Health Care with an Iron Fist

Published May 19, 1994

Those who support some form of national health system, from the President and Mrs. Clinton on down, enjoy stressing the “caring,” “compassionate” nature of their proposals. In fact, however, proposals for nationalized health care rely mostly on coercion a nd intrusion into the private affairs of Americans–to an extent rarely, if ever, seen during times of peace.

Despite talk of “managed competition” and “market forces,” all of the leading proposals for nationalized health care rely almost exclusively on government force- -civil and criminal penalties–to reshape the health care industry.

For example, under the “Health Security Act” proposed by the President, employers and individuals must purchase health insurance, and only through government-created organizations called “Regional Alliances.” Each Alliance is granted a government-protecte d monopoly over the provision of health insurance within its region. [Sec. 1202(b)] To assure enrollment, the Alliances will monitor births and residence changes. Any person who moves into an area is required to register with the local Alliance.

Employers and health care providers are forcibly enlisted in the enrollment effort. Employers must report the health insurance status of all employees to the local Alliance on a regular basis, under threat of a $10,000 fine for each failure to do so. [Sec s. 1602(b) and 1609] Doctors and other care providers must report to the local Alliance the identity of any person seeking health care without evidence of enrollment in a health plan. [Sec. 1323(b)] Individuals who have failed to enroll in a plan will be required to pay a fine and then will be involuntarily enrolled by their Regional Alliance. [Sec. 1323(i)]

Once enrolled, an individual may be given a choice of health plans from which to select coverage–although states have the power to establish single-payer plans in which no choice is allowed. [Sec. 1221-1224] Even in states that allow multiple plans, choi ce will be illusory. A newly created “National Health Board” will prescribe the benefits package and premiums that must be offered by every plan. [Title I, Sub. B; Title VI] Health plans may not offer financial incentives or market tie-ins (such as discou nted health club memberships) to encourage enrollment. All marketing materials must be approved in advance by the Alliance. [Sec. 1404] Government micro-managers prescribe the forms that must be used to record enrollments, claims, diagnoses, and treatment s. [Sec. 5130(c)] Each use of an unauthorized form merits a $10,000 fine. [Sec. 5141(b)]

If an individual or employer fails to pay premiums on time, the Alliance can assess interest and late fees “as may be necessary” to collect its “premiums.” In addition to the Alliance’s “late fees,” the government may impose a civil fine of $5,000 or thre e times the unpaid premium, whichever is greater. [Sec. 1345]

Although the Act proclaims that it shall not be construed to prohibit the private purchase of health care, it specifically prohibits the sale of any private insurance policy that would in any way duplicate the benefits provided by the Act. [Sec. 1422] Sin ce the Act requires all plans to cover everything from hospital and doctor visits to aerobics classes and stress management programs [Sec. 1127], it effectively precludes the sale of any private health insurance.

Under the Act, health care providers may not charge or collect from a patient any fee for a service included in the basic benefits package, even if the patient’s health plan fails or refuses to pay for the service. [Sec. 1204(d)(3)(C); 1406(d)] To top it off, any offer, direct or indirect, of “anything of value” to influence “actions, decisions, or duties relating to a health alliance or health plan” constitutes “bribery and graft in connection with care.” If you offer to babysit your neighbor-the- doctor ‘s children, in exchange for your neighbor’s agreement to look at your child’s sore throat, you’ve both committed a federal crime punishable by up to 15 years in prison. [Sec. 5434]

The Act also includes price controls on both providers and insurers. [Sec. 1322(c); 1406(d); 6001] Plans may not attempt to control costs through underwriting [Sec. 1402] or by eliminating coverage for aerobics, dental cleanings, or other less- essential benefits. Plans that try to reduce costs by investigating fraud may be subject to lawsuits and penalties of up to $1,000,000 per claim for “unreasonable denial or delay in payment.” [Sec. 5207(a)] With effective cost-cutting options eliminated, health pla ns unable to meet the premium caps established by the National Health Board will have little choice but to ration care. Unless, of course, they simply stop paying doctors.

If a plan quits paying doctors, the doctors must nevertheless care for the plan’s enrollees, even in non-emergency situations. [Sec. 1204(d)(3)(D)] Doctors may neither boycott nor threaten to boycott a plan, even if the plan has ceased to pay them for the ir services. [Sec. 1322(c)(6)]

Regulations, of course, must have enforcement “teeth” in them. Penalties and sanctions thus permeate every title of the Clinton proposal. Indeed, the Act creates two broad new categories of federal crime: “federal health care offense” and “health care fra ud.” [Secs. 5402(d); 5431]

The heavy penalties attached to these new crimes are startling. “Health care fraud” is punishable by up to life imprisonment. Corporate health plans face fines of up to $100,000 if they miss government reporting deadlines. [Sec. 1394] Pharmaceutical compa nies face fines of $10,000 per day for failing to provide cost information to the government within the prescribed time frame, and up to $100,000 per item if the information is erroneous. (Imagine if the government itself were held to such a standard!) Th is is “in addition to any other penalties prescribed by law.” [Sec. 2003(b)(3)(D)(i)] Asset forfeiture is required whenever a “federal health care offense” has a “significant detrimental impact on the health care system,” a phrase left undefined. [Sec. 54 32]

While these examples focus on the President’s plan, it is important to remember that all of the proposals that would create a nationalized health care system ultimately rely on a similar use of force. Alternatives that would cost the government little or nothing and avoid the creation of massive bureaucracies– Medical Savings Accounts, reductions in state-mandated benefits, or expanded COBRA coverage–have received virtually no attention in Washington.

All too often, our political representatives pass laws and adopt programs without fully understanding the implications of what they have done. But the implications of nationalized health care should be quite clear: more bureaucracy; more rules, regulation s, and red tape; and a decline in the quality of care. Indeed, perhaps government-run health care should be declared a federal health care offense.

Bradley A. Smith is a visiting assistant professor at Capital University Law School.