One Million and Counting

The big news of Cover the Uninsured Week was the good news about the surge in uptake of Health Savings Accounts, especially among the previously uninsured.

America’s Health Insurance Plans surveyed 99 of its member companies who reported that more than one million people have signed up for HSAs since they were created in January of 2004. And 37% of them were previously uninsured.

There’s more good information to be mined from the study, including the news that the number of HSA holders working for large companies shot up from 13,000 last fall to 162,000 in March and that one company says it is selling nearly eight Health Reimbursement Arrangement plans for every HSA.

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The HSA news was previewed during our standing-room-only briefing on Capitol Hill on Tuesday, offering “Targeted Solutions for the Uninsured.”

Merrill Matthews of the Council for Affordable Health Insurance opened with a 10-point description of who the uninsured are, setting the stage for a discussion of how to best reach them.

1. The first panel discussed ways to make the private marketplace for health insurance work better. Greg Scandlen of the Galen Institute described how consumer-directed health care is helping to improve efficiency in the marketplace.

Tom Miller of the Joint Economic Committee explained the features of stable risk pools and how state-based regulatory burdens could be lightened by allowing people to buy health insurance across state lines.

Scott Spiker, president and CEO of Destiny Health, gave his real-world perspective on the barriers to efficiency and free choice in the health insurance market. A veteran of the financial services industry before joining this premier HSA company, Spiker said that consumers would greatly benefit from increased competition and expanded choice. He said walls should be torn down to allow people to buy health insurance across state lines, producing the efficiency we’ve seen in interstate banking.

Spiker gave an example of how states drive up costs by barring underwriting: When an insurance company can’t see the risk they’re taking, it drives up costs because a contingency premium must be built into the price as a protection against potentially large claims, Spiker explained.

2. The second panel described ways in which the private health sector can and does provide a safety net.

I led off by describing the need to provide new resources to those who are uninsured – those who make too much to qualify for public programs like Medicaid and SCHIP and too little to have the good higher-paying jobs that come with health insurance.

Refundable tax credits for the uninsured have bi-partisan support, with new legislation introduced just last week. We can help to fix the marketplace, create new purchasing pools, and reduce regulatory barriers but what the lower-income uninsured need most is the kind of help that working people with health insurance get – a tax boost to help them afford private insurance coverage.

Len Nichols of the New America Foundation offered refreshing and inspiring ideas to engage the faith community in creating a new, charitable safety net for the uninsured. He quoted scripture to make his point that providing access to needed medical care is a moral obligation but that Americans are not ready to pay the taxes that would be required to support a system of universal coverage.

Instead, if 19 people in a church were willing to pay $10-$20 a month, they could help the 20th member to get health insurance. He said that community health centers also could be playing an even more important role in providing easy access to care.

Dr. Rene Rodriguez, president of the InterAmerican College of Physicians and Surgeons, described the Partnership for Prescription Assistance as “a great private-sector solution” to help the uninsured get access to prescription medicines.

The Partnership brings together pharmaceutical companies and hundreds of national and community organizations to create one place where patients can find easy access to more than 275 patient assistance programs to “find the right program for them.”

Finally, Richard Popper, executive director of the Maryland Health Insurance Plan (MHIP), said Maryland created a program to reduce the burden of uncompensated care on hospitals by giving people an assured place to buy coverage. Hospitals pay an assessment into the MHIP pool and clients pay premiums to get insurance that otherwise isn’t available to them.

Our event was jointly sponsored by Merrill Matthews and CAHI, Jim Frogue of the Center for Health Transformation, and the Galen Institute. AEI and CATO also held uninsured week briefings, both well worth the visit to their websites.

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Congratulations to our friend Roy Ramthun, who this week was named senior advisor to the President on health policy. He has big shoes to fill – starting with predecessors Dr. Mark McClellan and Doug Badger. Roy moves across the street from the Treasury Department where he has been key, along with his able colleague Bill Sweetnam, in developing guidelines for the successful implementation of Health Savings Accounts. Roy’s appointment is great news for the country and for advocates of freedom and free markets in the health sector.

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Hurricane Savings Accounts. And to show that a good idea can go a long way: The Florida legislature has approved a measure that would allow residents to set up tax-free Hurricane Savings Accounts. They work like an HSA, but rather than health care, the money is earmarked for hurricane related expenses. And as people accumulate larger balances, they can buy less expensive insurance because they have a cushion to afford a higher deductible. Sound familiar? The state now is encouraging Congress to follow suit with federal tax breaks for these other HSAs.

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

  • No single solution will protect health of the uninsured
  • Canada south
  • A pharmaceutical free lunch?
  • Consumer driven health care: The changing role of the patient
  • High-cost Medicare beneficiaries
  • Combining tax reform and health care reform with large HSAs

NO SINGLE SOLUTION WILL PROTECT HEALTH OF THE UNINSURED
Authors: Merrill Matthews and Grace-Marie Turner
Source: Bergen Record, 05/04/05

