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Volume 55, No. 9 September 1999


The decision in United Seniors v. Shalala (98- 5142), handed down by the U.S. Court of Appeals for the D.C. Circuit on July 16, 1999, was hailed as a victory for Medicare patients in a lead editorial (Wall St J 7/29/99) and a syndicated column by Cal Thomas. But before physicians rush to contract privately with seniors, without opting out of Medicare, they need to read the actual decision (posted at www.aapsonline.org).

The broad question of whether seniors have the right to spend their own money for the medical treatment of their choice has yet to be adjudicated by any court, despite this case and its predecessors.

AAPS first litigated the issue in AAPS v. Weinberger, which challenged the Professional Standards Review Organization (PSRO). In 1975, U.S. Solicitor General Robert Bork wrote: "Patients whose medical care is provided by public funds have no constitutional right to whatever care [their physicians] using `the highest standards of medical practice'...may `judge necessary'...or to obtain that care "from a physician *** of their choice" (see AAPS News Jan 1998).

Here, the federal government asserted the power to regulate that which it funds. The next question: what if the government provides no part of the funding for a service?

Relevant but nondispositive cases include NY State Ophthalmologic Society v. Bowen and Stewart v. Sullivan (see index to AAPS News on our web site). A cogent analysis of the case law, the meaning of § 4507 of the Balanced Budget Act, and "HCFA's phantom policy on private contracting" is provided by John S. Hoff in an important new book, Medicare Private Contracting: Paternalism or Autonomy, available from the AEI Press (800-269-6267). (Mr. Hoff was also lead attorney on the brief filed by amici curiae in United Seniors.)

As amici in United Seniors observed, the right to autonomous decision making in obtaining medical care is "so fundamental that it has not been previously questioned, nor has it required articulation." Moreover, "the right to own property would have little meaning if one could be prohibited from using it." Unfortunately, the Court did not consider these issues, holding that:

Critical to our analysis is that the injury plaintiffs assert is to their ability to purchase services for which Medicare will not itself pay, thus rendering them unable to obtain those services on any terms.... Plaintiffs make clear at oral argument, however, that they disavow any claim to a constitutional right to pay their doctors more than the Medicare fee limits for services they can obtain through Medicare [emphasis added].

In other words, plaintiffs tested only the right to buy noncovered services: either those categorically excluded, such as cosmetic surgery or experimental treatments, or those denied because Medicare viewed them as unnecessary. For necessary or life-saving services, they, in effect, declared themselves ready to accept "any terms": presumably, even lengthy waits, outdated procedures, or second-rate surgeons, if these resulted from price controls or oppressive regulations.

The Court relied on the Secretary's interpretation of §4507: "The Secretary stresses...that section 4507...does not impose restrictions on agreements to provide services for which Medicare would not pay [emphasis in original]...."

The Court also accepted the defendant's reassurances that HCFA did not intend to sanction physicians who submitted Advanced Beneficiary Notices (ABNs) with claims for services denied because they did not meet "Medicare's particular and often unique coverage requirements." But Judges warned:

It should not be missed...that HCFA exempts from this note of encouragement those services not "in accordance with accepted standards of medical care....Needless to say, billing patients for unwarranted procedures may well be subject to sanction.

Plaintiffs asked the Court to declare §4507 unconstitutional. Mr. Hoff explains: although §4507 is "an exception to nothing" (there being no statutory prohibition on private contracting), physicians are "fearful of HCFA's pronouncements and potential enforcement" and hence will not contract privately unless they fall under the section's protection. The Court declined to rule on this issue:

We affirm the grant of summary judgment without reaching the constitutional questions because the Secretary's recently-clarified interpretation of section 4507, to which we must defer, eliminates the injury that is the basis of plaintiffs' constitutional attack.

