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 Our newsletter features a commentary by Grace-Marie Turner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus announcements of coming events. It is emailed in an HTML format from the galen@galen.org email address, via Constant Contact, and you may have to adjust your email settings and junk mailbox to ensure that you don’t miss an issue.Newsletters< Prev 1 2 3 4 5 6 7 8 9 Next >May, 25 2007
You Get What You Pay ForWe have precisely the health sector in this country that we are paying for. As we are barraged from all sides with articles, books, and now movies about how absolutely awful our system is, it is important to realize that if we want change, we must start b... We have precisely the health sector in this country that we are paying for. As we are barraged from all sides with articles, books, and now movies about how absolutely awful our system is, it is important to realize that if we want change, we must start by improving the payment and incentive structures that direct how it functions.
We have an obligation to embrace what is good and to do a much better job than we have of fixing what is wrong, particularly by adjusting the incentives to get better care and lower costs and to cover more of the uninsured. We can show the world what a functional, responsive, innovative, and affordable 21st century health care system should look like. We just have to shift the incentives so that is what we are paying for. ********** But the threats to innovation continue, nonetheless: The physician who brought attention to the problems with the Merck painkiller Vioxx, cardiologist Steven Nissen of the Cleveland Clinic, has mined the GlaxoSmithKline research database, which was posted on GSK's website, for information about its diabetes drug, Avandia. Nissen concluded that the data showed a higher risk of heart attacks associated with the drug. GSK says that the meta-analysis that Nissen conducted of 42 studies misses important differences in the design of the studies. The FDA, in a news release, says the evidence is ?contradictory? and that it ?has not confirmed the clinical significance of the reported increased risk.? It will perform its own analysis of the data, including whether other drugs in the same class could have similar risks. No drug is without risk. The most important thing is for doctors and patients to have the best and most timely information available. And those risks should be weighed against what the drug is designed to treat, such as the much greater risks of blindness, kidney failure, and limb amputation associated with diabetes. As part of our 21st century health care system, we need a much better way of getting accurate information to patients. Headline-grabbing articles about medicines for pain, menopause, heart conditions, depression, and now diabetes are scaring too many people away from medicines they may need even as later studies show the findings to be much more nuanced and perhaps even wrong. ********** Health Policy Matters will return after the congressional recess. Have a peaceful Memorial Day. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
THE HEALTH CARE SYSTEM: TOWARDS SIGNIFICANT CHANGES The Canadian health care system is a monopoly that is ?closed to external pressures, impervious to real change, adaptation and innovation, and which favours inefficiency,? writes Claude Castonguay, one of the father's of Quebec's health care system. ?We have to move beyond 'the patchwork solutions' and 'filling the gaps' methods used to respond to problems that continue to arise,? writes Castonguay. He lays out a step-by-step process for health care reform in Quebec and writes that ?the most significant change that should be introduced to our system is the separation of the roles of purchasers and providers of health care services.? Castonguay also includes several health care reform proposals, including the increased development of medical clinics and the abolition of prohibition against private health insurance. Dr. Jacques Chaoulli successfully challenged that ban in 2005, yet Quebec is ?one of the only jurisdictions where the role of private health insurance is limited to providing coverage for services not covered by the public sector.?
John Vernon of the National Bureau of Economic Research, Bob Goldberg of the Center for Medicine in the Public Interest, and others examine the impact of cost-effectiveness analyses on treatments for Alzheimer's disease, including the quality-adjusted life year (QALY) that is commonly used to measure the costs and benefits of medical technologies. These analyses are increasingly being used to justify reimbursement, coverage, and clinical guidelines decisions. Vernon and Goldberg argue that ?using comparative effectiveness of treatments and technologies in order to make coverage and reimbursement decisions based on additional or incremental value?would deny Americans significant social and economic gains from medical innovations.? The current estimation of $50,000 per QALY has not changed in more than twenty years and "is substantially lower than recent estimates?which are close to $175,000," write the authors. Using this new figure, Vernon and Goldberg find that new drugs that would produce a 5-year delay in Alzheimer's disease onset for all new cases between 2010 and 2050 would yield a benefit of almost $4 trillion. 2007 TOWERS PERRIN STUDY ON ACCOUNT-BASED HEALTH PLANS Employees are not taking full advantage of their account-based health plans (ABHPs) "because employers have not explained the benefits in ways that resonate with employees or make them comfortable" with this new way of managing health spending, according to a survey from the consulting firm Towers Perrin. Communication between employers and employees about these new health accounts and plans, such as HSAs and HRAs, is the most significant issue impacting their success. The survey also ?shows that when employees have an understanding [of] how their ABHP works and feel comfortable with the level of financial risk associated with it, they more actively utilize the plan and its resources, and become smarter health care consumers." The IRS recently announced the 2008 annual contribution limits for health savings accounts. For 2008, the maximum HSA contribution will be $2,900 for an individual and $5,800 for families. WAL-MART HEALTH CLINICS DIVIDE US MEDICS Illinois and Massachusetts are among states that are considering stricter regulations on the new generation of retail health clinics that are expanding in Wal-Mart, CVS, Target, and other stores nationwide, the Financial Times reports. Advocates of the clinics point to improved access to care and lower costs, but physician groups like the Illinois State Medical Society and the American Medical Association have voiced concerns about quality and whether the clinics can deliver what they promise. Despite these concerns, ?the retail clinics show that business is pushing for change on its own without waiting for government,? concludes the Times. ?And walk-in clinics could do for US healthcare what low-cost Southwest Airlines did for the airline industry, by making healthcare better, faster, and cheaper.? IN BID FOR BETTER CARE, SURGERY WITH A WARRANTY A hospital group in central Pennsylvania is taking a radical approach to surgery, reports The New York Times. Geisinger Health System ?essentially guarantees its workmanship, charging a flat fee that includes 90 days of follow-up treatment,? writes the Times. Under Geisinger's program, which focuses on elective heart bypass surgery, ?the hospital charges a flat fee for the surgery, plus half the amount it has calculated as the historical cost of related care for the next 90 days,? reports the Times. Rather than billing for any additional hospital stays, Geisinger absorbs the extra cost -- which typically runs from $12,000 to $15,000. Since the program began in February of last year, ?patients have been less likely to return to intensive care, have spent fewer days in the hospital and are more likely to return directly to their own homes instead of a nursing home,? the Times reports. INNOVATION-DRIVEN HEALTH CARE: 34 KEY CONCEPTS FOR TRANSFORMATION In his new book, Dr. Richard L. Reece, a pathologist, writer, editor, consultant, and speaker, provides an in-depth look at innovative trends in health care from both the physician's and consumer's perspective. Reece breaks down health care innovations within six key areas, including hospital-physician joint venture innovations, employer and health plan innovations, constraining costs and expanding markets, and consumer innovations. Dr. Reece's book ?is an intelligent, knowledgeable analysis of the impact of innovations on the future of U.S. health care,? writes Harvard Professor and Manhattan Institute senior fellow Regina Herzlinger. ?If you want to continue doing what you are doing, this book will enable you to assess how you fit into this new world and to adapt yourself if needed.? UPCOMING EVENTS: Value-Driven Health Care through Quality Improvement and Measurement Robin Hood, Robber Baron, or Rubik's Cube? How Fair Is the Distribution of Benefits in the U.S. Health-Care System? Vital Signs & Side Effects: The Consequences of Likely California Health Reform Is there a role for markets in health care? 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. May, 18 2007
