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Volume 59, No. 9 September 2003

PRIVACY, LIBERTY, AND TELEOCRACY

What Americans are living through today is not a mere "health care reform," but a profound transformation, as Newt Gingrich explains in his new book Saving Lives & Saving Money (also see AAPS News Feb 2001).

Nor is it just a transformation of American medicine, but a giant step in the metamorphosis from the traditional Western political tradition of nomocratic or rule-based government into modern teleocracy. A teleocratic government of which communism is one extreme form is designed to achieve certain ends. These might be building a "new society," abolishing poverty, or redesigning a system of "health and healthcare."

There are virtually no limits to the government role in a teleocracy, observes Joseph Sobran, because anything that people do could be subversive of the desired outcome. Thus, many spontaneous activities are apt to be censored or criminalized (Griffin Internet Syndicate 7/17/03).

Incentives are touted, but if they don't work, the government can always resort to brute force. Even Newt Gingrich, who styles himself a "free-market conservative who believes in minimal government involvement," thinks it is justified to "mandate the use of electronic systems to drag the medical system into the 21st century."

Information, after all, is critical to achieve his goal of a "collaborative government [that] manages by outcomes."

Change is urgent; Gingrich invokes the bioterrorism threat, and the looming choice of "quality or bankruptcy."

Recall that, although separated by a few years in implem- entation, the Clinton criminalization and "administrative simplification" provisions were passed in the same package, the Health Insurance Portability and Accountability Act of 1996 (HIPAA). They also mesh nicely with the USA PATRIOT Act. Still more demands for data, and more punitive uses for it, are rapidly coming to the fore.

Patient safety bills now being considered (H.R. 663 and S. 720) are more about surveillance than safe care, writes Twila Brase, R.N., of the Citizens' Council on Health Care. Taxpayer funds would be used to build computerized data systems, falling in line with an initiative announced on July 1 by the Dept. of Health and Human Services to create a "national electronic health care system" ( www.cchconline.org).

The Institute of Medicine (IOM) is urging the federal gov- ernment to use the leverage that it acquires by paying medical bills for one in three Americans to address quality concerns. Payment should be partly based on quality as judged from data that practitioners would have to submit (AM News 11/18/02).

Punishments are being developed faster than incentives. Since the IOM released its To Err Is Human report in the fall of 1999 (AAPS News Apr 2000), "the timing is about right for us to see cases that have been percolating behind the scenes," said Joan Krause of the Univ. of Houston Health Law & Policy Institute (BNA's HCFR 7/23/03). Federal prosecutors are looking for a good False Claims Act case based on allegations of inadequate quality of care.

The campaign of prosecutions of nursing homes for quality will probably spill over to hospitals and physicians' practices, according to Jim Sheehan, Assoc. U.S. Attorney for the Eastern District of Pennsylvania (Medicare Compliance Alert 8/4/03).

Private payers' Special Investigations Units use common data bases and data mining programs to target providers who are referred to the FBI for criminal prosecution. HIPAA can turn what was formerly a private billing dispute into a federal crime with heavy fines and up to life imprisonment if a beneficiary dies (ibid.; AAPS News Jan 1994). Failure to report significant events may be taken as a sign of "conceal[ing] endemic quality problems," and thus of fraud.

HHS claims that "Congress intended a broad interpretation of `health care fraud and abuse,' including adverse patient outcomes, failure to provide covered or needed care..., or delays in diagnosis and treatment'' [emphasis added] (Turner G-M, HIPAA and the criminalization of American medicine, Cato J 2002;22(1):121-150.)

The "basic tool kit of a health-care quality movement" includes practice guidelines linked to the medical record. This will allow the government to combat the "epidemic" of wide variation in how doctors treat patients with similar ailments. Getting doctors to "embrace these tools as the standard of care" is essential. Without them, the system will "continue to spiral out of control" (Winslow R, Wall St J 2/3/03).

Control: that's what the debate is about. Control requires information. Privacy is the right of a person to control information about himself and is a subcategory of the right to liberty. In a teleocracy, privacy is balanced against the need of the state to know or used to shield the state from exposure.

