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The Judicial Branch took much of its present form from Chief Justice John Marshall, several decades after the Constitutional Convention of 1787. Somehow, the fact of being the last branch to set its boundaries gives the Judicial branch the last word in certain circumstances, including the possibility that its last word may need some reconsideration. Sometimes not, of course, since if the other two branches make a mistake, the Court can overturn them; but the other two branches can regain control by seeking to change the law. That's the sort of balanced power which the founding fathers envisioned. But if the Supreme Court itself makes a mistake, it remains pretty much a mistake in residence, until the Court itself re-examines the matter. It would be indelicate for anyone else to cite a list of examples of this observation, so they are usually taken up, one at a time. The example with the greatest application to Healthcare is the 1982 decision in State of Arizona v. Maricopa County Medical Society.
Maricopa County is where Phoenix is located, and its County Medical Society was one of the pioneers in what was then called Foundations for Medical Care. These were organizations in which local physicians took the lead in organizing and managing health insurance for the local community. There is no doubt the rules and policies of the Foundations were conceived and implemented by physicians, who felt empowered by the defects of health financing which they saw in daily practice. It is also true these physicians were impatient with both the government and the health insurance companies, who seemed to resist helping the sick poor by implying it violated a
per se technicality intended for business corporations. And furthermore, on the topic of business corporations, they are not exactly an enumerated Constitutional power of the federal government. At the same time, "Foundation" physicians could easily see opportunities for reducing waste in the local hospitals which would only be exploited if physicians were in charge because physicians could usually judge the cost/benefit more readily. Having recently returned from World War II, these doctors knew that medical care could be excellent even without such a thing as health insurance, and indeed even when hospitals were only a collection of tents. Perhaps a few of them were overly influenced by the TV serial, "MASH", whose central theme is that if doctors take the lead and do the right thing, much can be forgiven. That's a sort of Hollywood restatement of the latitude of ancient Courts of Equity, intended to cover a situation where obvious harm exists, but no law exactly addresses it.
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The Maricopa Medical Society
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Accordingly, the "better sort" of a doctor in Arizona perceived that the respectable ones would readily consent to care for the poor at lower rates, whereas the shirkers in their midst would ruin things for everybody by refusing to do their fair share of pro bono work. Like labor unions, the doctors resented the free rider phenomenon. The idea of a two-class system of medical care was also abhorrent to them, however; if there wasn't enough money to spread around, a "good" doctor would just agree to lower his fees unilaterally. This moral quarrel often conflicts American business, which characteristically takes the view that it doesn't really matter what costs or taxes or burdens are imposed by the government. What matters is that competitors mostly agree to abide by the same handicaps. When handicaps are roughly equal, the difference between success and failure is -- talent. To a considerable degree, talent rising to the top summarizes the aspirations of the anti-trust statutes, where it is both a simultaneous source of cost escalation and price suppression. Physicians are ultimately expected to find their highest duty is fiducial to the patients' best interest, particularly when the main conflict is only a financial one. In the antitrust arena, particularly the per se violations, the difference between a business corporation and medical society is sufficiently wide to justify considerable professional latitude. As it is not, in the case of insurers, and as it only partly remains, in the case of hospitals. The Maricopa Medical Society responded with perhaps excessive enthusiasm to the challenge of making local sense out of the price-fixing dilemma, but it was never given the opportunity to make its case.
At one time, local healthcare costs were held down by imposing competition on the hospitals, treating insurance administration in particular as clerks to pay the bills, rather than as big business's cup-bearer of fairness in a naughty world. Needless to say, the hospitals and health insurers had long chafed at the ability of physicians to change hospitals, and the patients to change insurers when their Attorney General seemed to suspect a return to Robin Hood notions of a special right to defy the law. What disappeared was an ancient concept of professional latitude. In certain parts of the country, big business was already reconsidering its control of hospitals and insurers as their agents in both assuring low-cost medical care, and suppressing its cost. With the defeat of physicians by the Maricopa decision, plus the approaching withdrawal of big business, the way was opened for hospitals and insurance companies to go to war for monopoly control of their own finances. Thirty years later, hospitals and insurers are now universally merging, and applying monopoly controls to admit favored physicians as their employees. The Affordable Care Act is the mechanism by which the government means to control the victors, thus making government itself into the hidden battlefield. It's a far cry from leaving medical decisions in the hands of physicians and their patients, to chose the treatments, and to agree on the price.
