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Volume 57, No. 7 July 2001

ZERO TOLERANCE

A Florida student was barred from Commencement, faces felony weapons charges, and may lose her National Merit scholarship. A sheriff's deputy had spotted a 5-inch serrated kitchen knife on the floor of her car while patrolling the school parking lot. District policy mandated him to report it. The student said that the knife must have fallen out of a box when she recently moved and that she didn't know that it was there (Terry Spencer, Associated Press, 5/31/01).

Similar examples are legion-a Northern Light search turned up more than 87,000 references (see links collected at www.crossmyt.com/hc/zerotol/zerotol.html). An 11-year- old was hauled out of class in handcuffs for drawing a picture of weapons (Wall St J 5/18/01). A 6-year-old was suspended under a school's anti-drug policy for sharing a lemon drop, and the school called an ambulance for the lemon-drop-eating friend. A 13-year-old girl was hand-cuffed, searched, finger-printed, and interrogated for more than two hours at a D.C. police station before her mother was called-because she ate a French fry in a Metro station (Wash Times 4/10/01). A 10-year-old girl was suspended for sexual harassment because she repeatedly asked a boy whether he liked her. An 11-year-old British boy was charged with racism for saying "G'day, sport" to an Australian classmate ( www.thisistrue.com/zt.html).

The U.S. Supreme Court has validated the idea of zero- tolerance law enforcement in the case of Atwater v. Lago Vista (99-1408). Failure to wear a seatbelt is cause enough for police to search your vehicle, handcuff you, and take you to the city police station, leaving your children to the care of a friend and your vehicle to be towed away (WorldNetDaily 4/27/01).

The American Bar Association has called for an end to school zero-tolerance policies, calling them a "one-size-fits-all solution to all school problems."

The American Medical Association, on the other hand, rather likes the ring of "zero tolerance"; there are 56 references to it on its web site ( www.ama-assn.org). It favors such policies for weapons and violence, to "SAVE schools"; for illegal drug use; for alcohol above the minimum reliably detectable level in the blood of a driver; for "racially or culturally based disparities in care" (Doctors, be sure to report any colleagues "suspected" of such practices); and "true fraud and abuse." In "this `zero tolerance for errors' environment, the federal government has an obligation to emphasize prevention and education for physicians," says the AMA.

This education might as well start in grade school. Getting expelled from school is, after all, far more benign than being excluded from Medicare, delicensed, fined into penury, or sentenced to years in prison. Americans should learn early that in the land of the free, there is zero common sense, zero discretion, and zero justice for politically incorrect transgressions-and that the definition of a crime can be a matter of semantics. What is a "weapon"? Is a chicken finger, a plastic ax in a fireman's costume, or a cardboard gun equivalent to an assault rifle? What is an illegal drug? Should sharing an asthma inhalant or an ibuprofen tablet with a classmate in distress make a permanent blot on your record? And is eating a snack in the subway indistinguishable from vandalism?

Not surprisingly, a government that can't make these elementary distinctions has admitted "that even they can't tell the difference, in most cases, between simple, inadvertent error, and blatant, deliberate fraud" (E. Ratliffe Anderson, Jr., M.D., 1999 report to AMA House of Delegates). Nevertheless, the AMA continues to supply the CPT codes, pretending that a subjective opinion can be expressed to five significant digits with sufficient accuracy that a lapse justifies a huge fine if not imprisonment. (What is an "office visit" or a "new patient"?)

Coding noncompliance is only one area for zero tolerance. Possible breach of a Corporate Integrity Agreement (without any evidence) means that HCFA can arbitrarily withhold payments, crippling revenue flow (Medicare Compliance Alert 3/26/01). Hiring one of the 18,000 persons excluded from Medicare could lead to payment loss or fines, if the "employer should have known" (BNA's HCFR 3/21/01). Coming soon: enforcement of the 401,034 words in the HIPAA privacy regulations. JCAHO is already on the lookout for violations. Inspectors stroll around looking for patients' charts on doors or names on white boards; try to entrap staff members into conversations about patients; and eavesdrop to test for "auditory privacy" (HIPAA Compliance Alert, 6/01).

While zero tolerance applies to most Americans, zero accountability ("immunity") is the norm for government or even quasi-government officials. Carrier personnel asked for information on Medicare requirements give incorrect answers and refuse to divulge their true names (BNA's HCFR 4/4/01). According to a March 15 policy memorandum AB-01-44, carrier "fair hearing" officers may not hear arguments that a local policy is vague or contradictory (Part B News 3/21/01).

