AAPS News – June 2000

Volume 56, No. 6 June 2000

CLINTON CARE IN MIAMI

Essential tools of Clinton-style health care were on display
in Miami on Passover and Good Friday, at the home of Lazaro
Gonzalez: assault rifles, flak jackets, battering rams, a large
contingent of troops, duplicitous “negotiators,” and a phalanx of
lawyers and cooperative “health care providers.”

The “rule of law” is similarly enforced in physicians’
offices throughout the country: featuring “dynamic entries,” with
patients, staff, and even children held at gunpoint.

In such operations of the Clinton Department of “Justice,”
there is a veneer of legitimacy conferred by a judicial officer
who issues a search warrant. Enforcers may interpret that as
carte blanche to terrorize persons, damage property, and take
anything they wish-with impunity. In Elian’s case, no
court had issued the type of warrant legally required to break
into a home and seize a child, according to Harvard professor
Laurence Tribe (www.newsmax.com
).

Harsh, unlawful means may be justified by the supposedly
well-intentioned end: the noble, indeed “transcendent” goal of
health, in the broad sense of physical and mental well-being.

Irwin Redlener, M.D., a pediatrician at Montefiore Hospital
(known to AAPS from his role in the Clinton Health Care Task
Force, see p. 2), helped to rationalize the raid. In a letter to
federal officials, Redlener wrote, without personally examining
the patient: “Elian Gonzalez is now in a state of imminent danger
to his physical and emotional well-being in a home that I
consider to be psychologically abusive.”

Another government provider, Cornell child psychiatrist Pau-

lina Kernberg, M.D., has opined that Elian is unlikely to suffer
any lasting harm from the armed raid and “displays a sense of
well-being and happiness with his father,” based a 2.5 hr meeting
with the child and father. When visiting Miami at Janet Reno’s
request, Kernberg made no effort to see Elian or his physicians,
or to review the medical record. Kernberg has also made troubling
statements about Elian’s relationship with his cousin
Marisleysis, without ever meeting her, according to a Fox News
interview of psychiatrist Lydia Usategui, M.D. (Present at the
Gonzalez home during the raid, Dr. Usategui was threatened with a
submachine gun and gassed.)

Dr. Usategui told AAPS staff that Elian is a very
intelligent child, who made it very clear to her that he did not
want to go back to Cuba. She believes the Cubans brought to
Maryland are trying to change his mind. Tranquilizers were seized
by Customs officials from one Cuban doctor.

Government appointment of “providers,” overriding the wishes
of patient and family, is one of many ways in which the treatment
of Elian Gonzalez constitutes Clinton Care in action and reflects
the tactics of the Clinton Health Care Task Force.

Other aspects include seizing control of the semantics. With
Elian, the federal government defines “happiness,” “abuse,”
“family reunion,” and “paternal rights” to fit the political
exigencies-just as the Clinton Administration defined and
redefined “employee,” “advise,” “member,” and “meeting” to evade
open-meetings laws.

Then there is the tactic of demonizing opponents and
inciting ethnic or class warfare. The adoptive family, who
rescued Elian from the Atlantic and cared for him for months, is
being maligned, as for being “angry” and creating an environment
of “radical hysteria,” according to Kernberg and Redlener. In
Miami, discord is being fomented between Anglos and blacks on one
side and Cuban-Americans on the other. (American physicians are
also calumniated by government, and strife is encouraged, as
between specialists and generalists).

The spin doctors are framing the issue as a custody and
immigration case, currying favor with the Right by using terms
such as “paternal rights” and “illegal alien.” For the Clintons,
however, the Village, not the father, has the ultimate authority.
And Cuban children are the property of Fidel Castro. Moreover,
under common law, the sire of an illegitimate child had no
parental rights, and his status is quite controversial in today’s
courts -Elian’s parents divorced in May, 1991, and he was born in
Dec, 1993 (Ann Coulter, Human Events 5/5/00).

