Volume 53, No. 12 December 1997




At the time the Clinton Health Security Act was still being considered as a whole, The New Republic (2/7/94) published the article entitled "No Exit" by Elizabeth McCaughey, who is now Lieutenant Governor of New York.

Ms. McCaughey wrote: "The bill guarantees you a package of medical services, but you can't have them unless they are deemed `necessary' and `appropriate'....Escaping the system and paying out-of-pocket to see a specialist for the tests and treatment you think you need will be almost impossible." Also inescapable in the Clinton system were the "premiums" for the centralized health [rationing] "plans."

What would have been true for Clinton-style corporate socialism is already the case for Medicare (socialized medicine for the elderly). Bill Clinton, Pete Stark, the AARP, and the other advocates of government-controlled medicine aim to keep it that way, as shown by their vehement opposition to the Kyl-Archer bill, which attempts to expand the protection of Americans' right to seek private medical care (see p. S1 and AAPS News Nov. 1997).

Stark has resorted to vulgar outhouse humor in his fight against the Kyl-Archer bill. He has introduced the "No Private Contracts To Be Negotiated When the Patient Is Buck Naked Act of 1997" (H.R. 2784) and spent $10,000 of taxpayer money to have this travesty published in the Congressional Record.

But Stark's misguided ridicule is merely a diversion, not a threat. The peril is that the Kyl-Archer bill will pass with a Republican device to "fix" the problem diagnosed by Stark and his allies-by killing the very concept of private medicine.

One of Stark's "findings" is that patients who truly want to pay privately are not normal. (Does he think it is abnormal to pay for food if one could get food stamps or to work if one could collect welfare?) Most, he assumes, love "their" Medicare but are so gullible that they could easily be forced or tricked into paying outrageous fees instead of consulting one of the 96% of physicians who are reportedly content with Medicare.

The key Stark assumption about physicians is apparently accepted by most Republicans: physicians only want to see patients outside of Medicare in order to make more money.

Philip R. Lee, former assistant secretary of health in the Johnson and Clinton administrations, stated that in its support for the Kyl-Archer bill, the AMA is "trying to turn back the clock" to the days when physicians were free to determine the value of their own services-before the time when the AMA agreed to price controls in return for certain government rules (Washington Post 11/5/97).

Reality, of course, is different. Most senior citizens are intelligent, frugal, and inclined to scrutinize carefully every line of bills that they are asked to pay, as AMA trustee Pamela Formica, M.D., testified at a briefing on the Kyl-Archer bill. And many, if not most, physicians stay in Medicare only because they fear their incomes would otherwise plummet. Those who withdraw on principle take a serious financial risk and usually make a great financial sacrifice. In a free-market transaction, fees have to be mutually agreeable. Even affluent senior citizens may judge physicians' services to be worth exactly nothing if asked to pay out of pocket. Those with an ingrained entitlement mentality may be enraged.

If moral scruples are disregarded, it may be considered irrational to pay when something is available without significant charge. Rep. Stark and his allies deny that seniors may lack access to needed services under Medicare. However, a 1997 AAPS survey showed that 14% of respondents accept no new Medicare patients; 19% accept them only under special circumstances; and 40% restrict services to Medicare patients, decreasing their Medicare practice by an average of 36%. Also, 26% reported difficulty finding a physician to accept a Medicare patient who needed a referral.

About one third of physicians restrict Medicare services because of threats and hassles by carriers. More severe price controls, government-produced physician shortages, and increased penalties can only exacerbate this problem. Even seniors who are now perfectly satisfied with government medicine have an interest in preserving a way out.

Unfortunately, congressmen on both sides of the aisle call this an "open door to fraud."

To address this bogus concern, some suggest requiring "dummy claims" for all private services in order to obtain the "minimal information necessary" to prevent double billing.

AAPS regards this poison pill as a pretext for acquiring the information needed to control private medicine, as by imposing practice guidelines, price controls, global budgets, and other government regulations. (In other contexts, registration is recognized as the prelude to confiscation.)

AAPS maintains that the federal government has no right to information concerning medical services for which it does not pay, especially without the informed consent of the patient. Moreover, the completion of a dummy claim would be just as onerous as filing a real claim, adding to the cost of care, which is of far greater concern to a self-paying patient than to a HCFA bureaucrat. Also, given the hostility of HCFA to private contracting, filing a dummy claim (or affidavit) may serve as an invitation to abusive audits and investigations, or may be perceived as such, diminishing still further the access of patients to private care.

