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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
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Volume 48, No. 9 September 1992
NURSING HOME INVADED
About 60 elderly patients faced possible eviction from their
home as government inspectors threatened to terminate Medicaid
funding to Gaymont Nursing Center in Norwalk, Ohio. Conditions
in the nursing home posed a ``serious and immediate danger to
residents,'' according to Randy Hertzer, a spokesman for the Ohio
Department of Health. Local newspapers announced the state's
charges in large, front-page headlines.
In a 1990 survey, Gaymont was listed as one of two Ohio
nursing homes having no deficiencies. This time, however, the
procedure was different, possibly because of complaints by two
disgruntled former employees.
Six surveyors, twice the usual number, dispersed throughout
the facility. They demanded records; insisted on interviewing
residents without staff being present; interrupted personnel in
the middle of procedures such as bedbaths in order to carry out
their directives; and questioned the judgment of the patients'
physicians. The inspectors went so far as to intimidate the
staff into acting contrary to physicians' orders. In one
instance, a surveyor demanded the removal of a patient's
restraints; shortly thereafter, the patient fell. (The surveyor
later denied giving the order.)
The routine in the nursing home was disrupted for six weeks
by what the staff called the ``team from Hell.'' Nurses were in
tears. Residents appeared in the administrator's office,
Gaymont administrator William Dotson said that many of the
alleged infractions were ``found'' through the use of ``Gestapo''
``My employees were lied about, coerced, intimidated,
totally demoralized, and put into a state of shock,'' he stated.
In a letter to Dotson, one nurse wrote that she felt she had been
``mentally raped'' by the surveyors.
The surveyors took at face value whatever they were told by
residents in response to leading questions, regardless of the
patient's mental status. ``They twisted and turned statements
made by residents, employees, and family members to suit their
need for something to report,'' stated a nurse.
Remarkably, the residents' ``immediate jeopardy'' no longer
existed as soon as Dotson filed a large volume of paperwork with
Dotson stated that the problems resulted from regulations
that were frequently changed without notice. He periodically
buys a book that lists the changes, but many are still unclear.
The home was unable to comply with one regulation requiring a
lock on an exit because such locks were forbidden by the fire
Most of the regulations concern paperwork. As one nurse
explained, ``the pressures being put on us, the tons of extra
paperwork-because according to the state, if we aren't charting
it, we aren't doing it-has become a mental nightmare.''
Dotson said that he stands by his employees, who take pride
in offering excellent, loving care to the residents. He extends
an open invitation to all who would like to visit. He hoped that
about 20 citizens might come to a public meeting to show their
support; 130 appeared.
AAPS President-Elect Nino Camardese, MD, described the
inspection as an example of tyranny-arbitrary, unrestrained
government. He believes that Gaymont provides exceptionally fine
care to his patients as well as to his own mother-in-law.
Many supportive letters from family members and Gaymont
staff appeared in the local newspaper. One Norwalk citizen
called the Gaymont incident a ``grand example of big government
``It is unfortunate that a bunch of power-mad, two-bit
bureaucrats can wield the power of life or death over a
business....Whatever happened to the principle that the accused
is innocent until proved guilty? I'll tell you. When dealing
with any government bureaucracy, you are guilty until you are
able to prove yourself innocent, and by then, the damage is
Another citizen, who frequently visits Gaymont, was
``outraged that our tax dollars are being spent to fund these
power-hungry people who seem more interested in bullying quality
nursing homes than in finding and correcting real abuses.''
A physician wrote that there was indeed a real threat
existing at Gaymont. The danger is that ``the state is allowed
to have the power to disrupt people's lives like this, creating
havoc for all involved....More and more people work for
financially troubled government and must justify their `gravy'
jobs....They'll probably be raiding my office next because I
wrote this letter.''
Dotson felt that speaking out is risky. The general public
has been taught that those who protest about regulation must be
proponents of bad care. Still, he plans to file a complaint with
the state about the methods used by the surveyors.
``If I have the ability to keep any other facility from
going through this, I will do it....This isn't America.''
I hope we shall never be so totally lost to all sense
of the duties imposed upon us by the law of social union as, upon
any pretext of public service, to confiscate the goods of a
single unoffending citizen. Who but a tyrant...could think of
seizing on the property of men unaccused, unheard, untried...
