Yes, this can be done! We have found an insurance product without the termination date at age 65: the new AAPS association insurance plan, underwritten by CNA.
About 5 years ago, AAPS Past President Lois Copeland, M.D., visited a number of insurance executives, asking them to offer a free-enterprise substitute for Medicare Part B. She was appointed chairman of an ad-hoc committee of the Medical Society of New Jersey to investigate and promote such alternatives. At that time, these efforts met with no success, but AAPS has continued to seek such a product.
The plan developed for AAPS by Maginnis Associates, a division of KVI, could replace both Part A and Part B of Medicare, at premiums about 20% higher than for 64-year-olds.
But why would anyone want to pay for something that can be obtained ``free,'' or at a highly subsidized price, from the government?
The first reason is that it is a moral obligation to provide for one's own needs to the best of one's ability. It is simply wrong to force others to pay for your medical care. An individual who took money from a waitress at gunpoint would be called a robber, however much he ``needed'' cataract surgery, heart surgery, or a total joint replacement. But those who delegate the use of force to the government are called ``beneficiaries,'' or recipients of an ``entitlement.''
There is said to be an ``intergenerational contract,'' under which the younger generation is obligated to provide for the older. After all, ``we paid our taxes,'' say the older members. Indeed they did. But ``contributions'' are not accumulating interest in a trust fund to meet future needs. Every dollar paid into Social Security or Medicare is immediately used either to provide current benefits or to finance other government programs. It is gone forever.
The only way that older citizens can collect benefits promised by politicians is to force others to pay. The others include young mothers standing for hours at a cash register and laborers digging ditches in the hot sun. To the extent that payments are made from the ``Trust Fund,'' or by increasing the national debt, they will be made by someone else's as-yet-unborn grandchildren.
Just what kind of contract is it, if one of the parties had no say in it? Dare we call it ``taxation without representation''?
The second reason for starting now to provide for your own post-retirement needs is that the present situation simply cannot continue indefinitely.
It is predicted that Social Security and Medicare will demand nearly 40% of taxable payroll by 2020 (assuming that the elderly pay one third of their own medical expenses). (See Goodman and Musgrave, Patient Power.) This would certainly be accompanied by a drastic deterioration in workers' standard of living (from which we have so far been insulated by advances in technology). Will the workers tolerate it?
The third reason is that the quality of sickness care available under Medicare is already compromised. The situation will worsen as more seniors are pressured into HMOs with ``risk contracts'' and as price controls on physicians and hospitals become more severe. Additionally, the campaign against ``fraud and abuse'' is partly a cover for rationing; for example, those who provide services such as cataract surgery to patients with a diagnosis of dementia, however mild, may be prosecuted for ``fraud.'' As physicians awaken to the penalties attached to billing for services that may be ``unnecessary'' (even though beneficial), more are likely to withdraw services. A ``glut'' could quickly become a shortage.
Though the problems with Medicare are more emergent, the same sickness afflicts all of American medicine. Private medicine will soon succumb unless a rational, honest marketplace based on individual responsibility is restored. True insurance-a risk- sharing, rather than a prepayment mechanism-is an important component.
For decades, AAPS has advocated high-deductible insurance combined with Medical Savings Accounts. But when people call asking where they could buy such a product, we have had less-than- satisfactory answers.
Features we recommend in an insurance policy include: complete freedom of choice of doctor, hospital, and treatment; payment of benefits to the beneficiary rather than the provider (the main bulwark against fraud); reasonable premiums; and high enough deductibles to lead to significant cost savings. Also desirable for many is a policy that can be combined with a tax-excluded Medical Savings Account.
The policy offered by Maginnis Associates to AAPS, which has these features, appears so far to be unique in the marketplace. It is available only to members of AAPS (including associate members) and their dependents . Maginnis does provide major medical insurance for about 30 other associations of medical professionals, but without the option to continue past the time of Medicare eligibility.
Information will soon be distributed to all members eligible to purchase the product. An instant premium quote can be obtained by making a toll-free telephone call. Due to highly restrictive state regulations, policies are not available in New Hampshire or Vermont, and New York and New Jersey are in a separate category.
