Medicare Limits Senior Liberty
March 20, 1998
Imagine that you are diagnosed with severe depression
at age sixty. You seek out the best-known psychiatrist
who prescribes Prozac and long-term counseling. After
time, the medical treatment and counseling appear to be
working and you are quite satisfied with your psychiatrist,
whom you have come to trust. For the next five years,
you continue to see your psychiatrist and pay privately
for your outpatient mental health services.
Unfortunately, you turn sixty-five on 1 January 1998. Effective
that date, you can no longer pay privately for the psychiatrist,
medical doctors, and other health care practitioners of
your choice unless your doctor promises to stop seeing all
Medicare patients for two years. This new Medicare regulation was
included in the recently passed Balanced Budget Act of
1997 and signed into law by President Clinton on 5 August
How can the federal government enforce such a law? It
is easy. The federal government automatically enrolls
Americans into Medicare Part A (the part that pays for
hospital care) the minute they apply to collect their
Social Security payments at age sixty-five. They have
no choice about the matter. For many Americans, that means
they automatically become subject to Medicare rules and
regulations whether they actually want to participate
or not. In addition, the federal government enrolls seniors
into Medicare Part B (the part that pays for doctor visits)
unless they actively decline. Some Americans decline to
join part B because it does not cover most self-administrable prescription
drugs, such as Prozac. Medicare part B has been considered
voluntary, at least until now.
Once the new Medicare law takes place in 1998, seniors will
effectively be coerced into joining Medicare Part B. The reason
is that most doctors are not going to drop all of their Medicare
patients in order to treat a few private-paying ones.
"Currently, only 9 percent of doctors do not participate
in Medicare and few doctors can afford to give up their
Medicare practice for the sake of those patients who wish
to contract privately," says Paul Beckner, president of
Citizens for a Sound Economy. That means seniors will
have to join Medicare Part B if they want to see the doctor
of their choice. "Ultimately, the two year exclusion makes
it nearly impossible for most seniors to contract privately,"
Senator Jon Kyl (R-Ariz.) wanted to include explicit
language in the Balanced Budget Act that preserved the
right of seniors to contract privately with the doctor
of their choice. However, the two year exclusion provision
was added by Representative Bill Thomas (R-Calif.) who
stressed that President Clinton threatened to veto the
entire Balanced Budget bill without the addition.
It is ironic that President Clinton threatened to veto
the entire budget bill over a provision that would have
given Americans greater health freedom. After all, just
two years ago, he wrote the following to the Coalition
for Patient Rights: "I do not advocate prohibiting an
individual from purchasing outpatient mental health services
directly from a practitioner, even if those services are
also provided by the individual's health plan. Neither
the Health Security Act nor my current health care proposals
are meant to curtail this prerogative. I support the right
of patients to receive these services without being compelled
to disclose clinical records to health plans or to the
government. Further, I endorse the right of practitioners to
provide outpatient mental health services directly to
individuals without penalty."
Like Clinton's statement about the era of big government being
over--made as he expands regulations and spending-- his
statement about health care choice rings hollow.
Now that the budget threats are over, Congress has the
opportunity to debate a standalone bill that would return
to seniors their freedom to contract privately with the
doctor of their choice. Senator Kyl introduced the Medicare
Beneficiary Freedom to Contract Act of 1997 (S.1194) on
18 September 1997. The bill permits physicians and other
practitioners to enter into private contracts with Medicare
patients without being banned from the Medicare program
for two years. Congressman Bill Archer introduced a similar
bill in the house (H.R. 2497).
Not only does private contracting improve seniors' choice
of doctors, but it also reduces fraud and abuse. The American Association
of Retired Persons reports that 93 percent of polled respondents
believe that fraud is widespread in the Medicare program.
Some critics disagree with AARP's solution to the fraud problem,
which is to prohibit private contracting, thereby keeping seniors
locked in a system burdened with fraud and abuse. Karl Humiston,
a Harvard-trained psychiatrist and member of AARP stresses
that, "When Medicare was created in 1965, President Lyndon
Johnson promised that nothing in the Medicare law would
prevent seniors from exercising their freedom to choose their
health care. But thirty years later, Medicare is preventing seniors
from spending their own money on the doctors and health care
of their choice. Is that not Medicare fraud and abuse?"
Do not be surprised if President Clinton threatens another veto
on The Medicare Beneficiary Freedom to Contract Act in the
name of preventing Medicare fraud and abuse. However, Americans
must realize that the real Medicare fraud and abuse will
take effect 1 January 1998 unless corrective legislation
is passed to allow private contracting.
By Sue A. Blevins, president of the Institute for Health
Freedom, Washington, D.C.
Originally published in Regulation, 1997,
Vol. 20, No. 4. Copyright 1997 Cato Institute.