Market Innovations

An era of transition presents both risk and opportunity, and on Monday we heard from innovators who are charging ahead full speed with new products, services, and ideas that are transforming our health sector.

Four speakers described “Innovations in the Health Care Marketplace” during our standing-room-only briefing on Monday on Capitol Hill, jointly sponsored by the Galen Institute and the Council for Affordable Health Insurance.

We wanted to show legislators the incredible energy and imagination that are going into creating consumer-friendly options in the health sector including innovations in health insurance, long-term care and insurance, and banking:

  • Merrill Matthews, director of CAHI, said the insurance industry is offering many new consumer-friendly products in response to demand, such as plans that promote preventive care (Destiny Health’s Vitality program); insurance products that help patients with high-deductible plans fill the coverage gap (Golden Rule’s HSA Hospital Indemnity Rider); new products that cost as little as $69 a month for prescribed coverage (California Blues’ Tonik Care); and new tools to provide consumers with cost and quality data (Aetna’s price transparency project).

  • Larry Minnix, president and CEO of the American Association of Homes and Services for the Aging, showed a fabulous film, “Imagine — The Future of Aging.” It describes 21st century technologies that deliver long-term care that are incredibly user-friendly and can allow seniors to stay in their homes while getting high-quality medical care at a lower cost than traditional nursing home care.

  • Terry Truesdell, president of the National Long Term Care Network, described innovations in long-term care insurance that can support this 21st century vision of care, including new products that are more attractive to younger people.

    The average age of a buyer of a LTC policy is now 54, he said, and it is falling primarily because baby-boomers are seeing the incredible challenges of caring for an aging parent who doesn’t have LTC coverage. Innovative products also help lower the cost of policies by giving buyers more choices in the length of time benefits will be provided and the amount the policy will pay for services. This allows LTC policies to be part of a savings portfolio for seniors.

  • Deanne de Marino, policy analyst with the HSA Council of the American Bankers Insurance Association, said banks are offering bridge loans to HSA holders to help cover deductibles until their employer deposit catches up, are teaming with financial services organizations to provide longer term investment of HSA funds, and are streamlining communications and payment flows to make HSAs much easier to use. But she said that, while banks see huge opportunities in HSAs, they are being held back as they await clear rules governing their offerings.

It was a terrific briefing, and kudos to all of our speakers for contributing their knowledge to the mosaic of innovations in the health sector.


The Ways and Means Committee held a hearing yesterday on experience so far with HSAs. You can see the testimonies here.


And congratulations to our friend Julie Goon, named on Friday to replace Roy Ramthun as the president’s chief health policy advisor. Julie moves to the White House from the Centers for Medicare and Medicaid Services where she was director of Medicare outreach, educating people about the new Medicare Part D benefit and the other transformative changes in the Medicare Modernization Act. Welcome Julie!


Many friends of free markets, including Julie, joined us yesterday for the launch of the new Center for Medicine in the Public Interest at the beautiful five-star Mandarin Oriental Hotel in Washington. Our reception room overlooked the Jefferson Memorial, which is very appropriate for this new think tank that will promote freedom and progress. It will be headed by former FDA associate commissioner Peter Pitts and former Manhattan Institute scholar Bob Goldberg.

Mark McClellan of CMS was our featured speaker, and he could not have been more generous with his praise of Peter and Bob and the importance of their work in promoting ideas that advance free markets and innovation in the health sector. Mark said that not only the future of the heath sector in the United States, but the future of medical innovation on the planet depends upon a free and thriving health sector in the United States.


And on that note, we wish you a very happy Fourth of July to celebrate our cherished freedom and liberty.

