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 Tag: SCHIPOur 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.NewslettersApril 11, 2008
Join Us!Please mark your calendars now to join us on Tuesday, April 29, for a major address on Medicare featuring HHS Secretary Michael Leavitt. The program, which we will jointly host with several other think tanks, begins at 9:45 a.m. at the brand new Newseum at 555 Pennsylvania Avenue in Washington. This will be the secretary's major address on the massive threat that Medicare and other entitlement programs present to our nation's economy, followed by a forum featuring experts presenting their ideas and research on solutions.
 As we feared, the House Ways and Means Committee did indeed approve legislation on Wednesday that would require every expenditure from Health Savings Accounts to be approved, injecting new complexities, driving up costs, and discouraging HSA enrollment. Wisconsin Rep. Paul Ryan was the hero to HSA-advocates in leading the battle to strike the provision, but his amendment was defeated on a largely party-line vote. The measure was a tempting target for Democratic leaders in Congress who generally dislike HSAs and are always looking for new ways to raise money to pay for other spending. The Joint Tax Committee said the provision would save more than $300 million because the IRS will be collecting more penalties on HSAs and because contributions to HSAs will go down. They admitted that the HSA "substantiation" provision would have a significant impact on the HSA market. It's not clear that the Democratic leadership would have realized the damage they could do with this one seemingly small change, and there is a lot of anger at the Republican lobbyist who offered the idea on behalf of a self-interested benefits management company. And the legislation is totally unnecessary. Under current law, if people with HSAs use the money in their accounts for non-medical purposes, they have to pay taxes on the money, plus a 10% penalty — the same as if they had withdrawn the money directly. When people take a deduction for other kinds of medical expenses on their tax returns, they can claim anything they want, but if they are audited and can't validate the expense, they are subject to penalties. Chairman Rangel offered an amendment that would delay implementation by two years (until 2011) so there is still time to bring sense to this debate as it moves to a less-certain fate in the Senate. Clearly this was not a good week on Capitol Hill: The House Energy and Commerce Health Subcommittee approved legislation to block for a year the Bush Administration's rules to curb some of the fraud and abuse in the Medicaid program. You will recall that I testified on this last week, offering examples about Medicaid money being used to pay for transportation to bingo games and other non-medical expenses. The special interests won. The taxpayers lost. The measure passed on a voice vote, and Ranking Member Joe Barton signaled that it would be very difficult to override if the president were to veto to the bill. If nothing else, this shows how difficult it is to curb even documented abuse once a government health spending program is established. The only solution is to avoid expanding these programs that take on a life and constituency of their own. And I returned at 2 a.m. today from a six-day speaking trip that started last Saturday in Chicago, with a talk on transparency to the American Board of Quality Assurance and Utilization Review Physicians. Then on to Las Vegas to speak at the beautiful new Red Rock Resort to a Public Affairs conference of the National Association of Manufacturers on Monday. Then back to Harrah's on the Strip in Las Vegas for a talk on Medicare hosted by former Medicare Trustee Tom Saving at the Association of Private Enterprise Education conference on Tuesday. And finally, yesterday, a talk on "Can We Repair What's Wrong with Our Health Care System through Christian Principles?" at the Acton Institute's Lecture Series in Grand Rapids, Michigan, right after a quick visit to the beautiful President Ford Museum and Library there. These speeches and visits outside Washington are always encouraging to show, despite our problems with legislators in Washington, the wisdom and clear-headedness of the American people about the importance of keeping our health sector free and giving people new choices in a competitive economy. Grace-Marie Turner Recent News Articles and StudiesIn Massachusetts, Universal Coverage Strains Care In Massachusetts, Universal Coverage Strains Care Massachusetts' law requiring everyone to have health insurance is putting added pressure on primary care physicians and lengthening the wait for appointments — an unintended consequence of universal coverage, reports The New York Times. Physician Patricia A. Sereno said an influx of the newly insured to her practice just north of Boston has stretched her daily caseload to as many as 22 to 25 patients, up from 18 to 20 a year ago. To fit them in, she limits the number of 45-minute