AAPS strongly opposes the use of this issue to expand federal controls on private transactions. Police-state-style surveillance would be needed to enforce reporting demands.

Patients who are or may someday be of Medicare age may wish to try to protect their options now, before Section 4507 goes into effect (see pp. 2-3) or Kyl-Archer is passed.

IRS Seizes Milk Money


Although the IRS had the court case against the Lapps dismissed (see AAPS News Nov 1997), the agency is pursuing other actions against the Mennonite farmers, who refuse to file tax forms because they believe they cannot do so honestly. Having raised its apparently arbitrary estimate of what the Lapps owe to $51,000 and determined their sources of income, the IRS has decided to seize all payments owed to the Lapps from milk sales to a local dairy until the full amount is paid, even though the Lapps need much of that income simply to pay their costs of production. The sale of milk is practically the sole source of the family's livelihood throughout the winter months. Already, the small community is feeling the effects of the seizures because the Lapps can no longer buy things like grain for the cows. They fear they may have to sell part of their herd to be able to feed the rest. They are now cutting and selling wood to bring in some money. They also have available a 31-page booklet about their case; a book entitled No Law Against Mercy: Jailed for Sheltering a Child Against the State ($27.95 postpaid); an article by Hannah Lapp entitled "Plain Independent: What the Amish Can Teach Other Americans About Reducing Reliance on Government"; and various scholarly articles on economics and freedom.

The phone call from the IRS came at a particularly bad time, when the family was discussing the possibly serious neurological problems of one of their adopted daughters, who may need a ventriculo-peritoneal shunt. The family pays all medical bills out of pocket.

There have been various official visits to the farm from the "milk police" and the "dog police" (the family breeds show dogs), plus numerous harassing phone calls, including several that stated federal marshalls were on the way to seize the entire farm and all of their possessions. The Lapps prepared their video cameras to document their demise should it occur.

A special independent citizens committee has formed to aid the Lapps-possibly an unprecedented occurrence because everyone fears retaliation for aiding someone targeted by a government agency. The committee will track how many of its members undergo an IRS audit.

Medicare providers may ask: Did the payments they have received come partly from the Lapps' confiscated milk money?

[The Lapps' address is 3333 Cassadaga Rd., Cassadaga, NY 14718.]


Government Psychiatric "Help"


When deputies came to serve a court order for a psychiatric examination, Shirley Anne Allen of Roby, Illinois, a 51-year-old widow, ran them off with a shotgun. Eventually, she was rendered unconscious with rubber bullets and taken to the hospital-but only after a 39-day siege of her farm by police. The patient, who reportedly manifested depression, bizarre behavior, and delusions of spies in helicopters, was subjected to a variety of treatments: constant surveillance by dozens of troopers; sleep deprivation because of loud, raucous music; tear gas; bean-bag bullets; an encounter with a police dog (which she shot and wounded); the shutoff of electric power, water, and outside food supplies; and cold (police broke most of her windows, and temperatures were near freezing).

"We are not in this woman's face," said State Police Director Terrance Gainer. "We are there for this woman's protection and for the protection of her neighbors."

Her neighbors were generally supportive; one was driven away by police when she tried to bring a bag of groceries. Their lives were also disrupted as roads were blocked off and mail and garbage service were suspended.



Action Plan for the Month


Read the enclosed copy of ß4507 and reflect on the role of Medicare in your practice. Distribute the Grassroot Grannies alert and let us know what your patients and your Congressmen think. Consider asking patients to sign the Request/Consent for Non-Medicare Services to help keep options open.





A Declaration of Independence from Medicare and a Petition to Congress


Whereas: Medicare is a program for forced redistribution of income that is rightly called socialism or legal plunder; and

Whereas: Government officials have fraudulently persuaded Americans that Medicare is an insurance program whereby they are providing for their own retirement needs; and

Whereas: Medicare is actually funded solely by the taxes of current workers, the payments of retirees having been spent for other purposes long ago so that the Medicare "Trust Funds" contain only claims against the U.S. Treasury; and

Whereas: The bankruptcy of Medicare can be delayed only through increasingly oppressive taxes on workers and increasingly stringent rationing of medical services to beneficiaries; and

Whereas: Physicians' ability to practice ethical medicine is increasingly impaired by intrusive bureaucratic requirements, accompanied by threats of Draconian fines and imprisonment for violations of complex, ambiguous, irrational, and sometimes unwritten or ex-post-facto regulations,

The undersigned physicians do hereby DECLARE their intention to decline any form of voluntary participation in the Medicare program, and to continue to provide medical care to Medicare-eligible patients, accepting only those payments rendered voluntarily to cover mutually agreeable fees.

