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Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 58, No. 5 May 2002
"Although medical facts frame the decision-making process,
the choice in the end will be in the hands of our government
officials. In my opinion the people of the United States
have made it clear since September 11 that they are willing to
make sacrifices for the common good. The debate on
preemptive vaccination cannot go on indefinitely; we need to make
a decision. I believe that if the decision calls for widespread
vaccination, despite its attendant risks, we will accept those
risks bravely, with our sleeves rolled up...." (emphasis added,
JM Drazen, N Engl J Med 2002;346:1262-1263).
The threat is smallpox-the only highly contagious, vaccine-
preventable biowarfare agent-though the vaccine might be useless
against the strain developed at the Vector virology facility near
Novosibirsk (Civil Defense
Perspectives, Jan 2002). But the State Health Officer of
Florida will have the sole authority to declare an emergency and
force any vaccine he wishes on all persons, by
"any means necessary," if there is "no practical method" of
Unless Governor Jeb Bush vetoes SB 1262, as AAPS has asked,
no elected official need take responsibility for forced
treatment. The power is devolved upon bureaucrats-who were either
silent or in vociferous denial as the World Health Organization
destroyed 200 million doses of smallpox vaccine and as evidence
leaked out concerning Soviet biowarfare capabilities. Such
officials frequently boast about the campaign to eradicate small-
pox-which left the whole world vulnerable. "What was then
considered a triumph has now become our problem" (AS Fauci, N
Engl J Med 2002;346).
Government ambitions do not stop with control of infectious
disease (see AAPS News Mar 2002).
E. Fuller Torrey, M.D., asks "Can psychiatry learn from
tuberculosis treatment?" Medication compliance is a major problem
with schizophrenia and bipolar disorder, just as with
tuberculosis. "Is there something inherently different in brains
and lungs? Or is it that our brains are not thinking clearly?"
(Psychiatric Services 11/99).
The precedent needed for widespread forced drugging with
neuroleptics may be set in the case of Charles Thomas Sell,
D.D.S., now incarcerated in Springfield, MO (see AAPS News
Nov 2001 and Apr
2002). In its amicus
brief in support of a petition for rehearing en banc, AAPS
writes: "The Decision holds that merely by alleging fraud, the
State may inject mind-altering drugs into a prisoner against his
will, based on government testimony. The stunning breadth of the
Decision leaves few, if any, defendants free from the threat of
being medicated against their will. The panel majority even
rejected any limits on the type or quantity of drugs injected,
and implicitly allowed drugs that have not been fully tested and
approved for the specific purpose."
Dr. Sell allegedly suffers from delusions that make him
incompetent to stand trial. However, upon reading the original
AAPS amicus brief, he sent an unsolicited note to counsel
demonstrating both his cogency and the widespread fear of forced
drugging among detainees: "I just yesterday received a copy of
the brief, and the other inmates that have read it so far are
raving about it. You have given us prisoners here at Springfield
new hope in our efforts against the terrible practice of forced
medication. Also I would like to assure you that I am not the
despicable monster the government portrays me."
"The government claims that Dr. Sell is delusional about it
being out to get him. As in [Orwell's novel] 1984, it
seeks to drug Dr. Sell in order to change his allegedly
delusional hostility to government" (AAPS brief).
A delusion is "a firmly held belief not in keeping with the
individual s culture or level of education"-despite contrary
evidence and adverse consequences (Sapira's Art and Science
of Bedside Diagnosis). There is still no drug that changes
actual thought content, such as the conviction of Orwell's hero
that 2+2=4, despite Soviet efforts to cure the disease of
In 1953, KGB chief Beria told a US research physician that
he had eight neuropharmacologists on his staff. A 1967 East
German text noted that the field of psychotoxins is "the
beginning of a development that is directed toward the complete
influence and control over human consciousness." At a 1971
"disarmament" conference in East Berlin, it was stated that
"psychotoxins are weapons directed against the further existence
of an independently thinking and acting society."
