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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 5 6 7 8 9 10 11 12 13 Next >November 2, 2006
Pro-ConFor a change of pace, Health Policy Matters this week features a "pro-con" exchange on the new Medicare drug benefit between Rep. Jim McDermott (D-WA) and me. The paired articles were published over the last several days in newspapers around the country... For a change of pace, Health Policy Matters this week features a "pro-con" exchange on the new Medicare drug benefit between Rep. Jim McDermott (D-WA) and me.The paired articles were published over the last several days in newspapers around the country, including The Sacramento Bee, The Kansas City Star, The Charlotte Observer, and Sunday Gazette-Mail. The contrast in our views could not be more vivid: "So long as we permit the private sector to govern the public sector, as was the case in Medicare Part D, the American people will be short changed," Rep. McDermott writes. "It is time for America to have universal health care that will put the interests of the American people ahead of the special interests." I argue that private competition is indeed working: "The drug plans compete fiercely to get seniors to sign up with them, offering a long list of the newest drugs and negotiating with the drug companies to get the lowest prices?Costs for the new Medicare drug benefit are lower than original estimates, something that almost never happens with a government program, because seniors were given the chance to be smart shoppers." I regularly have commentaries published in newspapers around the country, but this pro-con seems to mark more clearly the contrast in philosophies about the future of our health care system. We will be back after the election to assess what the results portend for the next chapter of the health policy debate. Your vote matters. Grace-Marie Turner The Kansas City Star
Competition is working to bring down health costs and give people options about their care. Grace-Marie Turner ALEXANDRIA, Va. Competition works in health care, and consumers are starting to exercise their buying power to get more choices and bring prices down. For example, costs for the new Medicare drug benefit are lower than original estimates, something that almost never happens with a government program, because seniors were given the chance to be smart shoppers. The new Medicare drug program allows private companies, not a centralized government bureaucracy, to deliver the new drug benefit. The drug plans compete fiercely to get seniors to sign up with them, offering a long list of the newest drugs and negotiating with the drug companies to get the lowest prices. The result: Seniors have driven the average monthly premium for the drug benefit down by 40 percent. The drug benefit was expected to cost $37 a month when Congress created the plan, but because seniors flocked to the lower cost plans, the average premium is only $24 a month. And seniors will see average prices stay level next year. So premium prices for the new Medicare drug benefit are lower and, once seniors had finished the sign-up process, the majority of enrollees said they were happy with their coverage and were saving money -- an average of $1,200 a year. And consumer power is working to bring prices down at the retail level as well. One giant retail chain announced last month that it would offer customers a 30-day supply of more than 100 different generic medicines for just $4 each. A competitor quickly said it would match the prices, and surely others will be close behind. None of the other pharmacies wants to lose the business of customers who just might pick up some soap and toothpaste when they pick up their prescriptions. Consumers are beginning to reshape the health sector so that it can operate more like the rest of the economy, forcing companies to come up with faster, better, cheaper services and products, something government is notoriously unable to do. Yet some congressional leaders want to change the Medicare drug benefit by allowing Medicare to negotiate lower prices. They argue that government could use its huge buying power to get a better deal for seniors. But because the government is such a big buyer, that means it wouldn't "negotiate" prices but would dictate them. It could force companies to cut their prices so much that they would have fewer resources left to invest in research to produce the next generation of drugs. We could wait a long time for that cure for Alzheimer's or Parkinson's if research dries up. That's exactly what has happened in Europe. Those governments have been so intent on getting cheap pills that they have driven pharmaceutical companies to move their research facilities -- and the good, high-paying jobs that go with them -- to the more friendly environment in the United States. There's no doubt that Plan D is clumsily structured with a so-called doughnut hole in the middle that may force some seniors to pay about $3,000 out of pocket after their routine coverage ends and before catastrophic coverage kicks in. But that's not the fault of the private market: That is what an insurance policy designed by Congress looks like. In fact, the drug companies are working hard to fill the doughnut hole by developing plans that offer coverage in the gap. And seniors also have a chance, starting Nov. 15, to switch plans if they find themselves hitting the doughnut hole this year. Consumers are smart shoppers, and they have shown they can exercise even stronger buying power than the federal government and do so without killing innovation and research. It's about time that we give a new force in our health-care system -- savvy consumers -- a chance for a change. (c)2006 Galen Institute Grace-Marie Turner is president of the Galen Institute, which is funded in part by the pharmaceutical industry. To reach her, send e-mail to galen@galen.org.
Health-care plan for seniors benefits only special interest groups and is confusing and costly. Rep. Jim McDermott Health-care plan for seniors benefits only special interest groups and is confusing and costly. WASHINGTON Millions of senior citizens today are falling into a hole created by legislation Republicans claimed would benefit seniors when it was actually written by drug companies who unabashedly favored themselves first and foremost. Medicare Part D was a historic opportunity to provide real relief for seniors to help cover the cost of prescription drugs. But Republicans were more interested in special interests than the common good, and so they forced through Congress a deeply flawed bill that overwhelmingly fails the American people. The legislation includes a so-called doughnut hole -- a gap in coverage in which seniors continue to pay premiums but receive no benefit. Once they use $2,250 in benefits, seniors are left on their own, and coverage does not resume until they have spent $3,600 of their own money. Seniors are forced to pay the full cost of prescription drugs, and at the same time they still have to pay a premium to their insurance company every month. The legislation neutralizes the enormous purchasing power of 40 million seniors that would otherwise yield dramatic savings in the cost of drugs. The legislation channels implementation through hundreds of private insurance companies that contract with Medicare. This fragments purchasing power into hundreds of pieces, and the legislation reinforces this artificial price support by explicitly prohibiting the secretary of health and human services from negotiating on behalf of seniors for lower drug prices. Prices for drugs most often used by seniors have gone up substantially since this program was created. Medicare Part D forces seniors to choose among complex and confusing plans by a certain date or be penalized 1 percent a month for every month they postpone a decision. And the penalty would apply forever. Our nation's seniors deserve and need help covering the cost of their prescription drugs, which will total nearly $2 trillion over the next 10 years. The ability of pharmaceutical advances to fight disease and prolong life is extraordinary -- and amazing advances are just ahead. To deny seniors access to these benefits is simply unacceptable. And to take advantage of seniors as Republicans have done through this special-interest legislation is equally unacceptable. When it comes to health care, Congress must have only one special interest -- the American people. So long as we permit the private sector to govern the public sector, as was the case in Medicare Part D, the American people will be short changed. That is exactly what is happening today with America's health-care crisis, yet the private sector bemoans every effort to include every American in a health-care program, even as the crisis worsens. In the richest nation on earth, affordable health care should be a right, not a privilege. Forty-seven million Americans have no health insurance and millions more -- including many in Medicare -- increasingly are finding that even their share of health costs are unaffordable. If nothing else, the failure of Medicare Part D should be a wake-up call for the need to treat the health-care crisis as any physician (and I am one) would treat a gravely ill patient. All the Band-Aids the special interests have applied have done nothing to heal the wound, much less cure the problem. America spends more money on health care than dozens of other major nations, and yet Americans receive less. A rash of recent stories report that U.S. companies now are offering employees all-expense paid trips to other countries for medical treatment because it is cheaper -- even after factoring in international travel and related expenses. The conclusion is inescapable: Health care is on life support, and it is time to administer effective treatment. It is time for America to have universal health care that will put the interests of the American people ahead of the special interests. (c)2006 Rep. Jim McDermott Rep. Jim McDermott, a Washington Democrat, is a member of the House Ways and Committee.
