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Volume 61, No. 11 November 2005


Hurricane Katrina not only devastated the Gulf Coast, but could be used to batter down still more of the American economy and Americans' civil liberties if the wrong "lessons" are learned. Or, by exposing stark realities, it could sweep away some cherished misconceptions and the policies based on them.

Consider the private and the public responses:

Home Depot mobilized four days before the storm hit, bringing generators and hundreds of extra workers to nearby areas. Within a day, all but 10 of the 33 stores in the Katrina area were open, and within a week, all but four of the nine in metropolitan New Orleans were open.

Wal-Mart's relief supplies arrived days before FEMA's did. Local employees fended off looters and gave shoes, food, water, medicines, and other supplies to the needy. Ill-equipped National Guardsmen got holsters and ammunition from Wal-Mart. Its emergency call center aided not only displaced employees but nonemployees who couldn't get timely help from government. All but 14 of the 126 stores shut down by the hurricane were reopened by Sept 18.

FedEx not only staged more than 500 tons of relief supplies so they could be delivered quickly after the storm passed; its workers salvaged a FedEx radio antenna so that the 82nd Airborne and other rescuers had communications.

While Washington Parish waited for help from FEMA (which was only beginning to set up assistance offices 18 days after the storm), Nature's Way Purewater of Pennsylvania sent in trucks, and Temple-Inland got the water system back up. A Southern Baptist Convention team from Illinois served more than 14,000 meals a day (see Fortune 10/2/05).

The enduring symbol of government help will be the Superdome, a hellhole of misery and chaos, where people were forced to go while local government deliberately decided there was to be no food or water, lest people be "encouraged" to show up. Meanwhile, help that was not "coordinated" by government agencies was repeatedly turned away.

Dr. Mark N. Perlmutter, a Pennsylvania orthopedic surgeon, said he was ordered off the tarmac of the New Orleans airport, for lack of FEMA credentials, though he was the only doctor there and patients were dying. He was able to get them to accept the insulin and morphine he had brought the pharmacy was totally out of insulin (2theadvocate.com).

Up to 500 airboat pilots, who had spent thousands of dollars of their own money on supplies, were threatened with arrest if they tried to rescue drowning people in New Orleans. They were told it wasn't safe and after seeing people shooting at their would-be saviors on the news, some came to that conclusion on their own (Sun-Sentinel S. Fl. 9/2/05).

Because it brought four armed police officers for protection, the Phoenix Fire Department's Urban Search and Rescue team credited with rescuing 400 Katrina survivors from rooftops and flooded freeway overpasses has been suspended by FEMA (Ariz Daily Star 10/5/05).

Victims of Katrina lost not only their homes but their civil rights. Lest people defend themselves against marauders, law enforcement officials arbitrarily confiscated private firearms. New Orleans Police Chief Edwin Compass declared that only police would be allowed to have guns. A federal court enjoined further seizures after the Second Amendment Foundation and the NRA filed suit (AAPS News of the Day 10/5/05).

Government's contribution to the cause of the flooding also needs scrutiny. Construction of a barrier that might have protected New Orleans was stopped by a federal judge in 1977, when Save Our Wetlands filed suit claiming the environmental impact statement was deficient. The Mississippi River Gulf Outlet, constructed by the Army Corps of Engineers, and the Corps's shoddy maintenance of floodwalls, are partly responsible for the disaster. And federal flood insurance encourages construction in flood plains (Wall St J 9/26/05).

In the aftermath, there are the usual cries to expand the power and scope of government, redesigning not only New Orleans but all of American medicine.

Organization charts are to be redrawn again: should FEMA be elevated back to Cabinet level? Local authorities couldn't maintain order, and people didn't follow evacuation orders (though buses could've helped): is it a good time to empower the military to enforce a bird flu quarantine, or to repeal the Posse Comitatus Act? Patients don't know what medicines they take: should we put them all on the internet or in a central data bank? Medical care is disrupted on the Gulf Coast: should we "grab the chance to fix health care," as single-payer advocate Nicholas Kristof suggests?

Almost anything is a pretext to advocate for digitizing and centralizing medical records these days. Some paper records were destroyed, and some hospital patients got transferred without their records. But at Ochsner Hospital, the doctors went back to paper and pen. As Dr. David Stern of Torrance, CA, notes, "the least important consumer of power in the hospital was deemed to be the electronic medical record system." Besides, the temperature inside critical computer and network equipment topped 150F (Network World 9/15/05).

