1601 N. Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 48, No. 4 April 1992

PHYSICIANS' STATUS TAX UPHELD 4 TO 3

In a decision just handed down by the Florida Supreme Court in the case of Coy v. NICA (see p. 3), the Court agreed that the assessment of physicians to support a ``malpractice reform'' scheme constitutes a tax.

Furthermore, it is, in the words of the dissenting judges, a ``status tax,'' imposed on physicians because of their membership in a class. The class is not a ``suspect'' class within the meaning of the equal protection provision of the Florida constitution. (A ``suspect'' class is any group that has been the traditional target of ``irrational, unfair, and unlawful discrimination.'') Therefore, to determine the constitutionality of the status tax, the test of ``rational basis'' is the only one that applies. This means that although every presumption in favor of the validity of the tax is indulged, the state must proceed on a rational basis and may not resort to a classification that is ``palpably arbitrary.''

Four of seven judges on the Supreme Court panel felt that it was rational to impose a discriminatory tax on physicians who do not practice obstetrics, even if they don't have hospital privileges. The judges reasoned that a medical malpractice crisis that disrupted obstetrical practice reduced referrals to physicians and caused the deterioration of relationships between physicians and the general public. Furthermore, the crisis put a strain on hospitals and made them less pleasant places in which to work.

``Because health care services are delivered by a team of providers, all of whom interact and depend upon one another, a breakdown in one area of service impacts the other areas,'' wrote the majority.

Nevertheless, only one member of the ``team''-the physician who does not deliver babies-is singled out to pay the tax. Apparently, four judges believe that the primary goal of hospitals is to benefit physicians, not patients, nurses, ad- ministrators, lawyers, or the general public.

The Next Step

If physicians can be taxed to pay for a patient compensation scheme intended to increase the availability of obstetrical services, why shouldn't they be taxed to provide any and all medical care? According to the logic in the Florida Supreme Court's majority opinion, physicians can be forced to bear the entire cost of a scheme simply because they are believed to derive greater benefit from the scheme than the general public or other medical personnel.

The Virginia legislature has introduced a law to tax physicians to pay part of the cost of the Medicaid program. The tax would be a percentage of practice gross income (before any overhead expenses are deducted).

The introduction of this law followed a unanimous decision of the Virginia Supreme Court upholding a law similar to the Florida Birth-Related Neurological Injury Compensaton Act. The Virginia decision will not be contested.

Many states have passed or are considering laws that tax physicians indirectly by limitations on their fees. Two examples are West Virginia (see AAPS News June, 1991) and Pennsylvania (see April 1991). Recently, the Ohio House of Representatives passed a law that not only prohibits balance billing of Medicare beneficiaries, but also forces Ohio physi- cians to treat enrollees of a state high-risk coverage plan, for minimal fees, under threat of fines. (H.B. 478 is in a Senate committee at the time of this writing.)

The dissenters in the Florida Supreme Court recognize the implications of allowing the legislature to impose status taxes without proper reasons: ``Such a precedent would make equal protection an illusory right....Equal protection means that similarly situated people are treated similarly by the law and that, at a minimum, irrational distinctions may not be drawn.''

The three dissenting judges recommended quashing the opinion, holding the relevant statutes unconstitutional, and remanding the issue to the trial court to determine whether and to what extent the state owes refunds to the petitioners.

A petition for rehearing has been filed. An appeal to the US Supreme Court will be considered if the petition is denied.

On Access to the Courts

Democrat Harris Wofford is thought to have won a Senate seat in Pennsylvania because he said: ``If a criminal has a right to a lawyer, working Americans have a right to a doctor.'' We have a question: Do doctors have a right to a day in court?

According to the Medicare statute as amended:

There shall be no administrative or judicial review...of

(A) the determination of the adjusted historical payment basis...;

(B) the determination of relative values and relative value units...;

(C) the determination of conversion factors...;

(D) the establishment of geographic adjustment factors...;

(E) the establishment of the system for the coding of physicians' services under this section (See 42 USCS §1395w-4(i)(1).)

