AAPS News – Jan 1995


1601 N.
Tucson Blvd. Suite 9
Tucson, AZ 85716-3450
Phone: (800) 635-1196
Hotline: (800) 419-4777
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 51, No. 1 January 1995


“Health-care reform” legislation enacted in Kentucky (HB
250) is not just a disaster for patients and physicians. It
raises the question of whether the Constitution of Kentucky is
still in force-or whether the machinery of representative
government has been usurped by privileged private interests.

The blueprint for the legislation is basically derived from
State Initiatives in Health Care Reform, a program in which the
Robert Wood Johnson Foundation (RWJF) has invested more than $90
million. The prime mover in Kentucky was Governor Brereton
Jones. According to a proposal to the RWJF, “the Governor
recognized that while voluntary efforts have their place, what
was required was a basic and comprehensive change in the way
health care is financed and delivered. His efforts in Kentucky
have been a laboratory for the proposals, debates, and
initiatives now ongoing at the national level.”

Kentucky had in place the necessary elements: a
“committed” executive branch, the right leadership in the
legislature, a state budget squeezed by medical costs, and
properly disposed statewide media.

RWJF was ready to help Kentucky develop and implement
reform, providing that certain guidelines were met. These
included central control under a government board and the
subcontracting of services such as the development of alliances,
risk adjustment methods, and standard health plans.

RWJF conducted a “site visit” in Kentucky in 1992. The
inspector was Joycelyn Elders, who was recently forced to resign
as Surgeon General (because of actions that vindicated AAPS
opposition to her appointment).

The Jones reform plan was actually referred to by the
Kentucky Health Policy Board as the “Robert Wood Johnson Reform
Initiative.” Like the Clinton Plan, it was drafted in secret,
in violation of the Kentucky Open Meetings Act. Jones himself
stated that the Clinton Plan was basically the same as the
proposal he had unveiled for his state in April, 1993. The Jones
plan was enacted as HB 250 early in 1994.

HB 250 assigns enormous powers to a Health Policy Board, to
collect health data, set rates, decide on certificate-of-need
applications, determine the conditions under which health
insurance may be offered, and control who delivers medical care
in Kentucky and under what terms. However, HB 250 provides no
appropriations to fund the Board. Rather, it provides that the
Health Policy Board and the Health Purchasing Alliance may accept
grants from private persons and entities to finance the
performance of their functions, although it is a Class A
misdemeanor to pay a state employee with private funds. The act
even allows that these new entities may delegate their functions
to “qualified, independent third parties.”

The salaries of Health Policy Board personnel are to be
funded partly from an RWJF grant. Salaries of personnel at state
universities are also being paid by RWJF in order to implement
the generalist physician initiative of HB 250.

On November 2, AAPS member Stuart Yeoman, M.D., along with
two other physicians and a patient, filed suit in Franklin County
(Yeoman v. Kentucky, Ky CirCt, No. 94-CI-01663). The
complaint alleges that HB 250 delegates broad, uncircumscribed
state power to a private, multi-billion dollar foundation in
Princeton, NJ, in violation of the Kentucky Constitution
(BNA’s Health Care Policy Report 12/5/94).

HB 250 is also stated to violate the Constitution because it
is omnibus legislation that is improperly and deceptively titled.
(The Kentucky Constitution requires bills to concern a single
subject that is mentioned in the title.)

Other unlawful and unconstitutional features are: the
collection of private medical records (the act specifically
states that the individual’s permission need not be obtained);
the nullification of all existing health insurance contracts in
the state; and the requirement that all participants in Medicaid
also serve, at Medicaid rates, non-Medicaid-eligible individuals
with incomes greater than 200 percent of the poverty level.

The Act gives the Board the power to recommend initiation of
disciplinary proceedings against providers before the Board of
Medical Licensure. It prescribes delicensure as the penalty for
failure to use or accept the standardized uniform health claim

The Act includes a tax on the gross revenues of providers,
but by federal law the proceeds can only be used to fund
Medicaid, not the remainder of the program. The lawsuit
challenges the constitutionality of the tax because it singles
out a single class of citizens to support a program that
supposedly benefits the Commonwealth at large.