Hoosier POWERIndiana Gov. Mitch Daniels (former head of the Office of Management and Budget in Washington) has signed an innovative piece of health care legislation to ?expand access to health insurance, make citizens healthier, and engage patients in being more respo... Indiana Gov. Mitch Daniels (former head of the Office of Management and Budget in Washington) has signed an innovative piece of health care legislation to ?expand access to health insurance, make citizens healthier, and engage patients in being more responsible consumers of health care.?First the good news: The Healthy Indiana Plan creates a new HSA-type of mechanism for those who are currently uninsured and eligible for the new program -- uninsured adults earning up to 200% of poverty. It combines a funded account for first dollar health expenses, high-deductible private insurance coverage, and a separate fund for preventive services. Those participating in the program will get a payment toward funding a POWER account to pay their medical bills under $1,100. The government will pay premiums for commercial insurance to cover bills above $1,100. Deposits to the POWER account will be inversely proportional to income. The lower a person's income, the more the state will deposit. Whatever the deposit, beneficiaries will be required to put some of their own money into the account to top it off. They would spend money from the account for routine bills and when it is exhausted, insurance triggers in. It's a great idea to bring price transparency and individual responsibility into a public program. But the program is being criticized because it relies on an increase in the state cigarette tax to bring in $206 million a year to fund the health insurance program. The state tax money is being used as leverage to draw down additional federal matching Medicaid funds of up to $800 million. And it raises eligibility for Medicaid up to 300% of poverty. In Indiana, this is solidly in the middle class. It just shows how even a true conservative like Mitch Daniels can't resist the temptation to maximize the state's take in federal Medicaid dollars. Bob Helms of AEI argued the case vociferously before our Medicaid Commission that the Medicaid match rate is at the root of state and federal problems with Medicaid. Until the funding formulas are changed, we can't blame the states for taking advantage of this open and unlimited pipeline to federal dollars. Gov. Daniels is operating within the system we have, but he deserves credit for his innovative plan for the uninsured to bring individual responsibility, price awareness, and private insurance into a new program for the uninsured. He and his able and forward-thinking secretary of the Family and Social Services Administration, Mitch Roob, now must fight the bureaucracy in Washington to get approval to put their innovative POWER initiative in operation. If it works, this could be a new model for other states to follow. ********* I had a flood of responses to my article in Monday's Wall Street Journal about the new retail health clinics opening in Big Box stores and pharmacies around the country. Out of scores and scores of messages and phone calls, all but one praised the piece and liked the innovative, consumer-friendly concept -- which some readers hadn't known about. But one family physician called from New Jersey very upset, saying that these clinics will further ?dumb down? the practice of medicine. He said the nurses who will staff the clinics just aren't trained to handle the complex cases they will be presented with and are very likely to miss important problems. We had a long conversation about the protocols the clinics will be using and also about what people are supposed to do with their sick child on a Friday night. ?They should have paid attention, and they'd have known they were sick before then,? he said. ?Even still, they can call me 24-7, and I will see them.? He also operates a cash practice so his fees aren't that much more than the clinics' charge. I told him that if there were enough family doctors that practiced the way he does, there might not be a need for these clinics. But at least in this one segment of our health care system, the market and consumers will decide if this new concept will fly. ********* The Commonwealth Fund is at it again with another headline-grabbing survey showing how absolutely abysmally dreadful the U.S. healthcare system is. It says we rank last among six nations it surveyed, including Australia, Canada, Germany, New Zealand, and the United Kingdom, in a long list of access, efficiency, equity and other measures . You might note that these other countries have very different health structures than we do, with much more government domination. There is more wrong with this survey than we have time or space to describe here, but a core problem is the kinds of questions they ask. No where that I could find do they talk about relative survival rates after someone is diagnosed with cancer or how quickly you can start chemotherapy or get heart surgery if you are in crisis -- questions that get to the true quality of medical care in a country. This study is based on a public opinion survey of primary care physicians in these countries, asking how easy it is for their patients to get care evenings and weekends, waiting time to see a doctor, how easy it is to print out a full list of the medications their patients are taking, etc. We have a very different system with a lot of problems. But we also have strengths, which this survey largely ignores. This is an opinion survey that is very light on hard data, and yet it is being used to club the U.S. health sector once again. Is the strategy to wear down the morale of our health care workers and tear down the U.S. system so voters will demand that it be replaced it with a government-run version? You have to wonder. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
PORTRAIT OF AN ER AT THE BREAKING POINT Newsweek provides a chilling portrait of an emergency room in crisis. Like many ERs across the country, Atlanta's Grady Memorial Hospital suffers from ?cutbacks in funding, a growing pool of uninsured people, and an older and sicker population that requires more costly treatment.? On a typical Saturday night at Grady's ER, ?overflow patients lie in gurneys lining both sides of the hallways, while scores more sit anxiously in the waiting room outside; head-trauma victim after head-trauma victim arrive throughout the night, because most other hospitals in the area had either no ICU beds or no neurosurgeons available.? Grady has wait times that ?regularly reach eight hours and can sometimes stretch to 12 hours or more,? according to Newsweek. The hospital ?lost more than $20 million last year, up from $13 million in 2005 and $10 million the year before.? Grady has introduced a number of reforms in an effort to better triage care, including a Care Management Unit aimed at treating patients with congestive heart failure and diabetes, and a fast-track section to treat mild conditions like coughs and cuts, but it's unlikely that these reforms can stem the hospital's flow of red ink.
Efforts by the states to achieve universal health coverage continue to falter. In Illinois, Governor Blagojevich faced ?the political rout of the year? in his failed attempt to fund universal health coverage with a new ?gross receipts tax? on Illinois businesses, the Journal reports in a lead editorial. Several prominent members of the Governor's own party, including Chicago Mayor Daley, said the huge tax hike was a jobs killer that would chase businesses out of the state. ?One lesson here is that it is far easier to talk about 'progressive' political causes than to pay for them without doing larger economic harm,? the Journal concludes. In an op-ed for The Boston Globe, Sally Pipes of the Pacific Research Institute looks at Massachusetts' progress in achieving universal health coverage a year after enactment. Its implementers have made numerous changes ?each of which as increased current and future government spending, increased the government's role in regulating the healthcare market, decreased individual responsibility to purchase insurance, and made certain that the plan will fall far short in achieving universal coverage.?