physicals she schedules each day, thereby doubling the wait for an exam to three months. "It's a recipe for disaster," Dr. Sereno said. "It's great that people have access to health care, but now we've got to find a way to give them access to preventive services. The point of the legislation was not to get people episodic care." Universal Coverage One Head at a Time — The Risks and Benefits of Individual Health Insurance Mandates The risks associated with individual mandates suggest that they are no panacea, writes Glied. One important concern is that the government will provide insufficient funds for the subsidies intended to accompany the mandate. In that case, the mandate will act as a very regressive tax, penalizing uninsured people who genuinely cannot afford to buy coverage. This concern has led Massachusetts to create a hardship exemption for its mandate — an escape clause that effectively undoes the mandate if subsidies are inefficient. The ease with which it is possible to lift the mandate if the legislature fails to appropriate funds may make the individual mandate a rather rickety form of universal coverage. Further, if subsidies are insufficient or benefits inappropriate, the mandate will be very difficult to enforce and draconian in effect. To be effective, an insurance mandate should be in place at the beginning of an insurance term, ensuring that people have coverage when an adverse event occurs. Developing a system to promptly identify and penalize scofflaws will take effort and ingenuity, particularly in our diverse and mobile country and may require a degree of intrusiveness and bureaucracy that some will find unpalatable. Medicare Coverage and Strategies: Impact of the MMA and PBMs AEI's Joe Antos describes ways in which the Centers for Medicare and Medicaid Services exerts its influence over the health sector in the wake of the Medicare Modernization Act and in the face of evidence-based medicine standards. Medicare's outpatient prescription drug benefit has ratcheted up CMS's direct involvement and influence on every aspect of the pharmaceutical industry, from research and development of new products to pricing and distribution to the end-user. The immediate impact of Part D has largely been beneficial to manufacturers, distributors, health plans, employers, and Medicare beneficiaries, he says. However, the substantial shift in pharmaceutical spending from private payors and Medicaid to Medicare will focus intense political pressure on every part of the supply chain. A CMS veteran, Antos also provides a chronology of CMS's role, from the agency's inception to today, and offers insight into CMS's strategy and tactical effects on the American health care system. To begin to address Medicare's looming insolvency, the federal government should allow Medicare beneficiaries to take full advantage of consumer-driven reforms that exist in the private sector, such as health savings accounts, writes John R. Graham of the Pacific Research Institute. Dutch and German Health Ministers Talk With Leading U.S. Analysts In Health Affairs Web Exclusive Interviews As the United States debates health reform, the Dutch and German health systems have been increasingly put forward as potential models. These nations have achieved universal coverage through competition among non-governmental insurers within a governing regulatory framework, along with government subsidies for those with low incomes. In interviews with Prof. Uwe Reinhardt and Tsung-Mei Cheng of Princeton and Prof. Alain Enthoven of Stanford, German Health Minister Ulla Schmidt and Dutch Health Minister Ab Klink discuss their health systems, including efforts their countries are making to increase competition. For example, Klink says: "Competition now is especially at the level of the insurance companies. Still, many of the prices for care are fixed by the Dutch government. What we are trying to do in the coming years is to free prices, on the one hand, and to make insurance policies transparent, so that these two issues form pillars of the competition that we want to achieve." The Misguided War Against Medicines Government spending on prescription drugs is not to blame for the Canadian health system's lack of financial sustainability, according to the Fraser Institute. This study shows that prescription drugs accounted for only 9.3% of total government spending on health in 2006, down from 9.6% in 2005. Patented prescription drugs accounted for only 6.3% of total government health spending in 2006, down from 6.8% in 2005. After spending on drugs is subtracted, all other areas of health care accounted for 91.4% to 90.7% of total government health spending between 2002 and 2006. The study also found no statistical link between annual growth rates in total government health spending and increased spending on drugs. Additionally, the study found that Canadian government data showed average prices for existing patented prescription drugs in Canada have grown at a slower annual pace than the general rate of inflation for 17 of the last 19 years. Covering