As Americans come to rely more and more on the federal government, they should remember the words of New Orleans Mayor C. Ray Nagin, who blamed his city's breakdown on Washington, DC: "They kept promising and saying things would happen. I was getting excited and telling people that. They kept making promises and promises" (NY Times 9/5/05).

"A federal government that maimed a great city must not have the conceit to think that it can micromanage its future," writes David Schoenbrod (Wall St J, op. cit.).

Ditto for the rest of the nation.

Government Fixes

False Claims Act (FCA). Despite a tacit promise to go easy on providers who couldn't comply with Medicare regulations during Hurricane Katrina, the Office of Inspector General will use all the tools at its disposal, including the FCA, in investi- gations of possible neglect and abuse of hospital or nursing home patients during the disaster. OIG will look both at providers who did not evacuate patients (such as the owners of St. Rita's nursing home who face 34 counts of negligent homicide) and at those who did. Providers need to document thoroughly the decision-making process that prevented evacuation, and the backup plan in case buses didn't show up. "They need to be prepared to be scrutinized" (MCA 10/3/05).

EMTALA. HHS Secretary Leavitt gave personnel in over- whelmed emergency rooms in Alabama, Florida, Louisiana, Mississippi, and Texas permission to redirect patients without first screening or stabilizing them. The waiver was later extended to cover facilities in Arkansas, Colorado, Georgia, North Carolina, Oklahoma, Tennessee, West Virginia, and Ohio. The waiver is not a grant of immunity, but just some "flexibility" to show that the Secretary understands that under some circumstances a patient might be better off elsewhere [perhaps where running water and electricity are available]. Nevertheless, compliance officers are advised to fill in documentation gaps to cover future investigations or lawsuits.

"It is unlikely that HHS or a judge would enforce many EMTALA issues related to the hurricane, but private suits should still be taken seriously... especially since the waiver only suspended EMTALA obligations for the first 72 hours after a hospital initiated its emergency protocols."

The message: "When disaster strikes, compliance and documentation are still necessary" (MCA 9/19/05).

HIPAA. Secretary Leavitt relaxed some Privacy Rule requirements to allow disaster care in hurricane-ravaged areas. New patients could be seen even if they hadn't gotten a notice of privacy practices, and doctors could speak with family or friends without first getting a patient's permission. The hurricane also swept away HIPAA compliant and noncompliant data protection measures without distinction. To avoid future Security Rule violations, physicians with electronic records are advised to have remote off-site backups and emergency generators (HIPAA Compliance Alert 9/12/05).


Communications Silence

In the age of Information Technology, a great city and parts of the Gulf Coast suddenly dropped off voice, data, and video communications. Nothing much had changed since Sept 11, 2001, to correct the inability of first responders, civilian authorities, and the National Guard to communicate with each other. Human couriers were needed to carry messages. Few satellite phones were available; more than 30% of cell sites were disabled; 37 of 41 radio stations were lost.

In 2005, the U.S. couldn't match the standard set in the 1906 San Francisco earthquake. Soldiers were on the streets within 20 minutes, and the first relief train arrived from Los Angeles within 18 hours. By the next morning, Teddy Roosevelt's Secretary of War had ordered supply trains from across the country to head toward San Francisco (John Wohlstetter, Bandwidth, September 2005, www.discovery.org).

Moral Hazard

In an oft-cited article, Malcolm Gladwell calls the "moral hazard myth" the "bad idea behind our failed health-care system" (New Yorker 8/29/05). The lack of enthusiasm for national health insurance and the "thicket of co-payments and deductibles and utilization reviews" are based on the belief that insurance can produce risky and wasteful behavior. Gladwell fears that if people are allowed to save money by forgoing care and uninsured people spend an average of $934 per year on medical care while the privately insured consume $2,347 worth they will cut back on useful as well as frivolous care. And look at tragic results of omitting dental care!

Gladwell believes in social insurance: young, healthy people should be delighted to spend thousands of extra dollars to subsidize others, in return for a sense of security. Putting more burden on the consumer (at the time of service rather than while paying premiums or taxes) "reduce[s] the social redistributive element of insurance."

