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Omnia pro aegroto

Volume 56, No. 11 November 2000


Our Founders recognized certain intractable problems due to Nature (such as mortality) or human nature (the tendency to violate natural laws such as "thou shalt not steal").

Though realistic about the prospects for Utopia, they thought that life's problems could be mitigated by securing the "self-evident" natural rights of the people. For this purpose, "Governments are instituted among Men, deriving their just Powers from the Consent of the Governed." The people had the right to alter or abolish a government if it was destructive of those rights (as in Yugoslavia?)-or so thought the radicals who signed the Declaration of Independence.

A new type of radical with a Utopian goal now has the intention of "abolishing the Forms to which [we] are accustomed"- in "health care" and, necessarily, in government-on the basis of a very different theory of Nature. These "international visionaries," who are "chart[ing] a brave new world," do not underestimate the magnitude of their undertaking:

"No doubt Washington, Franklin, and Jefferson had a monumental task before them when they set out to draft a document establishing an independent nation. And while the times and context have changed drastically, the task set before an international group of leaders from several fields is no less monumental in scope" (Medical Ethics Advisor Archives 3/1/99).

Their agenda is gathering support within organized medicine as well as in the political realm. A recent manifesto entitled "Changing the Subject: Ethical Principles for Everyone in Health Care," by Frank Davidoff, Editor of the Annals of Internal Medicine and Tavistock group member, was published in September (Ann Intern Med 2000;133:386-389). The article elaborates on the ideas initially developed by the Tavistock group (see AAPS News Oct 1999) and comments on the "3 Ps" -problem, proposals, and politics-that must come together to bring about change.

Here is the updated version of the ethical principles:

(1) Rights: "People have the right to health and health care; (2) Balance: "Care of individual patients is central, but the health of populations is also our concern"; (3) Comprehensiveness: "In addition to treating illness, we have an obligation to ease suffering, minimize disability, prevent disease, and promote health; (4) Cooperation; (5) Improvement; (6) Safety; and (7) Openness.

Tavistock is fundamentally at odds with Jefferson in asserting that "rights don't exist `in nature'; they are socially defined." Notably, the right to health has been added, without comment, to the frequently asserted right to health care.

It should be discomfiting to observe that the German National Socialists were among the first to introduce preventive medicine and anti-smoking campaigns. Hitler, Himmler, and Hess were obsessed with food and health. Other Nazi leaders, such as Fritz Sauckel, Gauleiter of Thuringia, were among the chief anti- tobacco lobbyists. It is important to remember that their efforts to eliminate illness turned into efforts to eliminate sick workers, especially among foreigners and slave laborers, as at IG-Farben's Auschwitz plant. Yet Naziism may be rehabilitated: Robert Proctor's book The Nazi War on Cancer "may lead to a revision of traditional viewpoints on the impact of National Socialism, in particular that it will be viewed as a more subtle and plausible phenomenon than we commonly imagine. National Socialism had many advantages for most non-Jewish and healthy Germans" (Nature 1999;401:425-426).

Nazi precedents must be kept in mind when considering the consequences of efforts to secure the right to health, say in those found to carry a bad gene-especially in the absence of natural rights to life, liberty, and private property.

Tavistock recognizes that for every "rights holder" there are "obligation bearers." Discussion of the latter is lacking; logically, they have to include everyone, even patients.

Tavistock asserts that "everyone in health care is involved in global health care even if he or she isn't aware of it; and that the vast majority of people served by those working in health care haven't been born [conceived?] yet."

What does the "consent of the governed" mean when the vast majority of those "served" are purely hypothetical and the health of global populations is at stake? They will have to be represented by the right people. To develop such people, "group learning is essential," as is professional recertification, keeping up to date on ethics, looking for cost-effective care, and avoiding "reckless use of scarce societal resources."

Methods for implementing the ethics include peer-group pressure ("shaming"), endorsement by "high-stakes enablers" such as hospital systems and professional organizations, legal action to build up applicable case law, and example setting by models such as the Johnson & Johnson company in its handling of the Tylenol crisis.

The sponsors of Tavistock are familiar to students of the Clinton Task Force on Health Care Reform: the Robert Wood Johnson Foundation and the W.K. Kellogg Foundation.

