The Twisted Golden Rule
Home Up Corruption

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"He Who Has the Gold, Makes the Rules" 
- Ancient Proverb

Cancer Diaries

Part Eight: The Twisted Golden Rule

Written by Rick Archer
January 2014

Many of us assume the Golden Rule, "Do Unto Others As You Would Have Them do Unto You", originated in the Christian faith.

Such is not the case.  A similar maxim appears in practically all the world's religions and ethical traditions.

Considering just how widespread this concept is across the world, what a shame the Golden Rule is not observed more often.

There is a cynical corollary to the Golden Rule that goes something like this:  "He Who Owns the Gold Makes the Rules".

As you will read, this twisted version of the Golden Rule completely explains why America is stuck with one of the world's most mediocre health systems.

Keep in mind my "Cancer Diaries" began as an investigation into what seems to be the deliberate suppression of several potential "alternative" cures to cancer over the past century.  Just the thought that someone would deliberately deprive the human race of a remedy to this dread scourge is difficult to accept, but I have come to believe that is exactly what has happened. 

During my research, I have discovered the reprehensible action of deliberately sabotaging promising cancers cures is just one part of a widespread 'disease' that extends throughout America's entire Medical Industry.

While I continue to believe that America has many of the finest doctors, hospitals and research facilities in the world, I am flabbergasted to learn that health care in America has become far too expensive for most of the people it was meant to serve.  It isn't just the poor who cannot afford to get sick, now the middle class is just as terrified.  60% of all bankruptcies in America today are related to the inability to pay for catastrophic illnesses.  One single illness can effortlessly wipe out someone's entire life savings. 

I am convinced that the problems in finding a cure for cancer are actually just another symptom of a medical system that is unbelievably corrupt, ridiculously inefficient, and insanely profitable for those "insiders" who benefit from rigging the game.

Let us begin our look at the problems in American medicine with the following story.

Our Broken American Medical System

Why Medical Bills Are Killing Us

By Steven Brill, TIME Magazine
27 February 2013

When Sean Recchi, a 42-year-old from Lancaster, Ohio, was told in March 2012 that he had non-Hodgkin's lymphoma, his wife Stephanie knew she had to get him to MD Anderson Cancer Center in Houston. Stephanie's father had been treated there 10 years earlier, and she and her family credited the doctors and nurses at MD Anderson with extending his life by at least eight years.

Because Stephanie and her husband had recently started their own small technology business, they were unable to buy comprehensive health insurance. For $469 a month, or about 20% of their income, they had been able to get only a policy that covered just $2,000 per day of any hospital costs. "We don't take that kind of discount insurance," said the woman at MD Anderson when Stephanie called to make an appointment for Sean.

Stephanie was then told by a billing clerk that the estimated cost of Sean's visit - just to be examined for six days so a treatment plan could be devised - would be $48,900, due in advance. Stephanie got her mother to write her a check. "You do anything you can in a situation like that," she says.

The Recchis flew to Houston, leaving Stephanie's mother to care for their two teenage children.

About a week later, Stephanie had to ask her mother for $35,000 more so Sean could begin the treatment the doctors had decided was urgent. His condition had worsened rapidly since he had arrived in Houston. He was "sweating and shaking with chills and pains," Stephanie recalls. "He had a large mass in his chest that was ... growing. He was panicked."

Nonetheless, Sean was held for about 90 minutes in a reception area, she says, because the hospital could not confirm that the check had cleared. Sean was allowed to see the doctor only after he advanced MD Anderson $7,500 from his credit card. The hospital says there was nothing unusual about how Sean was kept waiting. According to MD Anderson communications manager Julie Penne, "Asking for advance payment for services is a common, if unfortunate, situation that confronts hospitals all over the United States."

The total cost, up front payable in advance, for Sean to get his treatment plan and initial doses of chemotherapy was $83,900. 

There was no insurance.  This money would have to come out of his pocket.  Otherwise he could just go home and continue dying.

The first of the 344 lines printed out across eight pages of his hospital bill - filled with indecipherable numerical codes and acronyms - seemed innocuous.

Here is one item. It read, "1 ACETAMINOPHE TABS 325 MG."  The charge was only $1.50, but it was for a generic version of a Tylenol pill.

You can buy 100 of them on Amazon for $1.49 even without a hospital's purchasing power... in other words, a 100% markup. That set the tone for all that followed.

Dozens of midpriced items were embedded with similarly aggressive markups, like $283.00 for a "CHEST, PA AND LAT 71020." That's a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.

Every time a nurse drew blood, a "ROUTINE VENIPUNCTURE" charge of $36.00 appeared, accompanied by charges of $23 to $78 for each of a dozen or more lab analyses performed on the blood sample.

In all, the charges for blood and other lab tests done on Recchi amounted to more than $15,000.

Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests.

By law, Medicare's payments approximate a hospital's cost of providing a service, including overhead, equipment and salaries.

On the second page of the bill, the markups got bolder. Recchi was charged $13,702 for "1 RITUXIMAB INJ 660 MG." That's an injection of 660 mg of a cancer wonder drug called Rituxan. The average price paid by all hospitals for this dose is about $4,000, but MD Anderson probably gets a volume discount that would make its cost $3,000 to $3,500. That means the nonprofit cancer center's paid-in-advance markup on Recchi's lifesaving shot would be about 400%.

When I asked MD Anderson to comment on the charges on Recchi's bill, the cancer center released a written statement that said in part, "The issues related to health care finance are complex for patients, health care providers, payers and government entities alike ... MD Anderson's clinical billing and collection practices are similar to those of other major hospitals and academic medical centers."

The hospital's hard-nosed approach definitely pays off. Although it is officially a "nonprofit" unit of the University of Texas, MD Anderson is hardly a non-profit operation.

MD Anderson has revenue that exceeds the cost of the world-class care it provides by so much that its operating profit for the fiscal year 2010, the most recent annual report it filed with the U.S. Department of Health and Human Services, was $531 million.

That's a profit margin of 26% on revenue of $2.05 billion, an astounding result for such a service-intensive enterprise.

The president of MD Anderson is paid like someone running a prosperous business. Ronald DePinho's total compensation last year was $1,845,000.

That does not count outside earnings derived from a much publicized waiver he received from the university that, according to the Houston Chronicle, allows DePinho to maintain unspecified "financial ties with his three principal pharmaceutical companies."

DePinho's salary is nearly two and a half times the $750,000 paid to Francisco Cigarroa, the chancellor of entire University of Texas system, of which MD Anderson is a part.

This pay structure is emblematic of American medical economics and is reflected on campuses across the U.S., where the president of a hospital or hospital system associated with a university - whether it's Texas, Stanford, Duke or Yale - is invariably paid much more than the person in charge of the university.

Rick Archer's Note: While you read about the misery of Sean Recchi's dilemma - death,  bankruptcy, or both! - keep in mind that study after study confirms the USA has one of the most miserable health systems in the world.  Yes, it is true that if you are rich, you can get excellent health care in America.  But how many of us are rich? 

According to this chart, only one country in the world pays more per person than the USA.  That would be Switzerland.  Before you feel too sorry for Switzerland, this country is rated as one of the Top Ten best health care systems in the world. 

In the USA, we pay $8,608 per person. According to this chart, you could go to Iran and get better treatment for $346.  17% of our earnings go to medical care.  No other nation is even close!   It is absurd to think how much we pay and how little we get in return.

That "$8,608 per person" is a legitimate statistic.  At age 64, I pay $830 a month in insurance.  That means I pay close to $10,000 a year up front.  That is a stiff price for a person like me who is retired.  THEN there is the $2,500 deductible....

What is darkly fascinating is that America is clearly slipping in the rankings.  In 2006, the USA was #37.  Now we are #46!  All that hype about America with its finest doctors, the finest hospitals, the greatest medical schools... well, some of it may be true... but our actual national system of medical delivery to the citizens is completely and totally broken.

The Texas Medical Center  (Steven Brill's Article continued)

Steven Brill, the writer for Time Magazine:

I got the idea for this health care article when I was visiting Houston's Rice University last year.

As I was leaving the campus, which is just outside the central business district of Houston, I noticed a group of glass skyscrapers about a mile away lighting up the evening sky.

The scene looked like Dubai. I was looking at the Texas Medical Center, a nearly 1,300-acre, 280-building complex of hospitals and related medical facilities, of which MD Anderson is the lead brand name.

Medicine had obviously become a huge business in Houston.  One look at that endless array of imposing structures was all it took to make this clear.

In fact, of Houston's top 10 employers, five are hospitals, including MD Anderson with 19,000 employees; three, led by ExxonMobil with 14,000 employees, are energy companies.  

How did that happen, I wondered. Where's all that money coming from? And where is it going?  

Why was Sean Recchi's bill so expensive?  (Brill's Article continued)

I have spent the past seven months trying to find out by analyzing a variety of bills from hospitals like MD Anderson, doctors, drug companies and every other player in the American health care ecosystem.

When you look behind the bills that Sean Recchi and other patients receive, you see nothing rational - no rhyme or reason - about the costs they faced in a marketplace they enter through no choice of their own. The only constant is the sticker shock for the patients who are asked to pay.

Yet those who work in the health care industry and those who argue over health care policy seem inured to the shock. When we debate health care policy, we seem to jump right to the issue of who should pay the bills

While this is an important question, it ignores what should be the first question: Why exactly are the bills so high?

What are the reasons, good or bad, that cancer means a half-million- or million-dollar tab? Why should a trip to the emergency room for chest pains that turn out to be indigestion bring a bill that can exceed the cost of a semester of college? What makes a single dose of even the most wonderful wonder drug cost thousands of dollars? Why does simple lab work done during a few days in a hospital cost more than a car? And what is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?

Recchi's bill and six others examined line by line for this article offer a closeup window into what happens when powerless buyers - whether they are people like Recchi or big health-insurance companies - meet sellers in what is the ultimate seller's market.

The result is a uniquely American gold rush for those who provide everything from wonder drugs to canes to high-tech implants to CT scans to hospital bill-coding and collection services. In hundreds of small and midsize cities across the country - from Stamford, Conn., to Marlton, N.J., to Oklahoma City - the American health care market has transformed tax-exempt "nonprofit" hospitals into the towns' most profitable businesses and largest employers, often presided over by the regions' most richly compensated executives.

And in our largest cities, the system offers lavish paychecks even to midlevel hospital managers, like the 14 administrators at New York City's Memorial Sloan-Kettering Cancer Center who are paid over $500,000 a year, including six who make over $1 million.

Taken as a whole, these powerful institutions and the bills they churn out dominate the nation's economy and put demands on taxpayers to a degree unequaled anywhere else on earth. In the U.S., people spend almost 20% of the gross domestic product on health care, compared with about half that in most developed countries. Yet in every measurable way, the results our health care system produces are no better and often worse than the outcomes in those countries.

According to one of a series of exhaustive studies done by the McKinsey & Co. consulting firm, the USA spends more on health care than the next 10 biggest spenders combined: Japan, Germany, France, China, the U.K., Italy, Canada, Brazil, Spain and Australia.

The Lobbyists and the Politicians   (Steven Brill's Article continued)

We may be shocked at the $60 billion price tag for cleaning up after Hurricane Sandy. Our nation spent almost that much last week on health care... and then again and again and again every week of the year. We spend more every year on artificial knees and hips than what Hollywood collects at the box office. We spend two or three times that much on durable medical devices like canes and wheelchairs, in part because a heavily lobbied Congress forces Medicare to pay 25% to 75% more for this equipment than it would cost at Walmart.

The Bureau of Labor Statistics projects that 10 of the 20 occupations that will grow the fastest in the U.S. by 2020 are related to health care. America's largest city may be commonly thought of as the world's financial-services capital, but of New York's 18 largest private employers, eight are hospitals and four are banks. Employing all those people in the cause of curing the sick is, of course, not anything to be ashamed of. But the drag on our overall economy that comes with taxpayers, employers and consumers spending so much more than is spent in any other country for the same product is unsustainable. Health care is eating away at our economy and our treasury.

The health care industry seems to have the will and the means to keep it that way. According to the Center for Responsive Politics, the pharmaceutical and health-care-product industries, combined with organizations representing doctors, hospitals, nursing homes, health services and HMOs, have spent $5.36 billion since 1998 on lobbying in Washington. That dwarfs the $1.53 billion spent by the defense and aerospace industries and the $1.3 billion spent by oil and gas interests over the same period. That's right: the health-care-industrial complex spends more than three times what the military-industrial complex spends in Washington.

When you crunch data compiled by McKinsey and other researchers, the big picture looks like this: Americans are likely to spend $2.8 trillion this year on health care.  That $2.8 trillion is likely to be $750 billion, or 27%, more than we would spend if we spent the same per capita as other developed countries, even after adjusting for the relatively high per capita income in the U.S. vs. those other countries.

Of the total $2.8 trillion that will be spent on health care, about $800 billion will be paid by the federal government through the Medicare insurance program for the disabled and those 65 and older and the Medicaid program, which provides care for the poor. That $800 billion, which keeps rising far faster than inflation and the gross domestic product, is what's driving the federal deficit. The other $2 trillion will be paid mostly by private health-insurance companies and individuals who have no insurance or who will pay some portion of the bills covered by their insurance. This is what's increasingly burdening businesses that pay for their employees' health insurance and forcing individuals to pay so much in out-of-pocket expenses.

The Effects of Rising Health Care Costs on Middle-Class Economic Security (source: AARP)

Harriet Komisar
Georgetown University


Health care costs, including costs for long-term services and supports, are a growing burden for middle-class families across all age groups. Wages have not kept up with increases in health care costs, and more middle-class families are struggling to cope with higher health insurance premiums and higher out-of-pocket expenses when they have an illness. Rising health care costs are crowding out other important priorities for workers, such as saving for their own retirement or for their children's college education.

Employers have responded to higher health care costs by scaling back wage increases, shifting cost increases to their employees, or changing the type of insurance they offer.

If these trends continue, many people who had been middle-class throughout their working years will be at risk of not having enough financial resources to maintain a middle-class lifestyle during their retirement years. Increased out-of-pocket costs to Medicare beneficiaries and the often catastrophic costs of long-term services and supports are major threats to middle-class security for retirees and family members, who often end up in caregiving roles.

Key Findings

This report documents the impact of rising health care and long-term services and supports costs for middle-class workers and retirees. Some key findings are as follows:

 National health care spending in the United States averaged $8,402 per person in 2010¡X72 percent higher than a decade earlier when it was $4,878, and nearly triple the 1990 level of $2,854.

  Health care spending has been growing faster than inflation and the overall economy. Between 2000 and 2010, health care spending per person grew at an average rate of 5.6 percent per year, outpacing inflation (2.4 percent per year) and the growth in gross domestic product per person (2.9 percent per year).

 Over the past decade, the average amount that middle-income households spent on health care increased by 51 percent¡, nearly double the growth in their incomes (30 percent) and three times the rate of growth in their spending for all other products and services.

 With rising health care costs, more people under 65 are burdened with high health care spending. In 2009, 21 percent of middle-income people under 65 reported spending more than 10 percent of their incomes on health care expenses, compared to 15 percent of middle-income people in 2001.

 One in five people are in families that have problems paying medical bills. Many of these families have experienced serious financial stress, such as problems paying for other necessities (e.g., food, clothing, and housing) or medically related bankruptcy.

 Health insurance premiums for employer-sponsored insurance nearly doubled over the past decade, with total premiums (employers and workers shares) increasing from an average of $7,601 per year in 2001 to $15,073 in 2011 for family coverage. Rising premiums contributed to a rise in the proportion of people without health insurance.

 Employers have responded to rising health care costs by shifting more health insurance costs to employees, offering high-deductible health plans with lower premiums but higher cost sharing, and limiting wage growth.

 Health-related expenses absorb a large share of incomes for people age 65 and older, and that share is projected to grow over time. The share of household income spent on health care expenses is projected to reach 18 percent for future retirees, compared to 8 percent for today's retirees.

Whoever has the Gold, Makes the Rules

Rick Archer's Note: 
Are you depressed yet?  Hey, I better warn you: this article gets much worse.

Before I get into the specifics of how the Twisted Golden Rule affects our medical system, first I need to demonstrate how this rule is applied here in America.  It didn't take me long to find two examples of how the Twisted Golden Rule works.

Twisted Golden Rule, Example 1

2013: Monsanto's Genetically Modified Wheat

"The strange case of genetically engineered wheat on a farm in Oregon remains as mysterious as ever. If anything, it's grown more baffling.

As we reported almost two months ago, the presence of this wheat was revealed earlier this spring when a farmer in eastern Oregon sprayed a field with the weedkiller glyphosate, or Roundup. Most vegetation died, as the farmer intended, but clumps of green wheat stalks kept growing. They apparently had sprouted from grain that was leftover in the field from last year's crop.

It was such a strange sight that the farmer wondered if this wheat might be genetically modified to be resistant to glyphosate, just like the popular Roundup Ready versions of corn and soybeans. He called a weed scientist named Carol Mallory-Smith at Oregon State University to ask her opinion.

"I said I didn't think so," recalls Mallory-Smith. The biotech company Monsanto had developed such wheat years earlier, and carried out field trials of it, but those trials ended at least eight years ago. Monsanto never asked for government approval to sell such wheat, and growing it without a permit from the U.S. Department of Agriculture actually would violate the law.

"So I was pretty skeptical, but I said, 'If you send me some samples, I'll test it,' " Mallory-Smith says.

To her surprise the tests came back positive. She passed the samples on to the USDA, which confirmed her results and launched an investigation.

The USDA is trying to answer two big questions about this wheat. First, where else can it be found? Second, how did it get into this farmer's field?"
   [Source: NPR]

In May 2013, genetically-modified (G.M.) wheat that was never approved for sale inexplicably turned up in a field in Oregon. A farmer found the crop when it miraculously survived a dousing of Roundup weedkiller.  Astounded by the crop's resistance, the farmer took samples to a lab to be tested.  The wheat was revealed to be an illegal strain. 

The indestructible wheat had been genetically modified to resist pesticides by Monsanto, the biotech corporation that owns the patents to both the pesticide AND the genetically-modified wheat. 

One of the new genes inserted into Monsanto's G.M. wheat had made it resistant to the herbicide Roundup Ready, which ironically is also manufactured by Monsanto.  (now isn't that curious??)

No one at Monsanto could explain how this random crop of Roundup-resistant wheat showed up in Oregon.  It had been over ten years since Monsanto last tested its wheat in the area.  No normal seeds should last more than two years, especially in a place like Oregon with hard winter freezes.

Another strange phenomenon is that 24 different strains of giant super-weeds seem to have acquired a similar immunity to Roundup.  In an eerie parallel to the disease MRSA, a new strain of bacteria highly resistant to some antibiotics, scientists wonder if the weeds have developed their immunity by somehow absorbing the same genes that Monsanto's G.M. wheat possess.

There remains a great deal of suspicion towards G.M. food in the world community.  Europe wants nothing to do with it.  Thanks in large part to the French writer Marie-Monique Robin and her book The World According to Monsanto: Pollution, Corruption, and the Control of the World's Food Supply, many Europeans do not trust Monsanto.  Neither does Japan and South Korea.  No one is quite sure just how safe or just how dangerous this genetically altered wheat is.  It could be a ticking time bomb.  It might take a generation or more for any sinister effects to appear. 

What people do know is there is an increasing suspicion that America's widespread use of toxic chemicals might be responsible for the growing rate of cancer. 

When we ask our doctors if these chemicals might be responsible for the greater incidence, we are frequently told that "cancer is on the rise because people live longer and cancer preys on the old". 

Maybe so, but another equally valid possibility might be the pesticides on your food, chemicals that have been leaked into your water AND soil AND air AND into your clothes AND into your home, into your household cleaning products and into the lotions and potions you spray and rub onto your skin, and into the vaccines injected into your body.

The numbing irony is that the same corporations that produce carcinogenic chemicals, including agricultural ones,
are also running the cancer treatment industry and selling chemotherapy drugs.   Now that's what I call vertical integration!" 
- Ken Ausubel

In other words, when it comes to any situation involving certain American chemical giants, the trust level in the developed countries is not very high.  Sure enough, immediately after this illegal wheat discovery in Oregon, Japan and South Korea cancelled enormous shipments of wheat from Oregon, citing fears that the wheat crop could be tainted with this suspicious seed.  

Immediately farmers across America reacted in anger because the price of wheat dropped precipitously due to the bad news.  Several lawsuits were filed citing Monsanto's sloppiness in allowing this accident to happen, thereby affecting their livelihood.

Monsanto dismissed the lawsuit as “a wild swing that is unlikely to connect.”

