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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 56, No. 2 February 2000
UP FROM SLAVERY
Physicians are beginning to think of themselves as slaves
these days-despite the outraged reaction of disciples of Martin
Luther King. While chattel slavery has been abolished, other
forms of servitude have arisen, to the detriment of all.
A slave economy is not only unjust to slaves, as Booker T.
Washington pointed out: "The slave system ... took the spirit of
self-reliance and self-help out of the white people." The masters
never learned a productive skill, as labor was beneath them, and
the slaves had no personal interest in the life of the
plantation. Thus, everything was in disrepair, and much was
wasted. When freedom came, the slaves were almost as well fitted
to begin life anew as the masters (Up from Slavery).
Physicians are not literally on an auction block, where
prospective buyers can examine their teeth. Yet whole groups may
be up for sale when a corporation is bankrupt. While the
"providers'" dental health is of little concern, their mental
health (attitudes and beliefs), financial performance, and
patient records are in for intense probing by "payors."
A slave has no property rights, only the privileges
conferred by the master. Today, physicians have privileges
conferred through licensure or accreditation; property
rights in their own skills, education, and labor are
increasingly restricted. One's entire investment in a facility,
for example, can be wiped out with a stroke of a bureaucratic pen
for lack of certain words on a document (see AAPS News
1/2000). One's medical license can be revoked for reasons
unrelated to competence or ethical behavior, such as failure to
buy prescribed liability insurance. One's hospital privileges may
be contingent upon providing uncompensated service or upon
membership in a group favored by the hospital for an exclusive
contract. Employability can be destroyed by malicious peer review
under cover of government-guaranteed immunity, with reporting to
the National Practitioner Data Bank.
A physician's ability to determine his own remuneration and
working conditions is circumscribed, not by voluntary decisions
of free-market customers, but by federal law. The range of
acceptable prescriptions and procedures is increasingly narrowed.
Boundaries are set by federal agencies, CPT codes, managed-care
policies, and elite committees. Practice "guidelines" are
proliferating-deviations make one a target for scrutiny.
Physicians are presumed incapable of evaluating scientific
evidence for themselves or of making independent medical
judgments. They need to be monitored constantly by genuine high-
school graduates. Their time and energy drained by bureaucratic
busywork and compliance plans, they will soon become incapable of
innovation, and ignorant of the state of the art in their own
field-as befits their status as slaves.
No individual holds a bill of sale for a physician. But many
hold an entitlement to a portion of the physician's labor:
bureaucrats, tax collectors, and "covered lives." The officials
may be very highly educated in the manner of Chinese mandarins,
although in possession of no skills useful outside the artificial
system. The patients, increasingly at the mercy of the payors,
are presumed to be incapable of dealing with the simplest ailment
Physicians were not captured in warfare, sentenced to the
galleys of medicine because of a crime, or born into slavery. For
the most part, their plight resulted from voluntary acquiescence
or laws passed by a democratic process.
If physicians signed a managed-care contract agreeing to
work for whatever the corporation deigned to pay, and for a term
that survived the bankruptcy of the company, they have only
themselves to blame when the liabilities come due.
Other than through political action, however, physicians
have no control over the tax burden. As an early British queen,
Boadicia of the Iceni, said in 60 A.D., "How much better it would
have been to have been sold to masters (into chattel slavery),
than possessing empty titles of freedom to have to ransom
ourselves every year (with Roman taxes)." For U.S. taxes, there
is no conquering evil empire to blame and enormous popular
support because so many Americans believe they gain more from
taxes than they pay. Physicians chafe under Medicare shackles,
but depend upon the revenue, as their entitled patients are
unwilling or unable to pay independently.
Many physicians who see themselves as half slave, half free,
are desperately seeking a rescuer: a labor union, a new type of
managed care directed by a person with a medical degree, the
"Federation" of organized medicine, or even the Single Payer. In
every case, one form of servitude or a new master would be
exchanged for another.
