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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 60, No. 8 August 2004


In response to an AAPS letter regarding the professional liability crisis, Benjamin Bennett, M.D., wrote: "You have described the reason why I quit practice 8 years ago and am now in nursing school so that I can serve the sick without the harassment of lawyers. I suggest that more doctors do the same; then maybe there will be some relief."

The median pay for R.N.s in the U.S. is $20 per hour or about $42,500 per year plus benefits. Their right to receive their paycheck is never questioned, nor do they face the prospect of a demand to refund the money, plus interest and penalties, to their employer. There are no $50,000 EMTALA fines for declining an unpaid night shift. Nor are nurses saddled with $100,000 in student loans to repay.

An ophthalmologist suggested that he would be better off financially as an optometrist. While doing refractions is hard work, optometrists today can earn a large fee by making a riskless, costless referral to a small cadre of surgeons capable of doing the massive volume of cataract or refractive surgery necessary to service an enormous overhead. Fee-splitting (up to $600 per eye for LASIK), previously considered unethical, is a given (Ocular Surgery News 5/01). Optometric "comanage- ment," in which an optometrist does all pre- and post-op care, is very widespread (Arch Ophthalmol 2002;120:71-75).

Physicians report increasing financial distress. One surgeon wrote that he is being forced to retire at age 61 because his pay had dropped to $7 per hour, which was not enough to repay the loan he had taken out to cover his professional liability premiums. Another physician wrote that on his salary of $40,000, he could not afford dues to professional societies.

Physicians' past as well as future earnings are threatened, and not just by federal programs. One publicly traded insurance company recently reported in its quarterly earnings statement that a significant portion of its profits is coming from "refunds" obtained from providers (MSSNY's News of New York 2/04).

"What physicians should realize is tht a health insurer's fundamental existence and financial success require detailed analyses of each provider's practice patterns using information management systems that cost millions of dollars." A refund demand typically extrapolates a small sample retroactively for 6 years, using determinations of "medical necessity" by an HMO- employed physician who often has no credentials in the specialty being reviewed. Refusal to pay leads to threats of fraud and racketeering charges and complaints to the licensing agency about substandard and inappropriate care.

Thirteen states have False Claims Acts with qui tam provisions, and others propose to follow their lead. Massachu- setts, which has one of the most draconian laws, also imposes liability for consequential damages flowing from the allegedly fraudulent act. Florida recently extended the criminal provisions of its already powerful false claims law to quality-of-care issues, which the federal government does not explicitly define as a false claim. (Medicare Compliance Alert 7/5/04).

More danger looms with the July 26 compliance deadline for Phase II of Stark regulations. Even experts still have significant questions about its interpretation. Linking Stark to the Anti-Kickback Statute narrows the safe harbors, blurs the objective bright lines so that providers cannot clearly decide whether they are in compliance, and removes the necessity to prove criminal intent (ibid.). Recruitment and relocation programs will be under intense scrutiny (MCA 6/21/04).

Punitive actions by medical boards, including license revocations and suspensions, increased 35% from 1993 to 2002, from 3,081 to 4,169 actions (AM News 4/21/03), while the number of physicians increased 25%, from 684,000 to 853,000 (AM News 4/26/04). Still, Sidney Wolfe complains that "Lax medical boards give bad docs free ride" (Ariz. Daily Star 3/5/03). Some groups advocate laws forcing doctors to prove their competency every two years.

On the other hand, public pressure is also building for reform of unfair practices by licensure boards such as the Office of Professional Medical Conduct in New York: "Patients in the thousands have signed petitions and written letters mourning the loss of their doctors" because of biased OPMC actions and tactics such as the use of OPMC police power to aid insurers in disputes with doctors over medical benefits (see www.faim.org for information on S.B. 4148a).

Meanwhile, no outcry from Sidney Wolfe has been heard as New Jersey expands prescriptive privileges for advanced practice nurses, physician assistants, and optometrists.

Not surprisingly, medical school applications in 2002 were down 29% compared with their peak in 1996 (AAMC).

Do we even need physicians? After all, the Resource-Based Relative Value Scale demands equal pay for equal (same code) work, regardless of provider qualifications. As Linda Gorman of the Independence Institute writes, "For the last 20 years public education campaigns have emphasized that medicine is an industrial production process, physicians are all alike, and you can get perfectly good care if you go to a clinic with a rotating cast of M.D.s, nurses, and P.A.s, as long as your records are stored in electronic form.... Evidence-based medicine advocates view physicians as diagnostic machines. Once the diagnosis is made, they want physicians to key it into software and mechanically follow the treatment plan recommended by a panel of political appointees composed of two physicians, three consumer advocates, two pharmacists, and two clueless `consumers.' They, in turn, will follow the recommendations of a university-based consulting service...."

