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

Volume 57, No. 3 March 2001


When a convicted felon gets his civil rights restored, he may once again be able to vote, hold public office, and own a firearm. According to Webster's New World Dictionary of the American Language, College Edition (1960), "civil rights" are those "guaranteed to the individual by the 13th and 14th Amendments to the Constitution...and by certain other acts of Congress; especially, exemption from involuntary servitude and equal treatment of all people with respect to the enjoyment of life, liberty, and property and to the protection of the law." This follows closely the 1913 edition, which also defines "civil" as "pertaining to citizens."

The Office of Civil Rights (OCR) has issued Policy Guidance concerning U.S. residents (legal or illegal) eligible for federally assisted programs, which imposes obligations on all persons and entities who receive federal funds to serve all comers in their own language. The policy is pursuant to Clinton Executive Order 13166, "Improving Access to Services for Persons with Limited English Proficiency [LEP]."

The policy, available at www.hhs.gov, refers to §601 of Title VI of the Civil Rights Act of 1964, 42 U.S.C. §2000d et. seq.: "No person in the [U.S.] shall on the ground of race, color or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance."

The implementing regulations at 45 C.F.R. §80.3(b)(1) state that recipients of federal funds may not "provide any service, financial aid, or other benefit to an individual which is different, or is provided in a different manner, from that provided to others under the program."

This provision, in effect, opens the entirety of a practice or enterprise to federal scrutiny as soon as the first federal dollar is accepted. How can an investigator know whether a Medicaid recipient, for example, is served in a different manner without inspecting the records of private patients? Additionally, the Civil Rights Restoration Act of 1987 provides that when an entity receives Federal assistance for a particular program or activity, all operations of the recipient/entity are covered, not just the part receiving the federal assistance. (This is why Hillsdale and Grove City Colleges rejected all federal aid.)

If all service is rendered in English, it is "different" in its effect on some recipients, according to 80.3(b)(2), because it might "have the effect of defeating or substantially impairing accomplishments of the objectives of the program with respect to individuals of a particular ... national origin."

A person need not have an intention to discriminate to run afoul of the law; a disparate impact is sufficient.

Cited precedents include Sandoval v. Hagan, 197 F.3d 484 (11th Cir. 1999), which held that the State of Alabama's policy of administering driver's license examinations in English only was a "facially neutral practice that had an adverse effect on the basis of national origin." Oral arguments were heard in the appeal to the Supreme Court in mid- January.

The four keys to compliance are: assessment, development of a "comprehensive" written policy on language access, training of staff, and "vigilant" monitoring.

Interpreters must be competent both in the language and in medical terminology, readily available during all hours of service, and trained in confidentiality requirements. In addition, written materials routinely provided in English must also be available in other "frequently encountered" languages. If the language doesn't have a written form, then oral translation must be provided.

There is no "one size fits all" definition of terms such as "persons likely to be directly affected." The OCR will address compliance on a "case by case" basis. Some vague guidelines are provided: for example, "vital documents" need to be translated into languages used by 5% or 1,000 (whichever is less) of prospective clients, and all written materials into languages used by 10% or 3,000. No practice is too small to be exempt; but some allowance is made for disproportionate burdens.

Of course, all compliance efforts must be paid for solely by the entity providing the service, even at a net loss.

The OCR will investigate whenever it receives a complaint or report of possible noncompliance. While it will focus attention primarily on larger entities such as hospitals, two of 250 investigations in 2000 involved private physicians.

There is no defined endpoint to the effort required. The OCR recognizes that a practice might encounter LEP persons who speak "perhaps over 100 different languages." However, as pointed out in the amicus brief filed in the Alabama case by the Eagle Forum Education and Legal Defense Fund, 4,000 or 5,000 languages are thought to be in current use.

The AMA and 40 other medical organizations have objected to the rule because it is too burdensome and may threaten access to care. It applies to SCHIP and may prompt physicians to turn away from this "already underused" plan. The AMA calls for rethinking the guidelines, especially as applied to small practices, or, alternately, for government payment for translators (AM News 12/25/00).

AAPS objects to the rules on principle. They are a fundamental intrusion into the heart of medicine: communicating with patients. OCR investigators are incapable of judging the quality of communication, whether in Mandarin, Laotian, or English. The only possible enforcement of this vague and open- ended policy is arbitrary and capricious: a fundamental violation of the principle that the U.S. is governed by written law-defined and applied in English.

