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Volume 48, No. 12 December 1992


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 requirement....

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 p. 3).

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- tion.

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 medical treatment.

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.

Anyone interested?
Bruce Schlafly, MD, St. Louis, MO

Reprinted by permission from Dr. Schlafly and St. Louis Metropolitan Medicine, Oct 1992 (vol 14, #10, pp. 18- 19).

[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 costs.

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 too.)

Patients and Physicians Declare Victory in New Jersey

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 sanctions.

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 Foundation.

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 Budget.

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.

New Members

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 state....

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 managers...

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 solutions.
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


AAPS Calendar

February 6, 1993. Board of Directors meeting and dinner meeting, Dallas, TX.

October 6-9, 1993. 50th Annual Meeting, Menger Hotel, San Antonio, TX.

Legislative Alert

Canadian Medicare: Cure or Catastrophe?

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 how expensive-``free.''

(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 store-``free.''

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 (214)386-6272].

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 alone!

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.

Non-Monetary Costs

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 patients.

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).

Public Support

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 individual liberties.

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].