Volume 55, No. 7 July 1999

POPULATION-BASED MEDICINE

I will prescribe regimen for the good of my patients according to my ability and my judgment and never do harm to anyone.Oath of Hippocrates

While the specific proscriptions in the Oath of Hippocrates- against abortion, euthanasia, seduction, and violations of patient confidences-have been the subject of controversy, the very core of the Hippocratic tradition has been erased in American medical schools, and virtually without notice.

Rarely is the traditional Oath administered to American medical graduates these days. Oaths written by others, or worse, a bowdlerized version bearing the name of Hippocrates, are used instead, if an oath is taken at all.

No longer does the conscience or judgment of the individual physician reign supreme. The new standard of care is determined by Society-operationally, by an elite committee. The preamble to the AMA's post-1980 code of ethics (which applicants for membership sign) makes reference to the physician's obligation to society and exhorts the physician to provide care that is "appropriate" and within the constraints of the law. The physician is just "a member of this profession," rather than an individual who is a professional.

A search of the various oaths finds the word "harm" only in the original Oath of Hippocrates. All others implicitly tolerate deliberate harm to an individual when required for the greater good of Society and not prohibited by law. This follows inexorably from the change in the purpose of medicine, from healing the sick to optimizing the "health" of the collective. As the oath written by Louis Weinstein puts it, the physician is to act in the "best interest of my patient," in the context of "a preventive approach to the problems of mankind." (For the text and comments on various oaths, see www.aapsonline.org.)

Mandatory immunizations are the best current example of the shift in focus from healing to "prevention," or from the patient's health to "public health." The very definition of public health has changed, from narrowly targeted efforts that interfered with individual liberty only in cases of a clear and present public danger, to global mandates that "balance" the "needs" of individuals against the greater good. (Of course, anything subject to being balanced is not an unalienable right.)

All discussions of the subject begin by calling vaccines the greatest boon to public health since clean water. This is actually untrue: DDT saved more lives than all vaccines put together, and better sanitation and higher standards of living controlled the Black Death (bubonic plague) and the white plague (tuberculosis). Moreover, the triumphs of the smallpox and polio vaccines, which obliterated highly contagious, lethal or disabling diseases, will not be replayed with current vaccines against milder, less common, or less contagious illnesses.

Nevertheless, a global crusade to achieve 100% immunization with 100% of the approved vaccines is in high gear. Generous foundation (and vaccine manufacturer) grants flow to promote vaccines and computerized registries to track compliance. Government subsidies abound not only to buy vaccines but to reward state health departments for using them. Taxpayers fund the no-fault Vaccine Injury Compensation Fund-which covers only a short list of recognized adverse effects from mandated childhood vaccines.

Persuasion not being enough, a hefty dose of coercion is added. Children are being denied entrance to school for lack of total compliance. Worse, parents are sometimes threatened with charges of child abuse or neglect-and removal of children from their custody-if they resist vaccines. If physicians wish to exercise their professional judgment (as described for the 1960 polio vaccine in AAPS pamphlet #1065), they could face deselection from managed care plans, in which immunization compliance is a critical "quality" measure. For giving a mandated vaccine, a physician is essentially immune from professional liability.

Federal decisions on vaccines are made in secret by a small committee of nonaccountable experts who have conflicts of interest, such as affiliation with manufacturers who stand to make enormous profits from required use of their product (see The Medical Sentinel, May/June, 1999).

The National Vaccine Information Center has filed Freedom of Information Act requests with the CDC and the FDA, demanding copies of all studies and reports used in determining the safety and effectiveness of hepatitis B vaccine in infants, children, and adults, including pregnant women.

Groups of activist parents are demanding the right to receive complete information and to refuse consent for certain vaccines, especially hepatitis B. Material provided to parents by health departments states that "getting the disease is much more likely to cause serious illness than getting the vaccine." This is literally true, but it begs the question of the risk of getting the disease: << 4 in 100,000 if the infant's mother is not infected. It is also stated that "no serious reactions have been known to occur due to the hepatitis B recombinant vaccines." This is possibly true, on a "WNL" (we never looked) basis. Studies investigating a suspected link with demyelinating disease (which led to termination of the mandatory vaccine program in France) are not complete.

The government's passive after-market surveillance, called the Vaccine Adverse Effects Reporting System (VAERS), documents about 25,000 adverse events in temporal association with hepatitis B vaccine, one-third of them serious (see p. 2).

