Introduction: the Corruption of Health Care Leadership as a Major Cause of Health Care Dysfunction
For a long time we have argued that health care corruption is a major cause of health care dysfunction. As we wrote in August, 2017, Transparency International (TI) defines corruption as
Abuse of entrusted power for private gain
In 2006, TI published a report
on health care corruption, which asserted that corruption is widespread
throughout the world, serious, and causes severe harm to patients and
the scale of corruption is vast in both rich and poor countries.
Corruption might mean the difference between life and death for
those in need of urgent care. It is invariably the poor in society who
are affected most by corruption because they often cannot afford bribes
or private health care. But corruption in the richest parts of the world
also has its costs.
The report got little attention. Health care corruption
has been nearly a taboo topic in the US, anechoic, presumably because its discussion would offend the people it makes rich and powerful. As suggested by the recent Transparency International report on corruption in the pharmaceutical industry,
However, strong control over key processes combined with huge resources
and big profits to be made make the pharmaceutical industry particularly
vulnerable to corruption. Pharmaceutical companies have the
opportunity to use their influence and resources to exploit weak
governance structures and divert policy and institutions away from
objectives and towards their own profit maximising interests.
Presumably the leaders of other kinds of corrupt organizations can do the same.
When health care corruption
is discussed in English speaking developed countries, it is almost
always in terms of a problem that affects somewhere else, mainly presumably benighted less developed
countries. At best, the corruption in developed countries that gets discussed is at low levels.
In the US, frequent examples are the “pill mills” and various cheating of
government and private insurance programs by practitioners and patients. Lately these have gotten even more attention as they are decried as a cause of the narcotics (opioids) crisis (e.g., look here). In contrast, the US government has been less inclined to address the
activities of the leaders of the pharmaceutical companies who have
pushed legal narcotics (e.g., see this post).
However, Health Care Renewal has stressed “grand corruption,” or the
corruption of health care leaders. We have noted the continuing impunity of top health care corporate managers. Health care corporations have allegedly used kickbacks and fraud to enhance their revenue, but at best such corporations have been able to make legal settlements
that result in fines that small relative to their multi-billion
revenues without admitting guilt. Almost never are top corporate
managers subject to any negative consequences.
While we at Health Care Renewal have written about this for years, we saw little improvement. However, in the past few years we began to feel a little more encouraged. For example, we had long complained that US law enforcement had not been devoting enough effort going after the corruption of the leadership of large health care organizations, thus effectively allowing these leaders’ impunity. However, the US Department of Justice during the Obama administration made some
modest attempts to decrease such impunity. One such measure was the
formation of a Health Care Corporate Strike Force.
As reported by Law.com,
the strike force was created in the fall of 2015, with five dedicated
lawyers working on about a dozen of the most complex corporate fraud
cases in the health care space.
Andrew Weissmann, the then-chief of the DOJ’s fraud section, told a
health care conference in April 2016 that the section was placing ‘a heightened emphasis’ on corporate health care fraud investigations.
He pointed to the recently established Corporate Fraud Strike Force
that he said would focus resources in investigation and prosecution of
larger corporate health care law violations, as opposed to smaller
groups or individuals.
Unfortunately, that strike force was downsized by the Trump administration as we noted in July, 2017. Perhaps that could have been viewed as just a minor setback.
Yet as the year wore on, it became obvious that the corruption was becoming an even bigger problem. In fact, it was becoming even more systemic, and worse, it appeared that the administration itself was fundamentally corrupt.
The Systemic Corruption of the Trump Regime
In December, 2017, the Los Angeles Times published a list by Adam Johnson of the “top 10 under-coverd news stories of 2017.” His third entry was:
3. President Trump’s unprecedented non-Russia corruption
Time will tell the extent of President Trump’s connection to Russian officials and how it may or may not have influenced his campaign but — regardless — Trump has led the most nakedly corrupt administration in modern American history, enriching himself, his family and his friends and hiring a Cabinet of political cronies and billionaires. Many journalists have done great work revealing this corruption, but these stories have not turned into full-blown scandals, let alone harmed the president.