In this case as in earlier ones, plaintiffs conceded the issue of private purchase of covered services at the market price. Thus, Judges did not have to reach constitutionality, which might come perilously close to Medicare itself. As the Court stated during oral argument: "It may be perfectly true that Medicare is unconstitutional. Okay? But that's not challenged...."

Mr. Hoff writes: "HCFA dodged and weaved to avoid a head-on attack on its policy. The benefit is that the assurances, given sporadically and informally, are now essentially adopted into law by the court decision. This does not prevent HCFA from changing its mind...or, as the court backhandedly recognizes, from prosecuting despite the assurances....The doctor could appeal, but that is not much comfort."

As the decision illustrates, Medicare is an entitlement, and an entitlement is not a right. Rather, it is a privileged claim on resources earned by someone else and controlled by the government. In HCFA's view, to exercise this claim (whether as a physician or a patient) one must renounce one's right to the liberty to use one's own property to sustain one's own life.

AAPS Members Take Action, Make News

Dr. Huntoon Greets Hillary in Jamestown. When Hillary Rodham Clinton came to town on her "listening tour," AAPS President-elect Lawrence Huntoon, M.D., decided to give her something to listen to. For two hours, he held up a 40x60 inch sign reading "AAPS v. Clinton. Pay Up. Go Home." He also distributed flyers about the AAPS lawsuit.

Only carefully selected persons were allowed to approach the First Lady (Buffalo News 8/5/99). Dr. Huntoon was among those herded into a distant cordoned-off area; police were not happy when he was stopped for media interviews along the way. He was also interviewed by the Secret Service.

"The Clintons are not people who have respect for the law," Dr. Huntoon said (Post-Journal 8/5/99). "It's clear from their record in office. I don't think people who don't have a basic respect for the law should be representing us."

Sabrin Supporters Cheer AAPS in New Jersey. Alieta Eck, M.D., who is campaign coordinator for Murray Sabrin's campaign in Somerset County, NJ, introduced AAPS to supporters as Sabrin announced his candidacy. Cheers for the group that sued over the illegal operations of Hillary Clinton's Health Care Task Force were deafening. Dr. Eck's letter concerning Sabrin's challenge to Gov. Christine Todd Whitman for the U.S. Senate was sent to AAPS News subscribers at the campaign's expense. AAPS does not release the mailing list; occasional PAC mailings on behalf of a candidate strongly supportive of freedom in medicine are sent from our Tucson mailing facility. More information about Professor Sabrin is available at www.murraysabrin.com.

SimpleCare Featured on NBC News. On Sunday, August 7, NBC News featured AAPS members Vern Cherewatenko, M.D., and David MacDonald, D.O. (who will speak at our annual meeting). The physicians advise patients to buy low-cost insurance for catastrophic illnesses, and let SimpleCare do the rest. (See AAPS News Aug 1999 and www.simplecare.com.)

Dean Rosen commented that the SimpleCare discounted charge of $35 is still higher than a $10 co-pay. "Huh?" said Greg Scandlen. "Did Rosen forget about the premium the patient pays to get the $10 co-pay?"

Dr. Garcia Makes House Calls. Tucson newspapers recently have featured mug shots and highly critical coverage of a number of physicians. But Hector Garcia, M.D., an AAPS member since 1975, broke the trend. Three full-color pages in the Tucson Citizen (8/4/99) were devoted to describing a day in the life of a real, non-HMO doctor. "Who are they?" he asks about managed care. "Your problems are my problems when you confide them in me." Dr. Garcia may retire at age 100.

AAPS Calls for Moratorium on Vaccine Mandates

In July, AAPS wrote to HHS Secretary Donna Shalala, requesting her to ask state health departments to place an immediate moratorium on mandatory vaccines:

"Although we recognize that vaccines, in the past, have prevented many serious illnesses, it is simply a fact that every insurance policy has a premium. Every medical intervention carries both risks and potential benefits. The risk:benefit calculation is different for each individual patient, and can only be made by the patient (or the patient's guardian) in consultation with the attending physician.

