Shifting Sands

The health reform debate is on shifting sands.

  • On the one hand, we see enthusiasm in corporate America for finding new ways to engage employees as partners in managing their health costs through consumer-directed health care tools such as Health Savings Accounts, Health Reimbursement Arrangements, and active chronic care management programs.

  • Then there is the big surprise in the large percentage of people signing up for HSAs who were previously uninsured, according to the latest study by America’s Health Insurance Plans.

  • But on the other hand, we see the drumbeat of news stories and articles determined to show that the private market for health insurance is a dangerous place. The Wall Street Journal, for example, had three articles on Tuesday about people who couldn’t buy health insurance in the individual market. Then, in a separate section the same day, it reported on the efforts by UnitedHealth, Aetna, and Blue Cross to actively market lower-cost health plans to the uninsured.

  • And The New York Times, of course, continues its editorial crusade for a government-run health system. But even the Times’ columnists are arguing with each other: Paul Krugman continues to push for a single-payer system while David Brooks used the voter backlash in Europe against the EU constitution as a platform to argue against socialized medicine.

We have long said that the debate over health reform gets down to the fundamental question over who will control health care decisions – bureaucracies or individuals. The fact that the debate is being sharpened around this key question is a good thing and will help voters make clearer decisions about which direction to go.

But the one central truth emerging is that there is no one silver bullet that will solve all of the problems in our enormous and enormously complex health sector. We can begin with small changes on the margin that provide new and better incentives for everyone to get the best value in health care spending. But the larger question of which direction our country takes may well await the 2008 presidential election.


On a non-health care subject: The big news of the week was Vanity Fair’s scoop in unveiling the identity of Deep Throat. While FBI official Mark Felt’s motives in leaking information to The Washington Post during the Watergate scandal are questionable, Bob Woodward and Carl Bernstein are certainly to be admired for keeping their source secret for more than 30 years. Of all the changes in journalism, trust between reporters and sources is one constant.

Closure to this mystery reminded me of a speech that I gave 25 years ago to a group of award-winning journalism students about the changes that needed to take place in journalism and politics: Old political deals sealed in smoke-filled rooms giving way to a more active political debate with an electorate that is energized and informed about ideas. I was surprised to see how relevant and instructive the lessons of that post-Watergate era are for today. I wrote my speech on my Olympic standard manual typewriter, and we’ve scanned it for you.

Grace-Marie Turner


  • O health-care leader, Where art thou?
  • Health leaders seek consensus over uninsured
  • Firms try to predict health of workers
  • Health care revolution in Europe
  • Brightening the dark side of consumer-directed care
  • Medical malpractice law in the United States

Author: Holman W. Jenkins, Jr.
Source: The Wall Street Journal, 06/01/05

Until health care reformers tackle the tax code, “business will have no choice but to provide default leadership in coping with the central malady of our health-care economy,” writes Holman Jenkins, Jr., columnist for The Wall Street Journal. Jenkins argues that the “huge tax subsidy for employer-provided health insurance is the original engine of excessive spending.” In the current system, it’s the “people in the lower tax brackets who don’t benefit from this discount and frequently find themselves priced out of the insurance market altogether, thanks indirectly to our habit of massively subsidizing the least needy,” writes Jenkins. He views health savings accounts with high-deductible health plans as moving in the right direction toward a system in which consumers are spending their health care dollars more wisely. And he cautions those who say these plans are “shifting costs” from employers to employees that “employees would be kidding themselves to believe they don’t pay for their own health care however the bill is served up.”
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Author: Robert Pear
Source: The New York Times, 05/29/05

“At a time when Congress has been torn by partisan battles, 24 ideologically disparate leaders representing the health care industry, corporations and unions, and conservative and liberal groups have been meeting secretly for months to seek a consensus on proposals to provide coverage for the growing number of people with no health insurance,” writes Robert Pear for The New York Times. Members of the group say they are looking for incremental steps to help the uninsured through a mix of private and public programs. The group expects to present its proposal to Congress and the Administration by the end of the year. Pear reports on several ideas including a mandate that parents arrange health insurance for their children, a new paycheck withholding program for health insurance, and tax credits to low-income individuals and families or small businesses to help them pay for insurance. [Neil Trautwein of the NAM who is participating in the discussion reports, however, that the list of policy options is “partial and incomplete” and does not reflect consensus in the group. “Whoever leaked that did the whole process a disservice,” he wrote in his latest witty and timely newsletter. ]
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Author: Barbara Rose
Source: Chicago Tribune, 05/31/05

