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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 48, No. 10 October 1992
AUGMENTING GOVERNMENT COLLECTIONS
Could you, within the next 30 days, write a check to the
government that might be larger than your quarterly estimated tax
payment-or even larger than your gross income?
Physicians have learned to cope with tax payments. Taxes
are predictable, and they are somewhat mitigated by the political
difficulty of legislating a tax increase.
Physicians now need to learn about new, unpredictable,
unfunded, nontax liabilities-and about the methods the government
may use to collect them.
Physicians who think that Medicare owes them money may soon
discover that the opposite is the case. Medicare may have
``overpaid'' in up to 50% of claims for evaluation and management
services. The physician may have selected the wrong code or
failed to document the reasons for his choice, or he may be
``overutilizing'' certain procedures.
In a July, 1992, addendum to the Medicare carrier's manual,
Medicare reviewers are told that physicians usually offer refunds
after being presented with ``a factual picture of the
overutilization issue.'' Reviewers are to ``verify the validity
of the extent of overutilization by the physician by studying a
statistical sample of claims. Compare claims of physicians in
similar practices in the locality to determine the extent that
the physician's services exceeded the services of those similar
If the physician doesn't ``offer'' a refund of the proper
amount, Medicare will collect it anyway. The reviewers are to
``accept compromise offers only in exceptional circumstances.''
Overpayments are normally to be repaid within 30 days of the
first demand letter. ``However, if a lump sum refund would cause
a severe financial hardship,'' the carrier may allow two months
to recoup overpayments of $5,000 or less, four months to recoup
between $25,000 and $100,000, and six months to recoup overpay-
ments of more than $100,000.
A debtor's request for extended repayment must be
accompanied by documentation, including an income statement, a
balance sheet, a projected cash flow statement, and a list of
investments with their current market value. Requests for
extended payment of 12 months or more must include ``at least two
letters from separate financial institutions denying the debtor's
loan request for the amount of the overpayment'' and a copy of
the loan application.
The addendum to the carrier's manual comes in the wake of
the US Supreme Court's decision to deny review of Chavez County
Home Health Services Inc. v. HHS. In this case, the US Court of
Appeals for the District of Columbia affirmed HCFA's use of
statistical sampling to calculate Medicare overpayments to home
health groups. However, Sen. David Pryor (D-AR) has introduced
legislation (S. 1838) that would prohibit the use of statistical
sampling for post-payment audits except in cases of known fraud
Another government agency that is gearing up to collect
money from physicians is OSHA. In the next five years, OSHA
expects to generate $900,000,000 in revenue from enforcement of
the ``Bloodborne Pathogens Standards'' (also see p. 2).
According to OSHA Instruction CPL 2.45B CH-3, which AAPS
obtained through a Freedom of Information Act Request,
``penalties are not designed as punishment for violations nor as
a source of income for the Agency.'' However, large penalties
``serve the public purpose intended under the Act.'' For example,
failure to comply with posting requirements carries a civil
penalty up to $7,000 for each violation and a like penalty may be
assessed for record-keeping violations. Proposed penalties may
be reduced up to 60% due to size of business, and up to 25% for
good faith. For repeated violations, ``gravity-based penalty
factors'' shall be doubled for the second citation and quintupled
after that, for ``smaller'' employers (defined as having fewer
than 250 employees), unless the Regional Administrator determines
that the penalty must be multiplied by 10 in order to achieve the
necessary deterrent effect.
After 22 pages of instructions for assessing penalties, OSHA
provides eight pages of instructions for collecting the debts,
delinquent charges, interest, and administrative expenses. In
bankruptcy cases, the agency may file as a creditor under the
Bankruptcy Act. With permission of the Department of Justice,
the agency might compromise or suspend collection action for
debts over $100,000.
In a special fraud alert, the Office of the Inspector
General published a list of ``suspect'' arrangements between
physicians and hospitals. These include significantly discounted
billing, nursing or other staff services; free training for
physicians' office staff in CPT coding; or payment for continuing
medical education courses. At the present time, no one knows
what is acceptable and what is not. Penalties to both physician
and hospital include exclusion from Medicare, up to five years in
prison, and penalties up to $25,000 (Med Staff Briefing 8/92).
