The “adverse selection death spiral” in insurance occurs when costs increase rapidly because lower-risk policy holders choose to change policies or be uninsured.
While some critics predicted an ObamaCare implosion during the disastrous roll-out, Ezra Klein triumphantly pronounced the “death of Obamacare’s death spiral” (Wash Post 1/14/14). Even though enrollment of persons aged 18–34 was only 24% rather than the needed 38%, Klein predicted that more would sign up just before penalties hit. Even if they didn’t, individual premiums would rise at most a few percent in 2015. Obama would roll out a sophisticated marketing plan, borrowed from the 2012 campaign, to target young adults.
Klein provides a neat animated explanation of the death spiral. He clearly understands that with guaranteed issue and community rating, as in the Affordable Care Act (ACA), a voluntary market is impossible. He thinks the penalty (eventually $2,000 for a family making $80,000) will make it work: “It’s less money than insurance will usually cost you, but you don’t get anything for that money.” But, Greg Scandlen points out, the cost of coverage is actually more than $16,000. And, Obama undermines Klein’s arguments by constantly delaying the effects of enforcement.
After the official end of the first ACA enrollment period, on Apr 15, “young invincibles” were still only 28% of enrollees on the public exchanges, though they constitute 41.5% of the uninsured population. The health status of enrollees is not known. “Selling insurance to those who think they don’t need it (or those who genuinely don’t) is very difficult,” writes Yevgeniy Feynman (Forbes 5/2/14). He does not, however, think exchanges are in danger of a death spiral, at least not until 2017 when risk corridors to protect insurers expire.
Monthly enrollment reports have been discontinued, so there is no way to track attrition (Michael Cannon Forbes 5/22/14).
The End Game
ObamaCare is likely a transition to the reformers’ intended goal: a Veterans Administration system, or Medicare/Medicaid for all. The VA is socialized medicine, like the British National Health Service. Medicare/Medicaid is single payer, with nominal private ownership, as in Canada. All have the problem described by Margaret Thatcher as “running out of other people’s money.”
Both the VA and the NHS are leaders in extensive use of the electronic health record (EHR), which some apparently see as the magic key to making bureaucratic command-and-control work. And AAPS president-elect Richard Amerling, M.D., notes a striking similarity between fudged waiting lists at the VA and stacking patients in ambulances outside emergency departments in the UK to comply with laws mandating timely treatment. Like the ACA enrollment statistics, they remind one of Stalin’s November 1929 statement to Izvestia: “Let us put statistics on socialist rails.”
The real solution to the unsustainability of these systems, writes Nobel laureate economist Paul Krugman, is a “combination of death panels and sales taxes.” While that might be politically impossible at the moment, he thinks it will someday actually happen—“maybe in the first Chelsea Clinton Administration” (Newsmax 11/14/10).
Already we have the Independent Payment Advisory Board (IPAB), which is fully empowered to deny access to care by setting Medicare prices so low that no one will offer them. Ultimately, Medicare may be paying one-third what private insurers pay, and half of Medicaid (Peter Ferrara, Heartland Institute Policy Brief, February 2014).
At first, IPAB will control half a trillion dollars in federal spending. After the exchanges fail, it will control the entire $2.7 trillion in health-related spending, predicts Stanley Feld, M.D. This will make it a “stealth death panel,” writes Ferrara.
To maintain “quality” statistics, there’s the modus operandi now used by Dutch hospitals, suggests Lawrence Huntoon, M.D., Ph.D. They discharge the nearly dead to die outside the hospital.
Death Spiral for a Nation
If the economy is running out of steam, politicians will try another “stimulus,” transferring more wealth from the private sector to the public sector, assuming zero costs for so doing. Keynesian economics is the “perpetual motion machine” of the Left, writes Daniel Mitchell.