In 1977, the World Psychiatric Association condemned the
Soviet Union for using neuroleptic and experimental drugs on
dissidents with the intention of changing attitudes and thinking.
"The practices amounted to nothing less than a combination of
lobotomies and torture using chemicals and electricity." While it
is not possible to change minds with drugs, "the willingness to
frighten, intimidate, drug into senselessness, pacify, cripple,
or kill is real" (JD Douglass, NC Livingstone, America the
AAPS argues that drugging Dr. Sell is a form of punishment
that is forbidden by Supreme Court precedent. It has been
suggested that it violates the international Convention against
Torture and Other Cruel, Inhuman or Degrading Treatment or
Punishment, to which the U.S. is a signatory. Side effects such
as akathisia and irreversible tardive dyskinesia -more common in
older patients such as Dr. Sell-are extremely distressing.
Arguably, the dulling, immobilizing, memory-loss inducing effects
of neuroleptics are a violation of the free expression rights
protected by the First Amendment.
Will forced drugging (and even torture) be justified as a
needed post-September 11 sacrifice for the common good? Will it
be rationalized by the Charter on Medical Professionalism (see
p.2), as a "commitment to equity," which "entails the promotion
of public health and preventive medicine"?
Charter on Medical Professionalism
A coalition of the American Board of Internal Medicine, the
ACP/ASIM, and the European Federation of Internal Medicine has
issued a "charter" calling for "a new relationship between
physician and society" (Lancet 2002;359:520-522; Ann
Intern Med 2002;136:243-246.) Citing "an explosion of
technology, changing market forces,...bioterrorism, and
globalisation," the charter seeks to "reaffirm" three fundamental
principles and ten professional responsibilities.
The principles are mutually contradictory, as pointed out by
Jerome Arnett, M.D. The "primacy of patients' welfare" and
"patient autonomy" are predicated on individual rights, whereas
"social justice" is based on the rights of the collective.
The Charter is silent on forced treatments, and limits
autonomy to decisions that are "in keeping with ethical practice
and do not lead to demands for inappropriate care."
The "responsibility" for public advocacy by each physician,
and for "commitment to a just distribution of finite resources"
also place the interest of others ahead of the interest of the
individual patient. Physicians solve that ethical dilemma by
abdicating to "society" (government). As Daniel Sulmasy, member
of the ACP Ethics and Human Rights Committee, explains: "If we
all agree that we can't afford to give anyone PET scans and the
rule applies fairly to everyone, then I will be able to act in
the best interest of my patients within those parameters"
(ACP-ASIM Observer July 2001).
The Charter is evidently operational in Buffalo, where
federal agents put stickers on equipment that allegedly had been
used "unnecessarily" by cardiologist Laurie Hill for nuclear
stress tests. The stickers say that the equipment may not be used
without permission of the federal government.
If physicians offer special personalized treatment to
patients for a fee ("concierge care," AAPS News Oct 2001), that's possibly unethical
(Int Med News 3/14/02) or a violation of the False
Claims Act (Medicare Compliance Alert 3/25/02).
If ethical principles are too hard to uphold in the face of
pressures from insurers and government ("society"), this
coalition has the answer: just change the principles.
Calling All Medical Students: Essay Contest
The Arizona Chapter of AAPS invites students to submit an
essay on the subject "What Does a Right to Medical Care Really
Mean?" The Grand Prize is an all-expense paid trip to the Cato
University Weekend Seminar at the luxurious Rancho Bernardo Inn
in San Diego, California, Nov. 7-10, 2002. This is an informal
event with the opportunity to interact with the world's
preeminent thinkers in political philosophy and economics.
Deadline: June 30. Word count: 1,000-5,000. Criteria for judging:
logical consistency; demonstration of understanding the major
issues; writing skills; and originality.