And what of the civil rights of physicians? Is it involuntary servitude to have to pay for a translator, even for illegal aliens, as a condition of practicing one's profession?

Third-Party-Free Clinic Opens

AAPS member Robert Berry, M.D., announced the Jan. 10 opening of PATMOS EmergiClinic in Greeneville, TN.

PATMOS stands for "Payment at the Time of Service." It was also the island to which St. John and others were exiled during Biblical times. The clinic hopes to serve primarily those who are exiled from our third-party dominated system-that is, people without health insurance.

The mission is to provide affordable, patient-centered, excellent care in the context of Christian service.

"While it is not our intention to exclude anyone," writes Dr. Berry, "we must require payment at the time of service to minimize the cost for everyone." For those who have insurance, the clinic provides a claim for the patient to file, or arranges for a company specializing in medical billing to file, for a $15 surcharge. Medicare and TennCare do not permit this option at the present time.

People with Medical Savings Accounts, high-deductible policies, or a Christian assurance plan (such as the Christian Brotherhood Newsletter) will all find the fees attractive.

For those who have difficulty affording the bills, the clinic will consider a payment plan, or trading services for goods or services that patients can provide, on a case-by-case basis.

Dr. Berry has 8 years experience working in emergency rooms both in the inner city and Greeneville. He views the clinic as a high-capability walk-in clinic that provides many of the services offered by a rural ER at a fraction of the cost.

At present, Dr. Berry is unaware of any clinic quite like PATMOS: a "for-profit, faith-based, free-standing emergency center that takes no third-party payment." The clinic plans to add primary care and occupational medicine soon, and to try to persuade large employers in the area to offer defined- contribution benefit plans.

Dr. Berry challenges other AAPS members to examine this concept-see www.emergiclinic.com. Note that the fee schedule uses a very simple, non-CPT coding system.


More Physicians Opt Out

As of June 30, 2000, HCFA reported that 1,396 physicians and other practitioners (including 82 clinical psychologists and 42 clinical social workers) had opted out of Medicare. The best represented physician specialties, in descending order, are: psychiatry, 492; family practice, 156; general practice, 121; internal medicine, 86; ob/gyn, 82; plastic and reconstructive surgery, 45; dermatology, 38; osteopathic manipulation, 27; physical medicine/rehab, 23; orthopedic surgery, 21; general surgery, 21; ENT, 18; anesthesiology, 18; ophthalmology, 12; al- lergy/immunology, 12; emergency medicine, 10.


Emmit Jennings, R.I.P.

Emmit Jennings, M.D., of Roswell, NM, a general surgeon, died on December 28, 2000, after a bout with cancer. Dr. Jennings joined AAPS in 1961 and served as President in 1983. He was President of the New Mexico Medical Society in 1967; Roswell City Councilman 1960-1971; County Commissioner 1988-1992; and State Senator from 1993-1996.

"He was the old-school doctor who was more worried about his patients than about making money," stated Senate Majority Leader Timothy Jennings, his second cousin.



A "message to all physicians" from D. Ted Lewers, M.D., Chair of the AMA Board of Trustees, states that "The AMA's CPT is `an investment in physician autonomy'" (AM News 12/4/00). He proudly reminds readers that the AMA has been the author of CPT codes since 1966. Thus, the answer to a question raised by an attendee of the AMA's April 1998 fly-in on the AMA/HCFA E&M Documentation Guidelines-"Can't we take our name off these things?"-is No.

Lewers claims that the CPT codes were adopted voluntarily through a "physician-driven process." Without the CPT, communications would break down and physicians' offices would be overwhelmed by red tape, he declares.

"The financial resources invested in CPT development have come solely from the AMA," Lewers states, without a hint about the multimillion dollar profits that accrue annually, providing a cushion against the loss of $4 million in dues.

Apparently, the AMA is worried about competition, as from 3M. An AMA-funded study reported that "the cost of imposing a replacement for CPT on the physicians of today would approach a trillion dollars."

Lewers invites comments at [email protected].

