AAPS Files Suit to Open Health Care Task Force Meetings
On February 24, 1993, AAPS, joined by the National Legal and
Policy Center and the National Council for Health Care Reform,
filed suit in the US District Court for the District of Columbia
(Civil Action No. 93-399). The suit asks for a preliminary and
permanent injunction forcing the Task Force to comply with the
Federal Advisory Committee Act, 5 U.S.C. Appendix. This would
require the Task Force to file an advisory committee charter, to
give public notice of its meetings in the Federal Register, to
allow public participation and attendance at all of its meetings,
and to permit the public to inspect and copy its minutes and
other written records. The suit would also require all subgroups
and subcommittees of the Task Force, including the
``Interdepartmental Working Group'' led by Ira Magaziner to
comply with the same procedures.
The lawsuit hinges largely on the definition of a ``federal
advisory committee'' within the meaning of the Act. AAPS
maintains that the Task Force is such a committee, and that the
committee is not composed ``wholly'' of full-time officers or
employees of the federal government because Hillary Rodham
Clinton does not and cannot hold such a position.
In support of this argument, AAPS relied upon Title 5 U.S.C.
Section 3110, which is also know as the Kennedy Act. This
forbids the President from appointing a relative (which includes
his wife under the plain language of the statute) to a position
of authority within the federal government. Additionally, AAPS
referred to definitions of ``officer'' and ``employee'' found
within other sections of Title 5.
Oral arguments before Judge Royce Lamberth occurred before a
packed courtroom. Reporters from a number of news organizations,
numerous Washington attorneys, and White House and Congressional
staffers were in attendance.
In response to the government's argument that the First Lady
enjoyed a special historical status that entitled her to
consideration as a ``federal officer or employee,'' AAPS counsel
observed that the vast authority invested in Hillary Rodham
Clinton is unprecedented. The Task Force could affect the way
that every American receives medical care, as well as altering
the tax structure and the function of a major industry. This is
hardly comparable to placing flowers along the highway.
The Justice Department also argued that the FACA, if held to
apply to the Task Force, would violate the separation of powers
doctrine by interfering unduly with the role of the President in
developing legislation within his first 100 days of taking
office. AAPS relied upon the US Supreme Court's decision in
Nixon v. Administrator of General Services to argue that such a
view would always render the Act unconstitutional; thus, none of
the lower court federal cases construing the Act would have been
handed down. Additionally, AAPS stated that such constitutional
questions need not even be addressed because if interference with
the President's power were substantial, the President could
invoke the exceptions to the open meetings requirement of the Act
under the Government in Sunshine Act, 5 U.S.C. Section 5526. The
President has not even attempted to do so in this case.
At the conclusion of the oral argument, Judge Lamberth told
the Justice Department to advise him if any meetings of the Task
Force were to be held before March 12.
What Others Say About the Task Force
``The regime of openness in government has been built by a
lot of people sympathetic to Hillary Clinton, said Peter
Flaherty, President of the National Legal and Policy Center.
``Now she would just sweep away those statutes because they are
inconvenient to her'' (NY Times 3/6/93).
Jonathan Lawniczak, senior health policy analyst at the
National Council of Senior Citizens: ``We don't know who's doing
what with whom in the task force'' (NY Times 3/5/93).
George Stephanopoulos, White House Communications Director,
said he did not know how many people working on the President's
plan were full-time government employees, temporary employees,
paid consultants, volunteers, or advisors of some other type (NY
``It is easier to find out who is in charge of military
intelligence for the Joint Chiefs of Staff than to find out who
is designing cost controls for President Clinton's health-care
plan,'' stated reporter Robert Pear. That's why publications
such as Health Care Reform Week ``charge hundreds of dollars per
year for tidbits of information that in other contexts in
Washington is normally public'' (NY Times 3/5/93).
``This is a very open process,'' said White House
spokeswoman Dee Dee Myers, describing the functioning of the
Health Care Task Force. But any official representatives of
``any interest groups'' would be precluded from having a regular
seat on any working group: ``It would be a conflict of interest,
we believe'' (Lori Santos, UPI).
Asked why the Health Care Task Force could not conduct more
of its business in public, Donna Shalala said, ``I have no
idea.'' Criticizing doctors for trying to maximize their income,
she said, ``You need a systemic, structural change'' (UPI).
