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

Volume 50, No. 3 March 1994


On the State-of-the-Union Show, Bill Clinton blasted 12 years of ``trickle-down economics,'' then flourished Ronald Reagan's veto pen (not yet used this term), with which Clinton will veto any ``health-care reforms'' that don't go all the way. Clinton intends to make history by guaranteeing ``health security that can never be taken away.''

For 60 years, he stated, Presidents have tried to give Americans this boon, only to be defeated by powerful special interests.

``Not this time,'' he pledged. He is ``drawing a line in the sand.''

The best summary of the structure of Health Security is the enclosed diagram, drawn by a Clinton supporter (an aide to Senator Arlen Specter [R-PA]) who was trying to understand the flow of authority.

At the bottom of the structure, in a tiny, inconspicuous box, are individuals and families; just above them are ``providers.'' At the top is the National Health Board.

The flow of revenue is not so easily diagrammed. The source of revenue to the system includes ``premiums'' paid by employers and individuals; taxes on tobacco products; subsidies for welfare beneficiaries; assessments of 1% of payroll for all employees who are covered through a corporate alliance; and civil monetary penalties.

The penalties are substantial. For example:

§ 1345, Collections, (d), ``Assistance: The Secretary of Labor shall provide regional alliances with such technical and other assistance as may promote the efficient collection of all amounts owed such alliances under this Act by employers. Such assistance may include the assessment of civil monetary penalties, not to exceed $5,000 or three times the amount of the liability owed, whichever is greater, in the case of repeated failure to pay.''

Families may be assessed the same penalty for failure to pay their 20% share.

Families may claim a discount based on low income. To do so, they must file a reconciliation of income statement. Any individual making a misrepresentation of fact ``shall be liable to the State in which the alliance is located for $2,000 or, if greater, three times the excess payments [made by the alliance] based on such misrepresentation.''

Health plans are also subject to civil monetary penalties, 5206 (a) Denial or Delay in Payment or Provision of Benefits: For ``unreasonable'' denial or delay in the payment or provision of benefits, the U.S. Secretary of Labor may assess up to $75,000 per violation, plus an additional $1,000,000 if there is a ``pattern'' of violations.

Providers are subject to civil monetary penalties for a number of offenses, including failure to comply with information standards. (Criminal fines were discussed in the AAPS Legal Supplement, January, 1994.)

The incoming revenue stream goes to several levels of the system: health alliances, State governments, and various agencies of the federal government. (Health alliances may be a nonprofit organization or a State agency, but basically are creatures of the State government.)

Disbursement of funds may be from the federal government to the States in grants for certain activities, e.g. ``comprehensive health education.'' But individuals will receive medical care through their ``health plan.'' All payments to physicians (except for nominal patient copayments) will come from the plan, which will in turn receive its funding through the alliance.

The health alliance does not simply transmit premiums for individuals or families directly to their plan. Rather, it first takes a percentage (2.5%) to cover its own administrative costs and then pays 1.5% of the premiums to the federal government for the support of academic health centers and graduate medical education. Then, it allocates payments to all the certified plans based on the number of enrollees and a complicated formula, developed by the National Health Board, to adjust for risk of illness and nonpayment or underpayment.

Provider payments will be based either on capitation or a fee schedule (probably the Medicare RBRVS). Balance billing is forbidden. The fee schedule is established by negotiation, a procedure that is considered state action; therefore, collective negotiations will be considered efforts to influence governmental action, and providers will not be permitted to threaten or engage in a boycott.

In the event that plan spending will cause an alliance to exceed its budget, the plan must reduce expenditures through a withhold or delay in payments to physicians and other ``providers.'' In the case of failure of one or more health plans, the State may require each solvent health plan to pay an assessment of 2% of premiums to the State to establish a guaranty fund. This fund will make those payments to providers that are required; providers will have no right to seek payment from plan enrollees beyond the copayments. Furthermore, the providers must continue caring for eligible individuals until they are enrolled in a new plan.

As Charles Jannings III, M.D., of Billings, MT, points out, the plan imposes 1,233 directives on everyone from accountants and anthropologists to underwriters and warehouse workers. It shunts funding to planners, decision-makers, reviewers, and enforcers. There is no mandate, however, to pay a physician a remunerative fee for medical services.

While economic controls choke off the slightest trickle of economic reward from the patient to the physician, torrents of funds will be diverted into politically controlled channels.

How much medicine can we expect to trickle down?

For More Information....

