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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
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Volume 51, No. 6 June 1995


Speaker Gingrich is setting the agenda, and Medicare is at the top for the next few months. With great political astuteness, Gingrich lobbed the ball into Bill Clinton's court. With equal savvy and lightning speed, Clinton slammed it back.

They both know where the ``third rail in American politics'' is, and neither wants to touch it. What politician could survive the credit for bringing down the federal building of Medicare, the great shining showcase of the Welfare State and government- funded medicine?

On the other hand, everyone wants credit for saving Medicare-including physicians. And something must be done.

If a building is in trouble, one needs to send in men in hard hats to examine the foundations.

Let's set aside the various Reports, Plans, Bills, Opinion Surveys, and Trial Balloons-and take a hard look at the foundations of Medicare. Here are the rock-solid indisputable facts that every American needs to know:

  • Medicare Part A is built on a first-dollar tax on wages. Out of every dollar an American earns, 2.9 cents goes to Medicare Part A. No one may lawfully earn money to buy milk for the children, a train ticket to work, or insurance for himself, without paying that tax first. Americans who earn $20,000 pay $580; those who earn $200,000 pay $5800 to Medicare Part A.

  • Medicare Part B premiums are about 75 percent subsidized by general tax funds. Uninsured working Americans are paying part of the premiums of wealthy retirees.

  • The tax is not enough; bankruptcy is inevitable. Receipts from the payroll tax already fall about $22 billion short of covering current Part A outlays.

  • The tax cannot be increased enough to keep politicians' promises. Increased longevity plus decreased fertility yields a demographic bomb. By 2040, the Medicare payroll tax alone would consume between 10.6 and 20.26 percent of all wages to maintain present benefits. Long before tax rates rise that high, capital and labor will move to places where they can earn a decent return. If forced to remain, their productivity will be minimal.

The dreadful truth is that Medicare is a pyramid scheme founded on deceit. It is like a poorly constructed building that straddles a major fault.

The answer to the question in the title is simply ``No, Medicare in its present form cannot be saved.'' That is simply a fact, not a wish or a statement of political philosophy.

The next question is what to do about it. One approach is to deny the magnitude of the problem and offer a palatable nostrum. Appealing but dangerous ``solutions'' include changes in the top management along with schemes that paper over the cracks with price controls.

Those in power know that they cannot repair the problem, but they hope to postpone the day of reckoning so that it does not occur on their watch. Or they simply wish to delegate the responsibility so that someone else will be blamed for the debacle. ``Private'' entities, namely ``managed'' care, are popular candidates. Let them skim a fat share of gross receipts from the top for playing the heavy and taking the heat.

``Managed care'' may be called a ``market-based'' or ``private'' solution, but those terms are in Orwellian Newspeak. As documents of the Clinton Health Care Task Force acknowledge, enterprises that exercise powers belonging to government, or that are under pervasive government control, are private only in name or form. Medicare HMOs are funded by the government and act as an arm of the government. But their failure will be construed as a failure of the marketplace and as a reason for frank government takeover.

Another approach is to call for the outright, immediate repeal of Medicare. This would be about as irresponsible as dynamiting an unsound building while people are inside.

The humane and rational approach is to shift our attention from saving the building to saving the people who are trapped in it.

The first step is to avoid further damage from loading on additional costly regulations. The second is to unload the counterproductive stresses that already exist (the Clinical Laboratory Improvement Act, restrictions on balance billing, claims filing when no reimbursement is expected, etc.). Next is to protect as well as possible the most vulnerable patients who cannot find assistance outside the system. Most important is to evacuate in an orderly manner those who are willing and able to leave-and simultaneously to allow the development of sound structures to replace the failed Medicare system.

Persuading people that they should leave a heavily subsidized program will not be easy-especially when they themselves have been taxed to provide the subsidy. Persuading young persons that they should not enter is somewhat easier. Finding the means for them to do so, given present levels of taxation, is the difficult part.

Under politics as usual, Congress will study plans to remodel the top floor. The health-care management interests will try to block the front exits, while fashioning policy that must inevitably hasten departures via the morgue.

Meanwhile, the real support for the structure is crumbling- the support of workers. Their ability to produce is drained by taxes and regulations, and their anger grows as they see the legacy that awaits them.

The choices are stark: we can tell the truth and rescue the people-or we can lie and do nothing to mitigate the inevitable collapse.

