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

Volume 49, No. 12 December 1993


For months, over 500 members of the working groups of the President's Task Force on Health Care Reform occupied two floors of the Old Executive Office Building. They held thousands of meetings and passed through numerous ``tollgates.'' Ira Magaziner reportedly arose at 4:30 a.m. to receive reports. Physicians who took their time to journey to the White House to participate in an ``outreach group'' were informed in writing that their thoughts were being preserved in minutes and ``bullets'' for First Lady Hillary Rodham Clinton. Congress and the public thought that the President was collecting the best and most authoritative advice from all who had something to contribute, in order to prepare his Health Security Act.

Where are the minutes now?

``Based on my knowledge of Mr. Magaziner, I don't think there are any records,'' stated an official who prepared an affidavit presented to the US District Court in the case of AAPS v. Clinton.

AAPS is engaged in discovery, attempting to obtain documents relevant to the question of whether the working groups of the Health Care Task Force constituted a Federal Advisory Committee that is required by law to open its minutes to public scrutiny. The answer depends on the structure and composition of the groups. Who were the members, who paid them, and how many hours did they work? Did they complete the conflict-of-interest disclosure forms required under the Ethics in Government Act?

The government has provided very little information in response to AAPS interrogatories-only some lists of names and incomplete time records that appeared to have been prepared after the fact. No organizational chart, no payroll records, no ethics forms, and no travel vouchers have been produced.

At first, the government objected to AAPS requests on the grounds that the documents were irrelevant and that producing them would be ``unduly burdensome.'' On reviewing the response of the US Department of Justice, Judge Royce Lamberth stated, ``there's so much government gobbledygook that I can't say I understand it at all.''

In an October 20 hearing on a Motion to Compel, US Attorney Jeffrey Gutman seemed to take a different tack, suggesting either that the desired documents do not exist or have not been located:

``The nature of the interdepartmental working group was such that there was no direction by Mr. Magaziner's office to produce minutes, agendas, and sign-in lists....''

On the other hand, Mr. Gutman stated: ``I'm not saying that we -- they don't exist. What I -- what I -- what I have done ... is that a colleague and I have reviewed a large volume of the interdepartmental working group documents, and the results of that investigation have revealed to us ... that a very, very few of the meetings ... produced these agendas....''

The Court noted that the Secret Service keeps records of persons cleared in for meetings in the Old Executive Office Building. However, Mr. Gutman did not know how long the Secret Service keeps the records.

The applicability of the FACA hinges on whether or not all the consultants worked full time. Lacking complete time records (which were not requested in any event) or meeting attendance records, Mr. Gutman asserted that it was ``preposterous'' to think that payroll records (which were requested but not produced) could serve as a proxy for the amount of time worked. Furthermore, he said that ``the date on which somebody filled in their conflict of interest form is not probative of whether they're a special government employee.''

Mr. Gutman summarized: ``If there isn't any more information available, there isn't any more information avail- able.''

Reports of this hearing in The Washington Times on October 21 caused concern in the House Government Operations Committee, chaired by John Conyers (D-MI). Responding to Congressman Conyers, White House Counsel Bernand Nussbaum wrote a carefully worded seven-page letter. He declared that neither Judge Lamberth nor any other court has ``made any findings suggesting that the government has failed to fulfill any legal obligation to maintain [Task Force] records'' and that the plaintiffs had not made a second motion to the Court for an order to compel the preservation of any materials in conformity with federal law (after the first such order was rescinded). Additionally, Nussbaum stated that ``the government has never suggested ... that any records that were created are now `lacking'....The question of whether records exist is not even presently pending before the District Court.''

The FBI is now conducting a criminal investigation to determine whether the administration misused taxpayer funds in the procedures for hiring members of task force working groups (US News & World Report Nov. 1, 1993).

President Clinton and Hillary Rodham Clinton have launched blistering attacks on ``special interest groups'' such as insurers, physicians, and pharmaceutical companies. The public can easily find out who is opposed to the Plan. The urgent question remains: who drafted the Plan?

Were the drafters employed by entities that stand to profit from the new system? Were they a disorganized horde, as implied in government testimony before the Court? Was the plan really written by an unidentified elite, who used a sham Task Force as window dressing?

The White House has apparently learned some lessons about documentation from Senator Packwood and former President Richard Nixon.

