AAPS News – July 2005

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Association
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto

Volume 61, No. 7 July 2005

FUTILITARIANISM

In the Netherlands, the ethical debate about withholding
treatment is being turned upside down. Instead of asking whether
it is acceptable to stop treatment, the Royal Dutch
Medical Association and the Health Council ask whether it is
justified to continue. “Artificial nutrition and
hydration” constitute “medically futile treatment,” these
authorities conclude, in conditions such as the persistent
vegetative state.

In 1990, Ineke Stinissen, who had been in a PVS since 1974
as a result of a medical error during an emergency Caesarian
section, was dehydrated to death. A prolife Christian group filed
a legal action arguing that no one could judge the quality of
life of an incompetent patient, and questioning the peculiar
determination of the nursing home that treatment had suddenly
become futile, after 15 years. The court rejected the group’s
argument for lack of standing.

“The questions echo today, in the wake of the recent case of
Terri Schiavo,” writes Inez de Beaufort of Erasmus University in
Rotterdam (N Engl J Med 2005;352:2373-2375).

The Netherlands leads the way in the routine killing of the
ailing aged and disabled newborns, even without consent of loved
ones or parents, but Britain is not far behind. Faced with the
costs of caring for an aging population, the Labour government
championed the Mental Incapacity Bill: food and water are now
considered to be medication (PRI Weekly Briefing 5/27/05) and
not just for patients in a PVS.

In what Wesley Smith calls “the most important bioethics
litigation in the world today,” 45-year-old Leslie Burke is suing
for the right to receive food and water via a feeding tube if his
neurologic disease renders him unable to swallow. He won in the
trial court, but the government appealed. The head of bioethics
at the Dept of Health explained the position of the National
Institute for Health and Clinical Excellence (NICE):

An assessment is made of the cost of treatment per
additional year of life which it brings, and per
quality adjusted life year (QALY)…. [This] is then
used as the basis for a recommendation as to whether or
not…the treatment should be provided in the NHS…
The Secretary of State believes that…clinicians
should be able to follow NICE guidelines without being
obliged to accede to patients’ demands…. If that
principle were undermined, there would be considerable
risk of inefficient use of NHS resources.

A prominent British physician told Smith: “Burke is only
thinking of himself rather than looking at the bigger picture.”

As some U.S. Supreme Court justices increasingly cite
foreign law in making their decisions, Smith warns: “How Leslie
Burke fares may determine whether futile care theory is allowed
to metamorphose from ad hoc health care rationing into an
explicit and expanding duty to die (Smith WJ, The English
Patient, Weekly Standard 5/30/05).

Practice has been forging ahead of the law, both in the
United States and abroad. Many physicians were astounded at the
attention given to the Schiavo case because they know that
thousands of patients are hastened to their death every year,
without the litigation, writes Ron Panzer of the Hospice Patients
Alliance. They “are offended should anyone raise even the
slightest objection to their now mainstream practices.”

After establishing the right of “health care providers” to
discontinue tube feedings in the case of Estelle Browning,
Michael Schiavo’s attorney George Felos declared: “Like the
winter’s frozen river giving way to spring, I felt the last ice
jam, the final obstruction, being swept away.” The legislature
revised the living-will statutes in accordance with the Florida
Supreme Court decision. Felos rejoiced that his work proved the
bane of his newly developed right-to-die legal specialty, but he
occasionally still gets a case, like Schiavo’s, that “stretches
the envelope” (Felos G, Litigation as Spiritual
Practice
).

The envelope may next be expanded from the PVS to the
“minimally conscious state” and, disability rights advocates
fear, to certain severely impaired patients reclassified as being
in the MCS (Bernat JL, Neurology 2002;58:337-338).

