AAPS News – Dec 2003


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of American Physicians and Surgeons, Inc.
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Volume 59, No. 12 December 2003


In the 1970s at Columbia-Presbyterian Medical Center, house
staff assured that everyone who had functioning kidneys even if
homeless, unconscious, and uninsured was in electrolyte balance
at the time of death.

Today, it is the view of certain courts that electrolyte
imbalance assures a peaceful death, even from thirst. The act of
providing hydration and nutrition to a patient who allegedly
cannot take it by mouth, and who has ever remarked that “I
wouldn’t want to live like that,” can be defined as “forced
feeding” and obstructed by the police.

The instant case of Terri Schindler Schiavo, who suffered
brain damage in an anoxic event about 13 years ago, echoes the
1989 case of Nancy Beth Cruzan. Miss Cruzan was also said by
some but not all physicians to be in a persistent vegetative
state. There are complicating guardianship issues in the Schiavo
case. The Cruzan case pitted the patient’s parents against one
physician and virtually the entire nursing staff of the Missouri
Rehabilitation Center. In the Schiavo case, her parents and some
physicians, who believe that she is conscious and fighting for
her life, and that she could take food by mouth if given speech
therapy, are opposing her husband. Mr. Schiavo, until recently
her court-appointed guardian, has allegedly denied her any
attempts at rehabilitation or oral feeding.

The Cruzan case reached the U.S. Supreme Court (Cruzan
v. Harman
). Together with former Surgeon General C. Everett
Koop, AAPS filed an amicus brief arguing that the removal of
simple nourishment, albeit through a gastrostomy tube, in order
to cause the death of a patient who was not terminally ill, was
equivalent to euthanasia. The American Medical Association and
the American Academy of Neurology filed as amici on behalf of the
parents, stating that the “right to die” is among the liberties
protected by the Fourteenth Amendment (AAPS News Dec

The Supreme Court, while remanding the case for lack of
“clear and convincing evidence” that the patient would choose
death, accepted by implication that tube-supplied food and fluids
constituted medical treatment and could ethically be withdrawn.
When two former coworkers presented vague testimony about a
conversation they had had with Miss Cruzan many years before, the
Missouri court ordered an end to feedings, and Miss Cruzan was
dead of dehydration in 12 days.

According to the AMA ethics and professionalism journal,
“Nancy Cruzan is responsible for a Supreme Court decision that
helped to empower people competent and incompetent with choices
at the end of life” (Virtual Mentor, Nov 2001).

“I think this is quite an accomplishment for a 25-year-old
kid,” her father said, “and I’m damn proud of her” (ibid.). (Mr.
Cruzan hanged himself seven years after his daughter’s death.)

In 1986, the AMA Council on Ethical and Judicial Affairs
issued an opinion (E-2.20) that “life-sustaining treatment may
include, but is not limited to, mechanical ventilation, renal
dialysis, chemotherapy, antibiotics, and artificial nutrition and
hydration.” At first applied only to those who were, “beyond
doubt,” permanently unconscious, the policy was expanded in 1994
to include patients who were neither terminally ill nor
permanently unconscious, “in accordance with a proper substituted
judgment or best interests analysis.”

Death by starvation and dehydration is now a common option
in advanced directives. The frequency with which it occurs, with
or without such a directive, is unknown, and so far no studies
have been done, according to Wesley J. Smith (Forced
, Times Books, 1997).

Hemlock Society Senior Vice President Faye Girsh may believe
that dehydration is “relatively gentle and painless in most
reported cases” (
), but it was the most dreaded
method of execution at Auschwitz. It is too cruel for animals or
convicted murderers. Fear that they or their loved ones could be
subjected to this fate may have helped motivate people to send
165,000 e-mail messages to Governor Jeb Bush of Florida, pleading
for a “stay of execution” for Terri Schindler Schiavo.

