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

Volume 50, No. 2 February 1994


Medicare beneficiaries and their private physicians have once again come to the defense of the right to contract privately for personal medical services, this time in an Ohio lawsuit styled Downhour, et al., vs Ohio Department of Health.

The lawsuit was filed on December 6, 1993, by Medicare beneficiaries Virginia Forney, Richard Shaw, Warren Jacobs, George Lierenz, Sam Giallombardo, Don Daugherty, Sarah Presley, and Hilda Ruggles, and physicians Warren Downhour, D.O., and AAPS Past President Nino Camardese, M.D.

According to Carl Wehri, M.D., President of the Ohio Physicians Defense Foundation, ``the liberty of a person to use his resources, as he sees fit, to direct the course of his own personal health care'' is a fundamental right that Ohio's ``bizarre policy'' now accords only to the most affluent.

Sections 4769.02 through 4769.10 of the Act Amending the Revised Code of Ohio provide that:

No health care practitioner...shall balance bill any supplies or services provided to a Medicare beneficiary whose family income is at or below six hundred (600%) percent of the current poverty guideline for a family of equal size....

As defined in the Act, ``balance billing'' means ``charging or collecting an amount in excess of the amount reimbursable under the Medicare program for a Medicare-covered service or supplies provided to a beneficiary of the program.''

In effect, this means that non-affluent Medicare patients are not allowed to contract outside the program, or to pay any fee in excess of the Medicare-approved charge, or to pay for services that Medicare determines to be ``unreasonable'' or ``unnecessary.''

If a service is available at a price that is less than the limiting charge but greater than the Medicare-approved amount, only the wealthy may lawfully buy it. If a service is likely to be ruled ``unnecessary'' and the physician is unable or unwilling to risk having to provide it without compensation, only the wealthy are allowed to sign a waiver agreeing to pay privately.

Plaintiffs argue that the Ohio bill directly contradicts the Medicare Act, which established a voluntary program. Medicare beneficiaries are entitled to receive services under the program but are not restricted to receiving only those services which are available under Medicare rules.

Specifically, Title 42 U.S.C. 1395 et seq., states that ``nothing contained in this title...shall be construed to preclude a state from providing or any individual from purchasing or otherwise securing, protection against the cost of any medical services....'' Sources of payment outside the Medicare program- including self payment-are thus permitted.

In the Omnibus Budget Reconciliation Act of 1993, Congress considered an amendment which would have banned balance billing for Medicare beneficiaries. However, the Conference Committee deleted this provision (7207) in its entirety. As passed into law, the Omnibus Budget Reconciliation Act allows balance billing by nonparticipating physicians to continue (although the amount is now restricted by limiting charges). In foreclosing this option to Ohio patients and physicians, the state has thus violated the Supremacy Clause of the US Constitution, according to the plaintiffs' argument.

Patients may elect to receive certain services outside the Medicare program for a number of reasons. At times, patients seek advice concerning matters they desire to keep private; to receive Medicare benefits, they must surrender the right to privacy. Some individual patients believe that they should not tax the federal Treasury every time they receive a medical service. Some patients object to being subjected to ever- changing rules concerning the frequency and type of examinations and treatments they may receive, particularly since these rules are instituted for the purpose of enforcing fiscal determinations rather than optimizing care. Sometimes these rules are contained in manuals inaccessible to beneficiaries except through the Freedom of Information Act, and some are not written at all.

In addition, plaintiff patients object to the Ohio law's requirement that they disclose personal financial information to determine the conditions under which they may receive medical services. Because this law differentiates obligations on the basis of income, it violates the equal protection clauses of the Fifth and Fourteenth Amendments to the US Constitution.