Wharton University Professor Mark Pauly and Bradley Herring of Emory University examine risk pooling in the individual health insurance market and find that the market works much better than detractors would have us believe. They found ?a very high level of risk pooling? in the individual market, and their research shows that the premiums for individual insurance ?are less than proportional to risk.? In states that strictly regulate premiums, individual insurance premiums for high risk individuals are lower than premiums for similarly high risk individuals in other states. But this comes at the price of an increase in the total number of people in that state who are uninsured. They recommend that policymakers focus on ?ways to lower administrative expenses for individual insurance? rather than on counterproductive efforts at premium rate structuring. The authors discussed their paper at an AEI conference last week, with video available.
?While our lawmakers obsess over FDA 'safety reforms,' no one is holding this government agency responsible for its complicity in stalling therapies for life-threatening diseases,? writes a former medical officer for the Food and Drugs Administration in a scathing commentary in The Wall Street Journal. Dr. Mark Thornton criticizes the FDA's recent decision to reject two new promising drug therapies designed to fight cancer. One of those drugs that tackles a rare bone cancer in children ?was summarily dismissed as irrelevant,? writes Thornton. The reason? ?The statistical data showing the odds of efficacy were 94% surety instead of the usual goal of 95% surety,? he writes. ?It will be years before we know the full impact of these decisions and how many cancer patients, young and old, have had their lives cut short as a result.?
New proposals are being considered in Congress to ?balance the risks that all drugs have against the public health benefits they offer,? writes AEI's Scott Gottlieb. But he says these proposals are flawed and would only increase FDA regulation over how drugs are prescribed and likely would not have averted recent crises such as those over the painkiller Vioxx and some antidepressants. ?Instead, the most immediate and direct impact of the heightened focus on drug safety issues appears to be a growing impetus on the part of federal decision makers? to try to mitigate drugs' risk through restrictions on how pharmacists, physicians, and patients use them,? Gottlieb warns. ?Ultimately, we need a more robust system for the more rapid accumulation of post-market information that encourages collaboration among providers, payers, and product developers around the issues of drug safety,? he writes. ?If the profession does not take a more active role in addressing issues of risk associated with the growing benefits and increasing complexity of the medical products, then the pressure for ever-increasing federal intrusion into medical decision making will be relentless,? Gottlieb concludes.
Twenty popular health care myths are dispelled in this new book by Dr. Arthur Garson Jr. and Carolyn L. Engelhard of the University of Virginia. ?This book informs Americans about American health care, ways in which it is tarnished and ways in which it shines,? they write. They offer conventional wisdom and then proceed to take it apart. For example, ?Myth #1: American medical care is second-rate compared with other countries.? They argue that ?medical care in the United States is among the best in the world.? In an interview with the Houston Chronicle, Dr. Garson said he was prompted to write the book after the health care reform debates of the 1990s, when claims were made that health plans based on preventive care would save enough money to pay for the uninsured. Not true, he says. That's Myth #6. ?The cold truth is that screening the entire population for high blood pressure?is very expensive.? UPCOMING EVENTS: SAVE THE DATE! Economic and Religious Freedom in Health Care Health Savings Accounts: Not Entirely Consumer Directed (Yet) A Second Opinion: Rescuing America's Health Care Value-Driven Health Care through Quality Improvement and Measurement Vital Signs & Side Effects: The Consequences of Likely California Health Reform 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. May, 11 2007
Land Mines in LegislationThe Senate has approved 93-1 must-pass legislation that, among other things, would give the pharmaceutical and medical device industries the privilege of paying $393 million in user fees to the government next year to help get their new treatments to pati... The Senate has approved 93-1 must-pass legislation that, among other things, would give the pharmaceutical and medical device industries the privilege of paying $393 million in user fees to the government next year to help get their new treatments to patients faster. But the bill, called the Food and Drug Administration Revitalization Act, in fact contains land mines that could actually delay getting new drugs and devices through the approval process and to patients.Senator Ted Kennedy praised the bill, saying, ?It greatly improves the way the FDA oversees the safety of drugs.? Not so fast. The FDA's job is to make sure drugs are safe and effective before they are introduced to the market. But the bill grants new powers to the FDA to throw up more regulatory hurdles. And even the user fees could backfire since, for the first time, they could be used not just to get drugs through the bureaucracy and to the market, but also to take drugs off the market. From the viewpoint of consumers, that isn't good. The House will take up the measure next, and since members there are even more hostile to the complex and enormously expensive process of private drug development, their version is likely to be even more problematic. What the FDA needs is not more authority to tie the drug approval process in knots, but more resources to use modern information technologies to bring greater accuracy and efficiency to the approval process, as former FDA Commissioner Mark McClellan passionately argues. The Wall Street Journal ran a chilling commentary by Dr. Richard Miller, president and CEO of Pharmacyclics, explaining how the FDA's ?outdated statistical standards? keep life-saving medicines from desperate patients. One example: The FDA rejected a drug, Xcytrin, developed by his company to treat lung cancers that have metastasized to the brain. ?The reason for the FDA's refusal? The positive impact of the drug could be shown to be independent of chance at 'only' an 88% level of certainty,? instead of the 95% certainty the FDA requires. People suffer and die waiting for FDA approval for drugs that collectively have cost billions of dollars to develop -- drugs which patients with few, if any, other options are desperate to get. The fault is not with the FDA but with the Congress that sets the rules under which the FDA must operate and which refuses to provide the new funding it needs to truly modernize its approval process. On the margin, the bill gives more regulatory power to an already risk-averse FDA bureaucracy. Unless the legislation is stripped of these new provisions, it not only could make drugs more expensive by lengthening the approval process, but could also impede innovation in one of our most important industry sectors. ********* During my testimony before the Energy and Commerce Committee last month, I cited studies showing that expansions of government health care programs often crowd-out private insurance coverage. The Congressional Budget Office has produced a new study with further validation. For every 100 children who enroll in the State Children's Health Insurance Program, the CBO says ?there is a corresponding reduction in private coverage of between 25 and 50 children.? So the crowd-out of private coverage is between 25% and 50%. But it says the ?estimates probably understate the total reduction in private coverage associated with the introduction of SCHIP" if the number of parents dropping private coverage also were counted. And CBO exonerates employers who are often accused of dropping private coverage if public programs are an option for their workers: The CBO says the evidence suggest that ?parents choose to forgo private coverage?rather than employers deciding to drop coverage for such children.? And you will recall that Senator Clinton and others want to expand SCHIP to higher-income kids -- $82,600 a year for a family of four. But the CBO says that ?expanding the program to children in higher-income families? will crowd-out private coverage even more since these kids are more likely to already be insured. The bottom line: Congress should insist that states focus on covering lower-income kids who are eligible and not enrolled in SCHIP, not expand the program to ?children? up to the age of 25 and to kids in upper-middle-income families at taxpayer expense. It is so important not to further undermine the market for private health insurance by expanding government programs. Taxpayers pay to fund government programs, and those with private insurance pay higher insurance premiums to make up for the cost-shift from public programs that underpay doctors and hospitals. A simple reauthorization of SCHIP would be a better course than massive expansion. ********* And some of you noticed that we skipped last week's newsletter, purely a result of schedule overload. I had been on a non-stop speaking tour for a week and a half and returned to non-stop meetings in Washington. And then it all caught up with me with a cold. It's the first time I can recall missing a newsletter unannounced, but we appreciate those of you who wrote and called looking for your weekly Health Policy Matters. Also, we have switched to a new distribution system to get the newsletter to you faster, but it may require updating the address in your SPAM catcher. The address to clear is our general mailbox at galen@galen.org. This seems a little like a Catch 22 since you won't get this message unless you are receiving the newsletter, but if it is forwarded to you by someone else or you are viewing it on our website, please make sure we are an authorized sender. Cheers. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
