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AAPS News January 2019: ACA Is Unconstitutional

Volume 75, no. 1  January 2019

That the Affordable Care Act (ACA) is unconstitutional is simply a fact, as AAPS argued in the lawsuit it filed days after ACA was enacted in 2010 (AAPS v. Sebelius) and in numerous amicus briefs (see archives at aapsonline.org/category/obamacare/).

The newsworthy development is the decision by Judge Reed O’Connor in the U.S. District Court for the Northern District of Texas in Texas et al. v. U.S.A.

(Update: Judge O’Connor cites an AAPS-related ACA-challenge in a December 30, 2018 order reiterating his earlier decision. Read more.)

In holding the entirety of the ACA unconstitutional, Judge O’Connor notes that in NFIB the majority of the U.S. Supreme Court found the individual mandate to buy ACA-compliant health insurance to be invalid because the Commerce Clause of the Constitution does not give Congress the authority to regulate inactivity or to compel people to engage in commerce. Chief Justice John Roberts, however, did some reverse engineering on the law and the Constitution to uphold the law under the virtually unlimited taxing power (see AAPS News, August 2012).

Then the Tax Cuts and Jobs Act of 2017 zeroed the “shared responsibility payment”—the “tax” that is “triggered” by the otherwise unconstitutional individual mandate. The mandate itself was not and could not have been repealed because TCJA was enacted under the budget reconciliation process.

Since a provision that raises zero revenue cannot be construed as a tax, Judge Reed reasons, the individual mandate must fall. Then, then the whole Act is invalid if the mandate is not severable. Federal defendants agree that the mandate is inseverable from ACA’s pre-existing-conditions provisions, but the rest of the Act is severable. Intervenor defendants, 16 states led by California plus the District of Columbia, argue that all of ACA is severable. They also claim that the individual mandate can now be sustained under the Commerce Clause because of lack of compulsion.

“The Intervenor Defendants hope to have their cake and eat it too by arguing the Individual Mandate does absolutely nothing but [yet] regulates interstate commerce,” writes  Judge O’Connor.

The individual mandate is the keystone of the entire law, as Rep. Nancy Pelosi and others stated. “If there were any lingering doubt Congress intended the Individual Mandate to be inseverable, Congress removed it,” the Judge writes, citing § 18091(2)(H): “The requirement is an essential part of this larger regulation of economic activity, and the absence of the requirement would undercut Federal regulation of the health insurance market” [emphasis added in Opinion]. Congress recognized the “disastrous” results in seven states of guaranteed-issue and community-rating laws without universal acquisition of insurance: an economic “death spiral.”

The whole design of ACA is an elaborate balancing act intended to compensate for the costs inflicted on some sectors—the $200 billion cut in payments to hospitals and the uneconomic policies insurers were forced to write—with benefits such as less uncompensated care and subsidized premiums. Without the mandate, the other parts of the law could no longer work together in the “perfect tension” that Congress envisioned. These provisions include Medicaid expansion, employer mandates, the exchanges, and premium subsidies. “The Medicaid-expansion provisions were designed to serve and assist fulfillment of the individual mandate,” the Judge wrote.

What’s Next?

State Attorneys General are seeking an expeditious appeal. At this time, the decision does not require the Department of Health and Human Services (HHS) to make any changes in the way it is administering ACA.

Hospitals and Medicaid managed care stocks fell. Community HealthSystems (CYH) dropped 9.4%, Centene (CNC) was off 5.2%, and Molina Healthcare was down 11.7%, with the Dow down 0.7%. Barron’s considers it a buying opportunity, expecting the decision to be overturned on appeal.

AMA president Barbara McAneny, M.D., stated that the decision is “an unfortunate step backward for our health system that is contrary to overwhelming public sentiment to preserve pre-existing condition protections and other policies that have extended health insurance coverage to millions of Americans.” The AMA led a coalition—including the American College of Physicians, the American Academy of Family Physicians, the American Academy of Pediatrics, and the American Academy of Child and  Adolescent Psychiatry—in filing an amicus brief in support of the law.

President Trump applauded the decision and tweeted, “We have a chance, working with the Democrats, to deliver great Healthcare!” It is not clear how Republicans intend to protect people with pre-existing conditions without coercion.

