Volume 57, No. 11 November 2001

FREEDOM UNDER ATTACK

President Bush called the September 11 attacks on the Pentagon and the World Trade Center an attack on freedom. The World Trade Center was surely a fitting target for the enemies of freedom, in both a practical and a symbolic sense. Private property rights and the freedom to engage in peaceful trade are the essential foundations of political freedom.

President Bush pledged that freedom would be defended. But in war, freedom itself can be the first casualty.

Other casualties include innocent civilians and soldiers killed by "friendly fire." Identifying the enemy is critical-and problematic. Can the world be clearly divided into two camps: those who are with us, and those who are with the terrorists?

Who are the terrorists?

One of the declared enemies-Osama bin Laden, the most likely mastermind of the September 11 assaults-issued a declaration of jihad or holy war in August, 1996. He called the June 1995 truck bomb in Dhahran, Saudi Arabia, the "beginning of the war between Muslims and the United States." There have been other episodes, and some suspect bin Laden's involvement in the Oklahoma City bombing-an allegation that might never be put to rest, partly because of the execution of Timothy McVeigh and the razing of the federal building.

Most Muslims, of course, are not enemies, and only a few will heed bin Laden's televised Oct. 7 message: "These events have divided the world into two sides: the side of believers and the side of infidels.... Every Muslim has to rush to make his religion victorious."

And most enemies of freedom are neither Muslims nor terrorists. Some are recognized governments. Others are sappers, gnawing away at the foundations of our civilization from within. Unless we are vigilant, the war could provide a golden opportunity for such foes.

Almost the moment that the airplane struck the first tower, the mass media began to drum in the message: we must trade our liberty for the promise of better security.

Tony Blankley, styling himself a former "crypto-anarcho- Libertarian," called on all Americans to "discard everything they thought they believed about civil liberties. He spoke admiringly of Old Abe, who, at a time of "unlimited danger... didn't hesitate to take unlimited power." The result: "thousands of American citizens were arrested and incarcerated indefinitely without benefit of due process. Not only dangerous actions, but seditious words were sufficient grounds for such arrests. The Union was preserved..."-and while the writ of habeas corpus was restored, the power of centralized government was greatly and permanently increased (Washington Times 9/26/01).

Lincoln suppressed all political dissent and obliterated constitutional checks and balances. Perhaps more than 20,000 political opponents were jailed, including the Mayor of Baltimore, its Chief of Police, a congressman, and 31 state legislators. More than 300 newspapers were shut down-for disagreeing with the assessment of "unlimited danger" or proposing an alternative to invading the South. The result of Lincoln's policies: 23,000 American casualties at Antietam, Sept. 16-18, 1862. The war cost the Union 3.2% of its male population, the Confederacy 9.7% of its (white) male population. The equivalent loss today would be 6.5 million men, most in their teens or early 20s ( www.lewrockwell.com/orig2/miller1.html). Charles Adams, in his book When in the Course of Human Events, suggests that a far better outcome would have been achieved using Constitutional methods rather than the seizure of unlimited power.

A bill purported to protect Americans against terrorism was brought to Congress very quickly after the attack-just as it was after the Oklahoma City bombing-providing for vast expansions of power that agencies have sought for a long time. A coalition from across the political spectrum, including AAPS, has called for prudent caution (join the discussion at aaps.commentary.forums.net ).

The most dangerous feature of the proposal is the very broad and vague definition of "terrorism." It includes "injury of Government property or contracts," or "acts dangerous to human life that are a violation of criminal laws of the United States or any State and that appear to be intended to influence the policy of a government by intimidation or coercion." Such "terrorist" crimes have no statute of limitations and are punishable by life imprisonment. Are we unduly worried?

On Sept. 12, a prosecutor told a jury that the events they had just seen on television showed the importance of protecting Government institutions from the likes of Dr. Robert Mitrione, accused and convicted of using the wrong code to bill for psychiatric services rendered by his employees.

Senator Clinton (D-NY) told The New Yorker that she empathizes with her constituents, having herself been the victim of "murderous rage"-in Seattle in 1994, when demonstrators led by AAPS members peacefully greeted her bus tour with chants of "Hillary, go home."

