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

Volume 52, No. 5 May 1996


``Do you realize what managed care is doing?'' asked AAPS Director James Weaver, M.D. ``They're creating a whole new type of discrimination-against sick people.''

The billboards, the posters in the airport, the television ads, the full page newspaper spreads all show youthful, vibrant, healthy people. And some Plans do provide some good advice about health-much of which you could have learned from your grandmother without paying up to $600/month.

Reading the provider contracts shows just what Dr. Gervais means (see p. 4): physicians and sick patients have no mutual benefits under managed care. CompreCare (which ``erroneously'' told physicians they had to sign up with managed care to treat Medicaid beneficiaries in Chautauqua County) requires providers to agree to these provisions:

* [I]n no event, including but not limited to nonpayment by the Plan, insolvency of the Plan, or breach or termination of the agreement, shall the Provider bill, charge, collect a deposit from, seek compensation, remuneration or reimbursement from...a subscriber...for services provided pursuant to the agreement....This clause shall survive termination of the agreement.

* Provider understands that there may be withholding from Provider's compensation to fund a utilization incentive risk-sharing program....The Plan shall have the discretion to determine the percentage of a Provider's compensation to be withheld, and to determine the portion, if any, ...to be distributed among Providers.

* Provider agrees that in the event of plan insolvency or termination of this contract, covered services to covered persons confined in an inpatient facility...and courses of treatment in progress, will continue until medically appropriate completion, discharge, or transfer to other appropriate provider.

In case that isn't clear, Lawrence Huntoon, M.D., explains: if the plan becomes insolvent or simply decides not to pay the doctor, he cannot collect from anyone. And if he has accepted a patient who has seizures, congestive heart failure, or another chronic conditions, he is obligated to continue treatment, without pay, indefinitely.

Patients are victims, not beneficiaries, of this arrangement. They pay huge premiums for ``health maintenance.'' But if their health fails and their Plan becomes insolvent, they are left with a pre-existing condition and no coverage. They are an unfunded liability to their Plan Provider, even if they are fortunate enough to have some assets that they have not turned over, permanently, to a Plan.

Under capitation arrangements, all sick people are charity patients even if the Plan is solvent, because their physicians are not compensated for their care.

In the past, before politicians tried to manufacture a right to ``health care,'' charity patients were not discriminated against-that is, they were not deprived of anything to which they had a natural right (life, liberty, property, or the pursuit of happiness). Nor could they legally deprive others. At that time, large charitable institutions were founded, voluntarily, as people availed themselves of the opportunity to serve their less fortunate neighbors. These institutions may be unable to survive in the managed-care environment.

As a rule, true discrimination does not arise against those who are simply less fortunate. For example, the most pervasive and recurring discrimination-anti-Semitism-didn't arise because Jews are inferior. Quite the contrary. Anti-Semitism becomes virulent when Jews are perceived as a threat.

Sick people are now a threat. They threaten the livelihood of their doctors and the solvency of their insurance Plan. And they threaten the healthy as well.

This new development occurs when sickness care is paid for from the same collective pool as ``health care.'' The problem is magnified because prepaid health care requires a much larger pool of resources and attracts more thieves.

Nobody really wants to collect catastrophic insurance benefits. But everyone has a claim on prepaid ``health care.'' Sick care takes money that subscribers prefer to have spent on their own ``health'' needs-as the Plan promised to do in its advertising. And Plan managers get paid for keeping the income- generators and the stockholders happy.

Payment at the time of service, by the person receiving the service, is voluntary and involves mutual benefit. But payment from the pool deprives others. Every transaction involves an act of coercion that may be more or less subtle.

While the sick have become a threat, they are weak and relatively few in number. It is easy to discriminate against them. The cruel irony is that the ersatz ``right to health care'' quickly requires the surrender of natural rights. The Plan takes property from all so they are less able to provide for themselves and more dependent on the managers. Liberty is the next casualty. Before long, life itself is at risk. The rise of managed care and clamors for physician-assisted suicide are not coincidental. Even in Des Moines, Iowa, physicians are split 50:50 on this issue, despite increasing awareness that in Holland, half of those who die at the hands of their physicians did not ask for their ``termination.''

AAPS has declared the week of May 5-11 to be National Patients' Rights Week as the focus of a nationwide educational campaign. We will join a nurses' march on Washington-not to demand more legal plunder, but to focus attention on the dangers of waiving genuine rights for the mirage of health security.

