Tobacco Companies Have Rights Too

Federal Judge Richard Leon got it right. The new proposed labeling on cigarette packages, which were passed in 2009 and required more aggressive wording and half-pack sized graphic images of the various diseases and related effects smoking cigarettes can have, simply go too far and are well beyond what the government should have the right to impose on a private company and their product. You can read the CNN article here. How far did these new mandates go? I’ve included a few of the images that were to be placed on packages below. Please note these images may be considered graphic.

Those are just a few of the images the government was going to force tobacco companies to put on their product. Don’t get me wrong. Smoking is bad for you in all kinds of ways. You shouldn’t smoke, and smoking costs our healthcare programs and insurance companies billions each year in avoidable medical expenses. However, the government shouldn’t be able to force a private company to put graphic images, obviously designed to cause an emotional response and have a negative effect on the sales of a product, on their goods. Tobacco products already have labels warning you that they are addictive and can cause cancer. It’s also pretty safe to assume that anyone who hasn’t been hiding under a rock for the past 15 years is well aware that cigarettes are bad for you, addictive, and can shorten your life.People that are still smoking or start smoking are aware it’s bad for them. HHS may try to paint these warning labels as an education campaign or an attempt to communicate the side effects of the product, but it’s pretty obvious it goes well beyond that. 

Think about this rationally for a moment. There are all kinds of products that are legal to sell that can have very negative effects. Take alcohol, for example. Does your beer or bottle of whiskey have a half-label picture on it showing a cirrhotic liver, a child affected by fetal alcohol syndrome, or a grisly fatal wreck caused by a drunk driver? Or you could consider those delicious snack cakes you find in the bread aisle. Do their labels have a half-box image of an obese person in a hospital bed? Or a person with an amputated foot due to complications from diabetes? The list goes on and on. 

Yes, people need to be healthier (in so many ways). Yes, stopping smoking or not starting smoking in the first place is a smart decision and is in the best interests of a person’s health and the overall healthcare system. But are we ready to let the government force private companies to place grisly images of health problems (or dead bodies) on their products to try and achieve that goal? Judge Leon said no. In his decision, he said “Congress did not consider the First Amendment implications of this legislation” and “the graphic images here were neither designed to protect the consumer from confusion or deception, nor to increase consumer awareness of smoking risks”. He said that the legislation goes too far because it forces a company pay to place a message and image it has no say or control over on their product and advertisements for their products, (reducing the space to place their own logos/advertising/etc. as well) and therefore makes the company promote a message (or image) from the government against their will. He therefore decided that the legislation was in contradiction to the right to free speech, and I think he’s right. If the government wants these images and statements out in the public as part of its anti-smoking campaign, it should buy billboard space and ad space on CNN, etc. to achieve that goal. It doesn’t have the right to force any company, making any legal product, to pay to place a graphic image or negative message on their products and I wish the government would brush up on the Constitution before it passes more invasive laws and regulations expanding the government’s power over private businesses. 

As always, your comments, questions, and rants are welcome.

-M

Question from reader: Why Shouldn't Higher Education be Provided by the Taxpayers?

Q:I can't help but notice that you didn't actually give a reason why higher education shouldn't be provided for in the same manner as high school level education, you simply stated that at this point it's not (which is true, but not germane to the point that an educated public is valuable enough to merit taxation to pay for higher education for all).