The lawsuit seeks to bar implementation of HB 250 and the
use of any advice obtained during closed meetings, and to require
the return of all revenues collected via the provider tax.

[Dr. Yeoman was previously a party to litigation that
challenged the provider tax (Smith v. Kentucky Revenue
). The Franklin Circuit Court declared the tax to be
unconstitutional (see AAPS News, Jan 1994). However, the
Kentucky Supreme Court reversed the decisions, after three Judges
recused themselves and Governor Jones appointed replacements.
The Supreme Court of the United States denied writ of

The implications of Yeoman v. Kentucky are
extremely broad. The process for enactment of the legislation,
as well as the structure of the program, bears a striking
resemblance to reforms in Washington, Arkansas, Florida, and
Minnesota (see p. 2). The interlocking special interest groups
who seek power and privilege both at state and national level
should be subjected to intense scrutiny.

Pennsylvania Doctors Promote MSAs

A group of physicians headed by AAPS member Robert Urban,
MD, of Monongahela, PA, has undertaken an aggressive campaign to
educate patients and physicians about the advantages of medical
savings accounts. The Society for the Education of Physicians
and Patients (S.E.P.P.) is on the air with 60-second radio spots.
These require no expense because they are public service
announcements. The group also offers a speakers bureau, bumper
stickers, and a packet of materials that includes the following:
a 20-page summary of Patient Power by John Goodman and
Gerald Musgrave; Phil Gramm’s June 16, 1994, article in The
New England Journal of Medicine
, the October, 1993,
Reader’s Digest article entitled “Here’s Health Care
Reform That Works,” and a current, complete listing of

S.E.P.P. is also running newspaper ads and has purchased a
number of billboards. Although billboards are expensive, some
companies will grant public service rates, which can bring the
price for one lighted 28 x 10 ft board down from $1000 to $150.
S.E.P.P.’s goal is to place 20 boards on the major highways
around Pittsburgh.

Since the Dallas M.A.C.E. conference in June, 1993, S.E.P.P.
members have sponsored monthly legislative meetings locally for
between 25 and 125 attendees. Participants have included Arlen
Specter, Rick Santorum, Barbara Hafer (Pennsylvania Auditor
General), and a number of state legislators and legislative

If you’d like to make a contribution to S.E.P.P., or to
obtain a copy of the radio script and other ideas, call Dr. Urban
at (412)929-5711.

Louisiana Fights Managed Care in Medicaid

The Louisiana Department of Health and Hospitals (DHH) has
applied for a Section 1115 waiver from Medicaid regulations to
replace the fee-for-service Medicaid program with managed care.
The Louisiana State Medical Society “does not plan to simply
jump on board,” stated President-Elect Jay M. Shames, MD. In
November, the House of Delegates passed a resolution calling for
the privatization of Medicaid. The LSMS plans to present its own
proposal, which would offer beneficiaries a range of options,
including medical savings accounts (BNA’s Health Care Policy

Speaking strongly against the proposal is a citizens group
called the Acadiana Coalition Against Government-Rationed Health
Care, under the leadership of Mrs. Sandra Hindelang (318-264-1144
or 318-984-6171) and Ross Little, Jr. “The DHH report speaks
favorably of the recently defeated health-care plans in Congress,
and calls their plan a first step.”

Opponents compare the DHH program to TennCare, which was
developed with the aid of the same consultants. Like the Clinton
Plan, it “was hatched by a few insiders, primarily bureaucrats,
with no input from the general public.” The predicted results:
rationing of care, skyrocketing costs, bureaucratic
micromanagement, and the worsening of medical care for the poor.

Alternative plans include those recommended by the American
Legislative Exchange Council (ALEC); Project H.E.A.L. Montana
(406-761-3181), headed by AAPS member Paul Gorsuch, Jr., M.D.; or
Americans for Free Choice in Medicine (714-645-2622), led by AAPS
member Arthur Astorino, Jr., M.D.