Groups protesting the court-ordered death of Mrs. Schiavo
include the Hospice Patients Alliance, which has received
numerous reports of the killing of disabled patients in certain
hospices. Not Dead Yet and more than 40 other disability activist
groups charge that Partnership for Caring, Last Acts, and the
Robert Wood Johnson Foundation (RWJF) deliberately conflate
terminal illness with disability, and promote statutes that
weaken protections for disabled patients. The CEO of the hospice
where Mrs. Schiavo resides is also on the board of directors of
the Partnership for Caring, a recipient of part of the $150
million RWJF has invested in “end of life” projects.

Last Acts issued a press release urging people to execute
living wills in order to avert the tragedy that befell Terri
Schiavo. The “tragedy” was an order by Governor Bush, pursuant to
a special act of the legislature, to reinsert her gastrostomy
tube six days into the court-ordered dehydration ordeal. The
patient has not died. A new guardian has been appointed, and the
ultimate outcome remains undetermined.

Last Acts proclaims that everyone has the right to refuse
medical treatment, and also that “none of us should be denied
treatment that we do want.” The questions, however, are being
asked in the past tense and subjunctive mood. What Mrs. Schiavo
wants now appears to be irrelevant. And Last Acts, as
well as the AMA, is silent about government barriers to the use
of measures not approved by the FDA, the DEA, or other
bureaucracy, even by patients who have no other hope.

Once the concept of the lebensunwertes Leben is
accepted, the obvious next step concerns the choice of method. If
dehydration is inhumane, why not a lethal injection?

National Socialist Euthanasia Files Opened

Files related to the euthanasia program of the German Nati-

onal Socialist regime, 1939-1944, are now available online in a
central data base. The German Federal Archive in Berlin has
gathered information from archives in Germany, Austria, Poland,
and the former Czechoslovakia. Included are 70,000 files kept for
decades by the secret police of the former German Democratic
Republic. About 200,000 persons were killed in gas chambers, with
drugs, or by starvation because they were considered handicapped,
socially unacceptable, or mentally ill (BMJ

“The actual medical records indicated either a `natural
death’ or a `mercy killing’ for the victim, many of whom were
starved to death. But we all recognize now that the killings were
based on a rationale that some lives were `unworthy of life’,”
stated Diane Coleman, President of Not Dead Yet. She fears that
the final body count of nonterminally ill disabled people starved
in hospice could exceed anything done by the Germans in their
euthanasia program (


In Germany, doctors and nurses themselves became the
zealots. Euthanasia was never officially legalized, although
Hitler signed a decree permitting medicalized killing. The
government never forced a doctor to kill a patient nor ever
punished a doctor for not euthanizing one (Smith WJ, op. cit.).

Non-Profits and Eugenics

In a recently released book, War Against the Weak,
and a Nov 9 article in the San Francisco Chronicle,
Edwin Black asserts that American eugenicists influenced the
National Socialist sterilization, experimentation, and
extermination campaigns with funding from corporate
philanthropies such as the Rockefeller Foundation and the
Carnegie Institution. Josef Mengele was one of the Kaiser Wilhelm
Institute doctors funded by Rockefeller.

The world recoiled in horror at the Nazi genocide, but
Wesley J. Smith among others warns of the similarities between
current thoughts on euthanasia and the intellectual foundations
of the German experience. One may ask whether the very silence of
American bioethicists testifies to a lingering, covert influence
of the eugenics movement.

Mandatory reporting of birth defects, for example, was
introduced in Germany in 1939. Almost all states now have a
similar requirement, according to Twila Brase of the Citizens
Council on Health Care.

End-of-life projects and organizations funded by the Robert
Wood Johnson Foundation (RWJF) use words such as “choice” rather
than “euthanasia.” When the Euthanasia Society of America changed
its name to the Society for the Right to Die, Choice in Dying,
and then Partnership for Caring (PFC), it did not change its
philosophy or agenda. It still honors its legacy of 1937, which
included calls for involuntary euthanasia such as the killing
of “born defectives.”