On November 8, Judge Royce Lamberth handed down an order on an AAPS Motion to Compel. The text is enclosed.

Documenting for Doctors

Physicians and insurers must not assume that asserted irrelevancy, undue burdens, inability to find documents, or nonexistence of documents will protect them in the event that a government agency wishes to investigate them. Physicians are, after all, caring for patients, not merely trying to restructure one seventh of the nation's economy.

Data are required for various purposes, notably for investigating allegations of fraud or abuse, or for determining the need to reimburse the Treasury for erroneous payments.

Confusion sometimes arises concerning responsibility for payment when a person is covered under both Medicare and an ERISA plan. The Health Care Financing Administration is now trying to recover money from employer-funded plans for claims submitted in the early 1980s. Under ERISA, plans are required to keep data for seven years, and many do not have the records that HCFA has requested.

In order to defend themselves in a Medicare audit or to answer allegations of fraud or abuse, physicians are advised to keep records for seven years. Medicare civil penalties have a six-year statute of limitations, beginning at the time a claim is filed. The federal false-claims law has a five year statute of limitations, as do the criminal false claims law and the criminal Medicare fraud law. Various Medicare provisions require different record keeping times. None is longer than seven years; however, some local organizations require ten years (Part B News 10/18/93).

Currently proposed legislation (S 1494; HR 3137) would lay the groundwork for a national health information ``super- highway,'' establishing the ``infrastructure'' for national health care reform, bringing American medicine out of the ``information dark ages.'' The bill could be ``folded into'' health care reform legislation at a later date. The legislation would establish a federal Health Care Data Panel to develop data standards and set penalties for failing to implement uniform data requirements within the timeframe set by the bill (BNA's Medicare Report 10/1/93).

The importance of documentation is highlighted by the penalties proposed for fraud or abuse in text of the ``Health Security Act'' released Oct. 27, 1993. A prison term of up to 10 years is the penalty for any scheme ``to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by...any health alliance, health plan, or person in connection with the delivery or payment for health care benefits, items, or services.

``If the violation results in serious bodily injury...such persons shall be imprisoned for life or any term of years.''

The draft document leaked in early September named some federal health care offenses: ``Failing substantially to provide medically necessary services'' and ``engaging in any practice that reasonably could be expected to have the effect of denying or discouraging enrollment...'' All physicians need to be certain they understand the rules and the penalties, especially if they plan to participate in the establishment of a health plan that can profit only by discouraging the enrollment of the sick.


The Keystone

Vladimir Ilich Ulianov (a.k.a. Nicolayi Lenin) said that ``medicine is the keystone in the arch of the socialist state.''

The Gothic arch is obviously very unstable during con- struction and must be propped up with braces. At this stage, any minor disturbance will make it collapse. But when the keystone is set, the supporting timbers can be removed and not even an earthquake will cause the arch to crumble.

All facets of an economy except medicine can be collec- tivized, and that nation may still be rescued from slavery. Not everyone is a government farmer. Some folks grow their own food. Not everyone rides the government bus. Some walk. Not everyone uses government Federal Reserve Notes. Some barter. But universal compulsory government medical care shackles all patients and all doctors, and that is everyone. When medicine (``health care'') is made a ``system,'' an entitlement, the keystone is jammed into place. Emancipation from that bondage would be slow, costly, laborious, bloody-requiring a civil earthquake-as current unfolding history confirms.

That is why doctors must NOT cooperate, must NOT participate, must NOT be particeps criminis. Far more is at stake than socialism's inferior care for sick patients and unbearable working conditions for automaton ``health care providers.'' Freedom for this entire nation hangs on our action.

The imposition of the ``universal compulsory health care system'' now being fashioned for America has nothing to do with professional, compassionate, conscientious medical care for ill human souls. It has everything to do with power and control of all of us (``beneficiaries'' and ``providers'') on the intended animal farm.

The ``system'' being built is veterinary medicine. The owner [is] the state....The animal (each of us) is to be the property of and exist at the sufferance of the all-powerful state.

