This is Chapter 8 of my book-in-progress, “Open Wide And Say Moo! – The Good Citizen’s Guide to Right Thoughts And Right Actions Under Obamacare.” Comments are fervently sought; you can leave them here.

You can read my rationale for undertaking this project, and thus opening myself up to the possibility of public failure, humiliation, derision, disapprobation, and unwanted scrutiny, here.

And here is the up-to-date archive for all the chapters that have been posted so far.
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Chapter 8 – The Real Infrastructure of Obamacare

In 2009, while the Obamacare legislation was being debated, opponents put together various, very scary “flow charts,” to show how utterly convoluted and inherently dysfunctional our healthcare system would become under this new plan. These charts incorporated the scores of new federal agencies, panels, commissions and bureaus that were to be created by Obamacare, and attempted to demonstrate their complex interlinkages with meandering flow lines, making evident, for instance, numerous opportunities for procedural endless loops. And on these charts, invariably doctors would be positioned on one distant corner, and patients far away on some other distant corner, and the astounding bureaucratic morass in the middle made it plain that they might as well be on separate planets.

In other words, the main point of these flow charts was to show how getting medical services under Obamacare would become an ungodly mess.

This remains an important thing to understand about Obamacare. Still, if you are an American who has attempted to get healthcare services out of the pre-Obama healthcare system, it would not be surprising if your reaction to such news is, “So what else is new?”

In fact, it seems likely that many Americans regard the prospect of Obamacare thusly: “Yes, Obamacare will almost certainly become a bureaucratic nightmare. Those charts do look a little scary. But really, all that means is that we’ll be trading one bureaucratic nightmare for another. And if Obamacare gets a lot more people health insurance, and offers coverage for pre-existing conditions, and stops the evil insurance companies from killing people, it still might be a good trade.”

Such flow charts, as nicely as they may illustrate the bureaucratic complexity of Obamacare, nonetheless fail to tell the real story. They fail to show that Obamacare is, in fact, fundamentally different from anything that has come before. That fundamental difference is in the complete, top-down, centralized, command-and-control organization it will bring to American healthcare. This top-down structure will systematically destroy the role of individual physicians in making medical decisions, and as a result their patients will be reduced to faceless members of a herd.

The Real Structure of Obamacare

As we have seen several times, in order to control American healthcare it is absolutely imperative to control the behavior of American physicians. And fundamentally, the infrastructure of Obamacare is set up to do just that.

The scores of new federal agencies that show up on those flow charts, of course, will hamstring doctors in various useful ways. Each agency will have its own regulatory structure, and each will establish hundreds of new rules, regulations, and guidelines, and therefore, will produce hundreds of novel opportunities for doctors (and anyone else working in the healthcare system) to commit healthcare fraud. This will help to achieve the useful goal of placing doctors into a risk-avoidance frame of mind, rather than a patient-care frame of mind. But still, the large majority of these new agencies can be considered as nothing more than mere annoyances – sort of a swarm of flies buzzing around doctors’ heads as they plod along, trying to perform the main task.

It’s that main task – the real structure of Obamacare – that’s important.

Obamacare is set up primarily to eliminate the opportunity for doctors to make individual decisions. Important medical decisions will be made centrally, and will transmitted, through the new healthcare structure, to the doctors on the ground.

Over the years, healthcare bureaucrats have come to understand that just telling doctors what they are supposed to do will not be sufficient. Doctors may or may not obey, and policing the millions of individual decisions that are being made by doctors every day will be next to impossible.

So fundamentally, Obamacare is designed to incorporate doctors into new organizations that will be established to deliver efficient, high-quality healthcare, as defined by the Central Authority. And here I use the word “incorporate” in its literal form – to merge bodily into a larger structure, and to become fully a part of that larger structure.

To maintain their viability, these new organizations must require their physician-components (and all their other organic components) to function in what us usually referred to as an “integrated, team-based decisional paradigm,” that is, to give up any idea of independent decision making. Rather, for the survival of the whole, each entity within the organization will need to closely follow formally established “best practices.”

These new organizations – which at the moment are being called Accountable Care Organizations (ACOs) – will likely consist of hospitals, doctors, and legions of “nonphysician providers,” such as nurse practitioners, physician assistants, and care coordinators. All medical care will be delivered by “patient care teams,” and, spearheaded by these teams, the organizaitons will go “at risk,” accepting pre-determined bundled payments to deliver care to a pre-defined population of patients.

For such organizations to work, doctors will have to cease being independent agents. They will have to follow to the letter the care directives established by the “team.” The viability of the entire organization will depend on doctors’ full compliance with this collective prime directive. Fortunately, since there is no need (or allowance) for independent thought or action on the part of physicians in such a system, one doctor is pretty much the same as another, so doctors are entirely interchangeable. The non-compliant ones can be culled out and replaced as needed.

These ideas are not really new, of course. HMOs tried similar things in the 1990s. The difference is that now there is nowhere else for doctors to go. Private practice is rapidly becoming unfeasible. Direct-pay practices (for as long as they continue to remain legal) are really only suitable for primary care. Specialists, who require lots of expensive stuff – things like gamma cameras, operating suites, catheterization laboratories, hordes of highly trained medical technicians, &c. – generally find it exceedingly difficult to function as independent operators. It is no longer the 1990s; if doctors want to practice medicine, joining an ACO will soon be their only option.

Once doctors are fully absorbed into these new “team-based” entities, it becomes relatively easy for the Central Authority to control things. The ACOs will only be paid if they follow the directives that are handed down by the various panels, bureaus, &c, created by Obamacare, and the ACOs will only remain viable if the imbedded doctors spend less money than the ACO takes in. Since the decision not to spend all that money will have been disseminated among numerous members of the “team,” and since team-based decisions will be mindful of “social justice,” doctors will be at least partially absolved of the crime of withholding useful healthcare. And since the Central Authority is merely handing out the money (along with a few helpful “guidelines”), it can plausibly deny that it is telling doctors how to practice medicine.

We Are The Borg

Knowing that many American doctors will find this arrangement odious, Ezekiel Emanuel from the White House’s Office of Management and Budget, and Nancy-Ann M. De Parle, Mr. Obama’s Czar of Healthcare Reform, co-authored an article in the Annals of Internal Medicine in 2010, to help change hearts and minds. It is a message directly from the White House to American doctors, appearing in a prestigious peer-reviewed medical journal no less, explaining why joining up with the new ACOs will be to their great benefit, and indeed, that it is an offer they cannot refuse. After reminding doctors of all the glorious accomplishments of Obamacare, they articulated why there is a duty to comply:

“[Obamacare] will unleash forces that favor integration across the continuum of care. Some organizing function will need to be developed to track quality measures, account for and manage shared financial incentives, and oversee care coordination. . .As physicians organize themselves into increasing larger groups — patient-centered medical home practices and accountable care organizations — they are, out of necessity, investing in the acquisition or development of management skills that could provide these organizing functions efficiently for physicians groups. . .For physicians, this means a profession that is more rewarding, more productive, and better able to realize its moral ideal.”

For readers who become somewhat mind-numbed by this kind of policy-wonk jargon, here is the correct translation:

“Physicians! You have been neglecting your moral obligation to the collective, in favor of your archaic devotion to the individual patient. Under Obamacare you will need to join organizations which are devoted to the proper collective goals, and which therefore will guarantee the proper moral ideals. You must function not as individual decisionmakers, but as integrated cogs in a vast healthcare continuum, which will stretch from the centralized bastion of gleaming moral authority (from which we pen this message) all the way down to the humble tip of your stethoscope. You will be rewarded for your cooperation, or suffer for your resistance (resistance, of course, being futile). So rejoice for the health of the collective, and for your own well-being, and prepare to be assimilated!”

Doctors, and all other healthcare workers, are to be integrated into localized, healthcare delivery collectives, which will dance to the ever-changing tunes set by the Central Authority. Everything in these ACOs will be shared collectively, including the financial risk, the medical decisions, and even the ethics of those medical decisions. The notion of doctors working as independent professionals, answerable only to their professional standards and to their patients, is to be abolished once and for all. In an Accountable Care Organization doctors do not owe the featured accountability to the patients. but rather, to the ACO itself, and to the Central Authority that regulates it.

This, then, is the fundamental structure of Obamacare. It finally places doctors into their proper place. They become interchangeable cogs in an integrated healthcare machine, a machine which is tied irrevocably, flesh to flesh, to the Central Authority.

Under this structure patients will lose their personal advocates once and for all. They will finally be reduced to the position that Progressive healthcare requires of them. They will no longer be individuals whose doctors owe them a duty. They will be members of a herd which an ACO is charged with husbanding at the lowest cost possible. And so, assimilating doctors into the Borg is the final step. It removes the last remaining obstruction to the widespread implementation of herd medicine.

Everything else about Obamacare – all those new agencies and all that new bureaucratic complexity – is just details.

How This Structure Facilitates Cost Control

As we saw earlier (Chapter 1), in any system in which healthcare costs are shared collectively, truly controlling the cost of healthcare will require withholding useful medical services from many patients who would benefit from them. But so far, despite all the coercion that has been applied to the medical profession, and despite the troubling extent to which doctors have caved in to that coercion, not enough healthcare is being withheld, and costs continue to accelerate. Physicians still have not been sufficiently controlled.

Reducing physicians to members of an integrated “healthcare team” which makes decisions collectively is a brilliant move. Any remaining vestiges of professional responsibility that may remain to some of the newly-integrated physicians will be washed out by the other members of the team, who will outnumber the doctors and who never have had such a professional imperative. For these others, a moral responsibility to the needs of the collective, i.e., to social justice, will likely be the obvious overriding imperative. And furthermore, it will be an imperative that is strongly reinforced at every turn by the agencies of the Central Authority which will decide how much money the team is going to recieve for its efforts. So the integrated teams will be exquisitely sensitive (and even sympathetic) to the needs of the Central Authority.

Obamacare provides countless ways for the Central Authority to influence the integrated healthcare teams to withhold medical services, from imposing outright rules, to influencing treatment philosophies, to threatening (overtly or subtly) prosecution. For the most part, however, these can be reduced to two main efforts: the imposition of expert-generated guidelines, and the imposition of payment caps.

Guidelines – A Tyranny of Experts

A major thrust of Obamacare will be to create numerous panels of experts, appointed by the Central Authority, which will – in an entirely disinterested and objective manner, of course – publish clinical “guidelines” which will suggest to physicians what medical services they ought to offer patients with specific medical conditions. In concept, clinical guidelines are a perfectly fine idea, and indeed are often helpful to practicing physicians. This is why professional organizations have published and updated numerous sets of clinical guidelines for decades.

But the guidelines published by the GOD panelists (Government Operatives Deliberating) will be something new. These guidelines will be treated as sacrosanct rules, which must not be broken, the violation of which might lead to criminal prosecution. We already have examples of criminal investigations based on alleged guideline violations, which I will show later.

I will be devoting much of the remainder of Part II of this book to the tyranny of experts which is about to be unleashed upon American doctors and patients, through the medium of “guidelines,” so I will say no more about it here. I will simply note that the structure of Obamacare, wherein it is an integrated team (instead of individual doctors) deciding whether to follow “suggested” sets of guidelines, will render this tool immensely more powerful than it has ever been before.

The Independent Payment Advisory Board

Perhaps nothing in the Obamacare legislation embodies the top-down, command-and-control nature of Progressive healthcare more than the Independent Payment Advisory Board (IPAB), a 15-member panel of “experts” to be appointed by the President. There are three particular features of the IPAB that illustrate this fact: The IPAB will control all healthcare spending, public and private. The IPAB has been awarded near-dictatorial power. And the IPAB is designed to be a nearly immutable entity.

The IPAB Will Control Everything

While the IPAB has several duties, the chief among these is to impose a final, insuperable cap on healthcare spending.

Obamacare hands the IPAB the authority to cap not only public healthcare spending, but also private healthcare spending (thus demonstrating, once again, that Progressives do indeed mean to restrict private healthcare spending). This particular feature of the IPAB is one of the more difficult-to-tease-out aspects of the Obamacare legislation, so it is fitting that the IPAB acquired this sweeping authority in a suitably convoluted and sneaky way.

Anyone who paid attention to the remarkable process that brought us our new and transformational healthcare system might recall that Obamacare was not passed in the usual manner. It began typically enough; there were separate House and Senate bills, each of which passed in their respective chambers (though without any Republican votes). Normally, the next step would be to send those two bills to a Joint Conference to hash out the differences, and then off to a final vote. This did not happen with Obamacare.

The main hangup occurred in the Senate. There, the President needed 60 votes to assure final passage of his bill. And in the way of negotiating for those necessary 60 votes, five or six Democrat Senators went behind closed doors to cobble together a list of amendments to the original Senate Bill – the so-called Managers’ Amendments. It is in the Managers’ Amendments that one can find such famous niceties as the bribes paid to Nebraska and Louisiana in order to entice their respective Senators to support the bill. Some of the deals made behind closed doors were so outlandish that even the Managers themselves (according to many reports at the time) did not expect them to survive the Joint Conference that everyone assumed would take place.

The original Senate bill, before the Managers’ Amendments were added, never created anything called an Independent Payment Advisory Board. Rather, in Section 3403 it created the Independent Medicare Advisory Board, whose powers (appropriately) were limited only to federally funded healthcare programs, such as Medicare. It was the Managers’ Amendments which re-empowered the IMAB, and re-christened it as the IPAB.

Specifically, Section 10320 (in the Managers’ Amendments portion of the legislation) grants the IPAB, beginning in 2015, the authority to limit all healthcare expenditures, that is, all healthcare expenditures, and not just expenditures by Medicare or government-run programs.

To emphasize this expanded authority, Section 10320 changes the name of the “Independent Medicare Advisory Board” to the “Independent Payment Advisory Board.” It directs the IPAB, at least every two years, to “submit to Congress and the President recommendations to slow the growth in national health expenditures” for private healthcare programs. Furthermore, it designates that these “recommendations” may be implemented by the Secretary of HHS or other Federal agencies “administratively” (that is, without any action by Congress).

The justification for this mind-boggling expansion of the IPAB’s authority, to the extent that any justification was offered, appeared to be that controlling private healthcare expenditures will directly impact Medicare, since the “target” Medicare growth rate (which the IMAB was originally charged with achieving) will be determined by overall healthcare expenditures. Therefore, it is necessary to control all healthcare expenditures, public and private. (More practically, if Medicare patients are subjected to arbitrary cost-cutting measures that do not affect younger Americans, we Old Farts are likely to become inconveniently rowdy.)

Once the Managers had devised sufficient paybacks in the Managers’ Amendments to get the needed 60 votes, and the Senate bill finally passed, President Obama and his Congressional allies, Mr. Reid and Ms. Pelosi, determined that allowing the new law to go to Joint Conference would be counterproductive. Support among Democrats in the Senate was so tenuous that party leaders realized the bill would never survive another Senate vote after a Joint Conference. It would be easier, they calculated, to ram the Senate bill, fully intact including the Managers’ Amendments, through the House of Representatives, employing the always-useful reasoning that passing the law right then was a manifest emergency. So that is what they did. And while the vote was also a much closer call than Democrat leaders would have liked, the Senate bill finally passed in the House. And in this way, to the astonishment of many, the Senate bill, Managers’ Amendments and all, became law.