Citing the fact that the wheat was growing randomly, like a weed, it seems likely that this was a case of accidental contamination (or perhaps deliberate sabotage), rather than a deliberate planting of the illegal crop.  “There was no negligence. Tractor-chasing lawyers have prematurely filed suit without any evidence of fault and in advance of the crop’s harvest,” said Monsanto’s general counsel.

In the past, the USDA has shown little sympathy for farmers whose crops have been inadvertently contaminated by Monsanto. Last year, the agency dismissed complaints by conventional and organic farmers that GM seeds intermingle with their own strains, simply advising they buy insurance to recoup their financial losses.

Humorist Stephen Colbert had a "field day" with this news. 

Calling the strange crop "Zombie Wheat" because nothing could kill it and it lived forever, he said the lyrics in "America the Beautiful" would have to rewritten... “amber waves of frankengrain”.

Then Colbert suggested the networks release a sequel to the popular "Walking Dead" series with "the Return of the Walking Bread". 

Colbert poked fun at Monsanto for saying it is "mystified by the appearance of the wheat", noting that "at this point, [the wheat itself] can probably talk" and solve the mystery.  (Colbert on Zombie Wheat)

On the same show, Colbert hosted science journalist Laurie Garrett.

Ms. Garrett brought up a curious point when she pointed out that Senator Roy Blount had introduced a bill called the Farmer Assurance Provision that makes it impossible to sue manufacturers of genetically modified crops.  This law went into effect in March two month prior to the strange Oregon wheat discovery.

Colbert, "So how long does that law last?" 

Garrett: "Six months".

Colbert: "Are we in the middle of that right now?

Garrett: "It went into effect two months ago in March." 

Colbert: "So first this crop came out of nowhere and Monsanto said they have no idea where it came from. And yet this crop just happened to appear during the time where Monsanto got this get out of jail free card?" 

Garrett's answer: "Go figure."

That's quite a coincidence.  Or maybe not.

As it turns out, Senator Roy Blunt is considered to be Monsanto's "Man in Washington".

Tom Philpott, writing for the muckraking journal Mother Jones, spoke of the same bill that Laurie Garrett told Stephen Colbert about.

"A recent Senate bill came with a nice bonus for the genetically modified seed industry: a rider, wholly unrelated to the underlying bill, that compels the USDA to ignore federal court decisions that block the agency's approvals of new GM crops.

The admission shines a light on Blunt's ties to Monsanto, whose office is located in the senator's home state. According to OpenSecrets, Monsanto first started contributing to Blunt back in 2008, when it handed him $10,000. At that point, Blunt was serving in the House of Representatives. In 2010, when Blunt successfully ran for the Senate, Monsanto upped its contribution to $44,250. And in 2012, the GMO seed/pesticide giant enriched Blunt's campaign war chest by $64,250.

Blunt is also a magnet for PAC money from the agribusiness industry as a whole, OpenSecrets data shows. In 2012, agribiz PACs gave him $51,000—more than any other industry save for finance, insurance, and real estate (FIRE). In 2010, the year of his Senate run, agribiz PACs handed him over $243,000, more than any other besides the FIRE and energy industries.

In a profile of Blunt published the year before, the Washington Post's Thomas B. Edsall wrote that Blunt had "converted what had been an informal and ad hoc relationship between congressional leaders and the Washington corporate and trade community into a formal, institutionalized alliance." According to Edsall, Blunt's relationship to the DC lobbying scene rivaled that of DeLay's, who would later be hounded out of the House after being indicted for ethical lapses.

Thomas Edsall writes in the Washington Post:

Both "Blunt Inc." and "DeLay Inc." reflect the growing importance of commanding multimillion-dollar funds and having reliable loyalists in Washington's lobbying community. Blunt and DeLay are fundraising powerhouses. Their political organizations use multiple fundraising committees, have rewarded family members and have provided an avenue to riches for former aides now in the private sector.


"He Who Has the Gold, Makes the Rules" 
- Ancient Proverb


The Twisted Golden Rule, Example 2

2009: The Texas Home That Crumbled

The story of Bob and Jane Cull's fallen home took place in Mansfield, Texas, a well-to-do suburb just south of Fort Worth.

The Culls were an upper middle class couple who had decided to build their dream home next to a golf course. They were fortunate to have the time and money to take five years searching for the perfect lot to build on. They found the plans they wanted and hired a builder.  In 1996, they moved into their home and were very happy with it for six weeks.

Then some serious foundation problems began. When a main structural beam weakened, they hired an engineer.  The engineer told them the bad news - their home was ruined. The Culls' new home was undergoing "foundation heave."

The clay soil underneath was expanding and contracting like a sponge as it got wet and dried out. The edges of the foundation began lifting, and the wooden frame began to bow under the stress.

The builder of their home refused to correct the problem.

This began a 13-year odyssey. 

The Culls hired a lawyer and started legal proceedings against their former builder, Perry Homes. They knew they faced an uphill struggle, especially in Texas.  In Texas, the legal system is never for the average person. Texas is renowned to forgo legal protection to ensure a healthy business climate.

In this case, the Culls went to arbitration as the law demanded. They won and the builder was instructed to pay the Culls a settlement of $800,000, remarkable by Texas standards. 

The homebuilder refused to pay. 

Bob Perry just happened to be the richest and most politically connected builder in the state. Rather than pay the settlement, he spent his money stalling. He abused the legal process by appealing, and appealing, and appealing. He appealed for years through the court system.  The case finally ended up before the Texas State Supreme Court, whose membership choose not to recuse themselves despite what seemed to many to be a conflict of interest.  It should be noted that every member of the high court had received contributions from Bob Perry — more than $260,000 from Bob Perry, his family and his political committees.

One has to wonder about the impartiality of having one's case being judged by men who to some extent owe their jobs to the man who appears before them.

The Texas Supreme Court voted 5 to 4 to throw out the $800,000 Cull judgment, stating that the case should not have gone to arbitration. By sending the case back to district court in Fort Worth, in so doing, the Texas State Supreme Court overturned two lower courts and reversed 13 years of legal decisions.  

Hence, after 13 years of court challenges, the Culls would now have to start the whole process again from scratch. 

Imagine how disheartened the Culls must have been.  13 years of neverending legal fees and court manipulations for nothing.  It was all down the drain.  Now they had to start over.  These were not young people either.  They didn't have the luxury of waiting much longer.

Further, even if they won the next round, they might possibly have to face a new state agency just created by Governer Rick Perry.  In a bizarre twist, this new agency was headed by the SAME ATTORNEY hired by Perry Homes to appeal the Cull's original case.

Now how did that happen?  How did John Krugh, lead attorney become the head of the new regulatory agency?

Bob Perry, Rick Perry - Are they related?  No, not by blood, but they are definitely used to agreeing with one another. 

So who is Bob Perry?  (Bio)  Back in 2004, Bob Perry was the largest single contributor to "Swift Boat Veterans for Truth", the attack campaign that sunk John Kerry's Presidential election bid. 

And talk about local Texas connections! 

Since January 2000, Mr. Perry donated more than $5.2 million to state candidates and causes, making him by far the most prolific giver in Texas over that time, according to campaign records reviewed by The Dallas Morning News.

Chunks of his money, coming sometimes in a flurry of $25,000 checks, have gone to support anti-lawsuit, pro-business groups ($320,000) and the state Republican Party ($980,000).

Last year, he provided $600,000 to 23 GOP candidates for the Legislature, helping lift Republicans to their first takeover of the Texas House since Reconstruction.

He also has given $175,000 to Gov. Rick Perry, $215,000 to Lt. Gov. David Dewhurst and $437,500 to Attorney General Greg Abbott. He is the largest individual contributor to almost every statewide officeholder, all Republicans.

At the time of the Texas Supreme Court decision in 2009 involving the Culls, Bob Perry was still contributing to the campaign funds of Governor Rick Perry, the aforementioned various Texas State Supreme Court candidates, and President George W. Bush as well.  In other words, Bob Perry knew the "right people". 

Bob Perry's maneuvers didn't stop there. The owner of Perry Homes was able to lobby for and obtain passage by the Texas Legislature of a law to ensure more protection for homebuilders.  Not home owners, but HOME BUILDERS.  Yes, Bob Perry felt that homebuilders needed more protection from frivolous homeowner lawsuits.  Fortunately, Governor Rick Perry heard Bob Perry's pain.  Rick Perry indeed created the very agency Bob Perry had asked for... and installed Bob Perry's lawyer as the director.  

A builder's best friend:  In June 2003 Governor Rick Perry helped push through a bill creating the Texas Residential Construction Commission, a new government agency that was supposed to protect homebuyers from unethical builders.

In reality, the bill was written by the housing industry with the help of John Krugh, a lobbyist for the homebuilder and GOP money man Bob Perry (no relation to Rick Perry). That September, after getting a $100,000 check from Perry, Governor Rick Perry appointed John Krugh to the TRCC.

Consumer groups fought back.  After six years, they got the agency abolished in 2009.  [source: Mother Jones]

The Culls were stunned.  13 years is a long time to see wasted, especially for people who are retired and advancing in years.

The Culls had played by the rules and gone through an arduous process as prescribed by law.  But the law had not worked for them even though they had a solid case.

Why not?  This strange decision had seemed drawn straight from the golden rule playbook: "He who has the gold makes the rules."

Now what?  For one thing, now that 13 years had passed, the Culls could not possibly sell their home because it would not pass inspection.  Furthermore, their savings were so tapped out with lawyer's fees they couldn't possibly afford the hundreds of thousands of dollars needed to fix their dream home.

However, all was not completely lost.  Bob Perry was still not off the hook.  All the Texas Supreme Court had done was tell the Culls that the arbitration decision was wrong; their decision had not vindicated Bob Perry, but they had bought the man more time.  If the Culls wanted to start over, they were still welcome to sue again in the lower court. 

And that is exactly what they did.  The Culls sued again.   This time they won.         [source: Georges Clark 2009]

2010 FOOTNOTE:  Political moneyman Bob Perry ordered to pay $51 million

DALLAS 2010The Law Offices of Van Shaw announces a $51 million jury verdict on behalf of a Mansfield , Texas, homeowner following a 13-year dispute with homebuilder Perry Homes to correct construction defects to their home.

The jury agreed unanimously that Perry Homes acted knowingly and intentionally, with “malice” and in bad faith in its dealings with homeowners Bob and Jane Cull, who first complained of construction defects shortly after they moved into their new home in 1996. Additionally, jurors agreed that Warranty Underwriters Insurance Company knowingly committed unfair and deceptive trade practices. The panel found that the actions of both companies amounted to fraud.

The unanimous verdict against Perry Homes and Warranty Underwriters included a total of more than $14 million in actual damages and more than $44 million in punitive damages.

The Culls were represented by Van Shaw. Mr. Shaw says Perry Homes has aggressively fought the Culls' claims and chose to spend far more to avoid blame in this lawsuit than to properly address the Cull's initial concerns. In 2002, the Culls were awarded $800,000 following an arbitration hearing, but Perry Homes refused to pay and appealed the award all the way to the Supreme Court of Texas, where all nine of the justices have received campaign contributions from Perry Homes president Bob Perry.

The fight between Perry and the Culls underscores the difficulty that some homeowners have in trying to get builders to fix their mistakes – especially politically well-connected businessmen with deep pockets. The Culls began their fight against Perry Homes a decade ago after cracks and other problems developed in their $230,000 home in Mansfield. The Culls said Perry Homes applied some cosmetic fixes, but didn’t repair the house. Instead, Perry launched a long battle in court that the Culls say was apparently designed to wear them down. Perry is the biggest campaign contributor to Gov. Rick Perry, who has supported the homebuilder’s efforts to limit lawsuits against business and who helped create a state agency that critics say was designed to protect homebuilders against complaints from homebuyers. The Legislature last session abolished the agency.

“We're grateful that the jurors in this case recognized the despicable treatment the Culls suffered at the hands of Perry Homes and Warranty Underwriters,” Mr. Shaw says. “Unfortunately, this kind of bullying treatment is not unusual for homeowners trying to correct construction defects. I'm hopeful that this verdict will send a message that homebuilders can be held accountable for their actions.”

Rick Archer's Note: I think the story of the defective home demonstrates clearly that whoever owns the gold makes the rules... or, in the Cull case, at least tries to make the rules. 

However, here in America, you never know... sometimes the underdog can still win.   And that is why there is still hope for our country. 

But how many people have the deep pockets of the Culls or the tenacity to stick to the fight for 13 years? 

Most people I know simply cower at the thought of being buried by these tactics.  The intimidation games played by the rich and privileged are definitely nasty. 

Isn't it strange the games that rich people play? 

It seems like Bob Perry spent more money trying to avoid his responsibility than he would have spent simply fixing the problem in the Cull's home in the first place. 

It reminds us again the extraordinary lengths certain people will go to win.

In 1996, the US Government spent $60 Million Dollars in a wasted attempt to convict cancer researcher Stanislaw Burzynski on a crime.  And what was that crime?  Burzynski had allowed his cancer patients to take his cancer treatment home with them.  The government said this action violated Federal law.   (source)



Michael Moore's Documentary on America's Health Care System

Rick Archer's Note:  We all know something is wrong with America's Medical System.  How can a nation which spends as much money as the USA rank 46th in the world for health care efficiency? 

How can America, the wealthiest nation in the world, a country which spends more money per person than any other country, rank 51st in the world for life expectancy?  (CIA data)  Gee, if we want to live longer, does this mean we should move to a poor country?   Or maybe we should just go to Canada.  If we did, we would probably live three more years.  By the way, Canada ranks 13th in the world.

It would be one thing to pay top dollar if we received a superior medical system in return. 

But in America's case, well... we don't get much in return.  Something is very wrong.

I honestly don't feel like I have to twist the reader's arm to convince you that our system is broken.  Every single one of us has some sort of bitter experience dealing with the American medical system.  The bitterness we all feel towards the tactics of the health insurance companies is profound.  The exorbitant charges of the doctors and hospitals just make our bitterness even worse.

For this section of my article, I am going to turn to Michael Moore and his documentary Sicko.  I understand that many people cannot stand Michael Moore.  Be that as it may, when Moore speaks about our health care problem, the man makes sense.  I found several of Moore's arguments about what is wrong with our medical system to be quite compelling.  For your own good, you should at least hear what the man had to say.

Michael Moore began his documentary with stories of people who did not have health insurance to cover their injuries and illnesses. Every one of these people were left devastated by the astronomical medical cost they were faced with. 

The case study which caught my eye involved an Oregon man named Rick... not me, of course, but another Rick... a Rick who somehow managed to slice off the tops of two fingers while he used a power saw. 

Rick did not have health coverage.  So the hospital gave him a choice. 

1. Reattach the middle finger for $60,000.
2. Do the ring finger for $12,000.

Rick chose to reattach the ring finger for the bargain price of 12 grand.  He threw the middle finger tip in the dumpster. 

There are 50 million Americans with no health insurance. 

Every day they awake and
pray they don't get sick.  Or they pray that don't have an accident like Rick from Oregon did.

Later in the Sicko documentary, Michael Moore caught up with Brad, a young Canadian who lives in London, Ontario.

Brad cut all five fingers off in a power saw accident very similar to Rick's.  Brad explained that as the blade went through, it caught the glove he was wearing and pulled his entire hand over the blade which promptly sliced through the entire group of 5 fingers, completely severing every one of them from his hand.

So now Moore went to interview the Canadian doctor who performed the reattachment operation of all 5 fingers.

(Surgeon): If you're looking at five fingers, you're looking at a 24-hour operation.

There actually were four surgeons, three plus myself, as well as all the nurses. 

We had two different anesthetists to carry out an operation of that magnitude.

When Brad came in, we didn't have to worry about whether he could afford it.

He needed help and we could concentrate on the best way to bring him through it.

Doctor, I met this American named Rick. He had cut off the ends of two of his fingers with a saw.

So when he arrived at the hospital, they told him one finger's gonna cost $60,000, and the other one was gonna be $12,000.

He had to choose which finger he could afford.

We've never told someone that they couldn't put a finger back on because the system wouldn't allow it.

I'm very glad I work within a system that allows me the freedom to look after people and not have to make difficult choices like that.

The Canadian Health System

To see what Canadians thought of their health system, Michael Moore drove over to a clinic.  He interviewed several different people in the waiting room. Here is the transcript:

(Moore) After meeting the doctor who reattached Brad's fingers, it seemed nothing I had been told back in America about the Canadian system was true.

Maybe I was just in the wrong part of town.  So I went across the city to visit a crowded hospital waiting room. Except that it wasn't very crowded.

There were maybe 20 people in the room and most were more than willing to speak to me on camera.

(Moore) How long did you have to wait here to get help?

Patient 1 - 20 minutes.
Patient 2 - 45 minutes.
Patient 3 - I got helped right away.
Patient 4 - They really do an amazing job.

(Moore) Did you have to get permission to come to this hospital?

- No.
- No. We just drop in.
- We can go anywhere we want.

(Moore) You don't have to get the visit preapproved by your insurance company?

- Oh, heavens, no.

(Moore) Can you choose your doctor?

- Oh, yes.

(Moore) What's your deductible?

Patient 1 - Nothing.
Patient 2 - I don't think we have any.
Patient 3 - I don't know.
Patient 4 - I don't think there is any, as far as I know.

(Moore) So what did this visit today cost?

Patient 1 - Nothing.
Patient 2 - We know in America people pay for their healthcare, but I guess we don't understand that because we don't have to deal with that.  And we're dealing with Parkinson's, stroke, heart attack. We're very, very lucky. Really we are.

I mean, we complain.  People complain about everything, right?

(Moore) Right, you're Canadian.  That's goes without saying.

- But on the whole, it's a fabulous system for making sure that the least of us and the best of us are taken care of.



What Wikipedia Says About Canada's Health Care System
A Statistical Comparison of Health Care Systems by Country, Year 2000 (source: Wikipedia
Country life expectancy Infant mortality rate Physicians per 1000 people Nurses per 1000 people Per capita expenditure
on health (USD)
Healthcare costs as a percent of GDP % of govt revenue spent on health % of health costs paid by government
Australia 81.4 4.2 2.8 9.7 3,137 8.7 17.7 67.7
Canada 81.3 4.5 2.2 9.0 3,895 10.1 16.7 69.8
France 81.0 4.0 3.4 7.7 3,601 11.0 14.2 79.0
Germany 79.8 3.8 3.5 9.9 3,588 10.4 17.6 76.9
Japan 82.6 2.6 2.1 9.4 2,581 8.1 16.8 81.3
Sweden 81.0 2.5 3.6 10.8 3,323 9.1 13.6 81.7
UK 81.0 4.8 2.5 10.0 2,992 8.4 15.8 81.7
USA 78.1 6.9 2.4 10.6 7,290 16.0 18.5 45.4

As one can see, this chart from Year 2000 suggests that Canada's system is more effective than our own. 

The "per capita expenditure on health" differential is the most telling.  The chart suggests that the USA spends nearly twice as much money per person as Canada.  3,895 to 7,290 is quite a disparity.

Health care in Canada is delivered through a publicly funded health care system, which is mostly free at the point of use and has most services provided by private entities. It is guided by the provisions of the Canada Health Act of 1984.

So why is health care less expensive in Canada?  The Wikipedia article makes several suggestions. 

Canada's provincially based Medicare systems are cost-effective partly because of their administrative simplicity. In each province each doctor handles the insurance claim against the provincial insurer. There is no need for the person who accesses health care to be involved in billing and reclaim. Private health expenditure accounts for 30% of health care financing.

Competitive practices such as advertising are kept to a minimum, thus maximizing the percentage of revenues that go directly towards care.

In general, costs are paid through funding from income taxes. In British Columbia, taxation-based funding is supplemented by a fixed monthly premium which is waived or reduced for those on low incomes.

There are no deductibles on basic health care and co-pays are extremely low or non-existent (supplemental insurance such as Fair Pharmacare may have deductibles, depending on income).

Family physicians are chosen by individuals. If a patient wishes to see a specialist or is counseled to see a specialist, a referral can be made by a GP. Preventive care and early detection are considered important and yearly checkups are encouraged.

2012 saw a record year for number of doctors with 75,142. The gross average salary was $328,000.

Canadians strongly support the health system's public rather than for-profit private basis.  A 2009 poll by Nanos Research found 86.2% of Canadians surveyed supported or strongly supported "public solutions to make our public health care stronger."

A Strategic Counsel survey found 91% of Canadians prefer their healthcare system instead of a U.S. style system.

