Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 48, No. 12 December 1992
PRIVATE CONTRACTING IS LAWFUL
In his October 26 decision in the case of Stewart v.
Sullivan, Judge Nicholas Politan of the US District Court in New
Jersey accepts entirely the plaintiff's argument that there
exists no prohibition in Medicare against private contract-
ing. He stated that: ``[n]either the statutes nor the
regulations expressly address the issue of whether disenrollment
on a partial or service-by-service basis is acceptable under the
Medicare program'' (Opinion, p. 5).
The Judge also found that the Secretary of the US Department
of Health and Human Services (HHS) has no clearly articulated
policy that forbids such contracting.
The case was brought by AAPS Director Lois J. Copeland, MD,
of Hillsdale, NJ, and five of her Medicare-eligible patients (see
AAPS News, Mar, Sept, and Nov 1992).
Reviewing the recent Medicare amendments enacting the
Resource-Based Relative Value Scale, the Judge noted that
physicians are required to submit a claim form, regardless of
whether or not assignment is accepted, when services are
furnished ``for which payment is made under this Part.''
The Judge's opinion completely follows the plaintiffs' argument
that claims must be filed only when the beneficiary seeks
reimbursement under Medicare, not necessarily every time
the patient receives a medical service. This finding rejects the
Secretary's primary argument that a claim must be filed in
all cases. This conclusion is especially notable in view
of the US attorney's vigorous defense of that issue. The Judge
placed no credence in the case the government relied upon (NY
State Ophthalmological Society v Bowen).
(In that decision, the court upheld the constitutionality of
the statutory ban on payment to assistants at cataract surgery.
Both sides stipulated that Medicare beneficiaries could not
contract privately; this point was not litigated.)
Considering the affidavits brought by plaintiffs to
illustrate the Secretary's alleged policy against private
contracting, the Judge noted the following: (1) The documents
contradict each other, and some indicate that HCFA has no
objection to private contracting. (2) In Court, the US attorney
disavowed the Medicare carrier bulletins that seem to enunciate a
``policy'' against private contracting, asserting that the
Secretary had ``no knowledge'' of their origin. (3) The
intermediaries issuing the bulletins have no enforcement powers.
Therefore, they are not capable of issuing a ``ripe'' threat
against a physician. (4) The Secretary's intentions are
definitive when ``regulations are promulgated in a formal manner
after announcement in the Federal Register and consideration of
comments by interested parties.'' Such formal rule-making did
not occur for the alleged policy against private contracting.
The Judge therefore concluded that ``the Secretary has not
promulgated any rules or regulations either formally or
informally espousing the policy [against private contracting]
alleged by the plaintiffs.''
Because there is no law, no regulation, and no ``clearly
articulated policy'' against private contracting, the Judge con-
cluded that physicians are not at risk of sanctions if they
engage in it, even if the mutually agreed terms are reached
without reference to Medicare rules:
The discretionary sanctions for violating the fee
limiting provisions are only authorized where the
physician acts ``knowingly and willfully on a repeated
basis''....Similar preliminary requirements exist for
the Secretary to exercise his discretion in imposing
sanctions for violation of the claims submission
How can physicians knowingly and willfully violate a
nonexistent policy, or a rule that has never been published?
Unless a law to the contrary is passed by Congress, patients
do still have the right to use their own money to obtain
the medical service of their choice. Unfortunately, they must
forego all prospect of Medicare reimbursement for that
particular service, although they need not completely disenroll
from Part B. Since most ``supplementary'' insurance benefits are
available only if a portion is paid by Medicare, patients would
have to pay fully out of pocket. Many will not be able to
exercise their freedom of choice unless and until private
alternatives to Medicare Part B, including MediSave accounts,
become available. The way is now open to develop such policies.
Judge Politan's opinion is an ``absolute victory'' for the
plaintiffs, stated attorney Kent Masterson Brown.
The Secretary cannot appeal to the Third Circuit because his
own motion to dismiss was granted on the basis that there is no
policy to prevent the plaintiffs from acting as they wish. If
the Secretary should suddenly announce such a policy, the
plaintiffs will return to the District Court under Federal Rule
60(b) and ask the Court to reopen the order and find the issue is
``ripe.'' In that case, the plaintiffs will be entitled to judg-
ment as a matter of law, the Court having already found standing
to litigate and no need to exhaust administrative remedies -see
The lawsuit clearly illustrates that Medicare has been
operating through intimidation in its attempts to place patients
and physicians in a straitjacket of restrictions. The program
relies on threatening statements by intermediaries that do not
have the force of law.