TOWARD FREE-MARKET HEALTH CARE At a speech before the Conservative Women's Network MEDICARE MELTDOWN Medicare Trustee Tom Saving tries to get the attention of policymakers and the American people by underscoring the almost unfathomable future costs of Medicare and Social Security entitlements. ?By 2030, about the midpoint of the baby boomer retirement years, these two programs will require almost one out of every two federal income tax dollars?Eventually, the deficits in these two programs will absorb the entire federal budget.? He says that increasing taxes is equally untenable: ?We would need a 10% increase in all nonpayroll taxes by 2020 and a 50% increase by 2080? to fill the $30 trillion funding gap. Saving recommends putting decisions of health care cost rationing in the hands of beneficiaries through health savings accounts and replacing Medicare's ?pay-as-you-go financing? with a system ?in which each generation saves and invests in order to pay for its own benefits.? FIXING SCHIP AND EXPANDING CHILDREN'S HEALTH CARE COVERAGE Rather than using SCHIP as a vehicle ?to establish a welfare program for middle-class or upper-middle-class families,? Owcharenko says that the program's reauthorization is an opportunity to strengthen access to private health care coverage. ?SCHIP coverage options should reflect the broadest array of insurance products available? and promote private coverage alternatives such as subsidizing private coverage through premium assistance or health savings accounts, she writes. In addition, Congress should give priority funding to states that stay within their budgets and cover uninsured low-income children and eliminate redistribution of unspent funds among states, which essentially ?rewards states for overspending and encourages other states to follow suit.? The Heartland Institute has produced a valuable briefing package on SCHIP. AS HEALTH PLAN FALTERS, MAINE EXPLORES CHANGES Since being enacted in 2005, Maine's universal health care plan has suffered low enrollment, higher than expected costs, and controversy over its financing formula. The enrollment benchmark of 31,000 for the program's first year still has not been met, with only 18,800 people signing up for the program so far, most of whom already had insurance. Further, the plans have proven costly for both enrollees and the state, with premiums rising by an average 13.4% this year, and more than half of enrollees unexpectedly qualifying for the highest subsidy of 80%. Finally, the financing formula has resulted in a lawsuit against the state that is currently under appeal by the state's insurance industry and the chamber of commerce. PAYING FOR KIDNEYS AEI's Sally Satel, who received a kidney transplant last Spring, argues that we need to alter the organ transplant process by creating a larger supply of organs through a safe, regulated system in which donors can receive compensation for their organs. She says that ?last year there were about 10,600 cadaver kidneys and 6,400 from living donors for roughly 70,000 potential recipients?By this time tomorrow, 18 people in need of an organ will be dead because they did not get one soon enough.? She encourages the creation of pilot projects that would give prospective organ donors ?valuable consideration,? such as lifelong Medicare coverage. ?We need to move beyond the idea that organs must be relinquished as gifts,? concludes Satel. ?The altruistic motive is deeply noble and loving. But relying upon it as the sole legitimate reason for giving an organ is causing too many unnecessary deaths.? ALEGENT HEALTH SHARING REBATES WITH EMPLOYEES THANKS TO CONSUMER-DRIVEN PLAN Employees at Alegent Health, a faith-based, not-for-profit health care system in Nebraska and Iowa, have experienced dramatic results with the company's consumer-driven health care plan, accumulating nearly $2 million in their health accounts to cover future medical costs. Currently 88% of Alegent Health's employees are enrolled in a consumer-driven health plan, which provides catastrophic coverage and covers 100% of the costs for preventive care. The Alegent Health plan also provides financial incentives to those who proactively manage their health:
GROWTH AND INNOVATION IN MEDICAL DEVICES: A CONVERSATION WITH STRYKER CHAIRMAN JOHN BROWN The chairman and former CEO of Stryker Corporation, a major manufacturer of medical products and services, says that consumerism is finding its way into the medical device area. With knowledge gained from the Internet, ?sophisticated patients and their families know who are the manufacturers, who are the leading surgeons, and they insist on getting the best surgeon and best product,? John Brown tells Health Affairs. ?We believe that the best situation is where a patient comes with information and then listens to the advice of their surgeon about which implant is best for them.? Brown also discusses the policy issues facing the medical device industry, including conflicts of interest, rising product prices, product safety, and direct-to-consumer advertising. UPCOMING EVENTS:
SAVE THE DATE! Which Way To Turn? Options for Rebuilding the Gulf Region's Health Infrastructure Message to FDA: We Need New Drugs, Faster Why America's Health Insurance is Unraveling -- And Why Even Universal Health Care Can't Fix It Health Savings Accounts: Not Entirely Consumer Directed (Yet) A Second Opinion: Rescuing America's Health Care 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. April, 27 2007
Dire WarningsThe week began with Medicare trustee Tom Saving warning that the future debt of this program for seniors is five times the size of the outstanding debt of the entire federal government today. Without change, Saving warns that Medicare would devour nearl... The week began with Medicare trustee Tom Saving warning that the future debt of this program for seniors is five times the size of the outstanding debt of the entire federal government today.Without change, Saving warns that Medicare would devour nearly half of all federal income taxes by 2030 and almost two-thirds by 2040, and that beneficiary premiums would rise to $3,700 a month by 2080. ?The Medicare premium will consume seniors' entire Social Security check, and they still will get a bill for the balance from Washington,? he warned. How bad is it? ?Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues and threaten America's future prosperity,? said Treasury Secretary Henry Paulson, also a ?trust fund? trustee. (There is no trust fund. Government spends the taxes that you and I pay as fast as the money comes in. The trust fund simply contains a mountain of IOUs.) Ignoring this program threatens inter-generational battles, crushing tax rates, and a government so big that it will cripple the economy. But the mood after an AEI briefing the morning after the release of the Medicare Trustees Report was ?nothing new here.? Congress will not act until there is a crisis, and then it will be too late. ******** In a luncheon address at AEI on Tuesday, Health and Human Services Secretary Michael Leavitt offered one note of optimism: Expenditures for the Part D prescription drug benefit were lower than expected and hospitalizations were down last year. He said he believes there is a correlation: ?Access to the right medicines can lead to fewer hospitalizations.? Sec. Leavitt said the same forces of competition that have brought prices down in the Part D program could also work for Medicare as a whole. He described a vision for a 21st century health care system with government as the ?organizer? rather than the ?proprietor? of our health care system. You can hear his speech in which he offered warnings against expanding the role of government, especially through Medicaid and SCHIP. ?In nations where government dominates the health care system, budgets are set, medical care is rationed, and the system takes care of institutions more than people.? Without change, Medicare and Medicaid face the same fate, with long lines, lower quality, and higher taxes, he said. Sec. Leavitt has been traveling the country, meeting so far with governors and legislators in 40 states to help them shape their own reform plans. He described a vision of a system in which everyone has access to ?basic? insurance, with subsidies for those who need help in purchasing policies. Roll Call Editor Mort Kondracke said after the speech that it was the first time he had heard a conservative vision of universal coverage so well articulated on an issue that he says has been owned by the Democrats. Thanks to AEI for hosting the Leavitt address, which was jointly sponsored by the Galen Institute and The Heritage Foundation. ******** The goal of universal coverage was very much on the minds of the Health Subcommittee of the House Energy and Commerce committee on Wednesday, where I was invited to testify before a hearing on ?Living without health insurance: Why every American needs coverage.? The debate is not, of course, about the goal, but rather how to get there. Here is the five-minute version of my testimony and the full version. I described the warnings that I have been telling you about in this space -- that expanding public programs not only crowds out private coverage but drives up the cost of private insurance because of cost shifting. And I offered this prescription: America can lead the way in creating a health care system that fits with our 21st century economy by putting in place new policies that respond to consumer demands for more affordable, portable health insurance.
