MEDICINE IN A STRAITJACKET
Volume 54, No. 3 March
1998
Association of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
http://www.aapsonline.org/newsletters/mar98.htm
The art and science of medicine, through a
collaborative effort by the AMA and HCFA, is to be reduced to the
production of voluminous documents by the new "E&M" "guidelines."
Meanwhile, the business of insurance, which now funds most of
American medicine, is targeted for obliteration by so-called
conservatives in Congress in the Patient Access to Responsible Care
Act (PARCA), H.R. 1415.
The two actions are not unrelated. Both medicine and insurance
were compromised long ago by the practice of assigning benefits to
"providers" and by broad expansions of coverage to routine, low-cost
goods and services. Thus, doctors became the servants of third
parties rather than patients, and insurance was transformed into
third-party prepayment for consumption rather than a voluntary
mechanism for sharing catastrophic risk and protecting financial
assets.
The consequences were predictable, and were indeed predicted by
AAPS and many others. The most obvious effect, the one that is
driving the proposed remedies, is the cost spiral. Payment is no
longer made for the value of a physician's service to the
patient-customer but for the submission of paper to a remote,
disinterested third-party payer. It is much easier to produce claims
than to provide worthwhile medical services. Moreover, patients are
more likely to demand services that are "covered"; they may even
urge physicians to shade the truth so as to obtain insurance
reimbursement. Therefore, much paper is submitted for excessive,
over-priced, marginal, misrepresented, or even altogether fictitious
service. And how is the third party to tell the difference?
Attempting to shield themselves from rapidly rising costs, third
parties use a variety of mechanisms: audits, managed-care
arrangements, and increasingly punitive fraud statutes. Some of the
same methods can be and are being used to increase profits for third
parties at the expense of patients and physicians, often in a highly
offensive and abusive fashion. This has led to cries for government
micromanagement, at first targeted at specific atrocities such as
drive-through deliveries and mastectomies, and now at the entire
insurance market.
Practicing physicians have greeted the "Documentation Guidelines
for Evaluation and Management Services" (available at
http://www.hcfa.gov) with outrage (see p. 4). One member said
that doctors would be inclined to provide only minimal services
rather than risk stepping on a land mine while trying to collect
payment for anything complex. The guidelines comprise about 379
kilobytes (some 60 pages), with Chinese menus for documenting the
examination of each body system.
While the AMA talks of revisions and an "extensive educational
program" (memo dated 1/26/98), AAPS counsel Andrew Schlafly is
developing a litigation strategy. He states: "This rash appeasement
of payers' wants has made a mockery of medical standards. The
interests of the patients and the efforts of physicians to defend
those interests are being trampled upon." Schlafly argues that the
guidelines violate the physician-patient relationship, chill free
speech, limit the ability of physicians to uphold the standards of
their profession, and violate the procedural requirements of the
Federal Advisory Committee Act and the Administrative Procedures
Act.
"Physicians must remain able to focus on the needs of the
patient, not on whether HCFA might allege `fraud and abuse' based on
supposedly incomplete documentation. A physician cannot render
quality care with a sword of Damocles hanging above. The proposed
guidelines are so stifling that the practice of medicine is
imperiled; they are invalid as arbitrary and capricious," Schlafly
writes.
As physicians' liability for criminal prosecution escalates, the
PARCA would vastly increase the responsibilities of insurers (and of
employers who offer insurance), not just for paying bills but for
assuring actual provision of services (see p. 2). The outcome could
be the destruction of employer-provided insurance (not necessarily
undesirable in itself) and its replacement with nationalized
medicine for all.
In psychiatry, straitjackets may be appropriate at times, as
shackles sometimes are in law enforcement. Punitive restraints may
be used for persons whose behavior is not constrained by rationality
or morality.
