AAPS News July 2018: LBJ-Nixon Care


The Republican betrayal and Democrat intransigence on repealing “ObamaCare” may be partly related to reverence for the legacy of the first African-American President. But in fact the Affordable Care Act (ACA) builds on the legacy of far less popular Presidents. The most difficult part of ACA to touch—and the one most responsible for the touted increase in “coverage”—is the expansion of the Medicaid portion of LBJ Care to nondisabled, childless adults. For the next step, Democrats are now receiving strategic advice to talk of “Medicare for all”—LBJ Care for all—instead of “single payer.”

LBJ wiped out competition for “my program” (Medicare): Private insurers cancelled all existing policies for persons over age 65 in response to  his “jawboning.” ACA actually outlaws most true insurance, and Obama’s Executive Orders greatly restricted remaining workarounds, such as short-term plans. Most if not all ACA plans are Nixon Care—that is managed care, whose lift-off was fueled by Nixon’s HMO Act of 1973. Under ACA, 57% of the increase in publicly subsidized insurance represented “crowd-out” of unsubsidized private plans (tinyurl.com/y96zpatz).

Other Presidents also played a role with bipartisan actions: FDR with Social Security (Medicare is Title 18 and Medicaid Title 19) and special privileges for employer-owned coverage; Clinton with CHIP (Children’s Health Insurance Plans); and George W. Bush, who jawboned the midnight passage of Medicare Part D.

The enumerated powers of the federal government in the U.S. Constitution do not include the financing, provision, or regulation of medicine. Promises in the Medicare act not to interfere in the practice of medicine or the compensation of physicians (§1801-1803, AAPS News, August 1995) have been violated early and often—but participation is claimed to be “voluntary.”

The Constitution does not apply to the private partners. (All Medicare carriers are private entities.) Swamp Care, brought to us by LBJ, Nixon, et al., unlike the Veterans Administration, is not socialized medicine, states George Lundberg, editor of JAMA from 1982-1999 (tinyurl.com/ychwzdbc). He is correct: it is rather a fascistic union of for-profit corporations and state power (https://tinyurl.com/yb6ywtqa).

The Medicare/Medicaid Sinkhole

After a long spell of subterranean erosion of water-soluble rock such as limestone, the apparently solid ground above it can suddenly collapse. Even a skyscraper could be buried in this way.

Federal health-related tax expenditures, including exclusions and deductions dating to the New Deal, amounted to $5 billion in 1967. They will soon exceed $500 billion. The federal share of U.S. health spending is now close to 50% (tinyurl.com/yczg2gt6).

“It hasn’t happened yet” is still the response to the annual reports of the boards of trustees of  Medicare and Social Security, which predict bankruptcy a few years into the future. For the first time since 1982, Social Security will take in less than it pays out. The Trust Fund is expected to be fully depleted (i.e. to have had all its IOUs redeemed by the taxpayers) by 2034, at which time beneficiaries can expect at least a 25% cut in their checks. Medicare Part A is slated to run out of IOUs by 2026 (in 8 years).

How about diverting still more of the nation’s economy into these programs? Already, Social Security, Medicare, and Medicaid devour three-quarters of federal spending, with no need for Congress to vote on their budgets (Wash Post 6/6/18, tinyurl.com/y8bnv9wy). Raising Social Security taxes would have the effect of diminishing other tax revenues (tinyurl.com/ybg8ksze).

Ernest Hemingway when asked “How did you go bankrupt?” famously replied, “Two ways. Gradually, then suddenly.”

The Real Beneficiaries

More than 60% of U.S. children were on Medicaid or CHIP in 2017—in the “richest country in the world”! Enrollment in Medicaid managed care plans continues to increase. By 2016, 71% of Medicaid’s 74 million enrollees were in these “private” plans.

While the “value proposition” for taxpayers is questionable, -care contractors for Medi-Cal earned $5.4 billion in profits on their contracts in 2014 and 2015 (the first two years of the Affordable Care Act [ACA] coverage expansion), write Jeff Goldsmith et al. (Health Affairs Blog 5/3/18, tinyurl.com/yagxne6e). In 34 states and the District of Columbia, managed-care contractor profits tripled from $1.1 billion in 2013 to $3.9 billion in 2015. States see that their tax dollars “seem to disappear into a large black box.” Medicaid spending claims almost 20 percent of state general funds(not counting federal matching funds).