Call CompuServe and type GO DEMOCRATS to download files that summarize the Clinton Plan. Although somewhat more readable than the Plan itself, these files are sanitized. Prison terms are deleted, as are the amounts of civil monetary penalties.

``No Exit: Are You Really Ready for the Clinton Health Care Plan?'' by Elizabeth McCaughey, The New Republic, 2/7/94, pp. 21-25 (see discussion, p. S1).

Socialized medicine, here and abroad: articles by William Goodman, PhD, John Goodman, PhD, and AAPS members Michael Schlitt, MD, Carol Brown, MD, Thomas Price, MD, Jack Tidwell, MD, Robert Sade, MD, and Miguel Faria, MD, in the Journal of the Medical Association of Georgia, Dec., 1993.

``A Billion Dollars a Day: The Financing Shortfall in President Clinton's Health Care Proposal'': write to the Republican Staff of the Joint Economic Committee, 805 Hart Senate Office Building, Washington, D.C. 20510, or call Nita Morgan at (202)224-0374. The analysis uses both the Administration's assumptions and more plausible estimates.

Don Devine, ``Understanding Clinton's Health Plan: The Alternatives and What Needs to Be Done,'' American Conservative Union, 38 Ivy St. NW, Washington, DC 20003, (202)546-6555.


Gramm Proposes Private Medicare Alternative

Under a proposal by Sen. Phil Gramm (R-TX), seniors could choose to stay in Medicare or take the amount the federal government expects to pay per individual and buy private insurance. Individuals could keep half of any savings. Through fiscal 1999, the proposal is estimated to save $61.5 billion (BNA's Medicare Report, 1/14/94).


TennCare Relies on Phantom Doctors

The first few days of the Tennessee experiment in expanded managed care resulted in ``an enrollee stampede and hospital chaos'' (Health Care Reform Week 1/10/94).

No one knows how many physicians are actually participating in the experiment. Some complain that they are inaccurately listed because their receptionists were misled into signing participation letters of intent, which they thought were simply a delivery receipt for promotional material. Many physicians have resigned from Blue Cross/Blue Shield because of the ``cram down'' provision that requires physicians to accept TennCare patients if they wish to continue treating their Blue Cross/Blue Shield patients of many years. The number of primary care physicians in Knoxville accepting Blue Cross/Blue Shield has dropped from 72 to 18 (and of the latter, at least one has retired and two are not accepting new patient, according to the News Sentinel). Several large employers are reevaluating their insurance plans (P.D.A.-Link Health Care News Summary, 1/27/94 and 1/28/94).


Insurance Coverage of Abortion

Currently, the vast majority of abortions are paid for by individuals with personal funds. Some group health insurance policies pay for abortion on demand, but many others do not. In some states, such coverage is quite uncommon.

According to B.J. Isaacson-Jones, president of Reproductive Health Services, Missouri's largest abortion clinic, ``the insurers that cover abortion are few and far between'' (St. Louis Post-Dispatch 9/24/93). Similar statements are reported from abortion clinic administrators in Kansas and Nebraska.

A new HCFA directive threatens states with loss of federal funds if they do not expand Medicaid coverage to abortions for rape or incest by March 31. Ten states have a law that forbids the use of public funds to cover abortions except to save the life of the mother. Governor Robert Casey (D) said that Pennsylvania would not comply because to do so would violate a state law that permits public funding only in cases of rape or incest that were properly reported to a law enforcement agency. He argued that the directive amounts to an interpretive ruling, not a regulation with the force of law, because it was issued without notice or comment. The issue ``involves a serious question concerning the limits of federal power over the states and the process that is utilized to exercise such power,'' Casey said (BNA's Health Care Policy Report 1/31/94).


Government Collects $122.7 Million in Penalties

Between April 1, 1993, and Sept. 30, 1993, the federal government recouped close to $122.7 million through civil monetary penalty and False Claims Act civil settlements related to Medicare and Medicaid fraud. During that period, 576 sanctions were imposed (BNA's Medicare Report 1/7/94).

A bill introduced by Rep. Charles Schumer (D-NY), HR 3093, would provide $200 million for FBI enforcement and to set up a national data base on health insurance fraud (BNA's Medicare Report 1/17/94).


Letter to the Editor

Doctors have a tremendous audience in their offices every day, eager to know more about how the politicians will affect their medical care. I decided that I should communicate directly with my patients myself, instead of relying on others to inform them....When one of my staff puts a patient in an examining room, she tells them that the doctor will be there in about five to twenty minutes and hands them something to read (e.g. the piece by Phyllis Schlafly or an editorial from the Wall Street Journal). She tells them that when I see them I would like to know what they think.