Members can help by posting, copying, and distributing the enclosed flyer and returning the enclosed survey.


Physician Receives High Honor-from Patients

``You were always there when we needed you,'' wrote a mother of five children, one of nearly 600 patients who brought a memento to a surprise party to thank Andrew Mance, country physician, for 54 years of dedicated service.

``I didn't do any more than God gave me the ability to do,'' said Dr. Mance of Oakland, MD, who still sees patients.

Dr. Mance, a former AAPS Director, believes that his patients are his responsibility, not the government's. He has never taken money from government programs.

Though Dr. Mance has seen many changes, he states that ``real medicine is exactly where it was years ago. In real medicine, you think of the patient. You think of yourself as a servant. If you are a good servant, you get paid.''

Dr. Mance is also a poet, and he is not a ``go along man.''

The Go Along Man
can be shackled by
The finest of thread -
When there is -
Silent acquiescence,
No resistance.

A. E. Mance, M.D., March 8, 1996


The HMO Bottom Line

AAPS President Don Printz, M.D., reports that two Atlanta HMOs ran out of money at the end of October, 1995: Blue Choice and PruCare. They didn't bother to inform the doctors, until the week before Christmas, that they would not be paid for any patients seen during November or December. One dermatologist wrote off $20,000-not for voluntarily providing life-saving care to the needy, but for providing discretionary services to ``insured'' patients. He signed up again, saying that the HMOs had promised to do better this year. U.S. HealthCare physician ``providers'' in Atlanta also had a bad year-so bad that more than half of them quit. It is not known whether the $9-million- per-year chief executive got his paycheck garnished too.

Managed care is also increasing physician overhead. Medical Protective Co., one of the largest professional liability insurers in Texas, said that the use of ``gatekeepers'' is a major factor behind their 23% rate increase. The company had noted increased losses due to misdiagnosis.

CNA Insurance Cos. of Chicago is asking state regulators to approve a 45% overall rate increase in liability premiums, and American Physicians Insurance Exchange of Austin is seeking a 32% rise.

Precise statistics on the impact of managed care don't exist because the rapid spread of managed care has occurred so recently (Am Med News 4/1/96).

Patients are apparently feeling some impact on their care. According to a March, 1996, survey by Aragon Consulting Group, less than 25% of HMO subscribers and 26% of PPO members are completely satisfied with their coverage, compared with 42.5% of conventional policyholders. Only 38.8% of those enrolled in an HMO and 44.2% in a PPO are highly satisfied with the selection of doctors available to them, compared with 76.5 % in traditional insurance plans.


A Conflict of Interest

Known as the ``Queen of the Senate'' and in line to be White House chief of staff in a Dole Administration, Sheila Burke has an interest in health policy issues that apparently doesn't stop at the office. Her husband, David Chew, held options to buy 18,200 shares of Aetna stock at the beginning of 1995. If he had exercised the options in January, he could have purchased more than $1.3 million in stock, with an instant profit of $482,000.

According to Michael Calabrese, director of the public interest group Congress Watch, Burke has helped negotiate Republican ``reform'' bills that would move tens of billions of Medicare dollars into Aetna and other companies owning HMOs. Burke claims that her stock options have not influenced her actions, and that none of the bills she has worked on would benefit Aetna to the exclusion of its competitors (Kansas City Star, 1/21/96).

Nonetheless, one must wonder if the Senate reluctance to enact MSAs is related to factors other than a threatened filibuster by Sen. Daschle (D-SD) or a veto by Bill Clinton.


FDA Obstructs and May Seize Lasers

Some of the most dramatic advances in the field of ophthalmology have been in the field of refractive surgery, and the most exciting development in recent years has been the advent of the excimer laser as a tool for shaping the cornea.

Invented in the U.S. in the late 1970s, these devices have been bogged down in the FDA regulatory morass until recently. Even now, only limited approval has been granted. In March, 1995, lasers produced by Summit Technology were approved for removal of corneal scars. Meanwhile, surgeons abroad have moved on to a better type of refractive surgery that spares the surface of the cornea: Laser-assisted in situ keratomileusis (LASIK). In the U.S., surgeons have only four options to make LASIK available to their patients:

(1) Become an ``investigator'' for a laser under study for FDA approval. The protocols are very restrictive, and opportunities are limited to an elite. Coincidentally, some ``investigators'' hold large grants, sit on FDA advisory panels, and are heavily invested in commercial laser centers. (2) Build a ``custom'' laser. (3) Purchase an older FDA-approved American- made laser abroad and reimport it. Such devices are well made and cost about $100,000 instead of $400,000 to $500,000. (4) Purchase a new ``approved'' laser. These are prohibitively expensive, and manufacturers demand a $250 royalty payment per treatment.

