As Prepared for Delivery –

Mr. Speaker, Mr. Vice President, members of Congress, distinguished guests, and fellow Americans:

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought — and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world. For the first time in nine years, there are no Americans fighting in Iraq. For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.

These achievements are a testament to the courage, selflessness, and teamwork of America’s Armed Forces. At a time when too many of our institutions have let us down, they exceed all expectations. They’re not consumed with personal ambition. They don’t obsess over their differences. They focus on the mission at hand. They work together.

Imagine what we could accomplish if we followed their example. Think about the America within our reach: A country that leads the world in educating its people. An America that attracts a new generation of high-tech manufacturing and high-paying jobs. A future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world. An economy built to last, where hard work pays off, and responsibility is rewarded.

We can do this. I know we can, because we’ve done it before. At the end of World War II, when another generation of heroes returned home from combat, they built the strongest economy and middle class the world has ever known. My grandfather, a veteran of Patton’s Army, got the chance to go to college on the GI Bill. My grandmother, who worked on a bomber assembly line, was part of a workforce that turned out the best products on Earth.

The two of them shared the optimism of a Nation that had triumphed over a depression and fascism. They understood they were part of something larger; that they were contributing to a story of success that every American had a chance to share — the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement.

The defining issue of our time is how to keep that promise alive. No challenge is more urgent. No debate is more important. We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules. What’s at stake are not Democratic values or Republican values, but American values. We have to reclaim them.

Let’s remember how we got here. Long before the recession, jobs and manufacturing began leaving our shores. Technology made businesses more efficient, but also made some jobs obsolete. Folks at the top saw their incomes rise like never before, but most hardworking Americans struggled with costs that were growing, paychecks that weren’t, and personal debt that kept piling up.

In 2008, the house of cards collapsed. We learned that mortgages had been sold to people who couldn’t afford or understand them. Banks had made huge bets and bonuses with other people’s money. Regulators had looked the other way, or didn’t have the authority to stop the bad behavior.

It was wrong. It was irresponsible. And it plunged our economy into a crisis that put millions out of work, saddled us with more debt, and left innocent, hard-working Americans holding the bag. In the six months before I took office, we lost nearly four million jobs. And we lost another four million before our policies were in full effect.

Those are the facts. But so are these. In the last 22 months, businesses have created more than three million jobs. Last year, they created the most jobs since 2005. American manufacturers are hiring again, creating jobs for the first time since the late 1990s. Together, we’ve agreed to cut the deficit by more than $2 trillion. And we’ve put in place new rules to hold Wall Street accountable, so a crisis like that never happens again.

The state of our Union is getting stronger. And we’ve come too far to turn back now. As long as I’m President, I will work with anyone in this chamber to build on this momentum. But I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place.

No, we will not go back to an economy weakened by outsourcing, bad debt, and phony financial profits. Tonight, I want to speak about how we move forward, and lay out a blueprint for an economy that’s built to last – an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.

This blueprint begins with American manufacturing.

On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen. In exchange for help, we demanded responsibility. We got workers and automakers to settle their differences. We got the industry to retool and restructure. Today, General Motors is back on top as the world’s number one automaker. Chrysler has grown faster in the U.S. than any major car company. Ford is investing billions in U.S. plants and factories. And together, the entire industry added nearly 160,000 jobs.

We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back.

What’s happening in Detroit can happen in other industries. It can happen in Cleveland and Pittsburgh and Raleigh. We can’t bring back every job that’s left our shores. But right now, it’s getting more expensive to do business in places like China. Meanwhile, America is more productive. A few weeks ago, the CEO of Master Lock told me that it now makes business sense for him to bring jobs back home. Today, for the first time in fifteen years, Master Lock’s unionized plant in Milwaukee is running at full capacity.

So we have a huge opportunity, at this moment, to bring manufacturing back. But we have to seize it. Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.

We should start with our tax code. Right now, companies get tax breaks for moving jobs and profits overseas. Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it.

So let’s change it. First, if you’re a business that wants to outsource jobs, you shouldn’t get a tax deduction for doing it. That money should be used to cover moving expenses for companies like Master Lock that decide to bring jobs home.

Second, no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here.

Third, if you’re an American manufacturer, you should get a bigger tax cut. If you’re a high-tech manufacturer, we should double the tax deduction you get for making products here. And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers.

My message is simple. It’s time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America. Send me these tax reforms, and I’ll sign them right away.

We’re also making it easier for American businesses to sell products all over the world. Two years ago, I set a goal of doubling U.S. exports over five years. With the bipartisan trade agreements I signed into law, we are on track to meet that goal — ahead of schedule. Soon, there will be millions of new customers for American goods in Panama, Colombia, and South Korea. Soon, there will be new cars on the streets of Seoul imported from Detroit, and Toledo, and Chicago.

I will go anywhere in the world to open new markets for American products. And I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration — and it’s made a difference. Over a thousand Americans are working today because we stopped a surge in Chinese tires. But we need to do more. It’s not right when another country lets our movies, music, and software be pirated. It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.

Tonight, I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China. There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia. Our workers are the most productive on Earth, and if the playing field is level, I promise you — America will always win.

I also hear from many business leaders who want to hire in the United States but can’t find workers with the right skills. Growing industries in science and technology have twice as many openings as we have workers who can do the job. Think about that — openings at a time when millions of Americans are looking for work.

That’s inexcusable. And we know how to fix it.

Jackie Bray is a single mom from North Carolina who was laid off from her job as a mechanic. Then Siemens opened a gas turbine factory in Charlotte, and formed a partnership with Central Piedmont Community College. The company helped the college design courses in laser and robotics training. It paid Jackie’s tuition, then hired her to help operate their plant.

I want every American looking for work to have the same opportunity as Jackie did. Join me in a national commitment to train two million Americans with skills that will lead directly to a job. My Administration has already lined up more companies that want to help. Model partnerships between businesses like Siemens and community colleges in places like Charlotte, Orlando, and Louisville are up and running. Now you need to give more community colleges the resources they need to become community career centers — places that teach people skills that local businesses are looking for right now, from data management to high-tech manufacturing.

And I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website, and one place to go for all the information and help they need. It’s time to turn our unemployment system into a reemployment system that puts people to work.

These reforms will help people get jobs that are open today. But to prepare for the jobs of tomorrow, our commitment to skills and education has to start earlier.

For less than one percent of what our Nation spends on education each year, we’ve convinced nearly every State in the country to raise their standards for teaching and learning — the first time that’s happened in a generation.

But challenges remain. And we know how to solve them.

At a time when other countries are doubling down on education, tight budgets have forced States to lay off thousands of teachers. We know a good teacher can increase the lifetime income of a classroom by over $250,000. A great teacher can offer an escape from poverty to the child who dreams beyond his circumstance. Every person in this chamber can point to a teacher who changed the trajectory of their lives. Most teachers work tirelessly, with modest pay, sometimes digging into their own pocket for school supplies — just to make a difference.

Teachers matter. So instead of bashing them, or defending the status quo, let’s offer schools a deal. Give them the resources to keep good teachers on the job, and reward the best ones. In return, grant schools flexibility: To teach with creativity and passion; to stop teaching to the test; and to replace teachers who just aren’t helping kids learn.

We also know that when students aren’t allowed to walk away from their education, more of them walk the stage to get their diploma. So tonight, I call on every State to require that all students stay in high school until they graduate or turn eighteen.

When kids do graduate, the most daunting challenge can be the cost of college. At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July. Extend the tuition tax credit we started that saves middle-class families thousands of dollars. And give more young people the chance to earn their way through college by doubling the number of work-study jobs in the next five years.

Of course, it’s not enough for us to increase student aid. We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money. States also need to do their part, by making higher education a higher priority in their budgets. And colleges and universities have to do their part by working to keep costs down. Recently, I spoke with a group of college presidents who’ve done just that. Some schools re-design courses to help students finish more quickly. Some use better technology. The point is, it’s possible. So let me put colleges and universities on notice: If you can’t stop tuition from going up, the funding you get from taxpayers will go down. Higher education can’t be a luxury — it’s an economic imperative that every family in America should be able to afford.

Let’s also remember that hundreds of thousands of talented, hardworking students in this country face another challenge: The fact that they aren’t yet American citizens. Many were brought here as small children, are American through and through, yet they live every day with the threat of deportation. Others came more recently, to study business and science and engineering, but as soon as they get their degree, we send them home to invent new products and create new jobs somewhere else.

That doesn’t make sense.

I believe as strongly as ever that we should take on illegal immigration. That’s why my Administration has put more boots on the border than ever before. That’s why there are fewer illegal crossings than when I took office.

The opponents of action are out of excuses. We should be working on comprehensive immigration reform right now. But if election-year politics keeps Congress from acting on a comprehensive plan, let’s at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, and defend this country. Send me a law that gives them the chance to earn their citizenship. I will sign it right away.

You see, an economy built to last is one where we encourage the talent and ingenuity of every person in this country. That means women should earn equal pay for equal work. It means we should support everyone who’s willing to work; and every risk-taker and entrepreneur who aspires to become the next Steve Jobs.

After all, innovation is what America has always been about. Most new jobs are created in start-ups and small businesses. So let’s pass an agenda that helps them succeed. Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow. Expand tax relief to small businesses that are raising wages and creating good jobs. Both parties agree on these ideas. So put them in a bill, and get it on my desk this year.

Innovation also demands basic research. Today, the discoveries taking place in our federally-financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untouched. New lightweight vests for cops and soldiers that can stop any bullet. Don’t gut these investments in our budget. Don’t let other countries win the race for the future. Support the same kind of research and innovation that led to the computer chip and the Internet; to new American jobs and new American industries.

Nowhere is the promise of innovation greater than in American-made energy. Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my Administration to open more than 75 percent of our potential offshore oil and gas resources. Right now, American oil production is the highest that it’s been in eight years. That’s right — eight years. Not only that — last year, we relied less on foreign oil than in any of the past sixteen years.

But with only 2 percent of the world’s oil reserves, oil isn’t enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy — a strategy that’s cleaner, cheaper, and full of new jobs.

We have a supply of natural gas that can last America nearly one hundred years, and my Administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade. And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use. America will develop this resource without putting the health and safety of our citizens at risk.

The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy. And by the way, it was public research dollars, over the course of thirty years, that helped develop the technologies to extract all this natural gas out of shale rock — reminding us that Government support is critical in helping businesses get new energy ideas off the ground.

What’s true for natural gas is true for clean energy. In three years, our partnership with the private sector has already positioned America to be the world’s leading manufacturer of high-tech batteries. Because of federal investments, renewable energy use has nearly doubled. And thousands of Americans have jobs because of it.

When Bryan Ritterby was laid off from his job making furniture, he said he worried that at 55, no one would give him a second chance. But he found work at Energetx, a wind turbine manufacturer in Michigan. Before the recession, the factory only made luxury yachts. Today, it’s hiring workers like Bryan, who said, “I’m proud to be working in the industry of the future.”

Our experience with shale gas shows us that the payoffs on these public investments don’t always come right away. Some technologies don’t pan out; some companies fail. But I will not walk away from the promise of clean energy. I will not walk away from workers like Bryan. I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here. We have subsidized oil companies for a century. That’s long enough. It’s time to end the taxpayer giveaways to an industry that’s rarely been more profitable, and double-down on a clean energy industry that’s never been more promising. Pass clean energy tax credits and create these jobs.

We can also spur energy innovation with new incentives. The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change. But there’s no reason why Congress shouldn’t at least set a clean energy standard that creates a market for innovation. So far, you haven’t acted. Well tonight, I will. I’m directing my Administration to allow the development of clean energy on enough public land to power three million homes. And I’m proud to announce that the Department of Defense, the world’s largest consumer of energy, will make one of the largest commitments to clean energy in history — with the Navy purchasing enough capacity to power a quarter of a million homes a year.

Of course, the easiest way to save money is to waste less energy. So here’s another proposal: Help manufacturers eliminate energy waste in their factories and give businesses incentives to upgrade their buildings. Their energy bills will be $100 billion lower over the next decade, and America will have less pollution, more manufacturing, and more jobs for construction workers who need them. Send me a bill that creates these jobs.

Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. We’ve got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.

During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our States with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today.

In the next few weeks, I will sign an Executive Order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.

There’s never been a better time to build, especially since the construction industry was one of the hardest-hit when the housing bubble burst. Of course, construction workers weren’t the only ones hurt. So were millions of innocent Americans who’ve seen their home values decline. And while Government can’t fix the problem on its own, responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief.

That’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won’t add to the deficit, and will give banks that were rescued by taxpayers a chance to repay a deficit of trust.

Let’s never forget: Millions of Americans who work hard and play by the rules every day deserve a Government and a financial system that do the same. It’s time to apply the same rules from top to bottom: No bailouts, no handouts, and no copouts. An America built to last insists on responsibility from everybody.

We’ve all paid the price for lenders who sold mortgages to people who couldn’t afford them, and buyers who knew they couldn’t afford them. That’s why we need smart regulations to prevent irresponsible behavior. Rules to prevent financial fraud, or toxic dumping, or faulty medical devices, don’t destroy the free market. They make the free market work better.

There is no question that some regulations are outdated, unnecessary, or too costly. In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. I’ve ordered every federal agency to eliminate rules that don’t make sense. We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years. We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill — because milk was somehow classified as an oil. With a rule like that, I guess it was worth crying over spilled milk.

I’m confident a farmer can contain a milk spill without a federal agency looking over his shoulder. But I will not back down from making sure an oil company can contain the kind of oil spill we saw in the Gulf two years ago. I will not back down from protecting our kids from mercury pollution, or making sure that our food is safe and our water is clean. I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny you coverage, or charge women differently from men.

And I will not go back to the days when Wall Street was allowed to play by its own set of rules. The new rules we passed restore what should be any financial system’s core purpose: Getting funding to entrepreneurs with the best ideas, and getting loans to responsible families who want to buy a home, start a business, or send a kid to college.

So if you’re a big bank or financial institution, you are no longer allowed to make risky bets with your customers’ deposits. You’re required to write out a “living will” that details exactly how you’ll pay the bills if you fail — because the rest of us aren’t bailing you out ever again. And if you’re a mortgage lender or a payday lender or a credit card company, the days of signing people up for products they can’t afford with confusing forms and deceptive practices are over. Today, American consumers finally have a watchdog in Richard Cordray with one job: To look out for them.

We will also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people’s investments. Some financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender. That’s bad for consumers, and it’s bad for the vast majority of bankers and financial service professionals who do the right thing. So pass legislation that makes the penalties for fraud count.

And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.
A return to the American values of fair play and shared responsibility will help us protect our people and our economy. But it should also guide us as we look to pay down our debt and invest in our future.