"It is the right of every patient to refuse a medical intervention, even if recommended by the attending physician, and it is the duty of the physician to advise according to his or her own best judgment. Informed consent is a prerequisite for ethical medical treatment (or for research), as is internationally recognized in the Nuremberg Code...."

AAPS also wrote to Harold Margolis, M.D., Chief, Hepatitis Branch, CDC, requesting details concerning the initial safety testing in children and ongoing studies on possible neurological and other complications of hepatitis B vaccine.

Methods used to implement universal hepatitis B vaccine in newborns are questionable. Burton Waisbren, M.D., states that vigorous peer review may have been circumvented by publishing "invited" articles from drug company-sponsored seminars in journal supplements. Also, CDC officials made personal visits to state boards of health, Dr. Waisbren states.

One potential method of persuasion is to tie federal welfare funding to immunization compliance.

All Kids Count, a Robert Wood Johnson Foundation project to establish immunization registries in every state, conceivably might play a role. The program emphasizes enrolling newborns, and hepatitis B is the only vaccine administered to newborns. "People really are seeing [registries] as the way to institutionalize immunizing our real young kids," stated William Watkins, executive director of the Decatur-based All Kids Count organization (BNA's HCPR 2/15/99).

AAPS testimony has sparked numerous inquiries (including many newspapers and radio stations in Connecticut, and school district officials in Philadelphia). And policy is beginning to change. All but two of Connecticut's birthing hospitals have suspended routine hepatitis B vaccines. A Virginia parent (who was notified of the vaccines his child received only after the fact) told AAPS that his state has also suspended hepatitis B vaccines in newborns of uninfected mothers. In a surprise statement by the Surgeon General-almost as a footnote in a larger announcement on halting the use of thimerosal as a vaccine preservative-federal policy now deems the vaccine appropriate at birth only if the mother is infected or of unknown status. "Federal officials did not acknowledge that recent criticism from Congress, parents, and doctors played any role in the policy change," wrote John Hanchette of Gannett News Service.

See www.house.gov/reform/hearings for testimony from the Aug. 3 hearing before the House Committee on Government Reform and Oversight, and www.aapsonline.org for the AAPS written statement distributed at the hearing.

AAPS Calendar

Oct. 13-16. 56th annual meeting, Coeur D'Alene, ID.
Oct. 25-28, 2000. 57th annual meeting, St. Louis.

What Is a Covered Service?

Now that the court decision in United Seniors augments HCFA's stated policy that noncovered or unnecessary services may be rendered at the price determined by mutual agreement of patient and physician, more questions arise.

What if a physician provides a service that he believes will be denied, files an ABN, and finds that Medicare "covers" the service, allowing $5.00 in reimbursement when the market value is $500? Presumably, all HCFA rules apply. Note that proposed Medicare reforms expand the coverage for screening or preventive services (e.g., the PSA, mentioned prominently in the case). Expanding coverage expands HCFA's power.

What about a service that would be noncovered by itself, but which HCFA insists on bundling with another service?

The unbundling of two covered services performed during the same encounter, such as acne surgery and lesion surgery or angioplasty and angiography, is the subject of the more than 1,000 secret "black box edits" scheduled to go into effect July 1 (Part B News 7/5/99). Reimbursement for claims containing these combinations is denied without explanation.

Billing the patient for a categorically noncovered service provided during the same encounter as a covered one may be cause not just for claim denial but for fraud prosecution. AAPS is aware of one eye surgeon who was threatened with criminal indictment for billing patients for cosmetic procedures performed along with an indicated covered procedure.

Then there is the Strub and Black Formal Mental Status Examination. Lawrence Huntoon, M.D., notes that there is no appropriate designation in the CPT manual for this lengthy procedure. Kathy Sheehan of Upstate Medicare informed him that "formal mental status examinations billed under procedure code 95999 as `stand alone' procedures are not covered." However, Pat Samson of Upstate Medicare told him that he was not allowed to bill for it privately: "Your assumption that this procedure is `non-covered' is inaccurate and Medicare would have jurisdiction over it and a claim should be filed using an evaluation and management procedure code."