The OIG does not have the staff to investigate every
hospital, so it has set up a hotline to receive tips. The most
valuable tips are coming from competing hospitals.
``If an employer chooses to ignore risk in the workplace, he
had better have his house on wheels.''
``Days of freedom from the regulatory community for the
medical industry are gone forever; the cavalier attitude of
physicians will change!''
``Bloodborne pathogens violations are of a serious nature
and maximum fines will be assessed.''
``OSHA has only civil and criminal penalties, but attorneys
who monitor inspections are contacting employees for possible
These quotations were compiled from telephone interviews
with compliance officers in 22 state offices of OSHA by Brian
Youngs of Microtek Medical Marketing, PO Box 36166, Phoenix, AZ
85067, telephone 800-258-7257.
Microtek has compiled an ``OSHA Compliance Test,'' available
from the above address. Any score less than 100% can lead to a
disastrous fine. The 60 items include:
``Each employee has received an explanation, and a copy of
the Exposure Control Plan and the means by which the employee can
receive additional copies.''
``Employees working on or around energized electrical
equipment or lines are fully instructed in cardio-pulmonary (CPR)
``Sterilizers are monitored with biological monitors on a
``Emergency phone numbers are posted on all phones.''
``All exposure incidents are detailed on OSHA form 101 and
properly summarized on report form 200 and retained for five
years.'' [Note that a form 200 must be completed by the end of
the calendar year even if no recordable injuries or illnesses
occurred during the year, and that the unadjusted penalty is
$1000 for each year that the OSHA-200 is not maintained.]
Any facility using or storing hazardous chemicals must have
a ``written site specific Hazard Communication Plan which
describes thoroughly how this employer is complying with the
requirements of the Hazard Communication Standard....''
In response to our Freedom of Information Act Request for a
list of regulated chemicals, AAPS was informed that ``OSHA does
not maintain lists of hazardous chemicals.'' However, from the
detailed instructions, we gleaned that physicians had better
request a Manufacturers Safety Data Sheet (MSDS) for any product
that mentions a hazard on its label. Since OSHA considers saw-
mills and grain elevators to be ``chemical manufacturers,'' it
seems apparent that anything might be considered a hazardous
chemical. Toner for the copying machine is specifically included
(OSHA Instruction CPL 2-2.38C), though an employee who does not
operate the copier on a full-time basis may occasionally change
the toner cartridge without being covered by the provisions of
the Hazard Communications Standard.
AAPS has received a copy of OSHA's Guide to Procedures,
which may be of assistance to physicians who wish to appeal an
OSHA fine. We have not been able to obtain any information about
the adjudication of specific cases, probably because no decisions
have been rendered yet. If you know of specific cases, please
bring them to our attention.
You may wish to request a copy of the following official
publications from OSHA Publications Office, 200 Constitution Ave.
NW, Washington, DC 20210, telephone 202-523-9667: OSHA
Instruction CPL 2-2.44 C, CPL 2-2.3 8C, and CPL 2.45B CH-3.
British Columbia Doctors Revolt
Faced with an insupportable public debt, British Columbia
has taken drastic action to curb medical expenditures. The
recent Professional Retirement Savings Extinguishment Act
declares that the province's agreement with physicians on a
retirement plan never existed. The Act also provides that even
if a court declares that the plan existed, no benefits will
accrue from it, and physicians may not sue the government to
collect them. Several legal opinions concur that the government
does indeed have the power to flush a contract down the Memory
Hole, although there is no precedent for such an action.
Additionally, the province has unilaterally placed a
``hard'' cap on expenditures for physicians' fees. The allowed
increase does not even cover the increase in population, much
less the aging of the population, increases in operating costs,
or other factors. If physicians provide services in excess of
the cap, the province will recapture the excess by decreasing
payment rates for services rendered near the end of the year.
Physicians have responded by closing offices on a rotating
basis. More significantly, all seven internists in the town of
Nanaimo have decided to sever their connection with the
government health system and will bill all patients directly.
Physicians in a northern town (so inaccessible that the govern-
ment could not fly physicians in to take their place) may follow
suit. The province will have serious political problems if it
starts reimbursing patients less for services received later in
At present, 70% of the public supports the physicians,
although Canadians do not like to take sides against their
British Columbia is unique in that it allows ``opted-out''
physicians to charge more than the fee paid by the government.
