AAPS News – Mar 2001


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 57, No. 3 March 2001


When a convicted felon gets his civil rights restored, he
may once again be able to vote, hold public office, and own a
firearm. According to Webster’s New World Dictionary of the
American Language
, College Edition (1960), “civil rights”
are those “guaranteed to the individual by the 13th and 14th
Amendments to the Constitution…and by certain other acts of
Congress; especially, exemption from involuntary
and equal treatment of all people with respect to
the enjoyment of life, liberty, and property and to the
protection of the law.” This follows closely the 1913 edition,
which also defines “civil” as “pertaining to citizens.”

The Office of Civil Rights (OCR) has issued Policy Guidance
concerning U.S. residents (legal or illegal) eligible
for federally assisted programs, which imposes
obligations on all persons and entities who receive
federal funds to serve all comers in their own language. The
policy is pursuant to Clinton Executive Order 13166, “Improving
Access to Services for Persons with Limited English Proficiency

The policy, available at
, refers to §601 of Title VI of the Civil
Rights Act of 1964, 42 U.S.C. §2000d et. seq.: “No
person in the [U.S.] shall on the ground of race, color or
national origin, be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any program
or activity receiving Federal financial assistance.”

The implementing regulations at 45 C.F.R. §80.3(b)(1) state
that recipients of federal funds may not “provide any service,
financial aid, or other benefit to an individual which is
different, or is provided in a different manner, from that
provided to others under the program.”

This provision, in effect, opens the entirety of a
practice or enterprise to federal scrutiny as soon as the first
federal dollar is accepted.
How can an investigator know
whether a Medicaid recipient, for example, is served in a
different manner without inspecting the records of private
patients? Additionally, the Civil Rights Restoration Act of 1987
provides that when an entity receives Federal assistance for a
particular program or activity, all operations of the
recipient/entity are covered, not just the part receiving the
federal assistance. (This is why Hillsdale and Grove City
Colleges rejected all federal aid.)

If all service is rendered in English, it is “different” in
its effect on some recipients, according to 80.3(b)(2), because
it might “have the effect of defeating or substantially impairing
accomplishments of the objectives of the program with respect to
individuals of a particular … national origin.”

A person need not have an intention to discriminate to run
afoul of the law; a disparate impact is sufficient.

Cited precedents include Sandoval v. Hagan, 197
F.3d 484 (11th Cir. 1999), which held that the State
of Alabama’s policy of administering driver’s license
examinations in English only was a “facially neutral practice
that had an adverse effect on the basis of national origin.” Oral
arguments were heard in the appeal to the Supreme Court in mid-

The four keys to compliance are: assessment, development of
a “comprehensive” written policy on language access, training of
staff, and “vigilant” monitoring.

Interpreters must be competent both in the language and in
medical terminology, readily available during all hours of
service, and trained in confidentiality requirements. In
addition, written materials routinely provided in English must
also be available in other “frequently encountered” languages. If
the language doesn’t have a written form, then oral translation
must be provided.

There is no “one size fits all” definition of terms such as
“persons likely to be directly affected.” The OCR will address
compliance on a “case by case” basis. Some vague guidelines are
provided: for example, “vital documents” need to be translated
into languages used by 5% or 1,000 (whichever is less) of
prospective clients, and all written materials into languages
used by 10% or 3,000. No practice is too small to be exempt; but
some allowance is made for disproportionate burdens.

Of course, all compliance efforts must be paid for solely by
the entity providing the service, even at a net loss.

The OCR will investigate whenever it receives a complaint or
report of possible noncompliance. While it will focus attention
primarily on larger entities such as hospitals, two of 250
investigations in 2000 involved private physicians.

There is no defined endpoint to the effort required. The OCR
recognizes that a practice might encounter LEP persons who speak
“perhaps over 100 different languages.” However, as pointed out
in the amicus brief filed in the Alabama case by the Eagle Forum
Education and Legal Defense Fund, 4,000 or 5,000 languages are
thought to be in current use.