The statute makes no exceptions even for situations in which the allowed fee for a service is suddenly reduced to zero. Although courts have upheld certain statutory restrictions on judicial review, no court has ever addressed a total statutory denial of judicial and administrative review.


Physicians' Rights

 

[From a letter to the N.C. Congressional delegation]

The congressional promise in 1965 was medical care for the elderly....This promise is resulting in a distortion and a perversion of some basic constitutional values.

Physicians have rights to life, liberty, and property as does any citizen in this country. The current system of the Re- source-Based Relative Value Scale is an active enslavement of the physician labor in this country. It is the result of a promise...that apparently cannot be kept without continued coercion and oppression of...other citizens....

I request that you free the American citizen from participa- tion in the Medicare system....I believe that I should have the right to practice medicine in a free economic system....

It is a joke to tell me, as a thoracic and vascular surgeon, that I can ``do something else.''

One additional comment: the concept is ``medical care'' and not ``health care.'' The use of the term health care is a delusion. Health can only be obtained through the will of God or through your own personal actions in taking care of it yourself. Medical care, however, is a service that is offered by other people. I believe the American public needs to know that they are asking for the services of other people when they discuss ``universal access'' to medical care.

James P. Weaver, MD, Durham, NC

 

From Positive ``Rights'' to Affirmative Obligations

The right to have an abortion was at first understood to mean the removal of governmental impediments. Now,``rights'' imply ``access,'' the ability to have something accomplished rapidly, conveniently, and cheaply. The original meaning of a right-``Congress shall pass no law''-has been inverted.

Although abortion is legal, practical impediments remain, as outlined in Resolution 9117 passed by the American Public Health Association (APHA) in 1991. America's capacity to provide abortions is shrinking, especially in rural areas; 83% of the counties in the US have no abortion provider. From 1976 to 1985, there was a 22% decline in the number of residencies in obstetrics and gynecology that offer training in first-trimester abortion procedures, and half of these programs offer such training ``only as an option and not as a mandatory part of practitioner competency.''

APHA reaffirmed its commitment to achieve ``accessible, affordable, and safe abortion services for all women who need and choose them, regardless of their geographic location or economic means.'' It recommends that ``all residency training programs in obstetrics and gynecology promote the integration of abortion care as a required component of residency training.'' A joint symposium of the National Abortion Federation and the American College of Obstetricians and Gynecologists made a similar statement. Also recommended: ``international training fellowships to expose physicians to the consequences of insufficient access to safe abortion.''

The University of Washington has developed a joint training program with Planned Parenthood. ``Those with religious objections will not be required to learn the procedure but will be required to participate in the counseling training to learn to speak sensitively and nonjudgmentally to women about their options.'' Others will do about 36 abortions in Planned Parenthood ambulatory facilities.


Sharply Divided Florida Supreme Court Upholds Constitutionality of Physician Tax

On February 13, 1992, the Florida Supreme Court upheld the constitutionality of the Florida Birth-Related Neurological Injury Compensation Act (NICA) in a four-to-three decision.

The case, James F. Coy, MD, Sidney R. Steinberg, MD and Claud A. Boyd, Jr., MD, v. Florida Birth-Related Neurological Injury Compensation Plan, et al., will undoubtedly gain national attention as states continue to debate financing schemes underlying proposed ``medical malpractice reform.''

Plaintiffs have filed a Motion for Rehearing, arguing that the Supreme Court of Florida misapprehended both controlling Florida constitutional precedents and the facts of the modern medical system.

NICA was enacted in 1988 as part of a package of medical malpractice reforms. The statute essentially creates a no-fault insurance system for obstetricians to insure against certain types of birth injuries. Florida obstetricians are not required to join the plan or to pay an annual assessment, but the no-fault insurance is available only if the obstetrician elects to join. In contrast, the statute forces all Florida-licensed physicians to pay an annual fee of $250. Further, while Florida-licensed hospitals that deliver babies are required to pay an annual tax of $50 per infant delivered, hospitals that do not provide obstetrical care are exempt from the tax. Other medical professionals who do not hold a degree of M.D. or D.O. are not taxed under the statute.