This critical decision has the potential to change the
entire dynamics of the Medicare system.
Hospital Cost-Shifting Threatens Private Practice
Economists tell us that if you impose a tax on a good or
service, the supply of that good or service will decline. For
example, when Congress decided to raise taxes on luxury boats,
sales of luxury boats fell, leading to a decline in their produc-
Current billing practices of hospitals in Missouri impose a
heavy tax on private and workers' compensation (WC) patients.
Thus, we are witnessing the decline of true private practice, the
rise of managed care, and a financial crisis in the WC system.
Consider the following actual example of billing used by one
profitable St. Louis county hospital. This hospital decided it
needed to raise its pharmacy charges in order to add staff to its
pharmacy. [Not being allowed to charge Medicare, Medicaid, Blue
Cross, or HMO/PPO patients, the entire ``contribution'' was made
by the other 19% of the patient population: self-paying patients
and those covered by WC or commercial insurance.]
Thus, this hospital shifts costs from government patients
(Medicare/Medicaid) and managed-care patients...[to others,
including the uninsured patient] who does not wish to declare
bankruptcy but actually pays the hospital bill himself. This
example is routinely repeated at all hospitals many times over.
Thus, if you are a physician in private practice who does
not participate with Medicare/Medicaid and HMOs/PPOs, your
patients...pay a much higher price for the exact same hospital
services....As one recent study concluded, ``hospitals are in
effect serving as quasi-governmental bodies, imposing taxes on
one set of patients to cover unreimbursed costs of another.''
No wonder private patients feel that hospital bills are
outrageous. And no wonder they are trying to get into an HMO in
order to protect themselves from financial ruin. Most have no
illusions about the quality of medical care in HMOs; they are
simply hoping they won't get seriously sick or injured. They
know that in managed care, going to the doctor is like taking
your dog to the vet; that is, medical treatment is rendered
according to the wishes of the master paying the bill: the owner
for the dog and the insurance company for the human being.
Please don't tell me HMOs simply represent the free market
at work. The typical consumer of medical care is not free to go
out and purchase health insurance on his own. Due to the nature
of the tax code, health insurance is usually obtained through the
employer since it is a tax-free benefit for the employee. The
employer wishes to limit costs and therefore he may purchase for
his employees a managed care type of plan which effectively
limits costs by rationing care. The HMO then cuts a deal with
certain hospitals to obtain a discount. Thus hospitals, HMOs,
and employers drive patients into managed care plans and away
from doctors who stay out of managed care plans. The result?
Good-bye, private practice.
Chief executive officers of HMOs and hospitals, even so-
called ``non-profit'' hospitals, are extremely well-paid for
their efforts. Using the legal and tax system to their best
advantage, they have forged a mutually rewarding alliance which
has transferred control of health care from the private physician
and patient to investors and businessmen. Along with the
government bureaucrats, businessmen now, in effect, dictate
What to do? In Florida, a group of private patients has
sued the hospitals, charging that hospitals have breached
common contract law by charging paying patients unreasonable
prices. Is there any lawyer in St. Louis who thinks there is any
legal basis for challenging current hospital billing practices?
Is there any way to form an alliance of private practitioners and
their patients, the uninsured, and those interested in reform of
the WC system to convince our state legislators to repeal
discriminatory hospital taxes?
If not, then maybe we need a truly private hospital in St.
Louis specializing in the self-paying patient. Self-paying
patients could submit claims on their own to their insurance
companies, but the hospital would not be responsible for these
claims. This private hospital would give the same discount to
everybody, and would not need to employ dozens of insurance
clerks. That alone would be a significant savings for the
hospital and its private patients.
Bruce Schlafly, MD, St. Louis, MO
Reprinted by permission from Dr. Schlafly and St.
Louis Metropolitan Medicine, Oct 1992 (vol 14, #10, pp. 18-
[The Missouri Hospital Association stated June 24, 1992: ``In
1990, if Medicare and Medicaid paid their fair share and if
payment were received for unsponsored patients, the private
sector's health care bill would be about 30% less-Ed.]