However convoluted the process may have been, the fact is that Obamacare grants the IPAB, a non-elected entity within the federal government, the authority to limit all healthcare spending, including private spending.

The IPAB’s Authority Is Nearly Dictatorial

A quick reading of Section 3403 might leave one with the impression that the IPAB is a sort of Mr. Rogers of healthcare – a mild-mannered, friendly, always-helpful, but ultimately undemanding agent for good. This is the impression imparted by the first few paragraphs of the Section, which paint the new entity as an “advisory” board, whose main task is to develop “proposals” and “advisory reports,” which “proposals” and “advisory reports” would solely consist of various “recommendations,” that ought to be “considered” for the purpose of cost reduction.

Nothing could be further from the truth. This language is simply another example of supplying a new law, which is far more radical than the authors would like people to know, with a soothingly misleading introductory paragraph. The IPAB is actually designed to be as all-powerful as it’s possible to be.

Each year, once the Medicare’s Chief Actuary determines that the projected per capita growth rate for Medicare exceeds the designated target growth rate (which is an inevitability), the IPAB is required to submit a plan which will cut healthcare costs sufficiently to bring the growth rate back in line; which is to say, the IPAB will determine what will be paid for and what will not. Then, the Secretary of HHS is required to implement the IPAB’s plan in its entirety, without exception – unless Congress acts to block implementation. However, the ability of Congress to do so is severely limited. The representatives of the people are forbidden from taking any action “that would repeal or otherwise change the recommendations of the Board,” unless it: a)votes to halt the IPAB mandates with a supermajority of the Senate; and b: devises its own specific cost cutting scheme that will achieve equivalent results. If Congress had the will to do such a thing, however, we never would have needed Obamacare in the first place.

So, in practice, the cost-cutting “recommendations” which the IPAB will “propose” for “consideration” by the Secretary and by the Congress will be implemented in their entirety, automatically, without revision, and will be backed by the full authority of the Federal government.

For all practical purposes, the IPAB will become a new agency of the executive branch with near-dictatorial authority to cut healthcare spending, public and private, where and when and for whom it sees fit.

The IPAB Is Designed To Be Immutable

Section 3403 also contains some remarkable language that likely has never been seen before in American legislative history. To wit:

“It shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment, or conference report that would repeal or otherwise change this subsection.”

So the designers of Obamacare, recognizing that the arbitrary cost cutting that the IPAB will impose on all those ACOs and other integrated healthcare teams (as they happily toil away in the new healthcare worker’s paradise) is sure to create significant political blowback, has sought to immunize the IPAB from any revisionary lawmaking that might result.

And as astounding as it may sound, the IPAB and all its designated dictatorial functions are designed by law to be in force for perpetuity. Our Congress has passed legislation that purports to bind all future Congresses from altering it in any way.

We have heard from the President and others that the IPAB is a very important feature of our new healthcare system. This “immutability clause” ought to convince us just how important they believe it to be. This clause necessarily implies that the IPAB is not only the most important innovation in Obamacare, but indeed, it apparently is most important legislative provision ever written. We know this because no other provision has ever received such extraordinary protections from any future alterations whatsoever.

One can only bask in the utter audacity of our Progressive leaders, who are so sure they know what’s best for us that they were willing to engage in all manner of legislative legerdemain to pass Obamacare, not only against the apparent expressed will of the people, but also (as it turns out) against the objections of any future American Congress that is sent to Washington by those people.

Not even our Constitution itself – a document that attempted to establish a government for all time – was as audacious as this. For the Constitution, at least, provided a mechanism for its own alteration.

One wracks one’s brain to think of the last time a law was promulgated with such audacity – not with the audacity of hope, but the audacity of perpetuity. Even monarchs who purported to reign under Divine Right understood that future monarchs, who would also rule under the same God-given right, might thus alter any laws they made.

I believe we need to go all the way back to Moses, coming down from Mt. Sinai and holding aloft his awesome Tablets filled with divine writ, to find a law or set of laws that, from the moment they were written, were decreed to remain in force for ever and ever.

Only God has ever tried this before.

The Structure of Omamacare In A Nutshell

So now we can see clearly the entire skeletal infrastructure of Obamacare. Actual medical care will be parsed out by integrated healthcare “teams.” There will no longer be any “doctor-patient relationships,” dedicated to the welfare of the individual patient. Instead there will be “team-patient relationships” dedicated to the ethic of social justice. These teams will receive from the Central Authority, via expert panels whose work product is “guidelines,” the clinical rules under which they are to determine who gets what healthcare, when, and how. And they will receive from the greatest GOD panel of all – the IPAB – the budgets which will determine how much of that allowable healthcare they can actually deliver.

Individual patients who are cut out and who want to use their own resources to guard their personal welfare will be guilty of the crime of encouraging an unfair, two-tiered healthcare system.

So go ahead, if you must, and amuse yourself with those organizational charts about Obamacare published by Republicans and other troublemakers. They are indeed troubling.

But if all you get out of those charts is that Obamacare will become a bureaucratic nightmare – sort of a DMV on steroids – you are missing the greater point. Obamacare does far worse than merely add a few more layers of ossified bureaucracy onto an already difficult-to-navigate healthcare system.

It fundamentally changes the structure of American healthcare, centralizing control, eliminating the doctor-patient relationship once and for all, and subjecting individual patients to the decisions of “integrated teams” that will be overtly dedicated to collectivist goals.

This structure will finally systematize the practice of herd medicine in America.

I have been working very hard on my book-in-progress, and, given my time constraints (which must take into account the various organizations that are actually paying me to do things), have tried to ignore everything else that would normally induce me to post on this blog. But it is difficult to ignore the Supreme Court.

The Supreme Court of the United States heard arguments last week on whether the individual mandate provision of Obamacare is constitutional, and if it is not, whether the whole bill must be overturned (or just the mandate itself).

Readers will know that I think the mandate should not stand. I agree with Justice Kennedy, who last week observed that the individual mandate fundamentally changes the relationship between the federal government and the individual. My belief is that this would be a negative outcome. The fact that healthcare is really, really important should not trump the freedom of individual action guaranteed by the Constitution, especially since it is entirely possible, in many different ways, to fix our healthcare problems without tossing out individual liberty or killing the Great American Experiment.

The Court’s decision appears to hinge on whether five justices will agree that either A) fundamentally changing the relationship between the federal government and the individual is a good thing, or b) overturning the largest legislative effort in history is a bad idea. Our political punditry tells us that four justices are locked into position A by virtue of their Right Thinking regarding the Constitution, so the outcome will hinge on whether one of the remaining five, who most often lean toward Wrong Thinking, can be convinced that position B is true (and that, for instance, overturning Obamacare would diminish the credibility of the Court).

It was interesting to listen to the left-leaning commentators lamenting the presentation made to the Court by the Solicitor General. Despite having more than two years to spiff-up the government’s arguments, and despite several “practice sessions” in the lower courts to fine-tune the message, the government’s lawyer was strikingly inarticulate when explaining the constitutionality of the individual mandate. This, of course, is because there is no good constitutional argument for it. If the government is allowed to promulgate this mandate, then one is hard pressed to articulate a cogent limit to the government’s power over the individual. And so, the government’s lawyer could not articulate one (despite pointed attempts at coaching from the Bench by few of the Justices partial to position A).

If the mandate is overturned, this unfortunate man will be scapegoated to the Progressive’s Perpetual Penalty Box.

President Obama, it should be noted, could have easily kept this issue from reaching the Supremes until after the election, but he did not. Rather, he opted for a risky path that would result in the Supreme Court rendering a possibly negative decision on his signature legislative accomplishment a mere four months before the election.

And this leads me to speculate on why he would do such a thing. I agree with those who say President Obama is a very smart man, and so I have to believe that he is gambling that any decision the Court makes can be turned to his benefit.

There are, in essence, three possible outcomes: 1) The mandate, and Obamacare, will be upheld. 2) The mandate will be overturned, but the rest of the legislation can stand. 3) The mandate will be overturned, and so will the entire package.

If Outcome One occurs, not only will Obamacare stand, but also the Supreme Court of the United States will have agreed that the government can direct the economic activities of individuals, to the extent that the Central Authority can force individuals to enter into contracts with private companies against their will. (Until now, in order to form a valid contract both parties had to enter the contract voluntarily.) This would be such a fundamental change in the relationship between the government and individuals as to entirely negate the basic premise underlying the Constitution. And while Outcome One might galvanize the Tea Party to sweep Republicans back into power at all levels, this fundamental victory for Progressives would dwarf the mere winning of an election by the opposition. President Obama would become a Perpetual Hero of the Progressive Pantheon, and, in fact, would be a strong candidate again in 2016. (By that time, the mess Obamacare will have become will be blamed on the Republicans’ mismanagement of it.)

If Outcome Two occurs, the issue upon which President Obama will base his re-election campaign will be set. Instead of having to rely on bogus issues like a Republican War on Women, he can run on healthcare.

Outcome Two leaves Obamacare intact, except for the mandate. The mandate is “merely” the funding mechanism for the legislation. The whole package can then be salvaged simply by re-instituting the mandate, but this time explicitly calling it a tax. (If they would have called it a tax in the first place, there would not have been any grounds for a constitutional challenge).

To do this, of course, the President will have to be re-elected, and will have to hold the Senate and gain a majority (or near-majority) in the House. In engineering this electoral sweep, healthcare will be his ticket.

His campaign would likely be based on three elements related to healthcare. First, of course, he will remind us of all the good stuff we will lose if we don’t put Democrats back in power – the uninsured will remain uninsured, people with pre-existing conditions will again be unable to get insurance, and our 25-year-old “children” will have to fend for themselves. Second, he will point to the Republican’s alternative healthcare plan which (unless some miracle occurs between now and the summer) is no plan at all; it’s chaos. Third, he will rely on the assistance of the Evil Health Insurance companies. The health insurance industry, as I have pointed out, is desperately relying on Obamacare, which is their only path to a viable business model. This is why they pulled out all the stops to see that Obamacare was passed in the first place. If saving Obamacare depends on electing Democrats, electing Democrats is what the industry will try to do.

So the moment the Supreme Court chooses Option Two, the insurers will do everything in their power, once again, to demonstrate their fundamentally ruthless, evil natures. They will raise their premiums 90%; or rule that they will no longer pay for newer cancer therapies; or announce that they are doubling their rescission efforts. Whatever it takes to demonstrate that, if you people elect Republicans, when you get sick you will have hell to pay. “Welcome back into our tender mercies, ” the heartless health insurance executives will laugh. “We, who have no sense of human decency or compassion, are very pleased to wallow once again in your pain and suffering and despair, in the name of profit.”

The Republicans will not know what hit them.

Outcome Three throws out Obamacare altogether. This outcome (like Outcome Two) re-establishes healthcare as the President’s only necessary re-election issue.

President Obama might. of course, take the same tact as he would take under Outcome Two – that is, re-instating Obamacare as originally written, but fashioning the mandate as a tax. He could then enlist the help of the Evil Insurance Industry, as above.

Or, he could go for the Brass Ring.

President Obama, it will be recalled, was originally against an individual mandate, and invoked as reasons for opposing it all the reasons the Conservatives argued before the Supreme Court. The mandate was placed into Obamacare as the only viable funding mechanism for a reform plan that included private insurers; and private insurers were included in the plan as the only feasible way to pass any reform plan at all.

But what Progressives – and President Obama himself, according to his own words – have wanted all along was a universal, single-payer healthcare system run by the government. (And indeed, in my view, Obamacare was designed to evolve to just that outcome after a few years.) Outcome Three will give the President a real chance of getting what he really wants, right now, in one giant step.

To this end, the President could address the nation, saying:

“My fellow Americans, we tried! Nobody can say we didn’t. We presented our nation with a healthcare plan that would cover almost everybody, and which would have saved the private insurance industry. But now, thanks to the the actions of the Republican naysayers, the Supreme Court has ruled out the only mechanism that would have allowed our healthcare reform plan to include the participation of the private insurance industry. And now, with this ruling,  and with the Republican-led demise of our visionary healthcare plan, the insurance companies tell us that in order to remain in business they will have to price their products so high that the number of uninsured Americans will soar – my advisers tell me that soon, over 100 million of you will be without health insurance. You and your loved ones and your neighbors face imminent death or disability, thanks to Republican nihilism.

Republicans should know that it may be easy to destroy, but it’s difficult to create. Where is their plan to save our healthcare system, and spare the lives of our citizens? All they have to offer are platitudes and chaos, and vague mutterings about “the markets.” This is all they have, after destroying our new centrist, market-based healthcare plan, which was made law by your elected representatives, and which would have brought high quality healthcare to everyone.

But thankfully, we still have a choice. And thankfully, the time to choose is now.

I and my Democratic colleagues did not want it this way. We fought hard against it. But our Republican opponents and their allies in the reactionary Court leave us with little choice. My fellow Americans, re-elect me, and send Democrats to the Senate and the House, and we will act to save the American healthcare system. If you re-elect me, and give me a Democratic Congress, I pledge that within 60 days, we will pass into law my new program to expand Medicare to cover all Americans. This is not the path I would have chosen if there was a real choice, and indeed it is not the path I chose. But our opponents saw to it that all the other paths have been closed to us; such was their blind zeal to destroy.  And if you don’t like it, as I myself do not, you know who to hold responsible at the polls.”

If the individual mandate is overturned, the Republicans had better have an alternative healthcare reform plan ready to go that they can articulate immediately, simply, compellingly and often. If they do not, the President will play them like a fiddle.

This is Chapter 2 of my book-in-progress, “Open Wide And Say Moo! – The Good Citizen’s Guide to Right Thoughts And Right Actions Under Obamacare.” Comments are fervently sought; you can leave them here.

You can read my rationale for undertaking this project, and thus opening myself up to the possibility of public failure, humiliation, derision, disapprobation, and unwanted scrutiny, here.

And here is the up-to-date archive for all the chapters that have been posted so far.

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Chapter 2 – The Demise of the Health Insurance Industry

I fear that, in Chapter 1, I may have left you with the impression that our healthcare expenses have been piling up for the past 50 years, to the point where our entire culture is about to collapse under the weight, without anyone or any organization doing anything about it.

If so, I apologize, for nothing could be further from the truth. In fact, our healthcare expenses have been piling up for the past 50 years, to the point where our entire culture is about to collapse under the weight, in spite of the heroic efforts on the part of our health insurance companies, our doctors, and our government to stem those costs.

Indeed, their efforts have been little short of astounding. The health insurance industry has driven itself upon the shoals in a daring attempt to rescue our healthcare finances, and lies there today, foundering and needing rescue itself. Doctors have made what amounts to a suicide attack against the rising costs, essentially throwing away the very essence of their own profession in the attempt, and leaving for posterity a signed suicide note. And our government – well, our government of course has tremendous resources, and has spent or pledged the lifetime earnings of the next three or four generations of its citizens in what appears to be an entirely fruitless effort to bring healthcare costs under control. (Our leaders assure us they feel very badly about this, however.)