To date, only 535 Florida-licensed obstetricians have elected to join the no-fault plan, while over 40,000 Florida- licensed physicians have been forced to pay the annual tax assessment to fund the plan.

The statute gives the Florida Commissioner of Insurance the power to raise the annual taxes on physicians who do not practice obstetrics in order to keep the no-fault plan on an ``actuarially sound'' basis.

The plaintiffs alleged that the financing scheme of the statute discriminates against physicians as a class, in violation of the Equal Protection and Due Process Clauses of the US and Florida Constitutions, as well as the Privileges and Immunities Clause of the Fourteenth Amendment to the US Constitution. Additionally, the plaintiffs claim that the statute unconstitutionally delegates the power to tax to the Florida Commissioner of Insurance, in violation of Article VII, Section 1, of the Florida Constitution.

The trial court and the Florida District Court of Appeals upheld the constitutionality of the statute. The Supreme Court of Florida granted the plaintiffs' Motion for Discretionary Review, and after oral arguments were held, deliberated 9 months before rendering an opinion. The narrow majority of the Court affirmed the rulings of the lower courts, relying almost exclusively on the ``factual'' findings of the trial court.

The majority held that the tax classification was not arbitrary (and thus not unconstitutional) because it believed that ``all physicians, regardless of whether they practice obstetrics, derive a benefit from [the] legislation that is greater in degree than that derived by the general public.'' The Court also concluded that ``actuarial soundness'' was a meaningful standard to guide the Florida Commissioner of Insurance in making future tax increases, and that therefore the legislative scheme did not involve an unconstitutional delegation of the power to tax.

Justice Kogan, joined by Justice Barkett and Chief Justice Shaw, filed a strong dissent. The dissenters observed:

[T]he state has enacted a program designed in principle to benefit the public as a whole, but that effectively benefits only obstetricians who elect to join the plan and those persons who suffer losses caused by certain birth-related injuries attributable to the member-obstetricians. While this is a laudable purpose, I can find no rational basis for imposing much of the burden of this program primarily on physicians as a class....I think this particularly is true in light of the fact that obstetricians are not obliged to join the plan, and many have exercised this option.

The dissenters also were troubled by the imposition of a ``status tax'' on physicians to pay for insurance against certain birth-related injuries. Such a tax is no different, in their opinion, from ``taxing only schoolteachers to pay for new educational facilities, or taxing only licensed psychologists to pay for public mental-health care, or taxing only policemen to pay for victims' compensation programs.''

The implications of allowing the decision to stand, in the dissenters' view, was to encourage society to shift its most onerous tax burdens exclusively onto those minorities or groups that lack a sufficient voice in the state capital. Although the Florida Constitution does permit some inequities in taxation, the dissenters believed that it would not tolerate the ``gross inequity apparent in the present case.''

 

Motion for Rehearing

In view of the strong dissent and the majority's extensive reliance on the ``factual findings'' of the trial court, plaintiffs have filed a Motion for Rehearing. This motion states that the Florida Supreme Court misapprehended points of law and fact.

First, the Court employed a tautological approach to Equal Protection analysis, which sharply departs from numerous prior decisions of the Florida appellate courts. Essentially, the Motion argues that the Equal Protection standard employed by the majority virtually immunizes any state classification from constitutional scrutiny, whereas under prior precedents, the Court has nullified statutory classifications on state Equal Protection grounds.

Second, the Motion argues that the trial court's ``findings of fact'' were based solely on post hoc rationalizations of government witnesses who favored the legislation.

Finally, the Motion argues that the Court completely overlooked the plaintiff's assertion that the statutory scheme fails to provide an apportionment mechanism setting forth how increases in future tax assessments will be distributed among those covered by the statute. This will lead to unfairness and favoritism in the apportionment of future tax burdens by the Florida Commissioner of Insurance.