The only solution is for physicians to assert their rights
and to reject their chains. This means they must renounce the
blandishments of their would-be taskmasters. They must look to
each other and to their patients, not to false messiahs and
foreign (socialist) theories gussied up with new labels.
Is the situation desperate? No more so than that faced by
Americans in former times. The best advice for freed slaves was
probably given more than a century ago by Booker T. Washington at
the Atlanta Exposition on September 18, 1895:
"A ship lost at sea for many days suddenly sighted a
friendly vessel. From the mast of the unfortunate vessel was seen
a signal, `Water, water, we die of thirst!' The answer from the
friendly vessel came back at once, `Cast down your bucket where
you are.' A second,...third, and fourth signal [were answered in
the same way]. The captain of the distressed vessel, at last
heeding the injunction, cast down his bucket, and it came up full
of fresh, sparkling water from the mouth of the Amazon River" (BT
Washington, Up from Slavery, 1901).
An "Unassigned" Office
Let me update you on my relations with Transamerica. I have
been asked to send all my claim forms directly to Norma Sandoval.
I can call or FAX her for any questions or errors, and she
responds personally. Though Transamerica has done this to shut me
up, my billing has been running smoothly, even with unassigned
claims, a constant problem before.
Robert Bork (see AAPS News
9/99) explained the difference between an "entitlement" (such
as Medicare) and a "right." Although patients are unaware that
Medicare has the right to deny care as "unnecessary," even if it
benefits the patient, this is the law. Patients should be told;
instead, physicians take the hit by taking assignment without
involving the patient. I have not been able to persuade my
colleagues to bill unassigned, even though all of them agree "in
I have now converted my office completely to "unassigned"
billing. I bill a 99215 for most office visits because these
visits are medically complex and very time-consuming. Oncology
patients have complex medical problems involving many systems.
However, Transamerica's computers do not think 99215 visits are
warranted, simply because of the number billed. Therefore, they
deny visits randomly or downgrade them to a 99213, without seeing
any medical record.
All of my patients sign an ABN acknowledging the possibility
of a medical necessity denial. The patients receive a denial form
letter from Transamerica, and I get a copy. Some don't care. Some
are so upset that they transfer their care to another oncologist,
suspecting that I am up to something (this is what they are told
by Transamerica). Workers at Transamerica are unfamiliar with
unassigned billing and tell patients that "the doctor is not
allowed to charge them."
Patients who try to deal with Medicare audits get a rude
awakening about how the system works. If patients wish to appeal,
I send them the record. I instruct Transamerica to correspond
only with the patients; after all, it is their Medicare.
All of this has made me a very happy doctor. I spend as much
time with my patients as they wish. The visit is over when the
patient is ready to leave. I see about three or four patients in
the office each day. They pay up front. I got rid of all my
personnel. My income has actually increased. It turns out that
the income generated from all those other patients I used to see
was required to support my office staff. With few patients and
up-front payment, I can handle phone calls and computer billing
My hospital practice remains "assigned" as hospitalized
oncology patients are too sick to discuss billing. Transamerica
has not asked for hospital prepayment audits for 6 months; they
are still working on prepayment audits from March, 1998. I was
recently paid my rightful $24.00 for two 99211 visits from March,
When all else fails in the audits, I am informed by a
nonmedical person at Transamerica that the visit was not
"medically complex" enough. No specifics are ever given, and the
letters show a complete lack of medical understanding, often
using a "diagnosis" that makes no sense.
Linda W. Wilson, M.D., Culver City, CA
A Bonfire for Managed Care Contracts
On December 17, 1999, David Jaffe, M.D., President of the
Harford County (MD) Medical Association, burned all his HMO-
related contracts in a public ceremony.
"HMO participation, in our office's experience, is
incompatible with delivering quality care," Dr. Jaffe said.