Moreover, the undersigned PETITION the U.S. Congress

(1) to enact legislation permitting current workers to withdraw from the Medicare system and provide for their own retirement needs through private investment and savings and

(2) to guarantee that current beneficiaries are not deprived of their right to use their own resources to obtain the medical treatment of their choice, even if their physician accepts Medicare payment for some services.

[Larger copies suitable for signing are available on request. A number of members have signed.]




The provisions of ß4507 (enclosed) apply only to covered services performed pursuant to formal "private contracts" likely to be unsatisfactory to both physicians and patients. AAPS has developed a sample Request/Consent Form for private treatment; no legal warranty is implied. Litigation strategies, both preemptive and reactive, are under consideration.

Medicare Non-"Providers"


AAPS hears from increasing numbers of physicians who are renouncing government payment. At the annual meeting, Dr. Tad Lonergan told about his pure free-enterprise clinic (tapes still available), which he opened after being excluded from government programs. Most physicians known to us who work outside the government system have excluded themselves voluntarily.

Physicians have taken a number of approaches.

A few physicians refuse to consider themselves Medicare "providers." They argue that Medicare Part B is voluntary for both patients and physicians. They have never signed any agreement with the government, nor have they implicitly accepted governmental oversight by taking assignment. Their relationship with their patients is based on mutual trust, not signed papers. If their theory is correct, Medicare regulations are simply irrelevant to them. As far as we know, the theory has never been subjected to a court test. We know of one family physician in rural Iowa who was eventually excluded from Medicare, a fact that he proudly advertised in the newspaper, continuing on with his low-cost family practice just as before. This was long before Draconian civil and criminal penalties were enacted. If physicians had followed the lead of Dr. Henry Wolf, our situation would be very different today.

A few physicians are Medicare non-"providers" because they have written to HCFA and asked that their provider number be retired or inactivated. They continue to care for Medicare-eligible patients who pay privately but file no Medicare claims. Some use a written disclaimer such as the Medicare Acknowledgement Form published in AAPS News July 1996. The main hazard is that patients or family members will violate their oral or written agreement and demand to collect their "entitlement." If the physician has not supplied paperwork and codes, it is not possible to file a claim without the physician's knowledge. Learning of the patient's betrayal of trust, the physician has the option of refunding payment.

Some physicians are non-"providers" either because they refuse to treat Medicare-eligible patients (except possibly under emergency conditions, when they simply work without pay) or because they provide only non-covered services.

Some physicians try to be both Medicare "providers" and private physicians. Some make a clear distinction between services that are legally not covered (such as cosmetic surgery) and perform only those services by private arrangement, filing claims for covered services that may also be provided. This practice may face a court test. At least one physician has been threatened with criminal indictment, although to the best of our information and belief his practice has been scrupulously honest. Other physicians perform "covered" services on a private-contract basis from time to time, electing this option in consultation with their patients on a case-by-case basis.


Better, or Worse?


The effect of Section 4507 is not altogether clear in our view and may not ever be determined without litigation. Enforcers may not be guided by the plain meaning of the Law.

It seems clear to us that the law applies only to physicians who are Medicare "providers." There is no law that requires a physician to be a "provider." (In Massachusetts, to be sure, one must sign a Medicare Participation Agreement to be licensed, but one is not required by law to accept Medicare-eligible patients in one's practice). Furthermore, ß4507 does not say that all physicians who treat Medicare-eligible persons on a private basis must file an affidavit. It simply provides a form of safe harbor for those who do file the affidavit. How safe is the harbor? For a clue, ask a physician who filed for a waiver under the Clinical Laboratory Improvement Act. Such physicians are open to expensive, intrusive inspections to prove that they do not perform any non-waivered services.

Does ß4507 make the murky situation regarding private contracting better, worse, or about the same? Some have said that AAPS is the only group in the country that thinks the situation might be better, because Congress has finally acknowledged that it is lawful to perform possibly covered services for Medicare-eligible persons for private payment, at least under certain circumstances. Whether it truly is better (or worse) depends on what the situation was before, both inside and outside the District of New Jersey where Stewart v. Sullivan was decided. AAPS is attempting to clarify the situation with the open letter to Secretary Shalala.