Right now, our most immediate priority is stopping a tax hike on 160 million working Americans while the recovery is still fragile. People cannot afford losing $40 out of each paycheck this year. There are plenty of ways to get this done. So let’s agree right here, right now: No side issues. No drama. Pass the payroll tax cut without delay.

When it comes to the deficit, we’ve already agreed to more than $2 trillion in cuts and savings. But we need to do more, and that means making choices. Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary.

Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else – like education and medical research; a strong military and care for our veterans? Because if we’re serious about paying down our debt, we can’t do both.

The American people know what the right choice is. So do I. As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors.

But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes. And my Republican friend Tom Coburn is right: Washington should stop subsidizing millionaires. In fact, if you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions. On the other hand, if you make under $250,000 a year, like 98 percent of American families, your taxes shouldn’t go up. You’re the ones struggling with rising costs and stagnant wages. You’re the ones who need relief.

Now, you can call this class warfare all you want. But asking a billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.

We don’t begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit, or somebody else has to make up the difference — like a senior on a fixed income; or a student trying to get through school; or a family trying to make ends meet. That’s not right. Americans know it’s not right. They know that this generation’s success is only possible because past generations felt a responsibility to each other, and to their country’s future, and they know our way of life will only endure if we feel that same sense of shared responsibility. That’s how we’ll reduce our deficit. That’s an America built to last.

I recognize that people watching tonight have differing views about taxes and debt; energy and health care. But no matter what party they belong to, I bet most Americans are thinking the same thing right now: Nothing will get done this year, or next year, or maybe even the year after that, because Washington is broken.

Can you blame them for feeling a little cynical?

The greatest blow to confidence in our economy last year didn’t come from events beyond our control. It came from a debate in Washington over whether the United States would pay its bills or not. Who benefited from that fiasco?

I’ve talked tonight about the deficit of trust between Main Street and Wall Street. But the divide between this city and the rest of the country is at least as bad — and it seems to get worse every year.

Some of this has to do with the corrosive influence of money in politics. So together, let’s take some steps to fix that. Send me a bill that bans insider trading by Members of Congress, and I will sign it tomorrow. Let’s limit any elected official from owning stocks in industries they impact. Let’s make sure people who bundle campaign contributions for Congress can’t lobby Congress, and vice versa — an idea that has bipartisan support, at least outside of Washington.

Some of what’s broken has to do with the way Congress does its business these days. A simple majority is no longer enough to get anything — even routine business — passed through the Senate. Neither party has been blameless in these tactics. Now both parties should put an end to it. For starters, I ask the Senate to pass a rule that all judicial and public service nominations receive a simple up or down vote within 90 days.

The executive branch also needs to change. Too often, it’s inefficient, outdated and remote. That’s why I’ve asked this Congress to grant me the authority to consolidate the federal bureaucracy so that our Government is leaner, quicker, and more responsive to the needs of the American people.

Finally, none of these reforms can happen unless we also lower the temperature in this town. We need to end the notion that the two parties must be locked in a perpetual campaign of mutual destruction; that politics is about clinging to rigid ideologies instead of building consensus around common sense ideas.

I’m a Democrat. But I believe what Republican Abraham Lincoln believed: That Government should do for people only what they cannot do better by themselves, and no more. That’s why my education reform offers more competition, and more control for schools and States. That’s why we’re getting rid of regulations that don’t work. That’s why our health care law relies on a reformed private market, not a Government program.

On the other hand, even my Republican friends who complain the most about Government spending have supported federally-financed roads, and clean energy projects, and federal offices for the folks back home.

The point is, we should all want a smarter, more effective Government. And while we may not be able to bridge our biggest philosophical differences this year, we can make real progress. With or without this Congress, I will keep taking actions that help the economy grow. But I can do a whole lot more with your help. Because when we act together, there is nothing the United States of America can’t achieve.

That is the lesson we’ve learned from our actions abroad over the last few years.

Ending the Iraq war has allowed us to strike decisive blows against our enemies. From Pakistan to Yemen, the al Qaeda operatives who remain are scrambling, knowing that they can’t escape the reach of the United States of America.

From this position of strength, we’ve begun to wind down the war in Afghanistan. Ten thousand of our troops have come home. Twenty-three thousand more will leave by the end of this summer. This transition to Afghan lead will continue, and we will build an enduring partnership with Afghanistan, so that it is never again a source of attacks against America.

As the tide of war recedes, a wave of change has washed across the Middle East and North Africa, from Tunis to Cairo; from Sana’a to Tripoli. A year ago, Qadhafi was one of the world’s longest-serving dictators — a murderer with American blood on his hands. Today, he is gone. And in Syria, I have no doubt that the Assad regime will soon discover that the forces of change can’t be reversed, and that human dignity can’t be denied.

How this incredible transformation will end remains uncertain. But we have a huge stake in the outcome. And while it is ultimately up to the people of the region to decide their fate, we will advocate for those values that have served our own country so well. We will stand against violence and intimidation. We will stand for the rights and dignity of all human beings – men and women; Christians, Muslims, and Jews. We will support policies that lead to strong and stable democracies and open markets, because tyranny is no match for liberty.

And we will safeguard America’s own security against those who threaten our citizens, our friends, and our interests. Look at Iran. Through the power of our diplomacy, a world that was once divided about how to deal with Iran’s nuclear program now stands as one. The regime is more isolated than ever before; its leaders are faced with crippling sanctions, and as long as they shirk their responsibilities, this pressure will not relent. Let there be no doubt: America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal. But a peaceful resolution of this issue is still possible, and far better, and if Iran changes course and meets its obligations, it can rejoin the community of nations.

The renewal of American leadership can be felt across the globe. Our oldest alliances in Europe and Asia are stronger than ever. Our ties to the Americas are deeper. Our iron-clad commitment to Israel’s security has meant the closest military cooperation between our two countries in history. We’ve made it clear that America is a Pacific power, and a new beginning in Burma has lit a new hope. From the coalitions we’ve built to secure nuclear materials, to the missions we’ve led against hunger and disease; from the blows we’ve dealt to our enemies; to the enduring power of our moral example, America is back.

Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about. That’s not the message we get from leaders around the world, all of whom are eager to work with us. That’s not how people feel from Tokyo to Berlin; from Cape Town to Rio; where opinions of America are higher than they’ve been in years. Yes, the world is changing; no, we can’t control every event. But America remains the one indispensable nation in world affairs — and as long as I’m President, I intend to keep it that way.

That’s why, working with our military leaders, I have proposed a new defense strategy that ensures we maintain the finest military in the world, while saving nearly half a trillion dollars in our budget. To stay one step ahead of our adversaries, I have already sent this Congress legislation that will secure our country from the growing danger of cyber-threats.

Above all, our freedom endures because of the men and women in uniform who defend it. As they come home, we must serve them as well as they served us. That includes giving them the care and benefits they have earned — which is why we’ve increased annual VA spending every year I’ve been President. And it means enlisting our veterans in the work of rebuilding our Nation.

With the bipartisan support of this Congress, we are providing new tax credits to companies that hire vets. Michelle and Jill Biden have worked with American businesses to secure a pledge of 135,000 jobs for veterans and their families. And tonight, I’m proposing a Veterans Job Corps that will help our communities hire veterans as cops and firefighters, so that America is as strong as those who defend her.

Which brings me back to where I began. Those of us who’ve been sent here to serve can learn from the service of our troops. When you put on that uniform, it doesn’t matter if you’re black or white; Asian or Latino; conservative or liberal; rich or poor; gay or straight. When you’re marching into battle, you look out for the person next to you, or the mission fails. When you’re in the thick of the fight, you rise or fall as one unit, serving one Nation, leaving no one behind.

One of my proudest possessions is the flag that the SEAL Team took with them on the mission to get bin Laden. On it are each of their names. Some may be Democrats. Some may be Republicans. But that doesn’t matter. Just like it didn’t matter that day in the Situation Room, when I sat next to Bob Gates – a man who was George Bush’s defense secretary; and Hillary Clinton, a woman who ran against me for president.

All that mattered that day was the mission. No one thought about politics. No one thought about themselves. One of the young men involved in the raid later told me that he didn’t deserve credit for the mission. It only succeeded, he said, because every single member of that unit did their job — the pilot who landed the helicopter that spun out of control; the translator who kept others from entering the compound; the troops who separated the women and children from the fight; the SEALs who charged up the stairs. More than that, the mission only succeeded because every member of that unit trusted each other – because you can’t charge up those stairs, into darkness and danger, unless you know that there’s someone behind you, watching your back.

So it is with America. Each time I look at that flag, I’m reminded that our destiny is stitched together like those fifty stars and those thirteen stripes. No one built this country on their own. This Nation is great because we built it together. This Nation is great because we worked as a team. This Nation is great because we get each other’s backs. And if we hold fast to that truth, in this moment of trial, there is no challenge too great; no mission too hard. As long as we’re joined in common purpose, as long as we maintain our common resolve, our journey moves forward, our future is hopeful, and the state of our Union will always be strong.

Thank you, God bless you, and may God bless the United States of America.

The Salt Lake Tribune

Published: February 18, 2011 07:13PM (Part of series on MLM)

Washington • For federal regulators, the idea seemed like a no-brainer.

People thinking of selling Avon, Utah-based Nu Skin or some other multilevel marketing (MLM) products should know how likely they are to make a profit. They should know about any lawsuits against the company and the number of independent sellers who ended up demanding a refund.

After years of study, the Federal Trade Commission in 2006 formally proposed a “business opportunity rule” to protect people from fraud by requiring such disclosures of MLMs, also known as direct sellers, along with companies pitching vending machine routes and letter-stuffing campaigns.

Then regulators asked the public to comment. And they did. First by the hundreds, then by the thousands, almost all of which were sent by direct selling companies or their distributors clamoring that the rule would hurt their home-to-home business, if not kill it all together.

Two years later the FTC dropped any reference to MLMs and forged ahead with its proposal. The commission expects to finalize the business opportunity rule sometime later this year.

So what happened? That depends on your vantage point.

The direct selling industry says it demonstrated that the proposal was unnecessarily onerous and persuaded federal regulators to back off.

The FTC’s staff say they decided the rule wouldn’t help consumers determine if a MLM was a good bet.

And then there’s a small group of critics who believes the FTC caved to political pressure from a questionable industry.

“It defies reason and the experience of millions of people to take the most common form of business-opportunity solicitation and exclude it,” said Robert FitzPatrick, president of Pyramid Scheme Alert, based in Charlotte, N.C. “This rule was snuffed out with a political lobbying campaign.”

That campaign was waged largely by the Direct Selling Association (DSA), which counts 16 Utah businesses as members. And the group doesn’t hide that it helped direct most of the 17,000 comments the FTC received.

“We certainly facilitated those communications. I’m not abashed about that at all,” said Joseph Mariano, the incoming president of the DSA. “We felt that the regulatory burdens they were going to place on legitimate businesses in an effort to weed out the scams were just too high.”

The drawn-out debate over the business opportunity rule shows how aggressive direct sellers respond to regulations they find threatening, but also how the government has struggled to fashion rules for an industry that regulators regard skeptically.

Such regulatory dust-ups are of particular interest for Utah, which has more MLM companies per capita than anywhere else in the nation. Companies like Nu Skin, USANA and XanGo employ thousands and rack up annual revenues of $4 billion. They also enjoy the support of Utah’s political elite. Sen. Orrin Hatch, Reps. Jim Matheson and Rob Bishop and former Rep. Chris Cannon sent letters to the FTC questioning the business opportunity rule and how it applies to direct sellers.

The thousands of comments, including those from Utah political leaders, almost exclusively focused on three areas: a seven-day waiting period to sign up, the financial and legal disclosures and a required list of references.

The companies felt a weeklong waiting period would zap the excitement of potential distributors, making it harder to recruit new people into their sales force. They also felt the earnings and lawsuit disclosures would make it look like the company was sketchy.

“There is sort of a feeling like ‘Why do you have to do this? Have you done something wrong?’” said James Bramble, general counsel for USANA Health Sciences, based in Salt Lake City.

As for the list of references, their complaints covered both privacy concerns and issues unique to the MLM world.

Distributors get more money when they add new distributors to their “downline,” so encouraging someone to call independent sellers to check on the validity of the business could start a recruitment war.

“We were ultimately able to persuade the FTC that the direct sellers should not be covered,” said Nu Skin General Counsel Rich Hartvigsen. “There are several million independent direct sellers in the United States. When they get involved in an issue that impacts their business, they have a fairly loud voice.”

Monica Vaca of the FTC’s Bureau of Consumer Protection said the 17,000 comments were far more than the commission normally receives on a proposed rule, but she didn’t believe the industry arguments resulted in the policy change.

“At its core what the business opportunity rule does is provide prospective purchasers with disclosures. Things we think are important for people to know before they invest money,” said Vaca. “Some of those disclosures are going to be more difficult to apply in the MLM context.”

She said the big one is the earnings disclosure. According to Vaca, MLM companies and even their distributors have an incentive to exaggerate annual earnings, making it easier to recruit others into the business.

“If they are engaged in some kind of collusion to inflate these earnings, then the earnings disclosure is not going to be really that useful,” she said.

Vaca did agree that providing references to other MLM distributors could be counterproductive.

“If they have an incentive to recruit you into their downline, then you don’t have somebody who is necessarily giving you the full, honest picture,” she said.

Beyond the details of the regulation, Vaca said the commission had a change in heart through the rule-making process.

“Initially, we felt like there was really quite a lot of evidence there, that there are some bad practices in this industry. However, identifying bad practices of 14 companies is a little bit different than identifying that as a prevalent problem affecting the entire industry,” she said, referring to past FTC lawsuits against 14 direct selling companies, none of which was from Utah.

The FTC decided that it would continue its case-by-case approach to rooting out the bad companies from the legitimate ones, focusing on how much of the money is made by recruiting others rather than selling products.

FitzPatrick, the vocal MLM critic, called that “absurd.”

“The original rule was not to prove that each scheme was a fraud,” he said. “The point of the rule was to provide disclosure so the consumer could know if it was a viable business opportunity.”

He said the biggest need is for more information on potential earnings, because he said people envision making big money selling the products and recruiting other distributors, but the overwhelming majority makes little or no money at all. He thinks the FTC should have tried to tweak the disclosure, not jettison it entirely.

FitzPatrick also lamented the political involvement in the rule making, including a direct selling company in Georgia that hired past FTC Chairman Timothy Muris and former Consumer Protection Bureau Director Howard Beales to argue on its behalf.

Vaca rebuffed the claim that the FTC caved to industry pressure, saying: “I think our report really stands on its own. We talk about all the reasons why it was not a good fit.”

But she also promised that the FTC would keep a vigilant eye on direct sellers.