The Cost of Taxes
Supporters of a government-financed health care system have
developed the ingenious argument that governments are efficient
at collecting taxes and can therefore reduce administrative
A 1985 study done by Arthur D. Little for the IRS showed
that businesses spent 3.6 billion hours on federal tax compliance
and individuals spent 1.8 billion hours. That translated into
2.9 million private individuals working full-time on tax
compliance compared to 115,000 IRS employees. Writing in the
winter, 1992, issue of Policy Review, James L. Payne estimated
the business cost at $102 billion and the individual costs at $57
billion. The total cost of $159 billion was equal to 24% of the
$657 billion paid in federal income, Social Security, Medicare,
and unemployment taxes in 1985.
In addition, taxes create a disincentive to production.
This effect was estimated to be 33% of the total taxes collected.
Legal tax avoidance schemes devour an amount equal to 6.8% of
federal taxes collected (Health Issues Brief, American Farm
Bureau Federation, 225 Touhy Ave., Park Ridge, IL 60068).
The Way to True Reform
The way to solve America's medical insurance crisis is to
put control back into the hands of patients, according to
economists John C. Goodman and Gerald L. Musgrave.
Goodman and Musgrave recommend medical savings accounts and
high-deductible insurance plans. These should be personal and
portable (not tied to place of employment).
Their proposal for market-based reform is published in a
688-page book entitled Patient Power: Solving America's Health
Care Crisis. The book may be ordered from the Cato Institute,
224 Second St., SE, Washington, DC 20003, telephone (202)546-
0200, $29.95 cloth or $16.95 paper. (Your congressman needs one
Patients and Physicians Declare Victory in New
In the case known as Stewart v. Sullivan, patients and their
private internist asked the Court to declare their right to
contract privately outside the restrictions of the Medicare
program on a case-by-case without the need to disenroll
completely from Part B.
On October 26, 1992, Judge Nicholas Politan handed down a
25-page opinion. Although ending with an order to grant the
government's motion to dismiss the complaint on the grounds that
it was not ``ripe'' for adjudication, the Judge completely
demolished the government's case.
The Judge found that he did not need to rule on the legality
of the prohibition against private contracting because the
purported HHS ``policy'' does not have the force of law to begin
with. The US Department of Justice itself refused to defend
carriers' threatening statements that implied that they could
enforce such a policy.
The Judge referred to correspondence submitted by the
plaintiffs. In a letter to the Medical Association of Georgia,
former HCFA Administrator Gail Wilensky stated that a Medicare
beneficiary could initiate a private contract with his or her
physician (although she also stated that a physician could not
initiate such a contract).
A letter to AAPS Director Joseph Scherzer, MD, from the
Medicare Claims Administration Office in Phoenix stated that
private contracting is totally acceptable:
A physician does not commit an offense by
merely obtaining an agreement from the patient not to
use his Medicare coverage....As long as the patient and
the physician follow the agreement, the physician is
not in violation of the claims submission requirements,
the limiting charge, etc., as the government is
excluded from the transaction.
Subsequent correspondence with Dr. Scherzer from the HCFA
Regional Office in San Francisco stated that ``(HCFA) does not
pursue or promote the use of private agreements.''
Because the Secretary has thus far not articulated a policy
against private contracting, the Judge could (and did) avoid
addressing the constitutional question of whether Congress could
foreclose all administrative and judicial review of fees set by
HCFA under the Resource-Based Relative Value Scale.
The Judge ruled that if a policy against private contracting
existed, then the plaintiff physician had standing to sue because
the threat of pecuniary and exclusionary sanctions was sufficient
to meet the ``injury in fact'' test. The patient plaintiffs also
had standing because the Judge was satisfied that ``[f]oregoing
all Medicare benefits in exchange for care from a physician of
their choice'' would constitute an injury in fact.
Further, the Judge ruled that there was no need to exhaust
administrative remedies because the plaintiffs were not
challenging a sanction imposed by the Secretary but an alleged
policy whereby the physician would allegedly be subject to
Since the Secretary has not forbidden private contracts, as
far as the Court can determine, then they must be allowed.
If the Secretary does articulate a policy, then plaintiffs
will be back in Court immediately. But at the present time,
there is no reason why physicians and patients cannot make
private agreements on mutually acceptable terms.
A photocopy of the decision is available for a self-ad-
dressed 9- by 12-inch envelope with $1.21 postage ($2.90 if you
wish to have it sent by Priority Mail.)
