Obamacare and Health Care

As Dr Scott Atlas, of Stanford University’s Hoover Institution, in a recent The Wall Street Journal op-ed noted,

  • Private company medical innovation R&D spending in the US the last three years averaged 2.1%, down from an average of 6% over the previous fifteen
  • Malaysia, Thailand, Singapore, South Korea, India, and the EU had greater R&D spending growth in the same period
  • The PRC had a growth rate of 22%

Certainly, those other polities, the EU excepted, were starting from a much smaller base, and so their growth rates will tend to be exaggerated. Certainly, too, our own historically weak economy is exacerbating the situation.

All that notwithstanding, though, this is a trend that is allowed to continue at the peril of our leadership in things medical. Obamacare, with its removal of the insurance aspect of health plans, actively hurts this. What plan can pay for the latest and best drugs or devices, and so drive innovation—or even those drugs or devices that are merely near the cutting edge, or that are middle tier—when those plans aren’t allowed to recoup their costs, except at generalized taxpayer expense?

There’s one aspect, though, that is a direct assault on medical innovation, and that’s Obamacare’s medical-device excise tax. This is a tax the takes 2.3% off the top—that is, before expenses and profit—of all medical device sales. This includes devices from heart pace makers to dialysis units to bandages sold in bulk to hospitals.

2.3% is no big deal?

  • Johnson & Johnson’s medical device and diagnostic sales were down 1.5% in the US, versus up 1.8% internationally, in the first half of 2014
  • General Electric reported that the US healthcare sales shrank by 2% in the second quarter, versus up 2% in Europe
  • Medtronic’s US sales for the 2014 fiscal year were up 1.7%, versus 5.9% internationally
  • Baxter reported US sales of medical products were down 15% for the quarter ended June 2014, versus up 8% globally
  • Fresenius’ US sales of dialysis products were down 1.2% in the first half of 2014, versus up 0.6% internationally

And (via the first link above)

Boston Scientific, Stryker, and Cook Medical have announced job cuts and plans to open new centers for R&D, manufacturing, and clinical trials overseas.

And so on.

Many attempts have been made to repeal this pernicious tax, the latest this past summer. The Democrat-controlled Senate refused to consider it. Again.

In Which another Federal Judge Gets it Right

Recall Halbig v Sebelius, the case wherein plaintiffs objected to subsidies being paid to Obamacare plan purchasers when the those plans were bought through ObamaMart, the Federally run health plan exchange, instead of through State-run health plan exchanges. The text of the Obamacare law allows the latter and bars the former. The DC Circuit agreed with plaintiffs and struck down the subsidies. (The current status of that ruling is that it’s been stayed pending review of Halbig by the DC Circuit sitting en banc.)

US District Judge Ronald White, of the Eastern District of Oklahoma, has ruled on a similar case that came up in his district, a part of the 10th Circuit. I won’t go into the specifics of Pruitt v Burwell, White’s case; the cases are very similar, and the point I want to make here is slightly different, anyway. I will note that plaintiff Pruitt is Oklahoma Attorney General Scott Pruitt, and defendant Burwell is Sylvia Mathews Burwell, HHS Secretary (sitting in for Kathleen Sebelius under an arcane Federal rule that allows such things). I will note further that Treasury Secretary Jacob Lew also was a defendant in this case, and leave things there.

White ruled for the plaintiff, which means he also held that the subsidies paid to Obamacare plan purchasers who bought them through ObamaMart are illegal.

Here’s where things get interesting.

In his conclusion, White wrote [citations omitted, emphasis mine]

Other judges in similar litigation have cast the plaintiffs’ argument in apocalyptic language. The first sentence of Judge Edwards’ dissent in Halbig is as follows: “This case is about Appellants’ not-so-veiled attempt to gut the Patient Protection and Affordable Care Act (‘ACA’).” Concurring in King, Judge Davis states that “[appellants’ approach would effectively destroy the statute….” Further, “[w]hat [appellants] may not do is rely on our help to deny to millions of Americans desperately-needed health insurance….”

And

Of course, a proper legal decision is not a matter of the court “helping” one side or the other. A lawsuit challenging a federal regulation is a commonplace occurrence in this country, not an affront to judicial dignity. A higher-profile case results in greater scrutiny of the decision, which is understandable and appropriate. “[H]igh as those stakes are, the principle of legislative supremacy that guides us is higher still…. This limited role serves democratic interests by ensuring that policy is made by elected, politically accountable representatives, not by appointed life-tenured judges.”

And

This is a case of statutory interpretation. “The text is what it is, no matter which side benefits.” Such a case (even if affirmed on the inevitable appeal) does not “gut” or “destroy” anything. On the contrary, the court is upholding the Act as written. Congress is free to amend the ACA to provide for tax credits in both state and federal exchanges, if that is the legislative will. … “But in the last analysis, these always-fascinating policy discussions are beside the point. The role of this Court is to apply the statute as it is written – even if we think some other approach might ‘accor[d] with good policy.’

Finally, quoting from a ruling by his own 10th Circuit appellate court,

In reviewing statutes, courts do not assume the language is imprecise…. Rather, we assume that in drafting legislation, Congress says what it means.