 jonathan-cunningham

Sure, I’ll try to address that a little better. The primary reason it shouldn’t be provided by society (taxpayers) in its current form is partially what I already described- the dramatic system changes it would require and the reduced access to most for a higher tax cost to everyone. Some would say, well expand it all the way and don’t reduce access to contain costs. That’s what’s happening in Medicare and Medicaid and we see how well that’s working for the national budget. There is also no economic argument for everyone in the society having a college education, as we do not need bachelor’s degree holders running assembly lines, cleaning offices, etc. but it is also a matter of pure fiscal responsibility. The biggest reason people go to college is to get a better job and make more money over their lifetime. Plain and simple. If you can afford to go for recreational purposes or pure interest purposes, more power to you, but there’s no justifiable reason the society should pay for you to learn about your fields of interest in a formal setting just because you want to, and I don’t know of anywhere in the world that is really done. Either access is greatly limited to only the best students who are then given that option, or much more career focused overall. Nowhere I can find pays for anyone who wants to go to college to go, which is basically what people have been suggesting on here the past couple days. That said, since the biggest reason people go to college is to get a better job, a college education is an investment. It is not a strict necessity to make a living, do well, etc. It’s required for some fields of course (and probably in several it doesn’t need to be), but society does not view it as a requirement to live a decent life, as we do a high school education. Since it is an investment, the student and their family should plan ahead financially, decide how much to invest, and make sure it will pay off. If it’s no longer a fiscally responsible investment for the individual to go to college, there’s no real reason the society should want to invest in it for you either knowing you aren’t willing to.

All people really want is to have the debt and risk of debt removed from them so they can attend college without worrying about these things, but that simply can’t happen in the US system where access is wide open and options are so varied. There’s also no logical reason that the government should take on the risk of investing in your education and future productivity if you’re not willing to do so. That’s where this capitalist vs. socialist/communist argument is going to keep coming up… If you want to have a better job, obtain a higher level of knowledge that will enhance your success in life, etc. then why shouldn’t you be willing to invest in it yourself and take on the risk? So you can no longer afford the ivy league school or private liberal arts school you wanted because they raised tuition? Go somewhere you can afford that still offers a solid education. You don’t ask the government to buy you a nicer house than you’re willing to buy with your own money, or can afford because the housing prices went up, do you? (Okay, some people basically did in the past, but we saw how that turned out haha!) I wouldn’t be taking on about $200,000 in student loan debt for medical school if it was an impossible investment, and I would never ask the government to do that for me either. If students are smart about where they go to school cost wise, the career fields they consider, and work as hard as possible to find ways to reduce the cost of their education, then they should be comfortable taking on the debt or financial responsibility for their own future.

Hope that helps give some insight into my viewpoint.

-M

Why YOU Should Care About the SGR

Everyone knows what Medicare is. Everyone knows our seniors currently rely on it to provide health coverage for them. Most have heard a lot of talk in the past couple years about Medicare reform, our out of control spending on healthcare and the pressing need to fix it before Medicare becomes insolvent. But apparently very few people actually know what the SGR is, or why it’s so key to this issue, and that scares me a little.

Before your eyes roll back in your head of boredom, let me point out the SGR affects everyone. If you or your loved ones are on Medicare or Tricare (the military healthcare program), or you know anyone that works for a hospital, doctor, or any aspect of the healthcare system, SGR affects you. So what the heck is it? The SGR is the Medicare Sustainable Growth Rate, and it was created in the Balanced Budget Act of 1997. The idea sounded brilliant: a formula to control Medicare spending by ensuring that the per patient cost did not increase faster than the GDP over time. The mechanism used to “enforce” this would be annual updates to physician payments. If a year came in under budget, doctors got paid more the next year for their services. If a year was over budget, they took a cut the next year. Sounds good right? Well, let’s say that the patients start spending a lot more each year than they paid into the system through increased utilization of services. Say Medicare starts expanding services covered that patients can now take advantage of. Say the economy goes to crap and the growth of GDP comes to a grinding halt. Sounds like that formula isn’t going to work out if any of those things happen, right? Well, what if they all happen at once?

