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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 smaller plans.

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 secondary purpose."

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 of reform.

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 first place.

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 government coverage.

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 is hidden.

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 www.cchc-mn.org.

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 any time.

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, 8/5/98).

AAPS Calendar

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 AMA/HCFA contract.

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 the AMA.

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 crime.

"A Voyage to Brobdingnag," Gulliver's Travels by Jonathan Swift

Members' Page

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 of neurology.
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 bureaucratic whim.
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 Alert

Patchwork 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:

" It allows 100% tax deductibility for the self employed effective December 31, 1998, instead of a 10-year phase-in.

" 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.

" 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 practice.

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 Choice."

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 contracting, posthaste.

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 Heritage Foundation.

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