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Volume 54, No. 11 November 1998


State-of-the art "Quality Resource Management" involves having all the monitored care episodes within "control bars."

The "outlier" physician can then be targeted for intervention.

Less sophisticated tools used by government agencies (such as Medicare PROs) involve making bar graphs of the percentage compliance with the use of "proven" remedies in eligible patients (such as aspirin, beta blockers, and angiotensin converting enzyme inhibitors in patients with myocardial infarction). The idea is for all institutions to be at the same level. Hospital administrators will admit that the agency is "statistically challenged"-if a member of the Medical Executive Committee points out that big percentage differences can be caused by one or two patients in a small group-but the charts are displayed nonetheless ("we have to do this").

Often the quantities measured-in pursuit of Quality- relate to cost issues: such as time required to do a colonoscopy, length of stay, or cost per discharge. The bottom line for the choice of research topics on Quality generally seems to be the bottom line- of persons other than the patient. In fact, the Value of health care services is defined as the "health benefit [to Society] per dollar spent" (Chassin, Galvin, and the National Roundtable on Health Care Quality: "The Urgent Need to Improve Health Care Quality," JAMA 280:1000-1005, 1998).

Quality is also about Justice: "If concern for justice should inform the choice of research topics, then the greater relative needs of the young [as opposed to the elderly] in the United States should receive increased attention in the design of research studies" (Starfield, "Quality-of-Care Research: Internal Elegance and External Relevance," JAMA 280:1006-9, 1998).

To assess Quality of Care, we need tools to assess Quality of Life, but even this is not enough, according to Starfield. There is a need for "increased inclusion of social variables in research design" in order to represent the "composition and needs of the population" (ibid.)

This requires more data, and higher quality data: "The imperative to develop standards for the electronic medical record, through the Health Insurance Portability and Accountability Act of 1996, provides an excellent opportunity to rethink the nature of clinical and clinically relevant data and how new approaches to recording it could overcome the current problems with incomplete and inaccurate data" (ibid.)

The medical informatics industry is here to help implement the millennial Vision, through a public-private partnership. One of the global action items in a strategic beginning is to "support the convergence on standards and coding schemes by accelerating current initiatives" (JAMIA 5:395-400, 1998).

The "radically new ways...to deliver health care services and...assess and improve their quality" would focus on the Big Picture: not on methods of fighting disease, but on overuse, underuse, and misuse of health services (Chassin, op cit.).

Underuse includes missing a vaccination; undetected and untreated hypertension or depression; or failure to use thromb- olytics, beta-blockers, or ACE inhibitors.

Note that a new, "broad" view defines "health care rationing" as "anything that allows patients to go without beneficial medical services." This will "emphasize the ubiquity of tragic choices in health care and highlight the need to decide what types of medical care we want everyone to receive" [emphasis added], writes Robert Wood Johnson Foundation scholar Peter Ubel (Arch Intern Med 158;209-214, 1998).

Underlying the Quality campaign are radical objectives:

  • A change from patient-based (Hippocratic) to population-based ethics. The "apparent conflict" between the two necessitates an "adaptation process [that] will disconcert the transition generation of physicians" (Greenberg, "American Medicine Is on the Right Track," JAMA 279:426-428, 1998). The new medical education will be expanded to include a set of "one-to-n" physician obligations (Greenlick, "Educating Physicians for Population-Based Clinical Practice," JAMA 267:1645-1648, 1992). Quality, after all, "is not identical to positive outcomes" (Chassin, op cit.).

  • Redistribution of resources from the sick to the healthy, from caregivers to administrators and overseers. More profits will go to manufacturers of vaccines and approved, required drugs; physicians who decline to prescribe "recommended" therapy will be accused of "poor quality." Other clear beneficiaries will be those who set the standards and implement the data collection requirements: such as signatories to a Sept. 28 letter strongly supporting the Digital Millennium Copyright Act, which would provide strong financial incentives to collect huge health databases. Signatories included the AMA and the Information Industry Association.

