From the President...

Reform of Medicare May Be Possible

Robert J. Cihak, MD

Freedom will always work better than regulation. Take for instance, the impact of a change in worker safety regulations in New Zealand described by Maurice McTigue, a former New Zealand legislator and official now working at the Mercatus Center of George Mason University (

For many years, under command and control regulations, improvements in worker safety seemed to be leveling off, with 0.5 percent per year improvement. Employers were required to check off a series of worker safety items on a government checklist. Once the checklist had been completed, the employer had evidence that he had complied with the law and therefore had indeed established a safe workplace. (Once the check marks were in the right boxes, employers were protected against trouble with the government over worker safety.) Some people speculated that perhaps no further improvements were possible. Others worried that there was something wrong with the system. But then a revolution did take place.

Due to a change in the law in the early 1990s, the command and control checklists were repealed and replaced with a very simple and very short law that simply required employers to provide a safe and healthy work environment. Employers were free to improve their own businesses; they no longer had government checklists to use as a shield if an accident did occur. After 2 years under this new regime, worker safety measures had improved 30 percent. In other words, command and control regulations stifled the normal desire of employers to have a safe workplace. The command-and-control checklists created a false sense of security and safety among employers and government officials alike.

The command and control approach was replaced with strong incentives. The driving force in the new law was an obligation to provide a "safe and healthy workplace." The legal test was the "reasonable person" test --- i.e., whether a "reasonable person" would have made changes in the workplace that would have prevented the injury.

Business owners took notice and looked at their workplaces more closely. As a result, they found things that could be improved. They also found the injury-free workplace to be profitable. Injuries and accidents demoralize workers, decreasing profits. In other words, both the employees and employers benefited.

Command and control drags everybody down to doing the minimum necessary; incentives lift everyone to the highest common denominator. Freedom will always work better than regimentation.

As we've seen with Medicare and the Food and Drug Administration (FDA), over-regulatory behavior often occurs in response to a perceived crisis or unfortunate accident, whether from perceived fraud or medication reaction. The politicians and bureaucrats then leap into inaction, to change the laws and regulations, often for the sake of change itself so that they could claim, "We're doing something." They rarely look at the results of the new programs, or even if they had a positive or negative impact on the system.

Likewise, the legislative response to hearings and witnesses complaining about "fraud and abuse" in medicine has resulted in the Kennedy-Kassebaum Health Insurance Portability and Accountability Act of 1996 (HR 3103), which requires the federal government to spend hundreds of millions of dollars every year to root out such fraud and abuse. A big difference here is that there isn't even a checklist for guidance. Medicare has yet to define what "necessary" medical care is. Doctors are sometimes prosecuted for administrative decisions made without statutory authority and not promulgated in an understandable way. The end result or goal is often out of sight by the time the process has been in place for a few years.

Perhaps Medicare will someday decide to make doctors' workplaces safe and healthy. For starters, politicians and bureaucrats should be convinced to look at the goals of their programs. Nominally they're supposed to help people. Yet they often scare and demoralize both patients and physicians with their investigative tactics.

New Zealand officials don't send spies into the workplace to attempt to entice employers into unsafe practices. In contrast, the U.S. Medicare system has sent spies masquerading as patients into physicians' offices, without substantial or significant cause. Some of these events are vindictive and abetted by jealous competitors of successful practitioners, as in the case of Dr. Jeffrey Rutgard in California.

In New Zealand, unannounced raids are only made after due cause is established. In the United States, raids with officials carrying drawn firearms occur with distressing and increasing frequency.

McTigue and several other legislators led the reform effort. In his experience, a small number of lawmakers can initiate and sustain reforms. He also found that the public must be aware of a problem before legislative solutions can be successfully attempted. In the United States, problems with the current tax and social security systems are being discussed in national discourse and finally considered in Congress, but this progress has taken decades of effort by many people and organizations.

Among medical organizations working to reform Medicare, AAPS is the de facto leader. We favored few are telling the truth and showing the world the problems and injustice in Medicare. This is a necessary first step.

The New Zealand experience shows us that our hopes may well be fulfilled.

Dr. Cihak is the President of the Association of American Physicians and Surgeons (AAPS), and a radiologist in Aberdeen, Washington. His column is distributed by and Scripps-Howard News Service.

Originally published in the Medical Sentinel 2001;6(2);45. Copyright©2001 Association of American Physicians and Surgeons (AAPS)