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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 54, No. 9 September 1998
The buzzword of Foundations, the AMA, and Congress is now
Accountability. Translation: litigation and prosecution and
endless counting, accounting, reporting, and auditing.
"The price for autonomy is accountability," writes Lee
Newcomer of United HealthCare (Health Affairs July/Aug
1998). Therefore, "Physician, measure thyself." Go to the record
room, dig out the records, and compare your performance with
approved standards, so that you can say "compliance with this
guideline (say an annual ophthalmologic examination for
diabetics) is approximately x%."
Autonomy, in the Newspeak sense, means subjugation- to a
truly independent and sovereign authority that sets the
guidelines and is above the law, accountable to no one.
The jurisdiction of the authority created by the Democratic
legislative proposals for a so-called Patients' Bill of Rights
would include all health insurers (not just the managed-care
entities supposedly targeted).
The authority is under no obligation to show the validity of
the guidelines or a positive cost-benefit; in fact, this could
not be done. It is recognized that "measures are in their
methodologic adolescence" and that "inaccuracy can creep into
performance measurements through every pore." Some of the most
obvious problems are insufficient sample sizes, inaccuracies in
data sets, and the presence of confounding factors that are
either understood but not adjusted for or not understood at all
(David Eddy, Health Affairs, op cit.)
The process is also quite costly. For HEDIS 3.0, the cost to
a plan ranged from $20,000 to $700,000 per measure
(ibid.). The cost will be disproportionately heavy for
Nevertheless, the Administration wants to implement the
methods, not study them. Proposed requirements for all plans
include an ongoing, internal "quality assurance and continuous
quality improvement program" that meets certain specifications
(Sec. 111, Daschle/Kennedy bill, S 1890). These requirements are
"deemed to be met" if the insurer is "accredited by a national
accreditation organization that the Secretary certifies...."
(perhaps the National Committee for Quality Assurance or NCQA,
the self-anointed guru of quality?)
All plans would have to "collect uniform quality data that
include a minimum uniform data set" in standard format, such as:
aggregate utilization, demographics, disease- and age-specific
mortality and morbidity rates, patient satisfaction, and quality
indicators and health outcomes (see Sec. 112).
All plans that use participating providers would have to
have a written process for selecting them and for "verification
of a health care provider's license and history of suspension or
revocation" (Sec. 113). Utilization review would be required,
which "may use outside agents and nonphysician
personnel" and shall use "written clinical review
criteria developed pursuant to the program with the input of
appropriate physicians" (Sec. 115). To set the standards and
oversee the whole process would be a reincarnation of the
National Health Board, Clinton's health care guardians, now
called the Health Care Quality Advisory Board, composed of the
Secretaries of HHS and Labor or their designees and 20 other
members appointed by the President (see Sec. 116 and also
Clinton's rejected Health Security Act of 1993). The Advisory
Board would "consult and cooperate with national health care
standard setting bodies which define quality indicators."
The Democratic proposal looks like a blueprint for an
enormously expanded public-private partnership, and although the
private partners are not named, the job description fits the AMA,
and AMAP, and the NCQA. The AMA has launched an enormous media
campaign, complete with slick paid ads and canned op-ed pieces,
to promote the act (without a whisper about Sections 111-116).
The AMA also opposes Republican versions (which lack these
sections) because they contain the "poison pills" of expanded
medical savings accounts and limitations on noneconomic damages
in malpractice cases. Such provisions would probably cause a
Presidential veto; they would also hinder the achievement of the
ultimate purpose of the legislation.
Three outcomes from the Clinton/Kennedy/Dingell/ Daschle
legislation appear inevitable: The enrichment and empowerment of
the private partners, including the AMA and trial lawyers (see p.
2); a fundamental change from private, patient-based medicine to
a population-based ethics and system; and clearing the field for
a total government takeover.
All of the measures involve a population, not the correct
diagnosis or optimal treatment of individual patients. A single
patient can in fact ruin a doctor's profile. And they are
intended to change, not merely measure, behavior.
