By:

Max J. Skidmore

The election is over.  Joe Biden won.  But a serious issue related to the funding of Social Security is hanging over the Biden Administration and the next congress:  will the funds deferred from the payroll tax by President Trump be restored to the Social Security Trust Fund?

Background

The financing for America’s Social Security system comes from a payroll tax, FICA (the Federal Insurance Contributions Act) levied on wages up to $142,800 (for 2021; the amount changes yearly). Wages above that amount do not count for purposes of the system.

The tax is 6.2% deducted from the employee’s wages. The employer matches that amount, thus providing an additional 6.2%.

Those amounts go into trust funds. Benefit payments come out of those trust funds, as do the very small administrative costs. Those costs are extremely low, less than 1% of the amount collected, making Social Security the most efficient such system in the world. 

The rest of the amounts in the trust funds (that is, the amounts left over after paying benefits and paying administrative costs) are invested in government bonds. Those bonds are completely safe, and regularly pay interest back into the trust funds.

Under the law, all benefits must come from the trust funds. So long as FICA taxes keep coming into those funds, there will always be income to pay for some level of benefits. 

Under the Obama administration, during the financial crisis that President Obama inherited, FICA taxes were temporarily suspended in order to make more money available to workers. This did not affect the trust funds, however, because the government replaced the amounts that the trust funds would have received from FICA.

President Trump’s Executive Action Regarding Payroll Taxes

Last August, President Trump issued an executive order delaying the collection of FICA taxes for the rest of the year. This order did not reduce the taxes owed; it only delayed their collection. 

Employers and employees will have to pay the accumulated taxes after the first of the year, and therefore many employers are continuing to collect FICA taxes, and are holding them to provide them to the government when they come due. This prevents them, and their workers, from having to come up with large payments to catch up on the amounts owed. 

The reason for this rather confusing policy has not been made clear. It may reflect a misunderstanding by Mr. Trump regarding how Social Security’s financing operates. 

On the other hand, he may have been making a move toward eliminating the payroll tax, and thus eliminating Social Security. Mr. Trump suggested that this may be his preference, but this cannot happen without a change in the law. Such a change would only be possible if Mr. Trump is re-elected, and if Republicans keep control of the Senate, and gain control of the House.

If the law were to be changed, and the payroll tax eliminated, it would be only a few months before the trust funds would be completely exhausted, and Social Security would be eliminated. Mr. Trump has made no secret of his desire to kill the system, and many Republicans – probably most of those in Congress – agree. Since Republicans did not have the courage to oppose Donald Trump, even those who do not agree with Trump would almost assuredly vote to do whatever it was he proposed.

Democrats all desire to retain the system, and even to expand benefits. Thus, the November 4th election was crucial to Social Security’s future. 

For the system to continue, it was essential to vote Trump out of office, to retain Democrats in control of the House, and to elect more Democratic senators, so that Democrats will control the Senate as well as the House. Now we have some uncertainty due to the two senate races in Georgia.  Those races could be critical for restoration of deferred taxes to the Social Security Trust Fund.

It is impossible to overstate the importance of massive Democratic victories at all levels, if Social Security, Medicare, and many other essential programs are to continue, and if other much-needed programs are to be enacted.  We had some important victories, but not a massive blue wave that we were hoping for.  Now, saving the Social Security System will be a matter of activism and fighting hard for a system so many people depend on in retirement and in other ways.  It will be important to learn your senator’s and congressperson’s phone number and make yourself know to them.

By

Dave Kingsley

Definition of Socialism and its Application to Medicare

Socialism is defined simply as “an economic system in which government owns the means of production.” The Medicare system produces no products and provides no services. The system does not manufacture pharmaceuticals or medical devices, it owns no hospitals or long term care facilities. It employees no nurses or physicians or other health care professionals for the purpose of providing services in a medical care facility. It is a program for underwriting health care risks for individuals who pay into it.

There is nothing socialistic about government management of a pool of funds provided by current and future beneficiaries for the purpose of paying for their medical care. In 2019, the program spent nearly $800 billion. In the current political and economic context, approximately 60% of all funds expended by Medicare is derived from the people receiving care. The other 40% is transferred to the program from the U.S. Treasury. This transfer would be unnecessary if a corrupt political process were not allowing excessive charges for services and products.

