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Volume 60, No. 10 October 2004


"If you thought `Hillarycare' was radical, wait for this," writes John Goodman, president of the National Center for Policy Analysis (NCPA). "John Kerry wants your money and your life" (Wall St J 8/26/04). Having learned from the Clinton debacle, Kerry would implement the plan incrementally and rely more on economic than political pressure.

Under Kerrycare, the federal government would become the nation's major reinsurer by paying 75% of catastrophic medical expenses above $50,000 if employers offer insurance to all employees and pay at least half the premium costs.

This proposal would transform most private medical "insurance" into a Medigap equivalent and could ultimately spell the demise of true medical insurance.

Recall that Medicare destroyed the insurance market for Medicare-eligible patients, despite 1803 of the law, which states that "nothing in this title shall be construed to preclude...any individual from purchasing or otherwise securing, protection against the cost of any health care services." It's Medicare Part B or nothing for physicians' fees, and one can avoid Medicare Part A only by forgoing all Social Security benefits.

Kerrycare would provide "trickle-down" subsidies (90% of the funds go to employers, states, and insurers); "phantom savings" (the perennial promise to eliminate waste and inefficiency); and a tax increase on the "rich," estimated to bring in enough revenue to cover about one-third of the calculated cost of $1 trillion over 10 years.

More than half the money in Kerry's plan would be spent expanding Medicaid and SCHIP, causing at least three people (Kerry's estimate) to lose private insurance for every 10 who sign up. Others say the private-sector crowd-out will be closer to one-to-one (NCPA Policy Report No. 269, www.ncpa.org).

Universal coverage of children might come about by making it mandatory for school attendance, as John Edwards proposed on the campaign trail. As the children become adults, Joseph Lee Pugh points out, it's expected that they will continue to want the kind of care they have been receiving.

"Unlike some incremental reforms, which are mere stopgap measures that fall apart after a few years, a truly universal program would like Medicare command political support forever," writes Jonathan Cohn.

The structure of the Kerry subsidies, which phase out as income increases, penalizes work. "Overall tax rates for low- income families would soar to levels normally thought to apply only to the very wealthy" (NCPA, op. cit.)

Cost containment might result from the Edwards method of limiting supply. "During his 20 years of suing doctors and hospitals, he pioneered the art of blaming psychiatrists for patients who commit suicide and blaming doctors for delivering babies with cerebral palsy," writes Charles Hunt (Wash Times 8/16/04). Quoting Charlotte neurosurgeon Craig VanDerVeer, M.D., Hunt credits Edwards with crushing obstetrics and neurosurgery in North Carolina, with the result that thousands lost their medical care.

Under the Kerry plan, the federal government would "assume the risk" of catastrophic costs, "thereby reducing the incentive for socially wasteful spending," writes Paul Krugman (NY Times 8/26/04). Because entitlements are not enforceable contracts, however, it is patients who assume the risk that treating their expensive illness will be deemed socially wasteful. Some might thus refer to the Kerry plan as being "faith-based."

"Only an idiot" would fail to support her husband's health care plan, stated Teresa Heinz Kerry (www.nbc10.com).

The Bush plan also has the potential to bring about radical change of the status quo but in the direction of freedom if its concepts of ownership and individual responsibility take hold. Bush tax credits are targeted to individuals, providing incentives to curb personally wasteful spending by allowing the economizers to benefit themselves. Bush has been touting Health Savings Accounts on the stump for six months; HSAs went unmentioned at the Democratic convention. Also, Bush has at least recognized the need to deal with the impending crash of the welfare state (H. Jenkins, Wall St J 9/1/04).

"No serious person doubts that our overreliance on third- party payments is the problem that will be solved or will lead to a government-run single-payer system that controls costs by denying care" (ibid.).

HSAs are now unavailable to many Americans because purchase of a high-deductible insurance plan is impossible in some states. Bush would permit "health insurance without borders." Reps. John Shadegg (R-AZ) and Dennis Hastert (R-IL) have introduced the CHOICE Act, which would allow any willing consumer to buy a plan from any willing insurer, by phone or internet, nationwide. State mandates now add 15 to 30% to the cost of medical insurance, and price up to 25% of the uninsured out of the market.

