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Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 62, No. 1 January 2006


Doctors are just like other Englishmen: most of them have no honor and no conscience: what they commonly mistake for these is sentimentality and an intense dread of doing anything that everybody else does not do, or omitting to do anything that everybody else does.

The Doctor's Dilemma, George Bernard Shaw, 1913

In the early 1900s, as now, there were pressures for conformity, yet great disparities in treatment. Medical errors killed people; medical costs bankrupted people; medical science was flawed; therapeutics was driven by fad and fashion; professions were called a "conspiracy against the public," concerned only about protecting their ego and their income; and socialism was the cure.

Shaw proposed to have physicians employed by the state as public health officers, with salary determined by the health of their district: payment for performance. The idea was to eliminate the possibility of a "vested interest in ill health."

He believed in massive data collection: "Remember that an illness is a misdemeanor; and treat the doctor as an accessory unless he notifies every case to the Public Health Authority."

Socialism is harsh. Even though Shaw wanted to force doctors to remind their patients of their fallibility, he advised that society "[t]reat every death as a possible...murder...; and execute the doctor, if necessary, as a doctor, by striking him off the register." The number of registrants would be strictly limited, and care, naturally, would be rationed.

Apparently, in his advocacy of socialism Shaw was blind to his own remonstrances about the uncertainties of science, and the fact that by playing on people's fear of death, "any trader can filch a fortune,...and any tyrant make us his slaves."

Rereading the Fabian socialist Shaw can help immunize us against thinking that current trends are New Ideas. But the proposed new standard of care is a radical change from the court- determined, case-by-case criterion for negligence. It is universal, and while supposedly based on science rather than authority (expert witnesses), a powerful authority will dictate what constitutes evidence, and what the evidence shows.

Congress has passed a bill creating the National Medical Error Reporting System to encourage voluntary, confidential reporting of medical errors. This was inspired by the system for reporting aviation errors or near-misses to NASA, to help reduce accidents. Senate Majority Leader Bill Frist, M.D., subscribes to the Institute of Medicine's assertion that medical errors are the nation's eighth leading cause of death.

The Center for Health Transformation, founded by Newt Gingrich, wants President Bush to "set as a national goal the elimination of deaths due to medical errors." Senators Hillary Clinton (D-NY) and Barack Obama (D-IL) introduced the National Medical Error Disclosure and Compensation (MEDiC) Act, S. 1784, which would provide federal support for a program that would require disclosure of errors to the patient and offer to enter negotiation for compensation if the patient was found to have been harmed by "medical error or the standard of care not being followed."

Deviating from the standard of care could thus be treated in the same way as an error. And who will determine the standard? The AMA proposes developing "evidence-based, valid performance measures" through a "consensus-building organization involving multiple stakeholders." This appears to be the proposed trade-off for eliminating the Sustained Growth Rate (SGR) methodology of setting Medicare fees, and its 26% fee cut expected over the next 6 years.

Our current parlous state persists despite the fact that the United States has the most heavily regulated medical system in the world; laws and regulations governing it comprise more than half the words in our entire body of law. The added element in - proposed solutions like the AMA's is a greater merger of state and corporate power: Mussolini's definition of fascism (Jones HE, www.mises.org/fullstory.aspx?id=1749).

The biggest stakeholder is the pharmaceutical industry. In a survey of more than 200 guidelines deposited with the U.S. National Guideline Clearinghouse in 2004, specifically written to influence physicians' practice, only 90 contained details about individual authors' conflicts of interest, and of these only 31 were free of industry influence (Nature 2005;437:1070).

While various types of surgical and endovascular intervention are included for peripheral arterial disease, the ACC/ AHA guidelines also recommend a long list of drugs: statins, fibric acid derivatives, ACE inhibitors, beta blockers, nicotine replacement, bupropion, aspirin, clopidogrel, cilostazol, and pentoxifylline (75-page executive summary, www.acc.org).

Since the "gold standard" for "evidence-based" medicine (EBM) is the randomized controlled trial (RCT), drug therapy is bound to be favored. Methods based solely on individual clinical observation or pathophysiology (thyroxin for myxedema, antibiotics for infection, surgery for obstruction, oxygen under pressure for carbon monoxide poisoning or ischemic brain damage) can never measure up by definition.