The short answer is it becomes a total mess where Medicare spending increases drastically and doctors are told well, this increased spending is no good, so we’re going to have to cut what we pay you drastically. Doctors then point out that Medicare payments over the last decade have been flat while the cost of practicing medicine continues to increase (ironically, some of that increased cost has been directly caused by new Medicare requirements) and they can’t take any cut and still make enough to keep the doors of their practice open. (See graph below, note the effect the 2012 cut could have):

Too bad, Medicare says, this is the formula and that’s how we control our costs. Congress then steps in and says “this won’t work, if we let that happen then doctors will just quit accepting Medicare and our seniors won’t have healthcare”, and they’re right. Doctors do quit accepting Medicare because of looming cuts, even though most of the serious cuts were never implemented, being avoided at the last minute by congressional action that delayed the cuts for short periods of time. That’s not the point though, the point is the instability this creates for healthcare providers and how it motivates them to just leave the unstable system for smoother waters. Congress sees this happening. But in their infinite wisdom, Congress never decides to try to fix the formula, so each delay simply increases the size of the next cut. The payment cut we were just facing was 27.4%, up from 21.3% last year, and projected to hit over 30% shortly. These cuts have been averted just weeks before the cuts were scheduled to take place, leaving doctors and hospitals not knowing if they will be able to make their budget for the next month or not. No sane person would choose to accept a payment system that threatens to cut their income by over 20% next month, maybe, if Congress doesn’t figure out how to fix it. But that’s exactly what doctors, hospitals, and other clinics are expected to do. Add in that the SGR also directs the Tricare reimbursement rate, which covers all our military families, and private insurers seem to be using Medicare rates as an excuse to cut their own payments, and you’ve got a real mess.

So why doesn’t Congress fix the SGR so that doctors and hospitals aren’t held hostage by the whims of a dysfunctional political body and can do their jobs without worrying if they’ll be able to afford to care for America’s seniors and military families next month? Well… see my previous post. Some people are trying to yell at Congress to fix it, primarily the AMA and other physicians’ and hospital groups. The bulk of what we were asked to do this weekend in D.C. was to ask our congressmen and senators to consider a permanent repeal of the SGR. Naturally, with the financial mess our country is in, a $300 billion+ measure isn’t going to be popular. So the AMA says, why not “pay” for this with the OCO funds (money “saved” by not still being in Iraq and drawing down troops in Afghanistan) and put this issue to bed while Medicare and Congress figure out realistic ways to lower healthcare costs? That’s the question/suggestion I was asked to take to my elected officials, and I did discuss it with them as one of the proposed mechanisms for repealing SGR, but our discussions always came around to the one weakness of both the SGR and the OCO funds: they’re really stupid.

The SGR is a budgetary construct. It says because we spent more than we planned in one year we’ll make it up in the next, but we don’t let that happen because “making it up” would gut Medicare as we know it and the whole thing would collapse. So then we claim the money we didn’t save that year is now “debt” and gets added on to the amount we have to “save” next year, making it even more impossible to ever make it up with “savings” in future years. So you have an endlessly growing pile of somewhat imaginary “debt” because our seniors are using more healthcare services and the GDP isn’t growing. But since we don’t want to appear to be rationing care or telling our seniors “You’re spending more than you ever paid in, this was supposed to be an insurance program not welfare and you’ll have to play by fiscally responsible rules.”, we keep letting this formula float and keep holding healthcare providers hostage. The OCO funds are equally, if not more so, stupid. The “money” in OCO funds is supposedly the savings from not still being in Iraq, etc. So basically our government is saying because we aren’t spending as much as we thought we would, we’re now saving money! Never mind that trillion dollar plus deficit, we’ve got these savings to spend since we didn’t spend as much on war as planned. That’s like me saying that I planned to spend $50,000 I have to borrow on a new car, but I decided not to buy the car so I have an extra $50,000 lying around to spend! And you wonder why our government is a mess?

The point is, the SGR is just as ridiculous as the OCO funds but with the serious side effect of discouraging doctors and hospitals from treating our seniors, military, and anyone else affected by changes in the SGR payment formula. It’s time to stop letting Congress and the Center for Medicare and Medicaid Services play fast and loose with the future of our healthcare. They need to stop pretending this formula works and get serious about fixing the actual problems driving the increased costs in Medicare. The fixes won’t be politically popular, but the longer we put them off the worse the problem gets and the less likely it is that our seniors and military will be able to have their choice of doctors. You should care about this issue, and you should demand more from the people you elect to represent you. Tell them to fix this and tell them you’ll be watching to make sure they do.

-M