The article used as a source a website, entitled “Tracking Trump’s Conflicts of Interest” published by the Sunlight Foundation. It includes a spreadsheet of literally hundreds of conflicts.
In January, 2018, Washingon Monthly published two related articles on President Trump’s conflicts of interest and corruption. The first was “Commander-in-Thief,” which categorized Mr Trump’s conflicted and corrupt behavior. The second, “A Year in Trump Corruption,” was a catalog of the most salient cases in these categories in 2017.
Commander-In-Thief opened with this explanation,
official Washington has tolerated an entire other class of corrupt and potentially unconstitutional behavior being carried out in plain sight, as Trump uses the presidency to enrich himself and his family. He has installed immediate relatives at the helm of the Trump Organization, continued to accept payments from foreign governments and private interests, and lavishly billed the government for using his own properties—all without guaranteeing that he will prioritize his duties as president over his own bottom line.
No president ever entered office with the type of immense personal fortune and ongoing business interests that Trump has. Trump’s vast business empire spans more than 500 companies in twenty-five countries and has earned him an estimated net worth of $3.1 billion. Traditionally, on taking office, presidents have placed their assets in a “blind trust” whose trustee is legally barred from telling the beneficiary about the trust’s holdings. Jimmy Carter famously placed the family peanut business into a blind trust in 1977. Ronald Reagan, George H. W. Bush, Bill Clinton, and George W. Bush all followed suit.
Trump’s trust agreement is a little different. For one thing, it’s not blind—Trump’s children have admitted to providing their father with regular business updates. For another, the agreement allows him to withdraw profits and assets from the trust at any time. That means Trump has a direct and ongoing financial interest in any policy decision that could affect his businesses.
Much of this has happened in broad daylight. The mainstream media has covered Trump’s conflicts doggedly. But the steady drip-drip-drip of evidence hasn’t captured the public’s attention like Russia has, or motivated any serious response by the government—no investigations are under way, either in Congress or the executive branch. This despite the fact that the infractions raise the same terrifying possibility as Trump’s possible collusion with Russia: the sacrificing of American interests in the service of the president’s personal gain.
[the Trump Chicago, an example of Mr Trump’s vast business empire]
The article noted that at the time of publication,
The only active effort to investigate Trump’s profiteering is happening through civil lawsuits in New York, D.C., and Maryland federal courts. The plaintiffs challenging Trump’s behavior include the watchdog group Citizens for Responsibility and Ethics in Washington (CREW); some 200 Democrats in Congress, led by Connecticut Senator Richard Blumenthal; attorneys general in Washington, D.C., and Maryland; and hotel and restaurant owners who compete with Trump. They all argue that Trump is in blatant violation of a provision in the Constitution meant to ensure that the president can’t exploit his office for profit.
Note that since those articles were written, Democrats in the House of Representatives have called for a serious investigation by the House Oversight Committee of how the Trump Organization is exploiting his presidency for financial gain, although the likelihood that their political opponents would condone such an investigation seems small (look here).
The article posited that Mr Trump’s corrupt activities fit into three categories.
Corruption Type 1: Foreign Emoluments
Mr Trump appears to be benefiting from payments or the equivalent from foreign governments, an apparent violation of the Foreign Emoluments Clause of the US Constitution.
Foreign interference in our political system was of grave concern to the framers of the Constitution. They knew that when a federal officeholder receives gifts, money, or other benefits from foreign governments, his judgment is compromised and his loyalties are divided. So they wrote a strict rule into the text of the Constitution, the Foreign Emoluments Clause, which provides that federal officeholders may not ‘accept of any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state’ without Congress’s approval.
Unlike with bribery statutes, a violation of the Foreign Emoluments Clause doesn’t require proof that an official gave something in return. It’s designed to protect against not just quid pro quo corruption, but also the mere appearance of improper influence on government officials.
Note that the Constitution also provides that
Before he enter on the Execution of his Office, he shall take the following Oath or Affirmation: — ‘I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.’
So any presidential violation of the Foreign Emoluments clause is also an example of what we have previously called mission-hostile management.