EBM is not exclusively a tool for reducing error, writes Kenneth Goodman of the University of Miami bioethics program. Fledged about the same time as managed care, EBM "was bound to be about money and lawsuits." EBM is a "cudgel for beating down costs" (PBM 2005;4:548-556).

Physicians must beware of accepting the concept of a standard of care that is itself evidence-based, threatening the autonomy of physicians and subjugating the patient's interest to that of the collective. Ethically, the standard of care remains the Oath of Hippocrates: "I will prescribe regimen for the good of my patients according to my ability and my judgment."

Reflections on Evidence-Based Medicine

What it is: a collection of secondary resources that "digest and summarize" the medical literature for clinicians; a creed; "one of the most influential doctrines in the medical world"; a "search for rules in a world of exceptions"; a hierarchical account of evidence; a branding exercise.

The top of the hierarchy: the randomized controlled trial (RCT), the "gold standard" even in circumstances when it is impossible to perform; poorly performed RCTs trump all non-RCT studies.

Absent from the hierarchy: listening to patients and their concerns.

The role of patients: "objects from which information is to be gleaned and then inspected."

Pitfalls of RCTs: the "privileging of inferential gaps" by abjuring pathophysiologic rationale; "evidence for sale"; studies underpowered to determine the harm/benefit ratio; limited ability to evaluate combination therapy or comorbidities.

[See autumn 2005 issue of Perspectives in Biology and Medicine, http://muse.jhu.edu/journals/pbm.]


From Autonomy to Accountability

"Third parties traditionally have not been in a position to prescribe medical behavior because medical professionals largely determine the content of their work. Outsiders, though, can try to hold the profession accountable to its own guidelines. Dovetailing on the professional authority already invested in the guidelines, these outside parties will try to enforce the normativity of the guideline and erode its flexibility, turning a guideline into an enforceable standard. The key mechanism for such conversion is financial accountability....

"What is at stake is who decides how medical work should be done. Are the people trained to do the work or those who pay in charge?" (PBM 2005;48:498).

"Doctors have been given the opportunity to scuttle Medicare," writes AAPS President Elect Robert Gervais, M.D. "All they had to do was to refuse to sit down with government and assist it in implementing coding, HIPAA, P4P, etc.... Doctors repeatedly had the chance to choose principle over expediency, but never did. They are now paying the price in innumerable ways."


The Standard for Review

The senior author of the Agency for Healthcare Research and Quality (AHRQ) negative review on the use of hyperbaric oxygenation in cerebral palsy made a private comment that no matter what, he would not find HBOT useful for neurologic indications, writes K.P. Stoller, M.D. A physiologic study of brain blood flow and metabolism after injury was thrown on the trash heap of "uncontrolled" studies. Papers reporting on SPECT scan imaging were simply disregarded.

A parent writes: "An artificially high standard that is still not in place for any other modality...now prescribed for brain-injured children" can be used selectively to exclude data.

This method, he continues, appears to be the "standard" for other reviews done by the Evidence-Based Practice Center at OHSU, such as one on vaginal birth after caesarian, which examines only 20 of 6,828 potentially relevant articles (Guise JM, et al. Obstet Gynecol 2004;103:420-429), excluding 99.7%.


Standard of Care Killed Washington

In the 12 hours before his death, from what in retrospect was probably bacterial epiglottitis, George Washington had 80 oz (2,365 ml) of blood removed and was also treated with calomel and tartar emetic. The reasoning was that vasoconstriction might relieve the inflammatory edema. The proposal to do a newly described procedure called a tracheotomy was rejected. This was also based on reasoning about pathophysiology, not on an RCT. Meanwhile, Benjamin Rush, a champion of bleeding, was facing allegations of malpractice. He had sued journalist William Cobbett, who had charged Rush with killing patients. Rush won the lawsuit the day Washington died (Morens DM, N Engl J Med 1999;341:1845-1849).