As recognized by David Eddy of Duke University and Kaiser
Permanente, leader of the Information Systems Working Group in
the Clinton Health Care Task Force, "I cannot think of a more
powerful method for shifting health care resources than a
national set of performance measures would be. Someone may want
to promote a measure to stimulate plans to give priority to some
intervention, disease, or population. Though such a measure is
often cast as a desire to compare plans, this may in fact be its
Eddy also notes that plans bear the cost of the measures,
and each round will cause more of them to drop out, as the
performance bar is raised. Moreover, those plans which now simply
pay bills will have to change dramatically; all may be forced to
become like tightly-managed HMOs, as "by their very nature,
process measures micromanage."
As physicians become more accountable to plans and
government, their responsibility to patients is progressively
undermined, and the death of private medicine is at hand.
ERISA and the Lawyer's Right to Bill
One of the key features of the Democratic Bill of Rights,
strongly favored by the AMA and its new bedfellow (the American
Trial Lawyers Association), is the preemption of ERISA (see p.
S1). Although a right to sue physicians for unlimited damages is
not, in the AMA view, essential to patient protection, a similar
right against ERISA health plans is called an indispensable part
According to the Healthcare Leadership Council, ERISA -
contrary to popular belief and media soundbites-currently
protects plans only against actions in state courts involving
benefits coverage and administration of benefits. Since a 1995
case narrowed the application of ERISA, there have been 15
decisions in federal court holding that ERISA does not shield an
HMO from medical malpractice liability. Clinton's own Secretary
of Labor has filed amicus curiae briefs arguing that
ERISA does not preempt malpractice claims against HMOs.
Why is this provision so important to proponents of the
Democrat's Bill of Rights? Some believe that any payment decision
could incur malpractice liability, forcing plans to pay virtually
any claim. (There still could be just as many "negative wallet
biopsies" depending on the new number of uninsured.)
The big difference between claims denial by indemnity
insurers as compared with HMOs is the timing. The latter
generally issue denials prior to treatment rather than after the
fact. A denial is often accepted to mean that the patient can't
have the procedure. Indeed, that may be its practical effect as
the physician defies the plan at his own peril.
It is argued that medical necessity denials by plans
constitute the corporate practice of medicine. It can also be
argued that such practices, along with arrangements that
constitute the functional equivalent of fee-splitting, are
ipso facto illegal. Thus, subjecting plans to
malpractice liability may be analogous to making burglars liable
to tort claims for a botched second-story job, while making no
effort to enforce the law against committing burglary in the
Leaving aside philosophical differences, there is also a
dispute about the cost of preempting ERISA. The AMA claims that
this proposal would cost only "pennies per day." Malpractice
insurers state that the number of pennies would be quite large
and the main targets would be physicians, who can expect to be
named as codefendants in all cases.
In a report prepared for the Kaiser Family Foundation,
Coopers & Lybrand declined to produce a cost estimate for this
provision due to "the high level of uncertainty regarding
potential changes in practices." The Barents Group estimated that
litigation costs alone would increase the cost of the average
policy by 8.6% (Sen. Kay Bailey Hutchison, NY Times
7/21/98). The total cost of the Clinton/Kennedy/Dingell plan,
with its 359 separate federal mandates, could be a 23% increase
in premiums nationally, according to Milliman and Robertson.
Each 1% increase in premiums prices about 400,000 people out
of the insurance market. And every increase in the number of
uninsured translates into increased pressure for universal
The history of the Employment Retirement Income Security Act
of 1974 is worthy of note. At the time, it was an alternative to
Ted Kennedy's national health plan. ERISA did have the desired
effect of spurring a large increase in the number of employer-
sponsored plans. About 25 years later, we may again be choosing
between ERISA and government medicine, but this time the agenda
SimpleCare: Uninsured Patients in Demand
A group of physicians in Seattle, led by Vern Cherewatenko,
M.D., David MacDonald, D.O., and Nass Ordoubadi, M.D., is not
waiting for legislation or a rescuer on a white horse. They have
developed SimpleCare for the 20% of patients who are uninsured or
for those with high deductibles or MSAs.
