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Omnia pro aegroto
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
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
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
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
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
Bernard Kaminetsky, M.D., is confident that they have done
their homework and are not violating any rules.
See: David Adlerstein, Florida Medical Business
"Fraternity" means brotherhood or a group with common
interests. It is not achieved by forcible redistribution of
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
... 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
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
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
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
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
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.
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
Sept. 18-21, 2002. 59th annual meeting, Tucson, AZ.
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 AlertUpcoming 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
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
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
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
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