HCFA Answers a Letter

On Sept 25, 1998, AAPS asked Nancy Ann Min DeParle a number of questions related to the 1997 E&M Documentation Guidelines. On July 19, 1999, we received a reply. Both are posted at www.aapsonline.org under "Correspondence."

Briefly, the 1997 guidelines were not withdrawn. And home visits to Medicare beneficiaries who do not meet the definition of homebound are not noncovered services. Codes are suggested and queries about them are referred to the AMA.

E&M Codes: The Demise of Value

Some historical gems from a detailed memorandum by Robert Nirschl, M.D., an orthopedic surgeon:

Until 1991, a relatively simple Medicare billing system was in place. Levels of evaluation and management (E&M) services required only 4 pages in the CPT manual. When the RBRVS was in place, HCFA-in collaboration with the AMA- introduced new, confusing guidelines taking 44 pages in the 1992 CPT code book. An expanding relationship developed between HCFA, the AMA, and the AMA CPT editorial panel. In 1997, the E&M codes became still more complex, now taking 54 pages. In spite of the resounding rejection of this approach by most physicians, the AMA and HCFA determined to press on. In Sept 1998, the AMA board asked the AMA CPT editorial panel to resume consultations with HCFA.

The original purpose of the medical record was to enhance patient care by providing reminders useful to attending physicians. In the medical liability era, the record became a legal document and the precedent of "if it wasn't documented, it wasn't done" was established. In the 1960s, with the expansion of health insurance, the record also became a billing document and for all practical purposes a public document.

Previously, physicians coded on a qualitative basis and probably undercoded more often than not. The E&M quantitative system defines safe harbors and thus a route for the legal expansion of services, with the probable result of increased billing for services of minimal medical value.

Dr. Nirschl concludes that regulation has harmed medical care and increased costs. Pending serious reform of a seriously flawed system, Dr. Nirschl advocates a return to a pre-1992 qualitative system for coding physician services.

Wisconsin Doctors Must Report All Visits to State

Wisconsin physicians who violate a recently passed statute requiring data on all out-patient visits to be submitted to the state may be imprisoned for 9 months, fined $10,000, or both. According to Jack Lockhart, M.D., President of the State Medical Society of Wisconsin, the Society shares many of the AAPS fears about government collection of patient data, "but given our political climate, repeal was never an option." The society also believes consumers may derive many benefits from a "thoughtfully crafted program." The Society negotiated a "revised" program allowing anonymous data to be collected.

"We do know from statements by state employees that they ultimately may seek to obtain much more information about patients than they will now get," writes Dr. Lockhart.

The Society argued to the legislature that physicians considered submission of patient-identifying data to violate their Hippocratic Oath. At least one prominent medical ethicist in Wisconsin supported this position. "However, in our working to improve this program we have never advocated, nor even suggested, to our members that they refuse to comply with the law," stated Dr. Lockhart.

Samuel Nigro, M.D., of Cleveland Heights, OH, writes that when he was a resident in psychiatry, the late Dr. Douglas Bond, Dean of Case Western Reserve School of Medicine, was subpoenaed to bring his records and testify at a court hearing. "He, of course, testified, carrying with him a folder with papers of the patient's medical record. They did not require him to turn over the record, because he protested such was a violation of confidentiality. He informed us that he would have turned it over to the court if that was the judge's ruling, but the folder contained nothing but blank pages."

"We have come a long way since the days when medicine was a profession," concludes Dr. Nigro. "Now it seems that everybody wants a ... piece of paper. That we have sunk so low is testimony to nothing but the outrageous leadership the profession has had during these past three decades."

