Medicare-Medicaid: A Chicken in Every Pot

“. . . I think we’ve got you something that we won’t only run on in ’66, but we’ll run on from hereafter!” - Wilbur Mills to President Johnson on Medicare in 1965.

As Congressman Wilbur Mills commented to President Lyndon Johnson, in a taped private conversation in 1965, he was encapsulating the primary benefit that the democrats of the day felt they would gain from the Medicaid and Medicare extension to the Social Security Act of 1935, and the primary reason that President Johnson and his team pushed so hard for the reform to include new entitlement programs for the elderly, the disaffected, and disillusioned.

The Historical Perspective

Wilbur Daigh Mills, democratic member of the U.S. House of Representatives, and the chairman of the powerful Ways and Means Committee, was considered, by many, to be the only person in Congress who truly understood the actuarial basis of Social Security, and was recognized as the Congress’s primary tax expert.  At the start of the war on poverty in 1964, Mills had serious concerns as to the affordability of the existing Social Security Act of 1935 for the nation, let alone any extension of the current benefits to include what was then viewed as a health care “safety-net” for the underserved and the elderly.

Mills did not believe that the nation’s tax system could fund the liability of Medicare.  In his paper, “The Origins of Medicare,” published in 1999, Robert B. Helms writes,

Even in the face of strong political pressure from other Democrats, Mills had been so consistent in his opposition to adding a medical benefit to Social Security that many suspected him of being sympathetic to the AMA’s socialized medicine arguments. He used his detailed knowledge of Social Security to question both the Kennedy and Johnson administrations’ cost estimates and to point out that estimating future medical costs was a much more difficult task than estimating the future costs of a cash benefit.

In a 1964 speech, Mills said: “In practical terms, this meant that if the hospital insurance system which would be created by the bill was to remain sound, the taxable wage base would have to be increased by $150 each year. Clearly, this would be a case of the tail wagging the dog.” (The taxable wage base increased an average of $46 per year from 1959 to 1964)

In that same speech, he pointed out that hospital costs were increasing at a rate of 6.7 percent, while average earnings were increasing at only 4 percent (1955 – 1963), and that he saw no reason to assume that the situation would change. His support for the final version of Medicare in 1965 was apparently due to the effects of Democratic gains in the House in the elections of 1964, President Johnson’s personal appeals for support, and the many technical changes that he was personally able to insert into the bill during its various stages of development.

We now know that Chairman Mills’ skepticism was justified: In 1964, the administration projected that Medicare, in 1990, would cost about $12 billion in 26 years (which included an allowance for inflation); the actual cost was $110 billion. We may not know until the year 2025 if today’s actuaries are any more accurate than those in 1964 in making twenty-six-year projections, but at least the current crew is leaving no stone unturned to tell everyone who will listen that the Medicare Part A trust fund does not meet their standards for short-term or long-term actuarial soundness.

Despite Mills’ dire warnings, and his correct calculation that the wage base would have to increase by 300% each year over the existing rate to afford this new entitlement, Johnson felt he was swept in with a clear mandate from the people due to his landslide victory in the 1964 election. So, to help drive increases in the Democratic Party majority in congress, he made the push for Medicare one of his primary platform goals. Johnson was so focused on getting Medicare pushed through congress, he was willing to leverage anyone, and everyone, with every tool he had at his disposal to get this divisive legislation approved. The following transcript, of a taped meeting with his Vice President, Hubert Humphrey, in the first days after the election, is quite telling.

Johnson: “They are bogged down. The House had nothing this week-all god-damn week. You and Moyers and Larry O’Brien have got to get something for them. And the Senate had nothing . . .  So we just wasted three weeks . . .  Now we are here in the first week in March, and we have just got to get these things passed . . .  The ones that I’m really interested in . . .  one of them is education, one of them is Medicare, and one of them is Appalachia . . .  I think the medical care will go through like a dose of salt through a widow-woman . . .  You’ve got to look each week and say, what is the Senate doing in Committee this week and when will they be through, what is the House doing . . .  You’ve got to be running into these guys in the halls, and going over and having a drink with them in the evenings . . .  I want that program carried. I’ll put every Cabinet officer behind you, I’ll put every banker behind you, I’ll put every organization that I can deliver behind you . . .  I’ll put the labor unions behind you.

Johnson’s election didn’t just change the Democratic Congress’s advantage over Republicans; it also changed Mills’ political view. Seeing the writing on the wall, Mills made another speech where he announced, “I can support a payroll tax for financing health benefits just as I have supported a payroll tax for cash benefits (meaning social security).”
Thus, began what has been termed by many as the greatest Ponzi scheme to ever be foisted on the American people. With Mills’ support, the measure passed. There were still several hurdles to overcome, but in the end, Johnson got the legislation he wanted, regardless of the consequences. On March 23, 1965, Johnson’s Oval Office taping system records the call he has been waiting for from Wilbur Cohen (architect of much of Social Security and Medicare), Wilbur Mills (Chairman of the Ways and Means Committee), Carl Albert (Democratic Majority Leader) and John McCormack (Speaker of the House) telling him the bill has just passed out of the Ways and Means Committee. It is the first time Johnson finds out what Cohen has just actually agreed to in Johnson’s name: (Listen to the Johnson Tapes on-Line)

Mills: We wound up, and I got instructions, we’ll introduce the bill at noon tomorrow, and will report it at 12:15 . . .  I think, we’ve got you something that we won’t only run on in ‘66 but we’ll run on from here after.
Johnson: Wonderful. Thank you, Wilbur.
Mills: Now here is Wilbur Cohen.
Johnson: When you going to take it up?
Mills: We could have it on late next week, if not, early the following week.
Johnson: For God sakes, let’s get it before Easter.
Mills: Oh, there’s no doubt about that.
Johnson: . . . I sure do congratulate you on getting this one out . . .  I congratulate you and thank you.
Cohen: I think it’s a great bill Mr. President.
Johnson: Is that right?
Cohen: Yes sir. I think you got not only everything that you wanted, but we got a lot more . . .  It’s a real comprehensive bill.
Johnson: How much does it cost our budget over what we estimated?
Cohen: Well, it would be, I would say, around $450 million more than what you estimated for the net cost of this supplementary program.
Johnson: What do they do under that? How is that handled? Explain that to me again, over and above the King-Anderson, this supplementary that you stole from Byrnes.
Cohen: Well, generally speaking, it’s physician’s services.
Johnson: Physicians. All right, now my doctor that I go out and he pumps my stomach out to see if I’ve got any ulcers, is that physicians?
Cohen: That’s right.
Johnson: Any medical services that are M.D. services?
Cohen: Any M.D. services.
Johnson: Does he charge what he wants to?
Cohen: No, he can’t quite charge what he wants to because this has been put in a separate fund and what the Secretary of HEW would have to do is make some kind of agreement with somebody like Blue Shield, let’s say, and it would be their responsibility . . .  that they would regulate the fees paid to the doctor. What he tried to do was make sure the government wasn’t regulating the fees directly . . .  the bill provides that the doctor can only charge the reasonable charges, but this intermediary, the Blue Shield, would have to do all the policing so that the government wouldn’t have its long hand . . .
Johnson: That’s good. Now what does it do for you the patient, on doctors. It says you can have doctor’s bills paid up to what extent or how much? Is there any limit?
Cohen: The individual patient has to pay the first $50 deductible, then he’s got to pay 20 percent . . .  of everything after that . . .
Johnson: That keeps your hypochondriacs out?
Cohen: That will keep the hypochondriacs out. At the same time, for most of the people it will provide the overwhelming portion of their physician’s costs.
Johnson: Yes sir, and that’s something nearly everyone could endure. They could borrow that much, or their folks could get them that much to pay their part . . .  I think that’s wonderful. Now remember this, nine out of ten things I get in trouble on is because they lay around. Tell the Speaker, and Wilbur, to please, get a rule just the moment they can . . .  That damn near killed my education bill, letting it lay around. It stinks. It’s just like a dead cat on the door. When a Committee reports it, you better either bury that cat or get it some life.

In the end, Medicare and Medicaid became the law of the land. And, as can now know, Mills was correct to have his doubts about the actuarial basis of Medicare, Medicaid, and Social Security when the bill was passed in 1965. But, like the Social Security Act of 1935, the 1965 Act was not an ending, but a beginning of a perpetual series of expansions of the benefits provided by these programs.

It is now painfully clear that Wilbur Mills was correct in his initial assumptions about both the solvency of the original Social Security Act of 1935 and its unprecedented expansion in the 1965 amendment that pushed through for significantly political reasons by President Johnson.  Mills estimates of what would be required in real taxable earnings gains in order to fund this “safety net” were eerily prescient. By 1974, the failure of the GDP to support the nation’s expenses for these entitlements, and the accumulating trade deficit, had placed the country in a significant cash shortage with few means of escape.

President Richard Nixon took us off the gold-standard, and by the late 1980s the significant, arbitrary increases in the currency had elevated almost everyone’s wage base to where they began to feel prosperous once again.  But, the costs were just being temporarily outpaced by the injection of this new currency, the day of reckoning was still coming and finally hit with a vengeance in 2009. It is now starting to become clear that the feeling of prosperity we all experienced was not the reality of our economy just the benefit of more baseless cash.

The Modern Perspective

Enter a few days ago our current President, Barack Obama. In the past few days, it is clear to me that the president still believes what Wilbur Mills told President Johnson in 1965.  He clearly believes that he should be able to run on the entitlements of Medicare and Medicaid to secure the votes for this free stuff, just like President Johnson.  The concept of “a chicken in every pot,” i.e. votes for free stuff, was not as much the hallmark of the Democratic Party prior to President Johnson.

Although President Franklin D. Roosevelt leveraged these ideals to help the country rise out of the Great Depression and prepare for WWII, and Herbert Hoover is often credited with the phrase; “A Chicken in Every Pot” is a quotation that is perhaps one of the most mis-attributed in American political history. Variously assigned to each of four presidents serving in the years between 1920 and 1936, it is most often associated with Herbert Hoover. In fact, the phrase has its origins in seventeenth century France; Henry IV reputedly wished that each of his peasants would enjoy “a chicken in his pot every Sunday.” Although Hoover never uttered the phrase, the Republican Party did use it in a 1928 campaign advertisement touting a period of “Republican prosperity” that had provided a “chicken in every pot—and a car in every backyard, to boot.” You see, we need to understand that political duplicity is not a democratic or republican affectation; it is a politician’s con.

But here we are once again, and even though President Obama is not uttering this phrase, it is clear that this is what he sees as his ticket to re-election.  Perhaps I am too cynical, but reading transcripts of committee hearings on what became the Affordable Care Act, listening to our congressional leadership saying things about the legislation like, “this is the path to a federal single payer system,” or “we need to pass it so we can see what’s in it,” and other equally ludicrous statements, and listening to the political agendas so blatantly expressed in the Johnson, or Nixon, tapes can do that to a person!

Based on my own experience, and backed up by the historical record all the way back to Mr. Mills, it is clear that the current system simply cannot work.  Frankly, and I don’t think I am telling anything out of school, none of our elected officials think it can work either.  They are currently almost evenly split between the “we know it can’t work and we need to fix it crowd,” and the “We know it can’t work but we can run on it again, and again, and again… crowd.” Regardless, to everyone it should now be clear that it can’t work.

So, it is astounding to me that the President of the United States, Barack Obama, now stands before the American people and making a reverse Robin Hood argument declares that the other party, Republicans, in this case, those evil people, want to take everything you have away and give it to the rich!  And what is more astounding is he says this is not class warfare!  People seriously can’t believe that such a bald faced lie can be true, can they? I have met many of our congressional leaders; republican and democrat.  I have not met one that was not concerned about all Americans.