Edmund Burke, Reflections on the Revolution in France
CLIA Impact Weighed by President's Council on
On July 30, practicing physicians representing a number of
organizations met with the staff of the President's Council on
Competitiveness, which is headed by Vice President Quayle, in
Washington, DC. The consensus was that the Clinical Laboratory
Improvement Act of 1988 will be a disaster for patient care. All
participants were in favor of further delays in implementation,
pending study of the impact, although AAPS made the only
unequivocal plea for repeal of the Act.
Several physicians made the point that preventing physicians
from performing certain tests was like taking away their
stethoscope. Many tests are personally performed by physicians
as an integral part of their specialty. Some tests, such as
vaginal wet mounts, simply cannot be referred elsewhere because
they must be done before the specimen dries. Others, such as
examination of spinal fluid, admit of no delay because of their
clinical implications. It would be ``immoral'' not to do such
tests, stated Dr. Robert Brodell of the American Academy of
``We will go ahead and do these tests,'' stated Dr. Richard
Jones, President of the American College of Obstetrics and
Dr. Gerald Keller, Vice President of the American Academy of
Family Practice, said many physicians would either do without
confirmatory tests or would say ``take me to jail or take me to
court and we'll fight it out.''
A hematologist stated that he would still look at his
patient's blood films. A nephrologist stated that he would
continue to look at urine specimens. ``I have yet to see a
laboratory report a red blood cell cast,'' he said.
Several physicians raised objections to the make-up of the
Clinical Laboratory Improvement Advisory Committee recently
appointed by HHS Secretary Louis Sullivan. Only one practicing
physician was appointed and ``one name after another...has a
conflict of interest,'' observed Dr. Jones. (Most appointees
were from pathology laboratories.
One major impact of CLIA will be to force physicians into
large groups, and to make it impossible for a physician to open a
solo practice in a rural area. Many dialysis centers that are
already struggling financially will be put out of business.
``I've heard from many doctors in rural areas that may do as
many as 50 different tests in their offices,'' said Dr. Keller.
``This means they will have to send in 750 analyses per year to
maintain the lab. The cost and extra work is prohibitive.''
Dr. Don Printz of Georgia brought a graphic demonstration of
the absurdity of the proficiency testing requirements: a positive
and a negative dermatophyte culture. ``HHS wants me to prove to
them, three times a year, that I can tell the difference between
red and orange.'' (Dr. Printz was recently elected to the AAPS
Board of Directors and also serves as Secretary-Treasurer of the
American Society of Dermatology.)
Besides the cost in dollars, CLIA will have a cost in lives,
stated Dr. Jane Orient, AAPS Executive Director. To continue to
perform screening laboratory tests, the Pima County Public Health
Department will have to divert $35,000 from other uses.
Candidates for funding cuts were the colposcopy clinic where
indigent women can obtain treatment for their abnormal Pap smears
or the salary of a public health nurse needed to help prevent the
spread of measles or drug-resistant tuberculosis.
Dr. Donald Lewers, who represented the AMA, stated that five
studies requested by the law have not been done, and that
implementation should be delayed until they are complete.
Sandra Mahkorn, MD, Associate Director of the President's
Council on Competitiveness, distributed a draft of a physician
questionnaire to determine the impact of CLIA on clinical
After the meeting, AAPS prepared the enclosed questionnaire.
If you are in active practice, please fill it out and return it
as soon as possible. Replies received by August 31 will be
tabulated and the results forwarded to the Council on Com-
Ohio Freedom in Medicine Seminar Planned
The Ohio State Medical Association, the Ohio Academy of
Family Physicians, the Ohio Osteopathic Association, the American
Medical Association, and AAPS will jointly offer a one-day
seminar at the Holiday Inn, 270 North, in Columbus, Ohio, on
Saturday, October 24.
Speakers include J. Patrick Rooney of Golden Rule Insurance
Co.; Robert Moffit of the Heritage Foundation; Edward Annis, MD,
Past AMA President; Lois Copeland, MD, and Trudy Drucker,
plaintiffs in Stewart v. Sullivan; Kent Masterson Brown, and
three leading medical students. A fee of $45 will be charged for
physicians not belonging to a sponsoring organization.
Registration is limited to 500. For more information, write Mr.
Herb Gillen, Executive Director, OSMA, 1500 Lake Shore Drive,
Columbus, OH 43204.
Annual Meeting Deadlines
Registrations must be sent to AAPS by September 1 to obtain
a $50 discount on the seminar fee.