Independent physicians who practice outside the established
“guidelines” threaten such progress, especially by raising
questions about the definition of “irreversible” or “reasonable
chance of recovery.” After Pakistan-born rehabilitation
specialist Jamil Ahmed spent 2 years trying out cocktails of
drugs that were “not specifically indicated,” Buffalo firefighter
Donald Herbert emerged from a 10-year state of unresponsiveness
(Buffalo News 5/24/05). Patients apparently as severely
impaired as Terri Schiavo have occasionally had a remarkable
recovery with hyperbaric oxygenation, or have at least improved
sufficiently to permit feeding without a tube (Neubauer RA et
al., J Am Phys Surg 2005;10:58-59).

A medical system truly dedicated to allocating services on
the basis of “need, not ability to pay” might be expected to give
priority to the most vulnerable patients of all. But the real
ethic for collectivized systems is utilitarianism: the greatest
good for the greatest number, as determined by a central
authority. Worthiness, or ability to serve a state purpose say
as a constituent for a desired program is the criterion.

If revenues plateau or decrease, while promised federal
spending balloons to reach or exceed 50% of GDP, as projected by
Congressional Budget Office Director Douglas Holtz-Eakin in May
19 testimony, should anyone be allowed to expend scarce
resources public or private for “futile” care?

“The fact that a relatively small number of patients account
for a large share of medical expenditures suggests another
possible cost-reduction strategy,” writes the CBO.

But futilitarian bioethicists already go far beyond the
CBO’s suggestion of better preventive care.


How Much Awareness?

“PVS is not death hidden by machinery,” writes Paul McHugh,
Professor of Psychiatry at Johns Hopkins University. “It is life
under altered neurological circumstances.”

In the late 1950s, Dr. McHugh was a neurology resident
caring for a patient who was, after a botched brain operation, in
a state similar to that of Terri Schiavo. The nurses who fed him
with cup and spoon, and some relatives who visited, believed he
had some awareness. Their testimony was not taken seriously,
although the physicians treated him with the respect owed to
America’s foremost clinical scientist.

One day, after a bold intern challenged him to demonstrate
evidence of awareness, Dr. McHugh shook the patient by the
shoulder and asked in a sharp voice: “Dr. A., what’s the serum
calcium in pseudopseudohypoparathyroidism?”

“It’s just about normal,” he replied, correctly. He had,
after all, discovered and named the condition.

“Subsequently, in all the months we cared for him, he never
uttered another word. But what a difference that moment had made
to all of us. We matured that day not only in matters of the mind
but in matters of the heart. Somehow, deep inside that body and
damaged brain, he was there and our job was to help him. If we
had ever had misgivings before, we would never again doubt the
value of caring for people like him” (McHugh P, Annihilating
Terri Schiavo, Commentary, June 2005).

Clinical Pathway to Death in New York

New York state senator William Stachowski has mailed his
constituents a sample living will, referring to the “confusion
often caused by end-of-life decisions,” as in the “tragic death”
of Terri Schiavo. As Dr. Lawrence Huntoon notes, like all other
living wills that hospitals offer patients, the form alludes only
to things that a patient does not want except for
medications to relieve pain, “including pain that might occur by
withholding or withdrawing treatment.” The form specifically
includes the minimally conscious state.

Dr. Huntoon fears that patients will not understand the form
but regard it as just one more admission form to sign.

“Death with dignity/ Is code you should know/ For
all of those things/ It’s your duty to forgo.

“So, don’t linger too long/ Resources are limited/ Just sign
all the forms/ So your organs can be distributed.

“And thanks in advance/ For signing the directive/ You’ve
done the right thing/ For the good of the collective.”


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

Hospice Allegedly Disregards HIPAA

The first complaint under the HIPAA Privacy Rule was filed
by Ron Panzer, President of the Hospice Patients Alliance,
against Suncoast Solutions, the for-profit subsidiary of the
nonprofit Hospice of the Florida Suncoast, where Terri Schiavo
died. The help screens of its software use real patient
information. The Office of Civil Rights has done nothing to stop
ongoing violations, Panzer said.