And that’s the deal. A law says what Congress—the People’s directly elected representatives—says it says. A judge, or any appellate court at any level of our judicial hierarchy, can only apply that law to the case before him. Most especially, he cannot rewrite the law or “creatively interpret” it into something more agreeable to his personal philosophy.

Oh, and just to saucer and blow the thing, White formally ruled pretty clearly:

The court holds that the IRS Rule [allowing those subsidies] is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, pursuant to 5 USC §706(2)(A), in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, pursuant to 5 USC §706(2)(C), or otherwise is an invalid implementation of the ACA….

Judge White’s ruling can be seen here.

 

h/t Jonathan Keim of the National Review Online

Personal Health Information Security

We’ve had HIPAA—the Health Insurance Portability and Accountability Act—for nearly 20 years. This act requires, among other things, all handlers of our personal medical information (primarily, but not exclusively, our doctors, hospitals, and health coverage plan providers) to have our permission to pass that information along, even to other doctors, hospitals, and health coverage plan providers and to take adequate steps to safeguard that information when it’s in their hands or being passed along.

It seems that this administration doesn’t consider itself bound by that same law. The latest example of this evident lawlessness is ObamaMart. The GAO has completed its own assessment of ObamaMart’s security and security practices, and it’s unimpressed.

…weaknesses remained in the security and privacy protections applied to HealthCare.gov and its supporting systems.

This is a year after ObamaMart’s rollout and the discovery of its lack of security. This is four years after HHS, through its CDC, began developing ObamaMart and…testing…it. It boggles my pea brain that security problems of this magnitude could still exist.

In the report, the GAO makes six recommendations to the Department of Health and Human Services to implement security and privacy controls to protect sensitive material. The report also makes 22 recommendations to resolve technical weaknesses in security controls.

Problems with the site ranged from the agency not setting up an alternate processing site for HealthCare.gov systems to allow them to be recovered if the site was hacked or went down to the strength of passwords.

These are basic things that any Computer Science 101 freshman knows. But wait—there’s more.

In addition to these weaknesses, we also identified weaknesses in security controls related to boundary protection, identification and authentication, authorization and configuration management. Collectively, these weaknesses put HealthCare.gov systems and the information they contain at increased and unnecessary risk of unauthorized access, use, disclosure, modification, or loss.

These are more of those things any freshman learns. And these are more of the sorts of things that HIPAA was designed to protect.

The HHS has denied some of these problems exist.

HHS has agreed with three of the six recommendations and has agreed with all 22 technical recommendations.

This isn’t incompetence. These folks are extremely intelligent and talented. Nor is this laziness. These folks are among the hardest working in government. No, this shortfall was deliberate.

Among the issues that concerned the administration’s own technical experts at the time was that security testing could not be completed because the system was undergoing so many last-minute changes.

Because securing citizens’ personal information is only an afterthought to this administration. Because obeying the principles and spirit of HIPAA and related Federal laws, if not their letter, just doesn’t matter to this administration.

Obamacare, Errors, and Attitudes

The AP has an article that goes into the pitfalls and pratfalls that Obamacare faces this fall, 2014 enrollment period. I’m interested in one error in particular and the attitude of one Democrat in particular who voted for Obamacare’s passage.

The error was the overpayment by the Federal government of many of the subsidies it handed out to…defray…the premium costs of having an Obamacare health plan. Overpayments could occur from a plan buyer underreporting income, from ObamaMart not correctly matching income data with subsidy accruals, and so on.

As a result of having discovered those overpayments, the government is trying to recoup them from the recipients. Congressman Bill Pascrell (D, NJ) disagrees with making people pay back part of their premium subsidy.

Why should individuals be punished if they got a bump in salary? To me, this was not the ACA I voted on.

Indeed, why should individuals be punished? Yet they would be, if Pascrell’s attitude prevails, by paying out more subsidy than was due. Oh, wait, the individuals being punished are taxpayers.

Of course Pascrell (and his fellow Democrats) know this; they just don’t care about those individuals. Taxpayers, after all, are just money trees with which to fund Democrats’ voters.

Obamacare and Health Coverage Cost Growth

President Barack Obama promised us, all those years ago, that if only Obamacare were enacted, a family’s health plan premium would drop by $2,500 per year, and no one would lose their employer-provided health plan. Period.

These two graphs from The Wall Street Journal draw a different…picture.ObamacareCost

These graphs cover the period since 1999. As the upper graph shows, the premiums for employer-provided health insurance and, since Obamacare’s passage in 2010, for employer-provided health plans, have risen at a steady pace—unchanged by Obamacare, and specifically, no drop in premium cost. It’s the same with the employee’s share of those premiums; that share’s pace of increase also has been unaffected—that is, no drop in cost—from Obamacare.

Now look at the lower graph. After spiking in Obamacare’s year of enactment in 2010, the per centage of businesses offering health plans to their employees has fallen to the lowest level in the 15 years depicted.

At best, Obamacare isn’t lowering employer-covered workers’ health coverage costs. There has been, though, a sharp decrease in the number of folks even offered employer-provided plans.

(That wages have risen much more slowly than health plan premiums is a different subject.)