AAPS Scores Victory in the Court of Appeals
The case of AAPS v. Clinton took a major turn when the
US Court of Appeals for the District of Columbia handed down its
opinion on June 22, 1993.
In holding that Hillary Rodham Clinton was the ``functional
equivalent'' of a federal officer, the Court reversed the US
District Court and determined that the 13-member President's Task
Force on National Health Care Reform was not a committee for
purposes of the Federal Advisory Committee Act, 5 U.S.C. App. 1
(FACA). Although that holding made news, the Court went further.
AAPS won on the issue of its cross appeal: the question of
whether the Task Force's ``Interdepartmental Working Group''
(IWG) and its cluster groups, as well as the Health Professional
Review Board, the group looking at cost issues, the group
considering legal issues, and the group looking at simplification
and quality issues, were subject to the open meeting and record
production requirements of the FACA. The Circuit Court reversed
the lower court determination and remanded the case. This allows
AAPS to conduct expedited discovery.
The Opinion allows AAPS to uncover how the huge working
groups were assembled, how they were paid and by whom, and what
happened during the meetings. Disclosure of this information was
the purpose for which AAPS filed the case.
As the Court has acknowledged, the working groups were the
ones that actually prepared the health-care reform plan. Hillary
Rodham Clinton's 13-member Task Force did little or nothing in
the actual development of the plan.
On July 9, 1993, AAPS filed a comprehensive set of
interrogatories with the Department of Justice, asking for
production of pertinent documents, including minutes,
transcripts, agendas, travel records, payroll records, and
expense records of working group attendees. If individuals'
salaries and expenses were paid by any private organizations,
AAPS is asking for their names.
The Justice Department will have 30 days to respond to the
interrogatories and request for production of documents. Then
AAPS can begin taking the depositions of the key players in the
About Access to Care
In correspondence to AAPS, Senator Arlen Specter (D-PA)
assured us that his Comprehensive Health Care Act of 1993
includes ``federal guidelines to better allow patients to
exercise their rights to decline medical treatment.'' He says
nothing about patients' rights to purchase medical care.
Current price controls are already limiting the availability
of medical care. One physician recently wrote to John Rother of
the AARP, explaining that ``as a practicing cardiovascular
surgeon, it becomes increasingly difficult to consider providing
care for patients [for whom] the reimbursement becomes so small
compared to the amount of effort and time necessary to provide
HCFA knows there is a problem. ``We are concerned about
those Medicare beneficiaries who are unable to find a nearby
physician who will accept them as patients,'' wrote Robert G.
Eaton, Associate Administrator for Program Development.
Nevertheless, Medicare at present is telling such patients that
it's just tough luck. As Eaton stated,``We cannot...readily
imagine anything that would be more destructive of the Medicare
program than to exempt a physician from [the] Medicare
requirements'' that cause the situation.
Specifically, Medicare continues to try to intimidate
physicians who would make private agreements with Medicare-
eligible patients. A certified letter dated June 17, 1993, from
Jody L. Turpin, Medicare Fraud and Abuse Unit, Salt Lake City
Regional RR Medicare, reads as follows: ``Medicare has recently
received information that you are sending a letter to your
patients informing them that you will no longer participate in
the Medicare...program. Our information indicates that this
letter requests that these beneficiaries sign a
contract...waiving their Medicare entitlement for services
received from your clinic.
This letter is to inform you that the Department of
Health and Human Services has determined that agreements such as
this have no legal force or effect, and existence of such an
agreement between a physician and a beneficiary will be viewed as
prima facie evidence that any violations of the Medicare
requirements by the physician with respect to that beneficiary
were intentional [emphasis in original].
The Medicare Carriers Manual dated June, 1993, includes
``new implementation instructions, effective date July 7, 1993,''
section 3044, ``Effect of Beneficiary Agreements Not to Use
There is nothing in the law that exempts
physicians from these requirements or Medicare services
from coverage because the physicians obtain from
beneficiaries agreements of the kind
described....Congress enacted these requirements for
the protection of all Medicare Part B beneficiaries,
and their application cannot be negotiated between a
physician and his/her patients. Agreements with
Medicare beneficiaries have no legal force or
Nowhere in the statute or published regulations have we
been able to find a provision depriving a Medicare-eligible
citizen of the right to enter a binding legal contract. Nor
do we find a provision depriving a person of the right to receive
private medical services or requiring his physician to inform the
government of all medical services that conceivably
could be covered under Part B if a claim were submitted.