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. October 26, 2006
Media SpinThe latest outpouring of studies about consumerism in the health sector comes this week from Health Affairs and EBRI (the Employee Benefit Research Institute). The problem this time is not so much with the studies, but with the media spin. The Washingto... The latest outpouring of studies about consumerism in the health sector comes this week from Health Affairs and EBRI (the Employee Benefit Research Institute). The problem this time is not so much with the studies, but with the media spin.The Washington Post, for example, led its report on the Health Affairs study saying, ?A new kind of health plan being offered by a growing number of employers appears to save on costs but may lead some patients to forgo needed care, a study by Rand Corp. economists has found.? But that is not what the study says. It says that basically, the jury is still out. The RAND authors, led by economist Melinda Buntin, say ??in no cases are the findings able to cover much more than the plans' initial implementation periods.? But this question of whether or not people will forgo care is central to the debate over consumer directed care. RAND's Health Insurance Experiment study from the 1970s still provides the most solid evidence that higher out-of-pocket costs decrease utilization of health services but with no adverse health outcomes. And it shows the corollary: If something is free or nearly so, people will use more of it even if it doesn't produce a commensurate health benefit. Dartmouth researcher Jack Wennberg has demonstrated this more recently with his work studying utilization of services by Medicare patients in different regions: Seniors in Florida use many more health services than those in Minnesota, but Floridians are not more healthy and the extra medical interventions can even be harmful to them. Here is the key phrase from the Buntin study that the Washington Post and papers around the country used as the basis for their articles: ??several studies find that those in consumer-directed plans are significantly more likely to adopt cost-saving behavior that might have adverse consequences.? And it says there ?may be? some modest selection of CDHC plans by healthier people ?that warrants monitoring.? That's it. But there is a wealth of positive information in this comprehensive and well-done survey of existing studies on CDHC that largely goes unreported, such as:
So why are these negative spins important? Because employers and others hear the reports and are often deterred from considering new health care financing options. Human resource managers do not want to take risks, and if study after study reports on negative consequences, you can bet they will be less than enthusiastic. I do believe, however, that the cost savings from CDHC plans can tip the balance. CEOs look at the potential cost savings and can't help but pay attention. Nonetheless, paternalism prevails: In one of six papers accompanying the Health Affairs lead study, California researcher Marjorie Ginsburg concludes that ?consumer-directed care reflects health care providers' failure to deliver value and unrealistically assumes that consumers can make sound, cost-effective medical decisions.? But that's not supported by the evidence. Buntin et al interviewed a number of health sector leaders: ?The experts with whom we spoke were unanimous in agreeing that increased consumer engagement is important to improved decision making, adherence, and outcomes and that financial incentives could be important in bringing about this engagement.? In its annual ?Health Confidence Survey,? EBRI found that people are very dissatisfied with the U.S. health system as a whole but quite happy with their own care, thank you. And here's the clincher: ?Most Americans are fairly confident that they have enough knowledge to make decisions about their health care?[and] one-third indicate that quality would improve if they knew the full price of health care services they receive, not just what they pay.? So the bottom line is that people believe they can be more engaged in their health care decisions and want more information, especially about prices. Reporters and political leaders who are still looking backward, take note. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
THE DANGERS OF UNDERMINING PATIENT CHOICE: LESSONS FROM EUROPE AND CANADA Health care in Europe is in a state of transition and can provide some valuable lessons for the U.S., according to a new report jointly published by the Galen Institute, the Institute for Policy Innovation, and the International Policy Network. The report provides a collection of nine essays by top European and Canadian economists and health policy experts offering first-hand reports on their national health systems. ?What these experts expose are governments often obsessed with micromanaging the health care system?And the result is millions of patients facing long waiting lines, going untreated, or treated with old and outdated technologies,? according to the report. Authors include Stephen Pollard and Wilfried Prewo of the Centre for the New Europe, Helen Disney of the Stockholm Network, and Brian Lee Crowley of the Atlantic Institute for Market Studies.
?In an effort being watched around the nation, Vermont is trying to give elderly people a choice of where they want to be cared for: in an institution or at home,? according to The Wall Street Journal. Vermont's ?Choices for Care? program uses a combination of federal and state money to reimburse family members approximately $10 an hour to care for aging relatives. ?According to a 2002 Vermont study, it cost the state $122 a day for a senior to be institutionalized versus $80 a day to receive care at home,? reports the Journal. Vermont is also supporting other alternatives to nursing homes including assisted-living facilities, day-care centers for seniors, and privately run boarding homes. Full text (subscription required): online.wsj.com
Health savings accounts are becoming increasingly popular, but several provisions included in the Health Opportunity and Patient Empowerment Act of 2006 could further improve HSAs, according to Greg D'Angelo and Bob Moffit of The Heritage Foundation. ?Congress should build on the success of HSAs by clearing away several problems with their management and administration: (1) authorize individuals to fund HSAs with a one-time transfer from other health accounts; (2) allow individuals opening an HSA mid-year to contribute up to the yearly limit; (3) give employers the leverage to make higher contributions for low-wage workers; and (4) simplify compliance with contribution limits by indexing and adjusting amounts annually,? write the authors. In addition to these improvements, the authors urge Congress to level the playing field for all health coverage options by fixing the federal tax code that favors employment-based health insurance.
GAO examines the problems states face in paying Medicaid claims for recipients who also have private insurance that should pay first. ?With an estimated 13 percent of Medicaid beneficiaries having private health coverage available to them, significant savings can accrue to both the federal government and the states when states are able to avoid costs and recover payments from liable third parties,? the report states. The two main problems states face in ensuring that Medicaid is the payer of last resort are verifying that recipients do have private health coverage and collecting payments from their insurance companies. The Deficit Reduction Act has new provisions that give states more authority to collect these third-party claims, and GAO says the federal government could help the states by providing guidance about changes they need to make to state law to comply.
