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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 49, No. 10 October 1993


In the constantly changing Health Care Reform Plan to be proposed by the Clinton Administration, there have been very few constants. Sin tax, no sin tax, employer mandate, no employer mandate, maybe an employer mandate in about 15 years, community rating, no community rating. The flip-flops have been too numerous to count.

One of the few consistent features of the Clinton Plan is the idea of Health Care Purchasing Alliances. These are large, ``semi-public'' purchasing cooperatives which, by virtue of their size, are supposed to be able to negotiate the best prices for health care in ``bulk rate.''

The Purchasing Alliance idea, known as Health Insurance Purchasing Cooperatives (or HIPCs) in the managed-competition scheme, is a theoretical construct. The actual entities are supposed to mushroom into existence once the Plan is passed. However, there is a real-world model: Blue Cross and Blue Shield.

Although BC/BC, unlike a Purchasing Alliance, is nominally a private entity, the other similarities seem uncanny. BC/BS is nonprofit and subject to regulation by the federal, state, and even local governments under which it works. In most cases, it is the largest insurer in the area it serves and therefore should receive the lowest prices from providers. In many states, BC/BS is the Medicare carrier. In many areas, it is rewarded with ``most favored nation'' statusÄthis means that BC/BS automatically gets the lowest price that providers offer to any entity.

Logic tells us that a look at BC/BS should show what the Purchasing Alliances will become after a few years in operation.

BC/BS has possibly outdone even the federal government under the Jackson Administration in its record of gross mismanagement and abuse, allegedly including out-and-out fraud in the case of the Empire Blues of New York.

The only BC/BS plan that has failed to date was the one in West Virginia. Over 51,000 individuals were left with outstanding unpaid medical bills. Bankruptcy resulted due to waste and mismanagement of funds, along with the complete lack of proper oversight by any of the duly appointed overseers on the local, state, and national level.

The same patterns were seen in the Blue Cross plans of Maryland and the District of Columbia. Senator Nunn described it best: ``Management run amok, while the Board of Directors, the state regulators, and the Blue Cross Association seemed either unwilling or incapable of doing anything to stop them.''

Empire BC/BS of New YorkÄthe largest of the 71 BC/BS plans, with more than 8 million subscribers (nearly 45% of the residents of NY) and $7 billion in premiumsÄshowed the same ``disturbing'' pattern of abuse that was seen in the other states. Additionally, the plan allegedly used two sets of books, giving falsified information to the public (and the Insurance Department) and keeping the real numbers secret. The false information was allegedly used by Empire in order to convince the state legislature to pass landmark legislation in 1992, radically altering the New York insurance market, much to Empire's benefit.

Despite significant premium increases, Empire's underwriting losses have totalled $618 million in six years (BNA's Medicare Report 7/2/93).

In all of these instances, upper management has been replaced and oversight has been ``upgraded.'' In New York, there will probably be criminal prosecutions. The office of the former Chief Financial Officer Jerry Weissman has been sealed, and he is reportedly no longer allowed entrance to the building.

The levels of abuse make previous episodes seem pale by comparison. As a frame of reference, John Sununu used Air Force planes for travel on semi-business trips and also for his wife's travel. He did not charter Lear jets to fly his family to vacations at government expense; Blue Cross did. The President's cabinet does not schedule meetings at resorts on tropical islands; Blue Cross has.

The problems with BC/BS have been brought to light by the Permanent Subcommittee on Investigations, chaired by Senator Sam Nunn (D-GA). In his opening statement at the hearing held on June 25, 1993, Senator Nunn raised some highly pertinent questions:

  1. What mechanism assures accountability for large, nonprofit insurers that are not subject to the disciplines of the marketplace?
  2. What options are available to a regulator facing a large regional insurer such as Empire? How does a state regulator balance the public interest in tough regulatory enforcement against the risk of jeopardying the insurance needs of large segments of the state's population? Are tough sanctions appropriate when there is a real risk of financial collapse? Has the system created health care giants that, as inefficient as they may be, are simply too big to regulate?
  3. Under those circumstances, what guarantees do we have that medical costs, whether justified or not, will not merely be passed on, again and again, to the taxpayers and the policyholders?
  4. [Given the concerns raised in these hearings,] can we build a health care system relying extensively on huge nonprofit organizations?



The General Accounting Office audited the IRS, using IRS audit techniques. The IRS flunked; 350 employees were found to have illegally gained access to taxpayer records for their own purposes, security was so lax (Health Law Hotline, 7/15/93).

