AAPS News – Sept 2000

Volume 56, No. 9 September 2000

OBEDIENCE SCHOOL

Ordering a military recruit to do stupid things is not at
all pointless. It teaches him the most important military duty:
to obey orders without question. He also learns that he is a
nobody, a cog in the machine, a Government Issue.

Recruits soon learn another lesson: Never
volunteer.

The “voluntary” compliance plans proposed by the HHS OIG
(
www.hhs.gov/oig/modcomp/cgpphysiciandraft.htm) could be
described as onerous, costly, counterproductive, mindless, and
stupid-but not pointless. They will obviously not “further the
mission of all physician practices to provide quality care to
their patients,” the stated intention. The true, unstated
objectives-judging from the likely outcome-are probably to
educate physicians about their position in the government
hierarchy; to inculcate proper attitudes of subservience; to
encourage self-incrimination; and to foment suspicion, distrust,
and fear in all physician practices.

Another possibly intended consequence of “compliance” is to
destroy solo and small group practices. Already, most such
practices spend between 25 and 50% of their time on compliance
issues, stated attorney Jonathan Emord at a Heritage Foundation
lecture on Mar. 1st (

www.heritage.org/library/lecture/hl665.html). That time,
which goes uncompensated, “is a high tax that they must bear to
practice medicine in the U.S.”

AAPS President Lawrence Huntoon, M.D., who spoke at the same
conference (see AAPS pamphlet
#1073), concurred: “I am beginning to wonder whether I can
afford to stay in practice or not…. The business of keeping us
informed and in compliance continues to spread and grow like a
fungus-an appropriate term for things that feed on objects that
are in the process of deteriorating” (see seminar invitations in
your mail).

Robert Berenson, M.D., of HCFA declares that “we have no
intention of punishing anyone for honest mistakes” and even
invites reports of “instances of improper pursuit of physicians
for honest, inadvertent errors” (testimony before House Budget
Committee Health Task Force on Regulatory Burden on Providers,
June 14, 2000). However, making a distinction between innocent
billing errors and outright fraud is not current
practice, according to Kathleen McDermott, Esq., at the annual
meeting of the American Health Law Association, June 18-21. “For
many prosecutors, there’s no such thing as a mistake” (BNA’s
HCFR 1/28/00).

In fact, “the government is more aggressive and inflexible
with individuals who have less resources to protect themselves,”
McDermott said. “Physicians are particularly vulnerable in fraud
investigations because, unlike corporations, they can be sent to
jail…and are more readily excluded from federal health care
programs without greatly affecting patient access to care.”

Though prosecutors have incentives to recover money, they
will pursue cases aggressively even when there is not much money
to gain (Medicare Compliance Alert 6/26/00).

The 42-page OIG Draft Compliance Program Guidance for
Individual and Small Group Practices (op. cit.) places
great emphasis on designating and training a compliance officer,
documenting and updating the training at least yearly, auditing
the practice, and documenting and auditing the compliance
program. The “Provider Self-Disclosure Protocol” includes a
Government sampling program known as RAT-STATS.

Simply having a compliance plan on the shelf could be a
liability, because violations of the doctor’s own plan “threaten
a practice’s status as a reliable, honest, and trustworthy
provider of health care”-apparently even without “significant
failures to comply with applicable Federal or State law.”

In these days of “qui tam millionaires,” having a compliance
officer means constant vigilance to prevent him from becoming a
whistleblower. Tips include the use of psychological tests to
screen out zealots prior to hiring; asking for periodic
certifications that officers are not aware of any problems
requiring disclosure; contract clauses requiring the officer to
donate proceeds of qui tam suits to charity; and making the
officer feel empowered and safe, as through a generous severance
package (Med Compliance Alert 7/3/00).

The “antifraud” effort is on a wartime footing, especially
in California. “[P]eople who will rip off the Medi-Cal system…
are the scum of the earth…, and I will not rest until every
single one is in prison,” declared Gov. Gray Davis. According to
attorney Patric Hooper, the environment is like the anti-
Communist spy inquiries of the 1950s, which also dispropor-

tionately targeted “foreigners.” The civil rights of suspects
have been violated, on several occasions at least, by the
enforcement tactics of State Controller Kathleen Connell,
according to the federal court in Los Angeles (BNA’s
HCFR 5/3/00).

