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Volume 57, No. 10 October 2001

TIERS, JUSTICE, AND HISTORY

In an A&E production of The Scarlet Pimpernel, boys in a French orphanage were made to recite in unison, over and over: "All men are equal, in nature and under the law." Only the Dauphin, Louis Capet, held his peace-and he was singled out for special indoctrination. His parents were not ordinary or equal citizens; his father, Louis XVI, was an "enemy of the people" and his mother, Marie Antoinette, a "foreign whore."

The French Revolution smashed a two-tiered society, brought down the aristocracy, and subjected all to the equally arbitrary rule of the Committee of Public Safety. The Revolution destroyed its leaders-even Citizen Robespierre ultimately lost his head-and was succeeded by the military dictatorship of Napoleon. Yet the egalitarian ideal lives on-especially in the Democratic Party founded by a Jacobin named Thomas Jefferson.

Today's Jacobins still war against a "two-tiered" medical system-and more targets are appearing.

"We must recognize that we are dealing with two different tiers of health-care needs and must cover those needs with two separate tiers of payment," writes Lawrence Mirel, commissioner of insurance and securities for the District or Columbia (Wash Post 8/26/01). One tier is catastrophic illness. That is an "insurable event": one that is unlikely, unpredictable, and never desired by the insured person. The other tier is routine procedures and health maintenance. The latter are not insurable events and are best paid for out of pocket or through a medical savings account. Mirel recommends this "two- tiered" system as the least expensive and most easily administered.

PacifiCare of California is building a tiered network of hospitals; patients willing to accept a copayment of $100 to $400 will have access to higher-cost facilities. Premera Blue Cross of Washington state is building a tiered network of physicians. Customers trade more financial responsibility for more freedom of choice (J Appleby, USA Today 8/27/01).

All of these ideas assume the existence of inequality, as in needs, values, resources, and abilities. In the Jacobin view, such inequality-even disparate rates of death and illness- probably stems from "deep-seated social inequalities" (N Engl J Med 2001;345:134-136). Any system that "exacerbates" the inequality, as by allowing patients to benefit financially from their own thrift or good health, or physicians from their own efforts to excel, would be anathema to a Jacobin.

An experiment to try: Ask a "liberal" whether the President of General Motors-or he himself and his family -should be forbidden to obtain any medical services that would not be accessible to a person begging in the streets. This is the logical implication of the Jacobin assumptions (see p. 2), although unlikely to resonate well with most Americans.

Hit pieces aimed at medical savings accounts by the Center on Budget and Policy Priorities and the Democrats' staff report of the Joint Economic Committee are firmly based on the politics of envy. The "wealthiest and healthiest" and the young would purportedly choose MSAs, thus "degrading" coverage available to the old, poor, and sick. Jacobin ideology ber alles, never mind the facts. According to IRS data, one-third of the people who purchased an MSA were uninsured for the six months immediately prior to the purchase. Data from Medical Savings Insurance Company show that only 5.5% of MSA purchasers are single and under the age of 30; 63% of the purchasers are over the age of 50. The RAND Corporation found that the highest-risk people tended to choose an MSA.

The problem with actually allowing ordinary citizens to make their own decisions is, in the view of elite policy guru Uwe Reinhardt, Ph.D., their contemptible lack of both intelligence and virtue. American insurers are providing customized, risk- segmented contracts in response to the "plebs' own ill-informed and myopic yearnings [to be] spared ... the obligation of being one's poor and sick brethren's keeper.... These healthy ones overwhelmingly favor insurance policies that excuses [sic] them from the Judeo Christian thing to share the burden of health care. When they do get sick, of course, they whine and lament the absence of government from their lives" ( groups.yahoo.com/group/HealthBenefitsReform , message 5305). Obviously, one of the most influential policy wonks has insurance confused with socialized prepayment, and prudent asset protection with charity or wealth redistribution.

Reinhardt continues: "In Singapore, Taiwan, and Japan, ... corporate aristocracies at least have installed universal, reasonably egalitarian health insurance systems and first-rate egalitarian [an oxymoron?] systems of education. By contrast, America's corporate aristocracy has left the lower classes to languish on both fronts-perhaps even to make them a more docile servile class." There is a disconnect between the part of Reinhardt's brain that makes this statement, and the part that later refers to federal insurance for homeowners who build in a flood plain. Now that most education occurs in government schools, 21% of Americans are functionally illiterate and 27% only marginal literate (AM News 3/20/00); as early as 1800, 80% of all Americans could read (Chronicles 5/99).