Litigation was funded by the American Health Legal
Amicus briefs were filed by the Florida Medical Association,
the American Medical Association together with the Medical
Society of New Jersey, and the Washington Legal Foundation.
First Case Filed Against CLIA
Four physicians are challenging HHS regulations under the
Clinical Laboratory Improvement Act of 1988. The case, known as
Wittcoff v. Sullivan, was filed September 14 in the US District
Court for the Northern District of Florida (DC NFla, Case No. 92-
30345 WEA 9/14/92).
The complaint alleges that the final rule is ``arbitrary and
capricious'' in categorizing tests qualified for a waiver, and
that it failed to comply with administrative law requirements for
notice and comment. Plaintiffs ask the court to enjoin HHS from
enforcing the regulation that excludes certain tests (microscopic
examination of urine or vaginal smears and blood tests for
pregnancy) from the list of waived tests.
According to plaintiffs' attorney Ann Tipton, the rules also
run contrary to common sense. They will impede proper patient
care and increase costs.
Michael Astrue, former HHS general counsel, said that he
expected this would be only the first of ``many, many cases'' to
challenge CLIA (BNA's Health Law Reporter, 11/5/92).
New CLIA Forms Required
Laboratories can expect to receive a new form, HCFA-116, in
early November. All laboratories are required to return it, even
those who already have a CLIA number. The original HCFA-109
survey form was never approved by the Office of Management and
More than 640,000 laboratories were sent registration forms
by HHS. To date, 116,000 CLIA applications have been processed.
HCFA expects to receive a total of 135,000 applications.
Approximately 3,500 labs have notified HHS that they will not
apply for CLIA status (MGMA Washington Report, October, 1992).
NICA Survives Challenge
The US Supreme Court denied writ of certiorari in the case
of Coy v. NICA, which challenged the Florida Birth-Related
Neurological Injury Compensation Act. The Act requires all
Florida-licensed physicians to pay an annual assessment to
support the plan. The 4:3 ruling by the Florida Supreme Court
(see AAPS News April, 1992) is thus allowed to stand.
AAPS welcomes Drs. Richard Anderson of Pittsburgh, PA; Dan
Antonescu-Wolf of Massepequa Park, NY; Roy Auer of St. Louis, MO;
Craig Brewer of Renton, WA; Richard Brownd of Silvercreek, WA;
Jack Bunn of Seattle, WA; Woodrow Burns, Jr. of Chapel Hill, NC;
Robert J. Casanas of Mariposa, CA; Richard L. Clay of Huntsville,
AL; Edmund R. Clement of Decatur, GA; Paul Corona of Los Angeles,
CA; Tom J. De Cino of Oceanside, CA; Venancio A.M. de Castro of
Arlington Hts, IL; Charles Debrovner of New York, NY; Kirit T.
Desai of Hamilton Square, NJ; Charles Duva of DeLand, FL; Andrew
Ellias of Colorado Springs, CO; Ted Fortman of Yukon, OK; R.
Peery Grant of Atlanta, GA; Raymond Handler of Des Plaines, IL;
Michael R. Heaphy of Lima, OH; John S. Jachna of Tucson, AZ; Rick
L. Jackson of Vancouver, WA; Glen Jarus of Whittier, CA; Mitch
Kaplan of Brooklyn Heights, NY; Chesley Kemp of Bowling Green,
KY; Donald Keusch of Boca Raton, FL; Thomas Kurnus of Salt Lake
City, UT; Thomas Landholt of Springfield, MO; Richard Mackool of
Astoria, NY; Hunter McKay of Renton, WA; Steven Meed of New York,
NY; Robin O. Motz of Tenafly, NJ; Edward I. Radel of Fair Lawn,
NJ; Arnold Ravdel of Houston, TX; James R. Robertson of Findlay,
OH; S. Todd Robinson of Lexington, KY; David Ruoff of Renton, WA;
Dee B. Russell of Rome, GA; Russell Samson of Sarasota, FL;
Antonio B. Santelices of Minot, ND; Cathy Schlafly of Wayne, NJ;
Charles M. Sheaff of Arlington Hts, IL; Kevin P. Short of Muncie,
IN; William Smedley of Kingston, PA; Ballard F. Smith of
Bradenton, FL; Dean E. Sorensen of Boise, ID; David G. Stewart of
Memphis, TN; John Story of Lancaster, SC; Kenneth M. Talkington
of Arlington, TX; Paul B. Thompson of Cocoa, FL; Gerald F. Whalen
of Shrewsbury, NJ; Harold P. Wittcoff of Pensacola, FL; and
Swiatoslaw Woroch of Bayonne, NJ.