TennCare Rations Care

Like revolutionary plans in other states, the basic outlines
of TennCare apparently came from the “White House Junta,” with
local variations developed by career politicians and Blue Cross
bureaucrats, according to Robert Dotson, M.D., speaking at the
AAPS 51st annual meeting. A state committee established to
recommend solutions to Medicaid cost problems held a single
meeting to elect a chairperson, then was presented with a
completed plan. “TennCare was a done deal from the word `go’,”
Dr. Dotson said. It was implemented by executive order of the
governor, only later receiving the legislature’s stamp of

While cutting physician’s fees to about 30 percent of the
relative value scale rates, TennCare expects physicians to bear
total financial risk. Anticipating resistance, Blue Cross
unilaterally changed the contracts of physicians in their PPO for
state employees, requiring TennCare participation (the “cram-
down provision”). Physicians resigned from the PPO in droves,
but many returned due to pressure from their hospitals, which
feared “loss of market share.”

The latest problem is a restrictive formulary. More than 93
percent of TennCare physicians say their ability to practice
effective medicine has been limited (BNA’s Medicare

Inside the Minnesota Medicine Cabinet

The Blitzkrieg tactics that were meant to achieve a
restructuring of American medicine in 100 days, though thwarted
in Washington, D.C., succeeded brilliantly in Minnesota. Less
than six weeks after Governor Carlson held a news conference
announcing consensus on Minnesota Care, this sweeping legislation
had been passed and signed into law.

The “reform” was drafted in secret by an Interagency Work
Group of the MN Dept of Health. It endows the Commissioner of
Health with broad rulemaking authority, so that regulations can
be established without public knowledge or input. The plan was
conceived in 1992, when the Robert Wood Johnson Foundation (RWJF)
made a “Phase I Development Grant” of $891,591 for “State
Initiatives in Health Care Financing Reform.” This small gift
was a Trojan horse that requested assistance from the Rand
Corporation, the Alpha Center, and the National Governors
Association, all funded by RWJF. They provided technical
assistance to develop regulations needed by managed care. Later,
the Dept. of Health contracted with Mathematica, Inc., another
RWJF-funded entity, to develop the “Regulated All Payor Option

Preliminary work had been done by various groups such as
Minnesotans for Affordable Health Care, many of whose members
also served on Hillary Clinton’s Task Force, notably Lois Quam of
United Healthcare Corporation and a number of academics from the
University of Minnesota.

MN-Care has made good on none of its promises. It has
created a virtual monopoly for HMOs, imposed heavy reporting
requirements on physicians, and will run a deficit of nearly $1
billion by 1997, according to David Hartsuch, who spoke at the
AAPS 51st annual meeting. Mr. Hartsuch, a C.P.A. and medical
student, has done an extensive analysis of MN-care and the
process by which it became law.

[Audiotapes of talks on state reform by Robert Dotson,
M.D., David Hartsuch, Wayne Dewberry, M.D., and Victor Duvall,
M.D., are available from AAPS, 800-635-1196.]

Legal Briefs

Judge Condemns White House Misconduct;

Will Impose Sanctions in Task Force Lawsuit

Judge Royce Lamberth of the U.S. District Court for the
District of Columbia is giving the White House “one last
opportunity to make the case [AAPS v. Clinton] moot.”

When releasing a large number of Health Care Task Force
documents to the National Archives in September, the White House
removed many documents, including most of those prepared after
May 31, 1993, when the Interdepartmental Working Group was
allegedly disbanded. After reviewing 13 boxes of documents
in camera, the Judge concluded that documents were
inappropriately withheld.

Before granting the White House motion to dismiss the case
on grounds of mootness, the Judge said that the court would
assure that defendants actually carried out what they represented
their intention to be: “making public all interdepartmental
working group documents as though the group were subject to FACA
[the Federal Advisory Committee Act].” In a ruling filed Dec.
1, the White House has been ordered to produce 250 floppy disks
along with additional documents. For any documents still
withheld, the Judge will require an adequate index and
explanation, so that he may determine which must be released.