Uninsured Children in the State Children's Health Insurance Program Orszag's testimony on the State Children's Health Insurance Program (SCHIP) focuses on its impact on the number of uninsured low-income children and the extent to which it displaces private coverage. According to CBO's estimates, the portion of children in families with income between 100% and 200% of the poverty level who were uninsured fell by about 25% between 1996 (the year before SCHIP was enacted) and 2006. In contrast, the uninsurance rate among higher-income children remained relatively stable during that period. CBO has concluded that for every 100 children who gain public coverage as a result of SCHIP, there is a corresponding reduction in private coverage of between 25 and 50 children. Orszag also discusses the Administration's August 17, 2007 directive to state health officials that imposes certain minimum requirements on states seeking to enroll children in SCHIP whose families have income above 250% of the poverty level. CBO's analysis suggests that the directive's impact on enrollment is likely to be modest. Upcoming Events Cracking Down on Killer Drugs: Dora Akunyili and the Nigerian Success Story The Impact of Health Insurance in Developing Countries: Experiences from China and Colombia Health Care in Crisis: What's Driving Health Reform in Canada and the United States? Election Year 2008: Health Care Reform Debate Nudge: Improving Decisions about Health, Wealth, and Happiness Hospital CEO Roundtable: Balancing Cooperation and Competition 2008 Leadership Development Breakfast Innovations in Health Care Delivery An address by Health and Human Services Secretary Michael Leavitt Jointly sponsored by the Galen Institute, The Heritage Foundation and the American Enterprise Institute Tuesday, April 29, 2008, 9:45 a.m. Washington, DC SAVE THE DATE! Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It 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. 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.
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health savings accounts, substantiation, HSA, Medicaid, Massachusetts, universal coverage, individual mandate, Germany, the Netherlands, Canada, prescription drugs, SCHIP
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HSAs October 5, 2007
Rome 'n SchipIn Rome last week, I debated Italian politicians on national radio, tried to explain our health system to government and industry leaders, and spoke at a conference at the Vatican about the fundamental values of health care and the common good.In Rome last week, I debated Italian politicians on national radio, tried to explain our health system to government and industry leaders, and spoke at a conference at the Vatican about the fundamental values of health care and the common good.Some take-aways: Europeans truly believe that we have a permanent underclass in the U.S. of 47 million poor citizens who have absolutely no access to health care. They are shocked at how barbaric we are and that any civilized country would tolerate such a thing. When I tried to explain the facts -- through a translator -- to an Italian senator on RAI radio, he was incensed. He didn't want to hear that we spend nearly as much as a percentage of our GDP on public programs -- to cover about one-third of our people -- as many European countries spend of their GDPs in total on health care. Or that almost half of our more than $2 trillion in health expenditures are primarily through these public programs that cover the poor, the aged, the disabled, veterans, and lower-income children. Or that many of the uninsured are temporarily without coverage in a system that ties health insurance to the workplace. Or that the uninsured do get care -- albeit in a far from ideal system -- through hospitals, private physicians, community health centers, charity clinics, and other means. Or that Americans value private coverage with its broader access to new technologies and medicines and faster access to surgeries and treatments. It seemed almost as if he wanted people to believe that there is nothing at all to be learned from Americans so as not to crack the veneer of socialized systems. Our favorite free-market Italian think tank, the Istituto Bruno Leoni and its dynamic leaders, Alberto Mingardi and Carlo Stagnaro, arranged the radio interview and a luncheon with government and industry leaders to provide more detail on how the U.S. system works. Hearing the details of our complex network of private and public programs, and that the uninsured cannot be denied care at hospitals, was news to almost everyone there convinced that Michael Moore was right. Here is a copy of my remarks. The main reason for my trip to Rome was to speak at a conference sponsored by the Acton Institute and the Pontifical Council for Pastoral Health Care at the Pontifical Gregorian University on Health, Technology, and the Common Good. I said that the common good is achieved by a society in which individuals are responsible beings in a moral society that "embraces the truth about the transcendent