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Association of American Physicians and Surgeons, Inc.
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Volume 49, No. 7 July 1993

``HEALTH CARE REFORM'': FORCE AND REACTION

The methods for proposing and implementing ``health care reform'' do not involve second opinions or informed consent. There may be an element of hard sell. The Democratic National Committee set up a tax-exempt foundation to solicit money from corporations, unions, and others for a public relations blitz to promote President's Clinton's health plan (whatever the as-yet- undisclosed plan turns out to be). The goal was to raise $7 to $37 million. Spokesman James Whitney was quoted as saying, ``At this point we intend to comply with the law,'' when asked whether the campaign would reveal the names of the donors (Washington Post 6/3/93). Section 501(C)4 of the IRS code permits unlimited fundraising without public disclosure of the donors. However, the arrangement, which has never before been tried by the executive branch, was nixed by David Gergen (the President's new message manager) soon after it was announced.

The primary method of persuasion is apparently to be naked force.

Coercion will be needed to destroy existing insurance arrangements. Already, groups are lobbying for exemptions.

Ken Parmelee, of the National Rural Letter Carriers Association said that the federal program shouldn't be ``torn apart'' to fix it. ``It makes sense for members of Congress and political appointees, but not regular workers and retirees, to be part of a national plan,'' he said (Washington Post 6/3/93).

(AAPS Director Joseph Scherzer, MD, of Scottsdale, AZ, suggested willingness of federal workers to be included in the national plan as a ``litmus test.'')

Coercion will be essential for financing the reform meas- ures, despite all the rhetoric about cost control, as state reform plans are demonstrating.

``Many Washingtonians will be forced to spend more rather than less both directly in the purchase of insurance and indirectly through increased taxes. This is forced spending, not spending control,'' explained AAPS member Robert Cihak, MD, of Aberdeen, WA.

Other states have increased taxes to support their ``health- care'' programs, including Kentucky, which has placed a 2% tax on the gross collections of ``providers,'' along with the proviso that the tax must not be passed on to the patients.

The price tag for national reform has recently been es- timated at $100 billion per year (New York Times 4/38/93), but any estimate will be well below the actual figure, as with every previous government program.

Various trial balloons have ascended (and descended), including a value-added tax and sin taxes. According to the most recent leak, sin taxes are likely to be placed on cigarettes but not alcohol (at least not on beer). The latest proposed financing mechanism is an additional payroll tax of 9% (a so- called ``wage-based premium'').

The vision of ``managed competition'' as a marketplace in which consumers made voluntary choices has been transformed. In the words of Congressman Pete Stark (D-CA), ``King HIPC is going to make the decisions.'' The architect of the Health Insurance Purchasing Cooperatives, Paul Ellwood of the Jackson Hole Group, said that ``the trend is absolutely the opposite of what we intended.'' Consumer cooperatives were supposed to be a ``happy idea,'' not ``some guy who beats you over the head.''

One way of forcing physicians to cooperate is by limiting or destroying the options. Congressman Stark has commented that Medicare must be all right because physicians continue to participate. But if this situation changes, the government may have a more draconian mechanism at its disposal.

The Selective Service has prepared plans to order up to 73,000 medical workers in the event of war or other national emergency.

``If we had to conduct a medical draft now, we could,'' said Lewis Brodsky, assistant director of the Selective Service (Ariz Daily Star 6/5/93). The proposed draft goes far beyond the ``doctor's draft,'' which inducted 23,000 physicians between 1950 and 1973. It could be implemented without a general draft. To assure adequate personnel, both men and women between the ages of 20 and 44 would have to register. The plan could summon workers in 59 specialties, including nurses, x-ray technicians, and psychologists.

The rationale for the move was today's lethal battlefield scenarios (including chemical warfare agents).

To gauge the potential reaction to the expansion of govern- mental force, the place to watch is Washington State. Recently passed legislation (see AAPS News June 1993) is the flagship for reform; Hillary Rodham Clinton was beamed in electronically to be present at the signing of the Act by Governor Lowry.