German euthanasia attitudes were “hate-filled, based to a
great degree on bigotry…and collectivist notions of the state
as a living organism,” while contemporary advocates tend to
emphasize compassion, scholarly dispassion, or concepts of
personal autonomy. “Yet when one cuts through the jargon, the
acts that are being advocated are the same as those advocated [by
Germans] more than seventy-five years ago” (Smith WJ, op. cit.).

News of the Day…in Perspective

Watch the AAPS home page, www.aapsonline.org, for frequent
postings of breaking news, with links to relevant information in
the AAPS archives. Recent items have covered the ongoing Medicare
debate; prosecutions of pain-management physicians; the abuse of
the PATRIOT Act; sham peer review; and the front-page Wall
Street Journal
article about the cash-based practices of
AAPS members Robert Berry, M.D., and H. Todd Coulter, M.D.

Banning Low-Cost Remedies

Proposed legislation S. 722, in the name of consumer
protection, would give the FDA the power to withdraw any dietary
supplement from the market, including vitamin C, on the basis of
a single anecdote about an adverse reaction. Prohibitively
expensive testing would then be required.

In a letter to senators, AAPS stated that the bill created a
double standard that could not be met by any product, and that
the FDA already has a monitoring system and tools to alert
consumers on safety issues.

“We are opposed to expanding the powers of the FDA, which
already delays patient access to life-saving drugs and devices
for many years. We are also opposed to FDA regulation of the
practice of medicine. Physicians need the ability to recommend
safe, natural products to patients who desire this option,”
stated AAPS (“testimony” at

HIPAA Updates

The impact of the Transaction Code Sets is still to be
determined. Empire Blue Cross Blue Shield said it had made a
“business decision” to accept or reject entire batches of claims.
Saratoga Hospital of Saratoga Springs, NY, had several batches of
837 claims rejected because of a single digit missing in a ZIP
code on a single claim (HIPAA Compliance Alert

The Office of Inspector General of HHS has provisions in its
2004 work plan to review compliance at managed care organizations
and university hospitals (ibid.).

From a 337-word guideline, the Privacy Rule has swelled to
101,000 words. Emergency crews reached a patient too late because
they thought they couldn’t mention his name and thus could not
get directions to his home (USA Today 10/17/03).

AAPS Calendar

Jan. 16, 2004. Board of Directors meeting, Orlando.

Jan. 17, 2004.
Practice management seminar, Orlando.

Oct. 13-16, 2004. 61st annual meeting, Portland,

Can the Legislature Protect Life?

Florida HB 35E, passed in record time as Terri Schindler
Schiavo was beginning to experience organ failure from
dehydration, gives the Governor the authority to issue a one-time
stay on the withholding of nutrition and hydration, under certain
circumstances. Michael Schiavo immediately filed for an
injunction, which was denied. Now pending is a constitutional
challenge to the law on the ground that it violates patient
privacy and the separation of powers.

Johnnie B. Byrd, Jr., Speaker of The Florida House of
Representatives, filed an amicus brief defending the constitu-

tionality of the statute. He argues that:

“The Legislature is vested with all legislative authority
except as it may be expressly limited in the state
constitution…. HB 35E adds protections to the lives of certain
incompetent residents…. The mere fact that interests
adjudicated under previous law may be affected is a natural,
expected consequence of every change in law….” He observed that
the Legislature did something very similar in 2001 in a law
providing for post-sentencing DNA testing.

Thus, “the fact that death has been decreed under prior law
is constitutes no bar to legislative action protective of life.”

Rep. Byrd noted that he could find no statute enacted to
protect the lives of incompetent persons that had been voided by
any court as violative of the right to privacy.

