The Rest of the Story

The Census Bureau's report on Tuesday surprised all of us, showing the number of uninsured had fallen last year to 45.7 million.

But, as I wrote in my commentary for The Wall Street Journal, that's unfortunately not the whole story. The number of people with private insurance was flat (at 202 million), but because of population growth, there was actually a decline in private insurance in percentage terms.

This shows the continual slide toward government-run, taxpayer-supported health coverage in the United States: Nearly three million of the 3.6 million people who got coverage last year received it through public programs.

My Journal piece explained how key changes by the states and the federal government could reverse this slide so that people can have access to more affordable insurance in a competitive marketplace, bringing our health sector into the mobile 21st-century economy. In particular:

  • Fairness: We must treat people fairly so all get the same tax break — whether they get their health insurance at work, through other groups, or on their own. Providing refundable tax credits would be much fairer than the current system of invisible tax benefits, which go disproportionately to higher-wage workers with expensive coverage.
  • Portability: The Labor Department says four in 10 workers change jobs every year. Clearly, tying health insurance to the workplace is not working for tens of millions of Americans. Health insurance needs to be portable so people can own and control their health insurance as they move from job to job.
  • Choice: We also must give people more options to purchase health insurance that meets their needs. This means a more competitive marketplace with more affordable policies, not restricted to the highly regulated and overly mandated policies that are the only options in many states.

I cited the work of economists Stephen Parente, Roger Feldman, and Jean Abraham, who, with Yi Xu, produced a paper for the University of Minnesota that describes the powerful effect a nationwide market for health insurance would have in expanding access to coverage.

In a conference at the American Enterprise Institute on July 31, Feldman and Parente explained that more than 12 million people who were previously uninsured would obtain coverage in a market that allowed competition among the states. The uptake would be even greater by giving people tax benefits for purchasing insurance. They conclude: "A national market would lead to substantial additional health care access which should lead to health improvements among the vulnerable populations who currently find health insurance unaffordable."

The article generated more feedback than any piece I've written in a long time, primarily because I believe people do understand that competition lowers prices, that health insurance should be portable, and that people shouldn't be trapped by the laws of their states into expensive plans dictated by politics.

Sen. John McCain advocates cross-state purchasing of health insurance combined with refundable tax credits, a combination that would power-boost access to health insurance in the private marketplace.

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The World Health Organization has revealed its true bias in a new report calling for all of the countries of the world to institute universal health programs. The report favors financing health care through general taxation with mandatory universal insurance. Since that does not describe the system in the United States, it is not surprising that we are 37th on their list of health system rankings worldwide.

While certainly access to health care is extraordinarily important, so are clean water, sanitation, adequate food, education, and housing — things that are abundant in this country. The lack of these poses a deadly threat to hundreds of millions of people worldwide. And the WHO ignores the extraordinary expense of setting up universal systems, including the lack of medical personnel and infrastructure to operate such a system.

This report is illuminating, both in showing the political bias of the WHO as well as their naiveté in understanding the way the world works.

Grace-Marie Turner

Recent News Articles and Studies

Health Care Reforms Can Succeed
Newsmakers: Interview with Grace-Marie Turner, Galen Institute
Health Insurance and Job Creation by the Self-Employed
2008 U.S. Index of Health Ownership
Government as "Competitor": The Latest Prescription for Government Control of Health Care
Treading in Water: The No-Growth Investment in Health Services Research
Physician Care and Telemedicine
Medicare Enhances Consumer Information on Hospital Care
New Survey Shows Consumer Driven Health Plans Continue to Grow
Cancer Patients Kept in Dark about 'Too Expensive' Drugs
Medical Technology in Canada
Bad Medicine
Medicare Part D: Some Plan Sponsors Have Not Completely Implemented Fraud and Abuse Programs, and CMS Oversight Has Been Limited

GALEN IN THE NEWS

Health Care Reforms Can Succeed
Grace-Marie Turner, Galen Institute
The Oklahoman, 08/20/08