The methods-like most corporate or government strategies-are described by catchy acronyms: PROACT (identify the problem, define the objectives, explore alternatives, recognize consequences and trade-offs) or FOTE and POTE (full or partial open truthful exchange). But the reality is old wine in new bottles: a "universal" (global, totalitarian) regime with mandatory "cooperation" (conscription) with the goal of furthering the "good of society as a whole" through central command and control. Of course there will be rationing, quotas, price controls, mandates, euthanasia, and constant empty rhetoric about compassion and justice.

Call it something else, but this is one more attempt to reinvent human nature and engineer the New Socialist Man.

MedChi Defeats Single Payer Resolution

Maryland was targeted to be one of the first state medical societies to endorse a proposal for single payer cloaked in rhetoric calling for "Health Care for All." The support of the biggest county medical societies was locked in. But on the way to Ocean City, AAPS members Christopher Unger, M.D., of Bethesda and James E. Kelly, D.O., of Easton sounded the alarm and rallied the opposition. Kathryn Serkes, Audrey Mullen, and Jane Orient of AAPS compiled data and circulated fact sheets. Based on a study of single payer in Massachusetts, Maryland could see a 10% increase in the state income tax rate and a loss of one-fifth of its labor force.

After an acrimonious floor debate, the resolution was defeated. MedChi physicians are determined to take charge of framing the debate, rather than serving as a front for outside agitators pushing the Maryland Citizen's Health Initiative.


Gallup Survey on Medical Privacy

According to a Gallup survey released on Sept. 26 by the Institute for Health Freedom, the overwhelming majority of Americans do not want their medical records accessible to third parties without their consent. Key findings: 92% oppose allowing government agencies to see records without consent; 82% object to access by insurance companies, and 67% to access by researchers in the absence of patient consent. In addition, 91% oppose a federal requirement to assign everyone a unique medical identification number to create a national medical data base. Only 12% had heard of the proposal to assign such numbers. The survey can be viewed in its entirety at www.forhealthfreedom.org/Gallupsurvey.


Why Be Computer Literate?

When employers or health plans seek physicians who are computer literate, "it is not necessarily the computer skills that they are after," writes Greg Borzo. "Rather, they view such expertise as an indicator of whether a physician subscribes to today's emphasis on cost-effectiveness, accountability, outcomes measurement, and performance-based review" and is likely to be a "good team player" (AM News 2/12/96).


Price Controls by Another Name

Both houses of Congress have passed laws allowing reimportation of drugs in an effort to reduce consumer costs. As Sen. John Breaux (D-LA) stated, "the effect of the measure would be to "drive American drug prices down to whatever level Canada sets by law. Why don't we just put on price controls in this country and call it what it is?" (David Broder, Wash Post 9/25/00). According to NCPA senior fellow Robert Goldberg, U.S. patients will see little benefit, but access to important new products will be reduced. Nearly one-third of the biotechnology products sold in the U.S. today are unavailable in Canada because price controls make it impossible to sell them at a profit (NCPA Brief Analysis #342).


Congressional Candidate to Speak at AAPS

At the St. Louis annual meeting, Richard J. Gimpelson, M.D., AAPS member and Past President of the St. Louis Metropolitan Medical Society will discuss "Doctors in Politics."


Glad to Have Opted Out

I read the Open Letter to the OIG and wish to detail my dealings with Medicare-Empire Blue Shield in NJ. These people were good at only a few things: making money on their HCFA contract; denying services for lack of medical necessity; and deflecting HCFA inquiries. After I had a major MI in 1999, requiring a month on a vent with a balloon pump, I decided that getting rid of Medicare would reduce my stress level. [I opted out] and let patients know that I would decide the fee and it was solely their responsibility to pay for the services. I was the only credentialed neuro-oncologist in northern NJ. Many patients were quite ill and were medically indigent, but several of my elderly patients were quite wealthy and did not deserve any discounts. I noticed that the patients who had insisted on coming to my office frequently for routine Parkinson's management stopped doing so; they were encouraged to call if they had any problems. These cases diminished to very few. Since I was very fatigued at the end of the day, I welcomed this. I was seeing only neuro-onc patients who needed my expertise. It was great. I never charged them if they couldn't afford to pay, and didn't worry about being accused of Medicare fraud when my lowest fee for 40 days of hospital care was $0.0. I felt totally relaxed about practice and regretted not getting out sooner. I no longer felt angry about services being stolen by HCFA, and I didn't give a damn when they called. We told them we were not in the program and to call someone else. My secretary thanked me every day. And I could throw all those promotions for coding classes in the trash. I know many doctors do not have this option, but my children are grown and educated. I went on disability after my second episode of CHF; it was something I should have done years ago. I still belong to and support AAPS.
Andrew Bender, M.D., Philadelphia, PA


