Category: Regulations

The “Affordable” Care Act Gives Huge Drug Subsidies to Rich, Urban “Nonprofit” Hospitals

(p. A1) A decades-old federal program that offered big drug discounts to a small number of hospitals to help low-income patients now benefits some of the most successful nonprofit health systems in the U.S.

Under the program, hospitals buy drugs at reduced prices and sell them to patients and their insurers for much more, often at facilities in affluent communities.

One participant is the Cleveland Clinic’s flagship hospital, which reported $1.35 billion in net income last year. The hospital doesn’t admit enough Medicaid and low-income Medicare patients to qualify for low-cost drugs under the program’s original requirements. But a quirk in federal law allowed the hospital to qualify as a “rural referral center,” despite its location near the center of Cleveland.

Despite the benefits, the program hasn’t resulted in new drug discounts for low-income Cleveland Clinic patients, nor has it caused the hospital to increase the financial assistance it offers to those who can’t afford care. (p. A10) The charity care the main hospital writes off represents less than 2% of its patient revenue, according to a Wall Street Journal analysis of hospital Medicare filings.

. . .

The hospital’s $1.35 billion net income figure for 2021, she said, includes investment returns.

Cleveland Clinic’s adoption of the drug-discount program at its main hospital in April 2020 produced about $136 million in savings on drugs that year, the spokeswoman said.

The federal drug-discount program, known as 340B after the statutory provision that created it, requires pharmaceutical companies to sell drugs to participating hospitals at reduced prices. The program has grown rapidly in recent years. It now includes about 2,600 nonprofit and government hospitals, which spent at least $38 billion on discounted drugs last year, according to the Health Resources and Services Administration, the federal agency known as HRSA that oversees the program.

What the hospitals do with their valuable discounts isn’t always clear.

The program doesn’t require participating hospitals to pass on drug discounts to patients, insurers or Medicare. There is no rule limiting how much they can charge for the drugs. They don’t have to report how much they make from such sales, nor do they have to spend any profits to benefit low-income patients.

. . .

The 2010 Affordable Care Act brought a big expansion of 340B, adding new categories including critical access hospitals, which are small, typically rural facilities, and rural referral centers, which are supposed to be rural hospitals that treat a large volume of patients, including many complicated cases.

Under the federal definition of rural referral centers, hospitals that aren’t in rural locations could still qualify if they meet other criteria—minimally, having at least 275 beds. There is no requirement to serve rural patients.

. . .

“We were trying to help rural hospitals,” said Robert Kocher, an Obama White House health adviser involved in crafting the ACA who is now at venture-capital firm Venrock. “It would not be our intention to have a medical center in Cleveland, Boston or Chicago be included.”

For the full story, see:

Anna Wilde Mathews, Paul Overberg, Joseph Walker and Tom McGinty. “Drug Discounts Aimed at Needy Boost Hospitals.” The Wall Street Journal (Wednesday, Dec. 21, 2022): A1 & A10.

(Note: ellipses added.)

(Note: the online version of the story has the date December 20, 2022, and has the title “Many Hospitals Get Big Drug Discounts. That Doesn’t Mean Markdowns for Patients.”)

Extreme Weather Can Bring Enough Water to Recharge California’s Aquifers

(p. A15) After a long, dry summer, winter has brought the gift of water to California, via a series of atmospheric river storms. Unfortunately, as these sprawling rivers in the sky have met developed areas covered with concrete and rivers locked in by levees, they have brought destruction: floods, mudslides, washed-out roads, blackouts, uprooted trees and at least six deaths.

But California doesn’t have to passively suffer through the whiplash of drought and floods. To reduce risk from both, it can return some of its land to water, working with natural systems.

One way to do this is by making use of unique geologic features called paleo valleys. These buried canyons carved into the state’s Central Valley were formed by Ice Age rivers that flowed down the western flank of the Sierra Nevada and were later filled in with coarse sand and gravel from glacial melt.

. . .

There is enough unmanaged surface water from rain and snow statewide to resupply Central Valley aquifers, making more water available to farmers, urban dwellers and the environment. Even with climate change, the state will most likely have enough water for recharge in the future in part because of more extreme weather, according to a 2021 study.

For the full commentary, see:

Erica Gies. “California Should Capture Its Floodwaters.” The New York Times (Monday, January 9, 2023): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Jan. 7, 2023, and has the title “California Could Capture Its Destructive Floodwaters to Fight Drought.”)