Anyone having knowledge of such a provision or receiving a
related sanctions threat from Medicare should contact AAPS
immediately (800-635-1196 or 606-253-4868).
The legal standing of the Providers Reimbursement Manual was
commented upon in National Medical Enterprises v. Bowen 851 F.2d
291 (9th Cir. 1988): ``The Manual is a guide for intermediaries
in applying the Medicare statute and reimbursement regulations
and does not have the binding effect of law or regulation.''
In National Medical Enterprises v. Sullivan 960 F. 2d 866
(9th Cir. 1992), the Court stated that ``where a statute is
silent or ambiguous with respect to the specific issue, an
agency's interpretation is upheld so long as it is based on a
permissible construction of the statute....Administrative
constructions that are inconsistent with the statutory mandate or
frustrate the policy that Congress sought to implement are
rejected by the reviewing court.''
AAPS welcomes Drs. R.O. Anya of Imo State, Nigeria; Thomas
L. Ashcraft of Tulsa, OK; Malcolm Bacchus of Reno, NV; Richard M.
Bachrach of New York, NY; Robert J. Bellino of Bradenton, FL; Tom
Bohr of Loma Linda, CA; John P. Briody of Marinette, WI; Christ-
opher J. Brown of Warrenton, VA; Gary W. Cage of Bethesda, MD;
James E. Campbell of Phoenix, AZ; David E. Couk of Warrenton, VA;
Thomas P. Dresser of Federal Way, WA; Patricia A. Duprey of
Danville, VA; Paritosh C. Dutta of Dallas, TX; David Eskreis of
Great Neck, NY; Steven A. Field of Brandon, FL; Jeffrey M.
Frankel of Seattle, WA; Kenneth Fraser of Scottsdale, AZ; A. G.
Gambrino of Toms River, NJ; David R. Grigg of Kettering, OH;
Michael Gros of Houston, TX; Robert A. Herman of Houston, TX;
Kevin B. Johnson of West Jordan, UT; George A. Joseph of Palos
Verdes Estates, CA; Waite S. Kirkconnell of Tampa, FL; Bent O.
Kjos of Seattle, WA; Ken G. Knott of Marietta, GA; Woodson
Merrell of New York, NY; James P. O'Hara of Omaha, NE; Ella Sue
Owen of Oklahoma City, OK; Rand Paul of Bowling Green, KY;
Ambrosio F. Pinaroc of Sulphur, OK; Dominick A. Ricci of Del Mar,
CA; Herbert Rubin of Beverly Hills, CA; Irwin D. Schlesinger of
Manhasset, NY; Terril J. Schneider of Warner Robins, GA; Hugh A.
Schuetz of Aberdeen, WA; Gary R. Schuster of Seattle, WA; Elden
Sherman of Charleston, SC; William David Stewart of Gallatin, TN;
Vincent J. Strangio of Trenton, MO; Terri Su of Santa Rosa, CA;
Jack S. Weiss of Scottsdale, AZ; and Lance S. Wright of
Stephen Fraser of Milwaukee, WI, is a new student member,
and Jeannette Lousteau is an Associate of the Washington State
The Nevada State Medical Association has offered its members
an Association membership in AAPS at a group rate.
Nominating Committee Report
The Nominating Committee presents the following slate of
officers for the election to be held at the 50th annual meeting
in San Antonio:
President: Charles W. McDowell of Alpharetta, GA
President-Elect: Lois Copeland of Hillsdale, NJ
Secretary: Donald Quinlan of Northbrook, IL
Treasurer: R. Lowell Campbell of Corsicana, TX
Directors: Dexter Blome of Zanesville, OH; John Boyles of
Centerville, OH; Robert Cihak of Aberdeen, WA; Jim Coy of DeLand,
FL; John Dwyer of Chicago, IL; Glenn Drumheller of Everett, WA;
V.L. Goltry of Boise, ID; Andrew Mance of Oakland, MD; Bruce
Schlafly of St. Louis, MO; Theresa Smith of Kamuela, HI; and
James Weaver of Durham, NC.
To be considered at the 50th annual meeting, proposed
resolutions must be received by Resolutions Committee Chairman
Don Printz, MD, by September 8. His address is 354 Arcado Rd Ste
4, Lilburn, GA 30247.
Reclaiming the Moral High Ground
Hans Sennholz, PhD, President of the Foundation for Economic
Education, told physicians and other Americans what they must do
to earn the right to criticize government subsidies on moral
grounds: Do not partake.