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Sen. John Sherman
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The Attorney General of Arizona, himself a colorful character, soon brought suit for an anti-trust violation, since price-fixing had been declared a per se violation, or confession of the absence of competition. These were additions made to the Sherman Anti Trust Act by earlier Supreme Courts, who found that an Act first written on the back of an envelope was difficult to administer. Further strictures were imposed by the Clayton Anti-Trust Act, but these might be remedied by subsequent Congresses. The important consequence was that the District Court of Arizona found it quite unnecessary to hold a trial or hear the evidence. The Court found against the doctors entirely on the basis of a motion for summary judgment. The matter passed through the Court of Appeals to the Supreme Court, which on the theory that price fixing is price fixing, by a vote of 4 to 3, upheld the Arizona suit. All the way from a writ of summary judgment in a district court, to the United States Supreme Court, without formal examination of the facts.
Perhaps, strictly on lawyerisms, that was safely correct. But in terms of the effect on medical care, it won the war for control of hospitals and the insurance companies. Somehow it was interpreted to mean that a hospital or an insurance company might do a great number of things which were forbidden to organizations run by physicians. The consequence is that Foundations run by physicians were under constant threat of what might happen to them if they did what HMOs were seen to be doing every day. The whole Clinton health fracas revolved around this particular case and its implications. From the physician point of view, if you had medical training, you were disqualified from running an HMO, because a change of leadership shifted the antitrust issue to a different level for two identical organizations. And that was true even if the physician had been trained for the role, while the administrator had not. What was particularly galling was to be tarred with the same brush of antitrust whereas others would describe their identical behavior as self-disciplined in the public interest. Self-imposed financial restraint was taunted and abused by aspirants for the same job with the same temptations, with multi-million dollar incomes but without adherence to the same code of ethics. The joke is that after all the Clinton Healthcare Plan's uproar, the public decided they disliked HMO's intensely, mainly because they couldn't choose their own doctor, and the doctor was being hampered in doing what seemed professionally best for the patient. None of these legal issues had arisen for physician-run HMOs. While of course, that might happen, such disputes would be settled by physicians, using medical arguments, followed by a change in management if the medical community widely disagreed with the decision. The only substantial difference was that doctors were running one, but subservient in the other, and the Courts had found that when doctors were in charge it amounted to price-fixing between competitors.
It now remains for some case to be found and carried to the Supreme Court which would allow an examination of the facts of this matter, perhaps remanding the case back to the District Court to hold a trial. That would seem a bare minimum after thirty years, and it now no longer get precisely to the issue. Somehow, another way must be found to examine which of two rather extreme theories of the Wild Wild West needs to be laughed off. Either we must re-examine whether, always and everywhere, price-fixing is such an undiluted evil that it never even needs a trial. Or whether we should continue to lynch price-fixers, and declare that medical care is too important to be left to people trained in its complexities, even when disciplined by self-interest in the exercise of its power.
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Henry J. Kaiser
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While on the subject of mixing business practices with professional standards, we might as well direct judicial attention to the unfair and probably unconstitutional (equal justice) tax preference for employers who purchase health insurance for their employees. An unnecessary grievance is created for millions of self-employed and unemployed people. Now seventy years old, this grievance has dubious evasions at its historical origin, has resisted multiple efforts for repeal, and benefits only one large group: big business. Henry Kaiser claimed he had difficulty attracting employees to his war industries because of wartime wage and price controls. Persuading the War Production Board to look the other way, he cloaked inducements to employees as something other than employee compensation. The fringe-benefits circumvention has since grown entirely out of control but is fiercely defended by business and union interests. As it grows, however, the inequity for the self-employed and unemployed to remain excluded from it also grows. Instead of addressing this problem directly, it might well be conjectured that recent regulatory attempts at forcing individual policies into group policy eligibility might be a way of exacting a price for cooperation, and for lobbying silence.