The 2021 study mentioned above is:

He, Xiaogang, Benjamin P. Bryant, Tara Moran, Katharine J. Mach, Zhongwang Wei, and David L. Freyberg. “Climate-Informed Hydrologic Modeling and Policy Typology to Guide Managed Aquifer Recharge.” Science Advances 7, no. 17 (April 21, 2021), doi:10.1126/sciadv.abe6025.

“Singapore’s Bill Gates” Thought Innovation Should Not Require Government Permission

(p. A9) In the late 1990s, before Singapore was known as a global center of digital innovation, Sim Wong Hoo had a theory about what was holding his country back.

Mr. Sim, who went on to become the city-state’s first tech billionaire, called it the “No U-Turn Syndrome,” or NUTS. In the U.S., he said, cars could turn around anywhere unless a sign told them not to. But in Singapore, drivers wouldn’t dare if it wasn’t expressly allowed. The “no rule, no do” mentality kept Singaporeans from thinking outside the box, he said.

So he wrote some new rules. Mr. Sim was raised in a poor household by illiterate parents before founding a startup that revolutionized computer audio and inspired a generation of Asian entrepreneurs. Many admirers still call him

. . .

Born in Singapore in 1955, when it was still under British rule, Mr. Sim grew up in a village in an area now called Bukit Panjang with 10 siblings. Their father died when he was young, and his mother struggled to support their large family by selling whatever seasonal fruits grew on the unkempt 1-acre farm she leased for about $15 a year. When not in school, the young Mr. Sim helped her sell eggs at a local market for about 1 cent apiece.

In his 1999 book, “Chaotic Thoughts From the Old Millennium,” Mr. Sim described himself as a weird child who made his own toys and board games because he couldn’t afford to buy them.

For the full obituary, see:

Feliz Solomon. “Singaporean Inspired Asian Tech Innovators.” The Wall Street Journal (Saturday, Jan. 14, 2023): A9.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date January 13, 2023, and has the title “Sim Wong Hoo, Creator of Sound Blaster, Inspired Asian Tech Innovators.”)

Mr. Sim’s book mentioned above is:

Sim, Wong Hoo. Chaotic Thoughts from the Old Millennium. Singapore: Creative O., 1999.

Government Contractor UNOS Is 15 Times More Likely to Lose or Damage Transplant Organs as Private Airlines Are to Lose or Damage Luggage

(p. A24) Where Tonya lives in California, the wait for a kidney from a deceased donor is up to 10 years. Tonya, like many on dialysis to treat kidney failure, knows the odds of her surviving the wait are slim; the median survival time for patients on dialysis is five years.

. . .

Everyday Americans are doing their part, signing up to be organ donors, but the organizations in charge of organ recovery (known as organ procurement organizations, or O.P.O.s) have been plagued with inefficiencies and abuses, and the contractor that runs the national system — the United Network for Organ Sharing (UNOS) — has been failing to oversee them.

The organ procurement system is made up of 56 organizations, each with a monopoly in its jurisdiction. When someone dies and can donate an organ, O.P.O.s are supposed to go to the hospital, talk to the person’s family and manage the process of transporting donated organs to those in need, but all too often they have failed to show up — literally.

. . .

Tonya asked the government to hold these organizations accountable, and naïvely, we thought it would be that simple. Our efforts would surely get Tonya a kidney.

She did everything she could to push for change, everything that our government asks of concerned citizens: She wrote an opinion essay; appeared in a government video; wrote letters to members of the Biden administration, including the Centers for Medicare and Medicaid Services (C.M.S.) administrator Chiquita Brooks-LaSure and the head of the Health Resources and Services Administration, Carole Johnson; worked with members of Congress, including Representative Katie Porter; and even testified before the House Oversight Subcommittee on Economic and Consumer Policy in May 2021.

There she told the committee she would die without the federal government’s urgent action. A year and a half later, on Dec. 30, 2022, Tonya died of complications from kidney failure.

. . .

After the video Tonya and I made, in 2020 the Trump administration finalized a rule bringing accountability to the forefront, and the Biden administration has inherited it. This is a good start: The new rule changes the metrics by which O.P.O.s are evaluated and requires that they face decertification for failure to perform. But the rule would not replace a single failing organ contractor until 2026, which is not acceptable.

. . .