With respect to HIPAA, an entire government agency is a scofflaw. Despite a 1998 law that forbids the creation of a unique health identifier, HHS has instructed private entities to reserve a field in their software for a "forthcoming government- issued ID number for all Americans" (letter to Secretary Thompson from Rep. Dick Armey, 5/15/01).

Worse, prosecutorial standards have been fatally diluted. "Americans are no longer secure in law-the justice system no longer seeks truth, and prosecutors are untroubled by wrongful convictions," stated Paul Craig Roberts (Forbes 12/11/00).

There is a place for zero tolerance: of government officials who violate their oaths to uphold the Constitution. The current trend is for doctors (and the AMA) to enable this lawbreaking through their cooperation. That must change.


Opted Out and Hanging On

Two years ago I began a new medical practice in which I work only for the patient. I, therefore, have opted out of Medicare, Medicaid (I see these patients without charge), and all insurance plans. I have encountered some major problems that others considering this path might want to know about.

First, I discovered that in opting out of Medicare I cannot participate in hospice programs. Patients are told that "the program will pay all medical expenses," but they submit the charges to Medicare, and I am excluded.

Second, local Medicaid officials advise their clients that they are not allowed to see me, even for free. They must be assigned to a Medicaid-participating primary doctor or be removed from the program. That physician is paid about $11 per month to supervise and restrict access to medical care.

Third, I was completely unprepared for the active efforts of private insurers to sabotage my practice. They prevented or discouraged patients from coming to me, even though my office charge was $8 less than that of their "approved" doctors. Their techniques astonished me. One company refused to pay for any prescriptions that I wrote, even cancelling payment on the maintenance medications previously prescribed by their "panel" physicians. (It is through the pharmacy that the insurer finds out that the patient is seeing me. Prescriptions are linked to the insurer for approval of drug, doctor, amount, directions, and cost. The prescription gets rejected on the spot; the pharmacist tells the patient that "I can't fill the prescription because the insurance company won't allow it." Some heart-to-heart discussions with pharmacists resulted in a change of phrasing to "I can fill this, but the insurance won't pay for it.")

One insurer telephoned patients who had seen me to tell them they were "at risk," as I was "uncredentialed" (by them, for their list, they didn't say). The strong implication was that I was practicing inferior medicine. When I confronted the company, I was told that clients were "at risk" of having to pay a $500 deductible not required if they stayed with the approved list of physicians. My lawyer said that I had no recourse since "what's said between the lines is not actionable."

Most insurers have a rule that if a patient with an acute illness can not get in to see the approved doctor within 24 hours they will pay for "urgent care." We photocopy our yellow pages ad that says "urgent care" and attach it to a completed HCFA 1500. We tell patients we will help them collect reimbursement if they have insurance, but their arrangement is with the insurer; we don't get in the middle.

I am not optimistic. People in this area have yet to suffer enough abuses to be willing to go outside traditional channels. The working poor and self-employed come to see me gladly because I give better value for money. It's the executives and unionized workers who think I am cheating them of their benefits. (They are in my office because their regular doctor couldn't see them for a week.)

This practice is within sight of becoming successful, although I'm sure I'll never live long enough to pay off the debt (I am 47 years old). I would do it again because I made the decision that this is the only way I could continue to practice medicine within my definition of ethical conduct. I refuse to shortchange patients as Medicare demands, or to dispense narcotics on demand as the hospital administrators insisted when I was an ER doctor. If this fails, I will find another occupation or another country.
Paul B. Duvall, M.D., family physician, Brevard, NC

 

Use Data, Go to Jail

In a May 9 letter to President Bush, Reps. Bill Thomas, Chairman of the House Ways and Means Committee, and Nancy Johnson, Chairman of the Health Subcommittee, informed him that a new provision in the privacy rule, rejected by the Clinton Administration until the issuance of the final rule, was unworkable. This requires physicians to obtain a specific consent form before using any personally identifiable information [such as a letter from a referring physician, or observations of a paramedic or caregiver] in treating a patient.

"Any time a doctor interacts with a patient, the doctor must ensure a consent has been obtained. Because a patient may revoke consent at any time, any subsequent interaction with the patient means the doctor will have to check to see if consent has been revoked." Moreover, the physician must have a tracking system for consents and revocations. The penalty: $100 to $250,000 in fines and 10 years in jail, or both.