The State of Florida has ten days to file a response to the Motion for Rehearing and the Court's decision will not become final until the Motion is acted upon by the Court.


New Members

AAPS is pleased to welcome the Richland County Medical Society, which joined us as an association, along with the following new individual members: Drs. Bolivar Albainy of Parma Heights, OH; Saroj A. Bavishi of Olathe, KS; Martin C. Carr of San Francisco, CA; Earl Dipirro of Teaneck, NJ; Donald A. Dyer of Pocatello, ID; Charles Goodno of Morehead City, NC; Ivan Halfond of Centreville, VA; Paul A. Hein, Jr. of Ballwin, MO; Terry J Keller of Boise, ID; Keith R. Koepke of Parma Heights, OH; J.M. Lackey of Pocatello, ID; Andrew W. McRoberts of Pocatello, ID; Daniel L. Meges of Parma Heights, OH; Paul Megibow of Tenafly, NJ; Thomas Mueller of Everett, WA; Carl N. Reilly of Port Charlotte, FL; J. Bruce Resnik of Parma Heights, OH; Charles A. Rush, Jr. of Ft. Worth, TX; Pete Spinella of Atlanta, GA; Timothy D. Steege of Mercer Is, WA; Ronald Surowitz of Jupiter, FL; David T. Sward of Mountain Home, AR; Gerald Volcheck of Essex, CT; Gary Webb of Dallas, TX; Charles W. Williams of Parma Heights, OH; and Kim Brian Wright of Seattle, WA.

New student members are: Carol Grant of Piscataway, NJ; Sadiasept Guillont of Ponce, PR; Chip Hardy of Bloomington, IN; Chris Hosfeld of Columbus, OH; Genevieve Neal of Piscataway, NJ; Jos‚ O. Santiago of Ponce, PR; and Thomas M. Yunger, Jr. of Columbus, OH.

 

Letters to the Editor

[From letters to Congressmen]

Dr. Bob Moffit's Feb. 6, 1992 Heritage Backgrounder No. 878 (``Consumer Choice in Health: Learning from the Federal Employee Health Benefits Program'') is a real eye-opener for me. Somebody needs to answer his fundamental question: How come every Medicare beneficiary is assumed to be a dope and need the ``protection'' of the Federal Government, while every one of the 9,000,000-plus Federal employees, down to the latrine cleaner in Leavenworth prison, is assumed to have the smarts to choose between dozens of competing health plans? Why don't Medicare citizens have the same options?
Robert Cihak, MD, Aberdeen, WA

 

While old oligarchies are being dismantled in the spirit of freedom, the US government is creating a shadow totalitarian regime within itself....Individuals are only important in their ability to add to the general welfare of the state. Like the old USSR, the Medicare Socialist Republic ... makes rules [by decree] based on what is good for everybody and demands adherence to policy [under threat of] stiff penalties....I can see some operative armed with a stopwatch coming to a physician's

office to assure that the doctor is face to face with the patient for the defined interval, measured in 15-minute increments.

[How have the bureaucrats managed to foist these new guidelines on us?] The first reason was our individual and collective cooperation with their efforts....The second factor was the long years of preparation...in the form of assignment of fees and the Berlin Wall (the MAAC). But it took the Big Lie to seal the deal. By assuring physicians that direct patient cognitive services were undervalued and would be rewarded, physicians were split by personal, pocketbook issues.

We have reached the Rubicon....
David A. Westerbrock, MD, FACP, Dayton, OH

 

The medical profession is a unique wagon train. It is the only wagon train going across America that, when circled to protect itself, tends to shoot inward.
Miguel A. Faria, Jr., MD, Macon, GA

 

The fees determined under the Relative Value Scale are totally unrealistic to compensate for the Evaluation and Management services that we provide our patients. If the rate does not increase significantly, we will be forced to stop providing services to Medicare patients. (This 5% of our patients consumes 20% of the physician's productive time.) Except for employee benefits, our costs are outside our control. About 40% of our cost is billing, including over 40 hours a year in seminar attendance to learn insurance regulations. One alternative is to close our solo medical practice in the inner city neighborhood and join a group practice in the suburbs. This would leave the neighborhood without an internist, but we guess this does not bother the Medicare program.
Wanda Velez-Ruiz, MD, Detroit, MI

 

From Organized Medicine

``The underlying issue cannot be physician rights, per se; rather, it is the balance between rights and the commonweal.''