"Without the substantial administrative burden of insurance
claim and referral processing, we will now be able to offer our
self (i.e. cash, check, credit card) paying patients the most
affordable price for physician visits."
Dr. Jaffe urges his colleagues to follow his example: "Only
by collectively refusing to participate in this HMO corporate
serfdom can we bring it to an end."
The sky did not fall. As of January 6, Dr. Jaffe reports
that "life is great here in HMO-free land."
Retirement Community Doctor Opting Out
John A. Bennett, D.O., a general practitioner in Sequim, WA,
has sent his patients a "Declaration of Independence from the
Medicare Program," listing numerous reasons for opting out as of
April 15, 2000. "As you might imagine, this has caused quite a
stir in the community," he writes. "My fellow physicians are
hoping that I am successful. They will wait a while to opt out
Dr. Bennett's practice, which has been full for years, is
about one-third Medicare. He expects to retain between 10% and
25% of those patients, and to rebuild his practice with patients
he has been turning away. He considers the action to be risky,
but not self-destructive.
"So far it has surprised me. Some of the patients that I
thought could best afford my services were the first to request
record transfer. Others, who seemed to be pressed by finances,
have expressed their wish to contract privately."
"Ask not what your country can force other people to do for
you," is Dr. Bennett's conclusion to e-mail messages.
Dr. Bennett's Declaration is posted at www.aapsonline.org under
Feb. 5, 2000. Board of Directors meeting, Dallas.
Oct. 25-28, 2000. 57th annual meeting, St. Louis.
The most impressive result of Tocqueville's researches
[on the causes of the French Revolution] was that the government
had...grown so centralized that all public activity was in
controlled, anonymous hands. The people were treated as children
in the wealthiest country in Europe....[W]e are now in the same
position as the French under the Old Regime.
Otto Scott's Compass, 1/1/2000
Reverberations: Total Quality Management
Responses to Total Quality
Management by Gerry Smedinghoff, AAPS pamphlet no. 1069:
Since I was involved in quality control at IBM, I have some
comments. Deming is a fraud. TQM is not a science but hokum.
Quality circles were a flop at IBM. The failure to trust
programmers to produce quality code led to the creation of
massive peripheral checking operations by uninformed personnel
that merely added to the cost of production and not the quality
of output. Deming, TQM, quality control, administrative cost
control, or whatever you want to call it did to IBM what no
competitor could ever achieve. It is also doing to doctors, and
to every other organization that applies it, that which
competitors could not do to them. It is all part of the effort to
socialize the delivery of goods and services.
Success in business comes from giving qualified workers
responsibility for producing, trusting them to do the job, and
occasionally verifying that they have done the job well. This
approach applies not only to medical services but to manufactured
goods as well. Honda does not trust some ephemeral control system
to produce good cars. It does the obvious, and checks to make
sure. It may be the old-fashioned way, but it is the only sure
LaMar L. Briner, President, LLBIS, Inc.
Gerry Smedinghoff's TQM article is one of his most brilliant
pieces, but it did not address the many processes in doctors'
offices and hospitals for which TQM/CPI can be applied. Patients
and treatments may be too variable, but many processes are not:
for example, accurate entry of information into data bases and
the accurate filling of prescriptions. Every time I interface
with the medical system as a patient, I am shocked at how
antiquated it is in terms of continuous process improvement, not
in terms of technology or doctor ability.... Certainly, someone
can maintain a simple frequency chart of how many prescriptions
are illegible and set an improvement goal....Something this
simple would lead to other innovations, like electronic entry of
prescriptions, which would make life simpler for docs....With my
pathology lab client, I put in some simple quality metrics and
CPI tools. Unbelievably, they didn't maintain any statistics on
the accuracy of their lab results or turnaround times. The vets
and the technicians loved it because they were dedicated to doing
the best work possible. We helped them achieve huge gains in
efficiency and effectiveness.