  • Increased pressure on independent physicians. Chassin et al state that "no health care professional can deliver high quality alone. Increasingly, health care professionals practice within groups and systems of care."

  • The destruction of the private sphere. All individuals, in all settings of care, including private homes, are to be included in "quality assessments."

Backing up the Quality regime is the federal government, whose awesome powers are explained in an AMA book entitled Federal Law Enforcement: Physician Compliance. The government may impose "sanctions" (up to five years in prison) if it finds fault with a single claim, ranging from an inadvertent mistake to outright fraud.

Quality will be the claim to legitimacy for the new Popery in medicine. Fear not: Your AMA promises to hold the Keys, functioning like the Pardoner in Chaucer's Canterbury Tales, with Compliance Plans, seminars, and influence in government.

Is a new Reformation at hand?

Approved, Effective, Required Therapy

According to an April 5 report in the Buffalo News, some 4,500 people-twice as many as previously reported-were lobotomized in Sweden between 1944 to 1963: without charge, and many without the consent of a relative. These included children as young as 7 years of age. Additionally, benevolent Swedish socialists sterilized some 60,000 nonconsenting persons between 1935 and 1976. The question of compensation for victims of these methods is being debated (Lakartidningen 94:3935-3938, 3933-3934, 1997).

Antonio Egas Moniz received the Nobel Prize for Medicine in 1949 for the discovery of prefrontal lobotomy. Initially intended as a treatment for certain psychoses, psychosurgery was advocated by a small group of American doctors in the 1960s as a way of dealing with the "public health problem" of racial unrest and political protest.

More recently, the health promotion movement shows signs of becoming ever more coercive and intrusive, "headed on a collision course with basic democratic processes and individual freedoms." Whereas Americans have been exhorted, in warfare, to sacrifice health, life, and limb for freedom, "[n]ow some would have us sacrifice that very freedom for health" (Kilwein: "Medicine as an agency of social control: part four," J Clin Pharm Therapeutics 20:49-53, 1995).

Once freedom is gone, other unthinkable consequences, from lobotomy to soylent green, can follow.


Unapproved, Unnecessary, or Forbidden Therapy

Areas of increasing concern to the hierarchy of organized medicine, the self-anointed Quality priesthood, is "Alternative Medicine-the Risks of Untested and Unregulated Remedies" (Angell & Kassirer, N Engl J Med 339:839-841, 1998) and "Marginal Medicine" (Lamm, JAMA 280:931-933).

It is reported that 34% of adults in the U.S. use at least one unconventional form of health care each year, defined as practices "neither taught widely in U.S. medical schools nor generally available in U.S. hospitals." The estimated 425 million visits to "alternative health care providers" in 1990 exceeded the number of visits to allopathic primary care physicians during that same period. Moreover, patients generally paid out of pocket for such services.

Three hypotheses were proposed to account for the popularity of alternative medicine: dissatisfaction with conventional medicine, need for personal control, and "philosophical congruence." Patient characteristics correlated with use of alternative medicine included more education, poorer health status, and a cluster of tendencies defined as "culture creative" (Astin, JAMA 279:1548-1553, 1998).

The defining feature of alternative medicine, in the view of Angell and Kassirer, is the lack of rigorous testing for safety and efficacy by the FDA and the lack of publication of research reports in the "best peer-reviewed medical journals." They do concede that many treatments used in conventional medicine have not been rigorously tested either, but "the scientific community acknowledges that this is a failing that needs to be remedied."

With notable exceptions, such as those reported in the Sept. 17 issue of the New England Journal of Medicine (which were due to adulterated herbal remedies), the chief hazard of alternative medicine is said to be a "harmful delay in getting treatment that has been proved effective." (This, of course, is also a hazard of managed care and socialized medicine.) One may speculate that the diversion of "resources" from approved therapy is also a major concern.

Expanding the powers of the FDA is one way to suppress alternative medicine.

