The political-medical complex

Remember President Eisenhower’s coinage “the military-industrial complex”? Here’s a contemporary analogue, outlined in a passionate argument by reader Robert L. Mabee. Do you agree? Disagree? Have a completely different take on things? Send your feedback to drugtopics@advanstar.com, and we will share your thoughts in an upcoming issue of Drug Topics.

The political-medical complex (PMC) has grown into a giant that is poised to control 30% of the nation’s economy. This monster will destroy our healthcare system and our economy.

The PMC started in 1965 with the legislation that launched Medicare and Medicaid. Some would argue that the PMC began when health insurance was “created” as a response to federal wage controls during WWII. Employers, seeking ways to attract employees without violating wage-control regulations, started offering health insurance to employees.

The use of health insurance as an employee benefit spread through city, county, state, and federal bureaucracies, as well as through the private sector, during the next 20 years. Government workers, military members, and veterans led the way with ever-expanding benefits.

A good idea run amok

Then came the launch in 1965 of Medicare and Medicaid, which established a way to provide both insurance for seniors who had paid into Social Security for many years AND welfare benefits to people who had never paid into Social Security.

Over the next 45 years, politicians became addicted to the ability to appear generous with other people’s money. At the same time, the large healthcare providers, who were increasingly dependent on the revenue from these programs, proved to be reliable sources of campaign financing. The practice of giving away other people’s money through the agency of large healthcare organizations and insurance companies benefited the politicians far more than it did the patients. 

With the passage of the Affordable Care Act (ACA) in 2010, this process exploded.

Small businesses, individual patients, and individual healthcare providers are not a reliable source of campaign funds. However, large regional healthcare monopolies, big hospitals, and healthcare plans that are vertically integrated can provide large contributions to friendly politicians. The politicians and medical administrators got rich by shaving money off the top from patientcare and provider reimbursement. 

Read ’em and weep

In an article titled “New laws and rising costs create a surge of supersizing hospitals”  by Julie Creswell and Reed Abelson, published August 12, 2013, The New York Times identified the potential danger in the growth of “supersized hospitals.”

This followed “Nonprofit hospital makes billions: Should it get a tax break?”, a piece aired by CBS Morning News on May 30, 2013, which highlighted the growth of University of Pittsburgh Medical Center, a tax-exempt hospital system. Both stories pointed out that this process has spread to every state in the nation.

Everybody wants

Everybody wants full access to “affordable” healthcare.

Conservatives are concerned about how we can pay for it and whether the IRS should administer it.

Liberals have resolved these problems: They see no problem with the cost of government healthcare and they think that “you” should pay for it. They have some reservations about big government. However, as long as the unions representing government workers and particularly IRS employees contribute 95% of their political PAC money to liberal or progressive candidates, they are in favor of big government.

In addition to the two groups listed above, which are divided on the issue of how to pay for healthcare, there is a third group awaiting the explosive increase in medical spending.

The elements of the PMC will rake in the cash from a new tidal wave of government-subsidized spending. By creating vertically integrated regional oligopolies, if not outright monopolies, they are prepared to control and eliminate competition across large segments of the country. 

Who’s afraid of the ACA?

All Americans should be concerned about the PMC, which is set to control nearly one-third of the nation’s economy.

In addition to consolidating healthcare facilities, hospitals, and clinics in its territory, it is actively lobbying governments and supporting political candidates who will do its bidding in return for the massive cash contributions politicians need to get elected.

The ACA was bad legislation from the start. It was defined by exclusion, passed by reconciliation, and implemented with exemptions.

Reconciliation. It was passed by reconciliation in order to avoid a debate. No one had to claim responsibility for this behemoth. It was simply deemed passed. All this sleight-of-hand and obfuscation caused a loss of the presumption of regularity. [Editor’s note: “Presumption of regularity is a principle applied in evidentiary evaluation that transactions made in the normal course of business are assumed to have been conducted in the usual manner unless there is evidence to prove otherwise.”]

Exception. Now the ACA is being implemented by exception. Many of the provisions of the act are so onerous (or destructive of “Cadillac Plans” that benefit political cronies) that their “supporters” have gained an exemption from the law.

