Health Care Week

This week was dubbed ?health care week? by the leading presidential campaigns, and it certainly was! Some highlights:

? The American Enterprise Institute, under the direction of Joe Antos, released on Monday the most detailed analysis produced so far of the health reform proposals of President Bush and Sen. Kerry.

Joe, a veteran of the Congressional Budget Office, led a team of experienced independent actuaries and cost estimators, each with expertise in specific programs and health sectors. They worked for several months using CBO techniques to produce their estimates.

They found that the 10-year cost of Sen. Kerry?s proposal would be $1.5 trillion, more than double the $653 billion cost that Mr. Kerry’s campaign cites based upon an analysis by Emory University?s Kenneth Thorpe.

The Kerry proposal would cover 27.3 million uninsured Americans, AEI said. The Bush plan would cost $129 billion over 10 years and cover 6.7 million uninsured, according to the AEI study. The bottom line cost to the government for each newly insured person under the Kerry plan would be about $5,500 a year. Under the Bush plan, it would be $1,900.

This ground-breaking study already is making headlines across the country. The Antos/AEI study stands out because it provides detailed descriptions about how its estimators developed their numbers and because the analysts used CBO scoring techniques.

? More than three million federal workers and their families will have Health Savings Accounts and high-deductible policies in their menu of health insurance options next year, giving the federal government?s imprimatur to HSAs as an alternative to HMOs or traditional insurance.

The Office of Personnel Management, under the direction of Kay James, announced on Monday to much fanfare that 18 of the 249 plans offered to federal employees in 2005 will be high-deductible plans.

Aetna stands to gain the biggest HSA market share by offering plans to federal workers in 32 states and Washington, D.C. One of the 18 will be a faith-based plan offered by the Order of Saint Francis in Illinois, created by Michael O’Dea and David Wilson.

Kay has done heroic work in promoting HSAs, also finding a way to soften the opposition of the retired federal employees association. She?s also kept the average premium increase in the federal health programs down to 7.9% after five years of double-digit premium increases. Kudos!

? But we aren?t out of the woods yet. Rep. Jim Moran (D-VA) sponsored an amendment on Wednesday that would have prohibited the federal government from offering HSAs to its workers. The amendment failed in the House, 223-181. Seven Republicans voted to bar HSAs while 19 Democrats crossed party lines to keep them in.

? I traveled to Des Moines, Iowa, this week to speak to the Iowa Association of Health Underwriters. These smart and savvy heath insurance brokers are fired up about HSAs, and many say that sales now represent half or more of their new business.

The State of Iowa uses a light hand in imposing regulations and mandates, and brokers could see big business opportunities if people from other states were able to cross state lines to buy health insurance from them.

? Finally, I was scheduled to speak next week in New Orleans at a huge conference on employee benefits sponsored by the International Foundation. More than 6,000 people were registered, and scores of speakers were scheduled, many traveling from abroad.

But as Hurricane Ivan appeared to be making a bee-line for the city, the foundation decided on Wednesday afternoon to cancel the conference. But by Thursday morning ? too late to undo their decision ? it became clear that Ivan had spared New Orleans with only some wind and a little water. Months of work and untold cost are lost. It?s amazing that even the threat of disaster can wreak such damage. Our prayers go out to the millions of people who have been impacted by this horrendous hurricane season, especially those who have lost loved ones.

Grace-Marie Turner


? The long-term care dilemma: What states are doing right – and wrong

? The case against John Kerry?s health plan

? An IT Trojan horse … Feds should stay out of ?evidence-based? medicine

? Canada?s once-proud public health system in crisis

? Britain?s National Health Service embraces a new faith in market incentives

? European price controls harm patient health: Don?t import them here

? Employer health benefits 2004 annual survey


Author: Steve Moses

Source: American Legislative Exchange Council and The Council for Affordable Health Insurance, 09/04

In this new paper, Steve Moses, president of the Center for Long-Term Care Financing, explains the long-term care crisis in the United States and profiles the practices of ten states. ?By making Medicaid nursing home benefits routinely available to virtually anyone since 1965, we have created a nursing-home based, welfare-financed long-term care system that fails everyone, especially the poor,? writes Moses. He suggests several solutions for the states including: targeting scarce public resources to the genuinely needy; closing the most egregious Medicaid eligibility loopholes, such as those related to annuities, trusts, asset transfers, and life care contracts; and implementing a strong estate recovery program to generate nontax revenue while making Medicaid a loan, not a grant, for the middle class as intended by federal law.

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Authors: John C. Goodman and Devon M. Herrick

Source: The National Center for Policy Analysis, 09/04

John Goodman and Devon Herrick of the National Center for Policy Analysis provide a detailed description and analysis of Sen. Kerry’s proposed health care plan and conclude that it would “radically reform the U.S. health care system” and that the “individual and small group markets would largely disappear.” The authors examine the likely outcomes if the Kerry plan were to be implemented and discuss the impact of major expansions of government insurance, ?inefficient subsidies? to existing employer plans, and added burdens on taxpayers. ?If he is successful, millions of middle-income families will be enrolled in Medicaid, the federal-state health program for the poor,? write the authors. ?Millions more will get their insurance through a system of managed competition modeled after the federal employee?s health system?Most people would be forced from the private health plans they have today.?

