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Association of American Physicians and Surgeons, Inc.
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Omnia pro aegroto

Volume 56, No. 6 June 2000


Essential tools of Clinton-style health care were on display in Miami on Passover and Good Friday, at the home of Lazaro Gonzalez: assault rifles, flak jackets, battering rams, a large contingent of troops, duplicitous "negotiators," and a phalanx of lawyers and cooperative "health care providers."

The "rule of law" is similarly enforced in physicians' offices throughout the country: featuring "dynamic entries," with patients, staff, and even children held at gunpoint.

In such operations of the Clinton Department of "Justice," there is a veneer of legitimacy conferred by a judicial officer who issues a search warrant. Enforcers may interpret that as carte blanche to terrorize persons, damage property, and take anything they wish-with impunity. In Elian's case, no court had issued the type of warrant legally required to break into a home and seize a child, according to Harvard professor Laurence Tribe (www.newsmax.com ).

Harsh, unlawful means may be justified by the supposedly well-intentioned end: the noble, indeed "transcendent" goal of health, in the broad sense of physical and mental well-being.

Irwin Redlener, M.D., a pediatrician at Montefiore Hospital (known to AAPS from his role in the Clinton Health Care Task Force, see p. 2), helped to rationalize the raid. In a letter to federal officials, Redlener wrote, without personally examining the patient: "Elian Gonzalez is now in a state of imminent danger to his physical and emotional well-being in a home that I consider to be psychologically abusive."

Another government provider, Cornell child psychiatrist Pau- lina Kernberg, M.D., has opined that Elian is unlikely to suffer any lasting harm from the armed raid and "displays a sense of well-being and happiness with his father," based a 2.5 hr meeting with the child and father. When visiting Miami at Janet Reno's request, Kernberg made no effort to see Elian or his physicians, or to review the medical record. Kernberg has also made troubling statements about Elian's relationship with his cousin Marisleysis, without ever meeting her, according to a Fox News interview of psychiatrist Lydia Usategui, M.D. (Present at the Gonzalez home during the raid, Dr. Usategui was threatened with a submachine gun and gassed.)

Dr. Usategui told AAPS staff that Elian is a very intelligent child, who made it very clear to her that he did not want to go back to Cuba. She believes the Cubans brought to Maryland are trying to change his mind. Tranquilizers were seized by Customs officials from one Cuban doctor.

Government appointment of "providers," overriding the wishes of patient and family, is one of many ways in which the treatment of Elian Gonzalez constitutes Clinton Care in action and reflects the tactics of the Clinton Health Care Task Force.

Other aspects include seizing control of the semantics. With Elian, the federal government defines "happiness," "abuse," "family reunion," and "paternal rights" to fit the political exigencies-just as the Clinton Administration defined and redefined "employee," "advise," "member," and "meeting" to evade open-meetings laws.

Then there is the tactic of demonizing opponents and inciting ethnic or class warfare. The adoptive family, who rescued Elian from the Atlantic and cared for him for months, is being maligned, as for being "angry" and creating an environment of "radical hysteria," according to Kernberg and Redlener. In Miami, discord is being fomented between Anglos and blacks on one side and Cuban-Americans on the other. (American physicians are also calumniated by government, and strife is encouraged, as between specialists and generalists).

The spin doctors are framing the issue as a custody and immigration case, currying favor with the Right by using terms such as "paternal rights" and "illegal alien." For the Clintons, however, the Village, not the father, has the ultimate authority. And Cuban children are the property of Fidel Castro. Moreover, under common law, the sire of an illegitimate child had no parental rights, and his status is quite controversial in today's courts -Elian's parents divorced in May, 1991, and he was born in Dec, 1993 (Ann Coulter, Human Events 5/5/00).