The same government that wants unimpeded mining rights in private records jealously guards its own secrets from public view. In Office of Independent Counsel v. Allan J. Favish (see p. 3), the OIC is attempting to block the release of certain original Polaroids of the body of Vincent Foster under the Freedom of Information Act, citing a "privacy" interest of Foster's remarried widow in being free of added emotional distress. Favish argues for the interest of the public in disclosure as a check on government trustworthiness.

The extent to which government secrecy now overrides individual privacy is seen in the modest proposed amendments to the USA PATRIOT Act (S. 1552). These would restrain government from "sneak and peek" searches of homes unless "absolutely necessary," and prevent certain political activists from being labeled "domestic terrorists."

The Panopticon (see p. 2) is being built under the cloak of "privacy," "safety," "national security," "quality," and "health."


The Panopticon

The Panopticon of Jeremy Bentham is an architectural figure that "incorporates a tower central to an annular building that is divided into cells, each cell extending the entire thickness of the building to allow inner and outer windows. The occupants of the cells...are thus backlit, isolated from one another by walls, and subject to scrutiny both collectively and individually by an observer in the tower who remains unseen. Toward this end, Bentham envisioned not only venetian blinds on the tower observation ports but also mazelike connections among tower rooms to avoid glints of light or noise that might betray the presence of an observer.

"The Panopticon thus allows seeing without being seen. `Such asymmetry of seeing-without-being-seen is, in fact, the very essence of power...because ultimately, the power to dominate rests on the differential possession of knowledge'." (Barton and Barton, Modes of Power)

The utilitarian philosophy of Jeremy Bentham (1749-1832) is seen by many as the foundation for collectivism and interventionist government.

 

More Data "Sharing"

Education Records. The Childhood Medication and Safety Act (S. 1390), while prohibiting schools to force children to take drugs like Ritalin, would require the Comptroller General to review prescription rates. The CDC has long sought access to student medical records. Gingrich wants to "start with the children" in his "nutrition-activity-attitude" system for health.

TIA II, State Based. Florida's new counterterrorism database called MATRIX (Multistate Anti-Terrorism Information Exchange) hopes to circumvent the criticisms leveled at the national Total Information Awareness (TIA) system (AAPS News Jan 2003) with networked state repositories, rather than one central database. The system will serve regular crime- fighting as well as emergency preparedness (Wash Post 8/5/03).

Mission Creep at Homeland Security. The CAPS II program that is supposed to enhance airline security would subject about 200,000 airline passengers per day to additional harassment for general law-enforcement goals (The Hill, 8/5/03).

Prescription Tracking. The National All Schedules Prescription Electronic Reporting Act of 2002 (H.R. 5503) would require dispensers to report electronically to HHS on every prescription for Schedule II, III, or IV drugs, including the patient's date of birth and SSN or alternate identifier. It would permit physicians to access the database. Currently, 17 states have lists of patients who receive Schedule II drugs, used by the police to "catch drug abusers and the doctors and pharmacists who provide the drugs" (USA Today 11/25/02).

HIPAA and National Security. The U.S. National Security Agency (NSA) and the Dept. of Defense have partnered with private firms to develop HIPAA-compliant (and NSA-compatible?) software. Anyone from a national security agency can demand records with an oral administrative subpoena; 2,102 were issued for the FBI in 2001. Unlike much evidence uncovered by search warrant, these records can be widely circulated among government agencies. Even the PATRIOT Act requires a court order (sfweekly.com 5/28/03).

 

Government Databases: Accuracy and Compliance

More than half the providers in the active Unique Physician/Practitioner Identification Number (UPIN) database had inaccurate information in at least one practice setting record, according to a study by the Office of Inspector General ( http://oig.hhs.gov/oei/reports/oei-03-01-00380.pdf).

Government compliance with the Privacy Act of 1974 is uneven, and the General Accounting Office (GAO) concludes in a June, 2003, study that "the government cannot adequately assure the public that all legislated individual privacy rights are being protected." Noncompliance was highest (29%) for the requirement to verify that information is complete, accurate, relevant, and timely before disclosure to a nonfederal organization. Agencies generally place a low priority on compliance efforts ( www.gao.gov/new.items/d03304.pdf).

Homeland security needs may be generating more personal information that is maintained outside the Act. The ease with which electronic databases can be created and merged may result in "unofficial" systems of records so that agencies themselves are unaware of all the uses of their data.