Craig Cantoni, Capstone Consulting
Jury Verdict in U.S. v. Doright
Outcome of the mock trial at the AAP 56th annual meeting:
We, the members of the Jury,... find the defendant, Freeman
Always Doright, M.D., President of AAPS, Fearless Leader of that
renegade group,..., Author of The Medicare Cakewalk and
other masterpieces, Nemesis of Medicare, Bane of HCFA, Official
Lampoonist, NOT GUILTY of mail fraud.
And furthermore, we, the Jury, in accord with the current
practice of judicial and jury activism, hereby find the
Prosecutor's conduct during the trial to be REPREHENSIBLE, and
the utilization of the Medicare system as the conduit for HCFA
hostilities against the medical profession, the servants of the
sick and the infirm, for the usual and standard practice of
sending statements through the US mail, UNCONSTITUTIONAL. And,
furthermore, we the Jury hereby ask the court to assess against
the Prosecutor the standard fine of $250,000, and to restrict him
from the court room and forbid him the use of a telephone,
computer, keyboard, or mouse for a period of twenty (20) years
[under pain of 20 years imprisonment].... This is a fair and
reasonable verdict SO HELP ME GOD.
read by Del Meyer, M.D., Sacramento, CA, Foreman
Medicaid Travel. Before signing a certification
statement, Martin Edelstein, M.D., of Great Neck, NY, wrote to
request necessary information: "As my signature will bind me
under law to the government for any direct or indirect monetary
damages, please send me a copy of the following laws that you are
informing me that I am bound by: Title 18 of the Official
Compilation of Rules, Other Publications of the Department
including Regulation 504.8(2), and Social Service Regulation
505.10(b)(5). Please also inform me of the mileage distance from
the patient's home to where she will go for care. Furthermore,
... if the patient will be traveling outside the CMAA, please
inform me whether there might indeed be any other centers of
specialized care within the patient's/recipient's CMAA that I
might not be aware of...and the extent of...their waiting lists."
BlueCross BlueShield of Illinois. PPO agreement,
provision #2: "Except as to the amount and manner of payment
specified below, this Agreement shall in no way affect the usual
patient/Provider relationship [sic.]." #11: The PPO Plus
Provider will ... permit the Plan or its agent or representative
to review [medical and administrative] records regarding Covered
Persons ... for the purpose of utilization management and quality
improvement activities." Nelson Borelli, M.D., of Chicago notes
that parts 2 and 11 are contradictory and that he could not ever
treat a psychiatric patient knowing that records of conversations
were to be divulged to third parties.
Medical Staff Bylaws. Mercy Health Center in Oklahoma
City has this provision under "Qualifications for Membership":
"Economic credentialing criteria shall not be used solely to
determine the qualification for membership on the Medical
Staff...." Steven Lantier, M.D., points out that Mercy Health
Systems was sued for implementing economic credentialing and that
a bylaws provision specifically allowing it could make the
hospital less culpable. The wording is such that physicians may
erroneously think they are voting against this process.
When Patrick Henry declared that patriots would rather die
than be slaves, he was referring to tax slavery. One source of
inspiration for the revolutionaries was Baron du Montesquieu, who
described taxpayers in Muscovy, Russia, who became landed serfs
to avoid the czars' ruthless tax administration. The Founding
Fathers also studied the fall of Rome, in which one freedom after
another was taken away in order to feed the growing welfare
state. All of Rome's efforts were soon designed to protect the
tax stream. Roman subjects welcomed barbarian conquerors as de
facto tax reformers.
Is the U.S. following the same route into corruption and
oppression? Tax Freedom Day was Jan. 31 in 1902, and May 10 in
1998 (Charles Adams, Investor's Business Daily 4/13/99).
Corporate Compliance. Our hospital now has a corporate
code of conduct, with which we are all supposed to comply: truly
bureaucracy ad absurdum.
