Perspective

As health reform sped to the top of the policy agenda this week, the timing for our upcoming conference offering some perspective on the debate could not be better.

We are hosting, along with the International Policy Network of London, a major conference in Washington this coming Monday that will feature experts in health policy from Europe and Canada to share with us "Lessons from abroad for health reform in the U.S."

Registration filled almost immediately when we sent out our save-the-date notice, showing the intense interest in the issue. If you are not able to join us, we are arranging for a live webcast which you will be able to view at http://www.galen.org/content/LessonsfromAbroad. We also will be posting all of the conference materials, including a booklet with summaries of each of the speakers' presentations, online at http://www.galen.org/content/LessonsfromAbroad.

For years, we have heard that European health care systems have been able to achieve what America finds so difficult: providing universal coverage with high-quality care delivered at a low cost.

As a result of these perceptions, many U.S. leaders want to import elements of these European health systems, including mandates that everyone must have insurance, large expansions of government health programs, cost and access controls, and higher taxes.

Our speakers, from think tanks, academia, and the medical profession in Canada and Europe, will share their real-world experience and expertise to tell us how that's working out. We will give you a full report in next week's newsletter.

 

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Yesterday's White House summit on health reform showed how much we do need to bring some reality to the debate.

Both President Obama's opening address and most of the comments in the breakout session televised by C-SPAN showed that there is abundant hope about solving the cost/quality/access axis and a general agreement that the realities that have intruded in the past to block major reform can be moved aside.

(I am sure that my invitation to the summit just got lost in the mail. Go figure.)

The president made a strategically important move in putting a $634 billion "down payment" on health reform in his 2010 budget, with only a broad outline of his goals and leaving it to Congress to actually write the legislation. He said yesterday that he is open to compromise on the agenda he laid out during the campaign.

Congress is much more likely to pass a bill that it writes than one that is shipped to them from the White House in a 1342-page package, as happened during the Clinton era.

This time, members are going to have to wrestle with the details, which they have been doing for months. The timetable is fluid, but they are certain that the sooner they act, the more likely it is that legislation can actually be passed. The general consensus is that they want a bill passed before the August recess.

And it is almost guaranteed that anything this Congress passes, Mr. Obama will sign.

But that means they will have to get into the details of a better way of paying for reform than raising taxes on charitable contributions and home mortgage interest deductions, eliminating private plan options in Medicare, and imposing higher taxes on pharmaceuticals in the name of "rebates."

And they will have to grapple with the thorny issue of mandates to require individuals to have coverage and employers to pay. When Mr. Obama said after the White House summit yesterday that he was willing to compromise, I wondered if that is what he has in mind.

Most analysts believe you cannot get to universal coverage without a universal mandate, and he opposed that during the presidential campaign. The next steps are extremely difficult to navigate since the government must define acceptable coverage, making it much more likely that the mandate will be for an expensive, comprehensive plan. And enforcement provisions will have to be specified, most likely financial penalties that will be a new tax on Americans.

Another contentious issue is whether or not there will be a new government health insurance plan for working Americans built on the Medicare model. PricewaterhouseCoopers has said that more than 100 million people could lose their job-based coverage as employers find the new public plan less expensive.

But with federal price control and policing authority and all of the resources of government to draw on, as well as the ability to set the rules for all of the players, a public plan is likely to drive private plans out of business, leaving people with only the government option. This is not what they were promised during the campaign.

There is much more to say: Here is a PowerPoint presentation I gave this week during a speech to the Employers Council on Flexible Compensation that explains more about these dangers and what we should do instead to provide targeted solutions rather than turning so much more of our health sector over to the government.

One comment during the summit that particularly struck me was from Janet Marguia, president of the National Council of La Raza. She detailed the serious problems with uninsurance in the Hispanic community, but then said that her members "are losing their jobs and their homes but what they are worried about most is health care."

 

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All of the talk about these proposals already is starting to have an impact on the employment-based health insurance system.

Hewitt Associates, the benefits consulting firm, reports that "more employers are considering exit plans to pull out of the health care benefits arena."

In a new survey on employer-sponsored health benefits, 4% of companies reported they are taking steps right now toward ending their health care benefits, while 19% more said they are moving away from directly providing health care benefits, up from 4% in 2008.

And does the government really ever make anything simpler? Certainly not with the new federal subsidies for COBRA coverage and requirements that employers provide it retroactively.

Bob Meyers, president and CEO of CobraGuard, described to employers the regulatory thicket they face as a result of passage of this provision in the stimulus bill.