In an amicus brief in a prior unsuccessful action to
continue feeding, Gov. Jeb Bush noted the “critical distinction
between removing artificial life support and the deliberate
killing of a human by starvation and dehydration.” A patient’s
right to life is violated when the state, acting as her guardian,
“assumes that the wish to live without artificial sustenance is
the same as a wish not to be fed at all.” The guardianship court
had forbidden any therapy prior to the tube removal that could
enable Mrs. Schiavo to safely eat by mouth.

Legal documents are posted at www.terrisfight.org.

Hung Jury in Trial of Dr. Cecil Knox

After an 8-week trial, Cecil Knox, M.D., a pain specialist
in Roanoke, VA, was acquitted on about half of the 69 counts
against him. The jury was unable to reach a verdict on the other
counts. Federal prosecutor Rusty Fitzgerald intends to retry him
on the remaining charges, including two counts of distributing
narcotics outside the scope of legitimate medical practice, which
led to the death or serious injury of at least one person. His
office manager, Beverly Gale Boone, though acquitted of drug
charges, faces retrial for racketeering, health care fraud,
conspiracy, and mail fraud.

Defense attorney Tony Anderson stated that Dr. Knox may have
received $5,032.85 more than he should have from government
programs and insurance companies, an amount that suggests
procedural errors, rather than an organized attempt to defraud
(Kahn C, AP, 10/22/03).

Three of the patients testifying against Dr. Knox had been
convicted of crimes related to their admitted abuse of
prescription drugs, and all admitted they had lied to the doctor
(McCaffery J, Roanoke Times 9/25/03).

“Try, try, again”

High-profile federal prosecutions have ended in hung juries
in the past month, including the prosecutions of Dr. Cecil Knox
and the executive Frank Quattrone. Shouldn’t the Fifth Amendment
prevent retrial of these defendants? After all, it says: “nor
shall any person be subject for the same offence to be twice put
in jeopardy of life or limb.” But courts do allow retrial after a
hung jury, and even permit retrial after a conviction is reversed
on appeal. Retrials are sometimes also allowed after declaration
of a mistrial. At least one defendant is in federal prison now
after two successive hung juries followed by a third prosecution
for the same offense, which resulted in conviction.

Abortion/Breast Cancer Link Case Settled

On the eve of trial, Dr. Charles Benjamin and the Cherry
Hill Women’s Center in Cherry Hill, NJ, settled a case brought by
a Pennsylvania woman who complained that she had not been warned
of the emotional and physical risks of abortion. At the age of
17, she had been referred by a high school guidance counselor for
a second-trimester abortion without her parents’ knowledge. New
Jersey, unlike Pennsylvania, does not require parental consent.

The settlement includes the cost of monitoring for breast
cancer. It is the first in the United States to recognize a duty
to warn of a possibly enhanced risk of breast cancer; there have
been two such settlements in Australia (WND 10/23/03).

Absolute Immunity in Peer Review Breached

The Supreme Court of California recently ruled, in a 6:1
decision, that absolute immunity does not apply to the
credentialing process when someone knowingly bears false witness
(Hassan v. Mercy American River Hospital).

“Because false information of any sort has no value in
evaluating a medical practitioner, the communication of
information known to be false cannot be intended to help or
assist in that evaluation….,” ruled the Court.

Dr. Hassan won no damages because the Court found no
evidence of malice and thus no grounds for his claim to proceed.
However, the ruling puts a chink in the armor of Section 43.8 of
a California law granting absolute immunity in peer review. The
California Medical Association, which had filed an amicus brief
on the side of the hospital (Waite VS, J Am Phys Surg
2003;8:83-86), stated that the ruling “could lead to an increase
in lawsuits filed by aggrieved physicians, even if the
information provided is true” (AM News 10/13/03).

Tricare: Trap for the Unwary

Any patient with Tricare can walk into a doctor’s office,
pay the bill, and then forward it to Tricare, which can claim
that the physician overcharged. The physician can be forced to
reimburse the patient even if he has no contract with Tricare.