After I have taken care of their medical problems, I ask them what they thought of the articles and whether they have any questions. Since this is done in a very courteous and friendly manner, no one has ever made any objection and almost everyone thanks me for the information and wants copies to take to their family, friends, company, etc. I also give a copy of Patient Power to those who show special interest. I never tell the patients what to think; I only suggest that they inform others (especially their elected representatives) of their feelings.
Robert Bullington, MD, Phoenix, AZ


AAPS Calendar

Mar. 19. The Society for Education of Physicians and Patients will sponsor a seminar in conjunction with the Medical Action Committee for Education at the Holiday Inn, Greentree, in Pittsburgh. Call Dr. Robert Urban, (412)929- 5711 for information.

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

Physicians Move for Recusal of Special Justices in Kentucky

After AAPS member Stuart G. Yeoman, MD, and his fellow physicians won their case against the constitutionality of the Kentucky provider tax and the Health Care Data commission, unprecedented events took place. The case was appealed to the Kentucky Court of Appeals by the State. On the State's Motion (with which Yeoman, et al. agreed), the case was transferred to the Supreme Court of Kentucky, a seven-justice tribunal which is the highest appellate court in the Commonwealth of Kentucky.

Immediately after the Order was entered, three justices on the Supreme Court recused themselves from sitting on the case, citing conflicts of interest. Then, in an unprecedented move, the Chief Justice certified the recusals to the Governor, Brereton C. Jones, and the Governor thereupon appointed three Special Justices to sit in the place of those who recused themselves. The Chief Justice, in making the certification, and the Governor, in appointing the Special Justices, relied upon Section 110(3) of the Kentucky Constitution, which would allow the Governor to make the appointments when ``as many as two'' justices recuse themselves.

Of the three Special Justices, one appears to have serious conflicts; i.e. he is an executive officer of the corporation that administers the health insurance program for all state employees, and which has close political ties to the Governor.

More than actual conflicts, what concerns Dr. Yeoman and his fellow physicians is the fact that the Governor made the appointments. The act which was declared unconstitutional (House Bill 1) was drafted by the Governor, and the Governor called a Second Extraordinary Session of the Legislature to pass it. The Governor lobbied for its passage and has publicly made the act the cornerstone of his administration. He even commented in the newspapers about one of the Plaintiffs after the suit was filed and reiterated his demand for the provider tax in his State of the Commonwealth address in mid January, after making the appointments!

Dr. Yeoman and his fellow physicians are not taking the matter lightly. In a nearly 200-page filling, they have moved the Court for the recusal of the three Special Justices. They cite the fact that Section 110(3) of the Kentucky Constitution does not allow the Governor to appoint Special Justices when more than two regular justices recuse themselves. The words ``as many as two'' limit gubernatorial involvement to the situation in which only ``two'' justices recuse themselves, not ``one'' or ``more than two.''

Moreover, Dr. Yeoman and his fellow physicians claim that for the Governor-a party in interest in the case-to appoint Special Justices denies them due process of law in violation of the Federal and Kentucky Constitutions. Because of the Governor's action, the Supreme Court has lost its independence, and an appearance of unfairness has insinuated itself into the judicial process. Such a lack of judicial independence (from the other coordinate branches of government) was addressed by the framers of the Federal and State Constitutions. It was even addressed in the Declaration of Independence, states Yeoman's motion, when that document complained of King George III making ``judges dependent on his will alone...'' Indeed, Daniel Webster stated the proposition well when he remarked: ``In a government like ours, entirely popular, care should be taken in every part of the system, not only to do right, but to satisfy the community that right is done.''

The US Supreme Court has addressed the issue, although not on facts as egregious as those in the Yeoman case. ``Justice,'' the Court has stated, ``must satisfy the appearance of justice.'' Dr. Yeoman and his colleagues contend that the ``appearance of justice'' is not only unsatisfied, but subverted. They ask the Court to remove the three Special Justices in order to satisfy their rights to the process of law under the Fifth and Fourteenth Amendments to the US Constitution.

The issue directly affects the very integrity of the judicial branch of government.


Court Rules that Itemization of Provider Tax Is Protected Free Speech

The US District Court for the District of Minnesota enjoined the State from enforcing a prohibition against itemizing a 2% provider tax on patient bills (Bloom v. O'Brien, DC Minn, No. CIV-4-93-1202, 12/30/93).

