The March Continues

With a major expansion of the State Children's Health Insurance Program in place and more than $150 billion in health spending authorized in the stimulus bill, the Obama administration already is well on its way to significantly increasing the role of government in our health sector.

President Obama is expected to take the next step in advancing his health reform agenda when he delivers his first State of the Union address on Tuesday.

As Mr. Obama said during the signing of the economic stimulus legislation, "we have done more in 30 days to advance the cause of health care reform than this country has done in an entire decade."

The march continues.

Details of his Tuesday address are sketchy, but I expect calls for further expansion of government health programs, including broader access to Medicaid and possibly Medicare, a mandate on employers to provide health insurance with subsidies for small businesses, creation of a new government health insurance program, and a significant increase in federal regulation of private health insurance.

The big question mark is whether the president will accede to the demands of Democratic leaders in Congress to call for a mandate that all individuals purchase health insurance. This is a political hot potato because the young people who energized the Obama presidential campaign would be hit hardest as they inevitably would be forced to pay more than their share for insurance to subsidize older, sicker Americans.

And who is going to lead this effort at HHS now that former Sen. Daschle is out? The capital was abuzz yesterday that the president might announce next week his choice for HHS secretary, with Kansas Gov. Kathleen Sebelius the leading contender.

Governors bring important expertise to HHS because they have experience in dealing with Medicaid, in trying to reduce the number of people without health insurance (Kansas has a lower uninsured rate at 12.7% than the national average), and in trying to make health care and coverage more affordable — all goals of the Obama administration. Gov. Sebelius also is a promoter of health information technology and is a cheerleader in encouraging Kansans to adopt healthy lifestyles.

But Gov. Sebelius or whoever is nominated will have to hit the ground running to start spending the $150 billion in new health care funds authorized in the stimulus law, including $87 billion for Medicaid, $24.7 billion to subsidize COBRA health insurance, $19.2 billion for health information technology, $10 billion for the National Institutes of Health, and $1.1 billion on comparative effectiveness research.

With a $2-trillion budget deficit expected this year and new efforts in Congress to get back to fiscal responsibility (imagine that!), it is going to be a huge challenge to push an even more ambitious health reform agenda. Further, leaders at both ends of Pennsylvania Avenue had said they want bipartisan support for a major health reform effort.

There may indeed be common ground to be found, but it will require a true bipartisan effort that has not been evident in Washington so far this year. It requires more than asking the other side to support legislation that already has been drafted or inserting pet projects in a bill to gain a few Republican votes.

Grace-Marie Turner

Recent News Articles and Studies

HSA Health Insurance Plans After Four Years: What Have We Learned?
Health Matters
Creating a Real Healthcare Market
At Wal-Mart, a Health-Care Turnaround
Stimulus Stealth
On Leadership: Essential Principles for Success


HSA Health Insurance Plans After Four Years: What Have We Learned?
Benjamin Zycher
Manhattan Institute, 02/09

Former RAND researcher Ben Zycher finds that the early growth of health savings accounts and other high-deductible coverage thus far outpaces that of individual retirement accounts (IRAs) and 401Ks. The brief history of HSA-qualified plans suggests that they are likely to continue to expand their market share significantly over time, especially if policymakers take steps to make them more economical. Other key findings:

  • Less than half the funds in HSA accounts in 2007 were expended, demonstrating these accounts' viability as savings vehicles.
  • Premiums for HSA-qualified policies are significantly lower than those for other types of plans — by about 10% to 40%.
  • Out-of-pocket maximums — the total amount that patients are responsible for paying, including the deductible — are higher for HSA-qualified policies, but evidence suggests that this is driven by the higher deductibles.

Health Matters
Melinda Beck
The Wall Street Journal, 02/14/09

Concierge medicine is gaining popularity across the U.S., particularly among older Americans with complex medical needs, writes Beck. The concept started in Seattle in 1996 with mostly wealthy patients and has since spread to people of more modest means, with annual fees ranging from $500 to $15,000. Doctors limit the number of patients they see and give them highly personalized attention, including detailed annual physicals, preventive care, same-day appointments and a promise to return their calls quickly, 24/7. Although there is no precise count, experts estimate that as many as 5,000 doctors and one million patients are involved in concierge care, according to Thomas W. LaGrelius, a geriatrician and president of the Society for Innovative Medical Practice Design, a professional society for concierge physicians.