70% of Canadians rated their system as working either "well" or "very well".  (Wikipedia)

Rick Archer's Note:
In the interest of fairness, I ran across an article by John Stossel of Fox News that strongly contradicts Michael Moore's rosy picture of Canadian health care. 

I suppose it all comes to down to which source you choose to believe.

For example, the CIA says you will live 3 years longer if you live in Canada.  But who would ever believe anything the CIA says?  (CIA data


Another Example of America's Broken Health Care System

After surgery, $117,000 bill from doctor he never saw

By Elisabeth Rosenthal, NEW YORK TIMES 
September 20, 2014

Surgical consultants have become the source of hefty fees via what some in the industry call drive-by doctoring.

When Peter Drier, 37, agreed to surgery in December, he was not in a good position to bargain or shop around. Several weeks earlier, he had woken up to excruciating pain in his upper back. A scan showed that one of the disks that normally serve as cushions between vertebrae was herniated and pushing on a nerve. He was living on painkillers.

Before his three-hour neck surgery for herniated disks in December, Drier signed a pile of consent forms.  A bank technology manager who had researched his insurance coverage, Drier was prepared when the bills started arriving: $56,000 from Lenox Hill Hospital in Manhattan, $4,300 from the anesthesiologist and even $133,000 from his orthopedist, who he knew would accept a fraction of that fee.

He was blindsided, though, by a bill of about $117,000 from an "assistant surgeon," a neurosurgeon based in Queens, N.Y., whom Drier had never met.

"I thought I understood the risks," Drier, who lives in New York City, said later. "But this was just so wrong - I had no choice and no negotiating power."

Drive-by doctoring

In operating rooms and on hospital wards across the country, physicians and other health providers typically help one another in patient care.

But in an increasingly common practice that some medical experts call drive-by doctoring, assistants, consultants and other hospital employees are charging patients or their insurers hefty fees. They may be called in when the need for them is questionable. And patients usually do not realize they have been involved or are charging until the bill arrives.

The practice increases revenue for physicians and other health care workers at a time when insurers are cutting down reimbursement for many services. The surprise charges can be especially significant because, as in Drier's case, they may involve out-of-network providers who bill 20 to 40 times the usual local rates and often collect the full amount, or a substantial portion.

"The notion is you can make end runs around price controls by increasing the number of things you do and bill for," said Dr. Darshak Sanghavi, a health policy expert at the Brookings Institution until recently. This contributes to the nation's $2.8 trillion in annual health costs.

Insurers, saying the surprise charges have proliferated, have filed lawsuits challenging them. Multiple state health insurance commissioners have tried to limit patients' liability, but lobbying by the health care industry sometimes stymies their efforts.

"This has gotten really bad, and it's wrong," said James Donelon, the Republican insurance commissioner of Louisiana. "But when you try to address it as a policymaker, you run into a hornet's nest of financial interests."

In Drier's case, the primary surgeon, Dr. Nathaniel Tindel, had said he would accept a negotiated fee determined through Drier's insurance company, which ended up being about $6,200. (Drier had to pay $3,000 of that to meet his deductible.)

But the assistant, Dr. Harrison Mu, was out of network and sent the $117,000 bill. Insurance experts say surgeons and assistants sometimes share proceeds from operations, but Tindel's office says he and Mu do not. Mu's office did not respond to requests for comment.

The phenomenon can take many forms. In some instances, a patient may be lying on a gurney in the emergency room or in a hospital bed, unaware that all of the people in white coats or scrubs who turn up at the bedside will charge for their services.

Can't fight back

At times, a fully trained physician is called in when a resident or a nurse, who would not charge, would have sufficed. Services that were once included in the daily hospital rate are now often provided by contractors, and even many emergency rooms are staffed by out-of-network physicians who bill separately.

When insurers intervene in a particular case, they say they have limited ability to fight back. Insurance examiners "are not in the room on the day of surgery to see the second surgeon walk into the room or why they were needed," said Clare Krusing, a spokeswoman for America's Health Insurance Plans, an industry group. And current laws do not require hospitals that join an insurance network to provide in-network doctors, labs or X-rays, for example.

When Drier complained to his insurer, the company cut a check to Mu for $116,862, the full amount.

So sometimes insurers just pay - to protect their customers, they say - which encourages the practice.   (Source)


Two Letters to the Editor regarding the Peter Drier Story

Broken system

Regarding "'Drive-by' doctors add shock to bills" (Page A4, Sunday), for many of us, our medical system seems like legalized theft. Granted, we have the best care in the world; however, there seems to be a lack of ethics in the quest for money.

As your article showed, doctors apparently think nothing of dropping in on surgery and then charging $39,000 per hour to "assist."

In this Peter Drier example, the actual doctor performing the three-hour surgery agreed to operate for $6,200 total, while the "drive-by" doctor made $117,000 for dropping in and assisting, with the patient having no prior knowledge, or consenting to this.

This is similar to asking your insurance company what a procedure will cost at a doctor's office and being told either $40 or $1,800 depending on how it's coded. Or getting a bill from a doctor's office for $1,700 after having the receptionist tell you "don't worry it's just a $40 co-pay." Or having the ambulance service call and say you owed $1,000 for a trip to the hospital and then you tell them you paid $600 months ago and they say thanks and hang up.

These are just some of the experiences my family has had. This medical system is broken, the bureaucracy makes it impossible to get a straight, honest answer, and the costs are outrageous.

It would be nice if some of these doctors and insurance companies were called on the carpet for some of these types of behaviors.

Mike Donnelly, Pearland, Texas

Punish predators

The story of hospitals, doctors and other health care providers sneaking outrageous overcharges into bills for medical procedures and services is certainly not a new one.

The natural outcome of this practice would be the blatant disregard for simple humanity demonstrated by the "assistant surgeon" told of in the story, a predator who literally snuck in the back door - unbidden, unwanted and unneeded - to add $117,000 to the patient's bill. To say that this practice is fraudulent is an understatement, which raises the question: Why are the people who do things like this not in jail?

Pete Smith, Houston, Texas


Rick Archer Note:  As one can gather, the insurance company passes on the additional cost to the consumer who now pays increasingly higher healthcare premiums.  We speak of how "capitalism" drives down costs through increasted efficiency, but in the world of healthcare there seem to be no market forces in operation. 

And why is that?   The answer of course is the Twisted Golden Rule.  Not only do the doctors, the lawyers, and the health insurance companies all have the politicians in their pocket, there doesn't seem to be much you or I can do about it.

You don't believe me?  Well, read on and see what you think.

Socialism versus Capitalism

I understand very clearly that the word "socialism" has deeply negative connotations here in America.

That said, based on Michael Moore's documentary, I came to the conclusion that the "socialist" Canadian health system is far superior to the American health system.  For that matter, based on what was shown in the documentary, I concluded that the "socialist" English health system and the "socialist" French health system are also superior to the American system.

I am no "enemy" of the capitalist system.  I understand that the capitalist model of seeking excellence through competition has its virtues.  I also understand the value of an incentive.  Any man will work harder if he expects a reward for his hard work and the right to keep the fruit of his efforts. 

I myself have been well rewarded for pursuing the capitalist dream.  Many years ago, I had an original idea that a dance studio could emphasize group dance lessons over the traditional "private lesson" model that was the established business practice at the time. 

I parlayed this idea into creating the largest social dance studio in the country.  As a successful businessman, I paid salaries, I paid rent, I paid taxes, I paid insurance, I paid health care, and I worked damn hard every step of the way for thirty years. 

I think this experience qualifies me as a card-carrying member of the American business community.

When it comes to taxes, I am no different than anyone else - I hate taxes.  Like everyone else, I do not enjoy seeing taxes take a huge cut out of my earnings.  Today I pay $20,000 a year in property taxes alone.  I continue to work well past retirement age simply in order to pay those property taxes.  And do you think I am alone?  Many other Americans continue to work well past retirement age for the exact same reason. 

So I understand why everyone fears any "socialist" medical system that would take an even larger cut out of our earnings.

But what if a "socialist" medical system turned out to be more cost-effective?   Let's look at that chart again.

Unless that chart is lying to us ... look for yourself in Wikipedia... American citizens pay far more than the evil "socialist" systems and get far less in return!

Think about it.  The American health care system is the laughingstock of the entire world.  How can anyone look at that chart and not wonder if there is a possibility that the American people have been fooled on this issue?? 

Furthermore, I want the reader to understand something else.  Everyone screams about the evils of Obamacare, but most people don't realize they are already paying a hidden health care tax.

As the number of Americans without health insurance continues to rise, so too do the costs borne by those who have coverage.  The people with insurance face what might be called a "hidden health tax." Private health insurance premiums are higher, at least in part, because uninsured people who receive health care often cannot afford to pay the full amount themselves.  The costs of this uncompensated care are shifted to those who have insurance, ultimately resulting in higher insurance premiums for businesses and families. 

When the uninsured do obtain care, they struggle to pay as much as they can afford. Often, however, the uninsured cannot afford to pay the entire bill, and a portion of it goes uncompensated. To make up for these uncompensated care costs, doctors and hospitals charge insurers more for the services provided to patients who do have health coverage. In turn, the costs that are shifted to insurers are passed on in the form of higher premiums to consumers and businesses that purchase health coverage.  (source)

This cost shift to health insurance premiums is a "hidden health tax."  In other words, if you are insured, you are already funding the poor.  Why not just shift to a universal health care system and level the entire playing field just like every other civilized country in the world?

They say if it ain't broke, don't fix it.  Well, my dear readers, our American health care system is broken. 

It isn't just broken, it is broken badly.  We have to do something. 

I happen to think the "socialist" Canadian health system, English health system, and French health system are all superior to the American health system.  And those systems aren't just "a little bit better"... I say those health systems are vastly superior.

Take a quick look at that chart.  That chart is not Michael Moore propaganda.  That chart is from Wikipedia, heretofore a staunch defender of the American Medical Association.

The chart shows quite clearly that something badly went wrong with our health system starting around 1978.  The chart also shows that things really began to spiral even more out of control in 2004.  Although the chart ends at 2007, we all know that things have only gotten worse since then.

It is beyond pathetic for American citizens to pay the most money of any society in the world and yet have our system ranked among the most mediocre. 

How could things have gotten this bad?

I am hardly an expert, but I have my suspicions.  For starters, I happen to think that "Capitalism" is the wrong approach to health care.

And now I will make my case.  

As one can readily see, health costs in the USA are rising much faster than in other countries.  Wikipedia

The Role of Government

Whether is it the central government or the local government, I think we can all agree there are certain areas that belong in the hands of centralized authority.

High on the list is National Defense.  On the local level we have the police and the fire department.  Then we have education, but local and national.  Then there are roads and infrastructure that must be built and maintained. 

Let's not forget about Social Security. Or Medicare.  Or the other social safety net programs like unemployment benefits, welfare payments, and food stamps. 

And let us not forget about NASA.  For defense reasons and the advancement of mankind, this program is a vital part of our NATIONAL identity. NASA is an integral part of being American.

Each citizen helps to pay for these things through tax dollars.

Now I understand that the government spends too much.  Yes, I get that.  No argument from me.  And like any household that overspends, arguments must be raised as to where to cut back or how to find more money. I completely agree that government spending is out of control.  But this is an issue for a different article; let's stick to healthcare for now.

My point is simply this: we all seem to agree that at least some "collective" things are better left to the government.

And I think healthcare is one of them...

Why?  Because when a medical plan attempts to make "profit" off "health care", the customer generally gets short-changed.

You and I are the customer.  We are being short-changed.


Profit Over People - Patient Dumping

Note: "Patient dumping" is the transfer of a patient from one hospital (typically a private hospital) to a public hospital because of the patient's lack of insurance or inability to pay. The uninsured are the most vulnerable to patient dumping. This deplorable practice is one of the truly disgusting features of our "capitalism-based" medical system.

Video Catches Hospital 'Dumping' Incident

by Ina Jaffe, NPR

2006 - For many months, Los Angeles city officials have complained that regional hospitals are dropping off their indigent patients in the city's tough Skid Row area. On Wednesday, officials at a homeless shelter released a videotape that allegedly catches one hospital in the act. The incident has become part of an ongoing investigation that could result in criminal or civil penalties.

Security cameras outside the Union Rescue Mission, the city's largest homeless shelter, show a taxi pulling a U-turn in front of the building. Several seconds later, an elderly woman in a hospital gown shuffles into view. She appears to have only hospital socks on her feet, and walks in the street for a while before turning back to the mission entrance.

Mission worker Regina Chambers met the woman outside, later identified as Carol Reyes, a homeless resident of the city of Gardena, a dozen miles south of downtown Los Angeles.

"When I first approached her, she was very disoriented, didn't know where she was or what she was doing," Chambers says. "All she knew is that she had been to a hospital."

It was later determined that Reyes was released from Kaiser Permanente hospital, a privately-owned facility in the city of Bellflower, 16 miles southeast of the mission.


Los Angeles goes after Vegas hospital for dumping 1500 patients

USA Today
May 20, 2013 18:43

The city of Los Angeles is pursuing a criminal investigation of a psychiatric hospital in Las Vegas, which has allegedly put 1,500 patients on buses and sent them out of state over the past five years.

About one third of these patients, some of which were homeless, were given one-way bus tickets to cities in California. About 200 of the 1,500 mentally ill patients were sent to Los Angeles County, 150 of whom arrived in downtown L.A. Since 2008, patients were bused to cities in every continental US state, even though some had no family, friends or housing at their destination. After the Sacramento Bee published an exposé on the dumping practices of the Rawson-Neal Psychiatric Hospital, the city of Los Angeles announced it would launch a probe investigating the matter.

“It’s just an abhorrent practice,” Gil Cedhillo, a candidate for the L.A. City Council and a former state senator, told the Bee. “You can’t just take someone from a facility and dump them downtown.”

L.A. has one of the strictest patient-dumping laws in the US, which was adopted in 2007 after a homeless schizophrenic was found walking the streets in his hospital gown while still connected to a catheter bag.

The Bee obtained bus receipts from the Nevada Division of Mental Health and Developmental Services and found that the hospital sent its patients away on Greyhound buses, equipped with a small supply of medication and several bottles of a nutritional supplement that only lasted a few days.

Health officials claim that most of the patients were sent off to cities where they had a place to stay, but the Bee discovered several cases in which mentally ill patients were forced to go to cities that they had no connection to.  One example would be James Flavy Coy Brown, a 48-year-old homeless man who had received treatment at Rawson-Neal.

Brown was put on a bus that dropped him off in Sacramento – even though he had never been there and knew no one in the city.  The former psychosis patient had only been treated for three days before doctors sent him out of state, despite his protests.

Equipped with a $306 one-way bus ticket, six Ensure nutrition shake bottles, and a three-day supply of psychiatric medications, he was sent away, only to end up on the streets of Sacramento – without medication.

The man had no Social Security card, food stamp card or Medicaid card, and checked into a homeless shelter, feeling the effects of medication withdrawal and the return of his psychosis.

“If I don’t take my medicine, I get really confused and I start hearing voices in my head, and they tell me to, like, jump off a bridge.  When things get too bad, I break something or to do something to purposefully get arrested or go to prison or jail,” Brown said.

Taxi pulls up, but then moves off camera

A homeless woman appears out of nowhere and begins wandering around.

Mission worker Regina Chambers meets the woman outside and learns what the situation is.

Rawson-Neal Psychiatric Hospital is located in Las Vegas, Nevada.   It is publicly funded by the State of Nevada.


Hollywood Presbyterian Medical Center

In February 2007, an investigation was launched after a hospital official allegedly "dumped" 54-year-old Gabino Olvera, a paraplegic patient, on a Skid Row street. According to witnesses, Olvera was removed from a hospital van and left writhing in a gutter, wearing nothing more than a soiled gown and a broken colostomy bag. 
The man was terribly disoriented and was trying to propel himself along with his hands.  He was carrying a plastic bag of his belongings in his teeth and trailing a broken colostomy bag.

The man was still wearing his wristband from the Hollywood Presbyterian Medical Center, matching the name on the van that dumped him.

The hospital, which is privately owned, agreed to pay $1 million and be monitored for up to 5 years as part of a settlement agreement reached in 2008.  [source]

Rick Archer's Note:  These deeply depressing stories of Patient Dumping are part of my evidence that our American medical system is totally and completely broken. 

Incidentally, there is no "patient dumping" in Canada.  This is a strictly AMERICAN phenomenon.

It must be so darned un-economic for a hospital to actually be expected to treat someone who is sick and has no money.  And the funny thing is, some of them have NON-PROFIT STATUS.

Here you have a gigantic American hospital corporation just trying to make a decent few billion bucks or so in "non-profits", and these riffraff insist on showing up in its emergency rooms all dirty, screaming in distress and, worst of all, penniless.

What's a forward-thinking megacorporation to do? 

Why, dump 'em, of course.  After all, it's the American Way!!


Profit Over People - Non-Profit Hospitals

The University of Pittsburgh Medical Center (UPMC) -- named one of the ten best hospitals in the nation by U.S. News -- cares for the sick and saves lives.

As a nonprofit organization, it also receives a tax break. But in recent months there have been questions raised as to whether the hospital acts more like a corporation, reaping big profits and driving up health care costs.

According to an audited financial statement, UPMC made $948 million in profits from 2011-2012. And while tax returns show it spends just two percent of its yearly budget on charity care, the hospital receives a state and federal tax break of about $200 million, according to city estimates.

Pittsburgh Mayor Luke Ravenstahl is suing to revoke its nonprofit status. His city stands to gain $20 million a year.

"I think they're going to be hard pressed to prove how they're operating the same way as the Little Sisters of the Poor or the Catholic Church, true genuine nonprofits. UPMC? I'm afraid not," Ravenstahl told "CBS This Morning."

The mayor said he was also surprised to learn that UPMC's CEO, Jeffrey Romoff, makes almost $6 million a year. That makes him the highest paid CEO of any large nonprofit hospital in the U.S., according to a recent analysis by TIME. Romoff also has more than a dozen administrators that take in annual salaries of over $1 million, and according to the city, he has access to a private chef, chauffeur, and a jet, as well as one of the most expensive office spaces in Pittsburgh.

Professor Martin Gaynor of Carnegie Mellon has published papers on hospitals that enjoy nonprofit status but do not always function like charities.

"There's a lot of concern here in the community," Gaynor told "CBS This Morning."

"They've taken some actions that don't appear to be consistent with an organization whose mission is to benefit the community."

Some of UPMC's funds are directed at facility improvement, but Gaynor has concerns about even some of that spending. He likened the new, state-of-the-art pediatric center to a palace.

"It's a tremendous asset to the community," he said. "On the other has to ask whether it was so important to make it so beautiful, or whether some of those dollars could've been used to better purpose -- to offer lower prices to members of the community, to offer more charity care."

While nonprofits are required to serve the community, UPMC has closed hospitals in poorer neighborhoods and opened them in more affluent ones, claiming the hospitals they closed were underutilized.

Some of the concerns in Pittsburgh have been echoed across the country. America's hospitals have been growing. The bigger they get, the more power they have -- to set prices and force insurers to pay more. Patients foot the bill via higher premiums, copays, and deductibles.

This is one factor behind the nation's increasing health care costs.     [source]


Profit Over People - Deny Deny Deny!!!

John Grisham's 'The Rainmaker'

The Rainmaker is a work of fiction.  The plot of The Rainmaker revolves around a pitiful young man with leukemia whose insurance company has denied him a bone marrow transplant.  The young man has a willing donor and a doctor's statement that this is his only chance to survive, but that doesn't matter.

Treatment denied.  The insurance company has flatly refused to pay for his medical treatments.

An idealistic young lawyer named Rudy comes across the leukemia case and meets the patient's grief-stricken mother. Seeing the callous way that her son's claim has been treated by an insurance company, Rudy winds up taking on her case as a matter of principle.

Only one problem - this young, inexperienced lawyer suddenly realizes he is taking on a powerful law firm representing the corrupt insurance company.  Rudy gulps in terror when he sees an array of one dozen highly-trained, well-paid lawyers facing him with one single purpose - they want to crush him.

Rudy is terrified.  Rudy knows he is in way over his head, plunged into a nightmare of lies and legal maneuverings. He is about to go head-to-head with some of the best defense attorneys -- and powerful industries -- in America.  This story turns into a David versus Goliath case that involves a frightening war of nerve and the legal skill of a rookie against this heavyweight team of lawyers.

Rick Archer's Note: 
Grisham's suspenseful novel of legal intrigue and corporate greed is riveting for one simple reason - the story is totally believable.  Insurance companies play the same game as Perry Homes in my earlier "He who owns the gold makes the rules".  Some companies refuse to pay on a claim and then hide behind a team of lawyers.  Raise your hands if you have heard that story before.