For instance, the Medicare Modernization Act in 2003 created a prescription drug benefit (Part D) and included a provision that prohibited negotiation of pharmaceutical prices by the Center for Medicare and Medicaid Services. Through enforcement of proper management of costs by providers, and reasonable charges for costs, the 40% transferred by the Treasury could be eliminated, thereby making the program fully funded by the beneficiaries.

By Dave Kingsley

Private Equity is One Model in an Array of Business Models Comprising the Long-term Care Provider Subsystem.

It is practically de rigueur these days to focus on private equity ownership of “nursing home chains” as the leading culprit in lowering the quality long-term care.  I am noticing this tendency on the part of progressive politicians, researchers, advocates, and activists.  No doubt, major private equity buyouts of long-term care chains have proven lucrative to PE firms and their investors while they have been disastrous for patients, families, employees, taxpayers and communities.

    Nevertheless, complex, dynamic social systems cannot be reduced to a few variables.  In science that is known as reductionism – a fallacy.  Far too many factors are overlooked when systems are reduced to a few variables or a single subsystem.  The system of long-term care facilities is complex and dynamic with a large number of interacting and reinforcing subsystems. 

    The corporate subsystem itself is comprised of a variety of ownership structures.  In addition to PE firms, long-term care corporations are organized as publicly listed holding companies, Real Estate Investment Trusts, family trusts, family offices, and limited liability corporations.  Most of the firms operating long-term care facilities are closely held and the public has no access to their financial statements.

    Approximately 25% of long-term care corporations are 501(c)(3) nonprofit entities.  A small number of nonprofit run facilities are high quality facilities.  Although the nonprofits have, on average, slightly higher scores on measures of quality, e.g., higher RN hours, lower number of complaints, and abuse and neglect cases.  However, many nonprofit operations are substandard.  For instance, the Evangelical Lutheran Good Samaritan chain runs on of the largest chains in the United States and has a poor track record and lower than average scores on measures of quality.

Major Subsystems of the Long-term Care System

    In addition to corporations reimbursed for providing care, federal and state legislatures, government agencies, trade associations, and advocacy organizations are major subsystems of the long-term care system. My research and observations have led me to hypothesize that these systems interact in a manner that reinforces the fundamental model of care that has been standard since inception of publicly funded long-term care, which is “the total institution.”

    Evidence for this hypothesis will be presented over time on this blog.  Also, I believe that too much focus on the PE subsystem distracts from the impact of macroeconomic trends since the 1970s. Economic and managerial philosophy has shifted finance from an auxiliary role in corporate governance to the dominant role.  The purpose of corporations has become finance rather than production of goods and services.  The long-term care system is part of the larger economic system which has become increasing characterized by management that values investors and treats stakeholders as resources to be exploited.

    Furthermore, the legal structures of trusts and corporations are designed for tax avoidance, debt, and asset protection and enhancement.  High net worth individuals can utilize these structures to pass more of their wealth to heirs and keep it out of the grasp of the IRS.  Not only does this system allow wealthy individuals and families to extract middle- and low-income assets for their own benefit, it allows them to avoid their obligations to the society that enriches them.

By Dave Kingsley

It is Overwhelmingly Clear that Key “Nursing Home” Institutions Should Have Known What Was Coming.

CNN is reporting 274,121 COVID deaths in the U.S. as I write this post. It is estimated that 40% of these victims are long-term care patients and employees; hence, approximately 109,648 patients and staff in long-term care facilities have died from COVID throughout the pandemic.  Had  responsible parties in the system been prepared and acted responsibly, these deaths could have been prevented.