If and when we allow These States in Union to become a socialist slave state, freedom for Americans will be only a forbidden dream. And remember that Lenin predicted that when this ``last bastion of freedom'' falls prey to socialism, freedom in the whole world will become entombed.
Curtis Caine, MD, Jackson, MS


``Universal'' Means Compulsory

Hillary Rodham Clinton announced that she was willing to negotiate the future of American medicine, but that one principle was non-negotiable: universal coverage with comprehensive benefits. Only the liberal Democrats and moderate Republicans have offered such plans, she stated, specifically criticizing the ``managed competition'' proposal advanced by former allies such as Congressman Jim Cooper (D-TN).

Ms. Clinton warned her opponents: ``If the forces arrayed against reform want a real battle in which their self-interest is exposed and their real agenda is made public, they will get it'' (NY Times 11/9/93). (She did not allude to the AAPS battle to bring to light the agenda of the supporters of ``reform.'')

Ms. Clinton also stated that all physicians believe in ``universal coverage'' (USA Today 11/9/93). At a Nov. 9 meeting of the Fairfield County Medical Association in Norwalk, CT, Daniel H. Johnson, Jr., MD, Speaker of the AMA House of Delegates, agreed that the AMA supported that concept. When asked whether the Clinton Plan would mean the end of private practice, he replied, ``Yes.''


``We are on the verge of making our dream a reality once and for all....We will roll over anyone who tries to stop us.''
Senator Jay Rockefeller (D-WV)

Oral Arguments Heard Before Trial Court in Challenge to Kentucky ``Provider Tax'' Statute

On November 1, oral arguments were heard in the case of AAPS member Stuart G. Yeoman, MD versus Kentucky House Bill No. 1, a statute imposing a 2% provider tax on the gross revenues of all Kentucky physicians and establishing the Kentucky Health Care Data Commission to gather information and audit the records of Kentucky physicians. The case, styled Stuart G. Yeoman, MD, et al. v. Kentucky Revenue Cabinet, et al., and the companion case with which it was consolidated, Charles Smith, MD, et al. v. Kentucky Revenue Cabinet, et al., are currently pending before the Franklin Circuit Court (see AAPS News Sept and Oct, 1993). (The Smith case was brought by three physician members of the Kentucky Medical Association.) A third case, filed by twelve (12) Kentucky Health Maintenance Organizations shortly after Smith and Yeoman were brought, was heard at the same time although not consolidated.

The first part of the oral argument was devoted to the Due Process and Equal Protection Clauses of the US and Kentucky Constitutions. Both provisions protect the individual from the state's exercise of arbitrary power over the lives, liberty, and property of individuals. The plaintiffs argued that Kentucky House Bill No. 1 was rife with constitutional error. They pointed out that because the tax is applied to gross revenues, a physician would be subject to it even if he realized no net profit after paying overhead costs. Essentially, physicians are singled out for double taxation to fund the Medicaid program, whether or not they receive revenues from the program.

The plaintiffs also argued that the statute violates the separation of powers. Among other reasons, House Bill No. 1 unlawfully delegates the power to set the rates and incidents of taxation to the US Dept. of Health and Human Services by tying the rate of taxation, and the items or services that may be taxed, to any and all future regulations on the subject issued by that federal agency. The plaintiffs maintained that such a delegation amounted to an outright abdication of the Kentucky General Assembly's responsibility and accountability for taxing decisions.

House Bill No. 1 originated in the state house as a revenue bill and was then sent to the senate, which added provisions creating the Kentucky Health Care Data Commission. This amendment, being unrelated to raising revenue, is a blatant violation of Section 47 of the Kentucky Constitution, plaintiffs maintained. Additionally, they argued that the unlimited power to conduct searches and seizures without a search warrant or subpoena violates both the Fourth Amendment to the US Constitution and Section 10 of the Kentucky Constitution.

The plaintiffs hope to have a ruling before Christmas.


Balance Billing Limits Upheld

The US Supreme Court declined to review a decision by the Second Circuit, which determined that balance billing limits did not involve an unconstitutional taking of property requiring government compensation (Garelick v. Shalala, CA 2, No. 92-6100, 3/5/93; 4 MCR 741). The court conceded that physicians did not create the social problem the law was intended to alleviate and that the plaintiffs (anesthesiologists) did not have the option to refuse Medicare patients by practicing on an outpatient basis (BNA's Medicare Report 10/8/93).


Letters to the Editor

According to an information directive from the Ministry of Health Ontario, the government and the Ontario Medical Association agreed to a 4.8% ``holdback'' of payments for physicians' services because of increased utilization. The goal is to reduce expenditures in the 1993-1994 fiscal year by $100 million compared with 1992-93.

