|
||
|
SEARCH BY KEYWORD
|
 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 4 5 6 7 8 9 10 11 12 Next >January 19, 2007
Tax CapWhile we have no confirmation at all from the White House, news reports are circulating that President Bush is considering bold changes to tax policy impacting health insurance. Hooray! There are several valuable proposals that would make it easier for ... While we have no confirmation at all from the White House, news reports are circulating that President Bush is considering bold changes to tax policy impacting health insurance.Hooray! There are several valuable proposals that would make it easier for people to buy coverage, such as making health insurance tax deductible whether you buy a policy yourself or get it at work. But the gutsiest idea, and one that would win the biggest cheers from the policy community and from economists around the country, is to limit the generous tax break for gold-plated, job-based policies and then use the revenue to help the uninsured buy coverage. The "tax cap" was one of the key recommendations that the president's Tax Reform Panel made in its 2005 report. Earlier that year, 59 policy experts representing more than 49 organizations, primarily non-profit public policy research organizations, submitted a statement to the panel advocating a cap. We said that the double tax break for employment-based health insurance - deductible for the employer and excluded from income for the employee - drives many of the distortions in the health sector today. But capping the tax break wouldn't mean the end of employment-based health insurance as we know it. Companies would still offer health insurance, and the full value of the policy would still be deductible for the employer. But if the health insurance policy an employee gets at work were worth more than, say, $11,500 a year for a family, then anything above that amount would be considered part of the worker's taxable income ($11,500 was the amount of the cap recommended by the tax commission and is the current value of the average job-based family policy). For example, a worker with a $12,000 policy would pay taxes on the extra $500 - equal to about $165 a year in added federal income taxes for a worker in the highest bracket. To repeat: Employers would still be able to deduct the full cost of health insurance because benefits and cash wages both are employee compensation and therefore are legitimate business expenses. But employees would not receive tax exemption for an unlimited amount of health insurance. Why is this so crucial? Our joint statement explains some of the distortions the current system creates:
I am convinced that the tax cap would provide a new negotiating tool so employers and employees could become partners rather than adversaries in figuring out how to stay under the cap and seek better quality, better outcomes, better service, and better prices in health care. A tax cap isn't the end all and be all of health policy. But it is a huge step in the right direction to give both employers and employees better incentives. And the amount recouped from people who don't change their behavior and who still get expensive policies at work (such as highly paid lawyers, corporate executives, and members of Congress) could generate resources to help the uninsured. This would be a courageous stand, but we will surely hear criticism that "they're going to tax your health benefits." But that need not be so if people make smarter decisions and respond to incentives to bargain for more affordable health insurance - which also frees up more of their pay for other needs. And isn't moderating the escalation of health costs the goal? This would help even more. As I explained in a talk to the American Benefits Council in 2005:
A tax cap would be the right thing to do. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
THE WRONG PRESCRIPTION The Washington Post called House legislation to require the government to negotiate Medicare drug prices "misguided." In an editorial published the day after the House voted 255 to 170 to approve the measure, the Post said that the Department of Veterans Affairs is a poor model for how to get low prescription drug prices. "Fully 3,000 of the 4,300 medicines covered by Medicare are unavailable under the veterans' program. Restricting the list of covered drugs saves money, but it also reduces the quality of the benefit -- 1.5 million veterans are sufficiently unhappy with the result that they opt to buy the more inclusive Medicare coverage." The Post concludes that "government fiat" is not the answer, and allowing competition among insurers is the better course. National Review editor Rich Lowry argues that Medicare Part D's "unexpected success" is due in large part to the absence of government interference in drug price negotiations. "As it happens, government negotiations of prices won't do any good unless the government is empowered not to offer certain drugs, thus achieving real bargaining power," writes Lowry. But this tactic will not only deny choice, it will also "obstruct medical progress, to the detriment of seniors and all of us." IS 'QUICK' ENOUGH? Ranit Mishori, a family medicine resident at Georgetown University/Providence Hospital, describes the growing physician resistance to retail based health clinics, like MinuteClinics, RediClinics, and MediMin. Some critics "worry about a child's receiving medical care at different places by different providers," writes Mishori. "But even as many doctors sound the alarm, others are scrambling to adapt?Increasingly, the discussion among physicians like me is focusing on how to compete with the new clinics." Some have started offering expanded office hours, online scheduling, and opening on weekends. But MinuteClinic's Anne Pohnert argues that retail based health clinics pose no threat to traditional medicine, noting that their list of patients includes people on vacation, young adults who don't have regular physicians, and the uninsured. "There are so many people and not enough providers?There's room for everybody," she says. "The consumers want to have choice, and we'll work together." DIVERSE GROUPS SEARCH FOR HEALTH CARE ANSWER "Groups representing doctors, retirees, business executives and others united behind a plan on Thursday to reduce the number of uninsured Americans through tax breaks and an expansion of some existing government programs," the AP reports. The groups, which have been working for nearly two years, include the U.S. Chamber of Commerce, the American Medical Association, and the AARP. "Their first priority is to focus on children." The coalition "envisions a 'one-stop shopping' center that would let uninsured children be automatically enrolled in the State Children's Health Insurance Program when they enroll in other means-tested programs such as discount school lunches