Decent medical care includes identification of possible and probable infectious diseases.  But that has been pervasively lacking in the profit and nonprofit long-term care system.  That is despicable and inexcusable.  If corporations extracting wealth from long-term care didn’t know a disease was coming that could kill a high proportion of people in their care, they should have known. “In the United States, in 2013, the Bill & Melinda Gates Foundation conducted a comprehensive review of worldwide data and predicted that a pandemic would occur during the next decade, most likely due to coronavirus.”[1]

The word was out in December of 2019 that a novel virus was spreading in China and causing some drastic government action by the Chinese government.  U.S. intelligence services were well aware of the spreading virus by late 2019.  By January of 2020, anyone reading major newspapers should have been aware that a global pandemic was probable.  Asian countries were aware of the spread of a coronavirus and taking extraordinary action to shut it down – which they did.

What did the U.S. long-term care industry do while China, Singapore, Hong Kong, Taiwan, and South Korea were taking action to block the spread of COVID?  Corporations extracting an extraordinary amount of cash from facilities for their investors continued business as usual. They did not have sufficient personal protective equipment stocked when the pandemic hit; they had no protocol in place for protecting patients and staff; they failed to put a testing program in place; and, they had no plan for acquiring separate buildings for quarantining infected patients and staff.  This lack of preparation for preventing an infectious disease under any circumstances is inexcusable, but in the face of a deadly, rapidly spreading pandemic, it is an atrocity.

Based on the architecture of long-term care facilities and the fragility of patients forced to live in close proximity, a tragedy was waiting to happen. Furthermore, staff continued to pass between the community and facilities without testing, PPE, and a clear understanding of the dangers involved with the disease.  Long-term care corporations set their patients up as “sitting ducks” in the spread of a highly contagious and novel virus for which no vaccine was available.  This deadly medical malpractice occurred with the acquiescence of the CMS, state regulatory agencies, and local health departments. 

    It was gross negligence for responsible parties not to recognize as early as December 2019 that COVID-19 would be a threat to the million plus patients in U.S. long term care facilities and take action to protect them.  All responsible parties, including long-term care providers and government agencies at the federal, state, and municipal level should be investigated and held accountable by a commission independent of those corporations and agencies.

[1] Solano, J. et al. (2020), “Public Health Strategies Contain and Mitigate COVID-19:  A Tale of Two Democracies.” The American Journal of Medicine, Vol 133, No 12, 1366. Renowned infectious disease expert Laurie Garrett and most other scientists involved with novel diseases – especially the coronavirus family of virus – were warning about the likelihood of the emergence of a virus like COVID-19.  See Laurie Garrett and The Coming Plague at https://www.lauriegarrett.com/the-coming-plague.

By: Dave Kingsley

Family Trusts and Other Legal Entities Are Major Investors in Skilled Nursing Facilities

There are many ways that vast amounts of wealth are being processed through nursing home financial plumbing for the purpose of shielding it from the IRS and adding value to accumulated capital.  Private equity has become the focus of discussion regarding nursing home ownership and neglect of patient care in in this process. Indeed, the notorious Carlyle Group takeover and bankrupting of HCR ManorCare will have a permanent place in nursing home lore.

    However, exclusive attention on private equity as the cause of shareholder over stakeholder management, distorts reality, which is this:   nursing home ownership is structured for shielding wealth of high net worth individuals (HINWIs – pronounced “hin wees) from taxes while adding value to their assets. Many financial structures are in place for making nursing home ownership a process piping system for avoiding taxes and creating more private wealth with public funds.

    I will be blogging about many forms of entities owning a share of the nursing home business in the United States. This post is about the “family trust.” In an analysis I have undertaken of owners listed by CMS for 344 long-term care facilities in Kansas, I found that 15% of the private, forprofit facilities had a family trust listed in the ownership hierarchy – several in some instances.  In researching NH ownership in various parts of the U.S., I have noticed that family trusts appear frequently as owners (usually indirect owners). 

    These legal entities allow wealthy individuals and families to shield their wealth from taxes and to pass assets tax free to heirs.  They also provide protection from creditors. So, taxpayers are denied their fair share of revenue from businesses they fund while wealth becomes increasingly maldistributed and concentrated in a tiny fraction of the U.S. population.

    As Nicholas Shaxson pointed in the The Finance Curse, transformation to a financialized economy received a boost in the 1970s through state and federal legislation. Legislatures created financial mechanisms such as the LLC for the purpose of tax avoidance, limited liability, and financial secrecy. Indeed, the state of Nevada has been dubbed “The Cayman Islands” of the United States.  It is not uncommon to find many LLCs in the network of operators, shell companies, and real estate incorporated in Nevada (or Delaware).

