Off the Mark

The American Medical Association approved in its annual meeting this week three initiatives that would move our health sector in the wrong direction:

  1. Individual mandate. The AMA endorsed a modified mandate that would require more affluent Americans to purchase health insurance. Individuals earning $49,000 and families with incomes of $100,000 “would be required to obtain a minimum of catastrophic health care and evidence-based preventive health care.”

    As we opined last week, this would be just the beginning of a mandate for everyone. And the mandate would come with penalties and red tape and with the government deciding what would qualify as “acceptable” health coverage.

    It is a big mistake to be talking about individual mandates before states clean up the mess they have created in their health insurance markets. Their excessive regulation and coverage mandates have made health insurance too expensive for millions of people to afford. That’s the place to start.

  2. Drug ads. The AMA wants drug companies to delay advertising newly-approved medicines until doctors can “become better educated on the pros and cons of prescription drug uses before prescribing them.” The Pharmaceutical Research and Manufacturers of America says its guidelines already ask companies to “spend an appropriate time” educating doctors before launching ad campaigns, but the AMA wants the FDA to set and enforce the ad ban.

    Couple this with efforts in many states to make it difficult for drug company representatives to even talk with doctors, and you are creating a Catch 22: A drug company will have gone through the $1 billion expense of creating, developing, and testing a drug to win FDA approval. And now the AMA wants to put up even more barriers to getting the drug to patients.

    Meanwhile, the clock on the patent would continue to tick away. This will make drugs more expensive – collapsing the time that a company has to recoup its investment before the patent expires – and it will keep patients from getting new drugs that they may desperately need. Is that really good medicine?

  3. Transparency. The AMA also took a shot at health insurers, passing a resolution calling for them to disclose their pricing and contracting strategies with doctors. The largest doctors’ organization in the country said that “pricing is largely outside of physicians’ control. It is based on a complex array of factors that are controlled by health insurers and often imposed upon physicians.”

    Physicians say they have little or no role in determining their prices and often don’t know what they’re going to be paid. This new AMA resolution is demanding that insurance companies disclose to the doctors their payment strategies, but in the 21st century health care economy, it’s the patient who really needs to know the price.

    This game of hot-potato over who is responsible for establishing prices is counterproductive. It’s time for physicians to take control and figure out what their prices are and make them available to their patients, as thousands of cash-only doctors already are doing.

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Meanwhile, one of the largest insurers in the nation, Aetna, announced this week that it is expanding its transparency initiative to give more of its members information on pricing and clinical quality.

Starting August 18, Aetna will provide on-line access to physician-specific information on prices, quality, and efficiency to members in Connecticut; Maryland; Washington, D.C.; and parts of Ohio, Kentucky, Indiana, Virginia, and Florida. Price information only will be available in Kansas City, Las Vegas, and Pittsburgh.

This is a major expansion of Aetna’s Cincinnati test site and will provide pricing information in these new states for 30 of the most widely-accessed services by specialty. Aetna also will provide indicators showing each doctors’ 30-day hospital re-admission rates, volume of Aetna members treated, and overall efficiency measures.

Kudos to Aetna for its leadership in providing these groundbreaking, consumer-friendly tools.

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

  • States’ changes reshape Medicaid
  • Patients get new tools to price health care
  • Prescription for progress: The critical path to drug development
  • Deadly solution: SB-840 and the government takeover of California health care
  • Where would you rather be sick?
  • Protecting consumers in an evolving health insurance market

STATES’ CHANGES RESHAPE MEDICAID
Author: Amy Goldstein
Source: The Washington Post, 06/12/06

Changes to the Medicaid program in several states are reshaping the program so that it “more closely resembles private insurance, rather than a social welfare system run with a strong, central government hand,” reports The Washington Post. This article describes innovative changes to the Medicaid program being implemented in several states, including West Virginia, Kentucky, Florida, and Arkansas. For example, “Starting July 1, West Virginia will phase in a redesigned form of Medicaid that requires patients to sign a ‘member agreement,’ promising that they will keep doctors’ appointments, take prescribed medicine and not overuse hospital emergency rooms,” according to the Post. “Patients who refuse to sign or to follow the rules will be eligible for less care.”
Full text: www.washingtonpost.com

PATIENTS GET NEW TOOLS TO PRICE HEALTH CARE
Author: Sarah Rubenstein
Source: The Wall Street Journal, 06/13/06

Insurers, including Aetna, Cigna, and UnitedHealth, state governments, and hospital associations, are providing new tools to help consumers comparison-shop for health care, reports The Wall Street Journal. Aetna, the first major insurer to disclose its negotiated prices for hundreds of office visits, diagnostic tests and minor procedures to consumers starting in Cincinnati last year, is now expanding its program into eight states around the country. State legislatures have also gotten involved, with South Dakota and Minnesota passing laws requiring hospitals to disclose charges for common services. These efforts to increase price transparency in our health care system represent “a step forward,” but it is “too early to tell whether people will use these new services,” concludes the Journal.
Full text (subscription required): online.wsj.com

