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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 50, No. 6 June 1994


While much of the nation hurtles toward total government subjugation of medicine, two Western states have taken modest steps toward restoring freedom.

``The Idaho Legislature unanimously passed a bill...allowing individuals and businesses to implement Medical Savings Accounts,'' states AAPS Director V.L. Goltry, MD, in correspondence to hospital board members and businessmen. ``Idaho is the first state to pass such a bill....We are now at the threshold of a unique opportunity to experience the power and wonder of free-market incentives in the delivery and receipt of [medical] care regardless of what the federal government does.''

At the same time, Boise is facing the invasion of managed care that has already devastated independent, truly private medicine in many other cities. As Dr. Goltry points out, ``the pressure to impose managed care on Boise...is being spearheaded by the same people that pressed for Gem Health and Healthguard, the two HMOs that ultimately went bankrupt, to the great detriment of physicians, hospitals, and patients who bought into these schemes.''

Dr. Goltry notes that with managed care, the management team can make huge personal profits-at the expense of patients, physicians, and the quality of medical care. ``Rationing is the only game in town in the case of managed care.''

The way to counter this threat, Dr. Goltry believes, is with a better idea-one already shown to work in the case of Dominion Resources and Golden Rule Insurance Company (see AAPS News Feb and Apr 1994). Dr. Goltry has personally distributed dozens of information kits on free-market economics, including the abridged Patient Power by John Goodman and Gerald Musgrave, to businesses and individuals.

St. Luke's Regional Medical Center of Boise and the Idaho Medical Association are looking into a combination of a catastrophic medical insurance policy and a medical savings account to offer their employees, allowing them to take advantage of the exemption from state income taxes.

The Idaho bill, drafted by Rep. Sheila Sorensen (wife of AAPS member Dean Sorensen, MD) allows deductible medical IRA contributions of up to $3,000 annually. Interest earned on such an account is also deductible.

The Arizona legislature also passed a bill allowing individuals to set aside $2,000 (families $4,000) exempt from state income taxes if the money is used for medical care.

The bill retains ``personal freedom, privacy, and the physician-patient relationship,'' stated Jeffrey Singer, MD, vice president of the Arizona chapter of AAPS.

The National Federation of Independent Business backed the bill because it brings reform without costing jobs.

The bills signed into law in Idaho and Arizona by Governors Andrus and Symington are not to be confused with the ``Family Choice Health Plan,'' which was defeated in Oklahoma, largely through the efforts of Rep. Mary Fallin and of Citizens for a Sound Economy (CSE).

In response to AAPS statements that the Robert Wood Johnson Foundation does not support free-market reforms, but only those programs that seem to establish managed care, RWJF spokesman Nancy Barrand pointed to the ``tax-free medical savings accounts'' the Foundation was developing in Oklahoma (Wall Street J 4/26/94).

In actuality, the RWJF awarded a two-year, $850,000 grant to the Oklahoma Governor's Commission to develop a program that would move toward ``universal health coverage'' along the same ``managed competition'' model that the Clintons used for their plan. The Family Health Accounts are assumed to exist within health alliances.

``[U]nlike models which create private medical savings accounts,'' these accounts are ``primarily created for the management of the flow of funds, and the income from the account balances would be used to finance expanded access to health service, for example, through expansion of services to low-income individuals'' (material prepared for Ira Magaziner by the Commission on Oklahoma Health Care, under Governor David Walters). In other words, these ``tax-free'' accounts would impose a 100% tax on interest.

The idea of a ``vertically integrated'' health care system under the total control of a state Health Authority did not appeal to Oklahomans, despite a media blitz. The RWJF paid for a two-hour ``educational'' television show that opponents saw as an advertisement for the governor's plan. (Anybody in the audience who tried to bring up an alternative was silenced for ``trying to inject politics into the discussion.'') Some representatives changed their ``no'' votes to a ``yes'' in a committee meeting, at which three RWJF representatives were present. Reportedly, the RWJF promised the state another $1.2 million for ``further study'' if the bill passed.

Oklahomans were more concerned about the $2.5 billion tax increase that would have resulted from its passage, as pointed out by Larry Stein, Oklahoma director of CSE.