Tricare manuals do not explicitly address the question of
whether a physician can opt out of Medicare and still bill
Tricare. Thus it is presumably permitted. In the future, Tricare
may issue a “clarification,” affirming or denying this.

There are three types of Tricare providers. Authorized
providers include any licensed physician. A participating
provider is a CHAMPUS-authorized provider who has signed an
agreement or indicated “accept assignment” on a claims form. A
network provider has joined the network of a Tricare Prime
Managed Care Support Contractor (MCSC).



Insurers Advertise Doing “Nothing.” The Blue Bunglers
are running large ads in the Buffalo News with the pitch
that “We’re doing everything to make healthcare easier. Including
nothing.” In the ad, they spell out that “nothing” means
“absolutely no copay” for pediatric primary care visits (mostly
well-child visits), maternity inpatient stays (pregnancy isn’t an
illness), and generic oral contraceptives (attempts to prevent
inpatient maternity stays that would cost the insurer more).

In other words, they are taking huge premiums for very poor
value first-dollar coverage and offering to cover people who
aren’t sick without charge. It’s a little like a thief boasting
of his virtue and compassion because after taking your wallet, he
didn’t take your watch and jewelry as well. The ads are clearly
aimed at a dumbed-down public.

Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

Two Types of Medical Service. The first type is person-
centered care, which primarily involves information exchange.
This can be delivered small scale, even solo. If third-party
coverage is omitted, costs diminish so significantly that such
coverage is not required. In my view, third-party payment for
outpatient primary care diminishes the quality of service.

The second type involves a technological event or procedure
that requires institutional support. The cost is many times
greater, and insurance coverage is appropriate.

Lumping the two distinct types of care together is
economically wasteful and endangers quality.

M. Kelly Sutton, M.D., Keene, NH

Charity v. Entitlement. Hospitals were started by
philanthropists and originally were places for caring for the
poor: it was all charity. People felt good to give and
thankful to receive.

Political rhetoric now gives people an entitlement
mentality, and they are angry if they are poor, even if because
of their own poor choices. Charity care paid for by government to
prevent revolution is a sad state of affairs. Indeed, it is not
charity at all but an enticement to remain poor and dependent
upon the nanny state.

Alieta Eck, M.D., Somerset, NJ

What Is “Society”? It is said that “society has decided
that everyone should have medical care.” When? I never had a
chance to vote on it. Is “society” our elected or appointed
representatives who have the power to make and enforce laws? Is
it each person who resides in the U.S.? … And why should
society, however we define it, have supreme authority over
individuals? Who made society God?

Joseph Lee Pugh, Diamondhead, MS

We Are All Uninsured….for Something. This being the
universal condition, we need to make a decision about what we
would like to insure, and what should be left uninsured. Each of
us will decide differently, given our individual values, needs,
and resources.

Greg Scandlen, Frederick, MD

Why Medical Care Is Different. Medical expenses have
not been factored into the household budget for necessities like
rent, utilities, and food, which must be paid for before beer and
entertainment. With MSAs, this will have to change.

Frank Timmins, HealthBenefitsReform group

MSAs Are for the Common Folk. It’s just a matter of
doing the math. I’ve had a Medical Savings Account since 1997. I
have spent about $4,000 and have about $17,000 in the account.
Given this amount and my employer’s continued contributions, I
can never be out-of-pocket for a covered medical expense for the
rest of my life. Would this be more important to a poor person,
or to a wealthy person?

Art Jetter, CLU, Omaha, NE

Why a Grand Plan? What is it about a certain set of
health reform experts that makes them so blind to the obvious
fact that successful business arrangements adapt to the people
and circumstances that exist and then improve by incremental
adjustments? Instead they keep harping on a grand Plan and making
everybody adjust to it…. All will be well if the data systems
catch up, the culture is reset, and people are reeducated to a
different mindset. What are they, French or something?

