Health Care Week

The Congress took a few more small steps toward health reform this week:

  • Both the House and Senate have passed identical bills creating a voluntary system for reporting medical errors with new protections from lawsuits. Sen. Frist says medical mistakes are the “eighth leading cause of deaths each year — more than car accidents, breast cancer or HIV/AIDS.” This could give analysts a wealth of information to help prevent injuries and deaths. The President is signing the bill this morning in a ceremony at the White House.

  • A cadre of powerful senators has merged two bills to encourage the development of electronic health records and to help hospitals develop IT systems. Encouraging the health sector to enter the Information Age also has broad support in the House.

Senate Majority Leader Bill Frist introduced a sweeping bill with provisions on medical liability reform, providing tax credits for the uninsured, enhancing Health Savings Accounts, providing support for high-risk pools, and a wealth of other reforms, most of which also are generally supported by the House. (The devil, as with all legislation, is of course in the details.)

On the House side, members approved Association Health Plan legislation, funding for state high-risk pools, and medical malpractice reform, but postponed for now any health care bills that require new federal spending for the uninsured.


The Medicaid Commission held its first meeting on Wednesday in Washington, giving members a chance to introduce themselves to each other and offering a forum for the public to begin to put some issues and concerns on the record.

The commission expects to meet again in mid-August to vote on proposals for the first report, due Sept. 1, which will contain recommendations for ways that the Medicaid program can save $10 billion over five years.

During the introductions, I said I hoped our initial report will be forward thinking and will set a tone for offering innovative solutions. I also recommended that we look at successes in the private and public sectors for new ideas that can introduce positive incentives for change into Medicaid.


A week after The New York Times published a dramatic series of articles about waste and fraud in New York’s Medicaid program, The Washington Post had its own series about the crying need for reform in Medicare.

For example, the Post describes complaints that Palm Beach Gardens Medical Center in Florida was “a breeding ground for germs” that led to “massive post operative infections” in the heart unit, leading to multiple rehospitalizations and even deaths.

And what did Medicare do? “It paid Palm Beach Gardens more,” the Post reports. Each time a patient is readmitted with complications, the hospital charged Medicare for more care, in effect paying “a bonus for its mistakes.”

It also describes the Joint Commission on the Accreditation of Healthcare Organizations as charging large hospitals an average of $26,000 for a Medicare accreditation survey. And “almost every institution that pays the joint commission’s fees” gets a stamp of approval – including Palm Beach Gardens, the Post reports. Medicare and Medicaid brag about their low administrative fees. Clearly more money should be invested in making sure taxpayer dollars are being wisely spent. Forty years after enactment of these two programs, it’s clearly time for modern management and oversight.


A dear friend, Gayle Melich, died last week in Florida after a brief battle with cancer at age 67. I was able to visit her earlier this month and saw her courage and grace in facing this awful disease. While I was there, she arranged to receive hospice care at home rather than going to a hospital where she knew they would not be able to reverse the course of a cancer that had metastasized to her liver. In my last phone call with her, she was preparing for a meeting with a minister to plan her memorial service.

She was never angry or bitter. She had given so much to causes she loved, especially advancing women in political life, but she died far too soon with too much left to do.

She was the first person I met when I came to Washington 33 years ago and was a beacon of how to live life – doing something you love and taking time to appreciate life’s beauty. I will always be thankful that I was able to visit her in her last days. The Washington Post ran a lovely obituary about her. Rest in peace, dear friend. You remind us how little time we really have on this earth and that we must take time to cherish every day.

Grace-Marie Turner


  • Medicare: Yesterday and tomorrow
  • CMS quality improvement roadmap
  • Health Savings Accounts: The first six months of 2005
  • Cheaper health insurance
  • South Carolina proposes major cuts in Medicaid benefits for poor