“We are going to be active in the MLM world for a long time,” she said. “The two main issues are the potential for a possible pyramid scheme, and the making of false or unsubstantiated earnings claims.”

mcanham@sltrib.com

Business opportunities

The FTC’s proposal was a play off the already established franchise rule, which requires chains to provide lengthy disclosures to a prospective buyer. This time, the FTC wanted to target much less expensive ventures such as at-home work companies and multilevel marketing.

Disclosures required

Any earnings claim made by the company

A list of lawsuits concerning fraud or deceptive practices

Description of any refund policy

The number of purchasers in the past two years and the number who sought a refund

A list of references, usually the 10 geographically closest to the new recruit

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The Salt Lake Tribune

Published: February 21, 2011 10:02AM

Companies such as Tahitian Noni International, headliners of Utah’s booming nutritional supplement industry, built fortunes extolling the healing powers of juices made from exotic, tropical “super fruits.” Tahitian Noni champions the noni, XanGo touts the mangosteen, and MonaVie boasts the once-obscure, now wildly popular açai (AH-sigh-EE).

But after nutritionists questioned some of their health claims, manufacturers rejected the “super fruit” label.

They’re now rebranding their products as medicinal and pumping millions into research — not just test tube analyses of key ingredients, but randomized, placebo-controlled human trials on whole formulas.

“We don’t rely on third-party research. We study our own finished product. We want to know that it has benefits as consumed,” said Brett West, research director at Tahitian Noni in Orem.

In one company-funded study, the juice reduced biomarkers that indicate cancer risk in 120 heavy smokers. Another study suggested the juice can reduce high blood pressure in adults. Both were published in professional, peer-reviewed journals.

In 2009, XanGo in Lehi tested its juice on 122 overweight and obese adults. At a dose of 18 ounces per day — far higher than its label recommends — the juice reduced indicators of inflammation, which may contribute to heart disease and diabetes, the study’s authors found.

But experts say they’re a long way from scientific proof. And without more independent research, there’s a void for thirsty shoppers.

“Just claiming a fruit has antioxidants or bioindicators of inflammation doesn’t mean it has lasting effects,” said Wayne Askew, chairman of the University of Utah’s nutrition department.

Scientific rigor demands that the studies be replicated many times.

“But how many researchers are interested in exploring noni? It’s not like an anti-cancer drug with several investigators working on it,” said Askew. “These studies may benefit [juice makers] without advancing science much.”

—

Antioxidant ability • The Food and Drug Administration bars manufacturers from claiming foods cure disease.

Noni, a lumpy yellowish-green fruit from a plant used in traditional healing throughout Polynesia, is instead promoted for improving endurance, boosting immune function and supporting healthy hearts, skin and joints. Similar boasts have been made for mangosteen, a fruit with a thick purple rind and sweet white pulp grown primarily in Southeast Asia. Açai, a purple berry from Brazilian forests, reportedly helps reduce inflammation and has found its way into weight-loss drinks and anti-aging creams.

Juice makers built these claims on the promise that their products are packed with antioxidants, which neutralize the free radicals (oxidizing molecules in cells) that cause aging and age-related disease.

Some studies support that. But in 2008, researchers at the University of California, Los Angeles, found açai to be a middling source of antioxidants, ranking behind red wine, pomegranate and store-bought grape, blueberry and black-cherry juices.

And in 2007, Choice, a publication by the Australian Consumers Association, found a common apple beat the antioxidant potency of juices containing açai, mangosteen, noni and the goji berry.

“It makes more sense, it’s more economical, to buy an orange or apple than to spend a lot of money on an exotic new fruit that may or may not be better for you,” said David Schardt, senior nutritionist at the Center for Science in the Public Interest in Washington, D.C.

A 25-ounce bottle of MonaVie Essential retails for more than $30, or $4.60 per the daily recommended 4 ounces. Since it’s a proprietary juice blend, there’s no telling how much açai you’re paying for.

POM Wonderful in California spent months and lots of money developing a chemical analysis of pomegranate juice, so their product could be compared to rip-offs.

No such test exists for açai, which is now found in mainstream drinks by Pepsi and Anheuser-Busch. MonaVie has patented its freeze-dried açai powder.

“Unlike with many herbs and vitamins, there’s no defined quality standard for açai. You can’t say one product is more authentic than the other,” said Todd Cooperman, president of ConsumerLab.com, which tests supplements for manufacturers seeking its seal of approval.

—

‘One more thing you can do’ • Nutritionists, meanwhile, have grown skeptical of dueling antioxidant claims, saying the recommended daily intake is easily met by eating fruits and nuts and cautioning that too much may be counterproductive.

Antioxidants are complicated, explains Alexander Schauss, senior director at Aibmr Life Sciences, a nutraceutical research firm in Puyallup, Wash. The oxidation of free radicals has important benefits, such as helping the body convert fat to energy, attack bacteria and recover from exercise and injury.

Some antioxidants are absorbed well; others not at all. Their relative importance and their interactions are issues scientists struggle to understand — and juice makers are working to add to the literature.

Schauss, a member of MonaVie’s scientific advisory board, found in a 2008 study that the juice demonstrated “significant antioxidant protection” in 12 healthy adults. It protected against the oxidation of low-density lipoproteins, LDL or bad cholesterol, which contributes to the development of the fatty buildup in the arteries and heart disease.

But Schauss looked at the immediate effects of consuming MonaVie — not on whether it has any health outcomes.

Açai is still a virtual unknown in the scientific world. Schauss’ study in the Journal of Agricultural and Food Chemistry is one of about 72 published on the berry, compared with more than 45,000 on vitamin C and 32,000 on vitamin E. Far more is known about these supplements, and even they have yet to be embraced by groups like the American Heart Association, which recommends a healthy diet instead.

But supplement makers point out that many Americans don’t eat enough fruits and vegetables.

“XanGo is not better or worse than taking vitamin C or E. It’s yet one more thing you can do,” said Shawn Talbott, the company’s scientific adviser.

The industry is now promoting other compounds found in their products, such as phytochemicals, which some lab studies have suggested may help prevent cancer.

“Most super fruits are no better for you than apples, oranges and bananas. They just cost you a lot more,” admits a promotional video on Tahitian Noni’s website. “But noni is different because it’s teeming with what researchers call bioactives, chemical compounds that can actually improve your health.”

Jeff Graham, a senior vice president at MonaVie, acknowledged research on exotic fruits is not fully developed.

But, he notes, MonaVie has funded 11 peer-reviewed studies since its founding in 2005. “You have to have capital to do that. Five or six years ago we couldn’t pronounce açai. Now 50-plus food and drink products leverage its power.”

kstewart@sltrib.com

The truth behind noni

The National Institute of Health is funding a clinical study of dried noni fruit extract in cancer patients at the Cancer Research Center of Hawaii. The first phase, published in abstract form only, found noni to be safe and well-tolerated by patients. Later phases will seek to ascertain any benefits.

XanGo Juice by XanGo Corp

Ingredients

Each 1 fl oz serving contains (32 g) of garcinia mangostana (reconstituted juice from whole fruit) and apple, pear, grape, blueberry, raspberry, strawberry, cranberry and cherry juice concentrates.

Price

$37 per bottle, or $100 for four bottles.

How it works

Marketers claim that the juice, made from the tropical fruit mangosteen, reduces inflammation and supports healthy respiratory and intestinal systems and joints. The mangosteen bark, leaf, root and rind traditionally have been used as remedies for diarrhea, dysentery, fever and skin conditions. Studies have shown the fruit to have some antioxidant, anti-histamine, anti-serotonin, anti-inflammatory and neuroprotective properties. But there is not enough reliable scientific evidence to support the juice’s purported therapeutic benefits.

Sources: Consumer Reports and ConsumerLab.com

MonaVie Essential by MonaVie LLC

Ingredients

Each 2 fl oz serving contains patented, freeze-dried açai powder and puree and a blend of 18 reconstituted fruit juices, including, grape, apple and pear.

Price

4 bottles for $120

How it works

People use acai, the fruit of the acai palm, for osteoarthritis, high cholesterol, erectile dysfunction (ED), weight loss and obesity, “detoxification,” and for improving general health. It exploded in popularity after being promoted as a “Superfood for Age-Defying Beauty” on the Oprah Winfrey show. Some studies suggest acai to be high in antioxidants, especially in products that contain the fruit pulp. Others show the fruit be a middling source. But there is not enough reliable scientific evidence to support the juice’s long-term therapeutic benefits.

Sources: Consumer Reports and ConsumerLab.com

Tahitian Noni Original by Tahitian Noni International

Ingredients

Each 1 fl oz serving contains (29.9 ml) of morinda citrifolia fruit nectar from pure noni puree and undisclosed amounts of grape and blueberry juice concentrate.

Price

4 bottles for $120 to $130

How it works

Traditionally, it was the leaves, and not the fruit, of the noni that were used medicinally as a poultice for wounds, skin infections and to promote lactation. Some distributors claim the juice stimulates the immune system and has proven effective in fighting AIDS, Epstein-Barr virus, cancer, lupus and kidney problems. It has also been promoted for increasing energy levels and promoting heart health. There is currently little scientific evidence to support these claims. But the National Institute of Health is funding a clinical study of dried noni fruit extract in cancer patients.

Sources: Consumer Reports and ConsumerLab.com

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©

By Steven Oberbeck

The Salt Lake Tribune

Published: February 21, 2011 08:16PM (3rd in series)

Lured by the promise of wealth, thousands of Utahns every year become “distributors” of the pills, potions and lotions multilevel marketing companies in the state make.

Nearly all will fail, with their money flowing into the pockets of an elite few top-level distributors — men and women who typically get into the game early and make a fortune off those who try but fail to duplicate their successes.

“You hear of people making a fortune in multilevel marketing. You also hear of people who made a fortune playing the lottery. Neither one is a good way to try to make a living,” said Jon Taylor of Kaysville, an industry critic and author of The Network Marketing Game.

Multilevel marketing companies, also known as network marketing companies, operate pyramid-like sales structures made up of multiple levels of independent distributors who earn commissions by selling products. The problem is, the products usually are expensive — $30 or more wholesale for less than a quart of fruit juice, for example. Marking them up even more for sale to the public doesn’t produce a lot of retail sales.

Instead, the distributors are the customers. They rely on getting a piece of the sales from new distributors they recruit — and on down the line. For the thousands at the bottom, though, it is nearly impossible to break even. But for those near the top, usually just a handful to several dozen people at each company, the money rolls in.

The top seven MonaVie distributors earn an average of $3.4 million a year. The top three distributors at XanGo earn an average of $1.3 million a year. Top-of-the-pyramid distributors at Usana earn an average of $857,865 annually, while Nu Skin’s top 115 or so “Blue Diamond” executives in the U.S. earn $535,276 a year on average.

Would-be entrepreneurs often can’t resist the lure of that kind of money. No matter how elusive the promise, they see an opportunity to work their way up to the elite earning level achieved by people such as Justin Prince.

Dressed in a neatly tailored suit and standing in front of a white board at XanGo’s headquarters last month in Lehi, Prince, a “premier” distributor, explained to a small group of new and potential distributors how they, too, could duplicate his success.

Premier XanGo distributors — who in terms of earnings are among the top one-quarter of 1 percent of the company’s sales force — make an average of $10,000 a month, although Prince said he makes more.

“You’ll want to use at least $200 of XanGo products a month, and in your first month connect three people, who also will buy $200 worth of product,” Prince said, writing those figures on the board. “At the end of your first month, you’ll make $180.”

The next month, he said, do the same thing while helping the three people initially connected bring in three more people each. “Your second month you’ll make $480. At that point you’re cash-flow positive.”

Do it for a third month. “At that point you have built a $9,480 a year business,” Prince said, explaining by duplicating that effort for another three months someone can make $14,000 a month, or $168,000 a year.

But Prince, who joined XanGo three years ago, also tempered his remarks.

“Let’s say for the sake of argument this is way optimistic,” he said, gesturing toward the board. “Let’s say it is 75 percent unrealistic and three out of four people don’t do what they say they’re going to do. At the end of six months, you’ll still be making $40,000 a year.”

Such talk reveals an underlying truth about multilevel marketing companies, said Robert FitzPatrick, founder of the website, PyramidSchemeAlert.org. “They are just product-based pyramid schemes built upon an endless chain of recruitment.”

To support his argument, he pointed to the turnover rate of distributors.

The Direct Selling Association, the Washington, D.C.-based trade group that represents many of the nation’s network marketing concerns, estimates the annual turnover among distributors is 56 percent. So statistically, at least, there’s a whole new corps of distributors every two years.

Rather than interpreting that as evidence companies are churning low-level distributors in order to keep the money flowing to top-level earners, the DSA offers a different explanation.

“People get involved in direct selling for many reasons,” said Amy Robinson, the DSA’s chief marketing officer. “Very often it is to fulfill a short-term goal, say buying a new refrigerator. They’ll get involved for a few months, reach their goal and drop out.”

Yet information from Utah’s top companies suggests even such a modest goal will be difficult for most to achieve.

Of MonaVie’s active distributors, 85 percent earned commission checks in 2009 averaging $35 a week or less. Of Nu Skin’s 76,246 distributors in the U.S. in 2009, 11,360 earned a commission check, and for a little more than half that number the average was $65 a month.

Distributors on XanGo’s two lowest earning levels, or nearly 73 percent of its active distributors, bring in an average of $122 a month or less. Usana reported that of its 165,710 associates, including those just starting out, the average yearly income was $617.

What isn’t disclosed are the often thousands of dollars in expenses distributors can incur trying to generate a commission, which might include time and the cost of purchasing promotional and sales-development materials from the companies or top distributors. “None of that comes without cost. These aren’t just pyramids based upon products, they’re also pyramids based upon time and effort,” Taylor said.

But Brian Douglas, a top level Usana “diamond director,” believes those who are committed can build a successful multilevel sales organization, just as he did after joining up with the company 14 years ago.

He offered his own explanation of why so few succeed.

“There is a high failure rate in any business,” he said. “The big problem we have is there is a very low cost to get involved. It is easy in, easy out. With low cost of entry, it is easy if things aren’t going great to throw up your hands and walk away. If you had a million bucks invested in a franchise, you would do everything you could.”

For FitzPatrick and Taylor, though, the deck is stacked against new distributors no matter how much time, effort and sincerity they bring to the table.

“If you have a company with 100,000 distributors and half leave every year, that means over five years 250,000 people who would have come and gone,” leaving their money behind, FitzPatrick said.

He conceded that the lure of direct marketing for many can be irresistible, especially during tough economic times.

“In one sense, network marketing companies do have a product that is in growing demand — the promise of a steady income. But at the end of the day, 99 percent of those involved lose money. It is an enormous flimflam on an almost incalculable scale.”

steve@sltrib.com

—

What top distributors earn

MonaVie • The top seven earn an average of $3.4 million a year.

Nu Skin • The top 115 or so “Blue Diamond” executives in the U.S. earn $535,276 a year on average.