Record numbers of convictions are being achieved in
California. In fact, Alan Cates, chief of the Medi-Cal fraud
prevention bureau, boasts: “We’ve never lost a case; every
[suspect] has pled.” His office threatens to add 6 months in
prison for every 2- to 4-week period that the accused fights the
charges (Medicare Compliance Alert 5/15/00).

Cates and Connell are named in a class action suit against
the California DHS (Labotest v. Bonta). The complaint
alleges: “Defendants’ goals are obvious…-to put out of business
providers who[m] defendants…suspect of wrongdoing, through
summary administrative actions, without giving them a
meaningful…opportunity to be heard” (BNA’s HCFR
6/14/00).

AAPS has submitted specific comments on the
compliance plan proposal, though the plan as a whole is
objectionable. Learning to beg, heel, and fetch only validates
the physician’s acceptance of his status.

The unconstitutional assault upon the profession of medicine
can be stopped only if a critical mass of physicians withdraws
what Ayn Rand called “the sanction of the victim.”

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Collaboration vs. Integrity

Never underestimate the HCFA. By sweet-talking the AMA into
promoting the RBRVS, they turned basic billing methodology into a
nightmare of codes, and codes within codes, and codes within
codes within codes….

Now Hear This, League of Physicians & Surgeons, 7/00

I received a telephone call from a U.S. Attorney’s Office
requesting that I train 10 staff members in coding for DRG
assignment. They have the responsibility of reviewing patient
records for DRG assignment accuracy and need to learn to code
quickly so they know what to review. When I explained that, at
best, I could train them to be entry-level coders IF they had an
anatomy & physiology, health information, medical terminology,
and pathophysiology background along with a minimum of 120 hours
of coding training, she said that they didn’t have time for that.
When I suggested that they contract out the record review process
to qualified health information professionals, she stated that
they had no budget for that. I’m not going to conduct this
training. And, I want to raise the question, how can fraud and
abuse regulations be enforced properly when the individuals
reviewing the records aren’t qualified to conduct the review?

Prof. Michelle Green, MPS, RHIA, CMA, CTR

Alfred State College of Technology, Alfred, NY

How Much Fraud?

There is no evidence that fraud in federal health programs
is any more pervasive than in defense programs; thus, there is no
justification for more draconian laws in one sector than in
another, stated Robert Charrow, former principal deputy general
counsel for HHS (Heritage Foundation, op. cit.)

Advocates of extreme regulation lump together “fraud, waste,
and abuse.” The first term has a precise legal definition. The
closest estimate of the amount comes from the DoJ claim to have
“recovered” $0.49 billion, much of that being treble damages, in
programs with total expenditures of $400 billion. “Waste and
abuse” are not legal concepts, and can mean anything, usually
that someone is doing something that the speaker finds
objectionable. HCFA points to $12.6 billion lost to “honest
errors,” miscoding and the like. This is a meaningless statistic.
If errors are honest, some will benefit the system and others
will not. There is nothing to indicate that the IG “netted out”
the errors, Mr. Charrow observes.

The Hidden Federal Deficit

The surplus announced by the Administration and Congress is
a lie, according to Martin Weiss’ Safe Money Report,
July 2000. The Flow of Funds report published by the
Federal Reserve shows that the U.S. government added $131 billion
to the federal debt in 1999. The “surplus” is generated by
raiding federal “trust funds,” including Social Security.

* * *

There’s no way to rule innocent men. The only power any
government has is the power to crack down on criminals. Well,
when there aren’t enough criminals, one makes them. One declares
so many things to be a crime that it becomes impossible to live
without breaking laws.

Ayn Rand, Atlas Shrugged

Annual Meeting: Nominations and Resolutions

The following slate will be presented at the annual meeting
in St. Louis by the Nominating Committee:

President: Dr. Robert Cihak of Aberdeen, WA

President-Elect: Dr. Robert Urban of Belle Vernon, PA

Secretary: Dr. Claud Boyd of Augusta, GA

Treasurer: Dr. R. Lowell Campbell of Corsicana, TX

Directors: Drs. Dexter Blome of Zanesville, OH; Kenneth
Christman of Dayton, OH; Melissa Clements of Oklahoma City, OK;
Dennis Gabos of Pittsburgh, PA; Robert Gervais of Mesa, AZ; Holly
Fritch Kirby of Lee’s Summit, MO; James Pendleton of Bryn Athyn,
PA; James Weaver of Durham, NC.

