Wisdom Prevails

Experts had said all along that the Maryland law, enacted earlier this year over Gov. Ehrlich's veto, would not meet the Erisa test, and that is exactly what the judge said.

Erisa allows companies to have employee benefit plans that are uniform nationwide, and the Maryland law would have meant that Wal-Mart would have had to make changes just for Maryland.

Clearly a violation of federal law.

None of the other 30 state legislatures lobbied by the AFL-CIO to pass similar legislation has followed Maryland's lead. Which doesn't mean big labor will give up; it will just try other tactics, including appealing the District court's decision.

The Wall Street Journal points out in an editorial that individuals and smaller firms need the same authority that big companies have through Erisa to shape their benefit packages to suit their employees' needs.

Erisa-qualified companies are exempt from the more than 1,800 state coverage mandates in the 50 states as well as from destructive state laws like community rating and guaranteed issue. And, amazingly, these companies still manage to provide quality health coverage to their employees, without politicians micromanaging the policies.

If small businesses and individuals were freed from the shackles of these expensive state mandates and regulations, they would reshape the market to provide more affordable policies and transform the health sector around people's needs, not the dictates of politicians.

These changes are vital for the health of our health sector and for American businesses operating in a 21st century global economy.

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Transparency: House Health Subcommittee chair Nancy Johnson delved into the important issue of price and quality transparency during a hearing on Tuesday with a star-studded witness list.

• Harvard Professor and Manhattan Institute Senior Fellow Regina Herzlinger argued that Congress should create a new version of the Securities and Exchange Commission - a Health Care SEC. The SEC "transformed the transparency of the world-class U.S. capital markets" in the Roosevelt era, and could provide a model as a neutral player to do the same in the health care economy.

• But then Robin Downey of Aetna described her company's leadership in making price and quality information available to Aetna members, with many other health plans and companies following suit.

  It's not clear to me that, in an Internet era, we need Regi's central clearinghouse for pricing and quality information. Consumers can be their own judge based upon competing sources of information that are readily available anytime, anywhere. And because health care prices are so localized, it makes overseeing this information even more difficult.

• Dan Evans, CEO of Clarian Health Partners, an Indiana health center, said "it is our vision in the near future for Clarian to be able to quote our patients a price for a particular procedure and align that price with our quality data to give our customers a true picture of the value proposition for the services we provide."

• Wisconsin Hospital Assn. President Stephen Brenton echoed Evans about the availability of information, through its interactive PricePoint web site. "We believe that today, PricePoint is the most comprehensive private-sector price transparency initiative in the nation. Our Information Center is currently working with seven states to brand similar programs."

  What? Do we see some competition emerging here over information sources?

• A plethora of information already is emerging, but, of course, there are skeptics: Ha T. Tu of the Center for Studying Health System Change says "Our research findings indicate self-pay markets are unlikely to be a workable model of effective shopping for health care services without either a large role for insurers or regulatory oversight."

  The last word?

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Congress is scheduled to be in session only one more week before the long August break beginning July 31. There is a lot of optimism on Capitol Hill that there will be action on health care legislation.

The best chances are for fixes to HSAs that have a small or no price tag, some form of association health groupings, and possibly a one-time FSA rollover into an HSA. We'll keep you posted.

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

• The Massachusetts health plan: Lessons for the states
• The Health Care Choice Act: Eliminating barriers to personal freedom and market competition
• Medical bills and bankruptcy filings
• From Medicaid to retiree benefits: How seniors impact America's health care costs
• Medicaid spending growth and options for controlling costs
• The patient's right to know
• Milliman Medical Index 2006

THE MASSACHUSETTS HEALTH PLAN: LESSONS FOR THE STATES
Authors: Nina Owcharenko and Robert Moffit, Ph.D.
Source: The Heritage Foundation, 07/18/06

Original advocates of the Massachusetts health reform plan, Nina Owcharenko and Robert Moffit of The Heritage Foundation observe in this latest paper that there are key components of the Massachusetts plan that states should adopt and others that should be avoided. "States should consider both establishing a statewide health insurance exchange for [tax-preferred] health insurance?and replacing the current provider-based subsidy structure for the uninsured with premium assistance to individuals in need," they write. States should not replicate the employer mandate or expand Medicaid to cover middle-income workers. Other states could also improve on the Massachusetts plan by allowing individuals to self-insure and deregulating their state health insurance markets.
Full text: www.heritage.org

THE HEALTH CARE CHOICE ACT: ELIMINATING BARRIERS TO PERSONAL FREEDOM AND MARKET COMPETITION
Author: Robert E. Moffit, Ph. D.
Source: The Heritage Foundation, 07/17/06

