Volume 51, No. 10 October 1995

IS GOVERNMENT ACCOUNTABLE?

Congressional hearings on Waco and Ruby Ridge, and physicians' experiences when investigated by the FDA or the fraud squad, lead to this question: When suspected of violating a federal law or regulation, are some more equal than others?

Once in a federal agency's sights, an ordinary citizen fears eventual ruin, even if exonerated, from legal bills if nothing else. He must take great care to avoid any action that could be construed as obstructing an investigation, tampering with evidence, or making a false or misleading statement.

But what if the shoe is on the other foot? What happens if the government's own agents are suspected of wrongdoing?

In December, 1994, Judge Royce Lamberth asked the U.S. Attorney's office to investigate whether Ira Magaziner, a senior advisor to President Clinton, committed perjury or contempt of court in connection with a sworn affidavit in the case of AAPS v. Clinton. (This case, which charged that the President's secret Task Force on Health Care Reform and its Interdepartmental Working Group violated the Federal Advisory Committee Act, was dismissed on grounds of mootness when the White House, after nearly two years of litigation, released a number of documents.)

Attorney General Janet Reno refused a request from the House Judiciary Committee to appoint an independent counsel, counting on the Executive Branch to do a thorough and impartial job of investigating itself.

On August 3, U.S. Attorney Eric Holder issued a 19-page letter, concluding that there was no evidence of criminal intent on Magaziner's part. Rather, he had apparently relied upon the advice of White House attorneys. (It is said that the late Vincent Foster might have actually written the declaration asserting that all Task Force members were federal employees.)

Holder reasoned that the definition of ``employee'' was so fluid and confusing that one could not prove the truth or falsity of a statement that an individual was or was not employed by the government. Similarly, ``membership'' in the Task Force was not really a ``meaningful'' concept. In any event, the government did not ``expressly'' rely ``solely'' on the ``all-employee'' argument, even before it explicitly shifted litigation strategy to pursue the theory that the Task Force was exempt from FACA because of being a ``horde'' rather than a committee. Furthermore, the Court did not really rely on the all- employee argument in dismissing the case against the IWG.

Holder did refer to the government's ``missteps,'' ``mistakes,'' and failure to correct Magaziner's declaration when circumstances had changed.

On August 11, AAPS and the Department of Justice again appeared in Judge Lamberth's court for a hearing on the issue of sanctions against the government for its conduct of the case (as in impeding discovery). Judge Lamberth ordered the DoJ to address a number of ``troubling'' questions in writing.

One concern was ``the fact that members of Mr. Magaziner's own private consulting firm were participants in the working groups, whom he should certainly have known about, and the U.S. Attorney doesn't address that at all.''

Lamberth quotes Holder's comment that ``the declaration can be misleading if relied upon as a historical description of the entire working group process.'' Holder said there was no evidence that Magaziner intended to mislead the Court, but he ``does not address whether there is evidence as to whether the White House or Department of Justice attorneys intended to mislead the court.''

Lamberth stated he had difficulty recognizing the distinction between attorneys telling him that ``those are the facts'' and arguing the point based on the purported facts.

Just before the Labor Day weekend (when, coincidentally, press would be unavailable), Holder took the remarkable step of writing to Judge Lamberth to say he did not mean to imply that the investigation ``found a willful or deliberate attempt to mislead the Court on the part of the government or the government attorneys.''

``That's outrageous,'' stated AAPS Counsel Thomas Spencer. ``Holder is supposed to be investigating the government attorneys, not rowing the boat for them.''

More briefings will follow. The Court should reach a decision about sanctions before the end of 1995. Any payments will be made by the taxpayers, not by individuals.

AAPS has conferred with several members of Congress, who may wish to undertake a congressional investigation.

``There's a double standard,'' said a staffer, off the record. ``If a private citizen did any of these things, the DoJ would really come down on him hard.''

``This case shows how difficult it is to hold the government accountable,'' stated AAPS Executive Director Jane Orient, M.D. ``There's an inherent conflict of interest in an agency investigating itself.''

FACA itself is a weak mechanism. If the government violates it, the secret committee can probably finish its work before the case is adjudicated. Even then, there are no real sanctions against the responsible individuals.