    In the 1990s, the state of South Dakota became the place to set up a family trust.  In a move to attract business, the state legislature passed laws that provide a haven for super-rich families to hide and protect wealth in a variety of trusts, e.g. “irrevocable family trusts.” However, the wealth sheltered in these trusts will be invested for obvious reasons (e.g., growing assets faster than inflation). So, the nursing home ownership networks frequently include one or more family trusts.

    Although trusts are a major type of investor in skilled nursing home facilities, there are others such as “the family office” (a financial manager for immensely wealthy individuals and their heirs), the Real Estate Investment Trust, and LLCs set up by wealthy individuals for purposes of tax avoidance, opaqueness, and, of course, earning a return on investment. This blog will be shining a light on the financial piping system set up to circulate wealth for tax avoidance and return on investment while frontline care is denied resources for high quality of care.

By Dave Kingsley

Dark Money Behind Court Nominations & Amicus Briefs Are Aimed at Deregulation

Senator Sheldon Whitehouse gave a brilliant presentation at the Senate hearing for Supreme Court nominee Amy Barrett that is must viewing for advocates concerned about regulation of the nursing home industry and protection of programs for the elderly. I’m uploading the video of his seminar on the flow of dark money into nominations and amicus briefs.

No one knows for certain where all the money flowing into nonprofits presenting amici briefs is originating, but there is considerable evidence that the Koch organization, and other wealthy pro-corporate organizations are providing much of it. Why? The majority on the court has a theocratic, radical free market and pro-corporation ideology. I would define them as a theocratic corporatocracy. They derogate the 1st Amendment separation of church and state while catering to conservative business organizations such as the Chamber of Commerce and a large number of other such organizations seeking deregulation.

The nursing home lobby fits comfortably into this mélange of business interests seeking restraints on the government’s power to protect customers, patients, communities, and the environment from profiteering predators – the way I would describe most nursing home corporations. Make no mistake about it, liability of operators will be greatly limited when employees and patients suffer due to their neglect. Cases before a theocratic-corporacratic 6 to 3 majority which involve damage to stakeholders will more often than not be decided in favor of corporations.

If you carefully listen to and watch this video, you will hear and see Senator Whitehouse explain that out of eighty cases involving corporate interests, eighty were decided by a 5 to 4 majority in favor corporations rather than in the best interests of citizens. When Barrett joins the court, it will become a 6 to 3 supermajority.

What We Can Expect: Looking Back, The Pattern is Clear

As stated above, the eighty cases analyzed by Senator Whitehouse were all decided in favor of the corporate-religious network by five to four. He has dubbed the five member majority as the “Roberts Five.” These cases fall within four categories: 1. Unlimited dark money in politics, 2. Denigration of the civil jury, which has an obligation to apply the law and not cater to monied interests, 3. Weakening of regulatory agencies, and 4. Voting rights.

No doubt, looking forward, Barrett will be expected to decide in favor of overturning Roe v. Wade, National Federation of Independent Business v. Sibelius ( ACA) and Obergefell v. Hodges (gay marriage). However, looking back at the pattern of the Roberts Five decisions, all four categories of cases impinge on the ability of advocates and activists to protect patients. Regulatory actions and laws designed to protect vulnerable elderly and disabled patients are likely to be found unconstitutional by the court as it has been reconstituted during the Trump administration. Suppression of voting rights will make it more difficult to elect state legislatures sympathetic to the cause of patients rather than investors.

Paul Ormond Managed HCR-ManorCare Into Bankruptcy & Walked Away With $116.7 Million

These days, one of the major problems facing retirees is adequate savings and retirement funds for survival throughout their later years of life. Not a problem for former HCR-ManorCare CEO Paul Ormond. After he managed the third largest nursing home chain into bankruptcy, he was awarded with an astounding golden parachute – ostensibly for retirement benefits.