In addition to the Constitutional and civil liberties issues
that should concern every American, the Elian Gonzalez case
involves the question of the integrity of the medical profession.
It appears that persons with medical credentials are being
selected for loyalty to the Clinton-Gore Administration and
willingness to serve its political objectives. In letters to
Attorney General Janet Reno and INS Commissioner Doris Meissner,
AAPS stated that “we cannot tolerate the specter of …
physicians putting their political or professional interests
ahead of the safety of this child,” and called for hands-on
assessment by unbiased experts (WorldNetDaily 4/29/00).
AAPS has also filed a Freedom of Information Act request
demanding documents related to the credentials, payment,
selection, and approval of health-care providers who are
examining or treating Elian Gonzalez, including those brought
from Cuba (see www.aapsonline.org
).

Physicians who are sworn to work for the good of their
patients and to do no harm may not disregard the consequences of
facilitating the return of this child to Cuba. Elian has been
“tainted” by exposure to Americans and would be perceived as a
threat to the regime should he express any pro-American or anti-
Castro view. Castro has said openly that the boy will have to
spend at least three months in a “re-adaptation center.” Castro’s
daughter Alina Fernandez told NewsMax.com that he will probably
“disappear somewhere.”

Elian Gonzalez is putting a face on the reality of Amerika:
a disregard for truth by government and press; wide acceptance of
unwarranted brute force by federal agents; and the prostitution
of the medical profession for political expediency.

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A Precedent for Elian’s Return

If Elian is sent back to Cuba to please a Communist
dictator, it won’t be a first for the U.S.A.

It is worth reviewing the history of Operation Keelhaul,
which appeared on an early electronic bulletin board authored by
a Czech expatriate, the late Petr Beckmann, in 1989 (see http://www.fortfreedom.
org/c24.htm).

“During World War II, some 2.5 million Soviet citizens found
themselves in Germany and the occupied countries as prisoners of
war, slave laborers, or refugees. From 1944 to 1947, these people
were forcibly repatriated…. Many committed suicide rather than
return to Soviet slavery. Many others were dragged kicking and
screaming into the trucks…. The operation was scaled down to
some slight extent…[by] formally `screening’ the victims for
the politically persecuted ones. But in essence the politicians
prevailed: the officers knew that they had to fulfill a certain
quota or have the Soviet authorities … step in. The `screening’
was merely a rationalization.

“Of the displaced persons thus forcibly returned to the
Soviet Union, more than 800,000 were slaughtered by Stalin’s
regime. In the history of a weak, hypocritical, and spineless
West, Operation Keelhaul and allied operations stand out as most
shameful examples.”

Today’s screening term is “economic migrant,” applied to
those who cannot prove individual political persecution.

This term, writes Beckmann, “rings a special bell in my ear,
for it is a term I heard many times during WW II in England. It
was applied by Communist refugees to non-Communist Jews who had
escaped from the Nazis.”

A more detailed history is given by Jacob Hornberger of the
Future of Freedom Foundation, “Repatriation: the Dark Side of
World War II: Part III” (http://www.execpc.com/~jfish/fff).

A 21st Century Pharaoh?

Some believe that Fidel Castro’s intense interest in Elian
Gonzalez stems from a prophecy of the Santeria, a Caribbean
religious sect. A boy surviving alone on the ocean for 48 hours
could be the divine El Egua, who must be returned to Cuba or
Castro will fall from power (WorldNetDaily 5/5/2000).

There have been other prophecies concerning children that
influenced rulers: Moses (Pharaoh) and Jesus (Herod).

How about a separation between the U.S. government and
foreign religions?

Irwin Redlener Speaks

As Liaison to the Health Professionals Review Group, one of
the audit groups directly responsible to Ira Magaziner on the
Clinton Task Force on Health Care Reform, which called for
government quotas on the number of specialists:

“Delivery of care should be by not-for-profit, member-owned
HMO’s with salaried physicians and no bonuses or incentives.
Should built in [sic.] technology assessment and
outcomes management. Employer-based coverage should be phased
out. Health care should ultimately be paid for in a progressive
income tax structure.

“Groups of primary care providers should be capitated … to
enable them to negotiate with hospitals and subspecialists.