How can they themselves comply with their own code, which
mandates "confidentiality of all information," once the
information is entered into a networked computer? And how will
they "provide the same quality and standard of care throughout
the healthcare organization regardless of patient's ability to
pay or payment source?" Everything done in hospitals is closely
tied to payor. If the patient has the misfortune of being
"covered" by managed care and needs an inpatient MRI, be prepared
to get down on your knees and beg. If the patient is "covered" by
Medicare and the MRI can be done as an outpatient, you must wait
at least three days or it will be considered "included" in the
The reason for the corporate compliance plan is that the
government says it might be taken into consideration when and if
they decide to impose fines and imprisonment for mistakes
("healthcare fraud"). Apparently, if your promise to be good is
printed up on paper somewhere, that's proof of intended goodness.
Maybe if Jeffrey Dahmer had written up a document ahead of time,
in which he said he didn't intend to kill or eat anybody, he
might have gotten a lighter sentence?
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
KidCare Bounties. Although parents know about the New
Jersey KidCare program, many are choosing to forego it. The
would-be champions of "the children" will not give up. They are
planning to spend $1 million on a public relations program to
make the concept more palatable. With another $1 million, they
will pay people to rope the kids in and hand parents a pen to
sign the forms: $1,000 start-up costs and $25 per child. The
bureaucrats must be frantic that they might lose their CHIP
funding and their jobs with health-care benefits.
Alieta Eck, M.D., Somerset, NJ
The "Uninsured" and Medicaid. Are states that expanded
Medicaid having trouble enrolling people? Medicaid is a lousy
program that no one would want if there were any other choice.
Moreover, there is no advantage to being "enrolled" if you don't
need services. Once you're sick, you can be instantly signed up
with no waiting period or penalty.
Greg Scandlen, Alexandria, VA
Government Creates Jobs. In 1974, Gerald Ford signed
the Employee Retirement Income Security Act (ERISA), which
actuaries proudly refer to as the "Full Employment for Actuaries
Act." A certified actuary must sign the annual statements filed
with the IRS. When clients complain about the inflated rent-
seeking fees that actuaries charge to keep their pension plan in
compliance with the law (ERISA law changes almost as much as
Medicare), the actuaries smile and say, "If you don't like the
law, write your congressman."
Gerry Smedinghoff, Consulting Actuary
On Documentation. The Texas Medicare carrier is paid
large sums to process all claims. At this point, by not paying
clean claims and telling patients we have not filed their claims,
they have almost completely destroyed my practice. As Scaevola
shouted to Cicero (106-43 B.C.): "Imbecile! Of what use are
records presented to tribunes, consuls, or senators if the
government is determined to rob and destroy a man who had
displeased them, or who possesses what they want?"
Richard Swint, M.D., Paris, TX
On "Uninsurance". I advocate outlawing insurance....In
the 1980s, when Missouri Medicaid almost never paid, most doctors
I know saw Medicaid patients and either didn't bother filing
claims, or filed them knowing they were like lottery tickets that
would probably never pay off. Once I had a claim rejected because
I used an Arabic rather than a Roman numeral. When I resubmitted
it, I had it rejected because I used a Roman rather than an
Arabic numeral. Insurance doesn't take care of anybody; it's just
a swindle, an economic cancer. As Ross Perot said, "To have a
rich country, you have to make things. We're just selling each
Joseph C. Keller, M.D., Chesterfield, MO
The Real Struggle. As a Cuban refugee who came to this
country at the age of 12, I gave up a long time ago trying to
characterize leftists as "well-intentioned but misguided souls."