The real purpose of HIPAA, Panzer states, is to allow
government and corporate “researchers” to access the data of
anyone in the system, so as to better “manage” the U.S.
population. The Health Department views the population as a
“herd,” and uses that term, Panzer warns.

Small Offices Not Required to File
Electronically

Many members have received notices from their Medicare
carrier implying that they are now required by law to file
electronically and thus become a HIPAA-covered entity.
This is not true. The statutory exceptions still
apply, as for offices with fewer than 10 full-time employee
equivalents, but you will need to provide written documentation
to the carrier.

Federal Payment for Illegal Aliens

The Medicare Modernization Act provides for $250 million per
year to fund emergency medical services provided to illegal
aliens during fiscal years 2005-2008, apportioned to states on
the basis of the undocumented alien apprehensions in that state.
Implementation has been delayed because of questions about how to
ascertain eligibility without subjecting patients to risk of
deportation. Providers must apply for enrollment. There is a
finite amount of money, and the precise amount of payment is
undetermined. Some hospitals fear that compliance might cost them
more than they could receive. See

www.cms.hhs.gov/providers/section1011/
.

Embryonic Stem-Cell Controversy

Given a choice between funding both adult and embryonic
stem-cell research or only work that did not involve destroying
an embryo, Americans favored the latter by 61% to 23%.

The Southern Baptist Convention, the second largest U.S.
denomination, stated that research on embryos relies on a “crass
utilitarian ethic which would sacrifice the lives of the few for
the benefits of the many.” The Vatican and most evangelicals
oppose embryonic stem-cell research, but most sects of Judaism
and Islam don’t consider the early embryo to be fully human. Most
Talmudic scholars hold that “ensoulment” occurs 40 days or more
into pregnancy. Embryonic research in Iran has the blessing of
its supreme leader, Ayatollah Ali Khamenei. Hinduism holds that
life begins at conception, but destruction of an embryo could be
justified if done for the “greater good.” Some Buddhists support
the research, but most Buddhist scholars hold that killing an
embryo at any stage violates the central tenet that living things
should not be harmed.

“Everyone agrees that fundamental ethical questions
underlying stem-cell research, many of which transcend religion,
need to be addressed,” writes Tony Reichhardt.

And stem cells are just the beginning. “The stuff that’s
coming down the pipe will make this look like child’s play,” said
Kevin FitzGerald, S.J., Ph.D. (
Nature 2004;432:666-
669
).

AAPS Calendar

Sept 21-24, 2005. 62nd annual meeting, Arlington, VA.

Oct 22, 2005. SEPP meeting in Pittsburgh, www.sepp.net.

Sept 13-16, 2006. 63rd annual meeting, Phoenix, AZ.


Doctor Versus Prosecutor

In late 1998, Utah state officials demanded that board-
certified neurologist Taj Becker, M.D., of St. George, pay
$107,000 in returns, fines, and investigative costs, within two
weeks, or face criminal prosecution, incarceration, loss of her
medical license, and bad publicity. Prosecutor J. Denis Kroll
testified that he informed Dr. Becker of the “parade of horrors”
(Becker v. Kroll, 340 F. Supp. 2d 1230, 1234 (D. Utah
2004).

There was no basis for this demand or for the criminal
prosecution that ensued when Dr. Becker refused to capitulate,
and instead complained about the abusive tactics of the Medicaid
Fraud Control Unit (MFCU) through testimony before legislative
committees and letters to officials and the news media. The
charges were eventually dropped, and Dr. Becker sued on the basis
of malicious prosecution and retaliation for exercising her
freedom of speech. While acknowledging that there was evidence
for malicious prosecution, the lower court held that years of
harassment and threats did not violate Dr. Becker’s civil rights
because she was never actually incarcerated. Dr. Becker appealed
to the Tenth Circuit Court of Appeals.