Laura D'Andrea Tyson, Chairman of President Clinton's
Council of Economic Advisors, explained the purpose of health
care reform in an interview on CNN's Newsmaker Saturday: ``We
can really get a tremendous amount of savings from health-care
reform. [The American people should think of it] not just as a
way to improve access to those who are not covered, but to reduce
the horrific costs that are on American companies and American
West Virginia Lawsuit Fails
The lawsuit supported by LIFE for West Virginians
challenging the Omnibus Health Care Cost Containment Act (see
AAPS News June 1991), failed when the West Virginia
Supreme Court voted four to one not to hear the case.
``We are all very disappointed,'' stated Jerome Arnett, MD,
of Elkins, WV, as he praised the work of attorneys Henry Mark
Holzer and Phillip Stowers. ``But we feel this project was
absolutely necessary in order to protect our constitutional
rights. These rights, however, seem to have been lost due to
political influence on the West Virginia Supreme Court.''
Dr. Arnett also informs us that Sally Richardson, who spent
two years on the WV Governor's Health Care Planning Commission,
has been appointed to the Presidential Task Force on Health Care
Reform. According to Lane Bailey, chief of staff to Sen. Jay
Rockefeller, ``this task force is literally writing the health
reform legislation that will become law.''
AAPS welcomes Drs. Ron Abrams of Mercer Island, WA; Baley
Fred Allred of Jamestown, TN; Alex Baskous of Anchorage, AK; Joe
R. Cannon of Abilene, TX; Kenneth D. Christman of Dayton, OH;
Thomas Claytol of Crossville, TN; Juan Colon-Linares of
Bradenton, FL; Claud V. DeShahago of Kirkland, WA; Steven A.
DeStefano of Rancho Cucamongo, CA; Jack Dingle of Columbus, OH;
Matthew C. Dobias of Lawrenceburg, TN; Richard A. Erdey of
Columbus, OH; John D. Fisk of Bellevue, WA; Margaret Gaines of
Renton, WA; Joseph A. Giordano of Sharon, PA; Orin M. Goldblum of
Pittsburgh, PA; Howard Heringer, Jr. of Erlanger, KY; Dilip N.
Joshi of Jamestown, TN; Valerie B. Kaiser of Albertson, NY;
George Kakaska of Dallas, TX; Edward T. Kelley, Jr. of San
Francisco, CA; Michael O. LaGrone of Bellevue, WA; K.B. Liegnar
of Armonk, NY; Bert A. Lies, Jr. of Santa Fe, NM; Jose Matta of
Bradenton, FL; Ann McCombs of Seattle, WA; Edward "Pete" McLean
of Seattle, WA; Arthur H. Mensch of Alexandria, VA; T. G.
Monaghan of Crossville, TN; Charles L. Nelson of Pasco, WA;
Wallace Y. Nishikawa of Oxnard, CA; B. G. Norwood of
Fayetteville, TN; Gary J. Proffett of Granada Hills, CA; Steven
F. Reeder of Dallas, TX; Kenneth Reger of Bellevue, WA; Kenneth
Reger of Bellevue, WA; Alan Rehmar of Columbus, OH; Joseph D.
Robertson of Crossville, TN; Neal H. Shonnard of Puyallup, WA;
Vicha Siri of Carrollton, TX; Craig D. Urban of Abilene, TX; W.W.
Voelter of Abilene, TX; and Clayton D. Wilson of Lawrenceburg,
TN. Henry Martinez of Anasco, PR, is a new student member.
Letters to the Editor
The federal government no longer appears to view health
costs and reform in the spirit of cooperative effort. George
Stephanopoulos in his remarks on Meet the Press Feb 14, 1993
clearly articulated that the administration plans to ``get the
doctors and hospitals for they have caused the problem.'' The
stealth health task force to date has not included practicing
physicians in the dialogue but may do so as a late public
relations event. [According to James Todd, MD, of the AMA, there
are 50 physicians among the 400 persons on the Task Force but
most are federally employed.] The recently initiated White House
campaign (Tipper, Hillary, and town meeting events) to sell the
public on the health reform package may be replete with medical
community bashing. Indeed, the process has already started with
the pharmaceutical industry and immunizations....
Since the Clinton Administration has initiated a confronta-
tional campaign, medicine no longer has the luxury of evolution
and compromise....Medicine...must refocus immediately to a direct
people (patient) campaign....
It should be noted that the patient is the true ``special
Robert Nirschl, MD, Arlington, VA
From a letter to Hillary Rodham Clinton, with copy of the
Feb 18 Wall Street Journal article entitled ``The Medicare
Plantation,'' concerning Dr. Lois Copeland's lawsuit (Stewart v.
Considering the complex task you have in reforming American
health care, I have a suggestion that will improve the quality of
care and save the government millions of dollars.
