Please Join Us

Interest is intense in our forum this coming Wednesday on “Consumer Choice Health Care: Reports from the Field.” People are flying in from all over the country to hear updates from executives of top companies offering these new products to describe who’s enrolling, what’s happening with costs, utilization and employee satisfaction, and what to expect next. Click here to learn how to register.

My colleague Greg Scandlen, unmatched expert on consumer-driven health care, has organized and will moderate the event. It will be held from 2-4 p.m. in the Dirksen Senate Office Building in Washington, of recent renown because of the ricin scare. The building is scheduled to re-open next week, and we therefore expect our event will take place there in Room 562, as advertised. But we have a back-up site arranged just in case and will let you know if we have a change of venue. We’ll also prepare reports for next week’s newsletters.

Tax credit distortions: New York Times correspondent Robert Pear wrote last Sunday about the experience so far with tax credits for health insurance enacted in 2002 as part of the Trade Adjustment Assistance Act. Pear reports that the TAA tax credits have covered only 5% of the projected population.

The report disappointed many of us because Pear failed to point out the many differences between the TAA credits and the fixed-dollar credits proposed by the White House and congressional leaders, which can help millions of uninsured families get coverage. The TAA tax credits could be equated to early Medical Savings Accounts: They were so bound by legislative restrictions that it is hard for a true market to develop. This was not a good comparison.

The Uninsured:

Last Wednesday, the Senate Health, Education, Labor, and Pensions Committee held hearings on “Health Care Spending and the Uninsured.” Highlights:

  • Gail Wilensky of Project Hope emphasized that slowing the rate of health care spending is a critical part of reducing the numbers of uninsured. Further, cost drivers, like advances in medical technology, medical liability, medical errors, and lifestyle issues (such as smoking and obesity), all “are exacerbated by the current reliance on employer-sponsored health insurance” that encourages increased and even excessive spending on health care.

    Employer-sponsored insurance makes people think they are spending someone else’s money, among other problems, exacerbating the health care spending problem and therefore the number of uninsured. Further, the tax subsidy is inequitable and provides much more generous subsidies to higher-income workers, she explains.

  • Duke University Prof. Christopher Conover described preliminary findings of a study he is conducting that shows “the net burden of health services regulation likely exceeds the annual cost of covering all 44 million uninsured. So a legitimate policy question is whether the benefits of regulation outweigh the benefits of coverage for all Americans.” (A VERY important question?)

CBO Director Doug Holtz-Eakin emphasized that “The uninsured population is constantly changing as people gain coverage and lose coverage” for many different reasons. “The varying characteristics of the uninsured should be kept in mind when developing policies to expand insurance coverage.”

Earth to single-payer advocates: One size does not fit all.

Grace-Marie Turner


? Insurers plan broader Medicare coverage

? Comparison of CBO and administration estimates of the effect of H.R. 1 on direct spending

? False compassion

? Two cheers for the Bush health plan

? A different approach to medical malpractice reform

? In a year divisible by four, pharma is the enemy


Source: AAHP-HIAA, 02/03/04

Increased payments to insurance companies as a result of the new Medicare law will be used to enhance benefits and to reduce premiums and co-payments for the elderly, writes Robert Pear for The New York Times in reporting on a new study by the American Association of Health Plans/Health Insurance Association of America. AAHP/HIAA conducted a survey of member companies participating in the Medicare Advantage program and found that more than 93% will use the extra money to lower monthly premiums, more than 60% will increase benefits, and 80% will reduce the cost of co-pays and deductibles. One example: New York?s Empire Blue Cross and Blue Shield will eliminate the $95 monthly premium it charges to seniors in Westchester County and cut from $140 to $22 premiums in Nassau County. Increased Medicare payments to insurance companies also will result in the introduction of new products: 37 are applying to offer drug discount cards and 31 are considering offering new Medigap packages in 2006.

