican House passed 350 bills, 98% with bipartisan support. Reid has created gridlock by keeping them from being brought to committee or the floor.
Stanley Feld, M.D., Dallas, TX
Sharing for the Good…Money. The U.S. has a data addiction and selling problem, as does the UK. It is easy to confuse hackers with real data sellers. The FBI estimates that a health record is worth $50, compared with a few dollars for a credit card record. Breaches cost the industry up to $5.6 billion/yr.
United HealthCare is one of the biggest data-selling companies. Walgreens and CVS pull in $1–2 billion selling data. Patients at Mayo all have their de-identified records sold to Optum Labs for its paying clients to research and mine. AARP is an Optum Labs data-selling promoter. The British National Health Service sold 47 million records to a major insurer, and will continue to sell data despite evidence that they sold tens of thousands illegally.
Data selling allows the scoring of doctors, and also of consumers to deny them access to things. As web data becomes more flawed over time, people are judged on fake or flawed numbers.
Prisoners at San Quentin are being taught to code—what a great way to train future hackers!
Barbara Duck, Orange County, CA
Note to AOA on the SGR. The American Osteopathic Association could advocate opting out of Medicare, making the sustained growth rate moot and ending the annual groveling. Or it could ask for a freeze on payments but an end to the ban on balance billing. This would save the government money and restore market pricing. I’m so glad I opted out in 2012; the SGR doesn’t affect me.
Steven Horvitz, D.O., Moorestown, NJ – http://www.drhorvitz.com/