On Private Contracting

Many questions come to the AAPS office regarding the issue of contracting privately with Medicare-eligible patients, especially after recent articles con- cerning Stewart v. Sullivan. In addition, there is escalating intimidation. Here is one letter a physician received from a carrier:

This letter is in regards [sic.] to beneficiary agreements not to use Medicare coverage.

Some physicians are requiring Medicare Part B beneficiaries, as a condition of acceptance for or continuation of treatment, to enter into agreements with the physician not to use their Medicare coverage.

The Medicare law does not exclude services from coverage or physicians from Medicare requirements on basis [sic.] of such agreements. In enacting the provisions for Medicare coverage of physician services and the Limiting Charge, Claims Submission, and other requirements that apply to physicians, Congress clearly intended that Medicare beneficiaries should be able to use their Medicare coverage and physicians who treat beneficiaries should comply with the specified statutory requirements. We view agreements of the kind described as contrary to the public policy of the United States as reflected in those provisions, and as therefore invalid. All Medicare requirements with respect to physician services continue to apply, and Medicare payment may be made to beneficiaries for covered services, not withstanding [sic.] these agreements.

Violations of these requirements are generally subject to sanctions, including civil money penalties and/or exclusion from the Medicare program.

Thus, if a Medicare beneficiary disregards his agreement and complains to the Medicare carrier about the failure of the physician to submit claims, or submits his own claims, the physician may be subject to possible civil penalties for such failure.

If you have any questions, regarding this correspondence, please call us at (214)669-7476 or (214)669-7235.

Edna Smith, Senior Supervisor, Program Monitoring



I do have some questions:

Is it the ``public policy of the United States'' to encourage citizens to violate contracts and to rupture the patient-physician relationship?

Does the ``public policy of the United States'' as enunciated by Edna Smith, Senior Supervisor, have the force of law? Can such statements by any public official be used as the basis for depriving persons of their liberty or property?

Has the Medicare program become an involuntary one for physicians or patients, rather than a voluntary one, despite assertions by Congress and the Courts?

Does ``should be able to use'' their coverage mean must use their coverage?

Your editor has not asked these questions of Edna Smith. To paraphrase George Bernard Shaw, ``to ask the question is to answer it.'' Furthermore, it is the editor's opinion that all public agencies should use the disclaimer cited by employees of the Arizona Revenue Service every time they answer a question, to the effect that the agency is not bound by the answer.

Your editor, along with other physicians and patients, has declared independence from the Medicare program. Contracts are based on consideration; we accept no consideration from the Medicare program. In our opinion, one becomes subject to the requirements of Medicare upon submitting a claim. One must submit a claim if one provides a covered service to a Medicare beneficiary. We provide noncovered services to non-Medicare beneficiaries.

As Edna Smith correctly declares, a piece of paper does not exempt a person from compliance with the law. However, an assertion by a public official does not constitute a law. There is no law that requires a Medicare-eligible patient to take advantage of his entitlement and thus become a beneficiary, and no law that forces a physician to accept a patient who wishes to take advantage of that entitlement. Patients are by law free to decide whether or not to accept their benefits and to consult any willing physician. (HHS encourages them to see a ``participating provider''; nearly 60% of physicians ``p- articipate.'')

The Health Care Financing Administration has declared physicians to be second-class citizens in refusing to recognize our legal right to enforce a contract. Likewise, Medicare-eligible persons, in the eyes of HCFA, are like minorsÄthey are not able to enter a legally binding contract. If a Medicare- eligible patient asks for our services and agrees to pay for them, and then renounces his agreement, we probably have no legal recourse. In fact, we may be well advised to refund any payment in an effort to avoid administrative penalties. Our only protection is the patients' morals. It is always possible that our government will choose to make an example of us, attempting to defame or bankrupt us, even if the law is on our side.

I have drafted the following statement for my patients:

I, _____, do solemnly affirm upon my sacred word of honor that I am consulting Dr. Orient as a patient and not as a government informer. The medical history that I give is true and is presented for the sole purpose of obtaining medical counsel and treatment. Specifically, my history is not contrived for the purpose of entrapping Dr. Orient into prescribing a drug, treatment, or diagnostic test that is unnecessary, not indicated, or in possible violation of a government regulation.