Socialist programs do not work, Dr. Sennholz said, but the
practical critique always fails. The socialists claim the moral
high ground, and they cannot be challenged by anyone who is
accepting the benefits of their programs. Such persons are
always vulnerable to charges of greed and self interest.
Dr. Sennholz and his wife can say, without hypocrisy, that
Social Security is immoral. They never applied to receive it.
(Of course, they did pay the taxes, but in the early years of the
program the taxes were about $30 per year.) To those who have
applied (and have not become dependent on the government's
largesse), he recommends giving their monthly check to a good
Dr. Sennholz was one of a star-studded cast of speakers at
the meeting of the Medical Action Committee for Education in
Dallas, June 18-19. The meeting attracted more than 400
physicians from all over the United States. Other speakers
included William Bennett; Sen. Steve Symms; Rep. Phil Crane; John
Goodman, PhD; William Goodman, MD; Carol Brown, MD; Brant
Mittler, MD; Mona Charon; Michael Schlitt, MD; Edward Annis, MD;
and Lois Copeland, MD. To order tapes, call (419)668-8282 or
(According to a recent study by the National Center for
Policy Analysis, elderly persons who are self-employed may have
reason to feel victimized rather than guilty under Clinton's
economic plan. In the worst case, they could face a marginal tax
rate of 130% on their earnings, if the ``benefit'' tax is
increased to cover 85% of their Social Security check- NCPA
Policy Backgrounder No. 126, 6/10/93).
Oct. 5. Board of Directors meeting
Oct. 6-9. 50th annual meeting, Menger Hotel, San Antonio, TX.
For hotel reservations, call (800)345-9285. To
register, call AAPS at (800)635-1196.
Oct. 12-15, 1994 (tentative), 51st annual meeting, Atlanta.
Legislative Alert The Clinton Administration's
handling of the ``health care'' issue may serve as a textbook
example to future Presidential Administrations on how not to do
good public policy. First, hire hundreds of wonks with little or
no practical experience but with different political and
ideological agendas. Second, systematically exclude the one class
of people who are experts in delivering the services-such as
Consider, for example, a campaign based on the proposition
that the entire legal system is in crisis, that legal costs have
soared through the stratosphere (they have, incidentally) and
that far too many Americans have no access to affordable lawyers,
even as chances of needing legal services increase with almost
every major piece of legislation affecting business. Such a
campaign is itself unimaginable, even without following it up
with a task force on legal reform that made a virtue of excluding
The Political Costs of Delay
The series of stops and starts, the constant floating and
descending balloons, and the sequential postponements of
deadlines make it appear that the Administration does not have
its act together.
``They're so pathetic,'' one Washington insider remarked,
``they can't even get the wrong idea out right.''
As Joe Bast of the Chicago-based Heartland Institute wrote
in the June 10th Wall Street Journal, ``The sheer number
of trial balloons tells Congress and special interest groups that
every element of the plan is negotiable. Mrs. Clinton and her
commission are no longer respected or feared.''
While Vice President Gore and his aides say they want a bill
signed in 1993, that is not at all likely. And 1994 is an
election year, when Congressmen are traditionally fearful of
taking any tough or controversial votes. Congressional
Democrats, many of whom are already committed to a single payer,
or Canadian-style approach, are worried about trying to sell a
plan back home that more and more voters will see as costing them
more and buying them less in medical services.
Beyond the Beltway, the early signs for the Clinton health
package are bad. Last May, the Robert Wood Johnson Foundation
entered into a $164,000 contract with the Harvard University
School of Public health to conduct a national survey on health
care reform. The Harvard team, headed by Dr. Robert Blendon,
found that while 85 percent of the American people support
``major reform'' of the health care system, they are also
relatively satisfied with what they have. More to the point,
while a huge majority supports reform, 56 percent believe that it
will have a negative effect on them personally-that they will end
up paying the same or more without an increase in the
availability or quality of medical services. More recently, the
Washington Post-ABC News Poll, released on July 7th, found that
56 percent believe that they will be paying more under the
Clinton plan (tracking Blendon's findings in May), but 43 percent
said that they expected the quality of care to get
worse. More serious for the Administration, only 17
percent of respondents thought that Clinton's health care plan
would lead to major improvements in the health care system.
