Consumerism Key to Curbing Health Care Cost Increases

The Fortis Health Foundation sponsored an all-day symposium at the Ronald Reagan Building on Monday entitled ?Toward Affordable Health Care: Prescriptions for Today.? The symposium had 14 different organizations as planning partners, including the Galen Institute.

The first panel discussed empowering patients in the medical marketplace. Larry Leisure of Accenture outlined the principles of consumer empowerment including true consumer engagement and providing economic incentives for consumers to be engaged. According to Leisure, currently only about one-third of all employees are actively engaged in their health management. Leisure said there must be consumer information, cost transparency, a broad base of provider networks, annual risk appraisals, disease management, and tax-effective vehicles if consumers are going to be at the center of health care.

Helen Darling of the Washington Business Group on Health said consumers must have a meaningful financial stake in health care decisions via cost-sharing if we expect them to make wise choices. ?If the patient is not engaged, we have no way to get out of this crisis,? said Darling. Grace-Marie Turner of the Galen Institute argued that employment-based health insurance is really a part of the employees? compensation package and that employees should have more control over how this money is spent. She discussed ways to get consumers more involved such as Health Reimbursement Arrangements.

A separate panel discussed how changes to the tax laws could help expand access and affordability of coverage. Professor Mark Pauly of the Wharton School at the University of Pennsylvania said we should make the tax subsidy, currently favoring employer-based coverage, neutral for individuals and employers. Concerning tax credits for the uninsured, Pauly said having the uninsured spend some money on their own for coverage is a good idea, and he would prefer a proportional credit with a higher proportion going to high-risk individuals. John Goodman of the National Center for Policy Analysis said he favors a fixed-dollar credit because it is closed-ended and subsidizes first dollar expenditures, letting people cover the last dollars themselves. Congresswoman Kay Granger (R-TX) described the uninsured population and outlined her tax credit bill, the SAVE Act.

Mike Pickens, commissioner of the Arkansas Insurance Department and president of the National Association of Insurance Commissioners (NAIC), spoke about government mandates on health insurance. He said there should be a cost analysis attached to every bill containing a government mandate on health coverage. Because the number one complaint insurance commissioners hear about is the cost of coverage, Pickens has set up a commission at the NAIC to study the issue. He advocated for a mix of public and private sector solutions to the problem of the uninsured, including tax credits, MSA expansion, and state high-risk pools. ?People who passed HIPAA back in 1996 were looking to mess up the small group market to turn up the heat for a single-payer system,? said Pickens. However, Pickens said he could not support the current association health plan legislation because it would allow participation by plans that are not actuarially sound. He cited concerns that AHPs would avoid state solvency regulations and may not have enough money to pay claims when they come due. Instead, Pickens promoted an idea being considered in Arkansas that would offer mandate-free health plans to small business through new purchasing groups.

Congressman Joe Barton (R-TX) said that House Energy and Commerce Chairman Billy Tauzin has been holding meetings on Tuesday and Thursday mornings with select members of the committee to develop Medicare reform legislation. Barton said Tauzin wants to move a Medicare bill by late Spring or early Summer. He asked for any group with ideas on Medicare reform and adding prescription drugs to contact one of the members of the group, which includes Reps. Michael Bilirakis, Joe Barton, Richard Burr, John Shadegg, and Steve Buyer.

Dan Crippen, former director of the Congressional Budget Office and now an independent consultant, stressed the importance of looking out for future generations when contemplating changes to the Medicare program. Under current law, with the addition of a modest Medicare prescription drug benefit, the total federal government spending on retirees would reach almost 18% of GDP by 2030. This would be up from 8% today, as the number of retirees doubles from 40 million to 80 million in 2030. In order to pay for that, we would have to raise taxes by about 10% of GDP which would put the payroll tax at about 35%, eliminate virtually all other government programs, or borrow a trillion dollars every year. ?The trust fund idea doesn?t matter economically. Moving spending from public to private sources doesn?t do much. All that matters is the overall size of the economy and what we ask future generations to provide us,? said Crippen. He urged changes in the incentives, coordinated care for the chronically ill, and a better understanding of current spending patterns as ways to help control spending in Medicare.

Other panels addressed tort reform and the cost of medical malpractice lawsuits to health care consumers, the role of new technology in consumerism, and case studies in businesses trying to cope with rapidly rising health insurance premiums. Department of Health and Human Services Secretary Tommy Thompson and FDA Commissioner Mark McClellan also spoke.