The AMA and 40 other medical organizations have objected to
the rule because it is too burdensome and may threaten access to
care. It applies to SCHIP and may prompt physicians to turn away
from this “already underused” plan. The AMA calls for rethinking
the guidelines, especially as applied to small practices, or,
alternately, for government payment for translators (AM

AAPS objects to the rules on principle. They are a
fundamental intrusion into the heart of medicine: communicating
with patients. OCR investigators are incapable of judging the
quality of communication, whether in Mandarin, Laotian, or
English. The only possible enforcement of this vague and open-
ended policy is arbitrary and capricious: a fundamental violation
of the principle that the U.S. is governed by written law-defined
and applied in English.

And what of the civil rights of physicians? Is it
involuntary servitude to have to pay for a translator, even for
illegal aliens, as a condition of practicing one’s profession?

Third-Party-Free Clinic Opens

AAPS member Robert Berry, M.D., announced the Jan. 10
opening of PATMOS EmergiClinic in Greeneville, TN.

PATMOS stands for “Payment at the Time of Service.” It was
also the island to which St. John and others were exiled during
Biblical times. The clinic hopes to serve primarily those who are
exiled from our third-party dominated system-that is, people
without health insurance.

The mission is to provide affordable, patient-centered,
excellent care in the context of Christian service.

“While it is not our intention to exclude anyone,” writes
Dr. Berry, “we must require payment at the time of service to
minimize the cost for everyone.” For those who have insurance,
the clinic provides a claim for the patient to file, or arranges
for a company specializing in medical billing to file, for a $15
surcharge. Medicare and TennCare do not permit this option at the
present time.

People with Medical Savings Accounts, high-deductible
policies, or a Christian assurance plan (such as the Christian
Brotherhood Newsletter) will all find the fees attractive.

For those who have difficulty affording the bills, the
clinic will consider a payment plan, or trading services for
goods or services that patients can provide, on a case-by-case

Dr. Berry has 8 years experience working in emergency rooms
both in the inner city and Greeneville. He views the clinic as a
high-capability walk-in clinic that provides many of the services
offered by a rural ER at a fraction of the cost.

At present, Dr. Berry is unaware of any clinic quite like
PATMOS: a “for-profit, faith-based, free-standing emergency
center that takes no third-party payment.” The clinic plans to
add primary care and occupational medicine soon, and to try to
persuade large employers in the area to offer defined-
contribution benefit plans.

Dr. Berry challenges other AAPS members to examine this
concept-see www.emergiclinic.com.
Note that the fee schedule uses a very simple, non-CPT coding

More Physicians Opt Out

As of June 30, 2000, HCFA reported that 1,396 physicians and
other practitioners (including 82 clinical psychologists and 42
clinical social workers) had opted out of Medicare. The best
represented physician specialties, in descending order, are:
psychiatry, 492; family practice, 156; general practice, 121;
internal medicine, 86; ob/gyn, 82; plastic and reconstructive
surgery, 45; dermatology, 38; osteopathic manipulation, 27;
physical medicine/rehab, 23; orthopedic surgery, 21; general
surgery, 21; ENT, 18; anesthesiology, 18; ophthalmology, 12; al-

lergy/immunology, 12; emergency medicine, 10.

Emmit Jennings, R.I.P.

Emmit Jennings, M.D., of Roswell, NM, a general surgeon,
died on December 28, 2000, after a bout with cancer. Dr. Jennings
joined AAPS in 1961 and served as President in 1983. He was
President of the New Mexico Medical Society in 1967; Roswell City
Councilman 1960-1971; County Commissioner 1988-1992; and State
Senator from 1993-1996.

“He was the old-school doctor who was more worried about his
patients than about making money,” stated Senate Majority Leader
Timothy Jennings, his second cousin.