The Minnesota tax will be used to subsidize health insurance for the uninsured. The law states that the tax can be passed on to consumers but may not be itemized on bills. The State argued that itemization could be misleading because it could appear to be a sales tax, whereas it is actually a revenue tax. Criminal penalties were prescribed.

The court ruled that the prohibition would have had a chilling effect on the exercise of First Amendment rights. Further, it stated that the public had an interest in obtaining full and accurate information regarding the economic impact of a tax, outweighing any potential harm to the state from itemization (e.g. frustrating its exercise of sovereignty).

Physicians did not challenge the constitutionality of the tax itself (BNA's Health Care Policy Report, 1/24/94).


PRO Not Liable for Damages When Failing to Follow the Rules

The US Court of Appeals for the Seventh Circuit affirmed the dismissal of a lawsuit brought by a physician seeking damages from his Peer Review Organization for allegedly failing to follow proper statutory and regulatory procedures when it found he violated certain requirements (Assar v. Crescent Counties Foundation for Medical Care, CA 7, No. 92-3678, 12/29/93). The PRO did not provide the physician with written notice as required by 42 CFR 1004.50 and did not submit a report to the OIG as required by 42 CFR 1004.70. The plaintiff asserted a Fifth Amendment due process claim. The court ruled that there is no statutory provision authorizing damages against PROs (BNA's Medicare Report 1/7/94).


``The best kept secret in America is that Medicare works.''--Uwe Reinhardt, PhD

According to John R. Lott, Jr., of the Wharton School, University of Pennsylvania, at least 30% of medical costs are due to regulations in Medicare and Medicaid programs (BNA's Health Care Policy Report, 1/24/94).