According to Skilled Nursing News Mr. Ormond, who left ManorCare in September 2017 was, “…owed $116.7 million under the prepackaged bankruptcy plan by which Quality Care Properties, Inc. (NYSE: QCP) will take over the Toledo, Ohio-based skilled nursing provider.” (https://skillednursingnews.com/2018/03/manorcares-former-ceo-owed-millions-bankruptcy/.) 

The Carlyle Group is one of the biggest and most predatory private equity firms on the planet. It engineered a takeover of HCR-ManorCare in 2007 and the looting began. Property was sold off and leased back by operations. Like all PE takeovers, most of the deal was leveraged with debt loaded on the victim company, i.e, HCR ManorCare.

The CG – HCR-ManorCare saga is a story yet to be fully explicated. It is a project on which we are currently working. It is important that the damage done to skilled nursing by financiers be compiled systematically, organized, and made available to the public.

Workers’ Doing The Backbreaking Work Have No Retirement

One salient feature of American free enterprise after the Reagan Revolution was the demise of company provided defined benefits pension programs, i.e. after a set number of years of employment, employees were vested and could count on an annuity from retirement until death. As the economic paradigm shifted toward a radical free market form of capitalism (I use the term capitalism quite loosely here), the responsibility for funding retirement fell on the shoulders of employees through defined contribution programs such as the Roth IRA and 401(k).

The frontline nursing home workers without whose hard work economic rewards for the financiers at the top of the ownership hierarchy would not be possible generally have no retirement benefits. The shift to defined contributions was an excuse for corporations to end defined benefits programs. Consequently, affluent Americans have most of the defined contribution accounts with sufficient funds for a satisfying retirement.

As Monique Morrissey of the Economic Policy Institute stated in her comprehensive report, “The State of American Retirement: How 401(k)s have failed most American workers:” “For many groups—lower-income, black, Hispanic, non-college-educated, and unmarried Americans—the typical working-age family or individual has no savings at all in retirement accounts, and for those that do have savings, the median balances in retirement accounts are very low” (https://www.epi.org/publication/retirement-in-america/).

DID YOU KNOW?

From 1997 to 2005, Federal Reserve Chairman Jerome Powell was a partner at The Carlyle Group, where he founded and led the Industrial Group within the Carlyle U.S. Buyout Fund. From 2005 until he was appointed Chair in 2017, Chairman Powell was involved in finance and service on Bipartisan Policy Committee and the Federal Reserve Board.

    The nursing home system is predatory. It is designed for optimum extraction and exploitation without reinvestment for innovation and improvement in the quality of care.  Although federal and state regulators promote a veneer of protection for patients and the public, their primary mission is maintenance of government support for massive real estate and financial services industries.

    Here are some recent examples of how the system of profit and nonprofit corporations, elected official and regulators is designed to protect providers at the expense of patients, the public, and communities in which they operate:

The power of money in politics

    The New York Times reported on August 16, 2020[1] that large nursing home chains are hiring high powered lobbyists to scrounge around Washington and push for favors such as tax breaks, immunity, and cash infusions through COVID relief bills.  Genesis, the biggest operator of nursing homes is on the brink of bankruptcy due to mismanagement and sees the COVID crisis as a path to rescue – it has hired two former top White House aids to lobby on its behalf. 

    Life Care Centers, the third largest owner and operator of skilled nursing facilities has hired former top-level congressional staffers to lobby on its behalf.  This company – owned solely by billionaire Forrest Preston – has a record of not just poor care but horrible care.[2]

    Aside from nursing homes corporations hiring their own lobbyists, they are represented by two powerful trade associations: the American Hospital Association and the American Health Care Association. OpenSecrets.org indicates that the AHA disburses about $100 million per year for political campaigns, lobbying, and maintaining a lobbying army in Washington and the 50 states.[3]  These appear to be a productive expenditure.  According to the NYT article:

The industry has received about $7.6 billion in federal grants through the federal economic stimulus package, according to the American Health Care Association, an industry group, and will soon get another $5 billion. Nursing homes have also received an estimated $11 billion more in government loans and advance Medicare payments, according to an analysis of federal data by Good Jobs First, a progressive research group. Executives at Genesis, which has reported 1,500 deaths at its homes nationwide, told investors last week that the company had received nearly $190 million in federal grants and was looking for more.