The SEIU and UAW supported passage of the plan and have now opted out. The House and Senate passed the plan and have now been given an exemption for themselves and their staff. The IRS has been expanding its workforce to administer the plan, but its union wants out of the plan.

What we got

The ACA now requires many individuals and groups to take action, provide coverage, and care for millions of new insured individuals. As with the legal remedy of “specific performance,” this is much easier said than done. [Editor’s note: “Specific performance” is defined as “A contractual remedy in which the court orders a party to actually perform its promise as closely as possible, because monetary damages are somehow inadequate to fix the harm. Most commonly ordered in cases involving real property and rare chattels.”]

Because of the problems with specific performance, courts for many years have shown a preference for liquidated damages. To some extent the current administration is seeking damages in the form of penalties from employers and individuals who choose not “to perform.”

Now, many in Congress who supported the ACA are acknowledging that it is “a train wreck” that will not work. To switch metaphors, like the HK1 - the Hughes-Kaiser 1 Flying Boat, popularly known as the “Spruce Goose,” upon which Howard Hughes lavished millions of dollars in a vain attempt to make it functional  - the ACA looked and sounded like a good idea. However, like the HK1, the ACA will not really be able to fly.

Goodbye to all that

The promises of lower costs, of keeping your insurance and your doctor – these have proven to be illusory.

The confidence of Harry Reid that the public would embrace “an efficient and high-performing government healthcare program” is gone.

No one wants the IRS put in charge of their healthcare and their medical records. 

The presumption of regularity is gone, and there is no certainty of even acceptable competence.

Recent revelations about the IRS raise serious concerns about the agency’s incompetence or even misconduct. There seems to be no one in charge. Government misconduct is met with denial or silence.

A critical component of healthcare is that there must be some one responsible in charge. Apparently, in government that concept is treated like old news - "Who cares? These problems are just too big for anyone to solve" – so why not put the PMC in charge; it will not accept responsibility or even care about the potential problems.

Bad idea

Herein lays the greatest danger. While the government alone cannot make the ACA fly, the political-medical complex has the ability and motivation to make it appear to work for a while. With large oligopolies controlling healthcare across several states, there exists a distinct possibility that the ACA may briefly fly, long enough to take the healthcare system and our economy into a crash landing.

Chief Justice Roberts did not endorse the ACA. In fact, he went to great pains to explain that although the Supreme Court might find the act constitutional, it is not the duty of the Court to decide the wisdom of such policies. While citing well-established and scholarly precedents, he paraphrased Larry the Cable Guy when he implied that “it’s not our job to fix stupid.”

Many in academia and the press have extolled the ACA as the administration’s crowning achievement and the law of the land. It is neither. It is a bad idea. It was poorly conceived. It can be implemented only with the help of overpaid healthcare administrators wielding monopolistic power over large segments of the economy.

Like the Spruce Goose, it will make only a short flight. Unlike the Spruce Goose, it will crash, destroying our healthcare system and our economy.        

Economic toxicity

Healthcare spending in this country has reached levels that are toxic to our economy. Unrestrained, the political-medical complex is gearing up for a short and disastrous flight. A few fat cats will make fortunes. The American people will be left with no functioning healthcare system and the daunting task of trying to clean up a mountain of government debt. 

We do not need the PMC, and we may not be able to survive it.

What will work

Fortunately, there is a very simple solution that will provide equitable coverage for all Americans.

First, increase the deductibles and copays for all government employees, government retirees, and welfare recipients to a rate comparable to those paid by the general workforce, and provide them with mandatory medical savings accounts.

Second, transfer administration of these programs to the private sector. This will replace pandering with underwriting. It will reduce the number of government employees by transferring their jobs and associated “legacy costs” to the private sector.

The combined savings of these two simple steps will be more than enough to pay for doubling the size of Medicaid and covering all the uninsured.

Since the taxpayers have already paid for these programs, no additional taxes will be necessary.

Robert L. Mabee is a pharmacist and attorney practicing in Sioux Falls, S.D. He also holds an MBA. Contact him at rlmabee@midconetwork.com.