Furthermore, I affirm that I am of sound mind and capable of making decisions for myself regarding my medical, financial, and general well-being. I promise that I will not enter any agreement, written or oral, with Dr. Orient if I consider that agreement to be to my disadvantage. I will not pay her any amount that I believe to be unreasonable or unjust. If I later regret a decision for any reason, I will speak directly to Dr. Orient herself.

If I keep my word faithfully, may I enjoy my life and prosper, respected by all men and in all times; but if I swerve from it or violate it, may the reverse be my lot.

I do hereby enjoin any person purporting to represent me to refrain from any action that, if undertaken by me personally, would dishonor my word.

Signed __________________ this ___ day of ____, 19___.

Witnessed by God and ___________________.

I recognize that I am at risk. My colleagues and this Association might or might not be willing or able to come to my aid if the government attacks me. I have become particularly wary of any patient who lists a government agency as his employer. Distrust works both ways, and it is possible that I will offend some patients. But the purpose of the above agreement is not so much to protect myself (today, there are no guaranteed legal protections) as to educate patients about how far we have moved in the direction of tyranny. Jane M. Orient, MD

AAPS Files Motion to Compel Discovery in AAPS v. Clinton

On June 22, 1993, the US Court of Appeals for the District of Columbia Circuit (the ``D.C. Circuit'') handed down its decision in AAPS v. Clinton, remanding the case for further proceedings on the issue of whether the ``interdepartmental working group'' (IWG), or any or all of its ``cluster groups'' or ``subgroups'' constitute federal advisory committees as defined in the Federal Advisory Committee Act, 5 U.S.C. App. Sections 1-14 (``FACA'').

In the lower court, AAPS had sought to take discovery on this issue, but the district court initially refused this request and held that the IWG was not covered by FACA. On appeal, the D.C. Circuit reversed this aspect of the district court's decision, writing that ``we believe further proceedings, including expedited discovery, are necessary before the district court can confidently decide whether the working groups is a FACA committee.''

The D.C. Circuit also set forth what it believed to be the relevant characteristics of a ``federal advisory committee'':

The point, it seems to us, is that a group is a FACA advisory committee when it is asked to render advice or recommendations as a group, and not as a collection of individuals. The group's activities are expected to, and appear to, benefit from the interaction among the members both internally and externally...The whole, in other words, must be greater than the sum of its parts.

Thus, an important factor in determining the presence of an advisory committee becomes the formality and structure of the group...

The D.C. Circuit noted that ``[T]he record does not reflect where [the persons participating in the IWG] came from nor does it show how many hours they work.'' While the government argued on appeal that the IWG was composed only of ``special government employees'' and ``consultants,'' the D.C. Circuit believed that such terms are alone irrelevant to determining whether a person is not a ``full-time officer or employee of the federal government'' whose presence on the IWG would trigger the application of FACA.

On July 9, 1993, AAPS filed and served its First Set of Interrogatories and Second Set of Request for Production of Documents seeking specific information on the structure, personnel, and purpose of the IWG. Specifically, these discovery requests sought the names and addresses of all persons participating in the IWG and any cluster group or subgroup thereof, their private or outside affiliations, their time records, travel reimbursement records, payroll records, and conflict-of-interest forms.

Although the Defendants have provided lists of persons participating on the IWG, the response to the discovery requests are replete with evasiveness and lack of candor. The Defendants have refused to provide the time records, travel reimbursement records, and payroll records of all but 47 of the participants whom they have identified, claiming such information to be irrelevant. Such information is, of course, relevant to show a fixed membership and the formal structure of the group. The Defendants have also refused to provide relevant documentation showing the number of meetings attended by individual participants and the purpose of each meeting. Additionally, the Defendants have totally failed to produced completed ethics forms required by the Ethics in Government Act.

Under Rule 37 of the Federal Rules of Civil Procedure, any party who is refused or denied an answer to a relevant request for information may file a motion with the district court to obtain an order compelling the party to answer the request. AAPS recently filed such a motion; oral argument will be held in the weeks ahead. If AAPS prevails on the motion, it will be one step closer to proving that the IWG must disclose its minutes and working papers to the public.

With the Clinton Administration planning to unveil its ``health-care reform'' agenda in the coming weeks, exposure of the inner workings of the IWG will assist in the debate over the merits or fallacies of the plan.


