Consumer Power Report

Published December 20, 2010

“This case isn’t about health insurance. It isn’t about health care. It’s about liberty.”

Those are the words Virginia Attorney General Ken Cuccinelli said to me the other day – you can listen to our interview at Heartland’s blog. Without question, the big news on health care came from the Commonwealth of Virginia, whose case against HHS Secretary Kathleen Sebelius passed the first judicial hurdle with a ruling by Judge Henry Hudson finding the individual mandate unconstitutional. It is not just Cuccinelli – whose view on this constitutional question was roundly ridiculed by the left during the debate about President Barack Obama’s law – who has triumphed in this first round, but the arguments of a host of constitutional scholars, libertarians, and conservatives who believe in limited government.

The ruling itself is carefully constructed and follows on much of what my colleague Maureen Martin has predicted as Obama’s law navigates its way through the courts. The two key questions are in the arena of severability and in Hudson’s decision not to grant the state an injunction. For more on the first question, you can read my Guide to Severability and Obamacare, released earlier this year. As for the second, I anticipate this to be a moot point – mostly because given the timeframe of the appeals process, we’ll know the outcome well in advance of the 2014 deadline. Every expert I’ve interviewed agrees the Supreme Court will likely rule on this case in 2012, in the midst of the presidential election season. That should make for an interesting political storyline.

It’s worth noting that Virginia’s Health Freedom Act, which made this standalone case possible, was passed with bipartisan support in Virginia – over the coming year, I expect other states to follow suit. I also fully expect, as does Virginia Speaker William J. Howell, that ideas like the Repeal Amendment will gain traction as well. States are examining budget numbers that are grim at best, and the more they calculate the cost of newly covered Medicaid members, the more the individual mandate looks like a major problem. The Congressional Budget Office found back in June that eliminating the mandate alone would save taxpayers billions – of course, they didn’t examine the possibility that eliminating it while retaining Obama’s burdensome regulatory regime would destroy the private insurance market. Details, details.

But back to that “liberty” thing – I just recorded an interview with a perfectly fine gentleman in the radio industry on the other side of the ideological aisle, and he posed the question: “Why should we even listen to these people citing things from the 1780s? As if that has anything to do with health care today? Would the Founders really have cared about the individual mandate?”

Some people may share this attitude. I responded by pointing out that you’d be surprised how little has changed in terms of how humanity behaves – if anything at all – and that the form of government we seek shouldn’t respond to trends or fads, but to the basic, simple, straightforward understanding of what works and why. History taught us this, just as it taught the Founders – we just have more evidence of their genius today. We know that socialism failed. We know that markets do a much better job of allowing people to achieve their best – to be more industrious, entrepreneurial, successful, and free – than any combination of government mandates, incentives, and regulatory regimes ever will. And we know government based on equal liberty is in every way superior to an inevitably corrupt system based on enforcing equal outcomes.

These blessings of liberty have made all the difference in shaping the America we know and love, and if we choose to reject them, we do so not as students of history, but as those so in love with our own ideas of the way the world ought to be that we reject the way it is.

Since this is my last CPR before Christmas, allow me to wish you all a happy and glorious holiday season. It has been my pleasure to write to you all this year, and I look forward to writing to you next year as well.

Best Regards,

Benjamin Domenech



I’ve written to you before about Avik Roy, Heartland Institute health policy expert, and his excellent coverage of how Obamacare has impacted the drug industry and other health policy questions. He has the most comprehensive roundup you’ll ever need to read regarding the case in Virginia, linking to nearly every good commentary on the subject and posing a number of interesting followup questions. He writes:

“In reading the opinion, I was struck by its carefulness. Hudson was rather precise in attempting to draw out how PPACA extended congressional powers farther than they had ever been extended before. There are two key Supreme Court cases that dramatically broadened the Constitutional provision that allows Congress to regulate ‘interstate commerce’: Wickard v. Filburn, a 1942 case in which the Supreme Court absurdly ruled that a man growing wheat to feed his chickens was conducting interstate commerce, even though he had no intention to sell it; and Gonzales v. Raich, a similarly suspect 2005 case in which the Court agreed that the Commerce Clause allowed Congress to regulate the ability of a man to grow marijuana in his own home for his own use.

“Hudson argued in his ruling that PPACA goes farther than the laws in question in Wickard and Gonzales, by penalizing inactivity as opposed to activity. In other words, he increased the likelihood that his ruling would be upheld upon appeal by not forcing the Supreme Court to overturn either of these two prior judgments. What the Supreme Court actually ends up doing will depend entirely upon whether or not Anthony Kennedy agrees with Henry Hudson. I would say the odds are 60-40 in Hudson’s favor.”

SOURCE: The Apothecary


Grace-Marie Turner of the Galen Institute has prepared a list of nine things states (and state legislators) should do to respond to Obama’s health law. It’s an excellent summation of a variety of ideas. Here’s just one example of her advice when it comes to the Medicaid problem:

“Medicaid is already gobbling up resources for everything from public safety to education to transportation, and the law requires states to expand it to cover at least 16 million more people in families earning up to $30,000 a year. States have been pleading for years for more flexibility so they can gain control over spending and be freed from federal micromanagement. States could follow the lead of Rhode Island, which was granted a waiver from the Bush Administration in January of 2009 to receive its Medicaid funding as a block grant rather than a federal match for Medicaid spending. The result: The state saved $150 million in the first 18 months. The state’s Health Secretary Gary Alexander says the savings from Medicaid were ‘the sole reason why Rhode Island possessed a state budget surplus in 2010.'”