A “message to all physicians” from D. Ted Lewers, M.D.,
Chair of the AMA Board of Trustees, states that “The AMA’s CPT is
`an investment in physician autonomy'” (AM News
12/4/00). He proudly reminds readers that the AMA has been the
author of CPT codes since 1966. Thus, the answer to a question
raised by an attendee of the AMA’s April 1998 fly-in on the
AMA/HCFA E&M Documentation Guidelines-“Can’t we take our name off
these things?”-is No.

Lewers claims that the CPT codes were adopted voluntarily
through a “physician-driven process.” Without the CPT,
communications would break down and physicians’ offices would be
overwhelmed by red tape, he declares.

“The financial resources invested in CPT development have
come solely from the AMA,” Lewers states, without a hint about
the multimillion dollar profits that accrue annually, providing a
cushion against the loss of $4 million in dues.

Apparently, the AMA is worried about competition, as from
3M. An AMA-funded study reported that “the cost of imposing a
replacement for CPT on the physicians of today would approach a
trillion dollars.”

Lewers invites comments at [email protected].

The AMA actually has received many comments on CPT codes, as
was evident in the 2,068 pages that AAPS received in May, 2000,
in response to a Freedom of Information Act (FOIA) request filed
in April, 1998. AAPS sought documents related to the AMA’s role
in formulating the E&M guidelines for choosing the correct code.
The tone of comments was very similar to those posted on our web
site. Some examples:

“The answer (short of scrapping the whole system) is
simplification. Unfortunately, how to simplify this cumbersome
system is beyond my level of wisdom.”

“The new codes are a bureaucrat’s delight and a practicing
physician’s nightmare.”

“The AMA should not be an accomplice to the debasement of
the patient-physician relationship.”

“This issue suggests that the AMA is no longer represen-

tative of the majority of physicians.”

AAPS Calendar

Feb. 20-21. Arizona chapter hosts Don Boudreaux of FEE.

June 1. Board of Directors meeting, Chicago

June 2. Spring Private Doctors’ program, Chicago.

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

Erratum. The Feb. issue should have included a
legislative alert and a new members’ page. Please call if you did
not receive both. Leave a message 24 hours at (800) 419-4777.

Coding Copyright Upheld 2:1

On Feb. 2, a three-judge panel of the U.S. Court of Appeals
for the Fifth Circuit upheld the lower court in Veeck v.
Southern Building Code Congress International
(SBCCI), No.
99-40632 (see AAPS News May and July 2000).

The majority held that Peter Veeck had been guilty of
copyright infringement by posting SBCCI’s building codes on the
Internet, and found no abuse of discretion in the district
court’s award of attorney’s fees to SBCCI.

Interestingly, the panel implies that Veeck might not have
committed a copyright violation had he obtained his copy from the
government-say by a Freedom of Information Act request -rather
than from a private company.

In a strong dissent, Judge Little stated that in his view
“due process concern for public access to the law forbids a
private entity from exerting sole control over a public law
through a copyright.” He distinguished the Veeck case from
Practice Management Information Corp. v. the AMA, in
which the Ninth Circuit refused to void the AMA’s copyright even
though finding that the AMA had misused it by licensing its CPT
coding system to HCFA on the condition that the agency agree not
to use a competing system :

I note that in Practice Management, the party
challenging the copyright was a private entity seeking
to `share in the AMA’s statutory monopoly.’… Had the
Ninth Circuit been faced with a situation similar to
that presented here-where a private individual sought
to publish gratuitously a public law for use by other
citizens…-it may have decided differently.

Judge Little found no meaningful distinction between
judicial opinions and statutes, which cannot be copyrighted, and
regulations that have been adopted into law. Once promulgated,
codes become a set of facts, and facts are not protected under
the Copyright Act. SBCCI claimed that its particular
expression was protected; however, Judge Little stated
that there is “only one accurate way to express an enacted law.”
Laws must be concrete, definite, and precise. (Otherwise they can
be found unconstitutional due to vagueness.)