As of Dec. 9, no new boxes had been delivered, according to
AAPS researchers, who work daily at the Archives. U.S. attorney
Thomas Millet assured AAPS that everything would be available by
December 16, when another conference with the Judge is scheduled.

“The court understands plaintiffs’ frustration with the
defendants’ misconduct during the course of this litigation, and
the court intends to impose sanctions,” Judge Lamberth wrote.

There are two separate issues that could lead to sanctions:
the defendants’ egregious evasiveness and stonewalling during the
course of the litigation, and the March 3, 1993, sworn affidavit
by Ira Magaziner. Relying on Magaziner’s assertion that only
government employees were part of the IWG, the court did not
enjoin the IWG from holding secret meetings early in 1993. (U.S.
attorneys have not attempted to show that Magaziner’s statement
was accurate; they have simply asserted that it wasn’t a
deliberate lie at the time that it was made.)

The court declined to allow AAPS access to the financial
records of the IWG, stating that FACA does not create a right of
public access to such information. However, “Congress is
perfectly capable of obtaining from defendants whatever financial
information it desires,” the Judge stated.

Several congressional offices are interested in pursuing
investigations of the Task Force when the new Congress convenes
in January.

“If Congress investigates, this will make Whitewater look
like a traffic violation,” said Thomas Spencer, an attorney
representing AAPS.

AAPS researchers have nearly finished reviewing all the
material thus far released. Over the next few months, efforts
will be focused on organizing a jumble of information into a
format accessible to interested investigators.

“There is a wealth of material concerning conflicts of
interest, as well as the far-reaching, dangerous implications of
some reform proposals, even those that sound quite positive or
innocuous,” stated AAPS Executive Director Jane Orient. “These
ideas are not moot; they will resurface next year.”

A Pattern of Illegal Activity

The Clinton Administration has been taken to court on yet
another violation of open-meetings laws. The Miccosukee Tribe of
Indians of Florida is asking for an injunction against Bruce
Babbitt, U.S. Secretary of the Interior.

As stated in a memorandum filed Nov. 2 in the U.S. District
Court for the Southern District of Florida (Miami), case number

At stake in this case are the lives, culture, and
subsistence of the Miccosukee tribal members in their
homeland, the Florida Everglades….Defendants have
denied the Tribal government access to their advisory
committee activities on Everglades restoration and
continue to conduct their business behind closed doors
in violation of the Federal Advisory Committee

HMO Sues to Suppress Publication of “D” Financial

Health Net of California has filed a lawsuit against Weiss
Research, accusing them of “fraud and malice” for warning
readers about their weak financial condition. Weiss reports that
they have far more debt and far less capital than any other
company their size. “This HMO is so highly leveraged that a 3.7
percent increase in claims as a percent of premiums could wipe
them out” (Martin Weiss’ Safe Money Report, 11/7/94).

An $89 million judgment was recently handed down against
Health Net for refusing a bone marrow transplant to a young
mother of three.

Weiss intends to continue publishing its ratings. Their
readers need the information, in their view, because if an HMO or
insurer is short of capital, it may be more likely to cut back on
the services that it provides.

Physician-Assisted Suicide Initiative Challenged

In the November election, Oregon voters narrowly passed an
initiative to legally authorize physician-assisted suicide-the
first such measure ever passed in the entire world. A lawsuit
filed Nov. 23 in federal district court seeks to block its
implementation (Lee v. Harcleroad, DC Ore, No. 94-6467-
TC). An injunction has been handed down, pending a decision on
the merits.

The plaintiffs allege that Measure 16 violates the Civil
Rights Act, the Religious Freedom Restoration Act of 1983, the
Americans with Disabilities Act, and the First and Fourteenth
Amendments to the U.S. Constitution. Financial assistance has
been offered by the Oregon Right to Life and the National Right
to Life (BNA’s Health Care Policy Report 12/5/94).

