Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Volume 55, No. 7 July 1999
I will prescribe regimen for the good of my patients
according to my ability and my judgment and never do harm to
anyone.Oath of Hippocrates
While the specific proscriptions in the Oath of Hippocrates-
against abortion, euthanasia, seduction, and violations of
patient confidences-have been the subject of controversy, the
very core of the Hippocratic tradition has been erased in
American medical schools, and virtually without notice.
Rarely is the traditional Oath administered to American
medical graduates these days. Oaths written by others, or worse,
a bowdlerized version bearing the name of Hippocrates, are used
instead, if an oath is taken at all.
No longer does the conscience or judgment of the individual
physician reign supreme. The new standard of care is determined
by Society-operationally, by an elite committee. The preamble to
the AMA's post-1980 code of ethics (which applicants for
membership sign) makes reference to the physician's obligation to
society and exhorts the physician to provide care that is
"appropriate" and within the constraints of the law. The
physician is just "a member of this profession," rather than an
individual who is a professional.
A search of the various oaths finds the word "harm" only in
the original Oath of Hippocrates. All others implicitly tolerate
deliberate harm to an individual when required for the greater
good of Society and not prohibited by law. This follows
inexorably from the change in the purpose of medicine, from
healing the sick to optimizing the "health" of the collective. As
the oath written by Louis Weinstein puts it, the physician is to
act in the "best interest of my patient," in the context of
"a preventive approach to the problems of mankind." (For the
text and comments on various oaths, see www.aapsonline.org.)
Mandatory immunizations are the best current example of the
shift in focus from healing to "prevention," or from the
patient's health to "public health." The very definition of
public health has changed, from narrowly targeted efforts that
interfered with individual liberty only in cases of a clear and
present public danger, to global mandates that "balance" the
"needs" of individuals against the greater good. (Of course,
anything subject to being balanced is not an unalienable right.)
All discussions of the subject begin by calling vaccines the
greatest boon to public health since clean water. This is
actually untrue: DDT saved more lives than all vaccines put
together, and better sanitation and higher standards of living
controlled the Black Death (bubonic plague) and the white plague
(tuberculosis). Moreover, the triumphs of the smallpox and polio
vaccines, which obliterated highly contagious, lethal or
disabling diseases, will not be replayed with current vaccines
against milder, less common, or less contagious illnesses.
Nevertheless, a global crusade to achieve 100% immunization
with 100% of the approved vaccines is in high gear. Generous
foundation (and vaccine manufacturer) grants flow to promote
vaccines and computerized registries to track compliance.
Government subsidies abound not only to buy vaccines but to
reward state health departments for using them. Taxpayers fund
the no-fault Vaccine Injury Compensation Fund-which covers only a
short list of recognized adverse effects from
mandated childhood vaccines.
Persuasion not being enough, a hefty dose of coercion is
added. Children are being denied entrance to school for lack of
total compliance. Worse, parents are sometimes threatened with
charges of child abuse or neglect-and removal of children from
their custody-if they resist vaccines. If physicians wish to
exercise their professional judgment (as described for the 1960
polio vaccine in AAPS pamphlet #1065), they could face
deselection from managed care plans, in which immunization
compliance is a critical "quality" measure. For giving a
mandated vaccine, a physician is essentially immune from
Federal decisions on vaccines are made in secret by a small
committee of nonaccountable experts who have conflicts of
interest, such as affiliation with manufacturers who stand to
make enormous profits from required use of their product (see
The Medical Sentinel, May/June, 1999).
The National Vaccine Information Center has filed Freedom of
Information Act requests with the CDC and the FDA, demanding
copies of all studies and reports used in determining the safety
and effectiveness of hepatitis B vaccine in infants, children,
and adults, including pregnant women.