AAPS is conferring with members of Congress on potential legislative remedies. Some suggestions are to apply the Freedom of Information Act to the White House; to establish a fast-track procedure for handling alleged violations of FACA (such as expedited hearings and discovery); to find a way to sanction the individual federal agent instead of the taxpayer; and to develop a better mechanism for agency oversight.

``A large and growing percentage of Americans distrust and fear the federal government,'' stated Dr. Orient. ``There's a reason for that.''

Medicare: the Opening Wedge

The fundamental flaws in Medicare, though apparently opaque to many of today's politicians, were obvious to its designers. BNA's Medicare Report (7/25/95) reviews some history while commemorating the program's 30th anniversary.

According to HCFA Administrator Bruce Vladeck, President Johnson ``knew they were overpaying,'' but they wanted ``a political buy-in from the providers.'' Joshua Weiner, senior fellow at the Brookings Institution, likened the strategy to the one that quelled British physicians' opposition to socialized medicine. The father of the British system said ``I will quiet them by filling their mouths with gold.''

Johnson really wanted a nationalized medical system, according to Robert M. Ball, Social Security commissioner during the Johnson Administration. Medicare was a ``fallback'' position; the ``whole object was to try to get something passed'' that would eventually lead to a national system.

A huge increase in utilization was expected. Johnson ordered the military to stand by to take patients at military hospitals if necessary, according to Vladeck.

Medicare had a number of effects that have not been well publicized. It led to a huge increase in hospital capacity and ended the use of open wards. It created a whole new industry, skilled nursing facilities, which came into existence in the 1960s because of Medicare hospital stay policies. It generated private fortunes for numerous individuals, including Ross Perot, who started a business to process Medicare claims (Electronic Data Systems or EDS).

Vladeck may ask the Smithsonian Museum to help with a Medicare exhibit to educate the public. ``He does not envision it will be a permanent exhibit recalling a program that no longer exists''-but perhaps he should.

A Liberal Tells It Like It Is

In the Sept. 4, 1995, issue of Time, Michael Kinsley stated:

• ``The `trust fund'...is an accounting myth.'' It is an unacknowledged part of the national debt.

• ``There is simply no way that the current system can continue indefinitely.''

• ``Medicare is a program that takes money from working Americans...and pays it to retirees....All are getting a far better deal from Medicare than current workers will get when they retire.''

• ``Medicare covers only about 45% of the health-care spending of the elderly...Seniors today spend more, in real terms, on health care annually than they did before Medicare started in 1965.''

• ``There is irony in Republicans' and conservative groups' pushing managed competition as the free-market solution to Medicare, since it is more or less exactly what President Clinton proposed last year....''

• ``Beware of the word choice. It can mean two different things. One is freedom to choose your own doctor and services. The other is freedom to choose among different medical plans.''

Where the Money Goes

Aggregating Part A and Part B expenditures, the average total of Medicare claims for a year is $120 for 16% of beneficiaries; $520 for 26% of beneficiaries; and $1096 for 19% of beneficiaries (CAHI, August 1995). There are about 35 million beneficiaries. Thus, around $13 billion in Medicare expenditures are for costs that would fall within a deductible of around $1500 and at least $6 billion that would fall within a combined deductible of $816. The cost of processing a small claim is not much different from the cost of processing a large claim. Consider the paperwork generated by a Medicare carrier for a $30 claim. Can it be done for less than the value of the claim? We hypothesize that at least $13 billion is spent processing claims that would not need to be filed at all if Medicare Part A and Part B deductibles were combined and if the government repealed the law forcing physicians to submit all claims, even for beneficiaries who had not met the deductible. There would be still more savings if many seniors could elect a combined catastrophic insurance/Medical Savings Account, which eliminated the majority of claims.

Claims processing has supported a multi-billion-dollar industry. Is it surprising that...

BC/BS Says MSAs Would ``Destroy the System''

Blue Cross/Blue Shield of Ohio warns that Medical Savings Accounts would ``derail the American Healthcare Revolution.'' The problem: with MSAs, 68% of Americans would save money, and they might take their savings out of the ``health care system'' and use it for other needs. BCBSO does want to reduce costs-but by targeting the ``top 10 percent of users'' (i.e. the sick and the injured).

``Since MSAs will entice employees back into traditional fee-for-service arrangements with providers, the gains made under managed care would most likely unravel,'' stated BCBSO (in booklet Z3486 5/95, obtained from BCBSO at 2060 E. 9th St., Cleveland, OH 44115-1355).