Xango • The top three distributors earn an average of $1.3 million a year.

Usana • Top-of-the-pyramid distributors at earn an average of $857,865 annually.

—

What most distributors earn

Monavie • Of active distributors, 85 percent received commission checks in 2009 averaging $35 a week or less.

Nu Skin • Of 76,246 distributors in the U.S. in 2009, 11,360 people, or fewer than 15 percent, received a commission check, and for a little more than half that number, the average was $65 a month.

XanGo • Distributors on the two lowest earning levels, or nearly 73 percent of active distributors, bring in an average of $122 a month or less.

Usana • Of its 165,710 associates, the average yearly income was $617.

Source • Company disclosure statements.

What top distributors earn

MonaVie • The top seven earn an average of $3.4 million a year.

Nu Skin• The top 115 or so “Blue Diamond” executives in the U.S. earn $535,276 a year on average.

Xango • The top three distributors earn an average of $1.3 million a year.

Usana • Top-of-the-pyramid distributors earn an average of $857,865 annually.

What most distributors earn

Monavie • Of active distributors, 85 percent received commission checks in 2009 averaging $35 a week or less.

Nu Skin • Of 76,246 distributors in the U.S. in 2009, 11,357 people, or fewer than 15 percent, received a commission check, and for a little more than half that number, the average was $65 a month.

XanGo • Distributors on the two lowest earning levels, or nearly 73 percent of active distributors, bring in an average of $122 a month or less.

Usana • Of its 165,710 associates, the average yearly income was $617.

Source • Company disclosure statements.

—————

A killer agency: The invisible victims of the FDA’s slow processes

Published: Friday, Feb. 11, 2011 12:00 a.m. MST

Sam Kazman’s “Drug Approvals and Deadly Delays” article in the Journal of American Physicians and Surgeons (Winter 2010), tells a story about how the U.S. Food and Drug Administration’s policies have led to the deaths of tens of thousands of Americans. Let’s look at how it happens.

During the FDA’s drug approval process, it confronts the possibility of two errors. If the FDA approves a drug that turns out to have unanticipated, dangerous side effects, people will suffer. Similarly, if the FDA denies or delays the marketing of a perfectly safe and beneficial drug, people will also suffer. Both errors cause medical harm.

This column by very conservative columnist Walter Williams provides a good example of the continual tug-of-war between the values of regulation and deregulation. It is always a constant battle between the rigid regulationists and the extremist deregulationists. The ultimate goal should be to arrive at the perfect center, where there is not too much regulation that destroys initiative and yet there is enough regulation to protect the public.

It is a challenge not only within the Food and Drug Administration, but that tug-and-pull exists in every regulatory agency.

There are extremes on both sides of the regulation philosophy and generally speaking we have arrived at the sensible middle in most cases. The agencies go through swings when extremely conservative presidents like George W. Bush stacked all the agencies with ultra-deregulationists and opened the floodgates of laissez faire philosophy in all aspects of government.

Forming an opinion of this column by Williams will give you a hint about where you stand on the political spectrum.

Watts Cookin’ stands firmly on the side of protecting the public from the crass profit motive that puts the public at serious risk.The profit motive must have checks and balances. There are simply too many charlatans that the prey on the public for profit, and many of them hide behind the protection of public and private corporations that seem to be immune from criminal prosecution.

Kazman argues that from a political point of view, there’s a huge difference between the errors. People who are injured by incorrectly approved drugs will know that they are victims of FDA mistakes. Their suffering makes headlines. FDA officials face unfavorable publicity and perhaps congressional hearings.

It’s an entirely different story for victims of incorrect FDA drug delays or denials. These victims are people who are prevented access to drugs that could have helped them. Their suffering or death is seen as reflecting the state of medicine rather than the status of an FDA drug application. Their doctor simply tells them there’s nothing more that can be done to help them.

Beta-blockers reduce the risks of secondary heart attacks and were widely used in Europe during the mid-’70s. The FDA imposed a moratorium on beta-blocker approvals in the U.S. because of the drug’s carcinogenicity in animals. Finally, in 1981, FDA approved the first such drug, boasting that it might save up to 17,000 lives per year. That meant as many as 100,000 people might have died from secondary heart attacks waiting for FDA approval.

In the early 1990s, it took the FDA more than three years to approve interleukin-2 as the first therapy for advanced kidney cancer. By the time the FDA approved the drug, it was available in nine European countries. The FDA was worried about the drug’s toxicity that resulted in the death of 5 percent of those who took it during testing trials. This concern obscures the fact that metastatic kidney cancer has the effect of killing 100 percent of its victims.

Kazman says that if we estimate that interleukin-2 would have helped 10 percent of those who would otherwise die of kidney cancer, then the FDA’s delay might have contributed to the premature deaths of 3,000 people. Kazman asks whether we’ve seen any photos or news stories of the 3,000 victims of the FDA’s interleukin-2 delay or the 100,000 victims of the FDA’s beta-blocker delay.

These are the invisible victims of FDA policy. In the 1974 words of FDA commissioner Alexander M. Schmidt: “In all of FDA’s history, I am unable to find a single instance where a congressional committee investigated the failure of FDA to approve a new drug. But, the times when hearings have been held to criticize our approval of new drugs have been so frequent that we aren’t able to count them. … The message to FDA staff could not be clearer.”

That message is to always err on the side of overcaution where FDA’s victims are invisible and the agency is held blameless.

Kazman’s day job is general counsel for the Washington, D.C.-based Competitive Enterprise Institute that’s done surveys of physicians and their views of the FDA. On approval speed, 61 to 77 percent of physicians surveyed say the FDA approval process is too slow. Seventy-eight percent believe the FDA has hurt their ability to give patients the best care.

But so what? Physicians carry far less weight with the FDA than “public interest” advocates and politicians.

When the FDA announces its approval of a new drug or device, the question that needs to be asked is: If this drug will start saving lives tomorrow, how many people died yesterday waiting for the FDA to act?

Walter E. Williams is a professor of economics at George Mason University.

Opinion Piece in Salt Lake Tribune

Published: January 8, 2011 01:01AM

In December 1952, an episode of London smog killed more than 12,000 people in less than a month, most within the first four days. It changed forever how the world regarded air pollution. As thick winter smog once again smothers the Wasatch Front, a review of research published in 2010 should be the next milestone in how Utahns regard air pollution.

In May, the American Heart Association published the AHA’s Updated Scientific Statement on Particulate Matter Air Pollution and Cardiovascular Disease. Based on hundreds of research papers, it suggested a formula for calculating the number of premature deaths in a community based on the concentrations of PM2.5 (particles smaller than 2.5 microns).

This formula produces the same conclusions that the Utah Physicians for a Healthy Environment have been stating since 2007. Between 1,000 and 2,000 people in Utah die prematurely every year because of our air pollution.

In 2010, numerous studies added Alzheimer’s, autism, diabetes and breast cancer to an already long list of health consequences that showed significant increases with air pollution. The exclamation point to all this research came with a remarkable study published in December.

Researchers examined the diameter of blood vessels in the back of the eye (the only part of the body where tiny blood vessels called arterioles are directly visible) in 4,607 people. Arterioles narrow with age and disease processes like high blood pressure. The investigators correlated narrowing of these arterioles with the amount of PM2.5 air pollution the patients were exposed to and discovered this: Chronic exposure to 3 micrograins per cubic meter of PM2.5 was associated with the amount of arteriole narrowing as would be found from seven years of aging, or a 3 mmHg increase in blood pressure.

It just so happens that 3 micrograins per cubic meter of PM2.5 is about how much pollution Rio Tinto admits to being responsible for in Salt Lake and Utah counties. This becomes a sobering confirmation of the health price tag we all pay for Rio Tinto.

In August, the Annals of Internal Medicine published a study demonstrating lung and chromosomal damage among oil spill cleanup workers whose exposure was comparable to that of Salt Lake City/Red Butte Creek residents during the Chevron oil spill: “Our findings indicate that exposure to oil sediments, even for short periods, may have detrimental health effects.” This type of chromosomal damage has been associated with increased cancer risk.

Last April, an Associated Press nationwide investigation discovered that pollution from oil refineries is at least 10 times greater than what is publicly reported to the government. With five refineries near Woods Cross, what is most depressing is the ongoing silence on the part of any Utah officials in response.

As the 2011 Legislature prepares its agenda, it would certainly be a breath of fresh air if mounting evidence on the ravages of air pollution began shaping public policy. But don’t count on it unless citizens consider this something worth fighting for. Start by contacting your legislators and demanding some New Year’s “pollution” resolutions. My list:

Be it resolved that we finally give mass transit funding priority over freeways; that we say no to Rio Tinto’s expansion as they are already our biggest polluter; that we demand real, not imaginary, or dishonest data about how much pollution our refineries emit; that Chevron pay for a health study of exposed Red Butte residents and move the pipeline away from Red Butte Creek; that those legislators scheming to weaken the Utah Department of Environmental Quality and the Division of Air Quality be exposed for violating the public trust; and those state agencies be liberated from the pressure to act as handmaidens of industry and function in their proper role as guardians of public health. Keeping these resolutions would bring a truly Happy New Year.

Brian Moench is president of the Utah Physicians for a Healthy Environment, a member of the Union of Concerned Scientists, and teaches health and the environment at the University of Utah Osher Lifelong Learning Institute.

The Salt Lake Tribune

Published: February 2, 2011 08:24AM

Few, if any, of the hundreds of patients who check into the Huntsman Cancer Institute for surgery or chemotherapy will give a moment’s thought to whether the hospital’s medicine cabinet is stocked.

The Tribune is always coming up with interesting stories and bringing attention to problems that exist. This problem shows the complexity of commerce. As a society we take too many things for granted and a constant and steady flow of products is one of them. We don’t appreciate the work of all the hands involved in the manufacturing, selling, and transportation of all the products we are desperately in need of—-until there is a breakdown somewhere along the chain of commerce. Thanks Kirsten, for a reminder of the marvelous coordinated effort it takes to keep us all alive and living in harmony with one another.

That’s as it should be, says Huntsman pharmacy Director Scott Silverstein, who does the worrying for them, freeing patients to focus on healing.

But a worsening national drug shortage has Silverstein anticipating the day he has to interrupt a patient’s therapy to say: “We can’t deliver on a drug. We can’t treat you.”

He’s in a privileged position. Providers across the United States are already having those conversations as drugs of choice ranging from cancer treatments to surgical sedatives run low — or run out — forcing providers to turn to less-preferred medicines.

In some cases, patients have died for want of the right drug.

Providers at the University of Utah’s hospitals and clinics have been able to prepare for acute shortages either by rationing drugs, using alternatives or finding other sources.

It helps to be home to the nation’s alert system, said Silverstein, referring to the U.’s Drug Information Service (UUDIS).

The service monitors and verifies shortages and reports them to the American Society of Health-System Pharmacists, which publishes them online. The U.S. Food and Drug Administration looks to the service to make decisions, such as whether to allow foreign imports.

And it’s setting the standard for how providers can cope with a public-health problem, fueled, in part, by the toll of the recession on drugmakers’ profits.

“I didn’t use to have to think about whether a drug would be available,” Silverstein said. “Now it’s getting to the point where it’s what keeps you up at night.”

The numbers are unprecedented, said Erin Fox, manager of UUDIS, which has been tracking drug shortages for a decade.

Fox recorded 211 drug shortages in 2010. That’s up from 166 in 2009 and 70 in 2006.

“It’s like disaster management daily,” said Fox, who has seen no signs of it leveling off. “We’re on pace with last year. Pretty much every day, we get a new shortage.”

Many of the drugs in dwindling supply are staples used every day: antibiotics, chemotherapy agents, morphine for pain relief, propofol for sedation, heparin to prevent strokes and epinephrine used in emergencies for heart attacks and allergic reactions.

About 54 percent of the shortages in 2010 were due to product quality problems, said Valerie Jensen, associate director of drug shortages for the U.S. Food and Drug Administration. Two of the largest manufacturers of sterile injectables, such as propofol, had product recalls last year after the FDA found particulates in the syringes.

Another 21 percent of the shortages are due to production delays, while 11 percent are caused when firms discontinue a product, usually for business reasons, Jensen said. The rest stem from increased demand, raw material shortages and the consolidation or closure of manufacturing sites.

The FDA can’t force a drugmaker to ramp up production. And companies don’t have to warn the agency of impending shortages unless there are no known alternatives on the market.

But a summit convened in November by the American Society of Health System Pharmacists brought providers together with regulators and drugmakers to forge solutions.

“The big thing that came out of that meeting was the need for more transparency and communication,” said Michael Cohen, director of the Institute for Safe Medicine Practices [ISMP] in Horsham, Penn. “It sounds so simple. But there are times when one manufacturer closes a line, when another can pick up the slack.”

The FDA has a role, too, Cohen said. With the recession, generic drugmakers started growing rapidly, but they faced limits on where they could purchase raw materials, much of which came from overseas. This caused the FDA to crack down on quality — “and rightfully so,” Cohen said. “But maybe with no real understanding of the consequences.”

Shouldering most of the burden are providers, he said. “The amount of time that’s being taken away from patient care is phenomenal.”

In an ISMP survey last summer of 1,800 health care workers, one of four said shortages led to medication errors that could have harmed patients. One in five said patients were hurt.

Doctors in some parts of the country reported having to ration cancer and other niche treatments for which there are no substitutes, deciding whether to start a new patient on a therapy or hold off to preserve the drug for someone who had already started a cycle.

“We had a few deaths with opioids,” Cohen said. Lacking morphine, hospitals had to switch to the more potent Hydromorphone, which, when given at morphine-level doses, led to overdoses.

“Hospitals need a good program in place for rapidly educating staff on how to administer atypical pharmaceuticals,” Cohen said. “They need secondary purchasing sources lined up, and they need a system for notifying everyone, from administrators to physicians and nurses, of impending shortages.”

Silverstein begins each day by checking a white board, where “shortages of the day” are listed. He knows they’re real — not just due to a back order with one drugmaker — because UUDIS verifies reports coming from pharmacy buyers across the country.

In this way, the system helps providers anticipate problems without them having to unnecessarily hoard pharmaceuticals.

“We have an incredible communication network with our [University of Utah] health centers,” Silverstein said “Sometimes, we partner on drug buying. It often comes down to identifying how many patients are coming in on a given week. We’re blessed to have a drug information center that’s so proactive.”

kstewart@sltrib.com

‘Don’t Repeal Health Law – Go Beyond it to Single-Payer Medicare for All’: Doctor’s Group

Statement by Physicians for National Health Program

WASHINGTON – A nationwide organization of doctors who favor a single-payer health care system today rejected calls by Republican leaders to repeal the new health law, noting that the law contains modest benefits for patients that should not be spurned.