origin and destiny of the human person," quoting the Action Institute's important mission statement. This responsibility extends to our families and communities. The state purports to assume this role in providing for the common good, but interrupts the principle of subsidiarity, i.e., not to usurp the proper functions of the individual, the family, and the doctor-patient relationship. Pope Benedict XVI wrote in his recent encyclical Deus Caritas Est, "We do not need a State which regulates and controls everything, but a State which, in accordance with the principles of subsidiarity, generously acknowledges and supports initiatives arising from the different social forces and combines spontaneity with closeness to those in need." In a state-controlled system, individual responsibility in using health care resources most efficiently is replaced by rationing by the state. Every country's health care system is unique and each has its own challenges in moving to a system that respects and supports the sanctity of the individual. The U.S., while it has many problems that I described, I believe is further along this path in supporting individual freedom and rights over health care decisions and destiny. But all countries have an obligation to look for solutions that move us closer to the goal that advances the common good by respecting the dignity, the freedom, and the sanctity of human life. I am preparing a written transcript of my remarks and will send you a link in next week's newsletter. Kudos to the Acton Institute, to its president Fr. Robert Sirico, and the Rome and U.S. Acton teams for producing this important conference. *********** We returned to the U.S. and the debate over reauthorization of the State Children's Health Insurance Program, where the same issues over private vs. public health insurance are central. The debate is not over whether this program will be reauthorized. President Bush has vetoed the bill that Congress sent to him because he believes that it goes too far toward expansion of state-controlled health coverage. When SCHIP was created, the target population was children whose parents earn too much for them to qualify for Medicaid but not enough to afford private insurance. The president wants a bill that focuses on these children, whose parents today earn $41,000 a year or less for a family of four (200% of the federal poverty level, in budget-speak). But this Congress wants to expand the program and would make $60 billion available to the states over five years to enroll millions more children, including many in higher-income families. With the added SCHIP money -- plus easier enrollment and the new bonuses and contingency funds in the legislation -- states would have every incentive to expand coverage to these higher income families. Three key questions: Would this help or hurt the poorer children the program is supposed to help? The legislation provides much more money and many new incentives for states to add children to SCHIP whose parents earn up to $62,000 a year for a family of four and even higher in New York and New Jersey. Two-thirds of uninsured children already are eligible for either SCHIP or Medicaid because their parents earn much less than that. Congress does need to make sure there is enough money in the legislation to cover them, but shouldn't these poorer, uninsured children be the primary focus of the expansion? States have struggled to get these children enrolled but they could get left behind in the stampede to add more higher-income children. The administration wants states to demonstrate that they have enrolled 95% of eligible children under 200% of poverty before expanding the program to higher-income kids. But Congress' bill would overturn that ruling. Is this not a statement that higher-income children would be the focus? And these higher-income children are most likely to already have private insurance that would be crowded out by SCHIP. What is the quality of coverage kids will get? In many states, private HMOs provide SCHIP coverage, and in others, SCHIP works like Medicaid with its low payment rates. Parents who drop private coverage to put their children on SCHIP to save money may want to think twice about whether this public program would provide them with the same access to their physicians as their private plans. The legislation contains language that would allow parents to use SCHIP money to put their kids on their coverage at work. We support that but are unsure whether the bill would lift the roadblocks to make this a viable option. Is SCHIP the right vehicle to start the journey toward universal coverage? States are trying to take the lead in this arena, and many of them will take advantage of every opportunity to use the new federal revenues to move forward. Eight states announced this week that they plan to sue the federal government for blocking their ability to add children in higher-income families to SCHIP. Further, states can add children to public coverage above $62,000 and receive federal matching dollars at their Medicaid match