As to property rights, the proposal gives the President the power to seize property, with no due process at all.

Will such provisions give the government greater ability to protect our lives than it had on Sept. 11? Or can we save our nation only by allowing citizens greater freedom?

Terrorists cannot destroy freedom, because freedom doesn't reside in the World Trade Center or in the Pentagon or at 1600 Pennsylvania Ave. Nor can a Superpower destroy evil-which doesn't live in a cave in Afghanistan.

Freedom, however, can be surrendered, and terrorists can destroy thousands of human lives. Government can punish; but only free men can defend freedom-and save thousands of their countrymen, as they did on September 11.

AAPS Members Respond to 9/11

AAPS Public Relations Counsel Kathryn Serkes, after being evacuated from Reagan Airport on Sept. 11, volunteered for search and rescue efforts at the Pentagon, with her dog. She coordinated Operation Resolve, including the God Bless America sing across the country from the NY Stock Exchange to baseball games, to encourage Americans to display unity and strength. She personally gave away 500 American flags in D.C.

Congressman Ron Paul, M.D. (R-TX), a life AAPS member, introduced H.R. 2896, which would clarify that the federal government will never place a prohibition on pilots being armed. His weekly column of Sept. 25 explains how we must defend our nation without the "sacrifice [of] our liberties at the hand of an irrational urgency." He recommends consideration of the constitutional method provided for dealing with piracy-one of only three federal crimes named in the Constitution-Letters of Marque and Reprisal, Article 1, Section 8 (www.house.gov/paul).

AAPS President Robert J. Cihak, M.D., provided practical self-help information for the public in the Medicine Men columns in WorldNetDaily, Sept. 14 and 24.

AAPS Executive Director Jane Orient, M.D., traveled to Miami to discuss defense against weapons of mass destruction (WMD) with the Univision Network. She helped a Cuban-American family demonstrate preparation of a sealed room, televised by the Spanish-language news magazine Aqu� y Ahora. Directions for this method of protection against chemical or biological attack, from the Israel Defense Forces, is posted at www.oism.org/ddp with other information on WMD.

Undermining the Infrastructure

An article entitled "Terrorists 1,000 and Enviros 5,000?" quotes a 1970s prophecy about the World Trade Center by Herbert Levine: "If a fire breaks out above the 64th floor, that building will fall down." The steel girders were designed to resist fire for at least four hours, during which time the building could be evacuated and the fire fought. Tower One lasted 1 hour and 40 minutes; Tower Two, 56 minutes.

The design, which was intended to resist the crash of a Boeing 707, specified fireproofing composed of asbestos and mineral wool. This material, invented by Levine in the 1940s, permitted the construction of large steel-framed buildings. (The Empire State Building is insulated with concrete, which is expensive and difficult to use.) In 1971, New York City banned the use of asbestos, so a substitute, inferior insulation had to be used above the 64th floor.

Like that of the Twin Towers, the infrastructure of America has been weakened by many forces, including junk science, opportunistic litigation, and political corruption.

"Still, there is enormous good and strength in our country. Let us hope and pray that it will be sufficient" (Access to Energy, Sept 2001, PO Box 1250, Cave Junction OR 97523).

Public uber Private

Opponents of private medicine are trying to turn the attack on freedom into an opportunity to mandate universal coverage. Arthur Caplan, Director of the Univ. of Pennsylvania's Center for Bioethics, states: "Every American is a veteran" ("Terrorist Attacks Show Need for Universal Health Plan, Caplan Says," Kaiser Daily Health Policy Report 10/1/01).

Individuals More Capable than Government

Greg Scandlen sees a different connection between the terrorist attacks and insurance reform than Dr. Caplan: "The police, firefighters, and construction workers of New York City have proven to be more competent than the CIA and FAA. Who would dare say they are incapable of choosing their own health care coverage anymore? Who would suggest that the federal government should take care of it for them?"