What has happened to the ethical standards of the medical
profession? Have the basic principles been turned upside down and
replaced with a relativistic calculus in which all standards are
necessarily arbitrary? A book widely used in medical schools,
The New Medicine and the Old Ethics by Albert R. Jonsen,
suggests that this is the case: "[T]he ethical problems posed by the
new medicine reflect the omnipresence of the population that stands
behind the [patient-physician] relationship." Individual patients
are but a "statistic of one" who can (and should) be sacrificed for
those forming "an infinite line at the door of the clinic." The
author even identifies one of the major causes for the change:
"federal payment for medical services has changed medical practice
in major ways." The same could be said for payment by other third
parties.
A straitjacket is never curative. It is likely by itself to make
the patient even more insane. The cause of the illness must be
identified; if an intoxicating, addictive drug is a cause, then
withdrawing the poison is essential.
If doctors and patients have become addicted to OPM (Other
People's Money), accepting the premises of socialism (which is legal
plunder), withdrawal is the only alternative to an increasingly
oppressive totalitarian regime. The restoration of the
patient-physician relationship-and of the proper role of
insurance-is essential. This probably cannot occur without changing
the federal tax code that strongly favors employer- provided
prepayment schemes.
The Norwood Bill
A respected conservative dentist from Georgia, Charles Norwood,
has gathered more than 200 cosponsors for a bill intended to combat
abuses by managed care (H.R. 1415).
The bill was endorsed by Rep. Fortney ("Pete") Stark (D-CA) in a
proposed amendment to House Joint Resolution 107 (see p. 3), as he
called for implementing the work of the President's Task Force on
Health Care Reform-a signal to conservatives that the bill is not
exactly what they think.
Businesses warn that if this bill passes, they may drop all
indemnity plans offered to employees. According to their reading,
they would become responsible for the availability of all services
covered under the plan (such as 24-hour emergency care), even in
sparsely populated areas.
The first two conservatives to withdraw support for the bill,
David McIntosh (R-IN) and Steve Largent (R-OK), stated in a letter
to Congressman Norwood that the bill would force insurers to operate
under unaffordable community rating and guaranteed issue
requirements. Also, the bill would grant new regulatory authority to
HCFA, which would make it easier for the Administration to enact
through regulation a system that was rejected by Congress. Moreover,
the bill would destroy the federal (ERISA) preemption of costly
state mandates, pricing many out of the insurance market altogether.
From a reading of the bill's actual language, AAPS is unable to
see how any health insurer could avoid becoming a provider of
services and hence a managed-care organization. Section 2771,
"Enrollee Access to Care" states: "A health insurance issuer shall
establish and maintain adequate arrangements...with a sufficient
number, mix, and distribution of health professionals and providers
to assure that covered items and services are available and
accessible to each enrollee under health insurance coverage...."
Additionally, the required "quality improvement program" would
necessarily involve comprehensive data collection about all
enrollees.
Employee benefits have a number of inherent drawbacks (Craig
Cantoni, Wall St J 8/18/97). They create a paternalistic
relationship and give the employer reason to intrude on the most
personal aspects of an employee's life. With 40% of total
compensation being in the form of benefits, it is difficult for
employees to place a true market value on their compensation or to
walk away from a job they don't like. Also, managers have difficulty
linking pay directly to performance when such a large percentage of
payment is seen as an entitlement.
The Norwood bill would only exacerbate these difficulties. And
instead of spurring true reform (such as tax equity and a resulting
move toward individually owned insurance), it would probably
accelerate movement toward compulsory government medicine for all.
The midpoint estimate of costs projected by Milliman and
Robertson is a 23% increase in insurance premiums for all plans; the
increase would be 39% under the most pessimistic assumptions (John
Goodman, Wall St J 12/5/97). Some say this is an
exaggeration. However, the impact of regulation is more commonly
underestimated. The portability provision of the Kassebaum- Kennedy
legislation was predicted to raise insurance rates by only 2 to 3%.
According to the GAO, the increases by five different carriers
ranged between 29 and 125%. Moreover, these were standard rates that
applied to generally healthy individuals; carriers might charge
higher rates to unhealthy individuals. The premium hikes will only
get worse as healthy people flee (Wash Times 12/8/97).