Groups of activist parents are demanding the right to
receive complete information and to refuse consent for certain
vaccines, especially hepatitis B. Material provided to parents by
health departments states that "getting the disease is much more
likely to cause serious illness than getting the vaccine." This
is literally true, but it begs the question of the risk of
getting the disease: << 4 in 100,000 if the infant's mother is
not infected. It is also stated that "no serious reactions have
been known to occur due to the hepatitis B recombinant
vaccines." This is possibly true, on a "WNL" (we never looked)
basis. Studies investigating a suspected link with demyelinating
disease (which led to termination of the mandatory vaccine
program in France) are not complete.
The government's passive after-market surveillance, called
the Vaccine Adverse Effects Reporting System (VAERS), documents
about 25,000 adverse events in temporal association with
hepatitis B vaccine, one-third of them serious (see p. 2).
The question asked by parents, and by Hippocratic
physicians, does not concern global incidence of a disease, but
the risk to their child or their patient of
both the disease and the vaccine-and the decision is
Congressional Hearing on Hepatitis B Vaccine
On May 18, 1999, Rep. John Mica (R-FL) held a hearing of the
Criminal Justice, Drug Policy and Human Resources Subcommittee of
the House Government Reform Committee to explore whether
hepatitis B vaccine is helping or hurting public health. A full
transcript is posted on the AAPS web site at www.aapsonline.org. A few
- Rep. Mica pointed out that while almost all states that
mandate childhood vaccinations allow exemptions, the information
sheet does not tell parents this fact.
- Michael Belkin, a securities analyst whose 5-week old
daughter died within hours of receiving hepatitis B vaccine,
submitted his analysis of the reports in the VAERS, which "go
into an empty drawer, and they pile up, and they go nowhere, and
nothing is done."
- Mrs. Judy Converse, whose son developed seizures after
receiving hepatitis B vaccine as a newborn, stated that no
informed consent had been sought or obtained. She tried to delay
his second shots at two months because he was ill, but was
threatened with an allegation of child abuse; the child developed
autism. His new pediatrician agreed not to give more vaccines but
discouraged reporting an adverse reaction; she said the family
would be harassed by the Massachusetts State Department of Public
- Mrs. Betty Fluck, a nurse who developed chronic
inflammatory demyelinating polyneuropathy and multiple arthritic
symptoms after hepatitis B immunization, obtained minutes of a
March, 1997, CDC meeting. The minutes showed that follow-up for
at least 60 days would be required to demonstrate onset of
multiple sclerosis; clinical studies by two manufacturers lasted
4 or 5 days.
- Burton Waisbren, M.D., (see www.waisbrenclinic.com )
voiced his concern that a nationwide experiment on universal
hepatitis B immunization was implemented without congressional
approval. He credited the joint efforts of an agency that stood
to gain influence and power, and a drug company that expected to
make billions of dollars.
- Bonnie Dunbar, Ph.D., a molecular biologist at Baylor,
stated that medical students were told by supervisors not to get
involved. Specifically, they were told not to report potential
vaccine reactions in two babies who were dying. Dr. Dunbar
herself had not been able to obtain follow-up on her own reports
to the VAERS. (She will speak in Coeur D'Alene.)
- J. Barthelow Classen, M.D., (see vaccines.net ) estimated that
there may be 10,000 cases of vaccine-induced diabetes mellitus in
the U.S. annually, from hepatitis B or Hemophilus B vaccines. CDC
Other concerns included the inability of scientists to
obtain grants to study long-term adverse consequences, or to
obtain data from completed studies. Of particular interest is the
identification of persons who may be genetically at high risk for
adverse reactions. People who have contacted their physicians
about possible reaction to hepatitis B vaccine have all been
Caucasians, according to Dr. Dunbar. Yet many safety studies were
done in Asia with different populations.
Mechanisms that could provoke autoimmune reactions include
molecular mimicry, or simple stimulation of the immune system,
leading to interferon production. Yet despite the particular
propensity of hepatitis B and the vaccine for molecular mimicry,
medical students are memorizing an examination study guide that
claims hepatitis B vaccine is one of the safest vaccines ever
VAERS on Hepatitis B
of raw data from the VAERS
(available by e-mail as a
compressed Microsoft Excel
file from snavely-
@primenet.com) shows 440
deaths, 7,726 emergency
room visits, and 2,549
hospital stays in 24,772
reports. About 10% of the patients had not recovered from the
adverse effect, and recovery status was listed as unknown in 33%.