“Health care reform must be able to supersede state scope of
practice laws and increase prescriptive authority of mid-level
practitioners through the use of protocols…. Must prepare for
layoffs of skilled personnel caused by short-term price controls.
Will there be funds for retraining into community-based care?”

On April 6 hearings on autism:

“There is no scientific basis for establishing a link
between autism and vaccination. It is the position of The
Children’s Health Fund, along with the American Academy of
Pediatrics and the American Medical Association, that
immunizations are critically important to ensuring the health of
our nation’s children. It is simply unacceptable
not to vaccinate children.”

Code Blue in the North

Martin Levant, M.D., of Calgary, Canada, writes: “As health
care implodes and access is an oxymoron, our Prime Minister and
his `hit man’ Rock engage in romper-room tactics. The quality of
medical school applicants is falling, as physicians in Canada are
held up to unwarranted scrutiny and in some cases financially
ostracized: i.e. if their earnings are high, they must be frauds
or embezzlers. Their incomes are publicized before office
expenses and taxes.”

The political wildfire in Alberta concerns Bill 11, a very
timid proposal intended to shorten waiting lists by permitting
private clinics to do surgical procedures that require (only) an
overnight stay. At the same time, the bill would ban private
hospitals and set hefty fines (up to $10,000 for a first offense)
for “pressure-selling” additional or upgraded procedures or
allowing patients to pay to jump the queue. Federal Health
Minister Allan Rock immediately complained that the bill might
violate, at least in spirit, the five sacred requirements of the
Canada Health Act: public administration, comprehensiveness,
universality, portability, and accessibility. He feared it might
“open the door to creeping privatization.”

In Ontario, the government wants to force patients to be
“rostered” with a family practitioner who will be a salaried
civil servant: another method of restricting access.

The brain drain continues. The net loss of physicians from
Canada, excluding those who leave prior to licensure and
practice, was 130 in 1981, fell to a minimum of 51 in 1987, and
has increased annually since then, reaching 432 (30% of the
graduating class) in 1997 (Medical Post 2/22/2000).
About 6,000 nurses have also left.

Though the politics of envy is alive and virulent in Canada,
more analysts are beginning to recognize the fundamental flaw in
medicare: patients are not allowed to pay directly for any
covered services. It is even written that “Ultimately,
we will accept that in health care, as in every other part of
society, things work best if the consumer, not the provider,
drives the system. That means patients, not governments, must
decide how the money should be spent…. Most of us, in other
words, are ready to abandon socialized medicine” (John Ibbitson,
Globe and Mail 1/18/2000).

Medical Savings Accounts are the solution in both Canada and
the United States, concludes Manitoba medical student and
journalist David Gratzer in his book Code Blue: Reviving
Canada’s Health Care System ($25.35 from Canadian Taxpayers
Federation, 105 438 Victoria Ave E, Regina, SK S4N 0N7). Reviewer
Mark Milke writes that the book will be “attacked and vilified,
of course, mostly by Medicare Luddites who won’t take time to
read it. But sooner or later, I predict, these ideas will be
adopted by politicians who will claim that this was really what
they intended all along” (The Report 1/3/2000).

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Medicaid Contract Treacherous

According the AAPS Non-Participation Policy, physicians are
urged to refrain, on principle, from signing contracts with
government “insurance” programs. Those who do sign such contracts
should review the analysis submitted to the Utah Medical
Association by Taj Becker, M.D., excerpted here:

The current contract between Medicaid and providers should
be rejected for the following reasons:

1. The terms are unconscionable and prima facie of a one-
sided nature. Most providers are paid at rates at or below their
overhead costs, excluding even minimum wages for physicians.

2. While Medicaid services could be viewed as total or
partial charity and still be willingly performed, the penalties
for “even one” act viewed as a violation of a baroque set of
ever-changing rules would be devastating to a physician unable to
sustain a lengthy, costly litigation process, which costs the
prosecutor nothing except taxpayers’ money. No competent lawyer
would advise his client to sign a contract that provides little
or no income (and probably losses) while risking his entire
future due to penalties from a waiting trap.