Physicians will have to check on consent before accepting a call from a frantic mother with a sick child. If the physician is out and has no access to the tracking system, advising a patient based on prior information risks criminal penalties.

Pharmacists would need consent to fill a prescription. Parents with sick children or homebound individuals would have to send someone to pick up the consent (and return it signed) before they could get the medication.

The authorization "does little to protect privacy, since it is a coerced `sign or die' construct. If patients refuse to consent to use of their information, providers may refuse treatment."

"HHS repeatedly advised Congress that such a consent requirement was unworkable. We can find no compelling reason why HHS reversed its decision" (see p. 3).

 

AAPS Calendar

July 31. Making a Federal Case out of Health Care: Five Years of HIPAA. Rep. Dick Armey, Mark Pauley, Conrad Meier, John Hoff, Richard Epstein, Madeleine Cosman, Grace-Marie Turner, Greg Scandlen, and others. Cato Institute, $175, see www.cato.org/events/hipaa.

Oct. 24-27. 58th annual meeting, Cincinnati, OH.

Nov. 17. AAPS, PA chapter, and SEPP. Healthcare Summit 2001, featuring Medical Savings Accounts, Pittsburgh, PA, call (724) 929-5711 or see www.sepp.net.

Sept. 18-21, 2002. 59th annual meeting, Tucson, AZ.


Citizens' Petition on Language Rules

On May 23, AAPS filed a Citizens' Petition with the U.S. Department of Health and Human Services (HHS), the Office of Civil Rights (OCR), and the Health Care Financing Administration (HCFA), under 5 U.S.C. Section 553(e) and the Petition Clause of the First Amendment, to revoke the Rule requiring physicians to provide translators for patients with limited English proficiency (LEP), as published at 65 Fed. Reg. 52762-52774 (August 30, 2000), and to refrain from taking any administrative action pursuant to the Rule.

The Petition notes that the Supreme Court has overturned legal precedent for the Rule in Alexander v. Sandoval, 121 S. Ct. 1511 (2001). Sandoval had sued the Alabama Department of Public Safety to enjoin the administration of state driver's license examinations only in English. The Court concluded that this requirement did not constitute intentional discrimination, which is forbidden by 601 of Title VI of the Civil Rights Act of 1964.

The Petition also argues that the Rule violated due process by depriving physicians of prior notice and comment. There was no good reason for the Rule's violation of the 30-day notice-and- comment period. It cannot qualify as an interpretive rule exempt under Section 553(d)(2) because Sandoval overturned the legal basis. Nor can the Rule qualify as a "statement of policy" under Section 553(d)(2) because it establishes new duties for physicians and creates new malpractice liability risks.

Finally, the Petition argues that the Rule is unconstitu- tionally vague. Physicians do not receive the requisite notice of "those who may run afoul of the enactment," nor does the Rule "channel the discretion of those who enforce it." It is not clear whether there is a threshold level of LEP patients that triggers the application of the requirement for a given physician, or whether it differs depending on the specific language. Moreover, it does not specify whose duty it is to identify a communication problem. Thus, the rule impermissibly subjects physicians to arbitrary enforcement.

Congressman Ernest Istook (R-OK) has also suggested rescission of the rule, which applies far beyond doctors' offices (as to the newspaper stand in a hospital built partly with federal funds, a sandwich shop in a government building, or a construction company that works on federal projects). In the event that President Bush fears losing Hispanic votes, Linda Chavez observes: "Just wait until some Mexican-American grocer who accepts food stamps finds out that he has to hire Farsi translators for his store" (Human Events 5/28/01).

 

Does the Chaperone's Testimony Count?

The delicensure of New York internist Dan Alexander, M.D., based on accusations of sexual abuse of patients, raises serious due process issues for all physicians. In an amicus brief filed by AAPS in the State of New York Supreme Court (No. 89006), attorney Janet M. Thayer states that AAPS does not condone patient abuse of any kind, but recognizes that physicians can be wrongfully accused.

In 1995, Dr. Alexander saw a patient for a variety of acute complaints. She did not divulge, although asked, that she was under psychiatric treatment. Her therapist testified that the diagnosis was histrionic personality disorder and that she had not cooperated with treatment, which she eventually terminated. In 1998, the patient filed a malpractice suit, claiming multimillion dollar damages, and caused an inflammatory front- page article to appear in the Jamestown Post-Journal headlined "Lawsuit Alleges Malpractice, Molestation." About two years later, the patient voluntarily discontinued the suit, with prejudice. However, after the article appeared, four other patients filed complaints about Dr. Alexander, some related to examinations done five years previously.