AAPS will file a Motion for Leave to File Amici
Brief for Rehearing En Banc. The AAPS interest is
that members are subject to criminal penalties based on mandated
codes that are withheld from public, Internet-based scrutiny due
to ownership asserted by the AMA.

AAPS contends that the Fifth Circuit decision violates the
Rule of Law by overruling a Supreme Court precedent. Only the
Supreme Court can override its own precedents. Further, AAPS
argues that members of the public have the right of free access
to electronic copies of the law by which they are bound. This
permits a level of scrutiny that will catch errors and illogic
more quickly than review by a handful of experts.

This case is likely to reach the Supreme Court even if
rehearing en banc is denied.

Civil Rights and Private Contracts

At a staff meeting at Thunderbird Samaritan Hospital in
Glendale, AZ, AAPS Director Robert Gervais, M.D., asked Senator
Jon Kyl (R-AZ), the foremost advocate of private contracting for
Medicare beneficiaries: How is it possible to have private
contracting if the 1964 Civil Rights Act obligates all private
cash-paying patients and their doctors to obey all government
rules if they set foot in a government-licensed facility? The
Senator noted that “that applies to education,” without giving,
in Dr. Gervais’s view, a satisfactory answer.

A communication from the law firm of Lewis and Roca states
that the Medicare Carriers’ Manual interprets the Civil Rights
Act to apply to all who receive Part B reimbursement. The Fiscal
Intermediary Manual that governs agencies that pay hospitals,
skilled nursing facilities, and hospices has a still more
expansive interpretation. It is advisable, the firm states, to
follow Medicare rules for all services, even non-covered ones.

“Our adversaries are very clever,” Dr. Gervais states. “They
have utilized the Civil Rights Act to turn all private patients
into public patients.”

The Rule of Law

“It will be of little avail to the people that the laws are
made by men of their own choice, if the laws be so voluminous
that they cannot be read, or so incoherent that they cannot be
understood; if they be repealed or revised before they are
promulgated, or undergo such incessant changes that no man who
knows what the law is today can guess what it will be tomorrow.
Law is defined to be a rule of action; but how can that be a
rule, which is little known and less fixed?”

James Madison, The Federalist Papers (No. 62)

Officers of the Court

Three attorneys for Jeffrey Rutgard, M.D., who was
imprisoned for Medicare fraud (see AAPS News Dec 1996), wrote a motion for a mistrial
that should have guaranteed him a new trial on appeal. However,
they did not file it. After Dr. Rutgard was
incarcerated, they explained that they were afraid the judge
would not like them if he read the motion and that it would have
a detrimental effect on future cases they would plead before his

The motion reads: “No member of the defense team [in a
collective 70 years of practice in federal court] has ever filed
such a motion before. However, all … believe it is their
ethical duty to file this motion in order to defend and protect
Dr. Rutgard’s constitutional rights….

“The Court has repeatedly disparaged and demeaned defense
counsel such that counsel no longer have credibility in the eyes
of the jury and counsel are also afraid to be vigorous advocates
for fear of the Court’s reaction….

“The cumulative effect of the Court’s actions has been the
creation of an atmosphere wherein it is impossible for the
defendant to obtain a fair trial. Therefore, Dr. Rutgard and his
counsel respectfully request a mistrial and the reassignment of
this matter to another court within this district.”

Among other things, defense counsel feared being held in
contempt if they advocated effectively for their client.

* * *

“…Today bureaucrats can define [a] criminal offense
on the spot by how they interpret the regulations that they
write…. This wide range of discretion is an example of
delegation at its worst…. The court system [also permits the
bureaucrat] to determine whether [the violation] is a civil or
criminal offense. A `cooperative’ offender may get off with a
civil penalty, whereas a person who sticks up for his rights may
get a criminal indictment.”

