Under an Avalanche

The avalanche of bad news on the health front over the last week is a bit overwhelming:

  • The Wal-Mart bill: The Maryland legislature enacted the “Wal-Mart” law, over Gov. Bob Ehrlich’s veto, triggering a major new round of health reform battles in the states. The law creates a new state mandate that requires big employers to provide health insurance for their workers, and it says companies must spend at least 8% of their payroll on health coverage or face a new tax.

    The employer mandate is a jobs killer, it takes management of health costs out of the hands of companies, and it opens the door for even more micromanagement of health care by government. Even The Washington Post editorialized that the bill is “a legislative mugging masquerading as an act of benevolent social engineering.”

    But you have to give Big Labor credit: They began by finding a liberal state to get a law passed that targets just mega companies with more than 10,000 employees (and really just Wal-Mart).

    But you can be sure that the bills in the next states will target smaller and smaller companies, and the mandates on how much they must spend on health care will get bigger and bigger. Big Labor may have figured out how to get a political winner in the first round, but there’s time to explain to the next 30 states that labor is targeting that this is bad policy, bad economics, and bad for workers.

  • Medicare: Virtually every news story about the new Medicare drug benefit is negative. One lesson government might learn from this: No private company ever would launch a new product for millions of people on one day. But Congress insisted that the new Medicare drug benefit had to be accessible to every one of Medicare’s 40 million beneficiaries. The amazing thing is that it is working at all.

    It’s worth remembering that when Medicare itself was first created in 1965, seniors were completely flummoxed. Social Security offices were swamped with questions. Patients and doctors didn’t understand the new program, and seniors were upset that they hadn’t received their new Medicare cards, just like today.

    With millions of people enrolling in such a huge new program, there are going to problems. But as HHS Secretary Leavitt announced this week, “Nearly 24 million Medicare beneficiaries now have prescription drug coverage, including more than 2.6 million people who signed up for the new stand-alone prescription drug coverage in the last 30 days. This number comes on top of the 1 million who enrolled in stand-alone plans in the first 30 days of the program.” Seniors must believe there is a pony in here somewhere?

  • Single-payer: When White House officials said that President Bush would put health care at the top of his domestic policy agenda this year, the floodgates opened with others calling anew for the government to create a single-payer system.

    Paul Krugman in The New York Times, Sebastian Mallaby in The Washington Post, and AFL-CIO President John Sweeney in a speech at the National Press Club all said it’s time for national health insurance.

    So you’ve just heard the starting gun for the next big round of the health care debate that will likely be decided in the 2008 presidential election. However the talking points are masked, it will boil down to one question: Should we have government control or consumer control over our health sector?

  • Wall Street: The one bright spot in the week was a packed conference on Wednesday in New York’s financial district, at which I spoke at the invitation of Christopher McFadden of Goldman Sachs. Nearly 200 people braved 30-mile-an-hour winds and rain and gridlock traffic so they could spend a day learning about this new idea called consumer directed health care.

    “A couple of years ago, you couldn’t get 10 people to attend a conference like this,” one organizer said. “Clearly the market is listening.”

    Here’s a link to the transcript.


Outrage of the week: The Treasury Department last Friday announced that people who buy hybrid automobiles can get a tax credit of as much as $3,400. The Treasury guidance follows Congress’ passage last year of the Energy Policy Act.

Excuse me, but that’s more than any tax credit that Congress has ever enacted for health insurance. Why is it that people can get a big credit for buying hybrid vehicles – basically a dollar-for-dollar subtraction from the purchase price – and uninsured people get just about zilch when they purchase health insurance?

The president is expected to include refundable tax credits for lower and middle-income families to purchase health insurance in his State of the Union speech and budget message. It’s time for Congress to get its priorities in order and act on this proposal that he has submitted every year of his presidency.

Grace-Marie Turner


  • Covering the uninsured in Maryland: Futile gestures or real reforms?
  • Insure all Georgians
  • Code blue: The case for serious state medical liability reform
  • More employers try limited health plans
  • Are adults benefiting from state coverage expansions?
  • National health care quality and disparities reports

Author: Edmund F. Haislmaier
Source: Maryland Public Policy Institute, 01/17/06

Legislation enacted by the Maryland legislature requiring big employers like Wal-Mart to pay for health insurance “is nothing more than a futile gesture of political symbolism destined to have no meaningful effect on health insurance coverage,” writes Edmund Haislmaier for the Maryland Public Policy Institute. Haislmaier presents an analysis of the uninsured in Maryland and finds six major flaws in the new law: 1) Workers will bear the cost; 2) The legislation does not apply to governments, which employ a large number of the uninsured workers in Maryland; 3) Non-profit employers are treated differently; 4) Employers can pay a $250,000 fine for failing to comply with the law; 5) Employers can increase their spending on already insured workers to achieve compliance; 6) The legislation does not require the state to expand coverage.
Full text: www.mdpolicy.org