Another method is to deny physicians the right to collect payment from anyone for unapproved therapies. For example, Pennsylvania Blue Shield determined, "[t]hrough a recent re-evaluation, ... that chelation therapy is not medically necessary for the treatment of conditions other than heavy metal poisoning." Therefore, they not only denied insurance coverage for this procedure (which is surely within their rights), but also dictated that, as of October 6, 1997, "a participating or preferred health care professional may not bill the patient for these services."

Insurance carriers are not stopping at therapy that lacks general acceptance. Regence BlueShield of Washington State is implementing draconian measures to suppress therapy that is not approved by them as being "medically necessary" in a particular instance. They do not simply deny reimbursement:

The Practitioner who collects an amount from the Patient in violation of the agreement is a Class C Felony [sic.].

And to check for compliance with the agreement, the company may audit any group of records, any time, with as little as 24 hours notice.

Richard D. Lamm has given an eloquent explanation of how the physician who provides care that helps a patient may truly be a criminal:

The best medicine for an individual is not always the best health policy for society. Government's goal is health and the physicians' definition of health care is not always the best or most efficient way to deliver health. By not crawling out of the trenches of our professions and looking at the total battlefield, we fail to maximize our contribution to the larger battle for a decent and productive society (Lamm, op cit.).

While it lobbies for a "Patients' Bill of Rights," the Quality priesthood has no principled objection to governmental or third-party barriers to medical care. Its own writings are in complete accord with the collectivist ethic, as long as it is implemented through a public-private partnership in which the priesthood holds the reins of power.



A New York internist noticed that the lab, with which he contracted, upcoded claims and billed for unordered tests. He wrote a letter to the lab asking it to stop, but he didn't keep a copy of the letter and filed no report. The doctor was convicted of filing false claims, ordered to repay $612,855, and serve 46 months in jail....Medicare Compliance Alert gives you 4 practice-proven steps to protect yourself...[Send money now.]

44. Because, by a work of charity, charity increases and the man becomes better; while, by means of pardons, he does not become better, but only freer from punishment.

45. Christians should be taught that he who sees any one in need, and passing him by, gives money for pardons, is not purchasing for himself the indulgences of the Pope, but the anger of God.

 Martin Luther, The Ninety-Five Theses, 1517

Battle on Sunbeam Blackout Continues

In its vigorous fight against an AAPS motion to lift the Protective Order in the case of Sunbeam Products v. AMA, the AMA took the unusual action of filing a Surreply on Oct 2.

The AMA states that it produced more than 26,000 pages of documents pertaining to its "potential and actual commercial relationships with other companies, including business plans, internal financial analyses, and confidential contractual arrangements." Without the Protective Order, it would have refused to produce many of these materials.

The AMA states: "[T]he discovery that the AMA produced in the Sunbeam litigation did not concern the HCFA agreement," which it describes as a "royalty-free license to use the AMA's work of medical nomenclature, Current Procedural Terminology, in connection with federal health care programs such as Medicare." The AMA's brief gives no estimate of the amount of revenue that the AMA derives from royalties or book sales to physicians who are required to use the codes.

The AMA argues that "AAPS cannot rescind the protective order merely because some of its members are also members of the AMA." The AMA claims that it "has been extraordinarily open in discussing the Sunbeam transaction with its members" and that "AMA members who want more information about this case have recourse through the procedures of the AMA's House of Delegates."

AAPS responded that the "AMA did not, and cannot, provide any justification for the protective order." While the AMA "emphasized in its Answer that its `mission is to serve as the voice of the American medical profession,'" the AMA trustees "obtained a protective order here that conceals their wrongdoing from the very profession they purport to represent." Had the AMA taken the case to trial and given depositions, "we would then find out whether the board or some members of the board actually knew about" the deal with Sunbeam, stated former AMA Trustee Raymond Scalettar, MD.

Judge Harry D. Leinenweber is expected to rule soon on whether to lift the protective order and require the AMA to preserve documents. All AAPS and AMA briefs can be downloaded from www.aapsonline.org.


Database Protection by Stealth

In a letter to all U.S. Senators, AAPS objected to the portion of the Digital Millennium Copyright Act that would create a new federal right to collect, maintain, and harvest highly personal medical information.

