How Much Things Change?

?and how much they stay the same.

The health policy debates on both sides of the Atlantic are remarkably similar. There are entrenched forces determined to resist change and fight to the end for solidarity, even if it means the decline and decay of the very programs they are trying to protect. And there are new voices courting the transformative power of consumers and markets.

This was the theme at a day-long conference on Wednesday in Stockholm on ?Markets and Solidarity: Building the European Healthcare of Tomorrow.? Helen Disney, director of the Stockholm Network coalition, in conjunction with Johan Hjertqvist of the Swedish think tank Timbro, convened think tank experts from 13 countries to begin to explore ways that consumerism can be injected into socialized health care systems.

Amazingly, all but the most unbending leftists in Europe are interested in at least learning more. With information spreading at lightspeed across the Internet, and with an explosion of new technologies and services in health care, consumerism is a force that cannot be restrained.

There is growing awareness that maintaining political power in Europe may well mean heeding consumer demands to begin to free health care from centralized, bureaucratic control.

We know that consumerism is taking root and spreading throughout the private health sector in the United States, with employers implementing new plans to make workers partners rather than adversaries in managing costs.

And surprisingly, European unification could spark an unintended consumer revolution there as well. If a citizen?s own country can?t provide needed and timely care, they can seek a voucher to obtain health care in any other European Union member country.

This could lead to hospitals moving from 19th century establishments of socialized mediocrity to Centers of Excellence built around the skills of talented doctors who attract patients from throughout Europe. (Think the Mayo Clinic of Sweden or Sloan-Kettering in England.) This could be a huge leap into consumer purchasing power in these socialized systems.

Unbending leftists. Also at the Stockholm Network conference, one unbelievably entrenched representative of the British Dental Association guild was insultingly disregardful of the United States, suggesting that we are basically savages and practically shouting in anger at anyone who would even listen to our barbarian ideas.

Fortunately, my panel was up next. I described our system, explained that 44 million uninsured are not a permanent underclass, but they are flowing through the system of employment-based health insurance, with most uninsured for less than six months. (And we work tirelessly on policy proposals to rectify this.) I also pointed out that the biggest problems in the U.S. are with our public health care programs that are centrally-controlled, rule-driven, and resistant to innovation.

But even there, we are willing to experiment. Among almost everyone but this leftist, there was particular interest in the Cash and Counseling experiment in Medicaid that allows recipients to choose services and their own caregivers.

Also in Stockholm, AEI?s Joe Antos described our idea for a consumer-friendly Medicare drug benefit to an interested audience attending a separate conference the next day. Click here to read our new paper with ideas on how to adapt a card account model to European health systems: /assets/Consumer_Choice_Prescription_Drugs.pdf


There clearly is an appetite for new ideas, but there is a long and uncertain journey ahead.

While some of our European friends think we are barbarians, they can learn much from us.

The United States is a vast laboratory of experimentation in health care financing.

? Like Europeans, we are struggling with the serious problems of government-run health programs. We have a single-payer health program (Medicare), we have a 50-state experiment with a joint federal/state program (Medicaid), and we have a nationalized system in which hospitals are owned and doctors are employed by the government (Veterans and Native Americans) ? reflecting a range European financing structures.

? In the private sector, we have countless doctor networks, payment rates, coverage schedules, and financial cost sharing for private health insurance plans offered through employers while millions more purchase individual policies.

? Another asset we have, the philanthropic sector, is practically non-existent in Europe. Two-thirds of doctors here provide charity care, communities create free clinics, and the Shriners raise money to build and operate free hospitals for children ? just for starters.

And that by no means captures our system?s complexity. But the key is our willingness to change and innovate. Isn?t it about time to start recognizing the diversity and strengths of our own system so others, including Europeans, will be more open to learning from us?

Meanwhile, the Medicare debate churns on in Washington, with Bill Thomas, Billy Tauzin, and other free-market leaders in the House and Senate fighting the powerful forces of the status quo to give consumers, not bureaucrats, choice and control.

How much things change and how much they stay the same!

Grace-Marie Turner



? Do some pay too little for health care?

? Prices and availability of pharmaceuticals: Evidence from nine countries

? Illegal drugs

? Importation nightmare

? Are all generic drugs equal?