To make matters worse, in the Biden administration’s 2023 budget, the C.M.S. requested flexibility to recertify failing O.P.O.s so they can keep their contracts even after 2026. If we allow failing O.P.O.s to keep operating, then we essentially nullify the reform we’ve worked so hard for and ensure further delays and more deaths.

. . .

When the Senate Finance Committee finally began investigating, it found that UNOS has systematically failed to provide oversight. At the committee hearing, doctors and transplant professionals testified that they have been afraid to criticize UNOS publicly, for fear it will retaliate against their patients. Also at the hearing, Senators Elizabeth Warren, Charles Grassley and Rob Portman called out another mind-boggling fact: From 2014 to 2019, UNOS was 15 times as likely to lose or damage an organ in transit as an airline is a passenger’s luggage.

For the full commentary, see:

Kendall Ciesemier. “She Feared the Organ Donation System Would Kill Her. It Did..” The New York Times (Wednesday, February 1, 2023): A24.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Jan. 28, 2023, and has the title “Tonya Ingram Feared the Organ Donation System Would Kill Her. It Did.”)

Mary Grimaldi Died of Measles a Few Days Before the Government Approved the Vaccine That Would Have Saved Her

(p. A15) Members of my own family have . . . chosen not to vaccinate their children against measles, even as my mother laments that the measles vaccine didn’t arrive in time for Sissy, as Maura was known in our family. She recently told me that she wishes she had found a way to enroll Sissy in the measles-vaccine trial, which involved 50,000 children over several years in the early 1960s.

. . .

Until the vaccine, the only way to gain immunity to measles was to contract the disease. Sissy was exposed as an infant when my brothers caught it, but the case wasn’t severe enough to give her immunity. “She’ll have to get the shot when it’s available,” the family pediatrician, Dr. George Herman, told my mother.

Why did it take so long for that to happen? Culturing the virus from the blood serum of young David Edmondston, and then weakening or “attenuating” it enough for a vaccine, was no easy feat. “The hardest vaccine to make is a live, attenuated vaccine,” said Dr. Offit. He would know: It took him and fellow virologists 26 years to develop a safe and effective vaccine against rotavirus, which can cause potentially fatal diarrhea in infants. “It is all trial and error. Nine years is fast,” Dr. Offit said.

It wasn’t fast enough for Sissy.

. . .

The Kansas City Times ran a short obituary. The paper asked my parents if they wanted to report the cause of death, and my mother said yes, “so that other parents would know to get the vaccine when it was available.”

A few pages away was an article headlined “O.K. on Measles Vaccine; Two Forms Released by Government and Surgeon General Predicts a Sharp Drop in the Disease Next Season.” “This is one of our most significant advances toward decreasing or eliminating one of our most serious childhood diseases,” said U.S. Surgeon General Luther Terry. An editorial in the paper on the vaccine news concluded, “The disease and its sometimes tragic consequences are on the way out with other ancient plagues.”

For the full essay, see:

James V. Grimaldi. “My Family and the Measles Vaccine.” The Wall Street Journals (Saturday, March 25, 2023): A15.

(Note: ellipses added.)

(Note: the online version of the essay has the March 23, 2023, and has the same title as the print version.)

Regulators Are Bad at Monitoring Unhealthy Banks

(p. A26) Silicon Valley Bank’s failure looks a bit like an S.&L. crisis in miniature. Like its 1980s counterparts, S.V.B. grew extremely rapidly, had many assets parked in fixed, long-term bonds, and was done in when inflation caused the Fed to raise interest rates, raising the cost of keeping deposits.

Like the S.&L.s, Silicon Valley Bank was heavily concentrated. It catered to start-ups for whom an S.V.B. account was a matter of status. One tech savant who had recently changed jobs (aren’t they always switching jobs?) told me that in his experience, roughly two thirds of start-ups banked with S.V.B. (the bank claimed that nearly half the country’s venture capital-backed technology and life science companies were customers).

. . .

The regulators clearly failed to monitor S.V.B.’s unhealthy mismatch of assets and liabilities.

. . .

Once you take risk out of a part of a bank’s operations, it is hard to let market principles govern the rest.

. . .

In past bank failures, uninsured depositors did not lose all — 10 to 15 percent was typical. And in this episode, there wasn’t any systemically bad asset à la mortgages in 2008. Given that the risk was contained, and that the Federal Reserve provides liquidity to banks facing runs (and provided emergency liquidity this week), allowing uninsured depositors of banks that fail to suffer a haircut might have been healthier for the system in the long run.