Is it right that people who have rotting teeth should have to pay more than those who don't? The goal of social insurance is not just redistribution of income, but the redistribution of the burden of illness. Utopia is equal pain.

[For insights on socialized dentistry, search UK news sites on terms like "dentist," "queue," or "pulled his own teeth."]

The moral hazard of the welfare state the creation of an underclass with an entitlement mentality is now widely displayed in the aftermath of Katrina. A physician who went to help at the Houston Convention Center reports:

Volunteers had created a medical center, a cafeteria, showers, and comfortable sleeping places, setting out mountains of good quality donated items. But only 20% of the people were appreciative, 10% were without comment, and 70% were rude or abusive. They complained about being served Jason's Deli instead of pizza and beer or about being asked to help women carry their mattresses. People evacuated free by American Airlines trashed the flight academy hotel.

"Now these same people who cursed me, refused my city's generosity, who refuse to help themselves, are demanding handouts on their own terms!"


AAPS Calendar

Oct 22, 2005. SEPP meeting in Pittsburgh, www.sepp.net.
Feb 11, 2006. Board of Directors meeting.
Sept 13-16, 2006. 63rd annual meeting, Phoenix, AZ.


"The word no liberal uses is `enough.' There is no such thing as too much government. There is no point at which, say, Ted Kennedy will ever sigh with satisfaction and say, `Well, at last we've made it.... At long last we have all the government we need.... Even one more law or regulation, in fact, might be excessive.'"Joseph Sobran


HIT the Key to Curbing Fraud

While health information technology is touted as a way to improve medical outcomes and reduce costs, it also promises innovative ways to reduce fraud and abuse in federal health programs, says HHS Inspector General Daniel Levinson.

The OIG's goal is to make data more accessible to law enforcement agencies. Health IT "provides transparency that makes fraud difficult," Levinson said (BNA's HCFR 9/28/05).


Katrina Destroys Court Data

All over Louisiana, people are in prisons with no paperwork or computer record and no way to adjudicate their cases. None of the parish court systems were linked to a centralized system for backup or disaster recovery; some data from tapes may be salvageable. It is estimated that 80% of court IT infrastructure in New Orleans will have to be replaced (Network World 9/19/05).


Computer Vulnerability

Computer systems and media can be destroyed by fire or flood as effectively as paper can, observed AAPS Executive Director Jane Orient, M.D. Recovery may depend on remote backup. But there is an additional computer vulnerability not tested by Katrina: shutdown of the electric power grid and destruction of computer circuitry by EMP (electromagnetic pulse) from a high-altitude nuclear explosion possibly the gravest existing threat to national security.

A single SCUD missile carrying a nuclear warhead could wipe out electrical systems across much of the continental U.S. for months or years, writes Sen. Jon Kyl (R-AZ), Chairman of the Senate Judiciary Subcommittee on Terrorism, Technology, and Homeland Security. Transformers for regional substations take more than a year to build and are no longer manufactured in the U.S. According to recent testimony, functional degradation could have "irreversible effects on the country's ability to support any large fraction of the present human population." Hardening key infrastructure and storing vital backup equipment is vital (J Civil Defense May/June 2005).

A paperless medical record system could be wiped out instantly by an EMP. But the loss of medical records would cause a tiny number of casualties compared with those resulting from the loss of safe water, refrigeration, transportation, and other essentials for a post-1880s society.


IBC Sued for Interfering with Private Contracts

While Medicare carriers assert that patients are not allowed to contract privately for "covered" services unless they see an opted-out physician, private insurance is not supposed to limit a patient's right to seek care outside the system.

But a deceased patient, Sandra S. Lobb, who was insured by Independence Blue Cross (IBC), was repeatedly denied treatment for alcohol dependency although her private physician prescribed it and her family desired to pay for it.

In a lawsuit in the U.S. District Court, Eastern District of Pennsylvania, Mrs. Lobb's family asks whether insurers may "overrule the medical judgment of properly licensed physicians and psychologists and alone determine whether...care...is medically necessary and medically appropriate" (McDermott v Koken, 05-cv-02536).

State-approved contracts between IBC and providers contain state-mandated language prohibiting acceptance of payment for any otherwise covered services that IBC determined to be medically unnecessary. Moreover, the contracts contain a "confidentiality clause" that prohibits both doctors and hospitals from disclosing the terms of the contract to subscribers. Facilities asserted that they had to discharge Mrs. Lobb to "custodial care/confinement" despite her numerous medical complications. Her physician stopped treating her because the provider contract obliges the physician to "participate in, cooperate, and comply with all decisions rendered in connection with Independence's Utilization Management Program."