This story is compelling because many of us feel like the little guy. How many of us have the guts to face teams of lawyers hell-bent on finding some pathetic legal loophole that will serve as a way to escape payment?  How many of us have the money and the patience to fight?  Most of us just give up.  You can't fight them.  They are too big and have deep pockets.  They are sure to outlast us.


Profit Over People:
We are Talking About People's Lives!!

The Rainmaker was a work of fiction, but this next story is the real thing.  In the Sicko documentary, four women were profiled with a similar horror - they were denied treatment.

Each woman had health insurance.

Each woman was sick.

And all four women were denied treatment by their health insurance companies. 

Here is the transcript of what these women said:

(Michael Moore) A quarter billion Americans are still able to get health insurance.

Let's meet some of these happy insured customers.

  •  Diane has Horizon BlueCross.
  •  Maria has BlueShield.
  •  BCS insures Laurel.
  •  Carolyn has CIGNA.

And it's a good thing that these women are all fully covered because they all got sick.

  •  Diane: Brain tumor on the right temporal lobe.
  •  Maria: Brain tumor.
  •  Laurel: I ended up being diagnosed with retroperitoneal cancer.
  •  Carolyn: Breast cancer.

(Moore) Fortunately, as they were insured, they got the red-carpet treatment at the doctor's office.

  •  Diane: The way they would treat it was to remove the tumor.
  •  Maria:  My doctor requested for me to see a neurologist.
  •  Laurel: Surgery was scheduled for December 9.
  •  Carolyn: There is a test that you can take that will show whether or not you would benefit from chemo.

(Moore) They got their treatment all right. But not before battling their insurance companies.

  •  Diane: "We don't consider that life-threatening."
  •  Maria: "It's not medically necessary"... [to receive an MRI].
  •  Laurel: They investigated whether or not this was a preexisting condition.
  •  Carolyn: "They claim that it's experimental."

(Michael Moore voiceover)

Diane died from her non life-threatening tumor.

Laurel's cancer is now spread throughout her body.

Carolyn's "experimental test" proved that she needed chemo.

As for Maria, while vacationing in Japan, Maria became ill.  In Japan, Maria got the same MRI that BlueShield of California had refused to approve.

The doctors in Japan told Maria she had a brain tumor.

That's odd because BlueShield had said repeatedly Maria didn't have a tumor.

That's when Maria said: "Well, I'm pretty sure I have a lawyer."

Rick Archer's Note:
  The reason these stories are important is that these four women represent what we all fear.  Their stories could just as easily be our stories.  It is the stories of people like these four women that explain why all of us live in constant fear of abuse by a health insurance plan.

  •  Raise your hand if you worry whether they will cover you for whatever condition you have.
  •  Raise your hand if you worry they will dig up some medical technicality to deny you coverage.
  •  Raise your hand if you worry your insurance plan will drop you like a hot potato if you get sick.
  •  Raise your hand if your insurance premiums have absolutely sky-rocketed in the recent past.

You can be angry at me all you want for suggesting a "socialist" health care system, but don't forget:  We are all in this same boat together.  Any one of these stories could be you next. 


Maria Watanabe versus Blue Shield of California

March 13, 2003.  Partial Transcript:

Lawyer: I'm going to direct your attention to exhibit one.  Please describe for me what it is.

Witness: It is a denial for referral to an ophthalmologist.

Lawyer: Is it your signature on this?

Witness: Yes.

Lawyer: I'd like to direct your attention to exhibit two.

Witness: This is a denial of a request for referral for a magnetic resonance imaging test of the brain.

Lawyer: It has your signature?

Witness: Yes.

Lawyer: Directing your attention to exhibit three. Please read this document.

Witness: This is a denial of a referral to a neurosurgeon.

Note: The letter in part stated this test could not be approved because it was not a covered benefit.

Lawyer: Can you explain for me how you came to sign the denial letter?

Witness: This is a standard signature put on all denial letters.  (deny deny deny)

Lawyer: Is it your signature or is it a stamp?

Witness:  That is a stamp.

Lawyer: Did you ever see this denial letter before your signature was stamped on it?

Witness: No, but the denial letters are fundamentally the same.  The denial letters that are sent out...

Lawyer:  The answer is no, correct?

Witness:  Okay, all right. No.


A jury found that Blue Shield of California breached its contract with Maria. She was not completely satisfied with the verdict, however -- which her attorneys say was due to an error by the presiding judge -- and Maria is appealing.

Maria Watanabe vs. Blue Shield of California
State: California
Year: 2008

Court: California Court of Appeal, 2nd District, Division 8

Issue: California law is clear: an insurer cannot delegate its implied covenant duties.

Blue Shield of California tried to shield itself from bad faith liability by claiming that Maria W’s benefits were denied by a medical group which had a contract with Blue Shield. But California law is clear: an insurer cannot delegate its implied covenant duties. The Know-Keene Act does not immunize insurance companies from bad faith liability. To allow an insurer to delegate its implied covenant obligations would effectively allow insurers to eliminate its bad faith liability.

Conclusion:   Absent the threat of bad faith liability, an insurer has little incentive to afford policy benefits.  (source)

Rick Archer's Note:
  The underlying point here is chilling indeed.  It suggests that without "law", an insurer has little incentive to afford policy benefits.

What does this mean precisely?  What ever happened to "Business Ethics"?  Have things gotten so bad that we cannot trust our health insurance companies to do the right thing because that is what they promised to do??

This situation brings us to the fundamental problem.

The fewer the medical procedures that are approved, the greater the profits for the insurance company.

That in a nutshell explains why "managed care" and "capitalism" are inherently at odds with humane public heath policy.  

Repeat:  Every single medical test that is denied means greater profits for the HMO or the insurance company. 

This practice absolutely guarantees that the health of some INSURED customers will be in peril!

In Maria's case, this woman is a mother of two small children. Maria is responsible for their safety and took steps to protect her health and her life savings by purchasing insurance... only to see someone willy-nilly deny her claim with a stamp no less.

In the end, Maria nearly died in Japan and was forced to seek legal help.

This brings up another point.  There is an old saying that everyone hates lawyers till you need one.  In a nasty game that contributes directly to human misery, the insurance companies know that most people won't have the guts that Maria had to fight back. 

For that matter, at first Maria didn't fight back.  Originally Maria simply accepted the insurance company's decision.  Had she not gotten sick in Japan and received the damning evidence of the MRI, Maria probably would not have had a case strong enough to fight back.

Meanwhile lawyers are hired to defend the customers denied treatment.  And more lawyers are hired to defend the practices of the insurance company.  This suggests when it comes to denying incredibly expensive medical procedures, some companies think it is in their best interests to "deny" and take their chances in court. 

If that is indeed true, what a truly awful game this is.  As depressing as it is to point this out, American capitalism has become so GREEDY that we now need LAWYERS to keep the companies honest. 

Lawyers are the big winners here.  They don't want anything to change.  Why should they?  They love this pathetic system of health care because it plays right into their hands.  The LAWYERS are getting rich in the process feeding off this deeply-flawed system of health care. 

Another one of the reasons why American medical costs are so high is the exorbitant insurance that doctors and hospitals are forced to carry to fight back against the litigious claims of their own dissatisfied patients.... and they pass their costs onto you.

In the end, the lawyers are thrilled.  No matter which side wins and which side loses, the lawyers get paid. 

And we all know who the biggest losers are - you and me.

In the end, the lawyers are thrilled with the Health Insurance "deny" technique.  No matter which side wins and which side loses, the lawyers get paid. 

Rick Archer' Note: The irony of getting jerked around by the "Good Samaritan" health plan is unmistakable.

About Japan's Health Care System

One final point before we move on.  While studying the story of Maria, I learned that Japan is also considered to have a health system superior to the USA.  No surprise there.  Apparently everyone's health care system is better than ours.  Oops... not true.  Apparently Slovenia and Ghana are still behind the USA.  My bad.

The health care system in Japan provides healthcare services, including screening examinations, prenatal care and infectious disease control, with the patient accepting responsibility for 30% of these costs while the government pays the remaining 70%.

Payment for personal medical services is offered through a universal health care insurance system that provides relative equality of access, with fees set by a government committee.

People without insurance through employers can participate in a national health insurance program administered by local governments. Patients are free to select physicians or facilities of their choice and cannot be denied coverage. Hospitals, by law, must be run as non-profit and be managed by physicians. For-profit corporations are not allowed to own or operate hospitals. Clinics must be owned and operated by physicians.  (source)

Ranking Third on Bloomberg's list of health systems, the Japanese system involves universal health care with mandatory participation funded by payroll taxes paid by both employer and employee, or income-based premiums by the self-employed. Long-term care insurance is also required for those older than 40.

Japan controls costs by setting flat rates for everything from medications to procedures. This eliminates competition among insurance providers. While most of the country's hospitals are privately owned and operated, the government implements smart regulations to ensure that the system remains universal and egalitarian. (source).



The Twisted Golden Rule, Example 4

Profits Over People:  Linda Peeno - The Humana Insider

One of the most powerful features of Michael Moore's Sicko documentary came from Dr. Linda Peeno, a physician who was a nine-month contractor working as a medical reviewer for Humana in the 1990s.  

Dr. Peeno said she eventually left her job because she didn't like their way of doing business.  Here is her compelling testimony before the US Congress in 1996.

My name is Linda Peeno.

I am a former medical reviewer at Humana.

I am here today to make a public confession.

In the spring of 1987, as a physician, I denied a man
a necessary operation that would have saved his life,
and thus caused his death.

No person and no group has held me accountable for this, because, in fact, what I did was to save the company a half a million dollars for this.

And, furthermore, this particular act secured my reputation as a good medical director, and it insured my continued advancement in the healthcare field.

I went from making a few hundred dollars a week as a medical reviewer to an escalating six-figure income
as a physician executive.

In all my work, I had one primary duty, and that was to use my medical expertise for the financial benefit
of the organization for which I worked.

And I was told repeatedly that I was not denying care, I was simply denying payment.

I know how managed care maims and kills patients.

So I'm here to tell you about the dirty work of managed care.

And I'm haunted by the thousands of pieces of paper on which I have written that deadly word - "denied."

Thank you.

Michael Moore's was able to get Linda Peeno to agree to an interview for his Sicko documentary.  Here is the transcript:

Dr. Peeno: The definition of a good director was somebody who saves the company money.

I was told when I started that I had to keep a 10% denial.

Then they were giving us reports weekly that would have all the cases we reviewed, the percent approved and the percent denied.

This included my own actual percentage denial rate.

Then there would be another report that compared me to all the other reviewers.

The doctor with the highest percent of denials was going to get a bonus.

Really? So you, as a doctor, working for the HMO, if you denied more people healthcare, you got a bonus?

Dr. Peeno:
That was how they set it up.

Any payment for a claim is referred to as a medical loss. That's the terminology the industry uses.

I mean, when you don't spend money on somebody, when you deny their care, or you make a decision that brings money in and you don't have to spend it, then it becomes a savings to the company.





"The definition of a good director was somebody who saves the company money." - Dr. Linda Peeno

"The doctor with the highest percent of denials was going to get a bonus." - Dr. Linda Peeno

"Any payment for a claim is referred to as a medical loss. That's the terminology the industry uses." - Dr. Linda Peeno

"When you don't spend money on somebody, when you deny their care, or you make a decision that brings money in and you don't have to spend it, then it becomes a savings to the company." - Dr. Linda Peeno

Rick Archer's Note
:  Besides the Michael Moore interview, on 21 June 2007 Linda Peeno was also interviewed by Amy Goodman on Democracy Now

Peeno recounted that while working at Humana, the insurer refused to pay for expensive treatments such as heart transplants for its customers, which led to their deaths.

Peeno said that "just within a day or so [of the refusal of the heart transplant, I saw a sculpture being installed in the rotunda [of Humana's headquarters].  I was told at that time that it had cost about the same as the heart transplant that we had denied...By the way, I later found out that that sculpture cost $3.8 million, so it was actually equivalent to eight heart transplants."

Peeno told Amy Goodman that when she went for her interview at Humana, "I was asked if I could be tough, because I was going to be telling doctors that they couldn't do things and that I would be expected to keep a 10% denial rate." 

Peeno also said that while she worked at Humana, "we were told that the medical reviewer that had the highest denial rate was going to receive a bonus at Christmas." (source)

Linda Peeno is now hailed as a whistleblower.  Immediately after her testimony before Congress in 1996, other physicians stood up as well.

"A Call To Action" appeared in the December 3, 1997 issue of the Journal of the American Medical Association.  It was signed by 2,300 Massachusetts physicians. 

"The time we are allowed to spend with the sick shrinks under the pressure to increase throughput, as though we were dealing with industrial commodities rather than human beings…

Doctors and nurses are being prodded by threats and bribes to abdicate allegiance to patients, and to shun the sickest, who may be unprofitable. Some of us risk being fired or 'delisted' for giving or even discussing expensive services.  Many of us are offered bonuses for minimizing care."

A Stockton, California, gynecologist named Daniel Fisher made an even stronger statement. He quit his practice over these concerns.

In a letter to his 2,651 patients, Dr. Fisher wrote:

"As of 7/1/98 I am quitting the practice of medicine. The system of HMOs, managed care, restricted hospitals and denial of needed medications has become so corrupt, so rotten, that I cannot stomach it any longer."  (source)


The Corporate Health of Humana

Rick Archer's Note:  Humana was the company called out by Dr. Linda Peeno in 1996.  So how seriously did Dr. Peeno's whisteblowing hurt the company? 

Apparently Humana survived.  In fact, as one can readily see, Humana is doing quite well.  As of 2012, it was the third largest Health Insurance company in America.

Humana: "Guidance When You Need it Most"

Bulletin: 2013 Humana Second Quarter Profits up 18%

By Jennifer Booton
Published July 31, 2013
FOX Business

Driven by increased premiums and services revenue, Humana revealed a stronger-than-expected 18% rise in second-quarter profit on Wednesday and raised its full-year outlook.

The Louisville, Ky.-based health insurer, which focuses on private Medicare plans, reported net income of $420 million, or $2.63 a share, compared with a year-earlier profit of $356 million, or $2.16.

Excluding the 12 cents Humana recorded as special items, the results topped average analyst estimates of $2.47 a share in a Thomson Reuters poll.

Revenue for the three months ended June 30 was $9.7 billion, up 6.4% from $9.2 billion a year ago, narrowly below the Street’s view of $10.3 billion. Humana recorded a 7.1% increase in Medicare Advantage membership, while premiums in the group edged up 5.8%.

In a statement, Humana CEO Bruce Broussard attributed the performance to “continued focus and executional discipline,” as well as in key initiatives like its chronic care program.

Humana raised its full-year EPS guidance to a range of $8.65 to $8.75 from an earlier $8.40 to $8.60. The guidance is mostly above the consensus view of $8.68.

Building on the successes from last quarter and a focus on axing costs, Broussard said Humana will be well positioned to face reform-related challenges set to hit in 2014.

The insurer is the fourth major health-services provider to report earnings this season.

Rivals UnitedHealth, WellPoint and Aetna all posted favorable profits as members used fewer services.

Rick Archer's Note: According to Michael Moore's Sicko, Humana's profits doubled in 2006.  This success has continued.  The Fox Business report shows Humana did quite well in 2013. 

One way to maximize profits is to limit insurance to "The Healthy".

Thanks to that policy, close to 50 million Americans are uninsured.  Many of these people are the ones with "pre-existing conditions".

If I were running a health insurance company, I would do the same thing!  The purpose of a health corporation is to make a profit.

However, this points out the absurdity of expecting self-serving corporations to SERVE THE PUBLIC GOOD.  These companies won't take care of you... they will take take care of themselves.


Profits Over People

Rick Archer's Note:  Oddly enough, the first thing that caught my eye when I looked at the initial list of health care companies and revenues on the right was the curious phrase "More competitors".   (source)

This "more competitors" phrase bothers me for the same exact reason that I am upset with the entire American medical system.  This phrase suggests that Humana is more concerned about competing against other companies than it is with the welfare of its customers.

I begin to wonder what steps a company like Humana might take to become even more profitable.  When it comes to "Competition" in America, one of the first tactics is to cut costs. 

Dr. Linda Peeno suggested the way our health care companies cut costs is to deny coverage... coverage that you and I have paid for with our monthly premiums. 

The Fox Business report above suggested that "Rivals UnitedHealth, WellPoint and Aetna all posted favorable profits as members used fewer services."

Although the Fox Business report didn't spell it out, one might guess "as members used fewer services" is CODE for deny deny deny.

"When you don't spend money on somebody, when you deny their care, or you make a decision that brings money in and you don't have to spend it, then it becomes a savings to the company."
- Dr. Linda Peeno

According to a 2008 article by Peter Dreier in the Huffington Post, legendary Humana CEO Michael McCallister said this in 2003:

"It is important to note if we have to choose between achieving our membership goals and achieving profitability goals, profits will win every time." 

Peter Dreier, the writer, didn't particularly warm up to CEO McCallister's statement.

"Indeed, Humana isn't shy about revealing its profits-over-people philosophy.

Whoever picked the name "Humana" for the health insurance giant had a great sense of humor.  The title suggests a company engaged in humanitarian pursuits, or at least one with a priority on human beings. 

Had the marketing genius in charge of picking a name for the corporation been more honest, he would have called it "Profita," in recognition of the company's main concern."

I say this again: When it comes to health care, the capitalist need to make "profits" is inherently contradictory to serving the public good.

We haven't even begun to address the problem of the 50 million who can't even get health insurance due to 'pre-existing conditions'.  Health insurance companies like Humana will only insure people it thinks it can make a profit on.

And the only way to save money on the ones who are insured is to not treat people!!

  •  Patient dumping
  •  Denial of care
  •  Non-Profit Hospitals move out of poor areas because there are no profits.
  •  Refusal to cover people with pre-existing conditions

I am sorry, but I cannot accept that our capitalist Health care system based on market share, competition, and profits can ever be compatible with the principles of kindness, sharing and healing.

Our American medical system may guarantee profits to companies like Humana, but the American taxpayer ends up paying for everyone else anyway through our tax-funded public hospitals (the hidden health tax).  No wonder our taxes are so high. 

Who in the world devised this ridiculous system?  How on earth did anyone manage to convince the American public that a health system based "competition" was a a good idea?   And, better yet, can anyone think of a better system?  

Well, apparently 36 countries can think of something better. Let's explore that idea.

Hey Folks, Here Are 36 Countries That Have Better Healthcare Systems Than The USA!!

Source: Business Insider (2012)

12 years ago, the World Health Organization released the World Health Report 2000. Inside the report there was an ambitious task — to rank the world's best healthcare systems.

The results became notorious — the US healthcare system came in 15th in overall performance, and first in overall expenditure per capita. That result meant that its overall ranking was 37th.

The results have long been debated, with critics arguing that the data was out-of-date, incomplete, and that factors such as literacy and life expectancy were over-weighted.

So controversial were the results that the WHO declined to rank countries in their World Health Report 2010, but the debate has raged on. In that same year, a report from the Commonwealth Fund ranked seven developed countries on their health care performance — the US came in dead last.

World Health Report 2000   (source)

From Worst to First:
37 - United States of America, dead last
36 - Costa Rica 24 - Cyprus 12 - Portugal
35 - Dominica 23 - Sweden 11 - Norway
34 - Denmark 22 - Colombia 10 - Japan
33 - Chile 21 - Belgium 09 - Austria
32 - Australia 20 - Switzerland 08 - Oman
31 - Finland 19 - Ireland 07 - Spain
30 - Canada 18 - United Kingdom 06 - Singapore
29 - Morocco 17 - Netherlands 05 - Malta
28 - Israel 16 - Luxembourg 04 - Andorra
27 - United Arab Emirates 15 - Iceland 03 - San Marino
26 - Saudi Arabia 14 - Greece 02 - Italy
25 - Germany 13 - Monaco 01 - France 

Now here is the kicker.  The report gave a way to view all systems at once.  I took a look... All 36 health care systems had some sort of Universal Health coverage!!  The USA was the only system to depend on the private sector for its health care. 

If you don't believe me, go look look for yourself.   The 36 Best Health Care Systems in the World

From what I gather, at the time America was highly embarrassed by the World Health Organization's World Health Report 2000.

Keep in mind that this report was probably the first time the inadequacies of America's overall health care had been so publicly exposed.  The American government and the American Medical Association were furious.  