That label is better applied to the current crop of Republican
leaders. Most of them fail to understand that the struggle in our
nation today is not between two competing views of democracy but
between two competing view of totalitarianism. Clearly, reality
teaches us that the superiority of socialized medicine is simply
a myth. The enslavement of doctors is the ultimate goal....Under
socialized medicine, there will be two kinds of doctors: the
slaves and the masters. I guarantee that the Woolhandlers and
Himmelsteins of the world plan to be in the latter group. Why are
so many physicians joining them? For the same reason fascists and
socialists have been voted into power so many times: the most
vicious and inhumane philosophy ever dreamed up is packaged and
sold to the masses as the "compassionate" alternative to
capitalism. Until doctors are willing to defend their freedom to
produce and their right to own the product of their labor, we are
Roger Menendez, M.D., El Paso, TX
Legislative AlertPresidential Candidates' Health
The Good, the Bad, and the Silly
With the Presidential primary season just weeks away, the
major Democratic and Republican presidential candidates are
fleshing out their health-care proposals. Republican Steve Forbes
and Democrat Bill Bradley clearly have the most highly developed
proposals. Vice President Gore, a champion of Clinton s health
policy, has proposed an expansion of traditional government
"insurance" programs, with a modest tax credit tacked on. Senator
John McCain has been pushing Medical Savings Accounts, a Medicare
prescription drug demonstration program, and insurance market
reforms to expand coverage among employees of small firms. Texas
Governor George Bush has not yet unveiled a detailed plan.
Health policy is going to be a major issue. Problems of
access, cost, and quality are getting worse, not better. More and
more Americans, doctors and patients alike, are finding
themselves on the receiving end of decisions made by someone
else, regardless of their wants, needs, or professional judgment.
The rising frequency of "uninsurance" is now officially
estimated by the Census Bureau to exceed 44 million Americans-a
significant overstatement, as, for example, about 18% of
Medicaid enrollees report that they do not have coverage.
Employment-based medical insurance premiums are increasing by 8
to 12% for 2000. And the "quality" of care debate has
intensified, as the massive shift from traditional indemnity
plans into HMOs continues. (Today, more than 4 out of 5
Americans are enrolled in HMOs.)
Change in the Tax Treatment of Medical
Insurance. Remarkably, there is a growing consensus
about the need to channel tax relief to individuals and families.
Democrats propose modest, Republicans more robust tax changes.
Al Gore proposes to allow a 25% refundable tax credit
to families who do not get medical insurance through the
workplace: the equivalent of a voucher for lower-income people,
which could be used to purchase coverage in the individual
market. Gore would also extend a 25% tax credit to small
businesses (firms with fewer than 50 employees) to cover the
premiums of employees who purchase their medical insurance
through a purchasing cooperative. It is not clear whether this
purchasing cooperative would be private and voluntary, or
government-sponsored like the regional alliances proposed under
the Clinton Plan. That little detail, of course, makes a big
Bill Bradley, like Gore, would retain the employer-
based tax exclusion for medical benefits. In that sense, his
proposal, as sweeping as it is, does not change the fundamental
structure of employer-based medical insurance. What Bradley does
is to add a new system of refundable tax credits for both
children and uninsured adults who buy private medical insurance.
The Bradley plan would use explicit subsidies based on income. If
the family income is less than $32,800, the Bradley plan would
ensure full premium payments of $1,200 per child. Premium
subsidies would increase with income within a range of family
income between $32,800 and $49,200 for a family of four. All
medical insurance premiums for children would be excluded from
taxable income, thus allowing every family to have the same tax
break that most families enjoy through the current system of
employer-based medical insurance. For adults, Bradley would
provide generous federal tax subsidies, in the form of refundable
credits ($1,800 for individuals and up to $5,000 per family), to
all individuals and families. The federal subsidies would be
adjusted for income only. The lower the income, the higher the
subsidy. The Bradley proposal is voluntary; there are no employer
or individual mandates to participate. An interesting trade-off
in the plan: Medicaid would be phased out. The plan is expensive:
$38 to 46 billion annually in premium supports or tax subsidies
Under the Bradley plan, there would be two broad options for
medical insurance for adults: continuing with individual or
employer-based private coverage, or participation at group rates
in any one of the private plans offered under the Federal
Employees Health Benefit Program (FEHBP). The missing details
here are crucial. For example, would FEHBP plans be able to offer
a different set of benefits to the non-federal population? Would
the market, in other words, be free to allow the supply to meet
the specific demands of the consumers in the non-federal portion
of the population? The federal employee population is very
different in many key respects from the population of families
with children who are uninsured. A failure to allow for these
differences is not merely bad policy; it is silly. Another
crucial problem: It is not clear whether an entirely separate
risk pool would be established for non-federal employees. The
FEHBP has been generally successful for federal workers, but a
lack of flexibility in either the pooling or the insurance
arrangements could damage a successful program and undermine the
objective. One thing is clear: the Bradley plan would establish a
separate pool in the FEHBP for individuals with higher risks.