Plaintiffs contend that the Ohio statute deprives them of their right to confidentiality in their medical treatment, in violation of the First, Fourth, Fifth, Ninth, and Fourteenth Amendments to the US Constitution. Insofar as the Act denies them their liberty to contract privately on a case-by-case basis without filing a Medicare claim (as asserted in the New Jersey case of Stewart v. Sullivan), plaintiffs contend that the Act deprives them of their liberty and property without due process of law in violation of the Fifth and Fourteenth Amendments to the US Constitution. Additionally, the Act violates the proscription against laws impairing the obligation of contracts set forth in Article I, Section 10, of the US Constitution.

Furthermore, the Act is unconstitutionally vague. Although it imposes serious penalties for violations, the statute provides no definition of ``family income'' and thus no fairly discernable standard for application.

Plaintiffs ask for a temporary and permanent injunction against enforcement of the Act.

Litigation is being sponsored by the Ohio Physicians Defense Foundation and the Freedom in Medicine Foundation. Plaintiffs' case is being argued by Kent Masterson Brown.

An Idea Whose Time Has Come...

The Individual Responsibility Plan

There has been a growing concern for the attitude displayed by some patients that someone other than the patient himself has the responsibility to remunerate his physician.

In 1961, the physicians of the Los Angeles County Medical Association approved a pilot project to remedy this flight from responsibility. From this has evolved IRP, the Individual Responsibility Plan, which by February 1, 1963, had been implemented by approximately 200 of the 900 doctors of the San Fernando Valley District, and approximately 30% of two other districts of the L.A. County Medical Association Other groups of doctors throughout the County have adopted and implemented the IRP.

IRP is the application of the philosophy that the doctor renders service to his patient and the patient is responsible to remunerate his physician for this service. The L.A. group has adopted a simple form on which the physician certifies the rendering of his service. This is given to each patient. It is then the individual responsibility of the patient to pay his doctor. Likewise, it is his responsibility to make his claim to his indemnifier. A goodly number of physicians throughout the country have practiced under this system for years. There is a growing group who are adopting and implementing this philosophy. Some have basically believed this to be the proper way to conduct their practice but had no idea that others were so doing. When they learned of IRP's general acceptance, they readily and enthusiastically adopted the plan.

I bring IRP for your information and consideration.

I move that the Central Medical Society approve as acceptable the philosophy of the Individual Responsibility Plan (died for lack of a second).

(Motion prepared to make if the above motion passed. Not made.) I move that our delegates to the MSMA inform the House of Delegates of this action of the Central Medical Society and that they seek similar action by the MSMA.
Curtis Caine, MD, Jackson, MS IRP read to Central Medical Society May 7, 1963


A Rational Medical Payment Program

So much has been written about the so-called health care crisis, that we have lost sight of what caused the problem-the frightful escalation of costs-in the first place: third party payers and the government. Sure, expensive technology and the liability climate are partly to blame, but as a practicing surgeon for the past 40 years, I have seen how neither doctor nor patient nor hospital gives much thought to economy when someone else is paying the bill. The answer is not more insurance for more people, but to restrict insurance to just the catastrophic for everybody.

I suggest that catastrophic insurance, which should be very cheap under this plan, not kick in until some high amount, say $10,000 is met by the patient. Though this seems shockingly high on first look, consider that employers are paying $4,000 to $5,000 or more annually for employee's health insurance. If this amount were given instead to the employee, who was allowed to shelter it in a self-insurance savings fund set up like an IRA, in about two or three years the family would have $10,000. If not needed for medical expenses, the money would still be theirs to pass on to heirs or to pay for a nursing home. Most Americans would rather receive this money and save it in this attractive but restrictive way than not to receive it at all. Thinking people would see how this plan would put money in their bank and not just lose it to the insurance companies. Even Medicare and Medicaid could be made to work on this principle; their self- insurance savings plans could be paid by the government at less cost than what is paid now.

With most of the patients paying most of their medical bills most of the time, there would once more be economic competition. Patients would have a financial interest in staying healthy and not wasting resources. Health costs would decrease greatly, and the insurance companies and governmental agencies would literally save billions in paperwork costs.

George B. Markle, IV, MD, 1993

[Dr. Markle first suggested backing away from insurance in an April, 1978, article in Medical Economics.]