Author: Joseph R. Antos
Source: The Commonwealth Fund, 07/27/05

The 40th anniversaries of the enactment of Medicare and Medicaid have spawned a number of papers on the history and the future of these programs: “American health care has undergone a revolution since Medicare began 40 years ago, a revolution based in no small measure on the program’s actions,” writes Joe Antos of the American Enterprise Institute. Antos describes changes that have been made to the program over the decades and explains that while the “problems of the U.S. health care system are larger than Medicare, the program can play a pivotal role in addressing those problems.” Antos’ commentary accompanies a Commonwealth Fund survey of health care opinion leaders’ thoughts on Medicare.
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Health Affairs also has published perspectives from seven former administrators of these programs, including Gail Wilensky, who served as HCFA administrator from 1990 to 1992. In an article for Modern Healthcare, Newt Gingrich and James Frogue offer their ideas on modernizing and improving both Medicare and Medicaid.
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Source: Centers for Medicare & Medicaid Services, July 2005

The Centers for Medicare & Medicaid Services (CMS) released a roadmap this week with the goal of ensuring that health care for all patients is “safe, effective, efficient, patient-centered, timely and equitable.” CMS acknowledges that “we have had a very innovative health care system that has tremendous potential, both now and for the future, but it is also a system that has been inefficient because of the way that we pay.” The report outlines five strategies for improvement that include: using partnerships to improve performance; developing and applying measures of quality; paying more for higher-quality, efficient care; helping providers and practitioners make care more effective, in part through the use of electronic health systems; and improving access to better treatments and providing evidence of their benefits, risks, and costs.
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Source: eHealthInsurance, 07/27/05

eHealthInsurance issued a new study this week comparing HSA purchases for the first six months of this year to the first quarter of last year. Highlights:

  • Premiums for HSA-eligible insurance went down 15% from 2004 to 2005.
  • Nearly two-thirds of HSA purchasers pay $100 a month or less for their plans.
  • HSA plans are comprehensive, with most covering 100% of the costs of hospitalization, lab tests, emergency room visits, prescription drugs, and doctors’ visits after the deductible is met.

HSAs also continue to be attractive to the uninsured and lower-income families, showing they have an important place in the health care mosaic.
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Source: The Wall Street Journal, 07/25/05

New legislation proposed by Rep. John Shadegg, which would allow cross-state purchasing of health insurance, could “dramatically reduce the ranks of the uninsured and spur general economic growth,” according to a The Wall Street Journal editorial. The legislation would be especially helpful to states like New York and New Jersey, where premiums for family policies run as high as $1,200 a month due to costly mandates and regulations such as guaranteed issue and community rating. By removing the fear of losing coverage due to changing jobs, moving, or starting a new business, portable policies also “would remove a huge barrier to the efficient allocation of human resources in our economy,” the Journal argues. “It is simply immoral that millions should be exposed to the possibility of financial ruin because of the all-or-nothing choice offered by the insurance regulations of states like New York and New Jersey,” concludes the Journal.
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The think tank community also weighed in with their take on the package of health care proposals facing the House. Edmund Haislmaier, Robert Moffit, and Nina Owcharenko of The Heritage Foundation note that Association Health Plans, cross-state purchasing of health insurance, and state high-risk pools all could improve access to coverage, but that Congress “will not fully reform health insurance markets unless it addresses the federal tax treatment of health insurance.” The Cato Institute’s Michael Cannon writes that House Republicans should abandon AHPs in favor of interstate commerce in health care, which “should be expanded to give the same choice to employers that it would give to individual consumers.” Finally, Jack Strayer of the National Center for Policy Analysis writes that the Shadegg bill could “usher in a new era in the evolving market for health insurance” by allowing insurers to “be able to offer products that meet individual and family needs without the cost-increasing burden of inefficient regulations.”
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Author: Roddie Burris
Source: The State, 07/24/05

South Carolina has proposed drastic changes to its Medicaid program, which covers about 850,000 poor, disabled, and elderly residents and costs around $4.8 billion a year, reports Roddie Burris, staff writer for The State. “The cornerstone of South Carolina’s new Medicaid plan is putting a cap [now unlimited] on how much money a Medicaid recipient can use each year to cover doctor or hospital visits, get medicines and other medical cares,” writes Burris. Additionally, the state “would set up a personal health account for each Medicaid recipient” which would allow recipients “to feel the responsibility of choosing an insurance coverage plan, then living within the coverage limits that plan provides.” According to South Carolina’s Department of Health and Human Services, “having that insurance would help familiarize Medicaid recipients with the market-based principles of supply and demand, something the agency says recipients have been shielded from for 40 years by the government.”
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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

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