Linda Gorman, Englewood, CO

Allow Interstate Commerce in Medical Insurance. Given
the obstacles placed in the way of affordable medical coverage,
it’s surprising that there aren’t more uninsured Americans. There
are more than 1,500 state mandates. In some states, mandates
account for 40% of insurance costs. In New York, a 30-year-old
man must pay $250 per month for medical insurance; in
Connecticut, the price is one-eighth as much.

The federal government should step in and allow out-of-state
medical insurance purchases. The internet provides a perfect
venue. Such an action would be entirely consistent with the
Commerce Clause in the Constitution.

This would be a reasonable first step in reestablishing
market choice. Thanks to a barrage of regulations, businesses and
individuals have limited and expensive options in most states. In
Vermont, there are just three carriers offering plans to small
businesses, and just two in the individual market. A Vermonter
has more choice in yogurt than in insurers.

David Gratzer, M.D., Toronto, Ontario

Legislative Alert

Medicare: The Final Battle?

By the time this goes to press, the Medicare conference
could be finalized. But don’t bet on it. October 17th has come
and gone, and the House Senate conferees, as of this writing, are
still slogging through the complex provisions of the House and
Senate bills, trying to meld two flawed pieces of legislation
into a coherent product. October 17 was the last announced
deadline for House and Senate conferees to finish their work.

Day in and day out the official lingo coming out of the
conference is that they are making “progress.” Well, as Bill
Clinton would say, “swear to God,” that’s true, but it depends on
how you define the word “progress.” For conservatives, the
“progress” is not all that attractive: Reportedly, the conferees
have dropped most of the health savings account language.

On October 29, the President said: “We’re applying a basic
principle: seniors should be able to choose the kind of coverage
that works best for them, instead of having the choice made by
the government. Every member of congress get to choose a health
coverage plan that makes he most sense to them [sic]. So
does every federal employee. If this kind of coverage is good
enough for the United States Congress, it’s good enough for
America’s seniors.”

Good sound bite, and a solid statement. But, to effect that
change means to change the financing structure of Medicare and
move toward a real premium support system, in which the taxpayers
contribute to the premium of the plan of the person’s
choice including a medical savings account. The Senate bill does
not do that; the House bill does, but not until 2010.

White House staff assertions to the contrary, for the most
part the President continues to address the Medicare conference
more as a cheerleader on the sidelines than a policy player. The
rhetoric is attractive, but still platitudinous. The current
White House line is predictable: the House-Senate conference is
making real “progress”; seniors need drugs and new choices and
new therapies; now is the time; we must support the process; and
the President wants a bill. The President has yet to line up
four-square behind the House conservatives and draw a line in the
sand, telling the Congress what he will and will not sign.

Meanwhile, the White House is keenly aware that the Medicare
bill is threatening seniors with unintended consequences. The
universal drug entitlement, as we have noted since the beginning
of this debate must must crowd out private coverage. It’s
inevitable. The Congressional Budget Office (CBO) says that more
than one-third of seniors with employer- provided coverage are
going to lose it. But the President said in his October 29 speech
that he talked to a senior executive from Caterpillar
Corporation, and that senior executive told him that corporations
have “no intention to dump retirees into a system they don’t want
to be dumped into.” Needless to say, a sound policy should not
depend on corporate “promises” or gimmicks to encourage employers
not to drop retiree drug benefits. The only option that has
surfaced thus far to accomplish that objective is another set of
federal subsidies.

Real Medicare Reform: A Victim of Political Crossfire?

Serious structural reform of the Medicare program for the
next generation seems to be treated as a secondary item.
Prescription drugs are the main agenda, and new money for doctors
and hospitals, particularly in rural areas, seems to be the next
major consideration. The creation of a system of competing
private options, financed through a premium support system, is
put off until 2010 under the House bill, one year before the baby
boomers retire, and phased in over a period of 5 years. And in
the House-Senate Conference, they are reportedly saving that
provision for consideration last.