“We reject the call by Republican leaders to repeal the Patient Protection and Affordable Care Act (PPACA), even as we recognize the new law is incapable of resolving our health care morass,” said Dr. Garrett Adams, president of the 18,000-member Physicians for a National Health Program.At the same time, the doctors said that the enactment of a single-payer, Medicare-for-all program is the only way to assure high quality, comprehensive care to all Americans and the only way to rein in skyrocketing health care costs.

This doctor’s group has got it right, and 18,000 members is no small group. If its membership was 100,000 it would make a big difference.

“We reject the call by Republican leaders to repeal the Patient Protection and Affordable Care Act (PPACA), even as we recognize the new law is incapable of resolving our health care morass,” said Dr. Garrett Adams, president of the 18,000-member Physicians for a National Health Program.

“The health law is flawed because it continues our nation’s reliance on an inefficient and wasteful private-insurance-based model of financing care – a rickety structure that denies health care access to millions, bankrupts patients, ratchets up costs and frustrates efforts to improve quality,” he said.

“That’s why we need to move to a single-payer system,” he said. “In doing so, we’ll save about $400 billion annually by cutting out the unnecessary paperwork and bureaucracy inflicted on us by the private insurers. We’ll also gain the one-system bargaining power we need to negotiate lower prices for pharmaceutical drugs and medical supplies.”

Adams said the “modest” benefits in the administration’s health law include greater funding of community health centers, the expansion of Medicaid coverage, and “measures to restrict some of the most outrageous practices of the private health insurance companies like denying coverage because of pre-existing conditions or rescinding coverage when people get sick.”

“These beneficial measures could have been enacted separately,” Adams said. “But now that they’re part of the law, we cannot in good conscience support the repeal of any provisions that might conceivably benefit our patients.”

Adams said Republican leaders’ call to repeal PPACA is especially objectionable, given that they have no serious alternative to offer by way of health care reform.

“The GOP and conservatives urge greater reliance on the private sector and ‘free market’ mechanisms, including less regulation of the insurance industry,” Adams said. “Such measures include allowing people to purchase insurance across state lines, which would lead them to buy junk insurance policies from companies in states where consumer protections have been all but eviscerated. It would mean a race to the bottom to even skimpier insurance policies than people have now.”

He also dismissed claims by the Republican leadership that tort reform will significantly affect the U.S. health care scene, noting that research has shown malpractice suits have a marginal impact on the costs of medical care.

“The proposals emanating from the GOP leaders would do nothing to control costs or reduce the enormous administrative waste in our current health care system,” he said. “They would do nothing to reduce the number of uninsured. In fact, the number of uninsured, now at 51 million, would likely rise much higher – worsening an already catastrophic situation.”

Adams, a pediatric infectious disease specialist who resides in Louisville, Ky., said that, in his opinion, Republican leaders who are vowing to repeal the new health law are not really aiming to do so.

“Despite their bluster, GOP lawmakers don’t really want to repeal the law because some of their chief financial backers, the health insurance companies, like its basic provisions,” he said. “The insurers especially like PPACA’s requirement that millions of people buy insurance from them and that at least $447 billion in federal subsidies will be coming their way over the next 10 years as part of this arrangement.

“We reject such political posturing at the expense of human suffering and human lives,” Adams said. “We call for a real, sustainable solution to our health care woes. PPACA should be superseded by a comprehensive health reform that provides quality, affordable care to everyone – single-payer national health insurance, an improved Medicare for all.”

The Salt Lake Tribune

Published: January 3, 2011 03:45PM

The U.S. Environmental Protection Agency announced Monday that Gasco Energy, Inc., will pay a $350,000 penalty and institute new air-pollution controls at its Uinta Basin facilities for multiple violations of the Clean Air Act.

Gasco, the former operator of the Riverbend Compressor Station on the Uintah and Ouray Indian Reservation near Vernal, will cut air pollution at its Uinta Basin operations by more than 550 tons per year, the EPA said.

The Denver-based company did not respond to calls seeking comment.

Meanwhile, EPA applauded the consent decree lodged by the U.S. Justice Department in Salt Lake City last week.

“Under this agreement, Gasco and its successors will make significant investments to reduce emissions from facilities throughout the Uinta Basin,” said Jim Martin, EPA’s regional administrator in Denver. “EPA will continue to work with partners, including oil and gas operators, to protect air quality resources for the benefit of those who live in the basin.”

Hooray! It looks like the EPA is back in business. It would be interesting to know how many fines and the amounts were imposed during the eight years of the anti-regulation Bush Administration as compared to the Obama Administration.

Another point of interest that is seldom followed up on in the news—-how many companies actually pay the fines and how many fines are significantly reduced and what was the relationship between fines and political contributions.

Gasco allegedly violated the Clean Air Act at the Riverbend facility in a number of ways, according to a complaint filed with the consent decree. The allegations stem from violations the company disclosed voluntarily on hazardous air pollutant emission standards, federal permitting, emissions monitoring and reporting requirements.

The added controls will mean a reduction of about 427 tons of volatile organic compounds and hazardous air pollutants per year, the EPA said. The pollutants are key factors in the creation of ozone, which has emerged as a problem so serious in the Uinta Basin that monitoring last year showed the area was one of the nation’s worst for ozone pollution.

The pollutants worsen respiratory problems, including asthma, and they reduce lung capacity even in healthy individuals. They also can harm the heart, the brain and the nervous system, in addition to damaging ecosystems and reducing visibility.

As part of the agreement, the company will install emission controls on dehydrators, compressor engines and storage tanks. In addition, Gasco and its successors will install no-bleed or low-bleed pneumatic controls on gas compressors and well heads at all operating facilities in the Uinta Basin. A pneumatic is a controller that uses pressurized pipeline gas to open or close valves. The use of low-bleed units reduces emissions of air pollutants and conserves gas.

The consent decree, lodged in U.S. District Court for the District of Utah, is subject to a 30-day comment period and the court’s final approval.

By Kirsten Stewart

The Salt Lake Tribune
Updated: January 1, 2011 12:18AM

A legislative probe that found evidence of waste and abuse in Medicaid may sharpen the resolve of lawmakers who have vowed to take a scalpel to the low-income health program’s budget.

But the chief problem uncovered by auditors — clinics overcharging for their services — isn’t limited to Utah. “Upcoding” is one of the most common types of health care fraud, but the amount of money that can be recovered from any single provider is small, says an attorney who helps states pursue fraud claims in court.

And it’s difficult to prove, which is why states tend to focus more on investigating fraud with potential for bigger payback, said Tim McCormack, a lawyer at Phillips & Cohen in San Francisco.

There needs to be full time government auditors watching this program like a hawk all year long. An occasional audit will not cut it. It needs to be an ongoing audit day after day after day. There are just too many ways with too many hands in the pot with enormous economic incentives for providers and vendors to unfairly take advantage of the taxpayer and the patient. The taxpayer and patient need protection and the providers and vendors need the temptations to cheat removed.

Clarity in the pricing of each of the procedures is essential and that’s not easily accomplished, but when there is doubt the taxpayer and the patient will lose every time.

“As a general rule, they go where they can get more bang for the buck or where patients are at risk for harm,” he said.

The difficulty of assessing possible upcoding is illustrated by the 10 providers flagged by the Utah legislative auditor general for submitting high numbers of high-dollar claims in 2009.

These providers submitted a level-five charge — $89 — for basic office visits, the highest amount allowed, 37 to 125 times more frequently than the state average, the probe showed.

Auditors examined individual claims at only two of the clinics; none of the 10 is accused of fraud.

The audit report doesn’t identify providers; The Salt Lake Tribune obtained the names through a records request. Most are quite large providers or cater disproportionately to Medicaid patients.

“We’re probably 10 times larger than most clinics. That alone probably skews us,” said Scott Barlow, chief executive officer of the Central Utah Medical Clinic, which spans 47 offices and 130 physicians.

Michael D. Whiting, a primary care doctor in American Fork who is sixth on the list, said “about 45 percent of our patients are on Medicaid.”

Also, some of the clinics, such as the pediatric cardiology and hematology units at the University of Utah, see patients with complex medical problems that often warrant high-cost claims.

“We see a high volume of these patients, because we’re the only place for services like these in the state, actually in the surrounding states,” said Ed Clark, pediatric chairman at the U. and director of Primary Medical Children’s Center.

True, upcoding is “exceedingly” hard to pin down, McCormack said.

“There are very complicated and sophisticated guidelines for how you bill things. It’s not just how much time did you spend, but how detailed was the exam and how many bodily systems were involved,” he said. “You really have to go into each patient’s chart and see what happened and what was billed. Did they do what they said they did, and was it medically necessary?”

Auditors scrutinized only a sample of level-five claims from two health centers on the list: the Salt Lake Health Clinic of Utah, owned and operated by the Utah Department of Health, which oversees Medicaid; and a private clinic run by Exodus Healthcare.

Few of the examined claims could be substantiated at the level billed — only 1 percent of those filed by the Salt Lake clinic and 12 percent of those from Exodus.

Whether the upcoding was intentional, a mistake or the fault of sloppy charting is hard to say.

The state-owned clinic has no financial incentive to overcharge, said Utah Health Director David Sundwall, who was surprised and embarrassed to learn he, too, had miscoded claims. Sundwall volunteers his services as a physician free of charge and, even with the overbilling, the clinic ran a deficit last year that was backfilled with state and federal funds.

For private clinics, the motive is clear. Bill $89 for a $16 office visit, and you’re $73 ahead.

It’s a practice often rationalized by doctors who lose money or break even on Medicaid patients due to the program’s low reimbursement rates, said McCormack. It’s also often overlooked by states, which are legally obligated to ensure there are enough providers willing to accept Medicaid patients, he said.

Brian Zehnder, medical director at Exodus Healthcare, acknowledges most providers can do a better job at making sure the medical record adequately reflects the thoroughness of treatment delivered.

But he stands by his physicians, whose claims were recently reviewed by an outside firm at the company’s request. The firm found “excellence in coding and documentation,” Zehnder said.

Exodus isn’t getting rich off Medicaid, Zehnder said. “The economy has been very difficult on everyone. We’re working just as hard as everyone else to make ends meet and serve the needs of the community with honesty, integrity and good business principles,” he said.

State health officials have pledged to continue ongoing efforts to beef up surveillance of Medicaid. But lawmakers question whether the agency can, or should, police itself.

Even anti-regulation conservatives such as Rep. David Clark, R-Santa Clara, support creation of an independent Office of the Inspector General (OIG) to more closely scrutinize Medicaid claims.

“I look at some of these things and try to figure out, ‘Is it really fraud, waste and abuse?’ … What is the level of incompetence?” said Clark, whose term as House speaker expires in January.

Advocates for the poor support the idea, too. But they want any money recouped to be spent restoring dental and vision care and other benefits lost to recession-era budget cuts.

“Please don’t take out your frustration on the beneficiaries,” pleads Judi Hilman, executive director at the Utah Health Policy Project.

McCormack, meanwhile, says an OIG alone won’t solve the problem. OIGs work best, he said, when pared with qui tam, or whistle-blower, protections that allow individuals to file private litigation against fraudulent health providers under the False Claims Act.

Sen. Ben McAdams, D-Salt Lake City, agrees and is sponsoring legislation to reward whistle-blowers.

“It’s hard for investigators to work without tips or a road map for unraveling fraud,” McAdams said.

kstewart@sltrib.com

—

Pricey medicine

The state-owned Salt Lake Health Clinic may have overcharged Utah’s Medicaid program, submitting 718 “level five” claims of $89 for basic office visits last year, the highest amount allowed. The state average for level-five claims was 5.7.

Other clinics also filed large numbers of high-dollar claims, a legislative probe found:

Salt Lake Health Clinic of Utah • 718

Exodus Healthcare Network • 539

Pediatric Cardiology, University of Utah • 339

U. Pediatric Hematology • 329

Intermountain Healthcare’s McKay Medical Clinic • 274

Primary care physician Michael D. Whiting • 267

Children with Special Health Care Needs program • 253

Intermountain’s Memorial Clinic • 252

Intermountain’s LDS Hospital Physicians Billing • 238

Central Utah Medical Clinic • 213

Source • Utah Legislative Auditor General, December 2010 Performance Audit of Utah Medicaid Cost Control

Pharmaceutical Industry Fraud

by Ralph Nader

The corporate defrauding of taxpayers (eg. Medicaid and Medicare) and prescription drugs with skyrocketing prices was the subject of a report by Public Citizen’s Dr. Sidney Wolfe and his associates (see citizen.org [1]).

Dr. Wolfe’s team compiled a total of 165 federal and state settlements since 1991 totaling $19.8 billion in penalties. A key finding is that the drug industry’s penalties under the Federal False Claims Act exceed even those assessed against the overcharging defense industry for fraud. [2]

It may well be true that the pharmaceutical industry leads the defense industry in fraud, but that figure is only regarding the amount that has actually been discovered. The defense industry just may be much better at fraud management than the drug industry. That’s the bet from this corner. In the defense industry it is really difficult to separate fraud from the normal course of business.

Before we become overly impressed with the cumulative amount of the penalties, specialists in corporate crime law enforcement believe that adding more federal cops on the corporate crime beat, backed by a determined law and order Justice Department with White House backing, would have greatly increased the number of cases and imposition of penalties on these drug industry giants.

Nonetheless, Dr. Wolfe’s study shows that the pace of penalties has picked up over the past five years. This is due to “a combination of increased violations by companies and increased law enforcement on the part of federal and state governments,” says the report.

Many of these cases were initiated by company whistleblowers, who under the False Claims Act can receive a share of the settlements. Since the corporate bosses of these drug firms are almost never prosecuted, what these executives fear the most are company employees who go public with the evidence of corporate misdeeds.

These violations do more than financial damage to consumers and government health insurance programs. One of the worst violations involves companies promoting unproven, often dangerous uses for their medicines. Last year, Pfizer paid $1.2 billion for illegal off-label promotion — the largest criminal fine in U.S.history. Other major corporate violators were GlaxoSmithKline, Eli Lilly, Schering-Plough, Bristol-Myers Squibb, AstraZeneca, TAP Pharmaceutical, Merck, Serono, Purdue, Allergan, Novartis, Cephalon, Johnson & Johnson, Forest Laboratories, Sanofi-aventis, Bayer, Mylan, Teva and King Pharmaceuticals.

It would be interesting to see if any one solitary official in either the drug industry or defense industry has spent any time in jail for the fraud they were involved in. Probably not one. That’s the way we deal with Corporate America in today’s world.

Could it be that more Congressmen have gone to jail than Fortune 500 executives?

The violations by these and other drug companies point to the wide range of impacts, including taking many lives of patients, which stems from these recurrent activities. These criminal or civil illegalities cover (1) overcharging government health programs, (2) unlawful promotion, (3) monopoly practices, (4) kickbacks, (5) concealing study findings, (6) poor manufacturing practices, (7) environmental violations, (8) financial violations and (9) illegal distribution.