New Members

AAPS welcomes Muncie Otolaryngolic Associates of Muncie, IN and Drs. Luis M. Albuerne of Houston, TX; Brent Allan of Scottsdale, AZ; Eric Anderson of Great Falls, MT; Stephen W. Asher of Boise, ID; Ralph Austin, Jr. of Macon, GA; Burton Baker of Concord, CA; Steve Barchet of Issaquah, WA; Gunther R. Bauer of Long Beach, CA; Patricia Bell of Atlanta , GA; Brain and Mary Ann Bertha of Great Falls, MT; Louise H. Bethea of Houston, TX; Charles Betz of Rome, GA; John R. Blake of Princeton, NJ; J.W. Bloemendaal of Great Falls, MT; Donald G. Bluh of Ithaca, NY; Christi Bourne of Phoenix, AZ; Stephen Boyce of Knoxville, TN; Loyd Brannon of Birmingham, AL; J. David Brayton of Pomona, CA; Darrell Brett of Portland, OR; S. Kent Brown of Scottsdale, AZ; J. A. Buder of Sandusky, OH; Randy Burks of Margate, FL; Richard D. Burns of Paradise Valley, AZ; Michael J. Burrell of Muncie, IN; John V. Butler of Shelton, WA; Ronald Cardoso of Livingston, NJ; Trent Carroll of Springfield, OH; Robert R. Casey of Oak Ridge, TN; Ted Cash of Chickamauga, GA; Timothy Castro of Spring, TX; Cheng Chao Tarng of Bridgewater, NJ; L. Terry Chappell of Bluffton, OH; Lawrence A. Churchville, III of Townsend, MA; Neil C. Clements of Tucson, AZ; Rich and Virginia Clemmer of Wilmington, DE; Peter Crist of Belle Mead, NJ; Ben Crocker of South Pasadena, CA; William V. Cuthrell of Boise, ID; Stuart H. Danovitch of Washington, D.C.; Chad Davis of Indianapolis, IN; David N. Drucker of Seattle , WA; Ardean J. Ediger of Boise, ID; Weldon T. Egan of Indianapolis, IN; Robert G. England of Carlinville, IL; Bradley D. Evans of Tucson, AZ; Leo Figgs of Yakima, WA; Jerry M. Fioramonti of Phoenix, AZ; Keith Fisher of Fort Worth, TX; James Fogarty of Barron, WI; James P. Fogarty of Barron, WI; Gregg M. Gaylord of Indianapolis, IN; Pierre C. Gilles of Scottsdale, AZ; Steven M. Gitt of Phoenix, AZ; Steven A. Glyman of Las Vegas, NV; Theodore Goldberg of Westwood, NJ; Richard Good of Munster, IN; David A. Goodman of Elkins Park, PA; George Goodman of Sewickley, PA; Harry Gordon of Scottsdale, AZ; James P. Gould of Des Moines, IA; R. Randall Grace of Phoenix, AZ; Thomas R. Graves, Jr. of Bradenton, FL; Michael R. Green of E-Town, KY; Thomas G. Griffith of Tacoma, WA; Albert T. Gros of Austin, TX; Shannon Grubb of Georgetown, OH; Howard E. Hagglund of Norman, OK; James L. Hamby of Boone, NC; John Harris of Lexington, KY; T. L. Henley of Troy, OH; Cleve Henriques of Pasco, WA; Avi J. Hettena of San Francisco, CA; Howard C. Hines of Salisbury, MD; Scott Holtz of Scottsdale, AZ; Stella Horton of Orange Park, FL; Oris B. Houglum of Tacoma, WA; Don Hubbard of Renton, WA; R. J. Hudson of Waco, TX; Lillianm Hunt of Fairfax, VA; Craig A. Hutchens of Reno, NV; Jose V. Iglesias of Houston, TX; Gregory Inda of Scottsdale, AZ; Bill Irwin of Hot Springs, AR; George Isajiw of Upper Darby, PA; Floyd G. Johnson of Boise, ID; Gary L. Johnson of Fairbanks, AK; J.E.B. Johnson of Lake Jackson, TX; Mark L. Johnson of Nashville, TN; Terry M. Jones of Bryan, TX; Robert R. Kester of Lewiston, ME; C. J. Kienzle of Scottsdale, AZ; John A. Kinard,Jr. of Watterboro, SC; James F. Knight of West Columbia, SC; Keith R. Koepke of Brooklyn, OH; Kathleen T. Kowal of Manville, NJ; Joh K. Lattimer of Kealakekua, HI; Alice R. Laule of Harrison, AR; Andrew R. Levette, Jr. of Rydal, PA; Dale P. Lewis of Spokane, WA; Richard Linchitz of Carle Place, NY; Donald H. Lindeman of Colville, WA; Franklin Long of Sacramento, CA; Steven J. Love of Boise, ID; Robert Lowery of Charleston, SC; P. Robert Maddox of Monroe, LA; Michael D. Magee of Irving, TX; Sam Marathe of St. Augustine, FL; Anthony Mars of Marinette, WI; Christa Johnson Mars of Fort Worth, TX; William M. Marsh of Scottsdale, AZ; William Michael Marsh of Scottsdale, AZ; David M. Martin of East Point, GA; Mark R. Mathews of Scottsdale , AZ; Robert G. McCall of Sun City West, AZ; Sean McCue of Macon, GA; J. Kenneth McDonald of Charleston, SC; William L. McGavran III of Midland, TX; James R. Meador, Jr. of Phoenix, AZ; William L. Mok of Amarillo, TX; Geoffrey B. Monsour of Greensburg, PA; John Murphy of Spokane, WA; Robert Narvaez of San Antonio, TX; Gary W. Nickel of Tacoma, WA; Anton Nielsen of Houston, TX; Gordon L. Nitz of Reno, NV; Kenneth R. Noel; Dana Nottingham of Columbus, OH; Joseph Painter of Houston, TX; Asit P. Patel of Laflin, PA; John H. Payne of Las Vegas, NV; Michael N. Payne of Carmel, IN; Marshall Pedersen of Crystal Lake, IL; Jack W. Pennington of Houston, TX; Francis S. Perrone of New York, NY; Steven D. Podnos of Rockledge, FL; John A. Pumphrey of Fort Worth, TX; Charles W. Rance of Tacoma, WA; Mike Redmond of Milton, FL; Robert Reichstein of New York, NY; Sandra Reilley of Tacoma, WA; Stuart Reynolds of Harve, MT; John P. Ries of Coos Bay, OR; Jonathan Ritson of Tacoma, WA; Robert C. Rosser of Birmingham, AL; Vincent J. Russo of Scottsdale, AZ; George Rusyniak of Rome, GA; Akim Sadaki of Columbus, OH; Steve Salisbury of Logan, UT; Newton A.F. Sampaio of Glendale, AZ; Joseph Sample of Dallas, TX; Joel Saper of Ann Arbor, MI; Mahmood Sarram of Tacoma, WA; John B. Sawyer of Sierra Vista, AZ; H.S. Schell of Trenton, NJ; George Schimmel of Brandon, MS; Bernie Schupbach of Yorkville, IL; Roger Schwartz of San Antonio, TX; C. Jane Scott of Sheridan, WY; Stephen R. Sears of Spokane, WA; Robert Settipane of Providence, RI; Gerald J. Shealy of Charleston, SC; Jerome Siegel of New York, NY; Paul E. Smith of Salem, OR; Wally Sneddon of Longmont, CO; David J. Sobba of Tacoma, WA; Gerard A. Sova of Stamford, CT; Guenter Spanknabel of Worcester, MA; Gerald E. Staab of Kansas City, MO; Jeffrey Steier of Scottsdale, AZ; Charles R. Steinberg of New York, NY; Darryl R. Stern of Tempe, AZ; Charles S. Stevens of San Antonio, TX; Steven Strober of Tucson, AZ; Nancy K. Stukan of Kealakekua, HI; Paul Teirstein of La Jolla, CA; Jeffrey S. Tennant of Alsip, IL; Elton Thayer of Paradise Valley, AZ; Greg Thompson of San Antonio, TX; Steven B. Tollison of Natrona Hts., PA; Thomas C. Trevorrow of Indiana, PA; William K. Trzcinski of Pasco, WA; Charles E. Umhey, Jr. of Bellvale, NY; Luther Vance of Perry, GA; Van E. Wahlgren of North Platte, NE; Larry Walker of Paris, TX; Mike Wentzell of Billings, MT; Linda J. Werner of Marinette, WI; Giles F. Whalen of Farmington, CT; E. Sidney White of Paris, TX; William V. Whitman of Seattle, WA; Brad Williams of Phoenix, AZ; Paul I. Wills of Fort Smith, AR; and Albert Zilkha of Old Brookville, NY.