The AMA actually has received many comments on CPT codes, as was evident in the 2,068 pages that AAPS received in May, 2000, in response to a Freedom of Information Act (FOIA) request filed in April, 1998. AAPS sought documents related to the AMA's role in formulating the E&M guidelines for choosing the correct code. The tone of comments was very similar to those posted on our web site. Some examples:

"The answer (short of scrapping the whole system) is simplification. Unfortunately, how to simplify this cumbersome system is beyond my level of wisdom."

"The new codes are a bureaucrat's delight and a practicing physician's nightmare."

"The AMA should not be an accomplice to the debasement of the patient-physician relationship."

"This issue suggests that the AMA is no longer represen- tative of the majority of physicians."


AAPS Calendar

Feb. 20-21. Arizona chapter hosts Don Boudreaux of FEE.
June 1. Board of Directors meeting, Chicago
June 2. Spring Private Doctors' program, Chicago.
Oct. 24-27. 58th annual meeting, Cincinnati, OH.

Erratum. The Feb. issue should have included a legislative alert and a new members' page. Please call if you did not receive both. Leave a message 24 hours at (800) 419-4777.

Coding Copyright Upheld 2:1

On Feb. 2, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit upheld the lower court in Veeck v. Southern Building Code Congress International (SBCCI), No. 99-40632 (see AAPS News May and July 2000).

The majority held that Peter Veeck had been guilty of copyright infringement by posting SBCCI's building codes on the Internet, and found no abuse of discretion in the district court's award of attorney's fees to SBCCI.

Interestingly, the panel implies that Veeck might not have committed a copyright violation had he obtained his copy from the government-say by a Freedom of Information Act request -rather than from a private company.

In a strong dissent, Judge Little stated that in his view "due process concern for public access to the law forbids a private entity from exerting sole control over a public law through a copyright." He distinguished the Veeck case from Practice Management Information Corp. v. the AMA, in which the Ninth Circuit refused to void the AMA's copyright even though finding that the AMA had misused it by licensing its CPT coding system to HCFA on the condition that the agency agree not to use a competing system:

I note that in Practice Management, the party challenging the copyright was a private entity seeking to `share in the AMA's statutory monopoly.'... Had the Ninth Circuit been faced with a situation similar to that presented here-where a private individual sought to publish gratuitously a public law for use by other citizens...-it may have decided differently.

Judge Little found no meaningful distinction between judicial opinions and statutes, which cannot be copyrighted, and regulations that have been adopted into law. Once promulgated, codes become a set of facts, and facts are not protected under the Copyright Act. SBCCI claimed that its particular expression was protected; however, Judge Little stated that there is "only one accurate way to express an enacted law." Laws must be concrete, definite, and precise. (Otherwise they can be found unconstitutional due to vagueness.)

AAPS will file a Motion for Leave to File Amici Curiae Brief for Rehearing En Banc. The AAPS interest is that members are subject to criminal penalties based on mandated codes that are withheld from public, Internet-based scrutiny due to ownership asserted by the AMA.

AAPS contends that the Fifth Circuit decision violates the Rule of Law by overruling a Supreme Court precedent. Only the Supreme Court can override its own precedents. Further, AAPS argues that members of the public have the right of free access to electronic copies of the law by which they are bound. This permits a level of scrutiny that will catch errors and illogic more quickly than review by a handful of experts.

This case is likely to reach the Supreme Court even if rehearing en banc is denied.


Civil Rights and Private Contracts

At a staff meeting at Thunderbird Samaritan Hospital in Glendale, AZ, AAPS Director Robert Gervais, M.D., asked Senator Jon Kyl (R-AZ), the foremost advocate of private contracting for Medicare beneficiaries: How is it possible to have private contracting if the 1964 Civil Rights Act obligates all private cash-paying patients and their doctors to obey all government rules if they set foot in a government-licensed facility? The Senator noted that "that applies to education," without giving, in Dr. Gervais's view, a satisfactory answer.

A communication from the law firm of Lewis and Roca states that the Medicare Carriers' Manual interprets the Civil Rights Act to apply to all who receive Part B reimbursement. The Fiscal Intermediary Manual that governs agencies that pay hospitals, skilled nursing facilities, and hospices has a still more expansive interpretation. It is advisable, the firm states, to follow Medicare rules for all services, even non-covered ones.

"Our adversaries are very clever," Dr. Gervais states. "They have utilized the Civil Rights Act to turn all private patients into public patients."