There are now 2,400 federal databases on citizens, and one system of records holds data on 290 million people, notes Twila Brase of CCHC (www.cchconline.org).

 

House Probing Hospital Charges to Uninsured

Reps. Billy Tauzin (R-LA) and James Greenwood (R-PA) have sent letters ( energycommerce.house.gov) to 20 large providers, including HCA and Tenet, as part of an investigation of "billing inequalities many uninsured patients face during hospital visits" (see AAPS News July 2003). Up to 35% of one hospital chain's profits are purportedly accounted for by the 2% of its patients who are uninsured (BNA's HCFR 7/23/03). In a June alert, the American Hospital Association urged its members to change their billing and collection practices (Wall St J 7/17/03).

 

State Coordinators Still Needed

State coordinators will be appointed at the annual meeting; you do not need to be present. If you'd like to volunteer to advise us about issues in your state, please call us at (800) 635-1196, or send e-mail to [email protected]

 

AAPS Calendar

Sept. 17. Board of Directors mtg, Point Clear, Alabama.
Sept. 17-20. 60th annual mtg, Point Clear, Alabama.
Oct. 13-16, 2004. 61st annual mtg, Portland, Oregon.


AAPS to File Amicus in FOIA Case

Ten years ago, Vincent Foster became the highest ranking government official to die in office in 30 years since the assassination of John F. Kennedy. Foster was the attorney assigned by Hillary Clinton to "fix" the AAPS lawsuit against the Health Care Task Force. Foster was found dead the day after President Clinton fired FBI Director William Sessions, and the FBI was not allowed to perform a prompt investigation of Foster's death.

To this day, the government has refused to release for independent scrutiny ten photographs of Foster's fully clothed body taken in Fort Marcy Park. One of the photographs, which showed a gun in the hand of the post-mortem body, was leaked and widely published in degraded form. But it raised more questions than it answered, such as how the .38 caliber gun of an alleged suicide remained in his hand and even appeared to be lodged underneath his leg.

Briefs are being filed before the Supreme Court on the issue of whether the government can continue to conceal the photographs, which might show multiple bullet wounds or a pattern of blood flow inconsistent with the posture of the discovered body. The precedent at stake is whether the government can hide behind the privacy exception to the Freedom of Information Act (FOIA), "exemption 7(C)."

The AAPS brief will argue for full disclosure. Government needs to be held accountable. All future FOIA cases will be affected by this precedent.

 

Taking Aim at Hired Guns

The Coalition and Center for Ethical Medical Testimony (CCEMT) was recently incorporated to expose self-designated experts who falsify credentials, prevaricate on witness stands, and intentionally or carelessly mislead lay juries about the standard of care, for personal gain.

Lying in court is "nothing less than a fraud against the public," stated cofounder Bernard Ackerman, M.D., a dermatopathologist from New York. CCEMT will develop tools to promote peer review of expert testimony and to make unethical experts accountable. See www.CCEMT.org.

 

Nullification

More than 100 cities have passed resolutions condemning the USA PATRIOT Act, saying that it gives the federal government too much snooping authority. The Arcata, California, City Council was the first body to pass an ordinance that would impose a criminal penalty, a fine of $57, on any city department head who voluntarily complies with investigations or arrests under the aegis of this act.

U.S. Justice Dept. spokesman Jorge Martinez defended the Act, saying it is constitutional and is being used only against people suspected as acting as agents of foreign powers or foreign terrorist organizations. He also calls the groundswell of resolutions "merely symbolic." There have been no instances of actual noncompliance by localities (CNN.com 5/18/03).

The New Mexico House of Representatives passed House Joint Memorial 40, sponsored by Rep. Max Coll, on a vote of 53-11, directing state law enforcement officials not to enforce the PATRIOT Act when doing so would infringe on civil liberties. The resolution does not have the force of law, and was tabled in the Senate.

These actions are a step toward the constitutional remedy of nullification, proposed by Thomas Jefferson in 1798 and eloquently supported by John C. Calhoun. They suggested that it was the nature of compacts that one side could not have the exclusive right to interpret the terms (Wood TE, Nullification: the Jeffersonian brake on government, Ideas on Liberty 3/02).