Still more radical ideas have been floated. The National Coalition on Health Care cochaired by George H. W. Bush, Jimmy Carter, and Gerald Ford would impose price controls on physicians, hospitals, and insurance premiums, and, somehow, bring about universal coverage (Wall St J 7/21/04).

From the opposite perspective, Holman Jenkins writes: "We just push checks around to conceal from people the true cost of their healthcare....Employers should be relieved of the primitive practice of bartering health care for labor. In turn, we could end the crazy spur to channel every routine medical expenditure through the insurance system....The only reform that stands a chance is one that dismantles the nutty system of tax subsidies that fuels health care inflation by...channel[ing] every ache, pain, and prescription through a third party payment bureaucracy" (Wall St J 3/17/04).

Entitlement Algebra

In a recent talk to seniors, Senator Kerry promised them free medicines and options for obtaining the free medicine that President Bush didn't give them, reports Craig Cantoni of Scottsdale, AZ. Kerry apparently sees only the left side of the equation e = t, in which e stands for entitlement and t for taxes, Cantoni says. A more complete equation is:

e + l + p + d + u + r + n = ta + tc,

where l represents legions of government bureaucrats; p, private-sector money for compliance with diktats; d, dues for lobbying groups like the AARP; u, unclean campaign contributions; r, rent-seekers in private industry who earn handsome incomes interpreting regulations; n, the damage to the moral fiber of the nation that allows neighbors to steal from neighbors; ta, taxes on adults; and tc, taxes on children.

Rearranging for ease of remembering, Cantoni finds that:

p+l+u+n+d+e +r = ta + tc.

As AAPS Director Robert Gervais, M.D., of Mesa, AZ, explains, free-market medical insurance products are constrained by premiums that people are willing and able to pay. Entitlements are funded by taxes, and people seemingly prefer sending taxes to the government to paying premiums because they know that government has the magical power to disburse $6,000 or $50,000 worth of goods for $3,000 worth of taxes. This is done by printing money or transferring costs to future generations (i.e. stealing from the grandkids). Of course the day of reckoning must come, but most socialists are willing to gamble that they won't be around to experience the debacle.


State Insurance Mandates Growing

In 1965, only seven benefits were mandated by states; today, the Council for Affordable Health Insurance has identified 1,800 mandates for coverage of services, persons, or providers. In January 2004 alone, 295 new mandates were introduced. Mental health parity, now required in 42 states, is one of the most expensive mandates. The total number ranges from 13 in Idaho to 60 in Minnesota.

Other regulations that drive up the cost of insurance include guaranteed issue and community rating. See www.cahi.org for detailed lists.


Medical Bankruptcies May Be Overstated

The popular press frequently cites a Harvard study in stating that "nearly half of all bankruptcies were the result of medical debt or a medical condition" (Milwaukee Journal Sentinel 11/1/03). Many debtors have health insurance but are considered underinsured. However, it is impossible to tell from the study how many were driven to bankruptcy by medical bills. In 1999, one in four debtors, about 330,000 families, cited an illness or injury as a reason for filing for bankruptcy; loss of income might have been the primary factor. One in three debtors said they had incurred more than $1,000 in medical bills not covered by insurance over two years. Combining these overlapping groups, the authors estimated that "the total number of bankrupt families with identifiable medical problems exceeded half a million in 1999 alone." Nearly half of debtors aged 65 or over listed a medical reason, compared with only 7.5% of debtors under 25 (Consumer Choice Matters 8/18/04, www.galen.org). (The April 2000 working paper is available at papers.ssrc.com.)


Pay for Performance in Britain

A new contract for general practitioners in the NHS, the "boldest such proposal on this scale ever attempted anywhere in the world," calls for linking pay to 76 indicators of quality. These include recording the blood pressure annually in 90% of patients, reducing total or low-density lipoprotein cholesterol levels in accordance with national guidelines, and the quality of written records. Performance indicators were introduced in the NHS in the 1980s, with the number of targets proliferating to 300. Clinicians see themselves as "overappraised and over- inspected," and state that the target system results in treating cases that can be processed quickly rather than those that are medically more urgent (N Engl J Med 2004;350:937-942).


Universal Mental Health Screening

In what some fear could become a "No Child Left Unmedicated" program, President Bush has proposed screening the entire American population, including preschool children, for mental illness (Health Freedom Watch July/Aug 2004).