Author: David E. Rosenbaum

Source: The New York Times, 10/26/03

?Consider what would happen if employers paid for their workers’ car insurance and if that insurance covered routine maintenance,? writes David Rosenbaum in The New York Times. ?No doubt, the cars would spend a good deal more time in the shop, and the price of repairs and the cost of auto insurance would skyrocket.? Some health policy experts say that our health care system works in the same way because so much of the costs of doctor visits, procedures, and medications are covered by insurance. “When consumers don’t have to pay any regard to price, they overconsume,” said Kate Sullivan, director of health policy at the United States Chamber of Commerce. “You get more value for what you buy when you have a stake in it.” ?[M]any economists, liberals and conservatives alike, have concluded that health costs will continue to rise out of control unless patients are required to pay more out of pocket for the services they use,? writes Rosenbaum.

Full text:


Authors: Patricia Danzon and Michael Furukawa

Source: Health Affairs Web Exclusive, 10/29/03

?Drug price differentials between countries roughly reflect income differences (except for Chile and Mexico),? finds a new study by Patricia Danzon and Michael Furukawa of the Wharton School at the University of Pennsylvania. Their study compares average price levels for prescription drugs in the United States to those in eight other countries – Canada, Chile, France, Germany, Italy, Japan, Mexico, and the UK. ?Our most comprehensive indexes, adjusted for U.S. manufacturer discounts, show Japan?s prices to be higher than U.S. prices, and other countries? prices ranging from 6 percent to 33 percent lower than U.S. prices,? write the authors. ?Our findings suggest that U.S.?foreign price differentials are roughly in line with income and smaller for drugs than for other medical services.?

Full text:


Source: The Washington Post, 10/27/03

?In the light of The Post’s ?Pharmaceutical Roulette? series published last week — which described for the first time the full extent of the ?shadow market? in American pharmaceuticals — it has become clear that this issue needs to be given much higher priority,? says an editorial in The Washington Post. The Post?s yearlong investigation looked at Internet?s role in the narcotics pipeline, the growth of the counterfeit market, and the porous borders with Mexico and Canada. ?The portrait of a dysfunctional regulatory system presented last week should force everyone involved in this debate to stop and think harder about whether this is really the right time to legalize a new influx of drugs from abroad,? says The Post.

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Author: Robert Goldberg

Source: The Washington Times, 10/28/03

?The purchase of drugs without a prescription via the Internet, particularly narcotics, is exploding,? writes Robert Goldberg of the Manhattan Institute. And the House-passed drug importation bill, sponsored by Rep. Gil Gutknecht, will only make it easier to obtain these drugs because the bill takes away the Food and Drug Administration?s authority to examine the safety of the products coming into the country or being sold to consumers. ?The bill virtually assures that the United States will be flooded with questionable medicines from a wide array of exporters,? writes Goldberg. He writes that anti-counterfeiting technology is not a foolproof method for stopping the flow of illegal drugs since the packaging is easier to duplicate than the drugs themselves. And while many in the U.S. look to Canada for more affordable drugs, Goldberg points out that, unknown to many Americans, Canada has imported ?over $264 million [in prescription drugs] from over 60 different countries with pharmaceutical quality standards that are either substandard or cannot be verified.?

Full text:

Robert Goldberg, Grace-Marie Turner, and others spoke at the National Symposium on Drug Importation in Chicago sponsored by the Heartland Institute last week. You can hear them at:


Author: Roger Bate

Source: American Enterprise Institute, 10/28/03

With Congress set to approve President Bush?s AIDS plan, many are wondering what drugs the U.S. will purchase with its share of the money, says Roger Bate, a visiting fellow at AEI. ?Stiff political, activist and foreign corporate opposition? to the major pharmaceutical companies has led some of Bush?s advisors to advocate generic drug use. But recent evidence from Medicins Sans Frontiers (MSF) calls into question the safety of generics, some of which are counterfeit and of low quality. Bate says there are three problems with treating patients with ?less-certain? drugs: If formulations are not as good, it may enhance drug resistance; second line treatments (with newer and more expensive drugs) will have to be brought online sooner, increasing overall costs; and if resistance builds up, doctors won?t know whether it?s due to the drug?s efficacy or its formulations, so useful drugs may be discarded too early. MSF has treated more than three thousand patients in ten countries in the past three years and ?is already discussing second-line treatments in most locations at a high cost of $2,388 per person per year ? That?s indicative ? of inferior drugs,? says Bate, ?If the Bush administration decides to buy generic drugs it should ensure that those drugs are bioequivalent to branded drugs, and not something different.?

Full text:,filter./news_detail.asp


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

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Elizabeth Lamirand

Editor, Health Policy Matters