Full text:

Full text of AAHP-HIAA press release:


Source: Congressional Budget Office, 02/02/04

Doug Holtz-Eakin, director of the Congressional Budget Office, explains that the differences between the CBO?s and the Administration?s cost estimates of the new Medicare law are largely due to differing assumptions about participation rates in the new drug benefit and the Medicare Advantage program. The CBO estimates that the 10-year cost of the Medicare bill will be $395 billion and the Office of Management and Budget puts the cost at $534 billion. ?Because the new prescription drug program represents a major departure from what currently exists, there is a great deal of uncertainty about its budgetary impact and a wide range of possible outcomes,? writes Holtz-Eakin in a letter to Congressman Jim Nussle. The Administration assumes a participation rate of 94% for the drug benefit plan, compared to CBO?s assumption of 87% participation, and the Administration assumes a 32% participation rate for Medicare Advantage, compared to CBO?s assumption of 9%.

Full text:


Author: Robert Goldberg

Source: The Washington Times, 2/5/04

Bob Goldberg of the Manhattan Institute weighs in this week with his take on the higher cost estimates for the Medicare law. ?The Bush administration’s higher Medicare estimate signals a possible popular uprising against government-run Medicare and a movement toward greater choice,? writes Goldberg. ?The fact that seniors could possibly receive better care at a lower cost is not lost on opponents?They can’t wait to kill the provision of the new Medicare bill that prohibits the government from interfering with the free market and the doctor-patient relationship about which drug to use.?

Full text:


Author: John C. Goodman

Source: National Center for Policy Analysis, 1/30/04

President Bush?s proposed tax deduction for people who purchase catastrophic health insurance is ?an important step in the direction of a more sensible health care system,? writes John Goodman, president of the National Center for Policy Analysis. He writes that the new Health Savings Accounts (HSAs) will level the playing field in the workplace, reduce incentives to over-insure in the workplace, reduce distortions in the individual market, and create a level playing field for the self-employed. ?The next step should be to allow the design of the health insurance plan to be determined in the marketplace, not in Congress,? concludes Goodman.

Full text:


Author: Jeff Lemieux

Source:, 02/03/04

Recent reports in the media indicate that Congress has given up on the issue of medical malpractice reform, writes Jeff Lemieux of, but Senator Michael Enzi (R-WY) has introduced a bill that ?should be taken seriously by consumer and patient advocates.? Under Enzi?s bill (S. 1518), states that experiment with alternative malpractice compensation schemes would be given funds from the federal government. Methods that expedite the compensation process, including ?health courts,? are also included in the Enzi bill. Lemieux concludes that the ?bill is a good start ? Malpractice reforms should go beyond just capping damages. Real reform should also seek to improve health care quality and reduce errors.?

Full text:


Author: Holman W. Jenkins, Jr.

Source: The Wall Street Journal, 2/4/04

The Democratic presidential candidates are ?running against their usual list of ?enemy? industries,? including pharmaceutical companies, writes Holman Jenkins in The Wall Street Journal. ?Were any of them to land in office, you can bet their threats against the drug industry would be quickly filed away in a circular keeping place until the next election,? writes Jenkins. ?President Kerry wouldn’t want to bear the political cost of its collapsing stock values, massive layoffs and the media reporting the folding up of research into cures for diseases like Alzheimer’s and Parkinson’s.?

Full text (requires subscription):,,SB107585881629120132,00.html?mod=opinion


Consumer Choice Health Care: Reports From The Field

Galen Institute Event, moderated by Greg Scandlen

Wednesday, February 11, 2004, 2:00 ? 4:00 pm

562 Dirksen Senate Office Building

Washington, DC

RSVP to Tara Persico at or call 703-299-9205. For additional details go to

Top Ten Myths about the Uninsured

Urban Institute Event

Wednesday, February 11, 2004, 8:30 – 10:15 AM

Washington, DC

For additional details and registration information, go to:

Vision for Healthcare

National Center for Policy Analysis Congressional Briefing

Thursday, February 12, 2004, 8:30am

National Press Club – Washington, D.C.

For more information or to RSVP, please contact Matt Moore or Anna Frederick by phone (202 628-6671) or email