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Newsletter

Health Freedom Watch
July 2010


Contents:

  • Obamacare’s Impact on Access to Care, Costs
  • Obamacare and Taxes
  • Cato Institute Releases 52-Page Guide to the Real Costs and Consequences of the New Health Care Law
  • AMA’s Government-Protected Monopoly Squeezes Out Alternative Medicine


  • Obamacare’s Impact on Access to Care, Costs

    Health-policy experts across the political spectrum are wary of Obamacare’s promises to increase access to health care and lower costs.

    The libertarian Cato Institute’s Michael Tanner notes President Obama recently told MSNBC’s Chuck Todd that the law “not only makes sure everybody has access to coverage but is reducing costs.”  Tanner refutes those claims: 

    • “The bill doesn’t come close to giving ‘everybody’ access to coverage. According to the Congressional Budget Office, 10 years from now there will still be at least 21 million uninsured Americans. That’s an improvement over today, but it’s a far cry from the universal coverage that Obama once promised. And nearly half of the newly covered aren’t getting access to true health insurance but are being added to the Medicaid program, with all of its attendant problems of access and quality.”

    • “Even further from reality is the president’s continued insistence that the new law is ‘reducing costs.’ In fact, the administration’s own chief health-care actuary reports that the law will actually raise US health-care spending by $311 billion over 10 years. This failure to control costs means that the law will add significantly to the already crushing burden of government spending, taxes and debt.”

    • “Anyone who thinks that their insurance premiums will be going down in the foreseeable future is going to be disappointed. The law does nothing to restrain the growth in insurance costs. In fact, the Congressional Budget Office says that premiums will double over the next six years, roughly the same rate of increase as would have occurred without health-care reform.”

    Meanwhile, Dr. Steffie Woolhandler, a professor of medicine at Harvard Medical School and cofounder of Physicians for a National Health Program (PNHP), told the SocialistWorker.org that the health-reform bill was actually written by the insurance industry and doesn’t address underlying problems:

    • “The big problem with the bill is that so much money and power is being handed to the private health insurance industry, which is the cause of the problem in the first place.… If you look at the [political] donations, plenty of insurance industry money did go to the Democrats. An insurance industry vice president, Elizabeth Fowler, actually came to work for Sen. Max Baucus, the head of the Senate Finance Committee, and was the author of the Baucus Framework for the legislation.”

    • “Under the new ‘exchanges’ set up under the law for the uninsured to go to buy insurance, people will have to spend up to 9.5 percent of their income for policies that cover only 70 percent of health care costs. So you would still be in a situation of having insurance that was so skimpy that you would have difficulty getting care when you needed it. As you know, Massachusetts has the prototype of this reform. If you go on the Internet to look at our insurance exchange, it’s called the Massachusetts Connector. For someone in their mid-50s, the cheapest policy available that would meet the mandate for someone who is paying the full rate—which is anyone who makes more than $33,000 in income a year—costs more than $5,000 per year in premiums. Then, if you get sick, there’s a $2,000 deductible—so you have to take another $2,000 out of your pocket before the insurance kicks in. And then, for the next $15,000 in health spending, you’re responsible for 20 percent of everything—$3,000. So it’s extremely expensive if you get sick and have to use it once you buy it.”

    • “That means that many people will still lack access to care—because they won’t be able to afford to use their insurance policy, even if they own it.”

     Sources:

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    Obamacare and Taxes

    By Greg Scandlen

    The following news summary is from Greg Scandlen’s Consumer Power Report #231:

    Is the Mandate a Mandate, or a Tax?

    Although the medical/business community is focused on how to implement Obamacare, the likelihood of it being thrown out by the courts is growing dramatically. The latest evidence is that the administration has decided not even to defend the law on Commerce Clause grounds, but will argue instead that the mandate isn’t really a mandate at all, but merely a tax. The federal government certainly has authority to levy a tax and provide a program.

    Well, yes it does. And if that was how the law had been written it would certainly pass judicial review. But of course, if that was how it had been written it never would have passed in Congress. Instead, it was written to require people to pay premiums to private entities. The “tax” here is not merely the penalty paid to the IRS for failure to buy health insurance, but the requirement to pay premiums in the first place. Ergo, it is NOT a “tax.” Private companies are not allowed to collect taxes from citizens.

    My advice to companies—do not throw away a lot of money learning how to comply with a law that will never survive a court challenge.