Washington's Clinton Plan Repealed

Mrs. William J. Clinton was present by satellite at the signing of the 1993 Washington Health Services Act, which came by FAX from the war room of the secret Health Care Task Force in the Old Executive Office Building in Washington, D.C. She was nowhere to be seen when most of the bill was repealed in May, 1995.

Governor Lowry, who had forced the ``reform'' bill through the legislature, decided to sign the repeal rather than his political death sentence. Michael Schlitt, M.D., President of the Washington chapter of AAPS, was in Olympia for the ceremony and has a Lowry pen to commemorate his years of battle.

Provisions that were repealed included: mandatory managed care; a uniform benefit package for all insurance companies; employer mandates; the requirement that all physicians belong to a Certified Health Plan; and caps on insurance premiums. The Health Care Commission, which had extensive regulatory authority, was replaced by an advisory panel. And medical savings accounts, which would have been unlawful under the former bill, were endorsed by statute:

``The legislature recognizes that the costs of health care are increasing rapidly and most individuals are removed from participating in the purchase of their health care.

``As a result, it becomes critical to encourage and support solutions to alleviate the demand for diminishing state resources....The legislature intends to clarify that health care savings accounts may be offered as health benefit options to all residents as incentives to reduce unnecessary health services utilization, administration, and paperwork, and to encourage individuals to be in charge of...their use of service....''

Although Washington State has no income tax and thus cannot offer any tax savings from MSAs, the law does request the U.S. Congress to amend the IRS code to establish tax equity for individual insurance.

The Washington Chapter of AAPS played a leading role in the coalition that fought the Clintonization of medicine in a bellwether liberal State.


Exodus from Canada

Both patients and physicians are jumping ship as the Canadian single-payer system begins to sink.

With six-month delays common for knee and hip replacements, Canadians are buying insurance that pays for procedures in the U.S. if the approved waiting list at home is longer than 45 days.

The price is right: about $25 per month for a single adult. Policyholders can choose from 800 U.S. hospitals, including the Houston Heart Center and the Mayo Clinic. Travel expenses are also covered (Medical Tribune).

Meanwhile, Canadian surgeons who perform the procedures are pulling up roots to move south. Orthopedic surgeon Robert Jackson, a ``national treasure,'' recently left Toronto for Baylor University in Dallas. In an extensive interview by the Toronto Sun (Sunday Magazine 4/9/95), Dr. Jackson noted that Canada has become ``the only place in the civilized world where private practice is forbidden.''

Among Dr. Jackson's reasons: ``I don't like being considered the bad guy all the time.'' Physicians are held responsible for the constant cuts. At The Orthopedic and Arthritic Hospital in Toronto, wards were closed and the staff had to sell pizza to pay for repairing the elevators. It was Dr. Jackson's job to explain to staff doctors why they were limited to some 25 joint replacements per year. The hospital could not afford more plastic joints, and patients were not allowed to buy their own lest a ``two-tiered'' system develop.

Although they must fight for operating room time, specialists still work very long hours seeing patients to earn a living. As the exodus exacerbates the shortage of specialists in many areas, those who remain have a crushing workload, often 100 hours per week. This may include two hours per day of unpaid labor to return phone calls and fill out government forms.

An additional attraction of the U.S. is the ability to do research that is no longer possible in Canada. Dr. Jackson will study joint motion, using computer technology, thanks to a grant from an anonymous Texas millionaire.

``Pathological egalitarianism'' is Dr. Jackson's diagnosis for the malady that has caused the ``systematic dismantling'' of medicine in Canada.''


Help Congress Dismantle Harmful Regulations

Senator Frank Murkowski (R-AK), Chairman of the Committee on Energy and Natural Resources, has issued a call for documented examples of regulatory excess or abuse of regulatory process, especially within the Departments of Energy or Interior. He is specifically interested in unnecessary or overly burdensome forms; requirements for information unrelated to the objective of the regulation; conflicts between regulations; abusive action as conditions for permitting; and standards that are clearly unreasonable considering the nature of the risk and the fiscal impact. Questions can be addressed to James P. Beirne, Senior Counsel to the Committee, at (202)224-2564. The address is Hon. Frank Murkowski, US Senate, Washington, DC 20510-6150, Attn: Regulatory Analyst.