Applying for Government Money

To see whether they are eligible for "extra help" of up to $2,100 with prescription drugs, Medicare beneficiaries are asked to disclose income and all their "resources," including bank and brokerage accounts, "cash at home or anywhere else," and value of life insurance "if cashed in today," under penalty of perjury including imprisonment (SSA-05-10128).


Hand Surgeon Opts Out

Having decided to opt out of Medicare as of July, 2005, hand surgeon Paul Gorman, M.D., of Johnson City, TN, explains why on his website www.trinityhandspecialists.com:

"In keeping with the quote from the 18th century Irish philosopher, Edmund Burke: `Better be despised for too anxious apprehensions, than ruined by too confident security,' my conscience has compelled me to voluntarily no longer participate in Medicare Part B for physicians services and any federal-state reimbursed health programs.... That which the government subsidizes, it ultimately controls, and while there is still a vestige of the free market left in medicine and the 13th Amendment to our Constitution which prohibits my involuntary servitude, I intend to work as hard as possible to show that a free and independent physician can outdistance a government bureaucrat anytime....

"Medicare has become the cornerstone of the socialist welfare state in America.... With its price controls and burgeoning enrollment as the `baby boomers' enter retirement age, the following are inevitable if the program is not disbanded or privatized soon: taxes will increase, services will be cut, rules will increase in complexity, and compliance penalties will become more punitive....

"Instead of restricting access to hand care, my policy is to contract privately...."


AAPS Calendar

Feb 11, 2006. Board of Directors meeting, Houston, TX.
Sept 13-16, 2006. 63rd annual meeting, Phoenix, AZ.

Medical Staff Reappointment Watch

The appointed Medical Staff Leaders of St. Dominic- Jackson Memorial Hospital in Jackson, MS, expect that, if you accept reappointment, you will:

  • Bring any concern regarding patient care...to the attention of either the Chief Executive Officer, Chief of Staff, or Department Chair;

  • Refrain from discussing these issues with others, who cannot effect change;

  • Provide care at the generally recognized level;

  • Follow medical staff approved protocols of care when such protocols have been determined by the Medical Executive Committee to promote quality care and appropriate use of resources.


Recertification Watch

As of January 2006, recertification by the American Board of Internal Medicine requires completion of a "self-evaluation module for practice performance." Physicians conduct a chart review of patients with the selected condition, submit data, receive a document comparing their performance with national guidelines, develop a "plan for improvement," and measure its effects after implementation (N Engl J Med 2005;353:1989-1997).


Conscience Watch

Pharmacists' refusals to fill prescriptions for contraceptives, which they may consider to be abortifacients, is increasing worldwide and is headlined as "a threat to women's health" (Science 2005;308:1557-1558). A small number of administrative and judicial bodies have considered challenges to pharmacist refusals. The Wisconsin pharmacy board found that a pharmacist's failure to transfer a birth-control prescription "fell below the standard of care," charged him the $20,000 cost of adjudication, and placed stipulations on his license. Bills permitting refusals on moral or religious grounds, introduced in 28 states since 1997, also have implications for treatments derived from embryonic stem cell research.

When Drs. Christine Brody and Douglas Fenton refused to provide artificial insemination to Guadalupe Benitez, she sued them for discriminating against her based on her lesbianism. The trial court declined to allow the physicians to raise religious freedom as a defense, but a California appeals court ruled that the doctors had the right to refuse the procedure based on marital status because it violated their religious beliefs. California nondiscrimination laws did not include marital status at the time the service was refused; the law has since been amended to cover same-sex couples who cannot legally marry. The case will be appealed to the California Supreme Court.

The California Medical Association initially supported the doctors, but withdrew upon discovering that the patient was a lesbian (AP 10/12/05; 365gay.com 12/8/05).


Right to Use Dangerous Off-Label Drug

An Ohio law that restricts the use of RU 486 intravaginally or past 7 weeks of pregnancy unfairly prevents some women from using the drug, says Planned Parenthood, which has challenged the constitutionality of the law with the help of the ACLU and ACOG. A practitioner who violates the law could be imprisoned for as long as 18 months. The FDA states that the "off label" use of the drug can result in death from bacteremia. State Attorney General Anne Berry Strait stated that FDA trials showed a great decrease in efficacy and increase in adverse effects after 49 days (LifeNews.com 12/5/05).