    Sources and author’s note: One of the niftiest analyses is by Ken Blackwell and Ken Klukowski on the Huffington Post (of all places) (http://www.huffingtonpost.com/ken-blackwell/obamacare-the-presidents_b_651227.html); Heritage also has an analysis, but it is a little too willing to accept that this “tax” is legitimate for my tastes (http://blog.heritage.org/2010/07/20/morning-bell-white-house-admits-obamacares-individual-mandate-is-a-tax/print/); and American Spectator (http://spectator.org/archives/2010/07/20/suing-obamacare/print).

    40 Million Small Businesses Affected by New Tax-Reporting Requirement

    Meanwhile, the IRS will have its hands more than full trying to administer everything else this law requires, according to the Washington Post. Some of this is just beginning to sink in to the minds of the public. In 2012, every business, including sole-proprietorships, will have to issue a 1099 to anyone from whom it buys $600 worth of goods or services.

    The IRS’s Tax Advocate Service says, “For example, if a self-employed individual makes numerous small purchases from an office supply store during a calendar year that total at least $600, the individual must issue a Form 1099 to the vendor and the IRS showing the exact amount of total purchases.” [http://www.irs.gov/newsroom/article/0,,id=225270,00.html]

    When I try to explain this to business groups, they invariably reply, “No, that can’t possibly be right. You mean if I buy $600 worth of paper from Wal-Mart in the course of a year I have to get their IRS number, the address of the corporate accounting office, send them a 1099 and another copy to the IRS?” Yep. That’s exactly what it means. “What does this have to do with health care? What is wrong with these people?”

    I don’t know, but the Tax Advocate Service estimates 40 million businesses will be affected. And no money was appropriated to cover the cost.

    CNN Money reports that purchases made with debit and credit cards will not be subject to this new rule, because “a separate reporting requirement kicks in next year that will cover card transactions and help the IRS spot unreported payments made through those channels.” The article quotes Tom Henschke, president of SMC Business Councils, as estimating only 10 percent of all transactions will be exempted. He says, “Most of the small businesses out there that do small business [purchasing] don’t do it by credit card. One of the reasons is the transaction cost is very high—2% to 3%.”

    Sources: Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2010/07/08/AR2010070806092_pf.html); CNN Money (http://money.cnn.com/2010/07/09/smallbusiness/irs_1099_flood/)

    Note: The two articles above are reprinted from “Consumer Power Report #231,” by Greg Scandlen, Consumers for Health Care Choices at The Heartland Institute, July 21, 2010: http://www.heartland.org/healthpolicy-news.org/article/28083/Consumer_Power_Report_231.html

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    Cato Institute Releases 52-Page Guide to the Real Costs and Consequences of the New Health Care Law

    The following is a news release from the Cato Institute:

    At more than 2,500 pages and 500,000 words long, the new health care bill—the Patient Protection and Affordable Care Act—is the most significant transformation of the American health care system since Medicare and Medicaid.

    The bill's complexity has created confusion, frustration, false expectations, and conflicts about its coverage and impact. The incisive report below, written by Cato Institute senior fellow Michael D. Tanner, provides an authoritative and deeply revealing explanation of its provisions.

    The diagnosis: the bill is bad medicine. It is likely to make Americans less healthy, less prosperous, less able to direct their own health care decisions, and places huge burdens on our economy and already massive national debt. It is now certain that the debate over health care reform will be with us for much longer.

    Source: Cato Institute news release on “Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law,” July 12, 2010: http://www.cato-at-liberty.org/2010/07/12/bad-medicine-a-guide-to-the-real-costs-and-consequences-of-the-new-health-care-law/ and http://www.cato.org/pubs/wtpapers/BadMedicineWP.pdf

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    AMA’s Government-Protected Monopoly Squeezes Out Alternative Medicine

    The following is a news article published by the Alliance for Natural Health-US:

    The world of medicine is run by billing codes. Every hospital, doctor, and practitioner who accepts insurance or Medicare uses billing codes so they can be reimbursed. But where are the codes for integrative and alternative medical services?  Our Action Alert [1] to the DHS this week asks for the incorporation of these integrative codes.

    Healthcare codes describe medical, surgical, and diagnostic services, remedies, and supply items provided to patients. They are designed to communicate uniform information about medical services and procedures among physicians, coders, patients, accreditation organizations, payers (insurance, managed care, Medicare, Medicaid, etc.).

    The code set copyrighted and maintained by the American Medical Association is called the Current Procedural Terminology (CPT) code. In 1983, an agreement between the HCFA (the government’s Health Care Financing Administration, which is under the Department of Health and Human Services) and the AMA made the CPT the sole coding system that could be used for billing Medicare. This monopoly completely squeezes out alternative and integrative medical practitioners.