As the media bemoan the vanishing "surplus," it's time to
look at the second set of books, the Federal Reserve's Flow of
Funds that tracks total new borrowing to fund the deficit. These
are the figures (official deficit or surplus/actual in
$billions): 1995 (-164/-349); 1996 (-108/-376);
1997 (-22/-236); 1998 (68/-418); 1999 (124/-
521); 2000 (236/-138); 2001 est. (281/-480)
(Weiss Safe Money Report 1/02-
www.federalreserve.gov, search on "Z-1 flow of funds," go
to table F4, p. 11).
Newspeak on "Privacy"
As AAPS member Taj Becker, M.D., points out in a letter to
the Utah Medical Association, the HIPAA privacy rule represents
an "unparalleled assault on patient confidentiality."
In its response to comments, CMS states: "These requirements
are consistent with U.S. Supreme Court cases holding that
warrantless administrative searches of commercial property
are not per se violations of the Fourth Amendment. The
provisions requiring that covered entities provide access to
certain material to determine compliance with the regulation come
within the well-settled exception regarding closely regulated
businesses and industries to the warrant requirement.... [T]he
health care industry is one of the most tightly regulated
businesses in the country.... [T]hose operating within it have
no reasonable expectation of privacy from the
government such that a warrant would be required...."
"As for business associates, they voluntarily enter into
their agreements with covered entities. This agreement
...functions as a knowing and voluntary consents [sic.]
to the search (...assuming it could be understood to be a
The latest revision to the privacy rule-which AAPS called
another "186 pages of mud" in a front-page story on NewsMax.
com-do little but obliterate the pretense of patient
HHS states that the latest revision "assures appropriate
parental access to their children's medical records," correcting
a problem with the current rule-as long as such access is
consistent with other law. However, to enroll a child in a
school-based clinic, parents may have to sign away all rights to
see any of the records, writes Linda Gorman of the Independence
Institute. Some states have laws denying parental access to
records on contraception, sexually transmitted diseases, or
abortion, while requiring parental consent for ear piercing.
May 17. Board of Directors meeting, Las Vegas, NV.
* * *
May 18. Spring meeting, Las Vegas, NV.
Sept. 18-21. 59th annual meeting, Tucson, AZ.
Sept. 24-27, 2003. 60th annual mtg, Point Clear, AL.
[Winston saw O'Brien and a man in a white coat holding a
"Did I not tell you just now that we are different from the
persecutors of the past? We are not content with negative
obedience, nor even with the most abject submission. When finally
you surrender to us, it must be of your own free will. We do not
destroy the heretic because he resists us; so long as he resists
us we never destroy him. We convert him, we capture his inner
mind, we reshape him.... We make him one of ourselves before we
kill him. It is intolerable to us that an erroneous thought
should exist anywhere in the world, however secret and powerless
it may be."
George Orwell, 1984,
NY Times Calls for Sacrificing Children
The New York Times is, of course, for "protecting"
children in general-but in pursuit of that glorious end,
individuals must be sacrificed. Until children are used as
experimental subjects, no one should be allowed access
to potentially life-saving drugs, according to the lead editorial
on April 7, "The Need to Test Drugs on Children."
The FDA is apparently caving in, rather than fighting the
lawsuit against the Pediatric Rule brought by AAPS, the
Competitive Enterprise Institute (CEI), and Consumer Alert
(AAPS News Dec. 2001). It has told
the court it will suspend all or part of the rule while
determining whether it is needed.
"This is a bizarre abdication of responsibility for
guaranteeing that society's youngest and most vulnerable members
are provided with the same safeguards that protect adults from
unsafe or ineffective medicines," opines the Times.
A drug may be marketed for adults, "but once the drug is on
the market, doctors are free to prescribe it for anyone they
please." And they might make a mistake in estimating pediatric
dosage, or encounter unexpected adverse effects, says the
CEI attorney Sam Kazman counters that the Rule is much more
likely to hurt children than to help them. Drugs intended for
children are already exhaustively tested. Moreover, by "basing
its testing demands on what doctors do in their offices, the FDA
is opening the door to regulating the actual practice of
medicine" (USA Today 4/7/02).