The Rule of Law

"It will be of little avail to the people that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man who knows what the law is today can guess what it will be tomorrow. Law is defined to be a rule of action; but how can that be a rule, which is little known and less fixed?"

James Madison, The Federalist Papers (No. 62)


Officers of the Court

Three attorneys for Jeffrey Rutgard, M.D., who was imprisoned for Medicare fraud (see AAPS News Dec 1996), wrote a motion for a mistrial that should have guaranteed him a new trial on appeal. However, they did not file it. After Dr. Rutgard was incarcerated, they explained that they were afraid the judge would not like them if he read the motion and that it would have a detrimental effect on future cases they would plead before his court.

The motion reads: "No member of the defense team [in a collective 70 years of practice in federal court] has ever filed such a motion before. However, all ... believe it is their ethical duty to file this motion in order to defend and protect Dr. Rutgard's constitutional rights....

"The Court has repeatedly disparaged and demeaned defense counsel such that counsel no longer have credibility in the eyes of the jury and counsel are also afraid to be vigorous advocates for fear of the Court's reaction....

"The cumulative effect of the Court's actions has been the creation of an atmosphere wherein it is impossible for the defendant to obtain a fair trial. Therefore, Dr. Rutgard and his counsel respectfully request a mistrial and the reassignment of this matter to another court within this district."

Among other things, defense counsel feared being held in contempt if they advocated effectively for their client.

* * *

"...Today bureaucrats can define [a] criminal offense on the spot by how they interpret the regulations that they write.... This wide range of discretion is an example of delegation at its worst.... The court system [also permits the bureaucrat] to determine whether [the violation] is a civil or criminal offense. A `cooperative' offender may get off with a civil penalty, whereas a person who sticks up for his rights may get a criminal indictment."
Paul Craig Roberts, Lawrence M. Stratton
The Tyranny of Good Intentions, Prima Publishing 2000

Members' Page

Discrimination. From an EOMB brought to me by a patient, I learned how participating physicians are treated very differently from nonparticipants when it comes to refund requirements for tests determined to be "medically unnecessary." The hospital forwarded billing information for a test that I did to another, participating neurologist, whose office billed the patient by mistake. A note in microprint tells the patient that Medicare assumes she didn't know that Medicare would not pay for this service, and that therefore it will "pay any amount you have paid your doctor/supplier for the service," although "future services of this type provided to you will be your responsibility." When I bill as a nonparticipating physician, the patient is told that she doesn't owe anything for the "unnecessary" test and is due an immediate refund if she has paid anything. Moreover, Upstate Medicare encourages the patient to call the fraud and abuse hotline to "help preserve the Medicare Trust Fund" (thus destroying patient-physician trust) before I even have the chance to submit the documentation proving that Upstate Medicare has not followed its own guidelines and has wrongfully denied the claim!

Can this be legal?
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


Sauce for the Gander. Given the documented fraud in government, it is essential as a demonstration of the OIG/ HCFA commitment to "zero tolerance" for fraud and abuse that the OIG advise OIG/HCFA designees that government immunity is waived in any breach of contract or any lack of adherence to regulations or laws that the designee knew or should have known was being committed (i.e. the same standard as for providers). To show the feasibility of compliance programs for small offices, the OIG and HCFA should require them in every small federal and state office. And to demonstrate the such programs impose minimal cost, these should be implemented at no cost to the taxpayer.
Taj Becker, M.D., St. George, UT


Cutting the Waiting List. The British have found an innovative way to reduce the overpopulation problem and save money for the government. They may train nurses to perform open- heart surgery, thereby increasing "throughput" by up to 50%. According to John Williams, vice-president of the Royal College of Surgeons, "Tony Blair made it clear they want to end job demarcation as part of the modernisation of the NHS" (London Times 10/22/00). Patients may also lose instant access to their GPs after hours, with calls being answered by nurses at the NHS Direct switchboard service. After all, it's free.
Lawrence Dunegan, M.D., Pittsburgh, PA  

On Professional Courtesy. Medicare says that one may not balance bill a patient nor offer professional courtesy. Why, then, won't Medicare pay physicians if they happen to treat a family member? It claims you would have treated the family member for free. But it's unlawful to treat others for free.