The “shake-down” of Dr. Becker was part of a general
strategy by the MFCU, which “repeatedly raided rural physicians’
offices in front of waiting rooms filled with patients, simply to
obtain billing records easily obtainable through a subpoena.
Often the investigations were groundless fishing expeditions,”
writes AAPS General Counsel Andrew Schlafly in an amicus brief.

Doctors said they were “treated like criminals in drug
busts,” according to the Deseret News.

“In effect and perhaps by design, these in terrorem
Medicaid prosecutions cause physicians to abandon Medicaid
patients in droves. That saves the state money,” stated Mr.
Schlafly. But patients’ lives can be lost when physicians are
abruptly removed or severely distracted.

Even without incarceration, the criminal prosecution was a
seizure of Dr. Becker’s person by compelling her to appear in
court, obey travel limitations, and live under a stigma, argued
Mr. Schlafly. Because of the immense damage inflicted by false
prosecution, victims must have redress, and future wrongdoing
must be deterred.

[The AAPS amicus brief, which is posted at
www.aapsonline.org
, was funded by the American Health Legal Foundation.]

NASPER: Prescription Drug Tracking

The National All Schedules Prescription Electronic Reporting
Act is again before Congress (H.R. 1132 and S. 518). This
purportedly will help physicians feel more comfortable in
prescribing opioids because they will have the ability to query a
database to discover whether a patient is receiving prescriptions
from other sources. It would not set up a nationwide database but
would provide federal funding for states that set up a statewide
database that is interoperable with at least one contiguous
state.

“Nationwide interoperability seems inevitable, eventually,”
stated AAPS Executive Director Jane Orient, M.D. “If New York is
interoperable with New Jersey, and New Jersey is interoperable
with Pennsylvania, then New York is interoperable with
Pennsylvania also.”

As of May, 2002, 15 states had prescription drug monitoring
programs (PDMPs). General Accounting Office Report GAO-02-634
noted that program costs were a major hurdle; annual operating
costs in Kentucky were $500,000. In Kentucky, physician requests
increased from 28,307 in 2000, the first full year of operation,
to 56,367 in 2001, a 100% increase. Law enforcement requests
increased from 4,567 in 2000 to 5,797 in 2001, a 27% increase.

The time needed to investigate alleged doctor shoppers
decreased from 156 days to 16 days with PDMP implementation in
Kentucky. States without PDMPs must rely on tips (probable
cause?) and lengthy, labor-intensive investigations.

The number of OxyContin prescriptions per 100,000 persons
tends to be lower in states with PDMP, but drug diversion appears
to be worse in neighboring states without a PDMP. The effect on
appropriate prescribing or unwarranted physician prosecutions is
not known.

The number of states with PDMPs increased only from 10 in
1992 to 15 in 2002, partly because of concerns about patient
confidentiality as well as funding.

James Graves, M.D., now imprisoned in Florida because of
drug diversion and abuse by a few of his patients, writes that he
would have queried a PDMP if it had existed, but many of his
misbehaving patients would not have been in it. He said that he
took every possible precaution, to no avail. He made copies of
drivers licenses and had patients sign opioid contracts. Taking
Polaroid photographs of patients did enable him to catch a
patient who had stolen a prescription pad; a pharmacist
identified her from the photograph.

Ban on Private Care Violates Rights, Court Rules

A Quebec family physician, Jacques Chaoulli, M.D., may have
singlehandedly put a stop to the policy of forcing patients into
a rigid government monopoly on medical services.

Private physicians (i.e. those who accept direct payment
from patients) have been “treated as a bigger threat than Al
Qaeda,” writes Peter Foster. “The totalitarian notion of
preventing people from spending their own money as they choose,
and of outlawing private provision of health services, is based
on junk economics and tribal ethics. Socialized health care
boosters seem to believe there is a `lump of health care,’ which
must be doled out by the tribal chief.” Patients must not grab
more than their fair share (Financial Post 6/18/04).