Resolutions must be received by R.S. Jaggard, MD, of 10 E.
Charles St., Oelwein, IA 50662, by September 15, 1992.
Hotel reservations must be made by September 21. Call the
Airport Radisson, Seattle, at 206-244-6000 or 800-333-3333.
The answer to the crisis in medical care is simple: Put the
patient back in charge.
Terree Wasley shows how we got in our current situation and
points the way to a consumer-choice solution.
AAPS members who attended the 1990 annual meeting in
Scottsdale may remember Ms. Wasley. Those who responded to her
survey may find their comments in print.
What Has the Government Done to Our Health Care? by Terree
Wasley is available from the Cato Institute, 224 Second St. SE,
Washington, DC 20003 ($19.95 cloth or $10.95 paper).
50% May Be Guilty of Fraud
Medicare carriers state that up to 50% of all claims for
``E&M'' (evaluation and management services) have inadequate
documentation. More than half should be assigned a lower code,
according to Blue Cross/Blue Shield of Rhode Island, based on the
information in the chart (Part B News, July 20, 1992). While
``education'' is HCFA's current agenda, upcoding could be defined
as fraud and asset forfeiture could be invoked.
AAPS Files Response to Government Motion to Dismiss in New
On July 14, 1992, AAPS filed a brief in response to the
government's motion to dismiss the case of Stewart v. Sullivan
and asked for a summary judgment declaring that nonparticipating
physicians and their patients have a right to contract privately
for medical services without filing a claim for Medicare benefits
or disenrolling from Part B. The plaintiff physician, Lois J.
Copeland, MD, of Hillsdale, NJ, is a member of the AAPS Board of
Directors. The other plaintiffs are all patients over the age of
65 who wish to contract privately with Dr. Copeland, their
The government has argued that in order to be heard in
Court, Dr. Copeland must first violate Medicare's policy, then
exhaust all administrative appeals. AAPS maintains that such a
legal proposition would effectively preclude any physician from
challenging any Medicare policy because of the risk of
professional ruin, and thus prevent any court from addressing the
important legal issues in this case. AAPS relies heavily upon
the opinion in its previous case that challenged the 1984
Medicare fee freeze, Whitney v. Heckler, 780 F.2d 963 (11th Cir.
1986), which held that physicians are not required to choose
between complying with what they claim to be an illegal policy
and risking sanctions by violating the policy in order to obtain
In arguing that patients do not have the right to contract
privately for medical services on a case by case basis, the
government relies exclusively upon 42 U.S.C. §1395w-4, which was
enacted as part of the Omnibus Budget Reconciliation Act of 1989.
The plaintiffs' brief notes that such argument ignores other
salient provisions of the Medicare Act, e.g. §1395k, which
states: ``the benefits provided to an individual by the
insurance program established by this part...shall consist of
entitlement to have payment made to him or on his behalf....''
An entitlement is not a requirement to apply for benefits every
time a patient receives a medical service. The government's
construction also conflicts with U.S.C. §1395 a and b, which
guarantee freedom of choice of physician and the freedom to
purchase or otherwise secure protection against the cost of any
The government argues that its interpretation of the statute
is entitled to the deference due an administrative agency. AAPS
responds that deference is not warranted because the construction
placed on the Act by the Department of Justice flatly contradicts
an earlier position taken by the Secretary of Health and Human
Services. AAPS cites a letter from Gail Wilensky, former HCFA
Administrator, to the effect that the law does not require
submission of a Medicare claim ``in the rare event ... that a
patient, for his or her own reasons, and entirely independently,
chooses not to use Part B coverage.''
AAPS also maintains that HCFA's ``policy'' (requiring Part B
beneficiaries to disenroll from the program in order to contract
privately) is a violation of the Administrative Procedures Act
because it ignored the ``notice-and comment'' procedures required
for rulemaking pursuant to a substantive change in the law.
Finally, plaintiffs contend that their construction of the
Medicare Act must be accepted by the Court in order to avoid
serious constitutional questions. The government's policy is an
unconstitutional invasion of patients' privacy in sensitive
medical information. Furthermore, the Secretary's construction
of the statute would involve an unconstitutional delegation of
legislative power, in violation of Article I, Section 1 of the US
Constitution. The section (§1395w-4) that gives the Secretary
the authority to set the fees of physicians under the Resource-
Based Relative Value Scale totally precludes administrative or
judicial review. Essentially, there is no check on the
Secretary's exercise of delegated powers to set prices unless
physicians can opt out on a case-by-case basis by contracting
privately with their patients.
