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Healthcare Reform in Question

An Open Letter and Analysis of what is Going Wrong   

Filed 9/1/09 GCN

(Editor's Note: The following is an open letter to Mississippi Congressman Gene Taylor by retired Coast FBI agent Royce Hignight. The letter is a detailed analysis of what is going wrong with healthcare reform by the President, the Democrats and the establishment Republicans. This report details a system of corruption and collusion that interferes with real reform. At this point no one is dealing with the heart of healthcare's failure in America)

TO:        Congressman Gene Taylor
FROM:  Royce Hignight
DATE:   August 31, 2009
RE:        Health Care

Dear Congressman:

I am writing this communication on Health Care in view of the fact that as one of the leading, “Blue Dog” Democrats, you are in a vital position of influence on this critical issue which is being debated by both the “Establishment” Democrats and the “Establishment” Republicans, neither of which, in my opinion, represents the best interest of the ordinary citizen.  As you know, there are probable dire consequences if either of these is successful.  It seems to me if this outrage is going to be stopped, the Blue Dog Democrats must put their country before their party, as you have regularly done, on this issue.  After you have read this letter, I believe you will see why I attach so much importance to the direction the Blue Dog Democrats choose.

(GCN file photo right: Cong. Gene Taylor)

The choices that both are proposing seem to be SOCIALISM from the ideological “leftists”  “Establishment” Democrats which would bankrupt the country while providing unacceptably poor health care.  On the other hand, the out-of-touch STATUS QUO,   “Establishment” Republicans keep singing the same old song about how great a health care system we have. It is a system that is capable of performing some miraculous feats, but it also performs very poorly in some aspects.  In any case it is a system which is bankrupting the country and which in fact is providing more and more substandard health care because of the unrestrained, obscenely extortionate cost of health care. This huge cost is, in my opinion, as a result of the greed in the health insurance and medical industry including, health technology, hospital care, and pharmaceuticals. The health care debate is not new.  The current situation and conditions are almost identical to the situation in 2003 when the Medicare statue was amended to include drug coverage for senior citizens.

Out of Control Costs

As you know, for the past 10-15 years the outrageous medical care costs have been in an out-of-control, upward spiral, far outstripping the rate of inflation.  As a result, insurance premiums are becoming more and more unaffordable, and more people are simply doing without insurance and proper medical care.  American citizens simply cannot afford much needed care without health insurance.  Much of the extreme cost of health insurance is attributable to the extortionate cost of pharmaceuticals.  As you know, many popular American pharmaceuticals are available to citizens of other developed countries, namely Australia, Canada, France, Germany, Japan, and the United Kingdom, at half the cost, or less than what U.S. citizens have to pay.  In third world countries, such as Mexico and those of Africa, pharmaceuticals are much cheaper even than in Europe, Canada, Japan, and Australia. 

(Editor's Note: As this article was released the U.S. Justice Department issued the largest fine in its history against the giant pharmaceutical company Pfizer)

Pharmaceutical companies are making a fair profit selling their products at far less cost in foreign countries, or they would not be selling in any market in which they did not make a fair profit. Then it is logical to believe that U.S. citizens are being “ripped-off.” The Centers for Disease Control and Prevention reported in 2004 that 44% of Americans take one or more prescription drugs.  Further, that one- in- six Americans or 16.5% take at least three a day. That is about 135 million Americans who are directly “ripped off.”  But, those “ripped off” also include everyone who pays taxes to support the Medicaid and Medicare systems.  In addition, everyone else who has private insurance is paying higher rates because of the “jacked up” prices of drugs.

The American drug companies make the dubious claim that they use the higher prices and profits gained from overcharging Americans to finance research and development of new drugs.  However, it makes absolutely no sense that Americans have to pay the cost of research and development for the rest of the world, particularly Europe, which is as well off economically as the U.S. 

This writer believes that medical costs being out of control has more to do  with profits made possible by  the incestuous and cozy relationships of the medical industry, particularly pharmaceuticals, their lobbyists, politicians of both parties, and high level political appointees in government than the high cost does with the development of wondrous drugs or other health care.  