Goldman Sachs says that consumerism ?represents an emerging 'disruptive technology' in the healthcare market. As such, it has the potential to recalibrate the US healthcare market and shift permanently the basis for competitive advantage in many healthcare product and service sectors.? The analysis observes that ?misaligned economic incentives and tax policies have impaired market efficiency and increased costs. In light of demographic patterns, we expect corporations and governments will be inclined to address imbalances in healthcare spending by restructuring health benefits and provider payment terms.? The report covers topics including why consumerism should matter to healthcare investors, the basics of consumer-directed healthcare, how consumerism is affecting healthcare spending, and adoption trends. It concludes: ?it may be that the market has passed the 'tipping point' in terms of the consumer's role in the health care economy.?
AEI's Sally Satel, who received a kidney transplant this Spring, writes about the ?misplaced faith in the power of altruism? in the organ transplant process. ?The current system expects people - living donors and the loved ones of the deceased - to give a body part and receive nothing in return,? writes Satel. But current laws make it illegal to receive any payment in exchange for an organ. ?It is time to change the law and permit imaginative pilot projects to increase the number of organs from donors - living and deceased,? writes Satel. ?One of the most promising ideas focuses on the large potential pool of living donors.? Medicare is a prime candidate to pay for such a project, but private insurers and charities could also serve as payers. UPCOMING EVENTS: Consumer-Directed Health Care: What Does It Mean? Where Are We Headed? Improving Health Care Quality: Is Medicare a Good Candidate for Pay-for-Performance? 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. October 20, 2006
Serious TalkIs there any reason to take talk of a single-payer, government-run health system seriously in the United States? Yes! The California legislature passed a single-payer bill this fall, which was blessedly vetoed by Gov. Schwarzenegger. And many states, in... Is there any reason to take talk of a single-payer, government-run health system seriously in the United States?Yes! The California legislature passed a single-payer bill this fall, which was blessedly vetoed by Gov. Schwarzenegger. And many states, including Massachusetts and Vermont, are imposing much more centralized control over their health systems. That's just how Canada adopted its single-payer system -- province by province. Further, public anxiety over health care is increasing, with opinion polls showing that a large majority thinks that average Americans should be paying less for health care -- and the government should be spending more. Even some otherwise conservatives are ready to give up on our hybrid system and call in the government. To bring some reality to the debate, the Galen Institute and the Institute for Policy Innovation organized a series of conferences and meetings this week for five European health policy experts to tell U.S. policy makers and opinion leaders what life is like under their government-dominated health systems. Critics of the U.S. system "tend to go misty-eyed when thinking about the merits of European health care systems," Helen Disney, director of the Stockholm Network, told a Senate briefing. Stephen Pollard of the Centre for the New Europe warns Americans, "Do not listen to the perennial siren voices which call for a single-payer system in the U.S." He says that Americans would never tolerate the rationing involved. Pollard explained that access to cancer treatment became a major national crisis in Britain when patients were having to wait a year or more after being diagnosed to begin treatment. The government now is spending billions of pounds in an effort to reduce that waiting time to three months by 2010 - but is unlikely to meet that goal, Pollard said. Johan Hjertqvist offered details of his Health Consumer Powerhouse study that show how poorly European systems respond to consumer needs. "The most important lessons from Europe are that monopolies serve consumers badly; that top-down reform is inefficient and difficult; that government action can conflict with priorities of the consumer?and that lack of health care information and communication always is harmful," Hjertqvist said. But, whatever the flaws of European systems, the U.S. is seen as far worse and is strongly criticized both from within and outside. The latest Commonwealth Fund study, for example, says "America's health system falls far short ? of what is achievable on all major dimensions of health system performance." In Europe, Americans are seen as barbarians, and market-based health care as nothing short of immoral, especially with 47 million uninsured. "Europeans just won't listen when we explain that nearly half of all health spending in America is through government programs for the poor, the elderly, and children and that no one actually is denied health care when they need it. They just don't believe it," Disney said. This criticism sours the public debate over market-based options. "Rather than following [a] bottom-up approach of empowering the consumer and letting him make choices, German health reforms have favored the top-down, interventionist approach," said Wilfried Prewo of Hanover, Germany, with the Centre for the New Europe. "The failure of top-down, interventionist policies has been followed by an ever-higher degree of command-and-control." "It would be the ultimate irony if?the U.S. were to embrace such a fundamentally flawed model" as a single-payer system, Pollard said, "at the very time when Europeans are discovering competition and choice." One of the most refreshing insights came from the physician in the group: "We all have single-payer health care systems," Dr. Alphonse Crespo of the Institut Constant de Rebecque in Switzerland observed. "Citizens always wind up paying for health care, either through taxes, insurance premiums, or out-of-pocket costs. "The real question is whether they have single-decider systems. In many European countries, there are single-decider systems in which governments and their agents control what medical services its citizens will or will not receive." Dr. Crespo says that Switzerland's experiment with its form of managed competition is souring: "Deep public dissatisfaction with sickness funds and current polls reflect a readiness to accept a single insurance provider as a lesser evil." He says the real cure is genuine competition to enhance consumer autonomy and personal responsibility. The good news is that political leaders in many parts of Europe are being forced as a last resort to consider market options and to move away from centralization (even though they would never dare call it an American solution). The Senate briefing was webcast, and you can view it anytime at www.fednet.net/asx/CPF/aj/ipi101806.asx. And our colleagues produced excellent papers summarizing their talks, available at www.ipi.org. Our thanks to the International Policy Network for sponsoring these visits. And special thanks to our European colleagues for sharing their insights and expertise to better inform our debate. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
