The law passed by Congress on January 3, 2013 to avert the
across-the-board tax increases and “sequester” (i.e., across-the-board budget
cuts) was “stuffed with special provisions helping specific companies and
industries.” While many of the provisions would increase the U.S. Government’s
debt, at least one would decrease it.
Is the latter any more ethical because it is in line with the more general
interest in reducing the federal debt? Put another way, does the end justify
the means? Do good consequences justify bad motives? These
are extremely difficult questions. The best I can do here is suggest how they
can be approached by analysis of a particular case study.
In the legislation, a provision reduced the Medicare reimbursement
rate for a radiosurgery device manufactured by the E.U. company Elekta AB. The
cut was pushed by a competitor, Varian Medical Systems. Senate Majority Leader
Harry Reid asked Sen. Max Baucus, chair of the Senate Finance Committee, to
write the cut into the legislation. While both senators could point to the
public interest in the debt-reduction result of the cut, their relationship
with Varian makes their motives suspect. Specifically, they may have exploited
personal conflicts of interest that eclipsed a more expansive duty to the wider
(i.e., not private, or personal) public interest.
While it is perhaps simplistic to relate campaign contributions to
a senator’s subsequent action, it is significant that Varian spent $570,000
in 2012 on lobbying. The company added Capitol Counsel, which had contacts to
Sen. Baucus. Vivian already had connections to Reid through Cornerstone
Government Affairs lobbyist Paul Denino, a former Reid deputy chief of staff.
Additionally, the leading beneficiary of the contributions of Varian executives
and the company’s PAC over the previous four years was Sen. Reid, whose
committees received $21,200. Varian’s lobbyists added $42,700 more to Reid’s
campaign.[1] While Sen. Reid’s
subsequent urging of the reimbursement rate cut could have been unrelated to
these contributions and contacts, the senator’s involvement compromises him
ethically. Put another way, it is at the very least bad form, or unseemly. It
implies that companies making political contributions and hiring lobbyists
connected to public officials do so (or worse, should do
so) to have special access to those particular officials to turn upcoming
legislation to the companies’ financial advantage. Even if the public also
benefits, it can be asked whether the companies deserve their
particular benefits. In the case of Varian, it may be asked whether the company
deserved the cut in the reimbursement rate going to Elekta.
As could be expected, spokespersons at both companies sought to
argue the merits of their respective cases in the court of public opinion. It
is more useful to look at the regulators’ rationale for increasing the
reimbursement rate for Elekta’s “Gamma Knife” in the first place.
Originally, the knife and Varian’s linac machines were lumped together by the
Centers for Medicare and Medicaid Services (CMS) under the same CMS code. In
2001, the Centers separated the devices in terms of data collection so an analysis
could be conducted on whether the devices should receive different
reimbursement rates. The Huffington Post reports that the reimbursement rate
for the Gamma Knife was increased because “it typically requires only one
treatment, while the linacs often require multiple treatments.” Also, “Gamma
Knives machines are more expensive to obtain and maintain due to the storage of
radioactive cobalt and regulation by both the Nuclear Regulatory Commission and
the Department of Homeland Security. Linacs don’t use nuclear material and are
regulated by the Food and Drug Administration.”[2] So, due to the cost and
use differential, CMS increased the Gamma Knife reimbursement in
2006 to $7000. From the standpoint of the criteria of regulators, the
data-collection and analysis method and the rational rationale are legitimate.
In contrast, because neither the use or cost differential had changed by
January 2013, the cut in the reimbursement rate cannot enjoy such legitimacy.
Hence it is possible that exogenous factors, such as the political influence of
Varian’s lobbyists and campaign contributions, were behind the change. From the
standpoint of the previous rate differential, the change cannot be justified.
Neither Sen. Reid nor Sen. Baucus could justify their actions (and motives) by
the substance of the case. However, they could still appeal to the salubrious
budget-cutting effect as justifying their involvement.
The question here is whether the favorable consequences of the cut
on the government’s subsequent deficits mitigates or reduces the shady scenario
of a senator acting on behalf of a company that had contributed to his or her
campaign. I would advise a member of Congress to avoid even the appearance of a
conflict of interest. If the result in this particular case is in the public
interest (i.e., reducing the deficit), does this positive consequence justify
the senators’ actions and even the questionable appearance? It’s a
no-brainer that the senators would immediately point to the public interest in
the consequence, but does it effectively remove the taint of immoral political
conduct (and perhaps motive)?
The link between the company-senator relation, the senators’
action in which the company stands to benefit financially in a material way,
and the financial benefit to the company can be distinguished ethically from a
good consequence to the public. A bystander would naturally view the
consequence to the public as salubrious even while having a sentiment of
disapprobation toward the company’s own benefit as well as the senators’ action
and relation to the company. In other words, the favorable impact on the public
does not remove the stain on the company and the senators. To be sure, that
stain would be greater were the public harmed rather than helped, but even with
the positive general consequence the senators may have acted for the private
benefit. Also, their action could have come from other senators, hence
obviating the ethical problem. In short, the public interest does not remove
either senator from the ethically problematic situation in which they decided
to occupy. Even if their motive had been solely for the public
interest, they violated the appearance of unethical motive and conduct.
“The end justifies the means” is a slippery slope in terms of what
the human mind can rationalize as legitimate. Great harm has been seemingly
justified by great ideals. Even in the face of the ideals, the harms provoke a
sentiment of disapprobation by the observer (excepting sociopaths). This
suggests that the ideals cannot completely justify unethical means. It
may indeed be that unethical means are necessary in some particular cases, but
this does not render the devices ethically pure. Ethical principles do not know
practical compromise. Rather, people do.
1. Paul Blumenthal, “Varian
Medical Systems Used Fiscal Cliff Deal to Hurt Competitor,” The Huffington Post,
February 8, 2013.
2. Ibid.
