Change is Coming

The Consumer Directed Health Care Conference, being held this week in Washington, shows the growing interest in this new movement. More than 1,000 people registered for the conference, and many of the attendees are leaders with top companies from outside the health sector, such as Microsoft, Intel, General Electric, Fidelity Investments, and JP Morgan, as well as a long list of companies from inside the industry, like Assurant, Aetna, Destiny Health, UnitedHealth, and Pfizer.

A year and a half ago, when the conference was held in Las Vegas, attendees at the CDHC conference were far outnumbered by a conference of tea drinkers. Not this year. American business is clearly paying attention.

Steve Case opened with a stage-setting speech, assuring attendees that “A consumer revolution in health care is coming. The critics can’t stop it, the naysayers can’t deny it. The question isn’t an ‘if’ – it’s a question of ‘when’ and ‘how.'”

He described four trends he sees propelling the movement:

  1. A shift in cost of health care from employers to consumers – coming much faster than was imagined a few years ago, and accelerating more each year.
  2. A demand for more efficiency, cost-savings and convenience in health care – a demand that comes increasingly from patients themselves, as they do more of the paying.
  3. A desire for more information about health care choices, and more tools and services to manage health care.
  4. A desire to live longer, healthier, more active lives, fueled by a greater awareness of the role of prevention and wellness in enabling such a future.

He then described ways in which his new company, Revolution Health, plans to provide products and services to address these needs, from patient-owned electronic medical records, to RediClinics, on-line medical management portals, and new incentives for a “virtuous cycle” of health and wellness.

He also said he is working to bring leaders from across the political spectrum together to move the debate “from polarization to a genuine consensus on how to make this change the most effective, successful, and empowering it can be for consumers.”

The program for the conference is far too extensive and varied to do justice to a report in this space. But browse through the agenda to get a sense of how much energy, investment, and interest is going into consumer-directed health care innovations.

Now, I’m going back to the conference, hoping that the storm with up to 6 inches of snow that is coming tonight will hold off until after the banquet and also hoping that people will stay for the session I am hosting tomorrow afternoon on “What’s Next on the Horizon.”

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

  • Growing and Collapsing: Medicaid, in need of a new prescription
  • Transforming health care: One person at a time
  • Congress got something right
  • After Katrina: How Congress should ensure health insurance continuity
  • Prospects for retiree health benefits as Medicare prescription drug coverage begins
  • Time, money and the market for drugs

GROWING AND COLLAPSING: MEDICAID, IN NEED OF A NEW PRESCRIPTION
Author: Grace-Marie Turner
Source: National Review Online, 12/6/05

Congress is finishing up the legislative year, with major battles being fought over trimming federal spending. A few minor changes to the Medicaid program are at the center of the debate. Grace-Marie Turner writes that Medicaid defines “those who want to take modest steps to begin to rationalize spending and those who are using the proposed changes as political scare tactics?It is an extraordinarily expensive entitlement program [that] is causing major budget woes for states and the federal government, and is, in the long run, hurting poor people.” She writes that, “Those who resist reform to Medicaid would do the most damage to those who need the program the most?people with severe disabilities and the poor who have no other options for health care?It’s time to start giving governors the tools they need to begin to bring this program into the 21st century.”
Full text: www.nationalreview.com

Merrill Matthews of the Council for Affordable Health Insurance also wrote about Medicaid reform in an op-ed that appeared in USA Today.
Full text: www.usatoday.com

TRANSFORMING HEALTH CARE: ONE PERSON AT A TIME
Source: Definity Health, November 2005

Evidence from several recent studies examining Definity Health’s consumer driven health programs (CDHPs) “confirms positive impact from engaging individuals in decisions about their health and health spending?slowing the rate of health care cost trend in the process.” The studies, which analyzed costs and utilization, consumer attitudes, and quality care metrics, show that individuals enrolled in CDHPs are more likely to be engaged in key health decisions. For example, “70% of re-enrollees report being more actively involved in health and lifestyle decisions, compared to 60% of new enrollees.” In addition, the studies show that preventive and health maintenance care are accessed more often, “rebutting early concerns that success would come at the price of appropriate, early care.”
Full text: www.galen.org

CONGRESS GOT SOMETHING RIGHT!
Author: David Gratzer
Source: The Wall Street Journal, 12/07/05