ER Doctors Pay $2.6 Million

Four emergency physician groups will pay $2.6 million to settle claims that they authorized upcoded billings that were submitted by Emergency Physicians Billing Service of Oklahoma City. Whistleblower Theresa Semtner will collect $443,502. She will also collect $3.2 million from the case against EPBS, which paid $15 million. MBLS Emergency Physicians of St. Petersburg, FL, provided certification that it will no longer be a Medicare provider; the three other groups will be subjected to a corporate integrity agreement (CIA).

"A provider may choose not to participate in federal health programs after being `beaten up' by the government in an investigation and `want nothing more to do with it," says attorney Gabriel Imperato, Borad and Cassel, Fort Lauderdale, Fla. If the provider no longer bills Medicare, OIG loses its right to impose a CIA" (Medicare Compliance Alert 9/11/00).

Delegation of Power

One of the most important cases before this session of the U.S. Supreme Court will help decide whether the Constitutional principle of nondelegation still has meaning (Carol M. Browner, Administrator of the Environmental Protection Agency v. American Trucking Associations (99-1257)).

Erik Jaffe writes in an amicus curiae brief for AAPS: "Central to the interests of AAPS are the enforcement of constitutional limits on the exercise of government power in general and on the administrative state in particular. Sweeping delegations of authority in the areas of health and medicine are extremely prone to abuse and difficult to police. AAPS has extensive experience challenging the regulatory edicts of an unresponsive federal health bureaucracy and knows first-hand the nature of administrative abuse that comes from lack of adequate legislative direction and control. AAPS thus views a revitalized nondelegation doctrine as essential to a limited government respectful of free markets and free citizens."

At issue is whether 42 U.S.C. §7409, the Clean Air Act provision directing the EPA to set national ambient air quality standards (NAAQS), is an unconstitutional delegation of legislative authority in that it provides no intelligible principle for setting the standards and allows the EPA to make the inevitable competing value choices and trade-offs.

This fundamental constitutional doctrine is oft-stated but rarely enforced. "Unfortunately, the history of the nondelegation doctrine can seem a history filled with excuses for not applying it." Yet it is only the clear assignment of power to one branch of government that makes it answerable to citizens.

The EPA's authority to "prevent unknown harms" is becoming so broad that "it is difficult to imagine any health effect that could not be used to justify EPA regulation." Moreover, the EPA's process is arbitrary by definition.

The EPA itself delegates authority to hand-picked groups of private scientists, whose interests may be adverse to the interests of the parties being regulated. Their analysis was severely criticized by EPA scientists, who put their own careers on the line to protest. An EPA draft document details numerous difficulties with the data used in setting the standards, including covariates and confounders, misclassifications of health outcomes, and errors in exposure measurements (CD Perspectives, Sept 2000, www.oism.org/cdp).

In another amicus brief filed by the Lincoln Institute for Research and Education and others, Herb Titus compares current U.S. administrative law to the Court of Star Chamber, which reigned supreme in England during the Middle Ages, exercising broad and undefined executive, legislative, and judicial power. "Only after the Star Chamber was abolished by Parliament in 1648 was `due process of law as established by Magna Carta' restored in England.... Only by ruling that Section 109 of the CAA effects an unconstitutional delegation of legislative powers will this Court...take a similar step towards restoration of the rule of law in America."

The AAPS brief was funded by the American Health Legal Foundation, 1601 N. Tucson Blvd #9, Tucson, AZ 85716.