So it’s not for lack of trying. It’s that what they have all been trying – namely, covertly rationing our healthcare – not only does not and cannot work, but also intrisically makes things much, much worse.

This and the next chapter will demonstrate the sorry state to which such misguided efforts to control costs have reduced our healthcare system and its participants – and well before Obamacare ever came along.

A Bit On Covert Healthcare Rationing

I have been writing a blog for the past five years about the covert rationing of America’s healthcare, so there is plenty I could say about this. However, I will limit myself, with exquisite difficulty no doubt, to just saying what covert rationing is and why it’s a problem.

First, let’s be clear on the definition of healthcare rationing. To ration healthcare is to intentionally withhold at least some useful medical services from at least some of the people who would benefit from them.

To ration covertly is to do the above without admitting to it, and most often while indignantly denying it.

I will not go into an exhaustive argument here to “prove” we’re rationing our healthcare covertly, or that covert rationing intrisically wastes far more money than it can ever save. I have done that elsewhere. Instead, I will simply lay out a 3-point thesis which makes it intuitively obvious that covert rationing is what we’re doing, and that by doing it we’re compounding the underlying fiscal problem.

Point #1: Healthcare rationing is a fiscal imperative. Rationing is fundamentally unavoidable, and therefore, we are not avoiding it.

In any advanced society, where a centralized agency of one species or another creates a pool of money from which most of the society’s healthcare bills are to be paid, whether that pool of money is controlled by the government, or by private insurance companies, or by some combination of these, then even if that centralized agency is very large, very powerful, and very coercive, and even if that agency is able to borrow (say) trillions and trillions of dollars, there will always be limits on how much money can be placed into the pool. On the other hand, the amount of money that could conceivably be spent to purchase every bit of all the available, potentially useful healthcare for every individual in the population who might benefit from it is essentially limitless.

This limited supply, and limitless demand, means that somebody, somewhere, will not receive all the available healthcare that would be potentially useful to them. So rationing is occurring. Q.E.D.

Point #2: We’re Americans, and Americans don’t ration. So the unavoidable rationing must be, and is being, done covertly.

An endearing trait of Americans, endearing to us Americans at least, is our limitless optimism, our undying belief that anything good that we can imagine can, and will, and must actually be accomplished. This refusal to recognize limits is responsible for much of the creativity, inventiveness, and productivity that has come from our American culture. And it has led to much good in the world, resulting, for instance, in most of the remarkable advances in healthcare we’ve seen over the past half-century.

The American culture of no limits, however, can be carried to counterproductive extremes. And that is what has happened with regard to healthcare.

Our “no limits” attitude about healthcare is typically American. It goes like this:

In America we have, and will continue to have, the best healthcare in the world – the best doctors, the best hospitals, and the best technology. Since one cannot place a price on a human life, anything that can be done for a sick person must be done, as long as there is some small hope of even a tiny benefit. Every disease is potentially curable, and as a matter of policy we will strive to learn how to cure every disease that exists (and when we run out of diseases to cure, we’ll invent new ones). Indeed, death itself is merely a manifestation of insufficient technology.

In summary, where healthcare is concerned, there are, and can be, no limits.

We can see the problem right away. While we have inherent spending limitations that unavoidably require healthcare rationing, we find that there can be no limits, and therefore, no rationing. Indeed, there can be no discussion of rationing, except to bitterly condemn the very idea. Any political leader or policymaker who would seriously suggest the idea of healthcare rationing would run squarely into this deeply ingrained culture of no limits, and would immediately become toast.

So, these two basic imperatives shaping our healthcare system – the unavoidable need to ration that will always accompany publicly-funded healthcare, and the culture of no limits – are, in their essence, completely incompatible with one another. Given our deep-seated need to simultaneously cling to both of these incompatible imperatives, our only option is to do the unavoidable rationing in a way that allows us to deny that rationing is occurring; in a way that allows us to ration while declaring that there are no limits. We can ration secretly. We can ration deceptively. We can ration covertly.

And (QED) that is what we are doing.

Point #3: Covert healthcare rationing is inherently and extravagantly destructive, not only to patients and their doctors, and not only to the healthcare system, but also to our national budget, and to our basic American social contract.

While there are plenty of problems with the American healthcare system, the truly intractable ones are intractable largely because of our need to ration covertly. As long as the need to ration healthcare covertly exists, these problems will persist.

By its very nature covert healthcare rationing is a deeply ironic construction. The whole purpose of rationing is to reduce spending on healthcare, and to control costs. But covert rationing (ironically) always increases expenditures. If we could ration healthcare openly, then it is possible that we could arrange, or at least try to arrange, the rationing in such a way as to optimize the efficiency, effectiveness and equity within our healthcare system.

But rationing covertly fundamentally means rationing in whatever way you can get away with. So, in order to hide the rationing, it is imperative to obfuscate, misdirect, complicate, juke, jive, shimmy and shake and do whatever else you must to to convince everyone – often including yourself – that whatever it is you’re doing, it’s not rationing. That is, you’ve got to create an environment of complexity and opacity in which you can get away with it.

As a direct result of this simple truth, simplicity, transparency and efficiency are lethal to a system based on covert rationing, and thus, are systematically rooted out. Covert rationing absolutely requires opaque processes and procedures, superfluous complexity, bizarre incentives, Byzantine regulations which are arbitrarily enforced or ignored in various times and places, astoundingly wasteful transactions, and the diversion of healthcare dollars to a complex host of non-healthcare ends, such as commissions, study groups and panels, various czars of this and that, ever-expanding layers of government bureaucracies, and the establishment of other massive bureaucracies within the healthcare system whose purpose is to defend against or manipulate those aggressive government bureaucracies. Covert rationing, by its very nature, demands and creates waste within our healthcare system, and therefore costs us far more money than it can ever save us.

So, while the fiscal mess in which we find our healthcare system is destined to screw all of us, by attempting to fix it with covert rationing we’re converting a simple screwing into a gang rape.

It will be instructive to have a look at how this has all worked out.

A Recent History of American Healthcare (continued)

It did not take long after the institution of Medicare and Medicaid in 1965 for astute economists and politicians to realize that, perhaps, we had just stepped off a financial cliff.

Smart people became alarmed about healthcare spending as early as 1970, when we were spending a “mere” 7% of our GDP on healthcare (a little more than a third of the proportion we’re spending now). And indeed, in 1972 Richard Nixon, demonstrating in yet another way that not all Progressives are Democrats, planned to propose in his second term a universal healthcare system. (So perhaps if those Progressives who today are so desperate for one hadn’t made such a big deal about Watergate, they would have had their heart’s desire 40 years ago.)

After Nixon was deposed, Gerald Ford got distracted trying to “Whip Inflation Now;” Jimmy Carter busied himself actually whipping inflation to heights not seen since the Weimar Republic; Ronald Regan dedicated himself to spending the Soviet Union into oblivion; and George Bush 41 beat up Sadam Hussein and raised taxes while trying not to move his lips. You know, stuff happened.

And the next thing you know it was 1992 and healthcare spending had nearly doubled as a proportion of the GDP since the time of Nixon.

Subsequently, the Clintons took up healthcare reform as their signature issue. Bill turned the effort over to Hillary because (as he explained it) she was smarter than he was, but some say possibly also as a reward for her amazing loyalty in the face of, well, you know.

In any case, at the beginning of the Clintons’ effort to reform healthcare, they had the goodwill and support of most Americans, of doctors, the media, and most importantly, the American health insurance industry. Hillary appeared to start off well, making a successful appearance before Congress, and, with great fanfare, convening numerous expert panels and other groups to gather their ideas, suggestions, and recommendations on healthcare reform, as if she intended to take them into account. Optimism was high.

But Hillary is a true Progressive, and so she already knew how to reform healthcare. Having made a great show of democratizing the process, she then retreated behind closed doors with a few hand-selected advisors, and soon emerged with a 1300 page bill of her own devising – Hillarycare.

Many were horrified by what was in that bill, which in fact gave the government full control of our healthcare system. Not the least among the newly-horrified were executives of the health insurance industry, who to that moment had been major supporters. They realized that if any law passed that was remotely like Hillarycare, their industry would soon become infeasible if not illegal. And so, acting with the alacrity of people who are in imminent mortal danger, the insurers quickly introduced the American people to Harry and Louise, a typical middle class couple who were depicted, in print ads and on TV, discovering numerous appalling provisions of the Clinton plan.

The rest was history.

The collapse of the Clintons’ reform plan caused a sudden deflation in Americans’ expectations, but the fiscal crisis remained. In fact, the one thing the Hillarycare effort had indeed accomplished was to create a general awareness among the public that the healthcare system was in dire financial straits, and that business as usual was not an option. And nobody (except for the doctors, wallowing as usual in wishful thinking) believed things could simply go back to the way they were before.

Into the breach stepped the very health insurance industry that had just torpedoed Hillarycare. And they had a plan.

“Citizens!” they said, “We have just dodged a bullet. Thanks to us, the frightening socialist reforms of the Clintons have been soundly defeated. But where does this leave us? We stand now between Scylla and Charybdis, between the specter of nationalized healthcare on one hand, and continued, wasteful, traditional fee-for-service medicine on the other. And we cannot countenance either.

“But wait! Here is a third way, a painless way, based on the sound principles of managed care, open markets, and free enterprise. Let us in the health insurance industry, successful businessmen all, wielding the tools of efficiency and sound business practices, step in and save the day. We will apply our proven tools and methods of efficiency to American healthcare, through our new vehicle for medical excellence – our for-profit HMOs. And we will demonstrate to the world the wonders that modern, free-market management principles can bring to American healthcare.”

And not having any other viable choice that any of us could see, we Americans gave the go-ahead.

The Brief But Remarkable Era of For-Profit HMOs

By this time, HMOs had been around, here and there, for 20 years. They were inventions of pipe-smoking, elbow-patched academics and other well-meaning naifs, who envisioned user-friendly, non-profit organizations which, by inculcating their clientele to the benefits of good health habits, disease-prevention lifestyles, and regular check-ups would – you know – maintain the health of its members. Until the collapse of the Clinton health reforms, HMOs were widely regarded with some bemusement, as the typical sort of ineffectual but benign social engineering experiment you generally get from cloistered academics, or as an eccentric aunt puttering about the attic of the healthcare homestead.

The for-profit HMOs which the health insurance industry introduced to America after the fall of Hillarycare were a different species altogether. If you asked the CEO of one of the old-fashioned HMOs what the mission was, she would say something like, “Why, it’s to maintain the good health of our clients, of course.” Not so for the new-style HMOs. Their mission (quite explicitly, since this is the message they used to sell all of us on the idea of turning American healthcare over to them) was to apply the modern management techniques of American business to make American healthcare efficient at last. And how does one assure that such modern business techniques will be fully and enthusiastically applied? By doing what every business must do to be successful – by focusing like a laser beam on profitability.

So if you asked a 1990s, new-style HMO executive what was his mission, he would reply, “Why, it’s to take this wasteful, inefficient puppy and turn it around into a profit-generating machine. Of course, as a spin-off you will get more efficient healthcare and the like. But the mission – and indeed the measure of our success, the evidence that we’re making healthcare more efficient – is our profitability.”

And with the mantra, “Profits = Efficiency” emblazoned on their standards, and with “Deus Lo Volt!” on their lips, the new-style HMOs went forth in the crusade to save American healthcare.

However, just as the real Crusaders became distracted on their way to the Holy Land by the opportunity to sack and pillage Constatinople, so did the HMOs become distracted by an unprecedented opportunity to sack every city, town and village in the land. Because it was the prospect of profits which would at last make American healthcare efficient, HMO executives argued, it only made sense for all the non-profit hospitals in America to be turned over to them. This way, the HMOs could incorporate those old, creaky, inefficient institutions into their new, machine-like, ultra-efficient, healthcare paradigm. When the city fathers and state commissioners of America seemed interested, the CEO would add, “We’ll even pay you for them.”

During the next six or seven years, virtually every non-profit healthcare organization in America – hospitals that had been owned and operated for decades by cities, counties, states, or religious organizations – were acquired by for-profit institutions. The way these transfers worked was: a) the hospital’s board of trustees (many of whom later wound up with well-paying jobs with the acquiring HMO) would approve the transfer; b) the state insurance commissioner or state attorney general would determine the intrinsic value of the hospital; c) the HMO would reimburse the appropriate entity with the assessed amount of money, often by establishing a charitable foundation.

For reasons I cannot fathom, the state officials seemed congenitally unable to estimate, even within an order of magnitude or two, the true intrinsic value of the transferred asset. Only the hospital’s value as a charity was considered, and not its potential as a business. They failed to consider the market value of trademarks, name recognition, decades of community goodwill, provider contracts, or subscriber lists. There were no competitive bidding processes; no formal valuations. So the new HMOs acquired thousands of major, publicly-held community assets, all across America, for pennies on the dollar.

If state officials were inefficient in this process, the markets were not. And the HMOs found that each time they acquired a formerly non-profit institution, the market would immediately reward them with a nice boost in their market valuations. HMOs suddenly became hot investment vehicles, and investors jumped in with their dollars. HMO executives were very, very happy.

This asset-acquisition phase of the for-profit HMOs was largely responsible for the great financial success these organizations enjoyed in the 1990s. And the hugely important story of the massive transfer of public assets to private companies went largely unreported.

Once they had gobbled up all the public hospitals, the for-profit HMOs immediately entered into a prolonged period of negotiated mergers with one another, thus consolidating the industry into a few massive players. This interval also produced large boosts in their market valuations, and it sustained the facade of corporate success for a few more years.

And that pretty much covers the glory years of the modern HMO. For a decade or so these companies were extremely successful, and performed very nicely for their shareholders. But their success, such as it was, had relatively little to do with their ability to make American healthcare more efficient. Rather, like those holy warriors who fought in the Fourth Crusade, their profits came mainly from sacking Constantinople, the city of their supposed allies and co-religionists.

To be sure, HMOs did work as hard as they could at improving healthcare efficiency during this period of time. They did this mainly by instituting efficiencies of scale. When you are managing several hospitals, or several scores of hospitals, you can streamline and consolidate your processes and procedures in some very big ways – with more pointed negotiations with vendors, for instance, or by computerizing and standardizing billing and ordering, or limiting drug formularies. You can also conduct fancy efficiency studies to show that, really, you could probably get away with an 8:1 nursing ratio instead of a 4:1 ratio. (By “get away with,” apparently, the efficiency experts meant that while the “downside” of such cutbacks might be suspected or even perceived by people on the ground, it was unlikely that it could ever be accurately measured – or therefore, proven – by a few local troublemakers.)

So the efficiencies of mega-corporate bigness were broadly applied, and as a result, during the latter half of the 1990s we saw less healthcare inflation than during any 5-year period over the previous 30 years. But the thing about applying this kind of cost-cutting measure – the kind that is applied on a global basis to the whole system – is that it is a one-time event. That is, the savings are realized right away, and as a result you successfully establish a new and lower spending baseline. But because (as we saw in the last chapter) the rate of growth in healthcare spending is not caused by the inefficiencies you’ve just eliminated, the increase in healthcare spending will thereafter simply resume and continue apace (albeit from a lower baseline).