“Americans have cause to celebrate the first two years of HSAs,” writes David Gratzer of the Manhattan Institute. “But with [several] steps, the third anniversary could be even bigger.” Gratzer recommends that Congress allow individuals to deduct HSA-compatible health insurance premiums from their taxes and pass Rep. John Shadegg’s legislation that would allow out-of-state purchase of health insurance plans. He also argues that the HSA legislation should be made less restrictive. “And even better than loosening restrictions to allow flexibility in deductibles within plans and among subscribers, why not get the government out of the business of micromanaging health insurance altogether,” writes Gratzer. “Allow individuals and companies to allocate a certain amount, pre-tax, into health care, to be used for premiums or health accounts — or both. Insurance companies will then design products with different mixes of health accounts and insurance.”
Full text: www.manhattan-institute.org/

AFTER KATRINA: HOW CONGRESS SHOULD ENSURE HEALTH INSURANCE CONTINUITY
Author: Edmund F. Haislmaier
Source: The Heritage Foundation, 12/02/05

“The recent hurricanes that devastated the Gulf Coast states focused national attention on some major inadequacies in America’s disaster response system, [including] the ability of medical providers and the health insurance system to cope effectively with the disruptions,” writes Edmund F. Haislmaier of The Heritage Foundation. “While the federal government can and should help, simply expanding Medicaid is a poor solution,” writes Haislmaier. Policymakers should instead offer a temporary, refundable, and advanceable health insurance tax credit, like the one proposed by Louisiana Rep. Bobby Jindal (H.R. 4086). The tax credit would “help those who are affected by a major disaster to continue paying the premiums for their private health insurance coverage” and “would be an important part of the solution for the 65 to 70% of the population covered by private, employer-sponsored, and non-group health insurance,” concludes Haislmaier. “By helping to ensure that the vast majority of those who had private health insurance coverage before a disaster struck would be able to keep it following the disaster, the tax credit would prevent those individuals from suddenly adding to the burden of uncompensated care on medical providers, becoming dependent on public assistance, or joining the ranks of the uninsured.”
Full text: www.heritage.org

PROSPECTS FOR RETIREE HEALTH BENEFITS AS MEDICARE PRESCRIPTION DRUG COVERAGE BEGINS
Source: Kaiser Family Foundation/Hewitt Associates, December 2005

Seventy-nine percent of businesses that currently provide retiree health benefits will continue their retiree drug coverage and accept the drug subsidy payment from Medicare when the benefit begins in 2006, according to a new survey by the Kaiser Family Foundation and Hewitt Associates. It is estimated that the average employer surveyed will receive $644 per individual retiree from Medicare in 2006. The survey finds employer retiree plans to be more generous than the standard Part D benefit, “suggesting it may often be in the retiree’s best interest to remain in employer plans.” However, “More than four in 10 employers taking the subsidy say they will not permit retirees to re-enroll in employer plans if retirees sign up for Medicare prescription drug plans,” according to the survey. “This finding underscores the importance of safeguards to deter retirees from making an irrevocable decision with potentially adverse long-term financial implications.”
Full text: www.kff.org

TIME, MONEY AND THE MARKET FOR DRUGS
Author: John C. Goodman
Source: National Center for Policy Analysis, 12/05/05

John Goodman takes a 30,000-foot economist’s view of our health care system, and finds many of the problems are rooted in flawed economic incentives. He focuses in particular on spending on prescription drugs. “While there has been a rising chorus of complaints in recent years over the high cost of prescription drugs, the vast majority of patients overpay for their drugs – in part because they fail to employ shopping techniques” to find the best prices and seek generic substitutes. He also says that health care is rationed in the U.S. by unnecessarily long waiting times in doctors’ offices and hospitals. “The exterior offices of lawyers?and other professionals are called ‘reception areas,’ not ‘waiting rooms.'” And he says a properly functioning market in the health sector is impeded by backward financial incentives in which physicians are paid for providing less efficient, more labor intensive care rather than more efficient and economical telephone and online consultations.
Full text: www.ncpa.org

UPCOMING EVENT:

The Medical Malpractice Myth?
American Enterprise Institute Event
Monday, December 19, 2005, 2:00-4:00 p.m.
Washington, D.C. 20036

For additional details and registration information, go to: www.aei.org.

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/.

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