In addition to the Constitutional and civil liberties issues that should concern every American, the Elian Gonzalez case involves the question of the integrity of the medical profession. It appears that persons with medical credentials are being selected for loyalty to the Clinton-Gore Administration and willingness to serve its political objectives. In letters to Attorney General Janet Reno and INS Commissioner Doris Meissner, AAPS stated that "we cannot tolerate the specter of ... physicians putting their political or professional interests ahead of the safety of this child," and called for hands-on assessment by unbiased experts (WorldNetDaily 4/29/00). AAPS has also filed a Freedom of Information Act request demanding documents related to the credentials, payment, selection, and approval of health-care providers who are examining or treating Elian Gonzalez, including those brought from Cuba (see www.aapsonline.org ).

Physicians who are sworn to work for the good of their patients and to do no harm may not disregard the consequences of facilitating the return of this child to Cuba. Elian has been "tainted" by exposure to Americans and would be perceived as a threat to the regime should he express any pro-American or anti- Castro view. Castro has said openly that the boy will have to spend at least three months in a "re-adaptation center." Castro's daughter Alina Fernandez told NewsMax.com that he will probably "disappear somewhere."

Elian Gonzalez is putting a face on the reality of Amerika: a disregard for truth by government and press; wide acceptance of unwarranted brute force by federal agents; and the prostitution of the medical profession for political expediency.

A Precedent for Elian's Return

If Elian is sent back to Cuba to please a Communist dictator, it won't be a first for the U.S.A.

It is worth reviewing the history of Operation Keelhaul, which appeared on an early electronic bulletin board authored by a Czech expatriate, the late Petr Beckmann, in 1989 (see http://www.fortfreedom. org/c24.htm).

"During World War II, some 2.5 million Soviet citizens found themselves in Germany and the occupied countries as prisoners of war, slave laborers, or refugees. From 1944 to 1947, these people were forcibly repatriated.... Many committed suicide rather than return to Soviet slavery. Many others were dragged kicking and screaming into the trucks.... The operation was scaled down to some slight extent...[by] formally `screening' the victims for the politically persecuted ones. But in essence the politicians prevailed: the officers knew that they had to fulfill a certain quota or have the Soviet authorities ... step in. The `screening' was merely a rationalization.

"Of the displaced persons thus forcibly returned to the Soviet Union, more than 800,000 were slaughtered by Stalin's regime. In the history of a weak, hypocritical, and spineless West, Operation Keelhaul and allied operations stand out as most shameful examples."

Today's screening term is "economic migrant," applied to those who cannot prove individual political persecution.

This term, writes Beckmann, "rings a special bell in my ear, for it is a term I heard many times during WW II in England. It was applied by Communist refugees to non-Communist Jews who had escaped from the Nazis."

A more detailed history is given by Jacob Hornberger of the Future of Freedom Foundation, "Repatriation: the Dark Side of World War II: Part III" (http://www.execpc.com/~jfish/fff).


A 21st Century Pharaoh?

Some believe that Fidel Castro's intense interest in Elian Gonzalez stems from a prophecy of the Santeria, a Caribbean religious sect. A boy surviving alone on the ocean for 48 hours could be the divine El Egua, who must be returned to Cuba or Castro will fall from power (WorldNetDaily 5/5/2000).

There have been other prophecies concerning children that influenced rulers: Moses (Pharaoh) and Jesus (Herod).

How about a separation between the U.S. government and foreign religions?


Irwin Redlener Speaks

As Liaison to the Health Professionals Review Group, one of the audit groups directly responsible to Ira Magaziner on the Clinton Task Force on Health Care Reform, which called for government quotas on the number of specialists:

"Delivery of care should be by not-for-profit, member-owned HMO's with salaried physicians and no bonuses or incentives. Should built in [sic.] technology assessment and outcomes management. Employer-based coverage should be phased out. Health care should ultimately be paid for in a progressive income tax structure.

"Groups of primary care providers should be capitated ... to enable them to negotiate with hospitals and subspecialists.

