Reality Health Policy

Just as reality TV has taken over network television, real-life stories are having a powerful impact on the health policy debate. Three examples recounted at events and conferences I attended recently say more than thousands of words of health policy papers:

? Last month in Las Vegas, Michele Armstrong, a consumer representative from Pennsylvania, said she took her son to the pediatrician authorized by her job-based health plan for help with his behavior problems.

The doctor diagnosed him with Attention Deficit Disorder and put him on medication. But the boy became thin, listless, and increasingly sickly, with more and more doctor’s visits needed to try to treat him.

Finally, when she got a new, more flexible consumer-directed health plan that allowed her to choose her own doctors, she got a second opinion. The boy didn’t have ADD, she was told, but was exceptionally bright and bored by his limited school curriculum. She took him off the drugs, enrolled him in accelerated classes, and the boy now is thriving – a turnabout she attributes to her ability to get control over her family’s health care decisions.

? This Monday night, the Society for Women’s Health Research held its annual black-tie dinner at the Ritz Carlton Hotel in Washington to celebrate innovation in medicine. The entertainment, as well as the most poignant story of the evening, were provided by the same person – (classically trained) pop musician Christine Baze.

Ms. Baze said she was diagnosed with advanced cervical cancer in her early 30s. Her “dream of becoming a rock star” seemed over as she struggled through surgery, chemotherapy, and radiation.

But after the treatments ended, she said the music once again stirred within her. Now cured, she has devoted her significant talents to giving benefit concerts across the country to educate women about the disease and the value of the life-saving treatments she received.

? Yesterday, in Seattle, the energetic and effective Washington Policy Center hosted a sold-out conference on “Health Care 2004: Opportunities for Reform and Innovation.” I spoke about Health Savings Accounts and future opportunities to advance consumer-directed care.

But the most gripping talk of the conference was given by a San Francisco University Professor who said he knew little about health policy – but a lot about health care.

Prof. Rick Roberts was diagnosed with HIV/AIDS in 1988 and was seriously ill with “wasting disease” in 2000 when he convinced his health plan to authorize a year of innovative drug treatments costing at least $4,000 a month.

But Prof. Roberts detected something wasn’t right with the medicine and discovered that he had been taking fake drugs — purchased through a legitimate local pharmacy — that nearly cost him his life.

Now vibrant and strong, he spoke on the panel on drug reimportation, warning that the Food and Drug Administration needs to focus its energy on increasingly sophisticated drug counterfeiters who are infiltrating the lucrative U.S. drug market.

He warns that if Congress were to pass misguided legislation legalizing imports from Canada, the “bad guys” would take advantage of the new pipeline to flood the American market with counterfeit and contaminated drugs.

“It’s beyond me that people don’t believe the legitimate concerns about safety,” Roberts said. “If I had died, they would have said it was from AIDS when, in fact, it would have been from these counterfeit drugs.”

These stories say more than we ever could about the value of patient choice, the importance of continued medical innovation, and the dangers of exposing our nation’s drug supply to “the bad guys.”

Grace-Marie Turner


? Private health plans in Medicare ? Cost trends and ideological battles

? Congress spends more to increase number of uninsured

? Health Savings Accounts: How to broaden health coverage for working families

? OPM issues call letter to Federal employees health benefits providers

? Employers? contradictory views about consumer-driven health care

? The pros and cons of importing drugs from Canada



Author: Jeff Lemieux

Source:, 04/21/04

New calculations of Medicare spending trends show that per-enrollee spending growth has been almost equivalent for both private health plans and the traditional fee-for-service Medicare program relative to the base year of 1997, writes Jeff Lemieux of Data suggests that HMO enrollees are not healthier than average, and it is therefore ?wrong to say that Medicare?s private plans have ?cost the Medicare program money? in recent years.? Lemieux also describes the ?larger political struggle? over Medicare?s private plans, with liberals opposing privatization and conservatives favoring direct competition between private plans and the fee-for-service program, and finds that ?a healthy rivalry? between the two plans is the best solution. ?Let both government-run and private health plans compete for seniors? business, and let the competition directly and quickly pressure both types of coverage to find efficiencies, new and helpful benefits, and other value improvements for both seniors and taxpayers,? writes Lemieux.