rate, which is still very generous. States are very aggressive in going after federal money, and this would be no exception. The 2008 presidential election is the proper venue to have the debate over how to cover the uninsured -- not just children but adults and whole families. Obscuring this debate in rhetoric and budget numbers confuses the public and does not lead to clear political decisions. This is a tough battle that is easy to demagogue. When Congress considers whether to override the president's veto on October 18, the real question is this: Is putting millions more children on taxpayer-supported coverage, including many who already have private insurance, really the right choice for America? Grace-Marie Turner RECENT NEWS ARTICLES AND STUDIES: Microsoft Offers Free HealthVault for Patients' Records Microsoft has unveiled a free web site, healthvault.com, that gives consumers a single place to store and manage their medical information, one the company says is safe from data miners, hackers, and other security threats. Using the site, people can store records, lab results and prescriptions lists, and even upload data like glucose and blood pressure readings. People can determine what pieces of their records they want to share with whom and for how long. Differences in Disease Prevalence as a Source of the U.S.-European Health Care Spending Gap Older adults who live in the United States are significantly more likely than their European peers to be diagnosed with costly chronic diseases, such as heart disease, cancer, and diabetes. They are also more likely to be treated for those diseases, adding approximately $100-$150 billion per year in U.S. health care spending. Americans are also nearly twice as likely as those who live in Europe to be obese. Sleepwalking Toward DD-Day The SCHIP legislation passed by Congress, which would expand the dependency of middle-class children on government, is not just "about the children." The struggle over SCHIP is a proxy fight over the future of the welfare state, meaning the trajectory of government and the burdens it will place on the economy. In the perennial tension between the competing values of freedom and equality, conservatives favor freedom, which inevitably increases unequal social outcomes. Liberals' mission is the promotion of equality, understood as equal dependence of more and more people for more and more things on government. SCHIP Plus a Tax Credit: A Compromise Health Insurance Plan for Kids Butler and Owcharenko propose that rather than expanding SCHIP above 200% of poverty, Congress instead should create a tax credit that would provide subsidies for families between 200% and 300% of poverty to get and keep private coverage. Biotechnology and the Patent System: Balancing Innovation and Property Rights Calfee and Barfield examine patent reform legislation, especially as it applies to the biotechnology pharmaceutical industry. They argue that the rapidly evolving scientific industry requires policy to evolve with it, but there are dangers in changing laws too broadly, too fast. Reform without Reason: What's Wrong with the FDA Amendments Act of 2007 There are many reasons to think that the drug safety provisions of the FDA Amendments Act (FDAAA) will work badly from the standpoint of drug development, new drug approvals, and ultimately, the welfare of patients. The FDAAA will increase FDA power, extend its reach beyond normal bounds, and expose FDA personnel to yet more scrutiny and criticism for safety problems no matter how unpredictable. There will be no tests or benchmarks for how well this new regime will work. In a world of ever more extensive post-approval clinical trials and database dredging, there is no reason to think drug safety data will become more reassuring or less alarming as time passes. Aetna Launches New Resource to Take the Guesswork Out of Comparing Charges for Hospitals and Other Facilities Aetna is launching a new web-based resource which will allow Aetna members to compare costs for health services. It will show a range for the entire cost of more than 30 common procedures -- such as colonoscopies and hysterectomies -- from admission through discharge. This includes facility charges, physician fees, and any supplementary charges such as anesthesia services. Available in November, the program will offer information for facilities in all or parts of 11 states and the District of Columbia. UPCOMING EVENTS: Vaccinated: The Quest for New Vaccines Yesterday and Today The Tax Code and Health Insurance Coverage Health Ownership SPN 15th Annual Meeting The Medical Arms Race and the Impact of Government Regulation and Payment Systems Changing the Culture and Improving Quality: Innovations in Long-Term Care Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at www.galen.org. If you wish to subscribe to this free weekly newsletter, update your address, or be removed from our list, please send an e-mail message to galen@galen.org. The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.
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