and food stamps," AP reports. "The initiative, which the groups labeled as Kids First, also creates a new tax credit designed to make it easier for families with incomes below 300 percent of poverty to pay for insurance for both children and adults." The Kaiser Commission on Medicaid and the Uninsured has published a new group of publications that examines trends in access to Medicaid and the State Children's Health Insurance Program (SCHIP). The package includes an update on enrollment procedures, eligibility rules, and cost-sharing practices in Medicaid and SCHIP in the 50 states in 2006. RETHINKING HEALTH INSURANCE Cato Unbound is a monthly "virtual trading floor" from the Cato Institute featuring essays and responses from the world's leading thinkers. This month's lead essay is by economist and author Arnold Kling, who argues "that the American health system does not insure citizens against the risk of ill health so much as 'insulate' them from the true cost of medical procedures, encouraging often needless procedures, and putting upward pressure on the costs of care." Respondents include health care consultant Matthew Holt, Duke University Professor Clark C. Havighurst, and Jonathan Cohn, senior editor of the New Republic, with some conclusions that universal, government-directed health care is inevitable in the U.S. TECHNICAL EXPLANATION OF H.R. 6408, THE "TAX RELIEF AND HEALTH CARE ACT OF 2006" AS INTRODUCED IN THE HOUSE ON DECEMBER 7, 2006 Legislation passed in December as part of the Tax Relief and Health Care Act of 2006 provides new opportunities to enhance Health Savings Accounts. The House Joint Committee on Taxation has published a technical explanation detailing the provisions related to HSAs. See pages 71-80 of the report. The Department of Treasury also published a news release with a good summary that helps consumers make sense of the new legislation. UPCOMING EVENTS: Can Government Price Negotiation Work for the Medicare Drug Benefit? Grace-Marie Turner speaking on the Small Business Advocate Show America's Health Care System is Sick - How to Cure it Third Annual Health Savings Account Summit Engaging the Consumer to Deliver on the Promise of HSAs Health Information Technology and Rapid Learning 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. January 12, 2007
ShowdownThe 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 tho... 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. January 5, 2007
All Drug Prices, All the TimeSince the new year began, we've been dealing with all-talk-all-the-time about prescription drug prices. The idea that the government should negotiate prescription drug prices is a key piece of health care legislation in Speaker Nancy Pelosi's 100 hour mar... Since the new year began, we've been dealing with all-talk-all-the-time about prescription drug prices. The idea that the government should negotiate prescription drug prices is a key piece of health care legislation in Speaker Nancy Pelosi's 100 hour marathon, and the House is expected to debate and vote on the measure next Friday.It sounds so simple. Since we are in favor of competition and price negotiation, what could possibly be wrong with government negotiating prices? Plenty.
My colleagues from several think tanks and I have been working on a fact sheet which I commend to you with more details to help educate this debate, and I also have an article in today's Houston Chronicle about the issue (see summary below). We will continue to look for the opportunities to get our message across in these new debates, and we will make it a Happy New Year! Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
MEDICARE DRUG BENEFIT IS FINE AS IS, MADAM SPEAKER Medicare Part D is ?a rare government program that's both successful and under budget,? writes Grace-Marie Turner of the Galen Institute. ?Despite this news, Speaker Nancy Pelosi, D-Calif., and the incoming Congress have pledged to 'fix' the Medicare Part D drug benefit in the first 100 hours of the new session by directing the federal government to 'negotiate' drug prices,? writes Turner. ?Part D represents the first significant initiative to reign in runaway medical spending by restoring personal responsibility and savings incentives to Medicare. In doing so, it shows that government can leverage free-market forces to cut costs while giving seniors more choices?Instead of trying to revamp it, Congress should apply the Part D model to other government programs.?
Wharton Professor Mark Pauly weighs in on the Massachusetts health plan and discusses which features should be copied by other states and which would benefit from modification. ?Rather than focus on details of subsidized coverage?the initial focus should be on providing coverage of greater actual value than a given benchmark, leaving plan details to consumers, not special interests or public health experts,? writes Pauly in a paper published by AEI. ?The best way to induce people to accept subsidized coverage, or to ensure that a political mandate is truly effective, is to permit individuals to choose their form of coverage,? he writes. ?Getting decent coverage to almost everyone is a better initial goal than getting perfect coverage to fewer of the uninsured,? he writes. ?States considering a universal health-insurance mandate or major health-insurance coverage expansion should provide more flexibility in the types of plans permitted and greater neutrality in the distribution of subsidies,? concludes Pauly. ONE COMPANY FINDS A WAY TO CONTROL HEALTH COSTS A Sacramento Bee columnist describes the remarkable results achieved by Safeway, the California-based grocery store chain, after it switched from traditional health plans to a consumer-directed health plan. ?After five years of double-digit increases, Safeway saw an 11 percent decline for the employees who opted into the new plan. And the company passed most of that savings on to the workers in the form of lower premiums,? reports the Bee. ?Counting the premium, the deductible and out-of-pocket costs, the average employee is paying less now than under the old traditional plan? and still has access to preventive care 100% covered by insurance. In 2006, about 44% of the company's 30,000 eligible employees were in the plan, and Safeway expects 70% to enroll in 2007. ?At a time when nothing else seems to be working to control health care costs, Safeway's experience is encouraging,? writes the Bee. ?It's an approach that needs to be explored further and allowed to develop so that we can see if it works over the long term, not smothered before it has a chance to take hold.? The Congressional Budget Office recently published a comprehensive analysis of consumer-directed health plans, including their potential effects on health care spending and outcomes. THE MYTH OF THE BIG BAD DRUG COMPANIES ?Critics?are wrong to portray