To make a statement that one political party is dedicated to the destruction of poor and helpless people is beyond unconscionable it is simply irresponsible.  And it would be equally irresponsible for similar invectives to come from the other side as well.  We are in a significant national, social and economic crisis.  If our leaders do not get serious about solving the problems then we need to get new leadership.  If all we have left when someone talks of hard choices is to damn them as a pawn for the rich, then I do not see how we will survive.

As we move beyond this primary election cycle toward the presidential election, we need to elect a leader that will realize that he can’t promise America that there will not be a chicken in every pot.  You see Mr. Obama; the chickens have finally come home to roost!

(for those of you who may be interested in more on this issue, it is discussed in more detail in my upcoming book, “The History and Evolution of Healthcare in America,” go to my website at www.loker.com and sign up to receive notice of its release.)

The wheels of justice not only turn slowly they often confuse the common man

If you want to listen to the lengths modern law and its practitioners, lawyers, go to spin reality and obscure common sense to convince courts that which otherwise normal people would deem ludicrous, just go to and listen to yesterday’s oral arguments on the Tax Anti-Injunction Act part of the Affordable Care Act (Obamacare) Supreme Court review of its constitutionality.

It is interesting to note that the Solicitor General, representing the government, seems to be schizophrenic as he attempts to argue for the Obama administration’s position that the court cant here the case because of the act—as the President does not want the decision to come till after the election—and on the other hand in representing the position of the government (the people in general) he tells the court that he thinks the court should hear the case.

Another point to note as it has very particular relevance is that in his argument yesterday, he describes the assessed fee for not purchasing insurance, under the mandate clause of the act, is a tax.  Tomorrow he will be arguing that it is in fact a tax.  This schizophrenic position has been confounding the government’s position since they debated the law and passed it in the first place.  In arguing why the case can be heard, Solicitor General, Donald Verrilli, argues that the penalty is not a tax for the purpose of the Tax Anti-Injunction Act.  Tomorrow he will argue that the “penalty” is in fact a tax to justify the federal government’s position that it can levee it and therefore it is not violating state’s rights.

It is very important to note that like congress and the president, the power of the judicial branch, including the Supreme Court is granted, loaned if you will, from We, the people of the United States.  As such, if the decisions rendered make no sense to We, the people, then it is either because they are wrong or not crafted to reflect well on our intentions as a people.

We need to begin to exercise our responsibility as the grantors of these very important and solemn powers and demand that all decisions and arguments be rendered with a standard of language that we can all understand and does not obscure whether or not our constitutional rights are being upheld.

I encourage everyone to take the time to listen to the arguments in the first person, not as reported by others.  Yes they will take a combined six to nine hours but to allow others to police our rights is to grant them the power to help obscure the elimination, or neutering, of our rights.

To quote and old friends mother, “Pay attention, you can learn something from a fool!”  I worry that in the end the fool will be us!

Stupidity or Duplicity: WE pay anyway!

Click to link to original ABC News Article

Do you think they just don’t get it? In a supposed attempt to find some “middle-ground” in order to make the “middle-men” whole as to the cost of birth control, the administration is acting like we are in the “middle-ages”—all poor and uneducated. First, the administration’s talking heads took the position that the cost of free birth control would be a savings for employers, now forced to pay for it because, pregnancies and abortions are much more expensive. The employers now have to pay for a product, to prevent a cost that their health plan is paying. The premise is that paying the lower cost birth control will lower the plan’s coverage cost and the health plan will then, in turn, lower the premium cost to the employers—not hardly!

Also, there is a big assumption that the rate of single mother and unwanted pregnancies will decrease because of improved access to birth control. I am not sure I agree with this either. Free or subsidized birth control is widely available, it just is not conveniently available everywhere. I am not attacking a woman’s right to have access to birth control. We have a very strong habit, of late, of confusing the discussion of access with no-cost access. It is the no-cost access I have the most problem with. The cost is not free, we all end up paying for it anyway, and the system that is based on mandates, despite the method of the mandate naturally inject inefficiencies and vagaries of control, so that a significantly reduced percentage of dollars spent actually go to pay for the good or service. Look at the healthcare debate numbers from the president’s round table at Blair House with republicans in 2010. By numerous authorities, from both sides of the aisle, only about 35 – 45 cents on the dollar ever make it to real care. So why do we do it this way?

The government now classifies birth control as preventative care, because the ACA or Obamacare requires health plans to cover prevention at no cost. Exercise prevents heart disease, so this should be classified as prevention, as well. Health plans really should cover gym membership at no cost. And, you know having fresh fruit prevents scurvy, health plans need to cover free fruit. Listening to peaceful music lowers stress levels, and therefor prevents high blood pressure and the risk of stroke so good music systems are preventative and should also be covered for free. And of course a warm, comfortable home is clearly preventative to lots and lots of health related problems so I guess “health plans” should provide this as well. This is the same issue I have with the insurance purchase mandate and the rationalization of its constitutionality by the extension of federal power justified by pointing to prior extensions of federal power under the commerce clause.

It is not the idea of helping people; women in this case, get access to care that is the issue. It is the duplicitousness of the need for access by extension to now mean everybody else needs to pay for it, and the effort to obscure the nature of the extension logic that I am finding most troubling. The argument that is being used, now over and over again, goes like this . . . Someone, or some group, needs access to something—or for political gain, we can convince them that they are being discriminated against because they do not have this access and we want to give them access so they will see us as looking out for them, what we are providing is now considered preventative, we passed the law that says if its preventative it must be provided at no cost, ipso facto, you have to pay for this group to get it because it’s the law.

The straw that is breaking the back of many on this issue is now that this administration is saying well, since you are objecting to assuming this cost, we, the government, will find some way to make you whole here, you won’t have to shoulder the cost. Everything the government does cost the people of the United States money. No matter how they try to spin this, it costs us money. We are the government and we are the only source of money. So nothing they can do at the federal level is going to make anyone whole without laying it on the backs of all of us in the long run. Simply saying OK we will let you get a credit to reduce something you pay us over here, just reduces the income the federal government needs to pay what is already spent ten years ago. Do they really think we believe they will not increase fees somewhere else to get the money? If they lay it on the back of some other industry, they are going to increase prices that we all pay so once again it is out of our pockets. There is no escape from zero-sum economics. Even if they just print new money out of thin air, as they have been doing for forty years now, it reduces the buying power of our currency and prices go up, again we pay.

Finally, it is time we realize that we only have finite resources, and everything we do costs us in one way or another. Paying for birth control for everyone is just reducing the money we need to pay for everything else. People are now living much longer and as we crossed from average life expectancy at the mid-seventies to where we are not in the eighties, the average cost of care has rapidly increased. Now we demand that heal plans no longer just cover basic life-saving procedures, we expect they also cover quality of life items as well. The technologies we have developed to make this real gain in median life span is based on very expensive technologies adding to the costs, and the magic bio-chemical bullets we have developed to fight the war with the other species, like bacteria, and viruses, etc. are increasingly costing more and causing more side effects as these species have evolved to be resistant. All of this, with some other reasons as well, is causing the steadily increasing cost for our healthcare. Sometime soon we need to begin to discriminate at what point people are individually responsible for at least some of these costs.

So I wonder are the people coming up with these ideas really this stupid. If they are not stupid, then do they think we are this stupid? Or are they simply Machiavellian? My initial reaction is they are not smart enough to be this duplicitous, but perhaps I am mistaken!

The State of Whose Union?

The President Reads the State of the Union Address

I have tried to resist responding to the State of the Union Address last night.  I really have tried!  But, you guessed it, I can’t.  I was so astounded by much of the rhetoric that passed through the President’s lips as unassailable facts I still can’t believe much of it.

As I am want to do, let’s review some real facts for a few minutes….

The President said the State of the Union was getting stronger

Well this really depends on what you choose as your measures and of course how hard you decide to spin them.  Here are some key statistics that were not highlighted in the speech.

Some of the pundits, immediately after the president’s speech, were very quick to remind everyone that President Obama inherited this bad situation.  That’s true, and so have every president since President Lyndon Johnson. in 1964.  The fact that they all have inherited it is not the relevant fact.  It is the fact that every one of them neither fixed it, nor improved it one iota.  In fact here is another little fact.  Everyone of them in some way or another actually contributed to making the situation worse-Republican and Democrat.  All they did was find ways to patch it, give more to those they thought deserved it (meaning would give votes to get it),  printed more money to pay for it, and hoped it didn’t all come apart before they got their golden parachute.  Well it has come apart now, hasn’t it.

“Fairness for all, Responsibility from all”
- President Obama 1/24/2012

Part of the problem I have with last night’s speech is the President stating he is going to make sure there is “fairness” for all.  It is not his wanting for people to have a fair shot that bothers me.  Everyone I know, if asked, would say they want fairness.  But fairness like many other things in life is a frangible and perspective driven concept.  It means different things to different people, and sometimes different things to the same people on different days depending on where they are and whether they are the beneficiary of the supposed fair treatment or not.

I just do not think anyone can give another fairness.  Often, the act of a group, or government, attempting to make something fair takes the form of redistribution or reallocation of something from one group or individual to another.  Look at the controversy surrounding Affirmative Action in Education and the implementation of quotas to make it fair. I am not challenging whether this was a good idea or not,  I am pointing out that in creating a quota to make it “fair” for one person or group, you simply are redirecting the opportunity from another person to this person.  If the person your took it from had nothing to do with the disparity in the first place then they now are being placed in disparity. Even in California, one of the strongholds of humanistic belief and liberal thought, some of our most liberal politicians have recently stated that we all need to get used to disparity.  That after 40 years of public life she now understands disparity must exist ; no mater the cost it cant be eliminated. It seldom works to try to make something fair by treating others unfairly—ask any six year old!

Frankly, if you look at other countries and other systems of government, America is just about as fair as anything could be given human nature in the first place.  I mean really, you think most of Africa is fair?  How about China?  Russia? Saudi Arabia?  Most other places are decidedly less fair than America.  So when people say we have some very deeply built-in unfairness, they usually are speaking in narrow terms.

Historically, if you look at our specific history in a vacuum, we’ve had periods where specific classes, specific races, and specific genders were treated unfairly.  This is very true and not something to be proud of in our newest age of enlightenment.  But once again, the facts are, that while we had these uncomfortable periods of our history, contemporaneously America was still head and shoulders above the rest of the world at the time.  We can always strive to do better , to be better people, to be better to each other, but no government can impose fairness nor can it replace the personal responsibility and character we should all instill in ourselves and our families.

Responsibilities from all

He used the term, “Responsibilities from all”.  The phraseology struck me oddly.  While I suppose it is grammatically correct to say that responsibility comes from somewhere or someone, I am not comfortable with this statement.  After thinking about it this morning, I realize this is because I believe responsibility should be innate in each of us.  That responsibility does not come “from” anywhere.  I feel that responsibility is part of our character and while it may flow from us it does not flow to us.  To try to illustrate this point, let me say that part of my responsibility, as I see it, is to help others.  In fact if I do help others I am being responsible.  I also feel that if I throw a baseball and it bounces and breaks your window, I should be responsible to fix the window. Fault in actions are in some way offset (not excused) by the exercise of responsibility for the fault by, or within, the individual.

I do not feel, however, that if you robbed a liquor store that it becomes my responsibility to pay for it. I assume most feel the same way.  But, I also feel that I am not responsible for any of the third party circumstances that you may have encountered in your life that led you to rob the liquor store.  I worry that the president believes that we are responsible for what others choose to do.  That somehow it is our responsibility to make sure they do not do something harmful or at least find themselves in circumstances that lead them to do something wrong.