After all, the Nineties had seen a bitter fight matching Hillary Clinton against the Republicans, the American Medical Association, the pharmaceutical industry and the health insurance Industry over health care reform.  Many of our government leaders had been widely quoted on how WONDERFUL our health care system was and how wrong Hillary Clinton was to force this awful SOCIALIST health care agenda down the throats of the American people. 

Then the World Health Report 2000 came out and suggested the current system wasn't so wonderful after all. 

So what would you expect our leaders to do about the criticism?  Did they take the report to heart and look for ways to improve the system?  Of course not.  Instead they unleashed their fury and denounced the report as total nonsense.

According to Business Insider:

"The results have long been debated, with critics arguing that the data was out-of-date, incomplete, and that factors such as literacy and life expectancy were over-weighted."

The World Health Organization was understandably cowed.  They backed down and decided to keep their mouths shut from now on.

"So controversial were the results in 2000 that the WHO declined to rank countries in their World Health Report 2010."

However, the U.S. fury didn't intimidate everyone.  According to the Business Insider report, in 2010 a private foundation conducted another comparative health study.  

In that same year (2010), a report from the Commonwealth Fund ranked seven developed countries on their health care performance — the US came in dead last [again]. 

It is interesting to note that Germany, the country whose economy is probably the most similar to the USA, also has a "socialist health care system".

Wikipedia states: Germany has the world's oldest national social health insurance system, with origins dating back to Otto von Bismarck's social legislation from the 1880s.

As mandatory health insurance, it has gradually expanded to cover the great majority of the population.  Approximately 92% of the population is covered by a 'Statutory Health Insurance' plan, which provides a standardized level of coverage through any one of approximately 1,100 public or private sickness funds. Standard insurance is funded by a combination of employee contributions, employer contributions and government subsidies on a scale determined by income level.

Higher income workers sometimes choose to pay a tax and opt out of the standard plan, in favor of 'private' insurance.

Take a look at the price tag at the bottom.  There's America charging its citizens TWICE as much for health care and ranking dead last in quality.  We can beat all six of those countries in Olympic Gold Medals any day of the week, but our health care system won't even make it to the final heat.


Universal Health Care 

In other words, America is practically the only developed country in the world left that still thinks the free-market, capitalist approach to health care is the superior approach. 

And how well is that idea working for us? 

Not very well.  According to this Bloomberg Report, the USA ranked 46th in 2013.  While you are at it, take a look at that "Health Care per Capita"... $8,608 per person

Good grief, is that Iran in #45?  We spend $8,600 per person and Iran spends $346 and still beats us?  Doesn't it make you want to scream:  Who in the hell designed America's health system???

Everyone in the world has a better system that the USA.  It is called "Universal Health Care".

Earlier in the Sean Recchi story about the inflated hospital costs at MD Anderson, the writer Steven Brill made this statement:

According to one of a series of exhaustive studies done by the McKinsey & Co. consulting firm, the USA spends more on health care than the next 10 biggest spenders combined: Japan, Germany, France, China, the U.K., Italy, Canada, Brazil, Spain and Australia.

Out of curiosity, I checked what Wikipedia had to say about each system.  Read for yourself.  

  Payment for personal medical services is offered through a universal health care insurance system that provides relative equality of access, with fees set by a government committee. People without insurance through employers can participate in a national health insurance program administered by local governments. Patients are free to select physicians or facilities of their choice and cannot be denied coverage. Hospitals, by law, must be run as non-profit and be managed by physicians. For-profit corporations are not allowed to own or operate hospitals. Clinics must be owned and operated by physicians.
  The French health care system is one of universal health care largely financed by government national health insurance. In its 2000 assessment of world health care systems, the World Health Organization found that France provided the "close to best overall health care" in the world.
  China's government, specifically the Ministry of Health of the State Council oversees the health services system, which includes a substantial rural collective sector but little private sector. Nearly all the major medical facilities are run by the government.
  Healthcare in England is mainly provided by England's public health service, the National Health Service, that provides healthcare to all permanent residents of the United Kingdom that is free at the point of use and paid for from general taxation.
  Health care spending in Italy accounted for 9.0% of GDP in 2006 (about $2,600 per capita) of which about 75% is public. In 2000 Italy's healthcare system was regarded, by World Health Organization's ranking, as the 2nd best in the world after France. Italy has the world's 10th highest life expectancy. Thanks to its good healthcare system, the life expectancy at birth in Italy was 80.9 years in 2004, two years above the OECD average.
  Health care in Canada is delivered through a publicly funded health care system, which is mostly free at the point of use and has most services provided by private entities.
  Primary health care remains the responsibility of the federal government, elements of which (such as the operation of hospitals) are overseen by individual states. Public health care is provided to all Brazilian permanent residents and foreigners in Brazilian territory through the National Health Care System, known as Unified Health System - SUS. The SUS is universal and free for everyone.
  Under Chapter III of the 1978 Spanish Constitution, all Spanish citizens are beneficiaries of public health services.  Article 39: The public powers assure social, economic and juridical protection of the family.
Article 43: The right to health protection is recognized. It is the responsibility of public authorities to organize and act as guardian over public health through preventive measures and the provision of necessary services.


  Health care in Australia is universal. The federal government pays a large percentage of the cost of services in public hospitals. 


Here in America, "Universal Health Care" is considered a code word for "Socialism".  Now I understand that Americans have been trained to reflexively hiss and boo whenever the nasty word "Socialism" is whispered, but just think about this for a minute. 

At its basis, "Socialism" is simply a philosophy that suggests some things are better regulated by the community as a whole.

By suggesting America's health care be regulated by the central government, I am hardly recommending something that is particularly profound.  

In fact, I think it is common sense.

Public Health Care is simply too important to be handed over to corporations that will perpetually act in their own self-interest.


"Socialized medicine" is a term used to describe and discuss systems of universal health care—that is, medical and hospital care for all at a nominal cost by means of government regulation of health care and subsidies derived from taxation.

The idea has been around forever.  Universal health care and national health insurance were first proposed by President Theodore Roosevelt. President Franklin D. Roosevelt later championed it, as did Harry S. Truman as part of his Fair Deal.

It took master mover and shaker Lyndon Johnson to get at least some of this idea implemented when he created Medicare in 1965.

What do you think Medicare is?  Medicare is "socialism" in action.  It is a medical safety net for the elderly funded by all the taxpayers.

Why do you think we have Medicare in the first place?   Before Medicare's creation in 1965 under President Johnson, two-thirds of people over 65 had health insurance, but guess how much they paid... 

Thanks to the policies of the self-serving health insurance companies, older adults were forced to pay more than three times as much for health insurance as younger people.

Coverage was completely unavailable or unaffordable to the rest.  If a person was old AND poor, have mercy upon their soul. 

That was 40 years ago.  Now today thanks again to the same ongoing policies of our nation's health insurance companies, we are almost in the same situation, but now our "least healthy people" are the ones discriminated against.

50 million Americans are denied health coverage due to lack of funds or "pre-existing conditions".  In other words, the same problems the elderly had back in Sixties has now reached a critical point in the general population. 

Our American "Profits over People" health care system is an utter failure.

What is the best solution?  Probably we should copy one of the systems that other countries have successfully adopted.  Take your pick - the Canadian system, the English system, the French system or the Japanese system.  I don't care; any one of those four systems are rated better than ours. 

Hillary Care

The World Health Report said the American system was ranked 37th in the world... oops, those were the 2000 rankings... we have slipped since then.

The USA is currently ranked 46th in world by Bloomberg.

If something isn't done, I shudder to think what our ranking will be in 2020.

So if we are ranked so poorly, why doesn't someone in government do something about it?   Funny you should ask.

In 1993, President Bill Clinton spoke to Congress about the need for health care reform. He said:

If Americans are to have the courage to change in a difficult time, we must first be secure in our most basic needs. Tonight, I want to talk to you about the most critical thing we can do to build that security. This health care system of ours is badly broken, and it is time to fix it.

Despite the dedication of literally millions of talented health care professionals, our health care is too uncertain and too expensive, too bureaucratic and too wasteful. It has too much fraud and too much greed.

At long last, after decades of false starts, we must make this our most urgent priority, giving every American health security — health care that can never be taken away, health care that is always there. That is what we must do tonight.

As some of us "older people" will remember, at that point Clinton handed his wife the ball and told her to run with it.

Hillary Clinton tried hard to implement health care reform in 1993, but quickly ran into a firestorm of opposition.  Mrs. Clinton put up a good fight, but it was all for naught. In the end she did not even come close to succeeding.  As the burning effigy suggests, Hillary became rather unpopular in the process.  In fact, I would guess she was the most hated woman in America.

According to Michael Moore's Sicko documentary, one of Hillary's problems was that she ran into some considerable opposition from the Republican party among others. 

The Republicans put out the message that universal health care meant more government control and less control by the people.

This of course led to the big scare word, SOCIALISM.

Attack ads filled the TV.  People were told that socialized medicine would lead to a domino effect ending with the fall of freedom and the worst medical system in the world.

As for me, I bought the message hook line and sinker.  I hated Hillary with a purple passion.  I was so glad when they beat her down.  Now, looking back, I wish I had paid better attention. 

What I am aware of now is how easily the media was able to sway public opinion.  Like the Swift Boat ads that sunk John Kerry in 2004, those attack ads against Hillary did the trick. 

As I said before, whoever owns the gold makes the rules

The story of Hillary Care is a perfect example of that slogan.  A veritable avalanche of money rained down to defeat this reform.  That money is what paid for the media blitz that beat her.

A casual glance at the list of her opponents shows that the Health Insurance Companies contributed $15 million to defeat these reforms. Gee, why does that not surprise me?

I also see the American Medical Association chipped in $3 million additional dollars.  No surprise there either. Doctors as a whole are always opposed to medical reform because they fear they will make less money. 

When all the various contributions were added up, the health care industry had spent $100 million to defeat Hillary's plan. 

Meanwhile, by the end of the Nineties, the United States had slipped to #37 on the ranking of world health care systems.  

Hillary was burned in effigy over her health reform proposals.

Hillary Clinton tried her best to get America to accept Universal Health Care.

This is just a partial list of the opponents.  The overall tab of the people lined up to defeat Hillary Care approached $100 million.


The Twisted Golden Rule, Example 5

Bush Care - The Medicare Modernization Act

Rick Archer's Note:

Put on your seat belts and maybe have a drink to calm your nerves.  This story is a doozy.

Earlier in my article I wrote:

"The chart shows quite clearly that something badly went wrong with our health system starting around 1978.  The chart also shows that things really began to spiral even more out of control in 2004. 

Although the chart ends at 2007, we all know that things have only gotten worse since then.

It is beyond pathetic for American citizens to pay the most money of any society in the world and yet have our system ranked among the most mediocre. 

How could things have gotten this bad?"

You are about to get a direct answer to that question.

As one can readily see, health costs in the USA are rising much faster than in other countries.  Wikipedia

In his 60 Minutes segment titled Under the Influence, Steve Kroft opened with this statement:

"If you have ever wondered why the cost of prescription drugs in the United States are the highest in the world or why it's illegal to import cheaper drugs from Canada or Mexico, you need look no further than the pharmaceutical lobby and its influence in Washington, D.C."

Kroft went on to expose a series of highly questionable moves on the part of several Congressman in regards to the passage of a controversial pharmaceutical drug bill in 2003.

If you had any doubt before, this story will make it perfectly clear that our government is run by certain people with highly questionable integrity.  Let me say this again - Whoever owns the gold makes the rules.

Before we discuss the Medicare Modernization Act (MMA) of 2003, I want everyone to know that I voted for George W. Bush in the 2000 Election.  Previously I voted for Reagan.  And I voted for Bush over Clinton.  Now that we have that issue cleared up, I prefer not to be characterized as a left-leaning Democrat.

When it comes to politics, I call it like I see it.  And in this case, the way I see it, the politics involved in passing this bill were beyond shameful.

The initial part of the following account is taken from an article about the passage of the bill written by Jake Tapper and Dan Morris for ABC News and Nightline.  In addition, I used material from a Wikipedia article on the same story to help with narration.

Then I concluded this story using the amazing article Under the Influence as seen on CBS' 60 Minutes with credit to correspondents Steve Kroft and Michelle Singer. 

The Medicare Bill of 2003

The MMA, or 'Medicare Bill' as I will refer to it, was signed by President George W. Bush on December 8, 2003, after passing in Congress by a close margin.

The bill was debated and negotiated for nearly six months in Congress. In the end, it barely passed amid highly unusual circumstances. Several times in the legislative process the bill had appeared to have failed, but each time it was saved when a couple of Congressmen conveniently switched positions on the bill at the last minute.

In the days leading up to this bitterly contested vote, Bush and Republican leaders said the price tag for the new law would cost $400 billion.  It would provide drug benefits to seniors beginning in 2006, as well as subsidies to insurance companies and HMOs. It would also allow the first steps to allow private plans to compete with Medicare.

The Curious Story of the Price Tag

According to Robert E. Moffit, director of the Center for Health Policy Studies at the Heritage Foundation, the GOP leadership of the House and Senate said, "Look, we're going to have a financially responsible drug benefit. That's what we're going to have, and it's not going to cost any more than $400 billion over 10 years."

And the conservatives in Congress were saying, "Wow, that price is really steep, but OK, all right. You know, we budgeted that, but the price tag can't go any higher than that!"

Robert Moffit said that due to the level of the protest over the cost, the supporters of the bill became locked into a position where they had to hold to that line.  Conservatives like Rep. Pat Toomey, R-Pa., thought that even the Republican leadership's $400 billion price tag was too high, too expensive.  Toomey and others were ready to vote 'no' if the price tag rose even slightly. 

Without any cost containment mechanism, Toomey said, he was concerned the Medicare bill would exceed the promised cost.

Toomey told ABCNEWS: "There is no mechanism to contain the cost of this bill. And you know in the history of every entitlement program in American history, they end up costing far more than the initial projections."

The events that followed bore Toomey's dire prediction out.  Unbeknownst to Toomey, there was a serious doubt raised about the program's looming cost by Medicare actuary Richard Foster.

Richard Foster was a 30-year veteran of the Medicare process.  An independent man known his integrity, Foster was relied upon by both Democrats and Republicans for his unbiased accounting.  

Foster calculated the cost of the bill and the number he came up with it was much higher than the $400 billion touted by the Bush administration and the Republican leadership.

Compared to the $400 billion price tag touted by the White House, Foster "had projections that were between $500 and $600 billion over 10 years for the drug benefit," according to Robert Moffit.

Cybele Bjorklund, a top health-care staffer for House Democrats, had relied on Foster's numbers for years. At least until last June.

"I had asked [Foster] for information on the effect and cost of particular proposals," Bjorklund told ABCNEWS, "and he said that he had at least part of the information ready, but that he was not allowed to give it to me. I asked him why, because under the law we are entitled to access this information and he had prepared it, and he was clearly unhappy with telling me that he couldn't give it to me.

And he said that he'd been threatened."

Richard Foster knew that Congress was being misled on the cost of this bill, but he was silenced by his boss, Thomas Scully, a Bush appointee.

Bjorklund said Foster told her that Medicare Administrator Thomas Scully — a Bush political appointee — had called him into his office and told Foster he could not give cost estimates to Congress anymore without Scully's prior approval.

"I was not happy about that," Foster told a congressional committee Wednesday. "I could ignore orders, but I knew I would be fired."

That night, Bjorklund said, she caught up to Thomas Scully and confirmed Foster's story.

Bjorklund: "I said to Scully, 'How can you do that? You need cause, he's protected'. And Scully replied, 'If he gives that information to you, I will fire him so fast his head will spin.' "

"It struck me as a political basis for making that decision," Foster said Wednesday. "I considered that inappropriate and, in fact, unethical."

Thomas Scully has denied this story.  

However, no one believes him.  Richard Foster had a 30 year career with impeccable credibility.  His story is corroborated by Cybele Bjorklund.  Furthermore, Scully left government shortly after to work for a law firm and investment bank with major health-care industry clients. As they say, actions speak louder than words.

Why Foster's calculations may have been withheld soon seemed clear. A few weeks after the Medicare bill was signed into law, the bill's estimated cost began to rise.  Now that it didn't matter any more, the Bush administration began admitting publicly it would cost $534 billion for the next 10 years — about $140 billion more than it had promised Congress the bill would cost.

"Within the Republican caucus there were a number of senators who were very uneasy about this, just from the dollar figure alone," said Chuck Hagel, R-Neb. "The $400 billion number was critical because that fit within the budget which most of us voted for."

With costs now far exceeding that figure, the bill's outcome was far from assured passage.

Now members of Congress on both the left and right began to ask: When did the Bush administration know that the bill would probably cost more than $140 billion more than it had said?

On 30 January 2006 of this year, Bjorklund got a hint. "One Friday afternoon, working in my office, I heard a fax come in.  When I checked the machine, it was a table that was unattributed.  It had come in anonymously and it showed an estimate performed by Foster's office last June 11It was an estimate of a package that was similar to what passed the Senate and it showed a score of $551 billion."

According to this fax, therefore, around the time Foster was allegedly being silenced, the Bush administration already possessed evidence that the numbers it was touting to Congress were far too low.

 "They said that there were nuclear weapons in Iraq and that Iraq was involved in 9/11, and that was false," argued Sen. Edward Kennedy, D-Mass. "They had indicated that this bill was going to cost $400 billion, and that was wrong.  And they misrepresented the figures here. They not only deceived the Congress, they basically lied."

Rachel Maddow on Thomas Scully

Mr. Scully's career in government took a turn for the infamous after he ordered another government official to withhold information from Congress.  That information was how much President Bush's Medicare prescription drug benefit would cost.

Publicly, the Bush administration was saying it would cost no more than $400 billion. Privately, they knew it was more like $600 billion. But Thomas Scully made sure that Congress never knew that.

A Bush administration investigation found that Mr. Scully threatened to fire the actuary who came up with the real cost figures if that actuary gave those real cost numbers to Congress. And while he was doing that, Mr. Scully was also busy getting himself a special waiver that would allow him to get a job as a health industry lobbyist as soon as he left government.

So, think about this for a second. He helped that prescription bill get passed by hiding its true costs, then he immediately went to work for companies who stood to make a mint from the fact that he got that bill passed. It's nice work, if you can get it, right? You know, it is technically legal to interfere with a federal employee who's trying to communicate with Congress.

But Mr. Scully was never charged.  Instead he left his job to become a lobbyist and started raking in the D-O-U-G-H, dough.  Ha, ha, ha, suckers!   (source)

Medicare Administrator Scully received an ethics waiver so he was able to negotiate the Medicare bill and simultaneously negotiate with various companies for his next job - companies representing health-care interests that stood to make millions from the bill.


How the First Vote Went

The bill was introduced in the House of Representatives early on 25 June 2003 by Speaker Dennis Hastert. All that day and the next the bill was debated, and it was apparent that the bill would be very divisive. In the early morning of June 27, a floor vote was taken. After the initial electronic vote, the count stood at 214 yeas, 218 nays.

Three Republican representatives then changed their votes. One opponent of the bill, Ernest J. Istook, Jr. (R-OK-5), changed his vote to "present" upon being told that C.W. Bill Young (R-FL-10), who was absent due to a death in the family, would have voted "aye" if he had been present. Next, Republicans Butch Otter (R-ID) and Jo Ann Emerson (R-MO) switched their vote to "aye" under pressure from the party leadership. The bill passed by one vote, 216-215.

On June 26, the Republican-controlled Senate passed its version of the bill, 76-21. The bills were then unified in conference.

How the Second Vote Went

On November 21, the bill came back to the House for final approval.

Things were far from normal from the moment the Medicare bill was called for a vote in the House of Representatives.  The voting was done at 3:01 a.m. on Saturday, November 22, 2003.

After 45 minutes, the bill was losing, 219-215, with David Wu (D-OR) not voting.

Speaker Dennis Hastert and Majority Leader Tom DeLay sought to convince some of dissenting Republicans to switch their votes, as they had done previously back in June.

In the speaker's crosshairs were several of the 12 Republicans who had signed a letter organized by Toomey complaining about the bill's flaws and pledging their opposition. But by the end of the night, nine of those principled 13 — Republican Reps. Sue Myrick of North Carolina, Marsha Blackburn of Tennessee, Joseph R. Pitts of Pennsylvania, Roscoe Bartlett of Maryland, Trent Franks of Arizona, David Vitter of Louisiana, and Joe Barton, Jeb Hensarling, and John R. Carter of Texas — voted for the bill.

Only Pat Toomey of Pennsylvania, Tom Feeney of Florida, Gresham Barrett of South Carolina, and Scott Garrett stuck to their guns.