The project started in Texas as an alliance of individuals from the pharmaceutical industry, the University of Texas, and mental health and prison systems, with funding from the Robert Wood Johnson Foundation and several drug companies.

Bush notes that many children are expelled from school because of "severely disruptive behavior," and he wants them to have state-of-the-art treatments. Whistleblower Allen Jones said that the recommendations of the New Freedom Commission, which was established by Executive Order in April 2002, would result in a comprehensive national policy to "treat mental illness with expensive, patented medications of questionable benefit and deadly side effects, and to force private insurers to pick up more of the tab" (BMJ 2004;328;1458). The full Jones report is linked to the News of the Day of Sept. 11, 2004.

Congressman Ron Paul, M.D., (R-TX) attempted, unsuccessfully, to defund the program. Concerns include nonexistent parental rights to opt out of screening; the possibility of coerced drugging under pain of child abuse charges; lifelong stigmatization by a subjective diagnosis; diagnosis for political reasons, with defenders of the U.S. Constitution labeled as violent or mentally unstable; merging of the screening with the academic standards of No Child Left Behind program; increased use of drugs such as Prozac and Ritalin, whose long-term safety and effectiveness remain unproved; and lack of fully informed consent despite the possibility of severe adverse effects.


AAPS Calendar

Oct. 13-16. 61st annual meeting, Portland, Oregon.
Sept. 21-24, 2005. 62nd annual meeting, Arlington, VA.

AAPS Sues to Void Language Rule

In cooperation with several physicians and ProEnglish, AAPS filed suit against the U.S. Department of Health and Human Services in the U.S. District Court for the Southern District of California, challenging policy that implements Clinton Executive Order 13166 (Colwell v. HHS). This policy may require physicians or medical facilities that accept federal funds to provide professional interpreters, free of charge, to patients with limited English proficiency (LEP).

At a San Diego press conference on Aug. 30, ProEnglish chairman Robert Park argued that the HHS policy guidelines constitute "official multilingualism disguised as civil rights enforcement." The use of English is not a form of prohibited discrimination on the basis of national origin, he said.

AAPS Executive Director Jane M. Orient, M.D., stated that the policy interfered with the patient-physician relationship, and that this unfunded mandate would decrease the availability of medical services.

The complaint argues that the requirement to assure the competency of translation exposes physicians to additional liability under malpractice claims.

Plaintiffs contend that the Policy Guidance was issued in violation of the notice and comment provisions of the Administrative Procedures Act, abridges freedom of speech, and is unconstitutionally vague. The frequent use of undefined terms such as "meaningful access," "reasonable steps," and "timely manner" makes it impossible for practitioners to know whether "they have met some entirely subjective standards of compliance in an area such as language that is in constant flux."

The Prayer for Relief asks for a declaration that Title VI of the Civil Rights Act of 1964 does not make language a proxy for national origin. It also asks that HHS be enjoined from enforcing the LEP rule.

The case was filed by the Pacific Legal Foundation.


AAPS Files Amicus in CON Case

Kentucky law has a broad exception for physicians' offices in its certificate-of-need requirement. Nevertheless, Kentucky hospitals have instigated administrative proceedings against John W. Gilbert, M.D., and Physician Services, PSC, declaring that a CON is required for the stand-up MRI services now provided in four of Dr. Gilbert's offices.

MRI services are performed only after a consultation is requested and a patient-physician relationship established. Scans are interpreted by Dr. Gilbert, a board-certified neurosurgeon trained in neuroimaging, or by a board-certified neuroradiologist employed by Physician Services.

In its amicus brief, AAPS states that the proceeding is an anticompetitive tactic calculated to impair the ability of Physician Services to compete against the Affected Parties.

"The majority of Physician Services' office locations are in medically underserved areas where many patients would otherwise be without access to such services...."

The scans offered by Dr. Gilbert promote the public policy of broad access to medical services, and interference with this free-market activity by the Cabinet for Health and Family Services would be arbitrary, capricious, and unconstitutional. Under the logic used by the Affected Parties, the University of Kentucky, the University of Louisville, and the Trover Clinic are also in violation of the law. A holding against Dr. Gilbert could thus have a wide and devastating effect on access to care.