New Plan Cuts Health Care Costs in Half

Employees of Dominion Resources Inc., a utility holding company in Richmond, VA, are offered an insurance plan with a deductible of $1500 for individuals or $3000 for families and allowed to keep the premium savings not used for meeting their deductible. About 75% of the employees opt for this plan in preference to the company's two low-deductible offerings. In 1990, the company began offering ``wellness incentives'' of up to $600 per year for employees at ``low risk'' as determined by blood pressure, weight, smoking status, cholesterol level, and seatbelt use. The four-year-old experiment shows the following results to date:

  • Since 1989, health spending has increased by less than 1% per year.
  • In 1992, employee medical claims dropped by about half. The company spent $135,000 (31%) less than consultants predicted (including the amount projected for wellness incentives).
  • Premium cuts are anticipated because a drop in number of claims has reduced administrative costs.
  • For further details, see article of this title by Peter L. Spencer, Consumer Research Oct., 1993, pp. 16-19, reprints $2 from 800 Maryland Ave NE, Washington DC 20002.


Good Reading

A Guide to the Clinton Health Plan, by Robert E. Moffit, Heritage Talking Points, Nov. 19, 1993, 214 Massachusetts Ave NE, Washington, DC 20002, (202)546-4400.

Managed Coercion, Crib Death for Technology, and Moving Targets, in Worse Than the Disease, an analysis of the Clinton Approach to Health Care, House Republican Conference, Rep. Dick Armey, Chairman.

Laboratory Failure: States Are No Model for Health Care Reform, by Michael Tanner, Policy Analysis #197, Cato Institute, 1000 Massachusetts Ave. NW, Washington, DC 20001, (202)842-0200, Sept. 23, 1993, $4.

Patient Power by John Goodman and Gerald Musgrave, abridged paperback $100/100 copies from AAPS. We have already distributed more than 30,000 copies; your non-tax- deductible contributions will help us distribute more.

Health Ration Cards with a photo of Hillary Rodham Clinton; 100 for $10 from Eagle Forum, PO Box 618, Alton, IL 62002. A teaching tool for your patients.

Update on AAPS v. Clinton

On November 9, 1993, US District Judge Royce Lamberth ordered the White House to comply with the discovery requests of AAPS in the ongoing case to open the proceedings of the Health Care Task Force to the public. The Court also ordered the White House to pay the legal fees incurred in bringing the Motion to Compel. The Court's Order was one of the most strongly worded orders issued against the White House since the Watergate proceedings in the early 1970s.

Within 20 days after the Order was issued, the White House, through Justice Department lawyers, presented counsel for AAPS with two large boxes of documents, which include lists of members of the interdepartmental working groups and its cluster groups, some payroll and travel records, as well as agendas and minutes of meetings. These materials have subsequently been made confidential by an agreed court order.

At the same time, the White House moved for an extension of time to complete the release of all the documents, complaining that additional time was necessary due to the extent of the materials. In the meantime, the White House produced two additional boxes of documents and records, the latest just before Christmas.

AAPS attorneys have responded to the Motion for an Extension of Time by filing a demand to be allowed to go ``on site'' and inspect all of the documents for themselves. A court order on the Motion and Response is expected at any time.

In the meantime, AAPS lawyers are examining some 4,000 pages of material to determine whether the interdepartmental working groups and cluster groups made recommendations to the President, and whether they were composed ``wholly of full-time officers and employees of the federal government.'' In addition, AAPS lawyers are conducting an independent investigation of the identities of the individuals involved in the Task Force. Depositions of key White House officials will probably be taken; Judge Lamberth, in his November 9 Order, clearly indicated his willingness to consider agreeing to such unusual discovery.

Also expected is an order on the amount of attorney fees that the White House will have to pay due to its ``outrageous'' behavior in attempting to block legitimate AAPS discovery.