The machine is currently fueled by the dollar’s status as the global reserve currency. The historical precedent is the silver coin (the real del ocho or “piece of eight”) of “el imperio en el que nunca se pone el sol.” The sun never set on the Spanish empire. But like so many great empires before and since, Spain was beset by unsustainable spending, constant warfare, debilitating debt, and an inflated money supply, writes Simon Black. By the mid 1500s, the Spanish government was spending two-thirds of its revenue just to pay interest.
What is the state of the U.S. economy? “The arithmetic of government statistics (jobs, growth and inflation) is distorted and dishonest almost beyond measure,” states Paul Singer. The U.S. government is monetizing 70% of net issuance of public debt, states John Williams (James Cook Market Update, mid May 2014).
As with congestive heart failure, decompensation may be sudden, devastating, and irreversible.
Death Spiral States
Eleven states are listed as dangerous for investors because they have more takers than makers. A taker draws money from the government as an employee, pensioner, or welfare recipient. A maker is gainfully employed in the private sector (William Baldwin, Forbes 11/25/12).
In 33 states, including 7 of the 11, welfare benefits pay more than a minimum-wage job, according to a 2013 Cato study. In Hawaii, one would have to earn pre-tax wages of $60,590 to equal total welfare benefits.
In early March, Moody’s downgraded Chicago’s credit rating from A3 to Baa1, three rungs above junk bonds. The main reason is underfunded pension obligations, amounting to $7,100 for every Chicagoan. Property taxes would have to double to make the payout if “something isn’t done.” The “something” seems to involve borrowing still more money. Illinois is first in the raw numbers of persons leaving the state, and second only to New Jersey in ratio of those leaving to total population (Wendy McElroy, Dollar Vigilante 5/1/14).
Economic Vital Signs
- 20% Unemployment: In one out of five American families, not a single person is employed. There are 1.3 million fewer jobs in the economy than in December 2007 (Durden and Snyder, zerohedge.com).
- Credit: 56% of all Americans have subprime credit (ibid.)
- Food: About 49 million Americans are now experiencing food insecurity (ibid.).
- Energy: The U.S. “dodged a cannon ball” when record cold weather pushed the electricity grid to the limit, with an all-time peak winter load of almost 142,000 megawatts. New EPA rules, supposed to forestall global warming (now called “climate change” or “climate disruption”) will force closure of many of the coal-fired plants needed to meet that demand (Steve Goreham 4/23/14).
- Gasoline Consumption: The U.S. government does not directly measure consumption, but uses as a proxy gasoline retail sales by refiners, which has plummeted from its July 1998 peak by 75% in 15 years. The deliberate over-supply of gasoline at the wholesale end (from refineries to domestic inventories) concealed the lack of an economic recovery, until storage was saturated (Tyler Durden, zerohedge.com 5/20/14).
- End of the Petrodollar? Even European contracts with Gazprom have been priced in U.S. dollars. But Russia and China have signed a treaty to conduct trade in their own currencies (Bill White 5/27/14).
George R. Watson, Jr., D.O.: R.I.P.
AAPS past president George R. Watson, Jr., D.O., died May 8 at age 67. He was an inspiring leader in patient-centered and third-party-free practice. He had offices in Park City and Hays, Kansas, offering alternative and family medicine. Achieving the rank of captain in the U.S. Air Force, he flew F-4 Phantoms in Vietnam and was on active duty during Desert Storm.
Lying and Dying at the VA
The VA has been the favorite of Leftist pundits. It’s a “huge success story” (Paul Krugman, 2011); “one of the best-performing and most cost-effective elements in the American medical establishment” (Nicholas Kristof, 2009); “the best health system for military veterans,” according to both political parties (Uwe Reinhardt, 2013); a model for other “providers” (RAND). Expanding the VA to non-veterans was “one of my favorite ideas” (Ezra Klein, 2009). But now Obama is “madder than hell” (Ben Shapiro, Truth Revolt).
Obama campaigned against “deplorable conditions in some VA hospitals” in 2007, but spotlighting the problems might have impeded passage of ObamaCare (Chip Wood, Personal Liberty Digest 5/22/14).