the nation's big drug companies as heartless, avaricious behemoths that act in whatever manner they choose and always get their way,? writes Richard Epstein of the Hoover Institution. ?The truth is, the pharmaceutical industry is too heavily regulated? Its big problem today is not that it's free to run roughshod over the needs of consumers, but that it operates in a hostile and excessive regulatory environment that frustrates sound business decision-making,? writes Epstein. Unnecessarily expensive clinical trials and major liability risks drive up costs and thwart innovation. Further, ?regulatory attacks on the industry's pricing model, including recent proposals to have the government negotiate rates for all senior citizens covered under Medicare Part D, threaten revenue stream.? Attempts to leverage prescription drug costs through the use of price controls would have ?dire consequences,? concludes Epstein. ?We must be careful not to mistake price controls for a cure when they are in fact a disease. Let our new reformist Congress beware.? HILLARYCARE COMES BACK The Democrats' plan to allow federal price negotiations for drugs under Medicare Part D would lead to ?a combination of price controls and restrictions on what drugs seniors can use,? writes Bob Goldberg of the Center for Medicine in the Public Interest. ?Democrats have consistently pointed to the government-negotiated drug prices offered by the Department of Veterans Affairs as a model for what they would do with Medicare Part D?Far from negotiating drug prices, the VA imposes them. Federal law requires companies to sell to the VA at 24 percent below wholesale price. If they won't, they are banned from selling medicines to Medicaid, Medicare, and the public health service,? Goldberg writes. ?In opposing the Medicare Part D reform in 2003, Democratic senator Patty Murray stated that she 'was unhappy at the prospect that this plan could tell patients with MS, Parkinson's disease, and ALS that they can't get the drugs they need because their plan will not cover them.'? Yet Goldberg points out that Azilect, the newest drug to treat the symptoms of Parkinson's disease, and Tysabri, a new drug for multiple sclerosis, are not on the VA drug list, though every Medicare Part D plan covers them. HEALTH POLICY IN 2007 AEI's Tom Miller provides a look ahead at the political agenda for this year's Congress. Democratic leaders will most likely ?halt, if not reverse, the Republican push for a larger private health plan role within the Medicare program and for less-comprehensive and more cost-conscious coverage in private insurance markets,? writes Miller. ?Don't expect legislation further liberalizing health savings accounts,? he says. Instead, the spotlight will be on expanding ?the 10-year old SCHIP program, trying to make it an entitlement program for all children, and perhaps extending it to lower-income childless adults.? Miller argues that Republicans ?need to ensure that initial efforts to expand the market share of consumer-friendly, private-sector-oriented agents can succeed?An ardent defense of an imperfect, but improving, vision of consumer-driven health care in both the private and public sectors is vastly preferable to the Democrats' nostalgic agenda that won't work.? Further, ?Republican members of Congress should acknowledge that much more remains to be done to convert the rhetoric of consumer empowerment and market competition into the reality of a deeper and more robust array of thriving care options.? UPCOMING EVENTS: Is the Massachusetts Health Plan America's Next Top Model? 2007 Outlook: Marketplace and Legislative Trends for the Year Ahead Health Care Reform Summit: Options, Opportunities and Obstacles for Oregon 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. December 14, 2006
The Year AheadWe close the year with encouraging news about passage of the important enhancements to Health Savings Accounts that we described to you last week. It was a small miracle that they were approved as the curtain fell on the last act of the Republican-control... We close the year with encouraging news about passage of the important enhancements to Health Savings Accounts that we described to you last week. It was a small miracle that they were approved as the curtain fell on the last act of the Republican-controlled Congress.Many of the changes were sought by employers who want to offer HSAs but needed these fixes to make them work better and to make them more attractive to their workers. But now we turn to a new debate as the Democrat-controlled Congress prepares to convene January 4. Sen. Ron Wyden of Oregon raised the curtain on this new production with a comprehensive plan to achieve universal health coverage. It involves some creative ideas, especially moving to a system with portable, individually-based insurance, state-based purchasing pools, and changing tax law to create fairer subsidies for health insurance than in the current employment-based system. But his plan may sink under the weight of mandates: It has an individual mandate, an employer mandate, many mandates for insurers, and even mandates for the states. At least he is spreading the pain. We'll have much more to say later, but expect this plan to start a vibrant debate, which Sen. Wyden acknowledges is a first shot for the 2008 presidential debate. There are pivot points in the debate over health reform, and one of them is whether legislators focus on universal access to health insurance or changes designed to make private insurance more affordable and accessible in a properly-functioning market. Like the Massachusetts plan, Sen. Wyden focuses on universal health insurance and would try to use the power of the government rather than the market to hold down prices. Incoming congressional committee chairmen already have announced their intent to focus on creating new government health programs and expanding access to existing ones, especially Medicare and Medicaid. Inevitably, when government expands access to taxpayer-financed programs, they quickly turn to price controls. Incoming Speaker Nancy Pelosi says prescription drugs will be next. The Chamber of Commerce in Rochester, MN, invited me to speak at a health seminar last week (wind chill, 11 degrees below zero), and we talked about the pressures that doctors and hospitals face with a growing number of their patients on Medicare and Medicaid. These programs pay at best 80% of costs, one hospital administrator said, which means that he is forced to charge private plans more to make ends meet. While we could argue that these institutions have many opportunities to become more efficient, that won't happen overnight. New incentives are needed to replace current bureaucratic, procedure-driven, regulation-intensive payment systems. The danger is that we hit a tipping point where employers, hospitals, doctors