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OpenMarket: Health Care

  • CEI Podcast for February 2, 2012: The FDA's Latest Power Grab

    February 2, 2012 3:52 PM

    Fellow in Consumer Policy Studies Michelle Minton breaks down the FDA's behind-the-scenes push to regulate dietary supplements nearly as strictly as prescription drugs.

  • Justice Kagan Should Recuse Herself from Obamacare Case

    January 30, 2012 2:49 PM

    Only in Bizarro World can you claim someone is your attorney -- and thus shielded by attorney work-product privilege -- and then insist in the very next breath that they never represented you. But that is what the Obama administration and Supreme Court Justice Elena Kagan are doing. The Obama administration refuses to release its communications with Kagan about health care litigation back when she was the administration's Solicitor General, on the grounds that they are covered by attorney work-product protection. Yet, contradictorily, it and Kagan insist that she never acted as the administration's lawyer in the matter, and thus doesn't need to recuse herself from hearing the constitutional challenges to Obamacare that will be decided by the Supreme Court this year.

    Law Professor Ronald Rotunda, the co-author of a leading constitutional law treatise, says that Kagan should have recused herself from hearing the case based on the federal statute, 28 U.S.C. 455(b)(3), that forbids former government attorneys like Kagan from being involved in cases they earlier were consulted on, and the Judicial Conference's ethical guidance for federal judges. As he notes:

    [Commentators have been] calling on Justice Elena Kagan to disqualify herself in the ObamaCare litigation because of her role, as Solicitor General, in preparing its constitutional defense. These calls have intensified with the release of recent emails. Justice Kagan’s supporters respond that she testified in her confirmation hearings that she had nothing to do with ObamaCare

    First, her phraseology was much more precise. She said she would only recuse herself from any case in which she “officially formally approved something,” or “served as counsel of record” or “played any substantial role.” But the statute requires disqualification if Kagan, as a federal employee (she was the former Solicitor General) “participated” as an “adviser” on a matter, even if she did not give any formal advice. She also must disqualify herself if her impartiality might reasonably be questioned.

    In response to a Freedom of Information (FOIA) request, the Obama Administration has turned over some emails but it refuses to turn over many others because, it says, these emails are “protected by the attorney work product doctrine.” That doctrine, the DOJ affidavit explains, covers discussion by “OSG” (Office of Solicitor General) lawyers about “legal issues, arguments, and strategy concerning anticipated” litigation over ObamaCare. So, the DOJ is simultaneously claiming that it completely walled off Kagan from any discussions involving the constitutional defense of ObamaCare, while admitting that Kagan was participating in emails discussing “legal issues, arguments, and strategy concerning” the anticipated ObamaCare litigation.

  • Michigan SEIU Scam the Product of Government Collective Bargaining

    January 30, 2012 2:42 PM

    Proponents of government collective bargaining view it as a fundamental human right. The shameful actions of SEIU in Michigan, however, undermine this claim.

    In 2005, Michigan lawmakers signed off to create the Michigan Quality Community Care Council (MQC3). MQC3 maintains a registry of homecare providers to assist Medicaid recipients looking for a caregiver. In reality, the primary function of MQC3 was to make 45,000 private homecare providers government employees and dues-paying union members.

    In 2006, SEIU took advantage of Michigan law deeming homecare providers government employees. To gain exclusive representation SEIU organized a covert union campaign. The stealth-organizing tactic led to 20 percent voter turnout and SEIU won a landslide victory.

    Soon thereafter, SEIU obtained a collective bargaining agreement (CBA) with the state. The events following the CBA expose the dangers of government union political influence and permanence of CBAs.

    MQC3, acting as a “dummy” employer for homecare workers, created a mechanism for union dues to be siphoned off Medicaid checks. Not only is it illegal to unionize homecare workers who are private contractors, homecare workers already have employers: their Medicaid beneficiaries. Worse, the scheme wholly rejects the purpose of Medicaid by diverting funds from individuals who cannot afford medical care to Big Labor.

  • Doctors Grow Disenchanted With Obamacare's Costs and Burdens; Health Care Law Arbitrarily Discriminates

    January 20, 2012 4:55 PM

    69% of physicians are "pessimistic about the future of medicine" because of the 2010 healthcare law, notes Dr. Marc Siegel in USA Today. "Just 13% of those surveyed backed the Affordable Care Act."  "When surveyed by" the Deloitte Center for Health Solutions, "83% of doctors said one likely change to the medical system as a result of the law would be increased wait times."  "73% said it would not reduce costs." "The concern of doctors is reflected among the American people: Support for the law has sunk to 29% in the latest Associated Press poll."