Pain Doctors' Convictions Upheld

The Fourth Circuit Court of Appeals affirmed the convictions of three physicians who worked at the Comprehensive Care and Pain Management Center in Myrtle Beach, SC, on charges of drug distribution, drug conspiracy, and money-laundering conspiracy (AAPS News, March and June 2003). The doctors claimed that they were entitled to a new trial because the lawyers on both sides confused the standards for civil malpractice and criminal liability.

Both the prosecutor and the court acknowledged that the doctors are entitled to resentencing under U.S. v. Booker. Dr. Michael D. Jackson was sentenced to 24 years and 4 months; Dr. Ricardo Alerre to 19 years and 7 months; and Dr. Deborah Bordeaux to 8 years and 1 month (AP 12/1/05).


Tip of the Month: Although it is not a crime for the government to lie to us, a special law makes it a crime to utter, during a federal investigation, something later deemed to be false and material (significant). See 18 U.S.C.  1001. Martha Stewart, for example, was prosecuted because the government felt she lied to an investigator. She was not prosecuted for the activity that triggered the investigation. States do not generally criminalize comments made to investigators, but federal law does. As a result, no one could fault or prosecute someone for responding to an investigator by saying: "I'd like to speak with my attorney first." In 50 years, will disagreeing with government be a crime?


On Tape Recording Officials

Laws vary regarding the legality or admissibility of tape recordings without the consent of all parties ( www.aapsonline.org.judicial/telephone.htm). In two cases in Australia, surreptitious recordings that parents made of child protection officials were allowed in court. While they had little effect on the proceedings, as the court felt they were too easily distorted or altered, the tapes did help to expose wild inaccuracies and fabrications by social workers. Even if recordings are never used in court, they can be an invaluable aid in transcribing your written notes of a meeting.

Australians advise: never rely on their recording of a session. It might take a long time to get a copy, and it could be damaged or altered. One might have a tape machine ready and start it as officials arrive, asking on the tape about any objection to taping the meeting "in order to create an accurate record for access later." Taping the refusal and answer to the question "Why?" could improve chances of acceptance. It is advisable to have a separate microphone placed away from guests to discourage interference. Have a witness and introduce him on the tape, and also name everyone present. Consider offering a copy of the tape to social workers (they have been known to refuse, but the offer was on the tape). While officials might be reluctant to compare the tape with their record to correct errors, their behavior has reportedly been much better while they were being taped, and errors turned out to be minor though possibly distressing.


Hospitals Seek More Protection. An interesting sidelight to the clause that Horty Springer devised for medical staff applications (AAPS News December 2005): In the Clark case (AAPS News October 2005), the hospital had the physician sign an "agreement not to sue" and thought it was home free when it did a sham peer review on Dr. Clark. The judge held, however, that the clause only applied to the time when the doctor signed it, as he could not reasonably foresee future claims (Clark v. Columbia HCA 25P.3d 215 2001).

This case was one of the first to crack the virtually impenetrable shield of immunity provided by the Health Care Quality Improvement Act (HCQIA). The verdict shocked and frightened many hospital administrators. As a result, the hospital bar is attempting to find a way around it, such as the "code of conduct" (unilaterally determined and enforced by the administration), the "competing physician clause," barring doctors who own any part of a competing facility from serving as an official of the medical staff, and other devious ways to deprive physicians of any due-process rights.

Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Price Transparency. Somewhere there is an entity that, for a cost less than that of massive paperwork exercises requiring hospitals to publish meaningless lists of prices nobody pays under laws of 50 different states, could put consumer- friendly English-translation Medicare procedure prices on the web. A private firm, Kelly Blue Book, does annual price surveys on cars around the country: instant price transparency, no legislation required, huge consumer acceptance.

