Health Care and the New Congress

New people:

Committee chairmen have a huge impact in deciding what issues to showcase, who to feature at committee hearings, and what legislation goes to the floor.

• If the Senate does switch, newly re-elected Ted Kennedy will chair the Health, Education, Labor, and Pensions (HELP) Committee with jurisdiction over a broad range of health care issues. Expect a bigger role for government all around.

• And the distinctly anti-market Rep. Pete Stark will chair the Health Subcommittee of the House Ways and Means Committee. Mr. Stark said last month that his priority will be to stop what he called ?the Republican drive to privatize Medicare.? He also will have Health Savings Accounts in his sights.

• And Rep. John Dingell, who The Wall Street Journal says ?has long had a reputation as a partisan investigative bulldog,? will chair the House Energy and Commerce Committee, with jurisdiction over many health care issues, including Medicaid.

Different issues:

• Health Insurance: The State Children's Health Insurance Program expires in 2007 and must be reauthorized. Conversations had already begun among our colleagues to use this as an opportunity to expand private insurance, including giving parents more help in adding their children to job-based policies.

  Expect, instead, more efforts from the new leadership to put children into an expanded Medicaid program and to further expand Medicaid to all uninsured adults with incomes up to 100% of poverty.

• Drug prices: One campaign theme of Democrats was to have the federal government ?use its negotiating power? to get lower drug prices from pharmaceutical companies. The 2003 Medicare law explicitly prohibits federal interference in private price negotiations.

  Likely House Speaker Nancy Pelosi has pledged that, within the first 100 hours after the House convenes, legislation will be introduced to repeal that ban.

  Private insurers already negotiate drug discounts for Medicare beneficiaries and have driven prices of the drug benefit down 40% below the government's estimates, but Democrats believe the government could get a better deal.

  ?I don't know that we could undo all the private plans,? Mr. Stark said earlier. ?But at least we could offer a government-administered drug benefit.? Look for more sticks than carrots to make this happen.

  Legislation to beef up the drug importation legislation that passed the last Congress also is very likely, and there will be a fight to reauthorize legislation to allow the pharmaceutical industry to fund speedier FDA drug approval.

• Democrats also will make a big push to allow federal funding for embryonic stem cell research, to fund more research on cost-effectiveness reviews of medicines and new technologies, and to put more teeth into requiring doctors and hospitals to follow ?evidence-based? practice standards.

A new playbook:

All around, there will be a big push for more government involvement in the health sector, which we believe is the source of many of the problems in the health sector today.

There also will continue to be aggressive moves in the states to reform their health care systems, with many looking to Massachusetts as a model. Our advice: States should begin instead by undoing the damage they have caused to their health insurance markets through over-regulation and excessive mandates.

Will Republicans try to get a few things done in their very brief lame duck session next week? Lobbyists will still be trying to get fixes into the continuing resolution they must pass to keep the government running, but meaningful changes are unlikely after the drubbing Republicans took at the polls on Tuesday.

The stock market rallied the day after the elections, with investors happy that Washington would be in gridlock for at least the next two years. But health stocks took a hit, with expectations that companies in this sector will be targeted in the new Congress.

True, President Bush does have veto power, but Congress has huge potential to shape the debate and will try to make it very hard for the president to stand his ground against the further encroachment of government into the health sector.

In spite of all of this, there still is a great deal of energy in the private sector to boost consumerism, with thousands of new companies investing in ideas and technologies to make the delivery of health care faster, better, and cheaper. We will do all we can to encourage these companies not to be daunted by what certainly will be a flood of testimonies and studies showing that markets have no role in the health sector and that consumerism is a deeply flawed idea.

And this is a good time to remember that the momentum toward consumerism and markets in the health sector is on our side.