Istook, who had always been a wavering vote, consented quickly, producing a 218-216 tally. In a highly unusual move, the House leadership held the vote open for hours as they sought two more votes.

At this point, Representative Nick Smith (R-MI) claimed he was offered campaign funds for his son, who was running to replace him.  This offer would be in return for a change in his vote from "nay" to "yea."

After controversy ensued, Smith backed down a bit. He clarified tht no explicit offer of campaign funds was made, but that he was offered "substantial and aggressive campaign support" which he had assumed included financial support.

About 5:50 a.m., Hastert convinced Otter and Trent Franks (R-AZ) to switch their votes. With passage assured, Wu voted yea as well, and Democrats Calvin M. Dooley (D-CA), Jim Marshall (D-GA) and David Scott (D-GA) changed their votes to the affirmative.  

The vote had been scheduled to last only 15 minutes.  However, the Speaker made sure to keep the vote until he got what he wanted.

Finally, at 6 a.m. — nearly three hours after the 15-minute vote began — the gavel came down and the triumphant Republican chair announced that the Medicare bill had passed.  The bill passed 220-215.

The Democrats cried foul, and Bill Thomas, the Republican chairman of the Ways and Means committee, challenged the result in a gesture to satisfy the concerns of the minority. He subsequently voted to table his own challenge; the tally to table was 210 ayes, 193 noes.

"The three-hour vote will enter the realm of dark legend," Robert Moffit said. "This was not good government's finest hour, shall we say."

Added Norm Ornstein: "There is simply no question here that what Speaker Hastert did in the name of winning at all costs stained his speakership and stained the House of Representatives in a way that will last for a very long time."

The Senate's consideration of the conference report was somewhat less heated, as cloture on it was invoked by a vote of 70-29. However, a budget point of order raised by Tom Daschle, and voted on. As 60 votes were necessary to override it, the challenge was actually considered to have a credible chance of passing.

For several minutes, the vote total was stuck at 58-39, until Senators Lindsey Graham (R-SC), Trent Lott (R-MS), and Ron Wyden (D-OR) voted in quick succession in favor to pass the vote 61-39.  The bill itself was finally passed 54-44 on November 25, 2003, and was signed into law by the President on December 8.

The Saga of Nick Smith
by Jake Tapper

Strong-arming is one thing, but the extreme measures employed on the floor that night have triggered an investigation by the House Ethics Committee. Investigators are focusing on the tactics used against Rep. Nick Smith, R-Mich., who refused to buckle and voted no on the bill.

In December, Smith — who has largely kept away from the media since then — described the scene to a local Michigan radio station, WKZO-AM in Kalamazoo.

"The arm-twisting was probably as strong as I've ever seen it," Smith said. "They threatened — here's what they did. They started out by offering the carrot." Smith is retiring this year, with his son Bradley running to replace him, "so the first offer was to give him $100,000-plus for his campaign and endorsement by national leadership. And I said no, I'm gonna stick to my guns on what I think is right for the constituents in my district."

The carrot having failed to work, Smith said, out came the stick. "They said, well, if you don't change your vote — this was about 4 a.m. Saturday morning — then some of us are going to work to make sure your son doesn't get to Congress." Smith says he "told them to get the heck out of there and I mighta used a different word besides heck."

Norm Ornstein of the American Enterprise Institute said "that, by any reasonable standard, is a bribe, and we're now in the middle of investigating it."

In December, after the Justice Department said it would review the bribery allegations, Smith issued a statement that contradicted some of his earlier claims, insisting no specific money amount had been cited.


Billy Tauzin - From Congress to Lobbyist

One of the stranger tales to come out of this fracas was the role of Billy Tauzin (R-LA).  Tauzin was the key player in the passage of the Medicare bill.  Then one month after the bill was passed, Tauzin resigned his post to work for Big Pharma.  His switch from regulator to lobbyist was widely noted.  In fact, how could anyone not notice?  After all, Tauzin practically flaunted his lucrative reward for switching sides. 

According to Jason Linkins of the Huffington Post, Billy Tauzin is an example of a former Legislator who managed to get staggeringly rich by peddling influence.  Linkins stated that after Tauzin quit his post in Congress to become a drug lobbyist, he made $19,359,927 in 4 years shilling for Big Pharma.  In 2010 alone, Tauzin was paid $11.6 million by the pharmaceutical industry.

Tauzin originally worked his way to become Pharma's chief lobbyist when he played a key role in shepherding the Medicare Prescription Drug Bill through Congress.  This was a bill which had been criticized by opponents for being too generous to the pharmaceutical industry.  In fact, the bill was so generous to Big Pharma that a great deal of opposition arose to its passage.  That's when Tauzin stepped up his efforts.

What exactly did Tauzin do to become so instrumental to the passage of this bill?  Two months before resigning as chair of the committee which oversees the drug industry, Tauzin did everything within his power to steer the drug bill through Congress.  

In his position as chairman of the House Energy and Commerce committee, Tauzin wrote the law creating Medicare’s prescription drug benefit, a boon to the pharmaceutical industry.  When it time to pass the bill, there were a lot of votes that changed sides at the last minute.  Rumor has it that Tauzin did most of the serious arm-twisting.

Walter Jones (R-NC) commented that the final vote was the "ugliest night" he had "ever seen in politics in 22 years".

When asked to comment by Steve Kroft, Tauzin replied, "Getting bills passed is just a messy process.  I mean, the old adage about if you like sausage or laws, you should not watch either one of them being made is true. It's a messy process."

As for arms being twisted?  "People were being talked to," Tauzin says. 

The 3 am - 6 am Vote

The unorthodox 3 am roll call on one of the most expensive bills ever placed before the House of Representatives began in the middle of the night, long after most people in Washington had switched off C-SPAN and gone to sleep.

The only witnesses were congressional staffers, hundreds of lobbyists, and U.S. representatives, like Dan Burton, R-Ind., and Walter Jones, R-N.C.

"The pharmaceutical lobbyists wrote the bill," says Walter Jones. "The bill was over 1,000 pages. And it got to the members of the House that morning, and we voted for it at about 3 a.m. in the morning," remembers Jones.

Why did the vote finally take place at 3 a.m.?

"Well, I think a lot of the shenanigans that were going on that night, they didn't want on national television in primetime," according to Dan Burton.

Too Close to Call

The 2002 political campaign was particularly critical for the pharmaceutical industry.  2002 saw an explosion of the drug industry’s political activity.  The drug industry had raised its political donations up for two election cycles in a row.  Now front groups poured millions of dollars into advertising campaigns in tight races around the country.  Not surprisingly, the industry’s preferred candidates won race after race.

In 2002, the Republican Party retook control of the Senate and expanded its small advantage in the House of  Representatives.

But when it came time to cast ballots, the Republican leadership discovered that a number of key Republican congressmen had defected and joined the Democrats, arguing that the bill was too expensive and a sellout to the drug companies. Dan Burton and Walter Jones were among the men who felt that way.

The bill was defeated in the first vote.  That should have been it; turn out the lights, go home.

But that wasn't it.  They kept the vote open.

"They're supposed to have 15 minutes to leave the voting machines open and it was open for almost three hours," Dan Burton explained. "The votes were there to defeat the bill for two hours and 45 minutes, but they had leaders going around and gathering around individuals, trying to twist their arms to get them to change their votes."

Steve Kroft asked Billy Tauzin, one of the main arm twisters, why a vote that was scheduled to last a maximum of 15 minutes was kept open for three hours.  Tauzin replied that the voting machines were kept open for three hours "because the vote wasn't finished."

Which in Kroft's opinion meant that the vote wasn't going to be over until Tauzin got the vote he wanted.  Tauzin just smiled.

Shortly after Billy Tauzin successfully steered the controversial drug bill through the House of Representatives, he chose not to run for re-election.  Instead just months later Tauzin went to work for the pharmaceutical industry as their chief lobbyist.  As the picture indicates, Tauzin wasn't shy about displaying his compensation.

They say a picture is worth a thousand words.  Well, the message underlying this picture is worth two million dollars.


BUYING A LAW: Big Pharma’s Big Money and the Bush Medicare Plan

Rick Archer's Note:   The entire purpose of my article has been to demonstrate that money equals power and Whoever has the Gold Makes the Rules.  If the reader still has any doubt about just how true this concept is, but wishes to be persuaded a bit more, then please continue reading.  The following excerpts are taken directly from a PDF posted on the Internet by Paxil Progress

These pictures appeared in the documentary Sicko.  The numbers reflect the contributions given by the drug industry to the men and woman mainly responsible for getting the bill passed.

Now keep in mind these are merely donations.  They say these donations in no way obligate our elected representatives to look favorably on any legislation put forward by the donors.  But isn't funny how the votes of these politicians so frequently seem to favor their benefactor? 


In compiling this report, Public Campaign Action Fund and its Campaign Money Watch program used investigations and research done by several organizations, as well as other research reports, that preceded this analysis.

In a period from 1999 to 2004, Pharmaceutical companies gave $44 million in political contributions.

78% went to Republicans and 22% to Democrats.

They spent millions more hiring an army of lobbyists that physically outnumber the 535 members of Congress.

The drug lobby spent $544 million on lobbying Congress, federal agencies, and the White House between 1997 and 2002. They hired 675 lobbyists – more than one for every one of the 535 members of Congress.

They funneled still millions of dollars more in additional funds to front groups to do their bidding under politically-palatable sounding names like Citizens for a Better Medicare and United Seniors Association.

Under the Influence 

A 60 Minutes Segment narrated by Steve Kroft

If you have ever wondered why the cost of prescription drugs in the United States are the highest in the world or why it's illegal to import cheaper drugs from Canada or Mexico, you need look no further than the pharmaceutical lobby and its influence in Washington, D.C.

According to a report by the Center for Public Integrity, congressmen are outnumbered two to one by lobbyists for an industry that spends roughly $100 million a year in campaign contributions and lobbying expenses to protect its profits.

One reason those profits have exceeded Wall Street expectations is the Medicare prescription drug bill. It was passed more than three-and-a-half years ago, but its effects are still reverberating through the halls of Congress, providing a window into how the lobby works.

"I can tell you that when the bill passed, there were better than 1,000 pharmaceutical lobbyists working on this," says Rep. John Dingell, D-Mich.  Dingell said the bill would not have passed without the efforts of the drug lobby.

"There is probably a lotta truth in it that the bill was stacked in their benefit. And it's probably also true that it was written by their lobbyists," Dingell says.

Said Dan Jones: "You couldn't even walk to the steps of the Capitol without having somebody, maybe one or two, coming up to you to say, 'Can't you change your vote? Can't you vote for this bill?' "

What was the Payoff for the Drug Industry?

Why was the drug lobby was so interested in this bill and what did it have to gain?  Ron Pollack, the executive director of Families USA, a nonpartisan health care watchdog group, said it all boiled down to a key provision in the legislation.

This provision prohibited Medicare and the federal government from using its vast purchasing power to negotiate lower prices directly from the drug companies.

"The key goal was to make sure there'd be no interference in the drug companies' abilities to charge high prices and to continue to increase those prices," says Pollack.

Pollack says there's no question that this was prompted by the pharmaceutical lobby.  "They were the ones who wanted to make sure Medicare could charge high prices and to continue to increase those prices."

The drug industry says that competition among private insurance plans that service the Medicare program help keep prices low.  But Families USA contradicted that assertion. They reported in a January study that Medicare patients were being charged nearly 60 percent more for the top 20 drugs than veterans pay under a program run by the U.S. Department of Veterans Affairs.   (source: Families USA report)

Ron Pollack says the VA prices are lower because it successfully negotiates with the drug companies on price.

"Medicare could do the same thing," he says, "but Medicare is prohibited from doing that as a result of this new Medicare legislation."

Steve Kroft: "What was the logic?  Or what was the idea, the rationale behind not giving the government the ability to negotiate drug prices?"

Rep. Dan Burton:  "The drug companies didn't want it. They wanted to make as much as money as possible. And if there's negotiation, like there is in other countries around the world, then they're gonna have their profit margin reduced."


Cashing Out

According to Melanie Sloan, executive director of Citizens for Responsibility and Ethics, it is alarmingly common for members of Congress to depart for highly paid lobbying jobs.  Sloan says, “This practice feeds the public perception that members are doing big industry’s bidding so they can cash out.  It seems like being a member of Congress is just a way-station on the path to a highly paid lobbying job.”

This practice is hardly limited to Tauzin.  For example, Bloomberg News reported that companies founded by Republican presidential candidate Newt Gingrich, a former House speaker, grossed $55 million from 2001 to 2010 for consulting services and memberships in a health-policy center.  (Bloomberg News)

Gingrich was the man given most of the credit for derailing Hillary Clinton's health reforms back in the Nineties.  It would seem apparent that people like Gingrich and Tauzin are well-rewarded by the health and drug industry for their success.

Steve Kroft:  Tauzin and Scully weren't the only public officials involved with the prescription drug bill who later went to work for the pharmaceutical industry.

John McManus, the staff director of the Ways and Means subcommittee on Health. Within a few months, he left Congress and started his own lobbying firm. Among his new clients was PhRMA, Pfizer, Eli Lilly and Merck.

Linda Fishman, from the majority side of the Finance Committee, left to become a lobbyist with the drug manufacturer Amgen.

Pat Morrisey, chief of staff of the Energy and Commerce Committee, took a job lobbying for drug companies Novartis and Hoffman-La Roche.

Jeremy Allen went to Johnson and Johnson.

Kathleen Weldon went to lobby for Biogen, a Bio-tech company.

Jim Barnette left to lobby for Hoffman-La Roche.

In all, at least 15 congressional staffers, congressmen and federal officials left to go to work for the pharmaceutical industry, whose profits were increased by several billion dollars.

Dan Burton: "The drug companies have unlimited resources. When they push real hard to get something accomplished in the Congress of the United States, these companies will lobby till they get it done."

December 8, 2003.  The time has come for President Bush to sign his 2003 Medicare Modernization Act into law.  So first they have a parade of the various people who helped push this bill through Congress.   These are people who promised to serve the public good. Let's see what their price tag is.


The Rich Get Richer 

Rick Archer's Note:  As I said earlier, Steve Kroft began his 60 Minutes segment with these words:

If you have ever wondered why the cost of prescription drugs in the United States are the highest in the world or why it's illegal to import cheaper drugs from Canada or Mexico, you need look no further than the pharmaceutical lobby and its influence in Washington, D.C.

Congressmen are outnumbered two to one by lobbyists for an industry that spends roughly $100 million a year in campaign contributions and lobbying expenses to protect its profits.

So one might ask:  Does the pharmaceutical industry get any sort of return on this sort of investment?   Let's find out.

As Drug Prices Continue To Soar, Big Pharma Reaped $84 Billion In Profits in 2012

(Think Progress, Tara Culp-Ressler, 2013)

The price of brand-name drugs has skyrocketed over the past several years, leading increasing numbers of Americans to switch over to cheaper generic drugs. But even those generic drugs are also increasingly costing Americans more money, as chain pharmacies across the country hike their prices to charge up to 18 times the drugs’ original cost.

There’s one clear winner in this equation: the giant pharmaceutical companies that are raking in the profits.

It should be noted that drug company profits soared following the passage of the Medicare Bill signed in late 2003.  Note in particular the year 2006 when the "consequences" of that bill finally kicked in.  Hmm.  Steve Kroft said the drug companies pay the lobbyists $100 million a year.

In 2006, the net income of the drug companies jumped over 20 BILLION DOLLARS.  I would say that's a nice return on investment.                       Source: Think Progress

Over the past decade, the 11 largest global drug companies reaped about $711 billion in profits, according to a new analysis from the Health Care for America Now (HCAN) advocacy group. In 2012 alone, the drug companies’ annual profits totaled nearly $84 billion. The organization’s analysis credits much of these profits to the federal policy that prevents Medicare from negotiating directly with drug companies — which allows Big Pharma to price gouge the government program’s prescription drug benefit, known as Medicare Part D:

Medicare’s prescription drug coverage is essential for seniors — and since Obamacare has helped ensure that more prescription drugs are now covered under Medicare Part D, millions of seniors have saved $6 billion on the medication they need. But, since Medicare is unable to negotiate bulk purchasing discounts, Big Pharma continues to overcharge the federal program for those drugs. HCAN points out that pharmaceutical profits soared around 2006, when Medicare Part D was first put in place.

Pharmaceutical companies often claim their huge profits are necessary because that money goes toward innovative drug research and development. But one recent study found that drug companies actually spend 19 times more on advertising their products than they do on investing resources to develop new ones. And some areas of scientific research, like the development of new vaccines to replace some old antibiotics that have become increasingly less effective over time, have largely stalled because Big Pharma isn’t as willing to invest money in less-profitable ventures.

While companies should obviously make some kind of profit from their products, HCAN points out that Big Pharma’s prices far exceed what people in other countries are paying for the exact same drugs. The United States’ per capita drug spending is about 40 percent higher than in Canada’s, 75 percent higher than Japan’s, and nearly three times higher than Denmark’s.


Rick Archer's Note:  I say the people with the gold make the rules. 

Now you know how they do it and now you see how the rich grow richer.

However, in life, for every winner, there has to be a loser.   Or losers.


Wealth Inequality in America

Are you curious who the "losers" are?  The 2000s have been termed a "Lost Economic Decade" for America. Due to the Great Recession and continued high unemployment, there has been a substantial deterioration in Americans' economic security. These substantial income losses for middle and working-class Americans has resulted in a sharp increase in Americans without health insurance.

However, not everyone suffered.  In 2012, the incomes of the Top 1% rose nearly 20 percent compared with a mere 1% increase for the remaining 99 percent. 1 in every 4 dollars earned went to the Top 1% as compared to 1 in every 10 dollars in 1976. [source]

At this point, the Top 1% owns 42% of the nation's wealth and the Top 10% has now captured a record 48% of total earnings.

Corporate profits hit a record in 2012 as share of U.S. economic output.  Even though unemployment remained at a high 7.2% and economic growth was sluggish, these economic changes have helped many employers by reducing costs.

Yale economics professor Robert J. Shiller, a Nobel prize winner for economics in 2013, believes that rising economic inequality in the United States and other countries is "the most important problem that we are facing now today".

One should note the last time the wealth disparity between the Rich and the Not So Rich was this bad was 1928, the year before the Great Depression began.  

America is creeping closer and closer to being a land of Have's and Have Not's.  Although things aren't quite as bad as the period before the notorious French Revolution, nevertheless this unfortunate situation has set the stage for potential class warfare. 

The Top 1% owns 42% of the nation's wealth
The bottom 80% owns less than 7% of the nation's wealth
Back in 1974, one dollar in every 10 went to the Top 1%
Today one dollar in every 4 earned goes to the Top 1%
From 1992 to 2007 the top 400 U.S. earners saw their income 
   increase 392% and their average tax rate reduced by 37%.

In other words, the Rich are Getting Richer   (source)


It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. 

In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful,
the humble members of society — the farmers, mechanics, and laborers — who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government.

- President Andrew Jackson


The Twisted Golden Rule, Example 6

The Rich Get Richer and Richer and Richer

Rick Archer's Note:  There is a man named Wade Frazier who is a brilliant writer.  I could read his stories all day long.

Mr. Frazier's anecdotes are so vivid that I think I am starting to understand just how crooked, dog eat dog, and cutthroat our American business practices are.  I am left wondering if things could actually be worse than the story I am about to share.  If so, we are all in very deep trouble.

A few years ago I read not one, but two books on the Enron Scandal.  While I understood what happened on a certain level, it was not until I read Mr. Frazier's first person account of the Savings and Loan Scandal in the mid-Eighties that I finally "got it".  I finally knew without a doubt how Andy Fastow and friends got away with what they did - people on the inside looked one way AND Enron's accounting firm looked the other way - and then thousands of innocent people lost their life savings. 

Please read this remarkable account.  I have trimmed it down a bit, but you can read the entire account here: My Adventure by Wade Frazier.  Any time you wish, feel free to substitute "Enron" for "Savings and Loan".

Wade Frazier:

I did not know what auditing was when I graduated from college.

When the busy season was over, there was a one-week training class for the new junior auditors. Near the week's end we had a “quiz the partner” session. A partner came to class and answered any question we had. We put our anonymous questions in a basket.

Among the standard questions for the partner was mine: "How does auditing increase the world's real wealth?"

In reply to my question, the partner put on a straight face and gave the standard answer that auditing helps provide reliable financial information for the business community, so better investment and business decisions could be made.  Note the key word here is "reliable".

A couple of years later I was on an audit with the same man.  That is when I saw how he really felt.

