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

Volume 58, No. 5 May 2002


"Although medical facts frame the decision-making process, the choice in the end will be in the hands of our government officials. In my opinion the people of the United States have made it clear since September 11 that they are willing to make sacrifices for the common good. The debate on preemptive vaccination cannot go on indefinitely; we need to make a decision. I believe that if the decision calls for widespread vaccination, despite its attendant risks, we will accept those risks bravely, with our sleeves rolled up...." (emphasis added, JM Drazen, N Engl J Med 2002;346:1262-1263).

The threat is smallpox-the only highly contagious, vaccine- preventable biowarfare agent-though the vaccine might be useless against the strain developed at the Vector virology facility near Novosibirsk (Civil Defense Perspectives, Jan 2002). But the State Health Officer of Florida will have the sole authority to declare an emergency and force any vaccine he wishes on all persons, by "any means necessary," if there is "no practical method" of quarantine.

Unless Governor Jeb Bush vetoes SB 1262, as AAPS has asked, no elected official need take responsibility for forced treatment. The power is devolved upon bureaucrats-who were either silent or in vociferous denial as the World Health Organization destroyed 200 million doses of smallpox vaccine and as evidence leaked out concerning Soviet biowarfare capabilities. Such officials frequently boast about the campaign to eradicate small- pox-which left the whole world vulnerable. "What was then considered a triumph has now become our problem" (AS Fauci, N Engl J Med 2002;346).

Government ambitions do not stop with control of infectious disease (see AAPS News Mar 2002). E. Fuller Torrey, M.D., asks "Can psychiatry learn from tuberculosis treatment?" Medication compliance is a major problem with schizophrenia and bipolar disorder, just as with tuberculosis. "Is there something inherently different in brains and lungs? Or is it that our brains are not thinking clearly?" (Psychiatric Services 11/99).

The precedent needed for widespread forced drugging with neuroleptics may be set in the case of Charles Thomas Sell, D.D.S., now incarcerated in Springfield, MO (see AAPS News Nov 2001 and Apr 2002). In its amicus brief in support of a petition for rehearing en banc, AAPS writes: "The Decision holds that merely by alleging fraud, the State may inject mind-altering drugs into a prisoner against his will, based on government testimony. The stunning breadth of the Decision leaves few, if any, defendants free from the threat of being medicated against their will. The panel majority even rejected any limits on the type or quantity of drugs injected, and implicitly allowed drugs that have not been fully tested and approved for the specific purpose."

Dr. Sell allegedly suffers from delusions that make him incompetent to stand trial. However, upon reading the original AAPS amicus brief, he sent an unsolicited note to counsel demonstrating both his cogency and the widespread fear of forced drugging among detainees: "I just yesterday received a copy of the brief, and the other inmates that have read it so far are raving about it. You have given us prisoners here at Springfield new hope in our efforts against the terrible practice of forced medication. Also I would like to assure you that I am not the despicable monster the government portrays me."

"The government claims that Dr. Sell is delusional about it being out to get him. As in [Orwell's novel] 1984, it seeks to drug Dr. Sell in order to change his allegedly delusional hostility to government" (AAPS brief).

A delusion is "a firmly held belief not in keeping with the individual s culture or level of education"-despite contrary evidence and adverse consequences (Sapira's Art and Science of Bedside Diagnosis). There is still no drug that changes actual thought content, such as the conviction of Orwell's hero that 2+2=4, despite Soviet efforts to cure the disease of dissidence.

In 1953, KGB chief Beria told a US research physician that he had eight neuropharmacologists on his staff. A 1967 East German text noted that the field of psychotoxins is "the beginning of a development that is directed toward the complete influence and control over human consciousness." At a 1971 "disarmament" conference in East Berlin, it was stated that "psychotoxins are weapons directed against the further existence of an independently thinking and acting society."

In 1977, the World Psychiatric Association condemned the Soviet Union for using neuroleptic and experimental drugs on dissidents with the intention of changing attitudes and thinking. "The practices amounted to nothing less than a combination of lobotomies and torture using chemicals and electricity." While it is not possible to change minds with drugs, "the willingness to frighten, intimidate, drug into senselessness, pacify, cripple, or kill is real" (JD Douglass, NC Livingstone, America the Vulnerable, 1987).