The system put a stop to Dr. Chaoulli’s busy emergency
house-call service in 1996, while desperate patients went without
care. Serving as his own lawyer, and footing nearly $600,000 in
legal bills from his own pocket with a little help from family
and friends, Dr. Chaoulli fought all the way to the Supreme Court
of Canada (Western Standard 10/11/04).

Dr. Chaoulli argued that long waiting lists contradict
constitutional guarantees for “life, liberty, and the security of
the person,” and the ban on private health insurance or care for
sick patients is “infringement of the protection against cruel
and unusual treatment.” The government argued that the Court
should not interfere with “one of Canada’s finest achievements
and a powerful symbol of the national identity.”

On June 9, after a delay of a year, “the equivalent of the
Berlin Wall came tumbling down in Montreal,” wrote Grace-Marie
Turner. The Court struck down Quebec’s prohibition against
private insurance for services covered under medicare.

The decision applies only in Quebec, for now, but freedom
could spread throughout Canada. It might even spread to the U.S.
single-payer system for the elderly, which now prevents private
contracting with non-opted-out physicians.


Correspondence

Insurers Will Resist Change. A powerful motivator for
most physicians, the path of least resistance to the money has
been through third-party payers. Unless and until physicians
begin to realize that the end of that path is government-mandated
physician slavery, the status quo will continue.

Just as a trend toward the free market is developing, we see
articles that are possibly intended to try to keep physicians on
the path. The cover story on the May 2005 issue of Physicians
Practice
features a smiling physician who says “I’m thriving
under Medicare.” The article itself shows how she is making ends
meet by selling items not covered under Medicare from an “in
practice store.” The AMA featured an article, “Out of Network,
Out of Luck,” with the message that you had better stick with
your abusive HMO because if you don’t, the patients will abscond
with the insurance check and never pay you. Entities that are
closely aligned with government, HMOs, and insurers will probably
work in collaboration with hostile patients, who feel entitled to
have doctors “take their insurance,” to try to enforce
participation with third parties.

During the transition to free-market medicine, physicians
can expect to be attacked. We must not tolerate blackmail by
“somebody else should pay for my medical care” patients. The
tactic is basically to say “if you don’t take my insurance, I’ll
file complaints against you and threaten your hospital privileges
or license.” Complaints include fabricated charges of poor care
or unprofessional conduct. Free-market physicians should consider
precautions such as RF detectors (to identify wired patients who
may be used to set them up), small concealable digital recorders,
chaperones, and meticulous documentation.

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

The Popularity of Socialism. Initially, people like
socialized medicine, just as there was at first little
dissatisfaction with Soviet rule. The British National Health
Service was great until the illogic of its construction started
destroying the social capital that private medicine had built up.
It takes a couple of generations to ruin working social systems
based on shared conceptions of what is right. Look at public
education. It took 40 years to ruin it.

Linda Gorman, Independence Institute, Engelwood, CO

It’s All Theirs. Many years ago, in a discussion about
high-risk pools and how much public or private money fund them,
the then-insurance commissioner of Massachusetts said: “Public,
private, what’s the difference?” Ultimately it is all public
money anyway.” In a nutshell, the mind of a liberal: the
government owns everything and lets you use it for a while.

Greg Scandlen, Hagerstown, MD

“Your” Medicare? There is no Medicare account with your
name on it, and no guaranteed benefits. You get only what the
politicians and bureaucrats agree on.

Joseph Lee Pugh, Diamondhead, MS

Why Work and Save? For doctors especially, the
possibility of retaining personal wealth is so remote that it
makes little sense to save. We are easy prey for personal injury
lawyers, DEA agents, and federal prosecutors, never mind the IRS.
Why should I work any more than necessary to meet current
expenses when my savings will probably be plundered by the time I
am 65? One thing they can’t steal from me is my time in the
present. The most reliable thing I can take with me into my 70s
is my medical skills, available 25 hours per week.