Authors: Ronald E. Bachman and Nancy Desmond
Source: Georgia Public Policy Foundation, 01/13/06

“If one of the major goals for Georgia is affordable health care coverage for all citizens, it is critical to achieve that goal within the framework of a ’21st Century Intelligent Health System,'” write Ronald Bachman and Nancy Desmond for the Georgia Public Policy Foundation. They recommend several steps Georgia lawmakers should take to reduce the number of uninsured citizens, steps that are applicable to other states: 1) Removing state law and regulatory conflicts to offering affordable HSAs; 2) Removing bureaucratic barriers to allow for an increase in the number of insurers offering HSAs; 3) Allowing for cross-state purchasing of HSAs; and 4) Providing state HSA tax subsidies for Medicaid beneficiaries transitioning to private coverage. “One-hundred percent coverage is achievable, through market-based solutions, private and corporate efforts, tax incentives, direct public subsidies, strong community support and faith-based outreach programs,” conclude the authors.
Full text: www.gppf.org

Authors: Randolph W. Pate and Derek Hunter
Source: The Heritage Foundation, 01/17/06

“Far too many highly skilled and car­ing hands can no longer afford to practice medi­cine, while trial lawyers are reaping the benefits of an outdated, outmoded system,” write Randolph Pate and Derek Hunter of The Heritage Foundation. “States need to stop the exodus of good physicians while protecting the right of patients to seek redress for medical injuries.” With the federal government stalled in acting on medical malpractice reform, the authors recommend that state lawmakers choose from a list of policy options including: Early offers intended to settle claims quickly without years of court delays, creation of health courts in which medically trained judges can provide more consistent disposition of claims, and limited liability for Medicaid, charity and emergency care.
Full text: www.heritage.org

Author: Vanessa Fuhrmans
Source: The Wall Street Journal, 01/17/06

“Mini-medical” or “limited-benefit” health plans are growing in popularity among employers seeking a less expensive alternative to traditional health insurance, reports The Wall Street Journal. Nearly one million people have mini-medical plans, which offer limited health coverage such as a fixed annual reimbursement for prescription drugs, 4 to 10 doctor visits per year, some coverage for hospitalization, and a lifetime ceiling of perhaps $50,000 for all health expenses. “Premiums can cost as little as $40 a month – far less than the $148 average for a major-medical plan bought on the market or the $335 average cost of someone on a company health plan.” Some people are pairing the mini plans with high-deductible, consumer-driven plans to cover catastrophic care, which “can still be cheaper than a traditional major-medical policy,” reports the Journal. A coalition of 10 large employers, including General Electric and Avon Products, will soon offer several low-cost options, including mini-medical plans, to about 900,000 independent contractors and part-time and temporary workers not eligible for regular company benefits.
Full text (subscription required): online.wsj.com

Authors: Sharon K. Long, Stephen Zuckerman, and John A. Graves
Source: Health Affairs Web Exclusive, 01/17/06

State efforts to increase insurance coverage in California, Wisconsin, New Jersey, and Massachusetts by expanding public programs often lead to a decline in employment-based health insurance, according to a new study by the Urban Institute. Not surprisingly, public coverage in all four states increased as a result of Medicaid expansions, but “there was also a significant reduction in rates of private coverage” in New Jersey, Wisconsin, and California. For example, the authors “found strong evidence for the crowding out of private coverage by the expansion [of Medicaid coverage] to parents in New Jersey.” Massachusetts proved to be the exception, where both public and private coverage expanded, due largely to an approach that offered premium assistance, rather than Medicaid coverage, to those with the option of joining an employer plan.
Full text: content.healthaffairs.org

Source: Agency for Healthcare Research and Quality, 01/09/06

“Quality of health care for Americans has continued to improve at a modest pace, and health care disparities are narrowing overall for many minority Americans,” according to the 2005 National Healthcare Quality Report and its companion document, the 2005 National Healthcare Disparities Report, released by HHS’ Agency for Healthcare Research and Quality (AHRQ). These annual reports measure health care quality and disparities across four key areas including patient centeredness, timeliness, effectiveness, and safety. Although quality of care remained largely unchanged from the previous year, 23 out of 44 core quality measurement categories improved and only two became worse. Additionally, “more racial disparities in quality of care were narrowing than were widening, and most racial disparities in access to care were narrowing (affecting blacks, Asians and American Indians/Alaska Natives).
Full text: www.ahrq.gov


Ask the Experts Live Webcast: State Health Care Initiatives
Sponsored by the Kaiser Family Foundation
Wednesday, January 25, 2006, 1:30 p.m. ET

Watch the live webcast on kaisernetwork.org: cme.kff.org.

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