While Medicaid doctors may be paid less than their cost, Centene in Florida is paid $215 per month for a child in a Medicaid plan that has no in-network providers (see pp 2-3).

Private plans purportedly can do things that the public partner, state Medicaid agencies, cannot, but there is little to no evidence that managed care either saves money or improves outcomes (Health Affairs Blog 5/5/18, tinyurl.com/ycaw5g9v).

Lundberg claims that other nations, which have “universal healthcare,” have “proven better outcomes at far lower costs…. Their health systems are simply framed by a different set of values…. Their approach is to provide decent medical care for all of their inhabitants. Our current…system is organized to transfer money from the many to the few” (op. cit.).

He doesn’t seem to mean from taxpayers to Centene et al.

Flashback: Abolish Medicare

At a time when annual Medicare expenditures were $189 billion (c. 1995) vs. $581 billion in 2014 (tinyurl.com/y8myxzld), George Meredith, M.D., of Great Bend, Kan., wrote “A mercy killing of Medicare” in The Wichita Eagle:

“Grandparents of America: Heath-insurance costs and taxes have a stranglehold on your children and grandchildren…. And you, in part, are responsible…. You’ve been duped by the central government and its Medicare program!”

He estimated that an average $12,800 per year was spent on medical expenses for a 66-year-old couple, through taxes on themselves and others, coinsurance, and out-of-pocket payments. In comparison, a 64-year-old couple would have paid $4,500 for competitive commercial health insurance, deductibles, and copays.  While commercial insurance paid 80-100% of hospital and doctor charges, Medicare paid 45% of hospital and 33% of most physicians’ charges. The General Accounting Office (GAO) said that administrative expense and internal fraud amounted to 29% of Medicare’s expenditures. Dr. Meredith advocated “immediate and total abolition of the Medicare program.” He suggested replacing it, for the truly needy, with a voucher for $2,250, the cost of real commercial insurance minus the cost-shifting, fraud, and high administrative costs attributable to Medicare.

Affordable Options

President Trump is removing Obama’s 90-day limit to short-term medical plans so that plans lasting 364 days will be available. An STM plan with better coverage than the $215 Centene plan (p 1) is available for $66, states Ron Greiner of PresidentTrumpOption.com.  A STM plan for a 40-year-old couple with two children might be one-fourth the cost of an employer-provided PPO.

In 2009, regulators in 25 states approved the sale of renewal guarantees as a stand-alone product. The cost is about $86/month. According to Michael Cannon, the Dept. of Health and Human Services does not have the authority to restrict renewal guarantees or prohibit the purchase of consecutive short-term plans, which would be an alternative to government-run care (WSJ 5/28/18). Trump may allow STM plans to offer this guarantee.

The managed-care cartel needs the “financial gravity-defying” regulations, writes Daniel Horowitz. In a semi-functioning market, they would be crippling, but when federal and state governments pump in $1.6 trillion/year in subsidies, the regulations are a “fortification for their monopoly.” Bailing out the cartel now would exacerbate everything that was wrong before ACA.

He points out that policymakers  erroneously speak of a separate public and private system.  “The private system is not really private, and the public system is not fully government-run. The private system is heavily influenced, regulated, distorted, and subsidized by government, especially after Obamacare…. The consumer is completely cut out” (tinyurl.com/yb9ulo2z).

Greiner notes that Centene stock was $6 when Obama got elected and is now $126. It is the largest Medicaid managed-care company, and may be the only plan on the ACA exchange.


“Mistakes should not be clung to just because of the time spent making them (https://tinyurl.com/y8gs4to6).

Barry Garelick, Math Education in the U.S., 2016


The AMA—Then and Now

1847: AMA was founded. Doctors were concerned about being kept poor because of competition. In 1901, JAMA stated: “The growth of the profession must be stemmed if individual members are to find the practice of medicine a lucrative profession.”