This is just what happened. By the turn of the century, healthcare inflation was headed back up into the double digits.

And so, if they had not realized it before, by the early 2000s it finally occurred to the HMO executives that, at long last, if they were going to remain profitable they were going to have to figure out how to cut healthcare costs by doing what they’d always told everyone they were so good at doing, but which they had never yet accomplished – actually managing the medical care of sick people.

This is when the panic began setting in.

Their panic was not inappropriate. For the HMOs had not been sitting on their hands when it came to making actual patient care less expensive. In fact, they had already tried everything they knew how to try – and it had not worked.

The business model of the HMO, simply put, is to gather the health insurance premiums from its subscribers, use that money to efficiently manage their healthcare, and keep whatever is left.

Therefore, to the HMO executive (the steely-eyed business executive we had all deputized to control our healthcare costs), the biggest risk to the business is: sick people.

Sick people are a huge problem. They are not subject to the usual “efficiencies” you can apply to most businesses. Simply streamlining business processes (admission and discharge procedures, consolidating laboratories, computerizing records and the like) does not work with sick people. You could implement these sorts of efficiencies all day long, and sick people will still be sick, and each one of them could blow through tens of thousands of your dollars each and every day.

Sick people, unlike the widgets which businesses typically process and manipulate to make their money, are not all alike. Each of them has a different constellation of medical problems, different needs, and different responses to testing and therapy. A medical service that makes Patient A recover in two days puts Patient B in the ICU for three weeks. Patients who recover enough to go home, but then stop taking their medications (or cannot afford to take them), or immediately resume an all-pizza-diet, will bounce right back in your hospital, and recommence consuming even more of your resources.

There can only be one answer to this problem. What you need to do is something you learned on your very first day of MBA school (where basically all you did was get your seat assignment, and eye-up the rest of the class to decide which ones you think you can work with and which ones you’ll need to sabotage in order to smooth out the curve). Namely, eliminate unnecessary expenditures. Which means: you need to avoid the sick.

Find ways to keep the sick (or potentially sick) from enrolling in your HMO. For sick people who manage to make it through the obstacle course you are going to set up for them, you will need to find ways to make things so unpleasant for them that they’ll go elsewhere. For the really sick who won’t (or more likely, can’t) leave, you’ll need to find ways to just toss them out.

And so, naturally, this is what HMOs did.

They made their best insurance products available to employers only, on the theory that people who have jobs are less likely to have serious, chronic illnesses or severe disabilities, or addictions. The inferior, “individual” insurance products (when HMOs could not avoid them altogether) were pre-loaded with onerous pre-existing condition clauses, so that only healthy young people were likely to be eligible. When HMOs held “open enrollment” drives for Medicare patients, they were invariably located on the second or third floor of buildings without elevators, often in affluent suburbs or at country clubs, and in any case in places that were at least two bus transfers away from “undesirable” neighborhoods. Such methods came to be known as “skimming” or cherry-picking, and were aimed at avoiding the sickest 10% of the population that accounts for 75% of all healthcare spending.

Sometimes, despite increasingly sophisticated cherrypicking techniques, a sick person would still get through the door. Or more likely, a formerly healthy subscriber, by virtue of a newly-acquired illness, would transform – werewolf-like -  into a voracious, healthcare-consuming monster. Techniques were developed for these, as well. In fact, the academic managed care literature (and yes, there is such a thing) paid particular attention to this issue – that is, how to frustrate undesirable patients sufficiently to entice them to go elsewhere. One interesting article titled “Demarketing of healthcare services,” appeared in the Journal of Healthcare Marketing in 1994. It said, among other things:

Decreasing accessibility to services . . . can be accomplished by “managing” the information distributed to patients regarding services available and how to access them. For example, an organization might excessively promote less-costly preventive procedures . . . and repress information about other elective and/or expensive services. In addition, providers can strategically locate and number specific services to make them easy (e.g., primary care) or difficult (e.g., specialists) to utilize. Furthermore, lag periods . . . also serve as containment strategies. Lags may be affected by the need for referrals, limited number of contracted specialists, restricted or inconvenient appointment availability, and increased office-visit waiting periods.

I would like you to notice a couple of things about this excerpt. First, of course, it nicely demonstrates that driving patients away was not an unintended consequence of HMO inefficiencies. The inefficiencies were manufactured specifically to achieve that end. But second, please observe that this is probably the most straightforward statement about covert healthcare rationing you’re ever likely to see from the people who are actually doing it. It graphically demonstrates that much of the inefficiency in our healthcare system is not accidental. It is carefully engineered for a very specific purpose. It is, in fact, an investment, aimed at improving the bottom line.

Here’s another example. In the late 1990s, the famous Jim Clark, the first Internet genius, the man who had founded both Silicon Graphics and Netscape, decided to launch a new venture which he called WebMD. While today WebMD is muddling along as a reasonably successful information portal, it was originally conceived by Clark as a powerhouse that would revolutionize healthcare in America. He wanted WebMd to become a platform for seamlessly interconnecting all the players in the healthcare system – doctors, patients and insurers – to improve communication, streamline transactions, reduce medical errors, and otherwise create efficiencies that would benefit American healthcare (and at the same time build shareholder value for WebMD). When he finally had built up the infrastructure for doing all this, at enormous cost, he went to the health insurers with his first can’t-miss proposition, the very can’t-miss proposition that had enticed his investors to put up the money for WebMd in the first place. Namely, he offered (in exchange for a tiny transaction fee) to process the HMOs’ medical claims for 70 cents per transaction (as compared to the $7.00 per transaction it currently cost them), and furthermore, to complete the transactions in a matter of minutes instead of a matter of months. Much to Clark’s amazement, there were no takers. None. And his dream died on the spot.

Astute readers will see the problem right away. HMOs, of course, have no interest whatsoever in streamlining their transactions. Quite the opposite. HMOs only make money if they do not have to pay out claims. And if they do have to pay claims, the longer they can hold on to the money before they actually pay it out, the longer they can keep it invested. And so, claims processing procedures have been carefully engineered into the most inefficient, Byzantine, and frustrating endeavors the devious human mind can conceive of. Unless a doctor’s practice hires a cadre of “claims specialists,” who spend all their time in an elaborate dance with the “claims specialists” employed by the HMOs, they would never collect any money at all. As it is, it is so expensive to chase smaller claims that many doctors simply don’t send in bills for them – which means the HMOs get to keep that money. Which means that doctors are reluctant to offer the medical services for which only a small bill is generated.

Are you starting to see how covert rationing works?

The End Game For HMOs

By the middle of the last decade, the health insurance industry realized it had run out its string. It saw no pathway forward to continued profitability.

The insurers had tried every sneaky and underhanded idea they could think of for reducing costs – cherry-picking the healthy patients, treating chronically ill patients like pariahs so they would go away, making access to specialty care as inconvenient as possible, forcing doctors to sign “gag clauses” to prevent them from telling their patients about certain treatment options (more on this shortly), browbeating primary care physicians into zombie-like compliance with handed-down care directives, refusing to cover expensive-but-effective medical services, and canceling the policies of tens of thousands of patients after they got sick, based on trumped-up technicalities. Indeed, they had tried everything short of dispatching teams of Ninjas in the dark of night to slaughter their most expensive subscribers in their beds. And still, their costs – essentially, the money they could not avoid spending on people who needed healthcare services – increased relentlessly.

All these efforts were to little avail. The cost of providing healthcare continued to skyrocket, entirely unabated. Finally, when all else failed, the insurers began instituting huge and unsustainable annual increases in premiums, to the point of driving their customers out of the market.

This latter move, of course, was an open acknowledgment that the industry had entered its death spiral. In fact, it was an SOS, a cry for help. It was the health insurance industry wailing, “No mas!”

The Health Insurance Industry And Obamacare

By 2009, when President Obama began his push for healthcare reform, the insurance companies knew they had no prospect of long-term profitability. Their business model was no longer viable, and, while telling soothing stories to avoid shareholder panic, they were urgently casting about for an exit strategy.

A drowning man will cling to any piece of flotsam that comes his way. What the insurance industry found floating by was Obamacare.

In return for its support in the healthcare reform battle, President Obama offered the insurance industry the graceful exit strategy it so desperately needed. Under Obamacare, for at least a few years the insurers hope to get One Last Windfall – namely, profits from the influx of previously-uninsured Americans whose premiums will be paid, or at least subsidized, by taxpayers. Here, the insurers are relying on the likelihood that the inflow of new premiums will, for a year or two at least, greatly outweigh the outflow of money they will have to spend caring for these new subscribers. Obviously, they will use every trick in their well-worn book to stave off expenditures for these new subscribers for as long as they can, but if they actually knew how to avoid paying healthcare costs indefinitely, they wouldn’t have sought a government bail-out. In any case, an inflow of new subscribers will be a very temporary source of profit for insurers. Hence, at best it is One Last Windfall.

What happens to the insurers after they exhaust this last windfall is still up in the air. Obamacare may, of course, eventually transition to a single-payer system, an outcome which many Conservatives desperately fear, and many Progressives fervently desire. Should this happen, there may very well be some final compensatory buy-out (or a buy-off) for the insurance companies – a truly-last windfall.

But more likely, the insurance companies under Obamacare will continue to exist essentially as public utilities. That is, they will exist as companies chartered by the government, which administer healthcare under the direction of the government, with the products they may offer, the prices they may charge, the profits they may keep, and the losses they may incur, determined solely by the government. It’s not glorious, but it’s a living.

And it’s a far better exit strategy than anything the insurance companies could devise for themselves.

So, when the time came, the insurance industry did whatever it needed to do to make sure President Obama’s reforms became law. Their assistance consisted of four simple steps:

1) Do not actively oppose Obamacare. In stark contrast to its behavior during the Clintons’ effort to reform healthcare, this time the insurance industry never employed its vast public relations resources to stifle healthcare reform. While they resurrected the original Harry and Louise, this time, like the insurance industry itself, they were older, wiser, sadder, and fully in support of the proposed reforms.

2) Submit quietly to demonization. A key strategy of proponents of Obamacare was to remind Americans repeatedly that the for-profit health insurance industry is fundamentally evil. This strategy was based on the time-honored precept that it is easier to get the unwashed masses to cooperate through hatred than through reason, and so, to gain their cooperation, one must give them something to hate. Obviously, this strategy meant that the health insurance industry had to accept its role as the bad guys in the reform debates without complaint, and without engaging in any serious self-defense. They did so.

3) Offer subdued public support to Obamacare. The AHIP (America’s Health Insurance Plans) issued public statements every so often that cautiously supported President Obama’s healthcare reforms. But its support had to remain subdued and tepid, since Satan can’t be seen leading the hymns. It was just enough public support to signal opponents of Obamacare not to expect much help this time from this quarter.

4) Whenever necessary, rise up and demonstrate to the world just how evil you really are.  At the end of the day, this was the most important role the insurance industry played in advancing Obamacare. It was certainly their most active role.

It was not a difficult role to fill. Since 1994 the health insurers had engaged in the sorts of truly evil, inhumane, and reprehensible practices that are naturally engendered by covert healthcare rationing, and that harmed or killed many of their subscribers. The only difficult part was choosing which reprehensible behaviors to feature, and when to do it.

In at least two key moments during the fight over healthcare reform – June, 2009 and February, 2010 – when the proponents of reform felt their momentum lagging, the insurance industry intervened with gratuitous evil behaviors whose chief function was to remind Americans just how unremittingly wicked and inhumane they really are. In the second case, at least arguably, the insurance industry turned the reform effort from apparent defeat to almost certain victory. Indeed, it is not too much of an exaggeration to assert that, in the end, the health insurance industry saved Obamacare.

June, 2009: Say Hello To My Little Friend

The debate over Obamacare entered a new phase in May and June of 2009. It was during those months that the opposition to healthcare reform found its voice, and it began to seem as if perhaps the Obama steamroller could really be slowed, if not stopped. People were even beginning to say that many Democrats in Congress, after getting an earful from their constituents when they held their summer town hall meetings, would abandon any idea of supporting President Obama’s healthcare reforms.

Supporters of Obamacare decided it was time to invoke the demons. So in mid-June, the House Subcommittee on Oversight and Investigations called three health insurers to testify on the practice of rescission, and to face not only indignant Congresspersons, but also some of the people who had been personally harmed by their practices.

“Rescission” is when an insurance company voids subscriber’s health insurance when they get sick (after happily accepting premiums from that subscriber, often for many years). Under some circumstances, rescission might be justifiable. It is legal and proper to cancel a policy if the subscriber is found to have purposely lied on the insurance application about a prior illness that is material to the current illness.

But health insurance companies for years have actively and aggressively practiced rescission on subscribers whose insurance applications contained inadvertent and non-material inaccuracies. Furthermore, the health insurance industry does not merely engage in occasional unfair rescission practices; it has industrialized the process (which, after all, is what they’ve always told us they would do to reduce costs). It employs health insurance detectives whose job is to comb the prior medical records of subscribers who are newly diagnosed with certain, expensive medical conditions, looking for even trivial discrepancies on insurance applications, which they can inflate to “fraudulent” omissions, thus voiding the policy. These health insurance detectives are paid by commission, according to how much money their efforts can save the company. Many of them find it a very lucrative career.

So, at the cost of perpetrating a bit of inhumanity, rescission can save insurance companies a lot of money.

Consider some of the individuals who testified in Congress along with the insurance companies on that day:

- A nurse in Texas had her insurance canceled after she was diagnosed with breast cancer because she had failed to reveal that, years before, she had consulted a dermatologist about acne.
- A man (whose surviving sister had to testify) had his insurance canceled before he could begin expensive cancer therapy, because he had not revealed (and indeed he had not known) that a prior CT scan had showed gallstones and an aneurysm – conditions unrelated to his cancer.
- A woman had her insurance canceled – and due to the rescission could not find replacement insurance – because she failed to reveal that, at one time, she had been on medication for irregular menstruation.

During the hearing, the three health insurance executives were caused to listen, on camera, to these and other mind-bending stories describing some of the inexcusable pain, suffering and death their unfair rescission practices had caused, and then were forced to listen to withering commentary by stunned Republicans and Democrats on the Subcommittee, whose own investigation had found that the three companies on the docket had retrospectively canceled the policies of 20,000 sick subscribers over the past 5 years.

After these heart-rending testimonies and the blistering attacks from extremely angry congresspersons, the executives were challenged by Chairman Stupak (D-Michigan) to now commit to discontinuing the practice of rescission unless intentional fraud could be shown.

All three replied, in turn, “No.”

Such a reply, in such a setting, almost defies belief. The only possible explanation, in fact, is that the insurance industry was stepping up to the plate, and embracing its assigned role as the Evil One in the great healthcare debate.

Even the most stone-hearted insurance executive can see that canceling the health insurance of a newly-diagnosed cancer patient, because she’d forgotten she had required acne medicine before the prom 20 years ago, is just a bit unfair. But how did these three executives react? They did not attempt to deny such reprehensible behavior, or to explain it, or to defend it. They were simply defiant about it.