The Jacobins haven't changed; they may bring down an existing aristocracy, but they will not elevate the masses. Their slogan "Liberty, Equality, Fraternity-or Death!" means death to dissidents. Equality does not exist in nature; attempts to achieve it require unrelenting coercion and are incompatible with liberty. Under conditions of liberty-and equal protection of the law-each seeks the best, not the least common denominator. Jefferson, a friend of liberty, recanted when he saw the Reign of Terror. Most Jacobins sacrifice liberty to an impossible dream-a miserable, drab one. Will they accept the guillotine or the Gulag as the inevitable price?


Liberty v. Regulation

Free-market entrepreneurs, such as Henry Ford or Bill Gates, envision products so abundant and cheap that nearly everyone can afford them. They do not dream up wealth redistribution schemes to help more people buy expensive cars or IBM main-frames.

"There is a huge potential for savings and wealth creation in the medical economy," writes Gerry Smedinghoff, who will speak at our annual meeting. Very rapid change could occur, just as it did in the London Stock Exchange in 1986. On Monday, electronic trading was permitted on a trial basis alongside the traditional outcry system. By Friday, the exchange floor was empty as everyone realized immediately how outdated and wasteful the old system was.

Problems with the medical economy include efforts to deliver an inherently private good in public setting, one in which everyone gets the same thing-laws, elected officials, food in an army mess hall-in the same way. This creates an enormous amount of waste. In an effort to compensate for loss of the market regulatory mechanism of honest prices, paid by the customer, a Byzantine regulatory system has arisen in which it is very difficult to find out what anything costs. Even the old London Stock Exchange was superior in this regard.

The federal tax code is an immense obstacle to restoring honest voluntary exchanges: Medical savings accounts are an important step. Unfortunately, and probably deliberately, "the federal MSA law [HIPAA] took a simple health insurance idea and turned it into a marketer's nightmare," stated Victoria Craig Bunce of the Council for Affordable Health Insurance.

More liberty, less regulation: that's the cure.

 

Senator Nelson Demands Egalite

Senator Bill Nelson (D-FL) is outraged: seniors in Boca Raton are paying $1,500 annually for "concierge" care from MDVIP physicians, while still collecting Medicare benefits. The fee covers a complete annual physical and preventive health services- categorically not covered under Medicare. Physicians limit their practice to 600 patients, promise same-day or next-day appointments and 24/7 beeper availability, and provide unhurried visits in a luxurious setting. The arrangement does not affect fees for services outside the annual physical, or copayments or deductibles required by insurers.

Former insurance commissioner Nelson has introduced legislation to forbid doctors who receive Medicare money from charging an access fee. "He doesn't want to create a two-tiered system," stated his press secretary Gretchen Hitchner. "He wants people to have fair and equal access to Medicare," and fears that some might be denied care.

MDVIP patients range in age from 30 to 90, with a mean in the mid-40s. Some make less than $30,000 per year.

Herbert Kleinhaut, a former patient of MDVIP physician Robert Colton, M.D., who stated that "money was not a problem" for him and that Dr. Colton provided good, unhurried service, nonetheless denounced him to the Medicare fraud department. Mr. Kleinhaut was highly unsatisfied at the prospect of a 6-month investigation. "If somebody's committing a fraud, you want him stopped immediately.... This is just a way to get around the Medicare rules."

Bernard Kaminetsky, M.D., is confident that they have done their homework and are not violating any rules.

See: David Adlerstein, Florida Medical Business 8/01/01.

 

Fraternity?

"Fraternity" means brotherhood or a group with common interests. It is not achieved by forcible redistribution of wealth.

Gerry Smedinghoff writes that with the redistribution scheme erroneously called "health insurance," "shoplifting has been legalized in the form of Medicare, Medicaid, and employer- sponsored health care. So now the majority of us are shoplifting from the sellers of medical goods and services, and the cost of the items legally taken is levied as a surcharge on the tiny minority of Amish and other cash-paying customers."

In the rest of the economy, the "shrinkage" is relatively small. However, now that the majority of the population is paying a legally "discounted" price for medical services, or even nothing at all, costs are becoming insupportable. The scene is set for a war of all against all.