(This policy could be easily changed.) In other provinces,
balance billing is forbidden. Thus, physicians may ``opt out''
completely but can derive no advantage from doing so. The
disadvantages make the ``option'' totally impractical. In
Ontario, there is no debt between a physician and a patient until
the government reimburses the patient; no interest may be charged
even though payments may be delayed for months. In Quebec,
patients receive no reimbursement at all for services obtained
from an ``opted-out'' physician.
Although the present crisis is more apparent in British
Columbia, the medicare system is in danger nationwide. The
federal government is already paying one third of its revenue to
service the debt. The remaining revenues are inadequate to cover
commitments, so debt continues to increase.
So far, only one part of the investment community has become
concerned about the implications of the British Columbia
government disavowing a contractual obligation: Hong Kong
investors who have been parking large amounts of capital in
Vancouver, in anticipation of the imminent Chinese Communist
According to Dr. Norm Finleyson, Executive Director of the
British Columbia Medical Association, Americans should learn two
lessons from the Canadian experience:
1. Do not allow first-dollar coverage in public insurance
2. Do not allow the government to pay doctors directly.
Administrative Proceedings in First Anti-Kickback Case
Draw to a Close; Appeal to Federal Court Expected
On July 24, 1992, the Department of Health and Human
Service's Departmental Appeals Board, Appellate Division,
rendered its decision in the first sanction proceeding under the
Medicare anti-kickback statute 42 U.S.C. 1320a-7b(b), which
prohibits the knowing and willful solicitation or receipt of any
remuneration in return for referring persons or arranging for the
acquisition of goods or services under the Medicare program. The
decision, styled Inspector General v. Hanlester Network, HHS
Appeals Board, Appellate Div., Docket No. C-448, Decision No.
1347 (7/24/92), represents the last administrative proceeding in
a closely watched administrative battle that will undoubtedly
affect the reach of the anti-kickback statute to medical joint
ventures and other partnership arrangements.
The Departmental Appeals Board concluded that all nine of
the defendants in the case violated the statute and should be
excluded from participation in the Medicare program for up to two
years (3 BNA's Medicare Report 933). The attorney for the
defendants will appeal to federal court for review.
In the first stage of the administrative proceedings, HHS
Administrative Law Judge (ALJ) Steven T. Kessel found that the
HHS Inspector General did not prove that the majority of the
defendants had violated the anti-kickback statute, but that four
of the defendants were in violation because their agent had
offered remuneration for referrals of Medicare program-related
business (1 BNA's Medicare Report 1013). However, the ALJ found
that the agent's conduct was contrary to the four defendants'
intent and policy. Therefore, he did not impose exclusionary
sanctions. Importantly, the ALJ interpreted the statute to
require that the Inspector General show that ``whatever payment
is solicited or received by the referring party'' was
``intentionally solicited or received by that party as a
condition for that party agreeing to refer program-related
business.'' Specifically, the ALJ concluded that ``[i]t will not
suffice to establish a violation to show that payments were
offered or made in the hope that a provider would be encouraged
to refer program-related business.''
On the first appeal to the HHS Departmental Appeals Board,
the decision of the ALJ was reversed, and the case was remanded
to the ALJ for further findings. The Appeals Board found that
the ALJ had ``misread'' the anti-kickback statute and that his
interpretation of the statutory term ``remuneration'' was too
narrow (BNA's Medicare Report 933). On remand, the ALJ imposed
exclusionary sanctions on some of the defendants but refused to
exclude others. The recent Departmental Appeals Board decision
is the result of the appeal of the ALJ's opinion on remand.
In a vaguely worded opinion, the Departmental Appeals Board
concluded that it was ``the totality of circumstances surrounding
the partnerships'' which proves that the unlawful conduct was
``knowingly and willfully offering and paying financial
inducement to physicians to obtain referrals of Medicare
business.'' It also concluded that any profit or loss as a
result of the arrangement is irrelevant. Importantly, the
Appeals Board concluded that the ALJ erred in refusing to impose
exclusionary sanctions against three of the defendants because
these defendants knew they ``were operating in an area of legal
In the appeal, the attorney for the defendants plans to
challenge the validity and constitutionality of the Medicare
Lithotripsy Rate Setting Remanded
The American Lithotripsy Society prevailed in the US
District Court for the District of Columbia in its challenge to
HCFA's rate setting for extra-corporeal shock-wave lithotripsy.