Physicians are needed if and only if individual human lives count. It is better to serve as an R.N. than to fill an M.D. slot only to enable the destruction of our profession.

AAPS Supports Due Process in Licensure

In correspondence to Senator Kemp Hannon, Chairman of the New York Senate Health Committee, AAPS General Counsel Andrew Schlafly wrote: "The Office of Professional Medical Conduct (OPMC) has a record of grossly disregarding justice and the needs of patients when it takes action against physicians." AAPS deplores "disingenuous expert-shopping" and supports legislation requiring OPMC to disclose each expert who is consulted but does not testify and whose work product tends to prove the innocence of the accused. AAPS also notes that even if the physician prevails in a committee hearing, the Administrative Review Board can simply ignore the report and arbitrarily decide otherwise without due process. Proposed legislation would help to remedy this problem.

AAPS also submitted suggestions to the Sunset Review Committee for improvement of the Texas State Board of Medical Examiners. These include: (1) Term limits for Board members; (2) use of appropriate reviewers: board-certified physicians in active practice who are experienced in doing procedures similar to those under review; (3) elimination of blanket immunity for TSBME-hired reviewers; (4) recourse for physicians who are treated unreasonably; (5) protections against indiscriminate, politicized use of summary suspension; (6) not allowing the posting of allegations about physicians on the website before a full hearing and appeals have been completed.

AAPS comments are posted at www.aapsonline.org under "licensure" and "state issues."


EMTALA Made Simple

Todd Taylor, M.D., ER physician and principal EMTALA peer reviewer for CMS in Arizona, calls EMTALA the "largest free public health program in the world." For the on-call physician, the best response to any inquiry from any hospital is very simple: "How can I help you with this patient?"

He explained the distinction between slavery and EMTALA: The former is involuntary servitude with the potential for exploitation (not all slaves are mistreated). EMTALA is "voluntary" servitude with overt exploitation. The revenue loss [unlegislated tax] on emergency physicians averages $138,000 per year. For general surgeons, it is about $26,000; anesthesiologists, $16,000; radiologists, $22,000; OBG, $4,000; all physicians, $12,000 (AM News, June 2/9, 2003).

EMTALA obligations flow from a hospital's contract with Medicare. The Veterans Administration and military hospitals are exempt; Indian Health Service hospitals are not.

Providing good medical care is not enough to satisfy EMTALA; technical compliance with the rules is required. The fine is $50,000 per violation, and an investigation usually alleges 6 or 7 violations for a single patient.


Who Is Qualified to Test Doctors?

At an American Thoracic Society meeting, physicians could obtain 52 hours of CME credit. AAPS Director Del Meyer, M.D., saw one pulmonary fellow purchase 85 tapes at $10 each to study later. Dr. Meyer once asked a bureaucrat whether he obtained additional information about his field by listening to tapes. "Only if my employer pays for the hours," he said. Yet bureaucrats claim that they know how to protect against medical errors and assure quality. The ulterior motive is to gain control of medicine (Medical Tuesday 6/8/04).


Committee Reports

The Nominating Committee chaired by Chester Danehower, M.D., presents the following slate:

President Elect: Kenneth Christman of Dayton, OH

Secretary: Charles McDowell, Jr., of Alpharetta, GA

Treasurer: R. Lowell Campbell of Corsicana, TX

Directors: Drs. Art Astorino of Newport Beach, CA; Todd Coulter of Ocean Springs, MS; John Dwyer of Chicago, IL; Ken Jago of Canton, GA; Tim Kriss of Versailles, KY; Peter LePort of Fountain Valley, CA; Robert McQueeney of Marinette, WI; and Tamzin Rosenwasser of Venice, FL.

To be considered, Resolutions must be submitted to AAPS in writing no later than Sept. 14.

