Dim and Bright Lights


The health care focus this week was not in Washington but in the media. Most notable: A shockingly one-side program hosted by ABC’s Peter Jennings which aired on Wednesday night, called “Bitter Medicine: Pills, Profits, and the Public Health.”

Jennings did everything he could to label pharmaceutical companies as profit-hungry villains with little or no redeeming social value and finds almost an hour’s worth of critics to reinforce his bias. This was in fact “bitter journalism” that should give anyone who values a sense of balance and truth heartburn.

Merrill Matthews of the Institute for Policy Innovation has written an excellent fact sheet rebutting some of the misstatements and half-truths in the program. You’ll find it at http://www.galen.org/news/053102b.html. Jennings was just awful.

But then, we saw an article in Fortune magazine and another in Forbes that gave us hope that private enterprise will prevail. (See below for links.)

First, Fortune profiles a small company desperate to find a way to escape double-digit increases in health insurance and settles on a new Web-based plan offered by Humana, called SmartSuite. It gives employees a much wider range of choices, and allows patients to file claims on-line and to track balances in their health spending accounts. This “would never be possible without the Web,” a Humana officer said, alluding to the huge potential of information technology to transform the health care industry.

“Because consumers have gotten used to paying relatively small, set deductibles and co-payments for virtually unlimited health coverage, most people have lost track of how much medical care, tests, and drugs actually, cost,” the article says. “That means we tend to use health insurance like a spoiled teenager with daddy’s credit cards.”

With more information and incentive to save, “employees on average tend to accept more risk in exchange for lower monthly payments,” the article says.

Humana is offering the plan to it’s own employees. The result: Health-insurance premiums that were expected to rise 19% this year will increase by less than 4%.

Just get the incentives right, and they will come?

And finally, we cheer Steve Forbes, editor-in-chief of Forbes magazine, for devoting almost his entire column in the May 27 issue to health care. “Business executives should understand that bad (read expensive) things happen when customers don’t control the purse strings.”

He argues for revival and liberation of Medical Savings Accounts, rollover of health funds in employees’ Flexible Spending Accounts, and – here’s the most important thing – refundable tax credits for the uninsured!

Steve Forbes has been one of this country’s most vocal and effective advocates of a flat income tax and had resisted supporting adding one more complexity to the code. But like his fellow flat-tax advocate, House Majority Leader Dick Armey (R-TX), he has concluded that refundable tax credits are the right policy prescription to help the uninsured obtain private health insurance – reinvigorating a competitive market and staving off more and more expansion of government-run health programs. Hooray for Steve!

For my take on how tax credits would facilitate a move to a more sensible tax system, see www.galen.org/news/taxchapter.doc

Grace-Marie Turner

Fortune article: http://www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=207847

Forbes column (free sign-up required): http://www.forbes.com/forbes/2002/0527/027.html

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