Draft Revived

Although the appropriations necessary to keep the Selective Service alive and functioning were deleted from the budget bill, Senator Barbara Mikulski's (D-MD) subcommittee of the Senate Appropriations Committee has revived a proposal that would allocate $25 million to the Selective Service System beginning October 1.

The proposal must be approved by the Senate Appropriations Committee, the full Senate, and a House conference. The process will probably move swiftly.

Pete Stark (D-CA), a member of House Ways and Means, called the Selective Service a ``phenomenal waste of money.''

For a copy of the comments that AAPS submitted on this legislation, send a 9x12 self-addressed envelope to 1601 N. Tucson Blvd. Suite 9, Tucson, AZ 85716 ($2.90 postage for return by priority mail, $0.75 by first-class mail).


Control Through Medical Education: an Update

The AMA's view of its role in physician workforce ``planning'' is expounded in the Sept. 1, 1993 issue of JAMA:

``The AMA, with the largest and most accurate repository of information on GME [graduate medical education]...stands ready to provide...policy makers with the policy-relevant analyses required...[for] physician workforce planning'' (p. 1060). ``Goals could be subverted if residencies not approved for funding from the payer pool are financed from other revenue sources....One approach would be to accredit only positions funded from the payer pool. Students would accept unaccredited positions at their own risk because they would be ineligible for...board certification'' (p. 1082).

``Licensure has been used successfully in other countries to limit the number of practicing physicians'' (p. 1103).

``Convincing the medical education community that they must support workforce planning recommendations that may negatively impact some sectors of the medical community will require skillful consensus building....''(p. 1104).



``We need to teach [comprehensive, age-appropriate] health education like we teach math, every day in our classrooms.''
Joycelyn Elders, MD, responses to Senators' questions Tucson, AZ

New Members

AAPS welcomes Ocala Eye Surgeons of Ocala, FL and Drs. James Abbenhaus of Yakima, WA; Mark E. Anderson of Irvine, CA; John Bargren of Tacoma, WA; W. Ben Blackett of Tacoma, WA; Max W. Brachvogel of Tacoma, WA; Todd M. Chapman of Charlotte, NC; Patricia A. Charochak of Puyallup, WA; Peter M. Daloni of Sharon, PA; Devanand Anthony Dominique of Grand Forks, ND; Lee R. Dorey of Tacoma, WA; Jay H. Ehly of Tacoma, WA; Judith T. Feigon of Houston, TX; Enrique J. Fernandez of Bradenton, FL; Gloria W. Freundlich of Atlanta, GA; Albert F. Garib of Newport Beach, CA; Ronald E. Harbut of Page, AZ; G. Gilbert Johnston of Tacoma, WA; Nathan Kaufman of Farmington Hills, MI; John Kindzierski of Livingston, NJ; Robert W. Kuakle of Tacoma, WA; Bob Q. Lanier of Fort Worth, TX; Aaron M. Levine of Houston, TX; Neville A. Lewis of Tacoma, WA; Ralph Litton of Reno, NV; Juvis Maes of Aberdeen, WA; Leslie S. Malo of Tacoma, WA; George E. Maloof of San Francisco, CA; David T. Petty of Chicago, IL; Joe Phipps of DeSoto, TX; Edward Rensimer of Houston, TX; Jeffrey Rutgard of La Jolla, CA; Guadalupe Sanchez of St. Peters, MO; Elizabeth G. Sanford of Tacoma, WA; Joseph S. Schwartz of Clearwater, FL; Bryan L. Smith of Venice, FL; Michael Steiner of Seattle, WA; Stanley Terman of Encinitas, CA; and Dennis A. Wight of Tacoma, WA.


CLIAÄThe Inspections Begin

On August 1, the Georgia Dept. of Human Resources, acting as agent for HCFA, began inspecting the office laboratories of dermatologists who had registered last year under the CLIA regulations. This first inspection was touted as being ``educational,'' rather than punitive; presumably, subsequent inspections will be the latter.

The most frequently cited deficiencies mentioned by the inspectors were: the failure of dermatologists to document to temperatures of their refrigerators where the culture media for dermatophytes is stored and the temperature of the room where the cultures are incubated (although these temperatures are of no importance); failure to note the exact time to the nearest minute when a fungal culture was inoculated (though it takes more than a week to grow); failure to perform a Gram-positive and Gram-negative control for each and every Gram stain; failure to perform quality control testing (inoculation with a known pathogen and contaminant) on every lot of culture medium, even though the manufacturer is required to do this; failure to have a protocol for quality assurance (telling what action is to be taken if the medium fails the test); failure to have a job description for all the ``positions'' in the laboratory even if all of them are filled by the dermatologist personally; and failure to have proper laboratory requisition forms for ordering the tests.