1910:  The Flexner Report (tinyurl.com/hwkmbcp), commissioned by the Carnegie Foundation at the behest of the AMA, “standardized the field,” curtailing diversity. Five of seven medical schools for blacks and all three for women closed. Schools had to stop teaching naturopathy or homeopathy. The number of  schools decreased from 160 in 1904 to 85 in 1920 to 66 by 1935.

1900-1949: George Simmons, who had a mail-order diploma, was head of the AMA and editor of JAMA until 1924. He sold the AMA “Seal of Approval” for drugs for a substantial donation. Morris Fishbein, who never practiced medicine, assumed dictatorial control until he was kicked out (tinyurl.com/y7qpg7ao). The AMA deplored “quackery,” but supported the tobacco industry’s dubious safety claims (https://tinyurl.com/ya8rne7q).

1983: Through an agreement with the federal government, AMA  obtained a monopoly on its Current Procedural Terminology (CPT) codes (https://tinyurl.com/ybq58sgl).

2001: The NY Times reported that AMA made $20 million/year from “licensure,” selling doctor profiles from its Masterfile to drug companies. The amount climbed to $45 million in 2007, when the AMA promised to stop doing it (ibid.).

2009-2018: AMA endorsed ObamaCare (https://tinyurl.com/yjappzg) and continues to support it. At its 2018 House of Delegates meeting, it opposed “sham coverage” and “skimpier plans” that compete with ACA plans (https://tinyurl.com/ydbgyl7e).

The Root Cause of the Cost Escalation

From an unexpected source, the diagnosis in a nutshell:

“By transitioning to a third-party payment system, we have separated the consumer of health care products and services from the direct payment for them. Most consumers do not know what treatments cost, and except for the cost of insurance or copays, they really do not care.

“As the benefit of free market competition from health care has been removed, the costs have predictably soared. Since 1960, the share of all health care spending paid by government has more than doubled, from about one-fifth to just under half. The result: Overall health spending now consumes about 17 percent of the nation’s gross domestic product” (beginning of executive summary, Johnson report on Medicaid fraud, see p 3).

AAPS Calendar

July 21. Missouri state chapter meeting
Oct. 3-6. 75th annual meeting, Indianapolis, IN.
Sep 18-21, 2019. 76th Annual Meeting., CA


Don’t miss out on the early-bird discount for our 75th anniversary meeting in Indianapolis, Oct 4-6. The deadline is Sept 1. Register at www.aapsonline.org/2018am.

DOJ Declines to Defend ACA

In Texas v. United States, No. 4:18-cv-00167-O (N.D. Tex.), the U.S. Department of Justice, the defendant, has taken the position that the individual mandate, without a tax penalty attached, is an invalid exercise of Congressional power and will be unconstitutional as of Jan 1, 2019. DOJ also holds that the guaranteed-issue and community rating provisions are not severable from the minimum-coverage provision (the individual mandate). The law itself calls the individual mandate “essential” to the operation of the exchanges. The decision not to defend a challenged law is rare, but not unprecedented; Obama declined to defend the Defense of Marriage Act in a 2011 lawsuit, writes Justin Haskins (Townhall 6/18/18, https://tinyurl.com/y8lw8bhz).

“The Trump Administration has given Democrats a generous political gift,” writes Paige Winfield Cunningham. Congressional Republicans are distancing themselves. Senate Majority Leader Mitch McConnell (R-Ky.) said “everybody I know in the Senate—everybody—is in favor of maintaining coverage for preexisting conditions ” (https://tinyurl.com/ycuhdb9n).

This provision is believed to be very popular because of a Kaiser Family Foundation poll that asks only about the benefit of the federal government’s guaranteeing that high-risk people pay no more than low-risk people for coverage. However, if people are asked whether they would be willing to pay higher taxes or premiums, support flips to opposition. And when asked whether they still support the preexistings provision if it diminishes quality—it punishes insurers who offer good coverage for the sick—voters oppose it 2:1 (https://tinyurl.com/ycvge4jj).

Democrat attorneys general, led by Xavier Becerra of California, are intervening to defend the law The AMA, hospitals, insurers, the American Cancer Society, the American /Heart Association, and many others filed amicus briefs to support ACA (Wash Post 6/15/18, https://tinyurl.com/y747lnz3).