AAPS argues that drugging Dr. Sell is a form of punishment that is forbidden by Supreme Court precedent. It has been suggested that it violates the international Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, to which the U.S. is a signatory. Side effects such as akathisia and irreversible tardive dyskinesia -more common in older patients such as Dr. Sell-are extremely distressing. Arguably, the dulling, immobilizing, memory-loss inducing effects of neuroleptics are a violation of the free expression rights protected by the First Amendment.

Will forced drugging (and even torture) be justified as a needed post-September 11 sacrifice for the common good? Will it be rationalized by the Charter on Medical Professionalism (see p.2), as a "commitment to equity," which "entails the promotion of public health and preventive medicine"?

Charter on Medical Professionalism

A coalition of the American Board of Internal Medicine, the ACP/ASIM, and the European Federation of Internal Medicine has issued a "charter" calling for "a new relationship between physician and society" (Lancet 2002;359:520-522; Ann Intern Med 2002;136:243-246.) Citing "an explosion of technology, changing market forces,...bioterrorism, and globalisation," the charter seeks to "reaffirm" three fundamental principles and ten professional responsibilities.

The principles are mutually contradictory, as pointed out by Jerome Arnett, M.D. The "primacy of patients' welfare" and "patient autonomy" are predicated on individual rights, whereas "social justice" is based on the rights of the collective.

The Charter is silent on forced treatments, and limits autonomy to decisions that are "in keeping with ethical practice and do not lead to demands for inappropriate care."

The "responsibility" for public advocacy by each physician, and for "commitment to a just distribution of finite resources" also place the interest of others ahead of the interest of the individual patient. Physicians solve that ethical dilemma by abdicating to "society" (government). As Daniel Sulmasy, member of the ACP Ethics and Human Rights Committee, explains: "If we all agree that we can't afford to give anyone PET scans and the rule applies fairly to everyone, then I will be able to act in the best interest of my patients within those parameters" (ACP-ASIM Observer July 2001).

The Charter is evidently operational in Buffalo, where federal agents put stickers on equipment that allegedly had been used "unnecessarily" by cardiologist Laurie Hill for nuclear stress tests. The stickers say that the equipment may not be used without permission of the federal government.

If physicians offer special personalized treatment to patients for a fee ("concierge care," AAPS News Oct 2001), that's possibly unethical (Int Med News 3/14/02) or a violation of the False Claims Act (Medicare Compliance Alert 3/25/02).

If ethical principles are too hard to uphold in the face of pressures from insurers and government ("society"), this coalition has the answer: just change the principles.


Calling All Medical Students: Essay Contest

The Arizona Chapter of AAPS invites students to submit an essay on the subject "What Does a Right to Medical Care Really Mean?" The Grand Prize is an all-expense paid trip to the Cato University Weekend Seminar at the luxurious Rancho Bernardo Inn in San Diego, California, Nov. 7-10, 2002. This is an informal event with the opportunity to interact with the world's preeminent thinkers in political philosophy and economics. Deadline: June 30. Word count: 1,000-5,000. Criteria for judging: logical consistency; demonstration of understanding the major issues; writing skills; and originality.


Government Non-Surplus

As the media bemoan the vanishing "surplus," it's time to look at the second set of books, the Federal Reserve's Flow of Funds that tracks total new borrowing to fund the deficit. These are the figures (official deficit or surplus/actual in $billions): 1995 (-164/-349); 1996 (-108/-376); 1997 (-22/-236); 1998 (68/-418); 1999 (124/- 521); 2000 (236/-138); 2001 est. (281/-480) (Weiss Safe Money Report 1/02- www.federalreserve.gov, search on "Z-1 flow of funds," go to table F4, p. 11).


Newspeak on "Privacy"

As AAPS member Taj Becker, M.D., points out in a letter to the Utah Medical Association, the HIPAA privacy rule represents an "unparalleled assault on patient confidentiality."

In its response to comments, CMS states: "These requirements are consistent with U.S. Supreme Court cases holding that warrantless administrative searches of commercial property are not per se violations of the Fourth Amendment. The provisions requiring that covered entities provide access to certain material to determine compliance with the regulation come within the well-settled exception regarding closely regulated businesses and industries to the warrant requirement.... [T]he health care industry is one of the most tightly regulated businesses in the country.... [T]hose operating within it have no reasonable expectation of privacy from the government such that a warrant would be required...."

"As for business associates, they voluntarily enter into their agreements with covered entities. This agreement ...functions as a knowing and voluntary consents [sic.] to the search (...assuming it could be understood to be a search.)"