The FDA is attempting to block options (2) and (3). At the urging of Summit Technology, the FDA issued an ``Import Alert'' in February, barring reimportation of Summit lasers; this is viewed as a prelude to seizure of lasers already imported.

The FDA claims inappropriate labeling, but will not say what the labeling should be; this information is being sought under the Freedom of Information Act. It also claims the lasers are somehow different from the approved devices and will not release a Letter of Equivalency previously issued.

The FDA overextends its reach when it dictates how doctors care for their patients. The Society for the Advancement of Laser Technology (SALT) has been fighting the abuse by regulation; physicians of all specialties are invited to join (1345 Oak Ridge Turnpike, Suite 304, Oak Ridge, TN 37830).
Robert Dotson, M.D., Oak Ridge, TN


Correspondence from the LLCS

The Public Health Committee of the Pima County Medical Society (Tucson) proposed to survey its members regarding their experiences with various managed-care plans and the effects of these arrangements on patient care. Because of fears of antitrust liability, the survey was referred to the Society's attorneys, who advised deleting two questions related to fees: ``If your contract defines a task, and you do not feel you are adequately qualified to do that task and refer, does that come out of cap, affect a withhold, have no effect, other?'' And ``Under terms of your major managed-care contract, are referrals to you paid by capitation, usual and customary, procedure fee, other?''

AAPS also referred the survey to the Limited Legal Consultation Service and received this opinion:

Our view is that there is nothing about the purpose, verbiage, proposed compilation, and publication of the survey which violates U.S. law. It is true that for alleged public policy reasons, the Dept. of Justice has taken aggressive positions in actions against physicians who appear to combine to effect fee barriers and ``price-fixing.'' This is because the prevailing political view of the federal government is that managed-care organizations tend to effect cost savings while physicians' groupings tend to be anticompetitive. While this is highly debatable, that policy is driving the prosecutorial philosophy of the Dept. of Justice.

It is interesting to note that surveys of the fee structures of law firms have always passed antitrust muster. We know of no prosecution attempting to prevent the common use of legal fee surveys performed on a national, regional, state, or city basis. Indeed, it is common practice of the American Bar Association and other similar organizations to publish ``standard rates'' for various groupings of lawyers. Not surprisingly, even published court opinions affirming fee awards relate to ``standard rates'' in given localities. Even more interestingly, both federal standards and those employed by managed-care organizations attempt to define ``customary fees'' by locale.

Against this backdrop, we offer our prediction of the likely result in the event that the Dept. of Justice challenged the survey as violative of the Statement of Dept. of Justice and Federal Trade Commission Enforcement Policy on Provider Participation in Exchange of Price and Cost Information: the survey as proposed is perfectly permissible. In the event of litigation, our view is that the government would not be successful in a challenge. Further, in our view there is nothing about the proposed publication which could result in a successful action for defamation. The respondents are offering opinions, not factual allegations which could be viewed as defamatory per se.

Thomas R. Spencer, Jr., Esq., Miami, FL


Privacy Killed in Maryland; Medicare Next?

Petitioning for the redress of grievances failed in the Maryland legislature. A bill requiring patient consent for the release of sensitive medical information to a state computer data base (see AAPS News Mar, Apr 1996) was killed in the House Environmental Matters Committee and also failed in the Senate by one vote. Siding with the state bureaucrats of the Health Care Access and Cost Commission (HCACC) were the Maryland Psychological Association, the Maryland Hospital Association, the American College of Emergency Physicians, the Psychiatric Advanced Practice Nurses of Maryland, Kaiser Permanente and the Maryland Academy of Pediatrics. On the side of patients were 60 other medical and patient advocacy groups, including AAPS, Med Chi, and the Maryland Psychiatric Society.

Some believe that self-pay patients were exempted from the required reporting. This is not true, press accounts to the contrary. The only patients permitted to receive medical care of any kind in Maryland, without reporting to the state data bank, are those whose care is paid for by capitated HMO plans or small employer/self-insured plans, according to MPS News.

AAPS will investigate grounds for legal action.