"Health care reform must be able to supersede state scope of practice laws and increase prescriptive authority of mid-level practitioners through the use of protocols.... Must prepare for layoffs of skilled personnel caused by short-term price controls. Will there be funds for retraining into community-based care?"

On April 6 hearings on autism:

"There is no scientific basis for establishing a link between autism and vaccination. It is the position of The Children's Health Fund, along with the American Academy of Pediatrics and the American Medical Association, that immunizations are critically important to ensuring the health of our nation's children. It is simply unacceptable not to vaccinate children."


Code Blue in the North

Martin Levant, M.D., of Calgary, Canada, writes: "As health care implodes and access is an oxymoron, our Prime Minister and his `hit man' Rock engage in romper-room tactics. The quality of medical school applicants is falling, as physicians in Canada are held up to unwarranted scrutiny and in some cases financially ostracized: i.e. if their earnings are high, they must be frauds or embezzlers. Their incomes are publicized before office expenses and taxes."

The political wildfire in Alberta concerns Bill 11, a very timid proposal intended to shorten waiting lists by permitting private clinics to do surgical procedures that require (only) an overnight stay. At the same time, the bill would ban private hospitals and set hefty fines (up to $10,000 for a first offense) for "pressure-selling" additional or upgraded procedures or allowing patients to pay to jump the queue. Federal Health Minister Allan Rock immediately complained that the bill might violate, at least in spirit, the five sacred requirements of the Canada Health Act: public administration, comprehensiveness, universality, portability, and accessibility. He feared it might "open the door to creeping privatization."

In Ontario, the government wants to force patients to be "rostered" with a family practitioner who will be a salaried civil servant: another method of restricting access.

The brain drain continues. The net loss of physicians from Canada, excluding those who leave prior to licensure and practice, was 130 in 1981, fell to a minimum of 51 in 1987, and has increased annually since then, reaching 432 (30% of the graduating class) in 1997 (Medical Post 2/22/2000). About 6,000 nurses have also left.

Though the politics of envy is alive and virulent in Canada, more analysts are beginning to recognize the fundamental flaw in medicare: patients are not allowed to pay directly for any covered services. It is even written that "Ultimately, we will accept that in health care, as in every other part of society, things work best if the consumer, not the provider, drives the system. That means patients, not governments, must decide how the money should be spent.... Most of us, in other words, are ready to abandon socialized medicine" (John Ibbitson, Globe and Mail 1/18/2000).

Medical Savings Accounts are the solution in both Canada and the United States, concludes Manitoba medical student and journalist David Gratzer in his book Code Blue: Reviving Canada's Health Care System ($25.35 from Canadian Taxpayers Federation, 105 438 Victoria Ave E, Regina, SK S4N 0N7). Reviewer Mark Milke writes that the book will be "attacked and vilified, of course, mostly by Medicare Luddites who won't take time to read it. But sooner or later, I predict, these ideas will be adopted by politicians who will claim that this was really what they intended all along" (The Report 1/3/2000).

Medicaid Contract Treacherous

According the AAPS Non-Participation Policy, physicians are urged to refrain, on principle, from signing contracts with government "insurance" programs. Those who do sign such contracts should review the analysis submitted to the Utah Medical Association by Taj Becker, M.D., excerpted here:

The current contract between Medicaid and providers should be rejected for the following reasons:

1. The terms are unconscionable and prima facie of a one- sided nature. Most providers are paid at rates at or below their overhead costs, excluding even minimum wages for physicians.

2. While Medicaid services could be viewed as total or partial charity and still be willingly performed, the penalties for "even one" act viewed as a violation of a baroque set of ever-changing rules would be devastating to a physician unable to sustain a lengthy, costly litigation process, which costs the prosecutor nothing except taxpayers' money. No competent lawyer would advise his client to sign a contract that provides little or no income (and probably losses) while risking his entire future due to penalties from a waiting trap.