The first listed symptom in more than 4,600 cases suggests
central nervous system involvement. These included prolonged
screaming, agitation, apnea, ataxia, visual disturbances,
convulsions, tremors, twitches, an abnormal cry, hypotonia,
hypertonia, abnormal sensations, stupor, somnolence, neck
rigidity, paralysis, confusion, and oculogyric crisis.
Diabetes mellitus was listed in a total of 44 cases, and
pancreatitis, which can lead to diabetes, in an additional 10. Of
course, these numbers are small and could easily be coincidental.
But hepatitis itself has a better-than-chance association with
diabetes. Looking at only the first listed effect in the data
base, there were 2,775 cases of abdominal pain, 77 cases of back
pain, and 1,453 cases of nausea and/or vomiting; pancreatitis was
probably not specifically sought.
About 20 million doses of hepatitis B vaccine have been
administered in the U.S. If 10% of the adverse reactions have
been reported (as often assumed), and one-third of the reactions
are serious (as in the reported ones), then the risk of a serious
vaccine reaction is about 4 in 1,000. In 1996, the incidence of
hepatitis B in the U.S. was 4 per 100,000.
To file a VAERS report, call (800)822-7967.
To be considered at the 56th annual meeting, resolutions
must be received by September 13.
Oct. 13-16. 56th annual meeting, Coeur D'Alene, ID.
Oct. 25-28, 2000. 57th annual meeting, St. Louis.
Ominous Parallel? "The kampf's first-line assault weapon
was a storm of propaganda, by means of public lectures,
congresses,...and compulsory anti-tobacco reading in all
elementary schools. Beginning in 1938, the government did not
hesitate to issue ordinances much like those to which we have in
recent years become accustomed. It was forbidden to smoke, for
example, on the grounds of the post office, many work places,
hospitals, government offices, and certain other public
Sherwin B. Nuland, The New Republic 6/14/99
There is an "inherent clash of cultures between medicine and
public policy," writes former Colorado governor Richard Lamm
(The Pharos, Fall 1998). Medicine says "do no harm."
Public policy says "maximize health to all," using tools such as
health policy, education, public safety, smoking control, etc.
The failure of medicine to define what care is marginal or
futile is "insensitive and unfair to those other people who share
your pool of common resources." A hip replacement, in Lamm's
view, equals two schoolteachers not hired. An MRI translates into
a class without new schoolbooks.
Quoting Reinhardt Priester of the Center for Biomedical
Ethics at the University of Minnesota, Lamm identifies the
ethical earthquake: "Providers should treat each patient with
a[s] full a range of resources as is compatible with treating
patients yet to come."
"We are individuals with certain defined rights and duties,
and also ... members of society that itself has rights," Lamm
states. "Group resources must inevitably balance costs and
benefits....The unthinkable has become the unavoidable."
The source of this conflict: socialism. "To the extent
that we do not pay the bills ourselves with our private funds,
but pay them through government or insurance, we need a
broader moral dialogue than now takes place," Lamm states
Commenting on how to spend the money better, John S.
Sergent, M.D., of Vanderbilt University suggests plugging some
holes such as the "appalling rates of childhood vaccination" and
spending still more on education. The first step, according to
David Bennahum of the University of New Mexico, is to "advocate
for universal access to health care." After that, "we can begin
to decide what care should be limited and who is to be denied."
Additionally, Bennahum asks, "How can we be a healthy population
if we are bombarded with subtle, carefully designed advertising
to smoke, drink, drive, and eat in unhealthy ways?" Suppressing
the "abuse of our First Amendment right" becomes a health care
Consequences: Update from Canada
The front page of the Quebec newspaper La Presse
declared on May 14, 1999: "Cancer: The Quebecois treated in the
USA." Robert Gervais, M.D., President of the Arizona Chapter,
writes: "There you have it. In Quebec healthcare is almost
unavailable for the truly sick but readily available for those
who are inconvenienced by minor aches and pains."