As a matter of office policy, Dr. Alexander always had a female chaperone, who was a health care professional, present during breast and pelvic examinations. At the hearing, the chaperone testified that she observed nothing unusual or improper in the examinations. However, the Hearing Committee rejected her testimony because of her "obvious interest in the well-being of the Respondent after working closely with him for several years." AAPS argued that the finding of bias was not supported by substantial evidence.

AAPS also argued that the administrative law judge deprived Dr. Alexander of his right to a fair hearing by restricting inquiries into the "connectedness" of the complainants with respect to media coverage of the malpractice claim and their contacts with the plaintiff's attorney.

"Under the Determination and Order of the Hearing Committee, as it stands today, it will be extremely difficult, if not impossible, for any physician to have a fair opportunity to defend charges of such inappropriate conduct."

[The complete brief is posted here.]

 

Making Medicare Look Easy

"HIPAA will make Medicare look like child's play," stated Donna Boswell, Esq., a partner with Hogan and Hartson of Washington, D.C., at the AAPS spring meeting in Chicago.

A doctor is exempt from the privacy rule if and only if he files no insurance claims and has no relationship with a laboratory, hospital, or other entity that requires electronic communication. (What's electronic? A FAX is; a telephone call probably isn't, according to the HIPAA glossary.)

Be cautious about "HIPAA compliant" products, Ms. Boswell warned. They may be compliant with only one of five parts, and probably not with the privacy component.

The privacy rules require a special, separate federal form before any information can be either disclosed or used, except in emergencies, which require efforts to obtain consent retroactively. The fact that the referring physician had permission to disclose the information to you does not mean that you have permission to use it, not even to answer a patient's questions prior to his first visit. Your existing general consent forms probably need to be discarded; they violate federal law if they even mention information disclosure.

The source of the rule that obstructs free exchange of information among a patient's caregivers: the AMA. Though hospitals have tried very hard to have this provision removed, the AMA is adamant about retaining it. In bold-faced print, on p. 8 of the comment letter to Margaret A. Hamburg of HHS, dated November 3, 1999, the AMA writes: "We recommend application of the controlling rule iterated previously: valid consent should be obtained before personally identifiable health information is used for any purpose" ( www.ama-assn.org/ama/pub/article/4118-4153.html) .

[Tapes of the meeting are available; call (800) 635-1196.]

"Asking HCFA for help is like asking the Boston strangler for a neck massage."
Senator Pat Roberts (R-KS)


Members' Page?

Privacy Entrapment. A woman recently called my office, identifying herself as from the US Public Health Service. She requested information on one of our Medicare/Medicaid patients. My receptionist advised her that we do not release any information on our patients over the phone and could not even tell her whether this was a patient of ours. The caller was advised to put her request in writing and send it with a signed authorization from the patient.

We soon received a packet of information with a cover letter on U.S. Dept. of HHS stationery, in an envelope with a return address "Westat-an Employee-Owned Research Corporation." It contained an authorization for release of information dated 6 months after the expiration date of the signature. The HHS letter stated that participation is voluntary, although the surveyor who called the office gave the impression that the information was required by the government. The patient is covered by two government programs, which already have the requested information on the claims form that we submitted. Why would HHS hire a private research firm to ask for information it already has, and why by telephone?

I wonder whether this is another case of the right hand not knowing what the left is doing-par for the course for HHS/HCFA. Or is it someone trying to entrap me into committing a privacy violation? And isn't it a crime to misrepresent yourself as an employee of a government agency to obtain confidential information?
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

 

A Hazard to Health, Liberty, and Security. The HIPAA regulations give unlimited access to sensitive personal data to government officials-and their friends in industry-to mine for any purpose they choose, be it research, entertainment, segregation, or population control. It's akin to putting a broadcast microphone into the confessional. Stalin couldn't have thought up a better means of control. We all should be afraid: just ask Congresswoman Nidia Velasquez how she felt when her psychiatric history was publicized during an election.