Meanwhile, Medicare is moving in the same direction. Dr. Huntoon stumbled upon the fact of centralized claims processing in the course of complaining about a Blue Bungler snafu. ``They let slip a new excuse,'' he writes, ``i.e. someone else actually processes the claims. I don't think they meant for that to slip out, but I pursued it. The system has been in place for seven years now, and I see that the Blue Bunglers have decided to make it public in the April Medicare Bulletin.''

The Bulletin states that the Multi-Carrier System (MCS) has grown to include 8 carriers responsible for processing Part B claims in 17 states. The shared system now accounts for more than 30% of the national Part B claims volume.

``At the present time, private medical information about one third of all Medicare patients in the country can be accessed in this one central location,'' writes Dr. Huntoon. ``Frightening, but true. We note that both HCFA and the Robert Wood Johnson Foundation for years have viewed the computerization and centralization of claims processing as key factors in their shared goal of government-run healthcare. Unfortunately, most people don't learn about these things until they are already in place.''

An AAPS member recently asked how the ``non-consent'' form (see AAPS News April 1996 and the for Patient Power Patient's Handbook) applied to Medicare. If central processing is used for your area, you may need to inform your patients that the consent they sign on their Medicare form contradicts the non-consent form. Both cannot be implemented. The only way out for the patients is private contracting.


The International Information Superhighway

Appended to a Briefing Book in the records of the Health Care Task Force is a ``Progress Report on the Information-Based Infrastructure Project,'' by the Diebold Institute for Public Policy Studies. Among the dignitaries signing the report are H. Ross Perot, Chairman of the Perot Group; Robert Galvin of Motorola; Roy Vagelos of Merck; Karlheinz Kaske of Siemens AG, and John Macomber, CEO of the Export-Import Bank. The report was brought to the attention of talk-show host Michael Reagan by Karen Mazzarella of Speak Out America, who helped AAPS review Archives documents.

The ``deployment'' of ``health care information infrastructure functionality'' has a timetable. In 1997-2001, the Supreme Court is supposed to rule that providing information service is ``not practicing medicine without a license.'' Goals for 2002-2006: ``transjurisdictional licensure approved in U.S. and Europe'' and ``Supreme Court rules patient information co-owned with government insurer.'' For 2007-2011: ``information utilities interconnected across national boundaries'' with ``UN assigned role in regulation of information utilities.''


Members' Page

Only Trying to Help. One of my internist colleagues came up to me one day apparently feeling a slight twinge of conscience about throwing in with the HMOs. He said: ``Larry, you know I have never been in favor of any of this managed care stuff.'' I said, ``but John, you were one of the first to join and you actually became the regional medical director for the ... HMO.'' John replied: ``Yes, but I didn't take any money from them to do it...I was just doing it because I felt sorry for my patients who didn't have anything other than HMO coverage, and I just wanted to help them.'' Well, you know, Dr. Kevorkian doesn't charge anything for his services either, and he also claims he is simply doing what he can to help. Does that make it OK? I guess if my colleagues are looking for ``absolution'' of their choice to participate in managed care, they've come to the wrong place. They really should be approaching their patients and asking them for forgiveness.

Another of my colleagues informed me that he and I are likely the only two in town who have not signed managed-care contracts or otherwise participated with insurance companies. I am also apparently the only one in town who does not participate in Medicare and the only physician in Chautaqua County who does not participate in Medicaid, as in ``the cheese stands alone.'' Still, I be not Swiss cheese. You've heard of ``Sleepless in Seattle.'' Well, I am ``Hole-less in Jamestown.''

I have looked down the ``gun barrels'' pointed in my direction, and have heard the words ``Ready...Aim...Fire.'' Yet to the astonishment of myself and others, I remain whole and hole-less. I have simply stood up for my patients and continued to practice the best medicine I know. Some of my patients have gone elsewhere and experienced a ``patient mill'' mentality due to the financial pressures imposed by the HMO. Some have returned to my office, saying ``it may have been cheaper, but it was no bargain.''

The underlying concept in managed care, a physician selling his loyalty and clinical judgment to the HMO as in less care = more profit is so blatantly wrong that it will no doubt self destruct on its own, given enough time. The truth is that physicians didn't have to and don't have to promote, through collaboration, the managed care malignancy. Those who have sold their soul to the company store have brought shame to the entire profession.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


Managed Care Can Never Work...because its goal is to pay doctors from premiums rather than claims. ``Providers'' must adopt the mindset of an insurance executive who profits by collecting premiums and avoiding claims. Von Mises stated that socialism can't work because of the economic calculation problem. I say that managed care is impossible (in the long run) because of the premium-claim problem....

