The Uninsured

The number of Americans without health insurance rose to 45 million in 2003, an increase of 1.4 million. But the increase was not as bad as many had feared in last year?s sluggish economy, rising by only 0.4 percent.

The biggest decline was among those with job-based health insurance where coverage fell 0.9 percent. In 2002, 61.3 percent of Americans had job-based insurance; in 2003, the number fell to 60.4 percent, continuing a trend.

We have been saying for years that government incentive policies for health insurance must be modernized to keep pace with a changing economy. With a highly mobile workforce, tying health insurance to the workplace is out of step with the economy. These new numbers prove it. There is no reason for people to lose their health insurance when they lose their jobs, but that?s just what is happening.

And while private insurance declined, the new Census Bureau data show that the number of people covered by government programs rose, from 25.7 percent to 26.6 percent, largely as a result of the growth of Medicare and Medicaid.

The bottom line: Government programs expanded, and private insurance shrank.

Right now, of the $1.6 trillion this country spends on health care, spending is almost equally divided between government programs and the private sector. Government programs crowd-out private coverage, with taxpayers shouldering more and more of the costs with less and less control.

We would be gloomy were it not for last year?s public policy changes that can begin to shift the balance back to private health coverage. Health Savings Accounts will help. Broader ownership of health insurance is the ultimate solution.

The percentage of Americans without health insurance has been almost level for more than a decade. In 1993, the year of the great health care crisis, it was 15.3 percent. Last year, a nearly identical 15.6 percent of Americans were uninsured.

At what point do we start to re-think the problem? The number of uninsured is slowly going to get worse without policy changes. Adding 45 million people to government program rolls just isn?t an option.

Refundable tax credits for the uninsured, deductibility of individually-purchased health insurance, and new purchasing options are crucial to begin to give more people more options to buy affordable health insurance ? insurance they can take with them even if they lose their jobs.

Here?s the link to the Census Bureau website where all of the new numbers are available:


Health Policy Matters will return after Labor Day. We hope you enjoy what?s left of the summer.


? Kerrycare

? Fighting disease is only half the battle

? Generic drugopoly: Why non-patented prescription drugs cost more in Canada than in the United States and Europe

? How to heal health care

? A vision for health system change

? Which medical conditions account for the rise in health care spending?


Author: John C. Goodman

Source: The Wall Street Journal, 08/26/04

Sen. John Kerry?s health reform proposal would cost more than $1 trillion, would accelerate health cost inflation, and would cost more than three times the new revenue he hopes to get from raising tax rates for high-income earners, writes John Goodman, president of the National Center for Policy Analysis, in a Wall Street Journal commentary. Further, Sen. Kerry?s expansion of government programs would crowd-out private coverage. ?Bottom line: It is entirely possible to spend $1 trillion and achieve no reduction in the number of uninsured!?

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Jeff Lemieux of writes that ?conservatives may have prematurely dismissed Senator Kerry’s health proposal.? Lemieux cites three elements of Sen. Kerry?s plan that are expected to attract on-going bi-partisan support: 1) the “premium rebate” subsidies for health insurance costs of the sickest patients, (2) the group purchasing system for small businesses, and (3) expanded public-sector coverage for people in poverty.

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Author: Henry I. Miller

Source: The Wall Street Journal, 08/25/04

Dr. Henry Miller refutes charges made by Dr. Marcia Angell in her new book, ?The Truth About the Drug Companies? and concludes that her ?diagnoses are wrong, and her cures are far worse than the disease.? Miller argues that evidence does not support many of Angell?s claims, including her assertion that most new drugs stem from publicly supported research. ?In 1999, the National Institutes of Health investigated whether its research funding commonly leads to the development of new drugs, the profits from which taxpayers might be entitled to share,? writes Miller. ?Of 47 drugs that had earned revenues of $500 million or more, NIH support had figured significantly in only four.?

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Robert Goldberg of the Manhattan Institute also refutes critics of the pharmaceutical industry, including Angell, who charge that ?me-too? drugs are unnecessary. ?[T]he best scientific studies, the best experts and the genetics shaping the next generation of personalized medicine demonstrate that very similar drugs work and effect different people quite differently,? Goldberg writes. ?Cutting out ?me-too? drugs would not only hurt patients taking those drugs now, but it would rob scientists of the ability to find new uses for those same medications in the future.?

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Author: Brett J. Skinner

Source: The Fraser Institute, 08/04

Brett Skinner of the Fraser Institute writes that the Canadian government ?may be using pharmaceutical policy to subsidize the development of a domestic [generic] drug industry, a practice that is inefficient, costly to consumers and taxpayers and a violation of free-trade principles.? He says that two major companies dominate nearly 60% of the market for generic drugs in Canada, allowing them to ?exercise monopoly-style control over a large and growing portion of the drug market.? As a result, Canadians ?are paying inflated prices for some of the most commonly prescribed drugs.? He says Canadians would save $810 million on purchases of generic drugs if they had been priced like patented medicines (at median international levels). ?Evidence of favouritism is also apparent in the decisions by the courts, which heavily favour generic drug companies in patent disputes, something senior civil servants acknowledge.?

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Authors: Bill Frist and Hillary Clinton

Source: The Washington Post, 08/25/04

Senate Majority Leader Bill Frist (R) and New York Sen. Hillary Clinton (D) write in a commentary in The Washington Post that the ?information revolution to cut costs and improve productivity? in the health sector is long overdue. ?[w]e lead the world in medical breakthroughs…[while] doctors and nurses struggle under mounds of paperwork.? Sens. Frist and Clinton also agree that there is an important role for the marketplace in the health sector, that ?We must also cultivate competition,? and provide consumers with ?pricing and performance information powered by robust information technologies.? Not surprisingly, they also agree that ?government has a job to do with leadership and federal investment in health information technology.?

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Source: The Heritage Foundation, 08/12/04

In this Heritage Foundation lecture, Daniel ?Stormy? Johnson, M.D., a practicing radiologist and past president of the American Medical Association, describes three key elements in his vision for health system change: 1) Allow individual choice and ownership of health plans; 2) Expand choices through ?Voluntary Choice Cooperatives,? and ?put the patient in the driver?s seat? in deciding which plan to join; and 3) Implement defined contribution plans which would have the public and private sectors put up the same amount of money no matter what choice the person makes. Stuart Butler, Bob Moffit, Stan Dorn, John Goodman, and Kenneth Thorpe offer their responses on Dr. Johnson?s vision and provide policy recommendations, including the implementation of refundable/advanceable health care tax credits and information technology systems.

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Authors: Kenneth E. Thorpe, Curtis S. Florence, Peter Joski

Source: Health Affairs Web Exclusive, 08/25/04

A new study by Kenneth Thorpe and colleagues shows that the ?fifteen most costly medical conditions accounted for half of the overall growth in health care spending between 1987 and 2000.? The authors found that 31% of the change was due to the five most expensive conditions: heart disease, mental disorders, pulmonary disorders, cancer, and trauma. They found that the reasons for spending growth, the rise in treated prevalence, rise in cost per treated case, and population growth, varied by condition. The authors recommend ?developing interventions designed to reverse the rise in disease prevalence? and caution that for many conditions higher spending on newer treatments ?has benefits that outweigh the increased costs.?

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