Volume 49, No. 6 June 1993

OPPOSITION TO ``STEALTH HEALTH'' MOUNTS

In a statement for the Congressional Record May 4, 1993, Rep. William Clinger (R-PA) observed that President Clinton was elected by promising to open policymaking to the average American. Vice President Gore went further, noted Clinger: ``No longer will decisions that should be made in public be made in private. In this Administration, everyone will play by the rules and public decisions will be public information.''

Clinger deplored the secret operations of the Health Care Task force and asked that the President ``begin playing by the rules.'' He supported a motion by John Conyers (D-MI), asking the House leadership to file an amicus brief in the case of AAPS v. Clinton, defending the constitutionality of laws requiring public access to certain actions of the Executive.

Participants in the brief included Speaker Thomas Foley (D- WA) and the Bipartisan Leadership Group consisting of Richard Gephardt (D-MO), Robert Michel (R-IL), David Bonior (D-MI), and Newt Gingrich (R-GA).

For more than 20 years, Presidents have obeyed the Federal Advisory Committee Act. President Nixon issued an Executive Order to all agencies to comply with the Act.

Previous court precedents support the constitutionality of legislation applied to Presidential advisory commissions. In Nixon v. Administrator of General Services, the court ``upheld the Presidential Recordings and Materials Preservation Act against contentions it would impair future Presidential receipt of candid documentary advice or candid (potentially recorded) oral advice.''

In a meeting with Judge Royce Lamberth on April 13, US attorneys objected to a proposed court order forbidding the Administration to destroy documents prepared by or for the Task Force. However, Dept. of Justice attorneys did state that it would be illegal to destroy such documents pending the outcome of litigation and promised not to do so.

Stealth technology is used by the Air Force to protect aircraft that are highly likely to be targeted by an enemy. Decoys may also be used to protect such aircraft. The very use of the protective technology raises questions about the mission of the airplane and who might want to destroy it.

The most powerful source of expected opposition will be small business (which has effectively delayed implementation of an employer mandate in Massachusetts). Critics of employer mandates say that thousands of small businesses will declare bankruptcy if forced to shoulder an estimated additional burden of $59 billion. And if small business resists successfully, ``the President will have a devilish time groping for other ways to pay for his ambitious changes'' (NY Times 5/3/93).

Another heated battle will arise if the ``basic benefits package'' mandated by the federal government includes abortion. This would have the effect of forcing all insurers, providers, and employers to ``collaborate in the practice of abortion on demand,'' according to Douglas Johnson of the National Right to Life Commission. Only 23% of Americans polled by CBS News and the NY Times in March thought that mandated benefits should cover abortions. Hospitals that refuse to perform abortions on ethical grounds may face a serious dilemma.

One Congressman noted that his office would be constantly besieged by special interests of all types if Congress is charged with defining a uniform ``basic benefits'' package. AARP has launched a letter-writing campaign to ensure the inclusion of budget-destroying long-term care benefits.

Medical specialists might eventually be aroused to active resistance, but perhaps too late. In an April 15 address to the National Managed Health Care Congress, economist Uwe Reinhardt stated that managed competition would virtually eliminate fee- for-service medicine and result in ``massive unemployment'' among medical specialists.

[According to a report by the Marion Merrell Dow Managed Care Digest, the ratio of specialists to ``primary care'' (``gatekeeper'') physicians in HMOs is just over 2 to 1. What is the ratio in the Yellow Pages of your telephone directory?]

Documents leaked from the Task Force also show cause for patients' concern. For example, the Task Force discussed requiring HIPCs to ``prevent consumers from making choices they might otherwise prefer (i.e. paying the extra money to enroll in a high cost plan).'' Since ``forcing some of a high cost plan's enrollees to switch would be difficult,'' a lottery might be required.

Because some patients might wish to obtain extra service by paying more out of pocket, the Task Force considered what to do about balance billing. Various ``options'' are under con- sideration. The ``pros'' of a ``transition'' phase repeatedly list the advantage of ``blunting opposition.''

Other terms favored by the writers of Task Force documents are: penalties, civil prosecution, compliance (``voluntary'' and other), enforcement tools, rules, etc.

The Stealth bomber can penetrate ground defenses. But it is vulnerable to look-down, shoot-down radar.