3. The statutory requirement that intent must be found to impose criminal penalties is ambiguous and can be side-stepped at will by the Medicaid Fraud Control Unit.

4. Those who believe the MFCU has little motive to harm a physician not engaged in intentional fraud do not appreciate the pressures on that unit to produce revenues to justify its high salaries and benefits.

Dr. Becker, who practices neurology in St. George, UT, suggests that the state be required to give physicians "early warning" of "outlier" status on the statistical profiles relied upon by fraud units, so that they could immediately remedy possible violations of the barely intelligible rules.

She believes that no meaningful change will occur until sufficient numbers of physicians withdraw from the system.


Are Doctors in Charge at UnitedHealth Group?

Hailing UnitedHealth Group's decision to stop pre- authorizations, AMA President Thomas Reardon said, "This action is historic,....a long overdue victory for American patients and the care they receive."

United had spent $100 million per year to respond to requests to approve care, which were almost always granted. It hopes to cut its medical monitoring staff by 20%-and its liability to lawsuits. Rep. Charles Norwood (R-GA) said that managed-care companies that turned over medical decision-making to physicians would not be liable to medical malpractice lawsuits under the "patients' bill of rights."

The company, however, will still track physicians' decisions and urge physicians with above-average costs to bring their practices into line. Eventually, it may publish such information or use it to determine who should be expelled.

Because United reserves the right to recoup payments retroactively, the League of Physicians and Surgeons urges physicians to get patients to sign waivers accepting personal responsibility for payment in every case.

Dr. Chuck Stempel, Dayton regional director for UnitedHealthcare, hopes doctors will become more receptive to practice guidelines as United changes its relationships with physicians "from a dictatorship to a partnership."


"Advocacy" versus Lying

A random national mail survey sent to 1,124 practicing physicians, of whom 573 responded, showed that 39% of physicians admit to having "manipulated reimbursement rules" at least "sometimes," in order to obtain larger third-party payments. Nearly a quarter admitted to doing this "often." The most common behavior was to exaggerate severity. About 28% agreed with the statement that "today it is necessary to game the system to provide high-quality care," and 15% that "in general, it is ethical to game the system for your patient's benefit." In 56%, worry about prosecution prevented exaggeration of patients' conditions to obtain third-party payment (Wynia MK, et al. JAMA 2000;283:1858-1865).

The editorial accompanying this article is a lengthy dialectic by M Gregg Bloche, funded by the Robert Wood Johnson Foundation (JAMA 2000;283:1881-1884). Both papers reflect a relativistic ethic, a calculus for coping with "irreconcilable pressures" in the "struggle to gain access to health care resources." There is a tension "among multiple sources of social control" and between social justice and "beneficence or mercy."

The underlying assumptions are covert: collective ownership of the means of production and the acceptance of legal plunder. The logically inexorable result, as explained by Frederic Bastiat, is the war of all against all-in which deceit is the norm and conscientious physicians are always, as Wynia's title states, "between a rock and a hard place."

"Escape from this dilemma starts with truth-telling about the assumptions," stated AAPS Executive Director Jane Orient.


Pharmaceutical Freedom Act of 2000

To ensure access of Americans, including seniors, to affordable drugs, Rep. Ron Paul, M.D. (R-TX) introduced H.R. 3636. This would provide seniors a tax credit for 80% of their prescription-drug costs; lower barriers to the importation of FDA-approved pharmaceuticals; and forbid the FDA to regulate Internet sales of drugs by state-licensed pharmacists.


Experts Comment on Medicare Trustees' Report

Highlights from an American Enterprise Institute panel on April 10, 2000, summarized by Kathryn Serkes:

Medicare deficits actually start in 2009, not 2023, according to Roland E. (Guy) King, former chief actuary to HCFA, "because we can't count on interest as a real asset." He takes issue with the accounting process that counts interest as part of the assets because it is just a theoretical transfer from one part of the budget to another.