On completing discovery and examining all records and documents, AAPS counsel will move the Court to declare that the interdepartmental working groups and cluster groups are advisory committees as defined by the Federal Advisory Committee Act, 5 U.S.C. App. 1-14. If the Court agrees (and AAPS counsel believes that the evidence is overwhelming), all of the records of the President's Task Force on Health Care Reform will be opened to the public.


Can Clinton Beat the Political Clock?

``One of the biggest obstacles facing the Clintons in their drive for a national health system reform plan is the political calendar....[T]he President and Mrs. Clinton have run into a number of setbacks, many of which were unforeseen.

``A ruling had to be made whether or not Mrs. Clinton's voluntary service as head of the task force violated any ethics standards previously set for relations of White House personnel....'' (Participation '94, American Medical Association).


Owners of Home Health Agencies Sentenced to 10 Years in Prison and $7 Million in Fines

Sentences of three owners of home health agencies convicted of Medicare fraud were upheld by the US Court of Appeals for the Sixth Circuit (U.S. v Henry, CA 6, Nos. 92-6649, 6650, 6653, 11/29/93).

On appeal, one of the defendants contended that the district court incorrectly calculated the amount of money stolen from Medicare funds in determining his offense level at sentencing. The appeals court ruled that the defendant failed to present any evidence to establish that the government's calculation was inaccurate or ``outside the universe of acceptable computations'' (BNA's Medicare Report Dec. 10, 1993).


Mail Fraud Statute Used Against ``Overbilling''

Billing more than the Medicare-allowed charge may subject physicians to the civil mail fraud statute. Pennsylvania dermatologist Joseph Corson ``voluntarily'' agreed to an audit of his billing practices and reimbursement of all patients ``overbilled'' (allegedly due to retroactive changes in the rules), under threat of having all his assets frozen up to an amount suspected of being acquired through fraudulent means. Dr. Corson also agreed not to take retaliatory action against patients who cooperated with the government in the case.

The Pennsylvania Department of Justice will make previously under-enforced junctures against overbilling a priority in the coming months, according to the Medicare Compliance Alert, July 19, 1993.


Job Opportunities for Informants

Under the property forfeiture laws of the last 20 years, informers can benefit from the proceeds of cases they help to make. Convictions can be based on their uncorroborated testimony, and the conviction can now lead to a death sentence. Four persons have so far been sentenced to die for making a drug deal. The informer might have traded testimony for forgiveness of his own crime (say murder), and may also have entrapped the convict into making the deal and using a coveted piece of property to do it. For example, he might have consulted his Rolex watch to tell the informant the time (Dannie M. Martin, New York Times 4/17/93).


The Law of the Land

``No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.''(US Constitution, Amendment XIV).

``The most frightening news brought about the Holocaust and by what we learned of its perpetrators was not the likelihood that `this' could be done to us, but the idea that we could do it'' (Modernity and the Holocaust by Z. Bauman, 1989).