Resolutions are due by Sept. 25. (Call 800-635-1196.)

Vaccine Compliance uber Informed Consent

“Not one person…should be satisfied…until the
immunization rate…is 100 percent,” said HHS Secretary Donna
Shalala at the 34th Annual National Immunization Conference.
“Eventually, HHS will provide $100 million for states to work
with HHS to create national immunization registries.”

The CDC estimates that 32% of U.S. children are enrolled and
have at least two vaccine doses recorded in a registry. All Kids
Count, an advocacy group that helps to fund State registries,
reports that at least one, Oregon’s, has a cost-sharing agreement
with its Medicaid program.

Registries are used to monitor the implementation of new
vaccine recommendations and to “change kids’ lives.” Children who
are underdosed or who receive subpotent lots or expired vaccine
can be called back (BNA’s HCPR 7/10/00). Better tracking
of adverse effects is not one of the stated goals.

One method of improving compliance-threatening a cutoff of
welfare benefits-is being tested in several States (“local
laboratories of public policy innovation”). Georgia reports a
significant increase in up-to-date immunization status: 72.4% of
2-year-olds in the intervention vs 60.6% in the control group
(JAMA 2000;284:53-59, 85-87). The authors concluded that
no harm was done because the sanctions were actually carried out
only 11 times; usually a threat sufficed. An accompanying
editorial opines: “The ethical stumbling block [in the program] rests in the fact that financial penalties…were threatened only
to individuals already at high risk for economic deprivation.”
Apparently, JAMA editors would have no problem with
administratively imposed punishment of all families that
exercise their own judgment in matters concerning their
children’s health.

Another “controversial” element is that neither
institutional review board approval nor informed consent of study
participants was sought. HHS waived these formalities: it claims
the right to do so in order to facilitate projects “judged likely
to promote the objectives of AFDC.”

The Nuremberg Code, however, has no exemption for public
policy research or HHS discretion: “The voluntary consent
of the human subject is absolutely essential”-and “without…any
element of force, fraud, deceit, duress, overreaching, or other
ulterior form of constraint or coercion….” (See
http://ohsr.od.nih.gov/guidelines/nuremberg.html.)

AAPS Calendar

Oct. 25-28, 2000. 57th annual meeting, St. Louis.

Oct. 24-27, 2001. 58th annual meeting, Cincinnati.

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White House Tactics Recapitulated

Briefing is now complete in the remand of AAPS v.
Clinton to the U.S. District Court. The Administration has
argued, in contesting an award of fees and sanctions to AAPS,
that the Working Groups led by Ira Magaziner never really advised
the President about health care reform, but only served as staff
to the Task Force made up of Cabinet secretaries.

Thomas Spencer of Miami writes for AAPS:

“The government waged a war of attrition against the
plaintiff and contended that the girth, alleged `fluidity,’ and
alleged disorganization of the working groups did not meet its
paradigm test…. It is now clearly evident that every
major contention made by the government, supported under
oath by various declarations of high government officials,
was either grossly misleading or outright false.

“The government has never before taken the position
that a group needs to actually meet with the President personally
to advise him. In…the first appeal in this case, the following
colloquy between the government and the Court transpired:

Court: Are you saying, then, that when
FACA talks about committees giving advice
utilized by the President, that literally
means they’ve got to come into the Oval
Office…and chat with him? Or that someone
is going to stand over him while he reads
their drafts, their reports?

Mr. Stern: No, Your Honor.

“…[T]he entire mechanism resulted in direct
consensus advice to the President by each of the working
groups…. The Task Force was neither the intermediator nor the
facilitator of the advice…. In fact, the Task Force never
prepared a report. The only report prepared was that of…the
working groups.”

Working groupies received Guidelines for Meeting with the
President. “…[T]he government suggests…that the statement
made at Tollgate IV [about the meeting process] was simply a
`feel-good’ therapy spin applied by Mr. Magaziner….”