Outside the purview of the Public Citizen study are the ravages of counterfeit drugs and poorly inspected ingredients in drugs, now mostly coming from China and India, due to the outsourcing by U.S. and European drug companies in their thirst for even greater profits.

Drug company sales are huge, growing from $40 billion in 1990 to $234 billion in 2008, and far exceeding inflation with their annual price gouging. To make matters worse, in 2003, the Congressional Republicans, with decisive support from some Democrats, passed the drug benefit bill which explicitly prohibited Uncle Sam, the payer, from bargaining for volume discounts with drug companies.

With over 400 full-time drug company lobbyists putting pressure on Congress, and tens of millions of dollars flowing into the legislators’ campaign coffers, budgets for federal investigators, prosecutors and inspectors are kept to a minimum. Unfortunately, crime in the suites pays over and over again, despite occasional penalties.

A bright spot is the increasing enforcement action at the state level.

By last year, 32 states had enacted false claims acts, including fourteen states that qualified as strong laws by federal standards.

Still, the Wolfe report concludes that the “current system of enforcement is not working.” He gives the examples of the $7.44 billion in financial penalties assessed over the past twenty years on GlaxoSmithKline and Pfizer, as compared to their combined total of $16.5 billion in global net profits in one year alone.

What would deter these illegal practices and risks to public safety? Dr. Wolfe says “the lack of criminal prosecution that would result in jailing of company executives.” is key. Moreover, the report notes that “a felony conviction could result in their companies becoming ineligible for reimbursement from federal and state health programs, a critical source of pharmaceutical company revenues.”

A flicker of hope that a little change is on the way came from the Food and Drug Administration’s Deputy Chief Counsel for Litigation, Eric Blumberg. He indicated that the government is considering going after drug company executives for violations such as off-label promotions. He stated: “unless the government shows more resolve to criminally charge individuals — at all levels in the corporate hierarchy — we can not expect to make progress in deterring off-label promotion.”

The problem is that the final operating decision is in the hands of the Justice Department — historically short-staffed and short-willed to entreaties for prosecution by the FDA and other regulatory agencies.

Furthermore, for over 30 years, the Justice Department has stone-walled requests that it start a corporate crime database as it has done with street crimes. Congress likes it this way, as it continues to cash corporate campaign checks.

Just last week, however, outgoing Judiciary Committee Chairman, Democrat John Conyers introduced a bill (H.R. 6545) to create such a corporate crime data base in the Justice Department. Well, as the saying goes, everything starts with a gesture!

Ralph Nader [3] is a consumer advocate, lawyer, and author. His most recent book – and first novel -  is, Only The Super-Rich Can Save Us [4]. His most recent work of non-fiction is The Seventeen Traditions [5].

December 16, 2010|By Shari Roan, Los Angeles Times

Children born to mothers who live close to freeways have twice the risk of autism, researchers reported Thursday. The study, its authors say, adds to evidence suggesting that certain environmental exposures could play a role in causing the disorder in some children.

“This study isn’t saying exposure to air pollution or exposure to traffic causes autism,” said Heather Volk, lead author of the paper and a researcher at the Saban Research Institute of Children’s Hospital Los Angeles. “But it could be one of the factors that are contributing to its increase.”

Reported cases of autism cases increased by 57% between 2002 and 2006, according to the Centers for Disease Control and Prevention, although professionals still debate whether rates have actually risen or a greater proportion of autistic children is being diagnosed. An estimated 1 in 110 children is diagnosed with autism today. There is no cure, although research has shown that various therapies can mitigate some symptoms, especially if begun early in life.

In the current study, published online in the journal Environmental Health Perspectives, researchers looked at 304 children with autism and, for comparison, 259 children who were developing normally. The children, between the ages of 24 months and 60 months at the start of the study, lived in communities around Los Angeles, San Francisco and Sacramento.

Each family was evaluated in person, and all of the children received developmental assessments. Researchers collected data on where each child’s mother lived during pregnancy and at the time of birth, and the proximity of the homes to a major road or freeway.

Children living about 1,000 feet from a freeway at birth — about 10% of the sample — had a two-fold increase in autism risk. The link held up even after researchers controlled for other factors that may influence development, such as ethnicity, parental education, maternal age and exposure to tobacco smoke.

The study did not find a link between autism development and proximity to a major road, as opposed to a freeway. That may be due to the type and quantity of chemicals dispersed on freeways compared with major roads, Volk said. In Los Angeles, some freeways carry more than 300,000 vehicles daily.

Gayle Windham, chief of the epidemiology surveillance unit with the California Department of Health Services Environmental Investigations Branch, said the study did not directly implicate air pollution as a risk factor for autism because it did not have a way of measuring how much pollution the mothers were exposed to during pregnancy.

“They are using a proxy measure for air pollution, which is distance to a freeway,” she said. “But you still don’t know how much time the women spent at home or working or commuting.” Windham was not involved in the study.

Windham was the lead author of a 2006 study, also published in Environmental Health Perspectives, that found that children with autism were about 50% more likely to have a birth residence in an area with hazardous air pollutants. The study was based on air pollution data from the Environmental Protection Agency that was matched to birth records in the San Francisco Bay Area.

Research like this suggests environmental factors need more attention, said Clara Lajonchere, vice president of clinical programs for the advocacy group Autism Speaks. Lajonchere was not involved in the study.

“The implication could be very far reaching in terms of prevention and public health concerns,” Lajonchere said. “I think it’s pretty well established that genes play a huge role in autism. But there is something going on beyond genetics.”

Chronic exposure to air pollution during pregnancy is thought to have physical effects on the fetus. High levels of carbon monoxide, nitrogen dioxide and particulate matter have been linked to a higher risk of preterm birth and low birth weight. Chemicals such as ozone, sulfur dioxide and polycyclic aromatic hydrocarbons, or PAHs, have also been identified as harmful to a developing fetus.

“We know there are some chemicals in air pollution coming from diesel exhaust that might be a good forerunner to look at,” Volk said. “But right now we really don’t know what it is about air pollution that is associated with autism.”

Families residing close to freeways may have to wait for more research before scientists can issue advice or recommendations on what to do about this potential risk, Volk said. For one thing, this study requires replication, she said. In addition, future studies will attempt to identify the level of exposure to particular pollutants.

shari.roan@latimes.com

Deseret News

Published: Friday, Dec. 24, 2010 5:45 p.m. MST

The NFL should consider contraction.

Not fewer teams; fewer pounds.

Let’s face it, the NFL needs to go on a diet. Send the players to Jenny Craig, sign them up for fat camp or Jillian Michaels, eliminate seconds at the training table, get serious about drug penalties — do whatever it takes.

Look, this sounds like a wacko idea, and it will never be seriously considered by the league because it makes way too much sense, but the NFL should adopt weight limits for players. Put them on a scale before each game, like boxers and wrestlers. With the much-publicized health problems of overweight NFL players, combined with the recent outbreak of explosive collisions and injuries, why not?

Doug Robinson has a great idea here. Now that it is openly on the table it could well happen. Support for this idea could pick up steam very fast. Limiting offensive and defensive linemen to 275 pounds would open the game up. Instead of 10 players standing and hugging one another in a mass at the center of the field it would bring a return to the fine art of blocking and tackling and return quickness to the game instead of power. Running backs would actually have options instead of just to ‘bounce to the outside.’

Way to go Doug Robinson. Good idea. We’re all for it.

The players are too big and many of them too fat. It exposes them to health risks on the field and off. It’s time to end the NFL’s version of the arms race — everyone getting bigger so they can compete with everyone else who is getting bigger.

In 2006, the Palm Beach Post studied the size of NFL players by compiling data from NFL rosters beginning in 1920 (a total of nearly 40,000 players). The newspaper reported, “From 1920 to 1984, there were never more than eight players in any season who weighed 300 pounds or more. This year, there were 570 players who weighed 300 or more listed on 2006 NFL training camp rosters, nearly 20 percent of all players.”

The Associated Press reported the increase in 300-pound NFL players: one in 1970, three in 1980, 94 in 1990, 301 in 2000 and 394 in 2009.

Look at the roster of the 1967 Green Bay Packers, winners of the first Super Bowl. Their biggest player weighed 260 pounds. Now look at the roster for the 2009 New Orleans Saints, winners of the last Super Bowl. They had 11 players who weighed between 294 and 343 pounds.

This trend toward battleship-size players has been emulated in the college and high school ranks. BYU’s roster includes 14 players who top 300 pounds, with several more who are one Big Mac away from joining the club.

Where will it end? Some players are already approaching 400 pounds. Next stop: 500?

The increase in size far outstrips the increase for the general population. That’s because, for the most part, it is manufactured weight. Players intentionally pack on the weight with supplements and meals that consist of 6,000 or 8,000 calories, and, yes, steroids and human growth hormone.

“The question they have to ask is, ‘How big is big enough and when do we stop getting bigger and think more about getting stronger and healthier and better?’” Michele Macedonio, nutritionist for the Cincinnati Bengals, told AP.

By bulking up, players are risking their health and a few years of their lives for fame, money and the thrill of playing the game. A study conducted by Dr. Stephen Baron for the National Institute of Occupational Safety and Health, found that linemen had a 52 percent greater risk of dying from heart disease than the general population.

The results of a 2006 Scripps Howard study of 3,850 pro football players who have died in the last century revealed the following: One of every 69 players born since 1955 is dead; 22 percent of them died of heart disease; 77 percent of those who died of heart diseases qualified as obese, even during their playing days; only 10 percent of deceased players born from 1905 through 1914 were obese while active players.

“Clearly, these big, fat guys are having coronaries,” Charles Yesalis, a Penn State professor of health policy and sport science, told ESPN.

University of North Carolina endocrinologist Joyce Harper published the results of a study in the Journal of the American Medical Association that revealed 56 percent of NFL players were obese according to their body-mass indexes — the government weight standard for height and weight. Some believe the BMI is inaccurate for athletes because it doesn’t take into account muscle mass, which weighs more than fat. Yesalis refutes that notion.

“When you get that big — regardless of whether your body is muscle or fat — your heart is stressed,” he says.

Besides, according to AP, Macedonio cited one study that showed a sampling of university offensive lineman averaged 27.4 percent body fat.

Another study revealed that the average life span of NFL players who play for five or more years is 55 (52 for linemen). They lose one to three years of their life expectancy for every year they play in the league.

The bottom line: Players are getting bigger and unhealthier. The average weight in the NFL has grown by 10 percent since 1985 with an average of 248 pounds; the heaviest position, offensive tackle, went from 281 pounds 25 years ago to 318 pounds.

“Is it good for guys to be that big? Of course not,” said Yesalis. “I fully support a weight limit of 275 pounds. It would reduce injuries and have a positive effect on the short- and long-term health of these men.”

A league-mandated 275-pound weight limit would not be any more unfair to those who weigh too much than it is for those players who get turned away because they don’t weigh enough. The weight limit would affect linemen almost exclusively — the players who are at the greatest risk for heart disease, diabetes and stroke, according to Mark Shilstone, the director of health and fitness for the Ochsner Clinic Foundation who has evaluated the condition of more than 300 NFL players. “(Linemen) are the walking dead,” Shilstone told USA Today. “They just don’t know it.”

The supersizing of NFL players has almost certainly contributed to another problem: Injuries. Today’s players are not only bigger, but they are faster than ever. Do the physics — bigger and faster players means harder collisions. Many of the most publicized collisions are occurring in the secondary, but 14 quarterbacks have been sidelined this season, several with concussions, because they were crushed by behemoth linemen. From a practical point of view, can the league afford to have so many players at its marquee position on the sidelines?

The other part of the weight-gain phenomenon the NFL must address more seriously is the use of steroids and human growth hormone. The league likes to boast of its testing procedures and its suspensions. It is na?e to point to drug testing and the relatively few failed tests as proof that steroids aren’t much of a problem in the NFL. This has been stated repeatedly, but it’s worth noting again that Olympic sprinter Marion Jones managed to pass every drug test she took (160) and then confessed to using steroids.

Does anyone find it strange that the NFL — whose athletes who have the most to gain by becoming bigger and stronger — has relatively few drug suspensions, while track and cycling continue to churn them out? Stranger still is the league’s weak penalty for drug use. The World Anti-Doping Agency and the IAFF — the governing body for track and field — suspend first-time offenders for 2-4 years second-time offenders for life. The NFL suspends first-time offenders for four games, which makes steroid use worth the risk, since the penalty is weak and there is little chance of being caught anyway.

The league will dispute that contention, but one thing is certain: The NFL has a Size-XXXX problem.

e-mail: drob@desnews.com

Published: Monday, Dec. 20, 2010 6:40 p.m. MST

SALT LAKE CITY — Sen. Orrin Hatch said he skipped a vote on the failed DREAM Act over the weekend because it was a “cynical exercise in political charades” by the Senate’s Democratic leadership.

The act, intended to help undocumented youths earn citizenship by attending college or serving in the military, failed 55-41 on Saturday with the support of just three Republicans, including Sen. Bob Bennett, R-Utah.

In today’s Senate where Republicans are filibustering everything, the 55 vote majority is not enough for the bill to pass the 60 vote requirement.

Bennett was one of three Republicans who could do the right thing—simply because he is through as a senator. His conservative, knee-jerk, Tea Party base turned on him because he was ‘thoughtful’ too often.

Hatch chose to skip the vote and earned ire from all sides. Based on the comment letters in The Deseret News, the core of which have been Hatch supporters for years, he is in for a serious election battle in 2012. There was not one letter out of 20 that supported Hatch’s non-vote.

Hatch, also R-Utah, was an original sponsor of the act first introduced years ago but said he would have voted against it had he not been in Missouri attending a grandson’s college graduation.

“The American people sent a clear message in the November elections that they want Congress to focus on getting the economy moving,” he said in a statement.

“Unfortunately, Senate majority leaders have opted instead to move ahead with show votes aimed at currying favor with their far left political constituencies.”

Just six months ago, Hatch spoke in favor of the act at a town hall meeting in Layton. On July 7, the senator told the audience he’s against amnesty for the children of illegal immigrants but supports the Development, Relief and Education for Alien Minors Act.

“A lot of these kids are brought in as infants. They don’t even know that they’re not citizens until they graduate from high school,” Hatch said. “If they’ve lived good lives and they’ve done good things, why would we penalize them and not let them at least go to school?”

Hatch spokesman Mark Eddington said the quote is taken out of context. He said the senator was not suggesting he held a different position on this issue but “is acknowledging there is a problem here.”

Eddington said Hatch believes “there’s no way we can or should do anything on immigration until the American people have confidence that our borders are secure. And the fact is they aren’t.”

Drugs like meth come into Utah from Mexico, Eddington said, “and with those drugs come violence, murder, drug and human trafficking. This is serious. So there’s no change here — his position is a recognition of a basic reality.”