Robert S. Berry, M.D., Greeneville, TN

Why Employee Benefits Are Shrinking. My column in
The Wall Street Journal, Aug 18, 1997, was prophetic. It
stated that the most significant cause of the decline in health
and retirement coverage has been the growth in the contingent
work force, which could reach 40% of the working population in 10
years. Companies use contract and part-time workers largely to
avoid benefit costs and burdensome record-keeping requirements.
ERISA regulations alone, in 10-point type and double-sided, are
two feet thick. The annual cost to small business of administ-

ering a 401(k) plan is $475 per recipient.

Craig Cantoni, Scottsdale, AZ

Limiting Supply in Ontario. Contrary to what some may
believe, the Ontario government does not pay all claims. It
downgrades and rejects claims and limits the number of services
payable per patient, per physician, and per unit time. For
example, I can only bill for three A184s (medical specific
reassessment, $41.15 Canadian in 2003) per 12 months, regardless
of need. After that I can only be paid for A188s (partial
assessment, $25.12). An especially galling requirement is that a
neurologist must stay within 15 minutes of the hospital for acute
stroke care (stipend is $40 for 24 hours).

Duncan M. McIlraith, M.D., Ottawa, Canada

Double Taxation. Physicians in our area must pay taxes
to support Medicaid and the universities of Kentucky and
Louisville, hours away. Then we must also provide free
care. The entitlement mentality is sculpted by government
largess. For elective surgery, the preoperative “deposit,” pegged
to Medicaid rates, is the only payment we usually receive. For
“emergent” procedures generally not a limb or life-threatening
emergency we receive no upfront payment. Many patients get
“urgent” procedures done so they can receive narcotics.

Lee Balakaw, M.D., Louisa, KY


Legislative Alert

The Stem-Cell Debate

This past month the House of Representatives voted 238
to 194 for federal funding of embryonic stem-cell research. The
legislation (H.R. 810), sponsored by Rep. Mike Castle (R-DE),
would reverse President Bush’s policy. The President has
threatened to veto the legislation, saying that the destruction
of human embryos is a destruction of human life. The Castle bill
fell 50 votes short of the number necessary to override a veto.
This is likely to be Bush’s first veto.

On a separate vote the House overwhelmingly (431 to 1)
approved H.R. 2520, sponsored by Rep. Chris Smith (R-NJ), which
would promote continued research and the storage of stem cells
derived from placental cord blood. Such stem cells offer many of
the promised advantages of embryonic stem cells without the
ethical problems. Indeed, 6000 patients, with 60 different
diseases, have already been treated with stem cells from cord
blood.

The stem-cell legislation now goes to the Senate, where the
President’s policy in this matter, as well as all others, is even
less well regarded. The issue is not the legality of embryonic
stem-cell research, but rather the wisdom of federal funding.

Proponents of embryonic stem-cell research say that the
federal funding is necessary to maintain America’s preeminence in
biomedical science. This appears to be a weak pretext for picking
taxpayers’ pockets. As to America’s competitive edge, its future
depends more on the genius and resourcefulness of our scientific
enterprises, thriving in a wholesome atmosphere of low taxes and
limited government, than on profligate infusions of taxpayer
cash. Those who want taxpayer funds for this research can always
tap into the deep pockets of California, which has
allocated $3 billion to the effort
.

But why the rush for federal money? Several private
companies are ready to take risks on basic research with their
own treasure. If the prospects for clinical success improve, such
companies will no doubt flourish in the market. Charles Darwin
himself, the world’s mentor on survival of the fittest, would
break out the champagne and cheer them on.

Some otherwise resourceful private-sector investigators
have, of course, been scared off by the intense debate about
ethics. The best of the White Coats have headed for the
proverbial high grass. But political wrangling is the price of
admission for living in a free society.

Another Round in the Health Care Reform Debate?