Republican Alternatives. Neither Bush nor McCain
has yet unveiled a comprehensive tax-based proposal for health
policy reform. At the heart of the Forbes proposal is a well-
developed Medical Savings Account initiative, but his overall tax
policy is governed by his flat-tax proposal. In sharp contrast,
House Majority Leader Dick Armey (R-TX) and several House
Republicans have proposed a major tax-credit proposal.
Medical Savings Accounts. Neither Bradley nor
Gore have endorsed MSAs.
Steve Forbes offers the most detailed MSA proposal,
which would eliminate all the current regulations that undermine
MSAs and allow universal access to MSAs. Specifically, Forbes
would dump the 1996 Kennedy-Kassebaum restrictions that limit
MSAs to persons employed in companies with fewer than 50
employees, eliminate the mandate that MSAs must have a deductible
of between $3,000 and $4,500 for families, and remove the cap on
the number of persons who can purchase MSAs. Forbes would also
introduce MSAs into the FEHBP to enhance that program s existing
competitive features for federal employees, and junk the 1997 MSA
caps in Medicare.
Forbes notes that, according to the Treasury Department, a
stunning one-third of new MSA policy holders were previously
uninsured; 72% are in working families; 77% are self-employed;
and 10% are single adults. Forbes would supplement his MSA
proposals with changes to Section 125 plans, called flexible
spending accounts, allowing employees to deposit funds in those
accounts at work and roll them over each year tax free.
John McCain is also a supporter of MSAs. McCain has
pledged to change the federal tax laws to allow all Americans to
save tax free for their medical expenses, including for both
acute and long-term care insurance.
Expansion of Established Government
Programs. Some presidential candidates take pains to
spell out the role of established taxpayer-funded systems, like
Medicare, Medicaid, and the public-health programs.
Al Gore is proposing the most aggressive expansion of
Medicare and Medicaid. In sharp contrast to Bradley, who would
phase out Medicaid, Gore would expand both Medicaid and the 1997
Children's Health Insurance Program (CHIP), which in most states
is, in effect, a Medicaid expansion. Gore wants to expand
eligibility for CHIP up to 250% of the poverty line. This would
mean families of four with an income of $41,00 per year would be
eligible for CHIP coverage. Additionally, Gore would expand CHIP
to cover the parents of eligible children, in effect expanding
government medical payment schemes into the middle class.
At the same time, Gore would expand Medicare coverage down
the age scale, proposing, like Clinton, to enable persons aged 55
to 65 to buy into Medicare. He would encourage the buy-in with a
tax credit, proving that tax credits can be used, not only to
enable persons to escape government insurance programs, but also
to lure them into such programs.
We pause to announce a simple fact about Medicare expansion.
The Bipartisan National Commission on the Future of Medicare
reported in 1999 that Medicare itself is a very poor value for
money. Medicare enrollees often face very high out-of-pocket
costs, and more than two-thirds of them find it necessary to buy
separate Medigap or some other form of supplemental insurance in
order to compensate for Medicare s gaps in coverage. At the same
time, the purchase of supplemental insurance to cover Medicare
copayments and deductibles stimulates an even greater demand for
Medicare services and adds to the overall costs of the program.