Grace-Marie Turner


  • HSAs and account-based health plans: An overview of preliminary research
  • The waiting game
  • Market forces pushing doctors to be more available
  • States make own plans for health insurance
  • British and European worker mutuality in health care: Welfare solidarity beyond the state

Source: America’s Health Insurance Plans, 06/06

America’s Health Insurance Plans (AHIP) has released a paper summarizing preliminary research and statistics for account-based health plans, including Health Savings Accounts and Health Reimbursement Arrangements. Highlights include a survey from Kaiser that found average premiums for HSA-qualified plans are about 20 to 30% lower than those in the employer market, and data from Blue Cross Blue Shield that shows the health status for individuals with HSA-qualified plans is similar to those enrolled in traditional plans.
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Grace-Marie Turner of the Galen Institute published an earlier paper evaluating studies on HSAs, including highlights of an in-depth study about how consumer behavior changes when people are given more responsibility over their health spending.
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Author: Sally Satel, M.D.
Source: American Enterprise Institute, 06/26/06

AEI’s Sally Satel, who received a kidney transplant this Spring, writes about the limits of altruism in the organ transplant process. Current laws make it illegal to receive any payment in exchange for an organ. But the waiting list to receive a kidney is four- to five-years long, and the number of people needing kidney transplants is growing far more rapidly than the supply of cadaver kidneys. “Many transplant professionals have lost sight of one of the most important measures of ethical worth: whether more good than harm results from the decisions they have imposed on us,” concludes Satel. “Instead of letting thousands die each year while waiting for an organ transplant, we should test the market’s ability to meet the demand.”
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Author: Milt Freudenheim
Source: The New York Times, 06/24/06

Competition is helping to make doctors more accessible and more focused on the needs of patients, reports The New York Times. “[D]octors know that as walk-in medical offices and retail-store clinics pose new competition,” their practices must change since “family care medicine is more than ever a consumer-service business,” according to the Times. Physicians, such as Melissa Gerdes of Texas, are allowing on-line scheduling and same-day appointments. “In Dr. Gerdes’s office, the innovations include daily clinics at lunchtime called QuickSick, in which patients who have phoned up that morning can come in for routine problems requiring immediate attention, like an upper respiratory infection, and are guaranteed they will be examined, treated and on their way within a half-hour,” reports the Times. Consumers truly are benefiting from competition.
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Author: Elizabeth Mehren
Source: Los Angeles Times, 06/25/06

The Los Angeles Times reports on the efforts in many states to reduce the number of uninsured. “In the absence of federal policy or Washington leadership ready to take on the issue, more states are making the uninsured a priority,” reports the LA Times. “The issue is so pressing that in the last two legislative sessions, more than a dozen states have moved to overhaul coverage for those without health insurance.” Massachusetts, Maine, and Vermont have enacted universal coverage plans. And many other states, including Arkansas, Florida, Tennessee, West Virginia, Hawaii, and Kentucky, have all passed laws aimed at lowering the number of uninsured citizens.
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The Council for Affordable Health Insurance has released a new paper with an overview of state efforts to impose mandates on large employers to require them to spend a certain percentage of their payrolls on health benefits.
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Author: Dr. Tim Evans
Source: Stockholm Network, 06/06

In the third in a series of Stockholm Network papers exploring the role of the market in healthcare, Dr. Tim Evans, director with the Stockholm Network and former president of the Centre for the New Europe, describes the development of the independent healthcare sector and the trade union movement throughout Europe and the United Kingdom. The paper also traces the rise of state health and welfare and the growing trend toward market-oriented reform in healthcare. “As Europeans become less tolerant of state failure in healthcare and less willing to act as passive recipients ‘grateful for what they receive’, so pressure is mounting for politicians to engage more consumer friendly and economically sustainable independent sector solutions,” concludes Evans. “In a global world of tax competition, demographic pressure and expensive technological advance, reality is conspiring against the grandiose and past promises of ‘big government.'”
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Health Risk Assessments: Strategies for Consumer Engagement and Health Improvement
America’s Health Insurance Plans Audio Conference
Thursday, July 20, 2006, 1:00 p.m. – 2:30 p.m.
For additional details and registration information, go to:

Pricing Transparency: Strategies to identify true cost and remain competitive in a consumer driven market
HCPro’s Healthcare Marketplace, Audio Conference
Thursday, July 20, 2006, 1:00 p.m. – 2:30 p.m.

For additional details and registration information, go to:

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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