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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 51, No. 7 July 1995
MEDICARE AT AGE 30: TIME FOR A NEW
On July 30, 1965, after its whirlwind passage through
Congress, President Lyndon Baines Johnson signed Medicare into
law, establishing the centerpiece of the ``Great Society.'' The
first year's cost was projected to be $900 million, and the tenth
year's cost $1.7 billion.
In testimony before the Health Subcommittee of the Ways and
Means Committee in 1975, former AAPS President Donald Quinlan,
M.D., noted that the cost was $10.9 billion, six times the
initial estimate. In 1995, it will be about $200 billion.
The Medicare Trustees Report for 1995 shows that Medicare is
in far worse condition than the authors admit. The Trustees
focus on exhaustion of the Trust Fund by 2002. This is a mass
``Everyone wants to believe that the apparent $150 billion
positive balance in the trust funds is equivalent to a stock of
canned goods in a cupboard, accumulated as a result of past
annual surpluses,'' wrote Lawrence J. White, Professor of
Economics at New York University (Knight-Ridder Financial
But it isn't. There is no $150 billion cushion that will
last for seven years. ``The Medicare cupboard is bare,'' said
The surplus moneys were ``invested'' in military bases,
interstate highways, national parks, subsidies, and bureaucrats'
salaries. Most of these ``assets'' can hardly be repossessed or
liquidated to redeem the IOUs in the Trust Fund.
The asset that the federal government is counting on is its
ability to tax and to borrow. The Trust Fund will simply be
added onto the deficit, which is added onto the national debt.
And that's before the baby boomers start to retire. At that
point, the Trustees Report resorts to sleight of hand.
In 1965, the federal government spent $0.03 of every tax
dollar on health care. This year, the government will spend
$0.23 of every dollar on health care. If current trends
continue, and if federal revenue continues to represent about
18.5% of the GDP, we will spend every penny of federal money on
Medicare and Medicaid by the time the last baby boomer reaches
age 65 in the year 2030.
As one government actuary observed, ``since the current
trend can't continue, we assume it won't.''
The actuaries conveniently assumed that the rate of increase
in Medicare spending will fall by half between 2010 and 2030, at
the very time when the number of persons over the age of 65 will
be doubling. Under these remarkable assumptions, Medicare would
still absorb 42% of federal taxes in 2035.
Both Republicans and Democrats are in a state of denial.
Simply cutting the rate of Medicare growth (proposed by
Congress and opposed by Bill Clinton) will not fix the problem.
However, in a recent White Paper, AAPS makes several modest
suggestions for a move in the right direction:
- Repeal laws and regulations that increase the cost of
delivering services (CLIA and OSHA rules for a start).
- Repeal laws that increase administrative overhead, such as
the requirement that physicians file all claims. (About 7% of
claims filed are for $0. We have received copies of several
checks for the sum of $0.01.)
- Repeal laws and regulations that restrict innovation (e.g.
FDA device regulations, see AAPS News, May 1995).
- Repeal laws that create incentives for fraud and abuse,
especially those that provide for assignment of benefits (payment
to providers rather than beneficiaries).
- Repeal market-distorting price controls (DRGs and RBRVS)
that result in rationing, cost shifting, and possibly in
increased expenditures through stimulating demand.
AAPS also supports measures such as medical savings accounts
that would permit seniors to benefit from prudent management of
their own care. These should be offered on terms that permit fair
competition with managed care. This concept was presented by
former Delaware Governor Pete DuPont at a June 8 meeting of the
National Policy Forum.
By far the most important immediate step in reforming
Medicare is to open the safety valve: private contracting.
Since the inception of Medicare, a few AAPS physicians have
followed the AAPS Non-Participation Policy of refusing to accept
The right to contract privately outside the Medicare system,
guaranteed in the law that established Medicare, was asserted in
federal district court in 1992 by AAPS President Lois Copeland,
M.D., and five of her Medicare patients (see AAPS News,
Dec. 1992). Because he could find no law, no regulation, and no
``clearly articulated policy'' against private contracting, Judge
Nicholas Politan concluded that physicians are not at risk of
sanctions if they engage in it.