A survey by the Minnesota Chamber of Commerce showed that Americans are confident of their own abilities: 77% employers and 78% of employees favor the idea of workers customizing their own benefits; 75% of employers and 71% of employees favor financially rewarding workers for controlling their use of benefits; and 52% of workers like the idea of "choosing their own coverage with only financial assistance from their employer."

Oregon Town Chooses SimpleCare

The McMinnville [Oregon] Physicians Organization (MPO) brought in David MacDonald, D.O., and Vern Cherewatenko, M.D., of Renton, WA, cofounders of SimpleCare, to speak to major employers in the town of 95,000. Of the 65 physicians in town, 62 joined SimpleCare. A $50/month major medical/hospital only insurance policy has been made available. Dr. MacDonald told physicians that they could make more money and provide better service by charging patients directly, even at fees 20 to 50% less than the fee encumbered by insurance overhead. It is expected that physicians will back away from all of their insurance contracts.

Though the program probably has the strongest appeal to uninsured patients, MPO Executive Director Anne Hamilton said the organization believes that many insured patients will choose to switch. "I don't want a plan to tell me who I can and can't go see, and I don't mind paying out of pocket for a better system," she told the News-Register on Sept. 25.

Ms. Hamilton estimated that about 30% of business overhead goes to cover employee benefits. Offering catastrophic benefits while letting employees pay for routine care themselves through SimpleCare would relieve the burden. "Ultimately, those savings can go back into the employees' pockets in the form of raises," she said.

AAPS Calendar

Oct. 24-27. 58th annual meeting, Cincinnati, OH.

Nov. 17. AAPS, PA chapter, and SEPP. Healthcare Summit 2001, Pittsburgh, PA, call (724) 929-5711 or see www.se- pp.net.

Sept. 18-21, 2002. 59th annual meeting, Tucson, AZ.

  

"The natural progress of things is for liberty to yield and government to gain ground." Thomas Jefferson

AAPS Opposes Forcible Drugging

On October 4, AAPS filed a motion for leave to file a brief amicus curiae in the case of Charles Thomas Sell, D.D.S, in the U.S. Circuit Court of Appeals for the 8th Circuit, supporting reversal of a lower court order to forcibly administer psychotropic drugs to the defendant for the stated purpose of rendering him competent to stand trial.

Since his arrest on a charge of Medicaid fraud, Dr. Sell has been imprisoned without trial, mostly in solitary confinement, for nearly four years. The government claims that Dr. Sell is delusional, largely based on his conspiratorial thinking and harsh criticism of government actions as in Waco. He has been determined not to be a danger to himself or others.

AAPS argues that state authority to force prisoners to take mind-altering drugs is highly vulnerable to abuse; the precedent could not be limited to the unusual facts in this case. "It is easy for a state to declare its adversaries to be insane; an expansive interpretation of the decision [of the lower court] would allow the state to forcibly drug its adversaries in the name of preparing for trial."

There is strong Supreme Court precedent against the use of drugs as punishment. AAPS notes that the government portrays Dr. Sell as an offensive individual; yet the more despicable the individual, the more likely that forced drugging serves a punitive rather than a salutary purpose.

AAPS also argues that the patient's right of informed consent is essential to the integrity of medicine. Moreover, the district court decision could enable the experimental use of drugs, contrary to principles established at Nuremburg.

A hearing is scheduled for October 15.

Psychiatry and Dissent

Between 1955 and 1970, Western enthusiasts for social theories of behavior used the Soviet system as a model when advocating centralized, government-run health systems.

"The Russian experiment, by way of contrast [to fragmented medical care in the Western world], has established a national health service through which medical care is provided free of charge to all citizens" (Am J Psychiatry 1968;125:656- 660).

In 1967, the KGB's annual report included a letter to the Ministry of Health by Academician Sakharov: "Fainberg and Borisov, political prisoners in the Leningrad psychiatric prison, have announced a hunger strike against compulsory therapeutic treatment with medications injurious to mental activity. I ask you urgently to intervene to preserve the health and dignity of prisoners in the psychiatric prison. Promote the removal of even the possibility of violations of human rights and medical ethics in the running of psychiatric institutions...."