Consumers are awakening to the implications of what Dr. Cihak called ``health care deform,'' and a coalition of small business, consumer groups, physicians and other medical workers, and insurers is building rapidly.

According to Washington State AAPS President Michael Schlitt, MD, the legislature took care to tangle up the ability to pursue a referendum to repeal the Act, by inserting an ``Emer- gency Clause.'' An initiative to replace the Act with true market reform will probably be delayed for a year. Meanwhile, the coalition is supporting a tax-revolt initiative, which could gut the Act by cutting off its funds. Initiative 602 would index state spending and tax collections to economic growth. Taxes enacted in 1993 would be repealed, and the tax collection limit would be decreased if personal income fell. In addition, increased taxes and fees would ``sunset'' in two years.

Hillary Rodham Clinton's Task Force may have been dissolved, but the war has just begun.


Fraud and Abuse Update

Unlike defendants in drug cases, physicians are not likely to be given immunity in exchange for incriminating others.

According to Thomas A. Temmerman, director of California's Bureau of MediCal Fraud, providers are likely to work out a deal with his unit only if they come forward early in an investigation with evidence not otherwise uncovered.

As with drug cases, prosecutors are moving increasingly toward the ``seizing and freezing'' of assets of providers accused of fraud (BNA's Medicare Report 5/10/93).

A recent decision by the US Court of Appeals for the Sixth Circuit in US v. Clyde D Brown, et al., found that the government could freeze real estate as well as bank accounts in health-care fraud cases, up to the percentage of the physician's assets that may have been gained through fraud. There is also a Medicare statute allowing government access to funds which could be forfeited in a civil monetary penalty (Medicare Compliance Alert 5/10/93).

Over the past two to three years, ``there has been a tremendous increase in civil enforcement activity'' by HHS, according to Washington, DC, attorney Alan Reider. Cases traditionally treated as overpayments due to mistaken billing or coding errors are now being worked up as civil penalty cases. The new ``abuse'' definition explicitly covers cases in which the ``physician has not knowingly and intentionally misrepresented the facts in order to obtain payment'' (Part B News 5/31/93).

Besides relying on complaints from patients or partners (the latter nearly always mean fraud, according to Joy Grinstead of Colorado Blue Cross/Blue Shield), a shift in claims processing from carriers to a national ``Medicare Transaction System'' will make it easier to profile services and spot fraud-and-abuse cases (Part B News 5/10/93).

Defense attorneys have been advised not to paint the accused as innocent victims of complex regulations. Instead, Karen A. Morrissette of the Fraud Section of the Department of Justice recommended making a case for why a provider should not be put out of business, say due to the needs of his community (BNA's Medicare Report 5/10/93).

Sometimes providers might be permitted to plead guilty to related tax-code violations to avoid imprisonment and loss of medical license. But the percentage of first-time offenders sent to prison is substantially higher than for other criminal offense categories, according to Thomas Temmerman (ibid.)

 

News from Canada

Ontario Improves Offer. Health Minister Ruth Grier has softened cost-control measures by offering new physicians 75% of the fee allowed for physicians already in practice. This was a large increase from the 25% formerly proposed. New doctors would also be allowed to bill 100% of the fee-schedule amount for all their services if they spend a quarter of their time serving an underserved domain.

Other cost-control measures include a cap on expenditures. If the cap is exceeded, physicians would be subject to a ``clawback'' of a certain percentage of their income (Globe and Mail 6/5/93).

Unionization Considered in British Columbia. Members of the BCMA will be asked to vote on unionization in a referendum this summer.

An alternative to unionization is opting out. A physician who has done so stated that the BCMA wants to form a union ``to protect its own backside'' by drawing more members and making dues compulsory. (Opted-out doctors cannot join the union.)