Arizona Patient Protection Act Signed into Law

Not one legislator voted against this act, although five representatives abstained. Managed care did win two concessions. The title was changed from ``Patient Protection'' to a bland and nondescript ``Health Care Services Organization,'' and the disclosure requirements were changed to apply only upon request of an employer. Nonetheless, managed care organizations will now have to provide information concerning contract provisions-for example, limitations on services, including procedures for emergency room, night or weekend visits, and referrals to specialists; procedures for securing prior authorization; circumstances under which the plan may retroactively deny coverage for emergency or nonemergency medical treatment that had prior authorization; any requirements that plan providers must comply with any specified numbers, targeted averages or maximum duration of patient visits; procedures for consulting a physician other than the primary care physician; and a description of any incentives or penalties associated with influencing plan providers to withhold services or minimize referrals to specialists.

After the legislature adjourned, the Arizona chapter of AAPS heard a rumor that the Governor might be persuaded to veto the bill on the grounds that it was ``unnecessary.'' President Joseph Scherzer, M.D., spoke about the Act on talk radio, the FAX network was activated, the phones rang in the Governor's office, and the bill became law.

Correspondence from the LLCS

This is in response to a request to review the new Medicare Electronic Claims Rider effective February 1, 1996. The analysis is limited because the requester was not able to locate a copy of his Electronic Trading Partner Agreement.

Part A, paragraph 1, states that the physician as the ``trading partner'' will be liable for all breaches of the agreement, whether caused by himself or any partner, employee, or other subcontractor. Accordingly, the physician may wish to protect himself by making a contract with his billing service, under which they agree to abide by the terms of the Medicare Electronic Claims Rider and indemnify the physician for any breaches of that agreement due to their own conduct.

Part A, paragraph 2, prohibits a physician from disclosing information about a Medicare-eligible individual to any other person or organization other than HCFA, without the individual's express written permission [see Dr. Huntoon's form, p. 4 -- Ed.]. Because of the broad wording of this paragraph, it appears that a physician will be required to obtain written permission from the Medicare eligible individual in order to use a billing or an electronic transmission service....

Part A, paragraph 7, requires the physician to certify that all claims for Medicare primary payment have been developed for other insurance involvement and that Medicare is the primary payor. It does not state the procedure or level of investigation necessary to determine whether insurance other than Medicare is available.

Part A, paragraph 10, requires the physician to attempt to prevent unauthorized users from submitting claims or committing data security violations. It does not state the types of security measures or the degree of effort that will satisfy the requirement. Moreover, there is no wording to indicate that the physician's security measures will be reviewed on the basis of what was reasonable under the circumstances.

Paragraph 14 also imposes a requirement for ``sufficient'' security procedures without specifying what these might be.

Because a physician is likely to have little control over the actions of the billing service, it is advisable to have a contract under which the service agrees to indemnify the physician for any breaches of the Medicare Electronic Claims Rider caused by them.

Part A, paragraph 18, seeks to absolve HCSA and HCFA from all claims, costs, or damages as a result of any claims discrepancies, regardless of the source of those discrepancies.

A physician will probably be given little latitude in terms of negotiating modifications to the Electronic Claims Rider Agreement. Accordingly, your best course of action [if you decide to submit electronic claims -- Ed.] may be to implement intraoffice procedures to ensure your own compliance with the claims rider and then protect yourself contractually from breaches of the claims rider by the outside billing services you elect to use.

Timothy M. Schellberg, AAPS General Counsel

and Thomas P. Gallagher, Esq.

[Members who have legal questions are invited to call 1-800-635-1196. Questions that fit within the purview and budget of the AAPS Limited Legal Consultation Service will be referred to Counsel. AAPS members and directors are quite willing to share their own experiences and opinions relevant to ethics and legality, but they cannot give legal advice.]


Physicians Forbidden to Supply Equipment

As of January 1, 1995, a physician who sells any kind of durable medical equipment to a patient is in violation of the new Stark II anti-referral regulations.

This means physicians may not supply wheelchairs, crutches, or anything else that Medicare classifies as ``DME'' but must send the patient to a supplier with whom he has no financial ties. There are complex exceptions for ``ancillary services,'' but regulations have not yet been written (Part B News 4/17/95).


Surgeons Challenge 5% Rule?