Nearly half (47 percent) said that it would lead to ``minor
improvements,'' and 30 percent said that it would lead to ``no
Commenting on the most recent surveys, Harvard's Robert
Blendon told the Washington Post, ``He's lost control of
the national agenda on health care. By waiting, it will no longer
be his plan versus the status quo, which everyone agrees is
terrible. It's his plan versus the single-payer plan, versus the
tax-credit plan, and it will be harder to get a consensus when
these other plans are on the table. The result may be: back to
A Reverse Wofford?
June's special Texas Senate race, in which Kay Bailey
Hutchison beat Democratic incumbent Robert Krueger by a 67 to 33
percent margin, is still sending shock waves through both the
House and Senate.
Recall that when the colorless functionary Harris Wofford
beat former Bush Attorney General Richard Thornburgh in a special
Senate election for the Pennsylvania Senate seat in 1991, the
health-care issue sizzled and became a major political weapon for
Congressional Democrats. Jim Carville, the political wizard who
would craft Bill Clinton's Presidential campaign, not only
brought Wofford to life, but helped him overcome Thornburgh's
mammoth 40 percentage point lead. Wofford's theme: If a criminal
has a right to a lawyer, a working man's got a right to a doctor.
Some sound bite. Recall also that the pale pastel Bush
Administration, which had been studiously ignoring the issue,
finally got serious and crafted a tax credit program. Congres-
sional Democrats initiated citizen ``town hall'' meetings all
over the country. And Presidential candidates, particularly Bill
Clinton, started using the health-care issue as a wedge issue to
break the GOP stronghold on the White House and lure working
class Reagan Democrats back to the Democratic fold.
But the Wofford Formula failed in Texas. Paul Begala, Jim
Carville's partner, flew down to Texas to help the embattled
Krueger in the last few week of the campaign. Krueger trotted out
the same ads that Wofford used, sounded the same themes, pushed
the same emotional hot buttons with the electorate. And what
happened: Nothing. Unlike Thornburgh, Hutchison was not caught
flat-footed and clueless on the health care issue, but counter-
attacked with a consumer-choice theme that struck a responsive
chord in the electorate. In their final televised debate with
Sander Vanocur moderating, Hutchison responded to Krueger: ``The
difference between us is, you don't want to give everybody in
America what you have as a Member of Congress. You have exactly
the choice that I am trying to give everyone...You choose the one
plan that is best for your family. You get the tax credit and you
are able to spend your money the way you want to. I want everyone
to have the choice that Bob Krueger now has.''
Members of Congress are starting to see the character of the
debate shift. Three or four years ago the focus was on access-
thus the liberal policy wonks' preoccupation with a Canadian
style system. The fallback was to make adjustments to the
employer-based system through mandates and price controls on
costs. Price controls always are and always will be initially
popular (and just as inevitably fail). But now the surveys are
showing that while Americans are friendly to major reform, they
are also generally satisfied with their medical insurance and
they are positively happy with their doctors. The issues are
narrowing: portability is the main theme emerging from the
Even more stunning is the recent remark from Congressman Ron
Wyden (D-OR) that any health care reform plan that does not give
high priority to ``choice''-of plan and physician-is dead on
The fallout from the internal divisions within Hillary's
Task Force continues. If White House Aide Ira Magaziner has been
the manager of the process, its intellectual leader is Paul
Starr, the Princeton University sociologist who won national
notoriety for his Pulitzer Prize-winning book, The Social
Transformation of American Medicine. Starr cobbled together
the regulatory regime favored by liberals (including a global
budget) and the infrastructure of managed competition favored by
the Conservative Democrats and the Jackson Hole Group. Starr's
paper, ``The Logic of Health Care Reform,'' which he sent to
Clinton in Little Rock, Arkansas, established the framework of
the emerging Clinton health-care reform.
At the same time, Hillary Rodham Clinton has been as-
siduously courting advocates of a single-payer system on Capitol
Hill and elsewhere, stressing common areas of agreement on the
shape of the overall package. Liberal critics such as Sidney
Wolfe, M.D., of the Public Citizen Health Research Group (which
now supports a Canadian style system), point out that the main
beneficiaries of the Clinton reform plan will be large insurance
companies. This view is generally shared by conservative critics
of managed competition.
Alain Enthoven, the Stanford University economist who is
most closely identified with the concept of managed competition,
is unhappy with the whole process. His colleague Paul Ellwood,
President of the Jackson Hole Group is telling friends on Capitol
Hill that the Clinton program basically hijacked the ideas that
he and others developed and then distorted them. Ellwood has
also been complaining to Ira Magaziner and others that the
Clinton plan would overregulate the health care economy and
reflects a set of negative (and economically unrealistic) percep-
tions about the medical sector of the economy. In particular,
Ellwood is concerned about global budgets and price controls.