Joe Antos, CBO Assistant Director, stated that "the prescription drug benefit isn't just the straw that broke the camel's back; it's a palm tree on the camel's back by 2070."

Norman Ornstein, AEI resident scholar, commented that "there's a large train wreck ahead-both for the budget and taxes....This is a cruel zero-sum game: Social Security, Medicare, and Medicaid are a tapeworm, pushing out everything else in the budget."


AAPS Calendar

June 24, 2000. Board of Directors meeting, Chicago.

Oct. 25-28, 2000. 57th annual meeting, St. Louis.

Oct. 24-27, 2001. 58th annual meeting, Cincinnati.

Members' Page

Little Frank. In 1998, the Medicare monster's son, who resides in my office, consisted of only six banker's boxes of my Medicare-related correspondence. Little Frank then weighed 131 pounds and stood 63 inches high. Earlier this year, he weighed 168 pounds and stood 6 ft. 10 in. high.

Due to his immense size and other considerations (i.e. I was concerned that federal agents might storm my office and kidnap him, much as they did with Elian Gonzalez), I dismembered Little Frank and moved most of him to a safer location. When he is all together now, he consists of 10 banker's boxes. It might be dangerous to try to stand him upright on our office scales now, as we estimate his height to be 8 ft. 10 in. Little Frank is truly a chip off the old block; his father, Frankenstein Sr., would no doubt be proud of him.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


Rights and Privileges. To practice medicine today is a privilege granted by state licensing boards. Even if a physician has completed all required training, ... and remains in good standing regarding the medical care he provides, he does not have the right to practice medicine.

The reason we live better and longer today is primarily better food and sanitation-provided by grocers, plumbers, farmers, butchers, carpenters, electricians, etc. So why don't we make their right to earn a living through their chosen occupation a privilege also? If they should lose the privilege of working, well, there's a precedent for it, with physicians-to achieve the greater good of society....
Roy Blackburn, M.D., Elizabethtown, KY


Why Contract Privately? The ability to enter contracts, and freely spend one's money for goods and services, is a fundamental feature of American society, unless you happen to be a Medicare enrollee.... HHS opposes allowing doctors or patients to opt out of the system, preferring to keep everyone trapped in a company store environment.... As HHS surely anticipated, until the opt-out provision [in the Balanced Budget Act] is dropped, private contracting will not be widely adopted.

What are the benefits of private contracting? For the physician caught in the vise of impossible documentation requirements and below-overhead [payment], the benefit is obvious.... Confidentiality of medical records and the ability to see a physician who does not accept Medicare insurance are [among the] benefits for patients....

For those who think the battle is not yet lost, and who think we should not roll over meekly before the federal bureaucrats and the managed-care juggernaut, private contracting is a tool to sustain an old and honorable profession, and to try to preserve what is left of the patient-physician relationship. Since January 1, 1998, I have not accepted Medicare insurance, and now that the regulations seem final, I have opted out of Medicare entirely, freeing myself for private contracting should patients desire.

If the federal government nurtured private contracting and MSAs as it did HMOs, and changed tax law as it pertains to the deductibility of health insurance premiums, enormous power would be returned to the patient. Much can be done to restore our profession's health if third parties are eliminated from the decision-making process, and their role as payers reduced or eliminated.
Richard A. Hurd, Jr., M.D., Alpharetta, GA
abstracted from AAOS Bulletin, Dec. 1999


Medical Privacy. If there's a lesson from the 20th century, it's that placing the will of government above the rights of individuals is a tragic mistake. In this century, hundreds of thousands of Americans gave their lives to save the world from that mistake. Now, 54 years after the fall of Hitler's Third Reich and 10 years after the collapse of the Soviet Union, an appointed official of the federal government tells us that "the need for privacy must be balanced against national priorities." HHS Secretary Donna Shalala, sworn to uphold the Constitution, should know that, in America, privacy is not just a "need," it's a right, guaranteed by the 4th Amendment. What arrogant disregard for the Constitution! The 4th Amendment requires officials to get a warrant if they want your infor- mation; their convenience does not overrule the Constitution.
Gerald Zupruk, M.D., Bethlehem, PA