New Associate Members are: David Duperrault of Valrico, FL; Sandie Frailing of Scottsdale, AZ; John Goode of San Pedro, CA; Duane A. Graham of Phoenix, AZ; J.D. Hayworth of Scottsdale, AZ; J.V. Horner of Eagle River, AK; J. Walter Larkin of Phoenix, AZ; Louise Rogers of Sun City, AZ; Susan J. Ruehle of Brodheadsville, PA; and H. Staley of Decatur, IL. New Student Members are: J. Davidson of Los Angeles, CA and Steven B. Porter of Wheatridge, CO.

Legislative Alert

Senator Gramm Introduces Medisave Bill

On January 27, Sen. Phil Gramm (R-TX) dropped his long- awaited Medisave bill (S.1807), with ten Senate cosponsors. The chief feature is the provision of tax-free medical savings accounts (MSAs), enabling employers or employees to contribute up to $3000 to the tax-free account. Part of this money could be used to purchase a catastrophic health insurance policy.

Other elements of the Gramm Bill include provisions promoting insurance portability, equal tax treatment for those who are either uninsured or self-employed, the pooling of small business to increase their market power in the purchase of insurance, assistance to low-income workers, medical malpractice reform, and the removal of certain anti-trust barriers for doctors and hospitals. Financing is effected through savings generated in Medicare and Medicaid and by a reduction in tax deductions for insurance.

Losing It?

The President's State of the Union address, replete with veto threat, was designed to jump start his health-care reform plan-for the third time. It's not happening.

If the Clinton health-care bill were to be brought up to the House or Senate floor today for an up-or-down vote, most Capitol Hill observers think it would go down to a decisive defeat. Nevertheless, Congressman John Dingell (D-MI), Chairman of the House Energy and Commerce Committee, and perhaps the Clinton Administration's strongest ally on Capitol Hill, wants his Committee to be completely finished with the Clinton bill by March 4th, putting the mammoth legislation on a fast track for House floor action.

Nevertheless, Capitol Hill observers also notice a distinct change in the mood on the Hill over the past several weeks. Members of Congress are no longer fawning over Hillary's enormous knowledge of the health-care problem. The Whitewater Savings and Loan mess is not helping her.

The White House is playing defense and losing ground. One reason is that this is not a political campaign, where clever positioning and broad political objectives drive the details of an issue. Rather, the intricate details are driving the politics. Witness how the White House sweats blood over pending econometric studies: how much people are going to pay, how many winners and losers, which specific tradeoffs in one area compromise the quantity or quality of the system in another area. Increasing public knowledge of the details of the Clinton Plan does not generate higher levels of popular support-the opposite is true. This means that the longer the debate continues, the less likely that the President will be able to get his way.