I see no end to the escalation in practice cost that the red tape will cause. The only way to be certain that no data were transmitted [in a way that required government involvement] would be for the patient to hand carry every piece of information. How inconvenient! And would an incapacitated patient have to hire a bonded, notarized delivery service?
Zvi Herschman, M.D., West Hempstead, NY

 

False Protection. As a physician of 47 years experience, I strongly oppose the so-called privacy protection in the Clinton-Shalala HIPAA rules. This is the same kind of privacy that permitted Hitler to eliminate enemies of the cause and is characteristic of Clinton's dictatorial administration.

A current custom that flies in the face of privacy [which HIPAA rules only exacerbate] is quality assurance activities dominated by institutional administrative staff. Free access to private information by unqualified individuals is a gross miscarriage of medical staff responsibility, which permits prejudicial decisions contrary to the best interest of patients.
Delfin Beltran, M.D., Andover, KS

 

Take a Number Please [a unique health identifier] and We Will Go Through Your Records Whenever We Want. My piece on HIPAA is found at www.etherzone.com/fath032601.shtml. All of American medicine is going to be taken over by this legislation. We should be developing an alternative source of medical care that is totally separate from all the intrusive regulations encompassed in HIPAA.
Steve Fath, M.D., Paris, TN

 

Catch 22. HIPAA regulations are so confusing that no one knows the ultimate result; final decisions are handed off to the Office of Civil Rights. The rules require every doctor to share patients' records with the federal government without consent, even handwritten phone notes. Patients have no recourse for breaches of privacy other than the right to complain. Perhaps the most inane part of these regulations is that patients would be required to sign a release upon their first visit; many patients refuse to do this, and we would have to refuse treatment. In some states, doctors can be fined either for refusing care or for providing medical records on request.
Stephen Reznicek, M.D., Cadillac, MI

 

HCFA Contest. For the "Name That Agency" game, how about HURT (Health Underestimated Regulated and Trashed) or FRAUD (Federal Regulatory Assistance Under Duress).
Frank Timmins, groups.yahoo.com/group/HealthBenefitsReform

 

Virtual Exposure in Canada. Within a few years of implementing the compulsory government health plan, it was obvious that massive leaks were occurring. Eventually, the government was forced to appoint a commission of inquiry, headed by Judge Horace Krever, who concluded that supposedly confidential medical files were available to almost everybody- lawyers, insurers, workers' compensation boards, the police, credit card agencies, and tax authorities-except the patients themselves. Judge Krever made more than 100 recommendations, of which very few have been implemented in the many years since the report was published. So much for the confidentiality of government records of any kind.
William Goodman, M.D., Toronto, Ontario, Canada


Legislative Alert

The Senate Changes Hands- Temporarily

Vermont Senator James Jeffords's recent announcement- that he is dropping out of the Republican party to become an Independent and vote to reorganize the Senate with the Democrats- has set off some curious commentary in the nation's capital and elsewhere in editorial boards and media circles around the country. The move is described variously as a seismic shift in American politics, a death blow to the Bush agenda, a delayed "act of conscience," a wake-up call to callous conservatives in the Senate and elsewhere who are congenitally insensitive to the feelings of "moderates" like Senator Jeffords, and an overall "good thing" for America because it will force the heretofore recalcitrant and surprisingly conservative President George Bush to move to the elusive and mushy "center," which is always a "good" thing, because that means he won't or can't pursue the ambitious and genuinely serious conservative agenda he campaigned on last year.

Curiously, the "liberal" agenda today in Congress and elsewhere is quintessentially negative and rigorously conservative in the worst sense of that word: Stop new things from happening. Stop tax cuts, stop Medicare reform, stop Social Security reform, stop education reform, stop increased energy production, stop the appointment of conservative judges. Stop meaningful change in government management.

The "liberal" agenda is also profoundly conservative in a related sense: existing institutions-ranging from Medicare and Social Security to public education and the federal civil service-are to be preserved as is and even embellished; they are not be changed in any meaningful way, even if the services provided by these institutions are demonstrably substandard or fail to meet the expectations of those they are supposed to serve. The upshot: government institutions and their bureaucratic processes are more important than individuals. The eighteenth century Bourbon dynasty would have understood and appreciated this: the sentiments of The Reaction.

How much will the Jeffords defection aid the cause of The Reaction? Sure, it's a setback for President Bush. But the political rhetoric is overblown, for obvious reasons.

