Tea Leaves

In my reading of the tea leaves over what’s coming in the health reform debate, I am worried about what I see.

Three examples:

  1. Momentum is building for big labor to join with corporate America to shove more health costs on to the American taxpayer. The most recent preview of this initiative came from Andy Stern, head of the Service Employees International Union, in a commentary in The Wall Street Journal last week.

    I first did a double-take in reading the article when Stern said, “the employer-based system of health coverage is over?the system is collapsing, crushed by out-of-control costs, a revolutionary global economy and masses of uninsured.”

    His analysis seemed enlightened? but not his solution. Stern said he has sent a letter asking every CEO in the Fortune 500 to join with labor in forcing politicians to act on health reform.

    You know what that means: Labor and big business joining together to get politicians to pour more of your and my tax dollars into the health sector. The first step most certainly will be to have the federal government take over the medical expenses for high-cost workers.

    I wrote a letter to the editor in response, which was published in the Journal, on Saturday, offering a different perspective: “It’s up to companies to figure out how they’re going to get out of the mess they’ve created. They could start by telling employees how much of their compensation package is going to buy health insurance, then working for policy changes that would give workers more freedom to purchase health insurance that is portable and can be purchased in a more affordable, less-regulated, national marketplace.”

  2. Cities are now joining the bandwagon to follow states like Massachusetts and Vermont in developing universal coverage and employer mandate plans:

    San Francisco this week approved a plan to provide health coverage to the estimated 82,000 uninsured adults living in the city, “regardless of income, immigration status or preexisting medical conditions… It’s a plan that industry experts have said could become a nationwide model.” (Which industry experts, would that be, we might ask.)

    Costs will be paid by a combination of taxes, mandated employer contributions, and individual premiums.

    The article was almost comical in quoting uninsured people who now plan to move back into the city to get health insurance “even though the weather there sucks,” one said.

    The Chicago City Council voted yesterday to approve a “living wage” bill that requires large retailers (like Wal-Mart) to provide health coverage to their workers. The bill would require retailers with “more than $1 billion in annual sales and stores of at least 90,000 square feet to increase workers’ pay to at least $10 an hour in wages and another $3 in fringe benefits by July 1, 2010.”

    Clearly they are ignoring the decision by District Judge Motz declaring similar legislative shenanigans in Maryland to be a violation of Erisa. Lawsuits clearly will be filed in Chicago as well.

    Jerry Roper, president of the Chicagoland Chamber of Commerce, said this was a sad day for the business community. “The aldermen who voted in support of this … helped put the sign up really big that development in Chicago is dead.”

  3. A new federal effort: California Rep. Pete Stark, who would become chairman of the House Ways and Means Health Subcommittee if Democrats were to retake the House in November, introduced a universal coverage bill this week.

    His AmeriCare Health Care Act would require employers to insure all full- and part-time workers and require states to fund coverage for low-income workers. Medicare’s price controls would be available to everyone “to hold down premium prices.” (It would be helpful for him to check to see what’s happening with Medicare Part B premium prices, up 10% a year, year after year.)

The political battles over the future direction of our health care system are clearly heating up, and the number of fronts in the battle is multiplying like mad.

We are on a sprint to save the private health sector, and we have barely a moment to waste in helping the competitive health care economy to put down roots and give Americans real choice and control over their health care. Join with us.

Grace-Marie Turner


  • Market principles: The right prescription for Medicaid
  • What states can do to reform health care: A free-market primer
  • The effect of state regulations on health insurance premiums: A revised analysis
  • Coincidence or crisis? Prescription medicine counterfeiting
  • The use of cost-effectiveness analysis of medicines in the British National Health Service: Lessons for the United States