The Alliance for Human Research Protection (AHRP), which
supports the AAPS lawsuit, states that the NY Times
misses the profound moral question of "who has the moral
authority to volunteer ... a child for invasive, risky, and
painful medical experiments for the good of others?" Former FDA
official Henry Miller, M.D., charges that the Pediatric Rule
"raises serious ethical problems about testing drugs on children
before they have been fully tested on adults."
Whose children will be what the Clinton Department of HHS
called "risk-bearing children"?
The Nuremberg Code, which expressly prohibits testing
without informed consent, has been largely disregarded in the
U.S. The Maryland Supreme Court recently wrote: "`[O]ur own use
of prisoners, the institutionalized retarded, and the mentally
ill to test malaria treatments during World War II was generally
hailed as positive, making the war "everyone's war." Likewise, in
the late 1940's and early 1950's, the testing of new polio
vaccines on institutionalized mentally retarded children was
considered appropriate. Utilitarianism was the ethic of the
day'." Grimes v. Kennedy Krieger Inst., Inc., 366 Md.
29, 77, 782 A.2d 807, 836 (quoting George J. Annas, Mengele's
Birthmark: The Nuremberg Code in United States Courts, 7 J
Contemporary Health Law & Policy 17,24 (Spring, 1991).)
As microorganisms develop robust resistance to more and more
antibiotics, a whole new generation of drugs posing a unique
challenge to bacterial adaptive mechanisms sits on the shelf.
These drugs are modeled on natural peptide antibiotics (cecropins
A, B, and D) that penetrate the bacterial cell membrane and
create a channel through which ions leak out of the cell,
destroying the membrane potential and halting cellular
metabolism. After 16 years of work, Nobel laureate Bruce
Merrifield designed and tested a family of peptides made from D-
isomers of amino acids, which cannot be broken down by enzymes
based on L-isomers. One of Merrifield's 54 papers on the subject
is found in Ciba Symposium 186, J. Marsh and J.A. Goode,
eds., John Wiley, and Sons, Chichester (1994), pp 5-20.
"You, however, will probably never benefit from this
work.... With a more than $500 million entry fee [now more than
$800 million] required by your government for the prior testing
of any new drug, manufacturers are only interested in substances
for which they hold a complete proprietary interest and patents,"
writes A.B. Robinson, Ph.D.
Any of thousands of laboratories with solid-phase peptide
synthesis capabilities could readily manufacture these compounds-
but anyone who distributed them would be both imprisoned and
"No doubt a substantial amount of human testing will be
beneficial...-and there are lots of people dying from bacterial
diseases who would be delighted to be a part of such tests.... In
a perfect world, why should any free man be unable to purchase
and use a new drug based on his own judgment and at his own
risk?" (Access to Energy, Aug 1999).
Another compound that physicians are not permitted to use is
ethyl cyanoacrylate or Super Glue, which was found to be ideal in
closing surgical incisions, leaving virtually no scar. Eastman
submitted its initial drug approval application to the FDA in
1964. A special surgical team was dispatched to Vietnam in 1966
equipped with Super Glue spray-"a near miraculous treatment that
immediately stopped bleeding and saved many lives." [Any Vietnam-
era surgeons wish to comment?] Civilian use quickly spread to
Europe and the Far East. However, in the 1970s, Eastman, faced
with the prospect of FDA-caused bankruptcy, withdrew its
application. It was unable to prove that the spray would not
cause cancer 10 to 20 years later. People who immediately bleed
to death will not die of cancer, so FDA bureaucrats are safe from
Dr. Robinson has a modest proposal: "Super Glue should be
applied to the doors of the FDA. This bleeding wound needs
closing-and we would never notice a scar" (Access to
Energy, Jan 2002, PO Box 1250, Cave Junction, OR 97523).
Terrorism Not Diverting FBI from "Fraud"
As Willie Sutton said, "It's where the money is." Despite
allocating nearly half the FBI's resources to homeland security
and anti-terrorism efforts, health care fraud enforcement is
largely untouched. An important reason is the HIPAA budget.