Oklahoma's uninsured rate — one of the highest in the country — is directly tied to the relatively high cost of health insurance in the state, writes Grace-Marie Turner. And that, in turn, is tied to insurance regulations and the high number of legislative mandates dictating what services and providers must be covered under policies sold in the state. The average price of a job-based health insurance policy in Oklahoma is $4,088 compared to $3,991 for the national average. And to exacerbate the problem, the state's median annual income of $40,000 is significantly lower than the national average. That means Oklahomans must pay higher health insurance costs with a lower-than-average median income. The Oklahoma House Health Care Reform Task Force has been formed to investigate ways to expand access to health insurance for Oklahomans, writes Turner. Rather than expanding government programs, citizens need to be able to purchase affordable private insurance. That means encouraging competition among insurance carriers and giving residents more options to buy policies that suit them and their budgets.

Newsmakers: Interview with Grace-Marie Turner, Galen Institute
Center for Medicine in the Public Interest, 08/22/08

Grace-Marie Turner explains the dangers an
d implications of prescription drug importation in this interview with the Center for Medicine in the Public Interest. Turner also discusses the debate over socialized health care, the impact of an informed health care consumer, and Sen. John McCain's health care proposal.

HEALTH INSURANCE

Health Insurance and Job Creation by the Self-Employed
Aparna Mathur
American Enterprise Institute, 08/22/08

Mathur evaluates the impact of state health insurance mandates on job creation by small firms, using data from the 1990s when there was a tremendous increase in the number of mandates passed by states. He finds that health insurance mandates are a significant determinant of whether individuals decide to grow their businesses. The predicted probability of owning a business with at least one employee goes down from 0.45 to 0.34 (nearly 10 percentage points) as the number of mandates goes up from 0 to 16. The probability of owning a firm with more than two employees goes down by nearly 50% for the same change in mandated benefits, and by about 35% for firms with six or more employees.

2008 U.S. Index of Health Ownership
John R. Graham
Pacific Research Institute, 08/26/08

Graham has released the second edition of the U.S. Index of Health Ownership, which ranks each of the 50 states on a new measure of health care freedom. Alabama came out on top, and New York state was last in the degree to which their citizens are free to utilize health resources free from state overregulation. To rank health ownership among the states, Graham measured 24 variables in four categories: government health care, private health insurance, medical tort, and provider burden of regulation.

Government as "Competitor": The Latest Prescription for Government Control of Health Care
Robert E. Moffit, Ph.D.
The Heritage Foundation, 08/14/08

Moffit describes the dangers of creating a new government program in which the government is a direct competitor with private health insurance companies. The government would not only set the rules for the competition, but it would also enter into the competition as a player. It would set rules to advantage the government's own health plan and to disadvantage the private health plans, including setting the government's premiums artificially low, reducing or eliminating cost-sharing requirements, or more heavily subsidizing certain benefits to make the government plan appear more attractive. The plan would operate without incurring any of the normal financial risks private health plans must bear. One could easily imagine a massive crowd-out of private coverage, and America's entire health care economy would become an arena for special interest lobbying on a scale previously unimaginable. Personal choice and free market competition would be rendered meaningless.

The best thing government can do to "fix" health care is to make it more like other, more competitive sectors of the economy by setting the basic rules for competition and transparency, policing fraud and corruption, and then getting out of the way and letting markets and consumers decide what works, writes Paul Howard of the Manhattan Institute.

HEALTH REFORM

Treading in Water: The No-Growth Investment in Health Services Research
Emily J. Holubowich, MPP, Coalition for Health Services Research and Joseph R. Antos, Ph.D., American Enterprise Institute
American Health & Drug Benefits, July/August 2008

There is a "perfect storm" brewing in the American health care system, write Holubowich and Antos. Health care spending has grown faster than our economy for many years and is projected to double in as little as 10 years. In spite of what we spend on health care, research tells us that we only receive appropriate care half the time. We are simply not getting what we are paying for. Health services research (HSR) provides the data and the evidence needed to make better decisions, design health care benefits, and develop effective policies to optimize health care financing, facilitate access to health care services, and improve health care outcomes. To ultimately rein in costs and get better care at better value, the federal government will eventually need to increase its investment in HSR, and federal agencies that fund HSR will need to reprioritize their research portfolios by redirecting a significant portion of this increased investment to study health care spending, financing, and organization.