The decision in Stewart v. Sullivan
notwithstanding, Tom Ault, Director of HCFA's Bureau of
Policy Development, stated that ``for doctors to implement such
contracts is strictly illegal.'' And Medicare Technical
Amendments in 1994 muddied the situation further (see AAPS
News, Mar. 1995, for four legal opinions).
While AAPS believes it is lawful to treat Medicare-eligible
persons as private patients, the majority of physicians are
fearful, and with good reason. Defense against HCFA sanctions
would be extremely expensive, even if ultimately successful.
Therefore, AAPS is promoting legislation that would unambiguously
establish the right to private contract.
The 30th anniversary of Medicare, when the program is for
the first time under serious review, is an historic window of
opportunity. AAPS proposes to declare July 31 ``Medicare Patient
Freedom Day.'' See the enclosed flyer, watch your mail, and send
us your ideas.
I Remember 1965
And then there was Medicare....
I had just begun my medical school training at Cornell
University Medical College when President Johnson brought the
Great Society into being, laying the first cornerstone for the
socialization of medicine in the United States. As the sons of
Americans were sent to their demise in Vietnam, Johnson arranged
for the future medical care of their parents and grandparents in
an initially generous, taxpayer-funded program that wove a web of
rising costs and infinite demand.
Medicare inflated costs at its very inception. The day
before Medicare, the cost of an emergency room or clinic visit
for the poor was $5.00 at The New York Hospital in New York City.
The day after, the government assessed the worth of these
services at $15.00. Thus, the poor elderly beneficiary, having
personal responsibility for the $45 deductible, could obtain only
three visits for the same amount of money that would have bought
nine visits before Medicare's birth. Because it became illegal
for any individual to be charged less than the charge to
Medicare, the younger poor saw their costs triple overnight.
And then there were walls. Now forbidden were the efficient
open wards of the past, where a small number of nurses and aides
could manage a ward of 20 or more patients, all of whom were
within sight and hearing of a skilled professional. Mandated
were walls enclosing two patients in each room, hidden from
watchful eyes. Andy Warhol took his last breaths while his
private duty nurse read or slept behind his walls. One wonders
if he would have survived in an open ward, visible to the nursing
staff of the floor.
Then there were limited partnerships in which private
hospitals changed hands, with ever-rising purchase prices driving
the per-diem reimbursement up ever farther. The taxpayers paid
more with each profitable sale and every wall.
Labor costs also rose as it became necessary to employ many
more nurses and aides to make frequent rounds on distant patients
hidden from view.
As costs rose, bureaucrats multiplied, with regulations
proliferating to control these costs, adding further to the
overhead of the program, which spun out of control.
As bureaucracies blossomed, physicians were the convenient
scapegoats for the fruit of the miscalculations of government and
its representative's ignorance of human behavior.
Following the initial largesse have come the inevitable
shackles, binding both physician and patient as compulsion
proceeds and freedom recedes.
Yes, I remember 1965, when the Dream of the Great Society
gave birth to the Nightmare of Bondage in 1995.
Lois J. Copeland, MD, Hillsdale, NJ
HMO Problems Pervasive
An April report by the HHS Inspector General's office showed
widespread problems in Medicare HMOs. Problems include
violations of federal regulations that forbid asking potential
enrollees about their health. Beneficiaries also reported being
subjected to a physical examination upon application. Nearly a
quarter of 4,132 beneficiaries reported failure to receive
primary care, specialist referral, or coverage of needed
emergency care. Many had difficulty making appointments, and
frequently gave up because of consistently busy telephone lines
(BNA's Medicare Report 4/28/95). A copy of the report,
Medicare Risk HMOs: Beneficiary Enrollment and Service Access
Problems (OEI-06-91-00731) is available from HHS, IG, 330
Independence Ave SW, Washington, DC 20201; (202)619-1142.
In response to a recent FAX alert, a number of AAPS members
have prepared reports on problems their patients have experienced
with HMOs. A summary will be prepared for Congressmen.
CBO Director June O'Neill stated that the Medicare program
could not save money by increasing managed-care enrollment under
the current system of paying 95% of the area's fee-for-service
average per beneficiary (BNA 5/5/95).
An AAPS survey on the impact of Medicare is enclosed. Some of
the same questions were asked in 1991 and 1993. We continue to
receive requests for those results. We need to know if things
have changed in 1995. Please mail or FAX your reply by June 30
to (520)326-3529 or (703)716-3400.