"That's a lot of money to walk away from," said FBI Health Care
Unit Chief Timothy Delaney (BNA's Health Care Fraud
To date, 3,586 medical practices have been excluded from
Medicare, along with 1,203 dental practices, 431 podiatry
practices, and 590 clinics (Medicare Compliance Alert
Tip of the Month: The Hyde Amendment enables
defendants of overzealous prosecutions to obtain reimbursement
for their attorneys' fees. Beginning in 1998, prevailing
defendants may so recover if the prosecution was "vexatious,
frivolous, or in bad faith." A good decision by the Ninth Circuit
on Feb 25, 2002, breathed new life into this remedy, ordering the
government to pay the attorneys' fees of a defendant accused of
wire fraud and money laundering. U.S. v. Braunstein,
2002 U.S. App. LEXIS 2866 (9th Cir. 2002). Finally-recourse for
the unjustly prosecuted.
Evading Constitutional Protection. I asked the head
attorney for the Medical Society of the State of New York (MSSNY)
whether the new Physician Profile Survey, which asks whether
physicians provide language interpretation services, violates the
Fifth Amendment. He stated: "I do not believe that self-
incrimination issues are implicated because the statute and
regulations do not impose criminal penalties for failing to
provide language interpretation services; see 45 CFR Part 80."
Does this mean that the Fifth Amendment doesn't apply in
cases in which civil penalties can be levied? [Yes.]
The MSSNY attorney also opines that physicians-who must
answer the survey or be automatically delicensed for
"professional misconduct"-can answer "no" to the question on
translation services and still be in compliance with Office of
Civil Rights (OCR) guidelines because the survey answers are
interpreted "narrowly" by the public, whereas the options for
having translation services "available at" the office are
interpreted "more broadly" by OCR.
Now I know the source of the infamous Clintonian quotation
"it depends on what the definition of `is' is."
The new state-mandated survey will create a ready-made
target list for zealous OCR agents.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
A Response to Dr. Swint on "Taking Insurance." To
protect our habituated rattlesnake handlers against the
inevitable "bite," I propose an effective antidote from the
distant past. Made from more than 71 ingredients including viper
flesh and opium, it was given with wine. In its heyday, Theriac
was believed to counteract any poison and cure any illness; King
Mithridates VI developed it in the 1st century B.C. to protect
himself against poisoning, an occupational hazard of kings. Could
it be used to protect against the poison of Medicare prosecution,
an occupational hazard of physicians in the 21st century A.D.? A
dose of Common Sense might be more effective.
How about a double-blinded study of evidence-based,
politically correct (if unvalidated) medicine? Would that make
third parties feel better? But where could we find a control
group of physicians using Common Sense?
Mark Twain said: "Man is the reasoning animal. Such is the
claim. I think it is open to dispute."
Jerome Arnett, M.D., Elkins, WV
On Direct Advertising. Though criticized as unethical,
direct advertising to the public is the only way drug makers can
force managed-care contracted doctors to discuss new and better
products with their patients. As the doctors' boss effectively
prohibits doctor-to-patient suggestions, patient-to-doctor
suggestions become the only access route. Such advertising is far
more ethical than relationships doctors form with third parties.
It also points out to the public the defects of managed care and
the shackles on HMO doctors, another good result.
Thomas LaGrelius, M.D., Torrance, CA
"Human Capital"-I've never liked that expression. It
conjures up such thoughts as "I've got $100 invested in this
slave, and I've got to get my money's worth!" Now adding the idea
that "employee health" is a "strategic asset," I can see
prospective buyers checking the teeth of the slaves on the
auction block to make sure they are buying good stock.
No thanks. Give me an employer who will pay good wages for
good work, and I'll see to my own health.