The only method sanctioned by Measure 16 is death by
prescription of a legal drug. An unintended consequence is that
terminally ill patients may have more difficulty obtaining pain
relief, due to new bureaucratic procedures designed to serve as
“safeguards.” Physicians may decide to write prescriptions for
potentially lethal drugs only in the burdensome manner
dictated by Measure 16, in order to avail themselves of immunity
provisions if patients die in a manner that could be attributed
to the drugs rather than their disease. There is also an
interesting irony: physicians may prescribe drugs intended to
cause death, but are still forbidden to prescribe less
dangerous drugs that might prevent suicide, such as
heroin, marijuana, and LSD (NEngl J Med 1994;331:1240-

Members’ Page

A Non-Nonparticipating Physician. HR 5252 is
interesting if you quote it correctly. The law applies to
“nonparticipating physicians.” What is a “nonparticipating
physician”? Dr. Copeland and I are not nonparticipating
physicians when we contract with patients completely outside the
Medicare system….We are nonexistent as far as HR 5252 is
concerned unless there are other clauses in the law that include

What is a physician who has been expelled from the system,
nonparticipating or nonexistent? But clearly this is a problem
for further study by AAPS and counsel.

John H. DeTar, M.D., Reno, NV

Season’s Greetings from Medicare. [Letter to Mr.
Preston Lowen, HCFA Representative in Syracuse, NY]

Please extend my sincere thanks to HCFA and to Upstate
Medicare for the Announcement of Changes to the Limiting Charges.
It’s been almost 24 hours since I last received any harassment or
threats from HCFA/Medicare, and I was beginning to feel a bit

I was especially elated to read that the “sanctions”
referred to in your “greetings” have now been codified into law
under section 1842(j)(2) of the Act….Civil monetary penalties
up to $2000 for each instance certainly cause me to want to see
as many Medicare patients as I can so that I can experience the
thrill of taking the risk of bankruptcy for typographical errors.
I must confess though that the possible “exclusion from the
Medicare program for up to 5 years” is becoming more and more
appealing. I really enjoy providing medical care at the rate of
50 cents on the dollar, but if there was some way that we could
achieve “exclusion from the Medicare program” without incurring
the $2000 fine, I’m thinking that I might actually be able to
make a living.

At the risk of being “politically incorrect” and inquiring
about individual rights,…did you forget to inform physicians
that patients and physicians are free to contract privately if no
Medicare benefits are claimed? [Stewart v. Sullivan]

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

Laboratory Tests Rationed. [Letter to David Chellappa,
Community Mutual Insurance Company (CMIC)]

I have received the new CMIC laboratory policy,…[which] states that a stat turn-around time of four hours will be
allowed. This is unacceptable. It is hard to understand how an
insurance company can tell a physician that he cannot send a
patient to the hospital for a laboratory test. I practice in a
rural area and due to CLIA, I can no longer afford to do
laboratory testing in my office. If I have a patient with an
urgent problem and need a blood test, I send the patient to our
nearby hospital. To say that I have to send the blood test to an
outside reference laboratory and wait four hours for the result
is asking me to commit medical malpractice….The policy also
states that physicians will be monitored for possible expulsion.
So you are asking me to commit malpractice and if I refuse to do
so you are threatening to drop me as a “provider.” If this is
not changed, I refuse to participate.

Joseph M. Kuhn, D.O., Payne, OH

[The Ohio Osteopathic Association and the Ohio State Medical
Association also protested these policies. As a result, CMIC
approved a list of stat tests that can be ordered at most
hospitals, along with a list of office tests (though Dr. Kuhn
calls the reimbursement “a joke”). Dr. Kuhn believes
physicians scored a victory, though he looks for restrictions on
the number of tests that can be ordered.]

More on Fee-Splitting. The letter by Dr. Carl Webber
in the December issue (“Is Managed Care Illegal?”) is right on
target. It usually is illegal for more reasons than Dr. Webber
cites and it is certainly unethical, because it is “fee

Most physicians aren’t aware that there was a huge scandal
in Europe and North America in the early part of this century
over the issue of fee splitting. This is a practice in which a
general physician refers a patient to a specialist and in return
receives a kickback of part of the specialist’s fee.