The federal law on medical savings accounts (MSAs) so far appears to be aborting the concept before birth. The plans are too complicated and administratively burdened by ``qualified custodians.'' Basically, MSAs should be as simple as possible so that the individual can save and use his money as he deems fit. He should only need to document (without expensive intermediaries) as already required by the IRS to show that MSA dollars have been used appropriately. Funds used for purposes other than medical care would be taxed when withdrawn.
If the administrative nonsense imposed by government continues, individuals should establish ``health security accounts'' (HSAs-the same as MSAs without the tax savings). Funds might be invested in tax-free bond funds so that at least the earnings would be tax-free.
A major change in thinking is needed. The health insurance concept is so ingrained that one feels naked and threatened by not having customary health insurance. But this is a temporary phenomenon. With the security of catastrophic coverage, most will be able to get through the initial phase of accumulating funds to cover the deductible with impunity and then be in a better position than they ever could have achieved by continuing to pay into customary insurance schemes. People who are in the know already have MSAs (such as Uwe Reinhardt, Professor of Political Economy at Princeton).
At a recent medical staff meeting, a young physician said to Dr. Nigro: ``I just tallied up the fact that I have given $75,000 to Blue Cross over the past ten years and haven't used a dime of it and have nothing to show for it.''
Dr. Nigro believes that physicians have a moral obligation to refuse to cooperate with immoral insurance schemes (such as capitation), and to do everything possible to resist them.
AAPS recommends that physicians educate patients and community leaders about the advantages of true insurance plus HSAs; purchase such products themselves; and be generous in helping patients and colleagues (and insurance brokers) who resist the managed care avalanche.
WHEREAS: Physicians are reporting armed raids on their offices by federal law enforcement personnel seeking evidence of insurance fraud; and WHEREAS: In the course of these raids, unarmed, nonviolent citizens, including patients, office staff, physicians, and even young children, are facing threats of deadly force; be it therefore RESOLVED: that the Arizona Medical Association inform the Congress ...[and appropriate officials] that physicians deplore the display of unholstered firearms in peaceful settings such as medical offices.
The issue of Medigap insurance is probably of greater interest to your patients than to physicians. AAPS does not advocate Medigap plans. However, further government intervention in the insurance market is not the answer to Medicare's problems.
Also, please complete and return the fourth biannual AAPS Medicare survey.
Previously, the IG had the authority to issue subpoenas- an ``awesome and intimidating power''-only with respect to ongoing inquiries in which federal funding was involved. The Senate contemplated use of the expanded power not only for investigations but also to collect data from both the public and private sectors for the proposed health care fraud and abuse data program (Cong. Rec. 10/30/95 at S. 16225, S. 16227).
The initial purpose of the OIG was very narrow. Rep. Levitas, a cosponsor of the 1978 Inspectors General Act, wrote that the IGs ``would not be a new `layer of bureaucracy' to plague the public.'' Rather, ``their public contact would be only for the ... purpose of receiving complaints about problems with agency administration and in the investigation of fraud and abuse by those persons who are misusing or stealing taxpayer dollars'' (124 Cong. Rec. 10,405 (1978).
``This expanded power is directly relevant to the concern that physicians and surgeons fully understand the nature of the risks which they now face,'' writes Mr. Shirk.
The subpoena power strikes yet another blow against patient privacy-which insurers see as an impediment to the fight against fraud. One survey of 86 plans found that 61% of all insurance fraud was committed by patients or undetermined sources. Physicians were divided about whether to report on their patients, according to a survey by the American College of Physicians. HMO physicians were somewhat more likely to report (Arch Intern Med 1997;157:501-504). Are the ethicists factoring in the risks of prison time for patients (if doctors report) or for doctors (if they fail to report)?
As explained by AAPS in previous publications (available on request), the RBRVS is actually based on the Marxist Labor Theory of Value, and calculates an incorrect fee in every instance. It is rife with outright inanity, for example, the reductio ad absurdum presented by Gary Keats, M.D., of Clearwater, FL: the Resource Based Practice Expense has a 5% malpractice component. ``A neurosurgeon with a $100,000 malpractice bill should, therefore, make $2 million, according to HCFA's scheme.''