From a moral and legal standpoint, AAPS continues to recommend the Non-Participation Policy of rejecting all taxpayer funds and declining to participate in all voluntary activities that help to support socialized programs.


An Open Letter to Secretary Shalala


Dear Secretary Shalala:

Congress recently passed Section 4507 of the Budget Reconciliation Act of 1997, entitled "Use of Private Contracts by Medicare Beneficiaries." This new Section raises more concerns than it answers, and HHS has not yet published any clarification even though the effective date of the Section is January 1, 1998. On behalf of our thousands of physician members, we request clarifications to the following:

1. Does HHS interpret this new Section as applying to any services that are not covered by Medicare?

2. Has HHS changed its policy toward private contracting by Medicare beneficiaries, as expressly adopted by the U.S. District Court in Stewart vs. Sullivan, 816 F. Supp. 281 (D.N.J.1992), by virtue of this new Section (or otherwise)?

3. Does HHS interpret this new Section as applying to any private contracts entered into prior to its effective date?

4. Does HHS impose any reporting requirements, prior to or after the effective date of this Section (please address both time periods), for services provided in which the patient and physician expressly waive any reimbursement under Medicare or other governmental programs?

5. Does HHS interpret this Section as applying a penalty to any physician who does not file an affidavit and yet provides a potentially covered service to a Medicare-eligible person, and, if so, what is the penalty?

6. Will HHS issue regulations clarifying application of this new Section and, if so, when can Medicare beneficiaries and physicians expect promulgation of these regulations?

7. With respect to physicians who file an affidavit pursuant to this Section, may they seek reimbursement from the government for services rendered outside the scope of this Section due to an emergency situation?

Medicare beneficiaries, and their physicians, have a constitutional due process right to obtain plain and clear notice of applicable law. We look forward to obtaining a prompt response from HHS to these narrow and important questions.

[Physicians may want to take certain actions pending a response--Ed.]

Members' Page


From Small Beginnings. Having just read the AAPS pamphlet by James Maccaro on the Road to Genocide, I am astounded by the current parallels to the practice of medicine in the National Socialist era. Take a look at the Chautauqua Integrated Delivery System...and its "ledger like accounting which tracks credits (Enrollee Allowances) and debits (claim costs) for each physician." A "subtle shift" in physician attitude seems already to have occurred such that people are now judged on their debits and credits (worth) to the Plan.

Try comparing the "Reich's Work Committee of Institutions for Cure and Care" (the Nazi agency responsible for carrying out euthanasia efficiently) to the present day "Compassionate Competent Care Initiative" funded by the Robert Wood Johnson Foundation and implemented by the AMA. This project will not only provide "education" but will try to "set the standard for what constitutes good patient care." Like the Nazi decree setting "a new standard of care"-resisted by Dutch physicians who saw where it was leading-the first eight elements of the AMA-RWJF initiative "might appear at first reading to be unobjectionable and innocuous."

Given the widespread abuse of euthanasia in the Netherlands today, it's almost as if the Nazi concept of killing those deemed to possess "a life not worthy to be lived" lay dormant for half a century and has now re-emerged. Whole societies, having abandoned their absolute moral immunization to such things, in favor of moral relativism, are now completely vulnerable to the spread of this disease.

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


A Chain Letter on Capitation. Dear Friend and Colleague:

Most of us, as physicians, are concerned about the obstacles in the path of physicians as they attempt to deliver care...As a first step, this letter is to encourage you not to sign any contract that leads to or involves capitation. When your name appears on the insurance companies' list, your patients think you are condoning capitations....This letter has been reviewed by an attorney and does not violate antitrust concerns, as the intent is not to boycott any individual plan but to voice one's...right to freedom of speech against an idea.

sent to us by Holly Fritch Kirby, M.D., Leawood, KS

[A full copy of the chain letter is available on request from AAPS.]


Private Doctors Do Exist. From a letter to Forbes:

I have been treating Medicare beneficiaries for cash payments, with no Medicare claims filed by me or beneficiary, for years-in fact, almost since the inception of the program in 1965. I do not intend to stop this practice, nor do I intend to sign any affidavit agreeing not to treat Medicare beneficiaries for two years, as [referenced in] Section 4507 in the recently approved budget bill. It seems to me to be an unenforceable law since if HCFA receives no claim forms, how will they know that a Medicare beneficiary has received medical care from me or anybody else for that matter....?