Dermatologists were informed that the results of the inspection were a matter of public record, accessible to ``any interested person'' on demand. Physicians were assured that the names of our patients would not be made public. (Inspectors insisted on seeing actual lab records and patient charts if the laboratory results were recorded directly on the chart.)

An informal poll of the Atlanta Dermatological Association last spring showed that 40% of the membership had stopped all laboratory testing because of CLIA. The poll was taken before the onset of inspections.

Dermatologists were also informed that they would have to participate in at least four proficiency testing ``events'' annually, beginning in 1994, for every individual test that they perform. Most programs require the payment of $150 to $300 per test per year.

The major impetus for the promulgation of these regulations was inaccurate Pap smears, which are virtually never read in a physician's office. HCFA has yet to develop a program for inspecting cytologic laboratories.

It was particularly worrisome that the inspector wanted to record the names or Social Security numbers of ``typical'' patients who had had laboratory testing. We refused to let this information leave our offices, allowing only initials to be recorded.

The chilling effect of these inspections, along with the costs of the required licenses and proficiency testing, will undoubtedly discourage any further development of in-office procedures with their advantages of patient convenience, instantaneous reporting, and cost savings. (The screening culture for pathogenic fungi costs $15 in the office and $42 in the commercial laboratory.)
Don Printz, MD Lilburn, GA

[The newsletter of the Missouri State Medical Association, June, 1993, reports that HHS has spent $100 million to get CLIA off the ground, but thus far has collected only $20 million in ``user fees.'']


AAPS Calendar

Oct. 5. Board of Directors meeting

Oct. 6-9. 50th annual meeting, Menger Hotel, San Antonio, TX. For hotel reservations, call (800)345- 9285. To register, call AAPS at (800)635-1196.

Nov. 6-7. Medical Action Committee for Education, Philadelphia (see enclosure). Oct. 12-15, 1994, 51st annual meeting, Atlanta.

Legislative Alert

Trimming His Sails?

Going into the final (?) stretch, the latest word is that President Clinton will reveal his Health Care Plan on September 22. The most likely forum will be a special Joint Session of Congress. A comprehensive bill is not likely to be sent up to the Hill at that time. Look for serious legislative action in the spring of 1994.

While the outlines of the emerging plan look substantially the same as reported here last month (see AAPS News Legislative Supplement, Sept. 1993), Clinton's August 16 speech to the nation's governors suggests that the White House is cutting back a bit. (The Gergen influence?) The Plan will still have phased- in universal coverage, a standard benefits package, employer mandates and financing, and a system of geographically based health alliances (purchasing cooperatives) managed by the several states. But there are both subtle and important differences.

First, the subtle differences: 1. The phrase ``global budgets'' has been dropped for the nicer sounding ``spending caps.'' Call them ``expenditure targets.'' The plan is to cap spending in the Medicare and Medicaid program, then extend the caps to private insurance premiums. The savingsÄexpected to be in the billionsÄare to help cover the currently uninsured. 2. A straight employer-based payroll tax is apparently ``out'' because it would be a tough sell. Instead, there is to be an ``employer-based premium contribution,'' ranging from 3.5% of payroll for small firms up to 7.5% for large firms for the ``standard'' benefits package. The maximum health insurance premium for the self-employed would be 9.5% of their earnings. Subsidies of some sort are expected for small firms.

The important differences: 1. Instead of the states, the federal government will have the responsibility to enforce the ``spending caps.'' 2. The exemption for big business is no longer on Hillary's kitchen table due to the obvious political problem of trying to sell a double standard (and the high-pitched objections of organized labor).

On the standard benefits package, the outlines are becoming clearer. Actually, two packages are expected: a fee-for-service family package, with a $400 family deductible and a $200 deductible for individual coverage, plus a 20% copayment for physician services. There will also be an HMO package with no deductible and a 10% copayment on physician services. Employers will be expected to pay 80% of the standard benefits package, and employees 20%. (Of course, as economists realize, health benefits are a one-to- one trade-off with wages.)

To limit his vulnerability on the tax-and-spend issue, the President is now offering only a set of new ``sin'' taxes on alcohol and tobacco, with an annual yield of $15 billion.

