The 80% Rule

Highlights

So much is happening on the health reform front in Washington this week that our heads are spinning, with legislators jockeying for control over procedures, timing, and the content of reform legislation.

Here's my take.

A number of key provisions in the legislation are clear:

The White House and leaders in Congress want to create a new government health insurance plan.

They want to impose a mandate that employers pay for health insurance for their workers.

They want to create a new National Health Insurance Exchange as a vehicle for strict federal regulation of private health insurance and for distribution of new subsidies for individuals and businesses.

They want to expand access to existing price-controlled government health programs.

And they may impose a mandate that all individuals have health insurance.

So here's my 80% rule: Constituencies are lined up in every industry supporting health reform, and most say they can live with most of the provisions on the table. But they also have 20% they can't support lest it destroy their business model.

The problem for reformers is that someone is going to fall on their sword over different 20% parts of the plan.

Employers, for example, will not accept a government mandate that they provide insurance. Health insurance companies know that a government health insurance plan would quickly put them out of business. And doctors, hospitals, and pharmaceutical and device companies will fight any effort to put tens of millions more people on price-controlled government programs.

There's more, but you get the idea.

This is one of the reasons for the delay in putting the puzzle pieces together into one bill and for all of the private and public meetings with these constituency groups.

No doubt clever strategies are being devised to soften the blow of each of these provisions. But there will have to be enough detail in the final bill for the Congressional Budget Office to score it, and that will certainly have everybody scrambling to assess the impact on their bottom line.

Our Health Policy Consensus Group is working on a statement that we will be releasing next week highlighting our concerns about many of the provisions being debated in the current health policy debate. Watch this space for more. We want the debate to take a very different approach, as we have written in this space many, many times.

 

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Natasha Richardson: Questions are rightly being raised about whether actress Natasha Richardson could have been saved if her skiing accident had occurred in the U.S. rather than in Canada. No one will ever know if the tragedy could have been averted, but it is worth looking at the timing and medical resources available to her.

Ms. Richardson did not wear a helmet during her beginner’s skiing lesson, and she sent medics away just after she fell. But once they were called back, it was four precious hours before she began to get the care that could have saved her life.

Medical reports indicate she had an intracranial bleed, and every pump of her heart put more pressure on her brain. The lack of a medevac helicopter meant she had to be driven in an ambulance from the Mont Tremblant ski resort to the Centre Hospitalier Laurentien in Ste. Agathe, 40-minutes away.

She was there for two hours, but the hospital had no scanning equipment and no neurosurgeon available to do the emergency surgery she needed to relieve the pressure. She then had to be driven another hour to Sacré-Coeur Hospital in Montreal to get trauma care.

The delay between the 911 call from the resort and reaching the specialized trauma center in Montreal could have been shortened considerably had helicopter transport been available or if the hospital near the resort had more sophisticated diagnostic equipment and surgical capabilities.

Canada's top head trauma doctor told the Associated Press that that "Our system isn't set up for traumas and doesn't match what's available in other Canadian cities, let alone in the States."

Government officials decided against paying for a medevac helicopter in the province of Quebec, despite a population of 7.5 million, half of whom live in Montreal. They have repeatedly rebuffed a private air transport company that wanted to offer its services. Instead, government officials opted to buy two airplanes which need much longer landing strips and weren't an option for Ms. Richardson.

The questions are relevant to the U.S. About 800 medical helicopters in the U.S. fly 400,000 missions each year, plus about 100,000 fixed wing medical flights. Major ski resorts tout their medical capabilities.

Canada spends less on health care than the U.S. does, but the scarcity of diagnostic equipment and the lack of any medical helicopters in Quebec comes with a different price. Even smaller, neighboring Nova Scotia has medical helicopters.

It is a tragedy indeed. We don't think about helicopters as being medical equipment, but when a centrally-planned health care system is making decisions about what the government will pay for, the big ticket items are often the first to go.

 

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Comparative effectiveness: Acting National Institutes of Health Director Raynard Kington hit a hotbutton when he testified yesterday before Congress, saying that the NIH may use economic stimulus money pay for research that includes comparisons of the cost of medical treatments.

"Kington's statements could cause controversy among conservative lawmakers because of their stance that the $1.1 billion in comparativeness effectiveness research allotted by the stimulus should not go to compare the costs of treatment," according to Congressional Quarterly. "They argue that the findings will be used to deny access to treatments found to be less cost-effective, thereby rationing health care."

We can get to a system of more efficient care delivery in the U.S., but not if we rely on top-down, bureaucratic, politically-driven decision making.