Most Jacobins were not and are not believers, either Jewish or Christian, even if they are paragons of ascetic virtue like Robespierre. The cheerful "sharing of one another's burdens" taught in the Bible can be clearly distinguished from victimization by legal plunder. Jacobin hostility to competing religions is inevitable due to the problems of a higher authority and the proscriptions against such things as murder, envy, and thievery.

 

... Or Death

Whenever a law is proposed to make us healthier or safer, California state senator Ray Haynes says we must always ask, "Would we be willing to shoot somebody over this?" The penalty may be just a $50 fine. But what if someone refuses to pay it? In April, a man was shot in Cincinnati by the police, spawning days of race riots. The man's crime: not wearing a seat belt. He hadn't paid his tickets or responded to court orders. He probably couldn't afford to. Finally, there was a warrant for his arrest. When the police tried to stop him, he panicked and led them on a high-speed chase. They shot him when they thought he was reaching for a gun. The police didn't know the reason for the warrant; they said they feared for their lives. There were complicating factors, but ultimately this man died because somebody thought it was a good idea to force people to buckle up. Was it worth it?

* * *

"Decency, security, and liberty alike demand that government officials shall be subjected to the same rules of conduct that are commands to the citizen. In a government of laws, existence of the government will be imperiled if it fails to observe the law scrupulously.... Crime is contagious. If the government becomes a law breaker, it breeds contempt for the law.... To declare that, in the administration of law, the end justifies the means would bring terrible retribution. Against that pernicious doctrine this court should resolutely set its face."
Justice Louis Brandeis, Olmstead v. U.S., 1928


Congressman Ron Paul Joins AAPS Lawsuit

Rep. Ron Paul, M.D., (R-TX), an obstetrician-gynecologist, has signed on as a coplaintiff in the AAPS challenge to the HIPAA privacy regulations filed on August 30 in the District Court for the Southern District of Texas, Houston Division.

"Far from protecting privacy, these rules give government officials and certain private interests a new federal right to access medical records without consent," Dr. Paul said. "AAPS deserves the gratitude of every American for fighting to stop these regulations, and I am pleased to support their efforts."

Congressman Paul is responsible for legislation that has so far stopped the implementation of the unique health identifier called for in the Health Insurance Portability and Accountability Act of 1996. His effort to repeal the privacy regulations through the Congressional Review Act was unsuccessful.

Patient coplaintiffs are Dawn Richardson and Rebecca Rex of Texas, who are officers of Parents Requesting Open Vaccine Education (PROVE), and Darrell McCormick of Florida, former billing manager for about 500 physicians at the Shands Healthcare System at the University of Florida in Gainesville.

In addition to the Constitutional arguments (see AAPS News, Sept 2001), AAPS contends that the regulations violate the statute, which mandates that: "[t]he Secretary shall adopt standards for transactions ... to enable health information to be exchanged electronically ... , consistent with the goals of improving the operation of the health care system and reducing administrative costs." HIPAA also requires that "[t]he Secretary shall adopt standards that ... take into account ... the needs and capabilities of small health care providers...."

The complaint states: "Using a methodology that fails to recognize economies of scale unavailable to small businesses, Section V estimates a cost of compliance for small businesses of $4,188 per establishment in the first year and approximately $2,217 thereafter." The regulations make the baseless assertion that costs may be offset in many firms by savings realized through the requirements of the Transaction Rule. Even this cost would be an unjustified burden, and it is grossly underestimated. One AAPS member reasonably estimated his cost of compliance to be $16,000 to $23,000 for the first year alone, and much more if an additional employee or consultant is required to manage the new software.

Another AAPS member reported that his hospital is demanding $3,000 from each of 500 medical staff members to help defray the hospital's costs of compliance.

Plaintiffs request a declaratory judgment that the Privacy Regulations violate the Fourth, First, and Tenth Amendments to the U.S. Constitution, HIPAA, the Paperwork Reduction Act, and the Regulatory Flexibility Act. The complaint can be downloaded here.

Litigation is being funded by tax-deductible contributions to the American Health Legal Foundation.

 

It's Not Y2K

Unlike Y2K, an easily defined problem that required a one- time fix, HIPAA rules are "organic," stated attorney Stephen Bernstein of McDermott Will & Emery of Boston. "It's part of every single part of your organization, and it continues forever" (HIPAA Compliance Alert, Sept 2001). Everyone in the organization, from board members to laundry workers, needs training, according to those who offer the "train the trainers" programs and materials. Compliance problems are unique to every individual hospital, medical practice, or supplier of medical goods.