Marching Off to the Gettysburg of Domestic Policy

With the start of the Fall Offensive, expect an all-out public relations blitz. The Democratic National Committee and the National Health Care Campaign are sponsoring training sessions. Look for concentrated grassroots efforts using phone banks, the mail, and even neighborhood street canvassing. Former Ohio Governor Richard Celeste has been given field command.

In every congressional district in the country where it counts, congressional Democrats are being organized by Congressman Vic Fazio (D-CA) who is preparing his colleagues for dealing with the media. Members are advised to stress the ``drastic need for reform.'' Key allies are expected to be the AARP, the National Council of Senior Citizens, local mental health associations, nurses organizations, members of the Red Cross, the American Cancer Society, the ACP, and the AAFP.

The Clinton forces' lines of attack are crystal clear. If congressional Republicans are shocked by the vigor of the White House offensive or thrown into confusion or find themselves on the defensive in the coming public-relations blitz, they have no excuses. They will not be fighting on the comfortable turf of tax- and-spend politics but on an issue where the congressional Democrats can and will make a powerful and voter-friendly political appeal: ``security.'' The second major theme will be ``savings.'' The campaign will promise to stop the skyrocketing costs that are allegedly ``crippling'' business and ``exploding our deficit.'' The third major theme will be ``simplicity''Äthe Clinton Plan promises to reduce the complexity of insurance forms and claims processing and close the loopholes that effectively deny people coverage.

Capitol Hill insiders think that the Clinton team will capture the high ground of the national health- care debate during the initial stages of the Blitz. The big question is whether he can maintain his momentum. Arguing for his success are a few formidable advantages. 1. Whatever Clinton's weaknesses in governing, he displays awesome skills campaigning outside of Washington. On this issue, he will be switching into campaign mode. 2. The ``security'' issue (``we care, they don't'') has the potential to become the ``wedge'' issue that brings blue-collar Democrats back into the fold.

However, there is a chance that the debate will ultimately turn on taxpayer cost rather than taxpayer ``security,'' and the cost issue is getting an early airing.

Early Skirmishes on Cost

In early skirmishing, the Clinton Administration is finding itself on defense. In a study for the Health Care Leadership Council, a group of providers and insurers opposed to employer mandates, Lewin- VHI, Washington's top number-crunchers, estimated that the net cost of the Clinton health-care proposal would be $42.7 billion in the first year. The total cost of subsidizing insurance premiums for the uninsured would be $75.4 billion, of which only $32.7 billion would be offset by ``savings'' (price caps and such) in government programs such as Medicare and Medicaid. Lewin also estimated that the extra annual costs to employers for covering their workers would be $24 billionÄmore if additional Administration proposals are included.

The Clinton Administration's response to the Lewin study has been to shoot at the messenger and to attack the folks funding the study. According to a report in the August 20th Washington Post, White House spokesman Robert Boorstin said that ``Lewin-VHI is an extremely reputable company that is trafficking in ridiculous assumptions and drawing conclusions about a program that hasn't been announced.'' The Administration's cost estimates are said to be lower, but none of the math has been released. In the meantime, attacking Lewin-VHI, whose cost estimates are routinely used by congressional committees and major corporations, is not the best way for the White House to enhance its credibility on Capitol Hill.

Playing defense again, the Administration is trying to put out another fire: the projected labor costs of employer mandates. Like a witness being pressed by Perry Mason, the Administration is strongly denying that the job loss due to employer mandates will be as high as claimed. But there is a dispute about what their own estimates really show. Is it ``only'' a couple hundred thousand jobs? Or is it more?

Drs. June and David O'Neill, two professors from Baruch College in New York, have just completed a comprehensive study for the Employment Policies Institute. The employer mandate, subject of an August 20 story in the Wall Street Journal by Carlos Bonilla, translates directly into the loss of 3.1 million jobs, of which 75% will be in the low-paying service industries. The most significant increase in labor costs would be in restaurants and taverns, where an increase of 19.% would result in an estimated loss of 828,000 jobs. In retailing, a 7.9% increase would destroy 726,000 jobs; in agriculture, a 15.6% increase would kill 194,000.

In addition, mandatory health care costs cut wages or at minimum reduce wage increases. As Bonilla comments: ''A Blue Cross card won't pay the rent.''

Attacks by the Allies

In an August 10 article in the Wall Street Journal, Paul Ellwood, MD, complained that Clinton forgets his health-care allies. The Clinton policy wonks ``never embraced'' the managed- competition model that the President promoted during the campaign.