In my life,  I have listened to many people justify their bad actions based on some set of circumstances that led them to do what they did.  I have heard things like; I was abused by my parents, my mother was an alcoholic, my tire blew out and because of my crack addiction I did not have enough money to get a cab so I could not get to work. Often, somewhere in each of these excuses became an attempt to transfer the responsibility to me or others because we somehow allowed the parental abuse, the mothers alcoholism, or the existence of crack cocaine– all of which if eliminated from this persons past would have somehow supposedly stopped the bad action in the first place so therefore–ipso facto– it is my fault, or your fault,  they did whatever they did.

I think these are some of the fundamental differences that divide us today.  I think the concept is attractive to take the position that everything that affects me is someone else’s fault or greed. Words like compassion and fair-share sound so good against the backdrop of greed, oppression, poverty and sacrifice.  But frankly, this is not what the fundamental issues we face are about.  It is now about our viability–national and economic.  We have destroyed our economy, and our viability, because we have systematically, over the past 100 years, made decisions for self gratification and personal appeasement of abstract goals that have affected our production, our cost effectiveness and our competitiveness in this new one-world economy.

We used to be the world leader in fisheries, agriculture, clothing, steel, oil, coal, automobiles, aircraft, raw production, basic manufacturing and many others.  But we have made decisions that have altered our ability to be in these industries at all or to be competitive in them.  Child labor laws killed the textile industry in New England, increasing labor costs and environmental laws killed coal, steel, oil and fisheries. Increasing labor costs, over production and now subsidies have effectively killed agriculture.  And overall for the rest the increasing costs in general, including labor costs, taxes, mandated benefits and shrinking labor pool (skilled and unskilled) have killed much of the rest.  Along the way, we have become a nation or middlemen, service providers, who purchase most of what we consume from other countries than we make ourselves.  Each year we bleed cash from our treasury to other nations workers.  Since 1972 this has exceeded $12 trillion.  That 12 trillion dollars more spent in buying stuff from other countries than we have sold to other countries.  This is one huge reason, but by no means the only reason, that we are circling the drain the way we are.

We have abandoned many industries because we felt there was just cause to do so.  Again, I am not saying any of these decisions were good or bad.  You need to make that call for yourself.  But, we have willingly walked away from most of the industries that led us to our short lived prosperity.  As we have embraced the “one-world economy,” we have killed our own production, rapidly and drastically increased our costs, and decided that we no longer can try to influence who goes to college (destined for middle management) and who works in the fields, the factories, and the plants.  In order to feel good, everyone has to go to college.  When we need labor, we relay with a wink, wink — nod-nod on immigration.  Since legal immigration is expensive and takes a long time we have a large illegal immigration problem–and we sit and wonder why!

As we have been indiscriminately printing money since 1974 we have lived in a fantasy land.  It is a wonderful place to be, don’t you see:

• Everyone goes to college
• Everyone can own a house
• Everyone gets a car
• Everything is fair
• Everyone is a millionaire
• Everyone has everything they want
• No one needs to worry about getting sick
• No one needs to save – in fact we need to borrow and spend more
• Someone else will build it
• Someone else will maintain it and clean it
• Someone else will pay for it

In this fantasy land, the government will see to it that all the above just happens.  We don’t need to worry or pretty little heads just pay the taxes it will all be fair.

Shrinking Middle Class

The president has brought this up over and over recently.  Our president is a master at using language to infer that the middle class is suffering because of individual greed, because of Wall Street, because of corporations, because of millionaires and billionaires…. The truth of this is that the middle class are suffering because they have lost the value of what they earn disproportionately to everyone else–poor and rich. They are not poor enough to get in on the gravy train that is now the myriad government subsidies that over one-half of the population receive, nor are they rich enough to use investments to hedge the loss of value by playing the inflated earnings game that has been the finance,  investment, and real estate (FIRE) economy game for the past 40 years.  They have been screwed!  One reason the number of the middle class in the population is declining is we are raising the level of eligibility of programs for the poor. And along with that the cost of the additional program subsidies is coming from the middle-class and the rich in the form of taxes and higher costs, the rich just don;t feel it as much because they can invest enough of their money to offset the loss of value. Like the subsidies for industries and the poor, some portion of the new money ends up as liquidity in the stock market because the banks put it there! Can you say Quantitative Easing?

What was not mentioned by the president is equally telling

The Affordable Protection Act, his singularly biggest achievement — if you count it that way, was only mentioned in passing.  His own administration has had to admit that there are many things in the legislation that are either unfordable like CLASS, unworkable like the Medicare M.D. fix and the plan to have the IRS as the reporting agency, or potentially unconstitutional like the insurance mandate.

Medicaid, Medicare, and Social Security, like many other things are items that this president inherited.  Unlike most they are the biggest, and most insidious, causes of the loss of value to the middle-class and the destruction of our economy.  Once again, I am not making a value judgement on these programs or whether or not they should exist.  They simply have become what many feared at the time of their creation, much larger drains on our economy then was planned for.  Also, since most of the money that was created since 1974 has been needed to pay for these entitlements, along with the accumulating trade deficit, they are collectively the main reason that the money came into being and as such the main reason that the real value of the middle class has declined so drastically.

In the end, you have to ask yourself why the president spent so my time decrying the state of our economy, our industry and our people but then offered as a solution a panacea, of no pain, more money, more taxes, more subsidies, more for the poor, more from the rich, more subsidies for non-profitable industries no plan for increasing domestic primary production, and nothing about solutions for the real problems we face?  Well I guess it really is about re-elections not solutions.

In Closing

While the president may have appeared to be the brunt of my ire in this piece, it really is extended to all members of the full-time-professional-political class.  DNC or GOP the rhetoric and practice of opponent vilification and liberal application of what amounts to noting but wall paper paste needs to stop. Real solutions need to be proposed and vetted in this election process.  As a Mugwump, if a candidate does not start to tell me how they are going to fix the real issue and elucidate exactly what the pain points will be for everyone, then I am not voting for them regardless of the party.

If there ends up being no one; then I may not vote for anyone.  If that happens then it probably won’t matter because it will be too late.

The Global Leaders 2nd annual healthcare forum: January 10, 2012

Tom Loker will be facilitating the discussion at the Health Policy table at The Global Leaders 2nd Annual Healthcare Forum. January 10, 2011 at the historic Marines’ Memorial Club in San Francisco, California. To get more information about the conference go to http://tinyurl.com/6nppmu5 .  To Register Now go to http://tglhealthcaresymposium.eventbrite.com/.

The Global Leaders is proud to host its 2nd annual healthcare forum on Tuesday, January  10th in San Francisco at the historic Marines’ Memorial Club. The theme for the 2012 event is “Eliminating the Gap Between Innovation & Resources.” The conference will focus
on connecting CEOs and other senior executives with institutional investors and business development executives who can help bring the pieces together in a rapidly changing landscape.

• Matching innovation with capital

• How to mitigate risks; both financial and regulatory
• The future of healthcare in a changing global market

WHO SHOULD ATTEND

• Biotech & Pharma
• Investors
• Business Development
• Research Analysts
• Key Opinion Leaders
• Journalists & Press
• Philanthropists
• Government Leaders

Be sure to check out Tom’s latest book, “Delusional Ravings of a Lunatic Mind.” available at Barnes & Nobel and Amazon.

Of you can find out more about Tom’s upcoming book, “The History and Evolution of Healthcare in America: The untold backstory of where we’ve been, where we are, and why healthcare needs more reform.“

Time for something new: How about WE?

This article could also be titled…. “If the Occupy movement wants an argument that will resonate, and work — this is an idea!”

America has had a kind heart

America historically has had a kind heart.  In the past, when friends and neighbors were in need we have risen as one to help each other.  We are a nation that was founded on the belief that with tolerance for opposing ideas, and being united in a common cause, we could rise from the oppression of our rulers in a foreign land and take control of our own destiny.Thomas Paine was enlisted to help unite the people in this view and he coined the phrase, “an island cannot rule a nation!”. While at the time of the American Revolution there was not 100% unity in the desire for separation—or even universal agreement that separation from England was a good and economically viable idea. In the end, our founding fathers strung together enough of an argument that if we remained true to the ideals established in our Declaration of Independence and if we crafted the proper covenants of governance as later codified in our Constitution of the United States and if we practiced tolerance for each others separate and distinct; needs, wants, desires, and religious beliefs we could not only survive but perhaps thrive; and in so doing become a model for a new method of common governance—a constitutional republic—a very separate and distinct system from a historical democracy.

As a nation, in effect we made a promise to ourselves to believe in our own future, to be vigilant in the preparation of our government for the succeeding generations, and to develop within the constraints of our new found republic rules and regulations to promote various individual freedoms — earned based on our own personal and collective responsibilities. In the era of the citizen politician, this system has worked remarkably well. However, as we are by our nature, human, and as such subject to our own failings, we have made mistakes.  These mistakes, often in the form of ill-conceived and poorly framed decisions to solve the pressing problems of the various historic periods, have often changed our understandings, altered our perspective or removed the need to maintain our own personal responsibility for our life and our own decisions.

In the 1930’s we began a series of what at the time appeared innocuous decisions that fundamentally altered who we are and how we think of ourselves and Americans. It is my belief, that in each case the decisions were made for valid reasons. But in the nature of the deliberations at the time, we were faced with the age old dilemma: the conflict between practical pragmatism and ideological morality.  As we began once again to find some prosperity, we have more and more consistently chosen the moral side of the equation. And who can really argue with such choices?

The rise of the full time professional political class

In the days of the citizen politician, when congressional and executive service to the country was part time, and in the end those that served gained little and gave much, decisions tended to become more tempered with pragmatism because the laws passed more directly and immediately affected our legislators just as they did the rest of the citizenry.  As we moved through the 1930’s and 1940’s short term decisions to extend the period of congressional duty to more of a full time period set us on a path to the development of a full time legislative role and later to the establishment of the professional politician.  As this role changed, not only did we end up with full time politicians, we ended up with what now is a legislature full of professional politicians—a Full Time Professional Political Class.  A new level of American who’s class gives them exemption from many laws but more importantly that by gaining election into this elite class become, by and large, exempt from the pressures of life that affect the rest of the “normal” people. The prize of elected office is now exemption.

As I have discussed in earlier articles, the currency of this class is votes and the goods exchanged are now our own hard won assets, taken by the professional political class to equalize the injustices, both real and perceived of those not of the professional political class.  Whether the flow is from the wealthy few to the “huddled masses” or from the masses back to the wealth few to stimulate programs to fund the huddled masses, in this zero sum game we are continuing to lose economically.

For the last seventy or eighty years these decisions have appeared to work, with little or few consequences.  I have discussed a number of these points in prior articles and will not rehash these decisions here.  I expect my readers are capable of doing their own research and forming their own opinions.  What I will remind you of, is that as the underlying dynamic of our political system changed and this new class rose, often those short term legislative solution, affected to solve the immediate problems of any given period, became permanent sales pitches to sell these often short term programs as now permanent gains for the huddled masses in exchange for votes.

The Political Class is broken

Unfortunately though, today the professional political class, like the people they are supposed to serve, are stuck! Our political system is stalled! As a result, WE are stymied! That’s right, it seems we as a nation are at an impasse, spinning in circles and getting nowhere.  Yes, it seems we are trying to pry open a door that just won’t open.

The evidence of this, of course, shows in the inability of Congress to come to resolution in order to solve things like universal health care crisis, the financial crisis, the economic crisis, the immigration crisis, the jobs crisis, the energy crisis, the stock market crisis—the list can go on and on…. Any solution is long overdue.

Though it can often appear that the powers-that-be in Washington are making an attempt to provide such solutions, the historical record of real fixes and real reform is just not there. That’s right, if WE read and listen to the daily news, WE realize that what Washington has on the table ultimately will not, and cannot, work.