******** Today I'm in Philadelphia to attend the Heritage Resource Bank conference where 700 think tank leaders from more than 50 countries have gathered to network and exchange ideas. I am moderating a session this afternoon on ?Faith-Based Health Care Reform.? We expect a big attendance at our session from people who don't normally focus on health policy issues but who understand the importance of freedom of choice so they can select health plans that suit their conscience and their values. And I head to Las Vegas tomorrow to co-host the Consumer Directed Health Care Conference there. Both the Heritage and the CDHC conference help to energize our free-market public policy spirits. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
MEDICARE'S FISCAL FUTURE: GETTING WORSE? GETTING BETTER? The American Enterprise Institute examined Medicare's fiscal outlook following release of the annual Medicare Trustees Report, with an opening presentation by Rick Foster, chief actuary for the Centers for Medicare and Medicaid Services. While highlighting the dire insolvency warnings for the program as a whole, Foster said that costs for the drug program were lower than 2005 estimates because drug costs increased much slower than the historical average; plan bids for 2006 showed greater price discounts and rebates; plan bids for 2007 decreased by 10%, reflecting more generic use and competition; and actual enrollment was lower, with many waiting until May 15, 2006, to enroll. Thomas Saving and John Palmer, public trustees for Medicare and Social Security, offered both warnings and remedies, as did AEI's Joe Antos, a former official with CBO and CMS. Robert Reischauer, former director of the Congressional Budget Office, and Jeanne Lambrew, former budget official in the Clinton administration, focused on policy challenges facing Medicare. Speakers' materials, audio, and video of the event are all available on the AEI website. HILLARYCARE INSTALLMENT PLAN The Wall Street Journal warns that congressional proposals to expand the State Children's Health Insurance Program are part of an incremental approach toward government-run health care. What ?began as a hard-cap grant to cover the working poor is evolving into an open-ended entitlement to cover whatever promises states make.? The editorial says that ?states have grossly exceeded Schip's mandate?[and] are using the program to expand government-subsidized coverage well beyond poor kids -- to children from wealthier families and even to adults. And they're doing so even as some 8.3 million poor children continue to go uninsured.? The Journal recommends that Congress ?work to return Schip to its original, more modest purpose? of covering near-poor children. FACING REALITY ON FOLLOW-ON BIOLOGICS According to AEI's John E. Calfee, proposed legislation creating an approval process for generic versions of biological drugs is unlikely to result in reductions in health costs. Physicians and patients ?will not easily be persuaded to switch from the drugs they trust to follow-on? versions of the biologic medicines. Calfee argues that biologics are so unique that a ?generic? version could operate as a completely new drug rather than a generic duplicate of the drug it is modeled after, a risk physicians will not easily take. In a separate article for Investor's Business Daily, the Manhattan Institute's Paul Howard assesses ?whether companies developing copycat biologics should be required to conduct clinical trials testing the safety and efficacy of their medicines.? WAL-MART EXPANDS IN-STORE CLINICS ?Wal-Mart, the world's largest retailer, said Tuesday it has plans to dramatically expand the number of health clinics it operates, opening as many as 400 in U.S. stores in the next three years and possibly 2,000 of them within five to seven years,? reports the Chicago Tribune. Wal-Mart currently operates 76 clinics in 12 states, and this expansion ?could put pressure on other big retailers to follow suit, which in turn could force primary-care physicians to become more competitive on pricing,? reports the Tribune. More than half the patients visiting existing Wal-Mart clinics are uninsured, said Lee Scott, Wal-Mart's president and chief executive. The clinics ?are going to provide something our customers and communities desperately need -- affordable access at the local level to quality health care.? TAILORING THE APPROACH: EMPLOYER ATTITUDES AND HEALTHCARE STRATEGIES ADDRESS DISTINCT ISSUES PricewaterhouseCoopers finds that employers are implementing changes to their health benefits plans to provide new tools and incentives for employees to be more engaged in managing their medical costs and health. Although support for the employer-based model remains strong, the report finds that ?80% of employers surveyed this year believe that employees must take more of their own responsibility for their health and healthcare costs.? Additionally, nearly two-thirds of employers ?said employees with unhealthy lifestyle behaviors?should pay a larger portion of their health benefits costs.? Employers continue to give employees more information about healthcare prices and quality, but realize that information alone is not enough. ?Employers are beginning to realize that the real challenge remains in motivating employees to act upon the information provided,? concludes the report. ?Employers agree that a shared responsibility exists between employer and employee; employers commit to provide tools, incentives and support, while employees must commit themselves to working towards wellness.? In a separate report, America's Health Insurance Plans released a set of recommendations to improve health care quality and patient safety. UNITEDHEALTH GROUP ANALYSIS CONFIRMS CHRONICALLY ILL CONTINUE RECEIVING NEEDED CARE WHEN ENROLLED IN A CONSUMER-DRIVEN HEALTH PLAN A new study from UnitedHealth Group's Definity Health business finds that members of a consumer directed health plan (CDH) receive evidence-based care and preventive care at the same or better rate as members of traditional plans. When compared to the benchmark population:
Full text: www.unitedhealthgroup.com UPCOMING EVENTS: SAVE THE DATE! Faith-Based Health Care Reform Which Treatment Works Better? A Look at Ways to Improve the Quality of Medical Decisions Consumer Directed Health Care Conference Health IT: Unlocking the Potential How Recent Legislative Changes Makes HSAs Even More Attractive Financing Mechanisms and Benefit Packages in Coverage Expansions TABD Innovation Conference Healthcare The Myth of Government Health Care 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. April, 20 2007