HSAS: AN AFFORDABLE NEW OPTION FOR BUSINESSES Grace-Marie Turner offers a primer for health insurance agents with highlights and key facts about health savings accounts. In this article, published in Agent's Sales Journal, Grace-Marie writes that HSAs are one tool in giving individuals and companies a more affordable option for health insurance. She also advises that "companies that have instituted health savings accounts have found that they were most successful if they also implemented an active communications program with their employees to educate them about HSAs." WAL-MART ANNOUNCES ACCELERATED ROLLOUT OF $4 GENERIC PRESCRIPTION PROGRAM IN 14 STATES Following a successful test in Florida, Wal-Mart says that "customer demand led the company to accelerate the launch" of its $4 generic prescription drug program into 14 additional states, including Illinois, Texas, and New York. The $4 generics program "includes 314 generic prescriptions available for up to a 30-day supply at commonly prescribed dosages" and "represents nearly 25 percent of prescriptions that [Wal-Mart] currently dispenses in its pharmacies nationwide." One factor in the early launch, the Wal-Mart announcement said, was to help seniors that may fall into the Medicare Part D doughnut hole before the end of the year. MEDICARE PRESCRIPTION DRUG PLAN GUIDE: HOW TO CHOOSE YOUR 2007 PLAN America's Health Insurance Plans, the National Association of Chain Drug Stores, and the National Community Pharmacists Association have published an online, interactive guide to assist Medicare beneficiaries in evaluating their prescription drug plan choices for 2007. "This comprehensive guide educates seniors about Medicare prescription drug coverage, examines their personal priorities and preferences, and helps them navigate through the different plan options," according to the news release. The guide covers topics including the top ten things beneficiaries should know about the Medicare prescription drug benefit, choosing a stand-alone plan, choosing a plan with both medical and drug coverage, getting the most from the coverage, and next steps for selecting a plan. CMS also announced this week that it will not automatically enroll dual-eligibles in drug plans for 2007, requiring them to pick their own plan. In last year's launch of the Part D benefit, the automatic enrollment caused a great deal of negative publicity following duals who were switched from Medicaid to private plans for their drug coverage without understanding the changes. UNDERSTANDING THE AMERICAN PUBLIC'S HEALTH PRIORITIES: A 2006 PERSPECTIVE An examination of 19 national opinion surveys dating back to 1940 shows that, in 2006, health care "is an important but second-tier issue," ranking higher than terrorism, education, Social Security, and the environment, but behind the war, the economy, and energy issues, according to Harvard's Robert Blendon et al. The report also highlights a troublesome paradox: A 2006 survey on national spending for health care found that "the majority of respondents (57 percent) thought that the United States as a country was spending too little on health care in the aggregate, and 70 percent said that government health care spending was too low." At the same time, the survey found that 65 percent of respondents think the average American spends too much on health care, while only 17 percent say too little (i.e., they say the government is not spending enough on their health care?). PRESCRIPTION FOR CHANGE ABC News and USA Today are running a series of features all this week on health care problems in the United States. The series highlights one of the findings in Blendon's survey (above): People have little concern about how much the country as a whole spends on health care, but they are very concerned about the costs of health care for themselves and their families. They fear that rising costs could cause them to lose their health insurance, creating a strong undercurrent of anxiety about health care. PAYING MORE, GETTING LESS 2006: MEASURING THE SUSTAINABILITY OF PUBLIC HEALTH INSURANCE IN CANADA Spending on health care by Canadian provincial governments "will consume more than half of total revenue from all sources by the year 2020 and all revenue by 2050 in six out of 10 provinces if current trends continue," according to a new study from the Vancouver-based Fraser Institute. The authors write that health care spending has increased faster than revenues for many years "despite higher tax burdens in each of the provinces as well as government policies that restrict access to medically necessary goods and services." They recommend implementing several policies used by other countries that could help control costs, including requiring co-payments for publicly-insured health services, giving patients the option to pay privately for medical services, and allowing both for-profit and non-profit health providers to compete for delivery of publicly insured health services. UPCOMING EVENTS: Narrative Matters: The Power of the Personal Essay in Health Policy 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. October 12, 2006
The Rest of the Story...So there was more to the story: Last month, The Wall Street Journal carried a front page article about Russ Moore Transmission in Fort Wayne, Ind., and their new HSAs. The article highlighted manager Nick Bond's struggle to provide his employees with th... So there was more to the story:Last month, The Wall Street Journal carried a front page article about Russ Moore Transmission in Fort Wayne, Ind., and their new HSAs. The article highlighted manager Nick Bond's struggle to provide his employees with the information they needed to manage their new high-deductible insurance. Journal reporter Sarah Rubenstein wrote that Bond and his office manager "had to hole themselves up in their offices for about two weeks developing a spreadsheet with price information on 32 drugs." I wrote in this space that the story seemed very one-sided to me, showing the challenges but none of the benefits of HSAs. How true that was! Mr. Bond saw our newsletter item and sent me an e-mail this week with a four-page, single-spaced paper he had written (and submitted to the Journal as an op-ed). He said, ?I felt a compelling need to finish our story on how the transition to a consumer driven health plan has fundamentally worked out for our small business.? Bond and his employees are on the front lines of the transition to a consumer directed health system, having to work hard to educate themselves - and their doctors and hospitals - about how this new world works. But Bond said his 36 employees ?understand how this somewhat grueling process of becoming 'savvy' health care consumers has within one year enabled our company to take hold of our health care plan and actually make proactive decisions.? The part of the story that the Journal didn't tell: When it came time to renew health insurance, Bond called a meeting, presented the options from several health insurers, and explained the bottom line cost to his employees. ?We collected thirty six ballots (which represented all of the enrolled full time employees at Russ Moore) and counted a unanimous vote for the high-deductible plan, which put more company contribution dollars in each individual's HSA spending account. ?We won! For the first time in nine years, our health plan renewal premiums were less than the prior year?While it's been a difficult road to travel for all involved and particularly for the employees that had to trust and learn a very new and as yet barely tested product, we are extremely hopeful for the future of this type of consumer driven health plan.? My take aways from this:
As we said, HSAs aren't for everyone and not every switch is a success. But there certainly was a lot more to this story. ********** And please join us on Wednesday for a not-to-be-missed briefing on ?European health care systems: Problem or solution?? We've invited health policy experts from the U.K., Sweden, and Switzerland to talk about their insights and experience with single-payer and other government-dominated health care systems. Join us and learn what the trade-offs would be for those who are looking to Europe for solutions to problems with health care in America. The briefing is at 10 a.m., next Wednesday, Oct. 18, in room 216 of the Hart Senate office building. The event will also be webcast live on the IPI website at www.ipi.org. Please join us! Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
THE RATIONALE FOR A STATEWIDE HEALTH INSURANCE EXCHANGE ?The best way to enable individuals and families to buy, own, and keep health insurance from job to job -- without losing the tax advantages of the employment-based coverage -- is to transform the balkanized and dysfunctional state health insurance market into a single health insurance market,? writes Bob Moffit of The Heritage Foundation. He outlines a plan for statewide health insurance exchanges that would offer all types of health insurance plans and function for individuals, small businesses, and large companies. ?As a vehicle for a defined-contribution approach to health care financing, an exchange would expand coverage and choice,? writes Moffit. ?Rather than have to decide whether to pay for full coverage or not, employers could make defined contributions of any size to the exchange. Moreover, employers could also enable employees, including those working part-time and on contract, to buy health insurance with pre-tax dollars.?