In place of specialist, put “all physicians” and
in place of general physician, put “referring managed-
care organization.” The corruption is identical. If you
receive a patient because you have discounted (kicked back) part
of your fee to the referring agency, you are engaged in fee
splitting, pure and simple. If you refer a patient to another
physician within the cartel because you are required to do so
under the terms of your contract, you are again engaged in fee
splitting, because the underlying assumption is that your
referral pattern will result in a financial gain to
yourself….If all physicians upheld the law and their oath not
to engage in fee splitting, managed care would disappear
overnight. Why don’t we do it? Could we at least form an
organization of physicians sworn to uphold the law by not
engaging in managed-care fee splitting? Could the FTC prosecute
us for upholding the law?

Once again, the fault is “not in the stars but in
ourselves.” Without our own moral and ethical failure, we would
not be in the managed-care mess.

George F. Wittkopp, M.D., Beaverton, OR

AAPS Calendar

Jan. 21. Board of Directors meeting, Dallas

May 6. Regional meeting, Boise, ID

Legislative Alert


Awestruck, Dazed. Shocked. Stunned. The casualty lists:
Foley of Washington State, Rosty of Chicago, Jack Brooks of
Texas, Sasser of Tennessee.

Congressman Newt Gingrich of Georgia is to be Speaker of the
House. Congressman Dick Armey of Texas is to be House Majority
Leader. Capitol Hill watchers expect Congressman Tom DeLay of
Texas to capture the job of Majority Whip. This amounts to a
Reaganite control of the House of Representatives. There are more
Reaganites in Congress now than when Ronald Reagan himself was
President of the United States, struggling against often hostile
majorities in Congress.

DeLay will move Heaven and Hell to make sure that the new
Congressional majority delivers on the Republican “Contract with
America”-a package of promises ranging from a balanced budget
amendment, term limits and middle-class tax cuts-as its first
order of business; no surprise there. He is also calling for a
united front, borrowing a leaf from liberal political

Although Congressional Republicans campaigned on the
“Contract,” most Americans are not deeply familiar with it.
Remarkably, the Washington press corps has focused on it,
strengthening the new Congressional agenda for January, no doubt

One fly in the political ointment has been the voluntary
school prayer initiative. Some are saying the issue is likely to
push the new Congress off course, like Clinton’s “gays in the
Marine Corps” problem in the beginning of his term. One
difference is that between 75 and 80 percent of the electorate,
according to the polls, supports the concept of voluntary prayer
in schools. The same can’t be said about gays in the military.

As for the new Democratic minority, the liberals have
consolidated their power, beating back conservative and moderate
challengers. Dick Gephardt, author of the House version of the
Clinton Plan, defeated the moderate Charlie Rose of North
Carolina for the post of Minority Leader, and David Bonior of
Michigan prevailed over conservative Charles Stenholm of Texas to
become House Minority Whip. The shift to the left will leave the
conservative Democrats with even less influence than they
previously enjoyed. Then, there is always the possibility that
conservative or moderate House Democrats might join Alabama
Senator Richard Shelby and switch to the Republican side of the
aisle. Shelby told the national press corps that there is no room
anymore in the Democratic Congressional ranks for a conservative.
With Tom Daschle of South Dakota replacing George Mitchell as the
leader of the Senate Democrats, Shelby’s assessment is directly
reinforced. Up to 10 to 12 Southern House Democrats could bolt in
the next few weeks. Watch Congressman Billy Tauzin, Louisiana
Democrat and a solid conservative.

So, what is the deeper political meaning? One fact stands
out brightly. The South has seceded a second time; this time from
the Democrats. The Southerners-Gingrich, Armey, Lott, Gramm,
Thurmond, et al.-have taken Capitol Hill, and liberal
Yankees are in full, disorganized retreat.

Senator Robert Dole will become Majority Leader, replacing
the retiring George Mitchell of Maine, the original cosponsor of
the Clinton Health Plan and a sponsor of a similar version.
Senator Trent Lott, the fiery conservative from Mississippi, and
ally of Senator Phil Gramm of Texas, has edged out Senator Alan
Simpson of Wyoming for the post of Senate Majority Whip. Lott,
Gramm, and their Senatorial allies want to have the Senate make
transition plans as quickly and as aggressively as their fellow
revolutionaries in the House of Representatives.