Dr. Cherewatenko, a family physician, offers three types of
visits: short ($35), medium ($65), and long ($95). There are no
codes, and chart notes are of the old-fashioned type: terse and
limited to information that he needs to treat the patient. He
charges $50 for billing; almost all patients write a check before
they leave the office. Managed-care overhead was such that on
each $79 service, he lost $7. Now, for the same "short" (10
minute) visit, he nets $5 from a charge of only $35.
Others in the Seattle area are also offering SimpleCare. The
concept is easily modified to fit the physician's specialty and
practice situation. Under development is a program for physicians
to donate time to care for the poor, who then provide volunteer
services to member organizations.
An Electronic Bill of Rights?
U.S. Supreme Court Justice William O. Douglas wrote in 1966,
"Once electronic surveillance...is added to the techniques of
snooping that this sophisticated age has developed, we face the
stark reality that the walls of privacy have broken down and all
the tools of the police state are handed over to our
bureaucracy." Testifying at the Chicago public hearings held by
the National Committee on Vital and Health Statistics (NCVHS),
Twila Brase, R.N., stated that Justice Douglas was a little ahead
of his time. Her first recommendation was that there should be
no government-issued unique patient identifier
(for complete testimony, see
Robert Gellman, Chair of the Subcommittee on Privacy of the
NCVHS, stated that once government-issued health identification
cards are needed, Americans may be forced to produce the card at
Rep. Ron Paul, M.D. (R-TX) introduced HR 4217 to repeal the
law authorizing the equivalent of a national ID card. Rep. Steve
Chabot (R-OH) proposed an amendment to HR 4274, an appropriations
bill, to defund programs that might serve to provide a standard
for a national identifier.
Now that public concern has been aroused, Vice President Al
Gore is advocating an Electronic Bill of Rights to penalize
unauthorized disclosures. However, he said nothing about
repealing unique identifiers, requiring consent to have
information entered into a data base, removing information on
children already entered without parental consent, or permitting
strong encryption without government access to the key. Some see
Gore's position as purely cynical; he once championed the
"Clipper chip," a government peephole into your computer.
"Clinton and Gore have done for privacy what Sherman did for
Atlanta," stated Dave Banisar, an attorney at the Electronic
Privacy Information Center (Declan McCullagh, Netly News,
Sept. 21. AAPS Arizona chapter, MSA meeting, Phoenix.
Oct. 9-11. 55th annual meeting, Raleigh, NC
Oct. 12-16, 1999. 56th annual meeting, Coeur D'Alene, ID
AAPS Files Motion in Sunbeam Case
On July 28, AAPS filed a motion for leave to intervene, a
motion to rescind confidentiality, and a motion for preservation
of discovery materials in the case of Sunbeam Products versus
the American Medical Association. The motion was filed on
behalf of its AMA and non-AMA members as well as AAPS itself as a
publisher of medical news and an organization likely to be
affected by the outcome of the litigation.
In the brief supporting the motions, AAPS General Counsel
Andrew Schlafly argued that the Association has criticized, and
may bring a legal proceeding to challenge, an exclusive licensing
contract between the AMA and the Health Care Financing
Administration ("HCFA") that is analogous in legal respects to
the exclusive licensing contract between the parties in this
case. Discovery here will likely be relevant to litigation
concerning the validity of the AMA/HCFA contract.
The AMA has argued that the AMA/Sunbeam exclusive licensing
contract should be voided as contrary to public policy, and
discovery materials (including admissions) relating to that
defense are relevant to AAPS s policy arguments against the
AMA/HCFA contract. AAPS also has a direct interest to avoid a
precedent in this case that will adversely affect its rights in a
case concerning the AMA/HCFA contract.
All physicians are affected by the AMA's actions because the
AMA claims to speak for the entire profession and to be "the
acknowledged leader in setting standards for medical ethics,
practice, and education." Indeed, its annual revenue of $200
million per year is based largely on this assertion. About two-
thirds of the AMA's revenue is derived from sources other than
membership dues, in spite of the AMA s claimed non-profit status.