One physician who has opted out called it the ``one of the most professional moves of my life.'' Nanaimo internist Dr. Paul Mitenko said that opting out could be the answer to the province's financial woes. In addition, there are medical advantages:

``I have to sell what I am doing to my patients. My argument is I work for you. The government runs your insurance company and I don't want your insurance company telling me what to do'' (Times-Colonist 6/6/93).

Data on Rationing Updated. The Fraser Institute has just released an updated study on waiting times for surgical treatment in all provinces in Canada. Including the time between a visit to a GP and a specialist, patients wait an average of 11.5 weeks for relief of an ailment in Ontario and 31.2 weeks in Prince Edward Island. Compared with 1991, there was an increase in the number of patients waiting in all provinces except Mani- toba and Nova Scotia. Data were collected by surveying specialists; the response rate was 31%.

Governments and their agencies do not usually collect data on waiting lists. An exception was a survey done in 1967 in British Columbia. Comparing those results with the present survey showed that a higher percentage of the population is on a waiting list (1.1% now vs. 0.6 in 1967) and that the waiting patients are sicker.

For a copy of ``Waiting Your Turn: Hospital Waiting Lists in Canada,'' Fraser Forum 1993, write or call Bev Horan, The Fraser Institute, 626 Bute St., Vancouver, BC V6E 3M1, telephone (604)688-0221.

 

Bankruptcy Watch

According to a report by Citizens for a Sound Economy Foundation, payroll taxes will have to be tripled to keep the Medicare program from going bankrupt by 2040.

Medicare Part A and Part B spending increased over 900 percent in inflation-adjusted 1987 dollars, from $10.9 billion in 1976 to $97.2 billion in 1990 (BNA's Medicare Report 3/26/93).

One reason is the inefficiency of government insurance. Persons covered under Medicare or Medicaid spent twice as much per person on medical care in 1992 compared with privately insured persons and more than four times as much as uninsured persons. For Medicaid persons under 65 years of age, the cost was $3,313 on the average compared with $711 for those who purchased their own insurance, according to the Council for Affordable Health Insurance (BNA's Medicare Report 4/23/93).

 

The Law of the Land

Article I, Section 8. The Congress shall have the Power to lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States....

[Note: this clause does not say that Congress shall have the power to levy Taxes to pay the debts of John Smith or of the State of New York, to provide a bodyguard for the defense of Mary Jones, or to provide for the general welfare of the Adams children.]


Recent Developments Under the Federal ``Anti-Dumping Statute

In 1986, the federal government enacted the Emergency Medical Treatment and Active Labor Act of 1986 (EMTALA) as part of the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). This statute, better known as the ``patient dumping'' statute, prohibits all hospitals receiving federal funds such as Medicare or Medicaid from refusing to treat or stabilize an emergency medical condition for nonmedical reasons. The statute authorizes civil suits against hospitals by patients alleging violation of the statute and harm due to the alleged violation. It also authorizes the Health Care Financing Administration (HCFA) and the HHS Office of the Inspector General to terminate hospitals' participation in Medicare and to assess civil monetary penalties against physicians and hospitals who violate the statute.

Shortly after its enactment, many commentators believed that the EMTALA would lead to a flood of federal court litigation by malpractice attorneys attempting to federalize the state common law of medical malpractice. The Legal Service's review of some of the recent cases handed down by the courts reveals that numerous opinions construing the EMTALA continue to be delivered by the federal courts.

One of the most notable recent decisions interpreting the EMTALA is Johnson v. University of Chicago Hospital, decided by the US Court of Appeals for the Seventh Circuit on December 28, 1992. In Johnson, paramedics radioed a hospital which was responsible for directly paramedics transporting emergency patients to the appropriate facilities. The patient was an infant in full cardiac arrest. The hospital receiving the radio call was close, but the hospital instructed the paramedics to take the infant to another facility because the hospital had no room in its pediatric intensive care unit. The paramedics took the patient to the hospital to which they were directed, but that hospital did not have a pediatric intensive care unit. The patient was transferred to a third hospital but later died.