Anthony A. Cassens, M.D., [email protected]


More Merciful Death? If you have until now chosen not to believe that government control of medicine would result in strict rationing and restricted freedoms, you need only ask Senator Kyl's office about the roadblocks to his efforts to guarantee the right of senior citizens to receive care outside the system. What American would expect our elected officials to try to imprison those over age 65 in the socialized system called Medicare? But what they would do with Medicare they would do with universal care.

A recent article (JAMA 1997;278:1001-1007) showed what happens when third parties control medicine. Medicare HMO patients have an 8% greater chance of dying within 100 days after discharge from the hospital compared with those receiving private care. Do HMOs really make death more merciful-by limiting physician visits, specialist referrals, medications, and diagnostic tests?

Joseph Scherzer, M.D., Scottsdale, AZ


Adieu to Medicare. As of Aug. 15, after much consternation, I discharged all my Medicare patients. This was not a financial decision, but a defensive act to protect myself and my family life. I did not enter medicine to risk jail sentences for the unintentional errors of my staff, and a $10,000 fine for each of those errors would be impossible for me as a small-town family physician to pay. HCFA's tactic of raising funds by redefining fraud will simply create more criminals for our already overcrowded prisons, plus physician shortages. Applying "command economy" logic, HCFA perceives the cause of its overspending to be too many physicians, so the plan is to reduce those numbers. Remember, Stalin's explanation for the rising cost of food was too many farmers. Likewise, rice farmers were executed in Sri Lanka in the 1970s to keep the cost of rice down. It didn't work there either....

Debra M. Monde, D.O., Abilene, TX


No to Welfare. The I.R.S. man says the law allows them to seize one's whole paycheck but that one can then apply for welfare. Thomas Szasz says in his book The Untamed Tongue: "You should not bite the hand that feeds you; unless it keeps you from feeding yourself"....If they get us on welfare they can claim they are helping more people. But I would rather beg than take their stolen money.

Jacob Lapp, Cassadaga, NY


Legislative Alert: AAPS Report from Washington


Medicare Private Contracting: The Gathering Storm?


Senator Jon Kyl (R-AZ), chief Senate sponsor of the Medicare Beneficiary Freedom To Contract Act (S. 1194), has garnered 43 cosponsors for the Senate bill. Congressman Bill Archer (R-TX), Chairman of the House Ways and Means Committee, has introduced a companion bill (HR 2497) in the House of Representatives. It has attracted a stunning 157 cosponsors. The Archer-Kyl bill would repeal the onerous requirement that doctors sign an affidavit and exclude themselves from treating any patients under Medicare for a period of two years to take advantage of the Balanced Budget Act provisions concerning private contracts.

The strong growth in Senate support testifies to the political potency of the issue. Kyl is making the rounds of his Senate colleagues convinced that the issue of patient choice is not only good public policy, but is also great politics. To the extent that senior citizens start finding out what is in that Balanced Budget Bill, Kyl could soon be proven very right-and politically a lot more savvy than so many of his colleagues. Senate Democrats are watching this issue carefully, weighing the growing public response. When the parade gets big enough, you can never tell how many politicians are prepared to jump out in front of it and pretend that they were marching to the tune of the vox populi all along. It is instructive that only Senator Ernest Hollings of North Carolina-a senior Democrat wise in the ways of the worldís most exclusive deliberating body-has sponsored the Kyl bill.

In the House, even though President Clinton is threatening to veto any liberalization-a good old word when used correctly-of private contracting in Medicare, "liberal" Democrats (if that adjective is appropriate any more) are getting progressively nervous. Why? You can always be sure when you are scoring politically when the opposition resorts to name calling over reasoned argument. We are starting to get a lot of name calling, and remarkable defenses of the Medicare status quo. As reported previously, Congressman Pete Stark (D-CA), Ranking Member of the House Ways and Means Subcommittee on Health, warns that the drive for private contracting in Medicare is nothing more than a scheme hatched by a few greedy doctors to get more money out of hapless seniors. Indeed, the central response of Stark and his allies has been an ad hominem attack on doctors.