The government is expected to file a reply brief in the
coming weeks. Oral arguments will be held in the US District
Court in Newark, NJ, on September 14, 1992.
Briefs amicus curiae on the side of AAPS have been filed by
the American Medical Association and the Medical Society of New
Jersey; the Washington Legal Foundation; and the Florida Medical
Florida Physicians Petition US Supreme Court
Does the Florida Birth-Related Neurological Injury
Compensation Act (NICA), which imposes a ``status tax'' of $250
on all Florida-licensed physicians, violate the Equal Protection
Clause of the Fourteenth Amendment to the US Constitution?
This is the question presented to the US Supreme Court in a
petition submitted by the Florida Medical Association and AAPS.
The petitioners request a review of the federal issue involved in
the challenge to NICA, which was denied in a four-to-three
decision by the Supreme Court of Florida (see AAPS News,
Citing the dissenting opinion in the case of Coy v. NICA,
petitioners note that allowance of such discriminatory taxation
endorses the view that ``society can shift its more onerous tax
burdens exclusively onto those minorities or groups that lack a
sufficient voice in the state capitol.''
WV Balance Billing Ban Upheld
After 16 months, Judge Zaikab finally ruled that West
Virginia's ban on balance billing for patients covered under
state-supported insurance plans is not unconstitutional. In his
view, the ban does not constitute a tax and is ``rationally
related'' to the state's ``compelling'' interest in saving money.
The decision stated that ``any provider could avoid the
ban...by simply refusing to accept patients covered by the
state's plan.'' However, ``there is no evidence in the record of
this case that health care providers have ceased to treat state
health care beneficiaries to the extent of placing their health
and well-being in jeopardy.'' Further, there is ``no fundamental
right under either federal or state constitution that the state
supply any person with the physician of his or her choice.''
According to AAPS member Jerome Arnett, MD, the long-awaited
decision clears the way for plaintiffs, L.I.F.E. for West
Virginians Foundation, to seek review in the state supreme court.
(Dr. Arnett discussed the case at the 1991 annual meeting. Also
see AAPS News, June, 1991.)
AAPS welcomes Drs. David Beck of Westport, CT; Ronald E.
Cordell of Charleston, WV; Richard DeJournett of Honolulu, HI;
Allan G. Hanretta of Santa Barbara, CA; Richard S. Kerr of
Morgantown, WV; Lawrence A. Lefkowitz of Norwalk, CT; Mel
Margaris of Great Falls, MT; Jim Mendenhall of Great Falls, MT;
Frank R. Recker of Cincinnati, OH; David M. Rowland of Decatur,
GA; Dale M. Schaefer of Great Falls, MT; Frederick M. Steinberg
of Jonesboro, GA; Richard N. Taylor, Jr. of Lewistown, MT;
Randall K. Tozer of Scottsdale, AZ; and Stanley Weinstein of
Cate Brown and Ann Murray of Ohio are new student members.
Letters to the Editor
Government, to the applause of third-party payers, is hell-
bent on reducing us from a profession to a government-controlled
trade, and we physicians are busy greasing the skids for our own
Although we constantly complain about Medicare's poor fees
and general level of harassment, we continue to sign on as
``participating physicians'' in embarrassingly large numbers (in
my state of Alabama, 75%!) How can we expect anyone to take our
complaints seriously when we voluntarily sign up every year...?
And we shouldn't be surprised that third party ``private''
payers, seeing how much backbone we lack, are increasingly
deciding to join in the feeding frenzy of our once mighty
profession....The easiest first step upward toward regained
professionalism is to stop signing those Medicare participation
John H. Lary, Jr., MD, Huntsville, AL
Physicians are neglecting their home territory-the office
girl or office nurse. At the first opportunity they should be
taught the correct answers, and when an opening appears they
should step in and tell everyone about the faults of any type of
government medicine. Most of them unfortunately don't seem to do
this simple but effective thing.
E.A. Rittenhouse, MD, McKeesport, PA
I recently attended my undergraduate college reunion with my
lawyer, Kathleen Carlsson. Three clases each presented a panel
of speakers about various aspects of the ``crisis'' in medical
care. These leaders of medicine agreed, not surprisingly, on the
issues: access, cost containment and quality. There was much
bashing of rapacious malpractice attorneys....