Public Support for Government Medicine Wanes
A 1994 survey by Widener-Burrows & Associates showed that
59% of Americans believed that giving government a bigger role in
medicine would be a costly mistake. Only 37% of respondents were
willing to pay more taxes to finance universal health care, down
from 54% (BNA 5/1/95).
Stark Bill Under Attack
Ways and Means Health Subcommittee Chairman Bill Thomas (R-
CA) is considering major changes in the Stark II Self-Referral
Law, stating that ``the new law goes beyond the original concern
with abusive joint ventures by adding detailed regulation of the
internal workings of physician group practices, hospitals,
medical schools, and entities that employ or contract with
Prepaid health plans under Medicare are exempted from the
law. Kathleen Buto of HCFA stated that ``we do not see these
provisions as an impediment to the development of legitimate
managed care arrangements.'' The law was developed in the
context of ``fee for service'' practice (third-party payment),
where ``there are no incentives for providers to control
utilization.'' However, AHA Board of Trustees Chairman Gail
Warden stated that the law may severely impede the formation of
Meanwhile, HCFA has not yet issued final regulations for
Stark I, which was passed in 1989. No proposed regulations have
been published for Stark II, which went into effect in January,
1995 (BNA's Health Care Policy Report 5/8/95).
Oct 12-14. 52nd annual meeting, Falls Church, VA.
Oct 21-25. American Society of Anesthesiologists meeting in
Atlanta. AAPS will have a display (F-40), and AAPS members (Drs.
Nahrwold, Schlitt, and Orient) will present a panel on
Alternatives to Managed Care.
Oct 10-12, 1996. 53rd annual meeting, La Jolla, CA.
Correspondence with the LLCS
An Exchange on Medicare Exclusion
The May 15, 1995 issue of Part B News carried an
article headlined ``Excluded doctors can see Medicare patients,
just don't file claims.'' If a patient filed a claim later, an
official from the Inspector General's office said that ``it would
be seen as a false claim and denied.''
``Unfortunately, many physicians don't see being kicked out
of Medicare as a punishment,'' the official noted.
From a May 15 letter to HCFA, citing that article:
Dear Comrade Vladeck:
I am quite interested in finding out more about this concept
of ``being excluded from the Medicare program''....I estimate
that I spend approximately 30 to 40 percent of my professional
time trying to straighten out messes created by your bureaucracy
or our bumbling local carrier....Is it true that if excluded from
the program, we could continue to see Medicare patients at
reasonable fees without ever having to interact with HCFA again?
Imagine, a doctor being able to focus on just practicing medicine
again! As a law-abiding citizen, is there any way one could
achieve this paradise? Surely you wouldn't just provide this
reward to those who break the law. Is there something one could
do to qualify? Maybe something like implying that the director
is a Communist? Something that would carry only a small
fine...no prison time, please. What if I treated a patient that
HCFA declared dead prematurely in your computers (a true story)?
I am eagerly awaiting your reply.
L. R. Huntoon, M.D., Ph.D., Jamestown, NY
A comment from the Limited Legal Consultation Service: Dr.
Huntoon's letter to ``Comrade Vladeck'' is interesting indeed.
He may well be right that once excluded, a private physician may
be free from HHS harassment. In theory, the State could still
criminalize ``overcharging,'' but it would be difficult for HHS
to sanction a physician who has already been excluded, as a
Accordingly, the HHS is likely only to use fines as
sanctions. Do we know of anyone who has actually been excluded?
To be excluded, a physician must be convicted of a
``flagrant violation'' or ``patient abuse.'' More often, the IG
imposes sanctions; sanctioned physicians are still part of the
program and ``fines can just keep building and building,''
according to the May 15 article in Part B News.
However, HCFA announced on April 7 that it was beginning a
``major enforcement initiative'' and would drop physicians from
Medicare for repeatedly overcharging (BNA's Medicare
Additionally, HCFA has formed an ``entry group'' to advise
on how to keep ``bad providers'' out of the system, ``on the
theory that if we don't let you in, you can't steal from us,''
explained senior advisor Judy Berek. ``The history of the program
is such that there was a time when we were worried that there
would not be enough providers in the system to serve our
beneficiaries. That time has passed'' (BNA's Health Care
Policy Report 5/15/95).