The Foreign Emoluments clause is basically a prohibition of a
particular kind of conflict of interest, payments to the President by
foreign leaders or states. However, many examples of violations of this clause by Mr Trump also suggest corruption. “Commander-in-Thief” describes
foreign governments’ lavish spending at Trump’s hotel and restaurants, particularly at the Trump International Hotel just steps away from the White House, in some cases at the prodding of Trump’s agents. After the election, the Trump International hosted more than 100 foreign diplomats for a tour, sending them home with goody bags and brochures in an attempt to encourage their patronage. Former Mexican diplomat Arturo Sarukhan has said that the State Department urged diplomats to stay at the Trump International while on official visits.
Delegations from at least eight countries have obliged. In September, Malaysian Prime Minister Najib Razak and other members of his administration were seen hobnobbing in meeting rooms at the hotel, bringing in what is estimated to be hundreds of thousands of dollars in revenue. Saudi Arabia has spent more than a quarter of a million dollars—$190,000 on lodging, $78,000 on catering, and $1,600 on parking—at the hotel in connection with its lobbying against legislation that would allow American citizens to sue foreign governments over terrorist attacks.
And the Kuwaiti embassy suddenly changed the venue for its National Day celebration last February from the Four Seasons to the Trump International, paying an estimated $40,000 to $60,000. A source with knowledge of the conversations between the hotel and the embassy told ThinkProgress that Trump Organization members had pressured the Kuwaiti ambassador to cancel the embassy’s ‘save the date’ reservation at the Four Seasons, where it had held the event in the past. Perhaps it’s purely a coincidence that neither Saudi Arabia nor Kuwait were among the Muslim-majority nations singled out by Trump’s travel ban.
[Trump International Hotel, Washington, DC]
Recall the Transparency International definition of corruption, abuse of entrusted power for private gain. That the Trump Organization, owned mainly by Mr Trump, and likely still run according to his wishes by his children, actively promoted foreign governments pay for overpriced hospitality services which would directly profit Mr Trump. Given that Mr Trump is supposed to lead foreign policy in the interests of all US citizens and according to the US Constitution, this seems to be a gross example of abuse of entrusted power, and is obviously for private gain.
“Commander-in-Chief” listed various other examples of violations of the Foreign Emoluments clause. Moreover, the companion article, “A Year in Trump Corruption,” listed pages of examples of the more prominent known violations, starting with the case of the 100 foreign diplomats above, and ending with
Oct. 31, 2017: Mexico’s former U.S. ambassador Arturo Sarukhan tweets that the State Department is encouraging diplomats to stay at the Trump International Hotel during official visits.
Corruption Type 2: Domestic Emoluments
Mr Trump appears to be directly benefiting from payments made by the US government, in violation of the Domestic Emoluments Clause. Per “Commander-in-Thief,”
The framers weren’t just worried about foreign influences. They intended the Domestic Emoluments Clause to ensure that Congress, other parts of the federal government, and the states ‘can neither weaken [the president’s] fortitude by operating on his necessities, nor corrupt his integrity by appealing to his avarice,’ as Alexander Hamilton wrote in the Federalist Papers. It entitles the president to receive a salary (currently $400,000 a year) and benefits fixed by Congress, but prohibits him from taking any other profits from the public—whether from the federal government or from any of the states.
Trump violates this provision, many constitutional scholars have argued, when state or federal entities patronize his properties and spend taxpayer money.
Again, this provision also prohibits a certain kind of conflict of interest, that produced were a president to personally profit from activities of the US or state governments.
One sort of example the article provided was
Trump doesn’t just rely on others to put money into his businesses—he patronizes them himself with stunning frequency, having spent more than 100 days at them, nearly a third of his presidency, while in office. Unlike any previous president, Trump’s vacation properties are for-profit enterprises, meaning each visit funnels public money to Trump’s business, mainly in the form of exorbitant security costs. Secret Service has blown through its budget due to Trump’s frequent travel expenses, requesting an additional $60 million to protect the first family in March. Trump’s detail reportedly paid Mar-a-Lago, Trump’s luxury club in Palm Beach, Florida, at least $63,000 between February and April, and has spent at least $144,975 on golf cart rentals at Trump properties in New Jersey, Virginia, and Palm Beach as of November. And last spring, the Defense Department signed a $2.39 million eighteen-month lease for space in Trump Tower for a military office meant to provide various presidential services, including access to nuclear launch codes.