Greg Scandlen, Alexandria, VA
The Real Goal. "Health care reform" is but one means to
an end: the transformation of our so-called democracy into a more
socialized form of government in which individual rights and
property rights take a back seat to collective rights and
Joe Pugh, HealthBenefitsReform listserv
The Deal. How many hours should I, a 41-year-old, be
forced to work, spending time away from my family, so that others
that I do not know can have medical care? I say it is impossible
for anyone to answer that question. When I see AARP rallying its
members to rob me of time with my family so they can avoid
spending more of their own money on their own medical care, I get
angry. In effect, their success in convincing a select majority
of 536 people in Washington, D.C., that their wants are more
important than mine is forcing me to become dependent on the
state for my own future wants. Isn't that the deal I'm making
with the state? I'll take care of those the government judges
worthy if the government will take care of me when I need it.
Wait...isn't that communism?
Richard Relph, HealthBenefitsReform listserv
Knowledge Without Works. It always amazes me to learn
in conversations about the sizable proportion of doctors who are
sympathetic to AAPS but who refuse to act by financially
supporting the organization. Aristotle said that to be virtuous
and happy, it is not enough to know the good; one must also be
willing to act on the basis of one's knowledge.
Robert Gervais, M.D., Mesa, AZ
Good Question. Why not just do long-term, controlled,
blinded, active surveillance of a large cohort once and for all
so we can really determine how safe and effective vaccines are,
especially when given in combination?
Doug Hertford, M.D., New York, NY
Legislative AlertThe Medicare Mess-Again
Medicare is still in financial trouble, but the only thing
that leftists in Congress can come up with is a big expansion of
benefits, particularly prescription drug coverage, coupled with a
firm opposition to any serious market-based reform.
Medicare is facing severe long-term financial problems.
Medicare and Social Security are both pay-as-you-go systems,
meaning that current beneficiaries are financed by current
taxpayers. The rapid aging of the population-doubling the number
of Social Security and Medicare beneficiaries over the next three
decades-will mean a smaller base of working taxpayers to pay for
the progressively more expensive benefits of an ever larger
number of retirees. The Congressional Budget Office (CBO)
estimates that Medicare spending will double over the next three
decades, from 2.3% of GDP to 5.4%. Medicare and Social Security
will account for 12% of GDP in 2030, consuming more than half of
all federal spending.
CBO's concerns were reinforced by the recent report of
Medicare and Social Security Trustees. The Trustees expect
Medicare Part A, the Hospital Insurance Trust Fund, to jump from
$149 billion to $245 billion between 2002 and 2011, when the
first cohort of Baby Boomers hit the system. During that same
period, Medicare Part B, Supplemental Medical Insurance, spending
is expected to go from $108 to $192 billion.
The HI Trust Fund is projected to remain solvent until 2030,
but income will start to fall short of outlays beginning as early
as 2016. In other words, Medicare then starts running in the red.
Unlike the HI program, the SMI part of Medicare, or Part B, will
never be insolvent because, under current law, it has a free run
on the Treasury. Part B costs are automatically covered by
transfers from the Treasury and higher premiums for
beneficiaries, who pay 25% of the real costs. The annual costs of
SMI are projected to grow from 1% to 2.1% of GDP over the next 30
Trustees warn: "Medicare faces financial difficulties that
come sooner-and in many ways are more severe-than those
confronting Social Security. While both programs face essentially
the same demographic challenge, health care costs per enrollee
are projected to rise faster than wages. As a result, the
Medicare program will eventually place larger demands on the
federal budget than Social Security." The Trustees also declare
that the "most significant implication" of its report this year
is that both Social Security and Medicare " need to be reformed
and strengthened at the earliest opportunity."
The Concord Coalition, a respected bipartisan group that
routinely campaigns for fiscal responsibility, picks up on this
theme. The Coalition argues that while the Medicare Trustees
report reaffirms the need for change, media focus on the
Trustees' projections of the conditions for "trust fund solvency"
in both Medicare and Social Security is misplaced. The Coalition
says that what is critical is not trust fund balance, but
operating balance-how much money is needed to keep the
systems in operation. They note that the share of general
revenues-taxes-to sustain Medicare and Social Security will grow
by more than 40% by 2040, when the Boomers are fully into
retirement and sleeping their days away in nursing homes. To put
that in perspective, that means that Medicare and Social Security
alone would require in 2040-for that year alone- $360 billion in
general revenue funds to keep both program afloat: the amount of
the 2001 budget for the Dept. of Defense.