New Members

AAPS welcomes Drs. Daniel Allan of Las Cruces, NM; Stephen Anderson of Bellevue, WA; Jan Bacon of Corsicana, TX; John Barnes of Corsicana, TX; John W. Bass of Phoenix, AZ; Christopher Bell of Crossville, TN; Joseph S. Bernstein of Brookfield, WI; Major E. Blair, Jr. of Denton, TX; Deborah Blair of Alexandria, VA; Alan Burckin of Walnut Creek, CA; Robert A. Callahan of Tampa, FL; Max Cannon of Great Falls, MT; Ann Cea of Rye Brook, NY; David A. Cech of Houston, TX; Jeffrey L. Childes of Muncie, IN; Richard Coughlin of Los Gatos, CA; John C. Doelle of Puyallup, WA; Laura D. Edwards of Houston, TX; Terry Lynn Edwards of Southold, NY; Charles Egley of Peoria, IL; Frank Ehrlich of Bryn Mawr, PA; Ronald M. Fletcher of Edmonds, WA; James A. Fosnaugh of Lincoln, NE; John C. Gallagher of Green Bay, WI; Leo Galland of New York, NY; Reuven A. Geller of Phoenix, AZ; Stephen D. Glacy of Phoenix, AZ; Gideon Hill of Glenside, PA; William W. Horsley of Scottsdale, AZ; B. Sharon Cole Jensen of Seattle, WA; Reldon R. Jones of Ceres, CA; Jamie Kapner of Scottsdale, AZ; Vicente Kaw of Middlesboro, KY; Randall Krakauer of Freehold, NJ; Phil Labove of Morris Township, NJ; William T. Lampe II of York, PA; Mark Landt of Medina, OH; William M. Lee of Carefree, AZ; Larry S. Lefors of Yakima, WA; Diane LoRusso of Rye Brook, NY; Michael Martindale of Jackson, TN; Greg Maurer of Bellevue, WA; Don G. McDowell of Alexandria, LA; Blake McKinley of Spokane, WA; Dennis Mollman of Chesterfield, MO; Debra Monde of Lathrop, CA; Tim Moore of Plano, TX; Steven Musgrave of Danville, PA; Clifford E. Myers of Peoria, IL; Paula Nadell of Phoenix, AZ; Mark A. Nelson of Brookfield, WI; Douglas W. Nicolarsen of Boise, ID; Michael S. O'Connor of University Heights, OH; Neil J. O'Keefe of Spokane, WA; Paul E. Olenski of San Diego, CA; Craig A. Olson of Spokane, WA; T. Otis Paul of San Francisco, CA; Jon Peterson of Houston, TX; Robert V. Plehn of Taft, CA; Jeffrey Pont of Phoenix, AZ; N. S. Prakash of Phoenix, AZ; Galen M. Reimer of Fallon, NV; F. Peter Rescigno of Essex Falls, NJ; Charles L. Ridley III of Macon, GA; Christopher Roberts of Scottsdale, AZ; Larry C. Roberts of Amarillo, TX; Marc J. Rosen of Glendale, AZ; Mark Ruttle of Palos Park, IL; Michael G. Ryan of Bradenton, FL; Douglas E. Smith of Boise, ID; Sidney L. Stapleton of Decatur, GA; Robert H. Stine of Peoria, IL; Mark Dillen Stitham of Kailua, HI; Glen Sublette of Butte, MT; Craig Suiter of Scottsdale, AZ; Eldon J. Swenson of Fox Point, WI; Deniz Tek of Billings, MT; Stephen Tucker of Woodlands, TX; Robert R. Urban of Monongahela, PA; Ivy M. Warsinski of Maryville, TN; Robert M. Wilson of Lockport, NY; Thomas Wilson of Phoenix, AZ; Brett Alan Wohler of Alexandria, VA; and Allen Woods of Valdosta, GA.

New student members are Kas Ray Badiozamani and Troy Falck of Seattle, WA.


Letter to the Editor

Today I sold my soul for a few shekels. I feel like Judas.

My office manager held up the gun used by the Medicare Bureaucrats and said ``Sign up!'' because:

You will be paid more (bribery),...

You will not have to fuss with Medicaid problems crossovers, (You don't have to try to determine the patient's income...[$39,720 is the ``poverty limit'']),

You are already a peon, and you cannot fight city hall because they will always change the rules in their favor and they have unlimited enforcement power....

So I sold my soul,...purely and simply on a principle that created Dachau: ``with no weapon you are obliged to do what the bureaucrat says-his man has the gun-fight back and you are dead.''

Alas, when I look up ``surrender'' in the quotations book, they mostly refer to God, not Mammon.

Milton said, ``How many Altars have been thrown down, and how many theologies and heavenly dreams have had their bottoms knocked out of them while he [Mammon] has sat there...'' (Paradise Lost I 678-680) Where is our federal government forcing us?....
Robert M. Webster, MD, Fairburn, GA


AAPS Calendar

Feb. 18, Regional meeting, Hyatt Regency, Bellevue, WA.