Washington has had many opportunities for the past 80 years to design and pass legislation that would fix our problem, they just can’t get the job done.  They can’t because we are asking them to fix something that is simply not in their purview to fix.  WE seem to keep asking them to fix the problems created by our own lack of personal responsibility and accountability.  We want the government to make it so that no matter what we do they must take care of us—make it all better.

I asked you a couple of paragraphs ago, “Who can really argue with such choices?”.  From a moralistic standpoint who really wants to argue against providing care for all who need it?  Or, who wants to argue in support of not helping people about to become homeless?  No one, in either the huddled masses (both the 99% and the 1%) class or the professional political class (all the rest) wants to make these arguments!  Despite the truth that no one is out to harm a fellow human being, isn’t it nice that we constantly beat this drum about how so-and-so wants to harm the other guy? In our hearts we know this is true but we allow these surrogates of others to beat this drum until some of us start to believe it. Who was it that said, “If you tell a lie big enough and keep repeating it, people will eventually come to believe it!”? Oh yea, it was attributed to Joseph Goebbels, although it is more likely a misquote of Adolf Hitler’s big lie passage in Mein Kampf.  One of the big issues today is that our Professional Political Class will not, in fact they can not, make such an argument.  The checks and balances that govern their existence prohibit them from making this argument. Their livelihoods are predicated on them NOT making such arguments. We have built a political system where they get compensated, quite handsomely, for promising to give us stuff for nothing-in effect lying to us.

Two minds but one heart

While I believe we all truly have one caring heart. I would submit, with no real evidence, that we as a species are of two sociological, perhaps genetic, minds on this issue.  About one half of the species sides on the moral and the other half sides on the pragmatic.  One side sees the argument as moral and cannot fathom any decision that would go along with sustaining the emotional pain of watching a neighbor fail.  The other side sees the problem as a survival issue, economic or otherwise.

Today, no one disputes there are millions in need in America, and more so in the world as a whole.  Seeing our governments inability to solve America’s problems is downright frustrating when you consider we are a nation that can mobilize in an instant to help people all over the world—like in Haiti or Sri Lanka—or how about the help we’ve given to various villages and communities in Bosnia, Bangladesh—or the impoverished countries in Africa. If we can do that then why can’t we take care of our own? Why can’t we help those who need, and most certainly deserve, to be treated with consideration and priority when it comes to physical and mental health and well being? While we should try to help the world, I for one would like to concentrate first on our own neighbors; as their suffering has a much more direct bearing on our own needs, wants and responsibilities.  I also subscribe to the belief that if I give someone in need $1.00 they get $1.00.  If I give it to the government the needy net about $0.35.  These are not my numbers but the governments in various forms.

We need an Answer

We need an answer. But to get one, we need momentum. And, to create momentum, I believe that if each one of us did a part—if we mobilize, all of us, pushed in our own individual way—we might very well force the door to solutions open, even if we do so only a little at a time.

I guess you could say that my philosophy toward solving the healthcare issue, and most of the other issues we face as a nation, can best be summed up in the words of that ever-popular Michael Jackson hit, Man in the Mirror, in which he and his co-writers Siedah Garrett and Glen Ballard, stated, “…I’m starting with the man in the mirror, I’m asking him to change his ways/no message could have been any clearer/ if you want to make the world a better place/take a look at yourself/and then make a change…”  In other words, it starts with each of us taking responsibility for both ourselves and our neighbors and a closer look at what every one of us can do to effect change.

While I was at Ramsell, I started a non-profit called the WE Movement.  In creating the WE Movement I believed that we could all do something, each of us to help Washington get the job done. While I was working on healthcare reform in Washington I learned a few things  about how our professional political class try to make sausage.  Having grown up in St. Mary’s County, Maryland, I know a thing or two about making sausage and Washington DC knows nothing about making sausage.  I would submit to you that we would be much better of in the long run if we went back to the days of part time citizen politicians, many of whom could be real sausage makers and we would find that our government would be much improved. If not improved, at least our daily diet of bad news would taste a bit better!

Let’s talk about health care for a minute.

We have learned that we in the United States are a generous people—all of us, whether we are Republican, Democrat, Independent—conservative or progressive. We also have learned that the majority of us wish that all people could and should have access to the health care they need.

Sadly, we have also learned that the scope of healthcare we want everyone to have is simply unattainable—the economic cost for it well beyond what we can provide—or more importantly—what we are willing to allocate to pay for it.  It is not an issue of taking money here to pay for it there.  It is an economic issues in that the more we pay for care to workers the less competitive we become in the world stage.

I have come to be of the mind that there are two very important universal truths that have emerged from this recent health care bill proposal:

1. We can’t afford what we want (and need) and,
2. the prevailing atmosphere of “Us” vs. “Them” has been a recurring theme and extremely corrosive to the ideals we have set.

For example, the goal of Universal Healthcare was to include:

• Affordable coverage for 100% of all Americans
• A mandated minimum standard of care
• Access to all, regardless of illness, state of disease or pre-existing condition
• Reduction of the overall cost of care to all Americans
• The elimination of “care disparity”
• And assurance of coverage for the underserved

All good ideas; lofty goals, yes, but A) we can’t afford this “vision” package because the implementation and subsidy costs alone total $1.55 trillion, and only 155 million people are getting paychecks out of the 338 million Americans who need them, and B) under the suggested guidelines, the cost of care for individuals will rise between $1000 a year to $3000 a year.

Next, it seems we’re faced with an “Us” versus “them” mentality: For example, coverage for 96% of Americans is requested (although 94% were already covered before the proposed legislation). The actual goal was to provide coverage for the uninsured or under-insured. And, the 2% additionally insured breaks out like this:

• O.8 percent are between 18 and 29 years old
• 0.4 percent are elderly—those that previously were not enrolled in Medicare
• The dilemma is where this leaves the uninsured and under-insured

The problem is that the minimum mandates for care were watered down; changes were made geared to garner support from AMA, AARP, Unions, and others such as the Medicare Advantage program which was effectively curtailed to get AARP support. Also, the cost to the nation will rise significantly; the curve does not bend down under full utilization, however. And, also the ideal to eliminate disparity has resulted in restrictions of options for “them” that can afford it, not an increase in options for the “us” that cannot.  In other words, it’s as though this bill has pitted two groups against one another rather than providing a plan that works for the good of the whole. The end result: we’re getting nowhere. As I said, we are stuck, stalled, stymied…the situation has created a sense of inertia precluding us from moving forward in any direction.

Here are some other statistics that need to be understood and made known:

• Medicare and Medicaid account for 1.3 trillion in health care spending this year
• Total health care spending in 2010 exceeded $2.8 trillion. Interestingly, some studies have shown that as much as 39% is lost to waste, defined as “duplication of services” and “unnecessary services.”  Other studies tell us that as much as 20% is lost to fraud and abuse.
• Ultimately, estimates suggest that over $800-billion per year is lost due to waste, fraud, errors and inefficiencies.

So, you may be asking: What can we do about it?

I believe that a simple form of coordination of care and benefits across all available sources will save at least 10% of the total cost of healthcare, and by eliminating duplication of services we can provide increased capacity within the existing networks.  Yes, it is possible, and what a way to begin to open that door!  And it is not simply in healthcare where these benefits can be attained.  It will work in virtually any area where those that have a re providing benefits to those that need.

It is staggering as we try to comprehend that $800-billion dollars in waste exists in the healthcare system across the United States today. What do you think is happening in other segments of government run programs?

Can you imagine what we could do with that amount of money if it were available for health care purposes—if we put this money to better use? And it’s not just the money that we can put to better use; it is the resources as well.  If we eliminate duplicate visits and other services we will free up resources to treat the others who wait in lines.

This is just one way to begin to solve the problem—better appropriation of resources and the spending of funds that are currently available. I believe there are a number of other ways to begin to solve the health care plan dilemma and we must because, just like you, most of us are out of patience with those who wish to make the health care issue, and all the others, a political playground. I think we can all agree that we are fed up as we stand by and wait for a resolution to a problem that is really quite solvable.

WE need to eliminate the “them” versus “us” mentality. We need a platform for those who wish to help each other—to be able to quickly and easily find those in need.  We need a method to filter the truly helpless from the clueless; or worse from the charlatans who simply want to get everything for nothing. Washington can play a key role, an appropriate role, in helping to develop such a system.  A virtual place for people to post what they are willing to provide so they can be matched with those in need. This becomes a “them” and “us” –that culminates in a “WE” solution.

I believe there are many others just like us who are willing to participate, and help each other in the collective crises we face if we can be assured that the needy are appropriately vetted.  Lets face it our government has a horrible track record in this regard.  Their own data shows that Medicaid and Medicare provide only about 35 cents on every dollar to care and we know that there is between a 15 and 20% rate of fraud in the system. Regardless of the percentage due to inefficiency this is at least a 50% improvement just in duplication and reduction of systemic fraud which we know from history the government just can’t do. We need a public private partnership to provide the core system.  Fortunately there are many choices.  Social networking is not far from being able to provide an effective infrastructure. Companies like LinkedIn and Facebook, already have flexible platforms.  MySpace not only has the platform but could rebuild their suffering brand by providing such a valuable option.  Of course there is also Google +, offerings from Microsoft, and many others.  It need not be just one provider.  Why not something in each and every infrastructure?

Webster defines “them” as “a group of people other than the speaker or people addressed.”

Webster also defines “us” in a similar fashion: “another person or other people.”

Presently, the mood in Washington is one of pitting “us” against “them.”
But the word, and collective consciousness we must all adopt in order to find resolution to the health care crisis, is “WE.”

Webster defines “we” as “you and I and others;”

It is all inclusive and that’s exactly how we must all be thinking in order to solve this health care  problem—with a “WE” mind-set. And, we need to tell Washington that this is where we stand as a nation.

For lack of a better analogy: If the Occupy Movement wants to find a message perhaps they need to become more about the WE and less about the 99% vs. the 1%. The truth is that this is not where the problem lies. It was basic grass-roots campaigns that grew rapidly in the 60’s when thousands took to the streets to put pressure on those in Washington who could not agree on how and when to end the Vietnam “war.” But this outcry spanned the classes and with a small exception did not pit one economic segment against the other as a way to curry favor in the majority. Clearly it has been shown that voices who cry out in unison with a unified, consistent, effective message  combined with an obtainable goal shared in every city, township and state can be very effective.  The speakers need also to be in every industry, economic strata, and profession—every company and corporation—and they need to gather and be heard. They cannot be disruptive nor divisive.

Our constitutional republic was set up so that our leaders would make the proper and just decisions for the good of the country as a whole.  The framers know that if we were only a “democracy” that in the end the system would fail.  That the mass of people would in the end vote more for laws that provide to their own benefit regardless of the overall bad effect to the nation.  The point of the constitutional republic was to set up our representatives so that they would be able to make the best decisions with little consequence and the bad decision would provide no gain.  In the past 80 years we have gone a long way to destroying that subtlety.  Historically, the concepts of fairness and equality for all did not equate to unequal burden nor benefit for anyone.  Today the entire concept of fairness and equality is conditionalized first on who has what.

WE need to take these messages to Washington.  We need to make it clear to our elected leaders what we think the effective role truly is for government.  To do that, we need to agree ourselves.  Abraham Lincoln said, “a house divided against itself cannot stand”.   Does anyone today doubt that we are a divided nation?  Even within our political parties we are divided.  I submit that it is no longer our politics that divide us; it is a much more simple philosophic divide.  We seem to be a nation of thirds.  One third morally driven (termed liberal), one third pragmatically driven (termed conservative), and one third combining the best (or worst—depending on your point of view) of both. Lincoln would likely be horrified.

