A view of the DC swamp


Critics of federal agencies won a small victory June 15 in the Supreme Court with the judges’ unanimous decision in American Hospital Association v. Becerra (pdf).

Judge Brett Kavanaugh’s testimony for the court offers, perhaps inadvertently, some revealing views of the DC swamp: ridiculous legal complexities, absurdities in a grand federal social program, and crude special-interest politics.

That American Hospital The case arose because (1) rural hospitals tried to get $ 1.6 billion in additional Medicare money annually, and (2) the US Ministry of Health (HHS) went too far in trying to stop them was.

A first look into the swamp: Medicare

Medicare is the second largest state program. (Disclosure: I’m enrolled in Medicare because federal law requires it.) It shows how social issues at the federal level are almost always counterproductive, how they drive up spending, and how — under existing swamp protocols — they almost always are to grow.

Medicare’s early sponsors advertised it as a low-cost program that covered hospitalizations. Now it devours about an eighth of the entire federal budget. Despite its enormous tax base, the program is approximate four years Away from bankruptcy.

Medicare has played an important role in driving healthcare costs from reasonably affordable levels to stratospheric levels that few can afford. This, in turn, leaves millions of Americans desperate for Medicare — mired in red tape, so to speak.

In addition to hospitalizations, Medicare is now paying hospitals to give away free prescription drugs to people who are Not hospitalized. Why? For in 2003, a supposedly “conservative” Republican Congress expanded the already gargantuan program, and a supposedly “conservative” Republican President, George W. Bush, signed it into law. (Yes, I know there were arguments for enlargement, but there were better arguments for market alternatives.)

Next Look at the Goo: The Medicare Statute

If you examine the Congressional Medicare Statute, you’ll learn more about the DC swamp. The law is unimaginably complex. This ensures that almost nobody outside of the DC Beltway (except for a few special interests) has any idea what it means. A single section of the law – the “Benefits” section – is over 32,000 words. That’s as long as a humble book.

The Payment of Benefits section contains a dizzying array of subdivisions. Look at the following example: Conventional laws are divided into sections and sub -sections, so that a typical reference “Section 2 (a)” or perhaps “Section 2 (A) (II)” could be. But the legislation in question in the American Hospital The case was “United States Code, Title 42, Chapter 7, Subchapter XVIII, Section 1395l

In addition, you can add government regulations.

Another look: Marsh Critters pay

In which American Hospitals In this case, the Supreme Court had to interpret the statute that defines how federal agencies reimburse hospitals for dispensing free medicines.

The law states that HHS has two options. The first option is to pay hospitals 106 percent of the drug’s average retail price. This is a really good deal for the hospitals: any volume discounts are not adjusted, and they also collect a 6 percent profit. This motivates them to give out as many free medicines as possible. As you can see, the hospital and pharmaceutical lobbies are in the swamp.

The law’s second reimbursement option requires HHS to conduct a survey to find out what hospitals are actually paying for the drugs. Then HHS can refund based on that. This could save some money. But if the American Hospitals case occurred in 2018, HHS had never conducted a survey.

Price controls in the swamp

You might think price controls are a thing of the past because they proved their futility during the Nixon and Carter administrations. If so, then you don’t know the swamp. Another part of the Medicare law forces drug companies to sell their products at a fixed discount to preferred hospitals — “340B hospitals” in swamp jargon. These are (supposedly) hospitals that serve low-income or rural communities.

Under the 106 percent reimbursement formula, 340B hospitals can feast like alligators: they receive 106 percent of the normal price of drugs and pay just 77.5 percent. Of course, the lobbyists of the 340B hospitals have a heartbreaking justification for this untenable situation. They always do. This is how the court described it:

“[T]340B hospitals claimed that lowering their prescription drug reimbursement rates would force those hospitals to scrap or drastically scale back other key programs that provide a wide range of medical services in low-income and rural communities — like treatments for cancer, mental health issues, opioid addiction and diabetes.”

That sounds appealing. However, this overlooks the fact that almost all other hospitals also have to treat patients with these symptoms. It also overlooks the medical needs of non-Medicare citizens, most of whom have to pay their own healthcare costs and federal taxes.

More from the swamp: HHS is trying to respond

HHS responded to this situation by lowering the prescription drug reimbursement rate for 340 billion hospitals to reflect the cost reduction received.

HHS’s response would have saved about $1.6 billion per year. It was probably the right thing. But if you think doing the “right” thing would save taxpayers money or reduce the deficit, guess again. The court’s opinion states that any savings “would be reallocated by law to other Medicare services.” In other words, it would allow HHS bureaucrats to redirect the money to projects they prefer.

The legal problem with the HHS maneuver was the following: At first glance, the law HHS only gives the authority to differentiate between hospitals if the agency first carries out a costs. And as I said before, HHS had never conducted an expense survey.

The Court’s Decision

Finally, we come to the small victory against the administrative state: In 1984 the Supreme Court ruled in Chevron v. Natural Resources Defense Council (pdf). That rafters The ruling said that when a law is not clear about how much authority the agency has, the agency – not a court – decides the issue. The Agency’s decision must be ‘reasonable’, but in practice its decision is usually final.

Justice Kavanaugh is known for being a critic of rafters. He believes that a power-seeking government agency should not be the judge in its own case.

in the American Hospital, HHS argued that it was a reasonable interpretation of the law to reimburse hospitals at different rates. But the court did not turn rafters. The court merely said the HHS view was legally incorrect. This could be a sign that the rafters Dominion is on the way out.

It says a lot about the swamp that the case that drained the bureaucrats’ powers was one where they were probably trying to do the right thing.

Another sign of the Slough? A poorly worded statement

The reasons for the judges American Hospital decision could probably have been explained in three or four pages. Instead, the statement 14 is quite repetitive: For example, the two reimbursement options of HHS (average sales price or cost collection) are described four times.

Another sign of sloppy wording is the use of the word “data” in the statement. Strictly speaking, “dates” is the plural form of “date”. So, one should say “this date is” and “these dates are”.

The Medicare Statute correctly treats “dates” as the plural form. But the opinion of the court varies. On page 3, the Opinion treats it as singular (“this data” and not “this data”). This happens again on page 9. But later on page 9 the word is treated in the plural (“data are”) and it remains so on page 10 (“data…help”) and page 13 (“data justify”).

Why the mess? We will never know. It looks like several paws were mistreated during the design phase. And someone who was supposed to proofread or edit the result didn’t do a very good job.

Regardless, The Swamp is guilty of far worse.

The views expressed in this article are the author’s and do not necessarily reflect the views of The Epoch Times.


Robert G. Natelson, a former professor of constitutional law, is a senior fellow in constitutional law at the Independence Institute in Denver.

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