AAPS stands by its contention that the government acted in
bad faith: “We recognize that we have a great burden in this
circuit to demonstrate bad faith…. It would be far more
monetarily efficient for plaintiffs to waive their bad faith
argument and rest on EAJA [the Equal Access to Justice Act]. But
it would not be right or just or in the public interest….

“At every stage of this litigation, until the boxes revealed
the truth, this government repeatedly played elaborate word
games, made misrepresentations, and employed dilatory discovery
tactics to stretch the truth and to lengthen the time and expense
of the case to plaintiffs….

“When the government is accused of intentional bad faith
misconduct demonstrating a deliberate and calculated strategy of
vexatious conduct, it claims that such conclusions cannot be
drawn by the court from circumstantial evidence, inferences, or
the totality of the facts…. Of course, when it prosecutes
ordinary citizens…, its circumstantial evidence theories
work….

“One badge of bad faith is an advantage to the government to
engage in this conduct…. The advantage effectively
achieved…through the administration’s ridiculous litigation
positions was to…maintain…secrecy, [giving the President] a
better chance to pass the Health Security Act…. We have
demonstrated many times before the factual record of paranoia and
secrecy surrounding this case….

“The public interest requires that the government not `get
away with it.’ Especially here, where the government confesses no
error, retracts no position, and admits of no mistakes.”

CPT Codes Challenged as Basis for Fraud

After 7« years of costly litigation, prosecutors are
demanding $190,000 from George Krizek, M.D. [see statement of Blanka Krizek on
Administrative Law and Abusive Fraud Prosecutions, and AAPS News Jan 2000]. At a hearing in
late August, a District Court judge will consider the methodology
for calculating the damages. From a memorandum by Monika Krizek
Griffis:

The CPT codes “putatively form the basis for the
Government’s…calculations. As privately copyrighted
descriptions of medical services that are neither law nor
regulation, these codes are inherently unsuited to be a basis for
either proving or quantifying fraud….

“Dr. Krizek,…who has been completely cleared of the
wrongdoing the Government accused him of, is bizarrely still a
hostage in the court system, trying to clear his name of
allegations of `fraud’ unspecified and undefined in any law….
While deciding against the Government on almost the entirety of
the case, the trial Court fixated on one thing, the Current
Procedural Terminology (`CPT’) codes for psychiatric services,
some of which include an approximate time factor. Although the
Court found the language of the codes `ambiguous,’ it determined
that the Defendants had a `deficient’ billing system, because
they could not reconstruct with precision how much time
Dr. Krizek had spent with any particular patient….

“The Government created a `liability methodology’…
underpinned by no more legally binding an HHS source than the
personal thoughts, ruminations and impressions of Special Agent
Mathew Kochanski, a junior investigator, [in order to `add up’
Dr. Krizek’s work day]….”

The brief gives a detailed analysis of psychiatric codes
90843, 90844, 98053, 90801, 90862, 90220, and 90620. “Only two
codes, 90843 and 90844, have any time dimensions
attached to them, and these are meant to be approximations…. In
a desperate attempt to `prove’ Defendants’ alleged fraud,
however, Agent Kochanski heroically adds minutes here and there,
and even supplies times when there are none in the codes….
[T]he Special Master did not question the Government’s failure to
provide any laws or regulations to provide a basis for these
calculations….

“The Supreme Court has squarely indicated its disapproval of
the type of hocus-pocus that the Government has performed here
through Agent Kochanski’s single-handed invention of CPT time
dimensions [in Bowen v. Georgetown Univ Hosp]: `We have
never applied the [Chevron deference] principle to
agency litigating positions that are wholly unsupported by
regulations, rulings, or administrative practice….'”

In Practice Management Information Corp. v. AMA,
the Ninth Circuit rejected the notion that the CPT coding system
is a law. The Secretary of HHS has taken the explicit position
that adoption of the CPT codes was not a rule within the meaning
of the Administrative Procedure Act due to absence of notice and
comment. For the Court to apply this non-law, non-rule to Dr.
Krizek deprives him of due process rights.

Defendants suggest an alternate methodology: the RBRVS. On
this basis, the Government owes Dr. Krizek $4898.16 in
underpayments for one of the five days at issue on remand.