A Kaiser Family Foundation executive tweeted that upholding the decision would throw the whole health care system and the  individual insurance market into “complete chaos.” This ignores ACA’s destruction of the market. After 8 years of ACA, Americans in the individual market, with or without a tax penalty, face a choice of one or a few Exchange plans, likely unaffordable without subsidies—or being uninsured. The Trump Administration is offering  some increased choices (AAPS News, December 2018), but ACA outlawed competition from guaranteed-renewable catastrophic insurance and from physician-owned hospitals—and destroyed state high-risk pools.

If ACA is held unconstitutional, will it be replaced by another unconstitutional law, possibly even more destructive of medicine?

Interoperability, Privacy, and Vulnerability

House members of both parties expressed frustration about lack of progress in achieving interoperability in heath information technology at a hearing before the House Energy & Commerce Health Subcommittee. Chairman Michael Burgess (R-Texas) was disappointed that a rule prohibiting “information blocking”—the practice of electronic health record (EHR) vendors blocking access to patient records in order to stifle competition—had yet to be released. Rep. Markwayne Mullin (R-Okla.) asked about ways (such as “alignment” with the Privacy Rule in the Health Insurance Portability and Accountability Act [HIPAA]) to make it easier to disclose patients’ mental health and substance abuse diagnoses “in order to get them the proper treatment.”

Medical data in centralized systems is not mainly used to expedite proper care, but rather for scoring and denying access. The data-selling business is worth $180 billion a year, writes Barbara Duck. Bad data is worth as much as good data, and nobody does a “data sniff” to verify accuracy. Pharmacists report getting lists of patients with five-star ratings for medication adherence. [The benefits of tracking and encouraging compliance were touted for cost-saving potential at a roundtable AAPS attended with former HHS Secretary Tom Price.] You get a reduced score on the Express Scripts Adherence Index for being male, not using home delivery for prescriptions, or having children in the household. Insurers use voice software to score your state of mind (“this call is being recorded for quality purposes”). “Weapons of Math Destruction” are being used to harm patients. With more contracts, CVS will have more data to sell.

Incidents of phishing, ransomware, scams, Trojan horses, identity theft, emails that disappear or come through altered, etc. could be the foreshocks for a coming earthquake-like destruction of the Internet—and interoperability, writes Richard Maybury. Already, there are some 10 billion household appliances in the world connected to the Internet. Few have any safeguards, and attacks through such devices are increasing by 600 percent/year. (He doesn’t mention medical devices, but these may be online also.) A casino was hacked through its fish tank thermometer.

“On October 9th, the GAO (Government Accountability Office) released a report disclosing that the Pentagon’s weapons systems are woefully vulnerable to ‘increasingly sophisticated cyber threats.’ …These were tests of the control of ‘weapons systems,’” Maybury writes. So if even the Pentagon is not safe from genius military hackers, how secure can civilian systems be?

One scenario might be that a government, unable to defend its military, might resort to a “scorched earth” approach that destroys the global Internet. Should we be maintaining some compartmentalization and pre-1990 modes of operation as a backup, instead of making everything interoperable?

See earlywarningreport.com/Dec2018EWR.pdf.

“A king rules with authority, a tyrant with power. A people accept rule by authority because of reverence. A people accept rule by power because of fear. Authority flows from Truth; power is based on lies.

“Democracies can rule with authority when…the great mass (not just a majority) of people, acknowledge an authority higher than man…. But once …man becomes, tacitly or openly, seen as the ultimate arbiter of all things, the democracy must devolve into a tyranny, or just plain dissolve. This is because man is insane, inconstant, intemperate, shifting, deceitful, and ludicrous.” 

William M. Briggs, http://wmbriggs.com/post/25996/

ACTION OF THE MONTH – Help fund a scholarship for a student to attend Thrive, Not Just Survive XXVIII. AAPS Educational Foundation, 1601 N Tucson #9, Tucson, AZ 85716. Tax deductible! http://aapsonline.org/scholarships

The Shamoon “Wiper Virus”

“In 2012, Saudi Arabia’s oil industry was hit by the Shamoon ‘wiper virus,’ possibly launched by Tehran. Roughly 30,000 computers were infected. Screens went black, files vanished, and email and phones died. To stop the spread of the virus, technicians had to physically rip out cables and trash computers in Aramco offices around the world…. Replacing it all required an estimated 50,000 new hard drives. Some communications functions came back immediately, but others took as much as six months. However, oil production did not stop. The crude oil, wells, tanks, pipelines, pumps and valves did not vanish. Only the ability to centrally manage them did. In planning for such an attack, the Saudis had made the production assets independent of the management assets. It was like the partitioning of modern warships. Damage to a compartment is restricted to that compartment. And, the more compartments, the safer the ship….” (Maybury, op. cit.)