Our tax rate will be a minimum of 54.8%. Actually, I am paying 58% because of other health-plan related taxes.

What is the cause of the increased utilization? Immigrants of all ages are pouring into this country like the St. Lawrence River. With a health card, they and all their friends can see a doctor any time at no cost. Also the general population is urged to see a doctor at any time....
P.A. Charlebois, MD, Scarborough, Ontario


...[T]he President's proposal would create a totalitarian system of health care imposed by force legally upon patient and physician, destroying the free enterprise system of medicine forever....
Frank F. Martin, MD Charleston, SC


The Clinton administration's emphasis on universal, one-tier medical coverage, rather than medical care, assumes that all physicians will be reimbursed through insurance mechanism....That assumption combines the worst of both worlds: the bureaucracy involved in any third-party payment system...and the endlessly mounting costs which third-party fee-for-service care has produced all over the world....
Nathaniel S. Lehrman, MD, Roslyn, NY


Being of Polish extraction, I have tried to keep abreast of my heritage. Please note an article in the Polish Falcons about a Polish government health ministry delegation which recently visited Chicago. The objective of its mission was ``to improve the quality of health care in Poland while moving it from the existing state-operated to a private practice model.

Isn't it ironic that a backward country like Poland is taking a forward step away from its socialistic state-operated medical care system, while the United States is hellbent to take a backward step into a socialist system?
Stanley Olesky, MD

  Taylors, SC

Asset Forfeitures Exceed Losses from Burglary

Since new forfeiture laws went into effect, federal law enforcement officials alone have seized $4.1 billion in private property-more than the $3.8 billion that burglars carried away in 1992. Before the government can cut off the check of a public welfare cheat or evict a deadbeat tenant, it must give notice and conduct a hearing. No such niceties are required in forfeiture cases (Paul Craig Roberts, Scripps Howard News Service, 11/1/93).