Had Mrs. Lobb been uninsured, these constraints would not have been placed on her care.

IBC is not licensed to practice medicine, notes attorney Lawrence Otter in the Second Amended Complaint. Otter is former Senior Deputy Attorney General of Pennsylvania.

Otter also argues that the actions of defendants rise to the level of state action that impairs their right of contract under Article 1 Section 10 of the U.S. Constitution.

The complaint is posted at www.aapsonline.org.


TeenScreen Under Legal Attack

In September, Rutherford Institute attorneys filed suit over the school-based mental health screening program called TeenScreen on behalf of Michael and Teresa Rhoades and their minor daughter Chelsea, in the U.S. District Court for the Northern District of Indiana, South Bend Division (Rhoades v. Penn-Harris-Madison School Corporation et al.)

In December 2004, Chelsea had been diagnosed with obsessive compulsive disorder and social anxiety disorder on the basis of a computerized questionnaire that took about 10 minutes to complete. Though she appeared to be a normal, happy, high- achieving teenager, the "test" revealed that she enjoyed cleaning house and didn't like to party very much. The majority of other students who took the test, she said, were also found to suffer from some type of mental or social "disorder." Students had to take the test unless they had a parental opt-out form; Chelsea's parents said they had not received the form and didn't know about the test in advance.

Students were presented with an "assent form" to sign, but Chelsea "did not have the legal capacity to consent and she was not aware of the purpose of the assent, the nature of the test..., or the purpose for which the test was being given."

The complaint alleges that plaintiffs were, under color of state law, deprived of their fundamental rights to the custody and care of their daughter as well as their privacy rights. Defendants allegedly breached their duties to obtain consent and to exercise due care in making or communicating any diagnosis, and caused severe emotional distress (see www.rutherford.org).

TeenScreen is funded by federal tax dollars funneled through state governments and promoted by educational grants from pharmaceutical companies. Medicaid then buys drugs, including the most expensive new antipsychotics, for the new customers "found" by the screening programs. After receiving grants of around $250,000, Medicaid programs may end up spending $250,000,000 on the company's drugs (Evelyn Pringle, Scoop 6/13/05, www.scoop.co.nz).

Parents fear that they will be pressured or even coerced to have their children drugged.


Hurricane Aftermath. Katrina has temporarily blown away the implementation of the government's "pay for performance" scam (Part B News 9/12/05). Owing to the recovery costs, plans to implement P4P and plans to address the flawed "Sustained Growth Rate" (SGR) payment formula have both been submerged. The hopes of the AMA and specialty societies that Congress would reverse Medicare pay cuts scheduled to be a minimum of 26% over the next 6 years are sinking fast. Meanwhile, Part B premiums will be increased by 13.2% in 2006. CMS complains that greedy physicians are working harder to try to maintain their income. How dare they!

No one has heard of any 26% cuts in salaries of HHS bureaucrats or payments to carriers for processing claims.

Opting out is sounding better and better.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Disaster Pending. Medicare and Social Security are impending disasters, but not for the U.S. government. It is under no obligation to pay amounts currently promised. Unless "the people" get their act together, the most likely resolution is that the government will continue wasting huge sums on the pet projects of the governing elites, draining the private sector and damaging the economy while making its books balance by cutting actual services to zero.
Linda Gorman, Independence Institute, Englewood, CO


Trust in Government. When I spent a summer in Brazil, a friend told me she had been saving up and almost had enough money to buy a car. One day the government suddenly froze all bank assets and devalued the currency. When she once again had access to her assets, she had only enough to buy a set of tires. Maybe it couldn't happen in America. But what if there's a crisis used to justify a "one-time tax," as on retirement funds?
Robert S. Berry, M.D., Greeneville, TN


HSAs, HRAs Only. Starting with MSAs in 1997, our experience has been so positive that my agency decided two years ago to do only high-deductible insurance with HSAs or HRAs. We prefer the former, but some employers have control issues. If a potential client does not want to go that route, we walk away. As my wife says, "We require our clients to be smart enough to do business with us." We realize 45% less in commissions per case on average, but it's the right thing to do. By adding other retirement plans such as 401(k)s to our product mix, we have doubled total agency revenue in 4 years. Our clients are beginning to regard us as consultants, rather than salespersons. We hope others will emulate us.
Edward Dee Hinds, Paso Robles, CA