Summary of the Maricopa Case
From a legal standpoint, the uncomfortable feature of the case of the Maricopa Medical Society is that it went all the way to the Supreme Court without any trial of the facts or real opportunity for the defendants to present their case. That is, the whole HMO movement was effectively removed from the hands of physicians by a motion for summary judgment, on a Supreme Court decision, 4 to 3.
To hold a trial of the facts by remanding the case for trial, would seem to be the only way to introduce the defense that the doctors would have made. It is improper to suggest to their lawyers what the defense should be, but certain facts are now public knowledge. The Medicaid Act was passed in 1965, requiring state consent for a joint program. By 1972, Arizona was the only remaining state not to have agreed to Medicaid, which by then was widely recognized as the worst medical program in America. In 1982, Arizona adopted a small portion of Medicaid, and it was only in 1988 that it fully adopted the program. In 2001, Arizona's governor was offered 7.9 billion dollars over four years, as matching money for the insurance exchange feature of the Affordable Care Act. The governor recommended to the Legislature that they accept the offer because at least it was "better than Medicaid". There can be little doubt the Legislature of Arizona was adamant on the issue.
What were the doctors expected to do with the sick poor people? No doubt, there was a wide divergence of opinion, but it seemed likely only a handful of saintly volunteers would come forward, and none of them would be able to afford to pay hospitals what it cost. They felt that only by bullying a substantial majority to take the cases would it work, and the only weapon they had was to make it a condition for membership in the medical society.
Under these contentious circumstances, surely the Supreme Court could find some words to create a better outcome. Price fixing is a per se violation of the act, and there is little doubt that all HMOs fix prices. But only a physician-run HMO could be accused of fixing prices for competitive reasons, although it is arguably how strongly they would compete for indigent patients. The Supreme Court may be reluctant to overrule the price-fixing part, and the Arizona politics of this case are surely thorny. But at least the Court could find some clarifying language about physician-run HMOs. The opportunistic response of the non-physician-run HMOs was to exploit the opportunity to eliminate the competition of physician-run groups. In the meantime, HMOs run by non-physicians have become contentious in the extreme, whereas the earlier physician-run ones were tolerated by most physicians, and embraced by quite a few. The matter is one of the important threads in the Obamacare controversy, so the Supreme Court has an opportunity to improve quite a few situations by writing a clarifying paragraph or two.
A bank account earning interest will contain more money than a bank account earning no interest. How much the interest will be, depends on circumstances, but earning interest beats no-interest every time. In the case under discussion, the account is a Health Savings Account, and the alternatives for spending are healthy alternatives. Because the volume of money passing through the system is estimated to be huge ($325,000 per lifetime), the interest to be earned on 316 million Americans is staggeringly huge. In the following discussion, it is assumed the comparatively easy decision has been made to accept the money, but the highly contentious decision remains: how to spend it. The following choices immediately come to mind:
Pay off the health entitlement debts of the past.The U.S. Treasury reports our foreign debt to be $4.5 trillion, of which one trillion is owed to China, and one trillion to Japan. The Treasury does not issue data any more detailed than the national total, for the interesting stated reason that all Treasury bonds are general obligations. Some of this debt originated as Medicare subsidy, but it is not easy to learn more than that. In addition, it would only seem fair to devote some of a windfall for health to paying off its past obligations. For these two reasons, it would be possible to run an appreciable surplus without seeming to affect current balances.
Universal Entitlement. Obamacare was enacted on the proposition of universal entitlement to health insurance. Implicit in that claim was the idea that many Americans did not have and could not afford health insurance, and that insurance coverage represented some minimum level of healthcare entitlement, even if it had to be subsidized. Persons who did not have health insurance were regarded as jeopardized, even if they were in perfect health, and even if they did not regard health insurance as worth its cost. This uninsured risk within the population was covered by providers absorbing the cost, along with traditional health charities, and other levels of government. Somehow the idea was included that it was superior to have the federal government cover these costs, or perhaps it was superior to cover these costs with a graduated income tax. Although in the early stages there was some talk of reducing healthcare costs by federalizing them, it was eventually acknowledged, extra insurance coverage implied higher costs for everyone, except those who received government subsidies, derived from graduated income taxes, and identified as entitled by government regulation. It is a great curiosity of this campaign that employers were never pointed to as having a burden lifted when the existing system was still described as employer-based. As proposing to devote a huge windfall to the purpose tends to bring out, the cost of healthcare was being shifted from employer tax-deductions to individual taxation of the upper-bracket sort.