In a National Bureau of Economic Research working paper, Columbia University Professor Frank Lichtenberg evaluates the effects that importation would have on new drug development. ?Since prices of drugs are lower in most other countries than they are in the U.S., importation would result in a decline in U.S. drug prices,? writes Lichtenberg. He warns that while the price decline may benefit consumers in the short run, importation could reduce the quality and safety of the U.S. drug supply and could reduce the number of new drugs developed. His analysis finds that, ?In the long run, a 10% decline in drug prices would therefore be likely to cause at least a 5-6% decline in pharmaceutical innovation.?
Medicare is scheduled to reduce physician payments by 5.1% on January 1 in order to control rising costs, but ?Medicare's physician-payment system doesn't do much to contain spending or to promote quality,? writes Michael Cannon of the Cato Institute. ?The Medicare bureaucracy is somehow supposed to divine the correct prices for more than 7,000 distinct physician services in each of Medicare's 89 physician-payment regions?And - unlike market prices - these price controls don't automatically adjust to reflect the value of goods and services,? writes Cannon. ?The government has no business setting prices for physicians' services,? he concludes. ?Until Congress lets the market set those prices, Medicare will continue to purchase sub-standard care and encourage shakedowns that benefit no one but politicians and lobbyists.?
Physicians are slow to adopt the use of electronic health records (EHRs), according to a new Health Affairs Web Exclusive. The study finds that, through 2005, approximately 24% of physicians used an EHR and only 5% of hospitals used computerized physician order entry. The study also finds individual or small practices have much lower adoption rates than larger practices. The study's review of earlier literature found ?large gaps in knowledge? and recommends that any future studies focus on narrowing the definition of an EHR, defining EHR use based on standard definitions, and better information on the use of EHRs by safety-net providers.
A group of Canadian pharmacists has come together to protest the U.S.'s decision to allow people to buy a 90-day supply of drugs from Canada, saying that it presents an ?imminent threat to Canada's prescription drug supply.? According to the open letter from the Ontario Pharmacists' Association to Canada's Minister of Health, Canada does ?not have the capacity to feed America's need for lower-cost drugs, and unimpeded depletion of our supply poses a serious threat to public health and safety in Canada.? Additionally, the pharmacists ?are further concerned that the legitimizing of Internet drug purchases by Americans further encourages fraud by offshore criminals posing as Canadian pharmacists and selling counterfeit drugs.? The pharmacists ?call on the Government of Canada to take immediate action to protect Canada's prescription drug supply by banning prescription drug sales to U.S. patients by all means, including 'foot traffic', Internet and mail order.? Canada's ban on direct-to-consumer advertising is also coming under fire. The nation's largest media company, CanWest MediaWorks Inc., has brought a civil lawsuit before Ontario's Superior Court of Justice claiming that ?Canadians are being denied important truths about prescription medications because of strict limits on drug advertising.? CanWest contends that there ?is a legal hypocrisy at the core of the drug-ad restrictions? and ?notes how it is legal to advertise over-the-counter medications for allergies, colds, pain and stomach ailments, though some are associated with side effects that include adverse interactions with other drugs, kidney and liver disease, even dependency.? In addition, ?U.S. channels seen in Canada already broadcast exactly the kind of prescription-drug ads CanWest isn't allowed to carry? and ?U.S. magazines sold here carry ads Canadian publications cannot.? UPCOMING EVENTS: European Health Care Systems: Problem or Solution? The Business of Health: How Does the U.S. Health-Care System Compare to Systems in Other Countries? The Cure: How Capitalism Can Fix American Health Care Grace-Marie Turner speaking on Morning News Brew Consumer-directed Health Care: How Does Dental Care Relate? Narrative Matters: The Power of the Personal Essay in Health Policy 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. October 6, 2006
The LinchpinCost is always the linchpin in any conversation over health policy. Several studies out this week show that cost increases are slowing, and that's a big reason why the political debate over health reform has cooled - for now. Three examples: Aetna rel... Cost is always the linchpin in any conversation over health policy. Several studies out this week show that cost increases are slowing, and that's a big reason why the political debate over health reform has cooled - for now. Three examples:
Finally, I made a field trip to our local MinuteClinic in Bethesda, MD, this week. The nurse in charge was exactly the kind of person you would like to take your child to see about his sore throat or earache. She has been a critical care nurse, has worked in West Africa for the State Department taking care of ?every imaginable health issue,? and now she is back in Maryland with a job that lets her be near her grandchildren. And to top it off, most of the services there were $40 to $50. The nurse didn't want me to use her name, but if I get sick, that's where I'm going. The U.S. health care system is moving into the 21st century. And savvy consumers are leading the way. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
MARKETS AND MEDICARE ?The Medicare prescription drug benefit is so far costing less than anticipated, while seniors are getting more insurance options at lower prices,? according to a Wall Street Journal editorial. The editorial stresses that market competition is important to the future of Medicare but says, ?For the moment, the bulk of such Medicare services as doctor and hospital visits are covered by a price-fixing bureaucracy no more efficient than any other system of socialized medicine.? It says the drug benefit plants the seed for a truly competitive Medicare program. ?Ideally, a future Medicare program would offer premium support so retirees can take the private insurance they have during their working years into retirement and through old age.?
David Gratzer offers the perspective of a physician licensed both in the U.S. and Canada to analyze problems in the U.S. health sector. He argues that ?the crisis in American health care stems largely from its addiction to outmoded and discredited economic ideas,? and he prescribes a strong dose of capitalism to reduce health care expenses, expand health insurance to millions, and improve the quality of care. The cure involves less, not more, government intervention, he argues. Nobel Laureate Milton Friedman writes the forward saying, David ?combines firsthand knowledge of medical practice?with a rare capacity for lucid exposition of complex technical material.?
Professors Robert Ohsfeldt and John Schneider, both health policy researchers, challenge well-publicized international studies that claim the U.S. healthcare system is the one of the worst in the developed world - on par with Cuba in the latest World Health Organization survey. In their new book, The Business of Health: The Role of Competition, Markets, and Regulation, they argue that the "U.S. health system performance is at least as good as those of other developed countries, including those with national single-payer systems." They argue that the U.S. could do even better with a big dose of competition "that takes full advantage of market forces" and that purging the profit motive with a government-run system is not the answer. On the same topic, George Mason Professor Tyler Cowen says in a New York Times commentary that U.S. researchers have developed many of the most important medical innovations of the last 25 years, and the U.S. ?is driving innovation for the entire world.? The U.S. "could use its size, or use the law, to bargain down health care prices, as many European governments have done?In the short run, this would save money but in the longer run it would cost lives."