Hatch is up for re-election in 2012 and, after seeing Bennett defeated by conservatives at the GOP state convention last May, is anticipating a tough fight. Rep. Jason Chaffetz, R-Utah, has said he is considering challenging the senator.

Immigration is a “nettlesome issue for politicians these days, particularly in the state of Utah,” said Kelly Patterson, head of BYU’s Center for the Study of Elections and Democracy.

Patterson said the act has already been “characterized as amnesty” for illegal immigrants. “Those are not labels that help him in any effort to seek re-nomination.”

But had Hatch cast a vote against the act, he may well have been criticized for changing his position. “What’s more likely to hurt you, being labeled a flip-flopper or being too soft on immigration?”

By not voting, Patterson said Hatch was attempting to find some middle ground.

“The more you have to explain yourself to voters, the worse off you are,” he said.

A number of Utahns had backed the act and expressed disappointment at its defeat. Bishop John Wester of the Catholic Diocese of Salt Lake said he was saddened by the vote.

“It is tragic for these bright, young immigrants and a loss for our country,” Wester said in a statement. He thanked Bennett “for his courage and leadership in voting for the DREAM Act” and said he will continue to advocate for both the act “and for humane reform of our broken immigration system.”

E-mail: lisa@desnews.com

In Vermont, Single-payer Health Care in a Single State

by Josh Goodman

WASHINGTON – Congress never really considered a single-payer health plan run by the government. Vermont is planning for one. This isn’t some liberal fantasy. Vermont lawmakers are serious. To understand how serious, you only have to look at the resumes of William Hsiao and Jonathan Gruber.

Hsiao, a Harvard economist, is credited with designing Taiwan’s single-payer system. Gruber, an M.I.T. economist, helped design Massachusetts’ near-universal health care system and the federal health care reform law itself. They’re on the team that the Vermont legislature contracted with this year to explain how single-payer would work there. In other words, the nation’s 49th most populous state is deploying some of the world’s leading experts to redesign its health care system. Their report is due early next year, after which Vermont will decide whether to become America’s first single-payer state.

Vermont is home of our favorite senators, Leahy and Sanders. Go Vermont!! Set the standard for America. Single payer is clearly the best solution to America’s health care problems and your leadership may eventually get the nation there. Cheers to Vermont!

Vermont’s project could serve as a test of something that even the state’s conservative counterparts elsewhere are interested in finding out: just how much power states have over their own health care systems.(Credit: Jobs with Justice)

If Vermont decides on that course of action, the experiment will serve as a test of whether more aggressive government intervention can improve health care and reduce costs. Long before the results of that experiment would be known, Vermont’s project could serve as a test of something that even the state’s conservative counterparts elsewhere are interested in finding out: just how much power states have over their own health care systems.

Vermont is perhaps an unlikely place to try something dramatically new in health care. That’s because by most standards, Vermont’s health care system already is one of the nation’s best. The United Health Foundation has ranked Vermont the healthiest state in the country four years in a row. Less than 10 percent of Vermonters lack health insurance, one of the lowest rates in the country.

If the state’s only concern were getting insurance to the comparatively few people who lack it, Vermont could sit back and wait for the new federal law, with its promise of near-universal coverage, to kick in. But expanded access is only part of what the state wants – and it isn’t the part that officials tend to mention first.

“For Vermont, it’s all about containing costs,” Peter Shumlin, the governor-elect, told Stateline. He points out that the annual cost of health care in Vermont – for individuals, businesses and government – has doubled to roughly $5 billion a year over the past eight years. “It’s killing small businesses,” Shumlin says, “kicking the middle class in the teeth.”

Vermont’s problems paying for health care aren’t much different than the problems other states face. What makes Vermont different is that many of its top officials believe the solution is to have only one entity providing health insurance. In their boldest schemes, they’re hoping to drive private health insurance providers out of existence and to free employers from the responsibility of providing health insurance to their employees.

That includes Shumlin, who led the state Senate when it approved the legislation approving the study that Hsiao is leading. The five-way Democratic primary for governor had other single-payer supporters, but none was more forceful than Shumlin. He won the primary by 203 votes, then won the general election by 2 percent.

Providing health insurance to everyone is, of course, a very costly endeavor. But Shumlin and many of the Democrats who run the legislature think single-payer can save money in a couple of ways. For one, they note that hospitals and doctors’ offices spend a lot of money filling out paperwork and coding claims for insurers. These administrative costs aren’t especially high in Vermont compared to many other states, but supporters of the single-payer plan believe that if health care providers could deal with one insurer, they’d be able to focus more on providing care and less on processing claims.

Supporters also see single-payer as an antidote to the fragmentation of Vermont’s health care system. For example, state Representative Mark Larson, who’s expected to chair the House Health Committee next year, laments that his local hospital, Fletcher Allen Health Care in Burlington, is planning to sell off its outpatient dialysis units.

Fletcher Allen made the move because it was losing money on dialysis. The reimbursements it was receiving from all of Vermont’s various public and private health insurance providers weren’t enough to pay for the costs. In the current system, even if it were clear that the cheapest and best way to care for dialysis patients was for Fletcher Allen to own the units, the state’s power to do anything is limited. The structure of health care is subject to the vagaries of Medicare and private insurers, not coherent planning.

Under single-payer, that would change. “It’s very hard to direct a strategy for accomplishing long-term savings in health care – to manage care better, to minimize unnecessary procedures, to invest in strategies that have demonstrated savings in quality and cost – without some system of financing and payments to direct those efforts,” Larson says.

There remains one huge question: Can wholesale reform work in a single small state? State Rep. George Till, a member of the legislature’s Health Care Reform Commission, is skeptical of single-payer.

Till points out all the different entities that provide health insurance to Vermont patients. There are the state’s private insurers. There’s the state itself, through Medicaid and through its coverage of state employees. There’s the federal government, separately through Medicare and the Veterans Health Administration. There are some larger companies, such as IBM, that self-insure. And there are many people whose health insurance isn’t even based in Vermont.

“At the hospital that I work for, we deal with 14 different insurers from New York,” says Till, who is a doctor.

Due to those complications, what Vermont is trying to do is, at its heart, a test of the power of state government. Can a state wrest total control of health insurance from the federal government and private companies?

The simple answer is that it can’t without federal permission. Companies that insure their own employees at their own expense are exempted from state health care regulation under the federal Employee Retirement Income Security Act, known as ERISA. Medicare and the VA, of course, fall under federal purview. The new federal health care law forbids states from receiving waivers from its provisions until 2017, although some senators are working to change that date to 2014, when the law’s most consequential provisions kick in.

If those efforts succeed, states would gain a lot more freedom to do what they please. For now, though, the definition of single-payer is in doubt, even among the people who are designing Vermont’s programs.

“The last thing we want to do is create the perfect policy that can’t be implemented,” says Steven Kappel, a Vermont-based health care researcher who is part of the Hsiao-Gruber team.

The question is whether single-payer without Medicare patients or without VA patients or any other piece of the pie would really be single-payer at all – and whether leaving a piece out would undermine the advantages of the change that Vermont expects. The researchers are charged with developing other plans beyond single-payer: One is a government plan open to all Vermonters with conventional private insurance as an alternative. Despite Shumlin’s commitment to single-payer, it’s possible another option might look more appealing in the end.

For now, though, those obstacles haven’t compromised the incoming governor’s commitment to the single-payer concept. In fact, he doesn’t think he has much of a choice.

Shumlin’s view is that health care interests are powerful enough in Washington that aggressive cost containment isn’t really possible there. “I believe that the states will have to lead true, meaningful health care reform,” he says. “We have a real opportunity to lead the country in health care if we have the courage.” But Shumlin and others also argue that, despite some of the difficulties, Vermont is the perfect place to try.

The biggest advantage Vermont has is the political environment in the state. Blue Cross Blue Shield Vermont, the state’s largest private insurer, has stayed neutral on single-payer. “We don’t think it’s our role,” says Kevin Goddard, the company’s vice president of external affairs. Even the state chamber of commerce, while somewhat dubious of the concept in its purest form, isn’t actively opposed yet.

What everyone agrees upon is that some very smart people are thinking about the best way to structure Vermont’s health insurance system. The initial report is due next month. Even critic Till says, “I think people will listen very carefully to what Dr. Hsiao comes back with.”

Published: December 19, 2010 11:40PM

Rule No. 1: Don’t start a land war in Asia. Rule No. 2: Don’t ever dare auditors to find something wrong.

Utah Department of Health brass violated Rule No. 2 when legislative auditors in 2009 found holes in the department’s ability to detect and stop fraud, waste and abuse in Medicaid. Medicaid is a program funded by both the federal and state governments to provide health care to the poor.

Dr. David Sundwall, head of the Utah Health Department, told auditors in 2009 that doctors in Utah had higher ethical standards than those elsewhere and that he did not believe that Medicaid fraud was nearly the problem here that legislative auditors suspected it was.

Lo and behold, the auditors are back with another report. Guess what they found?Evidence shows that fraud, waste and abuse of Medicaid payments in Utah probably is in the middling range of what forensic accountants find elsewhere in the nation.

Most embarrassing of all, the auditors found that a Salt Lake clinic operated by the Health Department itself is guilty of chronically overbilling Medicaid for procedures that should have been reimbursed at lower rates. Dr. Sundwall himself provides volunteer care at the clinic, and his billings were too high, though he did not benefit from them — he donates his time — and they may have been the result of clerical errors.

There are several lessons in this latest legislative audit of Medicaid, the third in an ongoing series. First, even though internal investigators within the state’s Medicaid program have uncovered some major funding abuses, the Legislature should create an independent inspector general for Medicaid. That’s one of the legislative auditor’s recommendations. The sums involved are huge. Medicaid cost $1.8 billion in the current year and provided health care for 342,000 people. If there are overpayments or fraud of even 3 percent, as legislative auditors suspect, that’s tens of millions of dollars that should be recouped from errant providers.

Second, the Medicaid coding system for procedures is complex, comprising some 7,000 codes that change annually. Errors are inevitable. But there’s also ample opportunity for abuse.

Third, inadequate reimbursement rates for Medicaid may explain why clinics overbill. They are straining with thin staff to provide care for the poor. That doesn’t excuse the practice, but adequate reimbursement is part of the equation.

Welcome to the tangled world of health care reform. Fighting a land war in Asia is probably easier.

Published: December 18, 2010 01:01AM
(Ed Firmage Jr. is a fine-art photographer in Salt Lake City.)

From the beginning, America has been a land of opportunity. And because of this, Americans dreamed big.

Our optimism comes from the unique experience of starting our national adventure with a continent of pristine land at our feet. America before Europeans was of course not uninhabited or untouched by people. But the native inhabitants practiced a mode of living that left the land intact. They, therefore, as much as Benjamin Franklin and Thomas Jefferson, are our founding fathers and mothers.

And so, unlike any people since the Stone Age, settlers in America enjoyed the benefit of a continent of unspoiled resources. For as long as the frontier remained, Americans could look West and see a future that was theirs to make and enjoy. As historian Frederick Jackson Turner observed, our character stems from our relationship with a frontier that seemed to be never-ending.

In the years following the “closing” of the frontier in 1890, Americans found themselves enmeshed in global problems that were not of our making: the suicide of Europe’s empires in World War I and the ensuing collapse of the idiotic peace that followed. The “war to end all wars,” in fact, set the stage for a century of war that included not only World War II but also the Cold War.

Together, these three big wars and the countless little wars they spawned defined America in ways that we ourselves might not have chosen as pioneers on the frontier or as participants in the great constitutional debate that marked our debut as a nation. Modern America is certainly not the world that my ancestors, who came West to build the Kingdom of God, would have chosen.

The 20th century and the beginning of the 21st are in fact a detour from our appointed course. Our Founding Fathers, who created the world’s first democracy since ancient Greece, dreamed of a society that would work differently from that of Europe.

Thus, for example, the founders set in place a legal framework that made it difficult for the president to wage war. Subsequent American history has been the story of the undoing of this intent of the framers.

And so, in ways and to a degree that would shock Thomas Jefferson or George Washington, America finds itself today playing warlord in Afghanistan.

The tragedy of America is that, in spite of being “on top,” we’ve lost our sense of purpose, the true defining of which was interrupted by the century of Europe’s wars and their disastrous impact on the American soul. The tragedy is our present false sense of self as a superpower. It’s a tragedy because being a superpower is a fantasy, a dark fantasy, not a life’s purpose for ordinary people. Superpower is the dream of tyrants, not democrats.

What, then, is our course in the next century to be? Is it continuing the long detour of militarism and corporate empire building (Eisenhower’s “military-industrial complex)?

Speaking for myself, I’d like to think that we have greater collective wisdom than that. I believe that our mission lies in the job, interrupted in the early 20th century, of creating a radically better kind of society.

The key now, as then, is having a frontier to challenge us. Free land is gone. But free power is everywhere, in sun and wind. Clean power, if we will embrace it, is the answer not only to our need for energy but our even deeper need, manifested by our present neurotic behavior, for high purpose in what we do.

And what purpose could be more inspiring than creating a way of life that will last!

Ed Firmage Jr. is a fine-art photographer in Salt Lake City.

The Salt Lake Tribune

Published: November 30, 2010 11:54AM
Updated: December 9, 2010 12:06AM

To keep his heart healthy, cardiologist Brent Muhlestein takes 5,000 units of vitamin D a day — a habit he will continue despite a new report claiming there is no evidence that the vitamin provides much benefit beyond strengthening bones.

Calling the Institutes of Medicine report released Tuesday “overly conservative,” Muhlestein points to his own studies at Intermountain Healthcare that suggest higher levels of vitamin D translate to better heart health.

Heads up folks. Dr. Muhlestein is an independent advocate for the higher dosage level because of his own very significant studies. Vitamin D appears to be a cheap source of good health.

“I tend to trust my own studies,” said the director of cardiovascular research at the Heart Institute at Intermountain Medical Center. “Our observational studies still demonstrate a significant association between cardiovascular risk and vitamin D insufficiency.”

With media reports touting the vitamin for reducing the risks of diseases including autoimmune diseases, cancer and diabetes, an Institutes of Medicine committee assessed 1,000 studies and reports to clarify the benefits and offer advice on how much to take.

“This thorough review found that information about the health benefits beyond bone health — benefits often reported in the media — were from studies that provided often mixed and inconclusive results and could not be considered reliable,” says the report.

It also found that most Americans receive adequate amounts.

Muhlestein disagrees. Tapping medical records for more than 41,000 Intermountain patients, he found only one-third had sufficient levels in their blood. Found in few foods, the vitamin mainly comes from sun exposure. But sunscreen blocks absorption, and Utah’s latitude reduces the UV radiation exposure needed for vitamin D synthesis.

