The Market Ticker
Commentary on The Capital Markets- Category [Health Reform]

The list of apparently-unlawful acts just keeps coming, doesn't it?

I've written for essentially the entire time that The Market Ticker has been in publication on the outrageous apparent violations of 15 USC by medical providers of all sorts, whether they be doctors, hospitals, pharmaceutical companies or other suppliers.  15 USC, collectively the Sherman, Clayton and Robinson-Patman acts, form the main body of US Anti-trust law and make unlawful any action by any party with "market power" that intends to or does restrain trade.  Among the most-serious and obvious apparent violations are those relating to "tied sales", where one is essentially extorted into purchasing "insurance" in order to avoid being billed at 2, 3, 5, or even 10x the price for a given service that someone with "insurance" is billed.  Business practices that act to effectively force you to buy something you otherwise would not are not only usually unlawful under 15 USC they can also reasonably be viewed as felony extortion -- "buy this or be bankrupted if at some point you need to buy that because you'll be charged 10x as much as the so-called insurance company is charged for the same good or service."

Then there is the wide body of consumer protection law, most of it at state levels, that makes unlawful any sort of predatory pricing, refusal to quote prices or bill out a service at a higher price than that quoted, various anti-gouging statutes that make illegal jacking up prices to those not in a position to negotiate (e.g. the gas station that doubles the price of gas when a hurricane is approaching) and similar.  Refusal to quote a price, billing at the highest rate to those who find themselves "in extremis" and similar are all quite-apparent violations of these laws, but are literally never prosecuted.

And now we have a new angle, which I hadn't though of but, being a former CEO and well-acquainted with the tax code in regards to business dealing, is utterly true: kickbacks.

Some kickbacks are illegal as they're defined in the law as bribery.  The clear examples are found in any sort of deal made with the government; there, a kickback for business is a felony, and you'll get a nice long prison sentence for it if you get caught.

But in many lines of business such things are not unlawful.  However, if you receive a kickback it is always taxable.

That is, if I bill you $10,000, but then forgive $7,000 of it which is exactly what happens every single day with thousands of people who get a hospital bill with a "chargemaster" price that is then "repriced" for their insurance on their "Explanation of Benefits" statementthat $7,000 is treated in the tax code the same way as canceled debt and thus is taxable income to the insurance company!  Oh by the way, the hospital does indeed deduct the "uncollected" amount from their income (which is also permitted in the tax code) and this effectively means the income they never received (and thus lawfully deducted from the top line) is never taxed at all.

Kickbacks.You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040), if from your self-employment activity.

The same is true for corporations that file 1120; income is income, and kickbacks you receive are income whether the underlying act is illegal or not.

So how about this folks?

On March 18, the Commissioner of the Internal Revenue Service, John Koskinen, filed his reply, in 11th Circuit Appeals case 16-10071. He admitted he did not and will not investigate and collect taxes, from the taxpayers identified giving and receiving kickbacks.

We do not need new laws to stop the abuse -- nearly all of it -- in the medical industry.

We simply need for someone to give a damn and enforce existing laws -- in this case, the intentional understatement of income and owed taxes to the tune of literal trillions of dollars, which, due to being intentional, has a no-statute-of-limitations lookback period and would bankrupt every one of these insurers.

No, insurance companies are not exempt from the Internal Revenue code.

They do, however, appear to be exempt from investigation and prosecution under it.

Gee, I wonder how that happened and, by the way, may I ask why you put up with it?



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Why did they just shutter a bunch of hospitals for failing to post the prices for all of their procedures?

Gee, try to get a quote from a hospital here in the United States, or actually expect that you'll pay the same price as the next guy.  Impossible, and yet they just shuttered several Mexican hospitals for failure to comply with what are basic consumer protection laws that not only exist there -- they exist here too.

Wake up America and start demanding handcuffs for hospital administrators, doctors and pharmaceutical companies.

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Folks, let's be clear: Autism is almost-certainly not caused by vaccines.

Let's remember the first rule of observational studies, which incidentally I was surprised to find a few years ago in my daughter's High School intro-to-stats class:  Observational studies can only show correlation and correlation cannot prove causation.

However, the absence of correlation is damn near bomb-proof evidence that the alleged cause you believe exists is false.