PRESCRIPTION FOR PROGRESS: THE CRITICAL PATH TO DRUG DEVELOPMENT
Authors: Robert Goldberg, Ph.D. and Peter Pitts
Source: The Manhattan Institute, 06/06

Bob Goldberg and Peter Pitts of the Center for Medicine in the Public Interest offer new ideas on how the FDA can improve drug development. The authors write that “the way to personalize medicine is to transform the FDA from an organization of rule-based regulators to a public health-focused agency staffed with 21st century science-based standard setters.” They laud the FDA’s Critical Path Initiative, which “has recommended evaluation of new ways to use genetic tools, faster computers, new imaging techniques, and electronic medical records in the drug evaluation process.” The Critical Path Initiative “should be a priority?By steering us toward a drug approval process that is driven more by science and restricted less by regulation – by unleashing the powers of American enterprise and pathbreaking science – the Critical Path Initiative can improve health and save lives.”
Full text: www.manhattan-institute.org

This month’s issue of the Fraser Forum, published by the Vancouver-based Fraser Institute, focuses on “A Few Facts about Prescription Drug Policy.”
Full text: www.fraserinstitute.ca

DEADLY SOLUTION: SB-840 AND THE GOVERNMENT TAKEOVER OF CALIFORNIA HEALTH CARE
Author: John R. Graham
Source: Pacific Research Institute, 06/06

A California bill that would impose a government-run health care system will have negative economic and health outcomes, writes John Graham of the Pacific Research Institute. A Canadian-style government healthcare monopoly in California “would result in 23,000 fewer doctors, $1 billion in lost wait times, and $9 billion in waste,” writes Graham. “Californians will pay too great a price to realize the small monetary benefits of the bill?the monetary savings are less than half of what the state could enjoy by implementing a system of consumer-directed health care and reducing the regulatory burden on private health insurance,” concludes Graham.
Full text (pdf): www.pacificresearch.org

WHERE WOULD YOU RATHER BE SICK?
Author: David Gratzer
Source: The Wall Street Journal, 06/15/06

David Gratzer, a physician licensed in both Canada and the United States and a senior fellow at the Manhattan Institute, takes a critical look at the results of a recent survey of Americans and Canadians released by the American Journal of Public Health. The authors of the study, Lasser, Himmelstein, and Woolhandler, concluded that Canadians have better access to health care and are in better health than Americans. “According to the survey, Canadians are more likely to have a regular physician, to have seen a doctor in the past year, and to be able to afford medications,” writes Gratzer. “But if you look at how well it serves its sick citizens, American medicine excels,” he says, describing higher survival rates for prostate cancer, stroke and heart attacks. “For those stricken with serious disease, there’s no better place to be than in the U.S.”
Full text: www.manhattan-institute.org

PROTECTING CONSUMERS IN AN EVOLVING HEALTH INSURANCE MARKET
Source: The National Committee for Quality Assurance, 06/06

As the health insurance market evolves and new types of plans arise, state insurance regulators and private accreditors need to offer consumers better information about consumer-directed health plans and other forms of insurance, according to a white paper published by the National Committee for Quality Assurance (NCQA). The paper examines the growth of consumer-directed health plans (CDHPs) and finds that consumers “enrolled in high cost sharing plans may experience problems such as misunderstanding how to choose or use the plans, disincentives to seek appropriate care and the potential loss of access to more integrated health plans.” To address these problems, NCQA recommends that regulators and accrediting organizations address disparities in regulatory and licensure requirements among the states, offer consumers better information about cost and quality, and set standards “that protect consumers regardless of the products or financing and delivery models in which they are enrolled.”
Full text (pdf): www.ncqa.org

UPCOMING EVENTS:

A Foot in the Door: What to Do about Health Savings Accounts?
Cato Institute Briefing
Tuesday, June 20, 2006, 11:00 a.m. (Lunch provided)
Washington, DC
To register for this event, please email events@cato.org, fax (202) 371-0841, or call (202) 789-5229.

11th Annual Wall Street Comes to Washington Conference
Center for Studying Health System Change
Wednesday, June 21, 2006, 9:00 a.m. – 12 p.m.
Washington, D.C.

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

Innovations in the Health Care Marketplace
Galen Institute and Council for Affordable Health Insurance Briefing
Monday, June 26, 2006, 12 p.m. – 1:30 p.m. (Lunch provided)
Washington, DC

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

EuroHealth Consumer Index 2006
Health Consumer Powerhouse Summit
Monday, June 26, 2006, 4 p.m. – 7 p.m.
Brussels, Belgium

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

Does the United States Need a NICE? Perspectives on the U.K. Model for Drug Reimbursement
American Enterprise Institute Event
Wednesday, June 28, 2006, 9:30 a.m. – 12:00 p.m.
Washington, DC

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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