The Industry is well protected, but patients and employees are neglected by regulators

    Regulators, whether they be CMS, state agencies such as the Kansas Department of Aging & Disability Services, or local health departments have circled their wagons around the industry and provide it with a veil of secrecy.  I began calling agencies and checking on websites for information about cases of COVID and deaths. 

    Nothing on websites. Using the ruse of finding a nursing home for a friend, I inquired about information regarding COVID cases and deaths in the facilities in the area.  Generally, I was referred to other agencies such as – believe it or not – an Area Agency on Agency, which has nothing to do with COVID or regulating nursing homes.

    Eventually, I was directed to public health departments such as the Kansas City, Missouri health department.  Amazingly, one public health director told me he did have that information but wouldn’t share it with the public.  One epidemiologist told me that her agency had the information but wouldn’t give me the phone number of the person I would need to talk to because that person was just too busy to talk to me.

    Seventy or one hundred thousand (who knows?) nursing home patients and workers who have died from COVID is an unnecessary, preventable tragedy of major proportions.  But due to deregulation and capture of government agencies and their employees, the tragedy continues.  The Wall Street Journal reported that 26 states are not bothering to even test inspectors entering skilled nursing facilities.[4]

In the final analysis:  A protective shield and largess for the industry.

    Government agencies and legislatures are enmeshed with the skilled nursing business in exploitation of private pay patients, workers, and taxpayers. Behind a veneer of state and federal regulatory activity is a mutually protective relationship between government and providers.

    The claim of a competitive market in which competition will improve service is mythical.  Prices are controlled – advantageously for the industry – through reimbursement rates while wages are allowed to float in an imaginary “labor market.” Huge amounts of largesse is funneled to the industry through tax expenditures, price controls, supplemental payments, and bailouts.

[1] https://www.nytimes.com/2020/08/16/business/nursing-home-safety-trump.html?searchResultPosition=1

[2] Having checked Nursing Home Compare ratings for Life Care Centers, I was struck by its extraordinary number of low ratings in Kansas and Missouri.  Also, I have noticed that this company appears frequently on the CMS “special focus facilities” list.  Its Wichita facility has been on the SFF list throughout the pandemic.  This means that the facility is so poorly operated that CMS won’t even rate it at the lowest level of 1.  Preston was caught because of whistleblower employees for overbilling Medicare for rehabilitation services.  He settled by returning $140 million to Medicare.  Who knows how much he got away with?

[3] https://www.opensecrets.org/orgs/summary?id=D000000116

[4] Anna Wilde Mathews, “Many Nursing-Home Inspectors Aren’t Tested,” Wall Street Journal, Saturday/Sunday, August 15-16, 2020, p. A3.

    PREDATORY ECONOMICS 101:  SUPPLEMENTS & NURSING HOME REFERRAL SERVICES

    Nursing home referral scam A Place for Mom is the topic of this second post in a series with the theme:  Predatory Economics (the other one calls out purveyors of the snake oil Prevagen, see last post August 11, 2020).  In this series we will be calling out businesses preying on the public – especially the elderly.  As a plutocracy has become more entrenched in the United States, predatory marketing and manipulation have become increasingly open and shameless. 

    Among other for-profit corporations that have been integrated into the assisted living and nursing home system, referral services now exist to guide prospective tenants and patients to assisted living and skilled nursing facilities.  We do not really need these services, the Center for Medicaid & Medicare Services rates nursing homes based on regular state inspections.[1]

    A Place for Mom, is the biggest and best known of these so-called services.  No doubt, many readers of this post remember Joan Lunden’s soothing assurances about how this service intends to be a guide to the best place for mom (her conscience must have bothered her, she’s gone).  The truth is that mom will be referred to whichever facility is willing to pay for the referral.

   It is important to note this:  A Place for Mom is owned mostly by predatory, private equity firms Warburg-Pincus.  There is no evidence that I’ve ever seen which suggests that this outfit is in the nursing home business for any other reason than to extract value for investors at the expense of care.