But was this scheme, which leads to constant internecine conflict between various groups of physicians, really concocted by Donna Shalala and her Republican predecessors? Actually, the Secretary has delegated her vast, unrestrained power over physicians' livelihoods to an ``unelected, secretive, and unaccountable bureaucracy which gives a special reception only to the input of its select sources of policy advice,'' states a plaintiff's brief to the U.S. Court of Appeals for the D.C. Circuit in the case of American Society of Dermatology (ASD) et al. v. Shalala (96-5284). The select, private panels include the CPT Advisory Committee and the AMA/Specialty Society Relative Value Update Committee (``RUC''), and exclude others, such as ASD, which argued that, contrary to the requirements of the Administrative Procedure Act (APA), there is no meaningful notice- and-comment procedure.
``When the `final rule with comment period,' such as the fee schedule published on Dec. 8, 1994, is published, the `proposed' values set forth therein `will in fact be the basis of payment for all of 1996...[i]rrespective of the comment'.''
As Senator Metcalf wrote in advocating passage of the Federal Advisory Committee Act (FACA), ``those who get information to policymakers can benefit their causes,'' while ``outsiders can be adversely and unknowingly affected.''
ASD argued that ``since 1983, HCFA has relied on the CPT Advisory Committee and the CPT Editorial Panel to develop HCPCS codes, and it adopts 100% of the code changes developed by those two AMA-convened committees.''
Like the Clinton Health Care Task Force, the fee-setting committees used by HCFA violate the FACA and the APA, contended ASD. Oral argument was heard April 14. Despite the judges' apparent receptiveness to the ASD position, a two-line ruling was handed down only two weeks later, upholding the adverse decision of the District Court.
Completely unabashed by this attack from a ``splinter group,'' the AMA presses for exclusive use of its CPT system (which prior to its adoption by HCFA for Medicare was only one of 250 coding systems), not only for determining payment, but for administrative management and the development of guidelines for medical care review. The AMA presented the case for recognizing its copyrighted code sets as one of the initial standards for administrative ``simplification'' required by Kassebaum-Kennedy (HIPAA, P.L. 104- 191) on April 16 to the Subcommittee on Health Data Needs, Standards and Security, National Committee on Vital Health Statistics, Dept. of HHS.
The importance of the seemingly arcane debate over codes was explained at the same meeting by the College of American Pathologists (CAP). ``The requirements of HIPAA...have the potential to drastically reshape the U.S. health care system.'' CAP stated that the CPT-4 and ICD-9-CM are classification systems, whereas ``a comprehensive health information system requires the use of a nomenclature, such as their copyrighted Systematized Nomenclature of Human and Veterinary Medicine (SNOMED). CAP calls for eventual convergence of the ``administrative transaction'' systems (CPT-4 and ICD-9-CM) with their nomenclature system.
At least two state medical societies (Illinois and Arizona) will be debating a contrary position, the abolition of the CPT system. The resolution drafted by the Peoria Medical Society delegation states that because the CPT process is extremely burdensome and has done nothing of significance to enhance medical care, it is ``resolved that the Illinois State Medical Society work on its own and through a resolution to the AMA to abolish the CPT coding process.''
The need for the committee ``arose from the proliferation of unconventional and unproven medical practices.'' It is estimated that in 1990, ``Americans made 425 million visits to providers of `unconventional' medicine, exceeding the number of visits to all US primary care physicians, at a cost of approximately $13.7 billion.'' The committee's review is targeted on practices ``not widely taught in medical schools nor generally available in hospitals.''
Methods to be used for identifying ``questionable'' practices include random review of newspapers and encouragement of ``consumer/patient'' reporting. Methods for effective prosecution include applying case law and rules of evidence to exclude testimony by satisfied patients. (This concern about good science somehow does not apply to ``scientific'' questionnaires used to show consumer satisfaction with managed care plans.) Agencies to be involved include the FTC, HCFA, the US Postal Service (mail fraud), the US Customs Service, the FDA, and the District Attorney.
Legislative remedies include granting injunctive powers to state medical boards, as well as the authority to ``monitor'' physicians engaged in ``questionable health practices,'' as by requiring them to file treatment plans with the board. Additionally, the Federation recommends monitoring and opposing health freedom laws.