The Clinton camp is showing signs of strain. At the National Press Club in Washington recently, Rep. Richard Gephardt, the House Majority Leader, unleashed an emotional attack against the critics of the Clinton Health Plan. Aides on Capitol Hill say that the performance was not characteristic of Gephardt. This episode follows the recent outbursts of White House aide Ira Magaziner, who has been calling critics of the Clinton health plan ``liars.'' Singled out for Magaziner's wrath are the Health Insurance Association of America (HIAA), led ably by former Congressman Bill Gradison of Ohio, and policy analyst Elizabeth McCaughey of the Manhattan Institute of New York, a conservative think tank. HIAA has been airing the very effective ``Harry and Louise'' ads, highlighting the bureaucracy of the Clinton health plan, while McCaughey published a devastating piece, ``No Exit: What The Clinton Plan Will Do For You,'' in the prestigious New Republic (2/7/94), once the flagship of sophisticated liberal political opinion. The White House press office took the unusual step of publishing a multi-page point-by- point rebuttal. McCaughey, in turn, is said to be preparing a counter-rebuttal. The New Republic (1/24/94) also published a piece by Jacob Weisberg, an unflattering portrait of Ira Magaziner as another brainy Sixties Kid-typical of Clinton appointees-turned superconfident central planner, in love with bureaucratic complexities and incapable of grasping the ``uncertainty principle.''

It's been a tough two weeks for the White House.

Senator Daniel Patrick Moynihan is now backpedalling from his January television performance, in which he stated that there is no health crisis, but there is a welfare crisis. A meeting with the White House appears to have changed his mind; there are now two crises. However, the damage was already done. Moynihan's remarks made William Kristol's position that there is no crisis both respectable and bipartisan. The result is that ``incrementalism'' is now in the air, even though Sen. Jay Rockefeller (D-WV) says that the idea is dead due to Clinton's veto threat.

The Business Round Table, the corporate giants' D.C. perennial pow-wow, voted down support for Clinton's health plan as too bureaucratic, in spite of intense White House lobbying. Instead, the big boys voted support for the managed- competition bill of Congressman Jim Cooper of Tennessee. The Clinton Administration tried buying big business with billions of dollars of taxpayer subsidies for their early retirees' health care. But even that shameless giveaway didn't work. The Business Round Table's action was followed shortly thereafter by a similar decision by the National Association of Manufacturers (NAM). While it was not surprising that the business leaders would back away from Clinton with the bureaucratic details of his gargantuan health reform bill sinking into the national consciousness, the danger it poses to the White House is the political domino effect. If Big Business groups go, who's next?

Big labor is expected to stick with Clinton. They really want a single-payer system and see the Clinton Plan as the way to get there.

Hillary's 500 bureaucrats, liberal congressional staffers, and consultants are no match for the 500 professional economists, including several Nobel Prize winners, who recently blasted the Clinton Plan's reliance on spending caps and price controls. The Clintons' response: First, the economists were only talking about ``part'' of the plan, not the whole thing. Second, ``premium caps are not price controls.'' Third, the price constraints in the Clinton Plan are not much different from the Medicare and Medicaid controls (RBRVS and DRGs) imposed during the Dark Decade of the 1980s. Got that?

New York Governor Mario Cuomo called the Clinton Plan a ``House of Cards'' and told state employees that the Plan would be a bad deal for them. For public employees, the bottom line is the bottom line, and these remarks are likely to trigger intense reviews by other state employee groups. Secretary of Labor Robert Reich refused to comment when reporters asked him to defend the (``temporary'') exemption for workers now enrolled in the Federal Employee Health Benefit Program (FEHBP). Now, White House spokesmen say that the Clinton Plan is really just like the FEHBP (it isn't), but they are committed to abolishing FEHBP (but not just yet), which is the newly found model for their plan (the latest after Hawaii). Is that clear?

During the Christmas recess, House Democrats got an earful of complaints from their bosses, the taxpayers, about what they have been reading and hearing about the Clinton health plan. At Piney Point Maryland, where House Democrats recently gathered at a retreat, moderate and conservative Democrats told the leadership that they can't sell the Clinton Plan back home. The reason: it's too bureaucratic.

Bad News on the Numbers

The Wyatt Company, a respected financial consulting firm, says that the cost of the benefits package under Clinton's Plan is 18% higher than that which was projected by the Administration. The true cost would be $5,155 for family coverage and $2,285 for single coverage. The White House estimate is $4,360 for family coverage and $1,932 for single coverage. (However, the glossy flyers prepared by the Democratic National Committee and distributed at ``public forums'' estimate that the monthly premium for families would be $73, which comes to $876 per year!)

