The Rest of the Story…

So there was more to the story:

Last month, The Wall Street Journal carried a front page article about Russ Moore Transmission in Fort Wayne, Ind., and their new HSAs. The article highlighted manager Nick Bond’s struggle to provide his employees with the information they needed to manage their new high-deductible insurance.

Journal reporter Sarah Rubenstein wrote that Bond and his office manager “had to hole themselves up in their offices for about two weeks developing a spreadsheet with price information on 32 drugs.”

I wrote in this space that the story seemed very one-sided to me, showing the challenges but none of the benefits of HSAs.

How true that was! Mr. Bond saw our newsletter item and sent me an e-mail this week with a four-page, single-spaced paper he had written (and submitted to the Journal as an op-ed). He said, ?I felt a compelling need to finish our story on how the transition to a consumer driven health plan has fundamentally worked out for our small business.?

Bond and his employees are on the front lines of the transition to a consumer directed health system, having to work hard to educate themselves – and their doctors and hospitals – about how this new world works.

But Bond said his 36 employees ?understand how this somewhat grueling process of becoming ‘savvy’ health care consumers has within one year enabled our company to take hold of our health care plan and actually make proactive decisions.?

The part of the story that the Journal didn’t tell:

When it came time to renew health insurance, Bond called a meeting, presented the options from several health insurers, and explained the bottom line cost to his employees.

?We collected thirty six ballots (which represented all of the enrolled full time employees at Russ Moore) and counted a unanimous vote for the high-deductible plan, which put more company contribution dollars in each individual’s HSA spending account.

?We won! For the first time in nine years, our health plan renewal premiums were less than the prior year?While it’s been a difficult road to travel for all involved and particularly for the employees that had to trust and learn a very new and as yet barely tested product, we are extremely hopeful for the future of this type of consumer driven health plan.?

My take aways from this:

  • Small businesses are very involved and engaged in trying to provide health insurance to their employees and will make great sacrifices of their own time to find an option that works.

  • High-deductible plans are more affordable and give employers an option to continue providing coverage. Bond said the high-deductible plan cost 15% less than the quote for traditional insurance, leaving $26,000 that could be contributed to his workers’ HSAs.

  • The key to the success of consumer-driven health care is better and more easily accessible information about health costs and options.

  • Employers who get actively engaged are the ones who are most likely to succeed and save money for everyone in the long run.

  • Employers and employees increasingly are wondering why on earth the tax code continues to tie health insurance to the workplace and not give people more options to buy coverage on their own.

As we said, HSAs aren’t for everyone and not every switch is a success. But there certainly was a lot more to this story.


And please join us on Wednesday for a not-to-be-missed briefing on ?European health care systems: Problem or solution??

We’ve invited health policy experts from the U.K., Sweden, and Switzerland to talk about their insights and experience with single-payer and other government-dominated health care systems. Join us and learn what the trade-offs would be for those who are looking to Europe for solutions to problems with health care in America.

The briefing is at 10 a.m., next Wednesday, Oct. 18, in room 216 of the Hart Senate office building. The event will also be webcast live on the IPI website at Please join us!

Grace-Marie Turner


  • The rationale for a statewide health insurance exchange
  • Importation and innovation
  • Fix Medicare – not its prices
  • How common are electronic health records in the United States? A summary of the evidence
  • Open letter from the Ontario Pharmacists’ Association

Author: Robert E. Moffit, Ph.D.
Source: The Heritage Foundation, 10/05/06

?The best way to enable individuals and families to buy, own, and keep health insurance from job to job — without losing the tax advantages of the employment-based coverage — is to transform the balkanized and dysfunctional state health insurance market into a single health insurance market,? writes Bob Moffit of The Heritage Foundation. He outlines a plan for statewide health insurance exchanges that would offer all types of health insurance plans and function for individuals, small businesses, and large companies. ?As a vehicle for a defined-contribution approach to health care financing, an exchange would expand coverage and choice,? writes Moffit. ?Rather than have to decide whether to pay for full coverage or not, employers could make defined contributions of any size to the exchange. Moreover, employers could also enable employees, including those working part-time and on contract, to buy health insurance with pre-tax dollars.?
Full text:

Author: Frank R. Lichtenberg
Source: National Bureau of Economic Research, 09/06

In a National Bureau of Economic Research working paper, Columbia University Professor Frank Lichtenberg evaluates the effects that importation would have on new drug development. ?Since prices of drugs are lower in most other countries than they are in the U.S., importation would result in a decline in U.S. drug prices,? writes Lichtenberg. He warns that while the price decline may benefit consumers in the short run, importation could reduce the quality and safety of the U.S. drug supply and could reduce the number of new drugs developed. His analysis finds that, ?In the long run, a 10% decline in drug prices would therefore be likely to cause at least a 5-6% decline in pharmaceutical innovation.?
Full text:

Author: Michael F. Cannon
Source: New York Post, 10/10/06

Medicare is scheduled to reduce physician payments by 5.1% on January 1 in order to control rising costs, but ?Medicare’s physician-payment system doesn’t do much to contain spending or to promote quality,? writes Michael Cannon of the Cato Institute. ?The Medicare bureaucracy is somehow supposed to divine the correct prices for more than 7,000 distinct physician services in each of Medicare’s 89 physician-payment regions?And – unlike market prices – these price controls don’t automatically adjust to reflect the value of goods and services,? writes Cannon. ?The government has no business setting prices for physicians’ services,? he concludes. ?Until Congress lets the market set those prices, Medicare will continue to purchase sub-standard care and encourage shakedowns that benefit no one but politicians and lobbyists.?
Full text:

Authors: Ashish K. Jha, Timothy G. Ferris, Karen Donelan, Catherine DesRoches, Alexandra Shields, Sara Rosenbaum, and David Blumenthal
Source: Health Affairs Web Exclusive, 10/11/06

Physicians are slow to adopt the use of electronic health records (EHRs), according to a new Health Affairs Web Exclusive. The study finds that, through 2005, approximately 24% of physicians used an EHR and only 5% of hospitals used computerized physician order entry. The study also finds individual or small practices have much lower adoption rates than larger practices. The study’s review of earlier literature found ?large gaps in knowledge? and recommends that any future studies focus on narrowing the definition of an EHR, defining EHR use based on standard definitions, and better information on the use of EHRs by safety-net providers.
Full text:

OPEN LETTER FROM THE ONTARIO PHARMACISTS’ ASSOCIATION Source: Ontario Pharmacists’ Association, 10/11/06

A group of Canadian pharmacists has come together to protest the U.S.’s decision to allow people to buy a 90-day supply of drugs from Canada, saying that it presents an ?imminent threat to Canada’s prescription drug supply.? According to the open letter from the Ontario Pharmacists’ Association to Canada’s Minister of Health, Canada does ?not have the capacity to feed America’s need for lower-cost drugs, and unimpeded depletion of our supply poses a serious threat to public health and safety in Canada.? Additionally, the pharmacists ?are further concerned that the legitimizing of Internet drug purchases by Americans further encourages fraud by offshore criminals posing as Canadian pharmacists and selling counterfeit drugs.? The pharmacists ?call on the Government of Canada to take immediate action to protect Canada’s prescription drug supply by banning prescription drug sales to U.S. patients by all means, including ‘foot traffic’, Internet and mail order.?
Full text:

Canada’s ban on direct-to-consumer advertising is also coming under fire. The nation’s largest media company, CanWest MediaWorks Inc., has brought a civil lawsuit before Ontario’s Superior Court of Justice claiming that ?Canadians are being denied important truths about prescription medications because of strict limits on drug advertising.? CanWest contends that there ?is a legal hypocrisy at the core of the drug-ad restrictions? and ?notes how it is legal to advertise over-the-counter medications for allergies, colds, pain and stomach ailments, though some are associated with side effects that include adverse interactions with other drugs, kidney and liver disease, even dependency.? In addition, ?U.S. channels seen in Canada already broadcast exactly the kind of prescription-drug ads CanWest isn’t allowed to carry? and ?U.S. magazines sold here carry ads Canadian publications cannot.?
Full text:


European Health Care Systems: Problem or Solution?
Galen Institute, The Heritage Foundation, and Institute for Policy Innovation Briefing
Wednesday, October 18, 2006, 10:00 a.m. – 11:30 a.m.
Washington, DC
This event will be webcast live on the IPI website at For additional details and registration information, go to:

The Business of Health: How Does the U.S. Health-Care System Compare to Systems in Other Countries?
American Enterprise Institute Health Policy Discussion
Tuesday, October 17, 2006, 9:15 a.m. – 11:30 a.m.
Washington, DC

For additional details and registration information, go to:

The Cure: How Capitalism Can Fix American Health Care
The Heritage Foundation Event
Wednesday, October 18, 2006, 12:00 p.m.
Washington, DC

For additional details and registration information, go to:

Grace-Marie Turner speaking on Morning News Brew
WHIS 1440 AM Radio Broadcast
Thursday, October 19, 2006, 9:30 a.m. – 10:00 a.m.
Bluefield, WV

For additional details, go to:

Consumer-directed Health Care: How Does Dental Care Relate?
America’s Health Insurance Plans Audio Conference
Thursday, October 19, 2006, 1:00 p.m. – 2:30 p.m.

For additional details and registration information, go to:

Narrative Matters: The Power of the Personal Essay in Health Policy
Health Affairs Event
Monday, October 23, 2006, 5:30 p.m. – 7:30 p.m.
Washington, DC

For additional details and registration information, contact Health Affairs at 301-347-3940 or

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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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.