Stealth Health in Washington State

The Washington State legislature passed radical reform legislation at 3:30 one morning, rocketing Democratic Governor Mike Lowry to national prominence as an expert on health care reform. Gov. Lowry declared that he had won ``victory over the special interests that fought to deny citizens the right to high- quality, affordable health care.''

Victory was achieved by locking the public out of the chamber, turning the jammed telephone lines over to an answering service, and strong-arming legislators into voting for an enormous and complicated bill after having limited time to deliberate on the final draft.

The bill invests tremendous power in a politically appointed Health Services Commission, which is to develop a uniform benefits package by December, 1994. The Commission will place caps on insurance premiums, establish standards for capital expenditures by health care facilities and providers, set standards for certified health plans, write guidelines for providers dealing with treatment of terminal or static health conditions, and establish uniform billing and claims processing. Additionally, a data bank will be established to track all medical encounters, leading a newspaper reporter to ask, ``Is privacy a casualty of health care reform?''

Funding mechanisms in the face of state budget deficits were glossed over in the rush toward passage.

Small businesses, which will be forced to foot a large portion of the bill, and patients, who will find their insurance policies radically altered, will be heard from soon.

Medical opposition to the legislation is spearheaded by the rapidly growing Washington chapter of AAPS. President Michael Schlitt, MD, vows that the battle isn't over.

``We are making an impact,'' Dr. Schlitt said. ``We have nothing to apologize for-in contrast to the Washington State Medical Association. We have not sought a `seat at the table.' We believe that the `meal' currently being served is poisonous to patient and doctor.''

Already, efforts are underway to craft an initiative that would replace the bill with sensible, market-based reform.

Put It on Paper or Be Purged

Medicare is seducing physicians into filing claims electron- ically (EMC), and the doctors' billing personnel generally love it. That's too bad. EMCs are cost-effective for government in more ways than one. The big picture is that the carriers purge their files frequently, destroying all evidence of inaccurate payment. This, of course, limits HCFA's liability for retro- active adjustments on claims paid incorrectly....

For example, two years after doctors and patients received a favorable determination in Cosgrove, and government testified that some $400 million is due the plaintiff class, less than $50 million has been paid out. HCFA alleges it can't locate many underpaid claims. Presumably, the EMC files were purged.

EMC is robot processing and reduces patient care to assembly line levels. It cannot acknowledge factors that enhance the difficulty of cases for which payment should be increased....Put it on paper!

League of Physicians and Surgeons
3 East 93rd St., New York, NY 10128, (212)876-4445

Before signing the ``Provider Agreement, Medicare Part B, Electronic Media Claims System (EMC),'' please read it. Among other things, the ``provider'' agrees that the Secretary of HHS or her delegate shall have ``access to all source documents and medical records related to any claim'' and that the carrier shall review supporting documents in the provider office periodically, but no less often than once a year.

Do You Dare See Government-Insured Patients?

The government has reportedly changed tactics in its war against health care fraud. Physicians suspected of overcharging Medicare, Medicaid, or worker's compensation programs are being charged with money laundering for merely depositing the proceeds of such payments into their bank accounts. Authorities typically seize office and personal bank accounts, patient records, equipment, and office furniture. The physicians' homes may also be seized. And they are told that any effort to protect their assets after they learn of the enforcement action represents criminal racketeering. Citizens may litigate such actions; the government strategy seems to be to appeal until the once successful citizen litigant runs out of money (Low Profile, Apr, Aug 1993).

Asset forfeiture has increased dramatically each year since the program began as a tool in the war against drugs. The Department of Justice publishes legal notice of properties seized in USA Today every third Wednesday. The Feb 17, 1993 listing covers an entire page in tiny print.

In enforcing anti-kickback legislation, the enforcement climate is also ``not pretty,'' according to S. Craig Holden, an attorney with Ober, Kaler, Grimes, & Shriver. There has been a massive reallocation of resources to the prosecution of both real and perceived health care fraud and abuse. All actions by physicians may be viewed as inherently suspicious.

The stakes are so high that physicians generally cannot afford to litigate a dispute but must settle. Holden calls the policy one of ``regulation by indictment.'' (BNA's Medicare Report 4/2/93).

``We're destroying our economy, but we're also killing our children.''Donna Shalala

Oral Argument in the Court Appeals:

Counsel's Thoughts on the Clinton Case

The case of AAPS v. Clinton was argued in the US Court of Appeals for the District of Columbia Circuit on April 30, 1993. On the bench were Judges James L. Buckley, Stephen Williams, and Laurence H. Silberman, Judge Silberman presiding. The galleries were jammed with the national media, representatives from Congress, White House staff, and representatives of leading Washington law firms. The atmosphere was electric.