Probably there are hundreds of thousands of older people
under Part B of Medicare who don't like it or need it. They
would prefer and can afford to ``contract'' with their doctors
for a confidential professional and financial relationship, free
of dictates and interference from any third party....
The HCFA has threatened doctors and their patients with
sinister penalties if they were to choose this free contract.
There is no valid reason for that prohibition, and there is a
recent court decision upholding that freedom....
[Allowing patients to contract] will restore freedom of
choice [and] will induce physicians to enter and continue in the
primary care of the elderly. The money saved can be used for the
care of people financially less fortunate.
Thomas H. Coleman, MD, Denver, CO
``Right now, health care is purchased by 250 million
morons called US citizens,'' [Wall Street J analyst Kenneth
S.] Abramowitz said. Managed care, he said, will ``move them
out, reduce their influence, and let smart professionals buy it
on our behalf.''
National Journal, Oct 31, 1992
AAPS has been scheduling a series of legislative seminars
during the critical first 100 days of the Clinton Administration.
Meetings were held in Florida March 4-6. If you wish to have a
seminar in your town, please call headquarters at (800)635-
1196 or our Washington, DC, office at (202)296-6010.
Mar. 20. Freedom in Medicine Foundation, Dayton, OH. For
information, contact Dr. Westbrock, (419)224-8983.
Speakers include Kent Masterson Brown, Lois Copeland, MD, Robert
Moffit, PhD, and Edward Annis, MD.
May 22. Board of Directors meeting and medicolegal seminar,
Oct. 5-9. 50th annual meeting, San Antonio, TX.
Legislative AlertHillary's Recipe
It's deja vu all over again. The same problems that befud-
dled the Clinton transition team are now blocking progress of the
Task Force: balancing cost and access, while leaving the basic
tax structure underlying the current system in place. The
Democrats' transition team, composed of some of the best liberal
Democratic talent in the country, couldn't satisfy the President.
After getting the bad news on January 11th that his vaunted
``managed competition'' idea, even with price controls on doctors
and hospitals, wasn't going to save any money, the President got
angry and started shooting the messengers.
Judith Feder, Harvard political scientist and Pepper Commis-
sion alumna, although still with the Administration, has suffered
serious loss of stature. Stuart Altman is headed back to
Brandeis. The President turned to the vaunted managerial prowess
of his wife, who is assisted by Ira Magaziner
, senior economic advisor at the White House. But it's not
working smoothly, according to Washington insiders.
The staffing of the Interagency task force is huge, and it
looks as though they are trying to reinvent the wheel. It is
estimated that between 300 and 400 federal agency pesonnel are
being assigned to the task force, which is broken down into 20
different working groups. It is displaying symptoms of bureau-
It is possible that the President is unsure what to do in
health care policy. While Hillary herself impresses Members of
Congress as smart and confident, absorbing lots of information in
her Capitol Hill meetings, she is taking a lot of notes but
giving little indication of where exactly she will be going with
all of this. Some Congressional sources fear that they will not
be part of the solution, but on the receiving end of a compli-
cated plan that is politically unworkable.
Recall the promise that the incoming Clinton Administration
would expand universal access and save over $700 billion in the
health care system through cost containment between 1993 and the
rapidly approaching turn of the century. (As Jay Leno said,
Clinton has broken so many promises that he's out of em, and is
now into breaking Reagan's.) Feder's group said it couldn't be
neatly done, and the transition team's 83-page report spelling
out in precise detail how it can't be done has been leaked to the
In a dramatic February 22nd front-page piece by Dana Priest,
the fiscal costs and trade-offs outlined in the confidential
report are laid laid out in painful detail. An aggressive program
of universal coverage would cost $175 billion over the next four
years. Already, Clinton's deficit package is calling for an extra
$243 billion in tax increases over the next four years, roughly
72% of the total deficit reduction package. Even if Clinton
delays ``universal access'' until 1997, one year after the end of
his first term, except for ``limited expansions,'' higher
revenues will be required. But such a delay is a politically
unattractive option for a President who promised universal access
and is currently suffering from what veteral Washington reporter
David Broder calls a ``trust deficit.''
The confidential report also offered the President an
alternative. He could propose a combination of new government
spending, estimated by Feder and company at $105 billion over
four years, institute a national system of price controls on
doctors and hospitals to help offset the costs, and cover every
American by 1997. The President would have to go to the Congress
and declare the current situation a ``national emergency'' in
order to impose price controls on private-sector medical prices.