The Bylaws Committee proposes the following changes: to Article II, Section 1, add (F) Associate Member. (1) Any person working in the medical care industry (other than an M.D. or D.O.) may apply for membership as a Professional Associate member. (2) Any person who shares the beliefs and principles of the Association may apply for membership as an Associate member. Change Article I, Section 3, to read: Membership dues in the Association, which includes subscription to the official publications, shall be payable with the application, and annually thereafter on the anniversary of the first payment. Dues shall be set by the Assembly established by the Board of Directors. Failure to pay dues within ninety days after the due date shall be cause for termination of membership. Add: Voting Privileges. All members with the exception of Student, Professional Associate, and Associate members shall have full voting privileges at all meetings of the Assembly.


Why Does Medical School Cost So Much?

In 1974, tuition at Columbia University College of Physicians and Surgeons, one of the most expensive private schools in the country, was $5,000 ($19,000 in 2004 dollars, see www.aier.org). It is now about $40,000, a 110% increase. For decades, all medical school tuition went to the main university, which used it to subsidize other areas, such as the graduate faculty. Fiscal control was transferred to the medical school in 1988 (Kastor JA, Mergers of Teaching Hospitals in Boston, New York, and Northern California, Univ. Michigan Press, 2001). Tracing the flow of money would be an interesting study. Cross-subsidies can work in either direction and could give academic institutions a hidden source of capital to squelch their competition. Medicare subsidies and federal research funding bring a huge influx of dollars, but accompanied by expensive regulation. A key experiment would be to build a proprietary school without walls or government funding, utilizing technologic advances such as multimedia digital archives. Why should large institutions have a monopoly on knowledge?

AAPS Calendar

Oct. 13-16. 61st annual meeting, Portland, Oregon.
Sept. 21-24, 2005. 62nd annual meeting, Arlington, VA.

AAPS Moves to Require Release of Prison Videos

Charles Thomas Sell, D.D.S., who has been incarcerated for 7 years without trial, claims that he has been brutally abused by officials in the federal psychiatric facility in Springfield, MO. Since 2000, Dr. Sell has been seeking the release of videotapes that purportedly show mistreatment. He states that guards have abused many inmates, using some in gladiator-style fights, or handcuffing them to bunks for 30 days straight (St. Louis Post-Dispatch 5/19/04). He hopes that public exposure may be of help to other prisoners.

On May 13, Judge Stohr ordered the prison to release the tapes under a protective order. After viewing them, Dr. Sell's attorneys moved to have the judge see the videos himself.

AAPS suspects that the tapes might show shocking treatment like that depicted in an Iraqi prison, such as humiliating a naked Dr. Sell in front of a female bystander.

Dr. Sell claims that on Nov. 9, 1999, after he had broken a plastic food tray, guards shackled him, naked, to a concrete block so that he could not move and left him there for 19 hours straight. A few months later, after Dr. Sell complained of being cold in his unheated cell, a guard allegedly stripped him, took him to the shower, sprayed him repeatedly with scalding water in front of a female nurse, slammed him face-first to the floor, and dragged him back to his cell.

An internal government memorandum does not deny this but simply states that Sell received "not inhumane treatment."

In its motion to rescind the Protective Order, AAPS states that judicial discretion to enter such orders is circumscribed by long-established legal tradition that places high value on public access to court proceedings. Dissemination of the tapes might facilitate reform of psychiatric detention facilities and help prevent recurrence of abuse. The Order has no plausible justification other than to conceal government wrongdoing.

"The videotapes contain no national secrets nor any information that might prejudice a jury pool against defendant Dr. Sell," writes AAPS General Counsel Andrew Schlafly.

The full brief is posted at www.aapsonline.org.


Mitriones Appeal Sentence Enhancements

Because of the Supreme Court decision in Blakely v Washington, decided June 24, Robert Mitrione, M.D., and his wife Marla DeVore have filed a supplemental brief to their Petition for Writ of Certiorari (AAPS News July 2004).

The question presented is "whether the increase in defendants' sentences based on findings never made by a jury violated their Sixth Amendment right to trial by jury."

The defendants' sentences were increased by factors of nearly 4 and 2.5, respectively, above the statutory maximum, based on allegations neither contained in the indictment nor proved to a jury beyond a reasonable doubt. Without the enhancements, both could have gotten probation.

In Blakeley, the Court held that "the `statutory maximum' is not the sentence the judge can impose after finding additional facts, but the maximum he can impose without any additional findings" (2004 LEXIS 4573, *14 [emphasis in original]). In the Mitriones' case, the judge made her own added findings on a preponderance of the evidence standard.