Catch 22

Robert Gervais, M.D., applied for relicensure of his federally delicensed ambulatory surgery facility (see AAPS News, Jan 2000). The government came to inspect but left immediately because it cannot survey a facility that is not "fully operational." The physician must perform surgery, without facility fee, on one "batch" of patients, and if that is satisfactory, on a second batch. A batch that is "too small" will be rejected, and the entire process is back to Square One. There is, of course, no retrospective billing for the facility fee.


Plea Bargains

A guilty plea constitutes a conviction that cannot be appealed and may have unexpected consequences, as Caroline Haggard Flores, operator of a Texas home health agency, discovered. After being led to believe that she would receive only the statutory minimum exclusion of 5 years, she pled guilty to "conspiracy to defraud" to avoid the potential of a much harsher sentence that could be imposed if she were convicted at trial. When she received a 20-year exclusion, she argued that she did not commit the acts of which she had been accused, but the state court refused to allow her to withdraw her plea (Civil Money Penalties Reporter, summer 2000).

Facing the prospect of mandatory minimum federal prison sentences of 20 years or more, which were intended for gangsters, some physicians plead guilty even when they believe they are innocent. A guilty verdict on 1 of 33 counts has the same effect as being convicted of all 33.


Health Freedom Bill Passed in Ohio

Signed into law in July, H.B. 90 amends §4731.227 to read:

"An individual authorized to practice medicine and surgery or osteopathic medicine and surgery may use alternative medical treatments if the individual has provided the information necessary to obtain informed consent from the patient and the treatment meets the standards enforced by the State Medical Board pursuant to section 4731.22 of the Revised Code and any rules adopted by the board.

"As used in this section, `alternative medical treatment' means care that is complementary to or different from conventional medical care but is reasonable when the benefits and risks of the alternative medical treatment and the conventional medical care are compared."

See www.healthlobby.com or www.forhealthfreedom.org. At the latter site, the Institute for Health Freedom provides links to government information in each state.

A patient consent form suggested by the Texas State Board of Medical Examiners in its guidelines for integrative and complementary medicine is found in AM News 9/18/00.


Teen Sues Over Lack of ABC Warning

This July, 19-year-old Stephanie Carter of Hatboro, PA, filed suit against abortionist Charles Benjamin of Philadelphia, alleging that Dr. Benjamin failed to inform her of any of the physical or emotional risks of the procedure, notably including an increased risk of breast cancer.

Because the abortion was actually performed in Cherry Hill, NJ, to circumvent the Pennsylvania parental notification law, the case may be tried either under PA or NJ law at the Court's discretion. In PA, the performance of any surgical procedure without proper informed consent is actionable as a battery. In NJ, damages may be assessed for the cost of additional monitoring as well as for the emotional stress of having been placed at risk. This is the first case of its kind concerning the ABC link (ABC Quarterly, summer 2000).

Members' Page

Trick Question. Medicare seems to be stepping up its attacks on emergency room visits. This is the second time in about a week that Upstate Medicare has suspended an emergency visit claim, requesting further information before they will process it. The question they require you to answer so that they can have another pretext for not paying the claim: which version of the E&M guidelines did you use to code the visit? The 1995 version is less stringent than 1997, but it has no guidelines for single system examinations (like neurology). If I respond "1995," they will tell me it doesn't meet criteria, automatically deny the claim, and demand that I refund the full payment.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


Newspeak. An article detailing the facts of the blatantly stupid attempt to regulate the medical market in Kentucky is published in The Actuary under the rubric of "opinion." But when actuaries make criminally irresponsible projections, as for Medicare prescription drugs, promising low- cost, high-quality medical care for everyone, these hopelessly misguided opinions are assumed to be facts. Apparently, in Actuary Speak, fact is opinion, opinion is fact, war is peace, slavery is freedom, and ignorance is strength. Gerry Smedinghoff, Recovering Ex-Actuary, Wheaton, IL


Medicare Shouldn't Pay. A clinic visit costs about as much as an oil change or a brake job, which are not covered by Mechanicare. The government should stop intruding into the physician-patient relationship and should get out of the business of paying for physician visits. The overhead of processing claims or haggling when claims are denied is a substantial part of both government and clinic costs.
Robert Berry, M.D., Greenville, TN


Cognitive Dissonance. I rarely see a discussion of the dichotomy between government's heartwarming concern for the uninsured and its policies that make insurance prohibitively expensive even for healthy middle-class families. And, without debating the legitimacy of the tax system, why isn't individual insurance a deductible expense? Apparently, the goal is to have the government manage "health care" for all, accomplished by making costs impossible and politicians indispensable-even though Medicare is barely solvent despite, in effect, forced funding, participation, and labor.