Squeezing Out Private Coverage - Health Policy MattersThe media will be filled next week with articles and ads about the uninsured, including a TV spot featuring nine-year-old ?Susie Flynn? who is running for president on the platform of bringing attention to the nine million American children who don't have... The media will be filled next week with articles and ads about the uninsured, including a TV spot featuring nine-year-old ?Susie Flynn? who is running for president on the platform of bringing attention to the nine million American children who don't have health insurance.The big push during ?Cover the Uninsured Week? will be to build the case for expanding the State Children's Health Insurance Program. No one is arguing that children shouldn't have health insurance, but it is vital to look at the consequences of a massive expansion of a taxpayer-financed, government-run program:
Remarkably, reason prevailed in the Senate this week: The New York Times reported that ?A pillar of the Democrats' program tumbled on Wednesday when the Senate blocked a proposal to let Medicare negotiate lower drug prices for millions of older Americans.? Democrats needed 60 votes to bring the measure to the floor, but got only 55, including six Republicans who defected: Sens. Norm Coleman (MN), Susan Collins (ME), Chuck Hagel (NE), Gordon Smith (OR), Olympia Snowe (ME), and Arlen Specter (PA). I had a piece published in The Hill newspaper on Tuesday that outlined some of our objections to this misguided proposal. The prevailing Republicans said it was a choice between a centralized government dictating prices and real price negotiation taking place now in the private sector where the Medicare prescription drug benefit is delivered and administered by private plans. Senator John Cornyn, a Republican of Texas, said the Senate bill would be ?a step down the road to a single-payer government-run health care system.? The House already has passed its version of a bill to allow government interference in Medicare drug price negotiations. Senate leadership has vowed to try again. But President Bush has again vowed to veto the bill if it reaches his desk. The battles over control of our health care system continue. ********** There are still a few seats left for Tuesday's luncheon address featuring Health and Human Services Secretary Michael Leavitt. Jointly sponsored by the Galen Institute, the American Enterprise Institute, and The Heritage Foundation, Secretary Leavitt will be giving his major address of Uninsured Week to describe the administration's policy on ?Promoting Health Insurance for Children and All Americans.? It's Tuesday, April 24, at noon at AEI in Washington, D.C. Please register with AEI, and do plan to join us. ********** Words fail in trying to understand the horror this week at Virginia Tech. Beautiful young lives full of hope and promise extinguished in one senseless instant, and lives of devoted and accomplished faculty members cut heartbreakingly short. Prayers and support are all we can offer to their families who will suffer a lifetime of grief over the joys that are lost forever. May they find some peace in knowing that these 32 innocent people are now safe with their Creator. Rest in peace. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
DRUG SAFETY REFORM AT THE FDA - PENDULUM SWING OR SYSTEMATIC IMPROVEMENT? Mark McClellan, former commissioner of the Food and Drug Administration, outlines steps for congressional action on drug safety in a New England Journal of Medicine article. ?First, the FDA needs more resources, and the only feasible way to provide them this year is a combination of greater user fees and the maximum possible increases in federal appropriations,? he writes. ?Second, new regulatory authority or organizational changes may help, but the promise of such reforms should be weighed against their potential deleterious effects on access to treatments,? writes McClellan. ?Finally, it is possible to implement a much more systematic approach?by augmenting FDA resources with the rapidly growing array of electronic resources related to drug use,? he concludes. COMPETENCE MAN A column in today's Wall Street Journal praises Dr. McClellan, who also is the former administrator of the Centers for Medicare and Medicaid Services. Kimberley Strassel says Mark is ?the big brain? who ?wrung every last ounce? of authority out of the Medicare Modernization Act ?to create a striking new model for Medicare competition that is today not only performing beyond expectations, but is changing the political health-care debate.? The success of the program ?emboldened Republicans? this week to defeat a bill that would have allowed the government to interfere in private drug price negotiations in the Medicare program. DRUG DANGER "Last week's recommendation by a FDA advisory panel against approving the Merck painkiller Arcoxia -- already in use in 63 countries around the world -- has dramatic implications for the future of drug research in this country," writes AEI's Scott Gottlieb. "In voting 20-1 to reject Arcoxia, FDA's advisers said that for certain ailments, we have enough medicines." This decision "will ultimately deny patients needed choices and it reflects a dangerous way of looking at drug development, safety, and, more importantly, the practice of medicine," writes Gottlieb. "All drugs have risks that patients must weigh against the benefits," he concludes. "But patients would be better off if the FDA focused on unearthing information to help doctors determine which pills will perform the best for each individual patient." AOL FOUNDER HOPES TO BUILD NEW GIANT AMONG A BEVY OF HEALTH CARE WEB SITES After three months in preview mode, Revolution Health Group, founded by former American Online CEO Steve Case, yesterday launched RevolutionHealth.com, its free health and medical information Web site. ?The revamped version of the site will be primarily aimed at women, who tend to be the bigger portion of the Web health audience,? writes The New York Times. This includes a Mom Central page intended for a busy mother who is ?trying to juggle her health, her children's health and perhaps her elderly parents' health, all at the same time,? said Ron Klain, Revolution Health's executive vice president. The Web site will also feature ?1,500 medical conditions that can be sorted by the ailment or treatment, with related comments from experts and from other users of the site? and ?a directory of doctors by specialty and location, along with short reviews by patients,? the Times reports. It will also promote the use of electronic health records by allowing users to create their own pages for collecting personal and general medical information. UNIVERSAL HEALTH SCARE The New Republic features a four-part online debate about universal health care between TNR Senior Editor Jonathan Cohn and physician David Gratzer of the Manhattan Institute. In an earlier article, Cohn ?compared the U.S. health care system unfavorably to those of other Western nations who provide universal coverage.? Gratzer counters: ?Don't measure a country's health care system by how well it promotes socialist goals or social engineering; judge a system by how well it serves people when they're ill. And, in this area, America is the best.?