One is put in mind of Tony “Scarface” Montana, bereft of friends, family, allies and bodyguards (albeit because of his own actions), hopelessly surrounded by an army of heavily-armed assassins, screaming, “Say hello to my little friend!” then launching defiantly into a wild, bloody and spectacular suicide.

One cannot for a moment believe that Richard A. Collins, chief executive of UnitedHealth’s Golden Rule Insurance Co., Don Hamm, chief executive of Assurant Health, and Brian Sassi, president of consumer business for WellPoint Inc., would have been stupid enough to publicly defy Congress over such an indefensible practice, if doing so was against their own long-term interests. Appearances to the contrary notwithstanding, they were not auditioning for a remake of Scarface.

This is not how an industry behaves which wants to court the goodwill of Congress at a critical juncture in its life cycle. This is not the strategy of an industry that wants Congress to defy its own party’s President and defeat healthcare reform, or that is begging Congress to give them another chance to figure out how to bring healthcare costs into check. This is not the behavior of any industry that wants to elicit any sort of favorable action from Congress. Indeed, these executives would have seemed more sympathetic and deserving if they had proposed instead to place live puppies on a spit and roast them over an open fire during half-time at the Super Bowl.

There is only one explanation for their astounding public defiance on this matter. Which is, it must have suited their long-term interests.

Recall that at the time of this remarkable hearing, there was growing skepticism about President Obama’s healthcare reform efforts, not only on the part of Republicans, but also on the part of a critical minority of Democrats in Congress. And for the first time since the election, there was some question about whether his reform plan would succeed in gaining sufficient support.

In this light the stark, defiant, public “no” uttered by the three insurance executives makes sense. “Look at us,” they were saying, “See how evil we are! We are utterly devoid of human decency, ethical constraints, or a sense of fair play. If we behave this defiantly when we are in the position of mere supplicants to your eminences, just think how we will behave if you fail to rein us in with new reforms! Abandon all hope, those of you who rely on us for your healthcare, and behold the congressional dogs that placed us in this position of power over your very lives!”

Given the headwinds the healthcare reform effort was to face during the next nine months, it is difficult to say with any certainty how much good the insurance industry did in June, 2009, when it took such an extraordinary step to remind Americans just how incredibly evil it is. But when the time came to help boost the President’s reform efforts, nobody can deny that the insurance industry stepped up and did its duty.

February, 2010: Raising Obamacare From The Dead

Things looked especially bleak for healthcare reform in early February of 2010. The incredible, Constitution-defying, machinations Congress had employed in its desperate attempt to pass healthcare reform had disgusted a majority of Americans, and momentum was clearly shifting to the opponents of Obamacare. And when Republican Scott Brown incredibly won the Senate seat in Massachusetts, robbing the Democrats of their crucial, filibuster-blocking 60th vote, many thought healthcare reform was dead.

But then out of nowhere, in early February, Wellpoint’s California subsidiary, Anthem Blue Cross, announced it was raising its already-astronomical health insurance premiums by as much as 39%, a move that promised to greatly increase the number of Californians who are uninsured.

The demoralized Democrats in the administration greedily capitalized on this new opportunity.

Secretary of HHS Kathleen Sebelius immediately fired off a very public letter to the company, demanding that they justify this unconscionable rate increase. And Wellpoint, lustily assuming its assigned role as villain, was delighted to reply, equally publicly.

We’re in a recession, Wellpoint brazenly asserted, and in a recession, like it or not, people exercise their prerogative to drop their health insurance. The only people who don’t drop their health insurance are the sick people, or those who are likely to become sick, which means that our cost per subscriber goes way up. So naturally, we have to increase premiums. By a lot. It’s just business. That’s just the nature of our current, unreformed healthcare system. So choke on it.

Wellpoint was also kind enough to mention (for anyone dense enough to have missed the point) that the need for higher insurance premiums would be nicely mitigated if everybody was mandated by the government to purchase health insurance.

Wellpoint’s anounced premium increase immediately triggered great volumes of delighted outrage by thankful Democrats, who desperately needed a large dose of “evil insurance company” at just that time. Wellpoint’s action reignited the proponents of healthcare reform, who were inspired to remind all Americans that this is what would happen to everyone if healthcare reform failed, and the greedy insurance companies had their way.

Stunned Republicans, seeing their impending victory over Obamacare evaporating before their eyes, could only issue a few lame and uncomfortable attempts to diminish the significance of Wellpoint’s unfortunate action. But to little avail. The momentum had shifted. At least arguably, it was Wellpoint’s decision to announce an unconscionable rate increase at this extremely critical juncture that put healthcare reform back on the road to adoption.

From a pure business standpoint, there was no good reason for Wellpoint to stir the soup at that moment. Wellpoint at the time was the most financially sound private health insurance company. While its California subsidiary did lose money in 2009, overall the company performed quite well, and reported a very nice profit growth for the year. And with several of its competitors in trouble, Wellpoint stood to do comparatively well for the foreseeable future.

Furthermore, it has since been learned that Wellpoint’s math was bad. An independent actuary working for the California Department of Insurance reported on May 5, 2010 that the company had made “numerous errors” in calculating is rate increases, and further, that Wellpoint could cut its rate hikes substantially, and still meet its required 70% medical-loss ratio threshold. So, uh, oops.

It stands to reason that if Wellpoint really wanted healthcare reform to go away, they would have first checked their math before announcing seismic rate increases, and then, if such astounding rate increases were really needed, they would have waited a few months – while Obamacare died – before announcing their rate hike.

The last thing they would have done is to throw the reformers a critical lifeline just as they were going under for the last time.

In any case Wellpoint’s action, especially at that moment, seems entirely gratuitous. Wellpoint could only have chosen to do its demon dance, at such an inopportune moment, in order to revive Obamacare during its darkest hour.

And that’s precisely what happened.

What This Means

What this means to those of us who would like for Obamacare to go away ought to be quite obvious. Simply nullifying or repealing Obamacare simply will not do. The insurance industry simply will not tolerate it. If we decide we need to get rid of Obamacare, to shed ourselves of the spectre of government-controlled healthcare (and far worse, government-controlled covert rationing), we’ll need to have another solution in hand.

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Some of DrRich’s conservative friends become quite exercised when they hear news commentators in the major media favorably contrasting the Occupy Wall Street movement with the Tea Party.

The Tea Party, the news readers intone, is a phony “movement” dreamed up by the Koch brothers to embarrass our first black president and to consolidate their own wealth, for which they recruited hordes of superstitious, back-woods, gun-toting, ignorant, NASCAR-loving, Bible-thumping, bigoted Ma and Pa Kettles to gather on the Mall, along with their Fox News cheerleaders and their country music stars, in a futile attempt to intimidate the enlightened leaders of the Democratic party into abandoning their program of good works. The Occupy Movement, in contrast, is a spontaneous uprising of innocent and right-thinking citizens against the tyranny of the Republican-controlled Wall Street fat-cat oligarchy, and their noble efforts have been explicitly blessed by such luminaries as Obama, Biden, and Pelosi.

Conservative Americans have a different perspective: The Tea Party was a completely spontaneous expression of public disapproval of a federal government run amok, and its gatherings are notable for its respectful, clean, polite, hard-working, law-abiding participants. The Occupy Movement, in contrast, is a contrived, Soros-funded attempt to undermine the American system, and, as one might expect from such a travesty, the Occupadoes are filthy, lawless, selfish, lazy and unappreciative of the blessings of America, which they themselves (judging from their smartphones and college degrees) have demonstrably received.

What conservatives and progressives seem to agree upon, in the matter of the Tea Party vs. the Occupy Movement, is that one is disruptive and disreputable, while the other is enlightened and constructive. They simply differ on is which is which.

For the benefit of his readers, DrRich would like to point out that, despite the foregoing, the Tea Party and Occupy Wall Street actually have a fundamental similarity between them. They are both middle class movements which are motivated by a conviction that the American system is moving in the wrong direction, that a major feature of that “wrong direction” is that an elite few have gained power that has enabled them to block the upward mobility that is supposed to be a part of the American compact, and that a fundamental change is in order. The solutions they advocate are very different from one another, of course, but their problem statements are very similar. And, most significantly, they both arise from the middle class.

At least since around 1500 AD (since the time when we can say that a middle class was present in most Western societies) the true revolutions – rapid, fundamental changes in the political system (not merely in who is leading the political system, but in the system itself) – have come to pass only when the middle class has finally become sufficiently aroused to demand (or at least tolerate) radical change. The American revolution, the French revolution, the Cromwell revolution (and the subsequent restoration), the Iranian revolution, the Nazi takeover of Germany, the fall of the USSR, various Mexican and South American revolutions, and virtually every revolutionary political upheaval one can think of in the last 500 years occurred only when the middle class had finally had it.

Political leaders instinctively understand that they can treat the poor and downtrodden as badly as they want to, and they will never rise up. (This is where John Brown got it wrong.) And so, from the political standpoint, while it might be worthwhile stirring up the emotions of the poor (at least in a democracy), in general the actual needs of the poor can be safely ignored.

But the needs of the middle class must be seen to, at all costs.

This is why Democrats (and their supporters in the media) were so unreasonably critical of the Tea party movement when it first presented itself, painting it as violent, unAmerican and racist, despite the fact that no objective evidence supported any of these charges. They were frightened nearly unto death by the implications of such a widespread middle-class expression of dissatisfaction with the direction the country is going – a direction that had been manifest for decades, but which was greatly accelerated during the first years of the Obama Presidency.

And it explains why Republicans were so quick to identify with the Tea Party (even though the mainstream Republican party is actually quite suspicious of it).

And so, when the Occupy movement finally appeared – a different middle-class movement sporting a redistributive agenda that is in line with major elements of the Democratic party – our Democrat leaders could not contain their delight. This, despite the rather odious and “non-traditional” behavior of the Occupadoes, including their public defecation, urination, fornication, rapine, drug use, property destruction, &c, that, in more normal times, would have politicians of both parties lining up to vilify them. Democrats reassure themselves that, while the Occupadoes might be dirtbags, if we play our cards right they can become OUR dirtbags.

Smart politicians in both political parties recognize the potential for real revolution in both of these movements – to reiterate, that both arise out of the middle class, and both are demanding fundamental change – and they understand the need to co-opt the one, and suppress the other.

And so the battle lines are drawn. The Tea Party agenda, which is often unfairly summarized in diminished form as “smaller government and lower taxes,” actually is fighting to restore the Great American Experiment, as articulated in the Declaration of Independence and the Constitution, whereby the autonomy of the individual is paramount. Under the GAE, the chief job of the government is to protect the citizenry from foreign aggressors, to grease the skids of a free economy, and to allow free Americans to strive as they will, and in doing so, the government may utilize only its very few, explicitly enumerated powers, and otherwise must stay out of the way.

In contrast, the agenda of the Occupy Movement is a levelling one. The fruits of America should be distributed equitably, so that there are no longer haves and have nots. Obviously, the only entity that can accomplish this feat is a strong, all-powerful Central Authority, which can confiscate the property of the “greedy” and award it to the “deserving.” Fundamentally this means that all property, in fact, is the government’s. To the Occupy supporters, while few of them will come out and say so, the Constitution is not a sacred document, but rather is an unfortunate and obsolete impediment to progress, a document that must be undermined and replaced.

To brush off either of these movements would be a mistake. Each of them is firmly grounded in the middle class; each of them discern a fundamental problem with the American system that can no longer be ignored; and each of them have already taken to the streets demanding that solutions cannot wait, and that action must be taken now.

But the two solutions being demanded by these two movements are not merely different; they are polar opposites, and are deeply irreconcilable.

Our political leaders have likewise taken sides, and the sides being irreconcilable, we can expect no cooperation or compromise between their two camps, at least not until we have another election in which the great, seething, conflicted middle class has an opportunity to say which of the two movements they have now spawned actually holds the key to their hearts.

This is a blog about the American healthcare system, and DrRich has not been bashful about expressing his belief that Obamacare – whatever good elements it may contain – is fundamentally a vehicle for undermining the autonomy of individual Americans, and handing to the government the authority to determine who in this country will get what, when and how. Until the last few months DrRich viewed the fight over Obamacare as the proxy fight for the real, underlying, fundamental question – the question of what kind of country we will be from now on.

But between the Tea Party and the Occupy Movement, DrRich has come to believe we no longer need a proxy. It looks more and more like we will have this fight out in the open, and instead of settling it with the kind of sneaky legislative legerdemain that brought us Obamacare, perhaps it will be decided by an actual election.

But whether it is decided by an election, a coup, or an exhausted capitulation, the fate of American healthcare – and everything else American – will ride on which of these two movements eventually predominates within the middle class.

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Progressive Americans have this much going for them: they can, without any reservations, second thoughts (or perhaps even first thoughts), enthusiastically and wholeheartedly support Obamacare’s individual mandate. For them, the individual mandate is an unalloyed good. Not only does it enable Obamacare to proceed, thus giving the government unprecedented control over every aspect of American healthcare, but it also establishes the authority of the government to control the economic activity of individuals. This new authority will come in very handy as our leaders continue working toward redistributive justice. So if you’re a Progressive, what’s not to like about the individual mandate?

Conservative Americans do not have it so easy. In principle, of course, the very idea of an individual mandate is constitutional heresy to a conservative, since it violates not only the letter but the very spirit of the Constitution. This is why, over the past three years, opposing the individual mandate has become for conservatives a more fundamental litmus test than opposing abortion. Accordingly, it is conservatives who have launched the constitutional challenge to the individual mandate, and who have now succeeded in bringing it before the Supreme Court, and who have based their chief strategy for bringing down Obamacare on the idea that the Supremes will agree with them about it.

DrRich, like most conservatives, is aghast at the idea that the Court might actually find the individual mandate to be compatible with the Constitution. Such an expansion of the power of the Central Authority over the lives of individuals will essentially gut the main idea behind our founding, and send us even more rapidly down the path toward tyranny.

But as he contemplates how he might feel on the day the Supreme Court finally strikes down the individual mandate, DrRich can’t help conjuring up the last scene from The Graduate. In that scene, Dustin Hoffman, who has just burst into the church and fought through a horde of wedding guests to grab his girl from the altar, and, with her in tow, has fought his way past the stunned groom and back through the angry crowd, and having at last jumped with her onto a city bus, is now sitting breathlessly, his hard-won love at his side, as the bus pulls away leaving their pursuers behind. And as that last scene fades, his look of elation at finally winning his heart’s desire gradually slackens, and transforms into a look of utter panic, a look that silently beseeches, “Now what?” Or, perhaps, “What have I done?”

DrRich thinks that’s what will happen to Republicans on the day the individual mandate is declared unconstitutional.

There is a reason, dear reader, that Mitt Romney, Newt Gingrich, and the Heritage Foundation, all of whom claim to be conservatives, at one time or another supported something very much like Obama’s individual mandate. That reason is: it is very difficult to conceive of a workable, market-based solution to our healthcare mess without one.