The reason for the difference, Wyatt explained, is that there would be higher utilization of medical services than projected by the Administration, affecting the cost of the package. It is worth noting that the Wyatt findings are consistent with those of Lewin VHI, which projected a 17% difference between the Clinton estimate and their own. Both estimates are well below another assessment by the Health Insurance Association of America (HIAA), which estimated a 30% difference. But HIAA's numbers are also closer to another independent study conducted by Hewitt Associates.

More potential trouble looms ahead in the area of financing and accounting. How the Congressional Budget Office (CBO) scores the mandated premiums will be a key issue. If CBO scores the premiums as a tax, then the funding will be on-budget and the Administration will be dealing with the public perception of a huge tax increase. If CBO says the mandated premiums are not a tax, then the Administration will be spared the budget accounting problem. But neither the CBO nor the Administration will be off the hook. House Budget Committee members Wayne Allard (R-CO) and Tim Penny (D-MN) along with 124 House members have introduced a resolution requiring that any health plan with federal mandates be considered as on-budget and that any mandated premiums be considered taxes. In any case, Allard and Penny say they will force a floor vote if the CBO declares the mandates off-budget.

But What About Bob?

Senate Minority Leader Robert Dole of Kansas needs a steering wheel. And perhaps a road map.

Dole's televised use of the complicated chart devised by the staff of Sen. Arlen Specter of Pennsylvania (see reverse side) in his response to the President's State of the Union address was masterful. Specter's office has been flooded with calls from taxpayers around the country, asking for his big chart. But where all of this is taking the Senate and the rest of the country is yet unclear to Dole's colleagues. And, worse, it might still be unclear to Dole himself. If he has a master plan to deal with the health-care debate, it is not evident.

Consider Dole's track record thus far. First, for much of 1993, he encouraged in every possible manner the efforts of Senator John Chafee of Rhode Island, who is committed to both ``managed competition'' and working with Hillary to find a bipartisan ``solution'' to the ``health-care crisis.'' The result of any such compromise would surely be an even more highly regulated government-managed system.

Next, after the President's September 22nd address to the nation outlining his complicated plan, Dole made noises about the need to work with the White House to resolve the nation's health- care problems.

Next, after Senators Nickles of Oklahoma, Hatch of Utah, Mack of Florida, and other House and Senate conservatives outlined a ``comprehensive consumer choice'' bill (S. 1743)- sharply different from Chafee's-restructuring the federal tax code to provide Americans with tax credits and medical savings accounts, Dole signed on.

Next, Bill Kristol, Dan Quayle's former Chief of Staff, said there is no health-care crisis and no need for such far reaching reforms-including fundamental reforms like medical savings accounts and tax credits, which ``remain open for the future.'' He is pressing for a series of incremental reforms. This sentiment spread quickly among House and Senate Republicans, and spilled over onto the Democratic side of the aisle. Congressman Michael Bilirakis (R-FL) and Congressman Roy Rowland (D-GA) drafted a consensus bill including a whole series of reforms upon which all players in the debate are alleged to be in agreement: insurance reforms to promote portability, malpractice liability reform, preventive care promotion, administrative simplification and anti-trust reform, and increased tax deductions for health insurance for the self-employed. These various provisions are taken from several competing bills, including the Cooper-Grandy and Breaux managed-competition bills and Action Now (HR 3080), the Michel bill, sometimes refereed to as the House Republican Leadership reform bill. Not to be outdone, Senator Phil Gramm of Texas introduced the Consensus Interim Health Reform Act (S. 1796), which provides for insurance portability, purchasing cooperatives for small business, paperwork reduction, and anti-trust reforms. Dole says he likes incremental reforms, too, and that Senate Republican strategy is building around that approach. But Chafee says that Dole is still very much in the Chafee camp, which might also be true, depending upon whether you think Chafee's bill is ``incremental'' too, whatever the term may mean at the moment.

While Dole would like to bring Chafee and Nickles and Gramm together and unite Senate Republicans, it's not happening. The ideological gap may be too big.

Cooper Emerges

With the White House stalled and Congressional Republicans confused, Congressman Cooper has emerged as the man of the hour with his ``Clinton Lite.'' He may include MSAs in his bill and is courting Ross Perot's United We Stand members, who could play a pivotal role in this very fluid debate. Cooper may have gotten a free ride with all of the critical focus on the Clinton Plan, although the basic infrastructure of his ``managed competition'' proposal will pave the way for an even heavier hand of government authority.