CONSUMER-DRIVEN HEALTH CARE

Physician Care and Telemedicine
Devon Herrick
National Center for Policy Analysis, 08/21/08

The use of information technology in diagnosing, treating and monitoring patients — known as telemedicine — is adding a new dimension to modern health care, writes Herrick. For example, TelaDoc Medical Services, a phone-based medical consultation service that links physicians, patients and health plans across the country, allows patients who are away from home to obtain less expensive and time-consuming treatment by contacting a local physician, rather than visiting an emergency room or expensive urgent care center. A physician returns a patient's phone call within 30 minutes (or less) 50% of the time and 75% of patient calls are returned within one hour. Further, 88% of those who used the service reported they saved time and money compared to a traditional office visit or a trip to the emergency room.

Medicare Enhances Consumer Information on Hospital Care
Centers for Medicare and Medicaid Services, 08/20/08

The Centers for Medicare and Medicaid Services has announced important additions to the Hospital Compare website that will give consumers even better insight into the quality of care provided by their local hospitals. The improvements include the addition of a mortality measure for pneumonia and, for the first time on Hospital Compare, publicly reported measures for hospital care of children. In addition to new information about pneumonia mortality, CMS is releasing new information to the website that will allow consumers and hospitals to drill down beyond the categorical information of the mortality measures for each hospital — whether the hospital's mortality rate is "Better than," "No different from," or "Worse than" the U.S. national rate.

New Survey Shows Consumer-Driven Health Plans Continue to Grow
United Benefit Advisors, 08/19/08

Consumer-driven health plans increased by 43% from last year, and now comprise nearly 13% of all plans offered
by employers, according to a Health Plan Survey conducted by United Benefit Advisors, one of the nation's largest employee benefit advisory organizations. The percentage of employees enrolled in these plans nearly doubled, from 6% in 2007 to 11.2% this year. Further, first-year CDHP premiums fell by 7.9%, while average premiums increased by 7.4% for all plans. The survey also finds employers are increasingly offering comprehensive wellness programs to their employees: nearly one in 10 (9.8%) of employers offered wellness programs in 2008, compared to just 7.4% in 2007.

The Council for Affordable Health Insurance provides a brief analysis explaining the differences between the various consumer-driven plans and which options are best for consumers and employers. CAHI also has updated its primer that answers common questions about health savings accounts.

INTERNATIONAL HEALTH SYSTEMS

Cancer Patients Kept in Dark about 'Too Expensive' Drugs
David Rose
The Times, 08/26/08

Doctors are deciding against telling cancer patients about expensive new treatments to avoid causing distress when they find out that the U.K.'s National Health Service (NHS) is unwilling to pay for them, reports The Times. A quarter of specialists questioned in a survey admitted to hiding the facts about new drugs for bone marrow cancer that may be difficult to obtain on the NHS. It is believed that thousands of patients with various types of cancer could gain extra months or years of life from the latest, most effective drugs, but in many cases they are being denied the treatments on the NHS because of a lack of approval by the National Institute for Health and Clinical Excellence (NICE), which assesses the cost-effectiveness of new medicines in England and Wales.

Medical Technology in Canada
Nadeem Esmail and Dominika Wrona
Fraser Institute, 08/21/08

Canada is slow to adopt the latest medical technology, forcing Canadian patients to rely on old and often outdated medical equipment for treatment, according to a new study from the Vancouver-based Fraser Institute. For example, according to the Organization of Economic Cooperation and Development (OECD), the number of MRI units in Canada (6.2 per million people in 2006) lags the OECD average (10.2 per million), and the number of CT scanners (12 per million people in 2006) also lags the OECD average (19.2 per million). Tellingly, the availability of both is about 60% of the OECD average. A separate study from the Fraser Institute finds Canadian seniors pay twice as much as American seniors for identical generic drugs.