In this example, Mr Trump’s personal decisions, for example to vacation at one of his own properties, automatically entail major expenses by the government he is supposed to lead. These these USG government expenses thus become revenues for none other than Mr Trump. Again, it seems easy to argue that such decisions are abuse of entrusted power for private gain.
Again, the companion article listed multiple other examples, beginning with
Nov. 14, 2016: Six days after the election, Trump receives all-but final approval from the National Park Service for a $32 million historic preservation tax credit for the Trump International Hotel.
And ending with:
Nov. 15, 2017: USA Today reports that, thanks to Trump’s refusal to divest from his businesses, the federal government has assigned at least 10 Justice Department lawyers and paralegals, at salaries ranging between $133,000 to $185,000 in public money, to defend Trump in four lawsuits alleging violations of the Emoluments Clause.
Corruption Type 3: Slimy, but Probably Legal
Mr Trump has also taken advantage of his office to increase revenues to the Trump Organization, which he owns. Per “Commander-in-Thief,”
Many presidents have been independently wealthy, but none before Trump entered the White House with a massive on-going business empire—or brazenly used the office to drive up that empire’s value.
Some examples given were
Almost immediately following his inauguration, the annual membership rate at Mar-a-Lago, which Trump has dubbed his ‘Winter White House,’ doubled, from $100,000 to $200,000, reflecting Trump’s eagerness to capitalize on the market value of access to the leader of the free world. In February, Mar-a-Lago management sold a tennis shirt featuring a ’45’ on the sleeve in reference to Trump, the forty-fifth president. By April, rates at the Trump International Hotel had jumped to at least $660 per night, an increase in hundreds from before his election. And in November, the president plugged his New Jersey golf course during a foreign policy speech in Seoul.
The companion article again listed numerous examples, starting with the increase in the Mar-a-Lago membership rate, and after examples involving Mr Trump’s Trump International Hotel in Washington, DC, and various other Trump resort and hotel properties, ending with:
Dec. 31, 2017: Trump ends 2017 the way he started it: with a private gala at Mar-a-Lago. This time, tickets are up to $600 for club members and $750 for guests.
Again, given that these cases involved the president trading on his office and the advantages of gaining personal access to him to increase revenues at the hospitality properties he owns, it seems easy to argue that they involved abuse of entrusted power for private gain.
In the rare instances in which health care corruption has been discussed publicly, one sometimes sees ideas about addressing corruption affecting various health care organizations. For example, in October, 2016, Transparency International announced its Pharmaceuticals & Healthcare Programme, based in the UK. It would
target global, national and local interventions. Ongoing research and the lessons drawn from regional and national projects will be used to influence global policy to produce structural change within the health sector; promote global best practice standards to strengthen transparency and accountability; and support national and local interventions and solutions.
That is all well and good, and will hopefully lead to some improvements globally. But such recommendations are based on tacit assumptions, particularly that well-intentioned governments will at least consider such changes in policy.
We in the US are now in a different situation. In an interview published by Vox, historian Robert Dallek said,
Often you see a lot of corruption result from a lack of oversight, but I think this administration is quite different in that Trump really sets the tone for all this. He encourages it, really. The fish rots from the head, and the stench of this administration starts at the very top.
IMHO, when the fish is rotting from the head, it makes little sense to try to clean up minor problems halfway towards the tail. It would be silly to expect that the Trump regime would want to “produce structural change within the health sector; promote global best practice standards to strengthen transparency and accountability; and support n ational and local interventions and solutions” all to reduce corruption in health care. Why would a corrupt regime led by a president who is actively benefiting from corruption act to reduce corruption?
The only way we can now address health care corruption is to excise the corruption at the heart of our government.