First, the Jeffords change of heart affects only procedural matters, not the substantive balance of power in the Senate. The number of "liberals" and "conservatives" remains the same. True, the Committee chairmanships change hands, and move sharply to the left, and the Senate leadership determines what is on the Senate calendar. In some cases it makes a serious difference. For example, it does matter that Senator Charles Grassley (R-IA) is being replaced by Senator Max Baucus (D-MT) as chairman of the Senate Finance Committee. The initial legislative products coming out of Finance on everything from Medicare and Medicaid to prescription drugs and tax-related issues will have a very different cast. But in other cases, it does not. Take the Senate Education, Labor, and Pensions Committee. Does anyone seriously think it makes much of difference whether Senator Jim Jeffords, the liberal Republican from Vermont, or Senator Edward Kennedy, the liberal Democrat from Massachusetts, chairs the Senate Labor panel? The fate of the Bush Education Reform bill in the Senate would not have been much different. What, on most major issues, would be the substantive policy difference? Right. None.

Obviously, the Jeffords change enables Senator Tom Daschle (D-SD) and his Democrats to have the first crack at fashioning the agenda. But the Senate is not the House of Representatives, where a House Rules Committee sets the terms, time, and conditions of the Congressional debate. The Senate rules are far more flexible, and the President's Senate allies will have ample opportunity to offer floor amendments in the nature of a substitute. Moreover, the Senate minority, never more powerful than in this Congress, can easily stifle legislative proposals by resorting to the traditional Senate filibuster, talking bad bills to death, and it takes a full 60 votes to get cloture and cut off the Senate debate. Not easy to do.

Second, the change does not alter the fact that major policy decisions will be effected by shifting coalitions: different combinations of Senate Democrats and Republicans coalescing around different issues. The pivotal role of Senator John Breaux (D-LA), who supports the substance of many of the Bush Administration's policy initiatives, will surely increase, making him perhaps the most powerful figure in the Senate.

The President, for example, can take heart from his recent victory on tax policy. The Senate Democratic leadership waged an all-out effort to slow down or stop Bush's compromise on a $1.35 trillion tax cut and, in the end, managed to corral only 38 votes. For all of the sound and rhetorical fury, the routine invocations of class warfare and denunciations of tax breaks for "The Rich" (who pay the bulk of taxes in the first place), that was not an impressive legislative performance. Senate liberals will probably have an easier time on raising the minimum wage, but some issues, like the "patients' bill of rights" legislation, soon expected to come to the floor of the Senate under the sponsorship of Sen. Edward Kennedy (D-MA) and John McCain (R-AZ), could prove to be a little more tricky; this is a "muddy" issue inasmuch as the deadly combination of increased litigation and vastly increased regulation could have unintended consequences on the insurance markets, including ever sharper cost increases or further increases in the ranks of the uninsured. Likewise, with Medicare prescription drugs, the CBO estimate that a displacement of the current private market for prescription drugs among seniors would be a cost increase in excess of $1 trillion over the next ten years is enough to dampen the enthusiasm of even the most fiscally irresponsible of Congressional spenders.

In short, the President can still effectively press his agenda. But his ability to do so will reflect his political skills in assembling, managing, and nurturing shifting coalitions.

Advancing a Common Ground?

As noted previously in this column, the Health Insurance Association of America (HIAA), the big insurance trade association, and the Families USA, a left-wing group that routinely campaigns for greater government control over American medicine, reached an agreement on a far-reaching proposal to reduce the number of the uninsured. The crux of the proposal is an expansion of two major government programs, Medicaid and the State Children's Health Insurance Program (S-CHIP), enacted as part of the notorious Balanced Budget Act of 1997, along with the creation of a new tax credit for businesses that would provide health insurance coverage for previously uninsured workers. This is sharply different, of course, from a proposal for tax relief to individuals and families either for the purchase of health insurance or for offsetting out-of-pocket medical expenses. Naturally, the economic and political dynamics go in very different directions.

The Left understands these political dynamics far better than the health insurance executives, who will surely gain the economic advantage of fresh contracts, but at the price of expanded government control. One senses that they are simply resigned to that prospect anyway. But, again, who knows?

A Budget Platform for More Government Control?

The debate on Common Ground takes on a special urgency because of the recently enacted Budget Resolution (H. Con. Res. 83). Section 216 of the bill sets aside a total of $28 billion over three years as a reserve fund for health insurance for the uninsured. While the provision does not specify the kind of infrastructure, it could become a vehicle for the Common Ground proposal. Curiously, the Section specifies that it would include a measure providing for a tax deduction for the purchase of health insurance for "moderate-income individuals not receiving health insurance from their employers."