Every American who uses medical care will probably pay as much as $200 over the next three years to implement these regulations. Blue Cross estimates for HIPAA compliance reach $42 billion. The American Hospital Association estimates it will cost hospitals $22 billion. The U.S. Dept. of HHS estimates a mere $6 billion (PRNewswire 8/28/01).

The National Governors Association is asking for a more structured and longer compliance period, stating it is "very difficult for states to comply in an efficient and cost-effective manner until all relevant regulations have been finalized and their implications can be assessed as a whole."

 

Peer Review Secrecy Challenged

A 3-judge panel in the 4th Circuit Court of Appeals has ruled that confidentiality of peer review cannot be used to cloak possible racial or ethnic discrimination. Ron Virmani, M.D., an obstetrician/gynecologist in Charlotte, NC, who was born in India and trained in the U.S., stated that he needs peer review records to prove that he was treated far more harshly than others. Presbyterian Hospital, which revoked Dr. Virmani's privileges, has petitioned for rehearing en banc.

The American Assn. of Physicians of Indian Origin, the National Medical Assn., and others filed amicus briefs supporting Dr. Virmani. The AMA and the North Carolina Medical Society filed a brief supporting the importance of peer review privilege without taking a stand on the merits of Dr. Virmani's case (AM News 9/10/01).

For more details on this and other cases of alleged bad- faith peer review, see www.peerreview.org.

 

Weitzel Asks Court to Appoint Private Attorney

Bankrupted by his first criminal trial over the prescription of pain relief to complicated elderly patients who died, Dr. Robert Weitzel (see AAPS News May, Aug 2001) petitioned the Court to appoint his private counsel as non-contracting public defender, at the same (low) rate of payment.

"After the State withheld exculpatory evidence at the first [five-week] trial, resulting in the granting of a new trial, it would be manifestly unfair to deprive the Defendant of experienced private counsel now that the Defendant is indigent," counsel argued. Such a result would "allow the State to benefit from its own breach of a prosecutor's constitutional, legal, and ethical duties."

The motion was denied by Judge Thomas Kay, who found no "compelling reason" for the appointment.

In order to resolve federal charges-22 counts alleging that he had prescribed morphine and Demerol for his own use- Dr. Weitzel pled guilty to 2 counts of obtaining controlled substances by deception. He admitted that the headache clinic did not have documentation for discarding non-used portions of a drug from a single-dose vial. Sentencing guidelines for lack of proper records are 0 to 6 months in prison.

 

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.sepp.net.

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


Correspondence

Double Standard. Senior Choice, a Medicare HMO, took a full five months to pay a "clean claim" for one of my patients. In response to my complaint, Ruth Zachok of HCFA Region II wrote: "As this was a Medicare member, the New York State Prompt Pay Law did not apply." Moreover, "no interest was paid as it is not required to be paid when payment is made to a member and not a provider." The patient's claim "was initially submitted timely to Univera for payment and was processed timely" [emphasis in original]-although inaccurately. "Therefore, the plan is not in violation of the terms of their Medicare+Choice contract. We apologoize [sic] for any misunderstanding you might have had concerning this case."

As to my complaining about this abuse, note the apology for my misunderstanding! My understanding, however, is right on target: whether you are a patient or a physician, "Commies" (CMS) will always find a way to legitimize it when they abuse or short-change you. Truth is irrelevant and "not required."
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

 

One Way Street. I am opposed to all incremental reforms that sound great, such as HIPAA and the PBOR. The only thing they do is increase the cost resulting from government intervention and bring us closer to the Canadian system.

In socialist states, the central planners take down all the signs except one, which reads "you will take this road." The people's ability to determine their own actions is vitiated.
Ernest J. White, Alexandria, VA, www.mdhcrx.com

 

No Way Back. The active opponents of government medicine in Canada have retired, quit in disgust (as I did), died, or moved to the U.S. Most of those in practice today have never known any kind of practice other than socialized medicine, have learned how to cope with the system and work it to their modest benefit, have accepted that their allegiance is no longer to their patients but to the bureaucrats who send them their monthly checques, and might even resist any attempt to privatize the system (as happened in Russia after the Soviet collapse) because they would once again have to compete.
William Goodman, M.D., Toronto, Ontario

 

