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 Category: AllShowdownJanuary 12, 2007
The House is expected to vote today, without any hearings or serious debate, to approve a measure that would allow the federal government to intervene in drug price negotiations for Medicare. But attention already has shifted to the Senate, where more thoughtful consideration may be possible.
The spotlight is on the leaders of the Senate Finance Committee, which held hearings on the issue yesterday.
Please note, in particular, the Fact Sheet we prepared, called "Medicare Part D and Prescription Drug Prices," that was a joint project of eight think tanks. (This updated version has some additions from the one I sent you last week.) As HHS Secretary Michael Leavitt wrote in a Washington Post article on Thursday, "The success of the Medicare prescription drug benefit provides strong evidence that competition among private drug plans has contributed significantly to lowering costs. The average monthly premium has dropped by 42 percent, from an estimated $38 to $22 -- and there is a plan available for less than $20 a month in every state. The net Medicare cost of the drug program has fallen by close to $200 billion since its passage in 2003." Price negotiation is taking place with the new drug benefit in Medicare every single day by private plans who know what they are doing and are producing dramatic results. Let's hope that reason ultimately prevails in the Senate. Making policy by political slogan is never good. President Bush said he will veto the legislation, but let's hope it doesn't come to that. ************** Gov. Schwarzenegger made banner headlines this week in announcing his plan for universal health insurance for the nation's most populous state. It involves an individual mandate, an employer mandate, new taxes on hospitals and doctors, a shell game of new subsidies, and a scheme to grab more Medicaid money from the federal government (which anywhere else would be called money laundering), for starters. Gov. Schwarzenegger instantly ran into a wall of opposition from the many sectors that will be gored by the $12 billion plan:
Schwarzenegger's detailed 10-page description of the new plan will quickly turn into 1,000 pages of legislation and many more thousands of pages of regulations, suffocating a health care system that is working about as well as can be expected under the circumstances. If you go to www.ehealthinsurance.com, you could find a $1,000 deductible policy for a family of four in Carmel, California, for example, for about $225 a month. The governator relied heavily on the Massachusetts model and suffers from the same overreach. To quote Tom Miller of AEI appearing on CNBC: "It's a heavy lift, and Arnold's muscles aren't what they used to be." What should the state do? Pare down the plan. Get the government out of the way and encourage even more competition among insurers, provide direct subsidies for people to purchase health insurance that they can afford and that is portable from job to job, and lift the burden of regulation so the Golden State can show the rest of the country how this should be done. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
MEDICARE PRICE NEGOTIATONS: A RESOURCE GUIDE The Galen Institute has compiled a resource guide that offers a listing of events, papers, and commentaries by health policy experts as well as news articles that educate the debate over government involvement in prescription drug pricing, with links to each item.
"Health care spending growth in the United States slowed for the third consecutive year in 2005, increasing 6.9 percent compared to 7.2 percent growth in 2004 and 8.1 percent in 2003," according to the Centers for Medicare and Medicaid Services (CMS). The 6.9% rate is the slowest increase since 1999. "Growth in retail prescription drug sales decelerated for the sixth consecutive year, increasing just 5.8 percent in 2005, following 8.6 percent growth in 2004 and 10.6 percent in 2003," according to CMS. Health care spending in 2005 reached almost $2 trillion, representing 16% of the Gross Domestic Product, or $6,697 per person. Medicare spending in 2005 reached $342 billion, while Medicaid reached $311 billion, continuing its recent deceleration.
AEI's Bob Helms, who served as a voting member of the Medicaid Commission, registers his dissent with the Commission's final report, arguing that it did not fully address Medicaid's deficiencies, particularly its "ill-conceived" and "outdated" Federal Medical Assistance Percentage (FMAP) program used to determine the amount of federal money given to the states. Helms finds that "data for all states reveal that there is a negative relationship between the per-capita amount of federal funds flowing to the states and the amount of poverty in the states - that is, as a general tendency, the poorer the state, the less federal money that state receives." For example, "States with the highest poverty rates - such as Alabama, Louisiana, and Mississippi - received much lower Medicaid payments per-capita than did wealthier states like New York and several New England states." Helms writes that a better approach "would be to block-grant the program and force Congress to decide how much money it wants to devote to Medicaid compared to all other budget priorities" or to "reform the current FMAP formula to target the poorest and most disabled beneficiaries and to reduce the matching percentage for program extensions beyond current mandatory coverage for those with higher incomes or for optional benefits."
Testifying before the Senate Committee on Health, Education, Labor, and Pensions, Joe Antos of the American Enterprise Institute provides an overview of recent market initiatives that make health coverage more affordable and improve the functioning of the health insurance market. "The most important recent federal initiatives to promote more efficient and effective use of our health dollars are the enactment of HSAs and the expanded flexibility given to states to reform their Medicaid programs," said Antos. The Massachusetts health plan has also received much national attention, but while the "plan is a bold initiative that intends to improve the functioning of the private insurance market rather than replacing it with government programs?The high cost of health insurance in the state, exacerbated by state mandates and market conditions, makes achieving that goal a difficult challenge," said Antos. "Promising ideas include small business health plans and widening access to insurance by reducing disparities in state insurance regulation." John Goodman, Ph.D. of the National Center for Policy Analysis also testified at the hearing, providing a defense of consumer-driven health care. "To control the growth rate of health care spending, someone must choose between health care and other uses of money?(a) government (national health insurance), (b) employers and insurers (managed care) or (c) patients in consultation with their doctors (consumer-driven health care)." He explains why the latter approach is the most sustainable.
"States are planning large expansions in health care coverage this year in an aggressive and potentially expensive attempt to reduce the ranks of the 42.4 million Americans who are uninsured," reports USA Today. "Popular proposals include guaranteeing medical coverage to all children; subsidizing medical insurance at small businesses; and providing tax incentives for businesses and individuals to make coverage more affordable," writes USA Today. "Behind the surge in activity on health care: States have new tools - budget surpluses, more flexible rules and successful experiments in other states," reports USA Today. "Also, states enjoyed unexpected success in controlling health care costs in 2006, freeing up billions of dollars that had been committed to health care but were never spent." Jim Frogue of the Center for Health Transformation notes that states "are experimenting more with health policy than at any time since the 1980s" and "legislatures are often simultaneously adopting policies that appeal to conservatives and liberals, avoiding the deadlock between Democrats and Republicans in Congress."
Government health expenditures have grown faster than the Gross Domestic Product in Canada since 1975, according to a new report from Brett Skinner of the Vancouver-based Fraser Institute. "Government health expenditure has grown faster on average than our ability to pay for it for a long time?We are near the limit of what taxpayers can afford and are facing significant trade-offs including reduced access to the latest medical care - worse than the lack of access already seen in Canada today - and proportionally less spending on other public priorities," writes Skinner. Possible solutions include "user fees for publicly funded health care; legalizing private insurance for medically necessary health care; and using competition between private (non-profit and for-profit) and public providers for the delivery of publicly funded health care," concludes Skinner. UPCOMING EVENTS: Health Care Reform Summit: Options, Opportunities and Obstacles for Oregon Can Government Price Negotiation Work for the Medicare Drug Benefit? 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. If you wish to subscribe to this free weekly newsletter, update your address, or be removed from our list, please send an e-mail message to galen@galen.org. The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors. CommentsNo comments Add Comment |
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