The conference is subject to intense cross pressures. On the
one side, House conservatives, led by Rep. Paul Ryan (R-WI), have
said all along that they will not support a bill without real
structural reform, and that means a premium support mechanism as
embodied in Section 241 of the House bill. Ryan and his House
colleagues do not mean “demonstration” project or a “pilot
program” in selected areas of the country, carefully designed,
like the 1996 MSA experiment under the Kassebaum Kennedy bill,
to make sure it fails. In his July 9 letter to President Bush,
Ryan and 75 of his colleagues stated clearly: “Any Medicare
legislation that includes a prescription drug benefit must
contain comprehensive structural reforms that prepare Medicare
for the next generation. Without the reforms needed to save
Medicare, simply adding payments and benefits will accelerate the
entire system’s insolvency, which is currently estimated to occur
in 2013.” Ryan specifies, “To that end, we feel it is vitally
important the conference report include both Federal Employees
Health Benefit Plan model reform and tax preferred, portable
savings accounts to help younger generations prepare for future
health care costs in retirement as part of the final package.”

In tandem with Ryan, Rep. Pat Toomey (R-PA) and ten of his
colleagues reaffirmed their support for the key premium support
mechanism in another letter to House Speaker Dennis Hastert.
Toomey and his colleagues also said that their support for a bill
coming out of conference would be conditioned on the absence of
any system of price controls on drugs. Moreover, it would have to
include a generous health care savings account provision, and
provision to control the cost of the drug benefit, so that the
price tag does not exceed $400 billion over ten years. Hastert is
reportedly in favor of some sort of cost-containment provision.

On the other side, Senate Democrats are digging in and
threatening a filibuster. Senators Kennedy (D-MA), Daschle (D-
SD), Kent Conrad (D-ND), and, recently, Olympia Snowe (R-ME),
have all said that they will not tolerate any real competition
between Medicare and private plan options based premium supports.
Senator Conrad, according to the New York Times, said
that “The competition model doesn’t work in my part of the
country.” (Tacit premise: only socialism or monopolies can work
in North Dakota? In fact, there are 13 plans, including one HMO,
available to federal employees in North Dakota under the FEHBP
model). Senator Snowe refers to the premium support model an
“untested, and uncharted approach”: hard to explain since the
premium support system in FEHBP is 43 years old, older than
Medicare, Medicaid, and most of the employer-based managed care
arrangements that Washington health policy wonks have championed
for so long.

Conservatives fear that House conferees will cave, put some
cosmetic face on the terms of a surrender to Senate pressure, and
allow the Left to dodge a major threat to its future ambitions to
establish a single-payer, government-run “health insurance”
program for America. There is the other strong possibility that
House Ways and Means Chairman Bill Thomas (R-CA) will hold the
line on premium support.

The Battle in the Weeds

If the daily press accounts and leaks are correct, (and
there is indeed a big if in that assumption, because so
much has turned out to be inaccurate), the conference has become
an adventure in how to add a universal drug entitlement to
Medicare for the second time in Medicare’s history (the 1988
Medicare catastrophic mess was the first), limit the collateral
political damage inevitably incurred by the disruption of the
lives of millions of seniors who already have good private
coverage, and do extensive statutory and regulatory patch work on
the creaking 60s edifice known as Medicare “provider payment”
system the thing they used to call HCFA, which, despite the name
change is as ugly as it always has been.

The conference has also been an arena of poisonous partisan
combat, with Members desperately trying to meet arbitrary
deadlines, calibrate their short-term political advantage, or
position themselves for the inevitable blame game if the current
effort proves to be unsuccessful.