The question asked by parents, and by Hippocratic physicians, does not concern global incidence of a disease, but the risk to their child or their patient of both the disease and the vaccine-and the decision is their responsibility.

Congressional Hearing on Hepatitis B Vaccine

On May 18, 1999, Rep. John Mica (R-FL) held a hearing of the Criminal Justice, Drug Policy and Human Resources Subcommittee of the House Government Reform Committee to explore whether hepatitis B vaccine is helping or hurting public health. A full transcript is posted on the AAPS web site at www.aapsonline.org. A few highlights:

• Rep. Mica pointed out that while almost all states that mandate childhood vaccinations allow exemptions, the information sheet does not tell parents this fact.

• Michael Belkin, a securities analyst whose 5-week old daughter died within hours of receiving hepatitis B vaccine, submitted his analysis of the reports in the VAERS, which "go into an empty drawer, and they pile up, and they go nowhere, and nothing is done."

• Mrs. Judy Converse, whose son developed seizures after receiving hepatitis B vaccine as a newborn, stated that no informed consent had been sought or obtained. She tried to delay his second shots at two months because he was ill, but was threatened with an allegation of child abuse; the child developed autism. His new pediatrician agreed not to give more vaccines but discouraged reporting an adverse reaction; she said the family would be harassed by the Massachusetts State Department of Public Health.

• Mrs. Betty Fluck, a nurse who developed chronic inflammatory demyelinating polyneuropathy and multiple arthritic symptoms after hepatitis B immunization, obtained minutes of a March, 1997, CDC meeting. The minutes showed that follow-up for at least 60 days would be required to demonstrate onset of multiple sclerosis; clinical studies by two manufacturers lasted 4 or 5 days.

• Burton Waisbren, M.D., (see www.waisbrenclinic.com ) voiced his concern that a nationwide experiment on universal hepatitis B immunization was implemented without congressional approval. He credited the joint efforts of an agency that stood to gain influence and power, and a drug company that expected to make billions of dollars.

• Bonnie Dunbar, Ph.D., a molecular biologist at Baylor, stated that medical students were told by supervisors not to get involved. Specifically, they were told not to report potential vaccine reactions in two babies who were dying. Dr. Dunbar herself had not been able to obtain follow-up on her own reports to the VAERS. (She will speak in Coeur D'Alene.)

• J. Barthelow Classen, M.D., (see vaccines.net ) estimated that there may be 10,000 cases of vaccine-induced diabetes mellitus in the U.S. annually, from hepatitis B or Hemophilus B vaccines. CDC officials disagree.

Other concerns included the inability of scientists to obtain grants to study long-term adverse consequences, or to obtain data from completed studies. Of particular interest is the identification of persons who may be genetically at high risk for adverse reactions. People who have contacted their physicians about possible reaction to hepatitis B vaccine have all been Caucasians, according to Dr. Dunbar. Yet many safety studies were done in Asia with different populations.

Mechanisms that could provoke autoimmune reactions include molecular mimicry, or simple stimulation of the immune system, leading to interferon production. Yet despite the particular propensity of hepatitis B and the vaccine for molecular mimicry, medical students are memorizing an examination study guide that claims hepatitis B vaccine is one of the safest vaccines ever made.

VAERS on Hepatitis B Vaccine

Preliminary analysis of raw data from the VAERS (available by e-mail as a compressed Microsoft Excel file from snavely- @primenet.com) shows 440 deaths, 7,726 emergency room visits, and 2,549 hospital stays in 24,772 reports. About 10% of the patients had not recovered from the adverse effect, and recovery status was listed as unknown in 33%.

The first listed symptom in more than 4,600 cases suggests central nervous system involvement. These included prolonged screaming, agitation, apnea, ataxia, visual disturbances, convulsions, tremors, twitches, an abnormal cry, hypotonia, hypertonia, abnormal sensations, stupor, somnolence, neck rigidity, paralysis, confusion, and oculogyric crisis.

Diabetes mellitus was listed in a total of 44 cases, and pancreatitis, which can lead to diabetes, in an additional 10. Of course, these numbers are small and could easily be coincidental. But hepatitis itself has a better-than-chance association with diabetes. Looking at only the first listed effect in the data base, there were 2,775 cases of abdominal pain, 77 cases of back pain, and 1,453 cases of nausea and/or vomiting; pancreatitis was probably not specifically sought.