HCFA decided that ESWL was to be classified as a surgical
procedure that could be safely performed in an ambulatory
surgical facility and therefore set a prospective rate of
payment. The rate that it set was less than half the market
value, according to the majority of commenters.
HCFA decided that the cost information submitted in public
comments was incomplete or otherwise insufficient and therefore
undertook its own study. HCFA consulted a number of people and
organizations; however, the agency did not make that data, as
well as some of the basic assumptions used in its calculations,
available for comment. As Judge Gesell pointed out, ``even as
late as the time of the hearing on the preliminary injunction,
defense counsel stated that the agency had still been unable to
locate or compile all the information it had gathered pursuant to
the agency's private investigation.''
One of HCFA's assumptions was that the utilization rate for
lithotripsy machines would be almost twice the current rate.
Despite this radical departure from historical use rates, HCFA
provided no opportunity for adversarial comment related to such
questions as the distribution and availability of machines.
Judge Gesell ruled that ``one of the primary reasons for
having a comment period is to provide an opportunity for
`adversarial discussion among the parties'.'' Providing the
reviewing court with the information is not adequate. The court
lacks the expertise to draw a conclusion without the benefit of
the adversarial discussion in the rulemaking record.
The Court reached no conclusion about the adequacy of the
rate, but slapped HCFA for failing to comply with the
Administrative Procedure Act. HCFA chose not to appeal.
Other medical organizations might wish to follow the lead of
the American Lithotripsy Society and carefully scrutinize all
bureaucratic policymaking to be sure that the government has
complied with its own laws.
Supreme Court Refuses to Review PRO Immunity
On June 22, 1992, the US Supreme Court denied a petition to
review a decision of the Seventh Circuit Court of Appeals
(Freeman v. Wood, CA 7, No. 89-C5080, 10/26/91), thereby
affirming the absolute immunity of Peer Review Organizations and
their physician members from liability in recommending sanctions
against physicians (see AAPS News, Jan. 1992). The
question posed by a Missouri physician acting pro se was this:
``May the judiciary give absolute immunity to Fifth Amendment due
process violators when Congress specifically states in the
controlling statute...that immunity is contingent on due care
being exercised?'' (BNA's Medicare Report 6/19/92).
Letter from the President
Government Medicine-Medical Care for Second-Class Citizens
by Second-Class Doctors
The term ``free-market economy'' is constantly used to
describe the struggles of the former communist countries to
repair their economies. Communism is just another word for
government controlled regimented economies, which since the dawn
of economic history have never worked. Only a free market can
guarantee quality and reduce costs. American medicine has
undergone unprecedented persecution and tyrannical controls in
the past two years. Such controls have never been inflicted on
any other social group in our nation's history. Patients and
physicians have given up more of their freedom in the last two
years than they have in the last 50, yet organized medicine does
nothing to resist this outrageous destruction of our constitu-
tional rights and privileges.
Whenever any economic system undergoes market failure,
governmental controls or unsound tax policies are always the
cause. The tax law that allows deductions for medical care by
both employer and employee are the root cause of the breakdown of
the medical marketplace. Repeal of this law must be accomplished
if we are to repair the damage done by unsound tax policies
during the past 50 years.
Economic history unequivocally shows that wage and price
controls have never worked, yet medicine has helped the
government establish a fee schedule (RBRVS). Internal medicine
convinced organized medicine that this ridiculous scheme would
take from the pocket of the surgeon and put into the pocket of
the primary-care physician; however, the government used this fee
schedule to penalize all physicians. The inequalities between
cognitive and noncognitive specialists should have been solved by
the marketplace and not by governmental controls.
Unfortunately, organized medicine did not learn anything
from its disastrous mistake. Now it is helping the government
establish practice guidelines (cookbook medicine), which will
stifle innovation and lead to an enormous waste of time and
resources, arguing over which diagnostic technique or which
treatment plan is most efficacious. Since modern medicine is an
ever changing field, establishment of practice guidelines is an
endless task fraught with unsolvable problems. This has been well
demonstrated in other socialized systems in other countries that
attempted to develop such guidelines.