Based upon information and belief, the full dues-paying
membership in the AMA is less than the 275,000 physicians stated
in the AMA s Answer in the instant case, and constitutes only a
fraction of the physicians at large. Yet because of its self
representations and its government-granted monopoly over a
mandatory billing system imposed on all physicians, the AMA owes
a fiduciary duty to all physicians.
Mr. Schlafly argues that the protective order sought and
obtained by the AMA is an effort by AMA officers to keep
important information from its members and all physicians. The
AMA has previously entered into concealed business transactions
with HCFA and others at physicians' expense. The outrage
expressed over the AMA/ Sunbeam contract was, in fact, less than
the anger recently expressed by physicians over the proposed
Evaluation & Management Documentation Guidelines based on the
Mr. Schlafly states, upon information and belief, that
substantial sums were paid and are continuing to be paid to the
AMA officers involved in the transaction with Sunbeam, that AMA
officers have advanced their own financial interests in a manner
contrary to the interests of the physicians they purport to
represent, and that such information is likely to be contained in
the discovery materials.
On February 25, 1998, the Court entered a Stipulated
Protective Order Governing Confidentiality ("Confidentiality
Order"), which allows the AMA to conceal its compensation
arrangements with the officers involved in the transaction, as
well as the testimony of its officers about the responsibility of
current AMA executives for the breach of duty. This
Confidentiality Order allows and requires destruction of
discovery materials upon settlement despite the substantial
public interest in such materials and the likelihood of a cause
of action by physicians for breach of fiduciary duty.
As the Northern District of Illinois recently reiterated,
"pretrial discovery must take place in the public unless
compelling reasons exist for denying the public access to the
proceeding." There is no justification for this Confidentiality
Order, which was entered without any notice or opportunity to be
heard by AAPS, physicians, the media, or the public. Just as a
government official has no legitimate interest in concealing
wrongdoing from the public, the AMA officers have no legitimate
interest in denying access by its own members and other
physicians to these materials. There is an important public
interest at stake here.
Closure of judicial records is appropriate only where a
compelling governmental interest exists, only where it is likely
to be effective in preserving against the perceived harm, and
only after considering less restrictive alternatives. Such
justifications are plainly lacking here.
The AMA, as a non-profit organization purportedly dedicated
to the public interest, would benefit from widespread disclosure
about the activities and wrongdoings of its officers, so that
meaningful reform is possible. Indeed, the AMA publicly announced
that it "will make a full disclosure of the Sunbeam agreement
investigation" (AMA Press Release of December 7, 1997). The AMA
even stated that 64% of its members felt that the AMA s promise
to disclose such information "considerably improves [the]
opinion" of these doctors about the AMA. "When doctors learn
about the steps the AMA Board has taken, their approval
immediately goes up with a bang," said President-Elect Reardon of
On July 31, the AMA announced that it would pay Sunbeam
about $10 million to settle the dispute; Sunbeam would not
comment. "This chapter in the life of the AMA is closed, once and
for all," asserted AMA board chairman Randolph Smoak, M.D.
The AAPS motion is to be heard August 12. A full copy can be
obtained at http://www.primenet.com/~snavely. (All recent
documents, including comments on regulations implementing
identifier numbers, are posted here because of technical problems
with our main web site.)
BLUEprint for Fraud
Suspicions that Medicare carriers shred claims, delete
electronic claims en masse, shut down the phone lines during peak
hours, manipulate files and file false reports to cover up their
misdeeds (see letters by AAPS Director Lawrence Huntoon, M.D.)
are all true. Blue Cross Blue Shield of Illinois will pay $144
million to settle allegations that managers lied to auditors,
destroyed documents, and mishandled claims. Medicare carrier
executives got $1.4 million in "bonuses and incentives" for such
actions. This came to light only because a clerk refused to shred
10,000 unprocessed Medicare claims (AM News 8/3/98).