I was with him on a savings and loan (S&L) audit.  He talked about an audit our firm had performed that exploded in our faces.

As auditors, we issue "opinions" on our client's financial statements.  Our opinion is published on the client's annual report and their filings with the SEC (Securities and Exchange Commission). The opinion approximately reads: "We audited XYZ Corporation’s financial statements and found them to be fairly presented in accordance with Generally Accepted Accounting Principles." 

In other words, we audited them and told the world that we had found them playing by the accounting rules.  We gave our word that our report was "reliable".

In return, we received a million or so dollars, which was the standard fee for a large corporate audit in those days.  Today, it is several times more.

The audit opinion can state that the client played fairly, while the financial statements themselves show a company in peril. That is not an audit failure, but if a company gets close to failing, there is a "going concern" principle that states if the company appears that it may soon fail, the auditors should qualify their opinion. A "qualified opinion" is always bad news and auditors rarely issue them.

Basically, if a company is close to failing and it receives a "qualified opinion", then the company is doomed because our audit guarantees no one will take a chance on them.  It becomes a death sentence.

An audit "exploding in our face" means that the auditors issued their standard unqualified opinion implying the company was "reliable", but then the company soon capsized.

It is conceivable to miss something.  Auditors are not fortunetellers.  However, if a company fails a few months after issuing "healthy" financial statements, and there is an unqualified audit opinion accompanying their statements, this raises eyebrows.  There is a strong implication that we lied.

At this point, the auditors are often sued for a negligent audit. 

(Note: Arthur Anderson, Enron's auditors, were put out of business by their failure).

How Arthur Andersen Turned to the Dark Side, March 16, 2003

In some ways an audit is a crapshoot, because a future event that nobody foresaw can capsize the company, but the "deep pocket" theory means that shareholders and others left holding the bag will try extracting money from somebody for the business failure.  That is the risk of being an auditor.

As auditors, we theoretically rendered independent opinions on our client's financial statements. However, there was a catch.  After our clients paid our fee, they could choose another auditor if they wished.  This was important, but I did not understand that situation's implications in my early days. I was just trying to survive.

In 1984, something happened that eventually made it clear. I helped audit one of the world's largest savings and loan (S&L) institutions.  We had been brought in to audit the S&L immediately after the previous auditors had been fired.  We were on a "high exposure" audit. "High exposure" meant that the likelihood of the previous auditors being sued was high.

The previous several months had seen this highflying S&L run out of money. Here they were posting record revenues and profits, then suddenly one day they were unable to pay their creditors and depositors. Then it all came crumbling down. Suddenly, those record profits appeared illusory.

There was a 1930s-style bank run, and the federal government stepped in to keep the S&L’s doors open. Meanwhile the S&L's shareholders filed a huge lawsuit against the previous auditors. I was the junior auditor on that "high exposure" audit. On such audits, my firm flew in real estate and banking experts from our offices across the nation, and now our important managers and partners did the work usually reserved for the lambs like me.

I was relegated to coordinating hotel rooms, rental cars and the audit’s administrative logistics. I was also the right hand of the partner running the audit. The senior manager who worked for him (who made partner a couple of years later) was my direct supervisor. Those two men were some of the nicest human beings I ever encountered in public accounting. The reason they were on that audit was probably because they were such nice guys. People were not exactly volunteering for the job, so they were the only ones with enough guts to accept the thankless task.

I was a lost waif in the office when I was assigned to that S&L audit. Although I was low man on the audit's totem pole, they treated me as if I were a peer - better than I was ever treated in the LA office.

On my first day there, my manager briefed me. He said, "As usual, you can make the numbers say whatever you want to until the money runs out."  I had heard that phrase before, but did not really understand it.

This particular S&L became one of the highest profile and earliest meltdowns of the entire Savings and Loan Scandal.  The S&L had concocted bogus transactions to hide their losses.  By itself, that was not the crime of the century, but it was unfortunately a common corporate activity.

Our job was making sure that practice did not happen on our watch. We were hired to apply Generally Accepted Accounting Principles (called GAAP in the profession) to their books. As we began our audit, it became obvious that our predecessor auditors had allowed their client to bully them into signing off on fictitious financial statements.

The gist of the problem was this: the Holy Grail of capitalism is profits. 

Corporations only exist to make profits for their owners.

I have seen numerous instances of corporate executives making this sagacious statement: "Gentlemen, you must not forget that we are not in the business of  blah blah blah, we are in the business of making money."  As for blah blah blah, fill in the blank; I have seen everything from "treating cancer patients" to "making efficient cars".

That phrase has been repeated endlessly in corporate halls as a motto to never forget.

With the profit drive being the ultimate reason for a corporation's existence, corporate managers have incentive to report the largest possible profits. There have been principles of accounting, such as the conservatism principal, the revenue realization principal, the objectivity principle, the matching principle and many others that supposedly guide accounting practices, so profits are not overstated.

The very existence of the Big Eight accounting firms depended on laws passed during the 1930s in the wake of Wall Street's collapse and the Great Depression.  These laws were designed to ensure those events would never be repeated.

On paper, our job was keeping corporations honest in reporting their profits.  Off the record, our job was to make profits for our own firm.  These two goals were often in direct conflict.

I can remember my idealism.  At the university, my auditing professor told us why the Big Eight partners made so much money. He said it was because sophisticated professional judgment was required to render an independent audit opinion. My professor said that such highly qualified professionals, with their sophisticated auditing practices, which entailed numerous levels of review, did not come cheaply. He said if the government took over the auditing profession, they would create bureaucratic guidelines so that a monkey could do an audit. They would produce substandard audit results and the profession would be ruined. With no other frame of reference, I believed it.

Now I saw the truth.  On that S&L audit, even an inexperience lamb like me could see that our predecessor auditors had signed off on ridiculous accounting practices.  So if it was effortless for an inexperienced beginner like me to spot, then how could a highflying Big Eight firm, with its highly paid, pin-stripe-suited auditors, approve such phony financial statements?   This question rattled around in my head.  It was more baffling than the Riddle of the Sphinx.

After a month on that audit, the partner in charge, my manager and I went to lunch. The partner said to me, "If you look at what (our predecessor auditor) approved, it is shocking. Yet, if we had been in their shoes, I doubt we would have done any differently."

My mouth dropped open.  Did he just say we would have done the same thing? 

He was the nicest partner I ever knew, and his candor that afternoon helped me figure it out.  This partner said that the predecessor auditors had been bullied into approving bogus financial statements.  How could they be bullied, with all those accounting standards, levels of review, and highly honed professional judgment? 

To put it bluntly: They were bullied by a million-dollar audit fee.

If an auditor proved too stubborn in applying GAAP to the S&L's financial statements, the S&L would merely hire a more pliant auditing firm.

Meanwhile, the partner who lost the million-dollar account because he refused to "see" the financial statements the client's way had probably just seen his career ruined. 

The pressures to look the other way were intense.

This explanation did not fully sink in until years later, when the entire Savings and Loan Crisis became headline news in 1988. 

A few years before that audit, the CPA profession was partly deregulated. The "free market" ideology of the time, exemplified by Ronald Reagan and his administration, created the acceptability of doctors, lawyers and CPAs to begin getting "competitive," advertising and taking business away from each other.  Theoretically it brought capitalistic principles to the professions, but calling off the watchdogs was a crime.

The notion of CPA firms rendering "independent, reliable" audit opinions became a farce. Those were the go-go years for Reagan's boys. Greed was a virtue in 1984. Michael Milken, Ivan Boesky, Donald Trump and other capitalistic heroes dominated the scene. By 1984, only two brief years after Reagan deregulated the savings and loan industry, the eventual outcome was evident for those with eyes to see.

What I had witnessed at my S&L audit was merely one of the first institutions to run out of money.  What I experienced on our firm's re-audit of the crooked S&L would go on to become typical throughout the industry.

What my manager said was true:

"As long as a company has money, it can get compliant auditors to sign off on virtually any financial statement. For a million-dollar audit fee, independence disappears."

Capitalism, profits and market discipline are nice ideas, but when a corporate giant is imperiled, our government rescues them with taxpayer money.  This is known as the "Too Big Too Fail" theory, a concept which is hardly capitalist doctrine.  The government bailouts of Lockheed and Chrysler were notorious in the 1970 and 1980s.  USA government interventions have also propped up industries such as steel and semiconductors.  In 2008, dramatic interventions are attempting to prop up the USA’s financial industry, yet once again.

In theory, shareholders take the risk if the business fails.  In banking however, with deposit insurance, the government, which is ultimately funded by taxpayers, guarantees the bank’s liabilities.  Banking is a regulated industry, where the government has assumed a great deal of the risk.

Bank and S&L liabilities are essentially guaranteed by public money, i.e. taxpayers like you and I.  The deal in return for that protection was the promise to adhere to certain regulations.

Banks and S&Ls were limited in the kinds of loans they could make, the interest they could pay on their deposits, etc. The public was ultimately the rock that stood behind the bank, making that $100,000 of deposit insurance per account mean something.

If anything, the public accounting profession had a larger duty to perform independent audits on regulated corporations such as banks and S&Ls because a bank’s failure would ultimately risk taxpayers' money, not just rich shareholders' money.  They were the watchdogs entrusted by the public.

In a regulated industry, there is an extra level of auditing and accountability, in theory. Along with fancy Big Eight auditors were also governmental auditors (federal and state) looking over the bank's shoulders, making sure the public's interest was being looked after and banks were acting prudently.

However, that all ended when Ronald Reagan, in the interest of "getting the government off of the public's back," began gutting the government agencies that regulated industries such as banking.

The nature of Reagan's deregulation was insane (or diabolically sane) and ushered in the S&L scandal.  Reagan "deregulated" the prudence side of the industry, letting S&Ls invest in almost anything they wanted, while letting them give out whatever interest rate to depositors they wished, while raising the deposit insurance from $40,000 to $100,000. Those acts dramatically shifted the risk from the S&Ls to the taxpayer.

It let the S&Ls "go to Vegas" with speculative real estate deals, giving out whatever interest rate they wanted, and increased the size of the bag the taxpayer would hold if it all came crashing down.  Organized crime rings avidly watched the deregulation bill make its way through Washington, rubbing their hands with anticipation.  It was obvious where Reagan's "rescue package" was headed.

If my profession had been honest and the auditing profession structured to eliminate the conflict of interest of corporations being able to hire any auditor they wanted, the S&L crisis would have never happened.

The alarm bells would have been going off back in 1983 throughout the industry, and something would have been done. The S&L industry was already doomed because of 1970s inflation related to OPEC’s oil price shocks. Increasing computer technology also eliminated much of the reason for S&Ls to exist. The price tag to responsibly sunset the industry would have been less than $10 billion in 1983. The number did not start growing large until about 1986.

What happened was avoidable. The Big Eight was not responsible for creating the S&L crisis, which was the result of global political-economic factors, corrupt politicians, greedy S&L executives and the landowners who made the big money from the scandal. Many books have dissected the scandal.  Although my profession did not create the crisis,
our prostitution for the audit fee, which was profession-wide, helped a $10 billion problem become a nearly $200 billion disaster.

When it came time to protect the public’s interest, which was the only reason our profession existed, we were busy kissing our clients' backsides. As it stands today, the public accounting profession is worthless. More than half of the Big Six's (now Big Four) revenues come from those audits. Back in 1984, the annual USA-based auditing revenues of the Big Eight were a few billion dollars. In 2004 they were about $10 billion. The inherent conflict of interest that existed in 1984 is still there. Minor reforms were enacted, but auditors cannot render independent audit opinions if the auditee pays their fee and can choose another auditor if they come up with the “wrong” answer. I have no confidence that when the next financial scandal looms, the Big Six will sound the early alarm (again, the Enron Scandal happened four years after this was originally drafted, and now it is the “Big Four”, and the current global financial scandal related to real estate hysteria will have the auditors accepting at least some responsibility).  If they are financial cops, they are cops on the take.

Money does not evaporate in such scandals. It goes into somebody's pockets. The S&L crisis was a defrauding of the public from beginning to end, and a great deal of criminal activity was engaged in, in addition to all those riverboat gamblers running S&Ls, lighting cigars with $100 bills and funding "see through" office buildings. There were S&L execs who went from one S&L to the next, looting it until it went under, then another S&L would hire them where the pattern was repeated, the CIA laundering drug money through them, and sheer Mafia gangsterism.


Rick Archer's Note:  It doesn't take much of an imagination to connect the dots.  These business practices caused the Great Depression of the 1930s. 

  •   In the Thirties, laws and regulations were put in place to ensure this would not happen again.

  •   Reagan lifted restrictions in the Eighties... the S&L scandal followed.

  •   Clinton lifted restrictions in the Nineties... the Enron scandal followed.

  •   Bush lifted restrictions in the 2000s... the Wall Street Crisis of 2008 followed.

I am sorry to say this, but it is my conclusion that human nature cannot be trusted to do the right thing when someone isn't looking.

In the dog eat dog culture of American business, it takes a certain type of cunning, amoral person to rise to the top... the kind of person who seems smiles and seems decent on the outside, but turns into a killer when no one is looking.

As I said earlier, for every winner, there is a loser... or losers. 

As Wade Frazier said, "Money does not evaporate in such scandals. It goes into somebody's pockets."

So whose pockets get lined? 


Winners and Losers

We started this article with a story about Sean Recchi.  His story is important because Mr. Recchi's misfortune could happen to anyone who gets sick.

As for Mr. Recchi, we probably could use a quick review:

Because Stephanie and her husband had recently started their own small technology business, they were unable to buy comprehensive health insurance. For $469 a month, or about 20% of their income, they had been able to get only a policy that covered just $2,000 per day of any hospital costs.

"We don't take that kind of discount insurance," said the woman at MD Anderson when Stephanie called to make an appointment for Sean.

Stephanie was then told by a billing clerk that the estimated cost of Sean's visit - just to be examined for six days so a treatment plan could be devised - would be $48,900, due in advance. Stephanie got her mother to write her a check.

"You do anything you can in a situation like that," she says.

I would define Mr. Recchi as one of the "losers" in American health care system.  In this case, his money went into the pocket of MD Anderson, theoretically a non-profit hospital. 

"Non-Profit"?!?!?  Are you kidding me?

It just boggles the mind, doesn't it?

Those Americans citizen who can actually afford health insurance pay a ridiculous amount of money in premiums.  Take me for example.  My $830 per month policy is close to 25% of my income.

And for what?  The United States has the highest infant mortality rate among high-income countries.  We rank dead last in terms of life expectancy among 17 affluent nations.  source

•  In 2013 the American people will spend approximately 2.8 trillion dollars on health care.  There is no "cap" in sight.
•  Unless changes are made, it is being projected that Americans will spend 4.5 trillion dollars on health care in 2019
•  If the U.S. health care system was a country, it would be the 6th largest economy on the entire planet
•  The Twisted Golden Rule:  The U.S. health care industry has spent more than 5 billion dollars lobbying our politicians in Washington D.C. since 1998
•  Overall, Americans pay 50% more than other countries for identical drugs as the result of laws and regulations preventing the US government from reining in drug prices like other countries do.
•  The U.S. ambulance industry makes more money each year than the movie industry.

Personal note: My mother once could not get a friend to drive her to a cancer radiation treatment appointment.  So the hospital sent over an ambulance billed at $750.

And here is one more fact:  Nearly 60 percent of all personal bankruptcies in the United States are related to medical bills. 

This article is not just about the poor who rely on the public hospitals supported by our tax dollars.

This article is not just about vulnerable, helpless patients dumped by the hospitals.

This article is not just about some unlucky family with "pre-existing conditions" who cannot get insurance at any cost.

There are actually people like Sean Recchi who HAD health insurance, but it wasn't "good enough"!!

Recchi's insurance did not even begin to cover the exorbitant costs of his cancer treatment.  The industry calls these people "underinsured".

Recchi paid $469 a month and he was UNDERINSURED.  I pay $830 a month.  Am I underinsured?  Are you underinsured?

Are any of us safe from the predatory practices of these hospitals and insurance companies?

Think about that.  Just one accident, just one illness, and a decent, hard-working American can see his entire life savings ruined by the cutthroat business practices of America's hospitals and insurance companies who work hand in hand.

The story of Sean Recchi was just one very sad example in this mushrooming phenomenon.

I believe that none of us are safe.

Here are some more eye-opening examples.

Hospital Charges Grow Like 'Compound Interest' In Opaque And Irrational U.S. Health Care System
       Source: Huffington Post

Why would Orange Park Medical Center in Florida charge $117,445 to place a stent into a patient's artery, while the Mayo Clinic half an hour away in Jacksonville charges less than 45 percent of that amount?

The answer, in short, is because the U.S. health care system doesn't operate according to the standards of competition that govern other industries.  Hospitals often rule local fiefdoms using their own idiosyncratic price-setting conventions, and the health insurance companies that pay the bills have little incentive to wage risky wars against prominent local institutions.

The prices in the above example are drawn from a database of charges at thousands of hospitals released this month by the Centers for Medicare and Medicaid Services.  Variation of that level isn't out of the ordinary among U.S. hospitals, which maintain detailed price lists called "charge masters" for thousands of services.

American hospitals are locked in a vicious cycle that results in erratically inflating charges, which increasingly bear little relation to the cost of medical care or the amount actually paid. In practice, hospitals set prices as if they have no competition at all -- something that's reflected in the Centers for Medicare and Medicaid Services data.

Hospitals tend to charge as much as they are able, knowing it's nearly impossible for patients to determine what local competitors charge or what health insurers pay.

The fact that the system isn't affected by typical competition metrics is a major reason why Americans often pay higher health care prices than citizens of other developed nations.  

Bob and Becky Weinkauf

A Family Fights a $474,000 Hospital Bill

"We owe nearly a half million dollars.

If we sold our house and everything we own, we might be able to pay maybe a quarter of the bill.

Rick Archer's Note: Bob Weinkauf's story is a prime example of how a random medical incident can ruin a person for life.  While you read this story, don't ever lose sight of the fact that this man had health insurance.  Of course, the industry would say he was "underinsured".

How about you?  How about me?  Faced with these ridiculous costs, how can any of us believe we are safe from the predatory practices of the American hospital system who mercilessly exploit their incredibly vulnerable patients? 

You can see the videotape version of this story on the CNN website.  Here is the transcript of the same story.

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): Bob Weinkauf is finally healthy enough to make a short walk from his front door to his mailbox, but it's a walk he dreads because he knows what's waiting, medical bills.

You might think you've heard this story before, but not this one because the health care industry has managed to keep this largely a secret. This story is about what's actually in Bob Weinkauf's bills and why he, and maybe you, are getting completely ripped off.

BOB WEINKAUF, RECOVERING PATIENT: This full drawer here and this drawer here are nothing but medical bills.

GRIFFIN: Last March, a sudden hacking cough put Bob in a hospital intensive care unit. He was having trouble breathing.

BOB WEINKAUF: I did at some point, you know, make some kind of reference to the nurses that I wanted to breathe and so they put me on a ventilator, and that's where it all started. I don't remember it.

GRIFFIN: It was the bill that could eventually bankrupt Bob and Becky Weinkauf. 

(Nearly 60 percent of all personal bankruptcies in the United States are related to medical bills.)

GRIFFIN: At 60 years old, struggling to keep a small business going, Bob had just switched to a discount insurance company. After just four days of treatment, the hospital was telling Becky her husband's insurance would not even come close to covering the costs.

BECKY WEINKAUF: She said the bill is up to $80,000 already, and she said, Mrs. Weinkauf, I hope you realize that you're responsible for this bill, and I got in the car. My mother-in-law was with me. I think she was scared to ride with me. I was just hysterical. I thought what am I going to do? I've worked my whole life. Is this how my life is going to end?

GRIFFIN: The $80,000, it turns out, was only the very beginning.

BECKY WEINKAUF: Altogether I did total them up, about $400,000.

GRIFFIN: Well over, in fact, $474,016.60. This is the summary of those charges, broad categories with few details. Becky and Bob Weinkauf decided ask a few questions and began to see just why health care in America is so expensive.

Everything Bob touched, used, or was given came with a whopping charge. Nurses pricked his finger to check his glucose levels, 190 times, $39 a piece, the total bill? $7,410 just for that.

Asking for that ventilator because he was having trouble breathing? Thirty two separate billings, total cost, $65,600. If he had been five years older and qualified for Medicare, all of these items would have been a tiny fraction of what he was billed. As it turns out, even asking for a urine bottle cost him extra.