This title was slipped into the bill and passed by voice vote as part of the consent agenda, "a serious abuse of this mechanism, which is supposed to be used only for noncontroversial measures such as the naming of Post Offices." AAPS stated that "[a]side from groups who would profit from this legislation (including the AMA, despite its `nonprofit' status), there is nearly unanimous opposition."

This Act seems to be designed to circumvent public outrage by allowing private entities to build the data base, rather than the government. A central health data bank is one of the key objectives of the Clinton Administration.


An Old Public-Private Partnership

The Reign of Fear introduced in 1480 by the Spanish monarchs Ferdinand and Isabella was designed to contain a popular movement: preachers making wild accusations against persons whose grandfathers had converted from Judaism under duress. The Inquisition enabled the crown to control inquiries into allegations of secret Judaism, according to The Spanish Inquisition by Henry Kamen (Wall St J 4/16/98).

Between 1481 and 1530, about 2,000 persons were executed. In the whole of the 16th and 17th century, fewer than three persons per year were executed. Some 2,200 persons were prosecuted for "Judaizing" between the 1660s and the 1720s, of whom about 3% were burned at the stake.

Despite the small number of executions (by 20th century standards), the Inquisition had a "profoundly negative effect on Spanish life for a very long time." The Holy Office destroyed the highly effective Spanish Jewish community and prevented the development of intellectual curiosity in all.

The son of an Inquisitor-General wrote in 1533 that no one in Spain could "possess any culture without being accused of heresy, error, and judaism."


Private Partners Pack Heat

To "protect the safety" of Inspectors-General and their private deputies, HCFA is asking Congress to give its investigators blanket permission to carry weapons as well as to issue search warrants and make arrests.

The AMA has stated that proposed regulations for private contractors in the Medicare Integrity Program "fell short on several measures," including failure to ensure that conflicts of interest were "properly mitigated."

AAPS commented (see www.aapsonline.com) that the proposed rule "affirmatively conceals the conflicts of interest of the private auditors" and that certain benefits permitted to auditors-financial compensation by a competitor of the physician being audited-are tantamount to bribery and should be strictly prohibited. (Also see AAPS News July 1998).


The Altar of Truth

Once the gold standard of quality assurance, the autopsy is under attack. According to Dennis O'Leary, President of JCAHO, "Health care organizations are no longer just being held accountable for doing their job well; they also have to make the most efficient deployment of resources in a resource-limited environment" (BNA's Health Care Policy Report 12/21/96). Requiring a certain percentage of autopsies is a very expensive exercise "that "I could not keep a straight face and justify to anybody," O'Leary said.


Stealth and Dissimulation

"Official regulations against Jews and political dissidents were heightened in a deliberately measured fashion, always leaving time for the public to adapt to one step before the next was taken. This gradual escalation eventually led to a degree of suppression and violence that had been unimaginable just a few years earlier. Furthermore, the worst episodes of violence were hidden from the public."

After some physicians and others forced a stop to euthanasia killings in 1941, Hitler gave only oral orders. This consummate politician changed his behavior to suit the audience, presenting himself as a fanatical stormtrooper one day and a moderate statesman the next (W. Weyers, Death of Medicine in Nazi Germany, Lippincott-Raven, 1998).

Members' Page

Hospital Tracking. Though I haven't heard anything from HCFA on my FOIA request for any information relating to a suspected government computer data base containing economic credentialing information on physicians, our hospital's computers have been tracking the length of stay (LOS) for each physician, by diagnosis code and cost/discharge. The implication is that those with "low" LOS and cost/discharge ratios are the "good" physicians. "Averages" are calculated on sample sizes as low as one (1), but are no doubt impressive to the statistically challenged. There is no mention of intensity of illness or comorbid conditions....

Now that hospitals are getting hurt by market disconnect, they are looking for ways to share their pain. Or, as our hospital CEO puts it, he wants to see an "economic realignment of hospitals and physicians," as part of his vision of "integrated delivery." There is a big push to adopt "clinical pathways" for every DRG thing done in the hospital. The CEO feels that physicians need to be encouraged and "coerced" (interesting choice or slip of words) to follow these pathways so that we can "streamline" and "standardize" quality of care throughout the hospital.

