The Final Stretch

The ideological divides between the House and Senate and between Republicans and Democrats are coming to a head as Medicare negotiators move into the final stretch in drafting a bill.

Opponents continued this week to criticize the bill, especially the doughnut hole in the benefit and the risks of private plan options — criticisms which no doubt will continue next year whether or not a bill passes.

House Speaker Dennis Hastert entered the fray yesterday to urge conferees to get a bill completed. ?My personal opinion is if we don?t get this thing done now, we don?t get it done. It will be almost impossible for us to get anything major done after we adjourn in the fall.? He predicted the issue would be exploited by ?the prancing ponies of politics on the other side of the rotunda that want to be president.?

Are we seeing end game posturing so that both sides can gain maximum leverage in the final negotiations, as some believe? Or is it a real impasse that will halt progress on a bill in this Congress? With the Nov. 21 congressional adjournment deadline looming, what happens over the next several days will be decisive.

A third alternative remains: If conference negotiators can?t bridge the divides to enact major — and much needed — reform of the program, they could pass legislation that will provide a funded drug discount card to lower-income seniors who don?t have coverage. This idea has broad bi-partisan support in Congress, strong support in the policy community, and it already has been approved by negotiators.

And then we can move on to other pressing issues like providing new incentives and opportunities for 44 million uninsured Americans to purchase private health insurance. Census Bureau figures show the demographics of the uninsured is changing, with more affluent Americans and more of those working for large companies going without insurance. Perhaps this will provide more political momentum for action. Stay tuned

Grace-Marie Turner


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? Pay-as-you-go M.D.: the doctor is in, but insurance is out

? Explaining premium support: how Medicare reform could work

? Where drugs come from: the facts of life about pharmaceutical innovation

? The grim economics of pharmaceutical innovation

? What?s wrong with importing Canadian drugs

? Cost and coverage analysis of ten proposals to expand health insurance coverage



Author: Rhonda L. Rundle

Source: The Wall Street Journal, 11/6/03

?Frustrated by red tape, some maverick doctors have cut out the middlemen, allowing them to offer less-expensive service and a return to the days when nothing came between patients and their family doctor,? writes reporter Rhonda Rundle in a front-page article in The Wall Street Journal. She profiles Dr. Robert S. Berry, founder of Patmos EmergiClinic in Greeneville, Tennessee. Accepting only cash, checks and credit cards allows Dr. Berry to keep his administrative costs low and to pass the savings along to his patients. ?A typical office visit costs $35, a set of blood tests is $20 and a pregnancy test is $10,? he tells the Journal. ?Other doctors in town typically charge $55 or more for an office visit and send patients to an outside lab where blood work can start at $100.? (Dr. Berry is in regular communication with our colleague Greg Scandlen, director of Galen?s Center for Consumer Driven Health Care, who is cheering him on.)

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Author: Jeff Lemieux

Source:, 11/4/03

?The premium support concept is both loved and vilified, but it is not very well understood,? writes Jeff Lemieux of He provides a step-by-step description of a national premium support approach modeled after the original Breaux-Frist proposal. Lemieux says a premium support system could be implemented nationally, with geographic adjustment, or locally in high-competition areas. ?The goals are to give beneficiaries real, stable private plan options, and to change the operational mindset of the government-run plan(s),? Lemieux concludes. He says premium support is unlikely to change Medicare dramatically at first, but ?it does hold the potential to slow the growth of Medicare?s costs and spark improvements in benefits in the decades after 2010.?

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Author: Sidney Taurel

Source: Hudson Institute Forum, 11/04/03

Speaking at the National Press Club, Sidney Taurel, chairman, president, and CEO of Eli Lilly and Company, refuted two criticisms leveled at the pharmaceutical industry: That many breakthrough drugs have been discovered by scientists at the National Institutes of Health (NIH) or in universities and that most new drugs aren?t really new. Taurel pointed to a study by Tufts University that found, of the 284 new drugs approved in the U.S. in the 1990s, about 93 percent originated from industrial sources. He cited a congressional study showing that of 47 major drugs, the NIH had contributed to the discovery or development of four, primarily through research grants. Refuting the claim that the new drugs created by the pharmaceutical industry aren?t really new, Taurel listed examples of ?the steady flow of new classes of drugs, many of them representing first-ever therapies for serious medical needs?In just 50 years we?ve seen the rise of antibiotics; numerous agents against cancer; major advances in cardiovascular medicine ?and treatments for depression, schizophrenia and other mental disorders.? But the industry?s ability to innovate is threatened by bills now before Congress that would weaken patent protection and allow importation of drugs from other countries (along with price controls). Taurel cautioned legislators, ? ? of all the criticisms leveled at the pharmaceutical industry, none is more serious or more consequential than the charge that we overstate our role as creators of new medicines?The choices you make will shape the future of medicine for ourselves, our parents, and our children.?

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Author: John E. Calfee

Source: American Enterprise Institute, 10/31/03

AEI?s Jack Calfee provides a detailed analysis of the inevitable economic dynamics of legalizing drug importation. ?Free importation would fail to achieve its intended effects of reducing prices,? he writes. ?Instead, it would create a web of market distortions that in turn would generate powerful political forces for domestic price controls.? Politicians hope that drug importation would force citizens of other wealthy nations ?to contribute more toward research and development,? but instead, drug importation would set off a chain of events that would result in ?the fateful step of establishing explicit price controls in the United States.?

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Author: Joseph L. Bast

Source: The Heartland Institute, 11/4/03

Prescription drug importation is ?another case where conventional wisdom is wrong and politicians are behaving badly,? writes Joe Bast of the Heartland Institute. Bast argues that the recent study released by Illinois Governor Blagojevich claiming that his state could save $91 million a year by importing drugs from Canada is filled with inaccurate assumptions. ?The $91 million estimate assumes that EVERY state employee and retiree buys 92 brand-name drugs ONLY from Canada,? writes Bast. ?But the authors of the study admit this won’t happen: They say it is more likely that 33 percent of those drugs would be purchased from Canada, reducing the annual savings to $30 million a year.? Bast also argues several other factors could further negate Blagojevich?s proposed savings, and he concludes: ?Drug importation is a good idea?except it won?t save money and would endanger the lives of millions of people.?

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Author: John Sheils and Randall Haught

Source: Economic and Social Research Institute, 10/03

For the past two years, the Economic and Social Research Institute has published ten proposals to expand health insurance coverage. These proposals, prepared by health policy experts including Wharton?s Mark Pauly and The Heritage Foundation?s Stuart Butler, offer a wide range of plans from expanding Medicaid eligibility to creating a tax-financed health care system. John Sheils and Randall Haught of the Lewin Group have prepared a detailed analysis of each proposal that estimates the decline of the uninsured, the cost to the federal government, and the impact on providers, employers, consumers, and state and local governments. The authors divided the proposals into five categories: incremental reforms; voluntary insurance pool proposals; employer contribution requirement (pay-or-play proposals); replace the employer health benefits tax exclusion with a tax credit; and tax-financed health care system.

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