How many compartments does your hospital or system have?

ACA Realities

Affordability: According to a Gallup poll, three in 10 Americans delayed seeking medical care because of cost. A 2018 Harris poll showed that 54% delayed care in the past 12 months (The Hill 12/19/18).

Denials: Medicaid, the main source of persons newly insured under ACA, was far more likely to challenge or reject doctors’ bills and took about twice as long to pay (tinyurl.com/y96xcz3h).

Unpopularity: As of Dec 19, ObamaCare enrollment was down 4% compared with 2017. In New Jersey, the only state that implemented its own individual mandate after repeal of the federal tax penalty, and banned short-term options, enrollment was down more than 8% (https://tinyurl.com/ya8fzjz9).

15 Million Blacklisted in China

The Chinese social credit system, which is supposed to be in effect by 2020, is already in full swing in some regions. Participation is supposed to be optional: “Join or die.” Some 15 million people have been blocked from purchasing a plane or high-speed train ticket. The goal of the program is “algorithmic governance” and to “make discredited people become bankrupt.”

Bad behavior includes buying too many video games or otherwise “being an idle person and not contributing to the greater good.” Your own “sesame score” is lowered if you fail to distance yourself from discredited persons. The system is already influencing the behavior of foreign companies.

AAPS Calendar

Feb 22-23, 2019. Thrive, Not Just Survive; Board meeting, Dallas.
Sep 18-21, 2019. 76th Annual Meeting, Redondo Beach, CA.
Sep 30-Oct 3, 2020. 77th Annual Meeting, San Antonio, TX

The Flynn Ambush

Former National Security Adviser Michael Flynn, who served 33 years in the U.S. Army and attained the rank of three-star general, has pleaded guilty to a single count of lying to the FBI, reportedly to avoid bankruptcy and to protect his son from becoming a legal target. The meeting during which he allegedly lied was presented as an informal conversation at which presence of counsel was supposedly not needed. Flynn had no reason to know he was in legal jeopardy; the probe into Russia and the Trump campaign was still a secret. The FBI agents, one of whom was Peter Strzok, had transcripts of Flynn’s conversations with the Russian ambassador. The interview, which was set up by Andrew McCabe, was apparently designed to trap Flynn into contradicting something in the transcript (WSJ 12/12/18). Special Counsel Robert Mueller recommended no prison time, considering Flynn’s “cooperation” and providing “substantial assistance” with other “ongoing investigations” (USA Today 12/4/18).

According to Sidney Powell, author of Licensed to Lie: Exposing Corruption in the Department of Justice (reviewed here), Mueller defied a court order, and ignored 2 years of requests by Sen. Chuck Grassley (R-Iowa), to produce all evidence favorable to the defense, and possibly destroyed exculpatory evidence.

The government’s Dec 14, 2018, memorandum responding to the Judge Emmet Sullivan’s order to produce exculpatory evidence concludes with a veiled threat to Flynn: “The seriousness of the defendant’s offense cannot be called into question, and the Court should reject his attempt to minimize it…. [A]ssuming the defendant continues to accept responsibility for his actions, his cooperation and military service continue to justify a sentence at the low end of the guidance range.” The implication is that if Flynn gave the government any more trouble over prosecutorial misconduct, they’re going to push to have him imprisoned for a long time, writes Adam Mill.

Once a defendant pleads guilty, further discussion about guilt or innocence is foreclosed. At the sentencing hearing, Flynn declined to withdraw his guilty plea. He’s the only one who can legally object to the mishandling of his case, and he chose not to do so. “Flynn’s continued willingness to stick to his plea solved a big problem for Mueller’s team,” Mill writes. The Judge’s tirade against Flynn at the hearing might have reflected frustration over the Flynn team’s attempt to “have his cake and eat it too,” suggests Sean Davis of The Federalist (ibid.).