3. The statutory requirement that intent must be found to
impose criminal penalties is ambiguous and can be side-stepped at
will by the Medicaid Fraud Control Unit.

4. Those who believe the MFCU has little motive to harm a
physician not engaged in intentional fraud do not appreciate the
pressures on that unit to produce revenues to justify its high
salaries and benefits.

Dr. Becker, who practices neurology in St. George, UT,
suggests that the state be required to give physicians “early
warning” of “outlier” status on the statistical profiles relied
upon by fraud units, so that they could immediately remedy
possible violations of the barely intelligible rules.

She believes that no meaningful change will occur until
sufficient numbers of physicians withdraw from the system.

Are Doctors in Charge at UnitedHealth Group?

Hailing UnitedHealth Group’s decision to stop pre-
authorizations, AMA President Thomas Reardon said, “This action
is historic,….a long overdue victory for American patients and
the care they receive.”

United had spent $100 million per year to respond to
requests to approve care, which were almost always granted. It
hopes to cut its medical monitoring staff by 20%-and its
liability to lawsuits. Rep. Charles Norwood (R-GA) said that
managed-care companies that turned over medical decision-making
to physicians would not be liable to medical malpractice lawsuits
under the “patients’ bill of rights.”

The company, however, will still track physicians’ decisions
and urge physicians with above-average costs to bring their
practices into line. Eventually, it may publish such information
or use it to determine who should be expelled.

Because United reserves the right to recoup payments
retroactively, the League of Physicians and Surgeons urges
physicians to get patients to sign waivers accepting personal
responsibility for payment in every case.

Dr. Chuck Stempel, Dayton regional director for
UnitedHealthcare, hopes doctors will become more receptive to
practice guidelines as United changes its relationships with
physicians “from a dictatorship to a partnership.”

“Advocacy” versus Lying

A random national mail survey sent to 1,124 practicing
physicians, of whom 573 responded, showed that 39% of physicians
admit to having “manipulated reimbursement rules” at least
“sometimes,” in order to obtain larger third-party payments.
Nearly a quarter admitted to doing this “often.” The most common
behavior was to exaggerate severity. About 28% agreed with the
statement that “today it is necessary to game the system
to provide high-quality care,” and 15% that “in general, it is
ethical to game the system for your patient’s benefit.” In 56%,
worry about prosecution prevented exaggeration of patients’
conditions to obtain third-party payment (Wynia MK, et al.
JAMA 2000;283:1858-1865).

The editorial accompanying this article is a lengthy
dialectic by M Gregg Bloche, funded by the Robert Wood Johnson
Foundation (JAMA 2000;283:1881-1884). Both papers
reflect a relativistic ethic, a calculus for coping with
“irreconcilable pressures” in the “struggle to gain access to
health care resources.” There is a tension “among multiple
sources of social control” and between social justice and
“beneficence or mercy.”

The underlying assumptions are covert: collective ownership
of the means of production and the acceptance of legal plunder.
The logically inexorable result, as explained by Frederic
Bastiat, is the war of all against all-in which deceit is the
norm and conscientious physicians are always, as Wynia’s title
states, “between a rock and a hard place.”

“Escape from this dilemma starts with truth-telling about
the assumptions,” stated AAPS Executive Director Jane Orient.

Pharmaceutical Freedom Act of 2000

To ensure access of Americans, including seniors, to
affordable drugs, Rep. Ron Paul, M.D. (R-TX) introduced H.R.
3636. This would provide seniors a tax credit for 80% of their
prescription-drug costs; lower barriers to the importation of
FDA-approved pharmaceuticals; and forbid the FDA to regulate
Internet sales of drugs by state-licensed pharmacists.

Experts Comment on Medicare Trustees’ Report

Highlights from an American Enterprise Institute panel on
April 10, 2000, summarized by Kathryn Serkes:

Medicare deficits actually start in 2009, not 2023,
according to Roland E. (Guy) King, former chief actuary to HCFA,
“because we can’t count on interest as a real asset.” He takes
issue with the accounting process that counts interest as part of
the assets because it is just a theoretical transfer from one
part of the budget to another.