Shammed Doctors Awarded Millions

A Dallas federal court awarded cardiologist Lawrence Poliner, M.D., $366 million in damages against three physicians and Presbyterial Hospital, which had suspended his privileges to perform catheterizations and echocardiograms. Competitors had accused him of poor patient care, although independent reviewers had defended him. Dr. Poliner's practice was severely damaged by loss of referrals and by another hospital's refusal to grant privileges. The hospital plans to appeal.

A U.S. District Court in Northern California awarded $4.3 million to Dr. John Ulrich, Jr., who was featured in a Pittsburgh Post-Gazette series on sham peer review as a reprisal against outspoken physicians. Two weeks after protesting a decision to cut staff positions, Dr. Ulrich was subjected to a wide-ranging hospital investigation. The hospital refused to remove a data bank report after the state medical board cleared him. He has not been able to work in his field for six years (S. Twedt, Pittsburgh Post-Gazette 6/24/04).


Doctors Sue Blue Cross/Blue Shield of Michigan

BC/BS of Michigan is attempting to force physicians to accept reduced fees that automakers negotiated with United Auto Workers, through the ploy of calling an office visit a "covered benefit" with a "100% copayment."

The Michigan State Medical Society and the Michigan Osteopathic Association are asking a judge to decide whether something with a 100% "copayment" is covered.


Tip of the Month: Beware of fake patients. Possible signs: showing up with a partner, asking for Vicodin or OxyContin, or acting in ways that contradict their words. For example, a patient may move as if in severe pain, but deny pain for the benefit of the tape that will be produced in evidence. Private insurers, such as BC/BS of Michigan, have sent wired investigators to entrap physicians. Even if acquitted in a jury trial, the doctor may confront the same "evidence" in a medical board proceeding. Compact radio-frequency detectors are available for screening patients. Be aware that even long- standing "patients" may be wearing a wire.


AAPS Asks Court to Unseal Proceedings

In the case of William W. Backus Hospital v. Safaa Hakim, M.D., AAPS filed a motion urging that proceedings be unsealed and that the public be allowed access to the courtroom. In this case, the hospital had allegedly used a peer-review proceeding to retaliate against a whistleblower. AAPS notes that "the confidentiality of peer review is invoked to conceal injustices against physicians and patients alike." AAPS members have a direct interest in being informed about cases such as this.

"Just as a government official has no legitimate interest in concealing wrongdoing from the public, a community hospital lacks a legitimate interest in wholesale denial of access by the public it purports to serve." There is a constitutional presumption in favor of open court proceedings, and closure of judicial records is appropriate only where a compelling government interest exists, only where it is likely to be effective in preserving against the perceived harm, and only after considering less restrictive alternatives.

The court read the AAPS papers but denied the motion for leave to file an amicus brief.


"Quality" = Documentation. While visiting in a major Buffalo hospital, I passed the office of the Quality Documen- tation Coordinator. The flow chart on the door said: "Better documentation leads to longer LOS [length of stay] and improved MCMIs [medical case mix indices] which leads to better patient outcomes." The truth, of course, is that the choice of ICD-9 codes affects the hospital's bottom line, and hospitals now hire people to encourage, pester, and nag physicians to fabricate, embellish, or otherwise alter diagnoses to maximize hospital revenue. An important aspect of the job is to sell the delusional concept that gamed documentation has something to do with better patient outcomes.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY


Socialized Medicine Is Here and Now. Third parties and government are controlling medicine, illegally practicing without a license, and not accepting responsibility for any untoward consequences. Compromise with socialists is a lost cause. It means they have won, so they continue what they were doing anyway, using the courts to play their game.
Milt Kamsler, M.D., St. Augustine, FL


Pre-paid "Insurance" Does Not Work. There is no long- term security with today's prepayment schemes, which cannot work no matter how you manipulate the pool. Real health insurance could work, in theory, but we have never had any. As some in the insurance industry said in the early 20th century, there is no way to insure for medical care. The lure of third-party payment is too irresistible for some citizens, and public welfare is a cancer that will kill any form of government.

