I am in Indianapolis, having facilitated a day-long session on health care, ably organized by Tracie Sharp, president of the State Policy Network. State think tank experts from around the country gathered at Eli Lilly’s corporate headquarters here for a first-hand look at the research campus and briefings from top scientists and other experts on the process of innovation.
More than 100 of our colleagues who fight fearlessly in the states for free-market ideas also brainstormed together on long and short-term ideas for action — to fight single-payer initiatives in their states, to give Medicaid patients more freedom and choice, and to give small businesses relief from expensive state benefit mandates and regulations.
Meanwhile, back in Washington, the Senate approved by a voice vote late Thursday the nomination of Dr. Mark McClellan to head the Food and Drug Administration. He’ll take the FDA helm soon and turn over his White House duties to Doug Badger, a long-term friend who was a general in the fight against ClintonCare.
Doug, a former top health policy advisor to Sen. Don Nickles, brings extensive experience in the Senate and the Reagan administration to his new job where he will continue a career-long fight for free-market ideas. Welcome, Doug!
Congress is preparing to leave town – finally – after having done blessedly little additional damage to our health care system. At the same time, two new initiatives are advancing that may actually do some good.
A short round-up might be helpful:
- Tax credits: The most significant health care legislation enacted this year was contained in the Trade Act of 2002.
The law provides refundable tax credits to help a limited number of workers, who lost their jobs because of international trade, to purchase their own health insurance coverage. They can get a direct credit against their taxes for 65% of the cost of a policy, and the money is “refundable” even if they don’t owe taxes.
- With new Census Bureau numbers showing more than 41 million people without health insurance, Congress’ first job next year should be to create less restrictive tax credits to allow millions more workers to purchase private coverage for themselves and their families.
- HRAs: One of the more significant moves by Washington to extend consumer choice over health insurance came through a ruling by the Internal Revenue Service. The IRS ruled in June that employers can create a new kind of health insurance policy for their employees to make them partners rather than adversaries in spending health care dollars wisely.
Called Health Reimbursement Arrangements (HRA), an employer can put money into a special personal care account that an employee can use to purchase routine medical care. The company also can purchase an insurance policy to cover major medical expenses. Importantly, any money remaining in the employee’s personal care account can roll over to the next year and can be available for health expenses, even after the employee retires or leaves the company.
- FEHBP: All nine million Federal workers and dependents will have the option of choosing an HRA next year. In addition to funding the personal care account and buying the catastrophic coverage, the plan also will pay for some preventive care, including doctor’s visits, screening tests, and immunizations — without any charge to the consumer.
And Congress also avoided passing two dangerous health care bills.
- PBOR: First, the Patients’ Bill of Rights appears to be dead, even though both the House and the Senate have passed the legislation and President Bush said he would sign an acceptable bill.
But it became increasingly clear that the bill’s massive new body of regulation was the wrong approach and would have provided an arsenal of new rules for Washington to exert more centralized bureaucratic control over our health care system.
Momentum for the legislation stalled when: 1) Many states passed legislation to allow patients legal recourse in their own courts; 2) The managed care industry made changes itself to address many concerns; and 3) People realized that the bill would have driven up health costs even further, causing millions more people to lose their insurance.
The biggest debate of the session was over a prescription drug benefit for Medicare, and that, too, failed.
- Drugs: Congress will certainly return to the issue next year. The drug debate is critically important because it impacts vital future innovation in the health sector. A misguided drug benefit not only would accelerate Medicare’s bankruptcy, but also dry up critical research dollars to produce tomorrow’s life-saving medicines.
Health care issues definitely will be back. But the good news is that several new initiatives are percolating through the system to give consumers more choice and control over their health care.
And, at least for now, some of the bad ideas that would have further crippled the system are on hold.
Grace-Marie Turner is president of the Galen Institute, a not-for-profit research organization focusing on health and tax policy. She can be reached at P.O. Box 19080, Alexandria, VA 22320.