Under Medicare rules, an assistant surgeon cannot be paid if fewer than 5 percent of surgeons use an assistant for a certain procedure. Even if the patient willingly elects to pay out of pocket, the assistant surgeon is threatened with sanctions if he accepts the money. The billing prohibition was challenged (specifically with respect to cataract surgery) in NY State Ophthalmological Society v. Bowen. Because both sides stipulated that private contracting was illegal under Medicare, the patients' right to contract was not argued. The Long Island Ophthalmological Society intends to file a constitutional challenge, referring to the case of Stewart v. Sullivan brought previously by AAPS President Lois Copeland, M.D., and several Medicare beneficiaries.

The society argues that ``this is the only example of the government forbidding payments for a rightful and contracted service. The Government has a long history of wage and price controls, but the wages and prices can never be zero.''

For further information, contact the Long Island Ophthalmological Society, Clinton, NY, (800)416-2020.


Under False Claims Act, Anyone Can Sue

All that it takes to become a qui tam plaintiff under the federal False Claims Act is information that someone submitted a claim that could be fraudulent. One need not have been harmed by, nor have any relationship to the plaintiff. However, most such plaintiffs are current or former employees. They may even be the very people that the defendant hired to review and correct its billing procedures.

The potential rewards are enormous: 15 to 25 percent of the amount collected from the defendant in a successful case. (And the penalties are up to $10,000 per false claim.)

The risks are minimal. The court may order an unsuccessful plaintiff to pay the fees and expenses of a defendant only if the action was clearly frivolous or vexatious. There is a separate private cause of action for employees who suffer retaliation for exercising their rights, but no comparable relief for employers damaged by unfounded allegations.

Because the Stark II amendments state that no one may request payment of a claim that results from a prohibited referral, such claims are arguably encompassed under the False Claims Act and thus subject to qui tam provisions (L.M. Robison, P.R. Roest, Mark D. Folk, Natl Law J 4/24/95).

Whenever we depart from voluntary cooperation and try to do good by using force, the bad moral value of force triumphs over good intentions.

Milton Friedman

Members' Page

QA for Reviewers. It amazes me that people feel they can obtain information about psychiatric treatment by phone. How is the physician to know the caller is not from The National Inquirer? My patients would be interested to know who is reviewing their case. Here is a suggested letter to be signed by the patient and sent to would-be reviewers:

This letter requests Dr. Nigro to obtain all appropriate information from all health care reviewers, managers, and examiners, or any other person so designated by my medical insurance company, who will see my records....Please answer the following 20 questions, [including] name, direct dial phone number, how long employed by this management program, professional qualifications, documentation of familiarity with direct clinical care, CME credits, number of lawsuits filed against you, and number of patients cared for per week.
Samuel A. Nigro, M.D., Cleveland Heights, OH


Equal Protection of the Law. To the Deputy to the Deputy Assistant, Secretary for Health Policy, Dept. of HHS:

Knowing your keen interest in bureaucratic rules, regulations and laws, and violations thereof, I would like to refer you to Section 552 on Public information....Then please turn to a letter dated Dec. 13, 1994, by the Director of the Freedom of Information section, responding to my FOIA request of April 16, 1993. That is 60 times longer than the time period required by law, Section 552 (A)(1)(i). As a true blue bureaucrat, your duty is clear: turn your subordinate and yourself in to the Dept. of Justice, for the good of the State.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


Doctors Need Permission to Help. A one-page consent form for patients gives Dr. Huntoon permission to release information concerning Medicare claims. In part, the form reads:

``In order to allow our office to help you with botched Medicare claims and other problems created by the bloated and bungling Medicare bureaucracy, the government requires us to have a form....If we do not have this form signed, the Medicare carrier will not research or reply to our inquiries concerning your Medicare claim that they have mishandled....

``I give Dr. Huntoon permission to send any and all information to Senators, Representatives, other government officials, medical societies, or others deemed appropriate by Dr. Huntoon to help resolve improperly processed Medicare claims or other Medicare created problems....''

Dr. Huntoon reports that patients are all too willing to allow their names and claim information to be used toward the goal of ending the pervasive and constant bungling.