When addressing the most fundamental rights—those of life, liberty and the pursuit of happiness, the authors of The Declaration of Independence started that document with the words “WE the people….” They went on to write: “…to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed—That whenever any Form of Government becomes destructive to these ends, it is the Right of the People to alter or to abolish it…” I am not advocating its abolition.  I am advocating we recoup our original national character.

I think we need to invite all of us— the collective WE—those young and old; well and ill; others within the healthcare and other business communities—to speak out—and to help the government find a way to solve these problems.

No one should be asking for money to do this. Existing infrastructures should be encouraged to build the support tools in their existing systems. Others should be determining what they can provide to tie into these support tools.  The government should be encouraging us all to do this, to adopt this philosophy and to establish some standards and guidelines to facilitate the private sector to participate right along with our part time citizen politicians in constructing a viable solution that works. To date, we have people saying, “We are fed up.” We are in need of a healthcare, financial help, economic recovery, jobs etc. initiative that works for the good of the ‘governed’. And, “We are tired of the bickering in Washington.”

Occupy, or any other organizations, should all hope to collect a groundswell of support—one that makes a powerful collective statement and an impact on Washington, one that will cause those in charge to listen to alternatives as to how to approach and conquer these dilemmas and also as a means to utilize such virtual matching and help systems free of charge to serve others who are less fortunate.

In the words of Stevie Wonder, those who decided to unite as WE should be determined to “… keep on tryin’/till WE reach the highest ground.”

What do you think?” Do you know anyone who has something to offer? Do you know someone in need of something?  Wouldn’t it be great if we could have a place to go match one with the other? Some place were the helpless can be identified, and the clueless and the fraudulent can be identified and filtered out.   I am not proposing the Government take the role of the determinant of who and who is not eligible.  I am proposing the government take the role of encouraging, promoting and defining the standards, that then allow private industry to combine their systems to help and put such determinations in the hands of the people offering the help.  I don’t mean we should get rid of our safety nets; but we should change the cost structures to a more efficient system and get the government at least partially out of picking winners and losers.  The  collective WE can identify the helpless, and work in virtual teams-virtual villages, to help each and everyone in need.  Virtually coordinating our efforts around the one person in need–placing them in the center of the world that is teaming up to help them.  This is the solution.  This virtual teaming approach will reduce, and perhaps in many cases, eliminate the waste due to duplication of efforts and could go a long way to identifying and reducing fraud and abuse.

In the end my message is–this is all up to WE.  We can continue to delude ourselves that the government can provide this effectively and efficiently but 80 years of history says otherwise.  So is it us–as in the US government as our collective surrogate,  or WE–as in all of us as individuals, that is best suited to do this?

That decision is yours regardless, the only difference is whether or not we all accept the individual responsibility– the duty–to do it or we push it off to the collective others.

U.S. District Court of Appeals “Reaches” for the answer to the purchase mandate

Click to open DC Appeals Court Ruliing

Yep, I Probably Need to Get  a Life!

The past few days, I decided I really needed, no I really-really needed,  to read the opinion of the United States Court of Appeals for the District of Columbia Circuit ruling on the case of:

SUSAN SEVEN-SKY, ALSO KNOWN AS SUSAN SEVENSKY, ET AL.,
APPELLANTS
v.
ERIC H. HOLDER, JR., ET AL.,
APPELLEES”

Appeal from the United States District Court
for the District of Columbia
(No. 1:10-cv-00950)

The court decided this case on November 8, 2011.  And from new reports you would think that the case made clear that the Patient Protection and Affordable Care Act (PPACA) was in fact constitutional and would lend credence to a affirmative finding of the validity of the law and purchase mandate by the U.S. Supreme Court soon.  Like most, media revelations, or more precisely-media invectives, reading this case neither answers the question of the constitutionality of the purchase mandate nor makes clear a constitutional argument that it will be affirmed by the Supreme Court.  Actually, for me it bolsters the base arguments not only on why it should not be upheld by the Supreme Court, but also why the underlying supporting rulings of prior cases like Wickhard v. Filburn and Miles v. Park need to be reassessed.  To see a background on these cases you can read my article on the Health Care Mandate and the Commerce Clause.

The truth be told, I had some very minor surgery and during recovery needed something to read!

Overall this is a relatively short ruling – just 103 pages – including the majority and minority (dissenting) opinions. I would advise all to read it, (click here to read the ruling) particularly the dissenting opinion even though the base argument for the dissent has little to do with constitutionality of the mandate.  Much of the concurring majority opinions are centered on the ability of the courts to hear this case at this time due to the Anti-Injunction Act.  In reading the concurring majority opinions I was repeatedly struck by the lengths they were willing to go in defiance of what I see as common sense; by ignoring, assuming or obfuscating the issues to arrive at their decision. The majority of their argument is centered on the Anti-Injunction Act, with little argument given to the principal issue of the constitutionality under the Commerce Clause and the Necessary and Proper Clause. The basis for the dissent is that the court did not have jurisdiction to hear this case at this time.  What is interesting in reading the dissent, written by Justice Kavanaugh, is the apparent length Justices Silberman and Edwards are willing to reach to ignore the argument that they do not have  jurisdiction and timeliness to even hear this case.  While I am hopeful this case should be heard at the soonest possible date by the U.S. Supreme Court, the argument by Kavanaugh is clear, concise, and compelling on the law and its prohibitive effect.  His argument, which I found both persuasive and full of common sense, is that due to the Anti-Injunction Act, the judicial branch is barred from hearing such a case until after there is an enforcement action.  Justice Kavanaugh cites:

Enacted in 1867, the Anti-Injunction Act, with a few exceptions, denies courts jurisdiction over pre-enforcement suits that would restrain “the assessment or collection of any tax.” 26 U.S.C. § 7421(a). The Supreme Court has strictly interpreted that Act as a firm bulwark against premature judicial interference with tax assessment and collection. As the Court has stressed time and again, although the Act may seem an inconvenient technicality in the context of a particular case, it is essential to the overall system of orderly and prompt federal tax administration.

Under the Anti-Injunction Act, a taxpayer seeking to challenge a tax law must first pay the disputed tax and then bring a refund suit, at which time the courts will consider the taxpayer’s legal arguments. Or a taxpayer may raise legal arguments in defending against an IRS enforcement action. But a taxpayer may not bring a pre-enforcement suit. In this case, the individual mandate takes effect in 2014, so taxpayers without health insurance must start paying tax penalties on their tax returns in 2015. The Anti-Injunction Act means, therefore, that a suit challenging the individual mandate cannot be entertained until 2015, unless Congress acts before then to exempt these suits from the Act.

The Anti-Injunction Act applies here because plaintiffs’ pre-enforcement suit, if successful, would prevent the IRS from assessing or collecting tax penalties from citizens who do not have health insurance. To be sure, the Affordable Care Act labels its exaction for failure to have health insurance as a tax “penalty” and not as a “tax.” But the Anti-Injunction Act still applies. That’s because the Affordable Care Act requires that the tax penalty for failure to maintain health insurance “be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68” of the Tax Code. 26 U.S.C. § 5000A(g)(1). And penalties under subchapter B of chapter 68 in turn must “be assessed and collected in the same manner as taxes.” 26 U.S.C. § 6671(a) (emphasis added). It follows from those two provisions, taken together, that these Affordable Care Act penalties must be assessed and collected “in the same manner as taxes.”

Readers should also note that in contravention to the arguments or the majority opinion, the Federal Government themselves, in numerous early challenges, cited that, despite the language in the PPACA calling the assessment a penalty it was for all purposes a tax. And as my grandfather, a respected country circuit court judge used to say, “Once the animals are out of the barn, it does no good to close the door!”  So while I have been of the opinion it would be best for the Supreme Court to settle this issue, it appears to me that Justice Kavanaugh is correct and the Anti-Injunction Act clearly denies the courts the ability to hear this case until sometime in 2014 or 2015.

Ramifications and Unintended Consequences

The ramifications of the constitutionality of the purchase mandate stretch way beyond health care and should be seen as the proverbial “slippery slope” for concerned people on both the right and the left of the political spectrum.  Just like everything else the government does, an affirmation of the constitutionality of the purchase mandate will have the potential for many unintended consequences.  Justice Kavanaugh, in his dissenting argument, notes;

“But the Commerce Clause issue is extremely difficult and rife with significant and potentially unforeseen implications for the Nation and the Judiciary. Cf. Northwest Austin Municipal Utility District Number One, 129 S. Ct. at 2513.

To uphold the Affordable Care Act’s mandatory purchase requirement under the Commerce Clause, we would have to uphold a law that is unprecedented on the federal level in American history. That fact alone counsels the Judiciary to exercise great caution. See United States v. Lopez, 514 U.S. 549, 580, 583 (1995) (Kennedy, J., concurring) (“The statute before us upsets the federal balance to a degree that renders it an unconstitutional assertion of the commerce power, and our intervention is required. . . .”

If upheld, the exercise of power contemplated under the PPACA purchase mandate would not be clearly confined to health care.  Under the theory argued by the Government, the Government could impose imprisonment or other criminal punishment on citizens who do not have health insurance.  This is far beyond the taxing authority apparently granted in the language of the PPACA.  The PPACA has language restricting the IRS’s ability to use all of the same measures it has claim to under the U.S. Tax code.  But in oral arguments, the Government freely acknowledged further penalties and impositions by the Government beyond the limitations imposed on the IRS as the primary enforcement authority.

Once such actions are taken to enforce the right of the government to mandate the purchase of insurance under this theory, there is little to stop the government to extend such rights beyond health care to include other things like mandating the purchase of retirement accounts, housing, college savings other insurance, etc.  If fact Justice Kavanaugh opines;

“…there seems no good reason its theory would not ultimately extend as well to mandatory purchases of retirement accounts, housing accounts, college savings accounts, disaster insurance, disability insurance, and life insurance, for example. We should hesitate to unnecessarily decide a case that could usher in a significant expansion of congressional authority with no obvious principled limit.”

Once Again Back to the Commerce Clause

There were two primary point of challenges to PPACA by appellants:

Appellants, four United States citizens and federal taxpayers, seek declaratory and injunctive relief to prevent various U.S. Government officials and agencies from  enforcing the minimum essential coverage provisions. They argue that the mandate exceeds Congress’s authority under the Commerce Clause and substantially burdens appellants Susan Seven-Sky’s and Charles Edward Lee’s religious exercise, in violation of the Religious Freedom Restoration Act.

Since I am not a lawyer and must rely on my “every-person’s” common sense approach, the concept of being forced to purchase insurance is a step too far for me when it comes to the argument that it restricts religious freedom.  I am sure there are those that will quote me chapter and verse as to why this is a religious issue but unfortunately I don’t see it, and neither did any of the courts so far.  The prime argument has been, and remains, the authority of the Federal Government to regulate, nee mandate, the purchase of health insurance and to assess a penalty/tax if you don’t purchase insurance.

Clearly, congress has taxing authority under the constitution.  This undisputed fact is why at the outset of these challenges the Government argued that despite the word penalty’s use in the PPACA, it was for all intents and purposes a tax.  But, while that argument perceptibly granted them authority, it raised the questions related to if you can be assessed a tax for NOT doing something.  Further, it creates the problem of judicial authority at this time if this is a tax under the Anti-Injunction Act. It is interesting to note that the Government no longer is arguing so vociferously that this is in fact a tax.

Having exhausted my preamble, I will now turn my discussion to the issue of the Commerce Clause and the rights under the constitution of the federal government to regulate commercial activities of individuals within or between states.  To me this is both the main crux of the argument related to the purchase mandate and the center point of what I think is one of the most heinous and or ingenious – depending on your point of view – extensions of federal authority over the past 100 years.