John Burry, Jr., Chairman and CEO of BCBSO, is spearheading a campaign against MSAs in Medicare. Interestingly, Blue Cross/Blue Shield plans won the contracts for MSA/catastrophic insurance plans for public employees in Ada County, ID, and Jersey City, NJ.

Ohio Chapter Announced

Ohio joins Washington, Arizona, and California in establishing a state chapter of AAPS. Officers are: President, Dr. Dexter Blome, a plastic surgeon from Zanesville; Treasurer, Dr. Samia Borchers, a dermatologist in Dayton; and Secretary, Dr. Kenneth Christman, a plastic surgeon from Dayton.

A number of Ohio members have recently testified in Columbus on state legislation to enable Medical Savings Accounts. This legislation passed the House by a nearly unanimous vote and has been sent to the Senate.

Please Let Us Know...

...if you hear one of our PSAs, now being broadcast nationwide. (``Find out how you can protect your right to choose your doctor and the medical care you receive...'' and ``Changes in Medicare laws could limit your right to keep or choose your own doctor...'')

...if your area code has changed. (Send or FAX your telephone number and FAX number to 520-326-3529.)

...if you have contacted your Congressman and want us to follow up. (Call 800-635-1196 and ask for Anne, or 202-371-0071 and leave a message for Chad Jackson.)

Legal Briefs

Dermatologists Sue over Secret Panels

On July 5, the American Society of Dermatology filed suit against the Dept. of HHS, charging that the Medicare physician fee schedule had been developed by secret advisory committees, in violation of the Federal Advisory Committee Act, the Government in the Sunshine Act, the Freedom of Information Act, and the Administrative Procedure Act (American Society of Dermatology v. Shalala, DC DC, No. 95-CVO-1263).

The plaintiffs argue that the panels responsible for developing CPT codes and rates of Medicare reimbursement are mostly made up of non-government employees, many of them representing the AMA. HHS adopted ``wholesale'' the AMA's pre- existing, copyrighted Current Procedural Terminology (CPT) codes. The AMA derives ``windfall'' profits from publishing about 800,000 copies of this document and annual updates.

Plaintiffs are asking the court to permanently enjoin further meetings of the panels or any use of their recommenda- tions and to issue a declaratory judgment that the panels are FACA committees, making meetings and all documents accessible to the public (BNA's Medicare Report 7/21/95).

``This lawsuit is not about money,'' writes Chester Danehower, M.D., ASD President, in the August, 1995, issue of Front Line. ``It is a matter of principle. If any governmental agency is allowed to break the law in implementing its policies, then the freedom of every citizen in this country is in danger....Since the government makes the laws, the leaders of governmental agencies cannot plead ignorance of the law. They must be held accountable.''

Danehower credited AAPS for being the first to take ``a significant stand against out-of-control government in AAPS v. Clinton.''

Kentucky Court Holds that Reform Law Enacted Properly; Health Policy Board and Universal Coverage Mandate Still Under Challenge

Franklin Circuit Court Judge Roger Crittenden ruled June 29 that the legislature adopted the Kentucky Health Care Reform Act, including the provider tax, in a constitutional manner (Yeoman v. Kentucky, KY CirCt, No. 94-CI-01663, 6/29/95). Other issues in the case brought by AAPS member Stuart Yeoman, M.D., have not yet been decided.

Plaintiffs argue that the vast and uncircumscribed powers of the Kentucky Health Policy Board violate the constitutional separation of powers. They also allege that the act was promoted by private interests, specifically the Robert Wood Johnson Foundation, which hoped to make Kentucky part of a nationwide system of mandated managed care (see AAPS News, Jan 1995).

Three insurance companies (Golden Rule, Time, and Fortis) have recently asked to join the suit.

Eight insurance companies have filed related actions in federal court, challenging the ``universal coverage'' insurance mandate, which limits the types of policies insurers may sell (Time Insurance v. Kentucky, DC EKY, No. 95-99). The companies insure about 40,000 Kentuckians.

In a similar case, the court granted an injunction to keep Golden Rule Insurance Company from having to comply with the law until a decision is made (Golden Rule Insurance Co. v. Kentucky, DC EKY, No. 94-125). (See BNA's Health Care Policy Report 7/17/95.)

Dr. Stuart Yeoman is scheduled to speak at the 52nd annual meeting of AAPS.