Medicare as Secondary Payer
An office manager asked whether a physician may charge
according to his normal billing schedule for a patient who is
primarily insured under Blue Cross/Blue Shield and secondarily
insured under Medicare.
The answer is No.
In 1994, in House Resolution 5252, Congress enacted a
provision that ``no person'' is liable for excess payments. It
appears that Congress intended to apply this to private insurance
companies, although HCFA has not yet formulated an official
policy. According to Phyllis Morical in the HCFA national
office, HCFA will disseminate this policy to insurance carriers
once it is developed.
Timothy M. Schellberg and Thomas F. Gallagher
Fabrication by HCFA Not Fraudulent
Dr. Huntoon writes that ``the Medicare carrier actually used
to make up fictitious claim numbers in their correspondence with
me regarding claims processing errors. I always thought that
making up claim numbers was fraudulent.''
HCFA disagreed, writing: ``Dear Dr. Huntoon: This is in
response to your fifteen letters since October 22. Your Oct. 22
letter concerns the fabricated claims number...Regardless of the
need to use a fabricated claim number the point is that the
Carrier staff felt that it was necessary to control incoming
correspondence. There was no intent to mislead or confuse
you....Sincerely yours, Preston Lowen, Medicare Contractor.''
Do we have your FAX number? If you have not received recent
Action Alerts (the latest was about the Archer-Jacobs Medical
Savings Account bill), you are probably not on our FAX network.
Please FAX your number to (520)326-3529.
AAPS Communications and Government Affairs
Capitol Hill. AAPS testimony has been included in
the record for hearings on health care fraud, physician payment
review, and FDA reform. Dr. Jane Orient testified before the
Health Subcommittee of House Ways and Means and met with Chairman
National Policy Forum. AAPS President-Elect Don
Printz, M.D., was a featured speaker at the June 8 megaconference
on health care, chaired by Haley Barbour. Representatives of
Congress, AHA, HIAA, Blue Cross, and Golden Rule also spoke. At
another NPC forum on the Bankruptcy of Medicare, AAPS was the
sole voice on the record against managed care and price controls.
Press. A news release and letter to HHS Secretary
Donna Shalala condemning an HHS probe of approved medical devices
as a ``fishing expedition'' was distributed to the press at the
American Enterprise Institute's forum on FDA reform. A news
release and op-ed article on the elimination of the office of
Surgeon General prompted inquiries from Rush Limbaugh and Rep.
Bob Dornan. Physician's Weekly featured a counterpoint
between Dr. Orient and former Surgeon General C. Everett Koop.
AAPS has appeared in the Wall Street Journal five times
since October, most recently with Dr. Orient's article ``A
On FDA Reform. It was good to see that the May 1995
issue of AAPS News focused on the FDA excesses in devices
....Another example of Kesslerian policy is the fact that the FDA
will not allow distribution of any of the ten or so articles that
I and my colleagues published on the issue of Tacrine in
Alzheimer's disease. These articles appeared in such shabby
places as the New England Journal of Medicine,
Lancet, European Neurology, etc. What is
allowed is distribution of highly technical protocols designed in
part by FDA pundits. Clinically, these protocols are confusing
and impractical. For example, the FDA-approved method takes up
to six months to find a proper dose and the method of testing
improvement requires a Ph.D. psychologist with special training
to administer the psychometric tests. In contrast, our protocols
took seven to ten days and used tests that family members could
easily learn to administer.
This FDA restriction is largely responsible for Tacrine
being used in a minimal number of the four million victims of
A piece of pseudo-reform legislation has been sponsored by
Ron Wyden (D-OR). The words are soothing, but details reveal
that Mr. Wyden trusts Mr. Kessler to do the right thing. The
rumor mill states that this bill was actually the idea of Mr.
Kessler, who has recently consulted the firm of Burson Marteller
to improve his image-the idea being that the best defense is a
William K. Summers, MD, Albuquerque, NM
The Managed-Care/Free-Market Oxymoron. In an interview
with David Frost, Speaker Newt Gingrich supported the managed-
care concept of Medicare. Yet he claims to support the free
marketplace. The ideas are not compatible.