The next question is: why has the AMA been silent about Medicare's elimination of professional courtesy? This tradition dates back to Hippocrates. It is clear that the AMA must be more interested in its profitability via the sales of code books and its contractual rights from HCFA than in the rights of individual physicians, or the basic precepts of medical ethics.
Lee Balaklaw, M.D., Louisa, KY


The Inverse of Egalitarian. The idea that some might not be able to afford a certain level of medical care-rationing by ability to pay-is abhorrent to many today. I usually respond to the egalitarian argument by turning it around. The inverse of "everyone should have access to the same good quality care" is "nobody should be permitted to purchase additional care with his own resources." Some people would agree with the second statement, but not many-even though it is the essential operating principle for the Canadian system.
Greg Scandlen, Frederick, MD


Compassion. The current funding of medical care for the elderly has to be one of the stupidest concepts known to man: Taxing poorer, younger working people (with minimal net worth and large immediate financial responsibilities such as a mortgage, children, or education) to buy medical care for older, wealthier retired people (with a much larger net worth and smaller immediate financial responsibilities). If anything, the flow of funds should be reversed. I would rephrase the debate: Why not show compassion for younger members of society and stop forcing them to subsidize wealthier older strangers? And why not stop torturing elderly people by forcing them to run the gauntlet of a sadistically bureaucratic Medicare system that is operated to make its annual budget instead of to serve its customers?
Gerry Smedinghoff, Wheaton, IL


Irrational Bundling. From a letter to Prudential HealthCare: A preoperative consult with a -57 modifier was denied by your new software and has been declared "history and physical included in the global service package." Yet the insurer will pay if no operation is done. Am I being told that my evaluation - almost universally inconvenient due to the unscheduled nature of emergencies-is useful and worthy of payment only when no operation is needed? Am I being told that I should operate based on the opinion of others?
Robert Lovett, M.D., Fort Worth, TX

Legislative Alert

Bush's Medicare Drug Push

President George W. Bush has just unveiled his Medicare prescription drug proposal: "The Immediate Helping Hand" program that he announced in September, 2000.

The $48-billion Bush plan would be targeted to states to help seniors who are not eligible for prescription drug coverage under the Medicaid program and do not have access to drug coverage through their retirement or supplemental insurance. It is designed to provide immediate relief to the seniors who need this assistance, while Congress engages in a more extensive overhaul of the current Medicare program. It appears that Bush will base his broader reconstruction of Medicare on the plan initially put forward by Senator John Breaux (D-LA) and Rep. Bill Thomas (R-CA), the co-chairmen of the now defunct National Bipartisan Commission on The Future of Medicare, sometimes called the Bipartisan Medicare Commission.

Meanwhile, the Bush interim drug plan would cover the full cost of all prescription drugs for seniors with incomes at or below 135% of poverty, and would cover some of the drug costs of all seniors with incomes between 135% and 175% of poverty with sliding-scale subsidies. It would also provide 100% coverage for seniors with drug costs over $6,000.

Bush's immediate problem is that top Members of Congress don't seem to like his Immediate Helping hand proposal-and the objection is not confined to the standard liberal Democratic opposition. When Tommy Thompson, the new Secretary of HHS, was questioned on the topic at his confirmation hearing before the Senate Finance Committee, Senator John Breaux (D-LA) told him that he should take the proposal back to the White House because it was an "ill-advised and ill-conceived concept." Breaux told Thompson that the idea that such a proposal could get fast-track acceptance in Congress was a miscalculation, and that a broader reform of the Medicare system would not take any longer than this plan would. Breaux has made no secret of his desire to get Medicare reform on track, and plans to reintroduce a new version of the bill he coauthored with Senator Bill Frist (R-TN) early in February.

Just as importantly, Senator Charles Grassley (R-IA), Chairman of the Senate Finance Committee, has indicated his desire to move a far more comprehensive Medicare proposal, based on the broad outlines that Bush unveiled during the Presidential campaign, and to do so quickly. Gail Wilensky, the former HCFA administrator who advised the Bush Presidential campaign, has said that a comprehensive piece of legislation could be readied before the end of the year.

Clinton's Last-Minute Regulations

Those controversial last-minute pardons are only a peep show compared to the Cecil B De Mille policy extravaganza that hit the Federal Register. In the final hours before leaving office, Bill Clinton literally flooded the Federal Register with reams of new regulations. HCFA had prepared a massive Medicaid managed-care regulation to be sent to the Federal Register on January 19, which, according to staffers inside the agency who wished to remain anonymous, was stunning in its level of prescription, dictating specifically what states and private plans in the program could or could not do.