 

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Friedman on Capitalism: And finally, one of the best things to come across our computers this week was a YouTube video of the late Prof. Milton Friedman being interviewed by Phil Donahue on capitalism and greed.

How extraordinarily relevant this interview is today! See for yourself.

Grace-Marie Turner

Recent News Articles and Studies

Expanding Federal Control of Health Care Will Only Raise Costs and Reduce Q
uality

Allay Fears by Reforming Health Care
Vindicating McCain
National Health Preview
Red Ink Red Alert
A First Big Step Toward Medicare Sustainability
Cancer Survival Rates in Britain Among the Worst in Europe

GALEN IN THE NEWS

Expanding Federal Control of Health Care Will Only Raise Costs and Reduce Quality
Grace-Marie Turner, Galen Institute
Belleville News-Democrat, 03/26/09

So far this year, stimulus legislation has pumped an additional $150 billion into our $2.4-trillion health sector, and the health care plans Washington is considering would add trillions more. Pumping more money into the health sector and increasing demand will add to the inflationary pressuring, which will in turn exacerbate the cost problem. The president argues there will be huge savings from its multi-billion dollar investments in information technology, wellness, and prevention and that the average family would save up to $2,500 a year as a result. But analysts say it will be hard to see any savings from these programs for the next decade, if then. And even if the savings materialized, Mr. Obama's own advisors have acknowledged they would not actually accrue to individual consumers but to the system as a whole.

Allay Fears by Reforming Health Care
Grace-Marie Turner and Amy Menefee, Galen Institute
Center of the American Experiment, 03/09

The United States is alone among industrialized nations in that the majority of Americans receive health insurance through the workplace, write Turner and Menefee. This policy is simply not working for tens of millions of Americans who don't get health insurance at work and for tens of millions more who would prefer insurance they could own and take with them from job to job. Modernizing federal tax policy could go a long way toward combating the fear of middle-income Americans that they are one pink slip away from losing their health insurance. Conservatives would do well to advocate several policy changes to make health insurance more portable and more affordable: make tax advantages equally available to individuals to help them purchase private health insurance; open new channels for people to access more affordable insurance; and protect people with pre-existing conditions so they can purchase and maintain their coverage. Pursuing these changes would address a growing economic fear among working Americans and allow health care decisions to be made by patients and doctors, not by politicians and bureaucrats.

The article is part of a series of American Experiment symposia aimed at vitalizing conservatism in Minnesota and the nation.

HEALTH INSURANCE

Vindicating McCain
The Wall Street Journal, 03/21/09

The worst-kept secret on Capitol Hill is that Democrats have always planned to tax health benefits to pay for their "universal" health care plans, writes The Wall Street Journal. Maybe they will all now apologize to John McCain for trashing his proposal to do the same thing in the Presidential campaign, the Journal writes. The reality is that the employer-based tax deduction is the original sin of our health care system. Most likely, Democrats will cap the exclusion by income or cost of the health plan, so that those with the most gold-plated benefits pay more for the privilege. But the deeper problem is that Democrats don't want to create a new private market for individual health insurance. Their goal is to finance a new "public option," a subsidized program modeled after Medicare and open to the middle class that would crowd out private insurers. The almost certain long-run outcome of these efforts is the total nationalization of health care. Anyone who believed Mr. Obama when he said that under his plan "you can keep your health insurance, keep your choice of doctor, keep your plan" should think twice.

Health benefits are a part of employees’ compensation packages, with the average job-based policy for a family now costing about $13,000 a year, writes the Galen Institute's Grace-Marie Turner in a letter to the editor of The Wall Street Journal. This is likely the most lavish expenditure that most employees make, and most don’t even know it. Tax policy hides from them how much of their pay package is going to health insurance. Capping this tax break would be good policy, despite the barrage of ads the American people heard during the 2008 campaign.

STATE ISSUES

National Health Preview
The Wall Street Journal, 03/27/09

Massachusetts is trying to manage the huge costs of the subsidized middle-class insurance program that is gradually swallowing the state budget. The state's overall costs on health programs have increased by 42% since the reform legislation was enacted in 2006. Gov. Deval Patrick and his colleagues are starting to move down the path that government health plans always follow when spending collides with reality. Even the single-payer cheerleaders at The New York Times have caught on to this rolling catastrophe. The real lesson of Massachusetts is that reform proponents won't tell Americans the truth about what "universal" coverage really means: Runaway costs followed by price controls and bureaucratic rationing.