Paul Craig Roberts, Lawrence M. Stratton

The Tyranny of Good Intentions, Prima

Members’ Page

Discrimination. From an EOMB brought to me by a
patient, I learned how participating physicians are treated very
differently from nonparticipants when it comes to refund
requirements for tests determined to be “medically unnecessary.”
The hospital forwarded billing information for a test that I did
to another, participating neurologist, whose office billed the
patient by mistake. A note in microprint tells the patient that
Medicare assumes she didn’t know that Medicare would not
pay for this service, and that therefore it will “pay
any amount you have paid your doctor/supplier for the service,”
although “future services of this type provided to you will be
your responsibility.” When I bill as a nonparticipating
physician, the patient is told that she doesn’t owe anything for
the “unnecessary” test and is due an immediate refund if she has
paid anything. Moreover, Upstate Medicare encourages the patient
to call the fraud and abuse hotline to “help preserve the
Medicare Trust Fund” (thus destroying patient-physician trust)
before I even have the chance to submit the
documentation proving that Upstate Medicare has not followed its
own guidelines and has wrongfully denied the claim!

Can this be legal?

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

Sauce for the Gander. Given the documented fraud in
government, it is essential as a demonstration of the OIG/ HCFA
commitment to “zero tolerance” for fraud and abuse that the OIG
advise OIG/HCFA designees that government immunity is
in any breach of contract or any lack of adherence to
regulations or laws that the designee knew or should have
was being committed (i.e. the same standard as for
providers). To show the feasibility of compliance programs for
small offices, the OIG and HCFA should require them in every
small federal and state office. And to demonstrate the such
programs impose minimal cost, these should be implemented at no
cost to the taxpayer.

Taj Becker, M.D., St. George, UT

Cutting the Waiting List. The British have found an
innovative way to reduce the overpopulation problem and save
money for the government. They may train nurses to perform open-
heart surgery, thereby increasing “throughput” by up to 50%.
According to John Williams, vice-president of the Royal College
of Surgeons, “Tony Blair made it clear they want to end job
demarcation as part of the modernisation of the NHS” (London
10/22/00). Patients may also lose instant access to
their GPs after hours, with calls being answered by nurses at the
NHS Direct switchboard service. After all, it’s free.

Lawrence Dunegan, M.D., Pittsburgh, PA

On Professional Courtesy. Medicare says that one may
not balance bill a patient nor offer professional courtesy. Why,
then, won’t Medicare pay physicians if they happen to treat a
family member? It claims you would have treated the family member
for free. But it’s unlawful to treat others for free.

The next question is: why has the AMA been silent about
Medicare’s elimination of professional courtesy? This tradition
dates back to Hippocrates. It is clear that the AMA must be more
interested in its profitability via the sales of code books and
its contractual rights from HCFA than in the rights of individual
physicians, or the basic precepts of medical ethics.

Lee Balaklaw, M.D., Louisa, KY

The Inverse of Egalitarian. The idea that some might
not be able to afford a certain level of medical care-rationing
by ability to pay-is abhorrent to many today. I usually respond
to the egalitarian argument by turning it around. The inverse of
“everyone should have access to the same good quality care” is
“nobody should be permitted to purchase additional care with his
own resources.” Some people would agree with the second
statement, but not many-even though it is the essential operating
principle for the Canadian system.

Greg Scandlen, Frederick, MD

Compassion. The current funding of medical care for the
elderly has to be one of the stupidest concepts known to man:
Taxing poorer, younger working people (with minimal net worth and
large immediate financial responsibilities such as a mortgage,
children, or education) to buy medical care for older, wealthier
retired people (with a much larger net worth and smaller
immediate financial responsibilities). If anything, the flow of
funds should be reversed. I would rephrase the debate: Why not
show compassion for younger members of society and stop forcing
them to subsidize wealthier older strangers? And why not stop
torturing elderly people by forcing them to run the gauntlet of a
sadistically bureaucratic Medicare system that is operated to
make its annual budget instead of to serve its customers?

Gerry Smedinghoff, Wheaton, IL

Irrational Bundling. From a letter to Prudential
HealthCare: A preoperative consult with a -57 modifier was denied
by your new software and has been declared “history and physical
included in the global service package.” Yet the insurer will pay
if no operation is done. Am I being told that my evaluation –
almost universally inconvenient due to the unscheduled nature of
emergencies-is useful and worthy of payment only when no
operation is needed? Am I being told that I should operate based
on the opinion of others?