Creating a Real Healthcare Market
Regina Herzlinger, Manhattan Institute and Harvard Business School
The Boston Globe, 02/18/09

Massachusetts can lower its health care costs by using integrated hospital systems, or "focused factories," writes Herzlinger. Insurers could require integrated hospital systems to give fixed price bids for providing all the care needed for specific chronic diseases or disabilities, such as Type II diabetes and high-risk pregnancies. Insurers would offer these bids to consumers. They could, for example, choose hospital A's diabetic team in preference to hospital B's, which costs $500 more a year. Transparency about the quality of care for a disease or a disability could be more easily attained from these focused teams eager to demonstrate the competitive excellence of their care. Accordingly, consumers, armed with relevant information, would pick those facilities that give them the best value for their money. Because these teams would effectively and efficiently treat those with chronic illnesses, which normally account for at least 75% of health care costs, this would give Massachusetts a shot at finally controlling expenses while improving quality — a potent combination.


At Wal-Mart, a Health-Care Turnaround
Ceci Connolly
The Washington Post, 02/13/09

Washington policymakers contemplating a fundamental overhaul of the nation's troubled health care system may want to study the saga of Wal-Mart, writes Connolly. Once vilified for its stingy health benefits, the world's largest company has become an unlikely leader in the effort to provide affordable care without bankrupting employers, their workers or taxpayers in the process. At a time when other firms are scaling back or eliminating health coverage, Wal-Mart has made a serious dent in the problem of the uninsured. New figures show that 5.5% of its employees now lack health insurance, compared with a nationwide rate of 18%. The company has also put into practice many of the innovations that experts say will lead to higher-quality, more efficient care. Wal-Mart has introduced digital records, partnered with prestigious organizations such as the Mayo Clinic, and begun targeting costly health problems such as obesity and premature births.


Stimulus Stealth
Peter J. Pitts, Center for Medicine in the Public Interest
The Journal of Life Sciences, 02/18/09

Comparative effectiveness, as it is currently designed, places into conflict the short-term budgeting dilemmas of government officials who are elected for relatively short periods of time with the ever-lengthening life spans of we the people, writes Pitts. As currently organized, comparative effectiveness will be used to increase government control over the practice of medicine and introduce price controls. A comparative effectiveness model for the 21st century should reflect and measure individual response to treatment based on the combination of genetic, clinical, and demographic factors that indicate what keeps people healthy, improves their health, and prevents disease, writes Pitts. In an era of personalized medicine, one-size-fits-all treatments and reimbursement strategies are dangerously outdated. We are early in this debate, but at least we can all agree that it must be about the quality of patient care.


On Leadership: Essential Principles for Success
Donald J. Palmisano, M.D., J.D.
Skyhorse Publishing, 02/09

Dr. Donald Palmisano, former president of the American Medical Association, examines leaders, good and bad, throughout history — from George Washington to George W. Bush — and the decisions each made during crisis situations. Palmisano also shares the insight gained and lessons learned from his own experience as a leader, including his recommendations for health system reform.

Upcoming Events

Grace-Marie Turner speaking on the Barbara McFaddin Show
WFGH-FM Radio Broadcast
Saturday, February 21, 2009, 10:00 a.m.
Bristol, VA

Health Technology Assessment
Stockholm Network Event
Monday, February 23, 2009, 11:30 a.m. – 2:00 p.m.
Stockholm, Sweden

Community Health Centers: Their Post-Stimulus Role in Health Reform
Alliance for Health Reform Event
Monday, February 23, 2009, 12:00 p.m. – 2:00 p.m.
Washington, DC

Addressing Underinsurance in National Health Reform
Senate Committee on Health, Education, Labor, and Pensions Hearing
Tuesday, February 24, 10:00 a.m.
Washington, DC
Grace-Marie Turner will offer testimony before the Senate HELP Committee about the importance of flexibility in policy design in expanding access to health coverage.

Health vs. Health Care: What and How Should We Purchase?
Oregon Health Forum Event
Tuesday, February 24, 2009, 7:00 a.m. – 9:00 a.m.
Portland, OR

Grace-Marie Turner speaking on the Small Business Advocate show
Nationally Syndicated Radio Broadcast
Wednesday, February 25, 2009, 7:30 a.m.

Conservative Political Action Conference 2009
The American Conservative Union Event
February 26-28, 2009
Washington, DC
Grace-Marie Turner will speak on a panel entitled "Health Care: The Train Wreck Ahead" at 11:30 a.m. on Friday, February 27.

Reform and Retrenchment: The Russian Healthcare System under Putin
Woodrow Wilson International Center for Scholars Event
Monday, March 2 2009, 12:00 p.m. – 1:00 p.m.
Washington, DC



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

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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.