The DOJ brief is cited by attorneys arguing that CMS cannot lawfully overrule state approval of plans, as in Idaho, that allow underwriting. To justify taking a position different from DOJ, CMS would have to “persuasively assert that federal agencies are required to enforce statutes the Executive Branch believes are unconstitutional, even while refusing to defend the statute in existing court cases,” writes attorney Anthony F. Shelley in a letter to Sen. James Risch. A series of precedents over many decades hold that the Executive Branch has the discretion and even the duty not to enforce laws it believes to be unconstitutional, he writes. The Constitution, after all, is the supreme Law of the Land.

Insurers on Hook for Risk Corridor Losses

In a case brought by Moda Health Plans, the U.S. Court of Appeals for the Federal Circuit ruled 2:1 that the federal government does not have to pay insurers the $12.3 billion they say they are owed for financial losses on ACA-mandated benefits.

Under the “risk corridors” mechanism, the government collected money from insurers and redistributed it, giving more to companies that fared poorly on the ACA marketplaces. The Administration claims the program can only pay out as much as it collected from participating insurers. Appropriations riders manifested the clear intent of Congress to suspend further obligation, ruled the Court. Other lawsuits are pending (WSJ 6/14/18).

Centene Sued for Lack of Medical Coverage

Purchasers of heath insurance from Centene, one of the mainstays of ACA, have filed a lawsuit alleging inadequate access to doctors in 15 states. Centene pays nothing for out-of-network services. The suit states that the company misrepresents the number, location, and existence of purported providers—some of which have no doctors at all (NY Times 1/11/18, https://tinyurl.com/ycgzd7s9).

Massive Medicaid Fraud Reported

The cost of Medicaid, initially $222 per user, has soared to $7,973, an increase of nearly 3,500%. The overall cost to the taxpayers is $554 billion/year, up from $299 billion in FY 2014, according to a report released by Sen. Ron Johnson (R-Wis.), chairman of the Senate Homeland Security and Governmental Affairs Committee (https://tinyurl.com/ycwnfuq9). (The first year of ACA’s Medicaid expansion was 2014.) Oversight by the Centers for Medicare and Medicaid Services (CMS) is “poor,” and the amount of fraud is said to be “stunning.”

Committee staff found that hundreds of thousands of users were ineligible; many “dead” people are getting benefits. Some 20,000 fraud investigations are in progress.

CMS acknowledged that ACA’s Medicaid expansion has heightened abuse potential, and in addition is helping to fuel the opioid overdose epidemic. It establishes incentives that make it enormously profitable to obtain and sell drugs. The number of criminal Medicaid-opioid cases increased 55% in the 4 years after  Medicaid expansion, and more than 80% of the cases were in expansion states (https://tinyurl.com/ycg6zhyd).


==>Tip of the Month: Your patients may be secretly recording you!to the Dartmouth Institute for Health Policy and Clinical Practice, there is a good chance at least one of the last ten patients you saw recorded the office visit, with or without your permission (https://tinyurl.com/ybpy3nkw). Secret recordings are prohibited in California, Illinois, Pennsylvania, Florida, and several other large states, but in most states it is legal as long as one party to the conversation consents (https://tinyurl.com/yaekd7uy). The problem is that sometimes patients post their secret recordings on social media.

It is not a HIPAA violation when a patient posts his own recording of a physician speaking to him. If you would not like for the public to hear, without your consent, your conversations with patients, then you might include a statement in your patient forms prohibiting this. For example, you could ask your patients to sign a statement that “I promise not to post on social media or the internet any unauthorized, secret recordings taken in this office, which may include confidential information or matters taken out of context.” At a minimum, this will enable you to discharge the patient from your care if he violates his agreement.

It is possible that patients have a legitimate reason for wanting a recording. They may want to review it to be sure they comprehended your instructions, or to keep family members informed. But it is difficult to see any valid reason for posting your comments on social media, where they can be misunderstood. If concerned about this, then including that statement in your forms for patients to sign may deter them from secretly recording you.