``I feel that the Oklahoma people have been made to think that the Governor's plan was developed by Oklahomans to deal with Oklahoma's problems,'' writes AAPS member Glenn P. Dewberry, Jr., MD. ``In reality, it is a `one plan fits all' model that originated from places like Jackson Hole and the Harvard Business School.''

Plans with similar premises are also materializing in other states, e.g. Missouri (see p. 2). Often, state medical associations endorse the plan or sit on their hands. ``It is our responsibility to make sure that the people of the state hear our insights and understand that our concerns come from having their interests at heart,'' stated Dr. Dewberry.

Physicians also need to show that freedom works.

Missouri Fights Clintonesque Legislation

An attempted hostile government takeover of medicine in Missouri was defeated, at least temporarily, in the State legislature.

As usual, the proposal was made in the name of the ``uninsured.'' However, numerous provisions would have the effect of increasing the cost of insurance, especially to the young and healthy. Such persons, who make up a substantial fraction of the uninsured, often choose to forego asset protection (insurance) due to its cost (already very high).

Key provisions, which bear a striking resemblance to proposals introduced nationally and in other states, are:

  • A powerful state board with the authority to determine the ``standard health benefit plans to be provided to all residents of Missouri'';
  • Emphasis on ``primary care,'' expanding the definition to include general dentists, physicians assistants, and professionals among the disciplines of nursing, social work, public health, pharmacy, mental health, dental hygiene, chiropractic, podiatry, psychology, nutrition, and health education;
  • Personnel quotas (``all boards, committees, and commissions created pursuant to the provisions of this act shall include representation by African-American persons with disabilities and shall be gender balanced [sic.]);
  • Mandatory community rating;
  • Mandated benefits to include mental health and substance abuse programs, plus environmental monitoring (e.g. measurement of indoor radon levels);
  • Extensive data collection requirements, with monetary forfeitures for failure to comply; and
  • A ``conscience clause'' for providers (not for insurers or subscribers) [Why?].

The bill was thought to be assured of passage: both houses of the legislature and the governor's mansion are in the hands of one party. But a few citizens started making telephone calls.

A small group of insurance underwriters for the St. Louis Association of Health Underwriters received a wake-up call from Bill Maher, an independent agent, who understood little about the political process before last February, when he took a trip to Washington, D.C., for his national association.

Within ten days, Mr. Maher's group had raised $15,000. They employed two lobbyists and set up a war room manned by two people armed with a FAX network. A mailing to 4,500 insurance agents brought around 400 responses asking for more information. Mr. Maher was not discouraged. ``Ten percent of the people always do 90 percent of the work,'' he said. About 45 to 50 people became centers of influence. Many called their key clients.

A lobbyist identified 13 representatives who were planning to vote for the measure and who possibly could be influenced (although he thought chances were slight).

``How are you planning to vote on House Bill 1622?'' people asked their representative.

When the answer was ``Yes,'' the next question was, ``Have you read it?''

The agents helped to explain the problems to legislators, businessmen, friends, and neighbors. State representatives listened to the concerned citizens who called them at home and at the legislature. The citizens had a two-page list of key provisions and understood how the measure would increase costs both for employers and employees.

The agents found that other groups also opposed the legislation. More than 200 physicians from the St. Louis Metropolitan Medical Society called on legislators. The Constitutional Coalition, chaired by Donna Hearne, arranged public meetings and brought AAPS Executive Director Jane Orient, MD, to speak in three cities April 26-28.

After the House bill was soundly defeated, the Speaker tried to substitute its contents for those of a much different reform bill that had passed the Senate. As this newsletter goes to press, that attempt has seemingly been foiled. Still, the ``dead'' proposal could be resuscitated at the last minute, as by adding certain key provisions to the Senate bill as it wends its way through the process. Adjournment is slated for May 15.

Mr. Maher is hopeful. ``A small minority is ramming this legislation through,'' he said. ``It doesn't take very many dedicated people to stop it. The trouble is that most people are completely unaware of what is being done to us.''

Many ask Mr. Maher why he is taking the time to fight this battle. ``It's true that I want to protect my livelihood,'' he tells them. ``But the main thing is that I have two children. One is diabetic and one has a brain tumor. I don't want the government deciding when my son can get a CT scan.''