and patients give up as government plays a bigger and bigger role in the health sector, suffocating the ability of the private sector to survive. Too many doctors today tell me that they can't see how that could be worse than what they're dealing with today. And too many young doctors - but by no means all - seem to prefer predictable hours and a steady paycheck to the independence and entrepreneurialism of their predecessors. Already, government controls more than 45% of all health spending in the U.S., more if you count the $200 billion in annual tax subsidies for employment-based health insurance. Once the government's share tips much past the 50% point, it could topple us into a government-controlled health system. The free-market ideas that you and I have been working to advance certainly are threatened. Sen. Ted Kennedy wants to start right away by expanding existing programs to require that all children have health insurance and will surely be working to make sure that the government is the major player. Senior Democrat staffers say they would like to begin by making the State Children's Health Insurance Program look more like Medicare (which means defined benefits and price controls rather than a more flexible, state-controlled block-grant program). And on the House side, Rep. Pete Stark will chair the House Health Subcommittee that controls the purse string for government spending on health care, including Health Savings Accounts. He also said he wants to undo the private sector options and choices that have become so popular with seniors on Medicare. We will continue to muster every communications tool we can to educate the American people about the risks ahead, working with colleagues to speak with one voice about our vision of a patient-centered health care system. We are not daunted, but it is something of an understatement to say that the year ahead will be challenging. Health Policy Matters will return in the new year to keep you posted on all of the important developments. We do live in a wonderful country, and this is a wonderful time of year to cherish our freedom with our families. We at the Galen Institute send you our very best wishes for a joyous Christmas season and a happy and prosperous new year! Grace-Marie Turner P.S. The toughest times may be ahead, but I am confident that we will prevail. Our side has the advantage of believing in the free market and the wisdom of the American people. If you can, please consider the Galen Institute in your year-end giving. We welcome your contribution at www.galen.org/join.asp or by mail to P.O. Box 19080, Alexandria, VA 22320. Best wishes and thank you. RECENT NEWS ARTICLES AND STUDIES:
EUROPEAN-STYLE HEALTH CARE? TIME FOR A REALITY CHECK. "Is there any good reason why we should follow the Europeans and have government officials run our health care system?" ask Grace-Marie Turner of the Galen Institute and Bob Moffit of The Heritage Foundation. Many states, including Maine and Vermont, are imposing much more centralized control over their health care. But "European tax and spending policies, particularly to sustain European health and welfare programs," show the high costs of such an approach, write Turner and Moffit. "Americans should pursue an American solution." For starters: "Creative state legislators ? could reverse current trends towards centralization and inject a healthy dose of market competition and consumer choice into state arrangements that are too often governed by outdated and counterproductive laws and regulations." HEALTH COVERAGE TAX CREDIT The Urban Institute has published two papers about the Health Coverage Tax Credit (HCTC) program. The first, written by Stan Dorn and Fouad Pervez, analyzes state-qualified health plans provided to HCTC beneficiaries as of March 2006 and finds that the "vast majority of potential beneficiaries have access to state-qualified plans, which typically include multiple health insurance choices." In the second paper, Stan Dorn examines Health Coverage Tax Credit enrollment rates. National take-up remains low, but some unions and state officials, including early retirees from Bethlehem Steel and the states of West Virginia and Virginia, have enrolled a relatively high number of eligible workers. Dorn writes that future enrollment can be increased through a modified HCTC program or tax credits that serve larger numbers of uninsured. INEQUALITY AND HEALTH CARE The Washington Post describes in a long and thoughtful editorial the growing problems with employment-based health insurance in the U.S. which it says distort the health insurance market and lead to rising inequality in health care. "Workers' total compensation may be rising, but health benefits gobble up an increasing share of that, so wages lag?Struggles with medical bills and fears of losing coverage are at the root of middle-class anxiety, and that anxiety creates pressure for misguided populist policies that would spread the dysfunction of the health system to the broader economy," writes the Post. While not offering solutions in this piece, the Post explains why this issue will be central in the next presidential debate. HOSPITALS AND PHYSICIANS: RELATIONS A Health Affairs Web Exclusive package provides several perspectives on the growing rift between hospitals and physicians. Among those responding are Denis Cortese and Robert Smoldt, President, CEO and CAO of the Mayo Clinic, who recommend an integrated delivery system, such as physician-led multi-specialty group practices or physician-hospital organizations. Gail Wilensky, former administrator of what is now the Centers for Medicare and Medicaid Services, and her coauthors promote the use of "gain sharing" arrangements, where savings generated by more efficient care delivery are shared by both physicians and hospitals, as a way to transition to an integrated delivery system. THE PRICE IS WRONG: MOST AMERICANS SIGNIFICANTLY UNDERESTIMATE HEALTH CARE COSTS, SURVEY SHOWS "More than 70 percent of U.S. consumers say they know little or nothing about how much their doctors charge compared to other doctors," according to a new survey sponsored by HealthMarkets, a health and life insurance provider. "Most adults (65 percent) think that, in general, a high-priced doctor in the U.S. charges two or three times as much for the same procedure as a low-priced doctor," according to the survey. But the survey's data shows that charges may be 10 times higher. The survey also "found strong demand for tools that provide greater transparency for health care services." Lack of price transparency is one reason health care costs increase faster than inflation year after year, according to Roy Ramthun, former senior health policy advisor at the White House and now president of HSA Consulting. DESIGNING A PREMIUM SUPPORT SYSTEM FOR MEDICARE The Congressional Budget Office examines