C. Burns Roehrig, MD, Internist 9/91

 

``...[S]ocial conflicts, protest marches, negotiations, job actions-all of these techniques are a matter of reallocation or attempts to influence power to determine primarily how-not if- government will intrude in the fabric of society.''

Eugene S. Osgrod II, MD, op.cit.

 

``With luck, we will never go back. Instead, we must further refine [the RVS], which always has had a great potential for unifying the profession in a way that nothing else can.'' Lonnie Bristow, MD, AMA Trustee


Legislative Alert

AAPS Report from Washington

The Bush Administration's ``Health Care'' Plan. As predicted in our last Alert, the Bush Administration plan emphasizes tax credits or vouchers. The basic elements are as follows:

  • For low-income Americans, a ``transferable'' medical in- surance voucher of $3,750 for a family of four that is large enough to purchase a ``basic'' health insurance package.

  • For middle-class families without employer-provided medical insurance, a tax deduction of up to $3,750 (a benefit of about $1,050). (``Middle class'' means a gross income of less than $80,000 per year.)

  • State-based insurance market reform. This would require insurers to sell insurance to all employers requesting it. Coverage would be guaranteed and renewable for employees, with limits on preexisting medical conditions removed. Health Insurance Networks (HINS) would be promoted, to create pools for small businesses.

  • Regulatory reforms to ``streamline'' insurance paperwork. The Bush plan envisions a uniform system of claims processing for all insurance firms.

  • Malpractice reform. States would be encouraged to eliminate ``joint and several'' liability for noneconomic damages; to place caps on noneconomic damages; to eliminate rules that allow ``double recovery''; and to promote pre-trial alternatives for the settlement of liability issues.

  • More spending for community health centers, migrant health centers, and the National Health Service Corps.

Response on Capitol Hill. Liberal Democrats have dismissed the Bush plan as a weak effort that does not control costs. By ``cost control,'' they normally mean some system of rigid price controls on medical services. Conservative Republicans generally applaud the use of tax credits and vouchers as a step in the right direction, but ask how it is going to be paid for.

Capitol Hill conservatives wonder why the Bush voucher is so generous. Last year, the average employer contribution to employee health insurance was approximately $3,600. Should the taxpayer have to subsidize the average cost of already overly expensive employer-based insurance to guarantee a basic level of coverage for low-income Americans?

The estimated cost of the Bush tax credit/voucher plan, which would apply to over 90 million Americans, is $35 billion in the first year alone. This is not ``budget neutral.'' The Administration claims, however, that billions will be saved through a deliberate promotion of managed care in private plans as well as Medicare and Medicaid, in streamlining claims processing, and in promoting competition through health insurance networks. Democrats and many Republicans are not convinced.

Beyond the budget issue, conservative reformers are pleased that the Administration is willing to make a fundamental change in the tax treatment of health benefits. Right now, virtually all of the tax breaks for health insurance are directed toward employer-provided health benefits. Additionally, conservatives are pleased that the President has directly and vigorously attacked Democratic proposals for ``national health insurance'' (pointing to costs of from $250 to $500 billion per year in new taxes) and the concept of mandatory insurance or ``play or pay.''

Already, there has been a notable change in the mood on Capitol Hill. While 18 months ago, socialized medicine seemed inevitable, nobody thinks that it is even likely now. Canada's reputation as a model for America fades with each passing day, especially in light of the latest news that the Canadians are also struggling with soaring costs and cutbacks in services. Moreover, the attack on ``play or pay'' by critics relying on the gold-standard statistical research of the predominantly liberal Urban Institute, a prestigious Washington-based think tank, is daily damaging mandatory insurance (see AAPS News Supplement, March 1992.)