 

Dr. Eist Wins Appeal of BPQA Decision

Relying in part on an amicus brief filed by AAPS with other organizations, the judge ruled from the bench in favor of Dr. Eist in Harold Eist v. Maryland State Board of Physician Quality Assurance (civil case no. 240300, Cir. Ct. Montgomery County). The court appears to have rejected the BPQA position that it has the unqualified right to demand disclosure of patient records without notice to the patient.

 

Tip of the Month: We inherit our legal tradition from England, where a man's home was his castle. Landowner rights have not survived the environmental movement, but do remain important in criminal law. An arrest in one's home requires a warrant, signed by an impartial magistrate based on evidence. In contrast, no warrant is required to arrest someone outside of his home. Many defendants including at least one doctor have been tricked into leaving their home by officials seeking to make an arrest without a warrant. Deception by government is fully allowed (e.g., "Come out and look at your flat tire" followed by an arrest outside of the home). Note also that a search of a home without a warrant is presumptively unconstitutional, while warrantless searches of cars and offices can be upheld.Andrew Schlafly, Esq.

 

Veeck Decision Stands

The Supreme Court declined to grant the petition for writ of certiorari in Veeck v SBCCI (AAPS News Jan 2003), allowing the Fifth Circuit decision to stand. AAPS wrote to the Dept. of Justice, which the Court had asked to comment: "Regulatory complexity needs to be exposed rather than concealed. The Department of Justice should not be siding with narrow special interests like that of Petitioner SBCCI and the American Medical Association, at the expense of the citizen's right to disseminate the law. We support an unfettered right of free speech to disseminate legal requirements."

 

Prosecutors Avoid Jury Trials

In 1989, 17% of drug prosecutions were disposed of after jury trials; by 1998, this had fallen to 7%. In FY 2001, only 3.4% of all federal convictions resulted from a trial; the rest, from guilty pleas. Criminal defense lawyers are leaving the field because "they are no longer permitted to defend their clients but are left with the role of negotiating guilty pleas, submitting memoranda on sentencing guidelines, and encouraging their clients to turn in other persons.... The huge disparity between the offered sentences...has forced virtually all defendants except the foolhardy to plead guilty to whatever is offered" especially since it may cost $600,000 to go to trial (NY Magazine 3/4/02).

Prosecutors can compensate witnesses by allowing them to avoid decades in prison with proper testimony. A defense attorney who offered comparable dollar value would be disbarred and imprisoned for bribery (Kuykendall GJ, Ariz Daily Star 9/5/98). See www.lawmall.com/pleabarg.


Correspondence

Trainwreck Is on Schedule. More than half of America's neurologists are no longer accepting complex cases. Neurologists typically have a high percentage of Medicare patients, and they have fared poorly in the RBRVS system. Payment is simply not commensurate with the time and effort required to care for complex Medicare patients. The superimposed liability crisis will cause the "Medicare marketplace" to change even more rapidly. If Congress adds a prescription drug "benefit," shortages and impaired access will accelerate at a whirlwind pace. If a Medicare patient can find a neurologist willing to see him, that physician will probably have been trained to give the "system" priority over the patient. There is now a "GME core competency requirement" in "system-based care." Medical devolution is underway with selection of the unfittest.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

 

Electronic Systems. The government's goal is to have double-digit-IQ coders decide payment based on ICD code (diagnosis), CPT code (procedure), V code (background), E code (history), and Q code (supplies). They can deny claims for $8/hour. Emergency rooms comply by getting rid of expensive doctors and employing physician assistants to run off a 2-page printout of all the negatives that apply to a human being possibly without mentioning the fracture. Recently, a patient with a broken hip who had a cast on his other leg for a trimalleolar fracture had three extremities coded as normal because the coder didn't look under the blanket. Physicians now have to call each other on the phone when they want information.
Owen McCarthy, M.D., Bradenton, FL

 

Who Is the Enemy? We need to stop circling the wagons and firing inward. Doctors are not the enemy. Neither are insurance companies, consumers, drug companies, hospitals, or employers. The enemy is socialists who revel in a divide-and- conquer strategy, seek to politicize everything, want to confiscate other people's property for their own use, and strive to increase government power because they enjoy ordering other people around "for their own good." The enemy is the laws and regulations used to accomplish these things.
Linda Gorman, Englewood, CO

 

What Health Care Reform Is About. To win the battle, we must win the hearts and minds of those who do not understand that the war is not about medical care but about how we are governed. We cannot win the war by arguing about health care. The masses of people will obviously want everything "free"; the illusion is just too strong a temptation to resist.