Nancy Kassebaum of Kansas, a moderate Republican will head
the Senate Committee on Labor and Human Resources, and Senator
Robert Packwood of Oregon will head up the Senate Finance
Committee. In the closing months of the health-care debate,
Packwood started to show his conservative Senate colleagues that
he had gotten religion on the matter of markets and tax code
changes; he endorsed medical savings accounts.

Speaking of Rebels, Senator Strom Thurmond of South
Carolina, as senior Senator, will assume the post of President
Pro Tem of the Senate. At a recent meeting of the Senate
Republicans, Thurmond let everybody know that, his age
notwithstanding, he has been torched by the revolutionary fire.
When the subject of terms limits came up, some moderate
Republicans hesitated about embracing the idea. Thurmond told
them that he had been in the Senate for 40 years, but if the
American people want term limits, then he would be only too happy
to go. And so should everybody else.

The power shift has enormous consequences for health policy.
In the House, Dingell is now reduced to a ranking minority member
on the Committee on Energy and Commerce, to be presided over by
Congressman Tom Bliley, a staunch conservative and a Virginia
Republican. As Bill Archer of Texas assumes the Chairmanship of
Ways and Means, Congressman Pete Stark of California will likely
be reduced to a noisy footnote to Committee deliberations.

Even more importantly, look for a conservative academic to
take over the direction of the powerful Congressional Budget
Office, now headed up by Robert Reischauer. Reischauer played an
enormous role in the national health policy debate, dispensing
bad news to just about everybody, including the Clintons, on the
cost of their health-care proposals. Candidates for the job
include Jim Miller of the Citizens for a Sound Economy, former
Director of the Office of Management and Budget (OMB) under
Ronald Reagan, and John Cogan of the Hoover Institution. Cogan
served as a labor economist advising Republicans on the so-called
Pepper Commission chaired by Senator Jay Rockefeller, where he
counseled strongly against employer mandates.

The issue of CBO director is not merely a matter of
personnel, but also of policy. Conservatives on Capitol Hill
generally admire the way the Reischauer did his job, but they
have always felt that the CBO method of scoring tax and budget
changes was archaic; it was a static rather than a dynamic
analysis. For example, CBO could always show “savings” from
price controls, but could never even approximate the effect of
market efficiencies. It modelled various Congressional proposals
as if tax-and-budget changes had no effect on economic behavior.


The journalists covering the election could not absorb
it, and many still can’t. Post-election surveys are showing bad
news for the White House. Stan Greenberg, the President’s
pollster, says that the Clinton Health Plan was seen as a big
government project that the voters didn’t want; Chris Matthews of
the San Francisco Chronicle, former Speaker Tip
O’Neill’s top staffer, said the same thing. The President’s
response: opponents “mischaracterized” his health plan as a big
government program.

Surveys show that, with the exception of black voters, most
Americans have shifted to the right. Talk radio programs are
partially responsible for increases in voter turn-out. But there
is a word of caution in the surveys. First, while this is an
anti-liberal vote, an anti-Washington vote, it is not an anti-
incumbent vote. Not one Republican incumbent lost re-election.
But even so, it is not necessarily a pro-Republican vote; it is a
replacement vote. The message: the other guys had forty years in
power; now it’s your turn. Do something.

This election also represents a radically different approach
to the way Washington does business, including the way in which
Washington has preempted state and local government authority.

Both Republicans and Democrats in Congress ought to be aware
of another major fact: most voters now refuse to identify with
either political party. According to Frank Luntz, the Republican
pollster, few voters under the age of 48 identify with either
political party and hardly any voters under the age of 32 do.
This is a sour electorate looking for concrete results. Congress
had better deliver.

The 1994 Election and Medicine

In California, Proposition 186, a proposal to establish
single-payer, Canadian-style medicine on the state level, failed
by a huge margin: 25 to 75 percent. This will temporarily take
the wind out of the sails of the socialized medicine camp. But
they’ll be back in states more liberal than California. In
Oregon, doctor-assisted suicide squeaked by 51 percent to 49
percent. Hippocrates, call your office.