SOURCE: Galen Institute


The Avastin ruling prompted an outpouring of responses from the breast cancer community and policy observers who decried a decision based less on clinical outcomes than on cost. You can read my story on the decision, with comments from Peter Pitts and Sally Pipes. The Wall Street Journal editorial page offered this encapsulation of the problem with the FDA’s decision, though of course the worst effect is the damage done to patients with terminal breast cancer:

“One depressing implication is what the decision says about health-care financing as government entitlements expand. Avastin is a political target because of its high cost–a typical course runs as high as $88,000–and after ObamaCare all medical questions are inevitably political questions too. In September, the FDA and Medicare proposed a ‘parallel review’ process that will allow the two agencies to coordinate market and reimbursement approval. Medicare is also increasingly opening ‘national coverage determination’ reviews that allow a government board to decide if a therapy is ‘reasonable and necessary.’

“Another danger is to the future of medical innovation. Cancer treatment advances incrementally. Every year doctors are better able to pair medicines with the biomarkers pointing to the individuals who are most likely to respond and learn more about tumor angiogenesis, which is the process of cancer growth that Avastin helps to choke off. The FDA’s assault will make it harder to conduct and enroll patients in further clinical studies, to say nothing of its message about the regulatory risk for drugs still in development.”

SOURCE: Wall Street Journal


Bradley Knight, MD, FACC, FHRS, and editor-in-chief of the Electrophysiology Lab Digest, has written an article in which he defends a proper view of relationships between physicians and industry – an increasingly hot-button topic. He finds fault with a proposal published in the Journal of the American Medical Association that recommended a broad restriction on those who can serve on PMA Professional Guideline and Scientific Session committees, writing, “these zero tolerance recommendations regarding committee membership fail to differentiate two very separate types of relationships between physicians and companies: those that are real conflicts of interest and those that could be perceived.” And here’s the key point (emphasis mine):

“Not all relationships with industry are created equal. A real conflict of interest should be defined as one where the person or a member of the person’s household has a reasonable potential for financial, professional, or other personal gain or loss as a result of the issues or content addressed by the committee. Obvious examples are when physicians are company employees, receive direct salary support, own company stock or stock options, or receive royalties. In these cases the physician has potential for future additional income based on the success of the company. In contrast, physicians who provide legitimate advice to a company, participate in industry-sponsored clinical trials, or are involved in an unrestricted industry-sponsored educational activity are not in a position to directly gain personally in the future based on the financial success of the company.

“The latter activities should be encouraged, fostered, and promoted, and physicians involved in these activities should not be restricted from being involved in leadership positions and roles in medical societies. It only makes sense that physicians should continue to work directly with companies to develop better products used for patient care. And it only makes sense that these physicians should be compensated for their efforts. These activities are not the same as making an investment in a company.”

SOURCE: EP Lab Digest


The Heritage Foundation’s Robert Moffitt and the Ethics and Public Policy Institute’s James Capretta released a high-quality paper this week on Medicare reform that offers five key areas for improvement:

1. Predictable and Stable Financing
2. Broad Personal Choice of Plans and Options
3. Standards that Meet or Exceed the FEHBP’s
4. Freedom of Choice for Medicare Enrollees
5. Medicare Savings for Medicare Alone

They write:

“A better Medicare program, with a range of personal choice and a system of governance broadly similar to the FEHBP, will give Medicare patients control over the flow of dollars and freedom to make decisions about how they access medical services. This will stimulate intense market competition among plans and providers, control costs, and promote rapid innovation and higher productivity through the efficient delivery of quality care, thus guaranteeing value in return for retiree premiums and taxpayer dollars. Strong budgetary controls will back up the competitive structure, ensuring that the Medicare program remains affordable. Most important, these reforms will promote personal freedom of choice as well as stable and reliable health insurance.”

This is a good start. While not feasible within the current Congress, it’s a good encapsulation of improving this unwieldy program in ways that move us toward a system empowering consumers.

SOURCE: Heritage Foundation


The Fraser Institute has issued its annual report on wait times in Canada, and again detailed an increase in wait times for therapeutic and elective procedures. Highlights of the study include:

  • Specialist physicians surveyed across 12 specialties and 10 Canadian provinces report a total waiting time of 18.2 weeks between referral from a general practitioner and elective treatment in 2010.
  • Patients wait longest to undergo orthopedic surgery (35.6 weeks) and wait least for medical oncology treatment (4.9 weeks).
  • Canadians wait nearly 3 weeks longer than what physicians believe is “reasonable” for elective treatment after an appointment with a specialist.
  • Throughout the provinces, in 2010 people are waiting for an estimated 825,827 procedures. Assuming that each person waits for only one procedure, 2.45 percent of Canadians are waiting for treatment.
  • Only 9 percent of patients are on waiting lists because they requested a delay or postponement.

I don’t think it’s a stretch to say America’s on-demand mentality would never allow for such widespread wait times, one of the chief controlled advantages of a government-run system. Not an advantage for you, you understand – an advantage for the government.

SOURCE: Fraser Institute