The latest revision to the privacy rule-which AAPS called another "186 pages of mud" in a front-page story on NewsMax. com-do little but obliterate the pretense of patient consent.

HHS states that the latest revision "assures appropriate parental access to their children's medical records," correcting a problem with the current rule-as long as such access is consistent with other law. However, to enroll a child in a school-based clinic, parents may have to sign away all rights to see any of the records, writes Linda Gorman of the Independence Institute. Some states have laws denying parental access to records on contraception, sexually transmitted diseases, or abortion, while requiring parental consent for ear piercing.


AAPS Calendar

May 17. Board of Directors meeting, Las Vegas, NV.
May 18. Spring meeting, Las Vegas, NV.
Sept. 18-21. 59th annual meeting, Tucson, AZ.
Sept. 24-27, 2003. 60th annual mtg, Point Clear, AL.

* * *

[Winston saw O'Brien and a man in a white coat holding a hypodermic syringe.]

"Did I not tell you just now that we are different from the persecutors of the past? We are not content with negative obedience, nor even with the most abject submission. When finally you surrender to us, it must be of your own free will. We do not destroy the heretic because he resists us; so long as he resists us we never destroy him. We convert him, we capture his inner mind, we reshape him.... We make him one of ourselves before we kill him. It is intolerable to us that an erroneous thought should exist anywhere in the world, however secret and powerless it may be."
George Orwell, 1984,

NY Times Calls for Sacrificing Children

The New York Times is, of course, for "protecting" children in general-but in pursuit of that glorious end, individuals must be sacrificed. Until children are used as experimental subjects, no one should be allowed access to potentially life-saving drugs, according to the lead editorial on April 7, "The Need to Test Drugs on Children."

The FDA is apparently caving in, rather than fighting the lawsuit against the Pediatric Rule brought by AAPS, the Competitive Enterprise Institute (CEI), and Consumer Alert (AAPS News Dec. 2001). It has told the court it will suspend all or part of the rule while determining whether it is needed.

"This is a bizarre abdication of responsibility for guaranteeing that society's youngest and most vulnerable members are provided with the same safeguards that protect adults from unsafe or ineffective medicines," opines the Times.

A drug may be marketed for adults, "but once the drug is on the market, doctors are free to prescribe it for anyone they please." And they might make a mistake in estimating pediatric dosage, or encounter unexpected adverse effects, says the Times.

CEI attorney Sam Kazman counters that the Rule is much more likely to hurt children than to help them. Drugs intended for children are already exhaustively tested. Moreover, by "basing its testing demands on what doctors do in their offices, the FDA is opening the door to regulating the actual practice of medicine" (USA Today 4/7/02).

The Alliance for Human Research Protection (AHRP), which supports the AAPS lawsuit, states that the NY Times misses the profound moral question of "who has the moral authority to volunteer ... a child for invasive, risky, and painful medical experiments for the good of others?" Former FDA official Henry Miller, M.D., charges that the Pediatric Rule "raises serious ethical problems about testing drugs on children before they have been fully tested on adults."

Whose children will be what the Clinton Department of HHS called "risk-bearing children"?

The Nuremberg Code, which expressly prohibits testing without informed consent, has been largely disregarded in the U.S. The Maryland Supreme Court recently wrote: "`[O]ur own use of prisoners, the institutionalized retarded, and the mentally ill to test malaria treatments during World War II was generally hailed as positive, making the war "everyone's war." Likewise, in the late 1940's and early 1950's, the testing of new polio vaccines on institutionalized mentally retarded children was considered appropriate. Utilitarianism was the ethic of the day'." Grimes v. Kennedy Krieger Inst., Inc., 366 Md. 29, 77, 782 A.2d 807, 836 (quoting George J. Annas, Mengele's Birthmark: The Nuremberg Code in United States Courts, 7 J Contemporary Health Law & Policy 17,24 (Spring, 1991).)


FDA "Protection"

As microorganisms develop robust resistance to more and more antibiotics, a whole new generation of drugs posing a unique challenge to bacterial adaptive mechanisms sits on the shelf. These drugs are modeled on natural peptide antibiotics (cecropins A, B, and D) that penetrate the bacterial cell membrane and create a channel through which ions leak out of the cell, destroying the membrane potential and halting cellular metabolism. After 16 years of work, Nobel laureate Bruce Merrifield designed and tested a family of peptides made from D- isomers of amino acids, which cannot be broken down by enzymes based on L-isomers. One of Merrifield's 54 papers on the subject is found in Ciba Symposium 186, J. Marsh and J.A. Goode, eds., John Wiley, and Sons, Chichester (1994), pp 5-20.