Any scheme for reforming healthcare that is based on private health insurance will fail if a substantial proportion of the population declines to purchase health insurance. Whether people have chosen to acquire health insurance or not, they will still get sick. And when the uninsured get sick there are only two choices.

The first choice is to refuse them care. Libertarians have no problem with this. They believe that if you want some healthcare, you should pay for it yourself. If you choose not to buy health insurance, or otherwise fail to make arrangements to pay for healthcare should it turn out that you need some (as well you might, if you engage in all the activities and abuse all the substances that libertarians say is your right), well, that’s too bad for you. Let your painful and untimely demise serve as an object lesson to everyone else, so that perhaps they will make better personal choices. Most non-libertarians, however, find this option abhorrent.

The second choice is to take care of the uninsured anyway. If you do that, not only do you drive up the cost of health insurance for people who have chosen to buy it, but you also create a huge incentive for people to not buy it in the first place.

This is why Republicans or conservatives who have thought deeply about healthcare reform (Gingrich, the Heritage Foundation), or who have actually instituted healthcare reform (Romney), will often settle upon a solution that incorporates something very much like President Obama’s individual mandate. Unless everyone is strongly “incented” to buy health insurance, a market-based healthcare system will collapse.

More to the point, Republicans ought to recognize that, while it seems to have wound up that way, the individual mandate in Obamacare did not start out as a sneaky way to undermine the Constitution. It was, in fact, a necessary concession to the more conservative of the Democratic members of Congress. President Obama and his minions (or handlers, depending on which talk show hosts you listen to) are on record as saying that their real goal is a single-payer, government-controlled healthcare system. And there is no reason in a single-payer, government-controlled healthcare system to invoke anything like an individual mandate to purchase insurance. The President would have been quite happy without any individual mandate, if he could have gotten his way in the first place.

The individual mandate was inserted into Obamacare purely as a necessary component of healthcare reforms that are ostensibly based on private health insurance, which is the only kind of reform the President could possibly get through even a Democratic Congress in 2010.

If the Supreme Court declares the individual mandate to be constitutional (which will violate everything DrRich holds dear about America), then it’s a huge win for Obamacare.

But if they declare it unconstitutional, that will trigger the Republican’s real problems.

Republicans, Democrats and federal judges all seem to agree that without the individual mandate, Obamacare is infeasible. The moment the mandate is declared unconstitutional, Obamacare disappears.

And this will create a “Graduate” moment. There the Republicans will be, sitting on the bus with the healthcare system they have just saved from the handsome-but-arrogant groom who had Big Plans for it, and heading to – where?  They can’t just go back to the old healthcare system; we’re past that. The health insurance industry has made it plain that their business model is broken, which is why they acceded to and even campaigned for Obamacare (a system under which they are to become federally-regulated public utilities) in the first place. Should Republicans institute their own market-based healthcare reforms? Good idea! But what do they do about the people who choose not to buy private insurance, now that they have had mandates to purchase declared unconstitutional? And even if they have an answer to that question (which they do not), do they have a plan ready to go, one that can be implemented quickly, before the healthcare system implodes? (Remember, Republicans, you will be dealing with a health insurance industry that has run out its string, and that will be at least angry if not panicked at the demise of its public-utility end-game.)

As it happens, DrRich himself has proposed a fix for the healthcare system that addresses all these problems – a system that is based on individual choice and incorporates private insurance, and at the same time covers everyone without any individual mandate, and controls healthcare costs to boot. The details are entirely irrelevant at the moment, and DrRich will not bore his readers with them now. (If you’re interested you can buy a copy of his book in Kindle format for five bucks, or if that’s too steep you can read an outline of his plan here for free.) The point is that workable solutions to our healthcare problems are indeed imaginable. The likes of DrRich has imagined such a thing, and so have others. But Republican candidates for President, and Republican congressional leaders, are not creating these solutions. Instead, they are steering us into a blind alley.

Here is what DrRich fears. When the individual mandate is declared unconstitutional next June, the Republican celebration will last all of 7.5 minutes. The insurance industry will make it very clear very quickly that they simply will no longer be able to function, and to have any hope of survival they will have to resume cherrypicking healthy patients, massively increasing premiums, denying recommended care, and dropping subscribers when they get sick. Even with these drastic steps, they will say, there’s no guarantee that health insurance will still be available for most Americans in a year or two. And at the time these astounding revelations are made, the Republicans won’t even be finished choosing a nominee, let alone be able to articulate a coherent plan for replacing Obamacare. By Independence Day panic will reign across the land.

The President will then make a speech. He will say, “We tried, America. In the spirit of bipartisanship we tried to give Republicans a system of market-based healthcare reforms, just like they say they wanted. But that kind of system requires an individual mandate, and our misguided friends on the right have now shot the individual mandate through the head. And when the American people ask those same Republicans who brought this disaster upon us, “Now what?” the American people get no answer. The Republicans are quite good at destroying healthcare solutions, but are hopeless when it comes to creating them. And you can hear for yourselves what the health insurers are now threatening to do to all of us when we get sick. It will be just like it was before, but much, much worse.

“We tried, America. We tried to create a market-based healthcare system that would be fair to all. But the Republicans, caring for nothing but their own selfish political fortunes, have blocked our efforts, and have left us all for dead.

“Fortunately, in a few short months you will be able to exercise your God-given right as Americans to choose. If you want to, you can vote into office the Republicans, the people who have traded your healthcare security and that of your family in favor of the chaos we are all witnessing today. Or you can re-elect me, and you can give me a Congress I can work with, and let us try to salvage something good from the ruins of the glorious reforms we fought so hard for the last time. Let us try to give you the best healthcare system that is still possible, given the new constraints the Republicans have now made for us. While you and I might not have started out wanting a healthcare system run entirely by the government, today our choice is either that, or the chaos, pain, suffering, disability and death that, thanks to the good offices of the Republicans and their friends in the health insurance industry, are now staring us in the face. But this is not the first time Americans have stared evil in the face. We have done it before, and we have always prevailed.

“We tried, America. We tried – but the Republicans denied, and babies died.

“My fellow Americans, in November you will have the opportunity to say no to the forces of evil, and to set this travesty right. I know the heart of Americans, and I know that you will do the right thing, not only for your own sake, but for the sake of your children, and your grandchildren, and generations of Americans yet unborn.*”

And when President Obama is finished laying out his argument, the Republican nominee, whoever he or she turns out to be, won’t know whether to cry, “Oops!” or “Nein, nein, nein!”

____

*DrRich is a conservative but also a capitalist, and so his speechwriting services are available to the highest bidder. Mr. Obama, mutual “friends” in the DOJ have proven adept at tracking DrRich down when necessary, and will know how to contact him.

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While all the Republicans and Democrats in Washington are spending all these fine summer weekends fighting over the debt ceiling, and so far have absolutely nothing to show for it, the smart people at the New York Times have gone ahead and solved the whole debt problem for us.

Blaring at us from the front page of today’s Sunday Review, in huge, bright red print, we see the following chain of logic: A 20% tax on soft drinks will produce a 20% reduction in consumption, which will prevent 1.5 million people from becoming obese, which will prevent 400,000 cases of diabetes – yielding $30 billion in health savings.

This revelation leaves DrRich slapping his forehead and wondering, “Why didn’t I think of that?” Simply use the tax code and the regulatory muscle of the Central Authority to change human behavior in the proper manner, and everything will fall into place.

It takes a special kind of person to believe that human behavior is so predictable, and so controllable, that one can actually titrate in such a manner the amount of obesity that exists in a society, and therefore, titrate the cost of healthcare. It takes a special kind of person to believe that, simply by tweaking a specific tax here, or adding a specific regulation there, one’s actions will yield precisely the response predicted by the “experts,” and that this response will translate precisely down a complex chain of assumptions (based on selective analysis, conjecture and wishful thinking) to yield cost savings anything similar to those predicted, and that the cascade of results (not being subject to any vagaries of human nature) will not have all manner of unintended consequences. That special kind of person is called a Progressive.

Let’s say that some really smart operative in the Obama administration, reading today’s Times, takes it into his head to solve the obesity crisis, the healthcare crisis, and the debt crisis all in one brilliant stroke, and accordingly, gets the President to appoint the entire New York Times Editorial Staff as the country’s new Czar of Food. These fine folks, sensing a once in a lifetime opportunity and not wanting to squander it on such small potatoes as a softdrink tax, decide to go all out. They institute large, prohibitive taxes on ALL the foods consumed by our society that contribute to our obesity. As a result, the only foodstuffs that remain untaxed are fresh fruits, vegetables, and fish. (And, considering the possibility that one or more of the NYT editorial staffers may very well be vegans, DrRich is not sure about the fish.)

According to the Times’ variety of calculus, this action will have remarkably positive consequences.  The consumption of unhealthy, obesity-producing foods will drop by some very large amount – probably 90% if the taxes are high enough – and American obesity will nearly disappear. Diabetes will go the way of tuberculosis and leprosy, all the other medical disorders made worse by obesity will greatly diminish, and we will save trillions of dollars in healthcare expenditures.

What would actually happen, of course, is quite different.

If all sugary foods and fatty foods and processed foods were heavily taxed, the demand on the untaxed foods (the fruits, vegetables and fish) would skyrocket, and prices would go through the roof. Only the very wealthy could get all the healthy food they wanted. The merely wealthy would get some of the healthy food, and would supplement their diets with the unhealthy stuff, grudgingly paying the excessive taxes to do so. DrRich does not know what the poor would do for food, but he bets they would be pissed.

A lot of other unpleasant things would happen as well. The companies that process foods and soft drinks – and most American restaurants – would suffer badly, and would probably go out of business. Robust black markets would establish themselves, trafficking in inexpensive, calorie-dense (and possibly even tasty) foodstuffs, which would now be produced in Mexico, Canada and China instead of in the US. Junk food cartels would murder each other along our borders. Americans would find themselves envying, rather than pitying, that occasional old fart who is discovered dining on a can of Fancy Feast Cat Food.

And furthermore, Americans will learn something about one’s ideal body weight that we don’t hear too much about today, because it does not fit into the “overweight is bad” narrative. Namely, while severe obesity is very bad for your health, being a little overweight is probably not so bad. Statistically speaking, it is more threatening to one’s longevity to be too thin than to be a little overweight.

DrRich does not have the solution to the obesity problem we have in America. If there is a solution, DrRich thinks it is likely to be some combination of science (since there is a large genetic component to true obesity), encouraging a sense of personal responsibility for living one’s own life, and yes, even public policy. But he finds the kind of linear thinking displayed in today’s Times – relying on assumption piled upon assumption, ignoring the obvious human and economic reactions that will knock those assumptions off their straight-line path – to be silly. And if they actually encourage public policy experts to behave in such a manner, they can be dangerous.

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In the speech President Obama gave responding to Congressman Ryan’s budget plan (the one in which he lured Ryan to sit in the front row in order to be publicly pilloried), the President did something DrRich did not think he would do before the next election. He openly invoked, and openly embraced, the Independent Payment Advisory Board (IPAB) as the chief mechanism by which Obamacare will control the cost of American healthcare.

“IPAB” might be a new term to many Americans, but DrRich pointed his readers to this entity, within a few weeks of the passage of Obamacare, as the lynchpin (and a very scary lynchpin at that) of the whole enterprise.

Until President Obama’s recent “outing” of IPAB, however, this new board has been almost entirely ignored by most commentators. Since the President’s speech, of course, many have written about it, either to celebrate it or to castigate it. (Of all these commentaries, DrRich most highly recommends the analysis provided by Doug Perednia at the Road to Hellth. In fact, DrRich recommends Perednia in general, as he is regularly producing some of the most insightful commentary, anywhere, on health policy.)

DrRich does not wish to simply repeat here all the observations that have lately been made by others regarding the IPAB. Rather, he will emphasize three particular features of the IPAB, features which are remarkable indeed, and which will tell us something very important about our Progressive leaders.

Three Remarkable Features of the IPAB

1) It has dictatorial powers.

The IPAB is a 15-member board appointed by the President.  Section 3403 of the Obamacare legislation tells us that the purpose of this board is to “reduce the per capita rate of growth in Medicare spending,” a noble goal indeed. Furthermore, in a superficial reading of Section 3403, one might think of the IPAB as a sort of Mr. Rogers of healthcare – a mild-mannered, friendly, always-helpful, but ultimately undemanding agent for good. This is the impression imparted by the first few paragraphs of the Section, which paint the new entity as an “advisory” board, whose main task is to develop “proposals” and “advisory reports,” which “proposals” and “advisory reports” would solely consist of various “recommendations,” that ought to be “considered” for the purpose of cost reduction.

Indeed, one might get the impression that the main difference between the IPAB and DrRich (another Mr. Rogers-like, mild mannered and undemanding personage) is that the former is appointed by the President and has a travel budget.

Nothing could be further from the truth. The IPAB is actually all-powerful.

Once the Chief Actuary of CMS determines that the projected per capita growth rate for Medicare exceeds a certain target growth rate (which it inevitably will), the IPAB is required to submit a so-called “proposal” which will cut healthcare costs sufficiently to bring the growth rate back in line; which is to say, the IPAB will determine what will be paid for and what will not. Then, the Secretary of HHS is required to implement that “proposal” in its entirety, unless Congress acts to block implementation. However, Congress is hamstrung.  The representatives of the people are forbidden from taking any action “that would repeal or otherwise change the recommendations of the Board,” unless it replaces those “recommendations” with its own legislation that would cut healthcare spending to the same target level.

For all practical purposes, then, the cost-cutting “recommendations” which the IPAB would “propose” for “consideration” will be implemented nearly automatically, with the full authority of the Federal government.

And, for all practical purposes, the IPAB will become a new agency of the executive branch, with near-dictatorial authority to cut healthcare spending where and when and for whom it sees fit.

2) It will control all healthcare spending, not just Medicare spending.

A common accusation, heard these past few weeks from conservative commentators, is that the secret desire of the President and his supporters is to make it so that the IPAB will have these same dictatorial powers over not just Medicare, but over all healthcare spending – public or private. DrRich believes these conservative commentators are unnecessarily accusing the President of being conspiratorial. In truth, no conspiracy is necessary, as this result is already law.

DrRich recommends that these conspiracy theorists read the actual legislation. It is a bit difficult to sort out, but in fact the IPAB is already granted the authority to control private as well as public healthcare spending.  It got this authority in a suitably convoluted way.

Those who paid attention to the remarkable process that brought us our new and transformational healthcare system might recall that the Senate bill, which ultimately became law of the land, was never designed to be actually implemented. It was designed solely to assure 60 votes in the Senate, after which the Joint Conference with the House was to meld the House Bill and the Senate Bill into a workable law.

As part of the negotiations to gain those original 60 votes in the Senate, five or six Democrat Senators went behind closed doors to cobble together a list of amendments to the original Senate Bill – the so-called Manager’s Amendments. It is in the Manager’s Amendments that one can find such famous niceties as the bribes paid to Nebraska in order to obtain an extra vote. But the Manager’s Amendments (which, contrary to the expectations of the actual Managers, are now part of our new healthcare law) contained lots of other stuff as well.