Six news media associations, including the Associated Press, had filed briefs amicus curiae because of concerns about secrecy in government. On Thomas Jefferson's birthday, Speaker of the US House of Representatives Tom Foley and the bipartisan leadership of the House also joined the amici in support of AAPS.

The US Department of Justice argued first. Counsel had been allotted 20 minutes for his oral arguments. By the time he sat down, the Court had grilled him for over two hours.

The Court first inquired into Hillary Rodham Clinton's status under the law. The Justice Department could identify no statute making the First Lady an ``employee'' of the federal government. Counsel then abandoned that idea and tried to assert that she was an ``officer'' or ``quasi-officer''-an argument with which the Court appeared to become impatient.

Judge Silberman then focused on Ira Magaziner's ``Interdepartmental Working Group,'' querying whether it should be considered an advisory committee under the Federal Advisory Committee Act (FACA). The Judge apparently didn't buy the assertion in Ira Magaziner's declaration that all members of the working group were ``in effect'' full-time employees of the government, either as ``permanent'' employees, ``special'' employees, or ``consultants.'' In the Judge's view, many members had been brought into the government just for this purpose and had employment elsewhere. Attempts to classify them as government workers appeared to be a subterfuge intended to skirt the law.

The Justice Department then argued that if it were applied to the Task Force and the Interdepartmental Working Group, FACA might be unconstitutional in its entirety.

``This is stunning!'' Judge Silberman replied. ``Are you telling me that after all these years, the Justice Department is now taking the position that FACA is unconstitutional in its entirety?'' [FACA was signed by President Nixon.]

After the questioning of the Dept. of Justice concluded, I was at the podium for about one hour and 40 minutes. I argued that the Interdepartmental Working Group was indeed a FACA committee.

``What should we do?'' asked Judge Silberman.

``Remand the case,'' I replied.

With respect to the constitutional argument, I appealed to the words of James Madison and Alexander Hamilton. In the Federalist Papers, both extolled the office of President under the Constitution as a ``unified'' chief executive. They warned of the loss of liberty that could result when the President shared his power with Congress.

``Here,'' I stated, ``was the signal problem with the government's argument.'' When the President asserted his constitutional prerogative to make recommendations to the Congress, yet invited into the Interdepartmental Working Group nearly 150 members of congressional staffs, he destroyed the unity of his office. In fact, he diffused his duty under Article II with individuals in the Article I branch. There is no prerogative left for him to claim in asserting that application of FACA in this case violates the Separation of Powers.

With respect to Hillary Rodham Clinton, Judge Silberman asked, ``What if she were given a job as a special emissary to a foreign country? Would she be an officer then?''

``No,'' I answered. ``Any such office would have to be approved by Congress. Only then could she become an `officer,' assuming she could circumvent the Kennedy Act.''

The Judges also wondered if the Cabinet would be subject to FACA if the First Lady attended meetings.

``Quite possibly,'' I said. ``It would depend on the authority with which she was clothed. For no matter how you look at it, until Congress makes an `officer' of her, she is nothing more than a private citizen.''

The Judges listened intently to our argument. We felt that the White House staffers in the ``VIP'' seats had much to reflect upon in the end. As the case is on an expedited schedule, the opinion is expected any day.

Message from the President

In May, 1990, Ohio Supreme Court Justice Craig Wright stated: ``Most of the Federal Register regulations affecting the practice of private medicine are in violation of the US Constitution.''

The US Constitution was established to protect our rights against violations such as those practiced by the King of England. One of the many grievances our Founding Fathers had against the King was that ``he has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.''

Respect for rights is what distinguishes a civilized society from a barbaric one. As Walter Williams, economics professor at George Mason University, stated: ``In a civilized society, people have respect for private property.''

Private property begins with man owning himself and his natural rights. Life, liberty, and the pursuit of happiness are inseparable and uncompromisable. These rights must not be violated by situation ethics and political expediency through the unconstitutional power of administrative law.

The most critical health care reform is freedom in medicine. Physicians must not be fettered, intimidated, harassed, oppressed, and threatened by senseless regulations or by bureaucratic federal ``practice guidelines.'' Though still the best in the world, the high costs and bureaucratic mess in American medicine are the direct result of government meddling since the mid 1960s.