"[L]aws are made for men of ordinary understanding and should therefore be construed by the ... rules of common sense; and their meaning is not to be sought for in metaphysical subtleties which may make anything mean everything or nothing at pleasure."
Thomas Jefferson, letter to William Johnson

Members' Page

On Nonparticipation. From a letter to Ms. Pat Samson, Support Specialist, Program Education & Training, Upstate Medicare: As for your assertion that "the only privilege" my nonparticipation status gives me is that I am not mandated to accept assignment from the Medicare program, you missed the mark by a wide margin. [This] status gives me the great privilege of knowing that I am not participating in a fraudulent, criminal, immoral program like the Medicare program (private citizens who conduct and promote such Ponzi schemes are thrown in jail), and that I work for my patients, not for the government. That knowledge allows me to sleep well at night and is thus worth far more to me than the "privilege" of not having to accept government money on each and every patient I see. I, along with many other physicians, see such acceptance as a liability in this age of HCFA "fraud" witch hunts.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


A Landmark Day. After having recently "opted out" of the Medicare system entirely, I experienced the thrill of treating my first Medicare patient by way of private contracting. I am an orthopedic surgeon. I provided a 45-minute, comprehensive office evaluation and consultation service, a joint injection, and prescriptions. The patient was quite pleased with the service and wrote out her check to me afterwards as if it was the most natural thing in the world....I am keeping a copy of the patient's check in my memorabilia file, as a symbol of freedom and a reminder that there are alternatives to government servitude. Never again will I feel agitated when rendering my services by thoughts of how unfairly the patient's "insurance" carrier (the government) will treat me after I send in the bill.

Direct, face-to-face dealings between patient and physician, both medical and financial, are the only way to salvage a medical system that has run amok under the influence of the third-party payment system. We have converted our office employee medical benefit plan to medical savings accounts. Why doesn't every physician? If physicians do not lead the way on MSAs, who will?
Alexander Sapega, M.D., King of Prussia, PA


Another Doctor Shrugs. I came to this continent three decades ago with the high hopes of youth, only to discover people who are "unaware that they are unaware," to quote Jim Davidson. Such people see the only and automatic solution, "the government should do something about it." Excluding AAPS, I have not found my colleagues to be an exception.

I am by choice and training a pediatrician, but after 20 years I realized I had three options: to continue sacrificing myself for my patients with little but hostility in return; to sacrifice my patients...; or to quit. I chose the last. I have doubled my income, with a fraction of the effort....

As to vaccines, I am personally convinced that vaccines are a tremendous accomplishment and are beneficial....There are risks and possible hazards in the use of vaccines, as is the case with all other actions that we may take. Every person or parent should carefully consider the risks and benefits prior to his free choice....Since statists cannot possibly allow this, dishonesty and disinformation inevitably result.
Jerry J. Krumlik, M.D., Yakima, WA


Medicare Appeals. From a letter to Georginia Aguilar, Medicare Hearing Officer, Transamerica Occidental Life Insurance Company, 3/9/99, concerning a 2-inch thick folder of pending denials and reviews dating as far back as 1/98:

I think you will agree that it is onerous for a doctor to have to constantly ask for hearings and reviews again and again because Transamerica loses records, constantly changes hearing officers, or simply ignores requests....The carrier Hearing Officer is not qualified to render decisions regarding medical necessity or level of documentation....I am therefore asking you to reopen the hearing. My documentation is more than adequate and is more detailed than any other oncologist's documentation that I have ever seen.
Linda W. Wilson, M.D., Culver City, CA


Never Opted In. When Medi-Cal started in California, I accepted eligible and registered patients only as private patients and treated Medi-Cal just as any other insurer. Patients paid at the time of the visit; I submitted the claims; when reimbursement came, I signed it over to the patient. The Sacramento bureaucracy cried foul. I said that by federal law, Medi-Cal had to be designed for the best interests of the patients and taxpayers, and that all parties were better served by my program than by the state's. It took about a month for them to initiate proceedings to "remove" me from a program that I had never joined. I told the judge I was discontinuing my pilot program, having made my point.
Thayer Smith, M.D., Downey, CA