key issues in designing a "premium support" system for Medicare, which would give beneficiaries a federal allotment that they could use to purchase health coverage, either through a private plan or traditional Medicare. The study reviews other health care systems that use premium support models, such as the Federal Employees Health Benefits Program. CBO uses a simulation analysis to determine the potential effects of selected approaches to premium support and finds that "setting benchmarks equal to the minimum bid in each county would generate the greatest federal savings and lead to the highest increase in premiums in certain geographic areas for beneficiaries who wanted to remain in the fee-for-service program." Additionally, "benchmarks would be lower than the statutory benchmarks for the Medicare Advantage program, which would reduce the Medicare program's per capita payments for enrollees in private plans." As a result, "the premium rebates and additional benefits that are currently offered by private plans would probably be reduced and, in some cases, replaced by premium surcharges." UPCOMING EVENTS: Evidence, Economics, and Politics: Australia's Experiment in Evidence-Based Medicine The Practice and Potential of Medicine: How to Close the Gap Trusted Third Parties for Personal Health Records & Patient Privacy Briefing Remembering Milton Friedman 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. December 8, 2006
Vivid ProofThe news last Saturday provided vivid, painful proof that drug innovation is indeed a very risky business. Pfizer was in the final stages of testing a new drug for heart disease that would not just lower bad cholesterol, as its Lipitor does, but also in... The news last Saturday provided vivid, painful proof that drug innovation is indeed a very risky business.Pfizer was in the final stages of testing a new drug for heart disease that would not just lower bad cholesterol, as its Lipitor does, but also increase good, artery-clearing cholesterol. The drug, torcetrapib, would have been a blockbuster, offering huge promise of actually reversing heart disease -- the nation's number one killer. The independent researchers monitoring the trial alerted Pfizer that the late stage trials showed a higher death rate among participants. The company quickly pulled the plug after investing close to $1 billion and 15 years on the drug and taking a $20 billion hit on its market capitalization. It would be wise for the incoming Congress to pay attention to the riskiness of this business. Pfizer has other promising drugs in the pipeline, but if Congress decides to put price controls on the industry, it will certainly dry up the resources needed for new drug development and the capital to take risks like this to tackle heart disease, Parkinson's, Alzheimer's, obesity, and the many, many other killer diseases that could be treated and even cured. For proof, they need only look at Europe's dying pharmaceutical research industry, decimated by short-sighted policies and price controls that dry up the resources for research. We don't want to go there. ********** The Senate is poised to approve several very positive improvements to Health Savings Accounts that would make them easier to use, more accessible, and more attractive. The legislation already has cleared the House as part of a big tax bill, and Senate approval is the final hurdle before the legislation will be sent to President Bush. The Senate is debating interminably, but passage is expected, possibly later today. Bear with us through the details, if you are following this, because they do provide some much needed fixes and new incentives.
The Tax Relief and Health Care Act of 2006 will be the major piece of health care legislation passed this year, likely in the last hour of the last day of the session. A lot of people who believe in the promise of HSAs worked very hard to convince members of the wisdom of these fixes. Kudos to all! *********** And, finally, there are those who don't believe in the promise of HSAs and who seem to think that the whole concept of consumer-directed health care is wicked. So we have yet another study out purporting to show that consumer-directed health care is a failure. This is getting so tiresome! The Employee Benefit Research Institute (EBRI) and The Commonwealth Fund have teamed up again this year for a study that compares traditional health insurance and consumer-directed plans. They report that enrollment in CDHC plans is flat, more people with high-deductible plans missed getting needed care because of costs and are less satisfied with their plans, and there is no measurable increase in the number of uninsured signing up. This year's study has the same problems as last year's, even though it was conducted by a different on-line survey firm. Click here for what we said last year that shows why the findings are skewed and out-of-line with the more reliable data produced by America's Health Insurance Plans. Cheers. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
THE MOVEMENT TOWARD CONSUMERISM WILL CONTINUE "The momentum toward giving consumers more power and authority over their health care decisions and spending will continue" in the coming year, writes Grace-Marie Turner of the Galen Institute. "Consumers have a taste of their power in the marketplace, with dramatic price cuts on generic drugs and with new, consumer-focused clinics that are springing up in retail stores and malls across the country," writes Turner. "Consumers also are seeking information to help them make decisions about their health insurance coverage, treatment options, and costs of care. And information technologies will spur the drive toward creation of digital health information records, further empowering consumers to be more engaged in their health care decisions."
People in consumer-driven health plans are positively motivated to modify their behavior when health promotion and wellness programs are incorporated, according to a new survey from Aon Consulting. Aon analyzed plan data from South-African based Discovery Health and its subsidiaries, including the U.S.-based Destiny Health, which together cover more than two million people. Both offer a voluntary wellness program that rewards members for managing their health; 62% of Discovery members have joined the program despite it not being mandatory, and more than 80% of Destiny members have started an exercise or nutrition program in the last 12 months. The survey also finds that people with these plans "consume less health care when paying from their HRAs/HSAs?but this does not result from avoiding necessary care." The study finds no long-term ill effects. "Members who have been in the plan the longest continue to exhibit lower claims and hospital admissions - a result that would not occur if savings were the result of skipping preventive care."