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

• Medicaid Advantage: A medical home for dual-eligibles
• Is there a right way to promote health insurance through the tax system?
• Developing a center for comparative effectiveness information
• Medicare Part D: Improving care for beneficiaries without drug coverage
• Health care savings from personalizing medicine using genetic testing: The case of Warfarin
• Rolling the health dice

MEDICAID ADVANTAGE: A MEDICAL HOME FOR DUAL-ELIGIBLES
Authors: Grace-Marie Turner and Robert B. Helms, Ph.D.
Source: Galen Institute, 11/06

The Medicaid Commission, on which Grace-Marie Turner serves, will meet next week to vote on recommendations for its final report, which must be submitted to HHS Secretary Leavitt by the end of December. The Commission will be considering a number of recommendations on eligibility, benefit design, and long-term care. Grace-Marie and Bob Helms of AEI have offered nearly 30 recommendations for reform, which were included in the Commission's catalogue of recommendations. One of our recommendations that will be considered by the Commission next week is to create a new Medicaid Advantage program to provide a medical home for beneficiaries eligible for both Medicare and Medicaid. These are people who need the most care but whose care is often the most fragmented. The Medicaid Advantage program would integrate acute and long-term care benefits for duals into a single program, managed by the states, to provide better coordinated care for beneficiaries. The idea was featured in a National Journal story this week. Here is a link to our detailed recommendation.
Full text: www.galen.org

IS THERE A RIGHT WAY TO PROMOTE HEALTH INSURANCE THROUGH THE TAX SYSTEM?
Author: Joseph R. Antos, Ph.D.
Source: American Enterprise Institute, 06/06

The tax exclusion for employment-based health insurance ?has skewed the development of the insurance market, resulting in generous coverage for higher-income workers but leaving millions of others uninsured and facing rapidly rising health costs,? writes Joe Antos of the American Enterprise Institute. Antos examines four recent reform proposals: tax credits for the purchase of private insurance, capping the tax exclusion for employment-based health insurance, tax subsidies for high-deductible insurance and health savings accounts, and expanding tax subsidies for out-of-pocket spending. ?Capping the exclusion to finance tax credits for those most in need is a conceptually straightforward approach that could only be accepted if those with higher incomes were prepared to pay more for their own health insurance,? concludes Antos. ?The right tax reform recognizes that political reality and balances the need for institutional improvements in health insurance with the need to maintain some stability in the insurance market."
Full text: www.aei.org

DEVELOPING A CENTER FOR COMPARATIVE EFFECTIVENESS INFORMATION
Author: Gail R. Wilensky
Source: Health Affairs Web Exclusive, 11/07/06

Gail R. Wilensky, former administrator of what is now the Centers for Medicare and Medicaid Services, discusses the possible creation of a new U.S. center to develop evidence on the comparative effectiveness for drugs, devices, and medical procedures. A number of countries, including the U.K., Germany, Australia, and Canada, have already established similar agencies, but Wilensky writes that the ?appropriate function, structure, placement, and financing of a comparative effectiveness center in the United States will need to reflect this country's political sensitivities and the unique public/private structure that has developed here.? Such a center could be placed within the Department of Health and Human Services, within a quasi-government entity, or within the private sector. ?Despite many different views, there is widespread agreement on the attributes that need to be associated with a comparative effectiveness center: objectivity in the selection of what is studied, credibility in the findings, and independence from political pressures generated either by government or by private-sector stakeholders,? concludes Wilensky.
Full text: content.healthaffairs.org

MEDICARE PART D: IMPROVING CARE FOR BENEFICIARIES WITHOUT DRUG COVERAGE
Source: PhRMA, 10/27/06

The Pharmaceutical Research and Manufacturers of America has commissioned a study to measure the impact of Medicare Part D on access to medicines and drug compliance for patients that didn't previously have drug coverage. The study found these patients now are more likely to comply with recommended drug treatments, they have access to a greater variety of drugs, and patients with chronic conditions -- including Alzheimer's, diabetes, and hypertension -- are getting treatment under Part D that they weren't previously receiving. One big reason for the compliance: Their average monthly out-of-pocket costs dropped from $59 last year to $29 after enrollment in Part D.
Full text: www.phrma.org