The patient's parents sued the first hospital, alleging violation of the EMTALA. A three-judge panel of the US Circuit Court of Appeals for the Seventh Circuit initially held that the statute applied even though the patient never actually presented to the emergency department at the first hospital. Upon reconsideration, the Seventh Circuit ruled that the statute only applies to patients who come to the emergency room and concluded that the hospital-operated radio system is distinct from the hospital's emergency room.

Before the Seventh Circuit reconsidered its decision, many in the hospital industry expressed serious concern over the consequences of the court's initial ruling. Many urban hospitals believed that the initial ruling would prevent urban facilities from engaging in the common practice of ``radio triage,'' which is necessary to prevent already overcrowded emergency rooms from becoming completely unmanageable. ``Radio triage'' permits patients in transit by ambulance to be directed to hospitals where treatment will be available in the shortest possible time.

In other developments, Public Citizen is pressuring HCFA to issue final regulations implementing EMTALA. In June, 1988, HCFA issued proposed regulations which would require hospitals receiving improperly transferred patients to report each such incident to HHS. Because they were never finalized, these regulations are of no legal effect. Public Citizen, which supports a Canadian-style socialized medical system, is requesting HCFA to finalize the regulations and to add even more paperwork requirements to those of the already burdensome statute. Public Citizen is considering litigation against HCFA if the regulations are not forthcoming (BNA's Medicare Report 4, p. 644).

The Legal Service will submit comments on any proposed rulemaking by HCFA purporting to implement the provisions of the EMTALA by increasing the paperwork burdens on physicians and hospitals.

 

Why Not Private Hospitals?

From a letter by Bruce Schlafly, MD, St. Louis, MO, to J. Patrick Rooney of Golden Rule Insurance Company:

I am an enthusiastic supporter of your proposal for the Medical Savings Account. I think it would go a long way towards restoring a private market to the health insurance industry. It puts money and choice back into the hands of the patient.

One of our problems is that we really don't have private hospitals in this country any longer. The situation with most hospitals is analogous to higher education. Like most colleges, hospitals take large amounts of government money, and as a consequence they are subject to all of the rules and regulations of federal and state governments. We therefore have witnessed extensive bureaucracies develop in our hospitals. This of course drives up the cost of medical care.

According to Milton Friedman, between 1946 and 1989 hospital personnel per occupied bed multiplied nearly seven-fold and cost per patient day, adjusted for inflation, increased an unbelievable 26-fold.

Let me give you a specific example....I recently attended a hospital committee meeting at which the administrators told us that our hospital needs to replace the forms filled out by the nurses for each new patient with a much more complicated form containing probing psychological questions. The administrators claim that the new form is now required by state and federal government regulations in order to meet their mandates for adequate nursing assessment of patients....

Another major problem is that hospitals cut deals with HMOs, giving them discounts at the expense of private patients....Patients seek to join HMOs to protect themselves against inflated hospital bills.

In addition to medical savings accounts, we need a few private hospitals-the equivalent of Hillsdale College. A private hospital would not concern itself with government rules and regulations but would simply concentrate on healing the sick. Patients at private hospitals could carry health insurance, but the patient would have the responsibility for collecting the insurance. Thus, the hospital would not have to hire an army of clerks to fill out forms....

P.S. If a pro-abortion ``Freedom of Choice Act'' passes, requiring hospital that receive government money to perform abortions, we may see the return of private hospitals sooner than anyone thinks!