One of the more interesting parts of the Manager’s Amendments (Section 10320) is entitled, “Expansion Of The Scope Of, And Additional Improvements To, The Independent Medicare Advisory Board.” (The original language in Section 3403 did not actually create something called an IPAB – it created an IMAB. The Manager’s Amendments re-christened it as the IPAB, as explained below.)

Section 10320 (which can be found way down on page 2210 of the new law) grants the IPAB (beginning in 2015) the authority to limit all healthcare expenditures, that is, all healthcare expenditures, and not just expenditures by Medicare or government-run programs.

To emphasize this expanded authority, Section 10320 changes the name of the “Independent Medicare Advisory Board” (created in Section 3403) to the “Independent Payment Advisory Board.” It directs the IPAB, at least every two years, to “submit to Congress and the President recommendations to slow the growth in national health expenditures” for private (non-Federal) healthcare programs. Furthermore, it designates that these “recommendations” may be implemented by the Secretary of HHS or other Federal agencies “administratively” (that is, without the interference of Congress).

The justification for this expansion of the IPAB’s authority is that controlling private healthcare expenditures will directly impact Medicare, since the “target” Medicare growth rate which the IPAB is charged with achieving will be determined by overall healthcare expenditures. Therefore, it is necessary to control those private expenditures. More practically, if Medicare patients (who are subjected to arbitrary cost-cutting measures) see their younger counterparts enjoying less restricted healthcare, we old farts are likely to become inconveniently rowdy.

Once the Managers had devised enough paybacks in the Managers’ Amendments to get the needed 60 votes, and the law finally passed in the Senate, President Obama and his Congressional allies, Mr. Reid and Ms. Pelosi, determined that allowing the new law to go to Joint Conference would be counterproductive (in particular, they would undoubtedly have lost Section 10302 if the House Democrats ever saw it). So the entire Congress was coerced into voting on the bill as passed by the Senate – including all the Managers’ Amendments – under the reasoning that passing the law right then was a manifest emergency.  And Congress, like the rest of us, could find out what was in it after it became law.

We are likely to hear grumbling from even some House Democrats as the real implications of the IPAB become more apparent to the public, since the House Democrats really didn’t get an opportunity to vote on (or read) this provision, except as part of an “all or nothing” healthcare reform bill.

Whatever. While the IPAB may begin by only controlling the cost of Medicare, it already has the authority to control all healthcare spending, including private spending. That’s you, dear reader. No further legislative action is needed.

3) It is an immutable entity.

Section 3403, the section that creates the IPAB and spells out its functions, contains some remarkable language that, DrRich suspects, has never been seen before in American legislative history. To wit:

“It shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment, or conference report that would repeal or otherwise change this subsection.”

So, the astounding truth, dear reader, is that the IPAB and all its designated dictatorial functions are in force for perpetuity. Our Congress has passed legislation that purports to bind all future Congresses from altering it in any way.

We can surmise from this fact that those who wrote this law must consider the IPAB to be very, very important. Of course, we know this because President Obama said so just the other week. However, what many Americans may not yet realize is that the IPAB provision of Obamacare must necessarily be not only the most important feature of our new healthcare system, but also the most important legislative provision ever written. We know this because no other provision has ever received such extraordinary protections from any future alterations whatsoever.

DrRich asks his readers to bask in the utter audacity of our current crop of leaders, leaders who are so sure they know what’s best for us that they were willing to engage in all manner of legislative legerdemain to pass Obamacare, not only against the apparent expressed will of the people, but also (as it turns out) against the objections any future American Congress may have that is sent to Washington by those people.

Not even our Constitution itself – a document that attempted to establish a government for all time – was as audacious as this. For the Constitution, at least, provided a mechanism for its own alteration.

As DrRich racked his brain to think of the last time a law was promulgated with such audacity – not with the audacity of hope, but the audacity of perpetuity – he initially drew a blank. Even monarchs who purported to reign under Divine Right understood that future monarchs, who would also rule under the same God-given right, might thus alter any laws they made.

DrRich believes we need to go all the way back to Moses, coming down from Mt. Sinai and holding aloft his awesome Tablets filled with divine writ, to find a law or set of laws that, from the moment they were written, were decreed to remain in force for ever and ever.

Only God has ever tried this before.

What Does This Tell Us About Progressives?

DrRich has gone on at some length about the Progressive program and the Progressive mindset. The creation of the IPAB, its configuration, and the manner in which it was created, simply reflects that program and that mindset.

Progressives are dedicated to “progressing” to a perfect society, and they know just how to achieve it. Unfortunately, a whole bunch of people – not merely right-wingers and a few Republicans, but most of the masses – just don’t see it their way. Specifically, the Progressive program requires individuals to subsume their own individual interests to the overriding interests of the collective – and human nature just doesn’t function that way.

Thus, the Progressive program inevitably relies on a cadre of elites – those who have dedicated themselves to furthering the Progressive program – to set things up the right way for the rest of us, while manipulating we in the teeming masses to let them. And the rest of us, once the correct programs and systems are in place, will at last understand that it was all for our own good. (Those of us who still don’t get it, to extrapolate from the actions of various collectivist governments of the past century, will either have to be re-educated or eliminated.)

The IPAB would serve as an ideal poster child for the Progressive program. It is an all-powerful commission of experts, appointed by Progressive leaders, which will make decisions based on only the “best” available data (and they are the determinants of what is “best”), that deeply affects the lives of every individual American, whatever the decisions might be that individuals would have made for themselves.

The manner in which the IPAB was created is a model for the Progressives. It involved manipulating the body of government that the Progressives find most problematic – the Congress, the voice of the people – and entirely marginalizing it.

The immutability of the IPAB is also a Progressive dream. Congress was manipulated into creating an all-powerful entity which it (the voice of the people) is enjoined from ever altering, down into perpetuity.  The IPAB is forever within the control of the executive branch, which the Progressives, of course, intend to hang on to at all costs.  (And, if lost, is relatively easy to regain.)

The fact that President Obama has at last brought the IPAB out of the closet, and has deemed it to be ready for public scrutiny, indicates that he is confident that the people will not understand the profound nature of what has been accomplished by the establishment of such an entity, or if they understand, will still be indifferent about it.

DrRich dearly hopes the President is wrong about this.

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A well-known Progressive blogger has taken issue with this post – and with DrRich.  See DrRich’s reply to said well-known blogger, here.

Podcast:

The last two weeks have made clear that the debate over our national debt will play a major role in the next election cycle.

On one side, many Republicans, lead by Representative Ryan, insist that the rate of growth of our national debt – especially the massive projected growth of Medicare and Medicaid – promises to destroy our society within a generation or two; and that the only way to avert that catastrophe is to make substantial structural changes to our entitlement programs. The subtext of their message is: Federal debt is bad, and debt of this magnitude will be fatal.

On the other side, most Democrats, led by President Obama, stress that our entitlement programs are promises that simply can’t be changed in any substantial way, insist that such entitlements are “investments in our future,” and suggest that whatever shortfalls our current system might encounter can be remedied by taxing millionaires and billionaires. The subtext of their message is: Federal debt can be a force for good, and in this case will trigger a much-needed redistribution of wealth (which is a primary goal of Progressives).

The debate over the national debt is as old as the Republic. In the original version of this debate, the part of the modern Republicans (i.e., debt is bad) was played by Jefferson, and the part of modern Democrats (i.e., debt is an investment in the future) by Hamilton.

In the early 1790s, unsupportable debt obligations, accumulated during the Revolutionary War and held by the various states and by private individuals, had entirely frozen up the credit markets, and precluded the brand new United States from having a functioning economy. Hamilton’s idea was for the federal government to buy up all these private and state obligations, and then issue federal bonds to raise enough capital to pay off the debt and to provide stuff, like a United States Navy, that would encourage investment and economic growth. (That Jefferson so viscerally disagreed with this approach, believing that all Americans should grow their own food and make their own clothes, etc., and that a national financial system was not only unnecessary but dangerous, was one of the chief factors that led to the two-party system in the U.S.)

Hamilton ended up doing a deal with Jefferson, and got his way (agreeing to move the nation’s capital southward, where the feds would find it more difficult to undermine some of the south’s more peculiar institutions).  And as a result of Hamilton’s massive and unprecedented bailout of the various states and private investors*, the United States of America became not only one united country, but a stable and growing concern. Indeed, it is arguably by this action that Hamilton definitively earned his place as one of our most important Founding Fathers.

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*Many of the “private investors” who needed to be bailed out turned out to be prominent political figures and supporters of Hamilton, whose names we’ve all heard and revered, and whose shady deals had helped to produce the fiscal crisis in the first place. So there are indeed many parallels to our current situation.
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Clearly, not all national debt is bad. Sometimes, just as President Obama insists, acquiring debt can be an investment in the future.

In fact, Hamilton’s great insight was that national debt can be the engine of economic growth. When the government borrows money to build out the national infrastructure, to provide easier access to markets, to provide easier transportation of goods, to provide easier access to energy, and to provide a stronger military to guarantee that its investments are safe, the government is doing what businesses do when they want to grow. It is borrowing money today that will generate economic growth, and that will, in turn, repay that borrowed money with interest. That’s good debt.

When Hamilton bailed out the various states and the private investors, he was essentially buying up war debt. He was taking upon the federal government the responsibility for paying for the war that had created the United States in the first place. In economic terms the Revolutionary War was like the high-risk start-up that exhausts its funding in creating its product. While the product of their effort (i.e. independence) was intrinsically very valuable, the various states had bankrupted themselves in achieving it. And because the states were bankrupt, commerce was paralyzed, and the new country was about to break up into warring factions. Hamilton saw that by creating a central entity to buy up the debt, and to raise capital against the country’s new independence, he could realize the intrinsic value of the new nation. Hamilton’s debt, because it was truly a catalyst to pent-up economic potential, was good debt. It truly was an investment in the nation’s future, one that paid off for future generations of Americans beyond even his wildest dreams.

On the other hand, when we accumulate national debt not to catalyze a growing economy, but instead to buy consumable products for individuals that the individuals “ought” to be buying for themselves (because they are consuming the products themselves), that’s just debt. It’s like credit card debt – it’s debt that is not paying for itself by stimulating new economic growth for the borrower, but instead it’s debt that will just have to be paid off sooner or later, and that in the meantime requires large payments in the form of interest. Such debt is not an investment in the borrower’s future; it’s not creating future growth that pays for itself. Instead, this kind of debt often compounds until it collapses of its own weight. That’s bad debt.

That’s the kind of debt, for instance, that was created by the mortgage crisis. The federal government has now gone into great hock buying up mortgages taken out by its individual citizens. It is taking steps to help those individuals stay in the houses they cannot afford, and to protect the institutions that made those bad loans. It is not taking active steps to stop the issuing of the sub-prime mortgages that created the crisis in the first place. One of the chief reasons we hear for freeing up the credit markets is so that more sub-prime mortgages can be issued. The notion that all Americans should have access to reasonable shelter is a compelling one. But that’s different from a policy that allows individual Americans to choose their own shelter, from a vast array of choices, and then send the taxpayer the bill.

While going into national debt bailing out the sub-prime mortgages is bad debt, it is nothing compared to our going into national debt buying healthcare for individuals. Our accumulating healthcare debt is really bad debt. According to the GAO, we’re already committed to accumulating $25 trillion to $55 trillion in healthcare debt over the next several decades. Furthermore, when a person “consumes” healthcare, it is well and truly consumed. There’s nothing left (except, for the individual, some chance of prolonged life or less suffering, which is good for the individual but neutral to our national economic health). At least when the government buys up mortgage debt it owns actual real estate, which has some intrinsic worth. Not so when buying up healthcare debt.

So going into massive debt paying for Medicare and Medicaid is not the same as the debt Hamilton took on in the 1790s. We’re merely accumulating debt, and not stimulating future growth. In fact, our irresponsible accumulation of bad debt is stifling economic growth.

So President Obama is correct to the extent that, sometimes, taking on a certain amount of the right kind of debt (the kind that stimulates real economic growth) can be an investment in the future.

But the Republicans are correct that the debt we’re taking on to pay for Medicare and Medicaid is not that kind of “investment,” but is a fiscal black hole – as we will all find out if we don’t get this debate right.

Podcast:

For some time now, numerous loved ones and dear friends have been advising and occasionally urging DrRich that, perhaps, it has become a bit inappropriate, and even unseemly, for him to continue in his longtime position as President and sole member of Future Old Farts of America (FOFA). For a not unsubstantial interval DrRich ignored this advice, feigning incipient deafness. But finally, after some focused study of that which these days returns his gaze in the mirror, and reluctantly concluding that maybe his loved ones have a point (and not wishing to seem Cranky), DrRich has reluctantly decided to resign from (and therefore disband) FOFA.

DrRich is pleased to announce that he has accepted a new position as President and sole member of Glorious Old Farts of America (GOFA).

And it is in this new capacity that DrRich has become alarmed at some of the dire warnings now being sounded by respected leaders of the Democratic Party, to the effect that the Republicans’ proposed federal budget for fiscal year 2012, released last week by Congressman Paul Ryan (who serves, DrRich believes, as Deputy Whippersnapper of the House Republican caucus), proves that Republicans are trying to kill old people.

Article 3, Subsection 4(D) of the GOFA charter clearly states: “All things being equal, we would prefer that Old Farts not be killed.”

Therefore, as President of GOFA, DrRich feels obligated to make some sort of public response to the Ryan budget, and to our ever-vigilant Democrat friends’ assertion that it is aimed at producing lethal harm to old people. DrRich’s important position in GOFA, of course, means that his opinion on this matter ought to carry serious weight in any high level discussions about this proposed budget.

By carefully studying the thoughtful commentary being offered by GOFA’s Democrat friends, DrRich has ascertained that Ryan’s proposed budget apparently will kill old people by “ending Medicare as we know it.”  DrRich does not find this a compelling argument, since Medicare as we know it is already being ended, by Obamacare, which is now the law of the land. Strangely, Democrat leaders are not claiming that Obamacare also kills old people.

So, as is all too often the case, the logic being offered up for public consumption by our political leaders does not hold up to simple analysis, which places DrRich into the position of having himself to provide the logical analysis of the question at hand.

DrRich, to be clear, frames that question thusly: Which plan for Medicare most threatens to kill old people? And he finds abroad in the land three distinct plans for Medicare: Medicare “as we know it,” Medicare under Obamacare, and Medicare under the Ryan budget. Let us analyze dispassionately how each proposes to kill the elderly.

Medicare As We Know It. Medicare as it is being operated today is generally popular with GOFA’s constituency, and most old people would like to continue things just as they are. And if you are one of those elderly Americans who is above, say, 75 years of age, chances are you would do just fine under Medicare as we know it. That is, odds are that you would live out your allotted years, and finally die from your heart disease or cancer only after enjoying every modern contrivance our healthcare system has devised.

However, if you are substantially younger than that, there is a real chance that your demise will be related to more systematic causes. This is because Medicare, if it were to continue just as it is today, would drive the U.S. into insolvency within a couple of decades, leading to cultural collapse, societal upheaval, &c. Our modern healthcare system (any modern healthcare system), being totally dependent upon a robust, complex, reasonably stable and technologically advanced society, would cease to exist. All of today’s life-prolonging therapies would either become very scarce, or would disappear altogether. And unless there arises out of the ashes a new culture which is centered upon ancestor worship, odds are that what little healthcare is available would not be disproportionally offered to the very old.