Maybe the AMA could do it, thereby making money from the consumer-directed health care revolution. Instead, it seems to be cowering in the corner, possibly owing to its dependence on handouts from the Robert Wood Johnson Foundation. Maybe it could get the Kelly people interested!
Linda Gorman, Independence Institute, Englewood, CO


Barriers to Accurate Pricing. According to a hospital CEO, his industry has never had cost-accounting procedures that provide accurate estimates of the cost of hospital testing or treatment. Developing them will take a major effort, especially considering the totally illogical billing procedures that have evolved owing to the market-blind, coercive demands of Medicare, Medicaid, and managed care which ties its contract arrangements to Medicare's dicta.

Hospitals' best hope may be that, at some glorious time in the not-too-distant future, they can begin to deal with patients and insurers on the basis of accurate cost-accounting instead of self-beggaring contracts. This means not signing managed care contracts, and encouraging consumer-directed health care (CDHC).
Robert F. Hamilton, M.D., Godfrey, IL


Hospitals Could Compete. I think that well-run hospitals, especially nonprofits relieved of tax burdens, could do very well, and even clean the clocks of some specialty hospitals. But they won't, because they are dominated by the same thinking as our education system: competition, productivity, results, incentives, and other basics that created the most prosperous economy in the world are utterly foreign, even despicable, concepts to their leaders.
Sean Parnell, Heartland Institute, Chicago, IL


Who Determines Value? It appears that one can't improve on the natural exchange of values between individual persons. Many call this the free market. Politicians who think their wisdom exceeds that of many such counterbalancing exchanges tread very close to hubris which the ancient Greeks considered the worst of character defects.
Robert S. Berry, M.D., Greeneville, TN


How to Sell Stuff. From a sales manual by a cemetary plot salesman: If you're having trouble selling something, first yell at the prospective customer and tell him he's a functional idiot if he doesn't buy your product. If that doesn't work, run to Congress and get them to pass a law requiring everybody to buy what you're selling. This may be much easier than finding products that people actually want to buy.
Greg Scandlen, www.chcchoices.org


Doctors' Prices. The government made a big error in prohibiting discussion of fees among doctors. The overall effect was to increase charges, eliminate transparency and competition, and lead to game playing.
Milton Kamsler, M.D., St. Augustine, FL


How Things Have Changed. It used to be that if one had a better mousetrap, he had a way to introduce it into the American economy. Now, in addition to the mousetrap, he needs to find a loophole.
Don Levit, HealthBenefitsReform Group


Punishing "Price Gougers." Say you have some generators, and disaster has struck. How much should you charge to offset loss of other business, replacement costs, delivery costs, etc.? If you face prosecution as a "generator king pin" in a chain of price-gougers if you charge by the value customers place on the product, the prudent action is to hide the generators.
James L. Pendleton, M.D., Bryn Athyn, PA

Legislative Alert

Medicare Payment and the Budget Bill

Doctors will get a 1% increase in the Medicare physician update if the Senate provisions are accepted in the House and Senate budget conference that is taking place as this essay goes to press. Remarkably, the House of Representatives has no Medicare provisions at all in its version of the big budget reconciliation bill. So, on Medicare, everything rides on how the conferees deal with the Senate provisions.

If the Congress enacts the Senate's temporary change, it would avoid a 4.3% cut in physician services in Medicare, already ordained under current Medicare payment update formulas. The technical name for the Medicare physician update formula is the Sustained Growth Rate (SGR). Among other things, the SGR formula ties Medicare physician payment updates to the performance of the general economy. That there is no logical connection between the performance of the general economy and the market conditions that obtain in provision of the professional services of the physicians is, of course, quite beside any rational point vaguely discernible on the intellectual horizon. This stupidity, like so many others, is a product of Congressional imagination, amply fueled by bipartisan economic illiteracy, and thus firmly embodied in federal law.

Our own suggestion is to make the Medicare physician system more rational by tying Medicare physician updates to the pricing for physicians' services as reflected in real conditions of supply and demand for physician services. This could be done simply through market surveys conducted by the Medicare Payment Advisory Commission (MedPAC), the panel that has responsibility for reporting to Congress on physician and hospital payment. Short of that, we could update physician payment according to the phases of the moon, which would be more rational, and more aesthetically pleasing, than relying on the SGR.