Health insurance is theoretically to help you when you
become ill. Managed care is a system that discriminates and
works against you when you become ill. Managed care has no
incentives to preserve the life of an ill patient, who is
perceived as a costly drain on the system-which is run by one of
Hayek's coercive tyrants. Managed care has had an unfair
advantage since the employer mandate in the HMO Act of 1973, and
the free marketplace has been damaged as a result.
The freedom-preserving, long-term solution is the Medical
Savings account combined with a catastrophic, individually
(family) owned insurance plan....Americans voted down managed
care in the November, 1994, elections. If Republicans impose
managed care on seniors and the poor, they could get voted out of
Holly Fritch Kirby, MD [a former HMO physician] Leawood,
New Electronic Data Submission System.
Although HCFA is always telling us how fast electronic claims
processing is, we note that we probably could have walked to
Binghamton with paper claims faster than our last electronic
claims were processed. Nevertheless, we decided to try to submit
another batch today. As the entire office staff huddled around
the main office computer, we listened intently to the modem
dialing the Blue Bungler number. To our total amazement, the
Blue Bunglers had the computer plugged into the phone lines, and
they answered our call! We are used to dead air, busy signals,
and ``please hang up and try your call again.'' Shortly after
entering my FIRST NAME and then my LAST NAME, the screen became
filled with cryptic messages transmitted at lightning speed:
“‡êŽ ˆ and ....We wondered if it was a code
intelligible only to aliens outside our solar system. Then we
remembered Upstate Medicare's recent ``Migration Article,'' which
demoted us from Providers to Ducks (``we ask that you make every
effort to comply with your scheduled migration date''), and we
decided the code was obviously in Duck.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
What Is the Doctor's Job? A report in Ob-Gyn
News advised: ``Physicians need to group together to
achieve maximum leverage from capitation, but they must make sure
the group has more primary care physicians than
specialists....Specialists attract the sick, not the healthy.''
I guess my age is showing, but I always thought that a
doctor's primary job was to take care of the sick people.
At a recent symposium, I was amazed to hear one young
primary-care physician, who considers himself a prime mover in
the formation of a new medical group ``that will succeed in the
new medical environment,'' explain that ``for economic reasons we
are requiring primary care physicians in the new group to take a
colposcopy course so that they can handle abnormal Pap smears
without referring them until we finalize our decision on which
Ob-Gyns to include in the group.'' He readily and quite
comfortably admitted that care would deteriorate under such a
There is nothing new about what is occurring in medicine
today. It is called ``Corporatism.'' In a bygone era, it would
have been called fascism, but that term has become so associated
with racial/ethnic hatred that people forget that the underlying
concepts of fascism were first and foremost economic. It is the
If this is allowed to continue, American physicians will be
called upon to determine which conditions-and thus which
patients-are ``worthy of treatment, given our limited economic
Stephen R. Katz, M.D., Fairfield, CT
Legislative AlertHearing on the Potential Role for
Employers and Medical Savings Accounts in the Medicare
Subcommittee on Health, Committee on Ways and Means
Opening Statement by the Honorable Bill Thomas
May 25, 1995
Welcome to our hearing on the potential role for employers,
unions, and medical savings accounts in the Medicare program. As
I said yesterday, this Committee is going to undertake a major
effort to make Medicare a better program, both to improve its
solvency and to provide better choices for beneficiaries. Today,
we will examine how we might provide options through former
employers and through medical savings accounts.
Last week we heard from a series of employers about their
successful efforts to control their health care costs and improve
quality in the coverage they provide for their workers and
families. For instance, we heard from the Pacific Business Group
on Health about their successful efforts in negotiating a nearly
10% reduction in HMO premiums for their members in 1995.
I would like this Committee to explore how we can tap into
that kind of creative energy by employers on behalf of Medicare
beneficiaries and the Medicare program. I believe we must find a
way to allow employers to play a more defined role in Medicare
coverage so that beneficiaries can stay with the plan they had as
workers if they like it and it is cost-effective for the program.
Clearly, this kind of change would raise many questions.
What would be the payment rate from Medicare? How would we define
an employers' retirees? What would we do about retirees who want
to stay in the Medicare fee-for-service program?