Paying the Deductible. How could an employee pay qualified expenses from an HSA if incurred before the HSA is fully funded? I have several suggestions: (1) Arrange for time payments. This used to be commonplace with childbirth: go home with a new baby and a coupon book. (2) Put it on your credit card. (3) Arrange for a short-term loan with a financial institution (some HSA administrators are doing this automat- ically). (4) Arrange for the employer to pre-fund the HSA or advance funds under these circumstances. (5) Let the bills pile up and delay paying until the money is in hand.
Greg Scandlen, Consumers for Health Care Choices


Mandates. The best way to make medical insurance less affordable, to make medical costs higher, and to make care less available is to mandate insurance. Just look at the Medicare and Medicaid programs fine examples of what not to do.
Joseph Lee Pugh, Diamondhead, MS


Collision Course. Irrationality must eventually come face to face with reality and come to an end. Pure Communism can last only a few years. Its close cousin, an extremely regimented market as in the Soviet Union, survived some 70 years. A somewhat less regimented system toward which the U.S. has been moving inexorably since 1943 will also fail.

Most American doctors are dependent on the state, which has created an artificial Boom. They know that a Bust must occur, but they hope to avoid it as long as possible by going along to get along. We can continue along the road to failure or reverse course by pushing for free-market reforms.
Robert P. Gervais, M.D., Mesa, AZ


Sanity. Insurance premiums reflect little in actual patient care, but much in paper pushing or actual obstruction of access to care that patients feel entitled to. There is no way we can return to sanity until that third-party role is minimized.
Alieta Eck, M.D., Somerset, NJ


Hog Slop for Accountants. The idea behind Health Savings Accounts is good, but the regulations are so complex that they shift educated people and other valuable resources from competitive enterprise to producing red tape that can't be sold on world markets. What we need is a High Savings Act that would allow Americans to save as much of their income as they want on a tax- free basis.
Craig Cantoni, Scottsdale, AZ


Even the Chicoms Get It. About 30 countries have replaced pay-as-you-go entitlements with personal retirement accounts: Britain, Chile, and many others have no unfunded liabilities.
Frank Timmins, HealthBenefitsReform Group

Legislative Alert

Delay the Medicare Drug Entitlement

That's what Senator John McCain (R-AZ), Rep. Jeff Flake (R- AZ), Rep. Jim Cooper (D-TN), and several other courageous House and Senate members are telling their colleagues and the taxpayers. Not only should Congress delay the drug benefit, it should reset the nation's spending priorities while financing assistance to the victims of Hurricanes Katrina and Rita, a genuine national emergency.

The spending explosion of the Medicare drug entitlement is set to go off on January 1, 2006, and will be mostly funded by general revenues. Over the next ten years, Medicare drug benefits will cost roughly $850 billion. According to the March 2005 Congressional Budget Office (CBO) estimates, the first year (2006) cost of the program would amount to $32.8 billion. In 2007, it jumps to $55 billion; in 2008, $63.9 billion; in 2009, $70.3 billion; in 2010, $78.4 billion. Previous estimates were that the Hurricane relief and recovery efforts were going to exceed $200 billion. Based on the CBO numbers, a four-year delay in the drug entitlement alone would yield roughly $222 billion in savings.

Official estimates of the cost of the program have varied, but members of Congress have been expressing deep concern about the mounting costs, which will add almost $9 trillion to the unfunded liabilities of the Medicare program.

How Unfunded Liabilities Affect the Economy

As this goes to press, two staff alumni of the Congressional Budget Office (CBO), Joseph Antos of the American Enterprise Institute and Tracy Foertsch of the Heritage Foundation's Center for Data Analysis, have just completed an econometric analysis of Medicare and its unfunded costs. They conclude that if Congress decided to pay all the unpaid bills of Medicare simply by raising the existing Medicare payroll tax, the result would be an increase from the current 2.9 to 13.4% of the taxable earnings of workers. Just for Medicare. This kind of a tax hike would have a profound effect on the functioning of the economy. Tax increases reduce disposable income, and thus both consumption and investment. Reduced investment would reduce productivity and job opportunities. Antos and Foertsch estimate that under this tax regime the Gross Domestic Product (GDP) would fall by $90 billion annually, and each year the American economy would lose almost 900,000 jobs.