“[T]he government never established any actual damages from
Dr. Krizek’s conduct…. [E]ven Government witnesses at trial
established that the Government benefited from the many years
that Dr. Krizek devoted to caring for…poor and elderly
patients”-until this lawsuit drove him from practice.

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Members’ Page

A Free Market for Uninsured. There are millions of
uninsured pets in this country; none of them have money
to pay for their own medical care. Yet, according to the American
Veterinary Medical Association, $11 billion is spent every year
on fee-for-service medical care for pets. Capitation and managed
care, of course, don’t exist in veterinary medicine because, in a
true free market, abuse of the customer is not tolerated.

Lawrence R. Huntoon, M.D., Ph.D., Jamestown, NY

Upside Down and Backwards. When you’re young, you
borrow money to go to school, buy a car, or buy a house. You make
an arrangement with your neighbors, brokered by a financial
institution, so you can have things you need now, when you don’t
have resources to pay for them.

Whole life insurance and employer-provided medical insurance
are based on the perverse economic concept that young people
should pay more for things they don’t need, so older, wealthier
people can benefit. Why acknowledge the financial limits of the
young by loaning them money to buy consumer goods, only to ignore
those same limits and coerce them to subsidize wealthier people
who could afford to buy more and better medical care for
themselves?

Gerry Smedinghoff, Consulting Actuary, Wheaton, IL

A Free Market in Peru. It’s been more than a year since
I moved here. In spite of the recession and medical insurance
pressure to deform the market, people are willing to pay out of
pocket for a good doctor’s job. I am happy not to be exposed to
paper cuts any longer, or to the fear of losing my life in a
legal treadmill. Here we have respect, confidentiality, less
overhead, no payment delays, no trivial lawsuits, and no stupid
paperwork. By the way, the American College of Rheumatology is
sending out templates to fill in on each patient to protect
against U.S. government audits!

I hope to return to work in the U.S.A. when the “liberal”
forces are defeated by the people. God bless America!

James Durand, M.D., an American Medical Refugee

Can’t Afford Insurance. The Arizona Republic
editorial board thinks that $17 per month is a lot for poor
people to pay for state subsidized insurance. At the Diamondbacks
game, I sat next to a first-generation immigrant couple, with
good work ethic, who almost certainly make less than 200% of the
poverty level. Total cost of the evening for them, including beer
at $5 per glass, food, tickets, and parking: $56 or 3.3 months of
insurance premiums. They said they try to get to a game every two
or three weeks. While buying a newspaper this morning, I observed
the scene at the local convenience store: lawn workers buying
lottery tickets, soda, ice, and Hostess cupcakes. The average
bill: $6.75, or $135/mon. The grocery items could have been
purchased for 25% less at the supermarket. The 25% overspending
plus the lottery tickets = $73/month thrown away, or 4.3 months
of subsidized premiums.

Some people are subsidizing the ridiculously low premiums so
that others can buy things that my skinflint immigrant
grandparents would never have thought of buying. Sure, some poor
people can’t afford medical insurance, but some can. The
government can’t tell them apart.

Craig Cantoni, Capstone Consulting, Scottsdale, AZ

Reflections on Boy Scouts of America v. Dale.
…Great wars bring great revolutions. World War I brought to
power the National Socialists in Germany and the Bolsheviks in
Russia. What will come from our wars against smoking, the English
language, the lack of accident and sickness insurance (“health
insurance”), dirty air, traditional morals, and common sense?

Charles Courtney, Riverside, IL

A Dialectic. Carriers have been advised to penalize
gastroenterologists who call in an anesthesiologist to render
services. The gastroenterologists should be anesthestizing the
patients themselves, and anyway monitored anesthesia is
“medically unnecessary” for GI endoscopy-an invasive procedure.
Yet my clinic was cited because I did not have anesthesia present
while doing Yag lasers (shining a light in the eyes)! Of course,
the anesthetist may not charge for being present, and
Medicare doesn’t require her presence if I do the very same
procedure in my office. Dizzying, nonsensical rules, rules,
rules.