Admirers found it more difficult to avert their eyes from abuses after 1969, when a New York Times article about the psychiatric hospitalization of Major General Pyotr Grigorenko, who had been arrested for criticizing the Soviet regime, noted that using "mental incompetence" to control political dissent was not unusual in the Soviet Union. However, only in 1977 did the World Psychiatric Association condemn such practices.

In 1974, psychiatrists in the West had become curious about reports of a high prevalence of schizophrenia in the Soviet Union-5 to 7 per 1,000 population compared with 3 to 4 per 1,000 in the UK. Soviet psychiatrists had "discovered" a unique form of mental disease called "sluggish schizophrenia" that fit the profile of political dissidents ( www.geocentral.net/be/kgb/dissidence.html).

Mark Field suggested that it was "at least conceivable that the average Soviet psychiatrist, brought up within the context of Soviet culture and values, will assess the very idea of opposition to the regime ... as prima facie evidence of some kind of deep disturbance (Ann NY Acad Med 1977;285:687-697).

The author of a recent review warns against "exaggerated cultural relativism" and concludes that "the Soviet experience continues to instruct inquiry in psychiatry for the West" (GS Belkin, Perspectives in Biology and Medicine 1999;43(1):31-46).

Fraud Fighting: a Growth Industry

Prosecutors do not see fraud problems dwindling, certainly not in the light of terrorist activities. In fact, according to attorney Marc Goldstone, some think that people may take advantage of the tragedy to commit abuses. Attorney Mark Allen Kleinman stated: "I would hope that this administration, which has now had to take $40 billion out of the Social Security Trust Fund, will have renewed respect for aggressive fraud-fighting efforts, which have returned billions of dollars to the treasury in recent years" (BNA's HCFR 9/19/01).

According to a study by New Directions for Policy, the federal government has "recovered" $8 for every dollar spent fighting fraud and abuse with the False Claims Act, bringing in $8.6 billion since 1986. The law is considered likely to generate billions more in savings through its "deterrent effect."

The report also notes that despite physicians' complaints of overzealous enforcement, the General Accounting Office agrees with prosecutors that they have used FCA in a "judicious and uniform" manner, and federal law prohibits prosecutions for honest mistakes (BNA's HCFR 10/3/01).

On the other hand, the Ninth Circuit Court overturned a $729,453 judgment against physical therapist Peter Mackby, who indisputably submitted false claims, remanding the case to district court to determine whether the punishment violated the Eighth Amendment's protection against excessive fines. The average claim was for $37, and the fine for each, $5,000. (The OIG has since increased the maximum fine to $10,000 per claim.) This ruling could make it harder for the government to prod providers into settlements.

The FCA has a grossly disproportionate effect on medical practitioners, compared with other industries. The maximum penalty for a single false claim for $100,000 by a defense contractor would be treble damages plus $10,000, or $310,000. The maximum penalty for the same harm to government from 500 false medical claims would be a staggering $5,300,000. Mackby's attorney Patric Hooper stated that the government can pursue huge fines even when there are no damages to the government (Medicare Compliance Alert 10/1/01).

There are new opportunities for ensnaring doctors in the new National Correct Coding Initiative, which prohibits 3,105 more code combinations, bringing the total number of forbidden combinations to 115,000. For only $299 + $29.95 s&h, you can buy software to reduce audit-triggering errors.

When the government errs, incidentally, there are no penalties. In Florida, Medicare and Medicaid were enjoined in a class action suit and ordered to pay $90 million to 23,000 physicians. Dr. Owen McCarthy will receive about $7,200 in three annual installments, which he estimates to be about 1/20 of the amount the government fraudulently withheld from him. Not a word about the settlement appeared in the press.

Correspondence

Is Charity Unlawful? We are seeing more and more letters notifying us that professional courtesy will no longer be extended lest it "invite scrutiny from the OIG." Another professional tradition is being systematically eliminated by government. First, it demotes us by calling us "providers." Then it destroys patient-physician relationships, substitutes itself as parent, and sets patients against us with "guilty until proved innocent" fraud initiatives. Now it is trying to eradicate any vestige of the professionalism that distinguishes physicians from members of other professions or trades.