Bob Moffit of Heritage provides a clear description and analysis of The Health Care Choice Act, sponsored by Rep. Shadegg and Sen. DeMint, which would allow people living in one state to purchase health insurance from another. "States where health insurers are licensed to sell their plans retain the primary authority to regulate the health insurance product," writes Moffit. The bill would also establish a federal floor for fiscal solvency requirements, entitle those who purchase plans from another state to consumer protections in their own state, and require insurers who sell in another state to pay that state's premium taxes and assessments for state high-risk pools. "A key advantage of the legislation is that it would not preempt, undermine, or override innovative state health care reforms; it would instead give ordinary Americans greater access to different types of health care coverage," writes Moffit.
Full text: www.heritage.org

MEDICAL BILLS AND BANKRUPTCY FILINGS
Author: Aparna Mathur
Source: American Enterprise Institute, 07/19/06

Medical debts are not the leading cause of bankruptcy filings, according to a new study by Aparna Mathur of the American Enterprise Institute. "In fact, households who are most likely to file are those with primarily other forms of debt, such as credit card or car debts, who also incur medical debts," writes Mathur. The study finds "that up to 27 percent (depending on the sample period) of all filings involve cases where medical bills were the primary form of debt." That figure increases to 36% (at most) when including all cases where there was any mention of medical debt. These numbers are "significantly lower" than the widely cited 50% claimed by Himmelstein et al in a 2005 study.
Full text: www.aei.org

FROM MEDICAID TO RETIREE BENEFITS: HOW SENIORS IMPACT AMERICA'S HEALTH CARE COSTS
Author: G. Richard Wagoner, Jr.
Source: General Motors Corporation, 07/13/06

In testimony before the Special Committee on Aging, General Motors Chairman Rick Wagoner highlights the company's initiatives to manage health care costs for its employees, retirees, and their families. "We believe there is NO single solution or a one size fits all approach to reducing the costs and improving the quality and outcomes of the care delivered," Wagoner said. He listed "numerous and varied approaches" that GM offers, like wellness and disease prevention programs. But Wagoner's push for a greater public/private effort for "high-cost cases" is cause for concern. Although he says the cases "pose a significant burden" for businesses, we don't believe that having taxpayers pick up the bill for these insurable expenses is the right solution.
Full text (pdf): media.gm.com

MEDICAID SPENDING GROWTH AND OPTIONS FOR CONTROLLING COSTS
Author: Donald B. Marron
Source: Congressional Budget Office, 07/13/06

Donald Marron, acting director of the Congressional Budget Office, also testified before the Senate Special Committee on Aging to explore solutions to the rising costs in the Medicaid program. Marron analyzes the sources of spending growth and the interactions between Medicaid and private insurance. He said "there is some evidence that Medicaid coverage discourages enrollees with high incomes from buying private insurance or saving more to pay for their long-term care needs" because they see Medicaid as a safety net. Marron examines options for controlling Medicaid spending, including reducing the federal contribution, reducing mandatory benefits or restricting coverage, increasing beneficiaries' cost sharing, and encouraging greater use of lower-cost services.
Full text (pdf): www.cbo.gov

THE PATIENT'S RIGHT TO KNOW
Author: Peter Huber
Source: Forbes, 07/24/06

"Diagnostic technology is on a collision course with the [Food and Drug Administration]," writes Peter Huber of the Manhattan Institute. "A dipstick (or something much like one) is coming to diagnose just about anything: infectious disease, disease caused by your own cells gone haywire or the threat of disease caused by imperfect genes," writes Huber. "No doctor, nurse or lab technician will be needed." But he is uncertain whether the FDA will allow it. "If the Constitution protects privacy at all, it ought to protect the go-it-alone privacy of a dipstick at least as much as show-and-tell privacy in an office."
Full text: www.forbes.com

MILLIMAN MEDICAL INDEX 2006
Source: Milliman, 6/29/06

The average annual medical cost this year for a typical American family of four with an employer-sponsored PPO program is $13,382, an increase of 9.6% from 2005, according to the 2006 Milliman Medical Index. The study, conducted by the consulting and actuarial firm Milliman Inc., assesses changes over a five-year period and looks at the major drivers and components of medical spending, including inpatient and outpatient hospital services, physician services, and prescription drugs. The report concludes that interest in consumer driven health plans (CDHPs) has risen in the last year, but "[w]hether CDHPs continue to grow and ultimately cover a significant portion of American families will depend on whether the plans, and the laws that govern those plans, evolve to encompass the diverse needs of American families."
Full text: www.milliman.com

UPCOMING EVENTS:

Ask the Experts: Price Transparency
Kaiser Family Foundation HealthCast
Tuesday, July 25, 2006, 2:30 p.m.
For additional details and registration information, go to: www.kaisernetwork.org.

Preparing for the National Provider Identifier: What it Means for the Industry
America's Health Insurance Plans Audio Conference
Thursday, August 17, 2006, 1:00 p.m. - 2:30 p.m.
For additional details and registration information, go to: www.ahip.org.

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at http://www.galen.org/.

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