In my view, all other payment mechanisms are parasitic on fee for service. Salaried workers ultimately derive their income from a fee-for-service mechanism. Because the fee under managed care is the premium, managed care providers cannot enter into mutually beneficial exchanges with sick patients.

All attempts to have providers depend on premiums for their income are wrong on both utilitarian grounds (because quality is impossible) and moral grounds (because patients are deceived into believing the provider has the mindset of a physician). In short, managed care is a fraud.
Robert Gervais, M.D., Mesa, AZ


Are Employers Liable? If lawsuits alleging misconduct by managed care also included the employee's company, which placed him or her in the relationship, MSAs would have a greater corporate appeal ....Certainly, 401(k) plans are superseding pension plans, in part, because their self-directed approach relieves the employer of a degree of liability.
A Member from Ohio


Selling Out for Profit. The February, 1996, issue of Review of Ophthalmology covers consolidations like we have observed with the takeover of Intergroup by Foundation Health. Just as the latter created instant millionaire status for the partner physicians of Thomas-Davis Clinic in Tucson (each received stock worth about $3.8 million), you will see that a number of physicians have sold out for stock, making more money than they would ever make treating patients.

Wall Street is prepared to pay for earnings growth, and it regards health care as a hot market. I think this is primarily because patients are no longer to have a choice of physicians, since these firms will contract directly with employers. The employer pays less than previously for ``health care,'' yet there is tremendous profit potential for the managed-care company, since it has no intention of actually delivering the same product (doctors seeing patients) but rather a rationed, assembly line situation, primarily using non-physicians. This is borne out by the fact that despite the rising number of contracts that companies like Intergroup are signing with employers, they are doing remarkably little recruiting for physicians.
T. Glendon Moody, M.D., Tempe, AZ


AAPS Calendar

May 10. Nurses of America march on Washington.
June 1. Board of Directors, Airport Marriott, St. Louis.
Oct 10-12. 53rd annual meeting, La Jolla, CA.
Sept 17-20, 1997. 54th annual meeting, Chicago, IL.


Legislative Alert

Big House Health Reform Bill

The House of Representatives really did it. In 1993, after months of Task Force work orchestrated by Hillary and Ira Magaziner, Bill Clinton never even got his 1342-page monstrosity to the floor of a then very friendly and very left-wing House of Representatives for a vote. But Speaker Newt Gingrich, the Universally Despised Grinch, did it. On March 28th, the Health Care Coverage and Affordability Act of 1996 (HR 3160) passed. On balance, unlike most big bills, it's pretty good. The House bill does three big things for workers and their dependents:

First, it increases the 30% deductibility of health insurance premiums for self-employed individuals, signed into law earlier last year, to 50%. More importantly, the House bill sets up Medical Savings Accounts (MSAs), enabling individuals and families to sock away up to $2000 and $4000 per year, respectively, to pay for routine medical services. Under the House bill, the employers can also contribute to this MSA, and the funds will roll over year after year, tax free, under the same rules that govern Individual Retirement Accounts (IRAs).

A second major feature of the House bill is its provisions for small businesses, which employ the majority of uninsured workers. The bill would allow small businesses to pool together to purchase insurance, amending the ERISA law to pre-empt states from forbidding or prohibiting such multiple- employer arrangements. The effect would be to give small businesses the same purchasing advantages enjoyed today by large corporations: a sharing of insurance risk and administrative costs. But small businesses will continue to shoulder the burden of premium taxes, thanks to Rep. Harris Fawell (R-PA), who agreed to allow these state taxes in order to soften opposition from Congressional leftists and insurance regulators. The exemption for all private plans competing in the Federal Employees Health Benefits Program (FEHBP), however, survived: the leftist double standard continues to prevail.

Thirdly, the bill would advance the popular cause of portability by restricting pre-existing condition exclusions in group-to-group and group-to-individual insurance changes. Insurance would also be subject to guaranteed renewability rules, so that insurance companies can't simply drop a person because he gets sick. However, while the new rules will aid some individuals, there can be no true portability unless and until individuals and families are able to own their own medical insurance policies, just as they own their own life, auto and homeowner insurance policies. This cannot happen without a thorough overhaul of the federal tax code-unlikely, given the ideological commitments of the present regime.