About 20 million doses of hepatitis B vaccine have been administered in the U.S. If 10% of the adverse reactions have been reported (as often assumed), and one-third of the reactions are serious (as in the reported ones), then the risk of a serious vaccine reaction is about 4 in 1,000. In 1996, the incidence of hepatitis B in the U.S. was 4 per 100,000.

To file a VAERS report, call (800)822-7967.

Resolutions Due

To be considered at the 56th annual meeting, resolutions must be received by September 13.

AAPS Calendar

Oct. 13-16. 56th annual meeting, Coeur D'Alene, ID.
Oct. 25-28, 2000. 57th annual meeting, St. Louis.

Ominous Parallel? "The kampf's first-line assault weapon was a storm of propaganda, by means of public lectures, congresses,...and compulsory anti-tobacco reading in all elementary schools. Beginning in 1938, the government did not hesitate to issue ordinances much like those to which we have in recent years become accustomed. It was forbidden to smoke, for example, on the grounds of the post office, many work places, hospitals, government offices, and certain other public spaces..."

Sherwin B. Nuland, The New Republic 6/14/99

Ethical Earthquake

There is an "inherent clash of cultures between medicine and public policy," writes former Colorado governor Richard Lamm (The Pharos, Fall 1998). Medicine says "do no harm." Public policy says "maximize health to all," using tools such as health policy, education, public safety, smoking control, etc.

The failure of medicine to define what care is marginal or futile is "insensitive and unfair to those other people who share your pool of common resources." A hip replacement, in Lamm's view, equals two schoolteachers not hired. An MRI translates into a class without new schoolbooks.

Quoting Reinhardt Priester of the Center for Biomedical Ethics at the University of Minnesota, Lamm identifies the ethical earthquake: "Providers should treat each patient with a[s] full a range of resources as is compatible with treating patients yet to come."

"We are individuals with certain defined rights and duties, and also ... members of society that itself has rights," Lamm states. "Group resources must inevitably balance costs and benefits....The unthinkable has become the unavoidable."

The source of this conflict: socialism. "To the extent that we do not pay the bills ourselves with our private funds, but pay them through government or insurance, we need a broader moral dialogue than now takes place," Lamm states [emphasis added].

Commenting on how to spend the money better, John S. Sergent, M.D., of Vanderbilt University suggests plugging some holes such as the "appalling rates of childhood vaccination" and spending still more on education. The first step, according to David Bennahum of the University of New Mexico, is to "advocate for universal access to health care." After that, "we can begin to decide what care should be limited and who is to be denied." Additionally, Bennahum asks, "How can we be a healthy population if we are bombarded with subtle, carefully designed advertising to smoke, drink, drive, and eat in unhealthy ways?" Suppressing the "abuse of our First Amendment right" becomes a health care priority.

Consequences: Update from Canada

The front page of the Quebec newspaper La Presse declared on May 14, 1999: "Cancer: The Quebecois treated in the USA." Robert Gervais, M.D., President of the Arizona Chapter, writes: "There you have it. In Quebec healthcare is almost unavailable for the truly sick but readily available for those who are inconvenienced by minor aches and pains."

In February, 1999, the Ontario government entered a $20 million contract with U.S. facilities to provide radiation treatments for Canadian cancer patients who otherwise faced unacceptable waits for treatment. British Columbia also went shopping to the south for items such as cardiac bypass surgery and radiation treatment for prostate cancer. In some cases, the service was provided by former Canadian physicians in the border town of Bellingham, WA, who were forbidden by law to sell their services to Canadians in Canada. The problem is not just inadequate facilities, but serious staffing shortages, with no prospect for training sufficient staff (Michael Walker, Wall St J Interactive 3/5/99).

In March, a combination of overwork and underpay prompted 23 of the 63 family physicians at Dartmouth General Hospital in Nova Scotia to resign. Forty percent of University of Toronto family practice graduates leave for the U.S. Manitoba has recruited a number of South African doctors, many of whom leave when they find they are confronting Third World conditions. There is now pressure to recruit physicians from other countries that people are anxious to leave, such as Cuba and Albania (Medical Post 5/18/99).

Inadequate pay is not the only reason for dissatisfaction. Global budgeting in hospitals, and stultifying government regulation, has produced a "comic opera-like scenario in acute care hospitals." Wards closed to "save money" are soon converted into offices for newly hired bureaucrats. Meanwhile, surgeons may be restricted to as few as five hours of operating room time per week (Fraser Forum, Feb 1999).