A special meeting on ``Preventing Healthcare Fraud ,'' sponsored by the FTC, Dallas Regional Office (tel. 214-979-9380), will be held at the Fairmont Hotel in Dallas, June 26-27.
Wanted: data concerning law-enforcement methods. If you know a physician who has been targeted for a fraud investigation without good cause, please call our office, 800-635-1196, for a copy of our research protocol.
The increased ``decision-making roles'' that the CEOs talk
about are much like those faced by slaves in past centuries, who
may have been allowed to ``decide'' whether to pick cotton in the
morning and slop hogs in the afternoon, or slop hogs in the morning
and pick cotton in the afternoon.
Lawrence J. Huntoon, M.D., Jamestown, NY
If costs are too high, companies resort to paying for care ``by the head.'' This encourages patients to see doctors for every little complaint because ``it doesn't cost them anything.'' Then they get angry when they are treated like cattle. After all, capitation means ``by the head.''
[When things are paid for with other people's money,] coercion
is the only way to control costs. [A better way] is for people to
buy insurance with as high a deductible as they can afford, choose
their own physicians, and develop ongoing trusting
William R. Fackler, M.D., Richardson, TX
Fraud Squads. From a letter to Congressman Boehner: If the
Medicare system is subject to fraud, it is largely because the
patients have largely been separated from payment for the services
they receive. Now we have ruthless, out-of-control fraud teams
literally marauding the country and wreacking havoc in the lives of
professions heretofore considered law-abiding citizens. This is
done to keep the average physician ``in line'' and afraid to act
for the benefit of his patients....
Carl Wehri, M.D., Delphos, OH
Physicians Live in Fear. Recently, a friend of mine had
3,000 charts taken from his office by the FBI in a commando
raid....I fear the worst for him. Recent law criminalizes medicine
in ways evoking the methods depicted in the recent movie
Holocaust. I do not know of any other professionals who
have to risk so much to have their invoices paid. Some physicians
may think they can camouflage themselves under the large forest of
medical practice. I do not see myself continuing to work under such
conditions. We're being made to feel like criminals simply for
James Durand, M.D., Mount Vernon, IL
Will Doctors Do Something? I have been saying we
need a John L. Lewis who will raise the banner and say you can't
mine coal with bayonets. Medicine can't be practiced in any form
without the consent of doctors....Perhaps the stress that doctors
are under now with the loss of autonomy, professionalism, and
income will provide the tinder for a spark to ignite the flame.
Gordon R. Meyerhoff, M.D., Roslyn Heights, NY
Are Clinton and Kennedy Republicans, or is Orrin Hatch a
Democrat? The father of the bride in the movie Love
Story, a devout Catholic who disapproved of the mixed marriage
he was witnessing, kept repeating to his son, ``The priest said
`God'.'' The son finally blurts out, ``He's not a priest, he's a
judge.'' The father calmly responds: ``He's marrying them, and he
said `God,' so he's a priest!''
Stephen R. Katz, M.D., Fairfield, CT
Is It Fraud? From a letter to a Senator: If an insurance
company with which I have a contract retroactively changes a code
to lower my fees, could this be considered fraud, and is it covered
under Kassebaum-Kennedy? (If the physician were to increase his fee
through such an ``error,'' he could be prosecuted or fined under K-
K.) And if a contracted plan states orally that I do not need pre-
certification for a certain procedure, then denies the claim due to
lack of pre-certification, does K-K provide recourse for this
Joseph M. Scherzer, M.D., Scottsdale, AZ
[No, ``health plans'' are only victims of fraud, never perpetrators under K-K --Ed.]
Are MSAs the ``Dr. Kevorkians'' of Health Care Reform, as
Sen. Daschle has said? Yes, MSAs do bring death to modern medical
social engineers, be they big insurance companies, politicians,
HMOs, or federal agencies, as shown by the MSA study I edited for
the Evergreen Freedom Foundation in Washington State. (I hand-
delivered the results of the study to Sen. Daschle's Health Care
Fellow last fall.)
Robert J. Cihak, M.D., Aberdeen, WA
The key catalyst for the budget agreement is that the Congressional Budget Office (CBO) has magically discovered $225 billion more in revenue over the next 5 years. As columnist George Will noted in the May 8th edition of The Washington Post, ``The budget agreement was made possible not by the political tweakers but by the millions of wealth-creating Americans responsible for the humming economy and the $225 billion five-year surge of revenues.''