In February, 1999, the Ontario government entered a $20
million contract with U.S. facilities to provide radiation
treatments for Canadian cancer patients who otherwise faced
unacceptable waits for treatment. British Columbia also went
shopping to the south for items such as cardiac bypass surgery
and radiation treatment for prostate cancer. In some cases, the
service was provided by former Canadian physicians in the border
town of Bellingham, WA, who were forbidden by law to sell their
services to Canadians in Canada. The problem is not just
inadequate facilities, but serious staffing shortages, with no
prospect for training sufficient staff (Michael Walker, Wall
St J Interactive 3/5/99).
In March, a combination of overwork and underpay prompted 23
of the 63 family physicians at Dartmouth General Hospital in Nova
Scotia to resign. Forty percent of University of Toronto family
practice graduates leave for the U.S. Manitoba has recruited a
number of South African doctors, many of whom leave when they
find they are confronting Third World conditions. There is now
pressure to recruit physicians from other countries that people
are anxious to leave, such as Cuba and Albania (Medical Post
Inadequate pay is not the only reason for dissatisfaction.
Global budgeting in hospitals, and stultifying government
regulation, has produced a "comic opera-like scenario in acute
care hospitals." Wards closed to "save money" are soon converted
into offices for newly hired bureaucrats. Meanwhile, surgeons may
be restricted to as few as five hours of operating room time per
week (Fraser Forum, Feb 1999).
No longer is the Canadian system popular. A recent poll
showed that 96% of respondents felt that substantial repairs or
complete rebuilding of the system was necessary, and 63% believed
they should be allowed to pay for upgraded treatment. Only 20%
believe they are obtaining the care they need.
The government rationing scheme is by no means fair. "In
which law of nature was it determined that medicare should cover
treatment for an ingrown toenail that might stop you playing
hockey or soccer, but not for a tooth infection that might result
in a cerebral abscess?" And how can it be that cancer patients
wait, while other patients receive subsidized suction treatment
for fat thighs? (Medical Post 2/9/99).
The dreaded two-tier system, which is permitted in every
other country except Cuba, Albania, and North Korea, would help
the poor most. At present, the politically powerful, the rich,
and the potentially litigious gain preferential access to limited
medical care (Medical Post 2/9/99).
Instead of learning to become helpless, like dogs resigned
to electric shock treatments, some Canadians are asking: "Instead
of rationing through waiting, wouldn't it make more sense to let
people make health-care decisions for themselves?" Medical
Savings Accounts are being promoted as a way to create a system
"safe from the government's latest money-saving `reforms'," while
ending queues and reinvigorating the patient-physician
relationship (Calgary Herald 2/25/99).
Will MSAs Be Late Bloomers in the U.S.?
Of the 750,000 MSAs authorized by Congress, only 50,000 had
been set up by last December. If not extended, the program will
expire on December 31, 2000.
Though crippled by government restrictions and initially
seen as unattractive by buyers and sellers alike, they are
beginning to take off. As medical insurance premiums may increase
11% for small companies this year, more are taking a look at this
option. For example, Bethany Women's Healthcare and Birth Center
(BWHC) in Phoenix reduced its medical costs by 50% with an MSA
Said office manager Kelly Chrisbacher, "I used to think that
MSAs were too complicated. I could kick myself for not doing this
a year ago." In 1998, premiums for BWHC's PPO were $48,000 while
employees submitted only $3500 in claims.
Nearly 50 carriers now offer MSA-linked policies, and about
a dozen banks and financial firms administer them. Specializing
in MSAs is MSAver Resources, (888) 367-6727, www.MSAver.com. See Business
Week's Frontier 5/24/99.