For example, in November 2003, medical costs were skyrocketing for everyone to the point of being unaffordable for many people, especially senior citizens. If you will remember, back in that period of time, there were stories of senior citizens eating cat food or dog food so they could afford to buy their pharmaceuticals.  The Bush Administration and Congress magnanimously stepped in.  The Congress passed Medicare legislation, known as Part D, of Medicare, to extend prescription drug coverage to all senior citizens under the guise of helping senior citizens.

 The legislation was pushed by the Bush administration and guided through the House by Congressman Billy Tauzin, (R-LA) who was the principal author.  While the excuse for passing this legislation sounds high-minded, even laudatory, many, including me, believed that the real purpose of this legislation was for serving the well-heeled and politically powerful pharmaceutical industry.  Medicare was already in a financial crisis, and this legislation just added a whole lot more debt.  

The legislation passed the House of Representatives in what Paul Krugman, columnist New York Times, said in an article dated May 6, 2005: “Republican leaders violated parliamentary procedure, twisted arms and perhaps engaged in bribery to persuade skeptical lawmakers to change their votes in a session literally held in the dead of night.”  Krugman went on to say, “But the real scandal is what’s in the legislation.  It’s an object lesson in how special interests hold America’s health care system hostage.” 

Drug Companies Sales Top Research Spending

Krugman said that Marcia Angell, the former editor in chief of The New England Journal of Medicine said in her book, “The Truth About the Drug Companies,”  “shows convincingly that drug companies spend far more on marketing than they do on research – and that much of the marketing is designed to sell ‘me too’ drugs (A drug that is structurally very similar to already known drugs, with only minor differences.) which are no better than the cheaper drugs they replace.  It should be possible to pay less for medicine, yet encourage more real innovation.”

Krugman went on to say, “If all this sounds like a story of a corrupt deal created by a corrupt system, it is.  And it was a very expensive deal indeed.  According to the Medicare trustees, the fiscal gap over the next 75 years created by the 2003 law – not the financing gap for Medicare as a whole, just the additional gap created by legislation passed 18 months ago – will be $8.7 trillion.”  The Medicare Legislation was to go into effect January 1, 2006.

Following the passage of the Medicare legislation that was a goldmine for the medical industry, Tauzin was given, or some would say rewarded with, a position as the President of the Pharmaceutical Research and Manufacturers of America Association (PhRMA) that was rumored to be a $2 million a year salary.  Representative Pete Stark of California said, “As a member of congress, Billy negotiated a large payout to the pharmaceutical industry by the federal government.  He’s now about to receive one of the largest salaries ever paid to any advocate by an industry.” 

I am sure you will recall that a number of Americans began obtaining their pharmaceuticals in Mexico and Canada, only to have the pharmaceutical industry and their lobbyists use their undue influence on Congress to make the practice illegal. Furthermore, the pharmaceutical industry got a prohibition written into the Medicare law prohibiting Medicare from using its purchasing power to negotiate lower drug prices.

Tauzin, who received $174,000 in contributions from health professionals and $119,750 from makers of drugs and other health products in his last election, is just one sordid example of many who have engaged in similar questionable practices to the detriment of the taxpayer.  Tauzin, who had been a member of Congress for 24 years, had many friends in Congress and would prove to be of much more value to the drug companies in the future.

Senator Trent Lott was quoted in a March 27, 2004, news article as saying, “Many Americans are legitimately asking why a triumvirate of health care, health insurance and drug costs all seem out of control.”

Senator Lott went on to say, “America’s pharmaceutical companies are great institutions which have helped make American standards of health care second to none, giving us miracle drugs that have made many dreaded diseases either extinct or treatable.”

Lott went on to say, “However, these globally operating companies cannot continue to ask only American consumers to finance pharmaceutical research and breakthrough medications.  These costs should be distributed globally and more equally.”

Empty Promises by New President

During the 2008 presidential campaign, the then presidential candidate, Barack Obama, ran a campaign ad in which he personally slammed the Republicans in a television commercial for the Bush/Tauzin 2003 Medicare legislation which did not allow Medicare to negotiate with drug companies.  He said that it was costing the taxpayers $310 billion dollars and that he would remedy that if elected. 