  A Place for Mom advertises itself as a “free service,” but the ads don’t tell the whole story. Indeed, mawkish, maudlin, phony-baloney television ads featuring Ms. Lunden and others would lead viewers to believe that the company is not even a company but rather just a free service that does nice things for moms (and dads or anyone else supposedly).

    Because a Place for Mom is a for-profit company, its revenue must come from somewhere.  In fact, nursing home and assisted living operations using the service pay a fee for referrals equivalent to one month of their monthly charge. This information is not present on the company’s website homepage. [2] However, it raises profound ethical issues that must be explored in some depth.

    Empirical evidence suggests that a Place for Mom revenue is driven more by the facilities willing to pay than by an objective evaluation of quality of care in those facilities.  For instance, exactly which skilled nursing facilities with which the company has a referral agreement in the Kansas City area is difficult to discern from its website.[3]  However, I did find Indian Creek Health Center of Overland Park listed as a Place for Mom’s referral. The CMS website on which the five-star rating for each facility can be found indicates a 1 – the lowest rating – for Indian Creek. 

  I called the company’s 1-800 number to see if they would disclose which facilities were customers. However, the salesperson was brand new and knew nothing about the nursing homes in the area. I could sense that her job was to capture me as a customer.  It was clear that if I didn’t tell them exactly for whom I wanted to find a facility I would not receive any information.

    These services exemplify the irrational nature of deregulated government funded systems. Neoliberals, conservative Democrats and Republicans, and libertarians promote the mistaken notion that government is inept and private businesses can provide services much more efficiently and effectively.  Contrary to the belief in the advantages of the free market over government in health care these privatized services tend to be opaque, predatory, and manipulate unsuspecting citizens into care that is far more costly than if it were provided by the government.

    It is important to consider the ethical concerns raised by operations like a Place for Mom:

• Individuals are lured into these services under the guise that quality of care is the main consideration in guiding customers to assisted living and nursing home facilities.
  
  
• Funds that could be dedicated to care are siphoned off into an unnecessary for-profit entity. 
  
  
• Evaluation of the service by social scientists is not possible due to a veil of secrecy.

[1] If you want to find out about a nursing home, go to this site and enter the city of the nursing home you are interested in and the name of the nursing home: https://www.medicare.gov/nursinghomecompare/search.html?  The facility to which A Place for Mom refers your mother/dad/friend/child/relative will pay for that referral.  This is money that comes out of care.  The people in the company’s boiler room operation will not have near as much information about the place as what you will find on the CMS website.

[2] https://aplaceformom.com

[3] https://www.aplaceformom.com/nursing-homes/kansas/kansas-city

EXPOSING SHAMS, SCAMS, AND PREDATORS

    This is the first in a series of blog posts with the theme:  Predatory Economics.  In this series we will be calling out businesses preying on the public – especially the elderly.  As a plutocracy has grown more powerful in the United States, predatory marketing and manipulation have become increasingly open and shameless. 

The Federal Trade Commission (FTC) and Food & Drug Administration (FDA) increasingly bend to the will of industry.  Because of saturation advertising on television, many people are suckered into believing that medical shams and phony products are legitimate.  We intend to expose them.  But we also believe that many aspects of Medicare, and Medicaid have been rigged to the advantage of providers and disadvantage of beneficiaries. So, those need to be exposed also.

    In the first posts, fraudulent sales pitches to the elderly and their families will be highlighted – “called out” if you will for these two scams:  (1) “Prevagen,” a snake oil which is sold as product for improving memory, and (2) “A Place for Mom,” a cubicle sales program (boiler room operation) for directing people to nursing homes by making victims think the company really cares about the quality of care they will receive.

    WE ARE NOT ANTI-CAPITALISTS.  We believe in a real, well-functioning capitalistic system in which both buyers and sellers have accurate and complete information.  However, we also believe that government must regulate business in the interest of the public good and provide the resources to people for full participation in a democratic society.

PREVAGEN, A PRODUCT FOR SAVING YOUR MEMORY. YOU MAY HAVE SEEN THE ADS.