Finally, we are undergoing constant harassment by a
multitude of government bureaucracies, along with threats of
horrendous monetary penalties. Most physicians and citizens have
no idea of the source of these agencies' powers: administrative
law. They do not know that a second legal system exists in the
United States for adjudicating disputes between citizens and
government bureaus. This law system denies the most fundamental
of constitutional rights. Through this system, government has
the power to destroy any citizen. This power is now being used
The proposed resolutions, printed in the enclosed flyer,
concern the issues of market failure in medicine and the abuses
of administrative law. I urge you to see that these issues are
on the agenda of any medical meetings that you attend.
If we are unsuccessful in repealing the bad laws that have
caused these problems, then medicine will become little more than
a public utility totally controlled by bureaucratic edict.
Practice guidelines will ration diagnostic tests, and treatments
will be hooked to a fee schedule regardless of complexity or
technological advancement. If a physician deviates from the fee
schedule or the guidelines, then he will lose his license through
If we fail to restore the economics of medicine to sound and
fair free-market principles, our patients will totally lose any
control over the cost and quality of medical care. They will have
no choice but to accept whatever the bureaucrats give them.
It is past time for organized medicine, doctors, and
patients to wake up. The end of private medicine may soon be
As Winston Churchill said in 1935 during the rise of Nazi
Germany: ``Want of foresight and willingness to act when action
would be simple and effective, lack of clear thinking, confusion
of counsel until the emergency comes, until self-preservation
strikes its jarring gong, these are the features which constitute
the endless repetition of History.''
John H. Boyles, Jr., MD, Centerville, OH
AAPS Member Runs for US Senate
John F. Perry, MD, an orthopedist practicing in Avis, PA,
will be the Libertarian candidate on the ballot for a
Pennsylvania Senate seat. His address is PO Box 728, Avis, PA
October 14, 1992. Board of Directors meeting, Seattle, WA.
October 15-17, 1992. Annual meeting, Seattle, WA.
October 24, 1992. Freedom in Medicine seminar, Columbus, OH.
(To register, call Herb Gillen at the Ohio State Medical Assoc.,
October 6-9, 1993. 50th Annual Meeting, Menger Hotel, San
Legislative AlertThe Presidential Campaign Heats
Up. Coming out of the GOP Convention as underdogs, President
Bush is opening up a two-front counterattack on both the
Democratic Presidential ticket and Congress itself.
As Robert Pear, writing in the August 12th edition of the
New York Times notes, no disagreement between George Bush and
Bill Clinton is ``more profound'' than their differences on
medical care. Faced with the fact that costs have risen 32% since
1989, Clinton is attacking Bush for ignoring them. The Arkansas
Governor describes the skyrocketing costs as akin to the rising
temperature on a ``patient's fever chart.'' Paraphrasing a
comment from former HHS Deputy Secretary Constance Horner on
national health insurance, Bush is characterizing Clinton's
health care reform as a proposal that has all of the efficiency
of the House Post Office combined with the ``compassion of the
KGB.'' Clinton, in turn, is chastising Bush for misrepresenting
his position on the right of Americans to choose their doctors.
The Clinton plan is basically a ``play or pay'' option, the
kind of approach supported by the Democratic leadership in the
Congress, including Senator Mitchell of Maine, Senator Kennedy of
Massachusetts and Congressman Rostenkowski of Illinois.
According to Pear's New York Times report, Clinton's advisers
were ``vague'' about the details of the reform proposal,
including its financing. Some form of new business payroll tax
In any case, through either mandatory public insurance
coverage or private insurance coverage, all Americans would be
guaranteed ``universal coverage'' under the Clinton plan,
including prescription drug and mental health coverage. Clinton
also wants to expand coverage of longterm care. These are
expensive items. To control rising health care costs, Clinton
would impose a national limit on health care spending and allow
states to set prices for doctors and hospitals and curb price
increases by pharmaceutical companies. This ``global budget''
provision is remarkably similar to the Stark-Gephardt proposal
now circulating in the House of Representatives (see September
The Bush ``Comprehensive Health Care Plan'' was unveiled
last February 6th, and bits and pieces of the proposal have been
sent to the Hill and included in Congressional Republican Health
Care Reform Proposals (see September Legislative Alert). But
benefits are only half of the equation. The costs are the other
half. The Bush plan calls for federal spending, largely for tax
credits and vouchers, at a level of approximately $100 billion
over the next five years. While there are surely cost savings
attached to such items as medical malpractice reform and
administrative simplicity, Bush's plan does not link the cost of
tax credits or vouchers to any specific financing mechanism.