Government has no right to tell physicians to whom they may donate their skills and labor. If I don't bill either the government or the patient, where is the crime? I know not what others may do, but as for me I will continue to provide professional courtesy to whomever I wish, whenever I wish. If government agents wish to prosecute me for being a professional and committing kindness, I say let them come.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

Democrats Not the Party of Jefferson. For the record, I respectfully disagree with Dr. Orient regarding the assertions that Jefferson founded the Democrat Party and that he was a Jacobin. Thomas Jefferson, James Madison, and other Virginians founded the Democratic-Republican Party, opposing the Federalists led by Alexander Hamilton, John Adams, and other patriots... The modern Democratic Party was established with the election of Andrew Jackson (Jacksonian Democracy) in 1828, which brought together an alliance among farmers in the south and west, entrepreneurs in different states, and urban workers throughout the country. By that time both Thomas Jefferson and John Adams had died on the same day, July 4, 1826... Moreover, Jefferson might have attended meetings at the Jacobin Club, but I really doubt that he was a dues-paying member of the club (dues were exorbitant). Early on during the French Revolution (until 1791), even constitutional monarchists, i.e., like the Feuillants, attended meetings there. By the time of the Reign of Terror (June 1793 to July 1794), Jefferson had broken his brief love affair with the ideals of the French Revolution and rejected the authoritarian and collectivist path the revolution had taken. Referring to Jefferson as a Jacobin was also incorrect; not even Thomas Paine (who almost lost his head to the Guillotine) deserves that appellation... [Excerpted from letter posted at www.aapsonline.org]
Miguel A. Faria, Jr., M.D., Macon, GA

Pleased with MSA. I recently signed up for an MSA account through the Mutual Insurance Group in West Palm Beach, FL. The account allows me to save $3,800/year in a tax-deferred IRA account for my family and roll any money over to the next year that we don't spend on medical care. Hospitalization and surgical claims are paid at 100% of customary by Beach Street Insurance. When we go to a doctor, we negotiate the cost of the examination and treatment, and usually realize a substantial savings. Money from the MSA account can be used for prescriptions, well care, cosmetic surgery, or dental work. I recommend that AAPS members contact their own insurance agent or Mutual Insurance Group. [Also see www.aapsonline. org under "Links" if looking for an MSA product -- Ed.]
Harry A. Hamburger, M.D., Miami, FL

Just Ask. Patients should ask physicians whether they have a prompt-payment discount [fair price] policy. Physicians are willing to do this-and if they haven't done it yet, all they need is a tiny push in the right direction. One patient request may be enough; two or three ought to do the trick.
Donna Kinney, HealthBenefitsReform listserv

Cognitive-behavior modification theory applies here. People act to get rewards and avoid pain.... Money is a universal reward. "I'm paying cash," and "Can you tell me who else offers this service in this area?" should sink into the cognition.
James Pendleton, M.D., Bryn Athyn, PA

Legislative Alert

With direct, massive attacks on tens of thousands of American civilians in the heart of New York and Washington, nothing can be taken for granted-not military protection of the world's only Superpower, not a vibrant economy, not even your own personal safety and security, or that of the ones you love. The national complacency, the seemingly endless summer of prosperity and financial security-all of that is in the past. So is the culture of the Nineties, the callous indifference to religious belief and the dismissal of that simple and humble patriotism that characterized an earlier time.

The President of the United States today is heading to an approval rating that may yet be the highest rating of any President in American history, based both on his conduct in office and his public performances, first, at the National Cathedral, and subsequently in his addresses to both the Congress and the American people. The plaudits keep coming in, noticeably from former Vice President Al Gore. It appears that the President himself has been transformed by these terrible events and has touched the spirit of his fellow Americans in a way that is rare for Presidents, except those ranked among the very greatest of our chief executives.

At no time, with the possible exception of those somber days immediately following December 7, 1941, has there been such a palpable unity of mind and spirit on the part of the American people. The contagion of good will has spread to Congress, which is, at least temporarily, enjoying the warmest spirit of bipartisanship in memory.