``The good news,'' he said, ``is that the system founded by our forefathers can work-if citizens get involved. Eternal vigilance is still the price of liberty.''


The Responsible Legislator's Declaration

As an elected official, responsible to my constituents, in the tradition of the honor of the founders of the United States of America, with the same firm reliance on the protection of divine Providence, I hereby declare, promise and pledge the following:

1. I will not introduce any legislation for consideration by my fellow legislators which I have not personally authored. I will not refer My work of creating legislation to staff members, services within my branch of government, other branches of government, or others outside of the government.

2. I will vote ``No'' or I will abstain from voting for any legislation that I have not first personally read completely and fully understand the contents thereof.

3. I will be subject to the same laws and their resultant regulations that apply to all others. I will not exempt myself or my legislative body from any law, save for my constitutional protection of freedom from arrest that is mine during my attendance at the Session of my respective house, in accordance with Article 1 Section 6 of the Constitution of the United States. Further I recognize, accept and Proclaim that all people are equal under the law.

4. I will be an active student of the Constitution of the United States of America, and I will read it weekly, in order to best fulfill my responsibility of the Office and the Trust that has been placed in me by my constituents. I will hold my position of stewardship of this office sacred. If I violate this Pledge and the Trust thereof, I will resign without delay.

[Camera-ready copy on an 8 x 11 sheet is available from AAPS for a self-addressed, stamped envelope.]

Your Doctor Is Not In: Healthy Skepticism about National Healthcare by Jane M. Orient, M.D., Crown Publishers, 1994, should be available at your bookstore in mid May.

White House Says that Task Force Lacked Structure, Therefore Secrecy Permitted

On June 23, 1993, the US Court of Appeals for the District of Columbia Circuit rendered its opinion in AAPS v. Clinton, 997 F.2d 898 (D.C. Cir. 1993), remanding to the District Court the question of whether the Health Care Task Force's ``Interdepartmental Working Group'' (IWG) and its cluster groups were subject to the Federal Advisory Committee Act (FACA). After months of research, AAPS filed a Motion for Summary Judgment.

In its reply, the White House conceded that 57 of 62 committees of the IWG were not composed wholly of federal employees, despite Ira Magaziner's prior declaration under oath. Magaziner filed yet a third declaration.

Nonetheless, the White House asserted that the IWG was exempt from open-government laws because it was really an amorphous mass of people who did not advise the President on anything, despite the expenditure of millions of dollars.

Briefing continues as of this writing and should be concluded by May 20. Meanwhile, in the wake of AAPS revelations concerning the role of tax-exempt foundations in drafting health- care reform plans, the Robert Wood Johnson Foundation has contracted with NBC for $2.5 million and with MTV for $2.8 million to produce two-hour special programs.


AAPS v. Clinton Generates Legal Progeny:

Barriers to Activist Government

Although the case of AAPS v. Clinton itself is not yet concluded, its long-term effect on how the government conducts its business is already being felt. The FACA can be used as a sword by citizens to challenge every committee or task force that any Administration creates. The first of what promises to be an enormous legal progeny clearly illustrates this potential.

In a case strikingly similar to AAPS v. Clinton, the Northwest Forest Resource Council challenged the Forest Ecosystem Management Assessment Team (FEMAT) established by President Clinton as being a federal advisory committee within the meaning of FACA. FEMAT boasted of over 600 participants, with multiple ``subteams'' and ``advisory groups.'' (The Administration was only willing to acknowledge that 37 of them were ``members.'') The FEMAT's structure and procedures strongly resembled those of Ira Magaziner's IWG. There were large numbers of nonfederal personnel on the FEMAT, including faculty members at Oregon State University, who continued to receive faculty paychecks while on leave of absence. Participants admittedly included private contractors paid with federal funds.

Like the President's Task Force on Health Care Reform, FEMAT refused to open its meetings to the public; made no attempt to fairly balance its membership; and took no precautions to assure that its advice was not inappropriately influenced by special interests.

As the Judge pointed out, ``scholars no less than business people have been known to have personal agendas.'' In fact, the composition of FEMAT suggested that the vast majority favored the ``ecosystem management'' approach and had no sympathy for the forest products industry.

US District Judge Thomas P. Jackson, relying on AAPS v. Clinton, held that FEMAT was a FACA committee and ordered all of its records open to the public. Jackson rejected every government argument on the issues presented.