The Ethics of Capitation. Due to the Washington State Medical Plan, I cannot afford AAPS dues. I have never compromised my standards, although it now means losing money when I care for children enrolled in the ``Healthy Options'' program. For example, if a Strep screen is obtained, the MSC plan will bill the practitioner $7, presumably as a penalty, leaving $3 of the $10 capitation fee for the child's care that month. Virtually all children over 3 years old, especially if they are in day care or school, become ill frequently enough that a physician can meet expenses only by prescribing medication by phone without seeing these patients.
Carol F. Truitt, M.D., Richland, WA


Right to Private Contracting Asserted. On Feb. 9, Marilyn Singletary, Fraud Investigation Unit, wrote an inquiry concerning a ``waiver of Medicare Part B entitlement'' form used by Dr. Kerr, stating that ``Medicare is monitoring physician compliance with the Medicare claims filing requirement.'' As of May 1, Dr. Kerr still had received no response to this letter, despite a follow-up telephoned request to confer with Medicare's legal department:

Let me share with you the dilemma that I face. I am a liberty nut. For reasons that you probably would not understand, I cannot accept the notion that the federal government has any constitutional role in financing or regulating my intrastate medical practice. Furthermore, I cannot, as a matter of conscience, accept money that the federal government has taken from one person and given, unearned, to another person. Therefore, I do not take Medicare or Medicaid money. I am, however, law abiding.

In September, 1990, when I heard about the ``law'' that requires physicians to submit bills to Medicare, I stopped, as a matter of conscience (and fear of prosecution), seeing Medicare- eligible patients. Later, after hearing about Judge Nicholas Politan's findings in the case of Stewart v. Sullivan, I began my present practice of using the contract that has apparently come to your attention.

In view of the Judge's finding that there is no ``clearly articulated policy'' against private contracting, I will continue privately to contract. If you can show me that such a policy does exist, and that an enforceable rule against private contracting has been published in the Federal Register, then I will have to reconsider my position, and Stewart v. Sullivan might be ripe for reopening. A mere reference to a Medicare carrier manual or bulletin would not be sufficiently convincing.

If, as I maintain, there is no rule against what I do, please have the courtesy to apprise me of that fact. This is a most important issue, and I look forward to resolving it quickly.
Richard S. Kerr, M.D., Morgantown, WV

Legislative Alert

Congress Returns; Budget Battle on Agenda

Coming back from their respite from the whirlwind 100 days, Members of Congress are plunging into the tougher part of the national agenda: the federal budget and ``Health Care Reform,'' including the reform of Medicare and Medicaid.

The federal budget battle promises to be a major-league clash this summer. Many Congressional and media critics of the House Republican agenda argue that the goal of a balanced budget simply cannot be reached, especially if tax cuts are included in the budget package. Others argue that it's simply a matter of guts.

Bolstering the case that a balanced budget and tax cuts can be achieved simultaneously is a formidable 260-page set of recommendations from the Heritage Foundation, a conservative Washington think tank. It targets for elimination nine federal departments, proposes major consolidation of numerous federal programs, and transfers dozens of federal functions, including the major federal welfare programs, to state governments. The proposal would cut $755 billion in federal spending over five years and achieve a balanced budget by the year 2000.

Members of Congress, testing the waters back home, are finding that a transfer of federal functions to state and local government has broad popular support. According to a March, 1995, survey jointly conducted by Democratic pollster Peter Hart and Republican pollster Robert Teeter for the ``Council for Excellence in Government,'' 75 percent of the American people favor giving the states ``more responsibility'' for programs now run by the federal government, and only 17 percent are opposed. A total of 50 percent think that their local government spends money wisely; 24 percent think that their state government does; and only 10 percent think that the federal government does.

Congress is getting the message. House Budget Committee Chairman John Kasich has the Department of Energy and the Department of Commerce on his hit list. Several conservatives, including Congressman Matt Salmon of Arizona, want him to go after the Department of Education also. Congressman Roscoe Bartlett of Maryland is floating a proposal to link Congressional pay to the Congressional success or failure to achieve a balanced budget by the year 2002. The goal would have to be achieved by cutting spending, not raising taxes. If Gingrich wants to play budgetary hard ball, this measure may just be the weapon he needs.