Patients May Withhold Permission to File Medicare Claims

The Dept. of HHS has finally issued a letter affirming the right to private contract, in response to inquiries from the Coalition for Patient Rights (CPR).

According to a memorandum from Jim Pyles of CPR: ``These findings recognize for the first time that psychotherapists can provide psychiatric services privately to Medicare patients without risk of violating the law. This is a change from the Department's prior view of the law as evidenced by the statement in the letter that a revision to the Medicare Carriers Manual will be issued `in the near future' on this subject. Currently the Carriers Manual at 3044 states that physicians can be subjected to civil monetary penalties and exclusion from the Medicare program if they fail to file a claim on a Medicare beneficiary's behalf within one year. In fact, several cases in which physicians are facing such sanctions will now be dropped as a result of this ruling.''

The August 4, 1995, letter is signed by Thomas A. Ault, Director of Policy Development, HCFA, 6325 Security Blvd., Baltimore, MD 21207. Mr. Ault states that ``in line with insurance practice, Medicare regulations (42 CFR 424.36-424.40) generally require a signed claims authorization by the beneficiary (or his representative).''

Therefore, ``if the beneficiary chooses to withhold a claims authorization for his own reasons, entirely free of any pressure by the physician, the Medicare program recognizes that the physician has no right or duty to submit a claim.''

However, ``this situation must be distinguished from the situation in which the physician requires a beneficiary, as a condition of treatment, to sign an agreement that no Medicare claim be submitted. Such an agreement is invalid and ineffective.''

Mr. Ault notes that a beneficiary may change his mind and require a physician to submit a claim at any time before the time limit expires.

His letter also acknowledges that, if a claim is ever filed, beneficiaries sacrifice the confidentiality of their records-all their records: ``it is conceivable that the medical records in connection with psychotherapy for which no claim is filed may be needed in order for the carrier to determine whether and in what amount Medicare payment may be made for other psychotherapy services for which a claim is filed.'' The statement signed by the beneficiary authorizes such disclosure: ``I authorize the release of any medical or other information needed to process this claim'' [emphasis added].

CPR states that ``for the time being, the limiting Medicare fee remains in place, even if no claim is filed.''

A copy of the HCFA letter and the CPR memo is available on request from AAPS.

AAPS Calendar

Oct 12-14. 52nd annual meeting, Falls Church, VA.

Oct 21-25. American Society of Anesthesiologists meeting in

Atlanta. AAPS will have a display (F-40), and members will present a panel on Alternatives to Managed Care.

Oct 10-12, 1996. 53rd annual meeting, La Jolla, CA.

Members' Page

The Emperor's New Disk. You have no doubt heard the story of the Emperor's New Clothes. Well, the Blue Bunglers have developed their own updated version of this classic story. Recently, they sent us a computer disk that was supposed to contain the NSF specifications, including information about Medicare secondary payor fields....The disk was completely naked. It had nothing on it. So while the HCFA bureaucrats, Vladeck, Buto, Toby, et al. all sit marveling at how wonderful their new technology is, the truth is there's not much to it.

I returned the naked disk. Now that it has been exposed, I am sure we can count on HCFA to cover it up. I didn't ask for another one; I've seen enough.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

Managed Care and Organized Medicine. Medical publications often speak of managed care as if it were a fait accompli; yet it is far from certain that managed care will survive and prosper. Not all physicians are ``living and working under managed care.'' In some areas, physicians, instead of cowering in fear, have united to keep the vandals out....

The reaction of most organized medicine in the past few years has been essentially a passive strategy of cooperation, negotiation, and appeasement that has been largely ineffective. The ``appropriate'' thing is to cease negotiating with those who are destroying our profession and subverting the interests of our patients. Instead, we should resist them vigorously on all fronts and advance alternatives that protect our independence and our patients' welfare.
R. Wayne Porter, M.D., Coming, AL

Two Masters. Under managed care, a physician has signed a contract to divide his loyalty between the insurance broker and his patient. Keeping costs down is a noble pursuit but would you trust an insurance company over your doctor in making that choice?....I do not participate in managed-care plans. I also do not invest in managed care companies, or the tobacco industry. Both, unfortunately, have been very successful financial investments.
James Austin Ball, M.D., Charleston, SC

Managed Care Will Fail. ``Managed'' care, in which the individual sick patient is dehumanized and disenfranchised, will self destruct without physician promotion, support, and participation. Medical Savings Accounts need to be understood by all physicians to counter the expedient, pragmatic, unprincipled, short-term-financial-gain balderdash we are fed by social planners abetted by ``organized medicine.''
Curtis Caine, M.D., Jackson, MS

Medicare Reform. We have asked our Congressman to consider the following points on Medicare reform:

1. First and foremost, Medicare must not be mandatory or coercive (e.g. unequal tax treatment to nonparticipants). Liberty is the antithesis of coercive participation.