A new book by Richard Epstein, professor of law and senior fellow at the Hoover Institution, is the ?first to offer a comprehensive examination of the pharmaceutical industry by following the tortuous course of a new drug as it progresses from early development to final delivery.? Epstein looks at the many challenges the industry faces, including intellectual property rights, FDA regulation, and pricing disputes. He concludes that the continued success of the pharmaceutical industry relies on ?strong property rights and clearly enforceable contracts, with minimal regulatory and judicial interference.?
CBO also has done a comprehensive analysis of drug development in the U.S., looking at the current state of pharmaceutical R&D and assessing the relative value of government vs. private research. ?Total spending on health-related research and development by the drug industry and the federal government has tripled since 1990 in real terms,? the study says. ?However, the number of innovative new drugs approved by the Food and Drug Administration each year has not shown a comparable upward trend.? CBO speculates on several reasons, including, ?Companies may not yet have fully mastered the complex new research technologies in which they work; the pool of relatively inexpensive research discoveries may be temporarily depleted?[and] the frequency with which leading drug companies have merged with one another over the past decade?has sparked concerns about the industry's R&D productivity.?
?The miracles of modern medicines do us no good if we're getting the wrong drugs, the wrong dosages, or inactive sugar pills,? writes Henry I. Miller, a physician and fellow at the Hoover Institution. Dr. Miller cites a recent report on counterfeit drugs published by the American Council on Science and Health as evidence of the growing problem. He says about ?ten percent of the world's drug supply is counterfeit, encompassing not only products that are completely fake, but also those that have been tampered with, contaminated, diluted, repackaged, or mislabeled.? He recommends several ways that Congress, companies, and consumers can combat fraud, including increased penalties for counterfeiters, applying new track-and-trace technologies, developing new authentication technologies, and only purchasing drugs online from pharmacies on the National Board of Pharmacy's approved list. UPCOMING EVENTS: State Health Care Policy Reform Summit Ceasefire on Health Care Measuring up: A Comprehensive Scorecard for America's Health System Industry Panel Discussion about Medicare Part D The Cure: How Capitalism Can Save American Health Care The Business of Health: How Does the U.S. Health-Care System Compare to Systems in Other Countries? Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at http://www.galen.org/. 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. September 29, 2006
Success StoriesHealth Savings Accounts dominated the news this week. Several reports: Two witnesses stood out during a Senate Finance Committee hearing on Tuesday by telling their own HSA success stories: Utah businessman Joseph Knight said his small manufac... Health Savings Accounts dominated the news this week. Several reports:
Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
2006 EMPLOYER HEALTH BENEFITS SURVEY Average premiums for employer-sponsored health insurance rose to $4,242 a year for single coverage and $11,480 for family coverage in 2006, according to an annual survey released this week by the Kaiser Family Foundation. But the 7.7% average premium increase was the slowest rate of growth since 2000. The survey includes a wide range of information on trends in employer-based health coverage, including data on high-deductible health plans, health savings accounts, employee cost sharing, and disease management and wellness programs. The authors of this study also published the results as a Health Affairs Web Exclusive.
The news was better for small group health insurance coverage. A survey by America's Health Insurance Plans found that premiums for small group coverage averaged $3,730 a year for single coverage and $9,770 annually for families in 2006. The survey included data from more than 650,000 small groups, with 80% having 10 or fewer employees. AHIP found that "Small group premiums in 2006 were slightly lower than those reported in the 2005 Kaiser Family Foundation survey of (mostly) larger employers, despite an additional year's increase in health costs." The survey also provides data on employee cost-sharing, premiums by state, premiums by size of group, and choice of benefit plans. MEDICAL MINDSET The "biggest obstacle" to controlling health care spending is consumer insulation from cost, according to Sally Pipes of the Pacific Research Institute. Pipes maintains that the solution to rising health care spending is not more socialism and risk pooling, as argued in recent articles by UAW president Ron Gettelfinger and New Yorker writer Malcolm Gladwell. "For Americans to truly manage health-care expenditures, we must see it as akin to other life necessities, food, housing, clothing, and transportation," she writes. "The truly needy are provided for collectively, through government programs. The rest of us must budget for routine expenses and insure against catastrophe." MEDICARE DEBACLE Congress continues to impose price controls on doctors' fees as a means of controlling spiraling Medicare costs, but Dr. Lawrence Hunter of the Institute for Policy Innovation warns controls fail and distort markets in the process. When "controls are imposed to keep prices [down], demand for the good or service in question rises, supply begins to dry up, and quality?declines." Hunter calls Medicare a "gigantic welfare program," and argues that when Medicare beneficiaries have "no skin in the game, consumers have no effective brake on their demand, and health-care providers under Medicare have every incentive to provide more services." (Accelerating demand is a major force driving up Medicare expenditures and beneficiary premiums.) OPPORTUNITIES FOR STATE MEDICAID REFORM The National Center for Policy Analysis encourages "common-sense" reform to Medicaid like substituting less-expensive for more-expensive providers and therapies, selective contracting with health care facilities and hospitals, and expanding efforts to combat fraud and abuse. The NCPA study describes Florida's program to use consumer-selected health plans to inject competition, choice, and control into Medicaid. "The ultimate goal of Medicaid reform should be to move patients to the same type of private health plans most Americans have," concludes the study. "In order to move in that direction, states should encourage private insurance, remove barriers to competition and allow Medicaid recipients to participate in private plans." HIGH-PRICED PAIN: WHAT TO EXPECT FROM A SINGLE-PAYER HEALTH CARE SYSTEM A single-payer health care system "has detrimental secondary effects far in excess of the primary beneficial effects alleged by its proponents," writes Dr. Kevin C. Fleming of The Heritage Foundation. "Policymakers should?focus closely on the performance of existing models: the British, Canadian, and other state-run systems," writes Fleming. "The empirical evidence generally shows that such a system would result in government rationing and waiting lines for care, reductions in the quality of care, chronic funding crises, slower adoption of and reduced access to advanced medical technology, labor strikes and personnel shortages, creation of new sources of inequality in access to care, expanded bureaucratic power, politicization of personal health care decisions, and a loss of personal freedom," he writes. UPCOMING EVENTS: Solutions for Patient Centered Healthcare Transparency in Health Care: What Consumers Need To Know Grace-Marie Turner speaking on the Mark Wayne Show Health Care Emerging Issues Forum State Health Care Policy Reform Summit 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. September 22, 2006