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Author: Regina Herzlinger

Source:, 09/04

The federal government?s plan to implement ?pay for performance? initiatives and evidence-based medicine standards may appear to have broad support, but Harvard Business School Professor Regina Herzlinger says this could be a ?Trojan horse? that will bring greater government control over health care. ?With the feds controlling both the measures of quality and amount of pay, competitive markets will shrivel and die,? writes Herzlinger. Instead of having a ?a political, monopolistic, potentially self-protecting group? making decisions, consumers should ?insist on receiving information about the real quality of healthcare ? the death and illness rates of physicians and hospitals by procedure or disease, adjusted for the severity of illness of the patients ? and control of payments, so that we, not the federal government, can judge value for the money,? concludes Herzlinger.

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Author: David Ljunggren

Source: Reuters Health Information, 09/14/04

Canada?s universal health care program ?is creaking alarmingly, with long wait lists for treatment, and shortages of cash and doctors,? writes reporter David Ljunggren for Reuters. According to the Vancouver-based Fraser Institute, the average waiting time for treatment in 2003 was 17.7 weeks, up from 16.5 weeks in 2002. ?Patients in Ontario who require major knee surgery can wait six months to see a specialist and then another 18 months for surgery,? writes Ljunggren. Fifteen percent of Canadians did not have a regular doctor last year, resulting in overcrowding of emergency rooms by people with routine problems. ?Experts say the shortage of doctors will only get worse,? cautions Ljunggren. ?And as medical expertise becomes ever more sophisticated, so will the demand and the expense.?

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Author: Benedict Irvine

Source: Medical Progress Today, 09/09/04

Political candidates who want to embrace the nationalized health care system in Europe ?might be surprised to find that private investment and consumer choice are the new watch-words in European systems,? writes Ben Irvine of the International Policy Network. Britain, in particular, has seen a ?tectonic shift? toward market-oriented policies like public-private partnerships between the National Health Service and for-profit commercial ventures, an increase in hospital building and modernization, the establishment of self-governing hospitals, and the creation of independent sector profit-making diagnostic and treatment centers. Irvine writes that greater competition and consumer choice in public services ?will help drive technological innovation, make providers more responsive to consumers, and lead to greater adoption of best-practices throughout the system.?

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Author: Robert Goldberg, Ph.D.

Source: Medical Progress Today, 09/16/04

Advocates of prescription drug importation overlook that ?the combination of government monopsony power and price controls [in Europe and Canada] has squeezed innovation out of the pharmaceutical and biotech industries,? writes Bob Goldberg of the Manhattan Institute. ?In 1970, Europe produced 9 of the 10 top selling medicines in the world. Now America does,? writes Goldberg. Between 1993 and 1997, Europe launched twice as many breakthrough drugs as the U.S. (81 to 48), but ?from 1998 to 2002, the trends reversed themselves 85 (U.S.) to 44 (Europe).? Eighty percent of all global biotech revenues are generated by the U.S., limiting the availability of new medicines to Europeans. ?The bottom line is that if policymakers want to lower drug prices they shouldn?t do it by importing failed international pricing schemes and their dangerous side effects to America,? Goldberg concludes.

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Source: The Kaiser Family Foundation and the Health Research and Educational Trust, 09/09/04

This annual survey of employers from the Kaiser Family Foundation and the Health Research and Educational Trust includes detailed information on trends in employer-based health coverage, including changes in premiums, employee contributions, cost-sharing policies, and health plan enrollment and choice. Employer-sponsored health insurance premiums increased by an average of 11.2% in 2004, according to the report, and the ?average annual premiums for employer-sponsored coverage rose to $3,695 for single coverage and $9,950 for family coverage.? The report also notes that ?there has been growth over the past year in the number of employers familiar with and offering consumer-directed health plan arrangements, specifically those that combine a high-deductible plan with a personal or health savings account option.?

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Expanding Consumer Choice and Addressing “Adverse Selection” Concerns in Health Insurance

Joint Economic Committee Hearing

Wednesday, September 22, 2004, 10:00 AM

Room 628, Dirksen Senate Office Building

Washington, DC

For additional details go to:

Bush v. Kerry: Who has the Best Approach to Insuring the Uninsured?

National Center for Policy Analysis Congressional Briefing

Wednesday, September 22, 2004, 9:30am

U.S. Capitol, Room HC-8, Washington, D.C.

For additional details and registration information, go to:

Previewing Medicare Advantage

Luncheon Briefing co-sponsored by the Alliance for Health Reform and The Commonwealth Fund

Wednesday, September 22, 12:15 p.m. to 2 p.m.

Washington, DC

For additional details and registration information, go to:

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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