The problems plaguing Canada are characteristic of all universal health care systems, writes Sally Pipes of the Pacific Research Institute. In Britain, more than 1 million sick citizens are currently waiting for hospital admission and another 200,000 are waiting just to get on a waiting list. While no one can deny there are significant problems in the American health care system, overall it provides exceptional value, writes Pipes. Government-run health care has proven to be heartless and uncaring, and the inferior treatments it provides come with a very steep price tag.

PRESCRIPTION DRUGS

Bad Medicine
Roger Bate, American Enterprise Institute
The American, May/June 2008

India is a center for drug counterfeiting — a profitable and deadly business that is spreading to the U.S. and Europe, writes Bate. The European Commission's customs department seized 2.7 million fake medicines in 2006, about a third of which originated in India. In 2005, the Drug Enforcement Administration investigated a Philadelphia-based Internet pharmacy that smuggled an estimated 2.5 million dosages of drugs into the U.S. from India, including the painkiller Vicodin, anabolic steroids, and amphetamines. The dangerous consequences of the fake drug — if only in the lost opportunity to take a real drug — may be discovered too late if at all, writes Bate.

Medicare Part D: Some Plan Sponsors Have Not Completely Implemented Fraud and Abuse Programs, and CMS Oversight Has Been Limited
Government Accountability Office, 07/21/08

The GAO finds that the Centers for Medicare and Medicaid Services (CMS) has not conducted adequate oversight activities to monitor Medicare Part D sponsors' implementation of fraud and abuse programs. None of the five Part D sponsors reviewed by the GAO, which cover more than a third of Part D enrollees, had completely implemented all of the required compliance plan elements and selected recommended measures for their fraud and abuse programs. Lack of CMS oversight of Medicare Part D sponsors' implementation of these programs risks significant misuse of funds in this $39-billion program. To help safeguard the Medicare prescription drug program from fraud, waste, and abuse, the GAO recommends the Administrator of CMS ensure that CMS conducts timely audits of Part D sponsors' fraud and abuse program implementation.

In its comments on a draft of this report, CMS disagreed with the GAO's finding that its oversight of Part D sponsors' fraud, waste, and abuse programs has been limited. In addition, CMS stated that insufficient resources have been one of the primary impediments to its implementation of a robust oversight strategy, noting that Congress did not respond to its request for additional program integrity funds in fiscal year 2006 through fiscal year 2008.

Upcoming Events

Grace-Marie Turner speaking on the Small Business Advocate show
Nationally Syndicated Radio Broadcast
Tuesday, September 2, 2008, 7:30 a.m. ET

Grace-Marie Turner speaking on the Miller, Mihalik, and Mike show
WNCX-FM Radio Broadcast
Tuesday, September 2, 2008, 8:00 a.m. ET
Cleveland, OH

Amy Menefee speaking on The Right Balance show
Syndicated Radio Broadcast
Tuesday, September 2, 2008, 11:00 a.m. ET

Consumer-Driven Health Care Workshop
Heartland Institute Event
Wednesday, September 3, 2008, 8:00 a.m. – 10:30 a.m.
Harrisburg, PA

Revolutionizing Health Care
National Press Club Newsmaker Panel Discussion
Friday, September 5, 2008, 10:00 a.m.
Washington, DC
Grace-Marie Turner will discuss ways of reforming the health care system and how to make quality health care affordable.

Building a Healthy Oregon
Oregon Health Forum Town Hall Forums
September 8-18, 2008

Overhauling Health Care Delivery
Health Affairs Event
Wednesday, September 10, 2008, 9:00 a.m. – 11:00 a.m.
Washington, DC

State Policy Network 16th Annual Meeting
State Policy Network Event
September 10-12, 2008
Scottsdale, AZ

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Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Turner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus 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 www.galen.org.

If you wish to subscribe to this free weekly newsletter, update your address, or be removed from our list, please send an e-mail message to galen@galen.org.

The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.

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