While Sen. McCain and others, especially Rep. Mike Pence (R- IN) and the House Republican Study Committee, are warning of the future economic impact of entitlement spending, both the Bush Administration and the Republican Congressional leadership have dismissed the Medicare delay as a non-starter. Former House Majority Leader Tom DeLay (R-TX), who helped to muscle the Medicare bill through the house during an infamous three-hour vote, is opposed to the idea. The White House says that seniors expect it and will depend on the drug entitlement staying on course, while House leaders are loathe to open a debate on legislation that they worked so hard to enact.

Spending Like Crazy

The Louisiana congressional delegation has come up with a new set of relief proposals totaling a whopping $250 billion. Congress has already passed two Katrina-related emergency spending bills, one for $10.5 billion and another for $51.8 billion. The size of the task, given the sheer physical devastation of the Gulf Region, plus the displacement of hundreds of thousands of Americans, is likely to exceed official estimates.

While Katrina and Rita costs pile up, the routine congressional spending is no longer routine; it has been revved up and ramped up and stuck on Nutso. The federal budget is at $2.6 trillion, chock full of pork projects and earmarks. The farm subsidies are at $30 billion. Even more grotesque, the recently enacted highway bill costs $286 billion and includes 6,400 earmarked projects worth $25 billion. Curiously, House Minority Leader Nancy Pelosi (D-CA) offered to give up big chunks of "pork" going to San Francisco, a move yet to be matched by anyone in the Republican Congressional leadership. It is an odd development when Republicans can be outflanked on the fiscal responsibility issue by Democrats like Pelosi. But you are going to have to believe your own eyes and ears and not follow the standard partisan playbooks.

Consider some of the recent comments by former House Majority Leader Tom DeLay (R-TX). He recently made the stunning assertion that the Republicans in Congress had already cut the fat in the budget. He added: "Wasteful spending can be found and should be cut like the $89 billion that never made it into the $286 billion (formerly $375 billion) highway bill that the President signed last month and as conservatives and Republicans, we should never let down our guard on this issue" (Washington Times 9/26/05).

You've got to admit it: This is a fresh approach. The House Republican leadership has been "fiscally conservative" because the final highway bill was $286 billion rather than the $375 billion monstrosity that might have been introduced, though it was not, and so DeLay claims seriously, folks that the Republican majority thus cut $89 billion in waste from the bill. President Bush, incidentally, threatened to veto the bill if its cost exceeded $256 billion. Of course, President Bush holds the undisputed Presidential record for vetoes: 0.

Medicare Advantage

Whatever one thinks of the drug entitlement of Title I of the Medicare Modernization Act, the Medicare Advantage program, the new system of private plans under Title II of the law, looks promising. The preliminary information looks good. The private plans offer a full range of benefits at affordable premiums. The danger is that Medicare Advantage could still fall victim, if not this year then maybe next year, to the same problems that beset the ill fated "Medicare Plus Choice." The latter was undermined by the congressional funding rules (2% cap on reimbursements, while cost increases were going into the double digits) plus a level of regulation that discouraged innovation and flexibility in caring for the elderly. "Medicare Plus Choice" was governed by 900 pages of rules and regulations. We are cautiously optimistic. But the future of the program will rest in maintaining the funding for private plans (the congressional Left doesn't like private health plans in Medicare or any other places) and making sure that the regulatory system allows maximum flexibility. The proof will be in the performance in 2006 and beyond.

The Medicare Advantage program could also be another vehicle for innovative health plans, including association plans, ethical health plans, or plans sponsored by faith-based or religious organizations. Ethical health plans could be an attractive option for the aged. In the FEHBP for the very first time last year, the Sisters of the Order of St. Francis offered a health plan in Illinois, though the very idea of it was scandalous to the Left because it did not provide for abortion or contraception. Given the growing concerns among the elderly and others about the quality of end-of-life care, it would make sense for the government to allow them to choose options that respect their deepest convictions. Now more than ever, patients need to be aware of the governing values of those who provide and pay for their care, such as whether physicians adhere to the traditional Oath of Hippocrates, which explicitly forbids euthanasia. With the increasing financial pressure of costly Medicare and Medicaid entitlements, patients have every right to be frightened at the prospect of being "cared for" by white- coated champions of the "quality of life."