New Members

AAPS welcomes Drs. Jeffery Amer of Syosset, NY; Robert Anderson of Marysville, OH; Azzam Baker of Secaucus, NJ; Roderick Baltzer of Cherboygan, MD; Robert B. Belk of Anderson, SC; Burt Bottjen of Algona, IA; Lisa Callahan of San Jose, CA; Merrill J. Cohen of Greenbelt, MD; Stanley I. Cullen of Gainesville, FL; Dan Dahlinghaus of Chicago, IL; Chester A. Danehower of Peoria, IL; Nicholas De Gregorio of Pittsburgh, PA; John Demetree of Bradenton, FL; Dale Doerr of St. Louis, MO; Anthony J. Dorto of Miami, FL; B.R. Drexinger of Roswell, GA; Robert Fath of Scarsdale, NY; Frank Fazio of Boise, ID; Chester G. Golightly of Lubbock, TX; Robert D. Gross of Fort Worth, TX; Raymond Handler of North Brook, IL; John Hanigsberg of Tempe, AZ; Robert Hastings of Tucson, AZ; Fredrick C. Hendrickson of Paulding, OH; Richard S. Herdener of Spokane, WA; Jim K. Herdson of Ocean Springs, MS; James F. Hesse of Wichita, KS; Rick Honer of Winter Haven, FL; T.M. Hughes of Houston, TX; Brian Hull of Wichita Falls, TX; Kilgore and Strom of Paris, TX; James King of Galax, VA; Yolanda Moyer Koth of Potomac, MD; Robert Kurtis of Clearwater, FL; Maurice L'Ecuyer of Houston, TX; John Lettieri of Spartanburg, SC; Thomas Levy of Colorado Springs, CO; Douglas Liva of Paramus, NJ; Stephen E. Mahoney of Houston, TX; Willis E. Martin of Rocky Mount, NC; Robert McDowell of Newport, VT; Andrew W. McRoberts of Pocatello, ID; W. Terrence Meyer of Las Cruces, NM; John Miethke of Vista, CA; James W. Neisler of Toledo, OH; Leonard J. Newton of Ithaca, NY; Jackie Nixon-Fulton of Cedar Hill, TX; Arthur O'Brien of Hayward, CA; Swati Pande of Midland, TX; Mangubui Patel of Queens, NY; Mark Peterson of Lewiston, ID; William Phillips of Augusta, GA; Martin R. Post of New York, NY; Morley Rosenfield of Phoenix, AZ; Peggy Russell of Austin, TX; Richard E. Scheetz, Jr. of Columbus, OH; Mark A. Schwartz of Long Branch, NJ; Michael Stephens of Dallas, TX; Ron Stevens of Evergreen, CO; Marvin Tiesenga of Oak Park, IL; Randall K. Tozer of Scottsdale, AZ; Joseph T. Tretta of Mt. Pleasant, TX; Louis Tribulato of Omaha, NE; David Udehn of Moline, IL; Ronald H. Ullman of Great Falls, MT; Sivachandra Vallury of Amityville, NY; Fred Wagshul of Dayton, OH; John Wang of New York, NY; Scott Wattenhofer of Omaha, NE; Shirley Wilson of Hawkinsville, GA; Scott Yun of Whittier, CA; Roberto A. Duran of Houston, TX; George and Stacey Ibrahim of Durham, NC; Geoffrey A. Jahan-Tigh of Baytown, TX; Alan C. Rodgers of Baytown, TX; Tracie Updike of Baytown, TX; Joseph P. Aiello of Spring Valley, CA; David Aiken of Metairie, LA; Walter C. Ashcraft of Crystal City, MO; Joseph Aziz of Houston, TX; Thomas A. Cadenhead of Denton, TX; S. W. Casner of San Marcos, TX; Michael Coverman of Austin, TX; Gary F. Cox of Victoria, TX; Albert D. Cuellar of Houston, TX; Austin R. Cushman of Boise, ID; Chester C. Danehower of Peoria, IL; Robert W. Davis of Boise, ID; Robert C. Erickson II of Massillon, OH; Robert K. Fell of Lafayette, LA; David Fields of New York, NY; Ray M. Fitzgerald of Houston, TX; Michael D. Foreman of Lafayette, LA; Anthony J. Forte of Tacoma, WA; James W. Geiselmann of Poplar Bluff, MO; William P. Griggs of Bellingham, WA; Neil Haddock of San Antonio, TX; Ross A. Hauser of Oak Park, IL; John C. Hawk, Jr. of Charleston, SC; C. Andrew Heiskell of Morgantown, WV; William A. Hewson of Stuart, FL; Loren G. Hinger of Boise, ID; Duane F. Hopp of Puyallup, WA; Chester R. Hoyt of Grand Rapids, MI; Stewart Hults of Indeanapolis, IN; Reldon R. Jones of Ceres, CA; Lenore S. Kakita of Glendale, CA; Michael E. Klein of Glendale, CA; Richard A. Kowalsky of Shorewood, MN; Rodney D. Lentz of Jefferson City, MO; Richard D. Long of Carson City, NV; Hayden E. Mayeaux of Abbeville, LA; J. Patrick Moulds of Houston, TX; Lan Thi Hoang Nguyen of Westminster, CA; L. William D. Nowierski of Boixe, ID; Jonathan M. Raines of Gladwyne, PA; Gil Robinson of Abilene, TX; Frank S. Segreto of Holbrook, NY; Avery L. Seifert of Boise, ID; Arnold B. Skor of Houston, TX; Donald H. Song of Tacoma, WA; M. Joyce Starling of Henderson, TX; Jon K. Stern of Houston, TX; Mark A. S. Stuart of Houston, TX; Gary Tennebaum of Dallas , TX; Thomas M. Van Eaton of Eatonville, WA; James H. Watts of Spokane, WA; and D. W. Williamson of Tacoma, WA.

