A request: Our two weekly newsletters, Health Policy Matters and Consumer Choice Matters, endeavor to keep you updated on the most important developments in health policy and the health care marketplace. We are most grateful for the countless comments you send telling us that the information is valuable to you. And you know that the newsletters are only part of Galen?s many activities to promote freedom and competition in the health sector.

As you look at your year-end giving, we very much hope that you?d consider a contribution to the Galen Institute. We are a not-for-profit organization and rely exclusively on donations from those who believe in what we are doing to support our work. Click here http://www.galen.org/join.asp for information about how to give. We would value having you as an official Friend of the Galen Institute (a new FOGI?)

Celebrating the Consensus Group: The Health Policy Consensus Group this week celebrated the 10th anniversary of its first meeting on Nov. 30, 1993. The Galen Institute hosted a reception for current and former participants in the group on Wednesday, and we were honored to have others with whom we worked closely over the years join us. Doug Badger of the White House, John McManus of Ways and Means, and Doug Holtz-Eakin of CBO each spoke to offer their appreciation and congratulations, along with their insights on the Medicare bill.

Senator Bob Bennett of Utah also came by to speak. His plea to me ten years ago to get the health policy community to describe a vision of free-market health reform led to the formation of the group. Bob Moffit of Heritage, Mike Tanner of Cato, and Bob Helms of AEI formed the initial core group, with John Hoff and Marty McGeein, now of HHS, former HHS official Donna Givens, and me, facilitating the conversation and development of our first Vision Statement. http://www.galen.org/vision.asp

Over the years, we have produced conferences, a book http://www.galen.org/book.asp, and a wealth of policy statements and have held more meetings and policy discussions than we can count. But most of all, we have become a community of people who are passionate about promoting ideas that will lead to a properly functioning, consumer-friendly market in the health sector. We have made great strides, but we have only yet begun. Click here to see the PowerPoint presentation that I narrated with a short history of the group. /assets/Consensus_Group_History.pdf.

Medicare: So the White House signing ceremony for the Medicare bill will take place on Monday. Afterward, all of us will be getting down to the hard work of promoting and cultivating the free-market opportunities in this bill. See the summaries and links below to articles that Greg Scandlen and I have written with our analyses.

Greg is the expert on the Health Savings Accounts in the bill, and his writings are being studied across the country. If you want to follow HSA developments closely, you can subscribe to his newsletter http://www.galen.org.asp. USA Today wrote a long article today, featuring Greg and his expertise. http://www.usatoday.com/money/perfi/taxes/2003-12-04-mym_x.htm

We have a great deal of work to do. The other side already has drawn its swords to slice the competitive, free-market policies out of this bill. We must protect and build on these good ideas, work to fix the things that could be better, and help consumers and market providers seize what can be transformative opportunities.

We have opened a new chapter in the health policy debate, with new tools to empower consumers and competition. There will be some tragedy and some comedy, but there is no doubt that we are making progress. Onward!

Grace-Marie Turner


? Health Savings Accounts will empower all Americans

? Medicare bill can lead to transformative changes in health sector

? Beyond Medicare reform

? Cost conscience

? Back in the U.S.S.R.

? The Trade Act of 2002


Author: Greg Scandlen

Source: Galen Institute, 12/3/03

?The recently-passed Medicare bill contains some very important provisions to empower people who are not on Medicare, including a new way of paying for healthcare that can apply to all Americans,? writes Greg Scandlen of the Galen Institute. Health Savings Accounts (HSAs) will give all 250 million non-elderly Americans access to a new health savings vehicle that is far more attractive than the previously enacted Archer MSAs. HSAs will result in ?greater efficiency, lower costs, and fewer uninsured,? writes Scandlen. ?Health Savings Accounts, indeed, are a prime reason the new Medicare bill stands a good chance of revitalizing America’s currently crumbling healthcare system,? concludes Scandlen.

Full text: http://www.galen.org/iodocs.asp?docID=571

The Council for Affordable Health Insurance has published a helpful primer titled ?Answering Your Questions about Health Savings Accounts.? It can be viewed online at: http://cahionline.org/cgi-data/news/files/38.shtml.


Author: Grace-Marie Turner

?The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 is being fiercely criticized from both the right and the left, but tucked away in this huge and hugely expensive legislation are seeds that can lead to transformative changes in the health sector,? writes Grace-Marie Turner. Among the important new policies: Health Savings Accounts; drug cards offering privately negotiated discounts with cash subsidies of up to $600 for low-income seniors; and incentives for private health plans to stay in Medicare to provide a base of participation for future modernization. ?It begins to engage consumers and competition in a sector of the economy dominated by government-fixed prices, and bureaucratic and regulatory control.?

