The Heritage Foundation

Executive Summary #1209es on Health Care

August 3, 1998

August 3, 1998 | Executive Summary on Health Care

BG1209es:  How Congress Can Restore the Freedom of SeniorCitizens to Make Private Agreements With Their Doctor

Most Americans would agree that the relationship between a doctor and a patient is nobody's business--especially the government's. Nonetheless, Congress and the Clinton Administration have made a confusing mess of the Medicare law that governs this very relationship.

Buried deep in the Balanced Budget Act of 1997 is a provision (Section 4507) that deliberately curtails a senior citizen's right to spend his or her own money on a medical service covered by Medicare and provided by a doctor of his or her choice. According to this law, to contract privately to treat a senior citizen a doctor must:

  • Sign an affidavit to that effect and submit it to the Secretary of Health and Human Services within ten days.

  • Agree to remove himself from the Medicare program and refrain from submitting any claims to Medicare for reimbursement for two full years.

Because very few physicians can afford to drop out of Medicare for two years, the vast majority refuse to treat senior citizens privately.

No other government health program has a similar statutory restriction for any other class of Americans. Indeed, senior citizens and their physicians in the United States have less personal freedom to engage in private contractual relationships than their counterparts enrolled in the British National Health Service, one of the world's best-known systems of socialized medicine.

The premises of the new Medicare restrictions are even worse than most Americans might imagine, because the Clinton Administration recently convinced a federal court that a Medicare beneficiary's right to privacy in a contractual relationship with a doctor--even though no tax dollars are involved--is not protected by the U.S. Constitution. This result of this odd combination of congressional, executive, and judicial actions has been twofold: a profoundly damaging precedent that curtails the personal freedom of doctors and patients, and a unique and confusing situation for doctors and patients in the Medicare program.

RESTORING THE RIGHTS OF SENIORS

There is a proposal before Congress, however, to restore the rights of seniors and their physicians. The Medicare Beneficiary Freedom to Contract Act (S.1194/H.R. 2497), introduced by Senator Jon Kyl (R-AZ) and Representative Bill Archer (R-TX), would:

  • Restore the right of doctors and patients to enter into private agreements on mutually agreed upon terms by repealing the legal requirement that doctors give up their Medicare reimbursement for two years if they enter into a private contract.

  • Repeal the statutory requirement that doctors submit an affidavit to the Secretary of HHS agreeing not to submit any Medicare claims for two years.

  • Clarify that nothing in Medicare law prevents Medicare patients from entering into private agreements with their doctors on a case-by-case basis for any length of time.

  • Take steps to ensure that private contracting does not lead to Medicare fraud.

CONCLUSION

The emerging debate over private contracting has exposed both the essentially authoritarian assumptions underlying the current Medicare system and the arbitrary operations of an arrogant bureaucracy unchecked by serious congressional oversight. It is time for Congress to begin to exercise serious oversight over the Health Care Financing Administration, the federal agency that oversees Medicare and has contributed significantly to confusing the issue of private contracting for senior citizens and their doctors.

Congress should curtail the excesses of the Medicare bureaucracy and fix what is clearly broken. Lawmakers should make sure that doctors and patients in Medicare enjoy at least the same professional flexibility and personal freedom that their fellow citizens enjoy.

In addition, members of the National Bipartisan Commission on the Future of Medicare, assembled to present recommendations to reform the financially troubled program, can make sure that America's senior citizens are never again burdened with similar bureaucratic restrictions.

By doing so, they can reaffirm the principle that all Americans retain the fundamental freedom to spend their own money on the physicians and medical treatments of their choice. Freely chosen contractual relationships between doctors and patients are the business of doctors and patients, not of Congress or the federal bureaucracy.

-- Robert E. Moffit is Director of Domestic Policy Studies at The Heritage Foundation.

About the Author

Robert E. Moffit, Ph.D. Senior Fellow
Center for Health Policy Studies

Related Issues: Health Care