Measles vaccination in the US began in 1963 following approval in 1962.  Within five years near-complete compliance was obtained within the US.  MMR, the combined vaccine that people like to blame autism on, replaced the single measles vaccination in 1971.  MMR is typically given at approximately age 1, with a second dose before starting school.

Autism is typically diagnosed within the first two or three years of life since it impacts early language development, with nearly all cases diagnosed before entry into primary school at age six.  In other words the cause couldn't be the second dose, as it occurs after diagnosis.

The rise in autism did not exhibit a "step function", it has been more-or-less linear and began roughly in 1980, continuing to today, with a doubling of incidence between 2000 and 2010.

It is utterly impossible to link what is a rising rate of a disorder with a nearly-level rate of vaccination since 1971 for these diseases.  The curve does not fit and therefore there is no correlation.  This is nearly-bombproof evidence that vaccines do not cause autism.

However, there is a curve that does fit.

That would be insulin resistance in the mother.

Oh, and by the way, we know that diabetic mothers have a roughly 400% greater risk of producing an autistic child than non-diabetic mothers.  That's statistical fact.

When did obesity start to take off in the United States, which I remind you is an excellent indicator of insulin resistance and thus chronic elevated insulin levels irrespective of clinical diabetes?


Causation?  Unproven.

However, the curve fit is an almost-exact match.

I remind you that not every case of autism has to match with the correlation for a strong causative link to be present, just as not every lung cancer is caused by smoking.

So why don't we look at this given the obvious match in rate-of-incidence curves?

There are plenty of reasons but I'll let you start with attempting to enumerate them in the comment section.

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2016-04-19 12:08 by Karl Denninger
in Health Reform , 1543 references

I've warned everyone who has read this column continually since 2009 that we are on a short leash, roughly a decade long (from 2009), on the impact of health care inflation, monopoly and anti-competitive behavior before it blows up our economy and government.

That is a civil-defense siren you hear and it is not a drill:

The nation’s largest health insurer, fearing massive financial losses, announced Tuesday that it plans to pull back from ObamaCare in a big way and cut its participation in the program’s insurance exchanges to just a handful of states next year – in the latest sign of instability in the marketplace under the law.

UnitedHealth CEO Stephen Hemsley said the company expects losses from its exchange business to total more than $1 billion for this year and last.  

There is no solution to this problem found in "reform" of the insurance market.  Changing or even scrapping Obamacare will do exactly nothing to change the outcome, nor will it make any material difference in timing.

You can only resolve this problem by cutting the snake's head off, and that can be done using existing law.

If we do not do it then we face the outcome that I put forward in this Ticker several years ago.

This is not politics, it's arithmetic.

I welcome a discussion with those in the policy arena, irrespective of political party, that are willing and able to have a frank discussion of facts, using the US Treasury's own figures and our existing body of law.

I'm easy to contact (look to the right) and my position on this, along with the facts and figures, have been self-evident and consistent for two decades.

It's time to cut the crap, if we're going to, before that sounding siren is obliterated by incoming events.

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The premise was tantalizing -- one little drop of blood being able to run the same sort of metabolic panel of tests that usually takes one or two vials drawn.  The difference in both hassle and cost promised was tremendous, with no small part of it being involved in sample collection that would no longer require a skilled medical professional to puncture a vein and obtain the required blood draw.

But now, it is reported by the Wall Street Journal, regulators want to ban both the founder of the company, Elizabeth Holmes, and the #2 exec there for two years from any blood-testing business along with revoking the firm's federal testing licenses.

It is effectively a death penalty proposal for the company.

Some of the concerns revolve around quality control.  Those are bad.

What's worse is the open question: Did the alleged technology work and produce accurate and repeatable results or was it all an elaborate load of crap?

Innovation is a great thing but only if it works as claimed and there's plenty of reason to be concerned here.  If these matters are about sloppy practices in a largely-funded but loosely-run firm, that's one thing.

But if they're really about repeatabilty and accuracy of the allegedly-new technology that's something else entirely, because the company should have validated that before attempting to apply for a license and engage in commercially exploiting their invention.

If the issue lies in the latter realm to any degree this is not about sloppiness any more.

It then becomes about fraud and very material harm done to real people through knowingly inaccurate results.

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