An Exercise in ``Cold Feet''? The Bush plan stops far short of engineering the critical changes in the federal tax code that could bring real reform to fruition. That is why the Wall Street Journal labeled the Bush plan a ``pale imitation'' of the Heritage Foundation proposal, and why liberal New Republic champion Michael Kinsley labeled it another exercise in ``cold feet,'' strong on rhetoric but weak on substance.

Bush's avoidance of the issue of the basic tax breaks that undergird the employer-based third-party payment system was not due to failure to discuss the options. HHS Secretary Louis Sullivan and his new Undersecretary Kevin Moley, formerly a Reagan appointee at HHS, have strongly favored addressing the tax treatment of medical benefits. At the Office of Management and Budget (OMB), Tom Scully, an aide to Richard Darman, has also pointed out the need to introduce market efficiencies. Conservative critics of the current system were fighting within the Administration for a fundamental change up to the last minute, just before showtime on February 6, and were even backed by OMB Director Richard Darman, an unlikely ally of beleaguered conservatives in the White House and HHS. But conservative forces in the Administration were overridden at the last minute by Hill Republicans, led by House Ways and Means heavyweight Bill Gradi- son of Ohio.

Wilensky Leaving HHS. HCFA Administrator Gail Wilensky is leaving HHS to accept a new appointment in the White House, where she will have a strong hand in policymaking. Previously, her role was largely confined to carrying out Congressional edicts such as the Relative Value Scale.

Market Alternatives on the Ascendancy in Maryland. A three-way fight is in progress in the Maryland state legislature: a single-payer government insurance system versus ``play or pay'' mandatory insurance versus a consumer-based, market-oriented alternative. Legislative hearings have been long and grueling. Despite the fact that Maryland is one of the most liberal and Democratic states in the country-with a Republican minority so small it barely counts-consumer choice may get a real chance. The Maryland Consumer Choice Bill, which will be voted on later this year, entirely replaces Medicaid with a voucher system and establishes a tax-credit program for middle income citizens.

Democrats have shuddered at the impact of high payroll taxes and heavy regulation on business amidst the recession. It is possible that Bush and the Republicans could be outflanked by Democrats, strategically beating them to the tax credit punch on the right.

Tax and Insurance Reform Proposals on Capitol Hill. New life is being breathed into market-oriented reform on Capitol Hill. Conservative critics of the current system argue that the employer-based insurance that dominates the American medical care system is a fundamental distortion of the market. It negates the forces of supply and demand that play such a dynamic role in other areas of the economy in controlling costs and allocating goods and services efficiently. Furthermore, consumers have virtually no say or control over the kind of insurance that their company offers, effectively limiting the number of options that are available.

The linkage between insurance and the job limits the personal freedom and mobility of the workforce. No other type of insurance-whether homeowners insurance, auto insurance or life insurance-is so inextricably tied to the place of work.

The promotion of consumer choice and the portability of medical insurance benefits from job to job are thus common features of market-oriented approaches.

Some of the major proposals are:

  • HR 3084, ``The Affordable Health Insurance Act,'' introduced by Rep. Bill Dannemeyer (R-CA). The bill provides refundable tax credits for the purchase of health insurance by low-income persons, financed through a limit or a cap on the value of employer-provided medical benefits. Dannemeyer's bill preempts state mandated benefits laws and provides for the creation of Medical IRAs or tax-free medical savings accounts. The bill has been referred to the House Committee on Ways and Means.

  • HR 3951 ``Comprehensive Health Care Access Improvement and Cost Containment Act,'' introduced by Michael Bilirakis (R-FL). The bill would give tax credits to low-income families and expand deductions for the self-employed and small businessmen. Like the Dannemeyer bill, it preempts state mandated benefits. For Americans who are uninsurable, the bill provides federal assistance to aid in the creation of state risk pools. HR 3951 also promotes reform of medical malpractice laws.