The government did not appeal Judge Jackson's ruling.

In another related case, the Washington Legal Foundation challenged the secret meetings of the US Sentencing Commission's Advisory Committee on Environmental Sanctions. Although formed with the understanding that its meetings would be ``open to the public,'' meetings were soon closed to the public and the press. The panel, dominated by anti-business ``environmental'' groups, government regulators, and law professors, released guidelines that would require courts to impose excessive fines for minor or technical environmental infractions. The draft was universally condemned by the business community and the American Bar Association for both substance and process. The committee refused to explain the basis for the proposal or to release the data and studies used in its secret deliberations.

The US Circuit Court of Appeals ruled that the Commission was exempt from FACA, making it the only agency aside from the CIA that is exempt from open-government laws. Nevertheless, the Court did rule in favor of the plaintiffs on the issue of common law disclosure of public records. The Sentencing Commission was required to file an index of all documents in its possession.

Another spin-off of AAPS v. Clinton is the question of the legality and constitutionality of the NIH grant-making process. Government funding for scientific research (increasingly, the only funding available) is under the control of advisory councils made up of private individuals who are not accountable to the public. The authority to appoint such individuals may have been unconstitutionally delegated to institute directors (Robert Charrow, J NIH Res Dec 1993).

The seemingly narrow legal question raised at the outset of AAPS v. Clinton goes to the heart of the ``public- private partnership'' that is extending its control over every aspect of American life, from science and industry to the private patient-physician relationship.


The Incentive Amendment

The following proposed Amendment to the US Constitution was sent to us by Burchard S. Pruett, MD, of Prescott, AZ:

The members of both houses of Congress shall receive a one percent increase in annual pay for every one percent they reduce the National Debt. They shall receive a two percent increase in annual pay for every one percent they reduce the overall tax rate. However, the inverse of this rule shall also apply, and their salaries shall be reduced by the above percentages. During time of war salaries shall be on hold. There shall also be a cap of $300,000 per year....

(Dr. Pruett notes that it would become very expensive for special interests to buy 51 percent of the Congress.)


``In visiting the sick do not presently play the physician if ye be not knowing therein.'' George Washington

Letters to the Editor

Ripe for Judicial Challenge?

A common strategy of the fourth branch of government (the bureaucracy) to avoid judicial remedy for its lawlessness is to use the defense of lack of ``ripeness.''

In the suit brought in New Jersey by Lois Copeland, MD, et al. (Stewart v. Sullivan), the court refused to rule on the issue of the right of the Medicare beneficiary to opt out of Medicare at will, because of lack of ripeness. HHS has never fined or excluded any physician from Medicare because of opting out.

Similarly, HHS has never enforced prohibition of a cataract assistant surgeon (CAS) to collect payment from a Medicare beneficiary.

The Medicare Carrier's Manual states that the physician can generally receive payment directly for services that Medicare is not likely to provide. However, under Section 1842(k)(1) of the Social Security Act physicians are forbidden to bill patients for assisting at cataract surgery. Laypersons, on the other hand, are not prohibited from billing, and assistance at cataract surgery is often performed by trained laypersons.

It turns logic on its head to mandate nonpayment for a service if performed by a physician but to allow payment to a nonphysician for the same service.

Regulations that started with the CAS are putting in jeopardy all assistant surgeons at all types of surgery. There is evidence that HHS is moving in that direction. A study to prove that an assistant surgeon has value is practically impossible to do, and it would jeopardize the patients in the control group.

Is it time to revisit New York State Ophthalmological Society v. Bowen, now that the government's exhaustion defense appears to be overcome? Or would it still fail for lack of ripeness?
Lewis C. Gordonson, MD, Great Neck, NY


Grassroots Effort

Enclosed please find reprints of a personal publication of mine which was an effort to disseminate information to the public prior to a visit by Hillary Rodham Clinton to the Sioux Falls area. I have used information from your material, and I thank you for it.
Gonzalo M. Sanchez, MD, Sioux Falls, SD

[Dr. Sanchez published a full page, extensively documented article entitled ``Clinton Health Plan: Wrong Diagnosis, Lethal Prescription, Parts I and II'' in the Argus Leader as a paid advertisement. In the article, he states that ``exploiting the anxieties and fears of some Americans, the Clintons are attempting to undertake the largest power grab in American history.'' A copy is available on request.]