It is long past time to redeclare independence.

Our Founding Fathers said: ``For the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes, and our sacred Honor.''

It is our turn now. If we don't do it, who will? If not now- when?

Nino Camardese, MD
Norwalk, OH

New Members

AAPS welcomes Cardiovascular and Thoracic Surgeons of Spokane, WA; and Drs. Alan D. Alyea of Spokane, WA; J. Michael Arnold of Marinette, WI; B. Athwal of Toms River, NJ; Frank Battaglia of Houston, TX; Howard L. Bell of Cincinnati, OH; Daniel S. Berman of White Plains, NY; Donald A. Boutry of Gig Harbor, WA; J. Scott Bowen of Renton, WA; Barry Brooks of Dallas, TX; Keith Bryson of Bowling Green, KY; Wayne F. Burnhead, Jr. of Dallas, TX; Abdul Majid Butt of Gujranwala, Pakistan; Melvyn Chase of Phoenix, AZ; Minhhang Chu of Baytown, TX; James R. Conforto of Fairview Park, OH; Charles H. Cummings of Tiverton, RI; John F. Delemba of Denton, TX; Richard J. Dobies of Dayton, OH; Charles Dorfman of Apopka, FL; J. Michael Epps of Jackson, TN; John A. Ferraro of Troy, NY; David F. Fowler of Atlanta, GA; Arthur R. Gindin of Princeton, WV; Michael S. Golden of Spokane, WA; Kimberlie J. Gonzalez of Baytown, TX; Lewis C. Gordonson of Great Neck, NY; Gordon F. Greenman of Renton, WA; Mark E. Healy of San Antonio, TX; John E. Hershey of Spokane, WA; Bruce S. Hinkley of Arlington, TX; Micheal L. Hogan of Wausau, WI; Timothy B. Icenogle of Spokane, WA; Arturo D. Imperial of Lake Jackson, TX; Charles F. Irwin of Dallas, TX; Rachna Ayesha Jafri of Houston, TX; Michael Jaquith of Venice, FL; A. Austin Jones, III of Livingston, TN; Tony Kampner of Crete, IL; Eugene Y. J. Kang of Baytown , TX; Kevin T. Kelly of Dothan, AL; Donald Kilpatrick of Charleston, SC; Mark Koch of Baytown, TX; Larry Kovachevich of Renton, WA; F.A. Krull of Nederland, TX; Kristine Kunesh-Part of Dayton, OH; Michael T. Kunesh of Dayton, OH; Charles T. Kunesh of Dayton, OH; Richard J. Lambert of Spokane, WA; John P. Lenihan, Jr. of Tacoma, WA; Lawrence E. Lohman of Kent, OH; C. Leslie Lovett, Jr. of Bowling Green, KY; Christopher Lyon of Newport Beach, CA; Alexander R. MacKay of Spokane, WA; Robert J. Masi of Portola Valley, CA; Weldon McReynolds of Jasper, AL; William J. Mesibov of Syosset, NY; Florias Andreas Morfesis of Harlan, KY; John J. Nanfro of Rome, GA; L. Nastro of Summit, NJ; Dennis O'Connell of Aberdeen, WA; A.G. Patel of Cedar Hill, TX; Robert C. Powell of Winnetka, IL; Eugenie M.J. Pugatch of Montclair, NJ; Murray C. Quinn of White Plains, NY; Alexander J. Ricci of Great Neck, NY; Richard H. Rolnick of Houston, TX; Elliott H. Rose of New York, NY; Frank J. Rose of Laguna Beach, CA; Larry Sears of Gainesville, TX; Glenn Sears of Gainesville, TX; Lawrence A. Shafron of Denton, TX; Allen R. Sklerov of Bradenton, FL; Henry T. Spector of White Plains, NY; Norman E. Staley of Montesano, WA; Howard F. Stock of Scarsdale, NY; Jeffrey Tobias of Englewood, NJ; Rodney D. Veitschegger, Jr. of Bowling Green, KY; Marshall C. Wareham of Dayton, OH; Carl S. Wehri of Delphos, OH; Elizabeth P. Wells of Baytown, TX; Lawrence M. Wells of Hollis Hills, NY; Darrick Wells of Baytown, TX; Barry D. Wenglin of White Plains, NY; Charles R. Wilson of Baytown, TX; David Miller Wise of Seattle, WA; Estelle Yamaki of Federal Way, WA; Richard W. Young of Arlington, VA; and Jan Zemplenyi of Bellevue, WA.