"You, however, will probably never benefit from this work.... With a more than $500 million entry fee [now more than $800 million] required by your government for the prior testing of any new drug, manufacturers are only interested in substances for which they hold a complete proprietary interest and patents," writes A.B. Robinson, Ph.D.

Any of thousands of laboratories with solid-phase peptide synthesis capabilities could readily manufacture these compounds- but anyone who distributed them would be both imprisoned and impoverished.

"No doubt a substantial amount of human testing will be beneficial...-and there are lots of people dying from bacterial diseases who would be delighted to be a part of such tests.... In a perfect world, why should any free man be unable to purchase and use a new drug based on his own judgment and at his own risk?" (Access to Energy, Aug 1999).

Another compound that physicians are not permitted to use is ethyl cyanoacrylate or Super Glue, which was found to be ideal in closing surgical incisions, leaving virtually no scar. Eastman submitted its initial drug approval application to the FDA in 1964. A special surgical team was dispatched to Vietnam in 1966 equipped with Super Glue spray-"a near miraculous treatment that immediately stopped bleeding and saved many lives." [Any Vietnam- era surgeons wish to comment?] Civilian use quickly spread to Europe and the Far East. However, in the 1970s, Eastman, faced with the prospect of FDA-caused bankruptcy, withdrew its application. It was unable to prove that the spray would not cause cancer 10 to 20 years later. People who immediately bleed to death will not die of cancer, so FDA bureaucrats are safe from criticism.

Dr. Robinson has a modest proposal: "Super Glue should be applied to the doors of the FDA. This bleeding wound needs closing-and we would never notice a scar" (Access to Energy, Jan 2002, PO Box 1250, Cave Junction, OR 97523).


Terrorism Not Diverting FBI from "Fraud"

As Willie Sutton said, "It's where the money is." Despite allocating nearly half the FBI's resources to homeland security and anti-terrorism efforts, health care fraud enforcement is largely untouched. An important reason is the HIPAA budget. "That's a lot of money to walk away from," said FBI Health Care Unit Chief Timothy Delaney (BNA's Health Care Fraud Report 2/20/02).

To date, 3,586 medical practices have been excluded from Medicare, along with 1,203 dental practices, 431 podiatry practices, and 590 clinics (Medicare Compliance Alert 3/25/02).


Tip of the Month: The Hyde Amendment enables defendants of overzealous prosecutions to obtain reimbursement for their attorneys' fees. Beginning in 1998, prevailing defendants may so recover if the prosecution was "vexatious, frivolous, or in bad faith." A good decision by the Ninth Circuit on Feb 25, 2002, breathed new life into this remedy, ordering the government to pay the attorneys' fees of a defendant accused of wire fraud and money laundering. U.S. v. Braunstein, 2002 U.S. App. LEXIS 2866 (9th Cir. 2002). Finally-recourse for the unjustly prosecuted.


Evading Constitutional Protection. I asked the head attorney for the Medical Society of the State of New York (MSSNY) whether the new Physician Profile Survey, which asks whether physicians provide language interpretation services, violates the Fifth Amendment. He stated: "I do not believe that self- incrimination issues are implicated because the statute and regulations do not impose criminal penalties for failing to provide language interpretation services; see 45 CFR Part 80."

Does this mean that the Fifth Amendment doesn't apply in cases in which civil penalties can be levied? [Yes.]

The MSSNY attorney also opines that physicians-who must answer the survey or be automatically delicensed for "professional misconduct"-can answer "no" to the question on translation services and still be in compliance with Office of Civil Rights (OCR) guidelines because the survey answers are interpreted "narrowly" by the public, whereas the options for having translation services "available at" the office are interpreted "more broadly" by OCR.

Now I know the source of the infamous Clintonian quotation "it depends on what the definition of `is' is."