The Managers' Grand Plan

Being from Minnesota, I think we understand the true hidden agenda in these health-delivery maneuvers, and they are exactly as you describe. The dollars will be controlled by the managers, and the people writing the regulations and the controls will be the same people that will gain contracts to monitor these systems-for example, Interstudy of Minnesota.

As you suggest, the grand plan would be to have physicians basically as salaried employees working for these managers who will rake millions out of the health-care system, leaving the doctors as the focal point for criticism....

What our patients, especially our Medicare patients, want most of all is the ability to choose their own doctor. This is the very thing the managed-care people are in business to prevent because only by separating the patients from their own doctors and putting them in the hands of a gatekeeper can they truly ratchet down costs.
Brooks J. Poley, MD, Minneapolis, MN


Does History Repeat Itself?

They were compelled by law to do business with only those people approved by the government (1). They were forbidden to produce for themselves (1). Taxation was incurred to repay debts not benefiting the taxed (2). All legal papers were to go through government hands (3). Blanket search warrants were issued to the authorities to search out supposed violators of these laws (4).

Sounds like something which could only occur in a nation ruled by a dictator or a tyrant. That's what our colonial forefathers thought when King George III and the British Parliament enacted the (1) Navigation Act 1760, (2) Sugar Act 1764, (3) Stamp Act 1764, (4) Writs of Assistance 1761...These acts made King George unfit to be the ruler of a free people....Isn't it interesting how similar these injustices are to the enforcement portion of the much ballyhooed mandatory universal government health-care proposals?
Gary Mattson, owner
Travelport Truck Stop, Candler, NC


AAPS Calendar

June 18. Board of Directors meeting, Arlington Park Hilton, Arlington Heights, IL, near Chicago O'Hare Airport.

Oct. 12-15. 51st annual meeting, Atlanta, GA.

Legislative Alert

An Emerging Consensus Bill?

The hottest thing on Capitol Hill is ``consensus.'' With Clinton supporters unable to sustain an up-or-down vote in Congressman Pete Stark's Ways and Means Subcommittee, and with Chairman John Dingell struggling to patch together a coalition of liberal Democrats and moderates to vote a variant of the Clinton Plan out of Energy and Commerce, and with Congressman Jim Cooper's ``managed competition'' bill going nowhere at the speed of light, it is not surprising that yet another bill is emerging.

The latest plan is the ``Health Reform Consensus Act of 1994'' (H.R. 3955) authored by Congressmen John Rowland (D-GA) and Mike Bilirakis (R-FL). In the past few weeks it has garnered over 60 cosponsors in the House. There is as yet no companion bill in the Senate.

Congressman Rowland looks upon the bill as a ``down pay- ment'' for reform, making as much possible progress this year without making disastrous mistakes in policy. Bilirakis, almost alone among House Republicans, kept insisting that the Medicare RBRVS should have been tested out before it was implemented throughout the huge Medicare system. (Of course, it wasn't; the major medical organizations in Washington lobbied vigorously for the Medicare fee program without such a demonstration program.) Bilirakis doesn't want to see Congress make the same mistake twice, and on a far grander scale.

The vital elements of the new bipartisan bill are as follows:

  • Insurance Reform. The bill raises the tax deductibility of health insurance expenses for the self-employed from 25 percent to 100 percent and eases the way for the formation of small employer purchasing groups at the state and local level. Pre-existing condition restrictions are limited under all employer-based health insurance plans. Health insurance cannot be cancelled by a company nor can the renewal of policy be denied except under certain specified conditions: nonpayment of premiums, fraud or misrepresentation and noncompliance with the terms of the contract.

  • New ``All-Payer'' Health Care Fraud and Abuse Laws. The new government program would be funded by federal tax dollars and would be supplemented by an HHS data collection system. ``Whistleblowers'' would be rewarded. Any violation of the health care fraud provisions would be prosecuted by the US Department of Justice, rather than state or local law enforcement authorities, and would be punishable as a felony, with prison terms of up to five years.