New student members are: Matthew A. Carrell of Dayton, OH;
Geoff Cly of Dayton, OH; Eric Jordan of Hattiesburg, MS; Louis W.
Ralofsky of Dayton, OH; Thomas J. Reid of Fairborn, OH; and
Jennifer P. Wang of Beavercreek, OH.
Letter to the Editor
It is with mixed emotion that I now view the chaotic results
of New Jersey's DRG ``experiment''....
As the most outspoken and unrelenting critic of the DRG
concept..., there is a certain satisfaction in at long last being
proven dead right in my analysis.
Every corrective measure to date, and most current
proposals, serve simply to further compound the problem....
I have long advocated a politically improper two-class
approach....My ``national system'' would in effect be a limited
experiment with national health insurance. It would cover all
government workers and all those deemed to be wards of the
The ``American system'' would provide fee-for-service care.
A major overhaul of the concept of health insurance would be
necessary. The first consideration would be catastrophic
coverage. Next, a high-deductible for big-ticket items. Funding
would depend on the IRA proposal. The health IRA calls for an
annual tax-free contribution by employer or individual of
approximately $3,600. This would cover the above benefits and
leave well over $1000 to be drawn on for ``routine'' medical
expenses. Unspent amounts would be carried over to provide a tidy
nest egg at retirement.
``Managed care,'' the current buzzword, is an insult to the
average person's intelligence. The only beneficiaries are the
Were my proposals to be implemented, the national system
would be an unholy mess. The saving grace is that it would spare
the legitimate providers the undeserved blame and prove once and
for all that the government was not the place to look for
Frank J. Primich, MD, North Bergen, NJ
excerpted from The Star-Ledger
Whom Shall Physicians Serve?
From a report to deputy ministers of health, Toward Integrated
Medical Resource Policies in Canada:
There is a continuing evolution from the
view of physicians as the private agents for
their patients' and their own interests, to
the view of physicians as clinically skilled
agents serving the collective goals of a
publicly funded health care system....
Progress in this direction, which has been slowly
evolving since the inception of ``Medicare,'' may be
aided by means of additional incentives that make the
accountability of physicians to collective public
objectives more explicit.
Argus, September, 1992
February 6, 1993. Board of Directors meeting and dinner
meeting, Dallas, TX.
October 6-9, 1993. 50th Annual Meeting, Menger Hotel, San
Legislative AlertCanadian Medicare: Cure or
by William Goodman, MD
In Toronto, Canada, where I live, we can receive up to 10 US
television channels in addition to our own. Accordingly, I'm well
aware of the fact that you Americans have been inundated,
particularly during the last 18 months, with horror stories about
the deficiencies of the American health care system and the
relative merits of ours. I watched Walter Cronkite's comparison of
the two systems on his Borderline Medicine program last fall. In
a 5-part series, I watched former US Surgeon General C. Everett
Koop expound at length on the strengths and weaknesses of both. I
watched David Brinkley's program with columnist George Will, HHS
Secretary Louis Sullivan and others. Last spring, various highly
trained American doctors explained on 60 Minutes why they had quit
medical practice at the height of their careers. Unquestionably,
medical care is among the hottest issues for both legislators and
the public at large.
Unfortunately, many Americans who feel that our Canadian
medical care delivery system is vastly superior to yours, and are
actively campaigning for one like it, haven't really taken the
trouble to investigate its downside-its costs (financial and
otherwise), its deficiencies, and some very serious problems which
it actually creates.
Canadian medicare is unquestionably the most popular
government social welfare program in Canada. To show you the
reasons for its seductive appeal, let me outline what I am entitled
to, as a Canadian, simply on presentation of my health care card:
(1) Theoretically, I can visit any doctor or as many
doctors as I choose, (general practitioner or
specialist), as often as I choose -``free.'' The
doctor or other approved health care professional
or institution is forced by law to accept as
payment in full whatever the government officials,
in their wisdom, have decided that that service is
worth or, more correctly, what the government is
willing to pay for it.
(2) Theoretically, I can undergo any laboratory
investigations or medically required therapy, or any
required surgery -``free.''