Application of Blakeley could lead to a large number of sentence revisions, stated Andrew Schlafly, counsel of record for the petitioners.

The full brief is posted at www.aapsonline.org.

Tip of the Month: In nine jurisdictions (Delaware, District of Columbia, Florida, Hawaii, Maryland, Missouri, Pennsylvania, Vermont, and Virginia), doctors have an easy way to protect their assets against malpractice lawsuits. If married, they can place all their belongings into "tenancy by the entirety" with their spouse, and no creditor (such as a malpractice attorney) can ever touch them. This can be done for bank accounts, stocks, houses, automobiles, and other personal belongings. In addition, Indiana and Michigan allow some, but not all, personal property to be held in this manner.


$1.75 Million Awarded for Legal Malpractice

When her case against Child Protective Services for the wrongful death of her son failed, plaintiff Annette Hendrix sued her lawyer for mishandling the case, as by failure to meet filing deadlines. A judgment of $1.75 million was handed down against lawyer Thomas Sylvester. Although another lawyer was jointly at fault, she will not be asked to pay damages because she has no malpractice insurance (Ariz Daily Star 5/25/04).


Guilty Verdict Reinstated

In October, 2002, U.S. District Judge Kenneth Ryskamp reversed a guilty verdict against Mahendra Gupta for conspiracy to defraud Medicare on the basis that CMS definitions of "related," "common ownership," and "control" are opaque. A defendant cannot be held criminally liable if the rules he violated were indecipherable. The government appealed. On March 29, 2004, the Eleventh Circuit Court of Appeals reinstated the guilty verdict on the grounds that the judge had waited too long (three years) to reverse (MCA 5/10/04).


25 Years for Pleading Not Guilty

Even the prosecutors who obtained a 25-year prison sentence for pain patient Richard Paey concede that he doesn't deserve it. Still, it's his own fault, they say, for insisting on his innocence and not taking a plea bargain. "All we wanted to do was get him some help," stated Assistant State Attorney Mike Halkitis (Jacob Sullum, reasononline 4/23/04).

Now in a wheelchair with a morphine pump, Paey at one time took Percocet. When he had trouble finding a new doctor, he used undated prescription forms from his previous physician, who denied authorizing them. Under Florida law, Paey is a drug trafficker of the worst sort, even though he never sold a single pill, because he illegally obtained more than 28 grams of painkillers containing oxycodone. The mandatory minimum sentence is 25 years. (See News of the Day Archive for 3/9/04 at www.aapsonline.org.)


Pfizer Unit Pays $430 Million

Although physicians are permitted to prescribe drugs for off-label uses, pharmaceutical companies are forbidden to promote use of their product for any but FDA-approved indications. In a qui tam action, Warner Lambert was accused of violating the Federal Food Drug and Cosmetics Act and defrauding state and federal Medicaid by promoting the use of gabapentin (Neurontin) for attention deficit disorder, migraine, restless legs syndrome, bipolar disorder, and amyotrophic lateral sclerosis. The fine is second only to that paid by TAP Pharmaceuticals in the Lupron case (BNA's HCFR 5/26/04).


A Model Waiver Form. In order to play in an annual charity basketball event, participants (or their parents) must sign a waiver form. This is published in a full-page newspaper ad. Since the inception of the tournament in 1997, 10,000 persons have signed this form. In it, they agree to hold tournament sponsors harmless for any injury associated with the event. They agree not to sue and to indemnify anyone for all costs if they do sue, and also bind all heirs and assigns by this waiver.

Now that physicians and charity basketball players find themselves playing on the same court, patient waiver forms may become the only option compatible with economic survival in the era of falling fees.

By the way, the whole concept of informed consent came from the Nuremberg trials, in which 16 of 23 Nazi doctors were found guilty, and seven sentenced to death.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Preventing Physician Ownership. Stark-like referral prohibitions are generally not limited to Medicare. They selectively prohibit physicians from investing in medical facilities while permitting anyone else to do so. Such rules are pushed hard by the American Hospital Association and its state affiliates. If hospitals can prevent physicians from competing with them, they will gain enormous control over their medical staff and will not need to listen to physician requests for better equipment, better nursing staff, better OR schedules, or charges that accommodate price-conscious patients.
Donna Kinney, Texas Medical Association


Why Ban Self-Referral? If you're good at what you do and open a hospital to give the kind of care you think your patients deserve, why shouldn't you refer your patients there? Nothing concentrates the attention like having a reputation and cash at stake when you are trying to lure customers who can take a hike if they don't like your service. If there is a concern about conflict of interest, require disclosure.
Linda Gorman, Independence Institute