Allowing the government to negotiate prices directly with pharmaceutical companies on behalf of Medicare beneficiaries "would prove ineffective, inflexible, and unresponsive to the highly diverse personal needs of America's seniors," writes Greg D'Angelo of The Heritage Foundation. "Medicare's clout is not superior to today's private sector arrangements, and its administrative determinations cannot serve as a substitute for the efficient operation of real market forces," writes D'Angelo. "By allowing government to interfere, or supersede, existing private sector price negotiations, policymakers would be replacing already functional negotiations between private insurance plans, pharmacists, and drug companies with a more rigid interference system of government price fixing." Heritage's Bob Moffit argues in the Philadelphia Inquirer that in the new Medicare drug benefit, "Private health plans are securing serious discounts, benefits are generous (especially for poor seniors), and eight out of 10 seniors say they're satisfied." Additionally, "when government officials do 'negotiate' drug prices, it almost invariably means setting a price below the market level, which reduces the supply of drugs or restricts the choice of drugs patients can have."
A new poll conducted by the Kaiser Family Foundation and the Harvard School of Public Health "looks at the public's priorities and views on health issues as a new Democratic majority takes leadership of the Congress and as the 2008 presidential campaign begins to take shape." Key findings include:
Full text: www.kff.org
"Critics of drug companies vastly overstate the industry's financial well-being - and overlook its indispensable contributions to the future of public health," writes Richard Epstein of the Hoover Institution. "The medical advances of the past 30 years are not just a matter of dumb luck. They are very heavily dependent on the patent law, pricing freedom, and marketing strategies that have allowed these firms to bring a wide variety of vital products to market," writes Epstein. But he says that a Democrat-controlled Congress promises a new round of regulations, including price controls, that will only prove harmful to the pharmaceutical industry. "As Adam Smith recognized long ago, the profit motive is the only constant and reliable spur to making the major investments on which the prosperity (and health) of any nation depends," concludes Epstein. "Today's pharmaceutical industry is not exempt from that enduring insight."
Wal-Mart, BP America, Intel, Pitney Bowes and Applied Materials "have joined forces to create a 'medical Internet' on which some 2.5 million people can compile their personal health records in one location, providing convenient access to everything from prescriptions and cholesterol readings to family medical histories," reports the Los Angeles Times. The system, called Dossia, "could reduce the chances of medical mistakes, improve treatment of chronic illnesses and eventually save billions of dollars by avoiding duplicative services." Participation in the program is voluntary and patients will determine who sees their medical information. "The electronic record would become an employee's lifelong property, traveling with the worker to a new job and, after retirement, the Medicare system," writes the Times. The Markle Foundation has just released Connecting Americans to Their Health Care: A Common Framework for Networked Personal Health Information. This white paper "describes a networked environment in which individuals could establish secure connections with multiple entities that hold personal health information about them." UPCOMING EVENTS: Grace-Marie Turner speaking on the Todd Feinburg Show Consumer Directed Health Care Conference Emerging Vaccine Innovations and Health Insurance Benefit Design Pay for Performance in Physician Healthcare Reimbursements and Its Implications upon Future Value Decisions Evidence, Economics, and Politics: Australia's Experiment in Evidence-Based Medicine 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. November 30, 2006
Opportunities UnfoldIt is wise for us to search for the opportunities amidst the challenges the new Congress will present. A few examples: The uninsured. Incoming Democratic Health Subcommittee Chairman Pete Stark co-signed an op-ed in The Washington Post in 1999 with ... It is wise for us to search for the opportunities amidst the challenges the new Congress will present. A few examples:
The movement toward consumerism is a growing global force, and we must continue to press forward with our ideas. People can make better decisions for themselves than government can, and the market will offer more creative, affordable options if given a chance. Onward! Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
'TIS THE SEASON TO SWITCH Seniors who want to switch or sign up for prescription drug coverage should take advantage of Medicare's open enrollment period through Dec. 31, writes Grace-Marie Turner of the Galen Institute. "This option to choose between a host of private insurers is what makes Medicare Part D so different from other government programs," writes Turner. "Knowing that beneficiaries have the option to switch to a competitor means that insurers are always trying to come up with better plans -- which results in lower prices and a broader array of choices." Competition also results in coverage of many more drugs in Part D than the VA or other government-run programs. (Some seniors can enroll at any time. See www.cms.hhs.gov for details.) THE HUMAN COST OF FEDERAL PRICE NEGOTIATIONS: THE MEDICARE PRESCRIPTION DRUG BENEFIT AND PHARMACEUTICAL INNOVATION "Federal price negotiations for drugs under Medicare Part D would reduce costs for taxpayers and perhaps patients, but those effects can be achieved only at the cost of reduced pharmaceutical innovation," writes Ben Zycher of the Manhattan Institute. Zycher uses a simulation analysis that projects the effect of federal price negotiations for prescription drugs on pharmaceutical research and development investment through 2025. The study "estimates that investment in new drug research and development would decline by approximately $10 billion per year?[and] will result in a loss of between 6 and 12 new medicines per year." This would have a profound effect on American life expectancies, concludes Zycher. Federal price negotiations "would yield a loss of 5 million expected life-years annually, an adverse effect that can be valued conservatively at about $500 billion per year, an amount far in excess of total annual U.S. spending on pharmaceuticals."