Note that HCFA trusts such carriers to do their own Annual
Carrier Evaluation Report and to hire investigators to check on
the alleged crimes of physicians.
No law of that country must exceed in words the number
of letters in their alphabet, which consists in two-and-twenty.
But indeed few of them extend even to that length. They are
expressed in the most plain and simple terms, wherein those
people are not mercurial enough to discover above one
interpretation; and to write a comment upon any law is a capital
"A Voyage to Brobdingnag," Gulliver's Travels by
Focused Bureaucrat Review. To Mr. Preston Lowen, HCFA
Representative: My office is conducting a Focused Bureaucrat
Review to determine whether the services that you provided during
the past year, which were paid for with tax dollars, were
necessary; and if so, whether they were performed in a timely and
competent fashion. We cannot complete this review without the
information listed below. Please provide your written responses
within FIFTEEN days. Should you fail to respond, we will assume
that the services you provided were not really necessary and will
lobby Congress to eliminate your position or withhold your pay.
Also please submit full documentation to demonstrate the medical
director's qualifications to perform medical reviews in my field
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
Political Arena Improvement Act (PLIA). When will we
get a minute-by-minute accounting of every conversation our
Senators and Representatives have with constituents, colleagues,
and lobbyists? Anyone who thinks that damage caused by mistakes
in an office laboratory, that the CLIA is supposed to correct, is
worse than the damage caused by powerful special interests and
corruption in government is seriously misinformed. I have learned
through harsh experience that government is made up of the same
flawed bamboozlers as you'd find anywhere, differing only in the
tremendous power they have over ordinary mortals. After all I
invested in mastering my profession, I live in fear that the
Health Gestapo could ruin my life at any time. How can I think
about my patients when I have to be counting minutes and body
parts? I have taken to coding everything at the lowest level, and
will be a very poor old lady at this rate. People don't realize
that their "protector"-the government-is a pitiless social
machine that views them as so much pre-ground hamburger.
Tamzin A. Rosenwasser, M.D., Sarasota, FL
Waste and Abuse. After spending four hours in a records
room on my day off signing orders and endless papers that have no
meaning to me or my patients, I asked why I was doing this.
Administration told me that it was a HCFA requirement for me to
sign everything personally. My position has always been that a
single signature on the front of a very small chart, devoid of
these pseudo-legal papers, should suffice. This would save an
average of six working days a year, now totally wasted because of
Howard H. Johnston, M.D., Phoenix, AZ
Foundations. Congressman Reece was squarely on target in
his characterization of tax-exempt foundations as being far left
(pamphlet # 1061, July, 1998). A superb example of that left-wing
influence was the role of a foundation in dismembering an
outstanding conservative department of economics at the
University of Virginia in the 1960s (see W Breit, Economic
Inquiry, Oct., 1987). Academic freedom succumbed under the
leftist foundation influence, forcing future Nobelists James
Buchanan and Ronald Coase to depart to George Mason University
and the University of Chicago, respectively.
Tax-exempt foundations are far too important for
conservatives to leave to the left.
Lawrence Cranberg, Ph.D., Austin, TX
On the Impairment of Contracts in public-private
partnerships: As Alexander Hamilton said, "It is in theory
impossible to reconcile the idea of a promise which obliges, with
a power to make a law that can vary the effect of it" (Boston
University Law Review 14:517, 1934).
Charles Courtney, Riverside, IL
Saying No to Insurance. Since I opened my practice in
1996, I have accepted neither traditional insurance nor managed
care. We are getting busier every day. I am hopeful for the
future of medicine and am happy to see that the fall of HMOs is
happening much sooner than predicted.
Shelley C. Giebel, M.D., Temple, TX
Empowerment. The most common cause of disagreement
between physicians and Medicare concerns the definition of
medical necessity. Every visit involves the choice: think first
of the patient, or of the system. Seldom can the two needs be met
simultaneously. Opting out allows the physician to place patient
care ahead of the federal regulation. It empowers him to practice
medicine once again.