The concurring majority bases their opinion of the Governments right to regulate commerce on precedent rulings beginning with a ruling where the court decided in 1945 that the Government had the right to seize and destroy a farmers wheat crop because it was in excess of the acreage the farmer was allowed to plant under the National Recover Act (NRA).  The fact that the farmer in question intended it for his own use on his farm and the wheat was not for sale, nor the fact that he likely would not have purchased wheat on the open market from out of state sources-but would more likely have bartered for it from another local instate source-did not sway the decision that this transaction affected interstate commerce and as such was now subject to federal authority. This landmark case, Wickard v. Filburn, and my feelings about this ruling are adequately described in Health Care Mandate and the Commerce Clause so I will not rehash them further here.  If you are not familiar with this history you should be.  Suffice to say, I believe the extension of the government’s regulatory authority as upheld in Wickard v. Filburn are much more than simply problematic.  The ruling endemic in the Wickard case needs a fresh review.  That said, I also think that there are many other problems in using even the logic of Wickard v. Filburn in upholding the insurance mandate.

Unlike Wheat – Health Care is Not Even Remotely Interstate.

While the U.S. Supreme Court, in 1945, stretched the fabric of imagination in tying personal wheat growing to an interstate commerce act subject to federal jurisdiction, health care is even more of a step too far.  Representative Melvin Watt (D), North Carolina during a House of Representatives Judiciary Committee hearing in the early part of 2011 on the need for Health Care/Malpractice Tort Reform commented that he was a strong advocate of states rights, and that in his entire life he had never seen an example of where the provision of medical services, health care, went across state lines.  He further said, he knew of no instance where a hospital existed simultaneously in two states, and that health care was so specifically regulated in each state as to make the provision of health insurance across state lines so problematic that it was in effect impossible.  He continued, that health care was clearly an issue relegated to the states and not subject the federal encroachment under the Commerce Clause and therefore the subject of federal tort reform over this issue, he felt, was out of order and beyond the jurisdiction of the Judiciary Committee.  This seemed like a very good argument to me at the time and still does.  Perhaps Representative Watt should write an amici curiae to the US Supreme Court on this specific topic.

In fact, in my opinion,  Rep. Watt is correct in almost all regards.  During the debate over the PPACA, it became clear that most of the country did not want a national health care option despite the best advocacy, efforts, and in some cases, obfuscation by many in congress.  A review of health care in America, shows that health care is, in fact, a state by state regulated industry.  Many, if not most, insurance providers have specific offices within each and every state to deal with the specific regulations, policy requirements, demographics, and actuarial within the state.  While one can buy policies from companies whose main headquarters may be outside of the state of residence of the purchaser, they can’t buy a generic policy that does not conform to the regulations of the state of residence of the purchaser.

So, even if Wickard is based on sound constitutional principals, health care is clearly not wheat.  While the case was made that wheat was a national commodity, and there was a national commodity market for wheat sales, and that poor Filburn by growing his own wheat and not buying it on the open market was affecting demand and therefore the national price of wheat; the same cannot be said for health care.  To amplify this argument, even the federal government through CMS recognizes at least the regional vagaries of the health care market by providing various rates for reimbursement of services based on geographic location.  There are numerous points of authority that will show that health care is, unlike almost every other industry you can think of, a state based economic system.  Again unlike wheat, affecting the sale or cost of a health care product or service in one state has little to no effect on any other state.  It is also likely true that the cost of care in San Francisco has little to no effect on care in Oakland let alone Petaluma, Sacramento, or Los Angeles.

Clearly, there is a national market for pharmaceuticals and medical devices but again each state regulates these items quite closely.  What a pharmacist pays for a specific drug in one state or region is so different for other states or regions that whole businesses like Foxmeyer Health have sprung up over the years to play games of arbitrage between local pricing variance for pharmaceuticals.  In my “every person’s” common sense approach health care is one clear example of a non-national market.

The consenting majority make the point that,

“… Because virtually everyone will, at some point, need health services, no one is truly  inactive, and the health services market is inextricably intertwined with health insurance. Congress found that those who do not purchase health insurance, and instead self-insure, almost inevitably take health care services they cannot afford. Hospitals, by virtue of federal law and professional obligation, provide these services, and as a result, $43 billion in annual costs are shifted to the insured, through higher premiums. That, in turn, makes health insurance less affordable and increases the total number of uninsured.”

While, this argument may be true, and then again it may not be true either, for this to have some form of sway the $43 billion would need to be a cost to all the federal taxpayers would it not?  Not state taxpayers under state regulations because that would not be interstate would it?  For this to be truly a national issue, the $43 billion would have to be almost exclusively a federal cost.  My reason is that since each state offers medicaid under their own authority and their own programs-and even President Obama has specifically referred to Medicaid as state programs-if private health care is also state specific how can this cost shift be a national issue.

One may argue that, Medicare is a national program, and they may also argue that the federal government subsidizes Medicaid at the state level.  But states remit money to the federal government, some of which they receive back, so I question the true source of the funding.  Someone should look at the  funds flow to determine, if possible, if the sources are local or federal.

Lets further assume that the Federal Government provides some funding to state medicaid systems, reimbursements/stimulus to hospitals, to offset uninsured care mandated by the federal government, and other federal governmental programs created by the federal government to subsidize the costs of the poor and the uninsured.  I don’t think it flows logically or constitutionally that this is now interstate commerce just because the federal government voluntarily created a program to provide money to citizens funded by taxpayers and that the costs that are shifted by the under-served drain on these funds makes it is now a national market.  If that is the case, then any time the government wants to take over an industry or regulate something we do, they will just decide to subsidize it and then claim it is now subject to the Commerce Clause and they can regulate it.  Does anyone really believe this is what the founders intended?

It is also good to note that the consenting opinion states that;

“The Government concedes the novelty of the mandate and the lack of any doctrinal limiting principles; indeed, at oral argument, the Government could not identify any mandate to purchase a product or service in interstate commerce that would be unconstitutional, at least under the Commerce Clause.”

So, even the Government acknowledges that his is tantamount to a preemptive right if it is upheld, but they basically then say, Trust Us  – heath care is so unique we would not think of doing this anywhere else!  I am sure the founders would never have contemplated that Mr. Filburn would have had his crops burned by the federal government only because he chose NOT to purchase wheat on the open market thereby maintaining the price the federal government deemed important.

The Majority opinion goes on to analyze the text of the Commerce Clause itself, including a contemporaneous definition from the Dictionary of the English Language of 1773;

“We look first to the text of the Constitution. Article I, § 8, cl. 3, states: “The Congress shall  have Power . . . To regulate Commerce with foreign Nations, and among the several  States, and with the Indian Tribes.” (emphasis added). At the time the Constitution was fashioned, to “regulate” meant, as it does now, “[t]o adjust by rule or method,” as well as  “[t]o direct.” To “direct,” in turn, included “[t]o prescribe certain measure[s]; to mark out a certain course,” and “[t]o order; to command.” In other words, to  “regulate”  can mean to require action, and nothing in the definition appears to limit that power only to those already active in relation to an interstate market. Nor was the term “commerce”  limited to only existing commerce.”

The last line of this extract, again for me is one of the steps too far.  How can you come to the conclusion that the framers in 1787contemplated regulating commerce that was not in existence therefor justifying the argument that you could regulate a non-action? To my simple mind this is word parsing and wordsmithing in the extreme.

The majority go on in their logic strained argument to state that the distinction between interstate and local commerce has been largely eroded and they cite the case U.S. v. Lopez as an example. This case was the “Gun Free School Zones Case” and much of the argument of that case was backward dependent on our old friend Wickard v. Filburn.

Since the concurring majority justices endeavor to find the original meaning and intent of the framers related to the Commerce Clause, perhaps they should weigh if the framers would approve of the federal government, in effect usurping the power of the states by creating national entitlement programs funded by federal tax collections, then using the argument that the lack of purchase of some good or service by the public was inordinately increasing the reliance on these programs and therefore costing the government, and hence the national taxpayers, more money and therefore it was an interstate commerce issue and effectively then subject to total federal control!  I do not see Thomas Jefferson, or even John Adams buying the argument that the Government can voluntarily create a program – that it could also cancel at any time if it got too costly – and then use this argument to claim further encroachment into state and personal rights under the very clauses they constructed to significantly and specifically limit the authority of the federal government and put those un-enumerated powers specifically in the hands of the states.

It should be noted that in this case the Appellants did not argue that Health Care and Health insurance are uniquely state concerns, but this has been argued successfully in other challenges to the PPACA.

Another frightening theory proffered in the majority opinion is based on this quote;

“Appellants’ view that an individual cannot be subject to Commerce Clause regulation absent voluntary, affirmative acts that enter him or her into, or affect, the interstate market expresses a concern for individual liberty that seems more redolent of Due Process Clause arguments. But it has no foundation in the Commerce Clause. The shift to the “substantial effects” doctrine in the early twentieth century recognized the reality that national economic problems are often the result of millions of individuals engaging in behavior that, in isolation, is seemingly unrelated to interstate commerce. See Lopez, 514 U.S. at 555-56.”

Once again this is predominately based on the original Wickard ruling and its extension under Lopez.  If it stays true and the opinion as proffered by the majority stands, there is nothing that stops federal intervention in anything we do or do not do.  I suppose they could argue that they can force us to drink alcohol to excess, then to drive – so the police can stop us, give us tickets, charge us with DUI, pay fines, take remedial classes, and then pay to retake a drivers test because in each case it was stimulating a national economy or it was helping defer the costs of dealing with the problems that were being born by the government, hence the taxpayer, hence it is all an interstate commerce issue under the Commerce Clause. And if we refuse to drink and drive, by extension we are not consuming the services in the interstate market and therefore affecting the prices of those goods and services and the resulting loss of market will cause an increase in the subsidies to those industries by the government, hence a drain on the taxpayer, hence interstate commerce and therefore properly regulated under the Commerce Clause.

My Conclusion

I think that the underlying case law here starting with Wickard v. Filburn, through U.S. v Lopez and other Commerce Clause related rulings dependent on Wickard up to today need to be reviewed.  I doubt this will happen absent a constitutional congress and an amendment to affect the vagaries purposely attributed by the Judicial Branch as justifications to expand federal reach.

I think that we need to focus our arguments in three additional areas:

1. That health care, and the provision of services thereof, is and are not an interstate market system nor should they be.
2. Someone needs to raise the constitutional question if the federal government can create programs that effect national markets and then use that effect to justify expanded reach under the Constitution.  If the answer to this is affirmative then this could be the biggest slippery slope of all.
3. Was the ruling in Wickard v. Filburn correct?  And If not how can this ruling be challenged outside of the question of the Insurance Purchase Mandate.

Like everything else, I want you to ask your own questions and not rely on my opinions?  I do not know that I am correct.  What I do know is I have to read these things myself and attempt to understand them and then do what I think is right.  In effect, I need to be a Mugwump.

Review of Article on Cloud Computing and Health Care from Healthcare Innovation Journal

In an article posted in Healthcare Innovation Journal titled, “Cloud Computing and Health Care” the Author, Vivek Raut makes some very good points about the potential of cloud computing in health care practice.  While I agree with many of his points; in a number of areas the ability to utilize the cloud in the manner he is suggesting are quite problematic.

Click to access original article

The use of the Cloud has tremendous potential to bring benefits in the areas that he cites like; reducing the complex and expensive infrastructure for providers, benefits of vertical integration and improvements of supply chain within a large provider, more appropriate infrastructure to improve collaboration, and more rapid and better access to vital care information among providers – it is the fundamentals of incorporating changes into the existing base system that doom such an approach to failure.  Without changes in the fundamental systems, other factors, naively considered in this article, prohibit or significantly impede the gains envisioned.