Robert Lovett, M.D., Fort Worth, TX

Legislative Alert

Bush’s Medicare Drug Push

President George W. Bush has just unveiled his Medicare
prescription drug proposal: “The Immediate Helping Hand” program
that he announced in September, 2000.

The $48-billion Bush plan would be targeted to states to
help seniors who are not eligible for prescription drug coverage
under the Medicaid program and do not have access to drug
coverage through their retirement or supplemental insurance. It
is designed to provide immediate relief to the seniors who need
this assistance, while Congress engages in a more extensive
overhaul of the current Medicare program. It appears that Bush
will base his broader reconstruction of Medicare on the plan
initially put forward by Senator John Breaux (D-LA) and Rep. Bill
Thomas (R-CA), the co-chairmen of the now defunct National
Bipartisan Commission on The Future of Medicare, sometimes called
the Bipartisan Medicare Commission.

Meanwhile, the Bush interim drug plan would cover the full
cost of all prescription drugs for seniors with incomes at or
below 135% of poverty, and would cover some of the drug costs of
all seniors with incomes between 135% and 175% of poverty with
sliding-scale subsidies. It would also provide 100% coverage for
seniors with drug costs over $6,000.

Bush’s immediate problem is that top Members of Congress
don’t seem to like his Immediate Helping hand proposal-and the
objection is not confined to the standard liberal Democratic
opposition. When Tommy Thompson, the new Secretary of HHS, was
questioned on the topic at his confirmation hearing before the
Senate Finance Committee, Senator John Breaux (D-LA) told him
that he should take the proposal back to the White House because
it was an “ill-advised and ill-conceived concept.” Breaux told
Thompson that the idea that such a proposal could get fast-track
acceptance in Congress was a miscalculation, and that a broader
reform of the Medicare system would not take any longer than this
plan would. Breaux has made no secret of his desire to get
Medicare reform on track, and plans to reintroduce a new version
of the bill he coauthored with Senator Bill Frist (R-TN) early in

Just as importantly, Senator Charles Grassley (R-IA),
Chairman of the Senate Finance Committee, has indicated his
desire to move a far more comprehensive Medicare proposal, based
on the broad outlines that Bush unveiled during the Presidential
campaign, and to do so quickly. Gail Wilensky, the former HCFA
administrator who advised the Bush Presidential campaign, has
said that a comprehensive piece of legislation could be readied
before the end of the year.

Clinton’s Last-Minute Regulations

Those controversial last-minute pardons are only a peep
show compared to the Cecil B De Mille policy extravaganza that
hit the Federal Register. In the final hours before leaving
office, Bill Clinton literally flooded the Federal Register with
reams of new regulations. HCFA had prepared a massive Medicaid
managed-care regulation to be sent to the Federal Register on
January 19, which, according to staffers inside the agency who
wished to remain anonymous, was stunning in its level of
prescription, dictating specifically what states and private
plans in the program could or could not do.

Policy analysts have had a hard time digesting these bulky
and utterly Clintonesque rules. President Bush has promised a
full-scale review. Independent analysis confirms the worst
suspicions. For example, on the HHS “privacy” rules, attorney
John Hoff, a former staff member of the Bipartisan Medicare
Commission and a trustee of the Galen Institute, notes that
the Clinton Administration has given HHS broad powers to
examine-without a search warrant-the books, records, and related
papers of “providers”-that includes doctors-in order to assess
. HHS would also require agencies or entities
covered by the regulations to agree to HHS access to their
records, and, says Hoff, that would also include employers.
Counselor Hoff notes something extraordinary for the record
books-something that should be reproduced for every civil
libertarian who has ever flirted with expanding government
control over medicine-and that is the utter incompatibility of
the principle of personal privacy and the expansion of government
regulation. Note this, and note it well, at 65 Fed Reg 82589-90
(December 2000): “From State and local licensure laws to the
federal fraud and abuse statutes and regulations, the health care
industry is one of the most tightly regulated businesses in the
country. Because the industry has such an extensive history of
government oversight and involvement, those operating within it
have no reasonable expectation of privacy from the government
that such a warrant would be required to determine compliance
with the privacy rules.” When economic freedom is taken
away, political freedom and civil liberties are sure to
We could not have said it better than the
professional staff of HHS. Secretary Thompson has some real work
to do.