Speakers include Lois Copeland, MD; Kent Masterson Brown; Peter Ferrara, Heritage Foundation; Merrill Matthews, NCPA; Rep. Phil Dyer of Washington State; Drs. Estelle Yamaki and Neal Shonnard on state physicians' response to Washington health-care reform; and Madeleine Pelner Cosman, editor of National Trial Lawyer. Call Tim Schellberg at (206)459-8622 for information or registration. Cost is $85 before Jan. 31; write check to AAPS--WA chapter, 10318 Wildwood Lane SE, Olympia, WA 98503. For room reservations, call (800)233-1234 and ask for $89 AAPS conference rate.

Feb. 19, AAPS Board of Directors meeting, Bellevue.

Citizens Against Rationing Health (CARH) event schedule:

call Tom Katina (202)546-6555. Feb. 2: Baton Rouge, LA; Mar 19: Riverside, CA. Dates not yet confirmed for Milwaukee, Sacramento, Tampa, Lansing, Athens (GA), Minneapolis, and Fargo.

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

Legislative Alert

The 1994 Timetable

Congressional staff never sleep, even during the Christmas break. While their bosses are out testing the waters back home, professional staff have been preparing for the political fight of the century. As for the White House, ``health care'' is its number one priority for 1994, followed by welfare reform and ``investment in human capital'' (translation: more social spending.) But the Christmas recess has been rudely interrupted by a new round of widely publicized allegations of extra-marital affairs by the President and continuing controversy over the Clintons' relations with a failed savings and loan in Arkansas. The President and his shell-shocked White House staff are struggling to regain control over the domestic policy agenda. Precious time and energy have been lost.

On February 3, 1994, a big hearing is already scheduled before House Ways and Means Committee on the topic of employer mandates. Small business representatives and Clinton Plan fans will slug it out in broad daylight.

Many medical organizations back a federal mandate on employers, including the American College of Physicians, the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Obstetricians and Gynecologists, the American College of Preventive Medicine, the American Medical Women's Association, the American Society of Internal Medicine, the American Thoracic Society, the National Hispanic Medical Association, and the National Medical Association. President Clinton stated that the presence of these medical organizations at a December White House briefing ``debunks the idea that this [his plan] is a big government plan that harms the doctor-patient relationship.''

Even with the AMA backing away from an employer mandate, the impressive array of medical opposition to their position has small business groups digging in for the fight of their professional lives. The National Federation of Independent Business (NFIB) reports that 84% of respondents in a Gallup survey of over 1000 small business owners opposed any mandate making them pay Clinton's proposed 80% of the cost of a standard benefit package. And 46% said that a federal subsidy would strengthen their opposition to a federal mandate!

At the House Energy and Commerce Committee, a fast- track timetable for the Clinton Plan is being discussed: all of the subcommittee work is to be done by March 31st and full committee action is to be completed by April 30th. The idea is to get the Clinton bill to the floor by the August recess, with conference action either before or shortly after the August recess, thus fulfilling the Clinton Administration hopes of getting a bill passed before the 1994 Congressional elections. This would likely mean a September vote in both the House and Senate, assuming that things go relatively smoothly for the Clinton team. But don't depend on it.

The other big committee in the House is Ways and Means. Congressman Dan Rostenkowski (D-IL) is telling his fellow Committee members that he is not wedded to any kind of rigid timetable. After the initial negative reactions of witnesses to the Clinton Plan in the first round of hearings, Rostenkowski, once burned by the Medicare Catastrophic debacle in 1989, reiterated his favorite theme: it's not important that Congress do it fast, but that Congress do it right.

At the same time, Congressional backers of the Clinton Plan are clearly worried about Rostenkowski's continuing legal problems related to investigations of the House Post Office. If these problems continue to distract Rostenkowski (they are serious enough for him to hire hotshot Washington lawyer Bob Bennett), or even force him to step down, the next Member in seniority is Congressman Sam Gibbons (D-FL). Gibbons favors extension of the Medicare mess to the entire population, like Stark of California, and can thus be counted in the ``single payer'' camp. Also, Gibbons lacks Rostenkowski's raw political muscle, and the White House would be the political loser if Rostenkowski were to go down for the count.