Action Plan for the Month
Write and call your Congressman and ask him to
oppose H.R. 1415 ("PARCA"). Let your patients know that their
insurance costs will increase, and encourage them to write and call
also. The answer to managed-care abuses is to change the tax laws
that favor employer- provided managed care and discriminate against
other methods of paying for medical care.
Ask these conservative Congressmen why they are sponsoring a
ClintonCare equivalent: Crapo (ID), Salmon (AZ), Cubin (WY),
Chenoweth (ID), Rohrabacher (CA), Cannon (UT), Barr (GA), Coburn
(OK), Hilleary (TN), Pickering (MS), Shadegg (AZ), and Scarborough
(FL).
Nagging will help and is needed, especially as a Harry-and-Louise
ad campaign is launched.
The Capitol Hill switchboard is (202)224-3121.
New Medicare User Fees Proposed
HCFA Administrator Nancy-Ann DeParle stated
that HCFA is an insurer and must recover some of its costs through
user fees (also see p. S1). "There should be some cost of doing
business with Medicare," she said, presumably with a straight face.
- Proposed fees that would impact most
physicians include: a $1 fee for any Medicare claim that is not
submitted electronically;
- an assessment for duplicate or
"unprocessable" claims;
- fees for an initial registration in the
Medicare program and physician recertification every five years.
See: BNA's Health Care Policy Report 2/9/98.
How to Reduce Insurance Fraud
Evidence from a Fortune 500 company that wishes
to remain anonymous shows that millions of dollars can be saved by
limiting the use of benefit assignments.
"There is an overabundance of evidence correlating fraud and
abuse with assignments....We see this most frequently in the areas
of chiropractice, physical therapy, mental health, etc. When we spot
what we strongly believe to be billing fraud, one tool available to
us is to prospectively disallow assignments to the provider. (Our
plan document permits us to accept or reject assignments at our
discretion.)
"When we notify a given provider that we will no longer accept
assignments, the claim abuse stops on the spot. This particular
class of abuse exists because the patient is told that he will not
be balance billed and will have the deductible or copayment waived.
"In the last 5 or 6 years, since we have used this approach, our
plan has saved millions of dollars. Moreover, we have managed to do
so with virtually no disruption in patient care."
AAPS Calendar
May 30. Board of Directors meeting, Dallas, TX
Oct. 9-11. 55th Annual Meeting, Raleigh, NC
House Joint Resolution 107, expressing the
sense of the Congress that "the award of attorneys' fees, costs, and
sanctions of $285,864.78 ordered by the United States District Judge
Royce C. Lamberth on December 18, 1997, should not be paid with
taxpayer funds," was passed on a vote of 273 to 126 in the House.
The Resolution is non-binding.
Taxpayers have, of course, already paid more than an million
dollars defending the actions of the Task Force and will pay more if
the judgment is appealed.
Opting Out of Medicare
Misinformation from HCFA Corrected: A number of physicians
have written about carrier statements that decisions to opt out
would have to be made by February 2. In a Feb 2 letter to AAPS
Director Lawrence Huntoon, M.D., Kimberly A. Neville, Support
Specialist, Program Education and Training, Upstate Medicare
Division, 33 Lewis Rd, PO Box 5200, Binghampton, NY 13902-5200, tel.
(607)766-6000 writes:
"I would like to apologize for giving you inaccurate information.
You are correct by saying that for a non- participating provider,
such as yourself, you only need to make sure you submit the
affidavit to the Medicare carrier within 10 days of the date the
first private contract is signed by a Medicare beneficiary. Only
participating providers need to terminate their participation
agreement with the Medicare carrier by February 2, 1998, so that
they can opt out of the Medicare program."
Sample Affidavit. Here is the text of an affidavit
submitted by an AAPS physician in January, 1998, after consulting
the AAPS Limited Legal Consultation Service (LLCS):
"I, ...., declare under penalty of perjury that the following is
true and correct to the best of my knowledge, information, and
belief:
"1. I am a physician licensed to practice medicine in the state
of .... My Medicare provider information number is ....