AAPS is the only organization with principle and backbone enough to contest foolish government policies. As a discontented past or present member of the AMA and AAFP, I happily pay my dues to AAPS.
Stephen DeGray, M.D., Bluefield, VA


A Mystery. It never ceases to amaze me how many people will accept what an insurer decrees-even if they have the financial means to purchase what is needed.
Gary Mirkin, M.D., Great Neck, NY


AAPS Calendar

Oct. 25-28, 2000. 57th annual meeting, St. Louis, MO.
Oct. 24-27, 2001. 58th annual meeting, Cincinnati, OH.

Legislative Alert

More Presidential Prescriptions

Last month the Republican Presidential candidate unveiled his Medicare reform proposal in detail. This month Vice President Gore has just released the details of his own Medicare prescription drug program. It is, in many respects, a variant of the original Clinton Medicare Plan. While OMB has estimated the cost of the Gore Plan at $253 billion over 10 years, the Congressional Budget Office now estimates that the Gore prescription drug program alone would cost $338 billion over the same time period. Regardless of the merits of the particular provisions, taxpayers should get ready for sticker shock. Considering the fact that the total cost of Medicare today is $220 billion, without drug coverage, this is a formidable increase in the cost of the program. The key features:

1. Premium-Based Federal Subsidy. Costs would be shared between the taxpayers and the seniors. Beginning in 2002, senior citizens would pay a premium of $25 per month. Seniors with incomes below 135% of poverty would be fully subsidized, and those between 135% and 150% of poverty would receive sliding-scale subsidies. Half of drug costs would be paid up to a cap of $5,000: first-dollar coverage, no deductible.

2. Catastrophic Limit for Drug Costs. There would be a $4,000 annual catastrophic limit, beginning in 2002, with no cost sharing for low-income seniors.

3. PBM Administration. The drug benefit would be administered through Pharmaceutical Benefit Managers (PBM) as are currently in use in corporate medicine. Medicare would contract with PBMs in geographic regions. The PBMs would assume no risk; they would act as current Medicare carriers; they would manage the benefit, using the standard cost- containment measures that are used today in employer-based health insurance contracts, such as drug utilization programs. According to the Gore campaign, "Regardless of their plan choice, all Medicare beneficiaries enrolled in the prescription drug option would have access to all medically necessary prescriptions, even if not on the plan s formulary." The Gore plan provides for government purchasing of drugs at discounted prices; campaign officials insist that the plan would not rely on price controls, and that such controls would be statutorily prohibited. A PBM contract would be awarded on the basis of a competitive bid, and there would be one PBM per region.

4. Employer Subsidies. In order to encourage employers to offer or to retain coverage of prescription drugs for retirees, Medicare would contribute 67% of its premium subsidy for the Medicare benefit to employers. According to campaign officials, this is "less than what it would pay if the beneficiary enrolled in the Medicare program, but more than what the employer receives today. Retirees would not have to do anything to keep their current coverage." Employers would apply for the incentive program, and they would have to show that their drug benefit is at least as good as Medicare's. If an employer were to drop coverage or offer a drug benefit of lesser value than that set by Medicare, retirees would be able to enroll in the government Medicare prescription drug program.

The Gore plan is little more than a campaign document, but the Clinton Plan, which it resembles, is laid out in fine detail in the March 20th legislative language, the Medicare Modernization Act of 2000. Dr. James Tozzi, a veteran career civil servant who served in five presidential Administrations, most notably at the OMB, and a senior researcher with Multinational Business Services, a Washington consulting firm, recently completed a regulatory analysis of the Clinton Medicare Plan and found that the Clinton Plan contains 412 new mandates, 182 related to Medicare prescription drugs.