I am very pleased that we have a distinguished series of
witnesses on our first two panels who will address the concept of
an employer role in Medicare and address some of these issues for
I am also very pleased that our last panel will address an
equally exciting concept: medical savings accounts for Medicare
Clearly, one very promising approach to cost control and
quality health care is medical savings accounts. With MSAs, a
person has the protection of a very high deductible for
significant health expenses. But they also have the freedom to
make wise choices with their money in the MSA-because it is their
This option is apparently working very well already for one
company-the RCI Corporation of Michigan. We will hear from that
company's director of benefits about how they have successfully
instituted an MSA program for their workers.
We need to explore how we might make an MSA option available
to Medicare beneficiaries too. But, again, there are some serious
questions that must be answered before we proceed.
What is likely to be the premium for high deductible
coverage for an average beneficiary? How much would that leave in
an account for medical expenses each year?
Who would sponsor MSA accounts and high deductible
insurance, and who would regulate them? Should all Medicare
beneficiaries be given this option, or just those beneficiaries
aging into the program? Should this be a one-time option for
beneficiaries? Or should they be allowed to disenroll at some
point from the MSA and reenter traditional Medicare?
I look forward to hearing from our distinguished witnesses
about the MSA concept for Medicare and how we might answer some
of these questions.
Testimony presented by Jane M. Orient, M.D., AAPS
The Association of American Physicians and Surgeons thanks
you for the invitation to participate in this discussion. We
will not claim to have a plan to save Medicare because we
understand it is a serious offense to lie to Congress.
The fact is that the handwriting is on the wall. You can
read it for yourselves in the 1995 report of the Medicare
Trustees. Medicare has been weighed in the balance and found
wanting. Next year, it will be wanting around $30 billion. The
gap between income and expenditures will increase progressively,
and the trust fund will be exhausted long before the baby boomers
In 1967, Frederick B. Exner, M.D., a former Secretary of the
Association of American Physicians and Surgeons wrote:
``Medicare can never be sound...The projected tax increases when
the plan was adopted should be enough to scare us even though
they failed to scare the Congress; but actually they will provide
only a fraction of what the expenses are sure to be.'' [In 1966,
the maximum Medicare HI tax was only $46.20 per year.]
The truth is that Medicare was built on an unsound
foundation and straddles a major fault. The foundation is
crumbling, and the building is about to be hit by a major
earthquake, the demographic dislocation of baby boomer
The structure cannot be fixed by remodeling the executive
suite and hiring a new management team. If all Medicare patients
were forced into HMOs, the structure would still collapse, and
the private sector would be blamed. Medicare HMOs would also
help to destroy the rest of the medical system. In the appendix
to our written testimony, physician's assistant Jim Morris, from
his position as an insider selling HMO products, describes the
deception and rationing forced on employers, patients, and
Medicare is a pyramid scheme founded on deceit. Seniors
think they have paid for their benefits. In reality, current
workers are paying for them and in addition must bear the brunt
of the cost shifting and price inflation caused by Medicare.
It is time to admit that we cannot repair the Medicare
building and to shift our attention to the people trapped inside.
Medicare traps patients and those who care for them into
We must immediately allow people who are able to do so to
escape from Medicare. This will help to unload the stresses on
To unstop the safety valve provided by the private market,
we should: (1) Encourage private contracting outside the
system. For such services, no Medicare claim is filed. (2)
Repeal price controls and allow balance billing so that the
marketplace can compensate when Medicare reimbursements do not
The long-term solution is to phase out taxpayer-financed
medical insurance for retirees. This requires fixing the problem
in the rest of the medical system.
What Congress must do, and can do without cost to the
Treasury, is to reform the basic inequity in the federal tax
The tax code should not punish Americans for paying for
medical care at the time of service or for buying individually
owned, portable insurance. Because of the tax code, most
Americans prepay for medical care through tax-favored, employer-
owned arrangements. Such coverage cannot even be transferred to
a different job, much less into retirement. It diverts a large
fraction of the medical dollar to the pockets of middlemen and
leads to inflated prices and overutilization.
Medical savings accounts and individually owned catastrophic
insurance should receive the same tax treatment as employer-owned
comprehensive coverage, which is really a tax-free substitute for
a wage increase.
Medical savings accounts allow patients to benefit
from cost-saving decisions. Because patients are spending their
own money, they consider costs in their decisions. This market
pressure tends to drive down the price paid per service
rendered. Companies that have tried medical savings
accounts have found that their medical costs have actually
In contrast, ``managed care'' can at best claim to
``contain'' expenditures by reducing the quality and
quantity of services. The patient bears the costs of rationing
(inconvenience, poorer care, and loss of choice) but receives
none of benefits of saving.