Policy analysts have had a hard time digesting these bulky and utterly Clintonesque rules. President Bush has promised a full-scale review. Independent analysis confirms the worst suspicions. For example, on the HHS "privacy" rules, attorney John Hoff, a former staff member of the Bipartisan Medicare Commission and a trustee of the Galen Institute, notes that the Clinton Administration has given HHS broad powers to examine-without a search warrant-the books, records, and related papers of "providers"-that includes doctors-in order to assess compliance. HHS would also require agencies or entities covered by the regulations to agree to HHS access to their records, and, says Hoff, that would also include employers. Counselor Hoff notes something extraordinary for the record books-something that should be reproduced for every civil libertarian who has ever flirted with expanding government control over medicine-and that is the utter incompatibility of the principle of personal privacy and the expansion of government regulation. Note this, and note it well, at 65 Fed Reg 82589-90 (December 2000): "From State and local licensure laws to the federal fraud and abuse statutes and regulations, the health care industry is one of the most tightly regulated businesses in the country. Because the industry has such an extensive history of government oversight and involvement, those operating within it have no reasonable expectation of privacy from the government that such a warrant would be required to determine compliance with the privacy rules." When economic freedom is taken away, political freedom and civil liberties are sure to follow. We could not have said it better than the professional staff of HHS. Secretary Thompson has some real work to do.

The Common Ground Minefield

Tread carefully. Your best hopes for insurance reform based on consumer choice and competition could be blown away in a minefield sown by narrow special interests dedicated to making an easy buck, and ideological advocates of government control dedicated to taking big bucks out of taxpayers' pockets for an expansion of substandard government programs. Last November 20, the Health Insurance Association of America (HIAA), the largest trade association of independent health insurance companies in America, joined up with the American Hospital Association (AHA) and Families USA, a left-wing organization that promotes a government-run medical system, in fashioning a "compromise" on care policy. They have called the initiative the "Common Ground Proposal."

In marketing the Common Ground Proposal, the HIAA and Families USA have initiated a 7-city "road show," a series of well-funded conferences designed to generate broad popular support for the proposal. Public Opinion Strategies has released initial polling results on the Common Ground Proposal. It shows that 85% of Americans favor the proposal, and only 13% are opposed. (As with similar polls in the past, these results are quite typical; the dramatic reversal of opinion always comes when Americans are asked whether they want to pay more in premium costs or taxes or whether they favor increasingly detailed government regulation in medicine. The best example of this is, of course, the 1993 Clinton proposal, which initially enjoyed lopsided majorities in its favor.)

Besides HIAA and Families USA, other "participating" organizations include the American Nurses Association, the Catholic Health Association, and the Service Employees International Union. John Sweeney of the AFL-CIO has hailed the agreement as an "important step" toward "building consensus" on federal policies to deal with the uninsured. Likewise, Senator Edward Kennedy (D-MA), has praised the proposal as an indication that "bipartisan cooperation" on this issue is possible, and the agreement between the "strange bedfellows" of the health insurance industry and the Left's top health-care lobbying organization. The evident objective is to build a groundswell of support for the key elements of the proposal, undermine the Bush Administration's effort to create a system of consumer choice based on individual tax relief, and break down political resistance in Congress and the Bush White House to many of its most objectionable features.

It is not surprising, of course, that the Service Employees and the American Nurses Association (ANA)-strong backers of federal control of American medicine-are lined up as "participants" in the 7-city conference tour. The surprising development is that the Chamber of Commerce and the American Medical Association (AMA), while not signing onto the Families USA-HIAA agenda, are also "participants."

The Common Ground Proposal has three elements:

#1. A Major Expansion of Medicaid. The Medicaid "single payer" system for the poor now covers about 34 million persons. Under the Common Ground Proposal, Medicaid would be further expanded to cover all persons with annual incomes below 133% of the official federal poverty line, or about $18,820 for a family of three. In a break with current rules, the Common Ground Proposal calls for eligibility for Medicaid to be based solely on a person's income.