The new state-mandated survey will create a ready-made target list for zealous OCR agents.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY


A Response to Dr. Swint on "Taking Insurance." To protect our habituated rattlesnake handlers against the inevitable "bite," I propose an effective antidote from the distant past. Made from more than 71 ingredients including viper flesh and opium, it was given with wine. In its heyday, Theriac was believed to counteract any poison and cure any illness; King Mithridates VI developed it in the 1st century B.C. to protect himself against poisoning, an occupational hazard of kings. Could it be used to protect against the poison of Medicare prosecution, an occupational hazard of physicians in the 21st century A.D.? A dose of Common Sense might be more effective.

How about a double-blinded study of evidence-based, politically correct (if unvalidated) medicine? Would that make third parties feel better? But where could we find a control group of physicians using Common Sense?

Mark Twain said: "Man is the reasoning animal. Such is the claim. I think it is open to dispute."
Jerome Arnett, M.D., Elkins, WV


On Direct Advertising. Though criticized as unethical, direct advertising to the public is the only way drug makers can force managed-care contracted doctors to discuss new and better products with their patients. As the doctors' boss effectively prohibits doctor-to-patient suggestions, patient-to-doctor suggestions become the only access route. Such advertising is far more ethical than relationships doctors form with third parties. It also points out to the public the defects of managed care and the shackles on HMO doctors, another good result.
Thomas LaGrelius, M.D., Torrance, CA


"Human Capital"-I've never liked that expression. It conjures up such thoughts as "I've got $100 invested in this slave, and I've got to get my money's worth!" Now adding the idea that "employee health" is a "strategic asset," I can see prospective buyers checking the teeth of the slaves on the auction block to make sure they are buying good stock.

No thanks. Give me an employer who will pay good wages for good work, and I'll see to my own health.
Greg Scandlen, Alexandria, VA


The Real Goal. "Health care reform" is but one means to an end: the transformation of our so-called democracy into a more socialized form of government in which individual rights and property rights take a back seat to collective rights and welfare.
Joe Pugh, HealthBenefitsReform listserv


The Deal. How many hours should I, a 41-year-old, be forced to work, spending time away from my family, so that others that I do not know can have medical care? I say it is impossible for anyone to answer that question. When I see AARP rallying its members to rob me of time with my family so they can avoid spending more of their own money on their own medical care, I get angry. In effect, their success in convincing a select majority of 536 people in Washington, D.C., that their wants are more important than mine is forcing me to become dependent on the state for my own future wants. Isn't that the deal I'm making with the state? I'll take care of those the government judges worthy if the government will take care of me when I need it. Wait...isn't that communism?
Richard Relph, HealthBenefitsReform listserv


Knowledge Without Works. It always amazes me to learn in conversations about the sizable proportion of doctors who are sympathetic to AAPS but who refuse to act by financially supporting the organization. Aristotle said that to be virtuous and happy, it is not enough to know the good; one must also be willing to act on the basis of one's knowledge.
Robert Gervais, M.D., Mesa, AZ


Good Question. Why not just do long-term, controlled, blinded, active surveillance of a large cohort once and for all so we can really determine how safe and effective vaccines are, especially when given in combination?
Doug Hertford, M.D., New York, NY

Legislative Alert

The Medicare Mess-Again

Medicare is still in financial trouble, but the only thing that leftists in Congress can come up with is a big expansion of benefits, particularly prescription drug coverage, coupled with a firm opposition to any serious market-based reform.

Medicare is facing severe long-term financial problems. Medicare and Social Security are both pay-as-you-go systems, meaning that current beneficiaries are financed by current taxpayers. The rapid aging of the population-doubling the number of Social Security and Medicare beneficiaries over the next three decades-will mean a smaller base of working taxpayers to pay for the progressively more expensive benefits of an ever larger number of retirees. The Congressional Budget Office (CBO) estimates that Medicare spending will double over the next three decades, from 2.3% of GDP to 5.4%. Medicare and Social Security will account for 12% of GDP in 2030, consuming more than half of all federal spending.

CBO's concerns were reinforced by the recent report of Medicare and Social Security Trustees. The Trustees expect Medicare Part A, the Hospital Insurance Trust Fund, to jump from $149 billion to $245 billion between 2002 and 2011, when the first cohort of Baby Boomers hit the system. During that same period, Medicare Part B, Supplemental Medical Insurance, spending is expected to go from $108 to $192 billion.