The Common Ground Minefield

Tread carefully. Your best hopes for insurance reform
based on consumer choice and competition could be blown away in a
minefield sown by narrow special interests dedicated to making an
easy buck, and ideological advocates of government control
dedicated to taking big bucks out of taxpayers’ pockets for an
expansion of substandard government programs. Last November 20,
the Health Insurance Association of America (HIAA), the
largest trade association of independent health insurance
companies in America, joined up with the American Hospital
Association (AHA)
and Families USA, a left-wing
organization that promotes a government-run medical system, in
fashioning a “compromise” on care policy. They have called the
initiative the “Common Ground Proposal.”

In marketing the Common Ground Proposal, the HIAA and
Families USA have initiated a 7-city “road show,” a series of
well-funded conferences designed to generate broad popular
support for the proposal. Public Opinion Strategies has released
initial polling results on the Common Ground Proposal. It shows
that 85% of Americans favor the proposal, and only 13% are
opposed. (As with similar polls in the past, these results are
quite typical; the dramatic reversal of opinion always comes when
Americans are asked whether they want to pay more in premium
costs or taxes or whether they favor increasingly detailed
government regulation in medicine. The best example of this is,
of course, the 1993 Clinton proposal, which initially enjoyed
lopsided majorities in its favor.)

Besides HIAA and Families USA, other “participating”
organizations include the American Nurses Association, the
Catholic Health Association, and the Service Employees
International Union
. John Sweeney of the AFL-CIO has hailed
the agreement as an “important step” toward “building consensus”
on federal policies to deal with the uninsured. Likewise, Senator
Edward Kennedy (D-MA), has praised the proposal as an indication
that “bipartisan cooperation” on this issue is possible, and the
agreement between the “strange bedfellows” of the health
insurance industry and the Left’s top health-care lobbying
organization. The evident objective is to build a groundswell of
support for the key elements of the proposal, undermine the Bush
Administration’s effort to create a system of consumer choice
based on individual tax relief, and break down political
resistance in Congress and the Bush White House to many of its
most objectionable features.

It is not surprising, of course, that the Service Employees
and the American Nurses Association (ANA)-strong backers of
federal control of American medicine-are lined up as
“participants” in the 7-city conference tour. The surprising
development is that the Chamber of Commerce and the
American Medical Association (AMA), while not signing onto
the Families USA-HIAA agenda, are also “participants.”

The Common Ground Proposal has three elements:

#1. A Major Expansion of Medicaid. The
Medicaid “single payer” system for the poor now covers about 34
million persons. Under the Common Ground Proposal, Medicaid would
be further expanded to cover all persons with annual incomes
below 133% of the official federal poverty line, or about $18,820
for a family of three. In a break with current rules, the Common
Ground Proposal calls for eligibility for Medicaid to be based
solely on a person’s income.

#2: Expansion of the State Children’s Health
Insurance Program or Medicaid Coverage for Adults
$48 billion State Children’s Health Insurance program (SCHIP)-
proposed by Clinton and backed by Senator Kennedy-was politically
attractive and passed the Republican Congress with little
opposition and indeed much enthusiasm, as from Senator Orrin
Hatch (R-UT). Under the Common Ground Proposal, SCHIP or
Medicaid, at the discretion of the states, would be expanded to
cover all adults with incomes between 133% and 200% of the
official poverty line. Eligibility, once again, would be solely
based on income, guaranteeing another massive Medicaid expansion.
As Reps Bill Thomas (R-CA) and Jim McCrery (R-LA) note in their
Dear Colleague letter, the HIAA-families USA proposal would
increase the total number of Americans covered by Medicaid by
a whopping 50%
, and would add another $25 billion per year to
the Medicaid budget.