New Members

AAPS welcomes Drs J. Austin Ball of Charleston, SC; John C. Bettinger of Greenbrae, CA; Eric Blacher of Houston, TX; Leroy B. Bloomberg of Newark, OH; Robert T. Brodell of Warren, OH; Paul C. Brown of Renton, WA; Albert J. Camma of Zanesville, OH; H. R. Capps of Idalou, TX; Joseph A. Castillo of Houston, TX; H. Chaim of Ormond Beach, FL; David F. Charles of Las Vegas, NV; Marvin A. Childers III of Loveland , CO; Larry B. Coleman of Pikeville, KY; William H. Conner of Rome, GA; Denton Sayer Cox of New York, NY; Michel Damiani of Houston, TX; W.H. Davidson of Laurinburg, NC; Eddie Davis of Huntington Beach, CA; Thatcher Dilley of Reno, NV; M.J. Dragan of Stamford, CT; J. Antonio Garcia of Tacoma, WA; Alan H. Greenspan of New York, NY; Lloyd C. Haggard of Plano, TX; Ben F. House of Jackson, TN; William J. Hyde of Scottsdale, AZ; Christopher M. Johns of Pittsburgh, PA; Murray A. Johnstone of Seattle, WA; Ellen B. Koerber of Dallas, TX; Steven J. Levy of Houston, TX; Howard F. Long of Pleasanton, CA; Lela C. Maynard of Pikeville, KY; Jeanne Murphy of Little Rock, AR; Irene Nasaduke of Stamford, CT; T.D. Newsom of Plano, TX; Charles Nichols of Pikeville, KY; Margaret Nordell of Danville, CA; Richard A. Norden of Englewood, NJ; Earl H. Parrish of Medford, OR; Henry Payson of Norwich, VT; Nancy F. Phipps of Nassau Bay, TX; Albert Poet of Mamahawkin, NJ; Randall R. Ralston of Dayton, OH; Florencio L. Reyes of Sidney, OH; Francisco Rodriguez of Phoenix, AZ; Mike Schweitzer of Billings, MT; A.D. or Ouida Sears of Dallas, TX; Shelly S. Sekula of Houston, TX; David I. Shadowen of Bowling Green, KY; Ronald Sherman of New York, NY; Kevin P. Short of Muncie, IN; Harold Shulman of Renton, WA; Diane S. Silver of Napa, CA; Rosemary A. Slogre of League City, TX; Charles L. Smith of Perrysburg, OH; Jack C. Smith of Jamestown, TN; Susan Stickevers of Staten Island, NY; Fouad Surur of New York, NY; Howard Sussman of Houston, TX; Sharon F. Tiefenbrunn of St. Louis, MO; Robert E. Turner of Cordova, TN; K. Wagner of Carpenteria, CA; and Hen Val Wu of Somerset, NJ.

Catherine Diane Boomus of Haslett, MI, is a new student member.

 

Letters to the Editor

The surgery that needs to be done is to cut the government out of the doctor-patient relationship. Third parties only want all the money they can extract from the system...

Regulation in this republic has increased the cost of health care and medical care astronomically (doctors practice medicine; everybody else does health care). Doctors get less, patients get less, and the government employees and third parties are reaping untold wages and profits.

Let us go forward by freeing the patients and doctors to settle between themselves what the fees will be. Let the patient be responsible directly to the doctor for payment of medical bills. Reimbursement from the third party is strictly and only between the insured and that party.
Robert M. Webster, MD, Fairburn, GA

[A solution to the problem of insurance companies calling to pressure physicians to discharge patients, in the guise of asking for information:]

 

I have recently started to refuse to speak with any representative of an insurance company unless the patient or a patient surrogate (e.g. a family member) is simultaneously on the line....Insurance companies should not be afraid of talking to their own insured. Physicians should not be caught in the middle of what is an ethical no-win situation....
C. Keith Whittaker, MD, Kansas City, MO
excerpted from JAMA 268:3434

 

The reason Canadian physicians love their system is best summarized by the word security.

There is an unlimited demand for physician services and a limited supply....Doctors can earn as much by concentrating on treating patients with very minor ailments as in treating the truly sick, whom they can ``dump'' into the lap of residents at university hospitals. Having patients return for their super quick office calls (when one visit is all that is required) is welcomed by patients and doctors alike.

