Hitting the Wall

Tempers flared Thursday on Capitol Hill as Medicare negotiations appeared to hit the wall, with Chairman Bill Thomas saying publicly that a new compromise worked out by Senate Majority Leader Bill Frist ?is guaranteed not to work.?

Frist, believing that support of the AARP is vital to passing any Medicare deal, has quietly been meeting with the organization?s leaders to broker a deal. Thomas was not in on the talks, and the deal, which involves limiting Medicare competition to five demonstration projects, was announced on Wednesday without him. Not smart.

For heaven?s sake, Congress can?t even seem to agree on a pilot demonstration project to test a competitive-model program! Conservatives said the demo is too small, and liberals said it is too big.

The pivot point for the whole bill has boiled down to allowing broader Medicare competition or letting the aging program continue to creak along with an additional $400 billion.

Sens. Kennedy and Clinton continued to lead the opposition to changes in Medicare?s structure. Clinton suggested that the pilot projects be implemented in states that backed Mr. Bush: ?Let them experiment on people who voted for them,? she told reporters.

President Bush was in Florida at a rally that the White House hoped would be a celebration of a deal. Instead, he had to use his talk to once again prod Congress to finish work.

The ball now is in the court of Sen. Frist and House Speaker Dennis Hastert who have said they will make decisions on key unresolved issues ? Medicare competition, limiting program spending, and tax preferred savings accounts ? to present to negotiators next week.

Both sides have said they must have a final vote next week or it will be too late. But it?s unlikely they will give up, and a vote by Christmas rather than by Thanksgiving now looks more likely.

Attacks: The Galen Institute was the subject of a vicious and unfounded attack in a Wall Street Journal column on Tuesday by Alan Murray. Murray writes about politics, not health care, and he clearly is ignorant about the role that our relatively new think tank plays in the policy debate.

Despite volumes of evidence that I sent him to show the broad range of health policy issues we are involved in, he decided to use us as his scapegoat to single out ?the ties that bind the pharmaceutical industry to a network of conservative think tanks.?

I fired off a letter to the Journal immediately. To quote:

?Alan Murray?s Nov. 11 column ?Drug Makers? Paths of Influence Need to be less Hidden? accuses the Galen Institute of being in the pocket of pharmaceutical companies because of our opposition to legalizing prescription drug imports from Canada and other countries.

?He could not be more wrong. We are a public policy research organization that studies and analyzes issues based upon our strong convictions that innovation and competition hold the keys to solving many of the problems in our health system.

?The drug importation issue is the fulcrum of the debate over Medicare, embodying the question of whether innovation-killing price controls or private sector competition will be employed to deliver a prescription drug benefit in Medicare. Our opposition to drug importation is part and parcel of our belief system, a position that is shared by thoughtful political leaders and policy analysts on both sides of the aisle.

?We believe that there are genuine risks to public safety by opening up our borders to imported drugs. Drug importation also is a tacit acceptance of price controls and threatens intellectual property rights, both of which would cripple new drug discovery. These concerns are not threats solely to the pharmaceutical industry but to all of America’s most productive industries.

?We work tirelessly at the Galen Institute for ideas to provide help for the uninsured, to get good prescription drug coverage to seniors, especially those with low incomes, and to energize the coming revolution in consumer driven health care. The drug importation debate, while important, consumes at most 10 percent of our time.

?We are engaged in these battles on the merits and are not beholden to any group, including the pharmaceutical industry. We have a broad base of support from foundations, individuals, and companies who support us because they believe in our work to fight for free markets and doctor/patient control over decisions.

?Murray missed the mark on this one. He should focus instead, as we do, on serious policy analysis, not reckless accusations.?

The attack was deeply upsetting to me and to all of us at the Galen Institute, but the support from our many friends who shared our distress and recognized the recklessness of the charges was most gratifying. Thanks to you all.

Grace-Marie Turner



? Cost control in the Medicare drug bill needs premium support, not a ?trigger?

? Medicare 101

? Universal care has a big price: Patients wait

? Don?t export our drug policy to the U.S.

? Why Canada is running short of drugs



Authors: Stuart M. Butler, Ph.D., Robert E. Moffit, Ph.D., and Brian M. Riedl

Source: The Heritage Foundation, 11/10/03

?Under pressure to limit taxpayer costs, House-Senate conferees are considering a ?trigger? proposal to limit general tax revenues to funding no more than 45 percent of Medicare spending in a given year,? write Stuart Butler, Robert Moffit, and Brian Riedl of The Heritage Foundation. But the authors argue that this proposal would not produce meaningful reforms for two reasons: It would delay reform, and it is not enforceable. ?Protecting future taxpayers from the huge costs of an open-ended expansion of Medicare is no easy task,? write the authors. ?But a ?supply-side? strategy of trying to clamp down on program spending?would either be ineffective or lead to ever-increasing price controls, micromanagement, and other vestiges of central planning.? Instead, the authors recommend a “demand-side” premium support model, like the FEHBP-style premium support mechanism. This would directly and automatically limit taxpayer costs since premium support defines up front how much the government will pay for each beneficiary, thereby providing built-in cost controls.