Privacy Resolution. The fact that the Arizona Medical Association adopted your privacy resolution (see AAPS News, June 2001) shows that doctors are learning that AAPS can discern the long-range bad implications of laws that often appear innocuous at first blush. Doctors are also learning to understand the old Russian saying, "You will know it's true when it happens to you."
Robert P. Gervais, M.D., Mesa, AZ

 

Wrong Objective. As George Fisher wrote on the Health BenefitsReform listserv, if there is indeed a large group of people for whom the insurance mechanism is unworkable, then let's stop saying we have a goal of universal insurance. Let's start saying that since universal coverage is unachievable for purely insurance reasons, let's take care of the uninsurables by some means other than insurance.
Gerry Smedinghoff, Actuary, Phoenix, AZ

 

Forced into the Salami Slicer. The only way to finally accomplish communist-style government health care is to trick everybody into using it. In Missouri, they raised the income guidelines so that nearly all children qualify. Then they paid agencies a $20 bounty for every child they got signed up on Medicaid. Everywhere you went-WIC, health department, food banks, doctor's offices-you found applications.

As a result, many Missouri insurance companies have gone out of business or raised their rates so high that nobody can afford insurance. Premiums quadrupled, and many families who were determined never to use Medicaid had to apply.

Once the majority of American families are using Medicaid, this will be cited as proof that they need it.

When my son was in foster care, he could only get glasses that were too small and smashed his eyelids. "That's all Medicaid will pay for," the doctors said. That's the kind of care we can expect, and the more options are eliminated from the private sector, the worse government care will become.
"Cheryl," a mom on the CPSWatch list

 

What If They Didn't Cooperate? The potential rises in costs as a result of the idiotic requirements of HIPAA are very serious. However, I am telling my listeners to ignore the damned things, and I hope some of them do. George Bush declined to be a villain who took away patient privacy. But I suspect he would be very pleased to be a hero who got rid of a stupid expensive requirement. It all depends on whether the provider community raises Ned about the matter, or if they supinely obey the rules. Some years ago, there was an article in Harper's entitled "The Vanishing Art of Losing Your Temper in Public." It should be our Bible in this matter.
George Fisher, M.D., HealthBenefitsReform message 5381

 

What Rights? Is it the right of an "ordinary citizen" to cause other ordinary citizens to lose medical coverage or see it become unaffordable? The PBOR reaches far beyond HMOs; its relentless supporters apparently have much more in mind than solving citizens' HMO problems. Regardless of whether other relief is on the horizon, PBOR is a pact with the devil, who will collect long before HMO problems are solved.
Frank Timmins, HealthBenefitsReform message 5117


Legislative Alert

Upcoming Conference on the Patients' Bill of Rights

By the time this goes to press, Congress and the President will have returned from the August recess. Medicare is on the fall agenda, and Senate staffers have been working on language over the summer. But before Congress gets down to business on Medicare, if it does, the big unfinished business is the Patients' Bill of Rights (PBOR). The Senate bill (S. 1052) passed on June 29th and was denounced as veto bait by the Bush Administration for inviting far too much litigation. The House Bill (H.R. 2653), amended as a result of negotiations between the White House and Rep. Charles Norwood (R-GA), passed just before the August recess. The Norwood compromise was denounced by Senator Edward M. Kennedy (D-MA), the chief Senate sponsor of the PBOR, as well as by House Democrats and Rep. Greg Ganske (R-IA). Ganske expressed bitterness over the compromise, and the rumor is that trial lawyers are not very happy about the caps in the House bill.

Suits Against Doctors?

But the trial lawyers may be happy to know that the legislation gives them yet another avenue for lawsuits against doctors-an unintended consequence perhaps. Former Deputy General Counsel Robert Charrow, a principal of Crowell and Moring, recently told a stunned audience at the Heritage Foundation that, while the legislation allows suits in state courts against HMOs, some of these states cap damages against HMOs. And in those states, lawyers would see the treating doctors as the deep pockets. As Charrow says, lawyers will simply sue the names on the injured patients' charts. Sounds pretty good for the gentlemen at the bar. (For a brief account of this discovery, see "Digging Up The Unintended Consequences Buried in The Patients' Bill of Rights," at www.heritage.org/shorts/20010831pbor.html). Perhaps the House Senate conferees will put some sort of a brake on such suits. But, if trial lawyers have a problem with the final version that comes out of conference, it will make it difficult for the Congressional Democratic leadership to support it.