The problems of incorporating cloud based solutions under the current health care model come in three areas;

1. The current legal requirements under the various privacy laws and HIPPA will not allow the kind of sharing and integration necessary to get the real benefits of such a system.
2. The potential scalability and related benefits of economies of scale are lost due to the technical and legal requirements of the current transaction model.
3. Simple movement to a Cloud based solution, either public or community, will not provide the improvements sought; as for each potential gain there is a corresponding offset in unintended consequences, infrastructure limitations, or cost of implementation.

This said, I do support the effort and agree there are significant savings to be had by the movement of health care systems to a Cloud based model.  With the proper redesign of the system itself into a comprehensive supply chain methodology, real gains from the cloud based approach can be realized.  Further, the most needed gain is the overall reduction in the cost of the provision of care through the elimination of duplication of services, fraud and abuse.  This can only be gained from the Cloud when the underlying methodologies for application of care and benefits is fully coordinated across all available sources.

Health care dollars in the U.S. are only woefully inadequate due to the percentage of loss due to fraud and abuse in our underlying system.  When only about thirty cents of the health care dollar spent makes it to the provision of care of a patient, it is clear that efficiencies need to be gained.  But the typical gains from solutions like the Cloud are focused in the areas of operational and administrative efficiencies.  In the health care continuum only ten to twelve percent of the dollars are lost due to administrative or operational inefficiencies.  The main loss of approximately fifty percents of the monies spent is in the area of duplicated/unnecessary services and fraud or abuse of benefits.

Clearly, the concepts inherent in the argument for Cloud computing apply here as well but only with a redesign of the current system and the underlying transactional model.  For instance; a community sharing of health data across a cloud to providers will still require written agreements under HIPPA between the providers and agreements with the cloud provider, all including the requisite business associate language.  The provider of cloud services would likely under the law be required to assure that each entity receiving any information had the proper legal documentation on file. The provider would also likely carry full liability for any breach by any agency under such a sharing arrangement.

Under the current health care transaction model, each agency stores and maintains full and multiple, sets of data on each patient in their system.  As patients see multiple providers their information is typically copied from provider to provider or supplied by the patient.  In a cloud based system there would be significant gains since the data could be shared a copied electronically and could also be regularly synched to provide accuracy and consistency.  The upside of this approach has major benefits to both the economy of the provision of care and to improved patient outcomes.  The down side is such a system, without a major change in the underlying transaction model, will overwhelm the current and foreseeable future of connected communication and likely yield significant cost increases for data storage and security.

Policy based controls over security in such a system under the current transactional model will yield little effect as the amount of data held in each location multiplies exponentially and the requirements of access to assure accurate and timely synchronization opens many additional corridors of access for hackers and data thieves.  The problem is not the Cloud itself.  In fact, the Cloud offers the opportunity to significantly improve security but to achieve these improvements a different transactional model needs to be adopted.  Even a singular public or community cloud warehouse point does little to provide the improvements in security due to the nature of putting all the information in one place.  No matter how secure we try to make it; one breach yields so much on so many it becomes a major problem.

To reiterate, I agree the Cloud will offer tremendous benefits.  In fact, I think the movement to the Cloud is already fait-accompli. It is not just the movement to the Cloud that is required.

There is an answer!  There are some very gifted people working right now on how to realize the gains that the author elucidates in his paper.  These changes are occurring and they will continue to occur despite our reservations and despite the inevitable short term unintended consequences that will show up along the way.  How can I be so sure of this?  Because this is not a revolutionary change that is occurring – it is evolutionary and the selection pressures forging these changes are both irresistible and irreversible.

I have always like this quote from Jim Morrison,

“The Future is uncertain and the end is always near!”

These words are a truism to the extent that they exist as a singularity.  Individually, we should all hold this advice very dear as we can be gone in an instant. But as a species, or in the abstract as a system, while we would have individually ceased to exist more than a millennium ago, it was adaptation cause by partially catastrophic events (selection pressures) that have led us to survival. Our evolution and decisions we have made along the way have both benefited us and caused unintended consequences.    Our discovery of the antibiotic properties of penicillin, for a brief period in our history significantly reduced death and disability from infections but along the way the organisms we were fighting have adapted and gotten more resistant.  We are now in the same position in our technologically based systems.  Health care is perhaps the one most evidently in need of change.  These changes are both inevitable and fundamental.  Without them the survival of the system itself is seriously in question.

If you would like to learn more about the efforts of those divining the answers on this subject, please contact me.

Pharmaceuticals in America: The Life and Death of a Patent Medicine King (1833 – 1960)

The Life and Death of a Patent Medicine King – Dr. Morse’s Indian Root Pills

There are those that believe the heyday of the Patent Medicine Men was over by 1930.  Still others believe that many of the leopards simply changed their spots. It is true that some of the original “cure-alls” live on today in various consumer products like Dr. Meyer’s

Original Brand of Pond's Cold Cream

Compound Extract of Tomato (now Catchup), Ponds Extracts (now Ponds Cold Cream,) Horehound Drops, Coca-Cola, Hires Root Beer, Dr. Pepper, 7-Up (originally called Lithiated Bib-Soda,) Listerine (at various times marketed as a floor cleaner, surgical antiseptic, cure for gonorrhea, and then successfully as cure for Halitosis(bad breath), and the Common Cold,) Halls Catarrh Cure (later Hall’s cough drops,) and many many others.  Further many of the companies, abandoned their “patent medicines” in favor of the new class of “ethical” pharmaceuticals that arose after the pure food and drug act of 1906. Even more damaging than the laws enacted by congress, were a series of articles in Colliers Weekly by Samuel Hopkins Adams that awoke America to the problems of these often deadly, always worthless concoctions that America was imbibing.

Many of the original members of the Proprietary Association, the rulers of the patent medicine kingdom, have disappeared from the pages of history.  That is not to say they do not still exist.  In fact, many of the major “Big Pharma” companies got their start in the heyday of Patent Medicines. If they did not produce patent medicines themselves – and few failed to capitalize on this lucrative trade from the mid 1800s through the 1930s – they provided raw materials to the purveyors of these noxious nostrums who made up a large portion of their incomes back in the day. It is no wonder that most of the major pharmaceutical manufacturers have purged their history of any mention of this era or these products.  The information is still there if you want to find it but it takes some serious digging.  Some great source for those so inclined, are the old periodicals available for free on Google Books.

Today, we fail to understand the lasting impact that this period and these manufacturers have had on our national psyche and our health care system today.  We have both many laws and numerous business practices that got their start either to help foster the sales of patent medicines or to curtail the influence of the Proprietary Association.  My book, “The History and Evolution of Health Care in America” among other things, explores in some detail the rise of this industry and its deleterious legacy on our current health care system.  Along the way I came upon an interesting story of the W.H. Comstock company, manufacturer of Dr. Morse’s Indian Root Pills.  In many ways this was the quintessential patent medicine manufacturer of the period.  The rest of this article will tell you a bit of the fascinating story of the W.H. Comstock company.

In northern New York there is the small, sleepy riverside town of Morristown.  Organized in 1871, few visitors even today to this picturesque location on the banks of the St. Lawrence River would suspect that it was home for over a century to one of the most famous and infamous purveyors of patent medicines of the late 19^th and 20^th centuries:  the W.H. Comstock factory, better known as the manufacturer of Dr. Morse’s Indian Root Pills.

Morristown was a quiet backwater before the Comstock brothers relocated their operations the 280 miles from New York City in 1867.  They moved, in part, to jettison some of their notoriety for a series of lawsuits between the family members in the business and many others in New York City.  Conversely, the village was a sleepy rural town whose main focus was dairy farming.  Lacking a powerful water flow at this part of the St. Lawrence it did not become a big haven for mills.  It did, however, at one point or another, develop a grist, carding and saw mill.  It was the arrival of the Comstock operation that spurred a significant period of growth in the town.

William. H Comstock (circa 1910)

What attracted the Comstock brothers was its isolation, its proximity to Canada, and similarly access to land immediately across the river.  It was also the perfect location for shipping. At the time of the relocation of the W.H. Comstock factory, the railroad was just beginning operations in the area, making travel back and forth to New York simple and convenient.  Comstock not only developed a factory in Morristown but developed a similar operation directly across the river in the Canadian town of Brockville.  It was this dual production and distribution system that helped the Comstock’s become one of the dominant players in the patent medicine game.

Like many in others in the same game, the Comstock’s were hard men in a hard business.  Founded by Edwin Comstock in 1833, along with numerous other brothers and sons their business evolved as a result of a number of questionable and contentious events in its early history.

The Comstock family came from a medical background and many of them were, or had worn the moniker of, physicians in their history.  More interestingly and likely very telling, is that the Comstock family home was in Connecticut only a few miles of the first American patent medicine, Lee’s “Bilious Pills.”  “Bilious Pills” both from Lee and many other imitators found such public and rapid success it certainly also had a profound impact on Edwin’s decision to venture forth in the same line of business.

Clearly, Edwin was not a novice when he established his business in 1833 in New York City.   As then early years progressed he would bring his brother Luscious into the business and also other brothers; Albert Lee, John Carlton, and George Wells.  He later introduced his son William Henry who ultimately succeeded him and who was the Comstock who brought the factory to Morristown.  Like many of the patent medicines of the day none of the Comstock’s products were patented but instead relied on the new trademark laws for protection.  Also like many others, they had numerous unscrupulous counterfeiters – the fakers were often members of their own family.

A great book for those who would like to learn more about the tortured history of the Comstock family along with the development of the patent medicine business might be obtained in the History of the Comstock Patent Medicine Business and Dr. Morse’s Indian Root Pills by Robert B. Shaw. (The book was published in 1916, and still available from Google Books.)

Comstock sold many more products other than the signature Root Pills. In 1854, Comstock & Company – then controlled by Lucius Comstock, listed nearly forty of its own preparations for sale, namely:

1. Oldridge’s Balm of Columbia
2. George’s Honduras Sarsaparilla
3. East India Hair Dye, colors the hair and not the skin
4. Acoustic Oil, for deafness
5. Vermifuge
6. Bartholomew’s Expectorant Syrup
7. Carlton’s Specific Cure for Ringbone, Spavin and Wind-galls
8. Dr. Sphon’s Head Ache Remedy
9. Dr. Connol’s Gonorrhea Mixture
10. Mother’s Relief
11. Nipple Salve
12. Roach and Bed Bug Bane
13. Spread Plasters
14. Judson’s Cherry and Lungwort
15. Azor’s Turkish Balm, for the Toilet and Hair
16. Carlton’s Condition Powder, for Horses and Cattle
17. Connel’s Pain Extractor
18. Western Indian Panaceas
19. Hunter’s Pulmonary Balsam
20. Linn’s Pills and Bitters
21. Oil of Tannin, for Leather
22. Nerve & Bone Liniment (Hewe’s)
23. Nerve & Bone Liniment (Comstock’s)
24. Indian Vegetable Elixir
25. Hay’s Liniment for Piles
26. Tooth Ache Drops
27. Kline Tooth Drops
28. Carlton’s Nerve and Bone Liniment, for Horses
29. Condition Powders, for Horses
30. Pain Killer
31. Lin’s Spread Plasters
32. Carlton’s Liniment for the Piles, warranted to cure
33. Dr. Mc Nair’s Acoustic Oil, for Deafness
34. Dr. Larzetti’s Acoustic Oil, for Deafness
35. Salt Rheum Cure
36. Azor’s Turkish Wine
37. Dr. Larzetti’s Juno Cordial, or Procreative Elixir
38. British Heave Powders

Because of its diverse inventory, Comstock became one of the major patent medicine companies during this period.  The manufacturer was also one of the pioneers of the Almanac as a sales tool. As Comstock began to develop its product line, the patent-medicine era was entering its golden years.  Robert Shaw states in his book, “Improved transportation, wider circulation of newspapers and periodicals, and cheaper and better bottles all enabled the manufacturers of the proprietary remedies to expand distribution—the enactment and enforcement of federal drug laws was still more than a generation in the future. So patent medicines flourished; in hundreds of cities and villages over the land enterprising self-proclaimed druggists devised a livelihood for themselves by mixing some powders into pills or bottling some secret elixir–normally containing a high alcoholic content or some other habit-forming element–created some kind of a legend about this concoction, and sold the nostrum as the infallible cure for a wide variety of human (and animal) ailments. And many conservative old ladies, each one of them a pillar of the church and an uncompromising foe of liquor, cherished their favorite remedies to provide comfort during the long winter evenings. But of these myriads of patent-medicine manufacturers, only a scant few achieved the size, the recognition, and wide distribution of Dr. Morse’s Indian Root Pills and the other leading Comstock remedies.”