AEI's Tom Miller argues that consumers need better ?point-of-service decision information? about treatment options; more diverse alternatives for insurance coverage, including bundled pricing; and information about value that is specific to individual doctors. ?Just giving folks more cost-sharing with some money funded into an account doesn't tell them how they're going to make better choices and end up better for it as a result of being more engaged in their health care.? Miller argues that better, but not necessarily more, information is crucial to a functional health care market. "An early assessment is that price alone draws attention, but it's not enough. We need the all-in cost by diagnosis or episode of treatment. We need to know a lot more about effectiveness,? he argues. He recommends a look at legislation introduced by Senator Judd Gregg that would "provide a way to open up the vault for the CMS physician-identifiable claims data" to provide a platform for development of better information for consumers. This lecture, which was originally given last fall, was posted this week by the American Enterprise Institute. HEALTHCARE REFORM PROPOSALS TO EXPAND HEALTH COVERAGE FOR THE UNINSURED The Center for Health Transformation, founded by former House Speaker Newt Gingrich, has created a new online resource that offers one-stop shopping for proposals about expanding coverage for the uninsured. It summarizes the health policy platforms of all of the 2008 presidential candidates who have offered them, lists and links to reform bills offered in the Congress and the 50 states, and provides links to bi-partisan commentary, news, and analyses. UPCOMING EVENTS: Promoting Health Insurance for Children and All Americans with HHS Secretary Michael Leavitt Medicare's Fiscal Future: Getting Worse? Getting Better? Curing the Trust Crisis in Health Care Medicare 101: What You Really Need to Know A Healthier US Starts Here! Examining the 2007 Social Security and Medicare Trustees Reports Intellectual Property: Driving Global Growth Consumer Directed Health Care Conference 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. April, 13 2007
Slippery SlopeAfter defeating about a dozen amendments, the Senate Finance Committee last night approved a bill that would allow, but not require, the administration to interfere in drug price negotiations between private drug plans and the pharmaceutical companies. ... After defeating about a dozen amendments, the Senate Finance Committee last night approved a bill that would allow, but not require, the administration to interfere in drug price negotiations between private drug plans and the pharmaceutical companies.Chairman Max Baucus (D-MT) was criticized by members of his own party for offering what they said was a watered-down version of the bill that passed the House earlier this year to require HHS to negotiate drug prices. But we should not be fooled by rhetoric. This would send us down the road to price controls and all of the attendant distortions they bring. And there is other mischief in the Senate bill, including requiring the disclosure of confidential price negotiation data (which would negate many of today's deep discounts) and setting us down the slippery slope of government involvement in directing that drugs offered in Medicare must be deemed ?cost-effective.? One amendment that went down to defeat is particularly puzzling: Offered by Sen. Pat Roberts (R-KS), it would have restored language prohibiting government interference in drug price negotiations that was introduced in an earlier Congress by former Senate Democratic Leader Tom Daschle and cosponsored by 33 Senate Democrats. The Democratic majority on the committee in this Congress voted it down. Senate Majority Leader Harry Reid (D-NV) says that the Baucus bill could come up for a vote on the Senate floor next week. If it gets 60 votes, it would go to conference with the House. But Congress is in dangerous territory. Seniors want to be assured that the price-negotiation bill would fulfill two goals: That it would in fact lead to cost savings and that it would not limit their choice of drugs. This bill fails the test. The Congressional Budget Office has said repeatedly, including in letters this week, that savings from the Baucus bill would be ?negligible.? That's because the only way that negotiations can work is through volume buying and the ability to walk away from a deal if the price is too high. If the government walks, the drug wouldn't be available. As we reported in our Fact Sheet on Medicare Part D and prescription drug prices earlier this year, a Kaiser Family Foundation survey conducted in 2006 found that 85% of Americans support allowing the government to negotiate prescription drug prices for Medicare. But support plummets when voters learn about trade-offs. Other surveys show that only 30% still support it when they learn that government negotiation would mean they could choose only from a limited list of government-approved prescription drugs. And only 28% of seniors believe that government would do a better job of getting low drug prices than the competitive marketplace. This is yet another example of the list of legislative initiatives in this new Congress that display hostility toward the private market. It may seem like a small step, but this takes us in the very different direction of injecting much more government rather than patient control over health care decisions and limiting the choices that would be available in the future. ************* But we are, of course, undaunted in our determination to continue to fight for free-market ideas. And you can join us for three upcoming events to advance this conversation:
Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
UNIVERSAL HEALTH CARE CHOICE AND ACCESS ACT Senator Tom Coburn, the Senate's only physician, described his comprehensive health reform proposal at an event hosted on Tuesday by The Heritage Foundation, which also featured commentary from the Galen Institute's Grace-Marie Turner and AEI's Joe Antos. Under the Universal Health Care Choice and Access Act, the current tax exclusion for job-based health insurance would be redirected to consumers as a tax rebate of $2,000 for individuals/$5,000 for families to buy their own health insurance. The plan would also open the market to other purchasing options by creating an interstate market for insurance. And he would provide new mechanisms and incentives for Medicare beneficiaries and Medicaid recipients to obtain private health insurance. Other key pieces of the Senator's proposal include initiatives to promote healthy lifestyles and disease prevention and incentives to increase the use of information technologies in the health sector. THE GOLDEN AGE OF MEDICAL INNOVATION ?We are in a golden age of medical innovation,? writes Jack Calfee of the American Enterprise Institute. ?In this new era, the most important advances in treatment often come from products which have been on the market for a while but whose properties were not completely understood until intensive research after the drug was introduced,? he writes. The cancer drug Avastin, for example, ?is a mini-pipeline all by itself, with some 20 clinical trials underway for different cancers or stages of cancer.? This era is also characterized by ?competition from follow-on or me-too drugs [that] has been raised to extraordinary levels of scientific sophistication,? writes Calfee. He warns of ?threats that can end a golden age,? including price controls, intellectual property, FDA regulation, marketing restrictions, and litigation. The Manhattan Institute's Peter Huber warns in a commentary for The Wall Street Journal that we are at risk of losing the battle against tomorrow's germs with today's stultified and bureaucratic drug research and testing techniques. ?What we need is a robust, flexible, innovative, diverse and fragmented portfolio of drug companies, sinking a lot of new capital into highly speculative ventures, almost all of which will lose money, with just one or two ending up waved though by regulators, eagerly paid for by insurers, vindicated every time by judges and juries, lauded in the mass media, and so spectacularly profitable for investors that they crowd in to fund more.? LEVIATHAN ON THE RIGHT: HOW BIG-GOVERNMENT CONSERVATISM BROUGHT DOWN THE REPUBLICAN REVOLUTION In his widely-quoted new book, Michael Tanner of the Cato Institute provides a ?scathing look at how the rise of conservatives who believed big government could be used to further the conservative cause ultimately undermined the legacy of traditional conservatives and shattered the Republican revolution.? Tanner's chapter on health care argues that ?