- According to whistleblowers at the Albuquerque VA, officials may have already destroyed records there (ibid.).
- More than 1,000 may have died while waiting for care between 2001 and 2013 (ibid.).
- A long-time employee and police detective alleges that Miami VA officials refused to investigate charges of physical abuse and of drug-dealing by patients (Miami Herald 5/23/14).
- A 2013 investigation by CNBC revealed widespread problems with unsanitary conditions and poor care. VA officials were reportedly distorting autopsy reports and clinical records (Avik Roy, Forbes 5/23/14).
- Patients-to-Medical Professionals Ratio: Guantanamo Bay prisoners, 1.5:1; VA 35:1 (Sean Hannity, quoting retired Navy Commander J.D. Gordon).
- You Have a Right to Go Elsewhere, but….: Veterans do have a right to seek private treatment, at their own expense, but when a dialysis patient, tired of the wait, tried to walk out, VA police reportedly tackled him. They allegedly stomped on his neck. He suffered a carotid artery dissection, stroke, and eventual death. His widow is suing for assault, false imprisonment, and negligence. She was initially told that her husband fell (Political Ears 5/29/14).
- Underfunded? VA outlays grew to $57.3 billion from $32.5 billion in 2005, a 76% increase, while the number of veterans seeking care increased 18%. Some 80% of “medical-care providers” received $150 million in performance pay in 2011 (WSJ 5/30/14). The Phoenix VA alone has more than 100 employees making more than $215,000/yr.
- VA P4P: At the Albuquerque VA, 20% of physicians’ performance pay was for those who found a way to limit follow-up visits to an average two per year (NYT 5/30/14). Administrators’ bonuses were threatened if wait times were too long.
Sept. 4-6. 71st annual meeting, Charleston, SC.
ACTION OF THE MONTH
Complete our survey on your experiences in the VA medical system at http://tinyurl.com/lwtwv7q.
Encourage friends and colleagues to do likewise.
Can Physicians Prescribe without an NPI?—II
“After months of the CMS Region II Office telling me that all physicians have to have an NPI to order medications for Medicare patients, it turns out that is not true at all,” writes Dr. Huntoon. “After consulting with the CMS Central Office, the CMS Region II representative sent definitive answers to questions I posed. They state: ‘you are correct that you are not required to obtain an NPI under this federal regulation.’
“They make clear that they have no intention of educating pharmacists and pharmacies about the exception specified in FR 77 No. 172, 09-05-2012, pp 54681-54682, that the physician is not required to have an NPI to order and for the pharmacist to fill prescriptions for Medicare patients. They take the position that although it is the misinterpretation of CMS’ NPI Prescriber Requirements by pharmacists that is causing a problem, the state regulates pharmacies, and, therefore, CMS has no obligation to educate pharmacists….” The misinterpretation of this rule serves the purpose of hindering the practice of medicine.
CMS also advises that in cases where the patient has Medicare Part D coverage, the patient can voluntarily choose not to use his Part D benefit to obtain medications.
As this information comes from CMS’s Central Office (conveyed by the CMS Region II representative), it applies to all physicians nationwide. The CMS letter is posted online at: http://aapsonline.org/medicare/CMS-05-14-2014.pdf.
If a pharmacist refuses to fill a valid prescription for a Medicare patient based on the mistaken idea that an NPI is required, physicians can provide a copy of this CMS letter.
Although Medicare Part D currently will still pay for prescriptions written by physicians without an NPI or who are not enrolled in Medicare, CMS has proposed a rule that will require enrollment or a valid opt-out affidavit, and an NPI, by Jan 1, 2015. See pp 4-5 of a letter from AOA president Norman E. Vinn, D.O., to CMS administrator Marilyn Tavenner .
