The Real World

With bitter controversy swirling around cost estimates of the new Medicare law, it was a good week to be out of Washington talking with real people about what is happening in the real world of health care.

Business owners don?t focus on 10 year cost projections: They deal with what health care costs today, and they are desperately seeking solutions.

Philadelphia: On Monday and Tuesday, Greg Scandlen and I were here speaking at a conference on ?Innovative Strategies in Health Care Delivery.? Greg chaired the conference and explored with a very savvy audience the opportunities and risks in consumer-directed products.

The incentive structures are sound in engaging consumers to make wise decisions about health spending, but a lot of other things need to happen to allow consumer-directed care to really take off:

? States need to give individuals and small businesses relief from the onerous health insurance regulations and mandates that are crippling competition in their health insurance and medical markets.

? Physicians, hospitals, and clinical laboratories need to make their pricing structures more visible and more rational, and the cozy cartels need to end.

? Consumers and businesses need to become educated about options that offer the promise of choice and savings, but which feel uncomfortable to millions accustomed to a protective system where decisions are made by someone else.

Change is uncomfortable, messy, and disruptive. Many people invested in the status quo are resistant. But the train has left the station, and the new era is underway.

Washington: Business leaders, including hundreds at the National Business Group on Health conference in Washington, hosted by President Helen Darling, are eager to learn more about how they can get on board.

I joined a panel where Aetna?s President Ron Williams and Product Development Head Robin Downey detailed the extraordinary success their company is having with consumer-directed products and described the wide range of products and tools to empower consumers.

Success stories like the one we reported earlier from Logan Aluminum cause others to look on with envy and to figure out how to duplicate their experience with Health Reimbursement Arrangements. Logan has 1,000 employees at its manufacturing plant in Kentucky and reduced its health costs by 19% last year, saving the company $925,000. It?s hard for other companies not to want to take a closer look.

Florida: Jeff Lemieux of and I spoke this morning at a National Association of Manufacturers breakfast in Naples, FL, at the invitation of Neil Trautwein, about the next steps in the policy agenda ? purchasing pools, initiatives for the uninsured, and ways to make the health insurance market work better.

It seemed that everywhere I went in this week of speeches, I brought a snowstorm with me ? from Philadelphia to Milwaukee and back to Washington ? with LONG flight delays as a result. The only exception is the beautiful 80 degree weather in Naples, where I am now. Here?s the PowerPoint presentation that I delivered here to describe the 2004 health care agenda.

Here, it?s easy to understand how remote the battles in Washington seem. But they are hugely consequential because they are the daily skirmishes in the accelerating power struggle that will determine who controls the government for the next four years.

But in the real world, where the bottom line is clear, real progress proceeds.

Grace-Marie Turner


? Doctors risk practicing without costly insurance

? Mandatory health insurance could be a plus

? Workers? perspectives on mandated employer health insurance

? Reining in prescription prices is a seductive idea. But it might kill you.

? President discusses health access

? HSAs, HRAs or FSAs: Which consumer-driven health care option should you choose?


Author: Bruce Japsen

Source: Chicago Tribune, 3/18/04

?Unable or unwilling to pay soaring malpractice insurance premiums, more Illinois doctors are taking the extreme step of dropping their coverage,? writes Bruce Japsen for the Chicago Tribune. Japsen writes that ?going bare? is risky for physicians, but with annual premiums topping $200,000 for a number of specialties, some doctors are willing to take the risk. “This is the only way I can stay here and take care of patients,” Dr. Mark Macumber, a family physician who has seen his annual premium quadruple since 2002, told the Tribune. Dr. Macumber requests that his patients sign a consent form informing them that he does not carry coverage. “The risk for seeing me is there’s no $1 million pot,? said Dr. Macumber. ?The benefit is that they can afford to see me.”

Full text:,1,1875145.story


Author: Morton Kondracke

Source: Naples Daily News, 03/18/04

Mandatory health insurance, modeled after states? auto insurance policies, would improve health quality, lower costs for employers, and cover the nation?s uninsured, writes Morton Kondracke, executive editor of Roll Call. But an examination of the effects of state auto insurance mandates shows that they do not lead to universal coverage, according to the Council for Affordable Health Insurance (CAHI). Today, 47 states require drivers to carry auto insurance, yet a recent study shows that 13% of drivers are uninsured ? not much lower than the 15% of Americans without health insurance. Tax credits for the uninsured are a better solution, writes CAHI: ?Tax credits are the carrots; mandates and penalties are the sticks. The former approach uses the tax code to help millions of Americans do the right thing. The latter will result in millions of Americans looking for ways to avoid the law and prove futile in reducing the number of people without health coverage.?