"2. I have entered or intend to enter into a contract for the
provision of medical services with a Medicare Beneficiary
(`Patient') pursuant to Section 4507 of the Balanced Budget Act of
1997.
"3. I hereby confirm that I will not submit a claim to Medicare
for any Medicare Part B item or service provided to any Medicare
Beneficiary for a period of two years beginning on the date that
this affidavit is signed.
"4. I hereby confirm that I will not accept receipt of any
reimbursement for any Medicare Part B item or service directly or on
a capitated basis, nor will I accept receipt of reimbursement for
any Medicare Part B item or service rendered from an organization
which receives reimbursement under Medicare for such item or
service, for a period of two years beginning on the date this
affidavit is signed.
"5. A copy of this affidavit is being filed with [name of
Medicare carrier], the designated agent of the Secretary of the
Department of Health and Human Services, no later than 10 days after
the first contract to which this affidavit applies is entered
into."Executed on: [date] Signature ......
Many physicians have been calling the LLCS about this matter;
some are reluctant to file an affidavit, fearing government
reprisals. There are numerous areas in the law that are ambiguous;
please call for an LLCS consult if you have questions concerning
your personal situation.
Some Data Not Really Required
When Traveler's Insurance Company demanded a
copy of Dr. Huntoon's IRS form Schedule C, he balked.
"The Schedule C has things like gross income, and all of the
itemized expenses. Just imagine what an insurance company could do
with that kind of information...sell it to other insurance companies
to use as a bargaining chip in various negotiations, etc. I, of
course, called the number at the bottom of their form and talked to
the person who answered."
The form was to be used to facilitate an audit to be sure the
office isn't hiding any paid employees and failing to pay the
state-mandated worker's comp premium. However, Dr. Huntoon explained
that all of the pertinent information from Schedule C is also on the
quarterly 941 reports, so there is no need for the Schedule C unless
it is to be used for nefarious purposes. Eventually, a supervisor
was called to the line.
"The supervisor admitted that they didn't really need my Schedule
C information for their worker's comp audit-i.e. they just thought
it might be nice to see if they could get this information simply by
requesting it on the form. And, apparently, they've had some success
with this `ask and see what you can get' approach, because I was
told that I was the only one who had called in so far to say NO!"
Dr. Huntoon is thinking of patenting his low-tech cerebral
aneurysm stress test, which requires only a worker's comp audit form
and a willing insurance combatant probing for private information to
which she has no right.
Consequences of a Data Deficit
In 1963, Milton Friedman asked John
Cowperthwaite, financial secretary to Hong Kong and disciple of Adam
Smith, about the paucity of statistics. He replied: "If I let
them compute those statistics, they'll want to use them for
planning." Nevertheless, there were some statistics. Friedman
computed that per capita income of Hong Kong was 28% of that in
Great Britain in 1960 and 137% of that in Britain by 1996, despite
the overcrowded conditions and lack of any resources except for a
great harbor (Natl Rev 12/31/97).
Reminder of a Government Promise
New plastic cards with Sections 1801, 1802, and
1803 of the statute creating Medicare are enclosed. We regret the
error present on the cards distributed previously. To request
additional copies, call (800)635-1196.
State of the Regulatory State
The annual report on the burden of federal
rules and regulations produced by the Competitive Enterprise
Institute (CEI), called "10,000 Commandments," notes that during
Clinton's first five years, pages in the Federal Register ran to
more than 60,000 annually (IBD 2/3/98), a 20% increase.
The 104th Congress passed more than 75 criminal statutes, and the
105th more than 20, each increasing the power of federal prosecutors
(Wall St J 5/16/97). As to the prosecutors themselves, the
Clinton DOJ has asserted that under the doctrine of sovereign
immunity, the US government could not be forced to pay money even
when it flagrantly violates a court order. Is it only a matter of
"policy and comity" for the Executive Branch to abide by the law (Wall
St J 3/12/97)?