Perhaps the most dramatic revelation this month is Hillary
Clinton's bold statement-again leaked by an administrative aide-
that the taxation of medical benefits, as a key to reform through
incentives for more prudent purchasing, is less important than
reelection in 1996. This profile in courage means simply this:
No genuine health-care reform. None.
Is Health-Care Reform Really Over?
If the federal tax code favoring employer-based
insurance is left untouched, then there is and can be no genuine
change in the system. On this point, there is an emerging
consensus: left, right, and center. This holds true no matter
which reform option one is backing, with the possible exception
of employer mandates. Advocates of a Canadian-style socialized
system know that the tax code would have to change. So do the
advocates of managed competition-the Jackson Hole group led by
Paul Ellwood and Alain Enthoven; the moderate Democrats'
Progressive Policy Institute; and House Democrats like Jim Cooper
and the Conservative Democratic Forum. So too do conservative
and libertarian advocates of medical reform, such as the
Washington-based Heritage Foundation and the Dallas-based
National Center for Policy Analysis.
If change in the tax treatment of medical insurance benefits
is politically off the table, then what's left? Logically, only
an expansion of the current employer-based system to include the
now uninsured at a huge cost of billions, coupled with price
controls to partially offset this new huge cost, giving the
public the illusion of cost containment while increasing costs in
the form of new taxation and shortages of quality service. But
price controls are not a reform of the system, whatever else they
are. Thus, all of the current incentives that drive up costs
will be left in place, the markets will remain distorted by the
federal tax code, and the insurance and medical markets will be
distorted even further by price controls. The effect of price
controls will be the same as ever: capital investment and labor
shifts to uncontrolled markets and a decline in the quality and
quantity of medical services. A legal guarantee of access to
health care is really a legal fiction of access, as in Canada,
with fewer medical services available to meet a rising demand.
Capitol Hill observers are now increasingly convinced that
Clinton will come forward with a comprehensive price control
strategy with global budgets for public and private spending. In
separate meetings with Congressional officials, HHS Secretary
Donna Shalala said that price controls were on the table. While
this strategy may be initially popular with the public-surveys
show repeatedly that the general public is convinced that high
cost of health care is traceable to greed, waste, and fraud (by
doctors, hospitals, insurers, pharmaceutical companies, you name
it)-it will compromise Clinton's position with advocates of
``managed competition'' in Congress, including many conservative
Democrats, and possibly realign them with Republicans in both the
House and Senate who are steadfastly opposed to a price control
regime. The main objective of the ``managed competition''
proponents, after all, is ``price competition'' rather than
broader competition on a wide range of insurance benefits rated
by risk. But the very idea of mixing price controls and ``price
competition'' is absurd.
Moderate and conservative members of Congress can withstand
the assault of statist initiatives, including price controls, and
fight back and win. Last year, after all, the pharmaceutical
companies defeated the politically attractive Pryor amendment,
making a strong counter case, backed up with solid information
(see Legislative Alert, May, 1992). But they can't do it if the
spokesmen for the private health care system, including
pharmaceuticals, hospital associations, and organized medicine,
cut the political legs out from under them. Incredibly, in the
face of the Clinton Administration attacks on the pharmaceutical
industry this past month, Mitch Daniels of the Eli Lilly Co.
suggested, according to the Wall Street Journal, that the best
strategy for the industry was one of ``pre-emptive surrender.''
If a Clinton proposal for comprehensive price controls runs into
a sea of white flags before a political shot is fired, advocates
of private medical practice can hang it up.
Is Managed Competition in Trouble?
Is managed competition just the latest health care reform
fad, destined to go the way of Canadian national health insurance
and ``play or pay''? It depends.
A growing problem for the orthodox managed competition
school is that there are a growing number of sects and creeds and
heresies that march under the same banner and are challenging the
orthodox for the allegiance of the ``managed competition
The idea is most closely associated with Professor Alain
Enthoven, Professor of Public and Private Management in the
Graduate School of Business at Stanford University and Paul
Ellwood, MD, a Clinical Professor of Neurology, Pediatrics, and
Physicial Medicine and Rehabilitation at the University of
Minnesota. Dr. Ellwood is also the President and CEO of the
Jackson Hole Group, the intellectual center of the managed
competition approach to health care reform.
Another form of the managed competition school is the Gara-
mendi Plan, a health care reform proposal designed by John
Garamendi, California Insurance Commissioner. In the Garamendi
proposal, employers are taxed on a per capita basis for each
employee in their company, and the proceeds of this taxation are
distributed to a health care purchasing cooperative. The
cooperative then contracts with a number of health care plans.