Another area of disagreement among liberals is the extent to
which employer-based health benefits should be taxed, if they are
to be taxed at all. The concept of taxing benefits appeals to
economists, left and right, as a way to make consumers more
sensitive to the price of benefits and thus control
overutilization and costs. Managed-competition advocates argue
that their plan cannot work without taxation of benefits at some
In a recent Washington meeting with union leaders, Hillary
Rodham Clinton reaffirmed that the Administration is preparing
such a tax. (Last February, Ms. Clinton ruled out a tax on
employee health benefits as politically unpalatable.) The AFL-
CIO is outraged at the proposal, and the unions can be expected
to fight it.
Instead of a tax on health benefits, union lobbyists are
pushing the Administration to adopt a ``wage-based'' premium or a
straightforward payroll tax. Such a tax is likely to run into
stiff opposition on Capitol Hill, especially from the ever
independent and stubborn Senator Daniel Patrick Moynihan of New
York, the Chairman of the powerful Senate Finance Committee. In
public discussion with commentator George Will on the David
Brinkley, Moynihan said the best level for a health-care payroll
tax was ``Zero'' and that the health care system itself was
already too much controlled and financed by the public sector. Of
course, one of the bright and snappy young White House kids,
early on in the Clinton Administration, threatened in the press
to ``roll right over'' Moynihan if he ever became an obstacle to
the Clinton domestic agenda. Hey kid, Moynihan's waiting outside.
The Tax and Economic Impact of the Clinton Plan
Lewin-VHI, one of the nation's top statistical research
groups, estimated that if the Clinton team relies on a payroll
tax to fund its health-care reform and confines the reform
measure to workers and their dependents, the total tax would have
to be set at 9.48 percent. This would add $66.8 billion in
annual health care costs to the system. If the plan also covered
all non-working people who are not now covered by health
insurance, the added annual costs would be $73.3 billion,
requiring a new payroll tax of 10.2 percent. If Medicaid were
folded into the plan, an additional $102.1 billion would have to
be raised each year, and the payroll tax would have to increase
to 11.31 percent. Incorporating the Medicare Program also would
increase total costs to $132.8 billion and the payroll tax to
In a separate but related development, the Employment
Policies Institute recently announced the results of a survey of
600 economists. According to the survey, four out of five
economists believe that employers who pay their workers less than
$20,000 a year will cut jobs if they are required by the
government to provide health benefits. Some form of an employer
mandate is certain to be a key element of the Clinton Health
Plan. Two of three of the polled economists stated that a better
idea was to simply have the government subsidize in some fashion
health care benefits for low-income workers.
The National Federation of Independent Business (NFIB), the
nation's largest small business group, just released a study
showing that a mandate on small business could cost 900,000 jobs
and place the wages or benefits of 18.3 million workers at risk
of being cut. Members of National Small Business United (NSBU)
estimated that a 7 percent payroll tax would cost them about
$50,000, which they could not afford. According to the US
Chamber of Commerce, the payroll tax rate could reach 18 percent
if states were allowed to set their own rates (BNA's Health Care
Policy Report 6/21/93).
The Loyal Opposition
While Congressional Democrats are nervous, it is clear that
they have a game plan. Look for Congressional Democrats to stress
that whatever its financial drawbacks, the Clinton Plan will give
Americans security. Every major survey of public opinion shows
that Americans fear losing their health insurance. If they are
faced with defending a plan that costs more and gives less, the
best tack will be to hammer home that at least people are
``guaranteed access'' to health care.
The Congressional Republicans meanwhile still have not
united on a comprehensive alternative. Conservatives in the House
are worried that the House GOP leadership will continue to drift,
fumbling around with bit and pieces of everybody's ``good idea,''
throwing the whole jumble into an incoherent grab-bag of sound
bites. Sen. John Chafee of Rhode Island and his colleagues on the
Senate Republican Health Task Force are still wedded to managed
competition, but Gramm of Texas, Coats of Indiana, Nickles of
Oklahoma, McCain of Arizona and Mack of Florida are diligently
working away on a far more comprehensive bill. Meanwhile, as the
debate heats up, the Republicans can expect to benefit if the
Clinton health care plan becomes a debate on taxes.