The diversity of the uninsured population makes it difficult to find one solution to the problem, write Merrill Matthews and Grace-Marie Turner. “The uninsured are not some monolithic, identical body,” they argue in this commentary article. “The uninsured vary significantly in the amount of time they are uninsured, in their social and economic conditions, and even the states where they live.” Matthews and Turner suggest that we must understand the population before implementing solutions. They describe eight things everyone should know about the uninsured including: the number of uninsured Americans has been rising, but the percentage (15%) has been relatively constant over the years; 25% of the uninsured have incomes of $50,000 or more per year; and the uninsured and the uninsurable are not the same. “What won’t work is a single solution,” conclude the authors. “The uninsured are different, and the solutions must be also.”
Full text: www.galen.org

CANADA SOUTH
Author: John McClaughry
Source: The Wall Street Journal, 05/06/05

“The Vermont House has approved the most radical health care proposal ever to gain majority support in a state legislative chamber,” writes John McClaughry of the Ethan Allen Institute. Under the proposal, a universal single-payer health care system would cover “essential” services for all Vermont residents, with a legislative committee defining what is essential. “The state’s 12 hospitals would be subjected to a binding ‘global budget,'” writes McClaughry. “Doctors and other providers would be compensated on a ‘reasonable’ and ‘sufficient’ basis, in light of bureaucratically established ‘cost containment targets.'” The system would be funded with $2 billion in new income and payroll taxes. McClaughry argues that the bill does not address several hard questions including, “What about sick people migrating into Vermont to gain the benefit of the universal care?” McClaughry concludes that if the plan goes into effect, “the reverberations will be felt from coast to coast.”
Full text: www.opinionjournal.com

A PHARMACEUTICAL FREE LUNCH?
Author: Doug Bandow
Source: Cato Institute, 05/04/05

Legislation is working its way through Washington, D.C.’s City Council that would allow politicians to decide whether prescription drugs are selling for “fair” prices and allow the city to transfer patent rights to the drugs to other firms to get lower prices. “It’s a truly nutty idea,” writes Doug Bandow, a senior fellow at the Cato Institute. “City politicians would decide which prices were fair and which were not?Imagine the District setting ‘fair’ prices for automobiles, heart pacemakers, and other products.” According to the legislation, “If a medicine cost less in Portugal, Albania, or South Korea, that apparently would demonstrate an ‘illegal trade practice’ and thus empower the District to hand off a company’s patent.” Bandow warns that the District’s legislation is full of risk factors, including regulatory barriers, unexpected costs, and undermining intellectual property rights. “Government price-setting and theft of patents would sacrifice America’s health,” Bandow writes. “That is far too high a price to pay to help re-elect election-minded politicians, whether in Congress or city councils.
Full text: www.cato.org

CONSUMER DRIVEN HEALTH CARE: THE CHANGING ROLE OF THE PATIENT
Author: Devon M. Herrick, Ph.D.
Source: National Center for Policy Analysis, 05/05

Patients are being empowered in new ways to manage their own health care, facilitated by new technologies and legislative changes, writes Devon Herrick, senior fellow at the National Center for Policy Analysis. Herrick lists some of the innovations, including ready access to medical journals online, over-the-counter do-it-yourself diagnostic kits, virtual physician visits via e-mail, and modernized chronic care management programs that actively engage patients in managing their own care. Herrick also examines the legal and regulatory barriers which hinder “the fuller development of patient self-management” including reform of legal liability, prescription drug regulation, referral laws, and laws that make practicing medicine online and across state borders difficult.
Full text (pdf): www.ncpa.org

HIGH-COST MEDICARE BENEFICIARIES
Source: Congressional Budget Office, 05/05

Medicare spending could be reduced if the program were to “identify the relatively small group of potentially high-cost beneficiaries and find effective intervention strategies to reduce their spending,” according to a new report from the Congressional Budget Office. “Medicare spending is highly concentrated, with a small number of beneficiaries accounting for a large proportion of the program’s annual expenditures?In 2001, the costliest 5% of beneficiaries enrolled in Medicare’s fee-for-service (FFS) sector accounted for 43% of total spending, while the costliest 25%…accounted for fully 85% of spending.” The report examines different methods which could identify these beneficiaries: selecting beneficiaries who were high cost in the previous year, identifying those who were hospitalized and correlated with high spending in the previous year, and identifying beneficiaries who were diagnosed with two or more of seven chronic conditions.
Full text (pdf): www.cbo.gov

COMBINING TAX REFORM AND HEALTH CARE REFORM WITH LARGE HSAS
Author: Michael F. Cannon
Source: Cato Institute Tax & Budget Bulletin No. 23, May 2005

Expanding health savings accounts (HSAs) would “bring more equity to the tax code, and more choice and competition to the health care sector,” writes Michael Cannon of the Cato Institute. He proposes creating large HSAs in three steps: 1) Raise the contribution limits to $8,000 for singles and $16,000 for families; 2) Do away with the requirement that account holders must have a qualified insurance plan; and 3) Permit account holders to make tax-free withdrawals to pay for health insurance premiums. Cannon assumes that “97 percent of workers would be able to receive the full value of their current health benefits as a cash deposit into their HSAs.” The benefits to high-income workers are clear, but he says low income workers would benefit as well “because employers who do not provide coverage could still make HSA contributions.”
Full text (pdf): www.cato.org

UPCOMING EVENTS:

MAKING THE CONNECTION: Helping Health Care Providers Collaborate Via Health Information Networks
Alliance for Health Reform and The Robert Wood Johnson Foundation Briefing
Monday, May 9, Noon to 1:45 p.m.
Room G-50, Dirksen Senate Office Building
Washington, DC

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