And while the IOM recommends adults get 600 international units a day, Muhlestein says a blanket recommendation doesn’t make sense. Instead, patients’ vitamin blood levels should be tested first, he said.

That’s how he came up with his own “prescription” of 5,000 units a day: Less didn’t boost his levels enough, even though the IOM report says 4,000 units should be the upper limit for adults.

An Intermountain study recently published in the American Journal of Cardiology found that patients who were vitamin D deficient but had no other cardiovascular risk factors were at an increased likelihood of developing diabetes, hypertension and high cholesterol.

Other Intermountain studies have linked deficiency to heart failure, stroke, coronary artery disease and death.

“My guess is there is a cause and effect relationship,” Muhlestein said, while acknowledging the need for a trial that would randomize deficient patients to taking the vitamin or a placebo. His studies have been observational.

One Intermountain study that hasn’t been published showed that deficient patients who boosted their vitamin D levels were less likely than others to have cardiovascular problems, he said.

“It appears that if you do something about your vitamin D level, it will reduce your risk,” he said.

hmay@sltrib.com

—

Reporting on vitamin D

A new Institutes of Medicine report found:

Research so far cannot confirm that vitamin D protects against cancer, heart disease, autoimmune diseases or diabetes.

Most Americans and Canadians up to age 70 need no more than 600 international units (IUs) of vitamin D per day.

Those age 71 and older may need as much as 800 IUs.

The Salt Lake Tribune

Published: December 7, 2010 09:56PM

Medicare beneficiaries have until New Year’s Eve to figure out whether to change or keep their prescription drug plan.

Parts A and B of Medicare cover hospitalization and doctor visits. With traditional Medicare, drug plans — generically known as Part D — are separate, while with Medicare Advantage plans offered by private insurers, the drug benefits are folded into the overall policy.

Health care reform means at least one big change: The so-called doughnut-hole gap, when seniors are on their own to pay drug costs, will shrink slightly in 2011 because the cost of brand-name drugs will drop by 50 percent.

Seniors should be alert to the need to evaluate the various insurance programs and make a decision before the end of the year on which supplemental program best suits their needs.

In 2011, once a Medicare beneficiary spends $2,840 on prescriptions, she has to pay for all other medicine until the total cost for the year reaches $6,448. In addition to the name-brand drug discount, seniors will get a small break on generics, paying 93 percent of the costs rather than 100 percent.

As with the Medicare and Medicare Advantage plans, subscribers can choose the drug plan that best suits them. Besides making sure needed drugs are available on the plans, consumers should note that while average Part D premiums are rising by $1 per month, some plans will cost at least 10 percent more, according to a study by Avalere Health, a Washington-based advisory services company.

Average premiums for drug plans are rising by just $1 in 2011, to $30 per month, according to the Centers for Medicare & Medicaid Services. But the 10 largest drug plans will raise premiums by an average of 10 percent, Avalere points out.

In addition, Avalere found:

• The percentage of covered drugs subject to prior authorization increased from 12.4 percent in 2008 to 16.7 percent in 2011.

• More plans will be dividing their formularies, or covered drug lists, into five tiers, which allows plans to charge consumers different rates of cost sharing to encourage the use of specific products.

• Some new low-cost plans are entering the business in 2011. The Humana Walmart-Preferred Rx plan will cost $14.80 per month, well below the average price for Part D policies. But out-of-pocket costs will vary depending on where medications are purchased, with Walmart, Sam’s Club or RightSource Rx mail-order pharmacy offering the lowest prices.

—

Time to evaluate prescription plans, new costs

O Utahns with Medicare Advantage plans have drug coverage as part of their subscriptions, but traditional Medicare beneficiaries need to pick plans.

For information on drug plans offered in Utah: www.q1medicare.com/2011/2011D-Medicare-PartD-PDP-for-Utah-Utah.php?st=UT&prodid=240

© 2010 The Salt Lake Tribune

By Lois M. Collins

Deseret News

Published: Monday, Nov. 29, 2010 11:02 p.m. MST

This is the final part of a Deseret News series that examines how Utahns are empowering our poor in three areas: homelessness, education and health care.

SALT LAKE — It’s 8 a.m. on a freezing-cold Sunday beneath the 500 South viaduct. Under the shelter of the overpass, a line of volunteers, their breaths clearly visible in the cold air, are serving breakfast on cardboard plates to the homeless.

But not everyone’s focused on the tempting aroma of the hot buttermilk pancakes and meaty gravy that’s being scooped over mashed potatoes. Bob, a tall, skinny man in a tattered gray coat, is searching for the nurse who sometimes shows up. He’s got a bad rash, he says, pushing up his sleeve to show a volunteer the angry red bumps from his wrist to his elbow. Sometimes the nurse gives him ointment that helps.

A few minutes later, a harried mom pushing an overstuffed stroller with a toddler sitting beside what looks like a trash bag full of clothes makes the same request. Did the nurse come?

Not today.

When you’re poor and uninsured or underinsured, health care can be a vexing problem.

Last year in Utah there were 387,100 people without insurance, including 100,500 children, according to the Kaiser Family Foundation. Of those, 71 percent were in families with at least one full-time worker. Another 12 percent were in families where someone worked part-time. Most of the uninsured are poor.

And even when there’s help, it may not be complete. While 10 percent of the state’s population has Medicaid, there are gaps in what it covers. Many low-income folks don’t qualify for Medicaid or for the Children’s Health Insurance Program. Barring the ability to get health insurance through an employer or afford it on their own, they slip through some good-sized cracks when it comes to accessing medical care.

It’s particularly true for poor working-age men and women, many of whom work for wages low enough they can’t rise above the federal poverty guidelines. They compound the problem by putting off going to a doctor or getting screenings because they can’t afford it. Some only go when they have more advanced and costly medical needs. Or they may use emergency rooms, which are a great deal more expensive than nearly any other option, as an entry point into the health care system. Some go there because the medical problem becomes a crisis, while others may not know where else to go. And if they cannot afford to pay for the care, some of the cost gets passed on to the paying customers in the form of higher costs.

Community answers

That ER utilization is one reason government agencies and health care providers support or offer health fairs and clinics in the community, from the Fourth Street Clinic to serve the homeless to the network of Community Health Centers like Midtown in Ogden and Central City in Salt Lake. A powerful line of care for the poor, they leverage local and federal money, as well as donations, and provide service based on a patient’s ability to pay, using a sliding fee. But clinics can’t just operate on fumes and good wishes. They must be what Intermountain Healthcare’s community clinics director Terry Foust calls “financially viable” if they’re to stay open. They can’t just see patients who need free service, he said. There are real costs associated with stitching arms and treating disease.

School might seem a funny place to establish a medical home, but that has proven to be an effective and accessible choice for low-income inner-city residents in the neighborhoods around Rose Park and Lincoln elementary schools, where Intermountain Healthcare has done just that. A string of community and school-based clinics stretches from Logan to St. George, said Foust. There’s a clinic in Dixon Middle School in Provo and they’ve teamed up with a community health clinic in Ogden to provide services at James Madison Elementary, which also hosts a major community-wide health screening event over a couple of days each year. In most cases, charges are based on income level.

A clinic in an alternative high school in St. George focuses on at-risk teens. The school is also home to an early Head Start program for the children of the teen parents. Such tools are, along with the education components, key to the high rate of graduation and college placement the school enjoys despite the challenges the students face.

But with numerous efforts to make care accessible and affordable for the poor, Foust said, people still fall through the cracks. Intermountain runs seven clinics statewide for low-income, homeless and uninsured patients and provides financial and volunteer support to independent medical clinics for the uninsured and medically under-served. Between them, they support a quarter-million patient visits. “We run about 92 percent uninsured. It used to be between 72 and 78 percent that had no other payment source.”

The clinics focus on primary health care, flu and chronic conditions like diabetes, he said. The big change has been who needs the low- or no-cost care. “We’re seeing patients who had insurance who lost a job, the under-employed and those who are working for quite a bit less. Their income has changed. And there’s another group. In an attempt to not cut anyone’s job, some employers cut back hours, leading to a loss of benefits. We see a lot of those.”

The medical needs have become more complex, too, he said. It’s more apt to be uncontrolled diabetes than a sort throat.

Monday, Derrick Joseph, 11, and Tyler Pollock, 12, waited patiently in the butterfly-themed waiting area of the Main Street Clinic, run by Salt Lake Valley Health Department, to get immunization shots that would let them go to school. They didn’t know each other, but represent the spectrum local health department clinics serve: Troy Pollock said his son Tyler has good insurance. Vini Joseph said her son, Derrick, has no insurance at all yet. The boys agreed, though, that the shots didn’t hurt much.

Besides providing low-cost or free vaccinations for children, public health clinics on a sliding scale also do prenatal care, women’s cancer screening, testing for sexually-transmitted diseases and more.

United Way in Utah County operates a program that provides mentors to first-time moms.

“A calling”

With so many needs, it’s fortunate that health care and charity have been intertwined in Utah since Mormon pioneers entered the valley. In 1868, Brigham Young, leader of The Church of Jesus Christ of Latter-day Saints, called Eliza R. Snow to help organize Relief Societies. President Henry B. Eyring, First Counselor in the First Presidency of the LDS Church, recently recounted the history in a talk: “Under the leadership of women of great vision and capacity, the Relief Society took the lead in starting charitable services which did not exist on the frontier for those in need. They created a small hospital. They supported women in going to the East to get medical training to staff it. That was the beginning of one of the great hospital systems in the United States.”

He’s referring to the creation of LDS Hospital and Primary Children’s Medical Center, later spun off by the LDS Church into Intermountain Healthcare, which the church gave to the community several decades ago when the church stopped providing direct care, although it continues to contribute to health care projects.

“You pass the heritage along as you help others receive the gift of charity in their hearts,” Eyring said. “They will then be able to pass it to others. The history of Relief Society is recorded in words and numbers, but the heritage is passed heart to heart.”

Nearly a century and a half after Snow was called to organize LDS women, volunteers of all faiths play an important role in the patchwork of care. Unless they’re actually medical providers, they can’t provide direct care, but they help with related tasks like setting up or registering patients. “If you call any clinic number, most of us can explain what our volunteer needs are. And we often know what the others need,” Foust said.

Volunteers are front and center in Provo, which solved part of its uninsured problem with the twice-a-week Volunteer Care Clinic that deals with acute medical problems that require just one to three visits. Overhead is slight because it’s open Tuesday and Thursday nights in space normally used by a daytime clinic. Its supplies are basic, like paper towels and over-the-counter drugs. There are no prescription drugs.

But while cost is low, how do you put a price tag on the gift of time and skills by doctors, nurses, nurse practitioners, students, translators and greeters who just show up because they’re needed? What’s the going rate for a pair of strong arms to brace you when you’re injured or ill and uninsured?

The clinic shares space with Mountainlands Clinic, a community health care clinic that offers acute and chronic care, as well as some dental. The building also houses Community Health Connect.

The doors to the Volunteer Care Clinic open at 5 p.m. and within an hour there are 40 to 45 people filling out paperwork and waiting for help. Patients must have an income less than 150 percent of poverty — currently $33,075 for a family of four — and no access to Medicaid or Medicare. For some, the wait will be several hours, said Stuart Collyer, co-director, a volunteer who spent 32 years as a Department of Veterans Affairs administrator and now co-directs the center with his wife, Cindy. The waiting rooms are large, with a place where children can draw or watch a video. The clinic is also exploring ways to fill the space and time by teaching families about screenings and preventive health practices, perhaps using some of the student nurse volunteers, he said.

The LDS Church provided some initial money and Collyer can call for help from LDS congregations in Provo if more volunteers are needed on a given night. United Way pays for the over-the-counter drugs that are given to the patients.

Intermountain Healthcare provides needed MRIs and ultrasounds or similar tests as needed. Many of the support volunteers, who are mostly pre-med and pre-nursing students who want experience helping real people, come from BYU Service Learning Center. Some volunteers are trained to take vital signs; others help with registration and other paperwork.

Davis County has a similar clinic. In both cases, the volunteer efforts are complemented by the logistical and in-kind support of organizations.

“Rather than expect the state or federal government to solve all the problems, they pulled together and started this. It’s a small group of people that get served, but it’s a gap that gets taken care of,” said Collyer. “I think ultimately, significant health care problems in this country are going to be solved partially like this. For me, it’s a twice-a-week reminder that there are really very giving people who, once they know there’s a need, are willing to help. And it’s a strong indication of how we can resolve issues in our community.”

Student aid

BYU nursing students “participate pretty vigorously” at the Volunteer Care Clinic, said dean of the College of Nursing Beth Cole. They also work with community health clinics and pubic health agencies on projects like flu shot campaigns.

The program’s efforts stretch well beyond campus. Cole said nursing students develop newborn kits they take to hospitals and shelters to new mothers. They screen for high blood pressure and diabetes at health fairs. They provide information about diet and nutrition, exercise and more. And nursing students will help those without resources find them.

The same is true of all the programs that teach and equip young medical practitioners, from physician’s assistants to physical therapists, clear across the state.

One of the biggest challenges for the poor and uninsured is getting the medicine they need.

“It’s heartbreaking when you diagnose somebody with something and they need expensive medication and can’t get it,” said Foust, who suggests that donating money to a voucher fund for such cases is a great way to help. Voucher programs also need volunteers to help patients fill out applications for drug company pharmacy assistance programs. At Lincoln Elementary’s clinic in Provo, for example, they’ve processed applications for more than $240,000 in high-cost medications. When a doctor prescribes a medication that a patient will likely have trouble affording, that patient can apply for some relief from the drug company. Drug company programs commonly give income-qualified patients a 90-day supply of a medication for free.

The ability to buy many common generic medications for $4 at various pharmacies has been a boon, as well. The Information and Referral line at 211, which is run by the Utah Food Bank, is a good place for people to start if they don’t know where to get help with prescription costs or health care access.

The Maliheh Free Clinic in South Salt Lake also relies on the community. Volunteer health care providers staff the clinic, which was started by and still receives support from the Semnani Foundation. Community donations help keep ongoing care flowing.

There’s a compelling link between health issues and homelessness, the one often leading to the others, experts say. Families and individuals teetering on the brink of financial meltdown can be pushed over by costly medical issues. And those without homes and resources are, similarly, more vulnerable to dire medical conditions because of a lack of care.

The VA Hospital makes an extensive effort to help homeless veterans with their health care needs, said Al Hernandez, homeless coordinator. They have residential treatment programs for homeless veterans and provide transitional housing and treatment for up to two years for mental health or substance abuse issues. They also have shorter-term residential treatment programs like the Ark of Eagle Mountain.

Hernandez said every housing program the VA Hospital is involved with has a treatment/case management component. Veterans go to the VA clinics or hospital for other types of care, too.

And the volunteers who help those seeking care? Most of them are veterans, too, he said.

e-mail: lois@desnews.com

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