  • Medical Tort Reform. The bill provides for a mandatory ``alternative dispute resolution'' (ADR) process. No malpractice case could be brought to court without a ``certificate of merit'' and without proceeding through ADR. Other provisions include: a limitation on non-economic damages of $250,000; a limitation on attorney's fees on a progressive scale (25 percent of the first $100,000 down to 10 percent of any amount over $500,000); a uniform statute of limitations (not to exceed 2 years for adults and 8 years for a minors who incur the injury below the age of six); and the use of practice parameters for medical procedures as a defense.

The bill also provides for federal claims-submission requirements (``administrative simplification''); expanded public health programs; a network of ``community health centers''; and a new procedure for certifying that mergers or similar commercial actions comply with antitrust law.

Of course, everybody is for ``antitrust reform'' and against ``fraud and abuse,'' but the real issues are buried in 250 pages of details. While Members of Congress may say that they agree in principle, the agreement may quickly break down when it comes to technical specifications.

Some of the effects of this bill would be to expand managed- care networks; encourage payment on a capitated basis; strengthen government data collection mechanisms; and increase State government involvement in local medical facilities through new Community Health Authorities.


In the Senate, tax caps on the value of employer-provided health insurance are picking up support, despite the opposition of organized labor, while employer mandates are losing ground. Senator Tom Daschle (D-SD), Don Riegle (D-MI), and Harris Wofford (D-PA) are all pushing vigorously for the employer mandate, and Senator Mitchell, the Senate Majority Leader, is looking at ways to make the employer mandate more palatable to the nation's businessmen. Senator Packwood thinks that the continuing behind- the-scenes discussions hold promise for some kind of gradual phase-in of an employer mandate. Don't bet on it.

Anti-mandate sentiment was spurred, once again, by an econometric analysis of the jobs impact of the Clinton Health Plan conducted at the request of the National Federation of Independent Business (NFIB) by the Consad Corporation, a research firm based in Pittsburgh, Pennsylvania. According to the Consad Report, the Clinton Plan would result in the loss of 850,000 jobs during the first years of its enactment; average salary reductions per worker would be almost $1200; 23 million workers would see their wages reduced; and most of the job loss would occur in small businesses with less than 100 employees. To make an employer mandate work, Congress would have to enact generous subsidies to small businesses, new expenditures running into tens of billions annually.

On the topic of employer mandates, the small business lobby is relentless. If a mandate is bad now, it won't get any better later on. That's the small business party line, and small business representatives, unlike doctors, show that they know how to play hardball on Capitol Hill.

In the House, the emergence of the Rowland-Bilirakis option underscores the Congressional gridlock. Congressman Richard Gephardt, the House Majority Leader, wants to move a bill before the August recess, but concedes that action will probably not take place until the Fall, just before the Congressional elections. The process is bogged down in the policy pits of Congress. The House Ways and Means Committee is sunk in confusion. Medicare Part C-the huge new government program created by Congressman Stark of California for covering the uninsured-is going nowhere. Chairman Rostenkowki's remarks about the need to do it right-with broad-based taxes if necessary-is not exactly a vote getter. Recall that President Clinton promised comprehensive health care reform without ``broad-based'' taxes.

While Rep. Jim Cooper is doing well in raising money from health insurance companies for his bid for the US Senate seat in Tennessee (27 percent of his campaign donations come from health and insurance companies, according to the liberal ``Citizen Action''), the Cooper-Grandy ``managed competition'' plan itself is not doing so well. The taxation of benefits and the proposal to reduce all health care options to managed care, staff-model HMO's is not politically attractive on anybody else's stump. So much for ``Clinton Lite.'' In addition, Congressman Jim Slattery (D-KS) has told Dingell in no uncertain terms that he will not vote for an employer mandate. Slattery is proposing his own bill, including ``consensus reforms.'' Unlike the Rowland- Bilirakis bill, Slattery wants to establish a government- standardized benefits package, coupled with purchasing cooperatives on the managed-competition model, with financing coming from further reductions in Medicaid and Medicare programs. (Everybody is for cutting Medicare and Medicaid: President Clinton, Sen. Chafee, Congressman Cooper, and Sen. Nickles of Oklahoma.)