The key is to have more direct linkage of patients and caregivers at the time of service, through cash. Government should encourage behaviors of responsibility and self reliance as a hedge against societal decay and government bankruptcy.
Joseph Lee Pugh, Diamondhead, MS


Two Forms of Payment. It's not a question of FFS (fee for service) vs. HMOs, but third-party payment vs. direct payment.
Greg Scandlen, Hagerstown, MD


Access and First-Dollar Coverage. We were a typical low-income family, with no insurance but plenty of access to primary care. The pediatrician would always see us, and I'd pay him when I could scrape up the money. A flat tire was a bigger problem; we had no credit and nobody would give us a tire without payment. When my employer got HMO coverage, I paid my asthmatic daughter's allergist out of pocket. The in-network doctors couldn't do same-day appointments, and didn't produce a reliable outcome. I was poorer because my employer spent my money unwisely on HMO premiums. My access would have been better with less coverage and more dollars in my pocket.
Donna Kinney, Texas Medical Association


Access Is Available. A woman wrote that when a new consumer-directed plan allowed her to choose her own doctors, she got a second opinion that caused a dramatic turnaround in her son's health. I can't imagine someone being unwilling to pay $60 for a second opinion, irrespective of the insurer's diktats, when her son is deteriorating. There is a deeper problem in America than absence of a consumer market. Under paternalism and socialism, people behave like trained seals.
Craig Cantoni, Scottsdale, AZ


Cost of Third-Party Payment. Billing overhead probably doubles the cost of providing service. The best way to determine the cost is to look at a practice like mine in which I can charge about half the going price and make as much net income. I don't play games to get paid; I tell the patient the price up front (simple throat infection, $35; pneumonia or kidney stones, $50). Here in northeast Tennessee we have to keep everything simple. Otherwise I would get confused and think I was treating the third party, not the patient.
Robert Berry, M.D., Greeneville, TN


How Can Low-Income People Afford a $5,000 Deductible? By getting patients to stop paying higher insurance premiums. Why not pay $100 for $100 worth of services instead of $200 in premiums, $100 of which is for paper shuffling?
Robert P. Gervais, M.D., Mesa, AZ


On Outrageous Hospital Bills. A response to the stories of people hit with huge hospital bills: Do you vote for politicians who promise to take care of you by forcing others to pay the bills; forcing insurers to offer the same premiums to all; and enacting guaranteed issue, mandated benefits, certificates of need, minimum benefit payout ratios, etc.? If yes, you just voted yourself a $20,000 hospital bill.
Sean Parnell, Heartland Institute


A Modest Proposal. Last fall, I received a hospital bill showing a charge of $8,000, and a letter from Medicare indicating a payment of $1,600. I called Medicare and was told the hospital had agreed to accept 20% of the billed charge.... I suggest that senators and other federal employees participate in this practice of accepting only 20% of their salaries or wages, in the interest of balancing the federal budget....
Don Huntoon, Medicare beneficiary

Legislative Alert

The Presidential Health Debate

President George W. Bush and Senator John Kerry are starting out in a very close race. And while international terrorism, war, foreign policy, and the state of the economy are likely to dominate the next two months, health care will still remain a first-tier issue.

Both candidates have outlined complicated "incremental" plans composed of a series of discrete policy initiatives. Both would result in additional federal spending. The Bush tax-credit program calls for an estimated $90 billion in forgone revenues over ten years, while the cost of the Kerry plan over 10 years ranges from $653 billion to almost $1 trillion.

To date, the Bush expedited waiver system has enabled states to expand coverage to 2.6 million persons through Medicaid and the State Children Health Insurance Program (S-CHIP). HHS has also boosted support for community health centers, thereby serving 3 million additional persons.

The enactment of Health Savings Accounts (HSAs) is Bush's signature triumph. It has the potential to transform the health insurance market. Already, according to ehealthinsurance, the nation's largest internet health insurance broker, 33% of those persons who purchased HSA policies were previously uninsured. HSAs drive the Left crazy.

The Congress also enacted Bush's health insurance tax credits for certain displaced workers under the Trade Adjustment Act, which created an infrastructure for a larger tax-credit system if Congress were to enact it.

The House of Representatives has already enacted Bush's proposals for medical liability reform, the creation of association health plans, and a liberalization of flexible spending accounts (FSAs), ending the current "use it or lose it" rule that returns unused funds to the employer. The Senate, however, has not acted on any of these Bush initiatives.