Outcomes research was the answer to everything....
Outcomes research is to be welcomed because it provides hard
data which we can use to improve our practices; much of what we
do is probably nonsense. But these speakers welcomed it
not...because it will improve our best judgment and aid us in
reaching it, but precisely for the opposite reason, to relieve us
of the ethical and legal responsibility of doing so. Outcomes
research [the speakers thought] will dictate what third parties
will cover, and so will keep costs down,...and will protect us
from second-guessing by peer reviewers and the plaintiff's bar.
The speakers implied that critical thought, at least by
individual practitioners, did not extend to outcomes research,
which will have to be swallowed whole.
What I witnessed was nothing less than general agreement to
abandon intellectual and professional responsibility. And this
explains why no organization but AAPS supported my litigation and
a major one was almost hostile to it: they were working very hard
for the opposite end, namely, the deprofessionalization of
American medicine. Compromise and appeasement is their order of
How should a knowledgeable physician act if he is the first
to believe that standard practice is incorrect and would harm his
patient?...I put the dissenting physician question directly to
some half-dozen movers and shakers in the medical and legal
professions. No answer has been offered.
Robert Carlen, MD, Sayville, NY
Nominating Committee Report
The Nominating Committee offers the following slate of
officers for the election at the Seattle meeting:
President: Nino Camardese, MD, of Norwalk, OH
President-Elect: Charles McDowell, Jr., MD, Alpharetta, GA
Secretary: Donald Quinlan, MD, of Northbrook, IL
Treasurer: R. Lowell Campbell, MD, of Corsicana, TX
Directors: Claud A. Boyd, Jr., MD, of Augusta, GA; Curtis W.
Caine, MD, of Jackson, MS; Lois Copeland, MD, of Hillsdale,
NJ; Victor F. Duvall, MD, of Clarkson, KY; and Michael
Schlitt, MD, of Seattle, WA.
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 AlertAAPS Report from Washington
Medical Issues and the Presidential Contest. The silly
season has arrived in Washington. It will soon descend on every
village and town in America. While policy-making is winding down,
politics is heating up.
With a buoyant Democratic Convention send-off to Governor
Bill Clinton and Senator Al Gore, Republican strategists are
scrambling to find a campaign theme to rescue President Bush and
his Administration. Because Ross Perot, the Texas billiomnaire,
has dropped out, some Republican strategists think the chances
for Bush and Quayle have improved. The reason: with Perot out of
the race, they think they can hold onto the South. Others are not
so sure, pointing out that the Perot Phenomena represents a
passionate and deep-seated disgust with Washington and the
current crop of politicians, including Bush. And Bush is down 25
points in the polls; pretty deep. Clinton and Gore are both
making overtures to the Perot dissidents as the true champions of
change. It may work. While a well-run, nationally televised
political convention gives the challenger a sizable bounce in the
polls, and Clinton's bounce has been a solid one, Bush partisans
and Congressional Republicans, in particular, are deeply worried.
Folks on Capitol Hill smell the odor of defeat; it is the unmis-
takable scent of chaos and confusion. Veteran White House
watchers have smelled it before-in 1980, the last year of the
With consumer confidence falling and unemployment hitting
7.8%, amidst a Carteresque national ``malaise'' spiced with anger
among the electorate, Bush handlers are desperately trying to
figure out a battle plan.
The good news for President Bush is that several options are
available. The bad news for Bush is that they are as dangerous to
Bush as his Democratic opponents.
One strategy says, in effect, yes, we have problems, but we
really will, scout's honor, do a much better job next time if you
give just us a second chance (we'll cut spending, reduce
regulation, get Americans back to work, etc.) Besides, it can
get worse. Much worse. Pursuing this line will require Bush and
company to attack Clinton and Gore vigorously, making the
Democratic ticket the issue, marginalizing as much as possible
public discussion of the four years of Bush's stewardship of
domestic policy. The likely line of the White House counterattack
is easy to discern. Clinton and Gore say they are ``moderates,''
but...we all know better...The L-word will be employed.