New student members include Anh Hoang of California; Mirza A. R. Beg, Mirza A. R. Beg of Florida; and Ashley S. Adams, Douglas K. Burke, Joe D. Callens, Melissa Canham, Daniel Carrasco, Audrey Chang, Mimi Cho, Joel Ciarochi, Kristin Coleman, Raquel Collins, Mark Dalton, Edwin Diaz, Kathryn Eubank, Cassandra Fallaw, John Faringer, Sanford Fung, Jonathon B. Gentry, Alfredo Gonzalez, Jeff Gunter, Terry Higgins, Thuy Ho, Son Huynh, Zainab Ilahi, Terry Irwin, Claudie H. Jimenez, Raime B. Kalish, Partow Kebriaei, Faraz A. Khan, Faraz A. Khan, Lowell T. Ku, Donna Kundert, Anita Kushwaha, Amanda LaComb, Dawn Laremore, Michelle LeBlanc, Anna Lichorad, Jeffrey D. Linder, Clinton Long, Brenda Luna, Daniel Meritt, Jr., Melissa Moss, Allan B. Ohman, Jr., Shannon Orsak, William A. Paruolo, Hank Prost, Marie T. Quintos, Matthew Roberts, Karen Salo, Sumeet Sharma, Lance M. Silverman, Lloyd Stegemann, Cynthia M. E. Taber, Kuloeep Talwar, Jeff Taylor, Jessica Vandrovec, Lan Phuong Vu, Chau M. Vu, Heidi Walden, Jamie Williamson, Jody Wilson, Jay Wright, and Daren P. Yeager of Texas.


AAPS Calendar

Dec. 11. Americans for Free Choice in Medicine and the Medical Action Committee for Education will host a meeting in Orange County, CA. For details, call Bryan Williams at (714)645-2622 or Dr. Arthur Astorino at (714)645-2250.

Oct. 12-15, 1994, 51st annual meeting, Atlanta.

Legislative Alert

Support for Clinton Plan Declines

Now that the President and First Lady Hillary Rodham Clinton have delivered the final 1,342 page legislative language to Capitol Hill in an unusual bipartisan ceremony, the Clinton White House is trying desperately to recapture lost political momentum. Since the President's passionate address to Congress and the nation on September 22nd, the political pros on Capitol Hill have noticed a steady decline in popular support for the President's health plan.

The President's first problem was that the initial September hype was not followed up immediately with legislative details for ravenous congressional members and staff. As one Democratic aide remarked, it was as if the Clinton Administration launched a military blitz without bothering to make sure that the supply lines were in order. They weren't.

While the First Lady's historic Congressional testimony was greeted with the expected decorum and fawning, the cheering quickly stopped after Hillary left the Hill. When HHS Secretary Donna Shalala testified before the House Ways and Means Committee and the House Energy and Commerce on October 5th, she got, in the words of the Washington Post's headlines, a ``bruising reception.'' Shalala didn't show much mastery of the details, so members from both sides of the aisle lit into the lack of specifics with bare knuckles. Chairman Fortney ``Pete'' Stark (D-CA) told Shalala that it appeared to him that she had no more hand in writing the Clinton Health Plan than he did. Likewise, Jim McDermott (D-WA), another advocate of the single-payer system, told Shalala that if she couldn't clearly explain the impact of the Plan on costs to businesses and individuals, he wouldn't be able to explain it to his constituents and thus could not support it.

The Clinton Plan also has to share the Capitol Hill spotlight with more than a half dozen other major reform ideas, which have already been introduced or are in the final drafting stages. Leading proposals include the Dole-Chafee managed competition proposal; the Cooper-Grandy managed competition bill; the Gramm-Armey Medisave proposal; the Michel-House Republican Leadership Proposal (HR 3080), which also includes a Medisave option, and the McDermott-Wellstone single-payer option. Also, Republican Senators Don Nickles of Oklahoma, Orrin Hatch of Utah and Connie Mack of Florida are fashioning a comprehensive consumer choice option, including tax credits and a Medisave accounts. And while bill language of the Clinton Plan is now available, there is yet no bill language for the proposals offered by Senators Chafee, Gramm, and Nickles.

Without decisive offensive action on the Administration's part to define the terms of the debate, the Clintons' opponents started to define it for them. With the precious ammunition of the leaked September 7th working draft, where the details could be quoted in chapter and verse, the President has found himself on the defensive in three areas.

First, the Clinton claim to ``simplify'' the bureaucratic health care system was belied by the plan for even bigger bureaucracy on a scale never before attempted.

Second, the financing of the Clinton Plan became a sitting target for every economist who could add and subtract. Martin Feldstein of Harvard University, a Republican and former member of the President Council of Economic Advisors, estimated that it would add $120 billion more to the federal deficit. But the list of critics was a wide ranging group: Dr. Henry Aaron, the respected economist of the liberal Brookings institution; Rudolph Penner, former Director of the Congressional Budget Office; and Senator Daniel Patrick Moynihan, who called the Clinton financing provisions ``a fantasy.''