The Budget Resolution language is troublesome, for it reinforces the erroneous idea that the employer's contribution to health insurance is the "employer's money," when every economist this side of Adam Smith, living, dead, and yet to be born, knows that it, just like wages, is an employee's compensation-and that working families, not employers, pay 100% of the nation's medical costs. Moreover, tax deductions, as the Congressional sponsors surely must know, have only limited impact on the uninsured. Overwhelmingly, the uninsured are low-income employees of small businesses. Presumably, they would not be counted in the "moderate income" category. But since leftists in Congress can routinely expand the definition of the "rich," perhaps the meaning of "moderate income" can also be expanded. Nonetheless, expanding tax deductibility itself, whatever its intrinsic merits as a measure of tax equity, is not of much help in reducing the uninsured. A Lewin Group analysis found that a tax deduction for non-group coverage would cost of $6.3 billion in tax revenue but would add only about 3.9 million Americans to the number of the insured.

Congressional leftists are digging in to oppose any provision of individual tax relief for the purchase of medical insurance. The $28 billion set aside in the Budget Resolution is not much, but it is enough to make serious structural changes in the medical insurance market. And the Left is interested in structure first-money later. The Common Ground proposal would provide such a structure. But there have been practical problems with both SCHIP and Medicaid as vehicles for expanding coverage, largely due to poor communication with low-income families. Steve Schroeder of the Robert Wood Johnson Foundation pointed out that six out of ten parents of kids who qualified for CHIP or Medicaid didn't think they were eligible (Wash Post 6/1/01). Likewise, Ron Pollack, Executive Director of Families USA conceded, "If that program (SCHIP) doesn't work, or is perceived not to be working, it disparages our efforts to go beyond children" (ibid.).

Still, in a recent report, The Commonwealth Fund suggests that building on the SCHIP program and Medicaid is one of the most effective "incremental" ways of covering the uninsured. Senator Edward Kennedy (D-MA) is preparing legislation to boost funding for both programs. The clear and unambiguous agenda is to expand government programs to establish coverage on the government's terms, eventually through a national system of government health insurance.

The Medicaid Option

What is curious is the new found enthusiasm for Medicaid, despite the fact that 23 states report that their Medicaid budgets are out of balance. The fiscal pressure will clearly intensify, since Medicaid funds are also be drawn off by a growing number of middle-class Americans who spend down their assets and end up in nursing homes. In criticizing the Common Ground proposal months ago, Representatives Bill Thomas (R-CA) and Jim McCrery (R-LA) have called attention to the serious shortcomings of Medicaid. In their December 2000 "Dear Colleague" letter, they cite an analysis by the Medicaid Access Study Group, which concluded that "Medicaid recipients in urban areas have limited access to outpatient care apart from that offered by hospital emergency departments" (N Engl J Med 1994;330:1426-1430). While disagreeing with the methodology of that study, Drs. Robert Derlet and Donna Kinser state: "Over the past six years, we have found that at any given time only 15 to 20 percent of clinics in Sacramento accept Medicaid recipients as patients. This practice has compounded the problem of overcrowding in emergency departments" (N Engl J Med 1994;331:877-878).

It would be interesting to add Medicaid to the Federal Employees Health Benefits Program, just as an option, to see how many Congressmen and Senators, who want to expand Medicaid to working families, sign up themselves. The District of Columbia, after all, is the equivalent of Medicaid Central.

Throw MAMA From The Train-Again

As Secretary Thompson said, "It's hard to love something called a HCFA. So I was thinking about changing the name. What about the Medicare and Medicaid Association? Then you could call it MAMA, and that's something you can love" (Kristen Hallam, Bloomberg News Service 5/31/01). More worrisome, Thompson says he wants to clear out literally hundreds of regulations that have been "languishing" in the equivalent of the HHS regulation warehouse for 15 years "or more" (Marlene Cimons, LA Times 5/29/01).

The HCFA story gets better. Thomas Scully, confirmed by the Senate as the new HCFA Administrator, recently started a campaign to "rename the Agency." The winner gets to have lunch with Scully. But how does one pick the winner? It's the HCFA employee whose suggestion comes closest to the name proposed by a public relations firm hired by the agency. Even the contest is in standard HCFA top-down format.

Robert Moffit is a prominent Washington health policy analyst and Director of Domestic Policy at the Heritage Foundation.