After three years of Obamacare, the two clear beneficiaries are health insurance companies and employers who donate the insurance to their employees. It is not clear either of these two groups was particularly suffering, so it is not obvious why a windfall should benefit them.
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Obamcare
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The case of King v. Burwell was argued before the United States Supreme Court March 4, 2015, and the decision was reported June 26, 2015. In a clear victory for President Obama, the Court held that it was not the intent of Congress that a phrase in the statute, even though repeated six times, should be the final meaning of the law. Someday a participant in the writing of the law will come forward and tell the story of how the words got into the statute in the first place, but at the moment all we know is the words are there, and the law is unworkable if they remain. Just about everyone would agree these two statements are true. Furthermore, it is clear only Congress could change them, and Congress has changed parties since they were originally written; so they probably cannot be changed at all before new elections are held, unless the President agrees with Congress to do it. There is a third possibility: Congress and the President could make private agreements about what they would compromise on and present a friendly adjustment. Whether that was tried and failed, or whether it was not tried at all, is unclear. So, the Supreme Court did what it never wants to do, it changed the law.
Since millions of citizens had watched (on C-Span) the legislation, dropped on the desks of astounded Congressmen, with no opportunity permitted to debate or amend it. Indeed, even to read most of it before it was voted on, the public is inclined to take the Court's word for it, that...
"The Affordable Care Act contains more than a few examples of inartful drafting".
Whether the clause in question was accidental or not, is a matter of opinion. The clause in dispute reads, and is repeated six times, as
Tax credits "shall be allowed" for any "applicable taxpayer", but only if the taxpayer has been enrolled in an insurance plan through"an Exchange established by the State under [42 U/S.C., pp18031]" pp36B(b)-(c)
Some idea of the Court's historic position is given in a few quotes:
"In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined--"to say what the law is."--Marbury v. Madison, 1 Cranch 137, 177 (1803)
"Oftentimes the meaning--or ambiguity--of certain words or phrases may only become evident when placed in context."--Brown and Williamson, 529 U.S. at 132.
"Reliance on context and structure in statutory interpretation is a 'subtle business, calling for great wariness lest what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.'-- Palmer v. Massachusetts U.S. 79,83 (1939)
In the end, three conservative Justices, Scalia, Thomas, and Alito found there was no reason to change the language of the statute as ambiguous, and four liberal Justices, Ginsburg, Breyer, Sotomayer, and Kagan found there was. The two swing Justices, Kennedy and Roberts, joined the liberals in finding the statute ambiguous, for a final vote of 6-3.
Judging from the global circumstances, it is probably fair to conclude that ambiguity was probably not the only issue involved, and it was probably inartful for the Court to establish a precedent that such a restructured role for the Court was either necessary or desirable. The history of Canada's use of this device to coerce provinces into joining the national health system was well known in Canada at the time. And the McCarran Ferguson Act has restricted insurance administration to a State level for seventy years. Both of these examples would seem to have provided a sounder basis for the Court to interfere in what really seems like pretty clear language in the law.
Campaigning for President, Hillary Clinton brought up a proposal in 2016 to permit the uninsured to buy into Medicare coverage between the ages of 55 and 65. Eight years earlier, the Congressional Budget Office estimated such coverage would cost about $7600 a year per added client. The appeal is particularly strong for divorced women because employer-based coverage ends when employment does. Nevertheless, the CBO estimate would make this segment the most expensive component of Medicare, so gradualism may have to wait for some enhancements.