For example, under 201 of the Medicare Modernization Act, HCFA would have broad regulatory authority to determine which drugs are to be approved. Should Medicare cover drugs to treat impotence or male pattern baldness? What about the drugs that treat only a tiny portion of the population? Should the government mandate these expensive drugs, or should they look toward less costly, possibly less effective substitutes? What about drugs that are very costly, but whose effectiveness is limited? Should the government push the seniors into generic drugs whenever possible?

The government would also have to establish the 15 geographic service areas to be managed by the PBMs, a tricky little item because of geographic cost differentials; establish conflict-of-interest rules; regulate the quality of pharmacy services; develop guidelines under which benefit managers would share in any savings; establish a grievance procedure to resolve consumer complaints against benefit managers and participating pharmacies, a poor but sometimes necessary substitute for consumer choice in a geographically based monopoly; and establish rules for evaluating PBM s effectiveness in containing costs through "price incentives and utilization management." There are many, many other such items. The thing is mind-numbing.

If some version of the Clinton-Gore prescription drug program is enacted, it will mean yet another massive expansion of the regulatory power of HCFA. The Administration is starting to get sensitive on this point. Already the Tozzi report has drawn fire from Administration supporters, primarily because Tozzi did the study on behalf of the Pharmaceutical Research and Manufacturers Association of America. But thus far the Clinton- Gore Administration hasn t said what is wrong with his analysis, or even addressed his central message. Tozzi s analysis is an open book and its truth is readily available to all honest observers. A copy can be obtained from the Multinational Business Services, 11 Dupont Circle NW, Suite 700, Washington D.C. 20036, or the Center for Regulatory Effectiveness at www.thecre.com.

Big Trouble at HCFA

The regulatory responsibilities of HCFA are not, of course, self-imposed; they are created by Congress. That is why so much of the understandable anger directed at HCFA is so often either futile or misplaced. It is the untamed Administration and Congressional passion for regulation and control that has resulted in such a top-heavy administrative burden. Yet both Congress and the White House, in their zeal to add benefits and expand eligibility, seem intent on ignoring HCFA s growing management problems. In 1999, 14 of the nation s top health care policy experts, including three former directors of HCFA, published an open letter to Congress and the White House in the winter issue of Health Affairs warning of an impending management crisis for HCFA. While they differed on what was to be done about it, and approached Medicare reform from different perspectives, they were all agreed on one point: HCFA is in big time trouble.

HCFA already has enormous problems in handling Medicare Parts A and B. In 1999, the House Ways and Means Committee revealed that in appealing claims denied by HCFA or its contractors, the adjudication process took 310 days for hospital claims and 524 days for physician claims. Based on the last two years of experience with Medicare Part C, the so- called Medicare+Choice program, a devastating combination of inflexibility in payment plus a level of detailed regulation that former HCFA official Bruce Fried and others have described as literally mammoth in scope, restricting the operations of plans in excruciating detail, has precipitated a crisis in that program. Now 900,000 seniors have lost their privately chosen coverage: Congress has known about the impending crisis since June and has done nothing, absolutely nothing.

This past year several different committees, including the Senate Finance Committee, the Senate Select Committee on Aging, the House Budget Committee Task for on Health, and the House Commerce Committee, have held hearings on the governance problems and regulatory problems at HCFA.

The addition of a prescription drug benefit to the current structure will dramatically add to the managerial burdens. There is absolutely no reason to believe that HCFA s problems in processing or overseeing the processing of 900 million claims for drugs will be any better than its oversight over the processing of claims for hospital and physicians services.

On Medicare, the central debate is not prescription drugs, but about whether Americans want to add a prescription drug benefit to Medicare without reforming the old Medicare structure itself. If we do so, it must be with the full knowledge that Medicare s growing managerial problems, described as critical by a broad range of experts, regardless of their political views, have not been addressed. Public officials should be held accountable for the inevitable consequences.