Patients own their medical savings accounts. Managed care
companies own patients.
Medicare is socialized medicine. We must replace socialism
with free enterprise. Because free enterprise works, all
Congress needs to do is to remove the impediments. The most
important impediment is that Americans have to earn about twice
as many dollars, after taxes, to wrest control of their medical
care away from employers and third parties.
The long-term cure for American medicine, including
Medicare, is ``tax equity.''
The short-term symptomatic treatment for Medicare is: ``let
The Medicare experiment provides one more demonstration that
socialism doesn't work. We have no choice but to replace this
failed and unjust system. If we act promptly, we can ease the
transition to free enterprise and minimize the pain for those who
are trapped in this misguided social engineering project.
You have heard much about the financial foundations of
Medicare. I'd like to say a word about its moral foundations. It
is true that free enterprise works and socialism does not. More
importantly, free enterprise is morally right, and socialism is
morally wrong. Money given as Medicare benefits is first taken
from someone who earned it. That money, in the words of former
Congressman David Crockett, is not yours to give.
Restoring the Patient-Physician Relationship in
Medicare: Statement by Don Printz, M.D., AAPS President
Elect, to the Seniors Coalition
The Seniors Coalition has challenged me to talk about the
effect of the presence of Medicare and other third parties upon
the patient-physician relationship and my ability to practice
We in AAPS are dedicated to the principle that the best
medicine is practiced when the patient is in charge, with the
physician acting as his ally. And nothing empowers the patient
more than being able to direct the money that is being spent for
his own medical care. Patients need to know the cost, but also
they should profit, from both a personal and economic standpoint,
by being an intelligent consumer.
Any time a third party is interposed between physician and
patient, there is not only loss of privacy but loss of your
control as the patient.
In Medicare, the interference has so far been marginal. You
still have your free choice of physician. We did have a rather
substantial change in the way physicians are paid under Part B in
the mid to the late 1980s. The way Medicare now pays me may not
have any relationship to the cost of performing a service. In
other words, Medicare has interfered with the pricing mechanism.
For example, HCFA has claimed that it cannot directly determine
what my office overhead should be. Therefore, they calculate it
based on what a 1200-square-foot apartment would cost in Atlanta.
People who get a notice from Medicare saying that their doctor
has exceeded the limiting charge don't realize the arcane way in
which the charge was derived.
A second method of interfering with the patient-physician
relationship is the notice that Medicare used to send out to
patients whose physicians did not accept assignment. It said
that if your physician had accepted assignment, the cost of your
visit would have been ``X.'' They enclosed a list of physicians
who accept assignment.
Many patients don't realize that ``accepting assignment''
simply means having HCFA send the physician the check directly.
Some of us consider this to be almost immoral. It completely
divorces our patients from any knowledge of what their medical
One reform that could be accomplished immediately is to stop
the system of assignment. Then the check would always come to
you as a patient, and you would then pay the physician. I am not
worried about my patient's honesty. I might lose a little, but
if HCFA would send me an explanation of benefits when they send a
check to you, that would put the relationship where it should be.
You are my boss, and I am your ally, and we work together on
The patient is even further removed from control under
managed care. Think about who is doing the managing. And who
profits from it? The largest managed care organization keeps
23.5% of its revenues from your premiums as profits and
administrative expenses. Worse, the gatekeeper (primary
physician) may profit from withholding laboratory tests and
specialty referrals. Under these circumstances, the doctor no
longer has the patient's best interests at heart.
In the extreme case, the veterinary ethic replaces the Oath
of Hippocrates. The payer decides whether the patient is worth
spending the money. In Britain, the Chancellor of the Exchequer
decided that patients over the age of 55 were not worth
dialyzing, and 1800 people died within the year.
How do we restore the patient-physician relationship? One
way is to allow you to put aside, in pretax dollars, the funds to
pay everyday expenses, and to restore insurance as a protection
against unlikely catastrophes. One suggestion is to eliminate
capital gains tax on funds placed in medical savings accounts by
The most important thing is to make sure that you stay in
charge of your medical care and that your physician not try to
serve two masters.