No longer is the Canadian system popular. A recent poll showed that 96% of respondents felt that substantial repairs or complete rebuilding of the system was necessary, and 63% believed they should be allowed to pay for upgraded treatment. Only 20% believe they are obtaining the care they need.

The government rationing scheme is by no means fair. "In which law of nature was it determined that medicare should cover treatment for an ingrown toenail that might stop you playing hockey or soccer, but not for a tooth infection that might result in a cerebral abscess?" And how can it be that cancer patients wait, while other patients receive subsidized suction treatment for fat thighs? (Medical Post 2/9/99).

The dreaded two-tier system, which is permitted in every other country except Cuba, Albania, and North Korea, would help the poor most. At present, the politically powerful, the rich, and the potentially litigious gain preferential access to limited medical care (Medical Post 2/9/99).

Instead of learning to become helpless, like dogs resigned to electric shock treatments, some Canadians are asking: "Instead of rationing through waiting, wouldn't it make more sense to let people make health-care decisions for themselves?" Medical Savings Accounts are being promoted as a way to create a system "safe from the government's latest money-saving `reforms'," while ending queues and reinvigorating the patient-physician relationship (Calgary Herald 2/25/99).

Will MSAs Be Late Bloomers in the U.S.?

Of the 750,000 MSAs authorized by Congress, only 50,000 had been set up by last December. If not extended, the program will expire on December 31, 2000.

Though crippled by government restrictions and initially seen as unattractive by buyers and sellers alike, they are beginning to take off. As medical insurance premiums may increase 11% for small companies this year, more are taking a look at this option. For example, Bethany Women's Healthcare and Birth Center (BWHC) in Phoenix reduced its medical costs by 50% with an MSA plan.

Said office manager Kelly Chrisbacher, "I used to think that MSAs were too complicated. I could kick myself for not doing this a year ago." In 1998, premiums for BWHC's PPO were $48,000 while employees submitted only $3500 in claims.

Nearly 50 carriers now offer MSA-linked policies, and about a dozen banks and financial firms administer them. Specializing in MSAs is MSAver Resources, (888) 367-6727, www.MSAver.com. See Business Week's Frontier 5/24/99.

Other web sites to check for MSA information: www.cahi.org (Council for Affordable Health Insurance); www.americanhealthvalue.com; www.mellon.com/personal/msa ; www.bankwi.com (State Bank of Howard Grove); www.ncpa.org (National Center for Policy Analysis); and www.wellsfargo.com/biz/bizmon/medsavings.

Members' Page

"WNL." At a coding seminar I attended, one physician in the audience had a rather novel, if fraudulent, way of complying with all of HCFA's absurd demands for clinically irrelevant detail. He says he puts "WNL" next to a long list of things on a pre-printed sheet. He says that although "WNL" means "within normal limits" to most physicians, no one has officially defined it, and he uses it to mean "we never looked."

At that seminar, I asked the faculty whether they were aware that AAPS had threatened to bring a lawsuit against HCFA over the 1997 E&M Documentation Guidelines, and whether they thought that had anything to do with HCFA's decision to back off. They admitted to knowing about the threat of an AAPS lawsuit but just didn't mention it.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

Legal Extortion. Mr. David Queen, former U.S. Assistant District Attorney, speaking about fraud and abuse at a meeting of the Kentucky Society of Anesthesiologists, stated that the OIG and FBI agents are enforcing their own interpretations of regulations-which are literal to the nth degree. Their job is to find guilty physicians and collect (extort) money from them. Mr. Queen stated that if the agents decide you have an error rate after examining six days of claims, they extrapolate that rate to all of your Medicare claims for six years. I am aware of one 6- man anesthesia group that has had to pay $1.2 million, and an 8- man group that has to pay $1.1 million. In the latter case, the OIG admitted that there was no fraudulent intent: it doesn't matter. The money must be paid within 30 days, even if you have to borrow it. Any explanations are irrelevant since they are judge, jury, and executioner.
Lee Balaklaw, M.D., Louisa, KY

No Constituency for Tax Reduction. The American Institute of CPAs has grown by 21% over the last 10 years. There are also 1 million accountants and 2.2 million accounting clerks and bookkeepers in the U.S. Would any of these people, who are wedded to the regulatory state, vote for a flat tax? Of course not. The problem will never be solved; it is too late. As Paul Samuelson, Newsweek business columnist, stated: "A minority of the population is paying a majority of the taxes, so the general public doesn't care about tax reduction."
Craig Cantoni, Scottsdale, AZ