    The AMA’s codes are for treatments by conventional medical doctors, in allopathic medical care systems. There are no codes for complementary and alternative medicine (CAM) because the AMA doesn’t deal in that type of medicine; for them to create CAM codes would in fact be a conflict of interest.

    There is a competing system that can fill those gaps: the ABC codes—a system of 4,400 new codes specifically designed for those 4,300,000 non-MD practitioners working in professions such as nursing, behavioral health, alternative medicine, ethnic and minority care, midwifery, and spiritual care. They are important for a number of reasons:

    • they are HIPAA-compliant (HIPAA is the Health Insurance Portability and Accountability Act; passed by Congress in 1996, it allows for people to transfer and continue their health insurance coverage when they change or lose their jobs, mandates industry-wide standards for healthcare information on electronic billing, and requires the protection and confidential handling of protected health information);
    • they can be used by both licensed and non-licensed healthcare practitioners on standard claim forms;
    • they complement existing code systems used in the allopathic setting;
    • they accurately document the care patients receive, covering a vast range of healthcare practices; and
    • they fulfill requirements imposed by both state medical boards and payers.

    Widespread use of ABC codes is desperately needed so alternative medical providers can be fairly compensated for the services they provide, and can document and quantify the safety and efficacy of their treatments.

    However, the AMA’s coding system is being spread across the board—and physicians are charged to use it, even though only 15–19% of practicing physicians are AMA members [2]. And it’s a huge business. The AMA’s own website says [3], “The AMA is a successful business entity that generates approximately two-thirds of its annual $230 million operating budget from non-dues sources”—which includes the hefty fees to use the CPT codes.

    In 1997, the US Court of Appeals, Ninth Circuit, ruled that the AMA’s exclusivity agreement with HCFA [4] for using CPT “gave the AMA a substantial and unfair advantage over its competitors” and “constituted a misuse of the copyright by the AMA.” The court did not address whether the AMA’s conditions and high prices for a licensee’s use of the CPT code constituted violations of anti-trust law as well.

    In 2001, when he was Senate Minority Leader, Trent Lott (R–MS) asked the Department of Health and Human Services to clarify the exclusivity arrangement it had with the AMA’s coding system [5]. In response, the HHS approved a two year pilot project using the ABC codes. The pilot project was an amazing success, providing stunning statistics in a report showing the need for a revised billing code system—one that would include billing codes for ALL health practitioners.

    According to ABC Coding Solutions, which developed the ABC codes, the AMA is now open to other coding systems, and ABC codes can work with CPT and provide supplemental information for billing, but the government has been unwilling to implement any changes that would have a greater effect on the healthcare billing system. Our Action Alert [1] to the DHS this week asks for the incorporation of these integrative codes.

    As we pointed out last week [6], doctors often have their hands tied by healthcare regulations. A doctor can be charged with a crime for billing an “unnecessary” treatment to the government or a private insurance company, because the CPT codes often do not allow for non-traditional services. This makes it difficult for doctors to bill their services accurately and puts them at risk of running afoul of government regulations.

    There are several ways for an integrative doctor to reduce this risk. One is to not participate in any government program or accept private insurance.  Another is to avoid using the CPT codes and instead substitute the ABC codes—ABC will automatically convert its code to the AMA’s code for such billing purposes. This makes the treatment more likely to be covered, and it will therefore be harder to say that it is “unnecessary.” This can be especially useful for an integrative clinic that is part of a hospital system that requires the AMA’s code.

    References:

    [1] Action Alert: https://secure3.convio.net/aahf/site/Advocacy?cmd=display&page=UserAction&id=442

    [2] Only 15–19% of practicing physicians are AMA members: http://www.medpagetoday.com/PublicHealthPolicy/PracticeManagement/3516

    [3] The AMA’s own website says: http://www.ama-assn.org/employ/workplac/affil.htm

    [4] AMA’s exclusivity agreement with HCFA: http://ftp.resource.org/courts.gov/c/F3/121/121.F3d.516.94-56774.html

    [5] Asked the Department of Health and Human Services to clarify the exclusivity arrangement it had with the AMA’s coding system: http://www.aapsonline.org/medicare/lottcptletter.htm

    [6] As we pointed out last week: http://www.anh-usa.org/criminalizing-doctors%E2%80%94yet-again/

    Source: “AMA’s Government-Protected Monopoly Squeezes Out Alternative Medicine,” Alliance for Natural Health–US, July 27, 2010:  http://www.anh-usa.org/ama%e2%80%99s-government-protected-monopoly-squeezes-out-alternative-medicine/

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    Health Freedom Watch is published by the Institute for Health Freedom. Editor: Sue Blevins; Assistant Editor: Deborah Grady. Copyright 2010 Institute for Health Freedom.