Other web sites to check for MSA information: www.cahi.org (Council for
Affordable Health Insurance);
(State Bank of Howard Grove); www.ncpa.org
(National Center for Policy Analysis); and
"WNL." At a coding seminar I attended, one physician in
the audience had a rather novel, if fraudulent, way of complying
with all of HCFA's absurd demands for clinically irrelevant
detail. He says he puts "WNL" next to a long list of things on a
pre-printed sheet. He says that although "WNL" means "within
normal limits" to most physicians, no one has officially defined
it, and he uses it to mean "we never looked."
At that seminar, I asked the faculty whether they were aware
that AAPS had threatened to bring a lawsuit against HCFA over the
1997 E&M Documentation Guidelines, and whether they thought that
had anything to do with HCFA's decision to back off. They
admitted to knowing about the threat of an AAPS lawsuit but just
didn't mention it.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
Legal Extortion. Mr. David Queen, former U.S. Assistant
District Attorney, speaking about fraud and abuse at a meeting of
the Kentucky Society of Anesthesiologists, stated that the OIG
and FBI agents are enforcing their own interpretations of
regulations-which are literal to the nth degree. Their job is to
find guilty physicians and collect (extort) money from them. Mr.
Queen stated that if the agents decide you have an error rate
after examining six days of claims, they extrapolate that rate to
all of your Medicare claims for six years. I am aware of one 6-
man anesthesia group that has had to pay $1.2 million, and an 8-
man group that has to pay $1.1 million. In the latter case, the
OIG admitted that there was no fraudulent intent: it doesn't
matter. The money must be paid within 30 days, even if you have
to borrow it. Any explanations are irrelevant since they are
judge, jury, and executioner.
Lee Balaklaw, M.D., Louisa, KY
No Constituency for Tax Reduction. The American
Institute of CPAs has grown by 21% over the last 10 years. There
are also 1 million accountants and 2.2 million accounting clerks
and bookkeepers in the U.S. Would any of these people, who are
wedded to the regulatory state, vote for a flat tax? Of course
not. The problem will never be solved; it is too late. As Paul
Samuelson, Newsweek business columnist, stated: "A
minority of the population is paying a majority of the taxes, so
the general public doesn't care about tax reduction."
Craig Cantoni, Scottsdale, AZ
Semantic Red Flags. Syndicated columnist David Broder
recently wrote that we must "face the truth" about rationing.
Even more troubling, former Governor Richard Lamm writes: "the
dollars that we spend on marginal and futile care are no longer
available to spend on needed care for someone else...or some
other...social need." Beware of people who use phrases like
"futile care" and "social need" in the same sentence.
Debi Carey, Lexington, KY
Carrier Errors. From data we have in our office, Blue
Cross Texas/Medicare, in a 12-month period, did not process 82
claims (1 in 20.3 claims sent). There were 223 errors on the
1,586 claims they processed. In the past two years, they have
illegally sent us $12,334.13 in checks (we accept payment only
from patients). Patients are being denied a rightful
reimbursement, or having their payments delayed for months. Blue
Cross Texas/Medicare handles their errors by telling the patients
to tell their doctor to refile the claims. When was the law
passed that requires doctors to correct carriers' errors?
Given the power that carriers have over physicians, this
letter was not written without considerable risk.
Richard B. Swint, M.D., Paris, TX
An AMA Profit Center. I received a letter from the AMA
dated Feb., 1998, in response to my letter of April 23, 1999, in
which I asked a simple service code question. The CPT Information
Service is now on a subscription basis: 5 inquiries per year for
$150, 24 inquiries per year for $600, or up to 75 coding
inquiries (with up to 225 questions) per year for $1,500. This is
outrageous! They developed the CPT code system and now we have to
pay a fee to get answers about it. If they had presented the
system accurately and comprehensively, we could understand it and
not have to join an expensive club [to get information needed to
comply with the law].