Robert Gervais, M.D., Mesa, AZ

You Will Be Audited. At a recent Medicare
compliance seminar in Oklahoma City, a lawyer formerly with the
FBI and the HHS OIG said: “Physicians should make no mistake. The
goal of the fraud and abuse hunters is to put each of you in
jail. If that is not possible they are there to retrieve monies.”
The average amount sought for each physician is around $200,000.
Every physician enrolled in Medicare or Medicaid can expect to be
audited in the next two to five years. Once home health agencies
and skilled nursing facilities have been shaken down, the focus
will shift to physicians.

It is not unreasonable for physicians to consider opting out
of Medicare. To paraphrase Sir Winston Churchill, when one
accepts the King’s sovereign, one becomes the King’s man. When
one accepts only the patient’s sovereign, one honors the
completely professional, personal bond of the patient-physician
relationship. Moreover, the threat of audit from any third party
is eliminated [see ASD’s Front Line, June, 2000].

Melissa Kline Clements, M.D., Oklahoma City, OK

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Legislative Alert

Patients’ Bill of Rights
Conference Stalled

The August Recess is upon us. The Conventions are stealing
the public spotlight. And the highly contentious House-Senate
Conference on the Patients’ Bill of Rights has stalled, perhaps
indefinitely. Time is running out.

After weeks of negotiations, House Democratic conferees have
walked away from the talks. Then, both sides attempted to
redefine the debate for the public, resulting in some high-
profile parliamentary jockeying in the Senate. Democrats led by
Senator Edward Kennedy (D-MA) have twice tried and failed to
enact a Senate version of the more extensive-and litigious and
more regulatory-House-passed bill. Senate Republicans, just
before the July 4th recess, jumped into the fray to redefine the
debate and narrowly passed yet another bill offered by Sen. Don
Nickles (R-OK), the Majority Whip, that would have provided for
limited liability for HMOs. But liberals and House sponsors of
the Norwood-Dingell Bill have said that the Nickles version of
the bill does not go far enough.

Capitol Hill observers have been able to piece together the
unmaking of the House-Senate closed-door slugfest. Sen. Nickles,
the key Senate player, knows something that most commentators
miss: the Norwood-Dingell bill would probably garner fewer
votes now, largely because of the regulatory details that have
been seeping out.

The details often mess up health care policy, as Miss
Hillary can testify. The House bill is so mind-numbingly
complicated. The first major issue for the conferees was the
question of how one designs an external review process before one
sets forth the terms and conditions and scope of litigation.
External review processes are in both bills. External review is
something upon which everybody, seemingly, is agreed upon. Right?
Well, on just that issue, the conferees slogged away for 6 weeks.

Then there is the tricky issue of employer vulnerability to
suits. As John Hoff has written in a splendid analysis for the
Heritage Foundation, there is no language that insulates
employers from lawsuits, or threats of devastating lawsuits,
regardless of what Members of Congress say about their own
legislative handiwork. They may not intend to pierce the veil of
employer security in this area, but their language simply does
carry out that intention.

In principle, most members of Congress want to say that the
HMO alone should be subject to litigation if the HMO does a bad,
bad thing. The problem, however, is that the HMO is not now,
never has been, and never will be independent of the employer in
an employer-based health insurance system. So the challenge for
the House-Senate conferees has been to draft a rock-solid
employer exemption. They have not done that.

The reason all of this is so hard is that Congress is
operating within the rigid confines of a tax policy that
exclusively favors employer-based health insurance. It locks them
into limited policy options. And it locks doctors and patients
into limited insurance arrangements. Perhaps a better analogy is
the HMO prison. Doctors-and their patients-are in the HMO
prison because they support-or ignore-the policy-driven employer-
based arrangements that Congress and the IRS created more than 50
years ago. The entire debate about the patients’ bill of
rights is akin to a debate about the conditions of your
imprisonment. Better food and more time in the exercise yard.
That’s progress, we guess. But then, there’s always the better
idea, jumping out of the box- jailbreak! But that means escaping
the current federal tax treatment of health insurance.