–Joe Moser
Galen Institute

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The Fortis Health Foundation sponsored an all-day symposium at the Ronald Reagan Building on Monday entitled ?Toward Affordable Health Care: Prescriptions for Today.? The symposium had 14 different organizations as planning partners, including the Galen Institute.

The first panel discussed empowering patients in the medical marketplace. Larry Leisure of Accenture outlined the principles of consumer empowerment including true consumer engagement and providing economic incentives for consumers to be engaged. According to Leisure, currently only about one-third of all employees are actively engaged in their health management. Leisure said there must be consumer information, cost transparency, a broad base of provider networks, annual risk appraisals, disease management, and tax-effective vehicles if consumers are going to be at the center of health care.

Helen Darling of the Washington Business Group on Health said consumers must have a meaningful financial stake in health care decisions via cost-sharing if we expect them to make wise choices. ?If the patient is not engaged, we have no way to get out of this crisis,? said Darling. Grace-Marie Turner of the Galen Institute argued that employment-based health insurance is really a part of the employees? compensation package and that employees should have more control over how this money is spent. She discussed ways to get consumers more involved such as Health Reimbursement Arrangements.

A separate panel discussed how changes to the tax laws could help expand access and affordability of coverage. Professor Mark Pauly of the Wharton School at the University of Pennsylvania said we should make the tax subsidy, currently favoring employer-based coverage, neutral for individuals and employers. Concerning tax credits for the uninsured, Pauly said having the uninsured spend some money on their own for coverage is a good idea, and he would prefer a proportional credit with a higher proportion going to high-risk individuals. John Goodman of the National Center for Policy Analysis said he favors a fixed-dollar credit because it is closed-ended and subsidizes first dollar expenditures, letting people cover the last dollars themselves. Congresswoman Kay Granger (R-TX) described the uninsured population and outlined her tax credit bill, the SAVE Act.

Mike Pickens, commissioner of the Arkansas Insurance Department and president of the National Association of Insurance Commissioners (NAIC), spoke about government mandates on health insurance. He said there should be a cost analysis attached to every bill containing a government mandate on health coverage. Because the number one complaint insurance commissioners hear about is the cost of coverage, Pickens has set up a commission at the NAIC to study the issue. He advocated for a mix of public and private sector solutions to the problem of the uninsured, including tax credits, MSA expansion, and state high-risk pools. ?People who passed HIPAA back in 1996 were looking to mess up the small group market to turn up the heat for a single-payer system,? said Pickens. However, Pickens said he could not support the current association health plan legislation because it would allow participation by plans that are not actuarially sound. He cited concerns that AHPs would avoid state solvency regulations and may not have enough money to pay claims when they come due. Instead, Pickens promoted an idea being considered in Arkansas that would offer mandate-free health plans to small business through new purchasing groups.

Congressman Joe Barton (R-TX) said that House Energy and Commerce Chairman Billy Tauzin has been holding meetings on Tuesday and Thursday mornings with select members of the committee to develop Medicare reform legislation. Barton said Tauzin wants to move a Medicare bill by late Spring or early Summer. He asked for any group with ideas on Medicare reform and adding prescription drugs to contact one of the members of the group, which includes Reps. Michael Bilirakis, Joe Barton, Richard Burr, John Shadegg, and Steve Buyer.

Dan Crippen, former director of the Congressional Budget Office and now an independent consultant, stressed the importance of looking out for future generations when contemplating changes to the Medicare program. Under current law, with the addition of a modest Medicare prescription drug benefit, the total federal government spending on retirees would reach almost 18% of GDP by 2030. This would be up from 8% today, as the number of retirees doubles from 40 million to 80 million in 2030. In order to pay for that, we would have to raise taxes by about 10% of GDP which would put the payroll tax at about 35%, eliminate virtually all other government programs, or borrow a trillion dollars every year. ?The trust fund idea doesn?t matter economically. Moving spending from public to private sources doesn?t do much. All that matters is the overall size of the economy and what we ask future generations to provide us,? said Crippen. He urged changes in the incentives, coordinated care for the chronically ill, and a better understanding of current spending patterns as ways to help control spending in Medicare.

Other panels addressed tort reform and the cost of medical malpractice lawsuits to health care consumers, the role of new technology in consumerism, and case studies in businesses trying to cope with rapidly rising health insurance premiums. Department of Health and Human Services Secretary Tommy Thompson and FDA Commissioner Mark McClellan also spoke.

–Joe Moser
Galen Institute

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