(3) Theoretically, I can be admitted to any hospital, on my
doctor's recommendation; stay there as long as he or she
deems necessary; and receive there any tests or medica-
tions or treatment or surgery he prescribes, no matter
(4) Theoretically, I can have private-duty special nurses, if
my doctor deems it medically necessary, and for as long
as he decides -``free.''
(5) If over 65 years of age or indigent, I can pick up any
and all government-approved prescription medications,
whatever the quantity and whatever the cost, at any drug
In most provinces I can have all of this without paying a cent
at the time of service and without having to pay any monthly or
yearly insurance premiums to anyone. In other words, it's like a
first-dollar, free-choice, on-demand, no-limit,
no-responsibility-for-payment, medical American Express credit
card, with that benevolent entity, the government, presumably
picking up the tab.
All of this would be marvelous, except for one drawback:
Canadians do not have a bottomless purse. The crucial question
therefore becomes whether, where, and to what extent what I need is
actually available and approved by government.
The cost of these benefits is borne partly by the federal
government and partly by the provincial government from what's
known as the Employer Health Tax. In Ontario, for instance, all
employers are required by law to remit to the provincial tax
department, at regular intervals, between 0.98% and 1.95% of each
payroll. The government reserves the right to increase this tax
percentage at its own discretion whenever it feels it needs or
wants more money. In Ontario, this tax covers only about 16% of
the amount required for the province's share of medical costs. To
produce the entire amount needed, the payroll tax would have to be
raised to 9.15%. The rest comes from general provincial revenues
and deficit financing (by the provinces as well as by Ottawa).
Provincial finances are under increasing strain as the federal
share (also covered by taxes and borrowing) is scheduled for
drastic downward revision, from its current level of 31%.
The basic financial difficulty with Canadian medicare is that
we have what's known in economics as ``an open-ended scheme with
closed-end funding.'' In other words, the demands which the
consuming public has a legal right to make (and is making) on the
system are unlimited; but the government money available to pay to
satisfy those demands is very definitely limited by what the nation
can raise by way of taxes or borrowing.
Despite increased restrictions on the medical facilities and
personnel available to the public, huge cost overruns threaten
national bankruptcy. As of May 1, 1991, the indebtedness of our
federal and provincial governments was $21,000 for every man, woman
and child in Canada (Toronto Globe & Mail, May 1, 1991). The
financial situation now is much worse). Accounting for population
differences, this would translate for the U.S. into a combined
public federal and state debt of close to six trillion dollars.
Before you even think of adopting a system like ours, I'd suggest
that you read a 1990 booklet titled What a Canadian-Style Healh
Care System Would Cost U.S. Employers and Employees published by
the National Center for Policy Analysis in Dallas, Texas [telephone
Don't believe your government health care economists.
Invariably, like ours, they will be optimistic about the low cost
of introducing and maintaining new social welfare programs. To
give you a classical Canadian example: when the ``free''
prescription drug plan for seniors and the indigent was introduced
in the province of Ontario about 20 years ago, the government
experts said it would cost about $1 million in the first year, and
would never exceed $10 million annually. By 1975, it cost $45
million, and last year it reached $916 million for that one year
Far from falling, medical costs are almost certain to rise
steeply in the foreseeable future, for two reasons. First,
demographic trends indicate that our population, like yours, is
getting significantly older, and we know that on average people
over 65 use up four to five times as much in the way of health care
dollars per year as those under 65. Secondly, as the eminent
Canadian historian Michael Bliss has pointed out, the decline in
religious belief in western developed countries and the consequent
questioning of immortality in some afterlife has left the populace
clamouring to extend the only life it knows as long as is medically
possible. With the unavoidable degenerative and other diseases
that come with old age, you know and I know that the result is the
law of diminishing returns, in other words, vastly more money to
try to avoid or at least postpone the inevitable-death.
Already, about one-third of beds in active treatment Canadian
hospitals are now occupied by the old, chronically-ill and
disabled, because (1) there's a waiting period of about two years
in most chronic hospitals, and (2) patients would much rather stay
in active hospitals, where the total bill is paid by government
whereas, in the chronic hospitals, a means test might require the
patient to pay up to two-thirds of the actual cost.
All of this was totally predictable and, in fact, was foreseen
29 years ago in 1963, by Canadian Senator Ernest Manning, (at that
time the premier of the province of Alberta). In a television
address, he stated:
Experience in other countries has shown
that medicare programs under which the state
assumes the entire responsibility, inevitably
invite abuses in the form of excessive demands
on medical practitioners...You can't sell
people the false prophecy that medical
services are a right for which they have no
responsibility, financial or otherwise,
without creating an attitude that leads users
to demand all they can get of the so-called
right at the state's expense.