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Author: Gene Steuerle

Source: Urban Institute, 4/12/04

Gene Steuerle of the Urban Institute argues that the growth of the open-ended tax exclusion for health insurance actually increases the number of uninsured in this country. “As the increased amount of money spent on the exclusion effectively increases the average cost of health care and of health care insurance, the greater the number of individuals in the economy who forego purchasing private health insurance,” writes Steuerle. Steuerle writes that it would be politically difficult to reform this subsidy, but, at a minimum, the Joint Committee on Taxation and the Congressional Budget Office could “provide annual estimates to Congress of the additional cost of the exclusion.”

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Author: Nina Owcharenko

Source: The Heritage Foundation, 04/16/04

The two key components of a Health Savings Account (HSA) ? a high-deductible health plan and a tax-preferred savings account ? are concisely explained in this web memo by Nina Owcharenko of The Heritage Foundation. Owcharenko also outlines four steps policymakers can take to ensure the success of HSAs: 1) Further rulings by the Treasury Department should remain broad and flexible; 2) States must make all legislative and regulatory changes needed to ensure that HSAs have market access; 3) All employers should integrate an HSA option into health benefit offerings for their employees; and 4) Policymakers should encourage HSAs for the uninsured since they offer an alternative to more costly first-dollar coverage policies. ?Members of Congress should continue to look for ways to facilitate a system of consumer choice that will allow individuals to select the plans that best suit their individual medical and financial needs,? Owcharenko writes.

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The Council for Affordable Health Insurance has published a helpful guide answering common questions about HSA legislation and its implications. The document includes questions on enrollment, eligibility, and tax treatment for contributions. CAHI also provides information on preventive care and prescription drug benefit plans.

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Source: Office of Personnel Management, 4/20/04

The Office of Personnel Management (OPM), headed by Director Kay Coles James, issued its annual “Call Letter” this week inviting carriers that participate in the FEHBP to propose offering Health Savings Accounts (HSAs) for eligible Federal employees and retirees. Because HSAs are not available to people eligible for Medicare, the letter also requires carriers to offer a similarly structured HRA to federal retirees on Medicare. Carriers have until June 1, 2004 to respond for the 2005 enrollment period. “For 2005, Federal employees will have more options that empower personal decision-making and maximize their ability to put more of their hard-earned dollars to work for their needs and those of their families – a cornerstone of the Administration’s health care policies,” says the letter.

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Authors: Jon R. Gabel, Heidi Whitmore, Thomas Rice, and Anthony T. Lo Sasso

Source: Health Affairs Web Exclusive, 4/21/04

Jon Gabel et al examined a survey of 1,856 employers and found that “[f]amiliarity with the term ‘consumer-driven health care’ was extensive in 2003.” The survey showed that nearly 66% of employees work for a company with a benefits manager who is “very” or “somewhat” familiar with the term. The survey also found that employers were most familiar with health reimbursement arrangements (HRAs). “Among employers that are very or somewhat likely to consider offering an HRA plan, more than 80 percent believe that an HRA will control utilization and lower overall future costs,” write the authors. “However, only 3 percent of these same firms believe that HRA plans are highly likely to be popular with employees, and another 38 percent rate them somewhat likely to be popular.”

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Author: Joseph L. Bast

Source: The Heartland Institute, 04/19/04

?A look at the reasons why we are debating drug importation today, rather than over the past 17 years since importing drugs was first made illegal, suggests that the debate may be short-lived,? writes Joseph Bast, president of the Heartland Institute. Bast provides an overview of the most commonly used arguments for and against importation and finds that it has become ?the controversy du jour? because of the following developments: Telecommunication advances, especially widespread access to the Internet; the activities of public interest and senior citizen groups; rising health care costs; and changes in exchange rates between the U.S. and Canada. ?The sources of much of the energy behind the debate ? partisan politics, public interest groups, and senior citizens ? may be gone or have moved on to other things by 2005 or 2006,? Bast concludes. ?One hopes bad legislation will not be passed in the interim.?

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Health Care 2010: Defining the Vision

National Institute for Health Care Management Foundation Forum

Monday, April 26, 2004, 12:00 pm – 2:30 pm

Hart Senate Office Building, Room 902

Washington, DC

For additional details and registration information, go to:

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Editor, Health Policy Matters