The apparent Senate strategy is to chart a “centrist course”
that will appeal to the broader public, but ease any anxieties
about creating an unworkable and litigious vehicle that would do
serious damage to the employer-based health insurance system.
This means that the tough issues have to be handled with a degree
of delicacy and finesse that is uncommon in this kind of
Congressional fight. For example, liability: There is an enormous
popular appeal for persons who have been injured by the decisions
of HMO officials to have the right to sue for damages. If the
scope of liability is too narrow, it will be seen as a sop to the
HMOs and their insensitive pals in the business community. If the
scope is too broad, it will be seen as the opening of vast new
territory for rapacious lawyers-the proverbial ambulance chasers.
So, the Senate is wrestling with the problem of how to extend
liability without creating a rash of lawsuits. Not too little,
not too much, but, as Goldilocks might say, just right. Well,
it’s hard to calibrate the language just right. Unintended
consequences are the normal consequences in this business. And if
you calibrate it just wrong, hell breaks loose and millions of
people lose coverage.

The related issue is the scope of the bill. The Senate bill
covers 48 million Americans; the House bill covers just about
everybody with private health insurance. (Federal government
health plans are exempted from these provisions). Where is the
basis for compromise? The trial lawyers want it all, and the
Clinton Administration is not likely to settle for anything less.

House Members who backed Dingell-Norwood are upset and
angry. They notice that the Medicare prescription drug issue is
stealing the thunder from the patients’ bill of rights. In
Norwood’s view, the House-Senate conference is “dead.” But the
issue could arise as part of the traditional year-end deal
making, so common in the closing days of a Congress, especially
in a highly contentious and close election year. Look for another
high-profile intervention by Bill Clinton, who is firmly opposed
to consumer choice of health plans but equally committed to
expanding litigation. This thing is far from over.

The New Era of “Surplus Liberalism”

The Congressional Budget Office (CBO) says that things
are better than we reported here last month (Washington
Post 7/19/00). In fact, the federal budget surplus is $400
billion higher than the White House estimated. Subtracting Social
Security surpluses, which the Congressional Republicans and
Democrats say should stay off-limits, CBO says that over the next
10 years we will have about $2.2 trillion in surpluses. While
everybody in Washington is excited about the fact that we are
paying more and more money for government, the CBO still cautions
that the slightest changes in the economy could dramatically send
the numbers in the wrong direction. For example, reports the
Post, a CBO analysis projecting just one half of a
percentage point less economic growth in 2010 shaves off about
$250 billion in the surplus for that year.

Even given the volatility of the federal budget surpluses,
serious tax cuts, letting the working stiffs out in Flyover
Country keep more of their own hard-earned dollars, look less and
less fiscally “irresponsible.” The important thing, you see, is
to get the rhetoric right. We can’t “afford” to let the poor
slobs keep more of their own money; “affordability” is a function
of flush federal coffers, never a thing to be reckoned on the
family budgets of the people. When Washington wonks talk about
“revenue loss,” they don’t mean income declines- the “revenue
loss” of productive American workers, who already on average
shell out about 40% of their income in federal, state, and local
taxes. “Revenue losses” are not acceptable to Washington’s
establishment-except for those who are working to produce the
revenue. Moreover, if you cut taxes, you end up cutting taxes
for “the rich.” The reason: one- third of American households
don’t even pay taxes; and “the rich,” broadly defined, are the
ones who pay most of them. So you get standard leftist
protests that tax cuts disproportionately favor the rich; of
course they do, because the rich disproportionately pay the taxes
in the first place. The Clinton Administration is busily fighting
tax cuts-including repeal of the notoriously stupid marriage
penalty-a repeal which the President promises to veto. So much
for tax cuts.

How about spending? Have it, flaunt it. Got it, spend it.
The Washington spending machine-now on automatic pilot- grinds
out dollars for government programs at a fever pitch. During the
past 10 years, the Post reports, non-defense
spending-domestic and entitlement spending-grew at the
astonishing rate of 20%, after adjusting for inflation. The
era of Big Government is far from over; it is just getting
started.

The surplus also feeds the passion for retaining old bad
habits. No need to reform a program, if you just got more money
to throw at it. The Clinton Administration has persistently,
consistently, and steadfastly opposed any serious reforms in
Social Security and Medicare, opting instead to keep the old pay-
as-you-go and regulatory structures in place, while adding
benefits and tinkering around with reimbursement and funding
formulas. Sobriety is for tomorrow and for the sober and
responsible fools who worry about tomorrow and tomorrow’s bills
that will have to be paid sometime, someday. This is today.
Belly up to the same old bar, and have another.