Members' Page
Bonnie and Clyde with a Badge. According
to James Bovard (Wall St J 12/29/97), in many cases of
asset forfeiture "innocence is irrelevant." This is progress beyond
the KGB policy of "show me the man, and I'll show you his crime," to
"show me the man's money and property and I shall take it." This
reminds me of bands of thieves that currently roam Nigeria. So large
and powerful are they that they actually write to prospective
victims, informing the victims that they will be at their house at a
particular time and that the victims should have the loot ready to
go.
According to Chief Justice Rehnquist, quoted in the same article,
"The government may not be required to compensate an owner for
property which it has already lawfully acquired under the exercise
of governmental authority." Bovard believes that Rehnquist has
granted government "unlimited power to steal." The power is
especially likely to be exercised against persons who show their
distrust for government by not filling out forms declaring that they
are taking more than $10,000 out of the country. "Reform"
legislation, originally intended by Rep. Henry Hyde (R-IL) to
correct some of the worst abuses, was ultimately written by the
Dept. of Justice. "This is like letting burglars write the laws on
breaking and entering," observed Bovard. The DOJ does not restrict
itself to breaking and entering....and it also is not eager to
pursue perjury charges against friends of the Administration.
Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY
A Deep Pocket. From a letter to
Anthem/Blue Cross Blue Shield/Accordia: Can you please explain to me
why I am paying twice as much for family insurance here in Kentucky
as I was in central New York, receive less coverage, and at the same
time am expected, as a participating provider, to accept
below-Medicare rates for anesthesia services? Furthermore, can you
explain why clean claims go unpaid for months...? And how can you
claim that you must raise your premium rates for small groups by
50%? The answer seems clear: Anthem/BC-BS/Accordia must be pocketing
80% of what it should be paying out in benefits.
Lee A. Balaklaw, M.D., Louisa, KY
Why Continue to Practice? A year ago, I
told all managed care companies to take a hike. I slashed my
overhead, let some of my staff go, closed my office on Fridays, and
continued to live scrupulously within my means. Three months ago, I
stopped accepting new Medicare patients.
I believe I could continue to have a fairly large practice in the
years to come even without managed care and Medicare; I have perhaps
the largest psychiatric practice in the state of Missouri. However,
I will be retiring from this mess in two more years, throwing away
30 years of invaluable experience. Why should I continue to practice
in the current atmosphere of bickering, haggling, distrust,
unrealistic expectations, threats of lawsuits, and the like....?
Should one be involved in an ongoing battle with hospitals, nursing
homes, managed care companies, government, patients, and every other
agency that one deals with? To give just one example: I see many
patients as an out-of-network "provider." The insurance companies
give the patients an unbelievable runaround as a way to discourage
them from seeing me....Blue Cross/Blue Shield, from which I resigned
a year ago, has in force many policies that deliberately create
animosity between doctor and patients in the course of routine
medical care.
K.P.S. Kamath, M.D., Cape Girardeau, MO
Taking a Stand. Doctors could learn from
Sarah Bush Johnston, stepmother of Abraham Lincoln, who married
Thomas Lincoln a year after Nancy Lincoln died.
Nancy complained about the dirt floor in the family cabin, but
she never got a wooden floor. When Sarah arrived with a wagon load
of furniture, she said she couldn't possibly put her nice furniture
on a dirt floor and headed back home, promising to return when the
wooden floor was in. It was finished by nightfall. Sarah was polite
and nonbelligerant, but firm. She addressed the issue immediately
and left personalities out of it. The decision was up to Thomas, but
Sarah used what leverage she had-the withholding of her presence.
It's a workable formula for getting action.
Gordon Meyerhoff, M.D., Roslyn Heights, NY
Medicare E&M Guidelines. This
publication is a masterpiece of bureaucratic idiocy. The service
being paid for is nothing but paperwork determined by word count.