The third problem is the effect on taxes, employment and productivity. The Washington-based Employment Policies Institute projected a 3.1 million job loss concentrated in low-wage service industries,

The Clinton team's handling of these objections has been at the very least creative. Not to be outdone for sheer chutzpah, Alice Rivlin, second in command at the Office of Management and Budget (OMB), entitled her October 20th Wall Street Journal defense of the Clinton Plan: ``Clinton's Conservative Plan.'' Among the items in the menu in Alice's new restaurant of ``conservatism'' are that it builds upon the New Deal's tax-supported employer based insurance system and that the Clinton team rejected the ``radical surgery'' of a single-payer system.

While the Clinton Administration has been beating off the higher estimates of the Employment Policies Institute, the prestigious Employee Benefits Research Institute (EBRI) is also jumping into the job loss fray, with the claim that employer mandates could cause the loss of 200,000 to 1.2 million jobs, unless workers' wages were lowered to compensate. Laura Tyson, Chair of the President's Council of Economic Advisors, thinks that any general job loss would be very small, tiny really, only 600,000, on the order of a rounding error to monthly employment statistics. Ira Magaziner asserts that the Plan will actually create jobs.

The medical industry provided 16% of all new jobs between 1980 and 1990 and now accounts 9.7% of all private jobs in the nonagricultural sector of the American economy. Tyson sees the Clinton plan as adding 400,000 new jobs to care for the millions of newly insured. She argues that by holding down costs and allowing businesses to increase wages, hire more workers, and make even bigger investments, the long run positive impact of Clinton's health care reform would be $10 billion in savings for business. However, she calculates a $13 billion increase in business spending for ``covered services'' in 1996, before savings from health plans kick in around 1999 (BNA's Health Care Policy Report 10/11/93).

Actually, the economic impact of the Clinton health plan in the outyears is impossible to predict. How each piece will interact with the others is unknown. And no existing econometric model can project far enough into the future to verify claims of big future savings. If the Clinton Plan follows all previous experience, it will result in an explosion of medical costs.

Public Response

According to a CNN/USA Today Gallup Poll, conducted two days after the President's September 22 speech, 23% of the public thought that Congress should pass the Clinton Plan as he has proposed it, while 54% favored passage only after making ``major changes,'' 15% favored outright rejection, and 8% had no opinion. Even more interesting, only 42% thought the Clinton Plan would solve the country's health-care problems, 40% said it would not, and 8% had no opinion. This survey shows a sharp decline from a similar survey conducted on February 26th, when 61% said the Clinton Health Plan, then only vaguely outlined, would work to solve the country's problems and 33% said that it would not.

Other surveys have also shown little public enthusiasm. An October NBC News Poll showed that only 21% of those surveyed thought the Clinton Plan would help them, and 34% thought it would hurt them. This is not the kind of public support that members of Congress like to have behind them as they overhaul one seventh of the national economy. It is substantially less than the initial popular support for the President's budget and tax package.

Congressional Assignments

Look for Senate Majority Leader George Mitchell of Maine and Congressman Richard Gephardt (D-MO) to be the chief sponsors of the Clinton Health Plan in Congress. Although the President and Hillary Rodham Clinton presented the legislative language on October 27th, the introduction is being delayed while the Democratic leadership works out the details for the assignment of the massive 1342 page bill to the various committees of jurisdiction and the Congressional Budget Office looks over Clinton's ``numbers'' again.

In the House, the bill will be assigned to the House Ways and Means Committee chaired by Dan Rostenkowski (D-IL), the House Energy and Commerce Committee chaired by John Dingell (D-MI), and the House Education and Labor Committee chaired by William Ford (D-MI). It is expected that Ford, one of the most liberal members of the House and a stalwart champion of organized labor, will also be the most cooperative with the White House. In the Senate, the bill will be assigned to the Senate Committee on Finance chaired by Daniel Patrick Moynihan (D-NY) and the Committee on Labor and Human Resources chaired by Edward Kennedy (D-MA).