2. Freedom to contract with the physician and agency (e.g. insurance or investment firm) of one's choice is paramount. Slavery is the compelled denial of the right to contract. We oppose slavery.

3. Economic viability requires responsibility. Such responsibility can exist only when citizens own their own insurance plan.

4. Efficiency demands that the role of government be strictly limited to enablement-allowing a free market to evolve wherein patients, physicians, and firms are allowed to benefit from their good decisions and to confront and suffer the consequences of their bad decisions.

Based on experience with our own HMO, managed care is a fraud. It contains cost by reducing patient interaction with physicians and nurses by a factor of four and increasing administrative expenses by the same factor.
Lee and Marjorie Hustead, Norristown, PA

A Doctor's Definition of ``Test''. I stated openly in 1992, in the Journal of the Florida Med Assoc and Med Tribune, that I intend to continue examining my patients, CLIA notwithstanding, and I exhort all my colleagues to do the same.

I am NOT performing ``laboratory tests.'' These ``tests'' have been so classified because some of them (not all of them) are sometimes done in labs. I am doing ``tests'' which are part of, and an extension of, my examination of my patients.

Anyone and everyone I speak to agrees with me, but is too afraid to do as I do. Thus we have patients denied the expertise of the dermatologist who won't look at skin scrapings in the office because it's not worth it to get a CLIA number, and he thinks it's ``against the law''....The nation's patients are denied the increased learning and accuracy in diagnosis that young doctors achieve when they are encouraged to become knowledgeable in microscopy, correlating the findings with the clinical presentation and the outcome of the illness.

I have not gone out of my way to flaunt this practice, but I refuse to creep around acting as if it is wrong when I know it's much more right than what is going on all over the country. I believe others are doing it too. You can't take care of patients otherwise.

Even if the freedom and autonomy issues for physicians were not involved, CLIA regulation of physicians' offices is wrong because-far from protecting patients-it damages them by denying them adequate, timely care.
Pepi Granat, M.D., South Miami, FL

Legislative Alert

The Medicare debate is well underway and will intensify this month. Thus far, Congress has had 38 public hearings on the Medicare mess and there are many more to be scheduled this fall. Gingrich and Dole can be expected to finalize the plans for Medicare reform in September.

Medicare reform will probably be included in the Omnibus Budget Reconciliation Act (OBRA), the central federal budget bill, that is to go to the President's desk by the start of the new fiscal year October 1st. Capitol Hill observers expect an exceptionally bitter floor debate.

The issues will be tough. It is one thing to vote in principle for a Budget Resolution that balances the budget; it is quite another to take up the knives, scalpels, and axes to actually do the cutting and slicing necessary to get there. The screaming from special interests who have been feeding at the federal trough for years will reach decibels never even imagined before. One senior Congressional staffer says that those members who have been talking tough will ``really have the opportunity to show that they don't faint at the sight of blood.''

Capitol Hill observers think it is safe to bet the farm on the Gingrich promise, as part of the Contract, to pass a bill that will balance the budget, with deep cuts in federal spending. Less certain is the Senate, which has shown itself to be more squeamish around budget axes. But smart money is betting, with a few hedges and qualifiers, that Dole will deliver.

Trainwreck?

Then comes the showdown. Clinton is expected to veto the bill and to have enough votes to sustain his veto. The Republicans will have two choices. They can compromise. Or they can stand firm and fund the government with a series of continuing resolutions, which will keep the federal government operating at current levels. This is, in effect, a freeze on federal spending. The freeze would remain until either the President or Congress relents in the stand-off. In the meantime, the federal government is likely to be shut down.