Gasoline on the Fiscal Fires
American Association of Retired Persons (AARP) officials
have told Congress they want a major prescription drug program-
priced out at an additional $750 billion over ten years. Raising
the political stakes in the fight, AARP honchos have told
Congress they would oppose the passage of any relief-"give
backs"-for doctors participating in Medicare, unless and until
they get an agreement on that new Medicare drug benefit. In a
February letter to Senator Kent Conrad (D-ND), Chairman of the
Senate Budget Committee, William Novelli, chief executive officer
of the AARP, said, "We believe that it would be irresponsible to
use Medicare (or Social Security) surplus dollars to increase
provider payments without first ensuring that older Americans get
the prescription drugs coverage they need and deserve. Our
members would not understand why Congress could find money to
help providers but not to meet their increasing drug needs. We
therefore would strongly oppose funding for a give-backs'
package prior to an agreement on a meaningful Medicare
improvement package that includes drug coverage."
In his missive to Sen. Conrad, Novelli said that an
acceptable new prescription drug benefit would be characterized
by an "affordable premium and coinsurance," catastrophic
protection against high costs, additional assistance to low-
income seniors, and safety features to protect seniors against
drug interactions. This sounds reasonable on the surface. But the
underlying dynamics are all too familiar: AARP wants to retain
the current "defined benefit" structure. In practice, this would
mean setting the "premium" for the prescription drug piece-like
other Medicare benefits-at a politically attractive low level,
encouraging an explosion of utilization, and then applying price
As former Senator Robert Kerrey (D-NE), now cochairman of
the Concord Coalition, recently reminded the Senate Finance
Committee, the AARP proposal more than doubles the amount ($300
billion) set aside in last year's Congressional Budget
Resolution-when OMB and CBO were projecting a total unified
surplus of $5.6 trillion over 10 years. That situation no longer
obtains, regardless of the cause.
Kerrey also sternly reminded the Committee that the Medicare
program is not fully funded, nor is it a real insurance program:
"The current un-funded liability for future beneficiaries is $10
trillion before a prescription drug benefit is added.
Second, it is not true insurance because the insurer is
underwriting a risk that is almost certain to be used
continually. This is especially true with most of the
prescription drug proposals where the usage will be expected and
annual." The potential costs of a Medicare prescription drug
benefit could be enormous. Underscoring the Senator's basic
point, prescription drug costs rose 17% in 2001 alone, largely
because of a rising consumer demand for newer and more effective
An Impetus for Real Medicare Reform?
Like former Senator Kerrey, many Members of Congress as
well as prominent policy analysts strongly favor a prescription
drug benefit for senior citizens, but only within the context of
fundamental reform. The Administration recently reaffirmed that
position. The issue is not whether to add a drug benefit, but how
to do it in the most cost-effective fashion.
The President, moderate and conservative Democrats, the
House and Senate Republican leadership, and a host of
professional and medical organizations have endorsed the creation
of such a new competitive system for Medicare, based on patient
choice and market competition. There is little doubt that real
savings would result. But the more important benefit of such a
reform is improvement in the quality of care and the working
environment for seniors' physicians. Instead of trying to fix
thousands of prices for doctors' services, the government would
create a new system such that Medicare patients could take
advantage of a competitive market in which participating plans
and physicians must satisfy patients' demands for high quality
service at competitive prices-or lose business. This is roughly
the way the Federal Employees Health Benefits Program (FEHBP)
operates. But Congress can improve on the FEHBP model. Instead of
bureaucratic central planning, a competitive market-based system
would offer rapid innovations in benefits, and the delivery of
medical services, free of the sluggish bureaucratic process and
red tape that characterizes benefit setting in the current
Battle for the Future
A major entitlement expansion for the elderly through an
unreformed Social Security and Medicare is guaranteed to give
younger workers heartburn, as they see a sharp increase in
payroll or federal taxes. When the tax bite finally hits, it will
surely weaken political support for these entitlements among the
young, setting off a struggle between the growing ranks of the
Baby Boomers and their children and grandchildren.