At no time has there been such a broad and direct empathy with the victims of barbaric violence. So many of us know someone who died, or someone with a family member or a neighbor who had perished, or simply identified with a familiar and popular personality, such as the beautiful and brilliant Barbara Olson, a TV commentator.

At no time has there been such a graphic display of heroism and sacrifice, of charity and selflessness, on the part of ordinary people who were, in an explosive instant, thrust into an extraordinary historical circumstance.

And at no time has there been a more clear recognition of why police officers and firemen, the best and bravest of our public servants, are so important to us, and why, if we should be lucky enough to have one as a family member, we should be so personally proud of that honorable connection.

Domestic Policy Impact

The impact on the course of domestic policy has already been profound. Virtually every major legislative initiative likely to be before the Congress for the rest of the term is related in some way, directly or indirectly, to the terrorist attacks and the new war effort. It is likely that work on the 13 major appropriation bills will be transformed into work on a Continuing Resolution, which would fund the government at current levels. The Homeland Security agency, to be run by Pennsylvania Governor Thomas Ridge, is another top item on the agenda. It also appears that work will continue on the education reform bill, a version of which has passed both Houses of Congress.

Among the casualties of the Sept. 11 attacks:

The Sanctity of the Social Security and Medicare Trust Funds. Remember the so-called Lock Box, celebrated by Al Gore and Republicans alike? Members of Congress were saying, before Sept. 11, that even if we had to trim the Defense Department budget, it was out sacred duty to preserve, protect, and defend the Social Security Trust Fund-which, as Clinton's former Labor Secretary Robert Reich admitted days before the Sept. 11 attacks, is, was, and forever more will be nothing more than an accounting fiction. It is not a real trust fund, but a depository of government IOUs, which can only be redeemed by increasing debt or raising taxes. Nonetheless, that fiction was one that neither party in Congress was ready to challenge- until Sept 11. Since then, Congress has enacted $40 billion to rebuild New York City and fund the military, as well as an additional $15 billion in relief for the airlines. So much for keeping the Lock Box locked.

As for Social Security reform, the report of the President's Social Security Reform Commission, due this fall, will probably be put off until spring, according to former Senator Daniel Patrick Moynihan, now Commission Chairman.

Medicare and Medicare Prescription Drug Coverage. There is deep division between liberals and conservatives in Congress on this issue, and it is not easy to find common ground.

The Patients' Bill of Rights. While bills have passed the House and Senate, conferees have not met, and the differences between the House and Senate bills are enough to prevent an early resolution. Senate Majority Leader Thomas Daschle (D-SD) has said the Bush White House would have to get House Republicans to give ground in any such conference, but the White House has not been very responsive to these appeals. Moreover, the Senate bill would apply the PBOR to all government plans, while the House bill would not.

Beyond the litigation provisions of the House and the Senate bills, both would establish broad new regulatory powers to the federal government to oversee, in highly prescriptive detail, the operations of private medical insurance plans. Regulation characterizes Congressional health care policy. Hostility to enacting free-market alternatives in Congress is, and has been, the norm, regardless of the rhetoric one hears from Republicans.

Economic Stimulus Plans

Look for Congress and the White House to push through a program intended to boost economic growth. This means significant tax reform. The outlines of that program will be determined by bipartisan negotiation, but conservatives are pretty clear about what they want:

First, allow companies to fully deduct the expense of investments in new plants and equipment. The current depreciation rules would be replaced by rules permitting immediate expensing of these outlays. Such a change would boost capital formation, and thus help the economy.

Second, accelerate the Bush tax rate reductions. Many of the components of the tax cut will not take place until 2004, 2006, and 2010. The idea is to make all tax rate reductions, IRA expansions, and repeal of the inheritance tax (the death tax), effective as of September 11, 2001.

Third, reduce the capital gains tax rate. Ideally, the capital gains tax should be repealed; it is a form of double taxation that penalizes risk and entrepreneurial efforts by business leaders and investors, and, of course, it discourages reinvestment. A big reduction in capital gains taxation would stimulate new investment and economic growth. Any such reduction should be permanent.