This sentiment was echoed in an official document released 22
years ago, the 1970 Report of my government of Ontario's own
Special Commission on the Healing Arts:
[Under an unlimited, free government scheme],
society would not regard as sufficient the amount of
health goods and services that could be produced, even if
all society's resources were devoted to nothing but the
provision of health care.
Uncontrollable spending has led to dictatorial Canadian
government controls on medical personnel and inevitably on
patients. Cuts in government funding have led to closure of
thousands of hospital beds which actually exist, but have been
taken out of service by hospital administrators who simply no
longer have the dollars to staff them. In a masterpiece of
understatement, McGill University reported:
The Ministry of Health of Quebec has been extremely
interventionist, and the consequences for all Quebec
faculties of medicine have been serious.....McGill has
had its number of funded positions, (that is, internships
and residencies), drop from 900 to 550.
Not long ago, I was informed that operating room time for
nonemergency cases at one of the university teaching hospitals in
Toronto was being cut 20% because of budget cutbacks-in spite of
the fact that there were long waiting lists already. By the way,
as a result of similar problems in Britain's National Health
Service, it was reported in March, 1990, that there were over a
million patients on their waiting lists. A wait of anywhere from
8 months to 5 years is not uncommon there.
By tying government-imposed fee schedules and doctors' gross
incomes to total patient-driven ``usage'' of health services and
government global health care budgets, the politicians are forcing
doctors to take the blame and pay the price for resultant reduced
access to medical services. This is very similar to the ``managed
care'' practices of many H.M.O.'s in the U.S.A. which, in order to
reduce costs, directly or indirectly discourage their health care
associates or employees from offering adequate services to their
Despite the restrictions on services in government-funded
facilities, the government refuses to permit Canadians to buy
privately what the government has decided it can't afford.
Free-standing, privately owned alternatives to overburdened
hospital ambulatory care or surgical facilities are either not
permitted or stringently controlled. (Politicians and bureaucrats
don't like competition; it makes them look bad).
Despite all its drawbacks, national health insurance in Canada
is immensely popular-probably the most popular institution in the
country. You may well ask why.
For one thing, socialized medicine promises to eliminate the
great fear of financial dependency or even bankruptcy resulting
from serious or prolonged illness. This is a fear which all of us,
as mortal humans, experience consciously or unconsciously, sooner
or later. Secondly, 90 percent of the public aren't sophisticated
or knowledgeable enough to equate the apparently ``free''
government-supplied medicare on the one hand with extortionate
taxes, deficit financing, and inflation on the other. Nor are
most citizens perceptive enough to realize the dire threat which
our Canadian system presents in the long run, not only to the
quality and availability of medical care, but to their basic
There's an old saying that ``everybody wants to go to heaven,
but nobody wants to die.'' It's obvious that millions of Americans-
a majority, in fact-would like the benefits of the Canadian health
care system, but without its drawbacks or costs. I have to warn
you, and through you the American public, that you can't have one
without the other. As the late baseball personality Casey Stengel
once said, ``If you don't know where you're going, you're going to
end up somewhere else.'' What vast numbers of Americans don't seem
to fully comprehend is the real end-result of apparently ``free''
Canadian-style health insurance: the delays, frustrations and
unbearable expense; the significant reduction in choice as well as
availability and quality of care; the painful, frightening, and
even life-threatening consequences.
Beware the politicians, present and future, offering you
``free'' health care handouts. If you accept them, rest assured
that it's going to cost you heavily, and soon. It'll cost you
money; it'll cost you heartache; it'll cost you frustration and
anguish when faced with lack of available care for serious illness;
it may even cost you your life.
The overall solution to American medical problems is not
Canadian medicare. To paraphrase Sir Winston Churchill, the
inherent vice of the American medical system is the uneven division
of blessings; the inherent virtue of the Canadian system is the
even division of misery.
Dr. Goodman is an otorhinolaryngologist who resides in
Toronto. These remarks are excerpted from his address at an AAPS
seminar in Great Falls, MT, June 20, 1992. Other portions of his
talk were previously published in Canadian Medicare: A Road to
Serfdom [available for $1 from AAPS].