The major policy change in the Kerry health plan is to have the federal government serve as the payer of last resort for 75% of all catastrophic costs in excess of $50,000 annually. In effect, this would negate the very purpose and function of private health insurance as it shifted the bulk of all high costs onto taxpayers. There is no evidence that private insurance, which is designed to spread risk among large numbers of individuals, is incapable of providing catastrophic coverage. The problem with private insurance is that is does not cover enough people, not that it is unable to pay the major costs of those whom it does cover.

Kerry's proposal would have several related consequences. First, it would distort the incentives of virtually all sectors of the medical economy, affecting patients, doctors, employers, and insurers, inevitably raising costs. Second, it will fuel new political pressures, from large corporations to union representatives, for the government to pay 100% of costs. That, of course, would drive costs higher still.

The basic dividing line between the candidates is philosophical. Bush would generally expand private sector options, while Kerry would generally expand government programs, including Medicaid and S-CHIP. Kerry would also provide tax credits for uninsured individuals to buy into the Federal Employees Health Benefits Program (FEHBP).

Getting It Wrong on the Uninsured

The Census Bureau just reported that almost 45 million Americans don't have health insurance, an increase of 1.4 million over last year. The political spin has been predictable. Progress for America, a left-wing think tank, says that 45 million translates into 150 uninsured Americans for every physician; nearly 7,500 uninsured for every hospital; and more than 84,000 uninsured citizens for each Member of Congress. The enormity of the numbers, so the reasoning goes, calls for an enormous government response.

Many Americans do indeed suffer high anxiety over health insurance. Those who have it are afraid of losing it. Those without it worry about paying their medical bills. The problem is rooted in the structure of the employment-based health insurance market, which is almost exclusively favored by the tax code. More than three-quarters of the uninsured work for firms where the employer doesn't offer them coverage.

The Census Bureau numbers are a "snapshot," but they are inadequate for an understanding of the problem. A look at the government Survey of Income and Program Participation (SIPP) provides a much better focused picture than the standard Census numbers. But the SIPP numbers are almost never cited by politicians or the media. According to the SIPP data, the typical family without insurance coverage suffers a spell of un-insurance for only about 5.6 months on average. Moreover, according to SIPP data, very few 3.3% of Americans lack insurance for four years or more. So, there is no evidence of any significant number of permanently uninsured people: we have a dynamic population, where people are in or out of coverage, largely based on their employment. What is wrong, once again, is tying the ease of a person's access to health insurance by law and regulation to a person's employment. If Congress doesn't change these dynamics, we can expect to be having the same conversations next year.

Getting It Wrong on Stem Cell Research

Ron Reagan, Jr., brought the Democratic Convention to a wild ovation with his appeal for federal support for embryonic stem cell research, arguing that medical progress, and cures for Alzheimer's and other terrible diseases, should not be impeded by those who put "narrow ideology" ahead of "science." Ron Reagan's cavalier dismissal of the serious ethical and philosophical misgivings over embryonic stem cell research was just the sort of anti-intellectual rant of which the Left used to accuse the old Right. Big issues, particularly those dealing with the meaning and destiny of human life itself, should be dealt with seriously, and not dismissively. A pragmatic rejection of the traditional respect for human life may be crucial to the mental and moral self-esteem of the abortion lobby, but it doesn't constitute a serious philosophical argument. But then high-mindedness is not to be expected at political conventions. In any case, what Ron Reagan did not tell the Democratic Convention in prime time is that only adult stem cells (derived from bone marrow) and neonatal stem cells (derived from placental cord blood) have been used to save or improve the lives of patients. Embryonic stem cells have never yet been used in this fashion, and there are enormous clinical obstacles to doing so that have little to do with "narrow ideology."

Limited work has been done with adult stem cells. There is an adult bone marrow registry of 5 million potential donors, but the General Accountability Office (GAO) reported in October 2002 that fewer than 25% of the patients in need of a bone marrow transplant were able to get a suitable match.