CVS Loves ObamaCare. As an article in the Wall Street Journal (https://tinyurl.com/ycyqwtt2) shows, “Medicaid expansion helps big business [such as CVS Pharmacy in Ohio] reduce competition. The writing on the wall has been clear for some time. Socialist schemes are driving independent physicians and pharmacies out of business, while large government-protected and favored businesses are enriched, all at taxpayer’s expense.Patients often end up paying more because of these schemes.engages in price discrimination, paying independent physicians  much less than hospital-employed physicians for providing the very same servicea hospital-owned facility. Independent physicians who are under severe financial pressure either agree to become hospital employees or go out of business.

In recent years, hospitals have implemented a nationwide purge of independent physicians. Sham peer review and discriminatory cross-coverage requirements are methods that may work when financial pressure is not sufficient. Patients lose access to the strong advocacy provided by independent physicians.

Likewise, independent pharmacies are deliberately being put out of business via government-protected pharmacy benefit managers (PBMs), who favor large pharmacy chains.PBMs may pay pharmacies less than the wholesaleof medications.

The expansion of Medicaid under ObamaCare is the gasoline that is fueling this price discrimination wildfire.money is being used to engineer the demise of independent pharmacies, while enriching PBMs and insurers. The American Dream of working hard and taking risks to have a better life is being systematically destroyed by this unconstitutional socialist scheme in which government selects winners and losers.

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


The War against Success. Prestigious colleges are pushing outlandish psychobabble and dangerous rhetoric that promotes and incites violence. They deplore, as indicators of “white culture” or “white privilege,” individualism, consumerism, meritocracy as an ideal, competition, ambition, and productivity. In fact, humans thrive on competition, not collectivism. Society progresses when individuals with unique talents and efforts are promoted based on merit, not on entitlements, quotas, and inferior skills. If we want society to devolve to the lowest common denominator, then by all means we must continue the destruction of the freedom of speech through political correctness (PC) invented and dictated by tenured professors with a self-loathing complex and now imposed by society-at-large as the norm.

Ileana Johnson,  https://tinyurl.com/ydx3bcbh


Is a Patient-Physician Relationship Worth Anything? A May 16 article in the New York Times Magazine states: “Surprisingly little is known…about what the relationship between a patient and his or her primary-care doctor is actually worth, in terms of that patient’s overall well-being or medical costs…. David Meltzer, an economist and a primary-care physician at the University of Chicago, may be the first and only researcher in the country trying to quantify that relationship’s value in a randomized clinical trial, the most rigorous scientific method” (tinyurl.com/y8tmbjm4).

They are now telling us that it takes a randomized trial to “prove” that a traditional doctor-patient relationship is worth something—after disrupting medical practices with 12-hour-shift know-nothing hospitalists for many years. What that article doessay is that hospitals own hospitalists, expect them to kick patients out too soon, and conduct sham peer review against doctors to “prove” they need hospitalists for better care.

Brant Mittler, M.D., J.D., San Antonio, TX


AMA-Flexner Model. In the early 1900s, convergent social progressivism and ideological empiricism gave rise to the Flexner Report. This report, which fundamentally transformed American medical education, relied solely on reductionist science and essentially omitted the dynamic encounter between patient and physician. The approach was vigorously opposed by William Osler, who thought that the crucial vector was from bedside to laboratory, not the other way around, and Francis Peabody, who warned that “laboratory never can become and never should become the predominating factor in the practice of medicine.” The AMA provided much of the background for the Flexner report, and AMAthen on largely controlled medical school accreditation, which became bureaucratized and sclerotic.

Michel Accad, M.D.,  https://tinyurl.com/y8wq9bdg


The “New” Ethics. In a email to an entrenched AMA representative, who is a man I know to be of great intellect, integrity and dignity, I asked, “What are we to think about the provider whose professional allegiance is not to the patient, but to a system or employer whose interest in the life of the patient is secondary?should have addressed that conflict.didn’t, it doesn’t and it won’t. Bioethics has given birth to the functional equivalent of ‘lifeboat ethics,’ with self-appointed ethicists determining who remains on board and who should be jettisoned.perspective cannot and should not be called ‘ethics.’ It is definitely not medical care.”received only a token response, something on the order of “keep up the good fight.”

Jeffrey Hall Dobken, M.D., M.P.H., Rumson, NJ