For the full commentary, see:

Roger Lowenstein. “The Bank Rescues Just Changed Capitalism.” The New York Times (Thursday, March 16, 2023): A26.

(Note: ellipses added.)

(Note: the online version of the commentary has the date March 15, 2023, and has the title “The Silicon Valley Bank Rescue Just Changed Capitalism.”)

Tighter Zoning Laws Resulted in More Racial Segregation

(p. A22) Across the New York City suburbs, a thicket of local zoning laws thwarts the building of all but the most expensive single-family homes.

In some parts of Scarsdale, in Westchester County, new homes must be built on lots of at least two acres. In most parts of the village of Muttontown, on Long Island, new homes must be at least 2,000 square feet. The Town of Oyster Bay, also on Long Island, requires that some guest apartments, known as accessory dwelling units, be occupied only by family members or domestic servants.

These zoning laws are among the most restrictive in the country. They severely limit the state’s housing supply, making the entire region less affordable. And they are rooted in Jim Crow.

For much of the 20th century, towns surrounding New York City used a stomach-churning mix of racial covenants and restrictive zoning laws to shut out Black Americans and others considered undesirable from thriving suburbs. The federal government supported this system in myriad ways, including by denying government backing for mortgage loans in Black neighborhoods, a practice known as redlining, which hardened segregation and sharply restricted the ability of Black Americans to secure mortgages and buy homes. After World War II, the government greatly expanded its role in residential segregation by backing large suburban developments across the United States like Levittown, on Long Island, on the condition that they exclude Black buyers.

The Fair Housing Act of 1968 made racial discrimination in housing illegal. But communities were still allowed to enact and maintain zoning laws that had the same effect. By this time, prices had risen, and the generous postwar federal subsidies that made it possible for white Americans to buy suburban homes — but which had largely been denied to Black Americans — were no longer available. Even if a suburb might no longer be allowed to overtly ban Black families, limiting development to large and expensive homes could achieve a similar goal.

As a result, the tighter zoning laws became associated nationally with increased racial segregation, as well as a diminished housing supply.

For the full commentary, see:

Mara Gay. “To Cut New York Housing Costs, Ease Suburbs’ Zoning Laws.” The New York Times (Thursday, Feb. 23, 2023): A22.

(Note: the online version of the commentary has the date February 21, 2023, and has the title “The Era of Shutting Others Out of New York’s Suburbs Is Ending.”)

Allow Entrepreneurial Competition in Medicine by Ending Obamacare’s Ban on Physician-Owned Hospitals

(p. A17) A tiny paragraph in the enormous Affordable Care Act prohibits physicians from building or owning hospitals. Any existing physician-owned hospital built before 2010 is prohibited from growing beyond the size it was when the bill passed. This law limits competition, defies common sense and is likely contributing to higher prices for Medicare and reduced access to treatment for millions of Americans.

. . .

. . . recent research affirms the power of American entrepreneurship to lower costs and improve quality. Doctors, whether at the bedside or the forefront of scientific innovation, are well-suited to reimagine healthcare operations, lower costs and improve the quality of care.

Specialty physician-owned hospitals focused on cardiology and cardiac surgery were found to deliver higher-quality care than nonprofit hospitals, with lower rates of hospital readmission or mortality for high-risk surgery. Physician-owned specialty hospitals for orthopedic procedures, such as hip and knee replacements, offered lower costs and higher quality than nonprofit counterparts.

. . .

Healthy competition drives job creation, innovation and long-term economic growth. The federal government doesn’t prohibit plumbers from owning plumbing companies, radio hosts from owning radio stations or farmers from owning farmers markets. It’s time to reopen the free market in healthcare and let the power of competition do its work.

For the full commentary, see:

James Lankford and Brian J. Miller. “End ObamaCare’s Ban on Physician-Owned Hospitals.” The Wall Street Journal (Tuesday, Feb. 21, 2023): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date February 20, 2023, and has the same title as the print version.)

State Bureaucracies Did Not Nimbly and Effectively Spend Massive Pandemic Crisis Funds

(p. A1) . . . when the Biden administration gave Mississippi $18.4 million in mid-2021 to hire public health workers — part of $2 billion in grants to bolster the Covid work force at state and local health agencies nationwide — it appeared that help had, at long last, arrived.

But as of January [2023], 18 months later, Mississippi had spent just $3.6 (p. A14) million of its grant — less than a fifth. Its attempts to hire epidemiologists, nurses and other soldiers in the war against Covid had largely fallen flat. The state has lost one in 224 residents to Covid-19, one of the nation’s worst death rates, including 122 people in tiny Scott County alone.