Absence of the Market. The two major sectors of the economy of which we have said "the rules of the market don't apply here" education and health are the two most dysfunctional sectors. Is there any correlation?
Sean Parnell, Heartland Institute


Some seem to see medicine as an issue that transcends all the rules of the universe because of the nobility of its very existence. This is apparently why reasonably intelligent folks persist in trying to rearrange the Titanic deck chairs.
Frank Timmins, HealthBenefitsReform group


Let the Customer Choose. I have no problem with kiosk medicine even though it does compete with my practice. A kiosk manned by a nurse practitioner in a grocery store in a nearby city charges $5 less than I do. Let the patient decide whether, in a particular situation, board certification in emergency medicine and internal medicine is worth the additional $5. No need to protect the producers.
Robert Berry, M.D., Greeneville, TN


Command and Control. Powerful interests are indeed trying to control physician behavior by fiat: have panels of experts develop practice protocols and enforce them on all clinicians, by payment restrictions, malpractice suits, and licensing. This is not a paranoid fantasy. It is quite literal. It would be a huge mistake, freezing into place the medicine of 2004 and inhibiting any further innovation.
Greg Scandlen, Galen Institute


The Data Base Trap. You won't see a "single database" of auto manufacturers, not even in Germany. Putting all physicians (and their patients) into such a database is a mechanism for totalitarian control. It must be fought at all cost.
Jack Tidwell, M.D., Columbus, GA


Licensure Board Actions. The California Medical Board spends 35% of licensure fees on social programs for which they have no mandate, such as forgiving indebtedness to place doctors in downtown Los Angeles. If you doubt that the Board is violently anti-doctor, read the monthly Bulletin to see the inconsequential matters for which doctors have been censured.
Herbert Rubin, M.D., UCLA


Separate and Unequal. Every form of taxation involves the creation of two classes: taxpayers and taxreceivers. How can one measure the cost to the grandkids and compare it to the benefit received by Grandma?
Robert P. Gervais, M.D., Mesa, AZ


"Liberal" Thought. You will remember from gross anatomy that liberals lack a corpus callosum. Thus, one side of the brain is unable to communicate with the other. I once asked a liberal: "Then you think that the rich can pay 100% of their income in taxes?" He said, "Absolutely. They can well afford it." I decided to push the point further: "Do you think the rich can pay 200% of their income in taxes?" He responded, "Absolutely. They can well afford it." I think liberals have been taught from their youth that the rich have hundreds of times more money than you can ever discover, and that there are simply no limitations on what they can be forced to pay.
Del Meyer, M.D., Carmichael, CA

Legislative Alert

The Presidential Election Issue:

Health Care or Tax Cuts

The Nominating Conventions will soon be upon us, and the Presidential race will be underway in earnest. The key domestic policy issue will be Government-managed and financed health care or tax cuts. Or, we would say: more government or more freedom. No matter how you slice, dice, or phrase it, that's the basic choice facing voters, according a leading analysis of the coming Presidential contest in the June 28th edition of The Washington Post.

The Post reporters have got the basics right. They note that Kerry has a health care plan estimated to cost between $653 billion and $950 billion over the next ten years. Ken Thorpe of Emory University says that Kerry's plan, a complicated and multifaceted thing, would yield a net increase of insurance coverage of about 27 million Americans. (This does not include, of course, any of Senator's Kerry's more expansive proposals for Medicare.) Kerry would pay for his basic health care expansion by rolling back Bush's tax cuts for all families with an annual income of more than $200,000, raising the two top tax rates of 33% and 35% to 36% and 39.6%, respectively, reversing the Bush tax cuts on capital gains and dividends for upper-income families, and preserving the estate tax. The total tax increases would amount to $860 billion over ten years, according to analysts with Brookings and the Urban Institute.

Bush, on the other hand, is committed to making permanent "an array" of federal tax cuts already enacted by Congress, amounting to $990 billion over the next ten years. Bush has also proposed a more modest program of refundable tax credits worth $90 billion over the next ten years, with an estimated additional increase of 2.5 million Americans getting coverage. Of course, Bush has also signed into law a massive expansion of the Medicare entitlement for prescription drugs, expected to cost, on the Administration's own estimate, an additional $540 billion over the next ten years.