A Lively WeekGood grief, the health beat is busy this week! Some short reports: Wal-Mart announced yesterday that it will soon offer a 30-day supply of nearly 300 generic medicines for just $4 each. Target quickly followed, and surely Walgreens and others will b... Good grief, the health beat is busy this week! Some short reports:
Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
DEBUNKING MEDICARE MYTHS With the November elections quickly approaching, politicians everywhere are discussing the successes and failures of the Medicare prescription drug benefit. Grace-Marie Turner's new op-ed sorts through the myths and realities and provides evidence to disprove five of the biggest myths about this new program. She uses study data to take on myths about rising prices, confusion among seniors, the "doughnut hole," and government price negotiation. "For the vast majority of seniors, Medicare Part D is saving them money and giving them the security of good insurance protection," concludes Turner. YOUR MEDICAL HISTORY, TO GO "The key to digital medicine is portability," writes Dr. David Brailer, former national coordinator for health information technology with the Bush administration. But he warns against legislation pending before Congress that "would make it harder to allow your information to follow you throughout your health care treatment." He says that House and Senate bills on health information disagree on "whether portability should be a condition for electronic record donation." Brailer says the House should go along with the Senate's version in protecting existing federal rules governing donation and portability of medical records. "In no place else does medicine's principal adage 'first do no harm' apply than to the action Congress is about to take," and Brailer adds that "we have one chance to get it right." BLUE CROSS AND BLUE SHIELD ASSOCIATION SURVEY SHOWS HSAS ARE POPULAR AMONG A WIDE CROSS SECTION OF AMERICANS A new survey released by the Blue Cross Blue Shield Association (BCBSA) examines demographics, satisfaction rates, and healthcare utilization of 3,000 consumers enrolled in BCBS consumer-driven health plans (CDHPs), non-Blue CDHPs, and non-CDHP plans. Key findings include:
MY HEALTH. MY MEDICARE. FALL CAMPAIGN DEBUTS WILL SUPPORT PREVENTION AND PERSONALIZED COVERAGE IN MEDICARE The Centers for Medicare and Medicaid Services has launched a new campaign to help Medicare beneficiaries understand their health and prescription drug coverage and to assist them in the new Part D enrollment period, which runs from November 15 through December 31. "My Health. My Medicare." is divided into four segments: September is the time for seniors to know and understand their current coverage; October is when seniors should use Medicare's resources and tools to compare their current coverage to other options; November is the chance to choose a new plan or change plans; and December gives beneficiaries an opportunity to work with their physician to develop a personalized plan for prevention. "Beneficiaries who are satisfied with their drug coverage can continue it in 2007," said CMS Administrator Dr. Mark McClellan. "But in 2007, because of strong competition, most beneficiaries will have options that cost less and that offer additional coverage, and we are providing enhanced support if they want to look at these options." MEDICARE MEETS MEPHISTOPHELES The Cato Institute has published a new book by David Hyman, titled Medicare Meets Mephistopheles, that takes a satirical look at the Medicare program. Hyman writes that "Medicare may be the greatest trick the devil ever played" on the American republic. "Medicare feeds on the avarice of doctors and other providers, turns seniors into health care gluttons, and makes regions of the United States green with envy over the dollars showered on other regions," he writes. "The program exploits the sloth of government officials to increase the tax burden on workers and drag down the quality of care for seniors." THE EMERGING MARKET DYNAMICS OF TARGETED THERAPEUTICS Authors: John E. Calfee and Elizabeth DuPr? Jack Calfee and Elizabeth DuPr? of the American Enterprise Institute examine how the market for high-cost, high-profile biotechnology drugs differs from that of their traditional counterparts. Known as "targeted" or "smart" drugs, they attack very specific biological molecules and, in general, do things no other drug can do. Targeted drugs lack a regulatory pathway to generics and will likely be resistant to price controls because they tend not to compete with each other, even when treating closely related diseases. "But the same properties that generate premium prices ? eventually [will lead] to vigorous competition despite the lack of generic alternatives," conclude the authors. UPCOMING EVENTS: Consumer-driven Healthcare: What's It All About? Findings from the 2006 Kaiser/HRET Employer Health Benefits Survey Modern Families, Outdated Laws Creating a 21st Century Medicaid System Remaking American Medicine: Health Care for the 21st Century Will the Real NPI Please Stand Up? Solutions for Patient Centered Healthcare 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. September 15, 2006
Apples and OrangesThe Commonwealth Fund once again is making headlines with a new study that says people with individual health insurance policies pay more, get less, have higher deductibles, and are less happy with their coverage than those with job-based plans. This cert... The Commonwealth Fund once again is making headlines with a new study that says people with individual health insurance policies pay more, get less, have higher deductibles, and are less happy with their coverage than those with job-based plans. This certainly would seem to undermine confidence in private health insurance.But America's Health Insurance Plans immediately countered that the Commonwealth study - which was based upon telephone interviews with only 137 people with individual policies (of 1,878 total in the survey) - doesn't jibe with AHIP's own survey of 1.9 million individual policies covering 3.2 million people. AHIP found that individual insurance policies were more affordable than Commonwealth reported and had richer benefits. Further, AHIP's data shows that 9 in 10 people who completed the application process were offered coverage. Commonwealth said that 9 in 10 people who "explored" buying coverage in the individual market didn't succeed. Certainly the market for individual health insurance has problems, many of which are due to heavy-handed regulation and mandates by the states. But the Commonwealth study is most off the mark with its basic concept of comparing what those with individual policies say they pay in health costs vs. those with job-based coverage. It is an apples and oranges comparison, made even fuzzier since the Commonwealth data comes from telephone interviews (while AHIP's is from actual policies purchased). When people buy individual policies, they must pay the full cost. But workers with job-based policies see only a fraction of the cost and are under the illusion that their employers pay the rest. Once again, it gets down to tax policy. Health insurance is part of the total compensation package for workers, but tax policy shields them from seeing its full price. So it's no wonder that people with individual policies say they pay more. Their full costs are visible, but not for workers with job-based policies. There is a brief aside by Commonwealth in footnote #14 about "economic theory" suggesting that "the differences in premium costs between those with individual coverage and those with employer coverage might be less than these data suggest." Well, yes! Economic theory is right. Heads nodded throughout a room of women business owners this week when I talked about health insurance costs. In a speech to the annual conference of Women Impacting Public Policy in Washington, these women acknowledged how difficult it is to boost the wage package for each of their workers by thousands of dollars to buy them health insurance. These business owners know that health insurance is part of a worker's pay. If they offer the