The liberal leadership of the American Association of Retired Persons (AARP), which claims to represent 30 million people over the age of 50, has never been shy about venturing onto health care policy battlegrounds and occasionally outruns its supply lines. Recall their support of the calamitous Medicare Catastrophic Act of 1988 and their carefully worded "pussy footin roun" with Miss Hillaryís health care plan, which was opposed by 80% of seniors in one prominent poll. Not to be outsmarted again, AARP has come out officially swinging against the Kyl bill. Spokesman Martin Corry recently told American Medical News (10/6/97) that the Kyl effort reflects the belief of some physicians that "one Mercedes isnít enough; I want two."

The second part of the liberal strategy-after trashing doctors-is to issue a stirring defense of the Status Quo. Nothingís wrong with Medicare that another ream of regulation wonít cure. Congressman Stark has laid out the statistics with a drum-roll: 96% of doctors "accept the Medicare fee schedule"; in 1995, 393 doctors received more than $1 million each from Medicare and 3125 received between $500,000 and $1 million; and the Physician Payment Review Commission (PPRC) "reports no problems of access because Medicare underpays doctors."

To show anybody who doubts it that he means business, Kyl has put a Senate "hold" on the President Clintonís nomination of Nancy-Ann Min DeParle as Administrator of the Health Care Financing Administration (HCFA). The effect of a Senate hold is to stall and possibly derail the nomination. It traditionally has been a way that Senators have bargained with the President and the Administration.

Remarkably, Congressman William Thomas (R-CA), Chairman of the House Ways and Means Subcommittee on Health, told the New York Times (10/26/97) that while he supports the Kyl bill, he opposes using the DeParle nomination as a bargaining chip with the Clinton Administration. Thus Thomas tells The Times: "That whole approach drives me up a wall. Itís so petty to think that you can stop the world until your little issue gets addressed. To hold up a nominee over one specific issue-thatís in the category of bribery and blackmail, not policy. Itís like assault and battery on a government nominee." The future HCFA Administrator, appointed by the Clinton Administration, is an innocent who must be spared Senatorial angst over a "petty" or "little issue".

Funny, President Clinton didnít think private contracting in Medicare was a "little issue"; in fact, as Congressman Thomas and his colleagues have revealed in various communications to the press and the public, well after the fact, President Clinton was prepared to veto the entire Balanced Budget Bill over this specific dispute-tax cuts, budget targets, the goal of reaching a fiscal balance, the bloody political and public relations battles of the past two years with Gingrich, everything-over section 4507. And it didnít seem a "little issue" to Thomas and his House Republican colleagues when they caved into the veto threat of the President during the negotiations on the Balanced Budget Act of 1997. In fact, it seemed so big that they had to make-according to them-a gut-wrenching decision to establish federal intrusion into private contracting between doctors and patients. So, thatís not blackmail and bribery on the part of Bill Clinton? No, heís just being "Presidential." But when Kyl holds up a nomination-not the entire Balanced Budget process, mind you, but a single nomination-then thatís "blackmail and bribery." And Democratic savaging of various Republican nominees such as Clarence Thomas was merely normal political behavior.

This episode is yet another chapter-and-verse lesson in the political behavior of House Republicans in the wake of the 1995 Budget Battle.

Kyl is getting big backing from the United Seniors Association, a conservative seniorsí group which represents 540,000 elderly citizens nationwide. Sandra Butler, the president of the group, said recently that "It seems incredible that our government would deny seniors the basic freedom to use their own resources to get better health care."

The efforts of the United Seniors have been reinforced by a growing coalition of organized opposition. The American Conservative Union (ACU), Citizens for a Sound Economy, and American for Tax Reform have all staked out opposition to Section 4507. Meanwhile, spokesmen from the National Center for Policy Analysis and the Heritage Foundation have also called attention to the negative policy implications for the elderly if a restrictive policy on private contracting is imposed on Medicare.

And yet the Congressional team sponsoring the bill gets increasingly nervous about the rightness of their own position. According to the Congressional Quarterly Monitor (11/3/97), top Republicans, the same group which gave us the now infamous Section 4507 of the Balanced Budget Act of 1997- which protects private contracts only with doctors who promise to get out of Medicare for two years-is now getting another case of the shakes. According to CQ, Republicans such as Mike Bilirakis (R-FL) are so spooked over Medicare issues that they fear corrective legislation would give the Democrats "fodder" to use against them in the 1998 campaign.