In the Senate, the key items of the House ``Contract With America'' will be debated. It will be tough going. Deliberations will be strongly affected by competition between Senators Dole and Gramm for the 1996 Presidential nomination. Gramm wants the Senate to pass the entire House ``Contract'' and then some, and is staking out a legislative strategy early. Capitol Hill observers expect that regardless of the Clinton Administration's approach to the Contract items, Gingrich and his allies in the Senate will fold the Contract provisions into the Budget Reconciliation Bill, which authorizes spending for federal departments and agencies. This will be a major political challenge to President Clinton. Another hard-ball tactic is the attachment of the conservative reform items to the Debt Ceiling Bill, which enables the government to borrow.

Expect longwinded press releases about ``responsible government.'' Of course, Senate and House Democrats used such tactics regularly against President Reagan, even before breakfast.

Senator Judd Gregg's Medicare Initiative

Following orders from Dole and Company to come up with a Budget plan to cope with the deficit without touching the Social Security System and without raising taxes, Senator Judd Gregg of New Hampshire has issued a major report on ``Options for Non-Social Security Entitlement Reform.'' By the Senator's calculation, adopting the recommendations of this report would slow the growth of entitlement spending by nearly $500 billion over the next five years. Still, non-Social Security federal entitlement spending would be enormous: $2.82 trillion in spending from 1996 to the year 2000. Without the Gregg reforms, that spending would be $3.2 trillion.

Gregg has put the details of his budget plan on the table and has issued a simple challenge to potential Congressional critics: if they find the plan unacceptable, they should propose their own alternatives. Medicare, of course, is the most controversial item.

Gregg's report recites the universally gripping figures. Medicare Trustees project bankruptcy for the Hospitalization Trust Fund as early as the year 2001. While private health care costs have been dropping, Medicare costs rose 10.5 percent last year, and they show no sign of slowing.

While Gregg affirms, contrary to some of his House colleagues, that the fee-for-service system should be preserved for those seniors who want it, he proposes the following ``cost containment'' measures: home health copayment of 20 percent (19.7 billion in savings over 5 years); lab coinsurance ($6.1 billion over five years); means testing for Part B premiums ($10 billion over five years); extending the HI tax to state and local government employees ($7.6 billion over five years); reducing the hospital inflation update by 1.5 percent ($10.2 billion over five years); and implementation of Physicians Payment Review Commission recommendations ($10 billion over 5 years).

Gregg also proposes a major restructuring of the ``terribly outdated'' Medicare system: a ``Choice Care'' option. Under this option, senior citizens would be able to get a ``Choice Check'' equal in value to the capitated Medicare amount in their region of the country. During an annual open season, they would be able to use this check to purchase various medical insurance options. A senior citizen who chose a less expensive plan could keep 75 percent of the difference. A senior citizen could choose a more expensive plan if he paid the extra amount.

In his report, Senator Gregg states: ``The Clinton health care reform plan projected $207 billion in savings under Medicare from forcing all seniors into a managed-care system with per capita spending limits. Choice Care does not share the Clinton plan's coercive aspects, and only budgets $35-45 billion in savings over 5 years. It is likely that Choice Care will be positively received by seniors and that even more savings will accrue.''

Of note, the Gregg plan has no provision for a Medical Savings Account option. If one really wanted to put consumers in charge, then an MSA option would be a natural, coupled with a catastrophic insurance plan. Additionally, it is not at all clear from the language of the Gregg proposal whether the ``Choice Check'' is an inducement to managed-care plans only. Instead of leveling the playing field, this plan could make Medicare an extension of the corporate-care revolution that is limiting consumer choice, not only of insurance, but also of personal physician. Gregg refers to the ``antiquated and costly fee-for-service system,'' but he also cites the example of the Federal Employee Health Benefit Plan, which does not discriminate in favor of managed-care plans.

The Gingrich Factor

Regardless of the options, the final shape of things to come in Medicare and in health care reform in general is likely to have the strong imprint of Speaker Newt Gingrich. Gingrich shepherded through the restoration of partial tax deductibility for the self-employed. And despite the fury of the American Bar Association, his team managed to secure a cap of $250,000 on non- economic damages as part of medical malpractice reform by a vote of 247 to 101. He has pledged to make medical savings accounts a key element of reform this year.

In an unprecedented public performance for a House Speaker, Gingrich addressed the nation on prime-time television, outlining the recent achievments of the new Congress and telling Americans where he wants to take the nation. This is stuff normally reserved for Presidents in modern times, but Gingrich may be taking the political system of the United States back to the much older republican tradition of Congressional supremacy as the first among equals in the three branches of government, a view clearly in accordance with the consensus of the Founding Fathers. In the aftermath of the recent legislative onslaught by Gingrich and Company, Clinton has felt compelled to assure the nation of his continuing ``relevance.''