The Post-Katrina Health Policy Fight

Congressional Democrats are pretty clear on what to do about medical care for the displaced individuals and families. Expand Medicaid massively. Former Clinton Administration HHS Secretary Donna Shalala called for a huge Medicaid expansion, regardless of the previous Medicaid eligibility of the displaced persons. A more modest variant of the Lefty proposal is the Grassley-Baucus approach. Increasingly, Senator Charles Grassley, the champion of the Senate version of the Medicare Modernization Act's drug entitlement expansion, is to take a basic Senate Democratic position and tweak it into a less expensive version of the real thing.

We have been down this road before. In the aftermath of the 9/11 attacks in New York and Washington in 2001, we also had to cope with a seriously damaged economy and the displacement of millions of workers. The immediate and unsurprising response of the House and Senate Democrats was to push for a radical expansion of Medicaid to persons with incomes 400% of poverty levels, reaching into middle and even upper-middle-income families. The Left is big on Medicaid expansion, which accomplishes two goals at once: it locks people who are not normally eligible for welfare into a welfare program, and also pours another layer of fiscal concrete on the foundation of a national health insurance program.

While many Democrats are largely in favor of another push to expand Medicaid, House and Senate Republicans have not fleshed out all of the details of their own proposals. For them, believe it or not, there is a strong and positive precedent. In the aftermath of the 9/11 attacks, conservatives in Congress worked closely with moderates in the Senate and came up with an alternative to Medicaid expansion. Ways and Means Committee Chairman Bill Thomas (R-CA) and Senator John Breaux (D-LA), with the support of the Bush Administration (Mark McCLellan was at the National Economic Council then) promoted a major refundable tax credit initiative for about 4 million displaced workers. That approach was adopted by the House leadership as a package of refundable tax credits of 65% for any private plan. The subsidies and the menu of plans would have been accessed through unemployment compensation offices: one-stop shopping. Valued between $12 and $15 billion, the package was enacted twice in the House and blocked in the Senate by the then Senate Minority Leader Tom Daschle, who was fighting instead for the Medicaid expansions. The significance of this fight in the winter months of 2001 and 2002 should not be forgotten. It was a rare and precious moment. It was the first time that the congressional Republicans were on offense that is with their own agenda and not the Democrats' agenda in a health policy debate in recent memory.

Now, fast forward to Fall 2005. The same dynamic is playing out in the Katrina debate. We have massive physical destruction. Job-based health insurance has literally washed away with the job sites in a large swath of the Gulf Region. Many of these folks previously had private health insurance; many still have it. Many would like to keep it.

The right response is, of course, not the expansion of Medicaid enrollment in a substandard welfare program but rather allowing and helping people to keep their private medical insurance if they wish to do so, or helping them to purchase a different medical plan of their choice. The insurance industry has already signaled its intentions to do everything possible to allow people to keep their coverage, including a loosening of insurance rules, and a grace period for premium payment. Those private sector efforts should not be directly undermined by the federal government.

That should be the policy goal. The debate should be on the best way to do this. Alternatives include a voucher program, a temporary emergency medical account system, or a system of refundable tax credits. It is no more necessary to enroll displaced Gulf residents in Medicaid than there is to buy thousands of trailers and force them into government trailer parks. Nor does Congress have to foist a FEMA-style debit card on the taxpayer, available for everything from Louis Vuitton shopping sprees to nights out at the hottest clubs outside of The Big Easy. Here a coded smart card, where the card can only be used for medical services (like many medical reimbursement cards today), makes eminent sense.

Tax Reform

The Tax Reform Commission's proposals for comprehensive tax reform may be out by now. There is one area where conservatives and libertarians are strongly united, and where big labor and big business are equally united: the tax policy that - ties medical insurance to the workplace. Freed from the restrictive tax code and superfluous government regulations, and the constraints of an artificial market dominated by employers and insurance companies, individuals could regain personal control over their own medical decisions.

Any reform proposal that does not address the tax issue is not to be taken seriously.

Robert Moffit is Director, the Center for Health Policy Studies at the Heritage Foundation, Washington, D.C.