Samuel A. Nigro, M.D., Cleveland Heights, OH
Fighting HCFA. From a letter to Senator Feinstein: I
have documented HCFA's system of "fraud detection" and sent you
many examples of so-called "improper payments" that in fact were
very proper. Their denials are completely random. That their
denials for lack of "medical necessity" never mention one single
medical fact is not surprising; the reviewers do not know
anything about medicine or patient care.
The paperwork involved for a physician to fight back is
impossible to deal with, and in disputing HCFA, the physician
loses even more money. I have spent the time and effort to do so
only to show Congress (who could care less) what the truth is.
You have created an agency more sinister than the IRS.
Linda W. Wilson, M.D., Culver City, CA
The Check Is in the Mail. How about sending a note to
the GOP: "check enclosed for 25% of the tax cut you promised." If
they call to say they haven't received your check, tell them you
haven't received the tax cut either.
Ernest J. White, Alexandria, VA
Legislative AlertTax Credits Take Off
On June 2, the Consensus Group of more than a dozen top
health care policy analysts, ranging from the libertarian Cato
Institute to the "moderate" Democratic Progressive Policy
Institute, an arm of the Democratic Leadership Council, unveiled
their latest version of a "Vision" for Health Care Reform at the
National Press Club in Washington, D.C. The common message:
Changing the tax treatment of medical insurance changes the
system for the better by promoting real patient choice and real
competition. The spokesmen suggested that the first step in such
a reform should be tax relief, either in the form of tax credits
or some other form of fixed incentives to individuals and
families who are not today covered under employer-based health
Mark Pauly, Professor of Economics at the Wharton School of
the University of Pennsylvania, noted, "There is virtually
universal agreement that the reason why more people are becoming
uninsured is because the cost of insurance is high relative to
their resources." The proposed strategy would retarget tax
subsidies to those most in need. Pauly insists that federal tax
policy should be changed in a way that does not distort the
choices of middle-class Americans as it does today. Incentives
should be efficient, and not favor more expensive medical options
as they do now. Tax incentives should avoid favoring traditional
insurance or managed care relative to medical savings accounts,
or group insurance over individual coverage, or non-profit
options over profit-seeking firms.
David Kendall of the Democratic Leadership Council s
Progressive Policy Institute says that Congressional
preoccupation with abuses by managed care has sidetracked a
broader debate. Now that it's reasonably clear that neither
party s version of "patients' rights" legislation is going to be
enacted in this Congress, it's time to get back to broader
questions, such as consumer choice through tax credits, which
Democrats see as a way of increasing coverage of the uninsured.
More than 10 tax credit bills are circulating on Capitol
Hill. Look for a modest, but important, tax credit piece to be
included in the Budget Reconciliation bill for this year.
Medicare Mess by the Numbers
Where political change has yet to make much headway is
in the crucial area of Medicare reform. At a June 1 meeting with
his chief advisors, Bill Clinton made it clear he does not have
any interest in a consumer-driven system, along the lines of
either the Breaux Plan or the Federal Employees Health Benefits
Program (FEHBP). The outlines of a Clinton plan are yet unclear,
but the bad news for doctors and patients is that
Administration's team is reportedly looking at the "cost
containment" strategies used by employer-based insurance,
including "selectively contracting" with "low cost but reliable
providers." Sounds very Hillary.
The outlook is dimming for serious Medicare reform this
year. Part of the problem is psychological: the trust funds are
in "good shape" for another bunch of years-as if the trust funds
had anything to do with the real fiscal problems of Medicare
spending, future taxes, or possible future benefit cuts. And part
of the problem is simply ideological. For liberals in Congress,
whose heads are set in the Sixties, the Congressional Budget
Office has another ream of statistics which should- but probably
won t-make them think again.