Semantic Red Flags. Syndicated columnist David Broder recently wrote that we must "face the truth" about rationing. Even more troubling, former Governor Richard Lamm writes: "the dollars that we spend on marginal and futile care are no longer available to spend on needed care for someone else...or some other...social need." Beware of people who use phrases like "futile care" and "social need" in the same sentence.
Debi Carey, Lexington, KY

Carrier Errors. From data we have in our office, Blue Cross Texas/Medicare, in a 12-month period, did not process 82 claims (1 in 20.3 claims sent). There were 223 errors on the 1,586 claims they processed. In the past two years, they have illegally sent us $12,334.13 in checks (we accept payment only from patients). Patients are being denied a rightful reimbursement, or having their payments delayed for months. Blue Cross Texas/Medicare handles their errors by telling the patients to tell their doctor to refile the claims. When was the law passed that requires doctors to correct carriers' errors?

Given the power that carriers have over physicians, this letter was not written without considerable risk.
Richard B. Swint, M.D., Paris, TX

An AMA Profit Center. I received a letter from the AMA dated Feb., 1998, in response to my letter of April 23, 1999, in which I asked a simple service code question. The CPT Information Service is now on a subscription basis: 5 inquiries per year for $150, 24 inquiries per year for $600, or up to 75 coding inquiries (with up to 225 questions) per year for $1,500. This is outrageous! They developed the CPT code system and now we have to pay a fee to get answers about it. If they had presented the system accurately and comprehensively, we could understand it and not have to join an expensive club [to get information needed to comply with the law].
Samuel A. Nigro, M.D., Cleveland Heights, OH

Fighting HCFA. From a letter to Senator Feinstein: I have documented HCFA's system of "fraud detection" and sent you many examples of so-called "improper payments" that in fact were very proper. Their denials are completely random. That their denials for lack of "medical necessity" never mention one single medical fact is not surprising; the reviewers do not know anything about medicine or patient care.

The paperwork involved for a physician to fight back is impossible to deal with, and in disputing HCFA, the physician loses even more money. I have spent the time and effort to do so only to show Congress (who could care less) what the truth is. You have created an agency more sinister than the IRS.
Linda W. Wilson, M.D., Culver City, CA

The Check Is in the Mail. How about sending a note to the GOP: "check enclosed for 25% of the tax cut you promised." If they call to say they haven't received your check, tell them you haven't received the tax cut either.
Ernest J. White, Alexandria, VA

Legislative Alert

On June 2, the Consensus Group of more than a dozen top health care policy analysts, ranging from the libertarian Cato Institute to the "moderate" Democratic Progressive Policy Institute, an arm of the Democratic Leadership Council, unveiled their latest version of a "Vision" for Health Care Reform at the National Press Club in Washington, D.C. The common message: Changing the tax treatment of medical insurance changes the system for the better by promoting real patient choice and real competition. The spokesmen suggested that the first step in such a reform should be tax relief, either in the form of tax credits or some other form of fixed incentives to individuals and families who are not today covered under employer-based health insurance.

Mark Pauly, Professor of Economics at the Wharton School of the University of Pennsylvania, noted, "There is virtually universal agreement that the reason why more people are becoming uninsured is because the cost of insurance is high relative to their resources." The proposed strategy would retarget tax subsidies to those most in need. Pauly insists that federal tax policy should be changed in a way that does not distort the choices of middle-class Americans as it does today. Incentives should be efficient, and not favor more expensive medical options as they do now. Tax incentives should avoid favoring traditional insurance or managed care relative to medical savings accounts, or group insurance over individual coverage, or non-profit options over profit-seeking firms.

David Kendall of the Democratic Leadership Council s Progressive Policy Institute says that Congressional preoccupation with abuses by managed care has sidetracked a broader debate. Now that it's reasonably clear that neither party s version of "patients' rights" legislation is going to be enacted in this Congress, it's time to get back to broader questions, such as consumer choice through tax credits, which Democrats see as a way of increasing coverage of the uninsured.

More than 10 tax credit bills are circulating on Capitol Hill. Look for a modest, but important, tax credit piece to be included in the Budget Reconciliation bill for this year.