Full text:,2071,NPDN_14960_2737636,00.html 

Full text of CAHI article:


Authors: Claudia L. Schur, Marc L. Berk, and Jill M. Yegian

Source: Health Affairs Web Exclusive, 3/17/04

A recent survey on employer mandates commissioned by the California HealthCare Foundation finds that ?the vast majority of workers support such a mandate – regardless of whether they are insured – although there is some variation regarding how extensive the mandate should be,? write survey authors Claudia Schur et al. However, surveyed workers thought the mandate would affect other workers more than it would them. ?If an employer mandate is implemented and these workers experience adverse labor market effects, their support for the requirement could erode,? write the authors. (And of course, jobs absolutely, positively would be adversely impacted.)

Schur et al also discuss Californians? opinions of the recently passed ?play-or-pay? legislation know as SB 2. ?In a recent Field Poll of California voters, two-thirds of respondents initially expressed support for SB 2,? write the authors. ?After they were ?briefed? on arguments for and against the legislation, though, there was considerable shifting of support in both directions, and overall support fell to 53 percent.?

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Author: James P. Pinkerton

Source: Los Angeles Times, 03/18/04

In response to fluctuating costs of the new prescription drug program, Senators Ted Kennedy and Nancy Pelosi have put forth a bill that would allow Medicare administrators to negotiate directly with drug makers, which they can?t do under the new Medicare law. This will inevitably lead to price controls, writes James Pinkerton of the New America Foundation. Gail Wilensky, former head of the Medicare program, says that, because of its size and power, ?government doesn?t negotiate prices; it sets them.? Price controls will also limit availability to prescription drugs as pharmaceutical companies ?pursue more profitable ventures elsewhere in the free market.? Pinkerton concludes, ?If Uncle Sam cuts down their prices, will [pharmaceutical companies] really continue to invest so much in the medicines of the future? ? The answer could be a matter of life and death for millions.?

Full text:,1,3013860.story?coll=la-news-comment-opinions


Source: The White House, 3/16/04

Speaking at the U.S. Chamber of Commerce on Tuesday, President Bush spotlighted five small-business owners with consumer-directed health plans, and said that Health Savings Accounts and Association Health Plans can be used to control rising health care costs. The president said that the best health care plan ?is when the small business owners are involved in the market, making decisions best for their employees. The best health care plans are those in which people have control over the decision-making process. We’ve got to trust people to manage their own health care plans.?

Full text:


Author: Victoria Craig Bunce

Source: The Council for Affordable Health Insurance, 3/15/04

For anyone confused about the different types of consumer-driven plans out there, the Council for Affordable Health Insurance (CAHI) has prepared a helpful analysis and chart explaining the differences between Health Savings Accounts, Health Reimbursement Arrangements, and Flexible Spending Accounts.

Full text:


The Promise and Pitfalls of Disease Management in Medicaid and Medicare

American Enterprise Institute Health Policy Conference

Monday, March 22, 2004, 9:00 a.m.?noon

Washington, D.C.

For additional details and registration information, go to:,eventID.775,filter.all/event_detail.asp.

Consumer-Driven Health Care: Implications for Providers, Payers and Policy Makers

Manhattan Institute Forum

Wednesday, March 31, 2004, 12:00? 2:00 p.m.

New York, NY

This forum will feature Harvard Business School Professor Regina E. Herzlinger. RSVP by calling (212) 599-7000 ext. 414 or send an e-mail to

How Leading Health Plans Are Reshaping Health Care

American Enterprise Institute Health Policy Discussion

Tuesday, April 6, 2004, Noon – 2:00 p.m.

Washington, D.C.

This discussion with feature Leonard D. Schaeffer, chairman and CEO of WellPoint Health Networks and first administrator of the Centers for Medicare and Medicaid Services. For additional details and registration information, go to:,eventID.770,filter./event_detail.asp.

Consumer Directed Health Care Conference

Organized by The Emergent Group

March 29 ? 31, 2004

Las Vegas, NV

Grace-Marie, Greg Scandlen and many other experts will be speaking at this three-day conference. For additional details and registration information, go to:

Health Policy Matters is a weekly newsletter containing commentary on health policy developments, summaries of timely and informative studies and articles on free-market health reform, and notices of upcoming events. It features research and writings by participants in the Health Policy Consensus Group. 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 this newsletter and our organization, please visit our website at

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Elizabeth Lamirand

Editor, Health Policy Matters