Obama was elected.  Now, hypocritically, he is singing a different tune.  An article in “The Pink Sheet” dated March 10, 2009, reveals that on March 5, 2009, a health summit of 150 people was held at the White House, including key congressional and administration players.  PhRMA President Billy Tauzin got the opportunity to make a case for universal drug coverage.  “Tauzin made a case for universal drug coverage…that broader access to drug therapy can prevent expensive medical complications down the road and ultimately save money in the health care system.” 

Tauzin said, “You’ve got to cover everybody one way or the other.”  It is easy to see why Tauzin would promote such a position, because the pharmaceutical industry would be able to sell more drugs if more people were brought into the system even at taxpayer expense.  Anyone would have to be an idiot to believe the pharmaceutical industry had an altruistic motive.

However, in several news articles that were put out in May, 2009, the health industry was portrayed as being altruistic and was doing the country a big favor by trimming the cost of the $2.5 trillion medical care system over the next 10 years with a pledge to cut their future  billings by $80 billion. This magnanimous pledge was made by the American Hospital Association, the American Medical Association, PhRMA, and the Service Employees International Union (SEIU) among others.  

A Yahoo news article, titled, “Drug industry backing Obama’s health care plan,” dated August 8, 2009, said, “The Nation’s drugmakers stand ready to spend $150 million (others say the figure will be as much as $200 Million) to help President Barack Obama promote his overhaul of health care this fall, according to numerous officials, a staggering sum that could dwarf attempts to derail his chief domestic priority.” The article went on to say, “The campaign, now in its early stages, includes television advertising under PhRMA’s own name and commercials aired in conjunction with the liberal group, Families USA.”

The article went on to say, “Ron Pollack, executive director of Families USA, said the partnership with the deep-pocketed drug industry is one of mutual self-interest…”   “We want to achieve coverage for everyone.”  “For PhRMA, this would improve volume for prescription sales because everyone would have better access to medicine…”  So, after several months of promoting the Obama/health industry deal, PhRMA’s true motives for being involved are revealed. 

According to the article, paraphrased, the drugmakers, by making a deal with the White House, were counting on the White House to block efforts by the Congress to allow the importation of prescription medicine from Canada and other countries as well as to prevent the government from negotiating directly with pharmaceutical companies for lower drug prices under Medicare.  In addition, the Obama deal would allow the drug companies to continue to reap the excessive obscene profits that Obama had complained of in his television commercial during his presidential campaign.

The article said that Obama’s health care proposal would extend health care insurance to nearly 50 million people who now lack it. This would mean that a huge new pool of potential customers for drug companies and other health care providers would be created.  It is all about the bottom line, and there is nothing altruistic or magnanimous about the drug industry’s offers to help the government save $80 billion in the future anymore than adding Part “D” to the Medicare Legislation in 2003 was altruistic or magnanimous. The drugmakers had a big “win” situation under the Republicans in 2003 Medicare Legislation.  But, if the Obama deal passes, the drugmakers will have a larger “win” “win” “win” “win” situation under the Democrats.

Of Politics and Payoffs

The aforementioned Yahoo article also noted that “Drugmakers have also funneled more money to Democrats in recent years, a trend that began soon after they gained control of Congress.”  But, it appears there may have been other “sweeteners” to get the Obama deal with the health industry done.

Another Yahoo news article titled, “Firms with Obama ties profit from health push,” dated August 19, 2009, reveals that some of the above mentioned television commercials, which promoted Obama’s health care legislation, were paid for by PhRMA and associated groups.  These commercials were really done by “Democratic consulting firms that are closely connected to the president and two top advisers.” 

Paraphrased, the article said that the group doing the pro-overhaul ads hired GMMB.  This group worked for Obama’s 2008 campaign of which Jim Margolis, a top strategist on Obama’s campaign,  and AKPD ,which was founded by David Axelrod, a top adviser to Obama’s campaign and now to the White House, would be paid millions of dollars to do the ads.  Axelrod sold his interest in AKPD for $2 million, which is being paid out in installments of $350,000 a year for four years.   A White House spokesman said that Axelrod has fully complied with the toughest-ever ethics rules for administration officials.  But, politicians make the rules, don’t they?  In addition, Axelrod’s son still works for AKPD, as well as David Plouffe, Obama’s campaign manager. 