Medical Insurance for Dislocated Workers

Senator Edward M. Kennedy (D-MA), once again beating the hapless Republican Congressional leaders to the punch on the issue of displaced workers, is preparing a comprehensive worker relief package worth between $21 and $31 billion. It would include an expansion of unemployment insurance and job training; federal payment for COBRA coverage; Medicaid expansions; and possibly expansion of the State Children's Health Insurance Program (SCHIP).

Needless to say, Senator Kennedy, the driving force behind Congressional health-care policy, thinks that the dislocation of thousands of workers in the airlines and related industries could be excellent candidates to enroll in SCHIP or Medicaid. Medicaid is having difficulty getting folks enrolled, because of the stigma of welfare and the bureaucratic structure. Not many middle-class Americans would choose to give up their private insurance to enroll in Medicaid, but Medicaid fits the health policy objectives of the Left: more government control.

Congressional Republicans don't like Kennedy's health-care fixation. But, as of this writing, Kennedy has a strategy and they don't. Some Congressional Republicans are sure that the conservative economists are right about the flawed structure and dynamics of the medical marketplace. This is a chance to make solid changes to promote consumer choice in the purchase of private medical insurance and medical services. Two major proposals are circulating on Capitol Hill:

Extend tax credits for COBRA coverage. Under current law, based on changes made through the Consolidated Omnibus Budget Reconciliation Act, employees who are separated can have access to their group medical insurance for 18 months, but they have to pay the full premium for coverage. For many families, that can be a financial hardship. There is a lot to recommend the COBRA arrangement as the vehicle for individual tax credits for medical insurance. The tax credit could be designed in such a way that it could help offset the cost of the employer's plan, or it could be used for a plan independent of the employer. Some have suggested that it could even be used to enable persons to buy into one of the competing plans participating in the Federal Employees Health Benefits Program or FEHBP. (If some in Congress insist on using government programs to expand coverage, it is hard to imagine why they would object to using the FEHBP.)

The design of the tax credit would have to be carefully drawn. For those without any income coming in, the tax credit could be refundable. Lynn Etheredge, a health policy analyst at George Washington University, suggests that the tax credit could be applied to the families of firemen and police officers who have been killed in the terrorist attacks. For persons not covered by COBRA, a complementary program, says Etheredge, would be a system of vouchers available through unemployment insurance offices or other public agencies.

Allow employees to keep and roll over funds in flexible spending accounts tax free to pay for medical services. Employees of US Airways and United Airlines, among many other corporations, have flexible spending accounts, tax-free accounts from which they can pay routine medical expenses. However, under current law, their employees either must use the funds in these accounts or lose them. It is a profoundly stupid quirk in the federal tax code. Congress can and should simply fix it. Perhaps the best option is to allow employees to carry over $2,000 annually, which would enable those funds to accumulate for meeting family medical crises or eventually to help offset retiree health care costs.

At present, roughly half of the uninsured are only temporarily lacking medical insurance because of a job loss or a change in employment. While COBRA coverage is available to former employees, as noted, many of them cannot take advantage of it because they cannot pay the full premiums. But by allowing workers to save and roll over funds in their FSAs, they could pay for COBRA and other health-related expenses. This should have been done years ago, but members of Congress don't seem to understand how such a change would help millions of Americans and create the foundation of the equivalent of medical savings accounts (MSAs) within the framework of employer-based insurance.

Medical Costs and Insurance Coverage

Because of a more accurate accounting, the Census Bureau reports that 38.7 million Americans are without coverage, down from roughly 43 million a couple of years ago. But analysts expect the number to rise again following the impact of the layoffs and the economic slump. Meanwhile, the Center for Studying Health System Change says that overall medical costs rose 7.2% last year, driven primarily by an increase in hospital spending, which accounted for 47% of all increases last year). Look for insurance premium increases to go back up to double digits. One solid indication of what is ahead is the release of the projected figures for the FEHBP, which is projecting a premium increase of 13.3%. Historically, because the competitive FEHBP has had a better record of containing cost than traditional employer-based insurance, analysts see this big jump as ominous.

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