BOB WEINKAUF: I'm just surprised they even charge you for that? Isn't there a charge for the room itself? Yes. There's a flat rate charge. I don't know what's included. I guess, it's just a room and a bed and everything else is -- because everything they brought in, whether it be Kleenexs, urinal bottle, some kind of tubing I needed for the iv or whatever, all of that was an extra charge every time they did it, they changed it.

GRIFFIN: Think that's outrageous? Take a look at this little white cup. You probably last used one of these getting ketchup for French fries. If you have been hospitalized, you probably recognize it too. It's that little white cup the nurse carries on a tray to bring your aspirin.

Well, I want you to remember this little white cup because in a minute I'm going to tell you a little hospital billing secret about these little cups that you will never forget.

Does anything surprise you anymore as to what particularly a hospital will bill?


GRIFFIN (voice-over): Pat Palmer has made a career battling hospitals over outrageous invoices. She's now battling for the Weinkaufs. She and her two daughters run medical billing advocates from her basement outside Roanoke, Virginia, and each time the phone rings, it's most likely a newly discharged hospital patient suffering sticker shock.

PAT PALMER, MEDICAL BILLING ADVOCATES: Just flabbergasted of the cost that's involved in the treatment that they had. They never dreamed it would be that high.

GRIFFIN: So where in the world do the hospitals come up with these prices? That, too, is shrouded in mystery. Hospitals determine their own pricing off a master list called the chargemaster.  Journalist Steven Brill, reporting for "Time" magazine says the Charge master is basically a way any hospital can charge any amount for anything.

STEVEN BRILL, SPECIAL CORRESPONDENT, "TIME" MAGAZINE: It's a price list, and nobody can really explain how this price list happened, and more important, nobody wants to try to explain what the costs are behind it because it's totally irrational. It varies from hospital to hospital.

GRIFFIN: A box of tissues becomes a mucous recovery system, a teddy bear to cuddle? That's billed as a cough suppression device.

PALMER: Certainly as a patient you think that's a nice gesture, a great gift. Not knowing that you could be charged $128 to $20 for that teddy bear.

GRIFFIN: Remember the little white cup? It's billed as oral administration fees.

PALMER: I've had a patient that had $5,000 worth of charges just for the little white cup to hand you your medication three, four times a day.

GRIFFIN: How do they get away with it? Mostly they don't. In very stark terms, only the uneducated, unrepresented or under or uninsured get charged full price. Big insurance companies negotiate discount rates. Medicare goes even further determining preset prices, maximums a hospital can charge. For people like Bob and Becky Winekauf, hospitals can charge whatever they want.

GRIFFIN (on camera): Can they ruin you?

BECKY WEINKAUF:  Well, of course they could.  And the worry about this bill is driving us insane.

BOB WEINKAUF:  Absolutely. There's no way in the world.  If we sold our house and everything we own, it would be maybe a quarter of the bill. There's just no way. It would kill us, literally.



GRIFFIN: Bob and Becky are still fighting that bill, and they have asked us for now not to name the hospital fearing it could damage any hope they would have of a settlement, but they agreed to tell this story really as a warning because this one illness of an otherwise healthy guy will literally be costing them for the rest of their lives.

JAKE TAPPER: So where does all this profit end up?

GRIFFIN: Yes, it is flowing right into the hands of hospitals and the insurers.

$474,000:  "If we sold our house and everything we own, it would be maybe a quarter of the bill."

Rick Archer's Note:  As Wade Frazier said, "Money does not evaporate in such scandals. It goes into somebody's pockets."

And I asked the question: So whose pockets get lined? 

I think we have our answer.

Bob Weinkauf lives in a very comfortable suburban home in Dallas.  He is an intelligent, well-educated, responsible man.  Bob, 60, was self-employed and bought the best insurance plan he could afford at the time.

Then he simply got sick. Weinkauf started coughing and couldn't breathe.  He landed in a hospital. Days later Bob was cured.

Then came the bad news: Bob Weinkauf was in debt for a half million dollars according to the hospital's "charge master".

Bob Weinkauf's story could easily be your story or my story.  After all, don't we all get sick at some point?  Isn't that why we have insurance to protect ourselves from financial ruin?

The way this system is rigged, what is to keep any of us from losing our entire life savings?  No one is safe

The Mysterious Charge Master

About the only defense for the chargemaster rates Stephen Brill was able to get was that it has to do with "charity".  John Gunn, chief operating officer of Sloan-Kettering offered this preposterous explanation to Brill:

“We charge those rates so that when we get paid by a [wealthy] uninsured person from overseas, it allows us to serve the poor.”

If this strikes you as nonsense, you’re not alone. Brill found two major holes in that argument. The first one is the most obvious: The hospital is not only charging those rates to wealthy medical tourists or “Saudi Sheiks,” as Brill puts it, but to average American citizens as well.

These chargemaster rates are billed to average uninsured Americans who aren’t poor enough to qualify for the hospital’s financial assistance program, and don’t qualify for Medicaid.
[In other words, people like Bob Weinkauf]

So in essence, middle-class Americans are being bankrupted to help pay for the poor and the elderly while still allowing the hospital to rake in massive profits and paying their executives some rather astounding salaries.

For example, at Montefiore Medical Center, a large nonprofit hospital system in the Bronx, its chief executive has a salary of $4,065,000, the chief financial officer of the hospital makes $3,243,000, the executive vice president rakes in $2,220,000, and the head of the dental department makes a not-so-shabby $1,798,000 per year.

Similarly, 14 administrators at New York City’s Memorial Sloan-Kettering Cancer Center are paid over $500,000 a year, including six who make over $1 million.

[For every winner there has to be a loser... or losers.  Who do you suppose pays the salaries of these men?]

Bob Weinkauf

Here are a two more anecdotal stories to further illustrate my point.  These are stories that were told to me by friends.

Rick's Story One:

One night a doctor's wife whispered to me that her daughter had hurt her knee in some freak accident while visiting Las Vegas.  The girl had to visit the emergency room for stitches.  The bill was $13,000.

Mind you, this is a doctor's child.  This man is a heart specialist who theoretically should have good insurance. 

But somehow this doctor ended up paying much of that $13,000 out of his own pocket.

I was so incredulous that the next morning I wondered if I had imagined the price tag.  Surely I misunderstood something. 

How on earth could stitches cost $13,000?

So I asked the woman via email to confirm her story.

From: Rick Archer [mailto:]
Sent: Monday, November 11, 2013 5:13 AM
Subject: RE: Dance teacher for salsa.

Hi there, hope your Salsa party worked out okay!

I am writing because my wife thinks I am nuts.

I told her you were billed $13,000 for your daughter's 5 stitches in Vegas.

Then the more I thought about, the more I decided I was confused. I can't believe it either.

Would you mind setting me straight? It has been bugging me for days.

Rick Archer


I never got a response.  So I assume she did not want to see this information and her name in print.  However, based on the stress in the woman's voice during our conversation, I think she was telling the truth.

Rick's Story Two:

Another night I asked my friend Jane how she has been coping with the loss of her boyfriend to pancreatic cancer a year ago.  She replied that it still hurts every day.  She lost him just one month after diagnosis. 

Then she began to cry.  What bothered Jane the most is that he had been complaining about a pain in his stomach for the entire two years she had known him.  His doctor kept saying it was 'acid reflux'.  The poor man chewed TUMS around the clock. 

Meanwhile his body withered away.  When the pain got too great, her boyfriend went to see someone else.  That is when he got the bad news.

Angry, the boyfriend went back and confronted his doctor. 

Boyfriend: 'Why didn't you test for cancer when I first came to you?  If we had caught this thing when I first complained, I might have longer to live.'

Doctor's Reply: 'The test you needed was not covered by your health plan.'

Boyfriend: 'Well, how much does that test cost?'

Doctor's Reply: '$500.'

Boyfriend: ' I pay $1,000 a month in premiums with one of the best insurance plans in the country and they wouldn't even approve the damn test? 

What do I even have insurance for?'

Doctor's Reply: 'No. It's not covered.'

Boyfriend: 'I carry $500 in cash on a regular basis and you didn't think to even mention the test to me?'

Doctor's Reply: 'No.'


Each of these stories could just as easily be your story or my story. 

Sean Recchi DID have insurance. Bob Weinkauf DID have insurance.  But the hospital jacked up the prices so much that it didn’t cover their bills.

Based on our current medical insurance system, none of us is safe, NOT EVEN RICH PEOPLE like Jane's boyfriend or the doctor's daughter. 

Look, I don't give a damn if you are Democrat or Republican and I don't care if you are rich or poor.  I am telling you we are all in this fix together.

The health industry is soaking us blind.  It is completely out of control.  There are absolutely no competitive "market forces" to rein it in.

Thanks to the Twisted Golden Rule, the politicians and the CEOs have seen to that.

Conclusion:  None of us is safe.



Need for Health Reform

Rick Archer's Note:   The stories I have told are being repeated across the nation on a regular basis today.

Study the chart.  Our medical costs are skyrocketing.  In the six years since that chart stopped in 2013, the gap has increased!

The reason we have Obamacare is obvious - We need reform.  And yet the moneyed interests in our country are fighting its implementation tooth and nail.

While the decade of the 2000s may have been absolutely wonderful for the rich, I am very skeptical that our nation as a whole is better off today.

We have already discussed the problems in the Health Industry.  But that is just the tip of the iceberg. There are other sectors of our country that are equally suspect. 


Thanks to deregulation and curbing the watchdogs, the banking industry has seen a horrifying series of meltdowns.  We had the Savings and Loan Crisis in the Eighties, the Enron Crisis in 2001, and the Wall Street collapse in 2008.  When it comes to acting in the public interest, time and time again the banking industry has shown a callous disregard for the public good in its frenzy to maximize profits.

Detroit and the Electric Car

The documentary Who Killed the Electric Car? made it very clear that the Detroit car companies and the energy industry worked hand in hand to defeat the electric car in the early 2000s.  The first electric car was called the EV1.  It was made by GM in response to a California law put in place to help solve California’s severe smog problem. The law stated that if a car company wanted to sell cars in California, at least ten percent of the cars sold had to be electric.

The EV1 turned out to be a pretty good car. At the time, the EV1 was fast, quiet, and and spewed absolutely no smog into the air. It required no gasoline and had a range of 100 miles.  You simply plugged it in to an electric outlet in the garage and the next day it was good to go for another 100 miles.

In the late Nineties, there was a two year period where several thousand people test-drove the cars in California on a daily basis.  The people who had these cars loved them.  But then mysteriously Detroit killed its own car!


Detroit claimed these cars were not for everyone due to their limited range and dependency on special outlets. 

Detroit's claim was roundly disputed.  The people who had been using the cars shot back that for 95% of the normal uses of the electric car, 100 miles a day would have been more than sufficient.  Yes, an afternoon round trip from LA to Vegas might be out of the question, but for the daily commute to work, 100 miles got the job done cheaply and without despoiling the air.  And everyone pointed out these cars were perfect for Los Angeles which could use a break when it came to its smog problem.

So Detroit's stated reason was just a smoke screen.


You will never get the truth out of Detroit, but the writing on the wall suggests these little cars were so darn effective that someone got scared.  So you have to ask who would suffer the most if "electric cars" took off?   You guessed it - the oil companies. 

The next thing you know, the Bush Administration began to support a repeal of the California law that had spawned these cars in the first place.  Then President Bush began a campaign to allow more offshore drilling for oil and drilling in the ecologically vulnerable Alaska.  On paper, based on the constant damage to the environment caused by burning fossil fuels, the 180% U-Turn on the electric car made no sense at all.  But when you realize who the biggest loser would be if the new technology succeeded - Exxon, BP, etc - you understand why these powerful companies used their influence to orchestrate a shutdown. 

After all, there was still plenty of oil in the ground; why end the party before it was necessary??  However, the crazy weather attributed to global warming caused largely by the continued carbon dioxide emissions darkly suggested this attitude was about as stupid and selfish as it could possibly be.

Wade Frazier, the man who shared his experience in the Savings and Loan collapse, also wrote in great detail how he watched advances in "free energy", techniques such as wind power, fusion and solar energy, be suppressed over the past 40 years.  In a manner very similar to how the medical world erases potential "natural cures" for cancer, the oil companies do the same thing to energy advances more efficient and cleaner than oil.  If you believe Frazier, the oil companies have worked overtime in past years either killing any energy invention or delaying its progress. 

Medicine, cars, energy: The stories all have a similar thread.  Whenever a technological advance threatens a well-established industry, that industry acts in its own self-interest to suppress any progress that might threaten its bottom line.

The result of all this greed is well-documented.  We all know the story.  Thousands of cancer victims die because there is no cure, the economy is stifled with one banking crisis after another, and the environment becomes increasingly threatened thanks to senseless energy policies.

However, out of all the problems in America, health care absolutely belongs at the top of the list. 

It is time we had health care reform. 



Ads Attacking Health Law Stagger Outspent Democrats

15 January 2014
Source: New York Times

WASHINGTON — Democrats are increasingly anxious about an onslaught of television ads hitting vulnerable Senate and House candidates for their support of the new health law, since many lack the resources to fight back in the early stages of the midterm campaign.

Since September, Americans for Prosperity, a group financed in part by the billionaire Koch brothers, has spent an estimated $20 million on television advertising that calls out House and Senate Democrats by name for their support of the Affordable Care Act (Obamacare).

The unusually aggressive early run of television ads, which has been supplemented by other conservative initiatives, has gone largely unanswered, and strategists in both parties agree it is taking a toll on its targets.   

Americans for Prosperity.  Interesting name.  Whose prosperity?

Is Obama Care as bad as they say it is??

Rick Archer's Note: 

I have to ask myself this question:  Why would anyone spend $20 million out of their own pocket to defeat this bill?  

Patriotism?  I doubt it.

We have seen before. This sounds exactly like how they beat back Hillary Clinton's health care reform 20 years ago. 

This entire article has been written with one purpose in mind:

I have tried to explain the Twisted Golden Rule.

We have seen one example after another of how the rich spend ridiculous amounts of money to continually get their way.

And now here we go again.  For people my age, this fight over Obamacare is pure déjà vu.

Back in 1993, after all the various contributions were added up, the health care industry had spent $100 million to defeat Hillary's plan. 

And how was Hillary Care defeated?  With attack ads like we are seeing again now.  The vicious fight in 1993 showed that people with money would stop at nothing to get their way. 

And they did get their way.

Now it looks like someone is spending exorbitant money to defeat Obamacare as well.  If you accept that the Twisted Golden Rule makes sense, then you understand that moneyed interests know they need to spend money to protect the insane profits that constantly flow into their pockets from America's current broken health care system.  In the long run, they will always get their money back. 

People with money can get out their message.  And it is no surprise that it is effective.  The uproar over Obamacare caused by the attack ads is so intense that people who have little money barely stand a chance of being heard.

The major point of my article has been to demonstrate beyond the shadow of a doubt that Washington AND Big Business are in bed together. Big business spends millions to influence Washington. And Washington goes along with it.

The connection must be broken or we will all continue to suffer.

Is Obamacare any good? 

I personally have no idea whether Obamacare is any good or not.  I am not even remotely knowledgeable about the inner workings of Obamacare. 

Like every other American, I am worried. Neither my wife nor I have the guts to trust Obamacare. 

  •   I wonder why the roll-out was so ridiculously flawed. 
  •   I wonder why insurance companies are dropping marginal customers like flies. 
  •   Although my own insurance was not cancelled, my own monthly premium went up over $200 a month.  Now over 20% of my monthly income is spent on health insurance.  And yet, due to my fear of the unknown effects of Obamacare, I still pay the premium and feel grateful to have it. 

At the same time, there is a nagging thought at the back of my mind that refuses to go away.  That thought goes like this:

Few of us here in America have the time or the background to understand the intricacies of complicated laws like Obamacare.  Instead, time and again we choose to listen to our trusted sources in the media.

This tendency - yes, I am just as guilty as the next person - allows us to be manipulated by the interests who have the most money to spend. 

Is it possible that we are being lied to about the Evils of Obamacare? 

Could it be possible that Obamacare might actually correct some of the terrible "wrongs" in our health care system? 

What I do know that as Obamacare becomes implemented, many Americans today are breathing a huge sigh of relief. 

Previously uninsured, many people who were unable to get insurance previously are now
poised to benefit from a system in which sickness or injury or pre-existing condition does not have to subject one to medical deprivation and financial ruin. 

Here is my take.  Our health care system is badly broken.  Surely the reader will not argue with me on that point.

We say we want a health system based on capitalist principles, but that is not even remotely realistic here. 

When it comes to health care, we don't have true capitalism in America; we have a system based on the Twisted Golden Rule.

Thanks to a horribly skewed manipulation of laws by self-interest groups, we now pay twice as much for our health care as most other developed nations and have one of the worst overall health systems in the world to show for it.

Here is a simple example of the kind of crap that explains our current situation: 

"Overall, Americans pay 50% more than other countries for identical drugs as the result of laws and regulations preventing the US government from reining in drug prices like other countries do."  (source)

Does that sound like "Capitalist Principles" to you? 

Capitalism, profits, competition and market discipline are nice ideas, but Capitalism in American Business now seems like a cord word for "screw the public".  

Whenever a corporate giant is imperiled, our government rescues them with taxpayer money and some ridiculous phrase like "too big to fail" when in reality we are left to wonder if some wealthy insider is getting a bail out-from a crony after looting the public.

The 2008 Wall Street meltdown said it all.  In truth, we have a business system that rewards incompetence, greed and selfishness.  The rich grow richer; business ethics are a thing of the past.  Regulators are hamstrung in the interest of "free enterprise".  The rich spend countless dollars buying off politicians to pass laws that exploit the working class.  

Then the businessmen - health insurance, pharmaceutical industry, doctors, and yes even the lawyers - turn around and spend more countless dollars to prevent reform. 

The rich spend more countless dollars on propaganda that compares Obamacare to socialism and communism.  The Fox News-style media scares us to death with threats that the industrious middle class will be taxed into oblivion. 

No one in my circle of friends has any real idea what to make of this highly-complicated Obamacare reform.  All we really know is what we have heard.  And you know what?  I readily agree that Fox News is very effective at putting doubt in our minds.  These scare tactics definitely work.  Like everyone else, I am worried to death that what little savings I have left will be taxed away. 

My email inbox is bombarded daily with messages that we are surely doomed if Obamacare takes hold and goes into effect. 

So is Obamacare any good?  As I said earlier, I do not know.  Ultimately I have no choice but to take someone else's word on it.  Unfortunately, at this point, there is so much uproar and contradiction I don't know who to believe.

I have read articles pro and con.   While I was researching Obamacare, I found a well-written article by Jonathan Chait of New York Magazine.  In Chapter Two, Mr. Chait had several words of praise for Obamacare.  If you wish, you can go read for yourself.

I am also fairly certain I would not have any trouble finding articles highly critical of Obamacare.  All I have to do is open one of those killer emails. 

So, in the end, there is so much information AND disinformation on the Internet, it really boils down to who you trust.

So who do I trust?  Well, that's a tough question. 

At this point, I don't trust anybody.  But I will say one thing:
I know exactly who I don't trust.

The Republicans defeated Hillary Care in the Nineties and our health system got worse. 
Credibility for Republicans: Minus One.

The Republicans passed their own Medicare bill in the 2000s and our health system got worse. 
Credibility for Republicans: Minus Two.

In the last election we had Republicans telling the whole world that Romney was practically a shoo-in to win; we know how that propaganda turned out.
Credibility for Republicans: Minus Three.

Then came that ridiculous Ted Cruz government shutdown back in October 2013.  To me, that was the final straw. 
Credibility for Republicans: Minus Four.

At this point, I don't trust the Republican message.  Okay, the Republicans are screaming at the top of their lungs that Obamacare is the worst legislation in history.  Got it.  I hear you.  Maybe these messages will turn out to be right, but why should I listen? 

Right now, Republican credibility is lower than at any point in my lifetime.  It seems to me the Republicans will say anything their masters bid them to say. 

I say give Obamacare a chance. 

"And one should bear in mind that there is nothing more difficult to execute, nor more dubious of success, nor more dangerous to administer than to introduce a new system of things:  for he who introduces it has all those who profit from the old system as his enemies, and he has only lukewarm allies in all those who might profit from the new system.

This lukewarmness partly stems from fear of their adversaries, who have the law on their side, and partly from the skepticism of men who do not truly believe in new things unless they have actually had personal experience of them."

- Machiavelli in 'The Prince'

1 - Current Status 2 - Medical Conspiracy 3 - Burzynski 4 - Royal Rife 45 - Morris Fishbein 6 - Medical Mysteries 7 - Civil War 8 - Twisted Golden Rule 9 - Corruption
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