Comstock took the lead as one of the main pioneers of the almanac -a sales brochure phenomenon of the day.  Almanacs were so popular and so mass produced that it was not uncommon for a person to walk into any drugstore and pick up three or four of them.  Some of these publications grew rapidly from just a few pages to over 64 pages by the mid 1800’s.

Stories published in the almanacs of the discovery of these nostrums, and also on the wrappers of the elixirs themselves, provided great reading and were the story-board commercial of their day.    Mr. Shaw relates in his book some examples of such inventive pitches,

Before 1900 the detailed story of the discovery of Dr. Morse’s pills was abridged to a brief summary, and during the 1920s this tale was abandoned altogether, until the end the principal ingredients were identified as natural herbs and roots used as a remedy by the Indians. In more recent years, the character and purpose of Dr. Morse’s pills also changed substantially. As recently as 1918, years after the passage of the Federal Food and Drug Act of 1906, they were still being recommended as a cure for:

Biliousness Dyspepsia Constipation Sick Headache Scrofula Kidney Disease Liver Complaint Jaundice Piles Dysentery Colds Boils Malarial Fever Flatulency Foul Breath Eczema Gravel Worms Female Complaints Rheumatism Neuralgia La Grippe Palpitation Nervousness

Further, two entire pages in the almanac were devoted to explaining how, on the authority of “the celebrated Prof. La Roche of Paris,” appendicitis could be cured by the pills without a patient having to resort to the surgeon’s knife.

In another segment from the book, Mr. Shaw relays information mainly directed to the female health problems of the day.

THE GREAT FEMALE MEDICINE the almanac read:

The functional irregularities peculiar to the weaker sex, are invariably corrected without pain or inconvenience by the use of Judson’s Mountain Herb Pills. They are the safest and surest medicine for all the diseases incidental to females of all ages, and more especially so in this climate.

Ladies who wish to enjoy health should always have these Pills. No one who ever uses them once will ever allow herself to be without them. They remove all obstructions, purify the blood and give to the skin that beautiful, clear and healthful look so greatly admired in a beautiful and healthy woman. At certain periods these Pills are an indispensable companion. From one to four should be taken each day, until relief is obtained. A few doses occasionally, will keep the system healthy, and the blood so pure, that diseases cannot enter the body.

Watch any television show, listen to any radio broadcast or read any periodical or newspaper and one of the most prevalent areas of medicinal support will point to the area of sexual dysfunction.  Viagra and Cialis are boldly marketed for the treatment of men’s lack of “libido” or rigor in performance.   Only slightly more discreetly advertised are products for women related to dryness, libido enhancements or other more prurient pursuits.  While we think these issues are a modern connivance they are not. Again Mr. Shaw’s excellent history provides valuable insight to back up this assertion.  It reads:

Over on the Canadian side of the river, where another plant approximately the same size as the Morristown facilities was in operation, the Comstock Company had assimilated the Dr. Howard Medicine Co. Dr. Howard’s leading remedies were his Seven Spices for all Digestive Disorders and the Blood Builder for Brain and Body. The latter, in the form of pills, was prescribed as a positive cure for a wide array of ailments, but like many other patent medicines of the era, it was hinted that it had a particularly beneficial effect upon sexual vitality.

Over on the Canadian side of the river, where another plant approximately the same size as the Morristown facilities was in operation, the Comstock Company had assimilated the Dr. Howard Medicine Co. Dr. Howard’s leading remedies were his Seven Spices for all Digestive Disorders and the Blood Builder for Brain and Body. The latter, in the form of pills, was prescribed as a positive cure for a wide array of ailments, but like many other patent medicines of the era, it was hinted that it had a particularly beneficial effect upon sexual vitality.

They have an especial action (through the blood) upon the SEXUAL ORGANS of both Men and Women. It is a well-recognized fact that upon the healthy activity of the sexual apparatus depend the mental and physical well-being of every person come to adult years. It is that which gives the rosy blush to the cheek, and the soft light to the eye of the maiden. The elastic step, the ringing laugh, and the strong right arm of the youth, own the same mainspring. How soon do irregularities rob the face of color, the eye of brightness!

Everyone knows this. The blood becomes impoverished, the victim PALE. This pallor of the skin is often the outward mark of the trouble within. But to the sufferer there arise a host of symptoms, chiefest among which are loss of physical and nervous energy. Then Dr. Howard’s BLOOD BUILDER steps into the breach and holds the fort. The impoverished Blood is enriched. The shattered nervous forces are restored. Vigor returns. Youth is recalled. Decay routed. The bloom of health again mantles the faded cheek. Improvement follows a few days’ use of the pills; while permanent benefit and cure can only reasonably be expected when sufficient have been taken to enrich the Blood.

Before the Blood Builder pills were taken, all their users were advised to have their bowels thoroughly cleansed by a laxative medicine and, happily, the company also made an excellent preparation for this purpose–Dr. Howard’s Golden Grains. While the good doctor was modern enough–the circular quoted from was printed in the 1890s–to recognize the importance of the healthy activity of the sexual apparatus, such a suggestion should not be carried too far–so we find that the pills were also unrivaled for building up systems shattered by debauchery, excesses, self-abuse or disease. Along with the pills themselves was recommended a somewhat hardy regimen, including fresh air, adequate sleep, avoidance of lascivious thoughts, and bathing the private parts and buttocks twice daily in ice-cold water.

Certainly during the early days of the “Victorian” era these findings did not soften the ardor of the general populace who took to these remedies nor did the nature of these times force subtlety in the description of the cures available.  Today, the main findings we see pushed down our throats, very often literally, are cures for sexual dysfunction, “female problems,” constipation, the common cold or flu, mental stimulation, and my favorite compensating for loss of energy.  If one looks at the advertising for Comstock’s products one will see a historical mirror illustrating the sale of exactly the maladies and remedies for them, sometimes by the use of blunt and bold copy.  Most of the messages were communicated via the almanacs, product wrappers and newspapers. It would not be unlikely for all concerned about the evolution of health care to not wonder how much longer the patent medicine men would have held sway if radio and television had also been mediums to reach the gullible public. But then again, who is to say these purveyors of the quack and addictive have disappeared?

In a final section from the book, Mr. Shaw cites two other main points of interest during this period in which Comstock stands out as a solid illustrative member of the illustrious patent medicine industry; the use of testimonials in advertising its products and the lack of hard money in communities (important later relative to understanding the issues physicians faced in their practice in rural communities).  The use of testimonials was critical in the sale of these nostrums.  The experience of the everyday user was what rung most true to consumers, again just like today.  A great deal of newspaper ink was devoted to the publication of the merits of this nostrum or that elixir.  On rare occasions they showed up as advertisements.  More often than not, they also appeared as articles and letters to an editor.  Mr. Shaw summarizes these issues as follows.

Testimonials submitted voluntarily by happy users of the pills were always widely featured in the almanacs, newspaper adver-tisements, and handbills. Although the easy concoction of the stories about Dr. Morse and Dr. Cunard might suggest that there would have been no hesitation in fabricating these testimonials, it is probable that they were genuine; at least, many have survived in the letters scattered over the floor of the Indian Root Pill factory. In some cases one might feel that the testimonials were lacking in entire good faith, for many of them were submitted by dealers desiring lenient credit or other favors. Witness, for example, the enclosed letter from B. Mollohan of Mt. Pleasant, Webster County, West Va., on April 16, 1879.

Mollohan’s complaint about the shortage of money and the long delay in collecting many accounts reflected a condition that prevailed throughout the nineteenth century. Money was scarce, and the economy of many rural communities was still based largely on the barter system, so that it was very difficult for farmers to generate cash for store goods. Consequently, country storekeepers had to be generous in extending credit, and, in turn, manufacturers and jobbers had to be lenient in enforcing collection.

Contrary to popular perception, and in spite of many government regulations and actions taken by numerous associations to curtail the business of patent medicines, the W.H Comstock enterprise continued to thrive long after World War II.  The company reached its heyday shortly after World War I, but continued to sell many of its nostrums to retailers and distributors until March 31, 1960, when the last shipment of one-dozen boxes of pills was made to Gilman Brothers of Boston and two-dozen boxes to McKesson & Robbins of Mobile, Alabama on April 11 of that year. And with this final consignment – the factory closed its doors, concluding 93 years of continuous operation in the riverside village of Morristown.

In many ways W.H. Comstock is a true representative of the rise and decline of patent medicine manufacturers of the early 20^th century.  I use the term decline as opposed to death.  It will be left up to the reader to determine if the patent medicine era has died or if the leopard has simply changed its spots. Later in this section, and in the others that follow, the reader will note that most of the companies are still with us, they have just changed their tactics or abandoned the “medicine” market for what is now referred to as “ethical pharmaceuticals” and/or the consumer product category.  Perhaps as a reader, you may come to the conclusion that “ethical” is a very flexible word when it comes to the acceptance and approval of pharmaceuticals.

After all, it took the FDA almost 100 years (1964) to finally get Warner – Lambert, the maker of Listerine – first formulated in 1879 – to finally stop improperly claiming in its advertizing that it was a cure for the common cold.

Please make a comment below if you like this brief history.  If so, I will be happy to include a few more in the next weeks as we prepare for the release of my new book!

President Obama’s Critical Question

Tonight president Obama asked a very key question. This is one of those great moments where one question that really is one of the key questions was used as a throw-away, feel-good line.

President Obama asked, “Where would America be if we had not passed Medicare and Medicaid?”

This is really a key question, is it not? This question should not be a throw-away line, as it is the underpinning of the base argument, that Medicare and Medicaid have been good for us as a people and for the country. My opinion is this is, in fact, one of the major differences in the grander debate. Clearly, the president believes that the answer to these questions is in the affirmative. But, what if the answer is no? What if the truth is, that Medicare and Medicaid, have driven up our health care costs, disproportionately? What if these programs have fostered an era of unprecedented lack of responsibility? What if these programs have been one of the significant contributors to the base cost of business in America, and are one of the key underlying reasons that America is no longer able to manufacture goods cost-competitively for the rest of the world to purchase from us? What if these programs have so changed the nature of our economy that we now have accumulated a trade deficit in excess of $12 trillion since 1972 and we can’t become a net exporter because our goods are too expensive?

I think these are the key questions that need to be discussed. I submit the president will not like the answer. I also submit neither Presidents Obama nor Bush, nor republicans nor democrats are to blame for the problem. I further submit it is this issue that is the key problem we need to pragmatically solve.

President Obama should get some credit for asking this key question. He should also get some critique for using it as a throw-away feel-good line to rally his base – particularly if the answer is not as he is assuming!

I hope others will help tackle this question in the next few days. I know I will be continuing this dialog in the next few days specifically on this topic. It has been key to my research and understanding on the crisis we have in our health care system, if is one of the core issues discussed in my book and something that I feel we must address.