Ellwood described the White House Task Force and its working groups as ``exclusive, secretive, compartmentalized, and unduly complex.'' To start with, the Task Force was given contradictory instructions: employ the marketplace, while imposing government controls that weaken market forces. Then participants were asked to consider only disconnected parts of the problem, with ``no mechanism for assuring that the policy ideas were consistent with others or with experience.'' The New York Times, the national arbiter of what's politically fashionable and what's not, published an August 18 editorial that is hardly good news for the White House. Describing the President's remarks as ``maddeningly vague,'' the Times went on to lament the absence of genuine competition and incentives in the Clinton scheme and ended on this remarkable note: ``Once providers are forced to compete to survive, and consumers encouraged to make cost-conscious choices, Washington can let the states figure out their own solutions.''

Senate Republicans: Inching Toward Surrender?

While Congressman Richard Armey (R-TX), the unofficial leader of seriously combative Republicans, is regularly unleashing preemptive salvos against the emerging Clinton health-care plan, Senate Minority Leader Robert Dole of Kansas stunned Capitol Hill conservatives by saying he could go for ``sin taxes'' as a way to help finance health-care reform. While drawing a line in the sand against new payroll taxes, Dole's early signals to the Clinton Administration are troubling to Senate and House conservatives who want to go on the offense with a comprehensive and politically attractive plan of their own. Not only that, Capitol Hill conservatives view Clinton in a seriously weakened political condition with progressively lower reserves of political capital. (Popular support for the Budget Plan actually dropped after Clinton's nationally televised speech. Phone calls to House and Senate offices were often running ten to one against the plan.)

In the meantime, Dole has been encouraging Senator John Chafee (R-RI), the Chairman of the Senate Republic Task Force on Health Care Reform, who is in favor of ``managed competition,'' whatever that happens to mean at the moment. Like President Clinton, Chafee still doesn't have a bill.

In response to Clinton's August 16th speech to the National Governors Association, Chafee quickly circulated a statement of ``consensus principles'' signed by 24 Senate colleagues. This outlines three major goals: the maintenance of quality health care; the need for universality of ``coverage,'' and the need to restrain medical costs. Beyond that, the chief recommendation is that health care purchasing cooperatives be set up to promote bargaining between providers and consumers and employers.

This statement itself is evidence of the rift in Republican ranks. Leading Senate conservativesÄsuch as Phil Gramm of Texas, Connie Mack of Florida, John McCain of Arizona, Dan Coats of Indiana, and Don Nickles of OklahomaÄare all missing from the line-up. While Chafee's staff keeps denying that there is a serious feud, it is well know that very basic policy divisions are emerging among Senate Republicans. The key issue: How much personal freedom should consumers have in making medical decisions?

On two issues, there does seem to be almost universal agreement. Senate Republicans, as indicated in a letter to President Clinton signed by 41 Senators, will oppose any employer mandate. Likewise, there will be strong GOP opposition to any global budget or expenditure targets.

`` Health Care Security Plan'': a Lexicon

A 47-page briefing paper called ``Health Care Update,'' dated August, 1993, is being distributed to congressional Democrats by the White House. The theme is: ``Health care that's always there.'' This piece helps to clarify the Plan, if you read between the lines. Here are a few important definitions (some based on the presentations at citizen forums now being held throughout the nation):

Allow, as in ``allow small businesses and consumers to band together in health alliances'': to force

Ask to contribute: force to pay

Choose: to pick one of a few standardized Health Plans and then to pick a doctor who is on their list

Community rating: ``Everyone who lives in the same area pays an equal amount for health insurance. Instead of letting insurance companies make a lot of money off a small number of people, they will make a little money off a lot of people'' (sic.).

Coverage: enrollment in a Plan (q.v.)

Emphasize, as in ``emphasize preventive care'': fund at the expense of something else, usually sickness care

Health alliance: ``All members of the community are part of the Health Alliance.'' Plan (n.): a scheme to provide all the care that is available Plan (v.): to ration, prevent, restrict, prohibit, or obstruct the delivery of unplanned medical care Prioritize: decide which patients receive care, based on three- to five-line descriptions of their problems Security: They can't cancel your coverage. [Neither can you.] Universal access: the availability of selected care to all on the basis of politically determined priority; in effect, restricted access or rationing