Shortly after the LOS and cost data were handed out [identifying physicians by name], we began seeing large LOS stickers on the front of every chart. Maybe we will even see a real time electronic board in the doctors' lounge like a stock market ticker, showing ongoing LOS numbers and cost/discharge. Yesterday, I found an LOS sticker that said "2.04": that's 2 days, 57 minutes, and 36 seconds to Discharge.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


Newthink. Where were the professors of medicine when the new regulations were enacted? I clearly remember when the Chairman of the Dept. of Medicine at Ford Hospital in Detroit told me to stop writing so much and to communicate in the chart in a telegraphic fashion. That meant to be focused and concise, and to write notes reflecting an integrated understanding of the patient's illness. Regulatory agencies now want a computer- generated history and physical and diagnostic coding that restricts the capacity for independent thinking and for integrating complex medical problems, while forcing physicians to waste time documenting nonsense. America is losing its best physicians to a bunch of bureaucrats and thieves.
James Durand, M.D., Mt. Vernon, IL


One Complaint per Visit. From a letter to colleagues: After attending a seminar presented by Inga Ellzey, I have done a lot of thinking. I have decided to advise my patients that I will not be able to take care of multiple problems at a single visit. I will also not provide treatment that is not clearly medically necessary.... As a consequence of my decision, I suspect that I will anger many people and lose some of my patients....I regret that medical practice has reached this level.
Rebecca L. Bushong, M.D., Anderson, IN


AAPS Calendar

Oct. 12-16, 1999. 56th annual meeting, Coeur D'Alene, ID

Legislative Alert

The HMO Debate

With Congress pondering the second possible Presidential impeachment of this century, a flood of unfinished appropriations bills, and the mounting pressures to adjourn in time for election campaigning, it does not appear that any major action will take place on the much vaunted "Patients' Bill of Rights" legislation in the House and Senate. But it ll be back.

The organized medical profession is largely favorable to enactment of such measures, the business community is largely opposed, and the debate has pitted normal political allies against one another in this heated controversy-the major sticking point being the right and ability of patients to sue insurance or managed care companies for damages.

Naturally, the Republican Congressional leadership has been put in the proverbial political crossfire-torn between two lovers and acting like folks who find themselves outmaneuvered for the zillionth time on health care policy by the White House and its liberal Congressional allies.

It s getting boring. The liberal Congressional playbook on health policy has gotten so dog-eared and smudgy that no surprises are left, no razzle dazzle; everybody on Capitol Hill knows what positions they are to play. And for Congressional leadership team that role is defense. Defense, without sacks, of course, is what they do on health policy, to the resounding cheers of the staff on the sidelines who yell to their supporters in the stands the inspiring fight song: It Could Have Been Worse. They do hand stands and go wild with delight, not at the deep pass or swift offensive sweep-they don t play offense, remember- but at the fact that the White House failed to score this time just like they did last time (Kidcare, Section 4507, etc.) and that time is running out. OK, sports fans, let s hear it for the Clock!

Congressional conservatives, naturally sickened at the thought of having to swallow yet another excuse for caving in to the apparently endless and seamless pattern of federal paperwork proposals to do something about managed care, have a respite, and can hope for better days and a better game in 1999. But to do that, they better get in shape, hit the weight room and train smart as well as train hard. That means knowing what it is that they want to do to solve the very real problems of the health care system.

The politics of the HMO debate would seemingly favor the White House and its allies on Capitol Hill. But that would be a superficial reading of what s really going on out there in the minds and hearts of the most sensible citizenry in the world. Sure, the polls say that Congress should do something about the HMO abuses. And, if the conflict is between doctors and insurance companies, doctors win with the public every time. According to the October 1998 edition of Roper s Public Pulse, Americans, when pressed about whom they can "strongly trust," express trust in their doctor by a margin of 57% compared to insurers with 35%. According to the September 1998 Kaiser-Harvard survey, 65% of Americans want the government to intervene and do something about managed care abuses, and more and more Americans see managed care plans as doing a bad job in serving health care consumers and think that the managed care titans care more about their profits than delivering quality care to employees and their families. Moreover, on the question as to whether consumers should have the right to sue the employer s health plan, the support is strong-73% support that idea, up from 64% as registered in December 1997.