Joe Antos, CBO Assistant Director, stated that “the
prescription drug benefit isn’t just the straw that broke the
camel’s back; it’s a palm tree on the camel’s back by 2070.”

Norman Ornstein, AEI resident scholar, commented that
“there’s a large train wreck ahead-both for the budget and
taxes….This is a cruel zero-sum game: Social Security,
Medicare, and Medicaid are a tapeworm, pushing out everything
else in the budget.”

AAPS Calendar

June 24, 2000. Board of Directors meeting, Chicago.

Oct. 25-28, 2000. 57th annual meeting, St. Louis.

Oct. 24-27, 2001. 58th annual meeting, Cincinnati.

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Members’ Page

Little Frank. In 1998, the Medicare monster’s son, who
resides in my office, consisted of only six banker’s boxes of my
Medicare-related correspondence. Little Frank then weighed 131
pounds and stood 63 inches high. Earlier this year, he weighed
168 pounds and stood 6 ft. 10 in. high.

Due to his immense size and other considerations (i.e. I was
concerned that federal agents might storm my office and kidnap
him, much as they did with Elian Gonzalez), I dismembered Little
Frank and moved most of him to a safer location. When he is all
together now, he consists of 10 banker’s boxes. It might be
dangerous to try to stand him upright on our office scales now,
as we estimate his height to be 8 ft. 10 in. Little Frank is
truly a chip off the old block; his father, Frankenstein Sr.,
would no doubt be proud of him.

Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

Rights and Privileges. To practice medicine today is a
privilege granted by state licensing boards. Even if a physician
has completed all required training, … and remains in good
standing regarding the medical care he provides, he does
not have the right to practice medicine.

The reason we live better and longer today is primarily
better food and sanitation-provided by grocers, plumbers,
farmers, butchers, carpenters, electricians, etc. So why don’t we
make their right to earn a living through their chosen occupation
a privilege also? If they should lose the privilege of working,
well, there’s a precedent for it, with physicians-to achieve the
greater good of society….

Roy Blackburn, M.D., Elizabethtown, KY

Why Contract Privately? The ability to enter contracts,
and freely spend one’s money for goods and services, is a
fundamental feature of American society, unless you happen to be
a Medicare enrollee…. HHS opposes allowing doctors or patients
to opt out of the system, preferring to keep everyone trapped in
a company store environment…. As HHS surely anticipated, until
the opt-out provision [in the Balanced Budget Act] is dropped,
private contracting will not be widely adopted.

What are the benefits of private contracting? For the
physician caught in the vise of impossible documentation
requirements and below-overhead [payment], the benefit is
obvious…. Confidentiality of medical records and the ability to
see a physician who does not accept Medicare insurance are [among
the] benefits for patients….

For those who think the battle is not yet lost, and who
think we should not roll over meekly before the federal
bureaucrats and the managed-care juggernaut, private contracting
is a tool to sustain an old and honorable profession, and to try
to preserve what is left of the patient-physician relationship.
Since January 1, 1998, I have not accepted Medicare insurance,
and now that the regulations seem final, I have opted out of
Medicare entirely, freeing myself for private contracting should
patients desire.

If the federal government nurtured private contracting and
MSAs as it did HMOs, and changed tax law as it pertains to the
deductibility of health insurance premiums, enormous power would
be returned to the patient. Much can be done to restore our
profession’s health if third parties are eliminated from the
decision-making process, and their role as payers reduced or
eliminated.

Richard A. Hurd, Jr., M.D., Alpharetta, GA

abstracted from AAOS Bulletin, Dec. 1999

Medical Privacy. If there’s a lesson from the 20th
century, it’s that placing the will of government above the
rights of individuals is a tragic mistake. In this century,
hundreds of thousands of Americans gave their lives to save the
world from that mistake. Now, 54 years after the fall of Hitler’s
Third Reich and 10 years after the collapse of the Soviet Union,
an appointed official of the federal government tells us that
“the need for privacy must be balanced against national
priorities.” HHS Secretary Donna Shalala, sworn to uphold the
Constitution, should know that, in America, privacy is not just a
“need,” it’s a right, guaranteed by the 4th Amendment.
What arrogant disregard for the Constitution! The 4th Amendment
requires officials to get a warrant if they want your infor-

mation; their convenience does not overrule the Constitution.