In its annual report, the Census Bureau reports that roughly
45 million Americans lack coverage. When new numbers come out in
September, we can expect the debate about the uninsured and
health care reform will start all over again.

The research on the uninsured is steadily improving. The
problem is more complex than the bumper stickers make it out to
be. The Census numbers themselves are raw figures, and the
situation for very different classes of people without coverage
is far more complex. It appears that this is a dynamic
population, concentrated among workers in small firms, retail
businesses, and services industries, with people in and out of
coverage. While most are low-income working folks, there is a
rather large number who are well into the upper middle class. In
Maryland, for example, one of the wealthiest states in the Union,
approximately one third of the uninsured population have a
household income of $50,000 or more
.

So what do we know? People are going without coverage for a
variety of reasons. Their employers don’t offer it, and they
can’t afford it on their own; they can afford it, but
choose to spend the money on something else, thinking that they
are young, healthy, and immortal; they can afford it,
but figure that if they do get sick, the taxpayers will pick up
the bill. CBO analyses show that many people are without coverage
for a short period of time; roughly 45% of the uninsured are
uninsured for four months or less. On one level, though, it
doesn’t matter exactly how many Americans are without coverage;
there is a general consensus that it is better for people to have
coverage than to go without it.

Where can the uninsured get the coverage? There are,
according to the Wall Street Journal, about 60 million
Americans who don’t get health insurance either from their
employer or from a government agency. Their only resort is the
individual insurance market, and what you get or don’t get is not
merely determined by consumer choice, but by state rules as well
as the fine print of the individual insurance policy. Roughly 17
million people, or roughly 10% of Americans under the age of 65,
according to the Journal, get coverage through the
individual market. But this market is not functioning as
effectively as either its critics or its proponents believe it
should.

The individual market is encumbered by state mandates;
Maryland, with a highly regulatory regime, has about 58 according
to one count. Additionally, individuals are often excluded
because of preexisting conditions or have health-related
restrictions. On one level, this makes sense: you can’t insure
for an event that has already happened. But it also means that
many cannot get the coverage they need and will end up being
dependent on the taxpayer.

This market is also unstable. People may sign up for
coverage when they think they need it, and then drop coverage
when they think they don’t.

Proponents of the individual insurance market say that it is
largely broken because of government policy and that it can be
fixed by policy changes. The big one is the federal and state tax
code. Lack of a tax break for the purchase of individual coverage
undercuts the ability of this market to compete with tax-favored
alternatives. Mandates, underwriting rules, and other regulatory
policies also impose uneven requirements on group and individual
policies.

Less Freedom, More Government

One thing is certain: neither the Bush Administration
nor the Congressional Republican majority has yet managed to
reframe the national debate on health policy in a way that the
public appreciates or understands. Senator Kerry and his
colleagues, in spite of losing the election, are once again
starting to drive the policy agenda.

On May 23, 2005, the National Coalition on Health Care, co-
chaired by former Presidents with a list of luminaries on the
letterhead, recently unveiled its recommendations. The analysis
was conducted by Professor Ken Thorpe of Emory University, a
former advisor to both Bill Clinton and John Kerry.

The Coalition has offered a menu of policy options: an
employer mandate supplemented by an individual mandate (the basic
Clinton plan prescription); expansion of existing public programs
(Medicaid, Medicare, SCHIP); a program modeled after the FEHBP
(the Devil here is in every nook and cranny of the details; and
Mephistopheles himself is hiding in the details within the
details so, use a microscope on this one); and drum roll
please a “universal publicly financed program” good old-
fashioned “single payer” socialism.

There is not much new, different, or imaginative in the
Coalition’s prescriptions: another resurrection of key elements
of the Clinton agenda that the Republican Congress has not yet
enacted (inadvertently) and an expansion of public programs.