Physicians Still Fear to Treat Pain Effectively. A physician who recently had his practice ruined after 25 years and excellent credentials said: "It will be a cold day in [the Inferno] before I am willing to extend myself to manage any of my patients who have chronic pain. Sadly, for the people of this county, there are few physicians still willing to treat chronic pain." The patients' problem is little better despite physicians realizing the importance of narcotics in intractable pain, because the regulators are just as destructive as before.
Robert Scovner, M.D., Frederick, MD

Legislative Alert

The State of the Debate on the Patient Bill of Rights

In the Senate. In September, the increasingly bitter Congressional fight on the patients' "bill of rights" begins all over again. As Members of Congress return home to their districts, this is the biggest piece of unfinished Congressional business.

The Senate has passed the Republican version, which provides a system of appeals for decisions made by managed care officials. The key difference from Democratic bill, championed by Edward Kennedy (D-MA), is that it does not change the ERISA law allowing patients to sue for injuries resulting from managed care decisions. The terms of the Democratic version of the bill would apply to all Americans covered by insurance, estimated to be 161 million. But the grievance and external review provisions of the Senate Republican bill would apply only to the 48 million Americans who are enrolled in self-insured plans covered under the ERISA laws. Calling the Senate Republican bill a sham, President Clinton has vowed to veto it.

The White House knows that the managed care mess is a good political issue, and it has the bonus of furthering the nonstop effort to expand federal regulatory control over American medicine. It must not be forgotten for a nanosecond that this has been the central White House interest since it launched its major-temporarily ill-fated-program for universal government control in 1993.

In the face of withering White House criticism, the Senate Republicans did mount an effective and united opposition to the Administration-backed bill. It s easy to understand why. Health policy is one of those areas where the iron law of unintended consequences goes berserk. There are now 43 million Americans who do not have medical insurance coverage. The Democratic bill would increase costs by about 6% ($72 billion over 5 years), according to the Congressional Budget Office (CBO). For every 1% increase in premiums, approximately 200,000 Americans lose their medical coverage. A related concern is the impact of mandates and litigation on employers and their willingness to offer medical coverage. This legislation promises literally an explosion of litigation. Lawyers would do a lot better than doctors under this bill. If they are going to be faced with yet another ream of costly mandates, or worse, if their plans are going to be subject to suits, or they themselves are subject to suits, they may very well drop coverage altogether. The Democratic bill would also duplicate what a lot of states are doing: 37 states, for example, have passed mandates for broader ob/gyn coverage, and a 2-day hospital stay for mastectomies is mandated in 19 states.

In the House. The House of Representatives, which was supposed to vote on its version of the legislation before the August recess, failed to do so. Speaker Dennis Hastert (R-IL) has been unable to forge a consensus because the leading doctors in the House-Reps. Greg Ganske (R-IA), Charles Norwood (R-GA), and Tom Coburn (R-OK)-have been dissatisfied with the leadership draft bill. Most recently, Norwood signalled his intent to forge a compromise bill with Rep. John Dingell (D-MI), one of the leading proponents of compulsory government health insurance. Rep. Dingell's negotiations with Tom Bliley (R-VA), chairman of the House Commerce Committee, failed because of Dingell's dissatisfaction with the Republican liability provisions.