Gerald Zupruk, M.D., Bethlehem, PA

Cost Shifting. Bob Helms of the American Enterprise
Institute explained that “cost shifting” refers to the usual
assertion that providers can grant a lower price to some buyers
only if they raise the price to other buyers. The theory of
multi-part pricing, on the other hand, implies that the price
that can be charged to one buyer depends on that buyer’s
intensity of demand and has nothing to do with whether the seller
can get a different price from other buyers.

Our hospital used cost shifting in reverse. First, it
granted unrealistically low prices to some, under pressures of
various kinds. Then, it tried to make up the difference, briefly,
from others, under the “grab what we can while we can” attitude,
even though they knew what would happen to the companies that had
no cut-rate contracts (including insurance companies with high-
deductible policies). Did these insurers pay the excessive prices
because their “intensity of demand” was established by inflexible
benefits criteria and legal obligations to their subscribers?

James Pendleton, M.D., Bryn Athyn, PA

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Legislative Alert

Slow Progress on the Patients
Bill of Rights

Recall that Congressional leaders were making noises about
getting the so-called patients’ bill of rights (PBOR) legislation
to Clinton’s desk by Easter. Now that Easter s come and gone, how
about Memorial Day? Forget that, too. The House-Senate conferees
are slogging through legislative swamps, trying to reconcile the
provisions of a mind-numbing bill, hoping that they can craft
compromises that are, in Goldilocks fashion, just right. If they
hold true to form, they will work on this into the early summer.
The big danger is that they will continue to fritter away time,
avoiding tough decisions-like saying no to counterproductive
overregulation-and resolve nothing.

Here is a potential scenario. We have seen it so often
before: the Congressional session is coming to an end in early
October. The conferees, under pressure from the White House and
Congressional leaders, start to panic; they slap together a
complicated compromise measure in the wee hours of the morning
that “does something” on managed care (they ll explain it later,
when they get the talking points from the young staffers).
Because they did nothing to reform the Medicare program, they’ll
feel the need to “do something” on that too, so they ll throw in
an amendment relating to Medicare prescription drugs, and
perhaps, for good measure, another amendment containing some sort
of “action” against medical errors (Congress and the Clinton
Administration are “against” errors). Then they may make changes
in the Sherman Anti-Trust Act so that doctors can join up with
the AFL-CIO as union guys in good standing, the first step in the
bigger long-term agenda to turn organized medicine into
government unions under the long-sought-after “single payer”
system. As dependents in the new order, doctors can do for
quality medicine what the teachers unions have done for quality
education. Then we ll have it: Another Big Bill, just like
Kassebaum-Kennedy, The Balanced Budget Act of 1997, and similar
Congressional handiwork.

Meanwhile, Clinton is putting on the pressure, devoting his
radio address at the end of April to the issue, and adding his
exhortation that Congress get moving on adding an artificially
cheap drug benefit to an unreformed Medicare program. Like the
sly old barkers working the rubes on the Midway, selling the
latest and greatest, handy dandy, brightly bottled elixir for
whatever ails you and yours, the leftists in Congress are
pressing the Clinton Administration s health-care agenda with new
found passion and high-minded rhetoric-sound-bite stuff for quick
television appearances.

The Administration s two key sales points now: promising the
seniors something for nothing on prescription drugs, and
promising workers and families what they always needed: more
lawyers. Most folks, good-hearted people who, as essayist
Florence King says, love the sweet sound of the “carin’ and
compassion” rhetoric of the “carin’ and compassion” politicians.
So, they are likely to fall for this stuff. Nice folks are the
natural targets of this kind of salesmanship, and Clinton, a man
of inerrant political instincts who can rhetorically harness his
program to the popular prejudices of the moment, measured with a
precision by his professional pulse takers, is betting the future
of the Congress and the White House that the sales pitch will
work. It might. The reason: most folks don t have a major
political agenda, and they ve got mortgages. And most folks
still think that the experts in Washington know what they are
talking about, and the full-throated rhetoric of their good
intentions is a window on reality.