It happens I was working on similar calculations for this book; the CBO estimate of what medical care once cost this 55-65 age group before 2008, seemed reasonable. The shape of the curve has probably not changed much in eight years. Nevertheless, there are now several reasons present estimates may be underestimated. The Consumer Price Index for medical care has jumped around but increased 3.4% a year, or over 30% more than the level eight years ago. Health insurance costs have probably exceeded overall costs for fifty years, so forecasting health insurance premiums has always included some guesswork. The cost curve for 55-65 is at the high end of a rising rate. Including more sick people also means fewer well ones, so there is leverage. The data is based on aggregating claims data from still earlier years, so insurance costs tend to struggle to catch up with community costs. The cost of care inflates, but this portion of the population is at the high end of commercial coverage, so it probably escalates disproportionately.
In addition to statistical underestimation, there are probably invisible sources of confoundment. With Medicare just ahead, these people hold back on elective expenses, with lack of insurance exaggerating the tendency. If the experience with Medicare in 1965 or the ACA more recently, is used as a guide, we can expect a backlog of untreated gallstones, varicose veins, perforated eardrums and the like, to make an appearance once they regain insurance. That's quite different from pre-existing diabetes, heart failure or strokes, and will take longer to appear because it is more deferrable. It would not be surprising to find that post-insured costs are 50% higher than the 2008 CBO estimate, and will remain abnormally high for a decade.
Finally, the method of data collection almost guarantees a low result. The published papers relate insurance companies were asked to report their claims, but no mention is made of insurance overhead, while the deductible and copayment ingredients are merely estimated. What seems to be implied is the data does not include insurance costs, probably for competitive reasons. And all of this is before we debate how much to subsidize, or how much it will encourage unemployment if we are too generous.
I surely do not know what is fair and proper to subsidize and can see no good way to estimate it. Medicare is already financed by about 50% government subsidy from the general fund, as well as another 25% from payroll deductions, which have already been collected at a probably lower level. With inflation at 3%, a 3% payroll deduction is less than it seems. No mention was made of the revenue sources for this proposal, but hidden extra subsidies of $5000-6000, per person per year, would seem to be buried in it for someone to pay. While no one disputes the genuine hardship this group experiences, this proposal would only be a bumpy introduction to the practical difficulties of the "single payer" idea.
There is little doubt working women are handicapped in many ways by higher health care costs attributable to pregnancy, and this handicap results in a number of undesirable social consequences. My suggestion has been to shift the cost of obstetrics from the mother's insurance to the baby's, which usually amounts to saying they should be shared by the father's employer through the father. While this shift would have the undesirable feature of shifting costs from the working age group to a childhood group which requires some sort of compensating cost-shifting, it mainly lengthens the period for compound interest to generate investment income, thus lowering the effective cost. A glance at the following chart clearly shows the bump in female costs between ages 15-45, transfer of which would go a long way to bringing the costs of males and females to much the same level. Since this cost would ultimately be born by a transfer of surplus revenue from the Medicare group, it would heighten the attractiveness of the First year of Life Insurance, which will be our next topic.
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Spending for healthcare crowds toward the end of life, while money to pay for it is generated before age 65. Potentially, the two age groups could unify their finances and get dual savings. Only the transfers need to be unified, using Health Savings Accounts as the transfer vehicle, allowing compound interest beyond the boundaries of individual insurance programs. The incentive is created to keep what you don't use, for your retirement.
That's not all. There is no way for a newborn to pre-pay his expenses. Someone must give children some money. Indeed, adding children to a new HSA system might add twenty-some years to the compound interest in Health Savings Accounts, if they only had some money. They don't.
So two systems need a change, roughly the opposite of each other. One faces toward the beginning of life and the other faces toward the end. (Even this conception finds the working class in the middle, largely funded by employers who change often and have other concerns foremost.) Working people aged 25-65 support this whole system, but have so many constraints on their financing it is not possible even to discuss them until the politics subside a little. Connect, yes; unify, only when you can.
Essentially, it is proposed: The HSA expanding into a unifying financial bridge between programs, one account per individual lifetime, serving many largely unchanged programs. Phased-in finance, minimizing changes in the delivery system. It's surprising at how simple some dilemmas become, once the individual patient decides what others now decide for him.
Prepare yourself for one big rearrangement of thinking, however. Extended retirement is a direct consequence of superior healthcare. Retirement could become five times as expensive as healthcare itself, and still be described as a predictable outcome of good healthcare. Where are new revenues -- to keep both of them -- to come from? Read on.
Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.