Robert G. Schwartz, M.D., Greenville, SC
excerpted from Health Freedom Watch, May/June 1998
On the Power of Language. Jerry Rubin, one of the
Chicago Seven, said: "The power to define the situation is the
ultimate power." This explains how managed care is covertly
seeping into physicians' minds and spirits.
A rose may smell as sweet when called by another name,
because the rose is not affected by what people call it. However,
language profoundly affects how people think about themselves and
others. The term "provider" does not even imply that one is a
human being. It does imply that one provider is equivalent to and
interchangeable with any other provider, and is an insensate
object to be manipulated and used.
Do not allow yourself to be called a "provider."
Karen Shore, Ph.D.
excerpted from speech to American Psychological Assoc.
Legislative AlertPatchwork Policy Making.
After the August recess, the House and Senate will have to
complete and reconcile different versions of their "patient s
rights" bills. The House version, enacted by a vote of 216 to
210, adds another layer of federal regulation on HMOs-
establishing grievance procedures for patients and fines for
misbehaving HMO bureaucrats. But it conspicuously fails to do
anything meaningful to reform the tax treatment of health
insurance. Until Congress tackles the federal tax code, it
will continue to try to compensate for a distorted market by
adding layers of regulations to dramatize to a numb and
frustrated public that their intentions are good. Good intentions
in this area, as we know all too well, are deadly.
Nonetheless, while the House Republican Congressional
measure has little to commend it, as it sets up government-
sponsored grievance procedures in place of real consumer choice,
Congressional conservatives deem it superior to Congressman John
Dingell s substitute measure that lost narrowly during the July
debates by a floor vote of 212 to 217.
The key feature of the Democratic Plan was to preempt the
ERISA preemption of state laws that establish a right to sue
insurance plans for malpractice and punitive damages. Health
policy analysts know that it is a hop skip and a jump from suing
the agent, in this case the insurance company, to suing the
principal, the employer who owns the insurance policy and sets
down conditions of coverage. Industry may have breathed a sigh of
relief. But the lawyers and their allies in the White House and
Congress will be back.
We have arrived at what has become a Congressional
Republican refrain on health care policy: it could have been
worse. So much for the Vision Thing.
The Senate Bill: Some Good Stuff
Like the House bill, the Senate bill-called the "Patient
Access, Quality, Choice and Trust Act"-fails to initiate a
serious overhaul of the tax treatment of health insurance. But
some provisions are OK:
À"À It allows 100% tax deductibility for the self employed
effective December 31, 1998, instead of a 10-year phase-in.
À"À It allows a person to carry over unused amounts of money
deposited in a tax-free Flexible Spending Account from year
to year. The money could be deposited in an MSA, a 401K or
IRA plan. The limit is $500-not much, but it s a start.
Millions of Americans are covered under cafeteria plans.
À"À It lifts the cap on Medical Savings Accounts. It eliminates
the 750,000 cap and allows lower deductibles-$1000 for
individual coverage and $2000 for family coverage. The bill
also allows the Federal Employees Health Benefit Plan to
offer MSAs, and would allow the contribution limit to equal
100% of the annual deductible.
Restraining, Guiding, and Directing
The Senate Republican "Patients' Bill of Rights" includes an
amendment to ERISA law, mainly in the form of federal mandates,
to require that: self-insured corporate plans must guarantee
access to emergency care, using the "prudent layperson" standard
for coverage of benefits; group plans must provide the option of
purchasing point-of-service coverage; group plans must also
provide patients access to ob-gyn services without going through
a "gatekeeper"; "gag rules" are prohibited. The predominant
theme, of course, is regulatory. The language of the bill is
chock full of requirements and prohibitions, and not as much
allowances and permissions.
Under the Senate bill, ERISA plans are also required to give
enrollees information, including covered items, cost-sharing
features, optional supplemental benefits, and restrictions on
payments to doctors who do not participate; coverage outside the
normally covered geographical area; the extent of patient choice
of "primary care"; procedures for pre-authorization, advance
directives, organ donations, appeals and grievances; methods of
paying physicians, reviewing and measuring utilization;
exclusions; and drug formularies.