Medicare: It's Unofficial!

Robert Novak, one of the best reporters in Washington, writes this explosive little paragraph in a piece on the President's domestic policy: "Senior administration officials privately admit that last year's prescription drug bill was a disaster substantively and politically. The golden opportunity for Medicare reform was squandered. Although the need for basic change along market-based lines persists, nobody has the will to revisit this issue anytime soon" (Washington Post, 6/14/04). Clip that for the permanent file.

Here is another question: Did those same unnamed senior administration officials feel the same way last year, and did they convey their reservations to the President before or during the November debate on the Medicare drug entitlement? The truth will out. Someday.

Meanwhile, the debate on how much the taxpayers will pay is just getting started. One very big estimate is that of Professor Laurence Kotlikoff, chair of the Department of Economics at Boston University and coauthor of The Coming Generational Storm. Kotlikoff estimates that the "present value" of promised Medicare benefits is $73.6 trillion, seven times the current GDP and 14 times the official U.S. debt. (The "official debt" doesn't count unfunded liabilities.) The "present value" of the future payroll taxes amounts to $12 trillion. What to do? Kotlikoff writes, "Historically, we've used general revenues to cover the gap between Medicare's expenditures and receipts. But continuing to do so will require a 50 percent immediate and permanent hike in federal income taxes. Alternatively, we can wait and raise taxes by an even larger percentage in the future. Tax hikes of this magnitude would severely damage our economy."

In other words, we are not going to "grow" our way out of the problem. Since nothing can be done about the demographics and business as usual won't work in the future, Kotlikoff thinks that the best way out is to "voucherize" the entire Medicare program, with a fixed government contribution adjusted by the Medicare patient's medical condition. Care delivery would be secured through private sector options.

Remembering Ronald Reagan

The pomp and pageantry of Ronald Reagan's funeral last month was more than appropriate. It was the response of a great nation in mourning for an increasingly beloved leader. Looking back on Ronald Reagan is powerful reminder to ordinary Americans of what real leadership means. Reagan not only changed America; he changed the world.

For doctors and patients, Reagan's health policy themes were familiar, if unfulfilled. Reagan had faith in private medicine, and he warned, repeatedly, of the threat that government programs posed for American medicine. But on the details of federal policy, the Reagan record was mixed. In 1983, he embraced the Prospective Payment System (PPS), originally developed by researchers at Yale University, as an answer to rising Medicare hospitalization costs. But recall the context of the Reagan initiative: the Carter Administration was pushing for price controls on hospitals. The PPS system was sold by the Reagan team at HHS as an attempt to inject an element of "fiscal conservatism" but it turned out to be nothing more than another federal price-control mechanism.

Likewise, Reagan signed the Medicare Catastrophic Coverage Act of 1988 into law. Originally promoted by the President as an attempt to provide peace of mind for America's seniors through the addition of a modest catastrophic benefit to the Medicare program, the House and Senate bills became a twin engines of a massive Medicare benefit expansion, including the addition of a controversial and costly Medicare prescription drug benefit. Even though the benefit was "self financing" in the sense that the Medicare beneficiaries were going to pay for the new benefit Reagan officials at HHS correctly warned Congress of the exploding costs of the drug benefit and the practical difficulties of the government administration of such a thing, noting that it would require the doubling of Medicare claims and the monitoring of all those new claims. But Congress, and its enablers in the AARP, ignored these reservations, and insisted on including the big benefit expansions. They thus passed it by overwhelming margins in the House and Senate, and Reagan signed the final bill into law. It turned out to be a huge political mistake. The actual and projected costs soared, and seniors, who were paying for the new benefit, staged a massive political revolt. In 1989, less than a year after Reagan left office, the Congress repealed the law, by equally lopsided margins in the House and Senate.

On a positive note, the Reagan Administration firmly opposed the Resource-Based Relative Value Scale (RBRVS), rejecting it as bad policy. That bad policy was then being promoted by the House Ways and Means Committee as the basis of a new Medicare payment system combined with price controls. The first Bush Administration acquiesced.