Medicare accounts for 12% of the federal budget today,
but will account for almost 20% in 2009. The recent leveling
off of Medicare spending is just temporary, and reflects little
more than a trough in the demographic swells. The elderly
population will increase by about 1% per year between 2000 and
2010, but will then increase by about 3% a year between 2010 and
2030, rising from 39 to 69 million beneficiaries. Today
Medicare population makes up about 14% of the population, but by
2030, it will reach 22%. About 85% of the Medicare population
is enrolled in the traditional "fee for service" sector (a
misnomer, if there ever was one), and that number can be expected
to decline somewhat, as more seniors enroll in the Medicare "risk
At the heart of HCFA s regulatory power is price regulation.
As GAO and others point out, tirelessly, that system both
overpays and underpays for medical services. Added to the current
morass are new concerns about pricing for home health agencies.
For example, the Medicare Payment Advisory Commission (MEDPAC),
chaired by former HCFA Administrator Gail Wilensky, is worried
about the viability of home health care services in Medicare,
noting that HCFA has not yet come up with a new pricing system
for the agencies and will not be able to meet its deadline for
doing so. Home health agencies may drop out of the program.
MedPAC is also looking at new ways to fund the National
Medicare Education Program-the latest Medicare boondoggle -
fearing that the "user fees" on managed care plans might give
more agencies an incentive to drop out of the program. NMEP is
the information program that Congress and HCFA devised to tell
Medicare beneficiaries about their "options"-many of which are
simply non-existent-in the misnamed "Medicare + Choice" program,
which looks just like the old Clinton Plan applied to the
Medicare system. The $95 million program -originally authorized
for $150 million-is supposed to get comparative plan information
out to Medicare beneficiaries.
Perhaps the most enlightening testimony on this subject is
that of Walton Francis, a former HHS official who is known to
hundreds of thousands of federal workers and their families as
the editor of Washington Consumer Checkbook, the
private-sector plan comparison book available to federal workers
and their families each fall during their "open season." This is
the guide they often use when they enroll in one of the hundreds
of private plans competing in the FEHBP. On March 18, Francis
told the Subcommittee that the historical record demonstrates
that HCFA, in sharp contrast to OPM and private plans in the
FEHBP, has been worse than "negligent":
"In fact, for a decade or more the government actively
resisted every effort to improve information available to seniors
on Medicare HMO choices." The reasons why HCFA did not simply
borrow from the successful experience of the FEHBP are worse than
lamebrained: "It is unclear why HCFA did not copy the economical
and effective OPM system, lock, stock and barrel, 10 years or
more ago. I was once told by a HCFA official that the reason
why no usable information was provided was because the plans
didn t want to make comparisons easy, and HCFA felt obliged to
defer to the plans wishes. This theory is so scandalous that
it is hard to believe. I am more inclined to believe in tight
budgets and weak imagination. Another theory is that a well run
choice program would drive traditional Medicare (a grossly
inferior insurance product) into the ground and that agency staff
are unwilling to foster fair competition. Regardless, the record
on Medicare HMO information is atrocious."
Francis quickly adds that even though the FEHBP experience
has been remarkably successful, it could be even more so, if OPM
would publish data each year on private plan disenrollment: "If
one plan loses 5 percent of its customers in a year and another
plan loses 20 percent, a prudent consumer knows which to choose."
Francis also advised the House Ways and Means Health
Subcommittee that the entire information effort for him (the
equivalent of less than one full-time federal employee) is
roughly 2 months work each year, with some clerical assistance!
Imagine the kind of health care information campaign private
sector entrepreneurs, operating in a free market environment of
consumer choice and competition, could launch with a fraction of
the money HCFA is extracting in user fees on plans?
As one thing leads to another, MEDPAC is now proposing that
Congress dump user fees on managed care plans "competing" in the
program (not quite the word a free marketeer would use to
describe this sort of participation) to cover the cost of this
information boondoggle, and fund it directly out of
appropriations. This could be one more incentive for managed care
plans to drop out of the program, and thus reduce patient options
even further. Altogether, a pathetic performance.
In the private sector, cost-sharing arrangements are
designed to make enrollees in private insurance plans more
rational consumers, and thus increase the economic efficiency of
the provision of services. In Medicare, the cost-sharing
arrangements, regardless of their intent, are not as effective.