Specialists enjoy the system because they have fief- doms....They control hospital privileges and choose residents who ``fit in'' with their ideas on how ``conservative'' medicine is to be practiced.
Robert Gervais, MD, Mesa, AZ

 

AAPS Members to Speak in Oakland

Two AAPS members are featured speakers at the Eleventh Annual Meeting of Doctors for Disaster Preparedness, to be held in Oakland, CA, Aug. 13-15. Radiation-oncologist Howard Maccabee, Ph.D., M.D., will speak on the flaws in Vice President Gore's book on the environment, and Jane Orient, M.D., will discuss impending disaster in American medicine. For further information, call 602-325-2680.

 

AAPS Calendar

Oct. 5. Board of Directors meeting

Oct. 6-9. 50th annual meeting, San Antonio, TX.


Legislative Alert

Unveiling the Clinton Plan: Another Delay?

Capitol Hill observers, who have been waiting for the great unveiling since May 3rd (Day 100) are not holding their breath. Indeed, The Plan still might not make it out of White House honcho Ira Magaziner's Bottom Desk Drawer by the end of June. The reason: Growing uncertainty over the impact of the huge Clinton Tax-and-Budget Package and its collateral damage to the Clinton Health-Care package.

Narrowly passing the House of Representatives by 219 to 213, the White House budget package is hardly a smash success on Capitol Hill. White House operatives are putting a bold and happy face on the fact that they passed the measure by six votes (in a body where they hold a huge Democratic majority of 81 votes).

During the last week of May, the House Democratic leadership was struggling to get enough votes to pass the huge Clinton budget package, the biggest tax increase in American history. Included is a new Medicare tax, which will subject all wages to the 1.45 percent tax; wages above $135,000 are not currently subject to this tax.

Late-night negotiations between Congressional liberals, backed up by White House operatives, and Congressman Charles Stenholm of Texas, leader of the Conservative Democratic Forum, resulted in a makeshift compromise of spending limits as a condition for Stenholm and company to support the President's package. The deal was to set annual ``spending targets'' for entitlement programs. If the spending is more than 0.5 percent greater than ``expected'' in any given year, then the President must propose a tax increase, additional spending cuts, or additional deficit financing to pay the difference. Then, Congress must vote for one of these, or an alternative of its own. For most Congressional conservatives, this doesn't sound like much to write home about.

Medicare will ``save'' an ``additional'' $50 billion over the next few years by freezing the inflation adjustment for payments to doctors and hospitals.

Freshman Democrats, who promised voters The Change, are deeply worried. Having voted for More of the Same, they will have to face a sullen and angry electorate, who will not see The Change in the economy or a reduction in the deficit. The Gross Domestic Product has grown this quarter by less than one percent, compared with the 4.7 percent growth in the last quarter of 1992. And Americans are beginning to realize the size of the tax increases required by the budget package.

The President's political situation-with his approval rating currently at 46 percent-has been described as ``meltdown'' or ``free fall.'' The hiring of ex-Reagan aide David Gergen to help Clinton with his ``message'' has the look of a desperation measure. (Gergen previously described the Clinton Transition as ``the sloppiest in memory.'')

Although the Republicans appear to be marching in lockstep under the discipline of Minority Leader Robert Dole (R-KS), the President's problem is with the Democrats. If Charles Stenholm of Texas can't deliver a strong moderate and conservative bloc, who can?

Early on in the Administration, Stenholm publicly warned Clinton ``to dance with the ones who brung him'' to Washington- that key slice of the electorate who believed that Clinton was a ``New Democrat,'' as distinguished from an old fashioned, liberal ``tax-and-spend'' Democrat. So far, the Congressional arm- twisting seems to be reserved for moderate or conservative Democrats, such as Senator Shelby of Alabama. When united, Conservative Democrats in the House can garner anywhere from 50 to 70 votes in a tough floor fight. On the key health-care reform issue, they are still Keepers of the Managed Competition Faith, probably the only group left in Washington, with the exception of a few liberal Senate Republicans, who still firmly believe in the elusive ``managed competition'' model as a legislative proposal. Obviously, from the steady drippings out of the White House Task Force on Health Care Reform, the Firm of Clinton and Clinton no longer do, if they ever really did. Ira Magaziner spilled it when he publicly admitted that folks in Washington don't much ``believe'' in market competition, anyway. How Conservative Democrats in the House and Senate respond to the unveiling will be critical in the national health-care debate.