The Shape of the Debate

August town hall meetings around the country have shown that Medicare reform is a tough sell for Congressional Republicans on the stump. High school auditoriums, fire halls, and Bingo parlors have been the scene of some tough and unpleasant and sometimes thoughtful exchanges between members of Congress and constituents. Congressional leaders have assembled task forces to hone the message for the voters. Speaker Gingrich is directing the House effort himself with the assistance of Rep. Dan Miller (R-FL). Senator Bill Frist is chairing the Senate Republican Medicare Working Group.

One way to gauge the progress of the debate is to scour the pages of the liberal Establishment's oracular outlets on matters of high policy. In a lead editorial of the August 20th New York Times, New York's most prestigious newspaper opines that, whatever you think of the Congressional Republicans and their ``Contract With America,'' they have reversed the terms of the political debate on nearly every issue.

``Before November, Congress debated how much more it would spend to put welfare enrollees to work. Now it debates how much less it will spend. Before November, politicians debated whether to cut off public services to illegal aliens. Now they debate whether to cut off legal immigrants as well. Congress used to debate which technology and national service plans to create. Now liberals declare victory if they keep existing programs alive. The Republican camp vision of limited government has won, for now... Nevertheless the Republicans deserve some credit, especially for tackling problems from which Democrats cowered. They have adopted a plan to balance the budget-too quickly for this page's tastes-and will deliver a proposal next month to slow the growth of Medicare. This takes real political courage. Medicare's popularity among the elderly makes it an uninviting target. But the program is headed for bankruptcy,'' stated the Times.

The Congressional leadership is hammering away at several themes, the most important of which is that the Medicare system just next year, for the first time in its 30-year history, will be spending more than it takes in for hospitalization services, and that the HI trust fund will be bankrupt in seven short years. The troubled financial condition of Medicare is dawning on more and more senior citizens and taxpayers. But the problem of the seniors' sense of entitlement lingers. Most still believe that they paid for their Medicare benefits. Or that they financed the Hospital Trust Fund. They didn't and they won't. This is even true of the newly retired who have been working for the past thirty years. According to the Senate Republican Task Force, the average two-earner 65-year-old couple retiring in 1995 will consume $117,000 more in Medicare benefits than they paid into the Trust Fund during their working lives.

The Minority leadership in the House seems to have settled on the Congressmen Pete Stark/Sam Gibbons strategy that says, in effect, that yes, Medicare has problems, we have known about these problems for years, and we did nothing very much about it, and anyway, these problems are still a long way off, and besides, they are really not that bad.

Not surprisingly, part of the difficulty that Gingrich and Company have in selling the bankruptcy idea is that too many senior citizens just don't believe it. They think the government can simply borrow to pay for the HI benefits: just print Medicare money. After all, that is what government does in just about every other category. But HCFA cannot borrow; if the Trust Fund goes south, no hospital bills can legally be paid!

The second problem that the Congressional leadership has been struggling with is the perception that they are cutting Medicare by $270 billion over the next seven years, and forcing seniors to pay at least $1000 more for Medicare services, in order to give a $245 billion worth of ``tax breaks'' primarily to ``the wealthy.''

Liberal rhetoric is getting hot. Congressman Maloney (D-NY), for example, says that the elderly ``may have to compromise food and shelter to pay more for health care.'' And Congresswoman Pat Schroeder (D-CO), never at a loss for a creative interpretation of data, thinks that the entire Congressional Budget Resolution is bonkers: ``If you had a report saying there would be a shortfall in the year 2002, would you run out then and take another $270 billion out of this account? It is not going to have a surplus. It is going to have a shortfall. If you take $270 billion out of it, boy, oh, boy, is it going to have a shortfall in the year 2002 because that is exactly what the other side of the aisle is trying to do.''

Congresswoman Sheila Jackson Lee (D-TX) is not about to put up with this ``slow the growth'' talk: ``They want to cut $270 billion out of Medicare with the false premise that we're slowing growth. What does slowing growth mean? It means that those who are diabetic who have been able to be under maintenance, and survive, and be healthy will no longer have any care. It means people with blood pressure will wind up in hospitals with strokes, without adequate health maintenance to keep their blood pressure down.'' Rep Gene Green (D-TX) deserves an award for the best line of the House debate: ``The Republicans are not trying to save the Medicare system any more than Hugh Grant was asking for directions.''