How Many Americans Are Uninsured? On Capitol Hill, one
of the main reasons advanced for comprehensive health care reform
is the large number of uninsured Americans, which, in any case,
is in the millions. But, how many, really? Are there
35 million? 37 million? 40 million? Alan Reynolds, the Direc-
tor of Economic Research at the Hudson Institute, says that the
actual number, at any given time, is probably more like 10
million, derived from Census Bureau data. Economist Reynolds
argues that the figure of 37 million, cited by so many
authorities on both sides of the health care debate, is drawn
from a ``snapshot'' survey, recording millions who have lost
insurance for a ``brief period of time,'' but who often regain
Capitol Hill Paralysis Continues. Virtually every
faction in Congress now has a health care reform plan. The
Congressional menu is big enough. But the more Members stare at
it, the less appetizing the various reform proposals become. Just
thinking about the huge $800 billion subject seems to sap them of
energy and enthusiasm. As of this writing, House Majority Leader
Richard Gephardt's shuttle diplomacy between House Democratic
health leaders and the conservative Democrats has amounted to
nothing. Congressmen Cooper of Tennessee and Andrews of Texas
obviously see no need to try to marry up their ``competitive
model'' with House liberals' price controls.
The Senate Majority Leader, George Mitchell of Maine, has
developed the most comprehensive play or pay bills in the upper
chamber. Mitchell's chief New England ally, Senator Ted Kennedy
of Massachusetts has reported the Mitchell bill, S. 1227, out of
the Senate Committee on Labor and Human Resources. Floor action
is next. But there is no floor action scheduled, and with time
rapidly running out there is not likely to be any. The numbers
tell a clear story. Though he has been marketing it for four
months, Sen. Mitchell's bill, S. 1227, has only ten cosponsors.
Could it be that Senate liberals are holding out instead for
a more radical reform of the health care system based on the
Canadian model? If they are, they are clearly keeping it a
secret from Sen. Paul Wellstone (D-MN), the Senate's chief
sponsor of the Canadian-style system. In the House, the
enthusiasm of Congressional liberals for Canadian style national
health insurance resulted in 71 cosponsors for Congressman Marty
Russo's bill, HR 1300. But Senator Wellstone's bill, S. 2320, has
2 cosponsors, Senators Metzenbaum of Ohio and Simon of Illinois.
If it is true that a big majority of Americans support national
health insurance, 69% according to a Wall Street Journal survey,
this enthusiasm is not spilling over into a Senate passion for
national health insurance in any concrete legislative way.
Public Opinion. The lack of consensus in the Senate
mirrors the apparent lack of consensus in the nation as a whole.
Perhaps the best assessment of the public sentiment is this: We
don't know what we want, and we want it now.
Senators know that the shelf-life of a proposal, its ability
to survive extended public discussion and debate, is key: Folks
say they are for ``national health insurance,'' which loosely
translates into ``free care for all.'' And so they are... as long
as they do not have to accept some of its limitations or pay for
the new benefits of ``free care.''
Rising health care costs are the main source of popular
discontent. In 1950, long before Medicare and Medicaid, medical
care accounted for about 5% of Americans' personal spending. In
1989, medical care ranked third as the object of Americans
personal spending, accounting for 14%, or $483.5 billion of the
estimated $3.45 trillion. Food ranked first at 18.5%, and housing
second at 15.5%.
The Canadian Solution. If health care costs are the
central concern of Americans who complain about the health care
system, Canada doesn't solve that problem; costs are merely
shifted to the public sector in the form of higher taxes or
delayed care. As former Canadian physician Ian Munro writes in
the September issue of Readers Digest, ``The average Canadian
already pays 46% of his income in taxes. But Canada's health care
spending is growing faster than inflation, faster than its
population and faster than the country's gross national product.
Today, the United States has the costliest health care system in
the world. But Canada's is second, and both countries' per person
costs have been rising at the same rate for years.''