Full text: http://www.galen.org/medicare.asp?docID=570


Author: Robert Goldberg

Source: The Washington Times, 11/28/03

The Manhattan Institute?s Robert Goldberg challenges conservatives to have faith ?that time and the American people [will] be on the side of greater freedom? and encourages them to work with the newly-enacted Medicare bill to build a market-based health system. We must ?ensure that more and more of future medical spending is largely a product of personal choices, not government controls,? writes Goldberg. Conservatives must also suggest changes that will shore up the weaknesses in the bill, and propose ways to provide affordable health coverage to all Americans, including refundable tax credits for health insurance. Finally, Goldberg encourages the creation of a Medicare competition task force ?to educate and build support? for the competitive demonstration project slated to begin in 2010.

Full text: http://www.washtimes.com/op-ed/20031126-075006-4569r.htm


Author: Bruce Bartlett

Source: National Review Online, 12/03/03

Writing in National Review Online, Bruce Bartlett of the National Center for Policy Analysis fears that a cost explosion from the Medicare bill will cause a backlash among seniors and encourage Democrats ?to explain every negative aspect of the program and exploit any discontent.? Cato’s Doug Bandow agrees, saying the bill will cost much more than the estimated $395 billion. Bandow says this figure is uncertain at best and examines the past history of Medicare cost projections to find that “every federal social program has cost far more than originally predicted.”

Full text of Bartlett article: http://www.nationalreview.com/nrof_bartlett/bartlett200312030842.asp

Full text of Bandow article: http://www.cato.org/dailys/12-04-03.html


Author: Regina E. Herzlinger

Source: The Wall Street Journal, 11/26/03

Although the competitive features of the new Medicare bill are a step in the right direction, ?we have just vastly enlarged the health-care sector. This is the one-seventh of our GDP that is run Soviet-style,? writes Harvard Professor Regina Herzlinger in The Wall Street Journal. Medicare?s price controls and disincentives for innovation pervade the health sector, since most private health insurers follow its lead. ?Under the Medicare regime, the money is spent cruelly, because it restricts care; and wastefully, because it shackles the innovators who represent the best promise for controlling costs, improving quality, and increasing the access to our health-care system. The competitive features of the new bill are a step in the right direction. But, if it went further, ending Medicare’s pricing and benefit stranglehold and recognizing physicians’ right to own facilities, we could replicate in our health care system the productivity gains we enjoy elsewhere in our economy.? Innovation and productivity can be increased, writes Herzlinger, through ?a growing number of consumer-driven entrepreneurial insurance plans, intermediaries and health-care providers,? such as Vivius and Destiny Health.

Full text: http://www.manhattan-institute.org/html/_wsj-back_in_the_ussr.htm


Author: Stan Dorn

Source: Alliance for Health Reform, 12/03

Stan Dorn of the Economic and Social Research Institute examines the health insurance tax credits included in the Trade Act of 2002, describing challenges in implementation and arguments for and against expanding the tax credits to more unemployed workers. Dorn lists five challenges to implementing the credits, including: affordability, access, timing, advance payments, and coverage of younger spouses of some retirees. According to Dorn, there are two schools of thought about expanding health coverage tax credits to recipients of unemployment insurance. Some suggest waiting to gain additional experience with the more limited credits, while others would use credits now to expand health coverage to a growing number of uninsured. ?Those in the latter camp may be willing to use Trade Act credits, which have already been enacted once with bipartisan support, to cover a much larger group of uninsured, laid-off workers, understanding that policy and program adjustments could be needed in future years,? writes Dorn.

Full text (pdf): www.allhealth.org/recent/AHRbrief_12-03.pdf


The Cost of Medicare: What the Future Holds

Heritage Foundation Event featuring CBO Director Douglas Holtz-Eakin

Monday, December 8, 2003, 12:00 ? 1:00 p.m.

Washington, DC

For additional details and registration information, go to: www.heritage.org/Press/Events/ev120803a.cfm.

Beyond Therapy

American Enterprise Institute Event

Tuesday, December 9, 2003, 4:00 ? 6:00 p.m.

Washington, DC

For additional details and registration information, go to: www.aei.org/events/eventID.666/event_detail.asp.

The Price of Pharmaceuticals: International Comparisons and the Effects of Controls

American Enterprise Institute Event featuring Patricia Danzon

Friday, December 12, 2003, 9:15 ? 11:00 a.m.

Washington, DC

For additional details and registration information, go to: www.aei.org/events/type.upcoming,eventID.682,filter./event_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 http://www.galen.org/.

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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.

Elizabeth Lamirand

Editor, Health Policy Matters