!Tip of the Month: Sham Peer Review Ambush. The target of a sham hospital peer review is often invited to a meeting where everyone except the target knows the agenda is to launch an attack. It is supposed to be an informal, friendly meeting. There is supposedly no need to have an attorney present. Hospital administrations/medical staff leaders will often offer the explanation that they don’t want to make the meeting “adversarial” by having attorneys representing both sides at the meeting—it’s just a “nice friendly discussion doctor to doctor.” Even when a physician is told he “cannot bring his lawyer” to the meeting, the doctor should show up with his attorney and a court reporter. The court reporter can record everything that is said, most importantly the hospital’s refusal to allow the physician to be represented by an attorney, and the doctor’s attorney’s strong objection thereto.

BCBS Antitrust Case to Proceed under Per Se Standard

The 11th Circuit Court of Appeals has denied an appeal by Blue Cross Blue Shield and upheld a district court’s determination that its allegedly restrictive practices will be analyzed under the per se standard of the Sherman Act rather than the more lenient rule-of-reason standard. The ruling eliminates the need for plaintiffs to prove economic losses or balance anticompetitive effects vs. procompetitive benefits. Agreements between competitors that involve price-fixing, market allocation, or group boycotts are viewed as per se unlawful.

This class action lawsuit (In re Blue Cross Blue Shield Antitrust Litigation, Case No. 13-cv-2000, MDL 246 (N.D. Ala.)), now ongoing for 6 years, is the largest antitrust suit in U.S. history.

Plaintiffs allege that the 36 BCBS companies have entered non-compete pacts that allocate markets and cap the amount of unbranded health insurance they offer, artificially inflating premiums and decreasing consumer choice for health insurance.

The “Blue System” has also been challenged in 2018 by others for alleged anti-competitive behavior.  An Anthem shareholder sued over BCBSA’s allegedly blocking its acquisition of Cigna. And insurance startup Oscar challenged Florida Blue’s exclusive broker policy, which caused more than 190 brokers to back out of agreements with Oscar.

Veteran’s Case Challenges Administrative State

The U.S. Supreme Court has agreed to hear Kisor v. Wilkie, a  dispute between a former Marine and the Department of Veterans Affairs, stemming from the VA’s denial of benefits for post-traumatic stress disorder (PTSD). The VA found the evidence Mr. Kisor submitted wasn’t “relevant” within the meaning of that term in the VA’s regulations. The U.S. Court of Appeals for the D.C. Circuit concluded that the meaning of “relevant” in the regulation was ambiguous and therefore sided with the VA, applying the Auer v. Robbins (1997) precedent. The Auer defense generally requires federal courts to accept an administrative agency’s interpretation of its own ambiguous regulations.

If the court overturns Auer,  writes Peter J. Wallison, author of Judicial Fortitude: The Last Chance to Rein in the Administrative State, “a logical next step would be to reconsider deference for agency interpretations of statutes that authorize their actions. In Chevron v. Natural Resources Defense Council (1984), the justices directed lower courts to defer to any agency interpretations of laws enacted by Congress, so long as the interpretation is deemed ‘reasonable.’” 

Chevron deference has helped enable more than 100,000 rules since 1993. “This avalanche of rules and regulations is beyond the ability of the president or Congress to control. It is also a challenge to the rule of law.” The Court might try to reclaim the authority asserted by Chief Justice John Marshall in Marbury v. Madison (1803): “It is emphatically the province and duty of the Judicial Department to say what the law is.”

If the court overturns precedents that require deference, critics may describe it as “judicial activism”—a misuse of the term. As Chief Justice John Roberts wrote in a 2013 dissent, the judiciary has an obligation “not only to confine itself to its proper role, but to ensure that the other branches do as well.” Because of judicial “hands-off” policy,  “unelected agency heads and bureaucrats have become America’s main lawgivers” (ibid.).