In the case of neonatal cells, the situation is much more promising. But Ron Reagan did not even touch upon that subject. Thus far, there have been thousands of cord blood cell transplants, and the source, of course, is easily replenished with the birth of every baby. More than 18 peer-reviewed journal articles have focused on neonatal or cord blood stem cell research and its applications, and the cord blood stem cells hold enormous potential for various conditions, including diabetes, spinal cord damage, Parkinson's disease, leukemia, and sickle cell anemia. Reagan also failed to mention the bipartisan Senate bill, cosponsored by Senators Orrin Hatch (R-UT), Dianne Feinstein (D-CA), Arlen Specter (R-PA), Christopher Dodd (D-CT), and Sam Brownback (R-KS), that would establish a National Cord Blood Stem Cell Bank Network with, of course, federal funding. Federal funding, imagine that! One of the advantages of such a network is that it would rapidly advance broad access to viable stem cell therapy today, not tomorrow.

Ron Reagan did not tell the Democratic Convention any of this. That is an indication of the genuine threat posed to real science by the forces of leftist "narrow ideology." Meanwhile, nobody will confuse Ron Reagan with Ronald W. Reagan. They were, and are, philosophical poles apart.

Getting It Wrong on Medicare

Republican political operatives sold the line that enactment of the Medicare drug law would be a political boon to the fortunes of the President and the Republican majority in Congress. Talk about getting it wrong! A recent survey by the Kaiser Family Foundation, along with a Harvard University team, showed that most seniors don't like the Medicare drug provisions, a large plurality admit that they don't know much about it, and 10% want the new Medicare law repealed.

A close reading of the survey reveals that while close to a majority of the Medicare population may have more or less strong feelings against the law, a clear majority also concede that after years of bitter debate and extensive discussions they don't understand the very thing that they register fairly strong feelings about. For example, 60% said that they don't understand enough about the law to say how it will affect them personally.

The Kaiser-Harvard study also found that huge majorities want to buy "cheap" drugs from Canada, and think that Medicare officials should "negotiate" [i.e. fix] the price of drugs, a shorthand way of saying that the government should fix prices. Governments have been fixing prices with the same disastrous results for more than 4,000 years, and there is not the slightest ground for believing that the end results shortages and decreasing quality will be any different in the 21st century. But politicians know that price controls are always popular at least initially.

These recent findings are consistent with previous research on the Medicare program as a whole. While it is enormously popular, very few seniors understand how it operates, how it is financed, how it will be financed in the future, or what it does or does not cover. Thus, they are extremely susceptible to false promises or to demagoguery.

The Kaiser Harvard report says 53% of seniors don't think the new drug discount cards are "worth the trouble" because they don't do enough to control costs and are "too confusing" to use. Among the 60% of seniors who don't have a card and don't plan to sign up for one, the main reason that the Kaiser-Harvard survey cites is that 63% of this class of seniors already have drug coverage or another discount card.

Critics notwithstanding, the weight of recent analyses clearly demonstrates that seniors could expect impressive savings from the discount cards. But left-wing critics know what right- wing Republicans often forget: the money savings or no savings isn't the issue. It's the structure, stupid.

Back to Real Medicare Reform?

The big policy problem is that Congress did not target assistance simply to those who needed it, but rather created a universal entitlement that would cover everybody. Roughly one- third of seniors get their coverage through former employers. And CBO estimates that 87% of these seniors will end up in the government plan, and many of them will be paying higher out-of- pocket costs for a government drug benefit that is inferior to most of the plans offered by employers. The Congress anticipated this and offered tax credits to employers to keep drug coverage. But employers are still expected to drop or substantially cut back their coverage. CBO and independent analysts predict that one-third of seniors with employer-based coverage will lose it. This will disrupt the lives of millions of seniors. It is not necessary. In January 2005, this should be fixed.

Likewise, Medicare's entitlement cost will be a killer. Recall that the initial ten-year cost, courtesy of CBO, was $400 billion. The Administration upped the estimate to $534 billion. CBO then said that in the second decade the cost of the drug bill was going to be $2 trillion. The truth is that we don't know. We do know is that the drug benefit is not paid for; there is no way we can finance this expansion without a major increase in taxation. Meanwhile, the congressional Democrats were proposing an expansion at least twice as large as the one that passed. Congressional Republicans may have had a fit of fiscal irresponsibility. But congressional Democrats would plunge the country into fiscal madness.

There is a short-term solution: the 2006 drug entitlement should at least be delayed until Congressmen can tell us how they are going to pay for it.

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