I’d like to preface today’s rumination by apologizing in advance for a possible lack of clarity. While I usually only get about 4 or 5 hours of sleep per evening, last night’s total is probably closer to 20 minutes. I find that I suddenly am unable to raise my right arm past the 20-degree mark for reasons unknown to me, which rendered sleep impossible last night. I can usually take a fair amount of aches and pains, but today, in addition to operating on lack of sleep, I downed three ibuprofen for the first time in about four years before leaving the house. I can therefore make no claims to the mental organization of today’s post, and all of my head slaps today will be restricted to the rhetorical variety. Now that we have been introduced to the wonder that is my right shoulder, let us press on!
The topic of money is on my mind this morning. Given the realities of the healthcare system in the United States, money will always enter the discussion at some point, but I’d like to talk about money today in the setting of it being a corrupting influence as applied to American healthcare. Two interesting tidbits of information related to money in healthcare crossed my path this week, and both point to the folly of our system’s current path.
First, Modern Healthcare released the results of salary research regarding the CEOs of industry trade associations and advocacy groups, such as the American Hospital Association and America’s Health Insurance Plans. For 2010, the average compensation for executives heading these groups was $969,000, which represented a 12.1% increase from the year before. This alone would raise eyebrows, but this increase happened as revenues for these associations fell on average by 4.4%.
The name at the top of the earnings list is an exceptional example of the corrupting influence of money. Billy Tauzin, the retired head of Pharmaceutical Research and Manufacturers of America (PhRMA), the lobbying arm of the drug industry, “earned” a total of $11.6 million in 2010, despite having stepped down from that position in the middle of the year. Prior to his time at PhRMA, Tauzin was a congressman from Louisiana who took the lead in crafting the legislation that created Medicare Part D. That legislation was written very much to the advantage of the pharmaceutical industry. Specifically, the bill restricted the traditional buying power of the government by forcing it to pay Average Sales Price for prescription drugs, rather than the taxpayer-beneficial Average Wholesale Price. Being the gift that keeps on giving, the drug companies thanked the principal architect with a generous salary that began only months after the passage of the legislation. It is worth noting that of the $11.6 million paid to Tauzin in 2010, $9.2 million was classified as “other payments”. PhRMA refused to disclose the nature of these payments, so I’m happy to define it for you. Whenever you see the words “other payments” in relation to a salary package, you are probably making an accurate guess when you assume that this term is being used as a country club euphemism for “kickback”.
While we’re on the subject of ill-gotten paychecks, let’s turn our collective attentions toward one of the more parasitic entities currently occupying our financial system, that being check cashing companies. The Department of Justice announced last week that four such businesses were charged with money laundering in connection with payments that appeared to be going to health care entities, but were in actuality shell companies set up to benefit foreign nationals to the tune of $50 million in a two-year period. For their trouble, the check cashing businesses received millions of dollars in “other payments” (see how that works now?). Two of these check cashing agencies were in Los Angeles, one was in New York and one was in my old hometown of Philadelphia in a neighborhood in the northeastern section of the City of Brotherly Love that also boasts unusually high rates of sketchy legal claims for injuries allegedly sustained from the local mass transit system.
I compare the two above examples of behavior and find very little difference between the two. When we are constantly on the receiving end of political pontifications regarding how the Medicare Trust Fund is being depleted and that “fraud” needs to be tackled, my natural follow-up question at this point would be to define fraud. Is it someone gaining undue financial advantage through the submission of false claim information, or is it legislation that is sold to the country’s citizens as a great benefit to them when the fine print clearly says something else entirely? I am here to argue that both are fraud. Theft that just happens to be codified into our laws is no different than an organized theft from a storefront. The only difference is that one group comes with high-dollar attorneys and an infrastructure of friends in high places. It’s important to remember that just because the dollar amount on a paycheck appears on a respected organization’s check doesn’t necessarily make it money earned honestly.
If my shoulder wasn’t so sore, I’d collectively smack these thieves upside the head.