For ex
ample, employers have a month to compile and submit lists of workers who were laid off between September 2008 and now, regardless of whether they were terminated voluntarily or involuntarily.

The government will have to specifiy fines if people claim the credit and are not eligible. And the rules and regs have to be issued to detail exactly how employers must comply.

One of the things that people kept insisting at the White House summit yesterday is that the health system will be so much simpler if government is in charge! Go figure.

Grace-Marie Turner

Recent News Articles and Studies

Will Consumers Be Allowed to Choose Their Own Health Care?
Obama Names His Health Team
Health 'Reformers' Ignore Facts
The Obama Health Care Budget: Hopeful Savings and Costly Change
American Recovery and Reinvestment Act (ARRA): Medicaid and Health Care Provisions
How's This Health Savings Account Working? Ask a Union Leader
Pre-Empting Drug Innovation
Getting It Right with Modern Drugs

GALEN IN THE NEWS

Will Consumers Be Allowed to Choose Their Own Health Care?
Grace-Marie Turner, Galen Institute
The Insider, Winter 2009

If President Obama were promoting a full-scale government takeover of the health sector, supporters and opponents alike would call the plan revolutionary, writes Turner. But because he has promised that nothing will change for people who like their coverage now, most people are unaware of the sweeping implications of what he is proposing. His plan would in fact lead to the deterioration of the private health insurance market, with the federal government — read: taxpayers — financing health care for a growing share of the U.S. population. If the Obama plan were implemented, Americans would naturally flock to the new public insurance program, which at least initially would have a lower premium. Slowly, but surely, private insurers would be supplanted by the public program. And the private coverage that Mr. Obama promises we can keep would vanish, leaving the American people with few options besides government-run health insurance.

Obama Names His Health Team
Grace-Marie Turner, Galen Institute
National Review Online: The Corner, 03/03/09

Health reform is expected to move to the front of the policy agenda in Washington now that President Obama has selected Kansas Gov. Kathleen Sebelius as his health secretary and Nancy-Ann DeParle to direct the new White House Office for Health Reform, writes Turner. Gov. Sebelius will have to hit the ground running to start spending the $150 billion in new health funds authorized in the stimulus law, writes Turner. She will also lead the administration’s effort to shape details of the $634-billion “down payment” on health reform in the budget proposal Obama sent to Congress last week. Working with her will be DeParle, an attorney who has extensive experience on the front lines of health reform. Her experience in state government and the political battles in Washington give her a detailed insider’s knowledge of government health programs to help navigate the significant political shoals ahead.

HEALTH CARE REFORM

Health 'Reformers' Ignore Facts
Sally C. Pipes, Pacific Research Institute
The Wall Street Journal, 03/06/09

The Democrats’ case to expand government health care is so full of holes that passing it quickly is their only hope, writes Pipes. In fact, if members of Congress slow down long enough to read the detailed reports of their own Congressional Budget Office (CBO) — or even its director’s recent Senate testimony — they will understand that many of the slogans they use to justify government intervention are false. A recent CBO report finds that working to achieve universal coverage through expanding government’s role in health care will increase total costs and therefore either increase premiums or taxes, not reduce them. Americans like their current health care, its plethora of choices and its intensive, high-tech approach to fixing our ailments. But the CBO is very clear that saving money on health care involves doing less of the very things Americans like the most. In other words, reducing costs means rationing the care of those who currently have private insurance and Medicare.

The Obama Health Care Budget: Hopeful Savings and Costly Change
Robert E. Moffit, Ph.D., Nina Owcharenko, and Dennis G. Smith
The Heritage Foundation, 02/27/09

The President’s $634-billion “down payment” on health care reform in his proposed budget depends on raising taxes and saving money largely through administrative payment changes in existing entitlement programs, write Moffit, Owcharenko, and Smith. The proposal depends on old-fashioned, populist, “soak the rich” tax hikes combined with technocratic tinkering with administrative payment and new software in anticipation of program savings. It does very little to change America’s flawed public and private third-party payment arrangements where value is secured for “payers,” not individual patients. If the president wants to affect real change — and secure value for individual patients rather than third party payers — he should take concrete steps to transfer direct control over health care dollars and decisions to individuals and families.

American Recovery and Reinvestment Act (ARRA): Medicaid and Health Care Provisions
Kaiser Commission on Medicaid and the Uninsured, 03/09

This fact sheet examines the key health provisions in the new economic stimulus bill, including the temporary increase in federal matching money for state Medicaid programs, subsidies for COBRA health coverage for laid off workers and funding for health information technology. It includes a breakdown of additional federal allocations to states for Medicaid costs under the act.