Created is a massive bureaucratic jobs program for non-medical
readers who will determine what the doctor's notes are worth. This
busywork builds nothing, produces, grows nothing, saves nothing,
creates nothing, and cures nothing. Wanted is one massive note
covering everything, repeated over and over. An experienced
practitioner can do 500 things mentally in a minute, but these
technocrat sinecures do not care unless it is written down. With the
micro-brain mega-tongue bulletin, we doctors need a court reporter
with us to keep chart records whenever we make rounds if we are
really going to tell the Medicare police what we do. This is the
final touch to the logorrhea of rules imposed by HCFA. It creates an
administrative kangaroo court ready to penalize anyone they
arbitrarily decide to target for reasons known only by Medicare.
Guilt is automatic because no one can do what these guidelines
demand.
Samuel A. Nigro, M.D., Beachwood, OH
Legislative Alert
The Clinton Budget
Since the State of the Union show, the Clinton Administration has
outlined its budget and spending priorities. Clinton is proposing a
budget of $1.73 trillion and projecting a "surplus" of $9.5 billion
in Fiscal Year 1999.
In outlining spending programs, Clinton has described his
spending priorities as "investments," for example, $1.1 billion in
biomedical research work, largely for the National Institutes of
Health (NIH), with an emphasis on cancer research, and $15 million
for HHS to improve the "quality and cost effectiveness" of the
health care system. The Agency for Health Care Policy and Research
would get $30 million to study outcomes and quality. While the
results would be applied first to Medicare and Medicaid, it is
expected that a bipartisan coalition will attempt to move
legislation this year to impose government "quality" standards on
the private insurance industry.
The Health Care Financing Administration (HCFA) would, under the
President's budget proposal, be given an opportunity to levy $800
million in new "user fees" on doctors, hospitals, and other
"providers" to offset the costs of the agency's "program management"
budget. According to the Bureau of National Affairs, $395 million
would be used to cover the cost of "audit" functions, enabling it to
double the number of audits in the campaign against the program's
awesome fraud and abuse problems. About $150 million would be
earmarked to pay for HCFA's dissemination of information on the
Clinton- Congressional "Medicare Choice Plans", the largely managed
care "options"-with federally dictated benefits packages.
The other major health care initiative is the proposal to expand
coverage for early retirees, or the near elderly.
A Bigger Medicare Program
Medicare expansion for early retirees would allow Americans aged
55 to 64 to buy into the financially troubled Medicare program; it
will be there for them as a "guaranteed" option outside of
employer-based health insurance-if they can afford it. They will pay
a fixed (naturally) price of up to $400 per month. The Clinton
Administration says that these premiums will fully pay for the
expansion and that 300,000 people will be able to take advantage of
this offer.
Hand it to the President. He knows how to play Medicare politics.
Only certifiable Meanies, with little or no compassion for the
victims of employer- based health insurance arrangements, could
stand in the sway of this generous and yet fiscally reasonable
proposition. Congressional naysayers will be painted once again into
the corner of opposing help for a class of citizens who Worked Hard
and Played by the Rules. Have you heard that line before?
A closer analysis of this proposal, though, should even give the
liberals some pause. It won't, but it should.
First, the vaunted Budget Deal does not even begin to solve the
deepening fiscal problems of Medicare. Everybody who is a grownup in
Washington knows this, and that is why the Balanced Budget Act (BBA)
calls for the creation of a Commission to set forth the long-term
reform options for the Medicare program. That is also why Senator
Bill Roth (R-DE), Chairman of the Senate Finance Committee, has said
that we should not be in the business of expanding Medicare until
the Commission presents its report next year.
The Congressional Budget Office (CBO), after passage of the BBA
Act of 1997, did a series of projections on what is indeed in store
for the American people if matters are not attended to with a degree
of discipline that is highly foreign to Congress and the
Administration. This is not an easy job. Medicare is a program that
the public likes but does not understand, which thrives not only
because of its political popularity in Congress but also because of
its elaborate system of cost shifting. Ignoring the systematic cost
shifting for a moment, what is the projected cost and tax burden
going to look like?