The Washington Post and the Los Angeles Times both report on the challenges that Democrats face in their attempt to lift the ban on government drug price negotiations with pharmaceutical companies. Democrats "are struggling to keep that promise without wrecking a program that has proven cheaper and more popular than anyone imagined," writes the Post. And the Los Angeles Times writes that the Democrats' proposal to adapt the Veterans Affairs model to Medicare "may prove difficult." Officials with Veterans Affairs "can negotiate major price discounts because they restrict the number of drugs on their coverage list?In other words, the VA offers lower drug prices, but fewer choices." Other possible options under consideration include creating a separate, Medicare-run program that would compete with the private plans.
PricewaterhouseCoopers finds that consumer-directed health plans are estimated to have the slowest rate of increase in medical costs for the coming year. In 2007, average medical costs (not premiums) are expected to rise 11.9% for preferred provider organizations (PPOs), 11.8% for health maintenance organizations (HMOs), and 10.7% for consumer-directed health (CDH) plans. "While only 3 million Americans are in consumer-directed health plans ? greater acceptance of [CDH plans], especially those that incorporate patient education and information tools, could have a strong impact on future medical costs," according to the survey of major health plans and insurance carriers. CDH plans "are viewed as offering a more flexible framework for employees to influence the steepness of the rise in medical costs." The survey also identifies inflators and deflators that contribute to medical cost trends. Inflators include new prescription drugs, increased demand, and cost-shifting; deflators include price transparency, new medical technology such as electronic medical records, and health and wellness programs. Health cost trends, including health premiums, remain stable at 7 to 8 percent, according to a study from America's Health Insurance Plans. The study reviews new data from the Center for Studying Health System Change and finds it to be consistent with earlier surveys from Mercer, the Kaiser Family Foundation, and the Federal Employees Health Benefits program.
A new Health Affairs Web Exclusive divides the uninsured into three groups: 1) adults and children who are eligible for Medicaid and SCHIP but do not participate; 2) those with incomes above Medicaid and SCHIP eligibility but who cannot afford coverage; and 3) those who can afford coverage but remain uninsured. The study "found that 24.7 percent of the uninsured are eligible for public health insurance programs, 55.7 percent are in the 'need assistance' category, and 19.6 percent are likely to be able to afford coverage on their own." UPCOMING EVENTS: Uninsured/Access to Care Health Policy Forum Who Cares What Patients Think? Should the Government Have a Role in Health Reinsurance? "Coincidence or Crisis" Book Launch 2007 Consumer Driven Healthcare Playbook Prescription Drug Policy in the U.S.: Is It Time for a Change? 2007 Health Care Agenda for Congress and the Administration Is There a Constitutional Right to Medical Self-Defense? 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. November 20, 2006
Carefully Bold on MedicaidOur Medicaid Commission held its final meeting on Friday to vote on recommendations to reform what has become the largest health care program in the country, with 55 million recipients. The recommendations we produced are carefully bold, respecting Medi... Our Medicaid Commission held its final meeting on Friday to vote on recommendations to reform what has become the largest health care program in the country, with 55 million recipients.The recommendations we produced are carefully bold, respecting Medicaid's role in serving low-income and disabled people but also recognizing the imperative to improve the program and align it with 21st century medicine. Will the report be dead on arrival when HHS Secretary Leavitt submits it to Congress next month, as some already warn? I certainly hope not. While the commission was appointed by a Republican administration and the report will be submitted to a Democratic Congress, we spent 16 months gathering a huge amount of testimony and research to take the first broad and detailed look at this 41-year-old program. The testimony was overwhelming that states need more flexibility to be creative in meeting the needs of their citizens without having to go through years of wrangling with Washington for permission. Patients also want more flexibility to get the care they need in the least restrictive settings. And governors say they must gain more control to keep Medicaid spending from swamping other state needs. Our recommendation to create a new Medicaid Advantage program was approved to provide better coordinated care for those dually-eligible for Medicare and Medicaid who often are the most vulnerable and yet whose care is often the most fragmented. Kudos to Commission Chairmen Don Sundquist and Angus King. Their skills as governors were abundantly evident in managing the process to get a very diverse group of commissioners to coalesce around a bold set of recommendations. We will put the final amended document on our website as soon as it is posted by the Commission staff. ************ Clearly, health care is moving to the front burner again and is becoming more mature, with two new reform initiatives released in the last week.