The HI Trust Fund is projected to remain solvent until 2030, but income will start to fall short of outlays beginning as early as 2016. In other words, Medicare then starts running in the red. Unlike the HI program, the SMI part of Medicare, or Part B, will never be insolvent because, under current law, it has a free run on the Treasury. Part B costs are automatically covered by transfers from the Treasury and higher premiums for beneficiaries, who pay 25% of the real costs. The annual costs of SMI are projected to grow from 1% to 2.1% of GDP over the next 30 years.

Trustees warn: "Medicare faces financial difficulties that come sooner-and in many ways are more severe-than those confronting Social Security. While both programs face essentially the same demographic challenge, health care costs per enrollee are projected to rise faster than wages. As a result, the Medicare program will eventually place larger demands on the federal budget than Social Security." The Trustees also declare that the "most significant implication" of its report this year is that both Social Security and Medicare " need to be reformed and strengthened at the earliest opportunity."

The Concord Coalition, a respected bipartisan group that routinely campaigns for fiscal responsibility, picks up on this theme. The Coalition argues that while the Medicare Trustees report reaffirms the need for change, media focus on the Trustees' projections of the conditions for "trust fund solvency" in both Medicare and Social Security is misplaced. The Coalition says that what is critical is not trust fund balance, but operating balance-how much money is needed to keep the systems in operation. They note that the share of general revenues-taxes-to sustain Medicare and Social Security will grow by more than 40% by 2040, when the Boomers are fully into retirement and sleeping their days away in nursing homes. To put that in perspective, that means that Medicare and Social Security alone would require in 2040-for that year alone- $360 billion in general revenue funds to keep both program afloat: the amount of the 2001 budget for the Dept. of Defense.

Gasoline on the Fiscal Fires

American Association of Retired Persons (AARP) officials have told Congress they want a major prescription drug program- priced out at an additional $750 billion over ten years. Raising the political stakes in the fight, AARP honchos have told Congress they would oppose the passage of any relief-"give backs"-for doctors participating in Medicare, unless and until they get an agreement on that new Medicare drug benefit. In a February letter to Senator Kent Conrad (D-ND), Chairman of the Senate Budget Committee, William Novelli, chief executive officer of the AARP, said, "We believe that it would be irresponsible to use Medicare (or Social Security) surplus dollars to increase provider payments without first ensuring that older Americans get the prescription drugs coverage they need and deserve. Our members would not understand why Congress could find money to help providers but not to meet their increasing drug needs. We therefore would strongly oppose funding for a give-backs' package prior to an agreement on a meaningful Medicare improvement package that includes drug coverage."

In his missive to Sen. Conrad, Novelli said that an acceptable new prescription drug benefit would be characterized by an "affordable premium and coinsurance," catastrophic protection against high costs, additional assistance to low- income seniors, and safety features to protect seniors against drug interactions. This sounds reasonable on the surface. But the underlying dynamics are all too familiar: AARP wants to retain the current "defined benefit" structure. In practice, this would mean setting the "premium" for the prescription drug piece-like other Medicare benefits-at a politically attractive low level, encouraging an explosion of utilization, and then applying price controls.

As former Senator Robert Kerrey (D-NE), now cochairman of the Concord Coalition, recently reminded the Senate Finance Committee, the AARP proposal more than doubles the amount ($300 billion) set aside in last year's Congressional Budget Resolution-when OMB and CBO were projecting a total unified surplus of $5.6 trillion over 10 years. That situation no longer obtains, regardless of the cause.

Kerrey also sternly reminded the Committee that the Medicare program is not fully funded, nor is it a real insurance program: "The current un-funded liability for future beneficiaries is $10 trillion before a prescription drug benefit is added. Second, it is not true insurance because the insurer is underwriting a risk that is almost certain to be used continually. This is especially true with most of the prescription drug proposals where the usage will be expected and annual." The potential costs of a Medicare prescription drug benefit could be enormous. Underscoring the Senator's basic point, prescription drug costs rose 17% in 2001 alone, largely because of a rising consumer demand for newer and more effective products.

An Impetus for Real Medicare Reform?

Like former Senator Kerrey, many Members of Congress as well as prominent policy analysts strongly favor a prescription drug benefit for senior citizens, but only within the context of fundamental reform. The Administration recently reaffirmed that position. The issue is not whether to add a drug benefit, but how to do it in the most cost-effective fashion.