The World is Watching: the Nickles Amendment

In the meantime, another big issue is boiling beneath the surface of the PBOR debate: the Nickles Amendment. At the very end of the Senate debate on June 29th, Senator Don Nickles (R-OK), offered an amendment to apply all of the terms and conditions of the PBOR to all federal insurance programs, including Medicare, Medicaid and the Federal Employees Health Benefits Program (FEHBP). Nickles made the simple and compelling argument that Congress has no business imposing rules and regulations on the private sector that it is not prepared to impose on itself, and moreover, if this is indeed such a good piece of legislation, then, of course, federal workers and retirees and other beneficiaries of government programs should not be denied the valuable protections that Senator Kennedy and his colleagues insist are essential to improved health and safety. So there. Senator Kennedy might have been taken aback by the unexpected Amendment, but he accepted it and asked Nickles if he would agree to have it passed on a voice vote. Nickles agreed- a mistake, by the way, for it would have forced the Senate liberals to take a very tough vote.

You guessed it: the powerful federal employee unions don't like the Nickles Amendment one bit-for the same reasons that small businesses and insurers don't like the bill. Higher premiums, more nasty suits, and the disruption that comes with both. The Nickles Amendment is comprehensive, and it will have a significant impact on the cost and the consequences of the legislation, though the Congressional Budget Office (CBO) is soft pedaling that idea-"pussyfootin" around with it, as one late Alabama Democrat used to say.

As for the House Republicans, the gang that loudly championed back in 1994 the novel idea that Congress should obey itself and live under the laws it imposes on the rest of us-well, they made darn sure that nothing like that nasty old Nickles Amendment made it into their version of the PBOR. Or, let's be charitable, perhaps they suffered a massive case of collective amnesia. Rep. Thomas Tancredo (R-CO) offered a very similar amendment, and it was not included under the rules for House floor debate adopted by the House Rules Committee. Business as usual folks .

It will be very interesting to see what they do with this little nugget in the House-Senate conference. They hope that you won't be watching. Watch.

The Big and Neglected Issue

For all of the rhetorical focus on it, the FEHBP is not, of course, the big issue. The big issue is how a fair and equitable application of the PBOR, applying physician-directed "medical necessity" standards would impact the big entitlement programs and their huge trust funds. Medicare and Medicaid are routinely squeezed by annual budgetary pressures and governed by a slow, cumbersome, and managerially inefficient bureaucracy. And, in terms of routine conflict with medical authorities over what treatments or procedures are, or are not, medically necessary or appropriate for patients, both programs are vulnerable to serious negative publicity that would make Members of Congress particularly uncomfortable.

Medicare especially is, and has been, an even more intense battleground than private insurance over some of the very high- profile issues that have surfaced between doctors and private insurers in the managed-care controversy. After several hearings during the past 18 months before the Senate Finance Committee, the House Ways and Means Subcommittee on Health, the House Budget Committee, and the House Commerce Committee, members of Congress know very well how unpopular the Medicare and Medicaid bureaucracies are among doctors and can easily imagine the unpleasant prospect of patient suits over Medicare or Medicaid coverage.

Carefully Calibrated Congressional Concerns

Consider the issue of administrative application of the PBOR to Medicaid. In the Balanced Budget Act of 1997, Congress enacted a change in Medicaid law that gave states, without seeking federal permission, the ability to "require" that Medicaid patients "join" HMOs. In other words, Congress created a mechanism to force low-income persons into HMOs, just as many employers, trying to control costs, required large numbers of workers to enroll in HMOs. As Amy Goldstein reported, the number of Medicaid patients in HMOs jumped from 46 to 56% between 1996 and 2000 (Wash Post 8/15/01).

In this classic instance of government policy incubating a much needed corrective for itself, Congress enacted a remedy for the excesses of a managed-care revolution that it had once promoted. The 1997 law provided for Medicaid managed-care protections. Meanwhile, the Clinton Administration, which had aggressively championed a coercive system of managed-care networks as part of its 1993 health reform plan, determined that Medicaid managed care, like managed care in general, was not, after all, the final solution to America's health care delivery problems. In their final days in office, Clinton Administration officials proposed a comprehensive set of Medicaid regulations to apply to Medicaid managed-care plans. (As with Medicare, the Clinton Administration's regulatory preoccupation was with private plans participating in the government program, not the cumbersome and sluggish structure of the government program itself.)