The House Republican situation is unenviable. Unlike the Senate Republicans, who demonstrated remarkable political unity in the face of the floor challenges by Senator Ted Kennedy and others, the House Republicans have no such unity or partisan discipline. Recall that Speaker Hastert is working with a 5-vote partisan margin. Any defections among his troops spells political defeat. Rep. Coburn, an obstetrician, has said that the two big items for him are "an external appeals process with teeth," and the right of doctors, rather than insurance companies, to define "medical necessity." Without these two provisions, it s curtains for the House Leadership bill. Coburn has told the press he can bring 25 to 30 House Republicans with him. So, the revolt of the doctors has thrown the Republican leadership into a policy tailspin, as they are desperate to find some way to thread the legislative needle to avoid what many Capitol Hill observers see as a political disaster looming on the horizon. There are nine physicians and four dentists in the House of Representatives, and they are clearly driving the debate. One exception is Rep. Ernie Fletcher (R-KY), a family physician, who thinks his medical colleagues have been promoting wrong-headed legislation- chock full of government mandates and regulations-that will simply make the current situation worse.

A Fresh Start? In the waning hours of the Congressional session, Reps. Coburn and John Shadegg (R-AZ) announced yet another effort to forge a compromise measure. This would, in fact, be two companion bills. One would deal with the issue of patient protection in managed care. The other would focus on expanding choice and access, and dealing with the problems of the uninsured. In an August 6 statement to the press, Speaker Dennis Hastert announced his support for the proposal.

The key elements of the Coburn-Shadegg proposal are:

  • Medical professionals will make decisions about medical necessity. Any time that a patient is denied coverage, that patient will have access to a timely independent appeal. Doctors, not HMO officials, will have the final say.

  • Patients will have the right to choose their own doctor, whether or not that doctor is part of an HMO, and they will also have a right to access to the "nearest" emergency room when they are in need of care.

  • Patients will have a right to sue HMOs if they make decisions injurious to the patient.

  • Women and children will have a right to access to obstetricians and gynecologists without going through a "gatekeeper" first; and children will have access to pediatricians as primary care physicians.

  • Patients will have increased medical choices through expanded medical savings accounts and tax deductions.

Coburn and Shadegg are also proposing to help the uninsured through provisions not yet developed. (It is well known that Rep. Shadegg, like House Majority leader Dick Armey (R-TX), is a keen proponent of tax relief to folks who do not get health insurance through the place of work.)

An Intellectual Mess. This clearly describes the Congressional debate, regardless of one's opinion of specific provisions in the various versions of "patient protection" legislation. Consider the House Republicans. Their recent political turmoil is rooted in a fundamental confusion, demonstrable ever since 1994, and painfully evident in the vast federal regulatory expansions that they have enacted-against their stated antiregulatory agenda-with the Health Insurance Portability and Accountability act of 1996 (the Kassebaum-Kennedy bill) and the notorious Balanced Budget Act of 1997, a leftwing policy analyst s dream come true with its dramatic expansions of HCFA s authority. From the legislative record, quite distinct from their almost libertarian rhetoric on the subject, it is not at all clear what agenda they want to impose on Americans. Then, again, Americans themselves don t seem to register a consensus on the topic, except they know what they are emphatically against: the Clinton Plan and heartless HMOs. Consider also the situation in the Senate. The Senate "liberals" say they want doctors, rather than insurance administrators, to make the key decisions about what is "medically necessary" for patients: a perfectly reasonable, if unoriginal, idea, and an indication of precisely how crazy the current employer-based system has become. But Senate liberals also want the federal government to decide the kind and duration of certain medical treatments-such as mastectomies-that will be mandatory in private health insurance packages. So much for medical freedom.

And nothing beats Senate Republicans for a public paradox. These supposed champions of ancient wisdom and morality have ratified, if only in a backhanded parliamentary way, the "modern" position that third-party administrators should have priority in determining what medical treatments are necessary. Whether they realize it or not, they have put the Senate in a position of repudiating the central ethical tenets of the ancient Hippocratic Oath, which holds the patient-physician relationship to be primary and sacred. So much for traditional ethics. Both sides are clearly confused, at least on the policy issues. Both are looking to score political points. Both are demonstrating how fundamentally inept official Washington has become. And, of course, both are wrong. The Senate Democrats are exactly wrong if they think that American medicine will improve if we have more people suing each other, or if we impose yet another layer of costly and counterproductive regulation. The Senate Republicans have got it exactly wrong if they think that we can long maintain tax policy that favors a monopoly of employer-based health insurance.