Cost Shifting. Bob Helms of the American Enterprise Institute explained that "cost shifting" refers to the usual assertion that providers can grant a lower price to some buyers only if they raise the price to other buyers. The theory of multi-part pricing, on the other hand, implies that the price that can be charged to one buyer depends on that buyer's intensity of demand and has nothing to do with whether the seller can get a different price from other buyers.

Our hospital used cost shifting in reverse. First, it granted unrealistically low prices to some, under pressures of various kinds. Then, it tried to make up the difference, briefly, from others, under the "grab what we can while we can" attitude, even though they knew what would happen to the companies that had no cut-rate contracts (including insurance companies with high- deductible policies). Did these insurers pay the excessive prices because their "intensity of demand" was established by inflexible benefits criteria and legal obligations to their subscribers?
James Pendleton, M.D., Bryn Athyn, PA

Legislative Alert

Slow Progress on the Patients Bill of Rights

Recall that Congressional leaders were making noises about getting the so-called patients' bill of rights (PBOR) legislation to Clinton's desk by Easter. Now that Easter s come and gone, how about Memorial Day? Forget that, too. The House-Senate conferees are slogging through legislative swamps, trying to reconcile the provisions of a mind-numbing bill, hoping that they can craft compromises that are, in Goldilocks fashion, just right. If they hold true to form, they will work on this into the early summer. The big danger is that they will continue to fritter away time, avoiding tough decisions-like saying no to counterproductive overregulation-and resolve nothing.

Here is a potential scenario. We have seen it so often before: the Congressional session is coming to an end in early October. The conferees, under pressure from the White House and Congressional leaders, start to panic; they slap together a complicated compromise measure in the wee hours of the morning that "does something" on managed care (they ll explain it later, when they get the talking points from the young staffers). Because they did nothing to reform the Medicare program, they'll feel the need to "do something" on that too, so they ll throw in an amendment relating to Medicare prescription drugs, and perhaps, for good measure, another amendment containing some sort of "action" against medical errors (Congress and the Clinton Administration are "against" errors). Then they may make changes in the Sherman Anti-Trust Act so that doctors can join up with the AFL-CIO as union guys in good standing, the first step in the bigger long-term agenda to turn organized medicine into government unions under the long-sought-after "single payer" system. As dependents in the new order, doctors can do for quality medicine what the teachers unions have done for quality education. Then we ll have it: Another Big Bill, just like Kassebaum-Kennedy, The Balanced Budget Act of 1997, and similar Congressional handiwork.

Meanwhile, Clinton is putting on the pressure, devoting his radio address at the end of April to the issue, and adding his exhortation that Congress get moving on adding an artificially cheap drug benefit to an unreformed Medicare program. Like the sly old barkers working the rubes on the Midway, selling the latest and greatest, handy dandy, brightly bottled elixir for whatever ails you and yours, the leftists in Congress are pressing the Clinton Administration s health-care agenda with new found passion and high-minded rhetoric-sound-bite stuff for quick television appearances.

The Administration s two key sales points now: promising the seniors something for nothing on prescription drugs, and promising workers and families what they always needed: more lawyers. Most folks, good-hearted people who, as essayist Florence King says, love the sweet sound of the "carin' and compassion" rhetoric of the "carin' and compassion" politicians. So, they are likely to fall for this stuff. Nice folks are the natural targets of this kind of salesmanship, and Clinton, a man of inerrant political instincts who can rhetorically harness his program to the popular prejudices of the moment, measured with a precision by his professional pulse takers, is betting the future of the Congress and the White House that the sales pitch will work. It might. The reason: most folks don t have a major political agenda, and they ve got mortgages. And most folks still think that the experts in Washington know what they are talking about, and the full-throated rhetoric of their good intentions is a window on reality.