The Council warns that the “cost of inaction” is higher than
the cost of taking the actions that they recommend. They estimate
that the number of the uninsured will exceed 54 million by 2015,
and that annual medical costs will be $3.8 trillion, or about
19% of the GDP
. Yes, that’s true. But public program growth
will far eclipse the growth in private coverage as aging Baby
Boomers begin to accelerate the income transfer from their kids
to themselves, via payments to hospitals and nursing homes.
The only way to control costs in public programs is to cut the
supply of medical services to seniors
leading us to the
inevitable fine print.

If you imagine that the “fine print” of the recommendations
would be fairly prescriptive, Clintonesque even, you imagine
right. The Coalition says that national legislation should
provide for coverage of all Americans within 2 or 3 years of
enactment, and that it should provide for serious cost
containment, specifically that benefit costs should rise at the
same rate as GDP per capita, or 4% within 5 years. The cost-
containment measures include reduction of administrative costs; a
reduction in “variations in clinical treatment” (which
could evolve into classic cookbook medicine, spiced up with a set
of rigid regulatory recipes); and controls on “provider
payments” to assure the “target rate of growth”
(ye oulde
price controls and global budgets again).

The quality and safety improvements would require the
nationalization of medical practice, with “national practice
guidelines,” a “national information technology infrastructure,”
and information about the “effectiveness and cost effectiveness
of care.” Looks like more work for the overburdened staff at the
federal bureaucracy charged with making this “work.”

Can’t We All Get Along?

In an unrelated development, Robert Pear of The New York
Times
recently reported that 24 health policy experts from
both sides of the ideological spectrum, as well as
representatives from business and labor, have been meeting
“secretly” to figure out whether there is anything anything at
all they can agree on to address the coverage problem. This will
be interesting.

The focus is on incremental steps, based on continuing
discussions, in a desperate search for ways to break the policy
logjam. The outcome of the search for “common ground” is not at
all certain, and, as in many cases in the past, these things can
fall apart once the details are discussed. While no single plan
has emerged from the behind the closed doors sessions they say
they don’t want any single plan they have been discussing
various options, including:

  • Income-related tax creditsfor those who
    can’t or don’t get health insurance through the workplace.
  • Health care tax credits for children under
    the age of 21 who are not eligible for Medicaid or the State
    Children’s Health Insurance Program.
  • Ease of administration for employers,
    allowing employers who don t offer health insurance today to use
    the withholding system in collect premiums as well as taxes, with
    the Treasury forwarding the money to insurance companies.
  • Ease of personal access to coverage.
    Federal grants to states to establish health insurance purchasing
    pools. If such pools create a level playing field for all sorts
    of plans, including HSAs, this could be a winner. If it is
    another way for the government to standardize and regulate supply
    of insurance products or medical services, it would be another
    version of the Clinton-style “regional alliance” a real loser.
  • Expand Medicaid coverage. The federal
    government would provide financial incentives for states to
    provide Medicaid coverage for any person whose income is below
    the federal poverty level ($9,600 for an individual).


The Medicare Drug Bill Again

Next year’s administration of the drug benefit continues
within the framework of a cumbersome Medicare regulatory regime.
Congress’s historic passion for regulatory expansion has
accelerated in recent years, imposing enormous administrative
burdens on doctors and hospitals, whose costs are absent from the
Medicare budget. While some analysts view Medicare’s
administrative or managerial problems as a matter of inadequate
resources, they are in fact a function of the Medicare defined
benefit structure, which inevitably results in Congressional
micro-managerial intervention.

Congressional Republicans say that they don’t want a
government-run drug program, and prattle on about the vigorous
role of private health plans and PBMs, but that is yet another
indication of myopia or strenuous efforts at self-delusion.
The dynamics of the Medicare entitlement will ensure the
progressive control of drugs over time, especially the
pricing.
The consequences can be no less baneful than the
results of all other government price-fixing schemes: a reduction
in the supply of advanced pharmaceutical products.

As noted last month, Rep. Jeff Flake (R-AZ) has the right
answer: Stop this madness before it starts on January 1, 2006.

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

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