Congressional advocates of a Canadian-style system can
bemoan America's plethora of medical technology, but what does it
mean to say, in concrete terms, that technology should be cut
back? It means, as Munro notes, that Tennessee, with 4.9 million
people has more MRI scanners than all of Canada, with 26.6
million people. Likewise, Canadians seeking vital medical
technology are coming to the United States. Munro cites the fact
that in 1990, for example, 602 lithotripsies for the treatment of
kidney and gall stones, or half of the lithotripsies performed at
the Buffalo General Hospital in New York, were performed on
Canadians. That same year, 8,263 Canadian doctors were practicing
in the United States. These developments are not likely to be
ignored in any full scale Congressional debate.
Effect on Unemployment. Senate Republicans, led by
Sen. John Chafee of Rhode Island and Senate Minority Leader
Robert Dole of Kansas, are battering the Senate Democrats' ``play
or pay'' proposal as being incompatible with economic growth. The
increased cost to employers will cost jobs. According to an
Office of Management and Budget (OMB) study, the addition of a 7%
payroll tax would result in the loss of as many as 700,000 jobs
nationwide. Hardest hit will be small businesses, which are
already struggling in a recession. The politics of the debate
are interesting, as there is a deep split between big business
and small business. Lobbyists and spokesmen for big businesses
favoring the ``play or pay'' option are telling the small busi-
ness community that they have to pitch in and pay higher taxes.
Faced with a new payroll tax to cover the cost of a new
public insurance plan, companies would respond by either reducing
wages, or not hiring new people, or raising the prices of the
goods or services produced, or a combination of these measures.
But if companies decide to keep wages and prices at pre-tax
levels or maintain the level of employment, the only other option
is to reduce corporate profits. Billions, of course, would be
lost. While their fellow Senate Republicans are turning up the
heat, Chafee and Dole are challenging Senate Democrats to stop
talking about health care reform and bring ``play or pay'' to the
Senate floor for a debate and a vote.
A Consensus Bill? While challenging the Democrats to
come out on the Senate floor and fight, Sen. Chafee is offering a
alternative he says could move quickly because its main elements
are already widely agreed upon by health care reformers in and
out of Congress. Says Chafee, ``These are issues addressed by
most reform bills introduced by members of both parties. They
could easily serve as the basis for a health care reform
initiative that could pass and be signed by the President
today.'' The eleven areas of agreement Chafee posits as the basis
for a 1992 health care reform bill are as follows:
- Insurance market reform. This would ensure that large
firms and small firms are treated equally and that current
insurance practices include guaranteed renewability of policies,
limitations on exclusions for pre-existing conditions and a
change in the basis for setting premiums, moving toward community
rating or modified community rating by setting premiums on the
basis of age, sex, and geographical area.
- Small Group Purchasing Organizations.
- Expansion of community health centers and the National
Health Service Corps.
- Encouraging managed care by means of tax credits and the
federal pre-emption of state anti-managed care laws.
- Pre-emption of state-mandated benefits. Some Congressional
proposals for federal preemption of state mandated benefits would
apply to state laws affecting small businesses; others would
apply the preemption to all business insurance.
- Promotion of state experimentation by expediting the
federal waiver process, particularly for experimental Medicaid
- Medical liability reform. Virtually every major health
care bill on both sides of the aisle addresses the problem of
medical liability. A conservative estimate of the impact of
medical liability problem on the health care system is $15
billion, roughly 15% of the total expenditures on physicians'
services. While reform measures differ, there seems to be an
agreement on promoting alternative dispute resolution programs.
- Reduced administrative costs. There is widespread Con-
gressional agreement on the need to introduce uniform claims
forms and promote electronic billing.
- Encouraging primary and preventive care, either through
existing public health programs or the private sector or both.
- Expanding outcomes research. With the authorization of
$100 million to pursue a research agenda, the Public Health
Service has taken the lead. The case for such an approach is
based on the need to cut costs. The case against it (such as the
dangers of ``cookbook'' medicine) has not yet been made by
While Sen. Chafee has posed this itemized list as this
year's ``downpayment'' on health care reform, there is no sign
that Senate Democrats are buying it.
The Congressional health care debate is being subsumed into
the larger Presidential campaign, further reducing the likelihood
that anything substantive will be passed before Congress