Another option is to acknowledge the ``gridlock'' in Wash-
ington and train heavy political artillery on Congress. Racked
with scandals and governed by an entrenched old-boy network,
Congress's approval ratings are in the statistical basement. The
Democratic Conventioneers in New York seemed to have locked their
Congressional leadership in the closet, a point not lost on
commentators for ABC, NBC and CBS. Blaming the Congress for the
gridlock has precedents. President Harry Truman successfully did
this in his tough fight for the White House in 1948. Rich Bond,
Chairman of the Republican National Committee, argues that the
President is being boxed in by the Congressional leadership,
making him sign legislation for higher taxes, and bills with
large doses of government regulation, like the Clean Air Act and
the Americans with Disabilities Act.
On medical issues, Bush's Labor Secretary Lynn Martin has
ridden point, along with Secretary Sullivan, against the ``Play
or Pay'' approach endorsed by the Congressional leadership.
Governor Clinton routinely includes health care reform in
his top list of priorities, presumably to be tackled jointly with
Congress in the promised first 100 Days of a Clinton Ad-
ministration. He has endorsed the ``play or pay'' proposal,
although Rep. Barbara Kennelly (D-MA), a member of the House Ways
and Means Committee, says that ``play or pay'' is dead, as far as
she is concerned.
Senator Gore, on the other hand, during his first foray
under the hot lights of the media as the Vice Presidential
nominee, emphasized the need for national health care reform in
language that, at least superficially, sounded like a single-
payer national health insurance system.
Included in Gore's proposal was the idea that abortion
coverage should be part of any national health insurance reform.
This is the first time that any national political figure has
deliberately linked health care reform with the enormously
divisive abortion issue.
The political calculation is both obvious and dangerous. In
the aftermath of the Supreme Court's recent decision in Planned
Parenthood v. Casey (1992), which simultaneously reaffirmed Roe
v. Wade (1973) and upheld Pennsylvania's restrictions on
abortion, the Democratic team obviously feels that a strong
liberal position favoring easy access to abortion will help them
with the voters this year, including many members of the medical
profession. Meanwhile, watch liberals in Congress try to turn up
the heat. In the House, Congressional liberals are pushing the
``Freedom of Choice Act,'' which will restrict states'
interference with abortion. While even strong supporters of the
bill do not think they have the votes to make it law this year,
the bill is likely to become a political vehicle for the 1992
race for the White House. Over in the Senate, Sen. Orrin Hatch
(R-UT), ranking member of the Senate Committee on Labor and Human
Resources, one of the Senate's key health policy committees, is
expected to play a leading role in the Senate fight against the
bill, which he characterizes as guaranteeing ``abortion on
demand.'' According to Hatch, the bill goes much further than Roe
v. Wade, and there is enough opposition to sustain a
The House Democratic Agenda for ``Cost Containment.''
House Ways and Means Democrats have been circulating a draft
bill that would impose the Medicare payment system, in essence a
comprehensive ``global budget'' and price control regime, on
private medicine. That bill now has a number: H.R. 5502.
The highlights of the bill were outlined in the August
Legislative Alert. To recapituate, it includes: (1) a national
health budget to control medical spending in both the public and
the private sector; (2) promotion of HMOs, permitting them to
negotiate independent rates directly with doctors and hospitals
outside of the rules governing national payment rates; (3) a
system of national payment rates for doctors and hospitals, based
on the Medicare RVS and DRG methods; (4) a national anti-fraud
and abuse program, replete with stiff penalties.
The political strength of the effort is yet unclear. Even
though some House heavies are jumping behind it, the bill still
only has seven cosponsors-all Democrats. House Democratic leaders
are sure that they do not yet have the 218 votes necessary for
passage in the House of Representatives. But they are working on
it. Backed by Fortney ``Pete'' Stark (D-CA) and Richard Gephardt
(D-MO), the bill is designed to appeal to Members of Congress who
want ``cost containment.'' Gephardt has been working intensively
to round up support among House Democrats. Other House
heavyweights are backing the bill, including Henry Waxman (D-CA),
Chairman of the House Subcommittee on Health and the Environment,
and John Dingell (D-MI), the powerful Chairman of the House
Committee on Energy and Commerce. Waxman and Dingell had earlier
proposed a national health insurance bill, financed by a
combination of value added and payroll taxes and estimated to
cost $400 billion. According to a June 30th letter circulated on
the Hill by Congressmen Sander Levin (D-MI) and Ben Cardin (D-
MD), ``The cost containment in H.R. 5502 uses the methods that
have proven successful in the Medicare program to reign (sic.) in
runaway costs. These measures have been implemented over the last
ten years, have received bipartisan support, and were instituted
because the market-place for health care was not working.''