Double Standards

Remember the 1994 "Contract with America" principle: Congress should not impose rules and regulations on the rest of the society that it will not impose on itself. Congressional Republicans, then led by Newt Gingrich, made a big deal out of the idea, a good one, and passed it as a solemn resolution of intent. Forget it!

The House version of patients' rights would permit states to subject all plans to litigation that treats contractual disputes over the terms of coverage much like malpractice lawsuits, with awards for pain and suffering and other noneconomic damages. Under the terms of the House bill, employers could not, and would not, escape the threat of devastating suits over the coverage they provide.

Also, this heavily regulatory approach, curiously reminiscent of the failed 1993 Clinton Health Plan, invariably means new fines and penalties. For example, HHS or DOL would be able to assess a civil penalty (a maximum of $500,000) against any health plan official who has demonstrated a pattern or practice of refusing to carry out the coverage decisions of the external review entities under the external review process established under the bill. Moreover, the federal government could ask a court to remove that official from office and bar him from any other "involvement" with that health plan.

This is pretty serious stuff. But it does not apply to the Administrator of HCFA, the Director of OPM, or Medicare or Medicaid contractors. No sir. In the case of both the House and Senate bills, Federal programs are exempted. For Congress, Congressional staff, and the White House staff, the specific provisions-and thus the costs-would not apply either to their own private plans in the Federal Employees Health Benefits Program (FEHBP), or to Medicare, Medicaid, and other federal health programs. As Washington attorney John Hoff, a former professional staff member of the National Bipartisan Commission on the Future of Medicare, observes, the White House has made some administrative changes in these federal programs to comport with the patients' rights proposals, but they are not substantively the same as the House bill. The only apparent reason, Hoff suggests, is that the politicians, having pondered the problem of double standards, decided to go for them because they do not want to expose official Washington to litigation for noneconomic damages. To be more precise, they don t want to have to tell the taxpayers that they will have to actually pay for these damages, and that taxes will therefore be increased.

Rising Costs

According to Watson Wyatt Worldwide and the Washington Business Group on Health, this year employers are reporting a sharp increase, 9.7%, in health insurance costs. As everybody who has finally lost faith in the Tooth Fairy knows, the economics of employer costs are simple: whenever and wherever they can, employers are passing on the higher costs to workers and their families in higher premiums, co-payments, deductibles, reductions in coverage, or elimination of coverage. According to the survey, 7 out of 10 employers are increasing employee contributions to cope with the new cost increases. Because of the tight labor market, employees have some leverage, and most companies are refraining from passing on the full increases to their workers, at least directly. In any case, the temporary slowdown of medical cost increases is clearly over. According to the number crunchers at HHS, total expenditures will jump from $1.2 trillion today to about $2.2 trillion in 2008.

These developments are certainly having an effect on the ongoing negotiations between House and Senate conferees on the PBOR. The Congressional Budget Office (CBO) estimates the House bill would increase premiums by 4.1%. Combined with the risk of large awards for damages resulting from the operation of the health plan they sponsor, it is uncertain how many employers would drop health benefits or coverage. A Hewitt Associates survey of nearly 600 companies found that 36% would consider dropping health insurance if their plans were subjected to malpractice suits. Another survey of 400 company personnel directors commissioned by the American Association of Health Plans found that 38% said "would be likely to stop providing coverage for some or all of their employees" and 57% "would be likely to stop doing so for some or all retirees." A Harris Interactive Study found that as many as 15.4 million Americans could lose their coverage. According to the Lewin Group, perhaps the nation s leading firm specializing in health are modeling, every 1% increase in medical costs causes 300,000 persons to lose their coverage. Using the CBO analysis alone, this means more than 1.2 million Americans would lose their employer-based coverage.