Another crucial conference issue is the "Values-Based Purchasing" provision, sometimes called "Pay for Performance," of the Senate bill; the House, thankfully, has no similar provision. As noted previously, this would establish government guidelines for medical practice in Medicare, and break from the tradition of government noninterference in medical practice, which was codified in the original Medicare statute.

Under the Senate bill, doctors would get paid according to their adherence to federally determined quality standards. Those who report that information, following the appropriate forms, paperwork, or filling in the right quality boxes, would get "bonuses." Those who didn't, would not, and the "savings" would be used to fund all the good little boys and girls who sit up straight in Medicare's Obedience School. While attractive to the health wonks, the idea is chock full of problems, including the further rupture of the patient-physician relationship, opportunities for gaming for higher reimbursements, and a retardation of innovation in the delivery of medical care. Sound and solid House conservatives (yes, there are some left) may still be able to unravel this latest roll of Medicare red tape before Congress wraps it tightly around another generation of physicians. We'll see.

Drug Bust

The exclusive Washington Adult community says we can't afford it. And the polls show it's still not a popular idea among seniors. And yet, the United States Senate, reputed to be "the world's greatest deliberative body," never even considered Arizona Senator John McCain's proposal to delay the Medicare drug entitlement for two years securing between $40 and $80 billion in savings to the taxpayer through the delay alone. Unfortunately, the McCain proposal is unlikely to be introduced by the House conferees as a compromise Medicare provision in the House and Senate budget deliberations.

Meanwhile, R. Glenn Hubbard, until recently former chairman of the President's Council of Economic Advisers, now says that the Medicare drug entitlement was "unwise." Question: Did Hubbard volunteer that advice to the President when he was the President's adviser, which is what advisers are supposed to do? As recently reported, both Hubbard and former Clinton Secretary of Labor Robert Reich said that the Medicare program was "unsustainable," with Reich volunteering that he didn't even think that the Medicare drug benefit was "sustainable" over the next five years (Wall Street J 11/30/05).

Spinning Left

The Left is spinning the initial implementation problems as reflective of a structural flaw: Free Market Competition and Choice. Plans offering the Medicare drug benefit have multiplied beyond all expectation 2,900 of them nationwide. So, the Left's basic complaint: There is too much choice. It is confusing seniors, angering them, and making it difficult for them to choose the "right" plan for them. Harold Meyerson, for example, entitles his op-ed piece on the topic: "Bewilder Thy Father and Mother" (Washington Post 11/30/05). Choice among many alternatives introduces complexity, says Meyerson, which is both bewildering and economically inefficient. The value of the European style "single payer" alternative is its simplicity it rescues us from complexity and its efficiency; it's also said to be cheaper. This is a curious line of reasoning that we normally do not extend to other sectors of the economy. Monopoly is good for you, as long as it's government monopoly. Applied to emerging fashion crisis, the Meyerson prescription would be the Mao Suit.

While most seniors clearly do find the unexpected range of choice in drug options confusing, it's worth clearing up a few misconceptions.

First, the problem with the drug program is its structure It's the Structure Stupid a weird benefit designed by Congress, with absolutely no analogue in the private market. It is also universal, which means it is crowding out all other coverage. The left is wrong to imply that the drug program, with its donut hole and weird benefit design, is somehow the product of a free-market approach to health care policy.

Second, what is meant by choice? Real choice implies the personal choice to keep what you have and what you like. It is the right to be free of coercion. The reality in this remarkable case is that almost half of the entire pool of eligible Medicare beneficiaries those who are in employer-based retirement plans and those in Medicaid will have no personal choice at all in their drug options. If employers decide that they no longer wish to offer drug coverage and dump retirees into the government program, they can do that. Retirees have no say in the matter. Why? Because, as everybody with two neurons firing knows, the employer-based system is not a consumer-based system, and employees and retirees get what their employer gives them whether they like it or not. In this case, most retirees like their existing retirement coverage, but, regardless of their wishes, they probably won't be able to keep it. For persons eligible for Medicaid, their opinion about either Medicaid or the Medicare drug program doesn't make any difference: Congress says they are going into the Medicare drug program. Period. Some choice.