Medical Mandates: Imposing Their Morality

Think Blue Sky. Imagine Congress gave HCFA
responsibility for designing sports cars. And the first models to
roll off the assembly line had square wheels. You’d say to
yourself, based on wide experience, wow, I knew they could do
that. After all, anyone who could devise a physician fee schedule
based on the proposition that a person’s labor time is the basis
for a price that would “mirror the market” is capable of
designing square wheels.

If you think that government policy can get really stupid,
we’re talking industrial strength stupidity, and you think you’ve
seen it all, you are wrong. How about government-mandated
contraceptive coverage for Catholic nuns?

Kid you not. On July 11, The Washington D.C. City Council,
which has primary responsibility, like most state governments,
for regulating health insurance, decided that every health
insurance plan serving everybody who is a citizen of the nation’s
Capitol must pay for contraceptives. Previous language had
allowed an exemption for religious institutions. D.C. Council
members tried to amend the bill by adding conscience clauses. The
first one, for employers who had moral objections to
contraception, was defeated on the ground that any business could
claim a moral exemption and get around the mandate, which Carol
Schwartz, a Republican, said was “a ridiculous” loophole that
should be closed. Personal moral objections to government policy
are, well, ridiculous. Right?

A second amendment, offered by Charlene Drew Jarvis and
Vincent Orange, both Democrats, said that at least religious
institutions and employers should be free of the mandate if they
have moral reservations about it. No deal. The defeat of the
“conscience clauses” was accompanied by a highly inflammatory
speech, reminiscent of the Nineteenth Century Know Nothings, by
City Councilman Jim Graham. Graham, a Democrat, warned of the
dangers of “deferring to Rome” and attacked the Pope for
reaffirming Catholic teaching that homosexual practices are
immoral. Graham, who is gay and backed by “women’s health
groups,” noted that the Catholic Church opposed condom
distributions and would, he feared, also oppose benefits for
homosexual partners.

“My problem is surrendering decisions on public health
matters to the Church,” he said (Wash Post 7/12/00).
“I’ve spent years fighting Church dogma…. We are permitting
religious principle to dictate public health. If we are going to
set this precedent, what does it mean for domestic partnership?”
That settled it. The progressive, modern, and sensitive D.C. City
Council voted 13 to 0 in favor of the mandate, happily unburdened
by any messy personal conscience stuff. That conscience business,
we hear tell, can get you into some real big time trouble with
the government, you know.

Democrats and Republicans alike in Congress, exercising
oversight over the District of Columbia, have been unimpressed by
the quality and the breadth of Councilman Jim Graham’s reasoning.
Rep. Ernest Istook (R-OK), a Mormon, attacked Councilman Graham’s
statements as a manifestation of anti-Catholic “bigotry.” Graham
declares he isn’t a bigot, nor is he anti-Catholic. Even if he
does sort of sound like one. Likewise, Congressman Thomas Davis
(R-VA) argued, rather simply, that Councilman Graham and his
supporters should realize that in a free society we all have a
right to be concerned about one religious denomination imposing
its will on the state. But we should be equally concerned about
the state imposing itself on religion and taking away personal
and religious freedom. Kind of basic, plain old American wisdom.

On July 20, the House Appropriations Committee approved an
amendment to the D.C. Appropriations. The amendment provides that
the D.C. contraceptive mandate shall not take effect, nor shall
any such insurance rule in the District unless it incorporates a
conscience clause.

This fight is just the beginning. With rapid advances in
medical science, ethical and moral challenges to doctors and
patients will grow. In a society increasingly divided over
definitions of right and wrong, in which some have a passion to
impose their views on all and take money forcibly to pay for
things many find repugnant or morally dubious, strife is
inevitable. What’s next? Who knows? What would have been
inconceivable yesterday is business as usual today.

Once again, one clever little solution to this sort of thing
is to change the tax and insurance rules so that individuals and
families, whatever their religious or irreligious persuasion, can
buy a medical plan of their choice, with the benefits that they
want. But there is a terrible price for this. Poor Councilman
Graham would have to sit through the awful specter of certain
unreconstructed D.C. citizens freely going out there with their
own cold cash, with not a hint of shame, and, in broad daylight,
mind you, “deferring to Rome.” The very thought of it, and in
this day and age, too. And, in front of the children!

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