One group believes that all resources and wealth should be evenly distributed and that no one has a prior claim on that wealth. The other believes in property rights, the concept that people have a right to the wealth and resources they produce or own. The question is: do we want socialism or communism or a free republic? The answer determines the type of medical system that we shall have. It's that simple.
Joseph Lee Pugh, Diamondhead, MS

 

Next Installment of Hillary Care. Why did the "simple insurance portability" bill, HIPAA, pass almost unanimously in 1996? It also contained, verbatim, Hillary's "fraud and abuse" legislation that makes every doctor a virtual criminal, and the "privacy rules" that are driving us crazy now, and the "electronic payments" provisions that will grind doctors' payments to a halt in October. The AMA actually denied the presence of the privacy rule (that AAPS pointed out before passage) until 1998 and didn't use the word "onerous" until 2000. Now we have this bipartisan "simple drug bill" that we know is too expensive and unpaid for and will drive the elderly from their private plans. It contains provision for 10 or 12 "private regional PPOs" with a "temporary right" to impose price controls. It looks a lot like Hillary's regional cooperatives. Bet that it too passes almost unanimously.
Stephen R. Katz, M.D., Fairfield, CT

 

Jury Nullification. After reading the June newsletter, I obtained a copy of Sparf v. U.S. 156 U.S. 51, 1895, from the internet and read all 71 pages of its century-old dense legalese. Although the Latin sometimes ran off my 40-year-old Latin register, I am reasonably sure that I tracked the document adequately. It did not actually hold that "...juries...have the right to nullify the judge's instructions on the law, but only if they didn't know about this right." The majority of the court made it quite clear that juries don't have the right to nullify the judge's opinion. The opinion only notes that juries have the power to do so, and makes the distinction with care. It was implied though not specific in the majority opinion that a judge is under no obligation to inform juries of their power. The dissenting opinion was close to sparkling in its correctness about the rights of juries and the salubrious reasons for these rights in the defense of liberty....

I've watched with dismay attacks on the jury system: grand juries that are the pet of prosecutors, contracts that require binding arbitration, proposals for "professional" juries, reductions in the size of juries, systematic exclusions of any juror who might retain the capacity to think, and regulatory tribunals used by the likes of CMS and the IRS. Even though the legal system doesn't respect the rights of juries, it appears to be wary of the power and determined to erode it.
Hilton Terrell, M.D., Florence, SC


Legislative Alert

Underway: The House-Senate Medicare Conference

While their bosses are back home meeting and greeting the voters and feeling political pulses, staffers from the House Ways and Means and the Senate Finance Committees are slogging through the competing versions of the Medicare legislation, the largest single entitlement expansion since the Great Society in 1965. The Senate bill is 1043 pages. The House bill is 747 pages.

With only a couple of brief meetings, the House and Senate conferees have left for the August recess, leaving the staffers to prepare positions for the resumption of the conference in September. Thus far, the first major area of agreement has been on the House provisions dealing with regulatory reform, a welcome set of changes that would ease the burden on doctors and hospitals and other medical professionals in the traditional Medicare program. The Senate bill had no similar provisions.

Another area of "tentative" agreement is on the prescription drug card for seniors for the period 2004-2006. In 2006, the proposed Medicare drug entitlement program begins. Under the tentative staff conference agreement, Medicare beneficiaries would be able to purchase drug discount cards for $30 a year. The staff-level agreement also calls for a $600 per annum federal subsidy for drug purchases with the card for seniors with incomes up to 135% of the poverty level. House conservatives initially proposed an $800 subsidy reaching more seniors.

The American Enterprise Institute (AEI) and the Galen Institute had proposed a discount/debit card provision, focused primarily on low-income seniors, as a permanent feature of Medicare, with a personal right to roll over funds in the drug accounts, much like medical savings accounts. It appears that the Medicare conferees will not be creating such a permanent structure. Too bad.