On the Republican side of the aisle, Congressman Robert K. Dornan (R-CA) has spiced up the health-care discussion by asking House Speaker Tom Foley (D-WA) why it is that professional staff of the House Legislative Counsel's Office, who are employees of the U.S. House of Representatives, are working on Hillary's Health Care Task Force, an agency of the Executive Branch of the Government. Good question. It seems that Republican Members of Congress are having a difficult time getting the Legislative Counsel's Office to draft health-care legislation in anticipation of Hillary Rodham Clinton's report.

Dornan is raising some intriguing housekeeping inquiries, mostly involving little details like the Separation of Powers. Specifically: How many staff have been working for the executive branch? Who authorized House staff to work for the executive branch? How many hours a week are they working for the executive branch? Why have Legislative Counsel staff with less expertise been delegated health-care legislation drafting duties? Are staff being paid from House accounts while they are working for the executive branch? Have any staff of the Office of Legislative Counsel worked for the executive branch during the years 1980 through 1992? Is there a policy governing the employment of House staff working for the executive branch? Interesting stuff; the sort of questions James Madison might ask. In the Senate, David Boren (D-OK), joined by Bennett Johnson (D-LA), is saying to ``no'' to the Clinton energy tax, and is calling for serious cuts in domestic spending. A Boren defection means the energy tax is dead. The powerful Senate Finance Committee, which has direct jurisdiction over health- care reform, has a narrow majority of 11 Democrats to nine Republicans. One Democratic defection means a tie vote, and a tie means any legislative initiative is automatically defeated in Committee. That's why the debate on the Clinton Budget is significant for the upcoming debate on the future of American medicine. It is the prelude.

The Shape of Things to Come

Maybe David Gergen can start out by helping Hillary Rodham Clinton toughen up her health-care reform message. In an emotional May 26th speech to the Legislative Conference of the Service Employees International Union, a group formally committed to a Canadian-style health model, Hillary assailed ``price gouging, cost shifting and unconscionable profiteering.'' Lamenting that the system has no ``real discipline, no budget, and no controls,'' Hillary was throwing lots of rhetorical red meat to her hungry audience. Good Machiavellians know that one sure way to get control of a complicated public policy debate is to demonize potential opposition. Look for villains and scapegoats (such as insurance companies, pharmaceutical companies, and doctors). If this is an early indication of what can be expected when Hillary gets going after The Plan is finally unveiled, fasten your seatbelts.

In the meantime, there are so many health policy trial balloons floating over Washington, D.C., that your plane would be lucky to get into National Airport. In the White House, Bill, Hillary, Ira, and the gang are burning the midnight oil as the last minute political calculations are being made on the largest domestic policy initiative since the Great Society.

Or are they ? Are the balloons really trial balloons? Is The Plan really being ``put to bed'' up to the last minute, reflecting some genuine policy debate or internal confusion within the Administration? Or are the trial balloons just good old political gamesmanship, a sideshow to befuddle the rubes along the Midway. Maybe, just maybe, for all of the hullabaloo about dozens of study groups, and the 500-odd staff members from the bureaucracy and the Hill, the photo ops, Hillary's highly publicized meetings with ``just plain folks,'' and ``serious'' give-and-take the Capitol Hill meetings, The Plan has been in Ira Magaziner's bottom drawer for months. Maybe, just maybe. Wait till some White House prima donna deigns to write his or her memoirs.

While details are not likely to be revealed until the very last moment, the shape of the Clinton program is as follows:

 Universal access to health insurance regardless of employment, status of employment, or any pre-existing medical condition.

 An unprecedented level of federal regulation over private insurance, including the federal establishment of new underwriting rules and rather detailed rules governing the level of deductibles and copayments.