Medicare Mess by the Numbers

Where political change has yet to make much headway is in the crucial area of Medicare reform. At a June 1 meeting with his chief advisors, Bill Clinton made it clear he does not have any interest in a consumer-driven system, along the lines of either the Breaux Plan or the Federal Employees Health Benefits Program (FEHBP). The outlines of a Clinton plan are yet unclear, but the bad news for doctors and patients is that Administration's team is reportedly looking at the "cost containment" strategies used by employer-based insurance, including "selectively contracting" with "low cost but reliable providers." Sounds very Hillary.

The outlook is dimming for serious Medicare reform this year. Part of the problem is psychological: the trust funds are in "good shape" for another bunch of years-as if the trust funds had anything to do with the real fiscal problems of Medicare spending, future taxes, or possible future benefit cuts. And part of the problem is simply ideological. For liberals in Congress, whose heads are set in the Sixties, the Congressional Budget Office has another ream of statistics which should- but probably won t-make them think again.

Medicare accounts for 12% of the federal budget today, but will account for almost 20% in 2009. The recent leveling off of Medicare spending is just temporary, and reflects little more than a trough in the demographic swells. The elderly population will increase by about 1% per year between 2000 and 2010, but will then increase by about 3% a year between 2010 and 2030, rising from 39 to 69 million beneficiaries. Today Medicare population makes up about 14% of the population, but by 2030, it will reach 22%. About 85% of the Medicare population is enrolled in the traditional "fee for service" sector (a misnomer, if there ever was one), and that number can be expected to decline somewhat, as more seniors enroll in the Medicare "risk contract" program.

At the heart of HCFA s regulatory power is price regulation. As GAO and others point out, tirelessly, that system both overpays and underpays for medical services. Added to the current morass are new concerns about pricing for home health agencies. For example, the Medicare Payment Advisory Commission (MEDPAC), chaired by former HCFA Administrator Gail Wilensky, is worried about the viability of home health care services in Medicare, noting that HCFA has not yet come up with a new pricing system for the agencies and will not be able to meet its deadline for doing so. Home health agencies may drop out of the program.

Consumer Disinformation

MedPAC is also looking at new ways to fund the National Medicare Education Program-the latest Medicare boondoggle - fearing that the "user fees" on managed care plans might give more agencies an incentive to drop out of the program. NMEP is the information program that Congress and HCFA devised to tell Medicare beneficiaries about their "options"-many of which are simply non-existent-in the misnamed "Medicare + Choice" program, which looks just like the old Clinton Plan applied to the Medicare system. The $95 million program -originally authorized for $150 million-is supposed to get comparative plan information out to Medicare beneficiaries.

Perhaps the most enlightening testimony on this subject is that of Walton Francis, a former HHS official who is known to hundreds of thousands of federal workers and their families as the editor of Washington Consumer Checkbook, the private-sector plan comparison book available to federal workers and their families each fall during their "open season." This is the guide they often use when they enroll in one of the hundreds of private plans competing in the FEHBP. On March 18, Francis told the Subcommittee that the historical record demonstrates that HCFA, in sharp contrast to OPM and private plans in the FEHBP, has been worse than "negligent":

"In fact, for a decade or more the government actively resisted every effort to improve information available to seniors on Medicare HMO choices." The reasons why HCFA did not simply borrow from the successful experience of the FEHBP are worse than lamebrained: "It is unclear why HCFA did not copy the economical and effective OPM system, lock, stock and barrel, 10 years or more ago. I was once told by a HCFA official that the reason why no usable information was provided was because the plans didn t want to make comparisons easy, and HCFA felt obliged to defer to the plans wishes. This theory is so scandalous that it is hard to believe. I am more inclined to believe in tight budgets and weak imagination. Another theory is that a well run choice program would drive traditional Medicare (a grossly inferior insurance product) into the ground and that agency staff are unwilling to foster fair competition. Regardless, the record on Medicare HMO information is atrocious."

Francis quickly adds that even though the FEHBP experience has been remarkably successful, it could be even more so, if OPM would publish data each year on private plan disenrollment: "If one plan loses 5 percent of its customers in a year and another plan loses 20 percent, a prudent consumer knows which to choose."

Francis also advised the House Ways and Means Health Subcommittee that the entire information effort for him (the equivalent of less than one full-time federal employee) is roughly 2 months work each year, with some clerical assistance! Imagine the kind of health care information campaign private sector entrepreneurs, operating in a free market environment of consumer choice and competition, could launch with a fraction of the money HCFA is extracting in user fees on plans?