The importance of the debate should not be underestimated, but it should not be overestimated either. And it is not abundantly clear that there is an overwhelming partisan flavor to the issue-one way or another. Republicans, Democrats and Independents are all equally supportive of managed care legislation, and both Republicans and Democrats in Congress are the lead sponsors of managed care reform bills. If such legislation fails to pass, 35% are more likely to hold the Congressional Republicans responsible, 20% are more likely to hold the Democrats responsible, and 17% would blame both parties equally.

In ranking of importance as an issue on the 1998 elections, education, taxes, and Social Security rank higher than the regulation of managed care. Interestingly, managed care is important, but more important than what? According to the survey, regulation of managed care is more important than tobacco legislation or campaign finance reform, two big-ticket items on the liberal Congressional agenda.

Worry, Worry

According to the Kaiser survey, 33% of Americans say that they are "very worried" that their health plan is more interested in "saving money" than getting them the best treatment available if they are sick. Naturally, the worry index rises inversely with the patient choice. We really should put all of this in a formula and test it regularly: Patient choice equals more satisfaction and less anxiety: For persons enrolled in the most restrictive managed care plans, 43% say they are "very worried." But as the Kaiser/Harvard survey makes clear, robust support for government regulation is dampened when the trade-offs between cost and regulation are made transparent. For example, support for comprehensive consumer protection legislation drops from 78 to 40% when people are told that the legislation could increase the cost of a "typical" health plan by $200 per year. That kind of drop makes even liberal politicians dizzy. And that kind of tradeoff is, incidentally, as the Kaiser/Harvard surveyors note, roughly the same cost estimate made by the Congressional Budget Office (CBO) for one of the leading "Patients' Bill of Rights" now before the Congress.

The pollsters also note that the support for such legislation also drops "substantially" when the public is presented with standard conservative criticisms that such measures will start to involve the government too intrusively in the health care system, increase the cost of plans, or cause people to lose coverage. The CBO has estimated that the bills on Capitol Hill would increase insurance premiums by about 4%, and the resulting premium increases would cause about 800,000 more people to lose their health insurance.

The liberals' problem is, if pressed, almost always the same: yes, people want the federal government to do something about health care, but no, they don t want the federal government involved with health care. This is not as weird as it sounds. The public gets pretty sober about such complicated questions when they are presented with the real tradeoffs presented by nice- sounding legislation guaranteed to expand access or improve quality care, or guarantee free care for all, or at least for the Kids, or the retirees. Or the early retirees.

States Assault HMOs

While Congress is running out of time and seems confused about how to go about "reforming" the managed care business, largely by adding more rules and regulations on the system, state legislators are not waiting around. According to the National Conference of State Legislatures, ten states have already passed "Patients' Bill of Rights" laws this year. A total of 17 states adopted similar measures in 1997. So, the states are already doing what Congress and the White House say they want to do, even in terms of opening up the managed care organizations to patient suits. Texas and Missouri have already enacted laws giving patients the right to sue managed care plans. And 29 states are considering similar legislation. For members of Congress, it might be a good idea to take a deep breath, pause, and find out how things are actually working out in the "laboratories of democracy." That way, stupid mistakes can be avoided, instead of simply compounded. Moreover, it might be a good idea for Congress and state legislators to start to hold federal and state agencies directly accountable for their cost projections. After all, industry is saying that lawsuits could add a substantial burden to the cost of health premiums, but federal and state officials say otherwise. CBO projects that lawsuits will add a mere 1.2% to the average cost of a health insurance premium. CBO and HCFA and state bureaucracies have said similar types of things in the past on mandates and regulations. Sometimes they are right, but too often they have been wrong. One modest proposal: If workers and their families get hurt because of rosy scenarios or "low balling" the legislative handiwork, then any mis-estimate, over and above the projected increase, can be proportionally tied to a reduction in salaries and expenses budget accounts of state government agencies making the incorrect estimates. That ll get 'em working hard on those estimates, and discourage rosy scenarios in the process.