Big Tax Hikes to Keep Medicare Afloat

While the dueling Medicare drug plans are cruising over the airwaves, a bipartisan group of Medicare mavens at the National Academy of Social Insurance (NASI) has just completed a major study on what kind of tax hikes will be necessary to keep Medicare afloat for the next generation of retirees (Financing Medicare s Future, see www.nasi.org).

Brace yourself. It ain t pretty. Some of the Key Findings:

Future Budget Surpluses Won t Cut It. Says Marilyn Moon, senior fellow at the Urban Institute and chairman of the NASI study group on Medicare s financial future: "While a robust economy and new cost containment measures have substantially improved Medicare s financial outlook, Medicare will still require significant additional revenues if we are to offer the baby boomers the type of coverage enjoyed by current beneficiaries." Current beneficiaries-taxpayers take note-do not get outpatient prescription drug coverage. Moon, a widely regarded liberal health policy analyst, goes on to note that reliance on surpluses in the end is ultimately a reliance on future taxpayers to bail out the program: "When a surplus is earmarked for a government program, it's like giving the program a `promise to pay' from the rest of the government, redeemable at some future date. But in a decade when Medicare s costs begin to exceed annual receipts and Medicare turns to its surplus, the government will either have to raise taxes, cut spending, or issue new debt to the public in order to redeem Medicare s securities. The panel agreed, however, that paying down the federal debt would improve the overall economy and make future changes less onerous."

Here Come Big Taxes. According to the NASI report, Medicare will require more than twice as much in taxpayer revenues-an increase of 111%-in 2030 as it did in 1998. If you add a Medicare prescription drug benefit, the tax take skyrockets. What NASI did was model the effect of a benefit with a $200 deductible, 20% coinsurance, and a $2,000 limit on out-of- pocket expenses. (Bush allows for a variety of deductibles in a competitive insurance program, and Gore keeps the old Medicare structure and proudly advertises none). The result: the program will need 171% more revenues in 2030 than in 1998. Sheila Burke, former health care policy staffer for former Senate Majority leader Robert Dole (R-KS) and Moon s fellow panelist, insisted: "Continued growth in the economy, more efficient use of health care and new contributions from beneficiaries are not likely to be enough." Even the Breaux-Thomas proposal, which would include prescription drug coverage and rely upon consumer choice and competition to control costs, would still result in a tax increase of 81% over the next three decades. No Medicare proposal now on the table will spare future taxpayers significant tax increases, simply because of the size and demographic pressures exerted by the Baby Boomers. Moon and Burke might not agree on much; but it appears that they got this right.

New Tax Options. The NASI outlined, in delicious detail, the kind of tax hikes that would be required to sustain the Medicare system at current levels, and ventured to make some projections. A variety of old revenue enhancers were examined, including an increase in federal excise taxes, taxing the Medicare benefits of upper-income retirees (AARP, call the office!), and taxing the value of employer-based health insurance (just tax 'em, and don t give 'em any tax credits in return-real popular, especially with the corporate types and the unions!) Of course, none of these calculations tell us how these tax increases would impact the general economy, economic growth, employment and capital, or investment spending. But that isn t NASI s job. This is what NASI did outline as major potential options:

Option 1: Raise the payroll tax from 2.9% to 4.84%. As NASI points out, this would mean that a worker making $35,000 a year would pay $847 per year, as opposed to $508 per year. That worker s employer would be subject to an identical increase under current law.

Option 2: Add an 8.43% surcharge onto the current income tax. A family with an income of $34,900 (just below the national median) with an average tax liability could see their taxes rise from $1,710 to $1,852.

Option 3: A federal tax of 2.02% on the purchase of goods and services, with the exception of housing, financial services, and certain labor categories. The NASI report says that this would mean that a family with $25,000 in taxable expenses would pay $505.

If one were to exclude the purchases of food, medical care, new housing, and related items, the national tax would have to be 3.29% to close the gap and keep Medicare afloat under the current benefit levels. Under that scenario, a family with $15,000 in taxable expenses would pay $494. Imagine Congress debating these kinds of taxes, what should and should not be excluded, what s to be tax favored and what not to be tax favored, and then there s the enforcement by the IRS.

Should be fun.

Robert Moffit is a prominent Washington health policy analyst and Director of Domestic Policy at the Heritage Foundation.