In the House Education and Labor Committee, Chairman Pat Williams (D-MT) of the Subcommittee on Labor and Management Relations is proposing a bill that looks a lot like the Clinton bill, only bigger. And at the same time, this Committee is a stronghold of ``single-payer'' sentiment in the House. It could report out a bill that looks more like a Canadian-style system.


Families USA, a liberal interest group that acts as a wholly owned subsidiary of the Clinton White House, has issued an April 21st report detailing what most policy analysts already know. The lack of insurance is tied to job loss or job-related causes. According to the report, 62 percent of those who lose their health benefits lose them because of a job loss, or a job change, or some other reason related to employment.

Curiously, the data beg a simple question. Why not eliminate tax and insurance rules that tie health insurance exclusively to employment?

Cost Shifting

Right now, privately insured people are said to pay about 30 percent more than the cost of their treatment to help offset the cost of the uninsured. Stuart Altman, Chairman of the Prospective Payment Commission, the federal agency that oversees payments to hospitals in the Medicare program, sees the problem as systemic, noting that the rate of uninsurance is going up because employers continue to drop health insurance for their workers. He sees no reversal of the current trend. The number of employers providing insurance fell 2.7 percent from 1988 to 1991, and 1.5 million were added to the ranks of the uninsured last year. The number would have been even larger if the Medicaid program were not in operation. In the next several years, the cost shifting could double.

Curiously, these data also beg the question: If cost shifting is the problem now, how will it be solved by even more cost shifting? Privately insured and self-paying patients are now charged more to offset losses from the care of government insured (Medicare and Medicaid) and uninsured patients. Under ``reform,'' the payers will have to offset still greater losses from Medicare and Medicaid as these budgets are cut. In addition, they will have to subsidize the insurance of those who cannot afford to pay. This is more costly than subsidizing care directly because insurance adds both to overhead and to demand. Still worse, most ``reform'' proposals require ``community rating,'' which by definition shifts costs from high-risk to low-risk individuals.

Also, the 30 percent estimate is not compatible with the statement that charity care by hospitals totals ``at least $25 billion annually,'' cited in connection with a Feb. 1 address by Bill Clinton to the American Hospital Association (BNA's Medicare Report 2/4/94). [0.30 x $800 billion = $240 billion]

Conservative Consensus?

In the face of the Clinton-Congressional juggernaut on health care reform, congressional conservatives have been engaged in their own battles. Senators Peter Domenici (R-NM) and Robert Bennett (R-UT) asked Grace Marie Arnett, a prominent Washington health policy specialist, to get the leading Washington think tanks together to hammer out a common statement of principles highlighting areas of agreement. After several months of closed- door meetings and nonstop wrangling over the specifics, scholars from the American Enterprise Institute, the Cato Institute, and the Heritage Foundation produced a draft consensus statement.

The key conclusion: If Congress is serious and wants to reform the ``health care system,'' Congress will have to end the tax exclusion on employer-based health benefits package and replace it with tax relief for individuals and families. This would open up the market, fostering choice, competition, portability, and personal ownership of private insurance. The Consensus Group document is being widely circulated all over Capitol Hill and was recently highlighted in the Wall Street Journal. Its impact on Capitol Hill remains to be seen.

For a copy of the Consensus Group Memo, write to: Arnett and Company, Suite 1010, 1133 Connecticut Ave. NW, Washington D.C. 20036.

Brief Items

Statistics. The Clinton Plan could require some 400 statistical series, but no baseline data exist for one-quarter of the policy objectives. Health statistics are intrinsically complex, ``especially when it becomes a question of generating numbers that show real causal connections,'' according to a Dun & Bradstreet study (BNA's Medicare Report 12/31/93).

School-Based Clinics. The Robert Wood Johnson Foundation awarded $23.2 million to 12 states to develop school- based ``health'' clinics. However, according to program director Julia Graham Lear, ``you can't even begin to make a dent without a serious federal initiative.'' The Clinton Plan calls for spending $500 million to increase the number of such clinics (BNA's Health Policy Report 2/7/94).

Medicare HMO Costs. A study by Mathematica Policy Research showed that Medicare pays 5.7 percent more to provide care to beneficiaries in HMO settings, as compared with fee-for service. HMOs attempt to lure Medicare beneficiaries by paying half their hospital deductible and adding prescription drug coverage (BNA's Medicare Report 12/31/93).