Opposition to the legislation among conservative Democrats
and House Republicans is strong and growing. The Conservative
Democratic Forum (CDF) has its own bill (see August Legislative
Alert), and the House Republican leadership has also introduced
an alternative of its own. Second thoughts are surfacing, even
among liberal Democrats, about the wisdom of a raw price control
strategy. In a thoughtful article in the Washington Post,
Congressman Ron Wyden (D-OR) asks why Congress could not combine
a market-oriented strategy with budget caps. Wyden's idea is to
start with a competitive market and have a budget cap kick in-if
and only if market forces fail to control costs. At the same
time, Congressman Bill Gradison (R-OH), ranking Republican on the
House Ways and Means Health Subcommittee, is cautioning his
colleagues about the wisdom of national or global health care
budgets, noting that such an approach assumes that government
somehow knows the right level of spending or the right pricing
for medical services. The problem: government doesn't. While
Gephardt and company wanted to bring the bill to the floor for a
vote before or after the national political conventions, chances
of doing so are fading.
The House Republican Alternative. Ever since President
Bush unveiled his ``Comprehensive Health Reform Program'' last
February 6, Congressional Republicans have been trying to forge a
health care reform alternative. The President's plan has been
sent to Capitol Hill in bits and pieces, including proposals to
extend the current 25% deductibility of health insurance premiums
for the self-employed and raise it to 100%; small group health
insurance market reform; reform of the claims processing system,
designed to simplify information and billing; and medical
Although it was supposed to be the centerpiece of the White
House effort, the President's tax credit proposal has not arrived
on Capitol Hill. The White House could be making a cold
calculation here, simply by defusing the issue while coming up
with an alternative. That serves a narrow political purpose. In
the political debate, right now, there are two groups: those with
a plan and those without a plan. Those without a plan are not
political losers; they are not even political players. By
chopping the President's plan up in bits and pieces, the
Administration is both making concrete proposals and allowing
Congressional allies to pick and choose from a health care reform
menu various items compatible with their particular tastes.
In the meantime, Bob Michel (R-IL) and Newt Gingrich (R-GA)
of the House Republican leadership have drafted a plan of their
own: H.R.5325. The key elements include the following:
- Medisave Accounts. The bill allows a business to con-
tribute to a tax free Medisave account either some or all of the
premium costs that an employer would otherwise incur for health
care coverage. The employee may use the funds in the account to
purchase medical or longterm care insurance or medical services.
The employee would be able to roll over the account from year to
year. The bill would impose a penalty for the withdrawl of funds
for non-medical purposes.
- Group Insurance Market Reform. The bill mandates that
insurance companies make at least a basic insurance plan
available to small businesses with preventive care benefits, as
well as more conventional insurance plan. It eliminates state
mandated benefits and pre-existing medical conditions as grounds
for exclusions from coverage, guarantees renewability and
assures continuity of coverage, establishes consumer protection
standards and limits premium increases. The bill also promotes
risk pooling, allowing small firms with up to 100 employees and
the self-employed to form groups to purchase cheaper health care
coverage. State laws restricting the development of managed care
programs are preempted.
- Medical Malpractice Reform. The proposal provides for a
new process of dispute resolution outside of court before
entering into litigation in the state court system; places a cap
on non-economic damages; allows for ``structured payments of
compensatory awards''; limits attorneys fees; reduces the time in
the statute of limitations; and eliminates joint and several
liability. Malpractice reforms are estimated to save $15 billion
per year, partially as a result of reducing ``defensive
- Expanded Practice Guidelines. The bill increases the
authorization of appropriations ($45 million over 3 years) for
development and dissemination of medical practice guidelines. The
bill would allow such practice guidelines to be used as a defense
in malpractice cases.
- Administrative Cost Savings. The bill authorizes the
Secretary of HHS to develop standard insurance claims forms and a
``data set'' for electronic transmission of coverage and billing
information. These standards would apply to doctors, hospitals
and insurance companies. Medical information and claims on
electronic billing cards would be identified by the patient's
social security number. Sponsors estimate that these
administrative changes would reduce costs by at least $25 billion
The bill does not include the expensive tax credits that
President Bush originally proposed last February to help the low-
income uninsured purchase health care coverage.