Double Standards

Remember the 1994 “Contract with America” principle:
Congress should not impose rules and regulations on the rest
of the society that it will not impose on itself.
Congressional Republicans, then led by Newt Gingrich, made a big
deal out of the idea, a good one, and passed it as a solemn
resolution of intent. Forget it!

The House version of patients’ rights would permit states to
subject all plans to litigation that treats contractual disputes
over the terms of coverage much like malpractice lawsuits, with
awards for pain and suffering and other noneconomic damages.
Under the terms of the House bill, employers could not, and
would not, escape the threat of devastating suits over the
coverage they provide.

Also, this heavily regulatory approach, curiously
reminiscent of the failed 1993 Clinton Health Plan, invariably
means new fines and penalties. For example, HHS or DOL would be
able to assess a civil penalty (a maximum of $500,000) against
any health plan official who has demonstrated a pattern or
practice of refusing to carry out the coverage decisions of the
external review entities under the external review process
established under the bill. Moreover, the federal government
could ask a court to remove that official from office and bar him
from any other “involvement” with that health plan.

This is pretty serious stuff. But it does not apply to the
Administrator of HCFA, the Director of OPM, or Medicare or
Medicaid contractors. No sir. In the case of both the House and
Senate bills, Federal programs are exempted. For
Congress, Congressional staff, and the White House staff, the
specific provisions-and thus the costs-would not apply either to
their own private plans in the Federal Employees Health Benefits
Program (FEHBP), or to Medicare, Medicaid, and other federal
health programs. As Washington attorney John Hoff, a former
professional staff member of the National Bipartisan Commission
on the Future of Medicare, observes, the White House has made
some administrative changes in these federal programs to comport
with the patients’ rights proposals, but they are not
substantively the same as the House bill. The only apparent
reason, Hoff suggests, is that the politicians, having pondered
the problem of double standards, decided to go for them because
they do not want to expose official Washington to litigation
for noneconomic damages. To be more precise, they don t want to
have to tell the taxpayers that they will have to actually pay
for these damages, and that taxes will therefore be
increased.

Rising Costs

According to Watson Wyatt Worldwide and the Washington
Business Group on Health, this year employers are reporting a
sharp increase, 9.7%, in health insurance costs. As everybody who
has finally lost faith in the Tooth Fairy knows, the economics of
employer costs are simple: whenever and wherever they can,
employers are passing on the higher costs to workers and their
families in higher premiums, co-payments, deductibles, reductions
in coverage, or elimination of coverage. According to the survey,
7 out of 10 employers are increasing employee contributions to
cope with the new cost increases. Because of the tight labor
market, employees have some leverage, and most companies are
refraining from passing on the full increases to their workers,
at least directly. In any case, the temporary slowdown of medical
cost increases is clearly over. According to the number crunchers
at HHS, total expenditures will jump from $1.2 trillion today to
about $2.2 trillion in 2008.

These developments are certainly having an effect on the
ongoing negotiations between House and Senate conferees on the
PBOR. The Congressional Budget Office (CBO) estimates the House
bill would increase premiums by 4.1%. Combined with the risk of
large awards for damages resulting from the operation of the
health plan they sponsor, it is uncertain how many employers
would drop health benefits or coverage. A Hewitt Associates
survey of nearly 600 companies found that 36% would consider
dropping health insurance if their plans were subjected to
malpractice suits. Another survey of 400 company personnel
directors commissioned by the American Association of Health
Plans found that 38% said “would be likely to stop providing
coverage for some or all of their employees” and 57% “would be
likely to stop doing so for some or all retirees.” A Harris
Interactive Study found that as many as 15.4 million Americans
could lose their coverage. According to the Lewin Group,
perhaps the nation s leading firm specializing in health are
modeling, every 1% increase in medical costs causes 300,000
persons to lose their coverage. Using the CBO analysis alone,
this means more than 1.2 million Americans would lose their
employer-based coverage.