Mississippi’s woes are an acute example of a larger public health failure that is reprised nearly every time a major health threat grabs headlines. The problem, experts say, is that Congress starves state and local health agencies of cash for even basic needs in quiet times. Then, when a crisis hits, it floods them with millions or even billions of dollars earmarked to battle the disease of the moment. And the sluggish machinery of Capitol Hill often ensures that most of the aid arrives only after the worst of the crisis has passed.

The $2 billion in Covid hiring grants is the latest example. Nationwide, states and localities had spent only $371 million of the money by December, or about 19 percent, according to the Centers for Disease Control and Prevention, the conduit for the funds.

. . .

The record is replete with other such fumbles.

Six months after the World Health Organization declared the H1N1 influenza pandemic over in mid-2010, states and localities had used just a third of the $1.4 billion in federal funds they had received to combat it. The outbreaks of the Ebola virus in 2014 and the Zika virus in 2016 also led to funding windfalls, but health experts say most of the money arrived late.

For the full story, see:

Sharon LaFraniere. “In Mississippi, Covid Millions Left Unspent.” The New York Times (Monday, Feb. 13, 2023): A1 & A14.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the same date as the print version, and has the title “Why Mississippi, a Covid Hot Spot, Left Millions in Pandemic Aid Unspent.”)

Progressives Want Us to “Reduce Consumption“ Because “They Believe Humans Are a Menace to the Earth”

(p. A15) Replacing all gasoline-powered cars with electric vehicles won’t be enough to prevent the world from overheating. So people will have to give up their cars. That’s the alarming conclusion of a new report from the University of California, Davis and “a network of academics and policy experts” called the Climate and Community Project.

The report offers an honest look at the vast personal, environmental and economic sacrifices needed to meet the left’s net-zero climate goals. Progressives’ dirty little secret is that everyone will have to make do with much less—fewer cars, smaller houses and yards, and a significantly lower standard of living.

. . .

The report concludes that the auto sector’s “current dominant strategy,” which involves replacing gasoline-powered vehicles with EVs without decreasing car ownership and use, “is likely incompatible” with climate activists’ goal to keep the planet from warming by more than 1.5 degrees Celsius compared with preindustrial times. Instead, the report recommends government policies that promote walking, cycling and mass transit.

. . .

Progressives’ ultimate goal is to reduce consumption—and living standards—because they believe humans are a menace to the Earth.

For the full commentary, see:

Allysia Finley. “The Climate Crusaders Are Coming for Electric Cars Too.” The Wall Street Journal (Friday, Feb. 13, 2023): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date February 12, 2023, and has the same title as the print version.)

The U.C. Davis report mentioned above that urges our return to the dark ages is:

Riofrancos, Thea, Alissas Kendall, Matthew Haugen, Batul Hassan, and Xan Lillehei. “Achieving Zero Emissions with More Mobility and Less Mining.” U.C. Davis: The Climate and Community Project, Jan. 2023.

“The 1619 Project” Shows How Government Policies “Discriminated Against African-Americans”

(p. A15) Hulu’s series “The 1619 Project” blames economic inequality between blacks and whites on “racial capitalism.” But almost every example presented is the result of government policies that, in purpose or effect, discriminated against African-Americans. “The 1619 Project” makes an unintentional case for capitalism.

The series gives many examples of government interventions that undercut free markets and property rights. Eminent domain, racial red lining of mortgages, and government support and enforcement of union monopolies figure prominently.

The final episode opens by telling how the federal government forcibly evicted black residents of Harris Neck, Ga., during World War II to build a military base. The Army gave residents three weeks to relocate before the bulldozers moved in, paying below-market rates through eminent domain. After the war, the government refused to let the former residents return. Violation of property rights is the opposite of capitalism.

For the full commentary, see:

David R. Henderson and Phillip W. Magness. “‘The 1619 Project’ Vindicates Capitalism.” The Wall Street Journal (Tuesday, Feb. 21, 2023): A15.

(Note: the online version of the commentary has the date February 20, 2023, and has the title “‘The 1619 Project’ on Hulu Vindicates Capitalism.”)

The commentary quoted above is related to Magness’s book:

Magness, Phillip W. The 1619 Project: A Critique. Great Barrington, Massachusetts: American Institute for Economic Research, 2020.