insurance, salaries will be lower. So looking just at what people SAY are their out-of-pocket costs is hardly a legitimate study. Workers and individuals pay the full price. It's just that individuals know it. Commonwealth should go back to the drawing board on this one. And maybe they could also join us in calling for deregulation of the health insurance market that makes individual coverage unnecessarily expensive and for changes in tax policy that would give people who buy individual coverage an even break. ************* And there is yet another study out that is upsetting our friends in the policy community, this one from GAO on "Early enrollee experiences with health savings accounts and eligible health plans." GAO's main conclusion is that 51% of the people enrolling in HSA-eligible insurance plans had incomes of $75,000 or more, appearing to buttress the argument that HSAs are only for the wealthy. But that also means that 49% of the purchasers had incomes of less than $75,000. We know from an Assurant study, from eHealthInsurance, and from AHIP data, covering millions of lives, that there is a virtual bell curve in income for those buying HSA insurance. Further, we know from Assurant and Blue Cross/Blue Shield data that people age 45-54 are the most likely to purchase HSAs: They are old enough to know they need health care, are wiser about wanting control over their choices, and have enough time before retirement to accrue some real savings in their accounts. And because they are older and likely have been in the workforce longer, they are more likely to have higher incomes. ************ The constant hammering at the individual market for health insurance and HSAs must encourage those calling for more centralized, government control. But where would that take us, exactly? To find out, please join us on Tuesday for a great conference in Washington featuring colleagues from European think tanks to give us their first-hand accounts of what life is like under socialized systems. Don't miss it! And if you can't join us, you can also listen in on the webcast at www.ipi.org. Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES:
MASSACHUSETTS: MORE MIRAGE THAN MIRACLE Massachusetts' health reform initiative "has generated more favorable press plaudits and political projections than its shaky foundations merit," writes Tom Miller of the American Enterprise Institute in one of a package of Health Affairs papers analyzing the Bay State's plan. Miller is the most critical, challenging, among other things, a key argument that costs would come down if hospitals didn't have to treat so many uninsured people. "Much of this argument is vastly overstated, if not illusory," Miller says. He concludes that policy should shift from pouring "more money into the same leaky insurance coverage vessels and toward insisting that those who control most health care spending - primarily physicians - begin to deliver better outcomes that consume relatively fewer resources." In another paper, Lynn Etheredge, consultant for the Health Insurance Reform Project, writes that the Massachusetts initiative "offers an important opportunity for a new federal-state strategy to cover the uninsured." He suggests a demonstration plan to combine the health insurance tax credits proposed by President Bush with the Massachusetts initiative to help lower-income workers afford coverage offered through the new Connector. All six papers can be viewed online at the link below.
Health Affairs has published Tom Miller's assessment of Michael Porter and Elizabeth Teisberg's groundbreaking book, Redefining Health Care: Creating Value-based Competition on Results. "Perhaps not surprisingly, the two business school professors find that the structure and strategy for health care competition need to be fixed, and the primary problems involve management and organization, not technology or regulation," writes Miller. "The core strength of this book is that it provides an overarching guidepost and vision to direct the otherwise fragmented players and components of the overall health care system," concludes Miller. The New England Journal of Medicine has published Dr. Arnold Relman's review of Arnold Kling's book, Crisis of Abundance: Rethinking How We Pay For Health Care, published by the Cato Institute. Dr. Relman disagrees with many of Kling's observations such as "that we cannot have health care that is both accessible and affordable while still insulating consumers from its costs." Nonetheless, Relman finds himself attracted to "a certain freshness and directness in much of Kling's argument," and "warmly" recommends this book to "general readers who want to understand what economics has to say about health care." GOING PUBLIC ON WHAT IS PRIVATE The Canadian Consensus Group has published the first in a series of discussion papers aimed at helping our northern neighbors better understand the health system they have. The paper observes that the vast majority of physicians and other health care providers are actually small businesspeople, albeit ones who get most of their revenues from government. And there are some practitioners who operate much more freely and receive more private payments, such as dentists and optometrists. But hospitals, which are classified as non-profit institutions, really are under almost complete control of the government. "One thing that we hope to make clear is that setting doctors free to make the decision to turn their practices into clinics [so procedures can be performed in less expensive settings outside of hospitals]?will not mean the end of civilization as we know it," conclude the authors. STETHOSCOPE SOCIALISM Columnist Deroy Murdock examines the pitfalls of socialized medicine, focusing on a new study from the National Center for Public Policy Research that recounts the abysmal survival rates of people who actually get sick and need care under government-run systems. Breast cancer, for example, is fatal to 25% of Americans but to 46% of women in Great Britain and New Zealand. Prostate cancer is fatal to 19% of American men but to 57% of men in Britain. The reason: Limited budgets and rationing. "For all its problems, America's more market-friendly health system offers patients better care," he concludes. "As for importing universal care, author P.J. O'Rourke said it best: 'If you think health care is expensive now, just wait until it's free.'"
Beneficiaries who have voluntarily enrolled in the new Medicare prescription drug benefit have proven to be savvy consumers, choosing the plans offering lower premiums, lower out-of-pocket costs, and a wider selection of medicines, according to a new PhRMA study conducted by The Lewin Group. Earlier studies of the drug benefit focused on plan offerings and average characteristics; the Lewin analysis provides a more complete picture of characteristics of the plans that beneficiaries actually have chosen. The plans offering the lowest prices and the greatest number of choice gained the largest number of enrollees. (So who says seniors aren't smart shoppers?) ACCESS TO CANCER DRUGS IN MEDICARE PART D: FORMULARY PLACEMENT AND BENEFICIARY COST SHARING IN 2006 The Medicare Part D drug benefit "could greatly expand beneficiaries' access to cancer treatments," according to research from Avalere Health, a healthcare strategic advisory firm. The authors analyzed differences in cost sharing and coverage for cancer drugs among Part D plans. "Twenty of the cancer drugs we analyzed, including several newly approved drugs, are covered by virtually all Part D plans," write the authors. "Among the ten drugs least often covered by Part D plans, many are brand-name versions of generic ingredients that plans cover nearly universally." Further, "many plans charge a relatively low copayment for most cancer drugs." UPCOMING EVENTS: Managed Care Risk Association Conference The Dangers of Undermining Patient Choice: Lessons from Europe and Canada The Secrets of Debit Card Integration in Consumer Driven Healthcare Medicare Meets Mephistopheles Balancing the Promise and Cost of Biotechnology | |