Bonuses Tied to “Quality” Metrics. A veterans’ hospital saw its ratings rise from one star to two in 2016, and the director earned a bonus of $8,120. Although more than half the beds remain empty, patients are turned away and denied care so as to improve the hospital’s metrics. To avoid penalties for deaths occurring within 30 days of admission, patients are coerced to be admitted to hospice. To avoid penalties assessed for an admission diagnosis of congestive heart failure (due to failure to prevent it), hospital officials simply require doctors to report CHF as “hypervolemia,” which isn’t tracked (tinyurl.com/yaawu5wg). In a system that rewards metrics, patients are treated like insignificant pawns to be moved around and manipulated for the benefit of  the “game players.” This is what happens when the patient is no longer the “customer” and bureaucrats follow things that can be measured but have little or nothing to do with good care.

I predict that the doctor featured in the NY Times story will need the services of the AAPS Sham Peer Review Hotline.

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

Which Will It Be? Here are the last few lines of “Medicine Leads….” predicted by Robert Welch in 1962: “Ladies and gentlemen, the foregoing explains why you as patients and we as physicians must not allow the government to usurp command over our illness care and make it a state controlled, all-encompassing, mandatory Health Care System; and by so doing, slam closed and weld shut behind us all, for decades to come, the iron-barred cell door of the penitentiary that is the New World Order—worldwide. And medicine would have led the way—to slavery. But I repeat—American Medicine can also lead the way to  freedom. Folks, which will it be? The outcome is up to YOU.  And what will you say when, in the darkness of midnight, your children and grandchildren whisper in your ear so they won’t be heard by the ever present NKVD, Gestapo, KGB, CIA, UN thought control police, ‘Dad, Grandpa—why didn’t you prevent this horror from happening?’ What will your answer be?”

Curtis Caine, M.D., AAPS President, 1981

Pharmacist Prescribers. Kentucky pharmacists tried to get authority to prescribe, diagnose, and treat any illness carte blanche. I attended all the hearings, and physicians were able to get the legislature to limit them to 13 diagnoses of minor illnesses. There is no oversight by the pharmacy board. Pharmacists are supposed to notify the primary “provider” within two business days when a patient is seen by a pharmacist, but there is no way to track this.

Patricia Swiney, M.D., Paris, KY

Medicare and Prices. Medicare Part A has a zero premium and a deductible equal to one day’s stay in a hospital. Purchasing a Medicare supplement covering the deductible creates an insurance policy with 100% coverage of in-hospital care until the 61st consecutive day. Zero externally priced goods disappear; they tell consumers that consumption of the good is free and tell producers that their efforts are worthless. Graphs in an article by Milton Friedman showed that starting in 1965, costs per patient started an inexorable rise, while the number of hospital beds per 1,000 population began to decline (WSJ 11/12/1991). The price index of physicians’ fees did not show the same meteoric rise since Medicare Part B has a premium, a deductible, and coinsurance.

Charles Courtney, Riverside, IL

Definitions. The public thinks that “coordination of care” means doctors and  hospitals talking to each other to organize care. But too often it means allowing outsiders to access the patient’s data, profile patients and doctors, share data without patient consent, and limit the doctor’s treatment.

“Value” is judged by outsiders, and payment based on it does not consider the physician’s time, skill, or expertise, or the cost of equipment and other overhead.

 Twila Brase, R.N., Citizens’ Council for Health Freedom

Miracle Overhead Savings. As the Medicare for All barnstorming begins, expect to hear repeatedly that Medicare’s overhead is only 2.1%, while private insurers’ is 12.1%, and therefore single payer would reduce administrative costs by 70%. Some backers of a Canadian-style system claim that government-run program could reduce costs to as little as 1.1%—an evidence-free argument until proved otherwise. Merrill Matthews debunks these arguments, writing that most of Medicare’s costs are hidden (tinyurl.com/ybp6zles). Robert Book calculated that over the years 2000 to 2005, Medicare’s administrative costs were an average 24.8% higher than the private sector’s (tinyurl.com/y76aklvs).

Robert W. Geist, M.D., North Oaks, MN

Fiscal Accountability. How much government money (state and federal) is going to pay for consumers’ (patients and families) actual medical services (including medications) and the hidden “administrative costs” of corporations who contract with the government to run Medicaid and MinnesotaCare (and who employ by far most Minnesota physicians)?

How can we know? Minnesota policymakers and voters need valid audits separating money for patient care versus the administration of Medicaid and MinnesotaCare.

Lee Beecher, M.D., Maple Grove, MN

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