Politics of Prosperity

Reagan will not be remembered for health policy, but rather for a dramatic economic revitalization at home and international victory in the Cold War. When Reagan took office, Americans were suffering under a savage inflation, a serious economic slowdown, and declining income. The prime rate was 19%, home mortgage rates 14.7%. By 1992, the prime rate was 6%, and mortgage rates 8%. In 1981, he presided over the largest budget and tax cuts in modern history. The overall result was that his policies crushed a raging inflation that was killing the prosperity of the country and destroying the lives of millions of Americans, including those who were living on fixed incomes. He stayed the course with his fiscal and tax policies, worked very closely with the monetarily conservative Federal Reserve Chairman Paul Volcker, and these combined fiscal and monetary policies soon lifted the country out of a serious recession. Raging inflation was dead.

Reagan presided over one of the longest periods of sustained economic growth in the postwar period, creating more than 20 million jobs in the process. It was an economic expansion that largely continued well into the 1990s, with only a brief downturn in 1991. Real average income for American households increased by 16.8% from 1982 to 1989. Isabell Sawhill and Mark Condon of the Urban Institute, no friends of "Reaganomics," found that the rich got "a little richer," but the poor got richer too. Incidentally, the share of income taxes paid by the wealthiest 5% of Americans actually increased, from 35% in 1981 to 44% in 1989. Poverty fell significantly during the Reagan years, from 35.3 million in 1983 to 31.5 million by 1989, just as it had increased rapidly during the Carter Administration. On a per capita basis, charitable giving increased about 4% per year from 1980 through 1989, double the charitable giving from 1955 to 1979.

The "Reagan Revolution" charged uphill against a well- entrenched and bitterly hostile Washington Establishment, and its momentum in the latter eighties eventually slowed. For example, Reagan led an effort to reduce the size and scope of government, and reduced federal employment by 100,000 in the domestic agencies in the first four years. After his big victories in cutting government spending in 1981, federal employment started to creep back up, reflecting the pushback by Congress and the beneficiaries of government programs that accelerated in his second term. But even during this period of backsliding, Reagan had established the rhetorical terms of national debate on the size and scope of government. It is supremely significant that when President Bill Clinton came into office, he promised to reduce federal workforce by 100,000, and actually ended up reducing the total size of the federal workforce (including the military) by 300,000. Clinton said that the "era of big government" was over, even though it wasn't. While formal federal employment may have been reduced, government contractors were growing in the millions in the Clinton years. Reagan may have won the rhetorical debate on big government, and Clinton may have echoed Reagan's rhetoric, but the battle on the ground was lost.

Likewise, Reagan was unable to control domestic spending and the consequent rise in deficits. With the enactment of The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982, Reagan agreed to raise taxes, but part of his agreement with the leadership on Capitol Hill was that for every $1 dollar in tax increases, Congress would cut government spending by $3 dollars. Congress never honored that pledge and Reagan did not engage in a "veto war" with House Speaker Tip O'Neill. We continue to run deficits, not because Americans are undertaxed, but because Congress overspends. They are spending again with reckless abandon.

The "Vision Thing"

Reagan had a coherent philosophy of government: He believed strongly in smaller government, lower taxes, and individual freedom. He was a champion of traditional moral values. These were not vague slogans or metaphysical abstractions; they were a governing philosophy that pervaded the Administration. At the staff level, this writer knows that the policy impact was pretty simple. Whatever the issue was before you, you had to simply ask yourself the question: "Why am I in this job, and what would Ronald Reagan want me to do?" You did that. You were not there to fatten your resume, or get "government experience." You were there to do a job. The key questions were always: Will this expand or reduce the size of government; will this help or hurt the taxpayers?

Changing the World

Reagan's biggest success was in foreign policy. Margaret Thatcher said it best: He won the Cold War without firing a shot. He had no illusions about either the Soviet leadership or the Soviet system. He called them publicly an Evil Empire, and he meant it in Biblical language. Reagan also did not think that the Soviet system was a permanent fixture, although a lot of people in academic life and the big think tanks thought that it was here to stay for a very long time. Right now, a lot of the same folks, or their ideological heirs, are saying that Reagan did not deserve credit for ending the Cold War because the Soviet Union was on the verge of collapse anyway. Really? That was not what they were all saying then, when the left was routinely denouncing Reagan's every move as cowboy diplomacy. In hindsight, the views of Reagan's critics on the subject of the Soviets look positively clownish or naive. Reagan knew that the creaky Soviet economy could not sustain a first-rate military program forever. He knew, and so did Mikhail Gorbachev, that another arms race would run them into the ground. He was right, his critics were wrong, and the world was changed forever.

Robert Moffit is Director, the Center for Health Policy Studies at the Heritage Foundation, Washington, D.C.