In the short run, we are going to see a respite because the
number of beneficiaries entering into the Medicare program right now
is at a low. The Baby Bust generation, born during the Depression
and the War Years of the 1940s, is not piling up a huge demand for
services. Indeed, the CBO says that we are at an historically low
period of growth in Medicare beneficiaries. But that changes in 12
short years. Then, the Boomers, the Sixties Kids, will start coming
into the system; no, they will cascade into the Medicare program,
creating demands on the Medicare system and the supply of doctors
and hospitals and clinics unlike anything we have ever seen before.
The demand for these services will accelerate for at least two
decades at an unprecedented pace.
CBO ran some number and presented them to the Senate Aging
Committee. Here goes. Between now and the year 2015, the number
of Medicare beneficiaries will climb from 38 to 53 million. A
big jump. But the cost of the Medicare system will not be
proportional; it will be five times what we are spending today.
Indeed, assuming current law, i.e. no changes in benefits or
funding, CBO projects the Medicare spending to go from $209 billion
to $1.1 trillion in 2015. Right now Medicare per capita spending is
at $5500 per beneficiary. By 2015, it is projected to be at $20,000
per beneficiary because of the acceleration in the volume of
Medicare services.
Adding new beneficiaries to the financially troubled program is
an exotic idea. Senator Gramm said it best: When the proverbial
Titanic is sinking, it's best to try to get folks off the ship, not
to go out and buy your momma a ticket.
A second consideration is the impact of such an arrangement on
the broader problem of entitlements. In 1935, when Social Security
was enacted, the age of eligibility was 65, but average life
expectancy was 62. This really was a New Deal. In 1965, the age of
eligibility for Medicare was pegged to Social Security, in spite of
increases in life expectancy. Today, even as Social Security's age
of eligibility is scheduled to move up to 67, that for Medicare is
to stay at 65.
The Clinton proposal would create new incentives for folks to
retire early, even though, as Senator Gramm and others have noted,
there has been a strong consensus that we ought to try to get people
who are living longer to stay in the workforce longer so that they
will pay payroll taxes and contribu- te to the growth of the
national economy. Experienced workers, at their peak levels of
productivity, who can afford to pay $300 to $400 per month for
Medicare, will be lost. Corporations will look at the
opportunities available for their older workforce as an excuse to
cut back on employer- provided health insurance. In recent years,
corporations have been desperate to unload the health costs of their
older workers and retirees onto the government.
Although the President says that his program is fully funded
today, will it remain so? Will not the sickest folks be the ones
most likely to take advantage of early Medicare? Isn't this adverse
selection against taxpayers? Will not costs then go up
disproportionately? William F. Bluhm, vice president of the American
Association of Actuaries, says that even modest adverse selection
could undermine the plan (Robert Pear, NY Times
1/20/98).
This brings us to the third point. Expanding an entitlement
program will mean an expansion of entitlements. Once you have a
new clientele in the government program, then they will use their
influence to lobby for an expansion of their benefits. Few folks
on the government benefits program actively write Members of
Congress of their desire to have their benefits reduced. Rather, the
argument will be that paying the full cost of the program will be a
burden on these folks; they should get help; and the help will come
from the taxpayers in the form of either reduced premiums or new
subsidies. So the dynamics of such a proposal will lead to another
cost shift onto the taxpayers. At the end of the day, the taxpayers
are always the suckers.
But you've got to give it to the White House: they know how to
frame the issue.
As for the Congressional Republicans, when it comes to health
policy, their track record has been to set up more and more federal
mandates. And they have a bunch in the wings-ready for enactment in
1998.
They could change course. Do a reversal. And in the process,
change the terms of the national health care debate and throw the
White House on the defensive for once.
As with children of working parents, the problem of lack of
insurance in this class of Americans is real, but it is hardly a
crisis. According to Senator Phil Gramm (R-TX), the number of
uninsured among this group is not huge-it's about 14%, not much
different than the national average. Why not allow Americans to
pick and choose the health insurance they want, outside the
workplace, with the same tax advantages now available for
employment-based insurance?