A POLITICO.com article, titled, “Axelrod’s ties targeted in health fight,” dated August 19, 2009, said, according to a spokesman for one of the groups involved in the commercials, that some of the commercials were “designed to shore up support among the conservative House Blue Dog Democrats and to target swing senators.”  Television commercials are not all the medical industry is doing to get the support of the Blue Dog Democrats.

A SUNHERALD news article titled, ”Blue Dogs rake in cash,” dated August 27, 2009, revealed that “During the first half of the year, as the Obama administration and moderate and liberal factions with the Democratic Party wrangled over the timing, shape and cost of health care reform effort, the party’s fiscally conservative Blue Dog Coalition pulled in $1.1 million in campaign contributions.” 

The article went on to say, “More than half the amount came from the pharmaceutical, health care provider and insurance industries…” The article said that on average, Blue Dog Democrats net $62,650 more from the health sector than other Democrats.  The article had a quote from Mike Parker, a former Mississippi Congressman turned lobbyist, who said, “The business community realizes that (the Blue Dogs) are the linchpin and will become much more so as time goes on.”

Republicans and Democrats Deserve Criticism

Back in 2003, the Associated Press looked at six measures in the House of Representatives and compared the voting results to the financial backing the members had received from interest groups who supported or opposed the bills.  The Associated Press found five of the six bills passed by the House were the ones on which their supporters had given the most money to Congressmen.  It certainly appears from this study that money talks.

It is clear to me that the “establishment” Republicans are mostly third rate ineffectual politicians, who did not learn much from the beating they took in the 2006 and 2008 elections.  They are still advocating their same old failed tactics of “trickle-down economics,” speaking for the wealthy and “special interests,” and trying to scare enough of the rest by demonizing Democrats in order to win enough support to carry their point of view.  However, the Democrats give them plenty of information with which to work.

The “establishment” Democrats are indeed a scary lot.  It appears they are “sugarcoating” their scary package by hiding their true intent under desirable ideas.  The health care commercials run thus far by the health industry promoting Obama’s reform consists of the following points to a large extent according to an ABC news article dated August 13, 2009, titled, “PhRMA-Backed Coalition Makes Big Ad Buy:

It means you can’t be denied coverage for a pre-existing condition, or dropped if you get sick.  It means putting health-care decisions in the hands of you and your doctor.  It means lower costs, a cap on out-of-pocket expenses, tough new rules to cut waste and red tape, and a focus on preventing illness before it strikes.  So what does health insurance reform really mean?  Quality, affordable care you can count on.

I believe almost everyone could support the above points.  However, Obama and the Democrats have 1100 pages of gobbledygook to go along with those acceptable, even desirable, points.  This gobbledygook, according to some who have read some of it, includes a variety of some really scary stuff.  This scary stuff appears to have more to do with remaking American society into a very radical revolutionary society than in making health care affordable. 

When one considers Obama’s background, his associates, and some of his very radical appointments, it is something to ponder.  It is for sure, in my opinion, the purpose of the bill is not to save money.

It is especially worrisome that Obama is willing to knowingly let the drug industry get away with obscene and extortionate profits to get his bill passed when health care costs are playing a major role in breaking the financial back of this country and causing hardship to the vast majority of citizens.

Healthcare Cost Imploding America

There never will be enough money in this entire country to satisfy the insatiable appetite of the health care industry and to provide the kind of health care that every American ought to receive as long as the medical industry can get what it wants from the political complex when all it takes is some cash to manipulate the political process.   Obscene health care costs threaten all Americans, insured or not. Even citizens with insurance are being severely impacted because of the ever rising premiums and co-payments.  Also, insurance companies are becoming more and more reticent to pay claims because of the extortionate cost of health care, leaving citizens caught in the middle.

As you are aware, these exorbitant health care costs have played a major role in the implosion of the American auto industry.  Just insurance premiums alone, are $12,000 a year or more for a family of four. If they have to have medical care, co-pay and other costs are in addition.  I have known professional and other well to do self-employed people who could not afford or get insurance.