As with the recently enacted House and Senate PBOR legislation, the Medicaid "patient protection" rules would guarantee patient access to emergency care, access to gynecologists and other specialists, the provision of health care information, and a grievance and appeals process for claims denials. Under the original Clinton draft, for example, disputes over care were to be decided within three days if a doctor believed that a person's life or health were threatened; private plans contracting with Medicaid were required to "communicate effectively" with patients who were not proficient in English; and report cards would be published, highlighting plans that did not meet the federal standards. Legally, of course, under this regulatory scheme, there would still be no way that Medicaid patients could sue the state government or its contractors for damages to life and limb as envisioned in the House version of the PBOR. That would take enactment of the Nickles Amendment or some version of it.

Once again, note that the proposed Medicaid rules, first unveiled by the Clinton Administration last January and as recently re-drafted by the Bush Administration, would apply only to private plans that contract with Medicaid, but not the traditional government-administered programs. Like Medicare, the traditional Medicaid program is formally labeled "fee for service." But it is "fee for service" in name only; it is tightly managed by government officials, through extensive rules and highly prescriptive regulations, including price controls. It is government managed care, with an emphasis on government management. Thus, even the statutorily authorized administrative application of the PBOR to Medicaid would establish a double standard in the treatment of Medicaid agents, shielding the Medicaid bureaucracies from requirements imposed on their private contractors.

HHS officials are saying that they need to revise the Medicaid rules and make them more flexible. This is necessary, they say, because the original version, as drafted by the Clinton Administration, goes beyond the intent and terms of the Balanced Budget Act of 1997, is overly prescriptive, and could prove burdensome to Medicaid HMO plans. Curiously, coming from the Bush Administration, such sentiments are eerily similar to complaints by private sector employers and plans lodged against the House and Senate legislation by private sector employers and health plans.

Medicare This Fall?

In July, Congressional leaders were looking forward to a fall discussion of Medicare and Medicare prescription drugs. Senate staffers have been working quietly on language over the summer months, and there are a lot of knotty issues that have to be addressed before the Senate takes up a serious bill. Senate Majority Leader Trent Lott and moderate Democrats alike, however, do not want to see a prescription drug debate take place outside of a comprehensive reform of the Medicare program. CBO priced out a ten-year drug benefit last spring at $1.2 trillion. That right, trillion. A stand-alone drug benefit, without a more comprehensive reform of the system, will drive the costs of the program well into the fiscal stratosphere, resulting in either cutbacks in Medicare benefits (through price controls or reimbursement reductions, of course), or major tax increases on working families, or severe premium increases on seniors-or a combination of all three.

The nasty debate set off by CBO's revised estimate of the size of the budget surplus is throwing the proverbial damper on Congressional ambitions. Leftists are saying that The Crime of The Century committed by Bush and Co. is that Big Tax Cut. They say it is threatening Social Security. Clinton's former Labor Secretary Robert Reich thinks that both the Republicans and the Democrats have got this entire thing wrong, and the public misunderstanding is being pushed into depths of ignorance that will make all sorts of crazy partisan rhetoric possible for the next two years. Reich observes, "The Bush Administration should state flatly that it doesn't matter if the so-called Social Security surplus erodes this year, or even next. The Social Security Surplus is an accounting fiction. It didn't even exist until about 18 months ago, when some Democratic advisors thought such an invention might be a good bulwark against candidate Bush's proposed tax cut." As for the Democrats, Reich notes, they have painted themselves into the corner of saying that they are prepared to cut funding for their favorite social programs in order to avoid dipping into the Social Security "surplus" (Wall St J 8/29/01).

Some Leftists want Congress to repeal the tax cut. Take those refund checks back! No joke. Robert Kuttner, editor of The American Prospect, has proposed to the Democrats that they do just that, and, in the meantime, get over their love affair with the "Balanced Budget," a constraining conservative Republican idea, which will prevent the Democrats in Congress from doing all of the good things that so-called liberal intellectuals like Kuttner say they should do. The Democratic Leadership does not appear ready to plunge into the cold political waters that Kuttner prescribes. And, when it comes to Medicare prescription drug expansion et al, Rep. Bill Thomas (R- CA), chairman of the House Ways and Means Committee, keeps asking: where are you all going to get the money?

The left has an answer, though: It's in your pocket, silly.

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