This, in turn, adds to the political pressure to impose tighter
price controls, reimbursement caps, and more complicated fee
schedules to slow the growth in Medicare spending. This results
in high-pitched screaming from doctors, hospitals, home health
care agencies, and nursing homes. This leads to accelerated
Medicare spending and the headlong rush toward the program s
insolvency. This frightens Congress into another round of price
controls, weird fee schedules, and legislative caps on Medicare
spending. The cat chases its tail.
Bill Bradley calls for a strengthening the "public
health infrastructure" and spending an additional $2 billion on
John McCain wants to expand the "outreach" efforts in
the states to identify and enroll 6 million more uninsured
children in the CHIP program and Medicaid.
Neither Steve Forbes nor George W. Bush have
announced any proposal calling for an expansion of any of the
traditional government "insurance" programs.
Medicare Prescription Drugs. Ever since Clinton
unveiled his Medicare prescription drug proposal in June, 1999,
the price, availability, and level of coverage of prescription
drugs has emerged as a major issue in health policy.
Bill Bradley has said that he will preserve the
current structure of the Medicare program and add an optional
prescription drug benefit, which would subsidize 75% of all drug
costs over $500 per year.
Al Gore is a champion of the Clinton Medicare reform
proposal, which would cover 50% of the costs of prescription
drugs up to an initial maximum of $2,000 per year.
John McCain would provide a block grant to the
several states to help low-income seniors who do not qualify for
Medicaid and who cannot afford private coverage to pay for
prescription drugs. McCain says that this proposal would cost
$5.1 billion annually when fully implemented. In addition, he
proposes a 3-year demonstration program in up to 5 states to help
seniors pay for catastrophic drug expenses.
Steve Forbes favors the use of MSAs as a vehicle to
purchase prescription drugs. Forbes emphasizes that MSAs for the
Medicare population should be part of a full range of private
medical insurance options for senior citizens in a reformed
Medicare program based on consumer choice and competition among
private medical plans.
Insurance Reforms. Most proposals include
changes in the regulatory structure of the medical insurance
Al Gore has said he would work to improve the
individual insurance market to make it work better.
Bill Bradley would create an entirely new insurance
market for those without employer-based coverage, while
preserving the basic structure of the employment-based system.
John McCain would allow small businesses to form
Steve Forbes favors the creation of voluntary choice
cooperatives to include plans sponsored by churches and religious
organizations, business organizations, unions, and professional
Consider that Al Gore is blasting Senator Bradley for an
expansive and expensive proposal that threatens funding for
Medicare and other government programs and endangers the welfare
of minorities. Gore's top aide Elaine Kamarck, formerly of the
Progressive Policy Institute, is reported to have said that
Bradley s plan is indicative of a "reckless spending mentality."
Unquestionably the $65 billion annual price tag for the Bradley
plan is probably too low, and as Martin Feldstein of Harvard
University has argued, it will surely balloon. Yet the Bradley
plan is cheaper and less expansive than a similar, but "more
ambitious," proposal for tax credits offered by President George
Bush in 1992, in an era of $250 billion annual deficits. At that
time, leftist Democrats blasted President Bush for offering a
puny and ineffective plan.
Consider also that Bradley, supposedly the leftist in the
Democratic campaign, offers "an escape from Medicaid, while Gore
would lead families on a forced march into the program" (Robert
Goldberg of the Ethics and Public Policy Center, The Weekly
Standard 1/10/2000). While Gore is attacking Bradley
vigorously on this point, Bradley is trying to mainstream low
income people into a system of private insurance, giving them a
stake in a revitalized private insurance market, and thus pre-
emptively undercutting political support for a Canadian-style
Forget the economics, follow the politics.
Robert Moffit is a prominent Washington health policy
analyst and Director of Domestic Policy at the Heritage