As DrRich sees it, continuing Medicare as we know it would ultimately result in most of our elderly dying much earlier than they do today.

Medicare Under Obamacare. Obamacare promises to prevent a Medicare-induced societal collapse by centralizing virtually all healthcare decisions, thus controlling expenditures. Government-appointed “experts” will decide which medical services ought to be offered to which patients, and will publish those decisions as “guidelines” (a euphemism for “directives”), which will be followed to the letter by doctors who wish to continue their careers and stay out of jail.

DrRich has argued herein that such a system will do great harm to many individuals in all age groups, and will effectively end the Great American Experiment. (Unlike some, DrRich would consider this latter result to be a bad thing.) But our question at the moment is more focused: Will old people be killed disproportionally under Obamacare?

DrRich thinks the answer is yes. First, “guidelines” have the most merit when they are applied to patients whose only (or main) disease is the one to which the guideline applies. For patients with multiple serious ailments, or who are beginning to suffer from various motor and sensory disabilities related to aging, the response to (or ability to follow) standardized treatment directives may be far less than supposed. The reduced ability of doctors to tailor therapy to individual needs (without incurring the undifferentiated wrath of the Central Authority) may thus prove particularly harmful to the elderly.

Second, our leadership class has already anticipated that merely centralizing all healthcare decisions will be insufficient to avert a fiscal disaster, and that more stringent controls will have to be employed. While they do not like to discuss such contingencies publicly, when they do, they make it clear that the elderly will have a reduced priority for healthcare services. That is, there will be age-based rationing.

Third, it is plain that Obamacare will attempt to make it illegal for elderly Americans (or any Americans) to go outside the system to purchase their own healthcare. Old farts will get what the Central Authority says they will get, and nothing more.

DrRich believes Obamacare would end up being pretty tough on the elderly, and that many old people will die earlier than they would die today.

Medicare Under The Ryan Plan. The Ryan plan offers to allow anyone who is 55 or older to remain on Medicare as we know it today. For those currently younger than 55, when they reach the age of Medicare they will be given a suite of health insurance plans to choose from, and will be given a certain amount of money by the government to use to support their premiums. This system is quite similar to that currently offered to many federal employees.

The amount of premium support will be based on the wealth of the individual. The poor and the sick, Ryan insists, will get full premium support, and indeed will end up with “better” health insurance than they would get today under Medicare. Wealthier individuals will have to pay a much higher proportion of their own insurance premiums.

The Ryan plan in its current form is little more than an outline, and DrRich would need to see details before feeling warm and fuzzy about it. But fundamentally it takes medical decisions away from a Central Authority and places those decisions back into the hands of patients. Further, it not only allows but insists that people (who can afford it) spend at least some of their own money on their own healthcare. Also, patients under the Ryan plan will be legally permitted – even encouraged – to purchase any additional healthcare they want, any time they choose. This plan restores individual autonomy (and its twin, individual responsibility) to American healthcare.

Undoubtedly, the insurance companies under the Ryan plan would be no less evil than they are today, and would do harm to patients every chance they get. But (as DrRich has amply demonstrated) so will the Feds, and it is far easier and far less dangerous for doctors and patients to fight insurance companies than the Central Authority.*

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*DrRich hastens to remind his readers that health insurance companies will want no part of a plan such as Ryan’s. Ryan’s plan would require these companies to continue operating under their current, broken business model. After fighting so hard for Obamacare (which converts insurance companies essentially to public utilities), the insurance industry will not give up its victory without a fight – especially if doctors keep insisting on publishing articles showing that old farts can do just fine after receiving intensive medical care. DrRich thinks the health insurance industry will watch the progress of the Republicans’ budget proposal carefully, and if they perceive it has any chance of success, will do whatever they need to do to stifle it.
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Would elderly people die earlier under the Ryan plan? Those who are deemed wealthy enough to contribute to their own health insurance premiums, and who as a result choose to become under-insured, may certainly die earlier. DrRich supposes this is what the Democrats mean by “killing old people,” since he can find no other rationale to support such a statement.

The Bottom Line. Ultimately, the worst thing that could happen to us old farts would be for the current Medicare system to continue as it is, without any meaningful fiscal reforms. The two other plans for Medicare both promise to control government expenditures on healthcare, and thus promise to avoid the societal collapse (and mass elderly casualties) that likely would be produced by doing nothing.

Obamacare accomplishes this by placing healthcare decisions into the hands of government-chosen “experts” who will determine the management of individuals from a great distance, and by giving the elderly a lower priority in unavoidable rationing schemes.

In contrast, the Ryan plan proposes to avert catastrophe by placing elderly individuals in the position of having to choose (and in many cases partially pay for) their own health insurance product, and then live with those choices.

Speaking on behalf of the entire GOFA organization, DrRich would rather his fellow old farts die as a result of their own personal choices in a plan like Ryan’s, than die as the first victims of the societal upheaval, or through the tyranny, promised by the other two options.

DrRich trusts that his position as President of such an august organization will render his opinion in this matter dispositive.

Podcast:

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This is the third in a series of articles on End-of-Life Care and Covert Rationing.  The first two articles can be found here and here.
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In his previous post, DrRich attempted to satirize the lame attempts of certain payers to “inform” certain of their “covered lives” that, among all the wonderful options available to them under their truly comprehensive health plans, the medical service of physician-assisted suicide would be compassionately offered and cheerfully paid for. DrRich even offered, thoughtfully as usual, some free though invaluable advice to payers on how they ought to go about marketing assisted suicide as a cost-saving strategy, and to do so in a far more sensitive and less ham-fisted way than they have managed so far.

If the mark of good satire is that at least some readers will have difficulty discerning whether the satirist is serious or not, then DrRich is feeling genuinely Jonathan Swiftian today.  For some of his readers (one of whom e-mailed, “I can’t believe what I just read. This is sick.”) have taken his modest proposal for selling assisted suicide at face value.  This is not the first time DrRich has made unfortunate impressions upon readers through his (possibly inept) use of irony. Sadly, it almost certainly will not be the last.

But assisted suicide being such an important and ethically charged topic, DrRich feels obligated to clear things up once and for all. So what follows is DrRich’s honest assessment of the advisability of physician-assisted suicide, in which he will attempt to forgo entirely any satire or irony (though he admits to having great difficulty in controlling his sarcasm).

DrRich believes that physician-assisted suicide is a very, very bad idea.  He has two major reasons for this belief.  On a purely practical realm, embracing and systematizing physician-assisted suicide under any healthcare system that is actively engaged in rationing (whether overtly or covertly) will almost surely lead to some terrible abuses of the practice. In this regard you can either use your imagination, or read the history of Europe in the first half of the 20th century.

His second objection to physician-assisted suicide is based on a consideration of ethics. DrRich admits to being on shaky ground here because: a) he is not formally trained in ethics, and b) it appears for all the world that those who are formally trained in ethics have universally concluded that physician-assisted suicide is perfectly OK in every way.

Debating with modern medical ethicists, at least if you are merely a layperson, is mostly a losing proposition.  This is not because ethicists are intellectually (or even ethically) superior, but rather because they are adept in couching their arguments in arcane twists of logic and webs of jargon that make their arguments difficult if not impossible for the uninitiated to follow.  This technique, of course, places novices like DrRich in the position of having little choice but to accept the ethical bottom line without really understanding how the bottom line was reached. It reduces medical ethicists to a priesthood, and medical ethics to received knowledge.

But DrRich maintains that advancing unintelligible ethical arguments is, well, unethical.

So DrRich will now present his understanding of the chain of logic by which modern ethicists justify physician-assisted suicide – and its close cousin, euthanasia.  (If any of you actual ethicists out there object to this analysis, and can explain where DrRich is wrong in clear language, DrRich will be all ears. Absent the clear language, though, you can pound salt.)

Modern ethicists argue as follows:

Point 1: Our society has already decided that the autonomy of the individual patient is the overriding ethical consideration in making end-of-life decisions. We formalized this determination when we decided – by overwhelming consensus – that an individual has a right to refuse medical treatment even if that treatment is very likely to save their life. Therefore, individual autonomy is the universally agreed-upon controlling ethical precept.

And in adopting this controlling precept, we have already firmly decided that passive euthanasia – allowing nature to take its course by withholding treatment at the request of the patient – is ethical.

Point 2: There is no ethical distinction between passive euthanasia and active euthanasia. That is, whether we let death occur by withholding effective medical care, or by actually doing something to help death along a bit, we’re taking an action that hastens death either way. Ethically, both of these actions are equivalent. So, once we decide that individual autonomy is the overriding concern, we must also allow for active euthanasia when a patient wishes it.

Point 3: Once active euthanasia is deemed ethical, there can be no further ethical objection to the lesser act of physician-assisted suicide.  If it is ethical for a doctor him/herself to bring on the death of a patient who requests it, there can be no objection to doctors preparing the suicide machine and handing the patient the switch.

The striking thing here (to DrRich, at least) is that in establishing the ethical case for physician-assisted suicide, we necessarily also establish – as a veritable pre-condition – the ethical case for physician-provided euthanasia. Whether the patient says, “Help me to take my own life,” or “Take my life for me,” modern medical ethics supports the physician who replies, “Roll up your sleeve.”

For those who don’t see a problem with this, DrRich refers you to the Dutch system, where, in full accordance with modern medical ethics, the rules permit both physician-assisted suicide and active euthanasia for patients who request it. Reports on the results of the Dutch system (reports which both sides have used to bolster their respective opinions on either the glories or the travesties of such a system) do point out one striking finding – hundreds of times each year, acts of *involuntary* euthanasia are occurring. That is, patients are being killed under the Dutch healthcare system at the hands of their doctors, without their explicit permission. All these patients, it is claimed, are being euthanized for entirely humane reasons.

What do our friends the medical ethicists have to say about such involuntary euthanasia? Well, it turns out that it’s OK with many if not most of them. Ethicists don’t like to tell us that their chain of logic doesn’t end with Point 3.  But once we make the principle of individual autonomy the overriding consideration in determining end-of-life ethical issues, the same chain of logic takes us directly to Point 4.

Point 4: Since honoring the ethical precept of individual autonomy makes voluntary euthanasia available for patients with intractable suffering, it would be unethical to withhold the same benefit from suffering patients who are too incapacitated to give their permission. Their incapacity should not restrict them from a good that is available to others, for to do so would be discriminatory and inhumane. To cure this problem, the boon of active euthanasia can and must be performed, even without the patient’s explicit permission, in incapacitated patients whom “reasonable people” would agree are suffering too much. Therefore, involuntary active euthanasia is also ethical.

This conclusion, of course, leaves us in a place where others (i.e., “reasonable people,” like doctors or other agents of the Central Authority) can decide for an individual what constitutes intractable suffering, and further, can decide when such an individual is simply too incompetent to know that euthanasia is the best thing for them. Some of you, of course (hello, ethicists!) think this is just a fine idea. Most apologists for the Dutch system apparently do.

But DrRich maintains that under our system of covert healthcare rationing, where doctors are under extreme pressure to do the bidding of the third party payers (private insurers and the government) who determine their professional viability, and where the payers are under extreme pressure to reduce cost, and have already displayed in numerous ways their willingness to permit suffering and death among their subscribers in order to do so, then opening the door for physician-assisted suicide (let alone physician-administered euthanasia, whether the patient requests it or not), would inevitably lead to some nasty abuses, and would ultimately serve to undermine our civil society. DrRich is too politically correct to use the “other” N-word, but he will take this opportunity to remind his readers that such a thing has already happened, in what recently had been perhaps the world’s most cultured and educated society, within the memory of millions of living people.

DrRich believes that the principle of individual autonomy is vitally important, and indeed it is the foundation of American culture. However, no single ethical principle, no matter how important, can be allowed to overrule all other ethical principles in all other circumstances.  By nature, ethical precepts are often in conflict, creating what is called an ethical dilemma. And (DrRich humbly submits) it is supposed to be the job of ethicists to help us work through those ethical dilemmas, to find the right balance between competing principles, and not simply declare that no dilemma actually exists, because Ethical Precept A is the only one we need to pay attention to.

Individual autonomy is critically important to American culture – and the fact that we must fight to preserve individual autonomy in the face of covert healthcare rationing is indeed the underlying message of this blog – but in no other aspect of our culture do we let it absolutely rule. The autonomy of individuals needs to be checked, and we indeed limit it. This is the fundamental reason that governments are necessary in the first place.

The reason we have laws (supposedly) is to make sure that the behavior of individuals acting in their own interest, especially those who have accrued power (for instance, by accumulating great wealth, by acquiring large weapons, or by becoming heads of state), does not abrogate the natural rights of other individuals. Indeed, most of the political fights we have – between Democrats and Republicans or progressives and conservatives – are to determine where to place those limits, on individuals and on the collective, to best encourage a robust society that honors individual autonomy but that also encourages reasonably equal opportunities for individual fulfillment (i.e., “happiness.”) The main purpose of our public discourse, then, is to find the right balance between the rights and needs of individuals and the rights and needs of society as a whole.

So for ethicists to say, “Individual autonomy is all there is to it, and we have no choice but to follow that principle to wherever it may lead us,” is not only completely irresponsible and dangerous, it also flies in the face of our culture’s history and our everyday experience.  The cost to society not only should but must be taken into account as we consider institutionalizing physician-assisted suicide (let alone voluntary or involuntary euthanasia).  In DrRich’s opinion, ethicists who argue that we need not consider the cost to society in making end-of-life policy have declared themselves unworthy of the title and they ought to be completely ignored.

The cost to our society of institutionalizing and systematizing physician-assisted suicide, especially while we are still covertly rationing healthcare, would be severe and potentially lethal. Within the next decade or two, if things do not change, we likely will be facing cost pressures emanating from our healthcare system that will gravely threaten the survival of our culture. With an existential threat such as this, can we really refrain from slowly transforming the request for assisted suicide from an option to a duty? Can the Central Authority really stay its hand when it has the capability of directing its agents at the bedside to perform euthanasia on unfortunate (and unproductive) citizens who are too “incapacitated” to understand it’s the only thing to do?

DrRich, who opened this post with a promise to avoid irony, apologizes. For when all is said and done, it is deeply ironic that by steadfastly clinging to the ethical precept of individual autonomy at the end of life, within in a paradigm of covert healthcare rationing, we will very likely end up by completely devaluing the inherent worth of individuals.

At least until we solve the fiscal problems within our healthcare system, we simply should not embrace assisted suicide – no matter what we may think of the ethics of the act itself – and we should fight efforts to make it acceptable. The cost to our society would be far too high.

If people want to commit suicide and if medical ethicists insist that assisted suicide is OK, then let the ethicists do the assisting. DrRich has relatively little to say against ethicist-assisted suicide. But, at least as long as covert rationing is the chief operating principle of the American healthcare system, for the love of God keep the doctors out of it.