HEALTH CARE COSTS

Red Ink Red Alert
The Washington Post, 03/22/09

President Obama should treat a new report by the Congressional Budget Office as an incentive to fulfill his repeated promises, during and after the campaign, to make hard choices on the budget, The Washington Post writes in an editorial. Until now he has offered a host of new spending — on health care, middle-class tax cuts, education and alternative energy — without calling for much sacrifice from anyone except the top 5% of the income scale. Though his emphasis on controlling health care costs is welcome, it's not a substitute for reforming the entitlement programs that are the drivers of long-term fiscal crisis, Medicare and Social Security. Yet the president has offered no plan for either and no road map even for achieving a plan. Several members of his own party in the Senate have been expressing doubts about his strategy, and the CBO report will lend credibility to their concerns. He should heed them.

A First Big Step Toward Medicare Sustainability
J.D. Foster, Ph.D.
The He
ritage Foundation, 03/24/09

Medicare is a vital program for seniors, but is fundamentally unaffordable as it is currently structured because it faces an unfunded obligation of $85.6 trillion, writes Foster. A key feature of Medicare is that it provides heavily subsidized insurance to seniors, with an average subsidy of $4,053 per beneficiary in 2007. Such a subsidy is warranted for low-income seniors and questionable for middle-income seniors, but indefensible for upper-income seniors. These subsidies are financed by taxes on non-seniors — workers and their families, small businesses, and others — putting upward pressure on revenue needs and limiting the resources available for other governmental purposes. Phasing out the subsidy for upper-income seniors is an obvious first step toward Medicare sustainability and would reduce Medicare's long-run excess costs by over $41 trillion.

INTERNATIONAL HEALTH SYSTEMS

Cancer Survival Rates in Britain Among the Worst in Europe
Daniel Martin
The Daily Mail, 03/24/09

Britain has the worse cancer survival record in Western Europe — and the figures are much worse than previously thought, reports the Daily Mail. Despite the government tripling National Health Service funding, survival rates are on par with Poland and the Czech Republic, even though they spend two-thirds less on cancer. The figures come from the hugely respected Eurocare-4 study, which compared the five-year survival rates of 2.7 million adult patients up to 2004. Britain is 16th out of 19 countries surveyed. Just 41.4% of men and 51.4% of women found to have cancer survive longer than five years after diagnosis. The study also found that the number of patients who are completely cured is much lower in the U.K. than in all of Western Europe and even the former Yugoslav republic of Slovenia. Experts blame NHS waste, drug rationing and a lack of cancer specialists for the shameful showing. Professor Karol Sikora of London's Imperial College (and a speaker at our recent event on Lessons from Abroad for Health Reform in the U.S.) said, "We have spent much more but we have increased the bureaucracy around cancer, and still have staff shortages in radiotherapy and other technical areas. In five years time our record will be even worse because we're not accessing the drugs we ought, and we don't have the fancy radiotherapy that Europe can get hold of."

Upcoming Events

Grace-Marie Turner speaking on the Aaron in the Afternoon Show
KLFD-AM Radio Broadcast
Friday, March 27, 2009, 3:15 p.m.
Litchfield, MN

Health Care Reform Landscape
Health Care Caucus Policy Forum
Monday, March 30, 2009, 11:30 a.m.
Washington, DC
Grace-Marie Turner will speak about ways to get universal access to coverage through private insurance.For more information, please contact Eric Wilson at 202-225-7772 or eric.j.wilson@mail.house.gov.

Health Policy and Medical Education
George Washington University School of Public Health and Health Services Brownbag Lunch
Monday, March 30, 2009, 12:00 p.m. – 1:00 p.m.
Washington, DC

Can the Market Provide Choice and Secure Health Coverage Even for High-Cost Illnesses?
Cato Institute Policy Forum
Tuesday, March 31, 2009, 12:00 p.m.
Washington, DC

White House Regional Forum on Health Reform
Tuesday, March 31, 2009, 10:30 a.m.
Greensboro, NC

Grace-Marie Turner speaking on Healthcare and Life show
WCAR-AM Radio Broadcast
Friday, April 3, 2009, 9:30 a.m.
Troy, MI

California Regional Conference on Health Care Reform
Mayo Clinic Health Policy Center Event
Saturday, April 4, 2009
Berkeley, CA

The Debate: Universal Health Care Should Be the Responsibility of the Federal Government
Benjamin Rush Society Event
Tuesday, April 7, 2009, 5:00 p.m. – 7:00 p.m.
New York, NY

Innovations in Preventing and Managing Chronic Conditions: What's Working in the Real World
Center for Studying Health System Change Event
Wednesday, April 8, 2009, 9:00 a.m. – 12:00 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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