There are two key issues here. First is the timing of consideration. If there is sequential referral to these various committees, a great deal of time will be consumed in staff work, and the committees are likely to go over much of the same ground twice. If the bills are assigned concurrently, then each committee starts work simultaneously on the provisions of law over which it has legislative jurisdiction. This approach obviously speeds up the legislative process. But it also has certain risks. The Energy and Commerce Committees and the Ways and Means Committees both have a disproportionate number of influential advocates of a Canadian-style single-payer system or of Medicare expansion, including Fortney Stark of California and Sam Gibbons of Florida. Likewise, Energy and Commerce Chairman John Dingell of Michigan and Congressman Henry Waxman of California are on record as favoring a single-payer approach. But given the final evolution of the Clinton Plan, many Capitol Hill critics of the proposal are certain that, for all the rhetorical flourishes on managed competition, a ``single payer'' (government monopsony) has been the goal from the outset. (Senator Wellstone has been busily engaged in last minute discussion with Ira Magaziner, making it easier for individual states to opt out of the Clinton plan if and only if they adopt a single- payer, Canadian style system, and not if they set up a consumer- choice option.)

There are also jurisdictional issues depending on the precise way in which the bill is drafted. If ``premiums'' are to be collected by the IRS, a large part of the bill would be under Ways and Means. Otherwise, more of the bill will be referred to Education and Labor. (The first approach has the disadvantage of making the premiums bear a stronger resemblance to a tax, which of course they are.)

Respecting You in the Morning Department

Given this picture (Dorian Gray, perhaps?), the medical industry's huge expenditure of political action committee funds looks like a massive exercise in pathetic groveling and profes- sional self-abasement. Medical industry PACs contributed $5.9 million to members of the Ways and Means Committee from January to June 1993. The biggest winners: Pete Stark (D-CA), $646,150; Charles Rangel (D-NY), $416,082; and Dan Rostenkowski (D-IL), $384,777.

Early Democratic Defections

Senator Daniel Patrick Moynihan, who has enormous influence over the course of the legislation, elicited from Secretary Shalala the significant fact that 40% of all Americans would pay more under the Clinton Plan than they do now. (The Administration had previously made lower estimates.)

Senator Bob Kerrey, the Nebraska Democrat who achieved some notoriety early on as a health care policy specialist and offered a comprehensive reform proposal as a 1992 contender for the Democratic Presidential nomination, is not going to be a sponsor of the Clinton Plan. Kerrey sees the Clinton Plan as another federal entitlement, and since federal entitlements are already out of control, he is opposed to creating another one until Medicare and Medicaid are fixed. Moreover, Kerrey is not receptive to employer mandates, a global budget for health care spending, the Congressional setting of benefits, or the creation of a powerful National Health Board.

Sen. John Breaux (D-LA) is joining with Sen. David Durenberger (R-MN) to sponsor a Senate version of the managed- competition bill (HR 3222) introduced on October 6th by Congressmen Jim Cooper (D-TN) and Fred Grandy (R-IA). The Cooper- Grandy bill is modelled on the original Jackson Hole Group proposal, and is more attractive to moderate and conservative Senate Republicans and Democrats than either the Administration bill, the Dole-Chafee proposal, or the Medisave proposal being offered by Senator Phil Gramm (R-TX). Joining Breaux are Senators Joseph Lieberman (D-CT) and Sam Nunn (D-GA). Lieberman wants a purer version of managed competition. Cooper and Durenberger are clearly looking to build a critical mass of House and Senate members to control the debate, isolating the Congressional left (Sen. Wellstone and Congressmen McDermott and Stark) and Congressional conservatives (Sen. Gramm and Congressman Dick Armey of Texas), and using this bloc to fashion an alternative to the Clinton Plan. Sen. Chafee likewise is looking toward renew- ing extended discussions with the Administration and striking a deal. Chafee has already struck a strong professional relation- ship with the First Lady. Naturally, Congressional conservatives are worried that the Senate Republican leadership could end up compromising with the Clinton team, resulting in vastly greater government control over an already highly overregulated health care system.

Mass Confusion

In a national survey jointly sponsored by the Kaiser Family Foundation and Harvard University, the general public has serious misunderstandings about medical insurance issues. For example, 44% of Americans think that the uninsured are poor, and 25% think they are elderly, despite the fact that the uninsured are mostly above the official poverty line, generally working, and most often young. Only 25% of all Americans know what a single payer means; 20% think they know what managed competition is (although most policy wonks can't figure it out); and 31% know what managed care is. Only 26% of Americans think that federal spending on health care is an important contributor to the deficit. While 40% think we spend too much on health care, 41% think we do not spend enough.