More Confusing Regulation

Why would a bill aimed at stopping the abuses of managed
care tackle fee-for-service medicine? Good question. But the
House bill does precisely that. Here s how it works: the House
bill would create a federal definition of fee-for-service
coverage. Failure to meet any one of the specified conditions
would disqualify a plan as a fee-for-service plan. As John Hoff
observes, under the terms of the bill, doctors or other providers
could not simply negotiate rates with the defined plan, hospitals
and physicians “could only choose between accepting and
rejecting rates offered by the plan on a take-it-or-leave-it
basis.” Dig that.

And it gets worse. It is not bad enough that the regulatory
system is more intrusive than most folks thought; it is going to
add to the confusion that already bedevils the conflicting state
and federal regulation of health insurance. The GAO has just
reported that HCFA s attempt to make the Kennedy- Kassebaum
regulations work-four years after enactment-is not going so well.
A shocker. Got a mess? Sure, and we in Congress and the
Administration will show you how we can make it even worse.
According to a recent analysis of the regulatory provisions
of the PBOR, conducted by the Blue Cross/Blue Shield Association,
numerous questions concerning the applicability of some
regulations would have to be decided by a state s insurance
department, others would have to be resolved by Department of
Health and Human Services (in fact, HCFA), others by the
Department of Labor, and in several areas it is unclear who would
resolve regulatory questions. So, depending on which one of the
myriad of rules embodied in the legislation evokes a question of
applicability, consumers and plans would have to deal with two
sets of regulators, federal and state, and would have to consult
with either a federal or a state official, or possibly both.

Many Americans may be frustrated with their medical care.
But it is hard to believe that this complicated mess being brewed
in the House-Senate conference is what most doctors and what most
Americans had in mind as a reform.

Remember the political agenda. Health policy in Washington
is the ultimate power game. It s not about doctors and patients,
and it’s not about seniors, any more than the vaunted children s
health bill was about kids. It s about control. The Clinton
administration understands what Congressional leaders too often
don t: the structure of the PBOR and the structure of the
proposed Medicare drug benefit will meet the central domestic
policy goal of the Administration ever since it took office in
1993: the progressive expansion of government control over
American medicine. It s about control. Libido
dominandi. (See the full text of John Hoff s penetrating
analysis of the PBOR at

www.heritage.org/ library/backgrounder/bg1350es.html.)

Clinton Drug Agenda

The White House says it will convene a major
prescription drug conference this summer to hash over the issue
in public (a relief), with press and klieg lights, and high-
mindedness all round. It’s the major event of the summer
offensive on the Medicare drug issue, building to a crescendo
somewhere around Fall, we d guess. Only a guess.

Some in Congress think that the best answer to the
prescription drug problem is to have the federal government fix
prices at the level of Canada or Mexico. It s obvious isn t it?
Viagra at Tijuana prices! What could be better than that?

We are not going to be spared yet another debate on the
wisdom of price controls. Price controls are perennially popular
among the economically illiterate. When politicians sell them to
the masses-as they have for the past 4,000 years -they sell them
as “cost controls.” Cheap is better than dear. It s a variant of
the old something-for-nothing scam; and it is a scam. But how do
you control costs with price regulation? You do it by making sure
that spending on the controlled commodity is not as high as it
was before the controls were imposed. That s the point. No
politician really thinks that price regulation will increase
spending on the controlled commodities in such a way that there
will be more of them, or a better quality, or a
greatly improved variety of them. It is never more; it
is always, honest to goodness, less.

Politicians, of course, can t control demand for
anything, except possibly themselves. But they can, using
the police powers of the state, control the supply of anything,
and the best mechanism to control supply is price regulation.
They never say it, but the real purpose of price regulation-in
almost every instance-is to reduce the supply of the commodity or
service controlled, to reduce its quantity, its quality, or the
technological innovation that makes increased productivity of the
commodity possible.

What are we to make of politicians who push price controls
as a serious policy? No, they are not stupid. Because we live in
a democratic society, it s worse. They are showing contempt for
the intelligence of the people they pretend to represent.

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