Then there is the Clinton Administration. Masters of quick- change artistry. Faster than you can define the word "is," the Clinton team has managed to change sides with bravado -giving chutzpah a new meaning-on the matter of managed care. And nobody-especially the press-seems to be noticing. They are good; really, really good. Recall when managed care was the magic bullet of health care reformers in the early 1990s? Indeed, the Clinton Administration s major 1993 health care proposal-the very centerpiece of its domestic policy agenda-was designed to set up managed-care networks all over the country, and control costs by establishing fixed budgets. But with characteristic political aplomb, Clinton is jumping in front of the anti-managed care parade-and conceding in fact, if not in principle, that his central prescription for "health care delivery" was, well, perhaps not the best idea after all.

If the regulatory juggernaut continues in September, what Congress and the Clinton Administration will be doing is not reform. Rather, they will be locking both doctors and patients into a highly restrictive system. And the doctors, now so zealous about regulating insurance companies, will be simply negotiating the terms of their incarceration.

The chief effect of both approaches, Republican and Democratic, is to perpetuate a system in which access to medical insurance is tied to employment, with no patient choice of benefits, and no rational economic incentives. In a remarkable response to Rep. Tom Coburn's heartrending recitation of his own case of a pregnant young woman being denied coverage for an antiserum to protect her baby against the consequences of chicken pox virus, Karen Ignani, President of the American Association of Health Plans, the top trade association for managed care plans, said that while the HMO's refusal to pay for the injection may seem "heartless," the problem was "probably created by an employer s decision not to purchase that benefit" (The Washington Post 7/27/99).

Of course, the current economic incentives-encouraged by government policy-are crazy. In what other sector of the economy could professionals, as a class, be paid more money for rendering fewer services.

A Curious Exception. The Congress, as nobody in the press seems to have noticed, is exempting public insurance programs that they themselves run (Medicare and Medicaid) from the various patients' bill of rights requirements. For example, if Congress were to apply the provisions of S.6, backed by the Clinton Administration, Medicare patients would be able to sue the Medicare bureaucracy not simply for recovery of the cost of the benefit, but also for damages for injury from denials of Medicare coverage-and to take the damages right out of the personnel budget of the Medicare bureaucracy. Lots of Medicare claims are denied each year. It would be open season for the trial lawyers, Clinton's most dependable political allies. We re talking Fat of the Land here. Just curious.

Likewise, if Congress were to apply these bills to federal programs, medical necessity would be determined by doctors rather than federal officials or Medicare contractors. Many Medicare are denied for the very same reason that managed care companies deny claims. Senator Kennedy has not lost his cool on the Senate floor on that one. Moreover, if we were to speed review of claims denials, why should we tolerate the hundreds of days required for elderly patients to wade their way through Medicare s complicated appeals process?

Needed: A New Policy. The only answer to the current problems of cost and access and quality is to open up the system to real patient choice. Instead of suing, you should be able to fire your poorly performing insurance company, without punitive tax consequences.

This will only happen if Congress does away with the monopoly now enjoyed by employer-provided health insurance. If you don t like your health plan offered by your employer, Congress says tough luck. It is not forbidden to go outside of the employer s plan and buy an independent policy, but it is official U.S. policy to punish you for doing so. You can only buy such a policy with after-tax dollars, adding perhaps 35% to the cost of a premium. Worse, if you buy on the individual market, you also pay all of the administrative costs of the individual marketing of plans, which can be hideously expensive. Worse, if you live in a state like Maryland or California, you are cursed with state legislators who like to play doctor, and who enact all sorts of mandates.

Unless Congress makes fundamental changes to restore a free market in medical insurance, this debate will terminate only in some form of national health insurance.

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