There are several reasons, states Dan Crippen, CBO Director:
"First, the requirements are too varied and complex to be well
understood by patients. Second, in some cases in which cost
sharing requirements could help reduce the inappropriate use of
services (such as home health) [there are] no such requirements;
other cases, which have high cost sharing requirements, have
little possibility of adjusting the use of services (such as long
hospital inpatient stays for severely ill patients). Third,
because Medicare does not limit enrollees' cost sharing
liabilities, most enrollees seek some kind of supplementary
coverage to limit their financial risk. Such supplementary
coverage often eliminates the incentives for prudently using
services that cost sharing is intended to create."
More ominously, an unreformed Medicare, the Godzilla of
government regulation, will have a greater and greater impact on
the private sector, simply by its sheer size. As Crippen told the
Senate Finance Committee on May 26, "Medicare pays for about
30 percent of all spending for hospital and physician services
and for about half of all home health care. Thus, changes in
Medicare have consequences far beyond the federal budget,
substantially affecting the private health care market as well,
for better or for worse."
The Medicare changes introduced in the Balanced Budget Act
of 1997 do indeed slow the growth of spending in the program, but
they do not fix the underlying problems. While Congress pressed
ahead with the poorly conceived and administratively complex
"Medicare + Choice" program -which private plans have been
avoiding in droves-the regulatory guts of the system have not
only been left intact, but expanded. Says Crippen: "The BBA left
in place the administered pricing system, which sets Medicare s
payments to plans. Consequently, the program has no meaningful
price competition among plans for the basic benefit package.
Instead, plans have incentives to increase optional benefits
rather than to reduce costs, just as they did before the BBA.
Therefore, even though the enrollees benefit from the greater
efficiency of risk based plans than of the fee for service
sector, Medicare does not." As Crippen and others note, changing
to a Breaux-style "premium support" arrangement would give
beneficiaries a government contribution and allow competition on
price as well as benefits and quality of service, so that
Medicare beneficiaries could enjoy the bounteous benefits of a
HCFA s Privacy Invasion
HCFA s controversial OASIS plan to collect detailed and
personal information on all patients in home health agencies
without patient knowledge or consent (see AAPS News, May
1999) has faded a bit from the news. HCFA proposed to force
10,000 home health agencies to collect responses to 79
"questions" ranging from financial arrangements to social
behavior and psychological states. Congressional reaction to this
outrage has been predictably tepid. While a few Members have
expressed their concerns, Congress has done absolutely nothing.
Though HCFA issued its proposed rule on March 10, no
Congressional action is on the horizon to put an end to this
nonsense, as of Memorial Day.
The good news is that the furor surrounding the privacy
invasion has thrown HCFA off balance, and, as of April 27, HCFA
officials have put their implementation of this unprecedented
intrusion on ice. They have, as previously reported here,
verbally indicated that they would not collect confidential
information from non-Medicare patients-that s big of them-but
only Medicare patients. While HCFA may have been beaten back by
bad publicity, they have not broken off the fight to collect
And the Coming Clash Over Confidentiality
Pressure is building to address the broader patient
confidentiality issue before August 1, at which time the Clinton
Administration is authorized, under the notoriously bad Kennedy-
Kassebaum law, to issue regulations governing the confidentiality
of patient information. The leading candidate for legislative
action in this area is the Medical Information Protection Act of
1999 sponsored by Senator Robert Bennett (R-UT). The Bennett bill
is quickly gaining the backing of the health care industry,
including the American Association of Health Plans, the American
Hospital Association, the Health Care Leadership Council, and the
Pharmaceutical Research and Manufacturers Association of America.
But it is not at all clear that the Members of Congress have come
to grips with the complex issues addressed by this, or any other,
confidentiality legislation. Conservatives on Capitol Hill are
wary that Congress, as so often in the past, will enact something
they don t fully understand. More to come.
Robert Moffit is a prominent Washington health policy
analyst and Director of Domestic Policy at the Heritage