The Cost of Reform in Oregon

The Oregon rationing experiment has received a federal waiver of Medicaid requirements. The Casacade Policy Institute (813 SW Alder, Suite 707, Portland, OR 97205) is now on record predicting its results in a report by Peter J. Ferrara:

• Without the plan, Medicaid spending would have risen 25% in two years; with the plan, it will rise 65%;

• The plan will increase further the cost of medical care for insured, working people;

• The plan will institutionalize cost-shifting; and

• Many employers will lay off workers or go out of business.

Copies of the report, which also provides a proposal for market-based reform, are available on request.

OSHA Penalties Increased

New fines to be levied by the Arizona Department of Occupational Safety and Health have increased by a factor of five to ten. Failure to post OSHA notice will be penalized by a fine of $1000 rather than $100. The minimum penalty for a (single) ``willful'' violation has increased from none to $5,000 and the maximum penalty from $10,000 to $70,000.

Previously, the ADOSH office would answer, in writing, questions submitted by the county medical society, in case physicians did not wish to call attention to themselves by telephoning. (The answers were published in the monthly bulletin.) The new official will no longer respond in this way. Instead, the physician must call so that ADOSH can acquire more information about the physician's particular situation.

Please inform AAPS of enforcement actions in your area.

AAPS Calendar

May 22. Board of Directors meeting and medicolegal seminar, Bradenton/Sarasota, FL, Hyatt Hotel and Sarasota Garden Club. Call 1-800-635-1196 to register (or request audiotapes) and 813- 366-9000 to make a hotel reservation.

June 18-19. Medical Action Committee for Education, East Hyatt Regency Hotel, Dallas/Ft. Worth Airport (see enclosure).

Oct. 5-9. 50th annual meeting, San Antonio, TX.

Legislative Alert

OMB Chief Leon Panetta said it: Clinton's domestic agenda is in such deep trouble that he should delay sending any kind of health care reform to Congress until after the debate on budget and taxes is over later this summer. Panetta fears that the debate over higher taxes and spending generally is bound to affect the consideration of any kind of expensive proposal in a decidedly negative fashion. Translation: It is all too much, too fast, and the Administration risks losing the entire Capitol Hill ball game. A whole series of difficulties have been plaguing the Clinton team during its first 100 days. The ``economic stimu- lus'' package was blocked in the Senate by Senator Bob Dole's disciplined Republican filibuster. The President's first major legislative defeat in Congress came the same week that his treatment of the Branch Davidians in Waco was being second- guessed by Congressional critics, including liberal Democrats like John Conyers (D-MI). Democratic Congressional backers are frustrated by a growing record of broken and unfulfilled promises, including the middle class tax cut; unpleasantly high Presidential visibility in divisive social issues like homosexuals in the military and ``gay rights''; record high disapproval ratings in the public opinion surveys for the President so early in his Administration; and a seeming inability on the part of the Clinton team to manage the government effectively, particularly the failure to expeditiously fill the 3000 key management and policy positions in the Executive Branch. In the latter case, the testily conservative Washington Times revealed that 25,000 resumes of 1992's Democratic faithful sent to the White House personnel office had been inadvertently put in storage rather than being processed to fill slots in the new Administration. And even the normally pro- Administration Washington Post has conceded that the personnel management problems have gone on far too long, and the time is running out even for the Post's editorialists to maintain any excuses.

What stuns official Washington is not the Panetta message -a truth just about everybody realizes-but the messenger. Immediate speculation centered on whether Panetta was speaking on cue in order to dampen overblown public expectations, or whether his statement signalled the outbreak of an internal firestorm from the smoldering resentment between Democratic moderates, the ``New Democrats,'' and Hillary's Sixties liberals. But the truth is simple: at the end of a long, tough week, Leon Panetta just blurted out what was on his mind.

Ditto the Health Care Task Force?

The general management and policy problems of the young Clinton Administration are evidently mirrored in the Presidential Task Force on Health Care Reform, aggravated by Clinton's very specific campaign promises and public pledges, including a self- imposed deadline of 100 days. Its recommendations were to be released on May 3rd. Then other dates were floated. May 17th? May 25th? Sometime in June?

The deadline was a strategic mistake from the outset-ditto, the secrecy. After all, this is important, but it's not the Manhattan Project.