Many companies are analyzing employee medical claims to find workers who are at risk of developing major health problems so they can intervene “before workers get seriously ill,” reports the Chicago Tribune. Employers contract with outside firms to analyze “claims data and information collected from employees about their lifestyles for clues to why some workers rack up average medical costs one year only to go off the charts the next,” according to the Tribune. Pitney Bowes, for example, “cut the cost of co-payments on drugs for diabetics and asthmatics to ensure more workers would follow through with treatment.” The company’s chief medical director, Dr. Jack Mahoney, says this “resulted in savings for us and improved quality of life for our employees.” Research by Dee Edington, director of the University of Michigan’s Health Management Research Center, shows that “an average 25 percent of employers’ health-care and pharmacy costs are related to what he calls ‘excess risk,’ which are factors that can be influenced by changes in lifestyle or medical care,” reports the Tribune.
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Author: Conrad F. Meier
Source: The Heartland Institute, 04/01/05

“After generations of suffering long waiting periods for timely medical care, rationing of medical procedures, and financial exhaustion from high income taxes?a growing number of European Union citizens are seeking movement toward the free market Americans tend to take for granted,” Conrad Meier of The Heartland Institute wrote in this piece published after his untimely death in March, 2005. During a trip to London a few months earlier, Meier had observed that growing discontent with national health systems has led many Europeans to consider private health insurance and medical care. UK citizens spent $7.7 billion on private health insurance products in 2003, 12.7% of the population had private medical insurance, and 8% had “cash plans” similar to health savings accounts. “The trend toward more private health insurance and medical care choices in the EU is in stark contrast to what we see happening in our own country,” Meier concluded. “While enlightened Europeans seek out the success of privatization and free markets, national health care devotees in the United States would return us to the dark ages.” [Rest in peace, friend.]
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Authors: Donald W. Kemper, MPH and Molly Mettler, MSW
Source: Healthwise, 05/05

This white paper from Donald Kemper and Molly Mettler of Healthwise addresses two concerns typically raised by opponents of consumer-directed health plans – that CDHC shifts health care costs to the poor and chronically ill and that most people are not ready to make their own health care decisions. Kemper and Mettler note that CDHC “tools and information are still evolving” and propose using information therapy, or “the timely prescription and availability of evidence-based health information,” as a way to reach out to the public. The authors also suggest two structural changes that would alleviate the “dark side” concerns about cost shifting and equity: 1) To relieve the cost shift burden to the poor and sick, adjust HSA contributions based on income, self-management behavior, and medical condition; and 2) Create new HSA plan features that would exempt prevention services and evidence-based disease management therapies from high-deductible HSA requirements. “If we strengthen the quality of consumer decisions through information therapy, and if we resolve concerns about equity and cost-shifting through adjustments to HSA contributions and exemptions for prevention – then what may seem dark today will be easily brightened,” conclude the authors.
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Authors: Peter P. Budetti, M.D., J.D. and Teresa M. Waters
Source: The Kaiser Family Foundation, 05/05

“Medical malpractice law and insurance have been a very visible focus of attention around the country and in Washington, DC in recent years and on a cyclical basis for decades,” write Peter P. Budetti and Teresa M. Waters in a report prepared for the Kaiser Family Foundation. The authors provide an overview of the questions surrounding medical malpractice law, including a description of how malpractice law works and trends in medical malpractice claims and payments. In addition, the authors examine “the legal changes that states have made over the past thirty years in response to periodic concerns about rising medical malpractice costs.” They also review newer proposals for statutory reforms of malpractice litigation, including expanding risk pools, patient compensation funds, and aligning malpractice law and patient safety concerns.
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Health Affairs also has two related web exclusives which examine the trends in malpractice, including the growth of malpractice payments and the effect of state caps on physician supply.
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Health Courts: A Third Way on the Medical Malpractice Debate
Hosted by the Progressive Policy Institute and Common Good
Tuesday, June 7, 2005, 9:00 – 10:30 a.m.
Room HC-7, U.S. Capitol
Washington, D.C.

For additional details, go to:

Workshop On Low-Income Medicare Drug Assistance
Kaiser Family Foundation Event
Wednesday, June 8, 2005, 9:30 – 11:00 a.m. (registration & breakfast at 9 a.m.)
Barbara Jordan Conference Center
Washington, D.C.

RSVP: Tiffany Ford at (202) 347-5270, or email

2005 Health Care Conference
Washington Policy Center Event
Thursday, June 16, 2005, 7:30 a.m. – 1:30 p.m.
Seattle, WA

For additional details and registration information, go to:

Tax Reform as the Road to Health Reform
Sponsored by The Heritage Foundation and the Galen Institute
Monday, June 20, Noon
Room 2261, Rayburn House Office Building
Washington, D.C.

For additional details and registration information, go to:

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

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