A Coming Cost Explosion?

The Health Care Financing Administration (HCFA) has recently completed a study which says that the nation s health care spending will more than double over the next 9 years. Costs will zoom from over $1 trillion in 1996 dollars to $2.1 trillion in 2007, the year that the Medicare Trust Fund is now scheduled to go bust. The HCFA study is published in the October issue of Health Affairs.

Between 1993 and 1996, the average annual growth rate in health care spending was 5%. But the recent moderation in cost increases is expected to end in 1998, and will start to climb to an average annual rate of 6.5% between 1998 and 2001. Strong increases in per capita income should fuel growth in the private sector of the health care economy, and consumers can expect to see a substantial portion of these increases attributable to the rise in prescription drugs.

Watson Wyatt Worldwide, a major benefits consulting firm, expects double digit-cost increases, with prescription drug benefits leading the way, with increases running between 15 and 22%; indemnity plans, though shrinking as a part of the employer- based market, are also expected to hit double digits, running between 12 and 15%; and PPOs should see increases of between 9 and 11%. According to the Watson Wyatt analysts, the reason for the increases is that the managed care/HMO revolution has "saturated" the employer-based market; there are not too many employees and their families left to cover. Indeed, The New York Times recently reported that 85% of all Americans with employer-based insurance are enrolled in managed care plans. In the meantime, the population is aging, increasing the pressure for health care services, and the advance in technology and the introduction of new and expensive pharmaceuticals can be expected to add further pressure for cost increases. Nothing surprising about any of this; but it does put an end to all of the earlier policy wonk talk about the HMO revolution being some sort of magic bullet for health care costs.

And speaking of HMOs, they are not only in political trouble-being assaulted by everybody from Senator Ted Kennedy and Representative Charlie Norwood (R-GA) to Academy Award winning actress Helen Hunt, the HMO-bashing heroine of the hit film As Good As It Gets-they are also in serious economic trouble. A report by Weiss Ratings reveals that a majority, 57%, lost money in 1997. This was the third consecutive losing year. In a separate report, the Morgan Stanley Index of HMO stocks showed a decline of 38% from 1997. Yes, Virginia, they really are in Big Trouble.

And Rising Uninsurance

This month also saw some more bad news from the Census Bureau. The economy is reportedly better than ever, unemployment is low, and Congress put in place all sorts of regulatory gadgets-and yet the number of uninsured Americans continues to climb. Now, according to the Bureau, the figure is at 43.4 million Americans, or 16% of the US population. This is a snap- shot, of course, of the uninsured population; the figures do not mean that 43.4 million are permanently uninsured; most of them are in and out of insurance -which is, of course, job-related in the United States. That is so because those in charge of federal tax policy insist on health insurance being job-related to qualify for exclusion from payroll and income taxes. Thus far, Members of Congress and the Clinton Administration simply refuse to do anything about it. In any case, one of the interesting bits of information to come out of the Bureau s report is that about 50% of the increase in uninsurance in the past year comes from households with annual incomes above $75,000 per year. According to the latest statistics, about 8.1% of them are uninsured, compared to 7.6% in 1996. The most likely reason that they are uninsured, noted the Bureau, is that they are self employed or work for small firms that do not offer health insurance.

A Glimmer of Bipartisan Common Sense

The September 25th Update from the Democratic Leadership Council (DLC) contains this gem: "This year s preoccupation with addressing abuses by managed care plans has sidetracked a broader debate about the future shape of our health care system. Now that it's reasonably clear that neither party s version of patients rights legislation is going to be enacted in this Congress, it s time to get back to the broader debate. In fact, there is a major new reform that is beginning to draw support from both political parties: moving away from the current employer-based system of health insurance to one that empowers individuals with the choice and the resources to buy their own policies." Amen.

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