Full text: http://www.heritage.org/Research/HealthCare/BG1704.cfm


Author: Robert Helms

Source: Policy University, 11/7/03

Robert Helms of the American Enterprise Institute presents an excellent basic primer on the Medicare program. Helms describes the origin, development, structure, and major issues facing the program. Helms is one of the preeminent experts on Medicare and has prepared a description and history of the program that is as concise as any we have seen. If you don?t understand Medicare read this. If you do, you?ll still learn a lot. This short presentation is one of the courses that can be viewed online at Merrill Matthews? newly created Policy University.

Full text: http://www.aei.org/news/newsID.19437,filter./news_detail.asp


Author: Elena Cherney

Source: The Wall Street Journal, 11/12/03

?Waiting is the giant flaw in many national health-care plans,? writes reporter Elena Cherney in The Wall Street Journal. In order to maintain efficiency and restrain costs, hospitals in Canada always strive to run at capacity, but this causes lines to form and patients to wait for care. ?Waits for certain nonemergency surgeries in Canada can be up to two years,? writes Cherney. ?In parts of the country, there are long lines for such things as magnetic resonance imaging or children’s mental-health services.? Ontario has turned to “cardiac-care coordinators” whose jobs are to ?make sure waiting doesn’t kill patients,? writes Cherney.

Full text: http://online.wsj.com/article/0,,SB106858499189259400,00.html?mod=health_home_after_ad


Author: David Gratzer

Source: National Post, 11/12/03

Canadian Internet pharmacies that import drugs to the United States should be put out of business, says David Gratzer, a Toronto physician and Senior Fellow at the Manhattan Institute. ?Reimportation may end up harming Canadian patients, by exporting to the United States our pharmaceutical policy [of price controls],? writes Gratzer, ?It?s one thing for us not to pull our fair share with research and development; it?s another to risk the US$32-billion America spends annually on creating better drugs.? Gratzer says Health Canada can enforce existing licensure requirements to shut down the ?glorified mail-order pharmacies,? but a more permanent solution is to eliminate price controls.

Full text: http://www.nationalpost.com/commentary/story.html?id=E12EC8D2-941A-48B5-AD16-6F2CA3147B8A


Author: Thomas Bray

Source: The Detroit News, 11/12/03

Drug companies sell drugs to Canada at deep price discounts ?mainly because the Canadian government threatened to stop observing their patent protection? if they refuse to comply, writes columnist Thomas Bray. Some politicians are starting to suggest that the U.S. government follow suit. ?Ah yes, cheap, effective drugs from the munificent hand of government. It?s a nice vision, but then comes the nagging memory of long gas lines and high prices in the 1970s when the same government set out to solve the energy crisis by imposing price controls?Will we ever learn?? he asks. The Canadian government, by meddling with the marketplace, is the real villain. ?The most sensible solution to the dilemma is for Canada to end its price controls and let the market sort things out. Price controls are just as big a barrier to free trade as, say American steel tariffs,? writes Bray.

Full text: http://www.detnews.com/2003/editorial/0311/12/a13-322533.htm

The Chicago Tribune reports that pharmacists from Manitoba, the hub of Canadian Internet pharmacies, came to Illinois this week to charge that Gov. Rod Blagojevich?s campaign to import prescription drugs would ?jeopardize medical care both in their country and this one.? Internet drug sale from Canada already have depleted the supply of medications for patients with problems ranging from brain tumors to childhood leukemia, they warned.

Full text: http://www.chicagotribune.com/features/health/chi-0311130061nov13,1,5680832.story


A New Approach to Vaccine Development: A Discussion of the Institute of Medicine Committee Recommendations

American Enterprise Institute Event

Monday, December 1, 2003 – 10:00 a.m. – 12:00 p.m.

Washington, DC

For additional details and registration information, go to: http://www.aei.org/events/eventID.670,filter.,type.upcoming/event_detail.asp


Sixty Years of Employer-Provided Health Insurance: Can You Teach an Old Law New Tricks?

Galen Institute and Council for Affordable Health Insurance Briefing

Wednesday, December 3, 2003 ? Noon (lunch provided)

Capitol Hill, Room TBA

Additional information will soon be available at www.galen.org.


Health Policy Matters is a weekly newsletter containing commentary on health policy developments, summaries of timely and informative studies and articles on free-market health reform, and notices of upcoming events. It features research and writings by participants in the Health Policy Consensus Group. 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 this newsletter and our organization, please visit our website at http://www.galen.org/.

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Elizabeth Lamirand

Editor, Health Policy Matters