[b]ig-government conservatives appear to accept the idea that government involvement in the health care system is, if not desirable, inevitable.? As a result, they have increasingly embraced proposals like individual mandates, managed competition, and increased regulation ?that take us several steps down the slippery slope to national health care.? THE VA DRUG PRICING MODEL: WHAT SENATORS SHOULD KNOW The Veterans Administration (VA) model of price negotiation ?could not easily be applied to Medicare and would prove inadequate to meet the needs of the rapidly growing Medicare population,? writes Greg D'Angelo of The Heritage Foundation. ?While the VA's pricing practices do not consist of price-fixing mechanisms alone, they are not 'negotiation' either,? he writes. ?Instead, the government, acting through the VA, uses its power to deny manufacturers market access as a way to extort lower prices.? The VA's single national formulary also ?reduces the range of drugs offered to enrollees,? writes D'Angelo. For example, a recent study by the Lewin Group found that of the 300 drugs most prescribed to senior citizens, ?106 (35 percent) are not included in the VA formulary, compared to ? 19 (6 percent) in the Part D plan formularies.? CONSUMER AND PHYSICIAN READINESS FOR A RETAIL HEALTHCARE MARKET A new study by the management consulting firm Booz Allen Hamilton finds that physicians are not responding to the growing number of consumers seeking more information to make health care decisions, opening up the need for new trusted sources of health-care information. ?Ninety percent of consumers with greater cost responsibility would find data on expected out-of-pocket costs for a medical product or service useful, as well as quality information about a provider's medical errors and safety rate for a specific type of treatment,? according to the study. Yet, ?just 19 percent [of physicians] currently make information on their safety or medical error rate for specific treatments available, and just 16 percent of physicians surveyed plan to do so in the next two to three years.? UPCOMING EVENTS: Save the date for a Health Policy Double-Header: Should the United States Be More Like Scandinavia? Medicaid 101: A Primer on the Health Insurance Program for Low-Income Americans Elements of State Health Reform: Individual Mandate and Employer Requirements Nothing About Us Without Us: Patient/Consumer Participation in Evidence-Based Health Care Curing the Trust Crisis in Health Care A Healthier US Starts Here! 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. April, 6 2007
The Good NewsWe are so very pleased to announce that Joel White, former staff director of the House Ways and Means Health Subcommittee, is joining the Galen Institute as a visiting senior fellow. In his new role, Joel will advance our work on the key areas of health a... We are so very pleased to announce that Joel White, former staff director of the House Ways and Means Health Subcommittee, is joining the Galen Institute as a visiting senior fellow. In his new role, Joel will advance our work on the key areas of health and tax policy and will promote free-market ideas for health reform through speeches and writing.Joel is president of JCWhite Consulting, a firm he established since leaving Capitol Hill earlier this year to provide strategic, political, and policy advice to clients. Joel's work with the Galen Institute will be in addition to his full-time work with JCWhite Consulting. Having worked with Joel for many years on health policy initiatives, I am honored to welcome him here so we can continue to work together to advance free-market ideas. Joel has an unmatched track record of promoting competition and patient choice in the health sector, and we look forward to continuing to work with him to offer ideas that will bring health care financing into the 21st century. And we also are pleased to announce a new staff member at the Galen Institute. Brad Hallman, a recent law school graduate with a keen interest in public policy, is joining Galen as a health policy analyst. He will focus on a broad range of issues, but already has been helpful with our research on the State Children's Health Insurance Program. He joins Tara Persico and Jena Persico, the powerful duo who handle just about everything else at the Galen Institute and are indispensable members of our research, publications, newsletter production, development, and meetings-management team. ************* And some more good news this week: America's Health Insurance Plans released during a White House ceremony this week the results of its member survey showing that 4.5 million people were covered by HSA-qualifying health plans as of this January. That's a 43% increase over last year, and the biggest growth is in the large group market, up from 162,000 in 2005 to more than 2 million this year. And the numbers continue to reflect interest in the uninsured in these new products, with one-fourth of those signing up previously without coverage. The average monthly insurance premiums for single coverage are $240 and $580 for families in the small group market -- clearly reflecting small businesses' interest in these more affordable products. The survey also shows a surge in use of consumer information tools such as online access to accounts, cost information, education tools, and personal health records. HSAs are just one offering in the constellation of consumer-directed care options that also include the older sister of HSAs, Health Reimbursement Arrangements. ************* It's clear when an argument hits a nerve with people on the other side of an issue. For example, you will recall that members of our Health Policy Consensus Group produced a Fact Sheet on Medicare Advantage (MA) plans last month. We reported in our paper, based upon government data, that: ?MA plans are particularly attractive to those who do not have other sources of supplemental coverage and are more sensitive to price.? These beneficiaries are attracted to the ?broader coverage and more predictable costs of MA plans.? If Congress were to cut funds for Medicare Advantage, as it is threatening, and plans were to pull out of the program, these beneficiaries could lose ?an absolutely key safety net,? according to former Clinton Administration Medicare official John Gorman. So the Center on Budget and Policy Priorities, a well-known liberal think tank, produced its own report. But unfortunately, they distorted the argument: They argue that ?Nearly half (48 percent) of all Medicare beneficiaries with incomes below $10,000 are enrolled in, and thus receive supplementary coverage through, Medicaid.? Yes, but as we argue, it is lower-income seniors above the Medicaid eligibility threshold who find MA plans particularly attractive. Seniors with annual incomes of $10,000 to $20,000 are those who are much less likely to have retiree supplementary coverage and who find private Medigap premiums too costly. They are disproportionately minorities and would be hit hardest if Congress proceeds to cut funding for the program to pay for a massive expansion of health insurance coverage for children. Our argument stands. ************* And then another report comes along that you will surely be hearing quoted a lot this month during the debate over allowing the federal government to impose price controls on prescription drugs in Medicare, AKA ?allowing the government to negotiate prices.? The Institute for America's Future makes an outlandish claim that Medicare could save $30 billion a year if Medicare were to directly negotiate prices with drug companies. The official Congressional Budget Office calculations show that savings from government interference in drug price negotiations ?would very likely be less than $10 billion? over 10 years ?and could be significantly less.? So how does the Institute for America's Future come up with such a huge number? They describe their calculations in their four-page paper: ?Under Part D, the CBO projects that the gross government spending for prescription drugs in 2008 under Part D will be about $52 billion. Assuming that the government is covering 2/3rds of all prescription drug spending, with individual seniors covering a third of costs, the total gross prescription drug spending for Medicare enrollees will be approximately $78 billion. Approximately $5 billion of this pays for the excessive administrative costs, which still leaves $73 billion in prescription drug expenditures. If Medicare was able to negotiate similarly to the VA and get prices reduced by 40%, the effect would be savings of roughly $30 billion a year.? Just a few problems with that: For starters, the VA beneficiaries consume about 2% of prescription drugs sold in this country and Medicare, about 50%. There's no way that the government could get the deep, deep price discounts the drug companies give to the VA. And the acting administrator of the Centers for Medicare and Medicaid Services, Leslie Norwalk, says that her agency simply does not have the expertise to engage in negotiations with the companies over the prices of thousands of drugs. Some members of Congress have recommended that she just hire contractors to do it. Her answer: ?That's exactly what we're doing now? by having private drug plans negotiate with the drug companies thr | |