The anxiety of millions of seniors is understandable. They never liked this legislation; they don't understand it; and the dynamics of a universal entitlement do not let them keep what they want or what they have. It crowds out existing coverage. It's the Structure Stupid! The result is a vast uncertainty among seniors and a political backlash against the White House and the Congressional Republicans. None of this was necessary. And it all could have been avoided with a targeted drug benefit for seniors who did not have coverage, especially those who were low income. But no, the Congressional Republican leadership aligned themselves with the Senator Kennedy's basic agenda and created, drum roll, please, a universal drug entitlement.

Act II Drug Price Controls

The carping will go on over the next few months, well into the next congressional election. But the Democratic agenda will be what it has always been: Impose price controls on drugs, fill up the notorious donut hole with even more federal subsidies, tighten up the regulations on private plans and drive them out of the program once and for all.

So, ladies and gentlemen, fasten your seatbelts: The nation is now committed to plunging eyes open, arms up, and screaming into the greatest entitlement expansion since the Great Society. We're talking trillions of dollars in drug benefits alone. Moreover, we're talking trillions that have been promised in total Medicare benefits that nobody on Capitol Hill or elsewhere has yet figured out how to pay for.

Economists at the Heritage Foundation estimate that, if we decide to actually make up the $30 trillion Medicare shortfall (that's the size of the long-term unfunded liability of the program) through tax increases, that would amount to an equivalent Medicare payroll tax jump from the current 2.9% of payroll to 13.4% right away. Still higher taxes, later on. That kind of taxation would sharply reduce disposable income, reduce investment spending, retard capital formation, and cost the economy in jobs and productivity. So, you don't want to pay the taxes? OK, let's just go straight into debt? Heritage numbers crunchers, using the best economic modeling on the market, are working on the economic impact of that option, too. Not good.

Better Next Year?

For health policy, this has been a disappointing year. The Medicare mess has deepened, and Congress has shown no willingness to act responsibly. The federal insurance market reform proposal, which would have allowed individuals and families to buy affordable health insurance plans across state lines, authored by Rep. John Shadegg (R-AZ), was reported out of committee, but has not even come to the floor of the House of Representatives for a vote. The Tax Reform Commission proposed capping the tax exclusion on health benefits, but stopped short of promoting serious reform. The Medicaid Commission has yet to signal any intention to promote serious structural reform. Yet, there are reasons to be optimistic. For example:

On Medicare, the good news is that Senator McCain (R-AZ), Congressman Jeff Flake (R-AZ), and 100 members of the House Republican Study Committee have introduced legislation to at least delay the drug bill. While not successful this year, the mounting fiscal crisis will soon force some serious action on Medicare; it's unavoidable.

On Medicaid, the largest health care program with 53 million enrollees and total costs of approximately $300 million, there are some interesting state initiatives. South Carolina and Florida have introduced new options for Medicaid recipients, including health savings accounts, and promoting choice and competition among providers to improve access to care among the poorest citizens. The big task is to promote long-term care insurance among the middle class, so that nursing home care doesn't become just another middle-class entitlement. If we do not control middle-class entitlements, we are going to shred the safety net for the poor.

Health savings accounts are also taking off. There are more than a million policies, and they are rapidly growing. Moreover, they are broadly affordable, and about 30% of these new policy holders are Americans who were previously uninsured. Meanwhile, Governor Mitt Romney of Massachusetts is trying to enact an innovative insurance reform, characterized by reduced regulation, defined contributions for health insurance coverage, and a robust system of private health plan competition.

Remember, one out of every seven dollars spent is spent on medical goods and services. Conservatives and libertarians, whatever disagreements they may have among themselves, must do everything they can to make sure that individuals and families control that spending, not the government. This is a common fight for the future.

Robert Moffit is Director, the Center for Health Policy Studies at the Heritage Foundation, Washington, D.C.

"[G]overnment power operates a lot like a gas in a closed space.... [A]s you expand the space, the gas fills it completely and absolutely. And it is hard often to restrict that gas again.... In times of crisis is when that space expands and it often expands with very little foresight and very little consideration."

Jonathan Turley

see Health Freedom Watch, January/February 2002