Like the House bill, the Senate bill sets up highly detailed
grievance and internal and external review procedures. When you
have no real consumer choice, consumers can go grieve-through the
proper federal channels of course.
Title II of the Senate bill deals with patient rights to
medical records. It requires doctors, employers, and health plan
administrators to make health records available to a person at
that person s request-unless such access would endanger that
person s life or physical safety. It also allows a person to
amend his records, and provides certain circumstances when the
plan or other such entity can refuse an amendment. It also
requires the plan and other entities to "post notice" of their
"confidentiality practices," while mandating that plans and
employers and other entities establish "appropriate safeguards"
for the protection of the confidentiality of the medical records.
Curiously, the Senate bill does not require express written
consent for the transmittal or release of medical records.
This would, of course, provide real privacy protection, a measure
broadly supported among civil libertarians, conservatives, and
liberals. But it s not in the Senate bill.
Just What We Need
Title II of the Senate Bill establishes a new federal
agency -the Agency for Health Care Quality Research (AHCQR).
Senate Republicans describe it as the potential "hub and driving
force of federal efforts to improve quality of health care in all
practice environments," including solo private practice. The
agency is to be modeled after the existing Agency for Health Care
Policy and Research (AHCPR), another one of the baronies of the
HHS Empire which Congressional Republicans were considering for
abolition in 1995. Under the terms of the Senate bill, the new
agency will be just another helpful federal bureau: promoting
health care quality by sharing information; share "true quality
measures"; report to Congress annually on "the state of the
quality" in the nation; "aggressively support state-of-the-art
information systems for health care quality"; "facilitate
innovation in patient care" and "coordinate quality improvement
efforts to avoid wasteful duplication." Senate sponsors insist
that their new agency will be simply a federal research agency
and will not-they tell us in bold letters-mandate "national
standards of clinical practice." Sure.
Assuming their best intentions, Senate sponsors must still
know that the creation of a federal agency is a risky enterprise.
It is but a short step from agency "recommendations," based on
the "best" research, to agency "guidelines," to some sort of
federal "certification" that plans meet such standards in order
to qualify for ERISA status, or to offer private options in the
Federal Employees Health Benefits Program, to using "guidelines"
for private options in a reformed Medicare system. And, of
course, liberals in Congress, once they have such a regulatory
weapon built, will not hesitate to boost its firepower. It s not
hard to imagine. A quality problem is spotlighted; there s a big
Congressional hearing, lots of press. Liberals demand that this
agency that just sits around collecting information do
something-like establishing federal standards for clinical
Negotiating From Strength?
The simple fact that the Democratic Plan lost so narrowly in
the House is another brutal indication of the weakness of the
Republican position. Since the defeat of the Clinton Health Plan
in 1994, the Clinton Administration, demonstrating an admirable
political resourcefulness, has regrouped from its big setback and
seized the political offensive, staking out bits and pieces of
territory to be invaded by discrete regulatory measures, moving
carefully to impose, step by step, the regulatory regime it could
not jam through the Congress, despite huge Democratic majorities,
in 1993 and 1994. To borrow an historical analogy, it s as if
Confederate General George Pickett, suffering massive casualties
in Robert E. Lee s bold gamble to break the center of the Union
line with a frontal assault at Gettysburg, fell back, quickly
regrouped, and immediately initiated a bold series of flanking
actions crushing his enemy in detail, and gaining large chunks of
ground against a dumbfounded Union army whose officers mistakenly
thought that they turned back the big assault and had just "won"
the big battle. The reverse happened at Gettysburg, of course.
But the fanciful analogy is worth pondering.