The House bill also contains elements of medical tort reform. It would limit pain and suffering damages in medical malpractice cases to $250,000, while punitive damages would be capped at $250,000 or three times the amount of the economic damages, whichever is greater. It would also eliminate joint-and- several liability and would bar punitive damages in most cases against drug and medical device manufacturers whose products had been approved by the Food and Drug Administration. Finally, the bill would set a five-year statute of limitations for any liability action filed after the date of the injury, and unsuccessful defendants in liability cases would be able to spread out their payments over time.

Clinton's Reaction

Leftists in Congress were quick to attack the bill as a sell-out to special interests, especially doctors. The Administration has not issued any communications to Congress using the ``V'' word, although it has signalled opposition to both MSAs and the medical liability provisions. The argument is virtually the same one used by leftists against IRAs: they would purportedly favor the wealthiest sector of the population to the detriment of the poorest and unhealthiest. The Clinton prescription amounts to a combination of class warfare and adverse selection bugaboos. Senator Nancy Kassebaum (R-KS), the model of ``moderate'' Republican respectability, said she might be willing to accept an increase in the tax deductibility of tax deductibility for private insurance among the masses, but not MSAs. Echoing the White House position, Senator Kassebaum said that she would oppose the addition of MSAs and tort reform in the Senate because it might drag down her mushy bill, carefully crafted so as not to offend Senator Edward Kennedy, long a prominent champion of ``moderation,'' as well as national health insurance and Spring Breaks.

Profiles in Courage?

MSAs have been so popular in Congress for so long that it is hard to understand the preemptive surrender signal on MSAs sent by House Budget Committee Chairman John Kasich (R-OH) and Speaker Newt Gingrich. They argued that MSAs would be sacrificed to avoid a presidential veto, so workers and their families would be able to get ``portability,'' which isn't real and which is just likely to mean going from one managed-care, employer-based arrangement to another. This is not the stuff of which Revolutions are made; and Gingrich and Kasich should walk the walk, as well as talk the revolutionary talk. Also, it's bad politics. Clinton is going to be hard-pressed to veto a ``health care reform'' bill in any case. What's the nub of his veto message? Let's guess: ``I'm vetoing that House-inspired health care reform bill because a bunch of extremists in the House, the same ones who want to destroy your Medicare and give tax breaks to the rich, wanted you to open up the equivalent of IRAs for medical care and allow you to spend your own money-an extremist idea if there ever was one. And you all know how bad those IRAs were and are; and anyway, in this great country of ours that can't be tolerated, because, as you know, and as Hillary and I discussed, after conferring with Ira, some people might not be able to do that or even want to do that, and anyway, the HCFA/managed care/policy wonks and the actuaries, who can read the future health care markets even better than they can read future Medicare and Medicaid cost projections, tell me it's bad for health if people save on insurance premiums, when they should be spending more on managed care, so unhealthy people can spend less,....'' Doesn't have a convincing ring, does it?

Still, he still might do it. It's hard to say what Clinton will do. The left, which has always had more regulation on its mind, really wants to stop tax changes, particularly MSAs. Clinton is getting support from the New York Times, which editorialized a few years ago that people should not be able to make medical insurance choices because only professionals can make such complicated choices for them (unless they work for the federal government). The March 28, 1996, editorialists clarify the point for us: Personal choice of different benefits and options, including MSAs, is fundamentally a bad idea because it is incompatible with the true goal of health care reform. And here it is: ``The goal of health reform ought to be the opposite-to standardize policies so that everyone buys the same basic package. That way health plans would be forced to compete by offering better treatment, rather than by tailoring coverage to attract only applicants unlikely to need treatment.'' So, in case you misunderstood, you have it from the Mouthpiece of the Left-wing Establishment: The same benefits for everybody. One Size Fits All. No real choice. Got It?

The Power Game

All of these ruminations are indicative of the real stakes: The debates on ``health care'' never were really debates about health; they are about political power. The rest is a vast political exercise in a Chinese-style making up of faces.

