We hosted our first annual Consumer Choice Community Conference last week in Washington, bringing together consumer-choice enthusiasts from around the country who are on the front-lines in making this new movement a reality. Click here for a detailed report on the conference.

Several highlights:

Rep. Paul Ryan, a member of the House Ways and Means Committee who is very savvy about health policy, told the group that he had spoken with Speaker Hastert last week to encourage him to bring health care legislation to the floor of the House this summer. If that happens, the bill that Ryan is jointly sponsoring with Reps. Cantor, Johnson, and Hayworth is likely to be a prime contender.

The bill, which incorporates President Bush’s agenda, would expand tax deductibility for HSA-qualifying health insurance, allow rebates for small businesses that set up HSA accounts for their employees, and provide refundable tax credits for the uninsured. Rep. Shadegg’s bill to allow cross-state purchasing of health insurance also likely would be considered.

Rep. Ryan also precipitated a lively discussion in emphasizing the importance of getting “price and quality data out to the public.” The physicians attending the conference were most vocal in saying that there is no way that government can balance the art and science of medicine in devising cost and quality rules because there is too much subjectivity and individuality in treating patients. Ryan advised the group to create its own standards – certainly his preference – lest government do it for them “because this train is leaving the station.”


The use-it-or-lose-it rule for Flexible Spending Account funds is a pet peeve of Senate Finance Committee Chairman Charles Grassley. And the Treasury Department last week offered some relief: It said that companies that offer FSAs can give their employees an extra two and a half months to use the funds in the accounts before forfeiting them.

Under the old rule, workers were required to spend the money they had opted to set aside in their pre-tax FSA accounts by December 31, resulting in a lot of prescriptions for designer sunglasses being filled in the middle of winter. The new rule will allow companies to extend the deadline for employees to use the money until the next March 15.

It’s a small fix, but don’t expect much more than this anytime soon. A full legislative fix takes a big bite out of the congressional budget, money members are likely to want to spend elsewhere. Instead, the momentum likely will shift to transitioning employees to HSAs, where the money can roll over indefinitely.


In one of the more shocking headlines we’ve seen recently, USA Today reports today that there will be “No more free Viagra for rapists.”

The Centers for Medicare and Medicaid Services said yesterday that “Medicaid programs shouldn’t be paying the cost of erectile dysfunction drugs for sex offenders.” USA Today says the “statement came a day after New York state’s comptroller announced that 198 convicted rapists and sex offenders had been reimbursed by Medicaid for Viagra between Jan. 1, 2000, and March 31, 2005.” CMS told states that they have the leeway to block paroled rapists and other high-risk sex offenders from receiving taxpayer-financed drugs for impotence.

Do we need any more evidence of the need to reform the dysfunctional Medicaid program?

Grace-Marie Turner


  • Decoding health insurance
  • A doctor-lawyer-gadfly v. Canada’s medical system
  • Increasing generic drug utilization: Saving money for patients
  • Health costs: Good news at last
  • Health-savings accounts for seniors
  • The return of HillaryCare

Author: Robin Cook
Source: The New York Times, 05/22/05

Advances in genomics are giving us the ability to predict more illnesses, but these breakthroughs may also lead to an “inevitable movement to universal health care,” writes physician and author Robin Cook in an op-ed for The New York Times. “In this dawning era of genomic medicine, the result may be that the concept of private health insurance, which is based on actuarially pooling risk within specified, fragmented groups, will become obsolete since risk cannot be pooled if it can be determined for individual policyholders,” writes Cook. “Only with universal health care will we be able to pool risk for the entire country and share what nature has dealt us; only then will there be no motivation for anyone or any organization to ferret out an individual’s confidential, genetic makeup.”
Full text (requires free subscription): www.galen.org

Author: Clifford Krauss
Source: The New York Times, 05/21/05

Dr. Jacques Chaoulli, a family physician and amateur lawyer, is challenging the constitutionality of Canada’s national health system, arguing that “long waiting times for surgery contradict the constitutional guarantees for individuals of ‘life, liberty, and the security of the person,'” The New York Times reports. Dr. Chaoulli’s lawsuit, now before the Canadian Supreme Court, argues against the country’s laws that prohibit private medical insurance as “infringement of the protection against cruel and unusual treatment.” The Canadian Supreme Court heard the case a year ago and has not yet issued a decision, “a rare delay that is raising eyebrows in legal circles,” reports the Times. “[Scholars] speculate that the justices may agree outright with Dr. Chaoulli, or are working out instructions to the government to find a way to fix what many agree is an ailing health care network.”
Full text (requires free subscription): www.nytimes.com