 Community rating-in effect, a price control regime for insurance. Like most price control proposals, this is a popular idea. In practice, it means that older, sicker persons with high medical risks will be deliberately undercharged for insurance, and that younger, healthier, low risk individuals will be deliberately overcharged for insurance. Overall, insurance premiums increase. For example, in New York, community rating has led to an overall premium increase of 18 percent (NY Times 4/1/93).

 Global budgets and price controls, which may at first be called ``voluntary.''

 Employer mandates. An unresolved question is whether large firms, with 1000 or more employees, which are generally self insured and thus free of state mandated benefits regulations, will be treated the same as small firms.

 Regional ``health alliances,'' which will negotiate fees, collect payments, and assure that federal requirements (such as the ``standard benefit package'' are met).

 A standard benefits package. The Administration is apparently settled on the proposition that any competition that does take place will take place at the level of price competition, and not a competition on the level of benefits or specialized services. The ``standard'' benefits are likely to be to ``comprehensive package,'' including prescription drugs, mental health care, preventive care services, childhood immunizations and some longterm health care, and possibly services and eyeglasses.

New Debate on Abortion

It is expected that the standard benefit requirement will include coverage for elective abortion. Recall that Vice Presi- dent Gore raised the prospect during the 1992 Presidential campaign. The President has again made it clear that abortion will be covered. This virtually guarantees a white-hot national debate, potentially more divisive than anything in memory. If the national Congressional debate on health-care reform was to be the political equivalent of the Battle of Gettysburg, the injection of the abortion issue makes it Gettysburg Plus Verdun. Once again, the President risks defection from moderate and conservative Democrats, and large constituencies that often vote Democratic in federal elections. The popular Pennsylvania Governor Robert Casey, who was denied a the podium at the 1992 Democratic National Convention for his pro-life views, declared a health plan with such a requirement ``dead on arrival'' on Capitol Hill.

Folding In Other Programs

Hillary Rodham Clinton's Task Force has considered folding Medicaid, CHAMPUS, and even the Federal Employee Health Benefits Program into its new health-care reform system. Later on, the idea is to start phasing Medicare and the Indian Health Service and possibly even the Veterans Administration program into the new reform infrastructure.

The political problem for the Clinton Administration is that all of these long-established government health programs have their own fierce constituencies and vested interests. Getting them to give up these programs for something as yet unknown is going to take some tough political selling. The abolition of the FEHBP has civil-service unions worried that they will be paying more for benefits and getting less than they do now. The idea violates on of the cardinal political rules in Washington: Never, ever mess with the huge and geographically omnipresent Postal Workers Unions, who also sell insurance through their own private health care plans.

Do They Respect You in the Morning?

While the debate is raging around health-care reform on Capitol Hill, doctors might be interested in how and where the lobbyists for the health-care industry, including organized medicine, spend their millions of bucks. On May 19th, the Washington Post listed the 20 top health care political action committee (PAC) contributions for 1991-92, with the American Medical Association weighing in at the top with a heavy $2,936,086, up 24 percent from the 1989-90 political season. The top ten recipients of health care PAC money in the House of Representatives, in order of amount, are: Rep. Henry Waxman (D- CA); Fortney (``Pete'') Stark (D-CA): Richard Gephardt (D-MO); Rep. Gerry Sikorski (D-MN); Rep. Dan Rostenkowski (D-IL); Rep. Sander Levin (D-MI); Rep. Vic Fazio (D-CA); Rep. Steny Hoyer (D- MD); Rep. Bill Richardson (D-NM); Rep. Thomas Bliley (R-VA).

In the Senate, the ``top ten'' PAC line up is as follows: Sen. Bob Packwood (R-OR); Sen. Tom Daschle (D-SD); Sen. John McCain (R-AZ); Sen. Charles Grassley (R-IA); Sen. Rod Chandler (R-WA); Sen. Christopher Dodd (D-CN); Sen. Dan Coats (R-IN); Sen. Diane Feinstein (D-CA); Sen. Arlen Specter (R-PA); and Sen. Christopher Bond (R-MO).