While Speaker Gingrich is getting grudging respect for his performance as a political Leader-Americans are unused to real leadership-the establishment press is really upset with the content of the now notorious ``Contract With America.''

``Let no one begrudge House Speaker Newt Gingrich full credit for his achievements as a political strategist,'' states the editorialist of the April 9th New York Times. ``He has supplanted the President as the most important shaper of national political debate. Before that, he pulled off the most difficult trick in campaign planning, which is to impose a single theme on hundreds of races...in an off-year Congressional election. No dispassionate judge of political talent can fail to be impressed. This is a skill of a high and rare order.''

However, commenting on the substance of the Contract and the Speaker's lack of personal popularity, the Times observes: ``He projects a seething anger that the American people are picking up on their emotional radar. Even for those who believe that Americans need a dose of fiscal discipline and boot strap ambition, Mr. Gingrich seems extreme because the nation he would create would be pinched, unfair, and punitive. His gift for tactics is not matched by a talent for seasoning power with compassion.''

The editorial is spiced with intemperate language- intemperate, mind you, not the red-meat stuff of the far left. Indeed, the Times editorial conjures up the image of a proper old lady trying her best to retain her composure, admonishing the bad behavior of the vulgar rabble. Imagine the editorials after the first round of budget cuts. Which brings up...

More Voices of Moderation

In the aftermath of the Oklahoma City bombing, Clinton gave the nation some sound advice. It is time to lower the octane on this country's political rhetoric.

Clinton's political friends and allies should take that advice. The President is also right-and we give him credit for saying so-that this sound advice pertains to liberals, as well as conservatives, journalists on the left as well as popular radio talk show hosts on the right.

For example, the national dialogue on public policy was not elevated when, during the ``school lunch'' debate, opponents of the House welfare reform bill accused the Congressional leadership of taking food from the mouths of starving children. Nor was it uplifting for Congressman Lewis of Georgia to compare the House welfare reformers with Nazis or for Mr. George Bushnell, major domo of the American Bar Association, to call the House Congressional leadership ``reptilian bastards'' for pursuing tort reform. Likewise, Carl Rowan, a nationally syndicated columnist writing in The Washington Post did no service to humanity by claiming that Senate Majority Leader Robert Dole and Speaker of the House Newt Gingrich are somehow vaguely responsible for creating the ``climate'' that incited the unspeakable terrorist violence in Oklahoma City.

Transforming Employer Health Insurance

While Gingrich has called for a congressional investigation of managed care in his speech to the American Medical Association (see May Legislative Alert), other Republicans in Congress are aggressively pushing HMO-style medicine as the key element in the reform of Medicare and medical insurance in general. The conflict within Congressional ranks on managed care is deepening. Backers of private employer-based insurance are saying that the movement to managed competition is a ``triumph of the market'' and proof that the Clinton Health Plan or anything like it was unnecessary all along. Others, largely conservatives, are arguing that the corporate movement to managed care is nothing less than another proof of the distortion of employer-based insurance, which thwarts real competition and deprives consumers of any meaningful control over their own money.

Meanwhile, employer-based insurance is changing dramatically. With the rise in medical costs, large firms have been moving aggressively toward managed-care plans, and now 63 percent of all of those enrolled in employer-based insurance are enrolled in managed-care plans. But small firms are changing as well. A survey by Arthur Anderson and Co. Enterprise Group, published in the March, 1995, edition of INC., shows that the average increase in medical costs among small to mid- size firms fell from 22 percent in 1993 to 14 percent in 1994. The most common responses to rising insurance costs were to change insurance companies (40 percent); change policies from low to high deductible (36 percent); switch to HMO or PPO plans (26 percent); increase employee's contribution (25 percent); reduce benefits (16 percent); institute wellness programs (9 percent); switch to self-insurance (9 percent); switch to cafeteria-style plans (6 percent); or drop coverage (4 percent). Of course, American workers and their families have very little to say about any of these decisions. After all, it's only their money.

As long as Americans are effectively denied the use of their own money for the purchase of insurance or medical services, because of the penalties of the tax code, the American medical system will remain broken.