Consider the recent flap in Maryland over the decision of the St. Agnes Hospital to thwart the managed care plans' policies of sending new mothers home 48 hours after delivery. St. Agnes officials said that they would not force women and their newborn babies out of the hospital until they were good and ready, and offered a free day of maternity stay to women even if the insurance companies refused to pay for it. The Maryland Health Services Cost Review Commission announced that St. Agnes had run afoul of state regulatory policy, which is a mortal sin to idiots in Maryland and elsewhere who still think, after 40 centuries of experience, that price controls are an economically efficient way of doing business. Robert Murray, Executive Director of the Commission, moaned that St Agnes' policy of paying for the extra days out of their own bottom line was ``highly problematic.'' But Murray's statement to the February 16th edition of The Washington Post is a gem: ``It tears at the fabric of our rate setting system...We cannot just allow hospitals to go off on their own.'' The very idea! Pretty soon patients might be going off on their own.

On March 7th, The Washington Post reported that the Maryland Commission, stung by unfriendly publicity, finally approved of the previously scandalous decision of St. Agnes Hospital-but only after a promise that the cost would not be shifted to other patients. (At the very beginning of the controversy, St. Agnes had said they would not shift the costs, which would come out of the Hospital's bottom line, but at that time this policy was ``problematic.'') Murray said other hospitals could also do such a good deed, but first they would have to seek government approval. Not consumer approval. No free exchange of goods and services or even of good will or love and friendship between doctors and hospitals and patients. In the bureaucratic state, governed by ``value-free'' ethics and puritanical political correctness, it's not the good deed that counts; it's the political decision and who makes it. You always have to get permission, even to be what the Wizard of Oz called a ``good deed doer.'' That's why MSAs are such a mortal threat. As Senator Bob Dole, a Kansas man himself, would say, perhaps, That's What It's All About.

Next, the Senate...

The Kennedy/Kassebaum bill (S. 1028) is scheduled to come to the Senate floor on April 18th. The bill limits exclusions for preexisting medical conditions for those who lose employer-based coverage and provides for guaranteed availability and renewability of health insurance. The bill also sets up group purchasing arrangements but, unlike the House bill, formalizes these arrangements in Health Plan Purchasing Cooperatives (HPPCS), a throwback to ``managed competition.'' Unlike the earlier version, the HPPCs are voluntary, but the bill does not establish an even playing field for medical insurance. Under Kennedy Kassebaum, the HPPCs would get more favorable treatment under certain state laws, thus worrying conservatives who fear that the Senate insurance reform proposal could, whether intended or not, create the insurance cartels that were the major threat in the proposals surfacing in 1993 and 1994. The more open business pooling arrangements carefully crafted in the House bill are clearly superior to those of the Senate.

Medicare Again

Though the public posturing on both sides of the great Medicare divide is that they are searching for an agreement, privately most Capitol Hill observers don't think that there will be a Medicare compromise. The same is true for Medicaid, which is not as politically potent an issue although it is fiscally the most explosive of the federal programs. According to a February 6, 1996, analysis published by Senate Republican Policy Committee, annual Medicaid growth has been well over 10% over the last decade and approached 20% in five of those years. As a share of state spending, Medicaid has increased from 10.2 to 19.4% over the 1987-1994 period.

For the Clinton Administration, no agreement is good election-year politics. But the fiscal mess in Medicare just keeps getting messier. The Hospital Insurance trust Fund ended fiscal year 1995 in worse shape than the Medicare Trustees projected six months earlier. Instead of finishing the year with a $4.7 billion surplus, Part A lost $36 million. This increases the likelihood that Medicare could go bankrupt before the due date of 2002. This latest miscalculation caused a stir on the Hill and kicked off an oversight investigation by the House Ways and Means Committee into the old question, directed primarily at Secretary Robert Rubin: What did you know and when did you know it? The Treasury Department said that they released early news of the shortfall when it came to their attention on October 27, 1995, right in the midst of the Big Budget Debate. But nobody, including senior Administration officials nor members of Congress, apparently had a clue about the shortfall until the New York Times published a front page story on December 5, 1995. The good news in all of this is that the day of reckoning on Medicare costs is close at hand.

Clinton's Budget

The President may have told Americans in his State of the Union Show that the Era of Big Government was over, but the Administration's latest budget submission says something else. The President finally submitted his Fiscal Year 1997 budget proposal to Congress-proposing $358 billion more in federal spending and $232 billion more in taxes over the next seven years than the Balanced Budget enacted by Congress and vetoed last fall. According to an analysis published by the Heritage Foundation, this amounts to $3,580 in higher spending and $2,320 in higher taxes for every household in the United States. Compared to the Balanced Budget Act, which he vetoed, the president's 1997 Budget submission will add $125 billion in new red ink through 2002. This amounts to an increase of the debt burden on every household by $1250. So much for the end of Big Government.

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