A new Wall Street Journal Online/Harris Interactive health-care poll also finds that ?the drug benefit has been highly successful with seniors in its first year.? The poll shows that 70% of seniors enrolled in a plan have saved money on prescription drugs and ?most seniors don't plan to switch plans at the start of the year, when such changes are made available; only 12% say they are likely to switch plans vs. 73% who want to stick with their current plan.?
Full text: online.wsj.com

HEALTH CARE SAVINGS FROM PERSONALIZING MEDICINE USING GENETIC TESTING: THE CASE OF WARFARIN
Authors: Andrew McWilliam, Randall Lutter and Clark Nardinelli
Source: AEI-Brookings Joint Center for Regulatory Studies, 11/06

Personalized medicine - the use of drugs and drug doses based on an individual's genetic makeup - has the potential to improve public health and reduce health spending, as evidenced in a new study by Andrew McWilliam, Randall Lutter and Clark Nardinelli of the Food and Drug Administration. The authors examined the integration of genetic testing for warfarin therapy, which is used to prevent and control blood clots but which is complicated to use because the optimal dose varies greatly among patients. They found that genetic testing ?could allow American warfarin users to avoid 85,000 serious bleeding events and 17,000 strokes annually.? Additionally, the authors ?estimate the reduced health care spending from integrated genetic testing into warfarin therapy to be $1.1 billion annually, with a range of about $100 million to $2 billion.?
Full text: www.aei-brookings.org

ROLLING THE HEALTH DICE
Authors: Reed Abelson and Milt Freudenheim
Source: The New York Times, 11/04/06

?Despite heavy promotion by insurance companies, corporate benefit consultants and even cheerleading by President Bush, employers have been slow to push consumer-directed health plans and workers have been even slower to choose them,? reports The New York Times. A recent survey conducted by the Kaiser Family Foundation and the Health Research and Education Trust found only 7% of employers that offer health benefits made consumer-directed plans an option during the 2006 enrollment season. ?Because consumer-directed health plans have been around for only a short time and adopted by relatively few workers, it is hard to know yet whether they are meeting the goal of making people better consumers of health care,? concludes the Times. ?That is why, despite the prospect of saving money on their employees' health benefits, many companies are also cautious, mindful that their workers could end up worse off.?
Full text: www.nytimes.com

UPCOMING EVENTS:

Every American Should Have Access to Affordable Health Care Coverage
America's Health Insurance Plans Luncheon Policy Forum
Monday, November 13, 2006, 12:00 p.m. - 1:30 p.m.
Washington, DC
For additional details and registration information, call 202-861-6388 or email rsvp@ahip.org.

From Lab Bench to Bedside
Manhattan Institute for Policy Research Evening Symposium
Monday, November 13, 2006, 6:00 p.m. - 7:30 p.m.
New York, NY
For additional details and registration information, go to: www.manhattan-institute.org.

The Future of Health Insurance
Health Affairs Briefing
Tuesday, November 14, 2006, 9:30 a.m. - 11:30 a.m.
Washington, DC
For additional details and registration information, go to: www.burnesscommunications.com.

Ask the Experts: Open Enrollment for Medicare Part D
Kaiser Family Foundation Webcast
Tuesday, November 14, 2006, 2:00 p.m. - 3:00 p.m.
For additional details and registration information, go to: www.kaisernetwork.org.

High-Risk Pools
Coalition for Affordable Health Coverage Luncheon Briefing
Wednesday, November 15, 2006, 12:00 p.m. - 1:30 p.m.
Washington, DC
For additional details and registration information, contact Jennifer Rudolph at 202-626-8520 or jrudolph@jeffersongr.com.

Medicaid Commission Meeting
Department of Health and Human Services Public Event
November 16 - 17, 2006
Arlington, VA
Grace-Marie Turner and her fellow Commissioners will vote on options for reform of the Medicaid program. For additional details and registration information, go to: aspe.hhs.gov.

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 www.galen.org.

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