Author: Governor Jeb Bush
Source: Stanford Law & Policy Review, Spring 2006

Florida’s Medicaid Reform Plan offers a “new vision of Medicaid [that] respects and trusts the participants by allowing them to make decisions about their health care based on their personal needs, instead of having bureaucrats arbitrarily do it for them based on contracts and directives,” writes Governor Jeb Bush in an article for Stanford Law & Policy Review. He provides a comprehensive description of his state’s new Medicaid waiver plan that includes disease prevention and personal responsibility. “We are reinventing the incomprehensible maze that is Medicaid today into a patient-centric system that enhances the quality of life for Floridians who rely on Medicaid services, rewards healthy lifestyle decisions, and saves millions of dollars.”
Full text: slpr.stanford.edu

Editor: John R. Graham
Source: Pacific Research Institute, 07/20/06

The Pacific Research Institute has released a new book on free market health care reform featuring chapters written by seven leading scholars. “The purpose of this primer is to educate state policymakers, legislators, and consumers about where we’ve gone wrong with health care and how we can fix it,” said Editor John Graham. Topics covered include Medicaid, health insurance, physician quality assurance, prescription piracy, pharmaceutical costs, hospital certificate-of-need laws, and malpractice liability. “States have significant authority to make positive changes independent of what the federal government does,” said Graham. “Although every state faces a different situation, the policies outlined in this book can serve as a blueprint for reform.”
Full text: www.pacificresearch.org

Author: Michael J. New, Ph.D.
Source: The Heritage Foundation, 07/25/06

Increased state-level regulation of health insurance leads to higher health insurance premiums, writes Michael New of The Heritage Foundation. Using data from 2005 and 2006, he compares the cost of health insurance plans across several states and focuses on four sets of state regulations: mandated benefits, health plan liability, direct-access-to-specialists, and provider due process. New finds that, over the two years, direct access to specialists can increase premiums by $31.15, while liability laws increase premiums by $21.84. Additionally, “states with more than 26 mandated benefits have higher premiums than states with 26 or fewer benefits.”
Full text: www.heritage.org

This is a follow-up to a study published by Heritage and written by Grace-Marie Turner of Galen in 1998 entitled: “Uninsured Rates Rise Dramatically in States With Strictest Health Insurance Regulations.”
Full text: www.galen.org

Editor: Peter J. Pitts
Source: Center for Medicine in the Public Interest and the Stockholm Network, 07/23/06

The Stockholm Network, based in London, and the Center for Medicine in the Public Interest, based in New York, have jointly published a book exploring the “frightening and dangerous growth in prescription drug counterfeiting.” Editor Peter Pitts of CMPI has gathered “some of the world’s leading experts” to provide “creative, timely and most importantly, practical and functional solutions to this crucial global health crisis.”
Full text (pdf): www.stockholm-network.org

Author: Heinz Redwood
Source: PhRMA, April 2006

The use of cost-effectiveness data by Britain’s National Institute for Health and Clinical Excellence (NICE) “is a flawed concept whose implementation has proven problematic for patients, health professionals, and pharmaceutical innovation,” writes Heinz Redwood, Ph.D., a British health policy expert and author. Decisions based upon cost-effectiveness data have resulted in delayed or limited access to new medicines for patients with chronic diseases like multiple sclerosis, chronic myeloid leukemia, macular degeneration, and osteoporosis. “The value of pharmaceutical innovations often cannot be captured in conventional accounting calculations,” concludes Redwood. “Cost-effectiveness decisions refer either to the ‘average’ patient or to the average of a defined segment of a patient population ?Yet innovation in prescription medicines is moving increasingly towards the needs of the individual, nonaverage patient, particularly in life threatening diseases.”
Full text (pdf): www.phrma.org


Medical Tourism: Affordable Alternative or Compromised Care
National Academies Seminar
Wednesday, August 2, 2006, 12:30 p.m. – 2:00 p.m.

For additional details and registration information, go to: www7.nationalacademies.org.

Preparing for the National Provider Identifier: What it Means for the Industry
America’s Health Insurance Plans Audio Conference
Thursday, August 17, 2006, 1:00 p.m. – 2:30 p.m.

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

Crisis of Abundance: Arnold Kling
Cato Institute Book Forum
Tuesday, August 29, 2006, 12:00 p.m. (luncheon to follow)

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/.

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