The bitterness of the process cannot be overstated. This
past week Rep. Charles Rangel (D-NY), ranking Ways and Means
Member, along with 13 Democrats, crashed a scheduled meeting
between Chairman Thomas and his Republican colleagues and a
select group of Senate Democrats, charging that Thomas has been
unfair in blocking Democratic conferees from participation in the
conference. Rangel and company are sure to make a big issue out
of the process, and tie it into their likely opposition to the
final product. When pressed by George Stephanopolous on ABC
on October 19, Thomas said that House and Senate staff,
on a bipartisan basis, have resolved more than one-third of the
issues in the House-Senate conference. He added: “At some point,
if you really want to resolve it, you have to have a coalition of
the willing or you will never, ever get the job done. You’ve been
in situations where people are simply fundamentally opposed to
what you’re doing, at some point having them in the room means
you’ll never, ever accomplish it.”

Chairman Thomas clearly has a big point: Rangel, Kennedy,
Conrad, and Daschle are fundamentally opposed to a competitive
system based on choice. But there is another fundamental point:
Policy failure could just as easily come with the enactment of a
profoundly flawed or unworkable program as with the failure to
enact any Medicare legislation at all.

So, House and Senate conferees are struggling in the weeds
among a wide array of complex and contentious issues, ranging
from payments to rural doctors and hospitals to the regulatory
regime that is to govern private plans. Senators Grassley (R-IA)
and Baucus (D-MT) want big additional payments to providers in
rural areas, adding costs of $25 to $28 billion over the next ten
years. The oncologists want their payments adjusted properly and
are bitterly complaining about any attempt to reduce them.
Officials of existing Medicare+Choice plans, one of the messier
regulatory concoctions of the Balanced Budget Act of 1997, are
desperate to secure higher funding to stabilize the program. This
would enable it to help serve as a transition to the newly
proposed Medicare Advantage system, and it appears that the
conferees are going to accommodate them.

The cost of the final product is likely to be considerably
greater than it was projected when House and Senate enacted these
Medicare bills last June, aggravating the unfunded liabilities of
the program. The conferees are debating among themselves a way to
cap the entitlement spending, but they have not yet agreed on
precisely how to do that. This is one of those items that will or
will not be “meaningful.” A paper dam against a flood of red ink
is not likely to hold, and the next generation of taxpayers will
be engulfed in a sea of debt, high taxes, or both. Given the
regulatory passion that traditionally grips Congressional authors
of Medicare legislation, it is still very possible that the
response to higher-than-expected costs will be expenditure caps,
price controls, or various other regulatory attempts to limit the
quality or quantity of medical services to senior citizens.

Unresolved Policy Problems

Beyond the issue of overall cost and the creation of a
genuinely competitive system in 2010, Medicare conferees are
trying to sort out enormous policy problems. There are four big
areas where these problems loom large:

Problem #1. The design of the drug benefit offered
through the medium of a drug-only insurance product.
design will be both unpopular and unworkable, as it is likely to
invite serious adverse selection.

Problem #2. The growing threat of patient
President Bush’s statements notwithstanding,
the CBO and independent analysts, including Clinton’s adviser Ken
Thorpe of Emory University, are convinced that the economic
incentives are pointing in only one direction: drop the retirees
and have the taxpayers pick up the tab.

Problem #3: Additional Clinton-style federal subsidies
to corporations to discourage them from patient dumping.

Curiously, conferees are even now pondering an additional $75 to
$80 billion in subsidies for employers to maintain their retiree
drug coverage over ten years, a costly scheme designed to undo
the damage of the entitlement structure they are proposing in the
first place. The easiest thing would be to drop the entitlement,
and target subsidies to poor seniors. Republicans whether they
realize it or not are actually resurrecting some key components
of the old Clinton Medicare drug policy, which ran into the same

Problem # 4: Getting the transitional competitive
system right
. Both House and Senate bills provide for
some expansion of competition in 2006, when the program would go
into effect. But it is hard to imagine how a genuinely
competitive system can develop under limitations such as the
rigid standardization of benefits and the imposition of
artificial service areas.

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

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