Playing Softball


The Wall Street Journal first reported it. And the Washington Times followed suit. But the news is so striking, one has to sit down and absorb it. House Speaker Newt Gingrich has been considering nothing less than the nomination of Horace Deets, top honcho of the AARP, as his choice for the big Medicare Commission. The Commission, which is to report in two years on long-term Medicare reform, was created by the Balanced Budget Act of 1997-the achievement of a lifetime, according to Clinton.

It is hard to fathom why Gingrich would do such a thing. It is akin to Teddy Kennedy appointing some right-wing activist to a prominent commission on entitlement reform. If Deets and the AARP crowd get the nod, then Congressional leadersí commitment to serious Medicare reform is, to put it charitably, pretty vague-after all the political bloodshed and the terrorization of seniors and Republicans alike by the Clinton Administration.


Democrats and Medicare Reform


The Democratic Leadership Council, the self-styled New Democrats that we have heard so much about since 1992, has released a revealing poll of Democrats and the general public on Medicare reform and other entitlement and policy questions. According to the DLC, 56% of the public has "little or no confidence" in the long-term financial stability of Medicare, though the surveys reveal that seniors have more confidence in the system than active workers. Contrary to the original position of the Clinton Administration, articulated by the President in his 1995 State of the Union, and hinted at thereafter, voters generally recognize the "need for large changes in the Medicare system". According to the survey, 73% of Americans, including 69% of all Democrats, think that Medicare will soon face a serious fiscal crisis. Only 23% of the general population thinks that Medicare is basically sound, and "should not be tampered with." And even more remarkable finding is that 80% of the general population and 76% of Democrats believe that it is "more important to reform Medicare than to protect it from Budget cuts."

On the specifics of Medicare reform, there is, of course, more division. But there are some interesting findings. First, 41% of Democrats favor smaller changes, such as raising premiums or cutting benefits slightly, as long as the basic Medicare structure is retained. But 48% of Democrats and a whopping 57% of all voters favor much larger changes in the system, including "letting the marketplace determine the price and level of health care provided" rather than the government setting the price of Medicare services and the "scope of Medicare coverage." Moreover, 75% of all voters, and 74% of Democrats, favor means testing, "or raising Medicare premiums" for the wealthy. The Congressional leadership should take note.


A Coming Medical Cost Explosion?


Next year, according to the United States Office of Personnel Management (OPM), premiums in the Federal Employee Health benefits Program (FEHBP) are projected to increase on average by 8.5%. This is the largest increase in FEHBP premiums in several years. The Feds are feeling the unpleasant pressure of their own legislative handiwork: the Kennedy/Kassebaum bill and other federal mandates.

Policy analysts are worried because the FEHBP, which is more driven by consumer decision-making than private-sector, employer-based insurance, has been traditionally better at keeping costs under control. In the private sector, OPM and industry analysts project a return to double-digit premium increases in 1998 as managed care matures and the population ages. Others observe, however, that while the FEHBP news is not good, there are certain features of the federal system that are quite different from the private sector plans offered by large companies. The federal pool is aging more rapidly than either the private sector workforce or the general population. By 1995, a total of 40% of all FEHBP subscribers were retirees. And the proportion of elderly and retired workers in the pool has been growing relative to the active working population. The reduction in the federal workforce by about 200,000 workers has deepened the imbalance between retirees and active workers. Because federal retirees are sharply more expensive than members of the active workforce, this factor alone is probably the greatest single factor driving health care costs up in the program.

The projected increases are likely to open the next phase of the health-care-reform debate and give the Clinton Administration another opportunity to press for more chunks of its health care agenda-the imposition of premium caps on health insurance and renewed "discussion" of the desirability of a "global budget."


The AMA and Private Medicine-a Look Back to 1972


The "Sesquicentennial Moment" commemorated in AM News on 10/13/97 involved the creation of the Professional Standards Review Organizations (PSROs) for Medicare. Then-president-elect Malcolm C. Todd, M.D., called PSROs "a greater threat to the private practice of medicine than anything ever developed by Congress." However, because repeal was "unrealistic, politically naive and unattainable," the AMA advised doctors "to work within the program in hopes of having a significant impact on implementation."

AAPS challenged the law (in AAPS v. Weinberger) and also the AMA leadership. James Sammons, M.D., then chairman of the AMA board, called the "give me liberty or give me death" tactics of AAPS to be "among the most divisive in American medicine."

In 1980, the AMA delegates did vote for repeal, and a year later, Congress began phasing out the unsuccessful program -only to replace it with something worse, the Peer Review Organizations or PROs.