Two other areas of major contention are whether to change Medicare into a system like the Federal Employees Health Benefits Program (FEHBP), as in Section 241 of the House bill, and whether to establish a government fall-back for prescription drug coverage, as in the Senate bill.

Kennedy versus Ryan

The FEHBP-style competition, even though it would not even start to take effect until 2010, is considered a deal breaker with Senate leftists. Sen. Edward Kennedy (D-MA) and 36 of his colleagues have warned that such a system would be unacceptable to them. But Rep. Paul Ryan (R-WI) and 75 of his fellow House Republicans, in a letter to the President, are saying just the opposite: there must be the FEHBP-style reform in 2010. Moreover, the House provisions creating health care savings accounts must also be included in the final legislation. Both look like conservative lines in the sand. In the House, where the bitterly contested Medicare bill passed by just one vote, Ryan's insistence on these provisions has real clout.

The big question is whether the White House will stand behind conservatives promoting any serious reform. Thus far, as Robert Novak of The Washington Post and other syndicated columnists have observed, the President has yet to draw any line in the Medicare sand, thus sending a message that he might sign a flawed bill. Apparently believing that the prescription drug entitlement is a political imperative, how far might the President go if he can't secure an agreement with congressional conservatives to stand firm for real reform? Would he go to the Left, abandon the conservative base, and seek the votes of liberal Democrats to pass a popular Medicare bill? Bill Clinton, after all, abandoned the Left and signed the politically popular 1996 Welfare Reform Act, largely written by congressional conservatives. So there is precedent for such a maneuver but it carries huge political risks.

Unfocused Debate

The Medicare conference may turn out the most important piece of legislation in the 21st century, setting the course for retirees, taxpayers, and their children and grandchildren for the rest of this century.

The political target of the prescription drug benefit is the current generation of seniors, a population that votes in significant numbers. But the Medicare debate is not, in fact, about the World War II generation, many of whom will not even survive to see this legislation take effect.

The Medicare debate is about the Baby Boomers, 77 million strong, who will begin to retire in just eight years and inescapably about their children, the young people now starting out in life, who are marrying, buying homes, and having and raising their own kids. These are the folks who are going to pay the taxes to sustain this program for the huge Baby Boomer generation.

The Boomers are used to having it all now, not later. They are not like their parents. No future Tom Brokaw is going to write adulatory tomes about the Sixties Kids. So, if you think the Medicare program is already in trouble, even without the addition of a Medicare drug entitlement, just wait 'til the Boomers a huge voting Bloc get on the Medicare rolls. The Mickey Mouse Club on subsidized drugs, or subsidized whatever else we want now. Think about that.

Untargeted Solution

The drug access problem afflicts a minority of the senior population, and the reasonable and responsible thing would be to assist those who do not or cannot get drug coverage. The facts should dictate the solution; but in this case, for some reasons that are downright strange among Republicans, and for left-wing ideological reasons that are not at all strange among Democrats, both houses of Congress are seeking to enact and enforce a universal entitlement in drug coverage. Congress thus made a huge policy decision. According to Rep. Bill Thomas (R-CA), Chairman of the House Ways and Means Committee, the House bill covers 95% of seniors.

Both House and Senate bills provide for a "voluntary" drug benefit. But that's a formality, really, and everybody knows it. Many seniors, if not most, of course, would either be involuntarily dumped out of their existing private coverage by former employers, or would see their coverage severely scaled back. The Congressional Budget Office (CBO) predicts that 37% of seniors with employer coverage would lose it under the Senate bill, and 32% under the House bill. CBO is sticking by its estimates. That's no doubt why some big corporations are enthusiastic about the Medicare entitlement expansion. They will have an opportunity to off-load billions of dollars of obligations onto the backs of the taxpayers, who are already facing huge tax increases for future entitlements.

This means that these retirees would not only lose their current coverage, but they would also lose their deferred compensation for that coverage, the money that they had forgone in wages to secure the promise of retiree health care coverage. The AFL-CIO, the UAW, and other unions are screaming bloody murder over the loss of private employer-based coverage. And it would not just be private employers who would dump retirees onto the government entitlement; it would also be state and local retirees, many of who also enjoy generous drug coverage.