Look at the evidence: Kidcare and Medicaid expansion;
mandates and managed-care regulation; proposed Medicare expansion
(temporarily stymied); unprecedented statutory limits on private
contracting in Medicare; Clinton-style fines, penalties, and jail
terms in the Kennedy-Kassebaum bill; the groundwork for a huge
national data base and a patient identifier; unprecedented
regulation of the private health insurance market in Kennedy
Kassebaum; expansions of the regulatory authority of HCFA over
"private"-government- standardized-health insurance options in
the Balanced Budget Act of 1997 under the guise of "Medicare
What s the lesson to be learned from all of this? You can t
battle a long-term, comprehensive programmatic vision, geared to
fundamental structural change, with a short-term pragmatic,
piecemeal approach tailored just to get you past the next
election. The Vision Thing wins every time.
Perhaps even more surprising politically has been the
ability of the Clinton Administration to restore public
confidence in its approach to health care policy. The President
and his team were once thought to be irretrievably lost in the
wake of their Rube Goldberg scheme to micromanage every nook and
cranny of the health care system. Right back from his trip to Red
China, Clinton renewed his offensive on health care policy.
Running out of time, and feeling themselves vulnerable on the
issue, Congressional leaders have intensified their own efforts
to pass their own legislation. A Time CNN Poll released
on June 5, 1998, revealed that four out of ten Americans think
the health care system is in a "crisis" and three out of four
Americans believe that health care reform should be a top
priority for Congress. But the real zinger was the revelation
that 46% of American polled think that the President is more
trustworthy than Congress in dealing with health care policy.
Recall that this is a President whose major contribution to the
1994 Congressional elections was the singular ability to get
House and Senate Democrats to run from his health care plan, and
to encourage Republican Congressional challengers to run against
it. This recent turnaround for the White House on health policy
is a remarkable political achievement.
Congress, in accommodating the regulatory animus of the
White House, is also undermining its own base. While Clinton
plays to his base, Congress plays against its own. Prominent
publisher Steve Forbes, a likely Presidential candidate, is
attacking the Congressional initiatives. Forbes, recently joined
by conservative groups, complains that the bills contain too much
regulation and do not empower the patient. His alternative is to
scrap all of the regulations that undermine the Medical Savings
Accounts and repeal Section 4507, which limits Medicare private
The Big Picture
Every concession to every White House regulatory initiative
gets Republicans in an ever deeper policy quagmire. Left-wing
policy analysts clearly understand that their regulatory route
is just a long march toward Canada s health care system.
Robert Kuttner, co-editor of the American Prospect, a
prominent liberal journal, has said as much in his article
"Toward Universal Coverage" (Wash Post 7/14/98: "Current
regulatory policy toward HMOs mirrors the patchwork nature of the
health insurance system. Most states now prohibit health plans
from denying a new mother two days in the hospital; they require
HMOs to pay for reasonable emergency room care and inpatient
mastectomies. But it is just not practical to regulate health
care one condition a time."
The Obvious Answer, says Kuttner, is "to have universal
health insurance. All insurance is a kind of cross subsidy. The
young, who on average need little care, subsidize the old. The
well subsidize the sick. With a universal system, there is no
private insurance industry spending billions of dollars trying to
target the well and avoid the sick, because everyone is in the
same system. There is no worry about `portability' when you
change jobs, because everyone is in the same system. And there
are no problems choosing your preferred doctor or hospital,
because everyone is in the same system. There s a common theme
here." Kuttner is right about that: No Escape.
"It is ironic, to say the least," writes Kuttner, "that our
desire to keep health insurance in the private sector led to less
patient choice, more gaps in coverage, more clinical interference
by private bureaucrats and a backlash of (mostly ineffectual)
government regulation. At some point, one hopes soon, this system
will collapse of its own weight and universal health insurance
will be back on the national agenda."
It's the old overripe fruit thing. Just give the "stupid
capitalists" the red tape to hang themselves.
Congress might yet get serious about real consumer choice
and real competition. They can bet that Americans would rather
choose their own health plans, rather than go through some
federally sponsored grievance process. Otherwise, they too, along
with the rest of us, could lose their private insurance plans and
end up in The Same System.
Robert Moffit is Director of Domestic Policy at the
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