Some suggest that a tax credit, even a refundable tax credit tied
to income or health condition, to purchase private plans outside of
employer- based insurance would largely solve the whole problem. But
it's obviously too simple-or too unlikely to expand the bureaucracy.
The Medicare Commission
The best news to come out in the past few weeks is the
appointment of Senator John Breaux (D-LA) as chairman of the
bipartisan Medicare Commission. The Commission, under the terms of
the BBA of 1997, is supposed to make its recommendations on Medicare
reform to Congress and the Administration in 1999.
Breaux has demonstrated, both in Senate hearings on the topic
and his public appearances, that he understands what is wrong with
the current system: reliance on price controls and central planning.
Count on him to be an opponent of the status quo and HCFA's
micromanagement of the financing and delivery of medical services to
the elderly. Another possible bright spot is the appointment of
Bobby Jindal of Louisiana as Executive Director for the
Commission. Jindal will report to Breaux and Congressman Bill Thomas
(R- CA). He's a young man, a Rhodes Scholar, with an impressive
track record of cleaning up a large part of the Medicaid mess in
Louisiana, turning a $400 million deficit into a $170 million
surplus (see Wall St J 1/30/98). He's a Republican health
care policy wonk-normally a contradiction in terms. Jindal also
previously worked for Congressman Jim McCrery (R-LA), who serves on
the House Ways and Means Committee. McCrery knows something about
what's wrong with the current Medicare system as well as the thing
the corporate types call the employer-based insurance "market" (sic.).
Hopefully, Jindal is cut from the same mold. In any case,
conservatives in Congress, who've had little to cheer about in the
past three years on health care policy, are hoping for the best.
The Commission has a big job ahead of it and a lot of stuff to be
undone. Expect them to be pressured by the standard cast of
characters who have made a living from Medicare and Medi-Scare
politics over the past three decades. Imaginative thinking is called
for; if the Commission should fail, and failure here is easy, then
we all pay a big price. Medicare "politics-as- usual" garbage-so
universally popular with the demagogues in Congress and the
professional lobbyists who made a career out of misrepresenting
senior citizens on crucial issues like Medicare Catastrophic
coverage, private contracting in Medicare, and the Clinton Health
Plan-won't cut it. If Congress does not seriously restructure the
program, promote real consumer choice and competition-not phony
managed competition based on a heavy doses of government
micromanagement-and introduce market incentives into the Medicare
system, then the options will be very limited.
Think of the politics: the effect on the "social safety net" of a
generation that has become dependent on Medicare; the "social
contract" with the Boomers who have been paying into Medicare
through their payroll taxes lo these many years; the working
families who could be targeted by tax increases large enough to
trigger a tax revolt unlike anything we've ever seen. As for
increasing premiums on retired beneficiaries, in 1997 Congress could
not even impose a $5 dollar deductible on home health care services,
the fastest growing component of the Medicare system.
Again, without radical changes in thinking, the Commission's job
is hopeless.
More Bureaucratic Illegalities
Please note that the General Accounting Office, the investigatory
arm of the Congress, has recently ruled that the Technical
Advisory Committee (TAC), which makes recommendations to HCFA on
medical technology coverage questions, has been operating illegally.
GAO notes that these coverage discussions, much like Hillary's task
force, have involved private citizens (selected medical directors of
Medicare carriers, which are private entities) and not just federal
employees, and therefore should have been open to the public under
the Federal Advisory Committee Act (FACA). Sound familiar?
The medical technology industry has long criticized HCFA's
closed-door coverage and reimbursement-setting policy. A review of
TAC was requested by Rep. Bill Thomas (R-CA). HCFA acknowledged that
the TAC was probably not in compliance with the law and will
temporarily exclude private-sector members until the committee can
be reconstituted to conform with FACA. HCFA's rapid decision to
comply was probably heavily influenced by sanctions recently imposed
by Judge Lamberth in the case of AAPS v. Clinton
(M-D-D-I Reports, The Gray Sheet, 1/26/98).
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