As one thing leads to another, MEDPAC is now proposing that Congress dump user fees on managed care plans "competing" in the program (not quite the word a free marketeer would use to describe this sort of participation) to cover the cost of this information boondoggle, and fund it directly out of appropriations. This could be one more incentive for managed care plans to drop out of the program, and thus reduce patient options even further. Altogether, a pathetic performance.

Unintended Consequences

In the private sector, cost-sharing arrangements are designed to make enrollees in private insurance plans more rational consumers, and thus increase the economic efficiency of the provision of services. In Medicare, the cost-sharing arrangements, regardless of their intent, are not as effective.

There are several reasons, states Dan Crippen, CBO Director: "First, the requirements are too varied and complex to be well understood by patients. Second, in some cases in which cost sharing requirements could help reduce the inappropriate use of services (such as home health) [there are] no such requirements; other cases, which have high cost sharing requirements, have little possibility of adjusting the use of services (such as long hospital inpatient stays for severely ill patients). Third, because Medicare does not limit enrollees' cost sharing liabilities, most enrollees seek some kind of supplementary coverage to limit their financial risk. Such supplementary coverage often eliminates the incentives for prudently using services that cost sharing is intended to create."

More ominously, an unreformed Medicare, the Godzilla of government regulation, will have a greater and greater impact on the private sector, simply by its sheer size. As Crippen told the Senate Finance Committee on May 26, "Medicare pays for about 30 percent of all spending for hospital and physician services and for about half of all home health care. Thus, changes in Medicare have consequences far beyond the federal budget, substantially affecting the private health care market as well, for better or for worse."

The Medicare changes introduced in the Balanced Budget Act of 1997 do indeed slow the growth of spending in the program, but they do not fix the underlying problems. While Congress pressed ahead with the poorly conceived and administratively complex "Medicare + Choice" program -which private plans have been avoiding in droves-the regulatory guts of the system have not only been left intact, but expanded. Says Crippen: "The BBA left in place the administered pricing system, which sets Medicare s payments to plans. Consequently, the program has no meaningful price competition among plans for the basic benefit package. Instead, plans have incentives to increase optional benefits rather than to reduce costs, just as they did before the BBA. Therefore, even though the enrollees benefit from the greater efficiency of risk based plans than of the fee for service sector, Medicare does not." As Crippen and others note, changing to a Breaux-style "premium support" arrangement would give beneficiaries a government contribution and allow competition on price as well as benefits and quality of service, so that Medicare beneficiaries could enjoy the bounteous benefits of a market.

HCFA s Privacy Invasion

HCFA s controversial OASIS plan to collect detailed and personal information on all patients in home health agencies without patient knowledge or consent (see AAPS News, May 1999) has faded a bit from the news. HCFA proposed to force 10,000 home health agencies to collect responses to 79 "questions" ranging from financial arrangements to social behavior and psychological states. Congressional reaction to this outrage has been predictably tepid. While a few Members have expressed their concerns, Congress has done absolutely nothing. Though HCFA issued its proposed rule on March 10, no Congressional action is on the horizon to put an end to this nonsense, as of Memorial Day.

The good news is that the furor surrounding the privacy invasion has thrown HCFA off balance, and, as of April 27, HCFA officials have put their implementation of this unprecedented intrusion on ice. They have, as previously reported here, verbally indicated that they would not collect confidential information from non-Medicare patients-that s big of them-but only Medicare patients. While HCFA may have been beaten back by bad publicity, they have not broken off the fight to collect patient information.

And the Coming Clash Over Confidentiality

Pressure is building to address the broader patient confidentiality issue before August 1, at which time the Clinton Administration is authorized, under the notoriously bad Kennedy- Kassebaum law, to issue regulations governing the confidentiality of patient information. The leading candidate for legislative action in this area is the Medical Information Protection Act of 1999 sponsored by Senator Robert Bennett (R-UT). The Bennett bill is quickly gaining the backing of the health care industry, including the American Association of Health Plans, the American Hospital Association, the Health Care Leadership Council, and the Pharmaceutical Research and Manufacturers Association of America. But it is not at all clear that the Members of Congress have come to grips with the complex issues addressed by this, or any other, confidentiality legislation. Conservatives on Capitol Hill are wary that Congress, as so often in the past, will enact something they don t fully understand. More to come.

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