CONSUMER-DRIVEN HEALTH CARE

How's This Health Savings Account Working? Ask a Union Leader
Patrick McIlheran
Pioneer Press, 03/03/09

The use of health savings accounts by the biggest labor union in Manitowoc County, Wisconsin, is evidence that giving power to patients actually works, writes McIlheran. The deal, unveiled in 2007, absolves county employees of any premiums. Instead, they all have a high deductible — $3,000 per family — so they’re insured against killer costs but have some incentive to shop on routine care. The twist is they pay the deductible out of an HSA filled entirely by the county, reversing some previous cost-shifting. If employees economize, the leftover money builds up, and they can keep it when they leave. The county is now self-funded, and it is paying i
n 2009, per employee, just what it was paying in 2006. Before going to HSAs, costs were doubling every five years or so. But McIlheran writes that the Obama administration plans to change the rules for health coverage and adds it would be good if the starting point were not a centrally planned scheme but rather a system that gives more control to patients by giving them money, information and incentives. Manitowoc County seems to be learning how that’s done.

PRESCRIPTION DRUGS

Pre-Empting Drug Innovation
The Wall Street Journal, 03/05/09

The Supreme Court ruled 6-3 this week in Wyeth v. Levine that drug companies can be held liable for harm even when their products are improperly administered by a third party, despite warning labels that were obvious and approved by federal regulators, reports The Wall Street Journal. The decision is a huge victory for plaintiffs' lawyers, but it’s a much bigger defeat for drug innovation and public health. A consequence of this ruling is an almost-certain spike in product-liability lawsuits aimed at drug companies. The ruling will also expose drug companies to a kind of double innovation jeopardy. They typically spend $1 billion on research and development to bring a drug to market, with an 11% success rate on average. But they endure that burden on the understanding that FDA approval will give them a period to sell that drug with patent protection and that FDA approval provides some protection from lawsuits. Now they will have to contemplate paying up front — and paying later, even if the tragic mistake in applying the drug is someone else’s. Wyeth is a dream come true for the plaintiffs' bar.

Getting It Right with Modern Drugs
Peter Pitts and Robert Goldberg, Center for Medicine in the Public Interest
The Washington Times, 03/02/09

The Food and Drug Administration must move to modernize its standards for approving generic versions of “controlled release” drugs, write Pitts and Goldberg. Controlled release drugs are a new generation of medication engineered to deliver a precise amount of a medicine, at precise intervals, over a period of hours, without losing potency or effectiveness. The good news is that more than 20 generic controlled release drug formulations are poised to be released to the market, pending FDA approval. The bad news is that the FDA is using dated generic approval standards to evaluate these modern medicines. This is critical considering that any deviation from how a controlled release drug is delivered to the body can lead to unbearably painful, harmful or even fatal patient consequences. For the FDA to continue to ignore the controlled release regulatory oversight is to invite disaster on two fronts: the complete erosion of the generic industry’s reputation in the eyes of patients, and unthinkable, widespread patient harm caused by ineffective controlled release generics.

Upcoming Events

Lessons from abroad for health reform in the U.S.
Galen Institute and International Policy Network Event
Monday, March 9, 2009, 7:45 a.m. – 2:00 p.m.
Washington, DC
Registration for this event is filled, but a webcast and conference materials will be available online. Please check www.galen.org and www.policynetwork.net for more information.

Stimulating Health Information Technology
Health Affairs Briefing
Tuesday, March 10, 2009, 9:00 a.m. – 12:30 p.m.
Washington, DC

Roles for State Purchasers in Driving Cross-Payer Health Care Quality Improvement
Center for Health Care Strategies Webinar
Wednesday, March 11, 2009, 2:00 p.m. – 3:30 p.m. (EDT)

The Top Ten Myths of American Health Care: A Citizen's Guide
The Heritage Foundation Event
Thursday, March 12, 2009, 12:00 p.m.
Washington, DC

Close Up on Evidence-based Care: Practicality and Implementation
Oregon Health Forum Event
Tuesday, March 17, 2009, 7:00 a.m. – 9:00 a.m.
Portland, OR

Can Health IT Improve Medical Care?
American Enterprise Institute Event
Wednesday, March 18, 2009, 10:00 a.m. – 2:00 p.m.
Washington, DC

 

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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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