    Obamacare is full of pork, special-interest favors, and political payoffs and mischief. Health policy analyst Michael Cannon writes about how an obscure provision of the health care law discriminates in favor of hospitals in one state -- Massachusetts -- at the expense of hospitals in all other states.

  • Obama Administration to People Needing Bone Marrow Transplants: Drop Dead

    January 19, 2012 4:54 PM

    In December, a federal appeals court ruled in Flynn v. Holder that the National Organ Transplant Act of 1984 (NOTA) does not forbid compensation for the majority of "bone marrow donors." That was great news for patients needing bone marrow transplants: As CEI's Greg Conko noted earlier, the court's ruling clarified that it is legal for approximately 70 percent of donors to be paid for their life-saving contribution, compensation that is essential because around 3,000 Americans die every year waiting for a marrow transplant because an appropriate match cannot be found. Only compensation provides an incentive for additional donors to come forward and contribute their life-saving cells.

    I put "bone marrow donors" in quotes, because the majority of "marrow donations" are not actually donations of marrow at all. Instead, peripheral blood stem cells are isolated from circulating blood, and those stem cells develop into bone marrow in the new patient. That procedure is not covered by the plain language of the NOTA statute, which only bans sales of organs and organ parts, not blood parts.

    Now, the Obama administration is asking the appeals court to vacate its ruling allowing donors to be compensated, and to rehear the case en banc. It argues that whatever the text of the NOTA statute may say, its reach should be judicially extended beyond organs to peripheral blood stem cells, in order to guard against the evil of "market forces”:

    The Obama administration has asked a federal appeals court to reconsider its decision last month to allow compensation to people donating bone marrow cells harvested from their bloodstreams.

    In a petition for rehearing by the full U.S. 9th Circuit Court of Appeals, Atty. Gen. Eric H. Holder Jr. argued that the court ignored the intent of Congress to shield all organ sales from "market forces" when a three-judge panel ruled unanimously on Dec. 1 that marrow cells collected from blood aren't covered by the 1984 National Organ Transplant Act.

  • War on Drugs Keeps Badly Needed, Perfectly Legal Medicine Away from Sick People

    January 18, 2012 4:00 PM

    Sick people, like those suffering from narcolepsy, are suffering from a manufacturing shortage of Adderall. That shortage was caused by the Drug Enforcement Agency, which controls and limits the supply of Adderall’s ingredients.

    Denying the obvious, the DEA falsely claims that there is no shortage, and that if there is one, it's because manufacturers don't want to make more of the drug, despite the fact that there is plenty of market for the drug:

    To manage controlled substances that can potentially be abused, the DEA sets manufacturing quotas for drug ingredients each year to control supplies like Adderall. But Adderall drug manufacturers . . . say they cannot meet the growing demand for the product without looser limits from the DEA. The DEA questions whether there is actually a shortage of generic supplies, which are at an especially low supply . . . Despite the growing demand, Special Agent Gary Boggs of the DEA’s office of diversion control told the New York Times, "We believe there is plenty of supply.” Barbara Carreno, a DEA spokeswoman, told Reuters that . . .“Any shortage of these products is therefore a result of decisions made by industry regarding manufacturing or distribution,” Carreno told Reuters. But a Teva spokesperson told Reuters, "Our production facilities are currently running at maximum capacity for Adderall utilizing all available API (the drug’s active pharmaceutical ingredient). The catalyst for the problem is the quota system, not the business.”

  • Price Fixing Causes Greek Medicine Shortage

    January 12, 2012 12:21 PM

    Greece is rapidly degenerating into third-world status. The UK's Daily Mail reports:

    Youngsters are being dumped by their parents who are struggling to make ends meet in what is fast becoming the most tragic human consequence of the Euro crisis. It comes as pharmacists revealed the country had almost run out of aspirin, as multi-billion euro austerity measures filter their way through society.

    If you only read this much of the article, you would assume that the country’s “austerity measures" are responsible for the medicine shortage, but if you’ve ever opened an economics textbook, you’d know this can’t be the case. Shortages occur when prices aren’t able to readjust to higher demand. Why aren’t prices able to adjust? Keep reading.

    Further evidence of Greeks feeling the pinch of austerity measures is the lack of aspirin and other medicines now available in the country.

    Actually, that’s more inaccurate information. Keep reading further.

    Pharmacists are struggling to stock their shelves as the Greek government, which sets the prices for drugs, keeps them artificially low. This means that firms are turning to sell the drugs outside of the country for a higher price - leading to stock depletion for Greeks. Mina Mavrou, who runs one of the country's 12,000 pharmacies, said she spent hours each day pleading with drug makers, wholesalers and colleagues to hunt down medicines for clients. And she said that even when drugs were available, pharmacists often must foot the bill up front, or patients simply do without.