#3. More Health Insurance Tax Breaks for
Federal law now provides unlimited tax
relief for both individuals and companies for the provision of
health insurance. For individuals, the tax break is an exclusion
of benefits from taxation; for employers, it is a deduction of
health insurance benefits as a cost of doing business. The Common
Ground Proposal introduces a new, nonrefundable tax credit- for
employers only-for paying a larger share of the premium for
workers with incomes between 133% and 200% of the official
federal poverty line. This proposal would reinforce all of the
current problems attendant upon the exclusivity of tax breaks for
employer-based health insurance.

The broad corporate support for the Common Ground
Proposal is based on the desire to “do something” about the
large number of uninsured Americans, running anywhere between 33
and 43 million at any given time, depending upon how they are
enumerated. The brainless “do something” mentality that greets
virtually every problem in American medicine has, however,
largely made matters worse.

Many members of Congress, including liberals and
conservatives, have made reduction of the uninsured a top policy
priority. Leading conservatives, including Reps. John Cooksey (R-
LA), John Shadegg (R-AZ), Dick Armey (R-TX), and Jim McCrery (R-
LA), have all backed comprehensive reform based on consumer
choice and competition. But the Common Ground Proposal goes
exactly in the opposite direction. For example:

Congress should be getting Americans off Medicaid and
into private health insurance, not putting more Americans into
. Medicaid is a programmatic mess. It has huge
and growing costs; it is delivering poor care; and doctors and
hospitals do not like either the Medicaid bureaucracy or the low
payment rates. Not many middle-class Americans would drop their
private insurance and voluntarily sign up for Medicaid. But
the Common Ground Proposal would-in effect-close off all
private options for low-income Americans, locking them into the
Medicaid Ghetto
. Many low-income families try to avoid
Medicaid. In 1994, the New England Journal of Medicine
found, as Reps Thomas and McCrery note, that they have good
reason for doing so: Medicaid recipients wait longer to get
appointments, and, according to a 1997 Kaiser Family Founda-

tion/Commonwealth Foundation study, are almost twice as likely to
fail to get needed care than patients in private health

The Common Ground Proposal would contract the private
health insurance market, rather than expanding it. It would
surely encourage a massive dumping of Americans out of private
health insurance and into the Medicaid program.
private health insurance market would become smaller and less
involved in the management of risks-the very purpose of
insurance. If low-income Americans are automatically eligible for
coverage under the government program, why should private
employers cover them at all? What is likely, of course, is
that employers would try to dump the sicker employees into
Medicaid’s adverse selection against the taxpayers
. This
would, in turn, exacerbate Medicaid’s already exploding costs,
and the taxpayers would pick up the bill. As Congressmen McCrery
and Thomas point out, “Perhaps that explains why the HIAA has
endorsed this contraction of the private health insurance market.
Some insurers would rather avoid risk than manage it.”

The Common Ground Proposal lays the groundwork for
even greater government control over American medicine

While Families USA gets closer to its objective of government
control over medicine, the HIAA gets an expansion of the New Deal
tax treatment of easily regulated and controlled employer-based
health insurance. The insurance industry gets a fresh flow of
taxpayer cash through the new business credit, and health
insurance contracts are, and remain, the exclusive preserve of
company health care benefit managers and insurance companies. The
insurance contracts are neater and safer. A sweet, short-term
deal. Of course, it is a hop, skip, and a policy jump to
employer mandates: the core component of the 1993 Clinton Health

Politically, with the Common Ground Proposal, the left wins-
and conservative and centrist advocates of consumer choice lose-
big time. That’s the end game of Common Ground. Keep off that

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

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.