At the Congressional level, the health-care issue played
against the Administration. Nobody is reporting a win because of
being a stalwart champion of the Clinton health plan. Hardly
anyone benefited from taking a stand on medical issues-certainly
not “Managed Competition” Jim Cooper of Tennessee, who left the
House and lost his Senate race. The possible exception is Phil
Gramm of Texas, who touts his role in helping to bring down the
Clinton Plan in the Senate.

Hard survey data show that the American people want careful,
constructive decisions made in Washington on the health-care
issue, but that the states should take the lead in reforming the
system. A November 8, 1994, survey of 1,200 voters conducted by
the Kaiser Family Foundation and the Harvard University School of
Public Health shows that among the most important issues in
deciding a vote for a member of the House, health care registered
33 percent, while crime came in at 29 percent and taxes at a
surprising 23 percent. As the top priorities for next year, 40
percent said health care, 31 percent said crime and 17 percent
said taxes.

When asked who should take the lead in developing a health-
care reform plan in 1995, 56 percent said Members of Congress,
and 18 percent said President Clinton. Clinton has lost any
popular claim to leadership on the issue. (And Hillary’s
negatives range between 38 and 40 percent.) When asked what kind
of legislation Congress should enact, only 25 percent said a
major reform bill, while 41 percent favored modest changes. Only
25 percent said that Congress should leave the system alone.

Changing of the Guard

The Heritage Foundation, Washington’s largest
conservative think tank, is holding seminars for new Members of
Congress, rather than Harvard University’s John F. Kennedy School
of Government, which quit the field in the competition with
Heritage. For Harvard University, which has been conducting its
Congressional Freshman Orientation Program for 22 years, this is
a shock, to put it mildly.

More shocking is the career change of men and women who have
made up the muscle tissue of the Washington establishment for
decades. No, not Members of Congress. Yes, Congressional staff.
Thousands of senior Congressional staff, in various states of
denial and disbelief, are getting ready to go out on the street.
For a good many senior liberal Democratic staff, including a
number who served on Hillary’s Task Force, it’s really over. All
over. And they are not hiring over at AARP or Families USA

Consumer-Based Reform: On The Way

It will not happen until the fall of 1995, at the earliest,
but the new Members of Congress are considering a series of
options for market-based reform. Ideas in circulation focus on
empowering individuals and families to make the key decisions and
on changing the tax code. Here are some of the major principles
under consideration:

1. Every American worker has the right to know exactly what
his employer is spending on his behalf for medical insurance and
precisely how that reduces his wages or other compensation.

2. All Americans have the right to own their health
insurance policy and to choose the kind of health benefits,
medical treatments, and procedures that they desire and are
willing to pay for.

3. Every American should receive equitable tax relief for
obtaining medical services, regardless of employment status.
Mechanisms include tax-sheltered Medical Savings Accounts and
allowing current Flexible Spending Accounts to roll over. The
tax favoritism now accorded to employer-provided “insurance”
(or prepayment) should be abolished.

4. Every physician has the right to exercise his best
medical judgment in caring for patients, regardless of practice
guidelines issued by government agencies.

5. Every doctor has the right to practice free of
unnecessary and counterproductive red tape. Any reform should
include comprehensive deregulation of private medical practice,
including the abolition of OSHA rules applying to private
medicine and specifically the repeal of CLIA regulations.

6. Americans should be protected against government-
sponsored cost shifting into the private sector. Reform of the
Medicare program should include the abolition of the DRG and
RBRVS system of administrative pricing and the elimination of
restrictions on balance billing.

7. Americans should have the right to take their private
insurance into retirement, instead of being forced to enroll in
the Medicare program. (Vouchers might be used to provide their
equitable share of benefits for which they have prepaid.)

8. Americans should be progressively liberated from costly,
nonproductive regulations at the state as well as the federal
level. No change in the ERISA should be made that does not
further state deregulation of the already overregulated health
insurance market.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.