The plan, which took well over a year to develop, is very timely and will gain a special hearing by a closely divided Congress looking for bi-partisan ideas. The plan would include help with routine and preventive costs with protection against major medical expenses, while giving those eligible more choice and control over their health spending. Now where have we heard that before? ************ Sen. Ted Kennedy, the incoming chairman of the Health, Education, Labor, and Pensions committee released last week his plans for reform when the new Congress meets. Why does it not surprise us that the emphasis is heavily on expansion of government-run programs, starting with Medicare for All, a plan he has been promoting for a generation? The question we have is whether the American people will be more or less inclined to turn over more of their liberties in exchange for the perceived security of a government health care card. That will certainly be the focus of the debate over the next two years. ******* And finally, we were absolutely blown away by your wonderful response to our survey last week. I can't tell you how much it means to us to know how much you value the newsletter. Several hundred of you took the time to fill out the survey, for which we are most grateful, with comments such as these: "This is one of the best written news and analytical products that I receive. It is very user friendly, and the material is well selected and impressively presented..." "You have one of the best newsletters around. The content is well written and substantive?" "It's a real treat to receive such a well-written and thoughtful newsletter on a weekly basis. Keep up the good work!" We will keep up our work, and also will carefully review your comments and suggestions, including your request that we work harder to link to articles that are more easily accessible online. And so you can see how your responses fit with the others, here is a link to the survey results so far. It's not too late to send us your comments. The survey is still available online at www.surveymonkey.com/s.asp?u=397442863489. Many thanks for your support of our work. We have so very much for which to be thankful this Thanksgiving. All best wishes to you and your family as you celebrate this special American holiday. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
WAL-MART'S THE BEST RX FOR DEMS' DRUG PROBLEM "Those in Congress who want to help Americans save money by buying Canadian drugs need to open their eyes," writes Grace-Marie Turner of the Galen Institute. She writes that "the real answer to high drug costs is competition, Wal-Mart style." The retail giant's $4 generic prescription drug program, which started as a pilot program in Florida Wal-Marts, has now been expanded to 26 states. Other stores, like Target and BJ's, have started to lower their prices as well. "None of this could have been possible up north because Canada's drug industry is swamped in red tape," concludes Turner. "In fact, generics in Canada are actually more expensive than they are here because Canadians pay a surcharge to subsidize generic manufacturing. Anyone who stubbornly insists that U.S. health care needs a heavy dose of Canada apparently doesn't shop at Wal-Mart."
The Massachusetts health plan has been touted as an innovative way to achieve universal health insurance coverage at an affordable cost, but a close examination of the plan finds that it is unlikely to achieve this goal and will instead cost taxpayers double what was originally claimed, writes Sally Pipes of the Pacific Research Institute. The health plan was originally estimated to cost an additional $125 million, but a new bond filing by the state reveals that it would actually cost $276 million more. Further, "Given the burdensome nature of health insurance regulation in Massachusetts, and the fact that the legislature failed to offer much relief from expensive coverage mandates, offering low-cost plans will be a challenge," concludes Pipes. Ed Haislmaier and Nina Owcharenko of The Heritage Foundation examine the policy implications of the Massachusetts health plan and find that, although it holds "promise for expanding coverage?the key lesson for policymakers may be the realization that the problem of the uninsured can never be adequately and effectively addressed without first tackling the issues of coverage and portability."
House Speaker-elect Pelosi has pledged to introduce legislation that would allow the federal government to negotiate prices directly with pharmaceutical companies on behalf of Medicare beneficiaries. But the Italian government's experience with pharmaceutical price controls could hold a valuable lesson for the United States, writes Alberto Mingardi, director of the Italian free-market think tank Instituto Bruno Leoni. Drug prices in Italy are among the lowest in Europe, due in large part to government price controls, he writes. The Italian government purchases almost 60% of the nation's prescription drugs. "But since the Italian government controls such a disproportionate share of the market, it in effect dictates drug prices." This has led to a number of problems, including distorting the laws of supply and demand, an increase in overall health care spending, and fewer choices in cutting-edge drugs. "So by attempting to hold down drug prices, the Italian government has deprived its citizens of the best care without reducing health-care spending," concludes Mingardi. "In their rush to revamp Medicare, U.S. policy leaders should be careful not to make the same mistake."
A new survey finds that "four-fifths of Americans are dissatisfied with the U.S. health care system and think that it needs to be improved," according to this Health Affairs Web Exclusive. The study also suggests "that the public is more supportive of solutions that give individuals, rather than the government or employers, the right to make decisions about what coverage is available." The majority of respondents (80%) say the current employer-based system is not working well and needs to be improved. Additionally, "Americans are relatively evenly divided regarding mandatory health insurance, with the exception of the uninsured who are largely against it," conclude the authors. "Americans want a system that expands coverage and maintains choice and yet does not increase individuals' out-of-pocket costs."
"Personal and portable health insurance is an idea whose time has come," writes John Goodman of the National Center for Policy Analysis (NCPA). Goodman describes the concept of portability and the legal obstacles to achieving it. For example, both federal tax laws and the Health Insurance Portability and Accountability Act (HIPAA) strongly discourage health insurance that is individually owned and portable. The study also examines three reform models which could help transition the current employer-based system into one that promotes personal and portable health insurance: the Massachusetts health plan, the NCPA-Texas Blue Cross Blue Shield proposal, and a health reimbursement arrangement approach. "With defined-benefit contributions, employers could get out of the health insurance business and specialize instead on those activities where they have a comparative advantage," concludes Goodman. "People could seek employment based on their talents and job opportunities, rather than on the basis of health insurance benefits." UPCOMING EVENTS: Uninsured/Access to Care Health Policy Forum Grace-Marie Turner speaking on the Morning Drive Show Health Care Forum 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. November 9, 2006
Health Care and the New CongressWell, it certainly is a new ball game. While the elections were not a referendum on health care, health care nonetheless is likely to take center stage in the new Democrat-controlled Congress, and we'll be dealing with new people, different issues, and a ... Well, it certainly is a new ball game. While the elections were not a referendum on health care, health care nonetheless is likely to take center stage in the new Democrat-controlled Congress, and we'll be dealing with new people, different issues, and a new playbook.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.
Different issues:
| |