Even if everything were to go smoothly for the Firm of Clinton and Clinton in the House of Representatives, the prospect of turf warfare in the Senate between the Senate Finance Committee and the Senate Committee on Labor and Human Resources (i.e., Kennedy v. Moynihan) is real enough, based on strong institutional and philosophical differences.

In spite of all of Ira Magaziner's talk about trying to create a ``centrist coalition'' in Congress (talks with Senator Chafee, etc.), it is increasingly clear that the real base of support for the Clinton Plan in the House is the Democratic Left. Of the 102 cosponsors of the Clinton plan in the House, 55 are also cosponsors of Congressman Jim McDermott's bill creating a Canadian-style system. This is not surprising, even though McDermott and Stark may carp at Clinton's Plan in public. In the final days before its introduction, the White House agreed to a series of changes in the Clinton bill, insisted upon by Senator Paul Wellstone of Minnesota, that would make it administratively easier for individual states to adopt a Canadian-style system. These adjustments pave the way for a Long March through the states, resulting in an eventual national triumph of a Canadian- style health care system.

While Clinton's forces are reaching out the to the Congressional left, Congressman Jim Cooper (D-TN) is making overtures to the Congressional right, and considering adding a Medisave Account provision modelled after Senator Phil Gramm's proposal to his managed competition bill. Any impending marriage of a Jackson-Hole-style managed competition proposal with Medisave would surely alter the political dynamics in the House.

The Numbers Game

The debate on Capitol Hill is being fueled by a steady flow of numbers from partisan and nonpartisan sources: projections, actuarial reports, statistical analyses, and econometric studies.

The Commerce Department projects that national health-care spending will exceed $1 trillion next year (about 15% of the gross domestic product).

The Administration has finally released a line-by-line description of its own bill, the Health Security Act (HR 3600) and S1757), accompanied by its own cost estimates for new federal health programs. The Administration concedes new federal administrative costs: $2.1 billion for new health information systems, $2 billion for a health insurance risk pool for the uninsured during the transition to the new regional alliance system; and $1.1 billion for federal oversight of the regional alliances and the state implementation of the new system.

Families USA, which acts like a wholly owned subsidiary of the Firm of Clinton and Clinton, released a December report that says that 53 million Americans will gain by the Clintons' prescription drug benefit, and the Clinton bill would guarantee coverage for 54 million Americans by 1998 who would otherwise lose it or lack it entirely. Echoing Hillary's outbursts, the number-one villain in the health care system for Families USA is the insurance industry.

More important is the December report of the respected Employee Benefit Research Institute (EBRI), which states that the number of Americans without health insurance increased 2.3 million in the last year, raising the total estimated number of uninsured at any given time from 37 to 38.9 million. According to the EBRI's December 1993 report, the major reason is loss of coverage for workers in small business. While the new figure of 39 million uninsured is likely to be quoted extensively, William Custer, Director of Research at EBRI, cautions that this number represents only a ``snapshot'' of the general population, not a permanent class of uninsured people. Because health insurance in the United States is largely tied to employment, loss of a job translates into a loss of health insurance. During the course of the year, as many as 53 million people could be without insurance for ``a month or more,'' and ``as few as'' 22 million could be uninsured for the entire year.

In addition, EBRI reports that over the past three years there has been a ``gradual decline'' in the number of Americans getting health insurance coverage through their place of work. Predictably, White House allies in Congress seized upon the EBRI findings to highlight the urgency of passing Clinton's health care reform plan, especially employer mandates. On the other hand, conservatives on Capitol Hill-Senators Nickles and Hatch- are highlighting the need to break the 50-year-old tax-based link between private health insurance and the place of employment.