No member of Congress has been more blunt or forthright about the budget deal than Senator Phil Gramm of Texas in a May 1st blast: ``The President gets a guarantee that the era of big government is alive and well in Washington with new entitlement programs and a massive increase in social spending not seen since the 1960s. Republicans get to claim tax cuts, though over time they will be offset by increases in income taxes generated by politicizing the consumer price index. The American people will not get fiscal restraint, a better economy, a balanced budget or permanent tax relief. The President wins, the Republican Congress wins, and the American people lose. This budget deal will be great for Washington and bad for America. It is the product of a system in which the two parties no longer contest ideas, but conspire against the public.''
The CBO revenue windfall, of course, means that Congress won't have to cut spending as much, thus avoiding tough decisions, while ducking serious structural reform of Medicare and Social Security and other big entitlement programs that account for well over half of all federal spending. It enables the politics-as-usual crowd to breathe a collective sigh of relief, get a ``photo op'' with the President on reaching a balanced budget, and otherwise let the current Washington establishment bloat in peace.
The details are yet to be filled in, and there's still a chance that the Budget Agreement could blow up. But don't expect the Budget Agreement to stop federal spending in any big way. It looks as if the deal calls for at least $100 billion in new discretionary spending over and above current levels. Included is at least $17 billion in spending for new children's health initiatives-no doubt some sort of Medicaid expansion is what Clinton has in mind, or some combination of Clinton-Hatch- Kennedy. There will be a restoration of welfare money for legal aliens and food stamps beneficiaries. The Congressional leadership and Clinton plan to cut $200 billion in entitlement spending over the next five years. It turns out that more than half will come from Medicare at $115 billion, most in the form of ``cuts'' to Medicare ``providers''-same old stuff they've been doing since 1966. Look for the costly home health program in Part A to be moved to Part B, something Phil Gramm said he would strenuously fight. They are also talking about $17 billion in Medicaid savings. The tax cuts-netting out at $85 billion-that both the President and the Congress agreed to will be far less than that envisioned in the original ``Contract With America'' outlined by Speaker Newt Gingrich. So much for serious tax relief.
Not all Members of Congress are blind to the problem. At a remarkable hearing of the House Ways and Means Subcommittee on Health, chaired by Rep. Bill Thomas (R-CA), it was revealed that of the 10 million or so children identified by the Census Bureau as uninsured, there are three million children currently eligible for Medicaid who are not participating.
Senator Robert Bennett (R-UT), an original cosponsor of the Hatch-Kennedy bill who dropped off once he realized its substance, is warning his Senate colleagues: If you do expand Medicaid, or some other form of government coverage, you will be likely to further erode private health insurance coverage by providing federal subsidies. In effect, Kidcare would put the children of poor working families on welfare.
A bright spot in the April 8th hearing was that Chairman Thomas stated his belief that it doesn't do the country any good to talk about uninsured children without discussing the inequities of the federal tax treatment of health insurance. At least somebody in Congress has mentioned the root of the problem. But Congressional Republicans are not listening to Thomas; at least not yet.
The facts on uninsured children are becoming clearer. Only 6.5% of children are uninsured for a whole year at a time. While uninsurance has been higher among adults, from 15% to 17% during the period 1988 to 1995, the uninsurance rate among children has held steady at about 13%.
States are addressing the issue. In 31 states in 1995, there were publicly or privately funded programs for children. But too often state efforts have made matters worse for the uninsured. Guaranteed issue, guaranteed renewability, and various forms of community rating have all increased premiums in the individual market. In states that have enacted such reforms (such as Kentucky, Washington State, and Minnesota), premiums increased, and so did the number of the uninsured in the individual market. In Kentucky, 40 insurers left the state, leaving only one major plan- Kentucky Kare-in the individual market. Does ``managed competition'' lead to monopoly?
Starting this July, Kennedy-Kassebaum imposes the same types of mandates at the federal level. The most conservative estimate, that of the American Academy of Actuaries, is that the KK bill will add two to five percentage points to premiums when implemented. Conservative estimates of health care cost increases are historically wrong.