  • S 314 ``Comprehensive Health Care Act.'' Introduced by Sen. William Cohen (R-ME). Cohen's bill gives Americans who are not covered by employer-based insurance a refundable tax credit. The bill also provides for federal grants to the states, financed through general revenues, to assist states in setting up state risk pools for persons who are otherwise uninsurable. Like the House bills, Cohen's legislation also preempts state mandated benefits laws.

  • S 454, ``The Comprehensive American Health Care Act,'' introduced by Sen. Mitch McConnell (R-KY). S 454 provides a tax credit worth up to $1,750 for the purchase of health insurance for active employees. The credit would be based entirely on income and would be phased out for persons with incomes in excess of $40,000. For retirees, a new tax credit would be enacted to purchase long-term care; likewise the credit would be income tested. It would be phased out at $40,000 per annum.

  • S 2095, ``The Affordable Health Insurance Act,'' introduced by Sen. Steve Symms (R-ID). The Symms bill is modelled explicitly on the medical care reform proposals of the conservative Heritage Foundation. It would provide a refundable tax credit of $2,500 per year for a family's medical insurance costs, plus $250 per year for long-term care insurance costs. The bill does not allow every purchaser of health insurance to claim a full tax credit, but the generosity of the credit is linked to family income. The Symms bill finances the credits by replacing the current tax relief for employer-provided insurance with a national system of tax credits. The estimated annual value of the tax exclusion on employer-provided health benefits is $66.6 billion, or $2 billion short of the total spending recommendations of the Pepper Commission chaired by Senator Jay Rockefeller (See AAPS News Supplement, March 1992).

Medi-Save Accounts Proposed. While Democratic proposals focus on how much bigger the government's role should be, House Republicans have a proposal to expand the individual's role.

The ``Health Care Savings Plan Act of 1992'' (HR 4130) was introduced on Feb. 5 by Rep. Rick Santorum (R-PA) with 18 cosponsors, including Newt Gingrich (R-GA), Richard Armey (R-TX), John Miller (R-WA) and Tom Delay (R-TX). The bill would allow individuals and families to set up tax-free ``Medisave'' accounts for purchasing medical services. Up to $4,800 per year, plus $600 for each dependent, could be deposited tax-free.

According to Rep. John Kasich (R-OH), employers now pay nearly $400 per month for medical coverage for an employee and a family of four. Under the Medisave concept, $100 would be used to purchase high-deductible coverage for catastrophic illnesses, and the remainder deposited to save for routine medical expenses.

The proposal ``puts cost-conscious, savings-oriented medicine in the hands of the consumer [by] applying free-market approaches that will ultimately retain physician choice and quality of care, increase access, and control costs,'' said Rep. Santorum (BNA's Medicare Report Feb. 17, 1992).

According to the National Center for Policy Analysis, more prudent buying fostered by Medisave accounts could reduce US medical expenditures by $147 billion per year. In addition, the use of savings to pay smaller medical bills would reduce administrative costs by as much as $33 billion (John C. Goodman and Gerald L. Musgrave, ``How to Solve the Health Care Crisis, Human Events, 2/22/92).

The concept of self-insurance for medical bills has been the basis of Singapore's medical system since 1955.

The idea of allowing workers to keep money that they don't spend on medical care has even captured the imagination of liberal columnist William Raspberry. Commenting on the idea as presented to OMB by J. Patrick Rooney, Raspberry wrote: ``As clever as the Rooney proposal looks,...it looks even better when compared to the `play or pay' idea being advocated in Congress'' (Everett Herald 1/21/92).

Medicare Bundling Law for Out-Patient Services. House Minority Whip Newt Gingrich (R-GA) plans to introduce legislation to repeal the provision of a 1986 budget law that requires hospitals to ``bundle'' out-patient services under one fee. HCFA expects to release regulations this spring. Hospitals fear that their out-patient services will be changed from profit centers to losers when they have to start paying for diagnostic tests and durable medical equipment received by patients after discharge from the hospital.