The timing of the reform plan is obviously less important than the substance. But, incredibly, there is still wrangling-at this late date-over the substance of the proposal. For example, the basic struggle between advocates of managed competition and an even more heavily regulated approach continues.

Doubtless, the Clinton minions will defensively reply that it is not supposed to be a smooth process. This is a tough, no- nonsense, head-banging job, dealing with the biggest issues in domestic policy. So what did or could we expect, anyway? But the political problem is that such a defensive response underscores one brutal and unmistakable fact: That the President never really had a coherent plan in the first place.

Instead of just putting The Plan together, Hillary and her team seem to have been forced to make The Plan up as they go along, borrowing bits and pieces from often incompatible proposals offered by different interest groups and liberal policy wonks. These groups, the ``good'' special interests groups as opposed to he ``bad'' special interest groups (e.g. doctors and pharmaceutical firms), seem to have had some genuine success in undermining the coherence of the original ``managed competition'' model.

A good example of interest group pressure has surfaced over the question of coverage. Will the universal rules for insurance be universal? Apparently not. According to the April 26th edition of the New York Times, Big Business-defined as any firm with 1000 or more workers-will be exempted from the new government-established health care purchasing cooperatives, the ``Health Alliances,'' envisioned by the Administration. Why? Because, according to Administration officials, the big employer- based health insurance systems are doing just fine in providing health care to millions of Americans (about 33 million to be exact), thank you very much. In other words, the inflationary, employer-based insurance system in its largest and most concentrated form is to be left intact-the very framework which more and more economists, be they left, right, or center, agree is the very reason for the cost explosion in the first place. Some reform. In effect, for Big Business, it's Big Business as usual.

Big Business, in the form of the big insurance companies, is also the biggest supporter of ``managed competition.'' The ``Alliance for Managed Competition,'' said to be ``providing health care coverage for 60 million Americans,'' includes Aetna, Cigna, Metlife, The Prudential, and Travelers. Guess who would likely dominate the geographically based, highly regulated, managed-competition market? Thus, the new rules, the employer mandates, and the accompanying regulations of the forthcoming reform are to be imposed on small and mid-size businesses. Small business-once again- will take it on the chin. Interestingly enough, for different reasons organized labor is outraged-at least in public-over this concession to the big boys and is claiming that Big Business lobbies won the exemption from the firm of Clinton and Clinton because of their cooperation with the President on his big budget and spending package.

The more important question is how all this will affect medicine. Senator Paul Wellstone (D-MN), the leading Congres- sional champion of the Canadian-style single payer system, got it just right: the ``Health Alliances,'' the new managed care networks covering small business, will become the ``dumping ground'' for low income people with high medical risks. We are talking about new and unprecedented levels of adverse selection. Offsetting this will be what? New taxes, probably.

Beyond the cross pressures of interest group politics, Hillary Rodham Clinton's policy process has been dogged with unnecessary controversy-the entire secrecy silliness and the self-defeating exclusion of physicians and other medical professionals from the process early on. So now the Task Force has announced that it will have 47 health care professionals, doctors and nurses and hospital types, review the work of the Task Force. As with the 500-odd members of the Task Force itself, mostly liberal Congressional staffers and HHS bureau- crats, the Washington guessing game is: Who do you know? Needless to say, the 47 health care ``providers''-a wonk word for doctors- were not selected to cast doubt on the Task Force product.

Are the leaks in the press just leaks, or are they really ``trial balloons'' deliberately sent up to catch flak or praise, giving Hillary and the wonks on the ground the sensors necessary to gauge the likely public and Congressional reaction?

A good example is the dramatic proposal for a value added tax (VAT) as a way to pay for expanded ``health care access.'' It is a sharply regressive tax. It raises big bucks, and its major attraction to policy wonks is that it is a ``hidden tax'' designed to extract revenues from an already overtaxed public in such a way that they won't realize it. (It does have the advantage that those who can't afford to pay the tax can simply do without new purchases. In contrast, a property tax would confiscate the assets of those who couldn't raise the money to pay it, thus further eroding our capital base.)

The VAT was off the table last February; it's now on; and may be off-again. Who knows? The big tax trial balloon, if it is that, is supposed to prepare the public for another huge round of taxation. House Republicans have been quick to seize on the VAT issue. Congressman Dick Armey (R-TX) and Congressman Tom DeLay (R-TX) have started an Anti-VAT Caucus in the House of Representatives.