Not so the federal retirees. The House quickly passed legislation to protect their drug coverage from the impact of the Medicare bill on July 8 under the Suspension of the Rules Calendar. The bill was passed on a voice vote no recorded votes on this, thank you very much. This is the House Calendar for "non controversial" legislation. Now get this. Several key Senators, on a bipartisan basis of course, are considering similar legislation to do the same. Rank hypocrisy.

Political Slam Dunk?

Recall that, for the congressional Republicans, the "stealing" of the Democrats' Medicare prescription drug issue is supposed to be the political equivalent of General MacArthur's stunning Inchon Landing in the Korean War. A strike deep into the enemy's political territory, throwing the other guys on the defensive. A political slam dunk: winning popular accolades, locking up the "senior vote," and taking the drug issue away from the Democrats. Really?

Well, let's follow the script. Senate staff and some folks in the business community will say that CBO is flat-out wrong about one in three seniors losing private coverage, or exaggerating, or operating on the wrong assumptions, or whatever. But others, less sanguine about the intentions of the Medicare expansion lobby, will say otherwise, and they will be right. Private drug coverage will either be lost altogether, or dramatically scaled back within the framework of the government program. In either case, this will be a major policy triumph for the Left.

Meanwhile, the seniors so dumped will generally have to pay much more out of pocket for an inferior government drug benefit. The Left, of course, will gleefully blame this on the bewildered and defensive congressional Republicans. But the Left in Congress will start to do something about it, as Senator Kennedy has already clearly and loudly indicated; they will start to fill up the "doughnut holes" or the "benefit gaps" in the Republican- devised Medicare drug benefit package. Expect the Congressional Left and its allies to make it a slow, painful, agonizing political process. Any doubts? Look at the amendments Senate Democrats already prepared for consideration of the Senate Medicare bill in June: fill the "doughnut hole" for Alzheimer victims, cancer patients, diabetes patients, and force an up-or- down vote on every last one of the amendments for every last one of the disease groups to close the "holes." Those amendments will be back, like insurance mandates, a replay of body-part politics. Who do you think wins in this process?

Then, the private sector market for prescription drugs contracts, and the government control over the prescription drug market expands. (Roughly 50% of all prescription drug purchases in America are by patients older than 65, so the government expansion has huge implications for the financing and delivery of prescription drugs.) So, the process results in a huge expansion of government control over medical care, setting off an explosion in drug utilization, enormous tax increases, and sooner rather than later draconian regulations to control expenditures. Nonetheless, this script is supposed to be a box office hit, a public policy triumph and an act of sheer political genius. We'll see.

Exploding Drug Entitlement Costs

The President caved on the demand for a universal rather than a targeted benefit. A little more than a month later, the price tag has already increased from $400 billion over the 2004 to 2013 period to $415 billion for the House or $432 billion for the Senate version. It's not going to stop there; depend on that.

Say Bye Bye to the Bush Tax Cuts?

Dr. Daniel Mitchell, a senior economist at the Heritage Foundation, predicts that, under the best-case scenario, with government paying "only" 25% of prescription drug costs, the Medicare deficit would still consume about a quarter of income taxes in 2026 and 39% in 2042. Such expenses would probably doom any future tax reform, as would become clear later this decade, just as most of the Bush tax cuts of 2001 and 2003 were expiring. Good economic policy, says Mitchell, would make the tax cuts permanent, thus maximizing the economic benefit of lower taxes, but, given the Medicare pressures, the tax cuts would probably be eliminated. Another victory for the Left.

William Beach, director of Heritage Foundation's Center for Data Analysis, says that Congress needs to take a realistic look at what the drug benefit will cost 15, 20, even 25 years from now. Beach says the drug benefit would, in inflation-adjusted dollars: (1) add $2 trillion to the $5 trillion shortfall Medicare will face in 2030; (2) cost today's typical 40-year-old head of household an extra $16,127 in taxes between now and the time he retires; and (3) saddle households with extra taxes averaging $1,125 annually by 2030.

Combined with Medicare's current projected shortfall by 2030, the average household would pay $3,980 per year in higher taxes. Congress must raise the funds necessary to prevent Medicare from going bankrupt once the new drug benefit becomes law. Raising most income tax rates or eliminating existing tax breaks are also possible options. More fiscal victories for the Left.

The plan needs to go back to the drawing board.

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