Tip of the Month: Once a practice is sold to a hospital, the hospital can essentially tell the physician how to practice. At the stroke of the hospital CEO’s pen, a physician’s practice focus can be ended. Specialty surgeons who signed contracts with hospitals and thought they were going to practice their specialty have learned that they would be doing general surgery because the hospital needed “work horses” in their ER—as agreed to in the fine print of their contracts. And, when they did not bring in the anticipated revenue for the hospital in their specialty surgery practice, the hospital did a sham peer review, and ended their careers. By engineering termination of privileges, the hospital avoids the risk of being sued for breach of contract: If the doctor loses privileges, the contract is automatically terminated because the contract says the doctor has to have privileges to comply with the contract. So, the key is, don’t sell the medical practice to the hospital.
AAPS Files Amicus in Hotze Case
AAPS member Steven Hotze, M.D., established jurisdiction in federal district court in his challenge to the Patient Protection and Affordable Care Act (PPACA, a.k.a. ACA), but the judge ruled against it on the merits. The case is Hotze v. Sebelius, 4:13-cv-01318 (S.D. Texas) (see AAPS News, June 2013). Hotze argues that PPACA violates the Origination Clause and also that the mandates on individuals and on his business violate the Takings Clause of the Fifth Amendment to the U.S. Constitution.
In an amicus brief authored by Lawrence Joseph, AAPS states that the mandate requires individuals to subsidize insurance companies and “lower insurance premiums for others who have government-approved pre-existing conditions that [PPACA] requires insurance companies to cover.”
Unlike the “spread-the-risk” aspect of true insurance, in which everyone pays a relatively small, actuarially determined premium to cover the expected costs of those in the insurance pool who will require care, PPACA favors various groups (e.g., those with pre-existing conditions) with subsidies to lower their premiums below their actuarial risk.
An article in Contingencies, the peer-reviewed journal of the American Academy of Actuaries, estimates this “spread-the-wealth” component of PPACA premiums at 17% to 20% of a healthy person’s premium.
AAPS argues that NFIB did not consider—and thus did not decide—the issues raised by Hotze. Prior to the Chief Justice’s saving construction in NFIB, which upheld the mandates under the Taxing Power, PPACA provided a penalty for failing to purchase government-compliant health insurance. Viewed (as intended) as a mandate, this violates the Takings Clause because it takes private property in form of an ascertainable portion of a health insurance premium that subsidizes lower rates for private, government-favored third parties. “The NFIB saving construction fares no better as a tax because the unconstitutional conditions doctrine prohibits Congress from using the Taxing Power selectively to coerce the ‘voluntary’ surrender of the right to be free from unlawful takings, which is what the ‘tax’ taxes.”
If the Court holds that the individual and employer mandates are not taxes under Chief Justice Roberts’s saving construction because they violate the Fifth Amendment, PPACA still would trigger the Origination Clause with other revenue-raising provisions, such as the excise taxes on medical devices.
“With the possible exception of driving high-paying technology jobs abroad, the medical-device tax has no conceivable regulatory purpose that could subsume or mask its revenue-raising purpose under the Origination Clause.”
A ruling for Plaintiffs on the Origination Clause would render PPACA void in its entirety.
All filings in the case are available at http://larryjoseph.com/_Dockets/Hotze-v-Sebelius.html.
IRS Fines for Sending Employees to Exchanges
Over Memorial Day weekend, the Obama Administration announced an IRS rule that would fine employers up to $36,500 per year for each employee who goes into the individual marketplace. This will prevent employers from giving employees a tax-free cash contribution to help them pay premiums, then “dumping” them into the Exchanges. Such “employer payment plans” do not satisfy the demands of ACA. Employers could increase wages—which are subject to payroll and income taxes (Robert Pear, NYT 5/25/14).
“The more we do to you, the less you seem to believe we are doing it.”