As to the substance of the ``reform'' package itself, Con- gressman Dan Rostenkowski (D-IL), the Chairman of the powerful House Committee on Ways and Means, told members of the American Group Practice Association that ``some of the proposals I've seen include elaborate linkages between several different institutions, none of which exist here or anywhere else at the moment,'' adding that ``these plans are the domestic equivalent of Star Wars where the plan was that a series of nonexistent technologies would be developed and linked to one another so that they would work flawlessly.''

While Rostenkowski expressed his intention to support the Clinton plan if it controls costs, ``pays for itself,'' and assures ``universal access,'' his remarks revealed a skepticism about the work of the Task Force that is unusual for a leading Member of Congress expected to carry water for the Administration. Rostenkowski will have more direct say over the shape of any future health care reform than any other member of Congress (assuming he survives a possible criminal indictment- subpoenas were served shortly after his ``Star Wars'' remarks).

The message of Senator Robert Dole's (R-KS) successful showdown with Clinton on the so-called Economic Stimulus Package has not been lost on the Clinton Administration. And the Administration's relations with Congress have generally been handled without much aplomb. Witness the clumsy White House threats against Democratic Senator Richard Shelby of Alabama, who defected on the Clinton budget package. Shelby was threatened-LBJ style-with retaliation against Alabama projects; Shelby balked and resisted, and since has become a political hero in Alabama, not a political victim. In Texas, Sen. Bob Krueger (D-TX), facing a special election in May, is running away from Clinton with lightning speed. Clinton's approval rating in Texas is in the basement. Bill Clinton is not only no JFK, he's no LBJ either.

Carter Redux? Maybe. Don't count on it. Bill Clinton knows how to take a hard political punch. Bloodied badly, he has hit the canvas before, only to confound his opponents by getting up and taking the fight-once again-to them.

Congressional Republicans: Reforming Their Ranks?

While Senate Republicans are still basking in their first major legislative victory over the Clinton Administration they still have not realigned around a common alternative to Hillary Rodham Clinton's emerging ``managed competition'' proposal. Like Union General George McClellan at Antietam, Senate Republicans have only stopped an advance. Politically, Congressional Republicans are not yet on offense. The initiative still rests with the Clinton Administration.

The strategic question for Republicans is whether they should pursue the same strategy on health care that they did with the so-called stimulus package, setting out to oppose the measure with the sole objective of defeating it, or also offer a viable and politically attractive alternative.

Congressional leaders realize that the two issues are radically different, and that the political fallout is likely to be different. The ``stimulus package'' was portrayed as a ``budget-busting, pork-barrel spending bill.'' Make-work stuff. However, the public, at least according to all reputable surveys, wants some kind of reform of the ``health-care system.'' Simple opposition-without an alternative that addresses genuine popular concerns-courts immense political danger. A Clinton Ad- ministration counter attack, coordinated by Jimmy Carville, painting his Congressional opposition as out of touch with the concerns of ordinary Americans, could prove disastrous to Dole, Michel and Co.

While Senator John Chafee (R-RI) and his 25-member Senate Republican Task Force (including Finance Committee heavies like Durenberger and Packwood) want to push their own version of managed competition (see May Legislative Alert), Congressional conservatives are getting their back up at the prospect. Reportedly, Senator Phil Gramm of Texas, and a group of conservative Senators (Nickles of Oklahoma, McCain

of Arizona, and Coats of Indiana) are working on a comprehen- sive bill that would reform the financing of medical care through a combination of tax credits and medical savings accounts.

Meanwhile, in the House of Representatives, Republican freshmen, led by Congressmen Cliff Stearns of Florida and Buck McKeon of California, are aligning their colleagues around a ``consumer choice'' option, building upon tax credits, vouchers, and medical savings accounts as the preferred financing mechanisms. Meanwhile, Congressman Richard Armey, Chairman of the House Republican Conference, is not waiting for the Clinton Plan to be sent to Capitol Hill. Based on the press reports, Armey is initiating pre-emptive strikes (in the form of policy papers) against certain provisions that have leaked out of the Task Force, such as price controls and employer mandates. Armey argues that price controls have never worked before and will not work now. They will only result in rationing.

``We can expect doctors to play more golf, wear their beepers less, and push patients out of the door as quickly as possible-to name just three forms of rationing.'' Armey is calling employer mandates a ``stimulus plan for unemployment officers'' and a ``Kevorkian Prescription for Jobs.''