Those health care plans will provide a standard benefits package
to the companies' employees and their families.
An increasing number of politicians have their own special
intepretations of ``managed competition.'' Bill and Hillary, for
example, claim to be believers, even though they apparently favor
global budgets and price controls. So too does the Progressive
Policy Institute, which has perhaps the most ``market oriented
approach'' of the managed competition reformers, and also the
Conservative Democratic Forum, whose bill is the main legislative
vehicle of the managed competition reform movement. That bill (HR
5936), introduced by Congressman Jim Cooper of Tennessee and Mike
Andrews of Texas is, in fact, a vehicle for an enormous expansion
of political contol over the medical marketplace. Nevertheless,
more and more business associations, insurance associations, and
even organized medicine associations, such as the AMA, are
converting to the managed competition faith, albeit with some
reservations. Opposition to managed competition is building among
small business associations and farmers' organizations.
What all managed competition advocates have in common is:
- Community rating for insurance- Every subscriber pays
the same premium amount for a health insurance plan
offering the same benefits, without regard to risk
factors such as age, sex and medical status.
- Health Care Purchasing Cooperatives (Health Insurance
Networks or Collaborative Networks)-either private or
government-sponsored organizations that would contract
with health insurers on behalf of individuals and
employers. The idea behind these cooperatives is to
pool the resources of small employers and individuals
into larger groups in order to purchase insurance at
rates that are affordable for businesses and individual
employees and the self-employed.
- Taxation of health benefits. Most managed competition
advocates favor the taxation of employee benefits in
some form, either a limitation on the deductibility of
the employer or a limitation on the current exclusion
of the employee. In the proposals of Conservative
Democratic Forum, tax deductibility for employers would
be limited to the cheapest health care plan in any
given geographic area that is contracting with a health
care purchasing cooperative.
For all intents and purposes, this tax policy would favor
managed care plans, such as Health Maintenance Organizations
(HMOs). Virtually all managed competition advocates favor direct
federal encouragement of HMOs either through the tax code or
through other regulatory arrangements. (The managed competition
tax revisions should not be confused with comprehensive changes
in the federal tax code to provide tax credits to individuals and
families for the purchase of health plans and services,
regardless of the place or work and regardless of the kind of
health care services employees choose.)
Econometric analyses do not sustain the notion that managed
competition will control costs. Clearly, the Clinton proposal
does not even begin to save money, and may end up adding another
multi-billion price tag to the current system. On February 3, Dr.
Robert Reischauer, the Director of the Congressional Budget
Office (CBO), told the House Ways and Means Health Subcommittee,
chaired by Congressman Fortney ``Pete'' Stark (D-CA), that
managed competition will not control costs. After analyzing the
the Managed Competition Act of 1992 (HR 5936), Reischauer
concluded: ``CBO's preliminary assessment is that after initially
rising above baseline levels for a few years, this proposal would
leave national health care expenditures at approximately the same
level that they would have reached otherwise. This result stems
from the assumption that the board would select a comprehensive
set of benefits for its accountable health plans. Initially
expenditures would be driven up because more people would be
covered by health insurance. But over time, this effect would be
offset as some people shifted into groups, group or staff model
HMOs because of the differential.''
The CBO estimate of cost savings was made on the basis of a
5-year projection. When Congressman Bill Thomas (D-CA), asked
Reischauer if five years was enough time to determine the cost
effectiveness of a proposal, Reischauer admitted it was not.
While Reischauer's testimony did not help managed competition
advocates in Congess, especially in light of the revelations of
what the Clinton plan is likely to cost, it was no comfort to the
free marketeers either. Indeed, Reischauer repeated the claim
that the Stark proposal, calling for Medicare style controls on
the private health care market would generate savings to the
system. As Reischauer indicated, ``...we've also learned from our
experience that cost control mechanisms that are effective
restrain the freedom of consumers or providers in some way.
Unfortunately the more effective mechanisms for holding down
costs are also the more intrusive ones.... Cost control mechan-
isms that effectively hold down expenditures in only one segment
of the health care system may not generate systemwide savings
because of cost shifting and other behavioral responses of
providers. This means that the cost controls that are applied
selectively to some groups of consumers or to some providrs, but
not to others, are much less effective than those that are
applied to the health sector as a whole.''
The representatives of organized medicine who in 1989 so
strongly supported the RBRVS Medicare rules helped to fashion the
chains of an imperial government regulation over their own
profession. Only the invincibly naive could have ever imagined
otherwise. Doctors should not forget.