Josef Mengele, http://tinyurl.com/3d9r4bv
Lifetime Chain and Shackle Mechanism. The American Board of Medical Specialties (ABMS) has approved standards for its Maintenance of Certification (MOC) program to be launched Jan 15, 2015 (see http://www.abms.org). The “continuous quality improvement mechanism” ensures a lifetime maintenance of larceny revenue stream for ABMS and its member boards. Physicians will spend so much time trying to comply that there will be little time left for actually treating patients or pursuing continuing medical education tailored to their practice. Patients will suffer.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY
Recertified Early; Lost 1.5 Years of Credit. In 2013, I called the American Board of Internal Medicine (ABIM) and was counseled by staff that this exam may be taken at any time during the 10-year re-accreditation period with no early penalty. Based on this counsel, I sat for and passed the examination in May 2013, although the deadline was not until Dec 31, 2014. But in November 2013, the ABIM changed the rules and now only grants 10 years of recertification from the date the exam is taken. Enrolling in MOC and passing the exam requires hours of study and years of planning, and this should be respected by ABIM.
F. Duncan Scott, M.D., Niceville, FL
Stop MOC Now! We should have stopped this green monster in 2010. U.S. medicine and patients would benefit most if we stopped MOC now, as advocated by AAPS, Rebel.MD, NoMOC (LinkedIn group), and changeboardrecert.org—not in 2 years, when hundreds of physicians will be removed from practice solely for lack of MOC. We cannot neglect our friends and colleagues whose careers and opportunities to help patients have been terminated prematurely because of onerous MOC requirements.
Katherine Murray Leisure, M.D., Plymouth, MA
Just Say No. Few patients know or care whether they are being treated by a physician, a medical student, an optometrist, or a nurse. Many would rather go to a “quick” clinic for treatment by an unknown nurse than search for a medical doctor with credentials such as board certification. The only ones who care about initial board certification are residents, their families, and hospitals determining privileges. The only entities pushing for recertification are recertifying organizations that reap financial rewards by milking pliable doctors. Since recertification is irrelevant to doctors’ performance and does not matter to patients, doctors should “just say no,” and recertification will vanish like dew in the sun.
Irene Nasaduke, M.D., Stamford, CT
Sea World. How do EHRs, ObamaCare, Medicare rules, managed care, etc. relate to Sea World? Think about the trained seals act. The seals do their thing under the direction of a trainer who is not a seal. The seals bark loudly, the crowd applauds, and if the seals perform well, they each get a fish.
Stanley Feld, M.D., Dallas, TX
The “Freshest” Doctors. Osteopathic physicians accredited by the American Osteopathic Board of Family Physicians (ABOFP) expire in only 8 years, not 10.
Craig Wax, D.O., Mullica Hill, NJ
Critical Shortages. In my entire medical career, which included an influenza epidemic in the 1980s, we never had the rationing of basic supplies such as intravenous fluids and anesthetic agents that we are now experiencing. We are having to ration cancer chemotherapy as well as surgical procedures.
Michael Riesberg, M.D., Pensacola, FL
Third Parties Take Doctors’ Sweat, Patients’ Blood. To save our profession, we need to simplify, deregulate, and decriminalize medicine. People die when doctors pay more attention to record-keeping and coding than to their patients’ problems. The third-party scam has to stop; insurers need to reimburse patients, not providers. But doctors and medical associations have aligned themselves with third parties and collaborated with their abuses. Now the best business in town is a funeral home—and mortality statistics are unobtainable for 3 years.
Jaime Durand, M.D., Arlington, TX
Death and Taxes in One Convenient Package. If Obamacare persists, there will likely be a fairly steady drop in life expectancy at a significant rate for the first time in our nation’s history, with some oscillations. In early years, shrinkage in medical workers plus aging of Baby Boomers will, if QALY criteria are applied, lead to euthanizing a fairly hefty portion of the population. Then a younger average age might increase the dollars available per senior, allowing more to make it into their later decades before being euthanized, until the average age increases again.
Morry Markovitz., Providence, RI
Freedom Is Slavery. The White House says that reducing the U.S. workforce by 2.5 million jobs over the next decade because of ObamaCare is a “good thing,” because Americans are “trapped in jobs.” No hurricane, blizzard, flood, or other natural disaster has ever done as much damage as Obama and company.
Joseph Scherzer, M.D., Scottsdale, AZ