Author: Scott Gottlieb, M.D.
Source: American Enterprise Institute, 05/18/05

“[W]hat steps can we take to encourage more widespread use of safe and effective, FDA approved generic drugs where these options make sense for patients both therapeutically and economically?” asks Scott Gottlieb, a physician and fellow at the American Enterprise Institute, in testimony before the House Committee on Energy and Commerce. Recent trends, like Health Savings Accounts, have made consumers more aware of the cost of health care and have led to increased use of generic drugs, but “one of the biggest impediments to more active participation by consumers is the lack of information – at the point of care – about the economic impact of peoples’ decisions,” writes Gottlieb. We should “arm consumers who want to be more active participants in their health choices, and who have the economic means and wherewithal to do so, with information that can help them weigh economics as one more factor in their treatment decisions,” concludes Gottlieb.
Full text: www.aei.org

Source: BusinessWeek, 05/30/05

“A slackening of price increases on everything from hospital procedures to doctor visits and the shifting of a larger share of health costs to employees in the form of higher copayments and deductibles” has caused a significant decrease in the growth of corporate medical costs, reports BusinessWeek. Health insurance costs increased only 7.5% in the period ending March, 2005, down 9.3% from the year before. In an effort to keep costs down, many companies are turning to consumer driven health plans, disease management programs, and “a variety of approaches aimed at injecting more ‘consumerism’ into the health-care system.” For example, several large employers, including GE, Ford, and UPS, recently created Bridges to Excellence, a program which identifies “the most efficient physicians to treat costly conditions like diabetes or heart disease.” Early results show that “the average annual cost to treat a person with diabetes was about 15% lower for doctors who participated in the program vs. those who did not,” reports BusinessWeek.
Full text: www.businessweek.com

Source: The Washington Times, 5/21/05

Patrick Rooney, chairman emeritus of Golden Rule Insurance Company, told an editorial board meeting of The Washington Times last week that he supports allowing Medicare recipients to “use Medicare funds to buy high-deductible insurance and then let them put the rest of their Medicare money into HSAs.” Rooney argues this “would save Medicare $1,260 annually for every recipient who opts in” and give seniors greater control over health care options. The idea is based upon shifting Medicare to a defined contribution system. Rooney calculates that a 65-year-old Medicare recipient could use his estimated $500 monthly allocation to buy a $2,600 deductible plan “with enough money left over for about $1,400 annually to contribute to his HSA.” Both beneficiaries and taxpayers would come out ahead, Rooney says. (The new Medicare law does include provisions for Medicare MSAs, but more legislative fixes are needed to make them viable.)
Full text: www.washingtontimes.com

Author: David Gratzer, M.D.
Source: The Weekly Standard, 05/23/05

Several pundits, including New York Times columnist Paul Krugman, have recently written pieces condemning the American health care system “in favor of the Utopian ideal of socialized medicine — which, incidentally, can’t be made to work in any country that has subscribed to it,” writes David Gratzer of the Manhattan Institute. Gratzer writes that Krugman, for example, “deplores the horrid state of American medicine, the large number of uninsured, and the high cost of it all.” However, Gratzer argues that the solution isn’t in socializing the U.S. health care system but addressing the “wasteful and bureaucratic” system of employment-based health care. “American health care needs to evolve along a third way – not the rationing of public systems, or the bureaucracy of HMOs,” concludes Gratzer. Rather, Congress should encourage Americans to become “more involved in their health care decisions” through consumer driven plans and legislation that would allow cross-state purchasing of health insurance.
Full text: www.weeklystandard.com


Consumer-driven Health Care: A Cure for New York’s Health
Care Woes

Empire Center Policy Forum
Thursday, May 26, 2005, 10 a.m. to 11:30 a.m.
State Capitol, Albany, NY

For additional details and registration information, go to: www.manhattan-institute.org.

The Market for Health Care and Health Insurance: Can the Government Improve It?
Cato Institute Capitol Hill Briefing
Thursday, June 2, 2005, 12:00 PM (Luncheon to follow)
B-354 Rayburn House Office Building
Washington, DC

For additional details and registration information, go to: www.cato.org.

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. 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 the newsletter and our organization, please visit our website at http://www.galen.org/.

If you wish to subscribe to this free weekly newsletter, update your address, or be removed from our list, please send an e-mail message to galen@galen.org.

The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.