More Confusing Regulation

Why would a bill aimed at stopping the abuses of managed care tackle fee-for-service medicine? Good question. But the House bill does precisely that. Here s how it works: the House bill would create a federal definition of fee-for-service coverage. Failure to meet any one of the specified conditions would disqualify a plan as a fee-for-service plan. As John Hoff observes, under the terms of the bill, doctors or other providers could not simply negotiate rates with the defined plan, hospitals and physicians "could only choose between accepting and rejecting rates offered by the plan on a take-it-or-leave-it basis." Dig that.

And it gets worse. It is not bad enough that the regulatory system is more intrusive than most folks thought; it is going to add to the confusion that already bedevils the conflicting state and federal regulation of health insurance. The GAO has just reported that HCFA s attempt to make the Kennedy- Kassebaum regulations work-four years after enactment-is not going so well. A shocker. Got a mess? Sure, and we in Congress and the Administration will show you how we can make it even worse. According to a recent analysis of the regulatory provisions of the PBOR, conducted by the Blue Cross/Blue Shield Association, numerous questions concerning the applicability of some regulations would have to be decided by a state s insurance department, others would have to be resolved by Department of Health and Human Services (in fact, HCFA), others by the Department of Labor, and in several areas it is unclear who would resolve regulatory questions. So, depending on which one of the myriad of rules embodied in the legislation evokes a question of applicability, consumers and plans would have to deal with two sets of regulators, federal and state, and would have to consult with either a federal or a state official, or possibly both.

Many Americans may be frustrated with their medical care. But it is hard to believe that this complicated mess being brewed in the House-Senate conference is what most doctors and what most Americans had in mind as a reform.

Remember the political agenda. Health policy in Washington is the ultimate power game. It s not about doctors and patients, and it's not about seniors, any more than the vaunted children s health bill was about kids. It s about control. The Clinton administration understands what Congressional leaders too often don t: the structure of the PBOR and the structure of the proposed Medicare drug benefit will meet the central domestic policy goal of the Administration ever since it took office in 1993: the progressive expansion of government control over American medicine. It s about control. Libido dominandi. (See the full text of John Hoff s penetrating analysis of the PBOR at www.heritage.org/ library/backgrounder/bg1350es.html.)

Clinton Drug Agenda

The White House says it will convene a major prescription drug conference this summer to hash over the issue in public (a relief), with press and klieg lights, and high- mindedness all round. It's the major event of the summer offensive on the Medicare drug issue, building to a crescendo somewhere around Fall, we d guess. Only a guess.

Some in Congress think that the best answer to the prescription drug problem is to have the federal government fix prices at the level of Canada or Mexico. It s obvious isn t it? Viagra at Tijuana prices! What could be better than that?

We are not going to be spared yet another debate on the wisdom of price controls. Price controls are perennially popular among the economically illiterate. When politicians sell them to the masses-as they have for the past 4,000 years -they sell them as "cost controls." Cheap is better than dear. It s a variant of the old something-for-nothing scam; and it is a scam. But how do you control costs with price regulation? You do it by making sure that spending on the controlled commodity is not as high as it was before the controls were imposed. That s the point. No politician really thinks that price regulation will increase spending on the controlled commodities in such a way that there will be more of them, or a better quality, or a greatly improved variety of them. It is never more; it is always, honest to goodness, less.

Politicians, of course, can t control demand for anything, except possibly themselves. But they can, using the police powers of the state, control the supply of anything, and the best mechanism to control supply is price regulation. They never say it, but the real purpose of price regulation-in almost every instance-is to reduce the supply of the commodity or service controlled, to reduce its quantity, its quality, or the technological innovation that makes increased productivity of the commodity possible.

What are we to make of politicians who push price controls as a serious policy? No, they are not stupid. Because we live in a democratic society, it s worse. They are showing contempt for the intelligence of the people they pretend to represent.

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