  • Obamacare Causes Layoffs in Medical Device Industry, Harms Medical Innovation

    January 3, 2012 6:50 PM

    Ramesh Ponnuru writes about the layoffs and lost jobs resulting from Obamacare's new tax on medical devices at Bloomberg News:

    A year from now, the federal government will start collecting a new tax on medical devices from tongue depressors to imaging machines, thanks to the sweeping health-care overhaul that Democrats enacted in the spring of 2010. People in the industry say it’s already having an effect.

    In November, citing the new tax, Stryker Corp. (SYK), whose products include artificial hips and knees, announced that it would let go about 1,000 of its workers. Earlier last year, Covidien Plc (COV), maker of surgical instruments, said it would lay off 200 workers in the U.S. and move production to Costa Rica and Mexico. It, too, cited the tax.

    Other companies in the field have announced similar measures -- or plans to expand production overseas but not in the U.S. -- without mentioning the tax. The sluggish economy is clearly part of the explanation, but the medical-devices industry had been a relative bright spot within U.S. manufacturing, losing only 1.1 percent of its employees during 2007-2008 while manufacturing as a whole lost 4.8 percent. A study done for AdvaMed, a trade association for the industry, claims the tax could ultimately cost more than 45,000 jobs.

    Medical-device companies employ more than 400,000 Americans. Their wages are higher than the national average. The U.S. is a net exporter of medical devices.

    The tax will change these numbers for the worse. It will be levied at 2.3 percent of sales; on average, profits make up less than 4 percent of sales in the industry. The AdvaMed study concludes, “The new 2.3 percent excise tax will roughly double their total tax bill and raise the average effective corporate income tax rate to one of the highest effective tax rates faced by any industry in the world.” . . .Richard S. Foster, the Medicare chief actuary, has estimated that if the tax is passed on to consumers it will raise national-health costs by $18.2 billion in 2018.

  • Obamacare Stifles Job Creation, Causes Layoffs

    December 28, 2011 2:17 PM

    At Bloomberg News, Andrew Puzder, CEO of CKE Restaurants, Inc., explains how the 2010 healthcare law is preventing jobs from being created and resulting in layoffs.

    For example, Puzder notes, CKE Restaurants, which operates Hardee's and Carl's Jr. restaurants, “will have to cut spending on new restaurant construction," in order to “offset higher health-care expenses," even though "building new restaurants is how" the company creates jobs.  Puzder argues that the increase in the company's healthcare costs will “more than consume" the amount it "spent on new restaurant construction last year, leaving nothing for growth."  It “will also need to reduce" its "capital spending," even though such spending creates jobs and enables the restaurant company to improve its infrastructure and maintain its business. Thus, its “ability to create new jobs could vanish."

    Puzder also points to the similar situation of "Grady Payne, chief executive officer of Connor Industries Inc., a supplier of cut lumber and assembled wood products" with 450 employees, who has laid out the unpleasant options facing "his company under the health-care law, each of which would cost $1 million or more,"  which is "'more than the company makes.' [Payne] concluded that his company’s goals have turned “from ‘hire-and-grow’ to ‘cut-and- survive.’”

    Puzder also documents the complaints of Victoria Braden, the president and CEO of Braden Benefits Strategies Inc., "a corporate employee-benefits adviser":

    "[Braden] said adoption of the law led to immediate job cuts at her company as she scaled back an expansion into a new line of business. Obamacare 'is devastating to my business, expensive for me and my clients to administer, and works against our goals of helping businesses to expand, and putting people back to work,' she said."

  • Businessmen: Obamacare Stops Them from Hiring

    December 23, 2011 11:48 AM

    Journalist John Stossel describes how "three successful businessmen came on" his TV show last week "to explain how Obamacare is a reason that unemployment stays high. Its length and complexity make businessmen wary of expanding." "An owner of 12 IHOPS told me that he can’t expand his business because he can’t afford the burden of Obamacare." Others complained that even experts admit they "can't tell you" how much Obamacare will cost them. "Brad Anderson, CEO of Best Buy, added that Obamacare makes it impossible to achieve even basic certainty about future personnel costs."

    Stossel agrees with Robert Higgs of the Independent Institute, who says that "if you wonder why businesspeople are not investing and reviving the economy, the answer lies in all the question marks that Obamacare and other new regulations confront them with." Higgs calls this “regime uncertainty." As Stossel notes, "it’s also what prolonged the Great Depression."  Obamacare also contains work disincentives that the Congressional Budget Office says will shrink the size of the economy and the workforce.


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