The President, moderate and conservative Democrats, the House and Senate Republican leadership, and a host of professional and medical organizations have endorsed the creation of such a new competitive system for Medicare, based on patient choice and market competition. There is little doubt that real savings would result. But the more important benefit of such a reform is improvement in the quality of care and the working environment for seniors' physicians. Instead of trying to fix thousands of prices for doctors' services, the government would create a new system such that Medicare patients could take advantage of a competitive market in which participating plans and physicians must satisfy patients' demands for high quality service at competitive prices-or lose business. This is roughly the way the Federal Employees Health Benefits Program (FEHBP) operates. But Congress can improve on the FEHBP model. Instead of bureaucratic central planning, a competitive market-based system would offer rapid innovations in benefits, and the delivery of medical services, free of the sluggish bureaucratic process and red tape that characterizes benefit setting in the current Medicare program.

Battle for the Future

A major entitlement expansion for the elderly through an unreformed Social Security and Medicare is guaranteed to give younger workers heartburn, as they see a sharp increase in payroll or federal taxes. When the tax bite finally hits, it will surely weaken political support for these entitlements among the young, setting off a struggle between the growing ranks of the Baby Boomers and their children and grandchildren.

But "liberals" might also be in for an unpleasant surprise. They have not pondered the effect of unreformed Medicare expansion on their activist political agenda. Historically, that agenda has been utterly dependent upon vigorous federal spending-Utah is not going to be a hotbed of leftist experimentation, for example. If a larger and larger share of the available federal tax money is going to seniors, and that will be a larger and larger share of the voting population, there is going to be less available for other things. With more than half of all federal dollars earmarked for entitlements and debt payments, one might see states and local communities reclaiming a greater share of governance, an altogether healthy development.

HHS Advisory Committee on Regulatory Reform

Medicare's problems are not confined to budgetary problems or reimbursement levels, but also include governance issues, such as the regulatory overkill that inhibits flexibility and undermines efficiency in the delivery of medical care.

Doctors for the first time have a friendly listener at HHS to hear of their struggles with Medicare red tape. Created by Secretary Tommy Thompson, HHS Advisory Committee on Regulatory Reform is holding its field hearings around the country to hear firsthand from doctors, hospital officials, Medicare patients, and others about their experiences dealing with the Medicare bureaucracy. (See www.regreform.hhs.gov.)

The good news is that the Advisory Committee is complementing solid oversight work undertaken by key Congressional committees such as the House Ways and Means Subcommittee on Health, the House Budget Committee, the House Commerce Committee, the Senate Aging Committee, and even the Senate Finance Committee. The Medicare Payment Advisory Commission has issued a useful report on Medicare's regulatory complexity, Reducing Medicare Complexity and Regulatory Burden (available at www.medpac.gov), and non- governmental organizations such as the National Academy of Social Insurance are also studying the issue. Medicare's bureaucracy, of course, has been a staple of analysis by the health care policy team at the Heritage Foundation (see www.heritage.org).

Helping The Poor Get a Doctor

As more doctors are refusing to take new Medicare patients, that other big entitlement, Medicaid, is going through fiscal hell. More than half of the states are finding that their Medicaid budgets are out of balance.

There might be a way for clever state officials to ease their burdens and get help to the poor at the same time. Many physicians want to avoid treating Medicaid patients. Part of the reason, of course, is that Medicaid is governed by price controls, which have a 4,000-year record of reducing the supply of goods and services. Part of the reason is also the Medicaid bureaucracy. One result: the difficulty that Medicaid recipients have in getting access to family doctors. Too many of these Medicaid recipients end up in hospital emergency rooms for routine medical services.

This problem can be partially overcome by getting a waiver from HHS and establishing a direct cash-transaction system in the Medicaid program. Quick access to physicians could be facilitated through a special Medicaid account system: Set up a cash account at some specified amount (say $1,500) for each Medicaid recipient, with a pin number and a debit card. Payments for routine medical services could be made directly out of the special Medicaid account. In effect, the debit card becomes an instrument to improve the quality and the continuity of care. The benefits accrue to both doctors and patients. Doctors could secure quick and immediate payment. For the Medicaid patient, the funds could be rolled over year to year in the Medicaid account. Upon leaving Medicaid, the patient could take the money and roll it over into a private medical savings account or use it to pay for private medical insurance. This Medicaid proposal is compatible with welfare reform, which looks to get people off welfare.

In the meantime, wherever possible, every Governor and state legislature should look for creative ways to help people escape Medicaid, which has a well-deserved reputation for poor quality care.

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