But good political rhetoric does nothing about the relentless numbers problem. Right now, Medicare is growing at the rate of 10.5% per year, or over three times the rate of inflation and roughly twice the rate of private-sector medical spending. Under the 1995 Budget Resolution, the average annual growth of Medicare is going to be 6.4%, or roughly twice the rate of inflation. On a per-capita basis, spending on Medicare enrollees will grow from $4800 to $6700, an increase of $1900 from 1995 to 2002, a 40% increase in per-capita spending. Under the Budget Resolution, total Medicare spending will grow from $181 billion today to $276 billion in 2002, an overall increase of 52%. Total Medicare spending projected by the Budget Resolution will be $1.6 trillion over the next seven years. Interestingly enough, total Medicare spending projected by the Clinton Administration, under its version of Medicare reform, would be $1.7 trillion over seven years. Thus, the actual differences between the Clinton plan for Medicare and the Congressional Plan are in reality quite small.

By jumping onto the popular Congressional ``balanced budget'' bandwagon and conceding that the financial situation in Medicare is serious, the Clinton Administration has succeeded in driving Congressional liberals nuts. It's hard to make the case that Gingrich is a brute, ready to dump old folks out of their hospital beds and onto the streets, when the President is saying, at least in the unalterable language of mathematics, the same basic thing.

The Clinton Administration, for rhetorical purposes, is saying that its plan for Medicare reform will save only $128 billion over the next seven years, while the Congressional Republicans want to savage Medicare with ``cuts'' to the tune of $270 billion. But the White House is relying on an OMB ``baseline'' for calculating the savings, while the Congressional leadership is using, as expected, the Congressional Budget Office (CBO) baseline. Not surprising, with different baselines, you get different results. But, as the Heritage Foundation recently showed, when you use the same baseline (the CBO figures) for both plans, the White House savings rise to $192 billion, not $128 billion, over the same time period, which is $78 billion (not $142 billion) less than the Republicans' 7-year savings. Look even more closely. Under the Clinton budget proposal, the Medicare spending for 1996 is $171 billion, compared with $172 billion in the Congressional Republican plan. Costing out the increases in spending over the next seven years, the Clinton Plan differs from the Congressional plan by an average of just $11 billion per year. With a national debt of almost $5 trillion and annual deficits running at approximately $200 billion, $11 billion is not much of a margin to fight a major political war. And Congressional liberals know this.

Enter Ross The Boss

Congressional leaders are getting some help in their Medicare battle from an irrepressible source. Ross Perot has put in his say at a major hearing before the Senate Finance Committee on August 30. His major recommendation: Don't do anything radical to Medicare without testing the prototype first. The rest was Pure Perot. His entry into the debate is nonetheless politically significant. Harper and Row has just published his book on the subject: Intensive Care: We Must Save Medicare and Medicaid Now. Perot's book puts Medicare in the context of the national debate that made him a household word, the broader debate over the federal budget. He noted that, under current projections, Medicare and Medicaid spending are going to increase by 158% over the 10-year period. At the same time, federal revenues will increase only 62%. This is a recipe, in other words, for huge and disastrous federal deficits. By 2012, according to Perot's projections, the federal government will have obligated itself to spend on Social Security, Medicare, Medicaid, and interest on the debt, a total amount that will exceed all of its revenues. Nothing left for national defense, for example. Perot is long on analysis of the problem, but a bit short on the details of reform. Still, Senate Finance Committee Republicans were impressed with the Perot testimony, which contributed to the general feeling that Congress must ``do something'' on Medicare.

Crafting Medical Savings Accounts

House Republicans are certainly going to include some sort of a Medisave option in the Medicare reform bill. There is increasing support for this idea from conservative groups. The Christian Coalition, the Family Research Council, the American Family Association, Eagle Forum, Concerned Women for America, and the Traditional Values Coalition-groups normally engaged in hot- button social issues and not health-care policy-are lining up to back the Archer-Jacobs Family Medical Savings and Investment Act (HR 1818). In coming together to support the bill, they have formed a coalition called the ``Families for Medical Expense Reform.'' Managed-care lobbyists are not happy.

But while there has been widespread support for the concept, drafting a specific measure has been tough. One concern is how to set the deductible and the catastrophic limit. Currently, spending per capita in Medicare is $4800. If a deductible is set too low, say $2500 or $3000, there may be an powerful incentive for seniors to reach it and run wild in utilizing medical services once they reach the catastrophic limit where insurance pays 100% of the coverage, and thus increase, rather than decrease, overall Medicare spending.