But "liberals" might also be in for an unpleasant surprise.
They have not pondered the effect of unreformed Medicare
expansion on their activist political agenda. Historically, that
agenda has been utterly dependent upon vigorous federal
spending-Utah is not going to be a hotbed of leftist
experimentation, for example. If a larger and larger share of the
available federal tax money is going to seniors, and that will be
a larger and larger share of the voting population, there is
going to be less available for other things. With more than half
of all federal dollars earmarked for entitlements and debt
payments, one might see states and local communities reclaiming a
greater share of governance, an altogether healthy development.
HHS Advisory Committee on Regulatory Reform
Medicare's problems are not confined to budgetary
problems or reimbursement levels, but also include governance
issues, such as the regulatory overkill that inhibits flexibility
and undermines efficiency in the delivery of medical care.
Doctors for the first time have a friendly listener at HHS
to hear of their struggles with Medicare red tape. Created by
Secretary Tommy Thompson, HHS Advisory Committee on Regulatory
Reform is holding its field hearings around the country to hear
firsthand from doctors, hospital officials, Medicare patients,
and others about their experiences dealing with the Medicare
The good news is that the Advisory Committee is
complementing solid oversight work undertaken by key
Congressional committees such as the House Ways and Means
Subcommittee on Health, the House Budget Committee, the House
Commerce Committee, the Senate Aging Committee, and even the
Senate Finance Committee. The Medicare Payment Advisory
Commission has issued a useful report on Medicare's regulatory
complexity, Reducing Medicare Complexity and Regulatory
Burden (available at www.medpac.gov), and non-
governmental organizations such as the National Academy of Social
Insurance are also studying the issue. Medicare's bureaucracy, of
course, has been a staple of analysis by the health care policy
team at the Heritage Foundation (see www.heritage.org).
Helping The Poor Get a Doctor
As more doctors are refusing to take new Medicare patients,
that other big entitlement, Medicaid, is going through fiscal
hell. More than half of the states are finding that their
Medicaid budgets are out of balance.
There might be a way for clever state officials to ease
their burdens and get help to the poor at the same time. Many
physicians want to avoid treating Medicaid patients. Part of the
reason, of course, is that Medicaid is governed by price
controls, which have a 4,000-year record of reducing the supply
of goods and services. Part of the reason is also the Medicaid
bureaucracy. One result: the difficulty that Medicaid recipients
have in getting access to family doctors. Too many of these
Medicaid recipients end up in hospital emergency rooms for
routine medical services.
This problem can be partially overcome by getting a waiver
from HHS and establishing a direct cash-transaction system in the
Medicaid program. Quick access to physicians could be facilitated
through a special Medicaid account system: Set up a cash account
at some specified amount (say $1,500) for each Medicaid
recipient, with a pin number and a debit card. Payments for
routine medical services could be made directly out of the
special Medicaid account. In effect, the debit card becomes an
instrument to improve the quality and the continuity of care. The
benefits accrue to both doctors and patients. Doctors could
secure quick and immediate payment. For the Medicaid patient, the
funds could be rolled over year to year in the Medicaid account.
Upon leaving Medicaid, the patient could take the money and roll
it over into a private medical savings account or use it to pay
for private medical insurance. This Medicaid proposal is
compatible with welfare reform, which looks to get people
In the meantime, wherever possible, every Governor and state
legislature should look for creative ways to help people escape
Medicaid, which has a well-deserved reputation for poor quality
Robert Moffit is a prominent Washington health policy
analyst and Director of Domestic Policy at the Heritage