#2: Expansion of the State Children's Health Insurance Program or Medicaid Coverage for Adults. The $48 billion State Children's Health Insurance program (SCHIP)- proposed by Clinton and backed by Senator Kennedy-was politically attractive and passed the Republican Congress with little opposition and indeed much enthusiasm, as from Senator Orrin Hatch (R-UT). Under the Common Ground Proposal, SCHIP or Medicaid, at the discretion of the states, would be expanded to cover all adults with incomes between 133% and 200% of the official poverty line. Eligibility, once again, would be solely based on income, guaranteeing another massive Medicaid expansion. As Reps Bill Thomas (R-CA) and Jim McCrery (R-LA) note in their Dear Colleague letter, the HIAA-families USA proposal would increase the total number of Americans covered by Medicaid by a whopping 50%, and would add another $25 billion per year to the Medicaid budget.

#3. More Health Insurance Tax Breaks for Businesses. Federal law now provides unlimited tax relief for both individuals and companies for the provision of health insurance. For individuals, the tax break is an exclusion of benefits from taxation; for employers, it is a deduction of health insurance benefits as a cost of doing business. The Common Ground Proposal introduces a new, nonrefundable tax credit- for employers only-for paying a larger share of the premium for workers with incomes between 133% and 200% of the official federal poverty line. This proposal would reinforce all of the current problems attendant upon the exclusivity of tax breaks for employer-based health insurance.

The broad corporate support for the Common Ground Proposal is based on the desire to "do something" about the large number of uninsured Americans, running anywhere between 33 and 43 million at any given time, depending upon how they are enumerated. The brainless "do something" mentality that greets virtually every problem in American medicine has, however, largely made matters worse.

Many members of Congress, including liberals and conservatives, have made reduction of the uninsured a top policy priority. Leading conservatives, including Reps. John Cooksey (R- LA), John Shadegg (R-AZ), Dick Armey (R-TX), and Jim McCrery (R- LA), have all backed comprehensive reform based on consumer choice and competition. But the Common Ground Proposal goes exactly in the opposite direction. For example:

Congress should be getting Americans off Medicaid and into private health insurance, not putting more Americans into Medicaid. Medicaid is a programmatic mess. It has huge and growing costs; it is delivering poor care; and doctors and hospitals do not like either the Medicaid bureaucracy or the low payment rates. Not many middle-class Americans would drop their private insurance and voluntarily sign up for Medicaid. But the Common Ground Proposal would-in effect-close off all private options for low-income Americans, locking them into the Medicaid Ghetto. Many low-income families try to avoid Medicaid. In 1994, the New England Journal of Medicine found, as Reps Thomas and McCrery note, that they have good reason for doing so: Medicaid recipients wait longer to get appointments, and, according to a 1997 Kaiser Family Founda- tion/Commonwealth Foundation study, are almost twice as likely to fail to get needed care than patients in private health insurance.

The Common Ground Proposal would contract the private health insurance market, rather than expanding it. It would surely encourage a massive dumping of Americans out of private health insurance and into the Medicaid program. The private health insurance market would become smaller and less involved in the management of risks-the very purpose of insurance. If low-income Americans are automatically eligible for coverage under the government program, why should private employers cover them at all? What is likely, of course, is that employers would try to dump the sicker employees into Medicaid's adverse selection against the taxpayers. This would, in turn, exacerbate Medicaid's already exploding costs, and the taxpayers would pick up the bill. As Congressmen McCrery and Thomas point out, "Perhaps that explains why the HIAA has endorsed this contraction of the private health insurance market. Some insurers would rather avoid risk than manage it."

The Common Ground Proposal lays the groundwork for even greater government control over American medicine. While Families USA gets closer to its objective of government control over medicine, the HIAA gets an expansion of the New Deal tax treatment of easily regulated and controlled employer-based health insurance. The insurance industry gets a fresh flow of taxpayer cash through the new business credit, and health insurance contracts are, and remain, the exclusive preserve of company health care benefit managers and insurance companies. The insurance contracts are neater and safer. A sweet, short-term deal. Of course, it is a hop, skip, and a policy jump to employer mandates: the core component of the 1993 Clinton Health Plan.

Politically, with the Common Ground Proposal, the left wins- and conservative and centrist advocates of consumer choice lose- big time. That's the end game of Common Ground. Keep off that grass.

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