Virtually all of the ``Kidcare'' options on the Congressional table expand welfare spending or create new federal entitlements. Incredibly, less than a year after passage of a welfare reform bill to ``end welfare as we know it,'' the same Congress is starting to look at ways to expand welfare program through an expansion of Medicaid, which is one of the biggest welfare programs. Worse, virtually all of the options on the Congressional table structure the delivery of medical services to children in such a way that the key decisons over the kinds of health plans and benefits will be determined by federal or state bureaucrats, rather than individuals and families. In other words, given the shape of even the Republican bills, the Clinton Administration, which suffered such a crushing defeat two years ago at the hands of conservatives in Congress, is in effect dictating policy: government, not individuals or families, will make health care decisions on the kind of coverage available to children. Consider the leading alternatives:
The Kennedy-Hatch proposal would give $20 billion in grants to states for government subsidies to uninsured children, financed by a 43-cent tax on cigarettes. The states would contract with private insurers, and the benefits package would be standardized by the federal government and would have to be the same as provided by Medicaid (roughly $1360 in value for children's coverage). In other words, the key decisions would be made by the government: the kind of plan, the shape of the benefits package, and what insurance companies can compete in the state pool. States would have the same role as the Clinton Administration health alliances in the 1994 Clinton health plan. States are not required to make voucher payments to employer-based plans, so insured parents with an employer plan would not be able to enroll their child in it with the extra funding if it did not meet the comprehensive criteria set forth in the Kennedy-Hatch bill. The Daschle proposal. The bill would offer tax credits to health insurance companies to cover children on the condition that the health insurer offer a plan to cover a child at little or no cost. The bill would create new authorities for the federal regulation of insurance rates, and standardized coverage guidelines, supervised by HHS. The scope of the Daschle coverage for uninsured children runs to 300% of poverty ($75,000 annual income).
Medicaid Expansion. The Clinton Administration proposal would expand Medicaid. An immediate effect of Medicaid expansion is to erode existing coverage for children in employer-based health insurance. So children will lose private coverage and get Medicaid. This will be considered a policy victory?
EITC Mandates. Another proposal is to force families getting the Earned Income Tax Credit (EITC) to use it to buy health insurance for their children if they don't have any. If families failed to purchase it, then a portion of the EITC would be sent to the state for use in covering the cost of uncompensated care. If the federal government requires a family to purchase, then the government will have to define what is to be purchased. The problem is that without a federal preemption of state mandated benefit laws, families would be required to purchase the state-mandated benefits package, which could be too expensive.
Conservatives on Capitol Hill are looking at other options, including the provision of a tax deduction to parents for the full cost of the medical expenses of children not covered by an employers plan; an income-related tax credit for the purchase of health insurance; and proposals to give state governors greater flexibility to offer alternatives within the existing Medicaid budget. A related option is to block grant Medicaid, set up a fast- track waiver program, reduce Medicaid mandates and thus allow states to target funds more effectively.
Thus far, Hatch-Kennedy is the leading proposal, which tells us a lot about the state of the Congressional debate.
According to American Medical News, April 7, 1997, fixed daily overhead means that the key to profitability is either to treat fewer patients, and thus spend fewer resources in curing people, or to see more patients per day. The Springer Clinic in Tulsa, Oklahoma, the subject of the article, has developed a three- tiered compensation system based on increasing volume. For the first 25 patients a doctor sees, he gets 40% of the charges per patient; for a daily volume of 26 to 35, he gets 50% of the charges; and for 36 and up, he gets 60% of the charges.
Even so, more and more HMOs are losing money. According to the Center for Studying Health System Change, 40% of the country's 630 HMOs lost money in 1995. They've got to recover their margins. So look for premium hikes of 4 and 5% for 1997. Could it be the beginning of the next health care cost explosion?
In the meantime, HMOs are trying to respond to the pressures created by bad publicity by opening up options for consumers. The chief mechanism is the point-of-service (POS) option: if you pay a premium surcharge, you can go to any doctor you wish.
Of course, an even better option is to go to any doctor you wish, regardless of any transactions with a third party payer. That's the beauty of the MSA option. That is why there is such fierce opposition to it.