    A supplement with the brand name “Prevagen” is sold nationwide and is marketed through a massive television advertising campaign. The claim is that this supplement will improve memory.  No evidence has ever been presented that it will do that – none, nada, zip, zero.  However, plenty of data exists that it will do nothing for brain health.[1]

    You might ask, “Why does the Federal Trade Commission or the Food & Drug Administration allow the purveyors making huge amounts from selling this phony, baloney product continue to blanket TV programming with false claims?” Although these agencies are unduly differential to industry (in my view), in the case of the Prevagen, they have attempted to stop false ads.  Both agencies have been attempting through litigation to end the fraud perpetrated by the manufacturers of the product but have been hung up through appeals.[2]

    Ads Preying on The Elderly

    You might have seen the ads.  An elderly lady is pondering over products at the pharmacy that could help her memory.  A kind pharmacist walks up and tells her that Prevagen is the best. Or you see 60+ people telling the viewing audience how much it has done for their minds.  One man even proclaims that all his friends say, “man you have a memory like an elephant.”   The content of the ads is clearly directed toward the elderly and preys on fears of memory loss – even dementia – during the later years of life.

Quackery Is Nothing New

    Medical quackery including worthless medicinals and the sales of snake oil have been part of U.S. history for centuries.  Prevagen is the latest iteration of a pill that will cost you a pretty penny but do absolutely nothing for you – unless you consider a placebo effect as doing something for you (much like Lydia E. Pinkham’s Little Pink Pills of yore).  The makers of this memory pill will charge you $70 on Amazon per bottle of 30 pills for which they have provided no scientific evidence that their curative will effective (check it out yourself on Amazon).

    What is in this magic pill?  The manufacturers are giving you ground up jelly fish. Robert H. Shmerling, MD Senior Faculty Editor, Harvard Health Publishing, had the following to say about Prevagen:

    “The bottle promises it “improves memory” and “supports healthy brain function, sharper mind, clearer thinking.” Never mind that the main ingredient in jellyfish (apoaequorin) has no known role in human memory, or that many experts believe supplements like this would most likely be digested in the stomach and never wind up anywhere near the brain.”[3]

    I asked the head pharmacist at the CVS pharmacy a few blocks from my home if her store sold Prevagen.  She said yes.  I asked her why they would sell a product that is obviously fraudulent.  She said that she didn’t have any choice in the matter, but stated that it was kept behind the counter because people were stealing it. “Why,” I asked. This pharmacist didn’t seem to know and didn’t seem to care about why people were stealing it. When you think about it, many people who are desperate about perceived loss of memory (or perhaps real loss of memory), but can’t afford the $70 bottle of 30 pills.

What Should We As Citizens Do?

    Elderly Americans remain deceived by the ubiquitous ads and waste of money on a memory pill that simply doesn’t work.  Leading retail outlets such as Amazon, CVS, Walgreen’s, and others peddling these over-the-counter supplements have no legal obligation to reveal the scientific truth about them.  The same is the case for television networks who are obviously earning a significant amount of advertising revenue from supplement frauds.  Moral obligation and corporate responsibility are another matter. 

    Please tell your nice friendly pharmacist that it is wrong to foist snake oil on the elderly.  Also, call your state attorney general and tell them to file an injunction against the company making Prevagen and the retail outlets selling it.

[1] See the discussion in the court referenced in endnote 2 regarding the Madison Study in which there was no significant difference in a double blind, placebo-experimental group design.  It took 30 post hoc analyses to find a subgroup with a significant difference on which the company (Quincy Biosciences) stakes it claim that it has been clinically tested.  The search for a significant p-value by repeatedly looking for subgroups in which a difference can be found is bogus.  Eventually such a difference will occur by random chance.

[2] https://www.ftc.gov/system/files/documents/cases/quincy_bioscience_complaint-filed_version.pdf; https://www.ftc.gov/enforcement/cases-proceedings/152-3206/quincy-bioscience-holding-company; https://www.lexology.com/library/detail.aspx?g=2f42c12e-180b-40f9-8597-e9371fc43324

[3] https://www.health.harvard.edu/blog/fda-curbs-unfounded-memory-supplement-claims-2019053116772