Even the wealthy are concerned.  One or two illnesses can gobble up a huge amount of assets. In 2001, I was in the hospital with by-pass surgery.  Just my hospital bill averaged $14,000 per day.  There is no way that was justifiable.  A trip to an emergency room that turns out to be for a minor problem can easily cost $3000-4000. I have seen people who worked hard all of their lives wither and die, after some unfortunate circumstance, because they lost their insurance and could not afford proper medical care. This is outright immoral when one considers it is not because there is a lack of money, but entirely due to the greed of those in the health care and insurance industries in my opinion. Bankruptcies, particularly among the elderly, have soared in the last several years with 30-50% attributable to medical costs.

Medical care is gobbling up 14-16% of GNP is far too large of a share of resources, considering that this amount is far more than other “first world” countries, yet without appreciably better end results.  Health care spending per person in the United States is double of that in Canada, France, Germany, Italy, and Britain.  Per capita spending on health care in the United States during 2004 was $6,102 (2006-$7,026 per person), twice that of Germany at $3,005; Canada at $3,165; New Zealand at $2,083; Australia $2,876; and Great Britain at $2,546. This great disparity is bound to be attributable in large part to the extortionate cost of pharmaceuticals for Americans.

 A government report in January of 2007 revealed that health care spending topped $2 trillion in 2005.  Another report indicated that by 2017, consumers and taxpayers will spend more than $4 trillion on health care, accounting for $1 of every $5 spent.  Even though the medical industry is raking in colossal obscene profits, news reports indicate that Medicaid and Medicare fraud at $90-120 billion annually is in addition to their obscene profits. 

I am sure that you will recall, that even prior to the collapse of the banking industry, the recession, all of the trillions committed or spent on “bailouts,” and stimulus packages, that David M. Walker, former Comptroller General of the United States, was crisscrossing the country warning of an impending colossal financial failure of the government. This predicted failure was largely because of the colossal indebtedness of Social Security, Medicaid, and Medicare of over $50 trillion. It is absolute insanity to be considering anything that would add to this debt that we can never repay.

When I refer to these medical costs as extortionate, that is just what they are.  By 2003, after the stock market collapse in the late 1990’s and the financial collapse of companies, such as ENRRON, WorldCom, Tyco, due to fraud and greed, when people and companies were tapped out and just could no longer afford to come up with more and more money for the health care industry, the health care industry in an unholy alliance with the political process (Republicans), used government and the government used its power to tax to raise more money which was funneled to the health care companies via Medicaid and Medicare. 

Political Process Manipulated

What is occurring now is a repeat of 2003.  Again we are in a full scale recession, and again we see companies, such as General Motors, going broke because of astronomical costs of health care.  Half of all bankruptcies are a result of the same reason.  The health care industry once again is forming an unholy alliance with the political process.  This time it is the Democrats who are trying to use the power of government to raise money and to funnel to the health industry.

The apparent manipulation of the political process is not just limited to the health care industry.  This manipulation by the health industry is a microcosm of what has occurred in the savings and loan scandals of the 1980’s; the dot.com scandals of the late 1990’s and early 2000’s; the collapse of the investment banks and below prime loans; and oil speculators all of which have occurred for the same reasons.  It is being set to continue with cap and trade and other proposals.

It is the accumulative costs of these corrupt alliances, fueled by greed, which has brought this great country to the financial breaking point and ruination during the last three decades more than anything else.  I believe It is the  accumulative frustrations of the citizenry because of the incessant  favoring of special interests over the will of the people by the corrupt political system that has led to the recent “tea Party” demonstrations and the uprisings in the ongoing “town hall meetings.”

Those feelings of frustration are just magnified when out of touch politicians or just plain dingy politicians call them a mob and worse.

I know that you said that you would vote against the Obama/Pelosi Health Care Bill August 17, 2009, at your Moss Point “town hall” meeting.  However, much more is needed.  I hope you will aggressively  use your influence with your Blue Dog colleagues to get rid of the special considerations previously grant to the health industry to the maximum. The proposed health bill just needs to be discarded.  The place to start to save money on health care is the place where $310 billion is being wasted because of special considerations given to the health care industry, according to Obama during his presidential campaign.   In addition, it should be a top priority to consider how to rid the entire political process of the undue influence of special interest money on the political process which has brought this nation to its knees from all of the scandals previously mentioned.

Royce Hignight


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