Dodging Bullets and Doctoring the Spin

Even more important than the EBRI study was the long-awaited analysis by Lewin-VHI, the econometrics firm that models health care reform. When Lewin released its findings in early December, outwardly the Administration was all smiles. Jim Carville, Clinton's chief political guru, was brought in for Spin Control on the Lewin numbers. The Basic Message: Clinton's financing ``works.'' The media have generally picked up this favorable theme, and the Lewin analysis did not sink the Plan, as some Clinton allies on the Hill feared it might.

Everything is in the deeper details of the report. Lewin says that if you accept the Administration's assumptions, including its assumption to hold down health care spending by the amount ordained in the premium caps, the math works out-mostly. Mr. Larry Lewin, President of Lewin-VHI, says that the growth of managed care under the Clinton Plan can indeed slow the growth in health care spending, but it's not a ``sure thing.'' As for the federal spending caps, they may be achievable ``on paper,'' Lewin noted, but that will depend on the ``political will'' of the public and the politicians, and that's ``not a sure thing either.'' Recall that Clinton's plan calls for health care spending increases to match the growth of the CPI by 1999. This is going to be a tough target under anybody's scenario. What the Lewin study underscores for Members of Congress is the need to examine closely the underlying assumptions of the econometric analyses. Look for critics to use the Lewin data for some tough questioning of Administration witnesses over the next few months.

Just about everybody on Capitol Hill understands this. So does the White House. Indeed, one unnamed White House staffer was quoted by the December 20th Newsweek: ``We dodged a bullet.''

Some older public-relations problems returned. While 52% of families would expect to see health care costs fall by $20 or more each year, 45% would pay more. According to the Lewin analysis, 30% would pay more for increased coverage, and 15% would pay more and get less. Recall that HHS Secretary Donna Shalala caused a stir on Capitol Hill two months ago when she admitted to Senator Moynihan that 40% of Americans with insurance would be paying more.

Although the short-term press spin to the Lewin report turned out OK for the Administration, the 196-page report itself could prove more than merely troublesome for the Clinton White House. For example:

 The insurance premiums for plans in the regional alliances are in fact 17% higher than the official estimates. This means $37 billion in higher federal subsidies to employers and employees or a real total of $153 rather than $116 billion in subsidies between 1996 and 2000.

 The net projected deficit reduction between 1994 and 2000 would be $25 billion instead of $103 billion.

 Overall, employers would pay more for health care under its Plan through the year 2000, not less as originally stated. Manufacturing, transportation, communications, and utility companies would see a reduction in their health care costs, but retail trade and service industries will see increases in these costs.

Lewin's argument that the Administration has underpriced its comprehensive benefits package is reflected in other independent analyses. The estimated family premium for the Clinton package is projected at $4360 per year by the Administration. While Lewin puts the cost at $5,101, the Wyatt Company, a benefits consulting firm, puts it at $5155. On top of that, Wyatt projects even bigger subsidies to the poor under the Clinton Plan and argues that the cost of paying for early retirees will wipe out any chance that the Clinton Plan could avoid deficits.

Ghosts of the Medicare Catastrophic Past?

In 1988, the AARP was the main force lobbying the for the ill-fated Medicare Catastrophic Coverage Act, repealed in 1989 after explosions of outrage among senior citizens saddled with paying for the new Medicare benefits. Now, AARP has proudly sponsored a poll on the Clinton Plan that shows 51% of Americans favor it, 36% oppose it, and 13% register no opinion. However, of the 25,000 members of the AARP who cut out a coupon from the AARP Bulletin asking for their initial reaction to the Clinton Plan, 82% said they were opposed. AARP staff, doubtless shocked, are saying that the AARP members' response is not really representative.

Warning the GOP

Impact is hard to gauge during the Congressional recess. But the latest hot-button item on Capitol Hill is a December memo from William Kristol, Vice President Dan Quayle's former Chief of Staff, to Republican leaders: Forget negotiations to make a bad idea better. Tell Americans how much they stand to lose if this ``Great Society-scale upheaval'' should come to pass.

``We don't want to wound the plan,'' Kristol said. ``We want to kill it.''