Good News and Bad


Consumer Health World Conference

Please join us for the Consumer Health World Spring conference May 4 – 7 at the Venetian Resort Hotel in Las Vegas. The Galen Institute is a co-host of this conference, and Grace-Marie will be speaking at a keynote session on "Challenging the Candidates: How Will the New President's Policies Impact Consumers and Health Care?"

We have a limited number of discount passes available, so please contact us to save on your registration fee. This is the place to be with the who's who of the CDHC movement, so please plan to attend.




Upcoming Event

And be sure to mark your calendars to join us for our major Medicare forum in Washington on April 29. It will feature an address by HHS Secretary Michael Leavitt on "Drifting toward Disaster" and a distinguished panel of experts offering diverse ideas on "Solutions for Sustainability."

We will send you a separate email shortly with your invitation, but please do mark your calendars now to join us — 9:45 a.m., Tuesday, April 29, at the Newseum in Washington.

HSA Threat

The House passed legislation on Tuesday, the mis-named "Taxpayer Assistance and Simplification Act," that contained the awful provision that would throw a mountain of paperwork at Health Savings Accounts.

But the good news is that the White House sent a letter to Congress warning that President Bush would veto the tax bill if it contains the HSA provision.

Also, the Senate has shown no interest in the provision that would require verification of every HSA transaction in real time. At the very least, it should hold hearings on this measure to find out the real costs and implications.

We may dodge a bullet this year, but it clearly shows that HSAs are vulnerable.

The NFIB was not helpful on an issue that should be of great interest to small business. They issued a key vote letter that encouraged passage of the tax bill containing the HSA provision. Their letter offered an ambiguous statement about HSAs, but by saying this was a "key vote" that will determine how members are ranked in the NFIB rating, it put pressure on members to vote yes. The policy community is once again confused and upset about NFIB's position.



Real Insurance

A new study from the Kaiser Family Foundation looks at the resources available to people who are uninsured and finds that "households with few assets cannot handle the cost-sharing requirements of many high-deductible health plan options."

The study, by Paul Jacobs and Gary Claxton of Kaiser, is flawed in a number of ways:


  • One of the primary reasons that people with low or modest incomes don't have health insurance is because they can't afford it. All of the 2008 presidential candidates are offering proposals that would provide them with new resources to obtain coverage. Given these new resources, people should then have the opportunity to select the health insurance plan that best suits their needs — whether it be a comprehensive PPO, an HMO, an HSA, etc.


  • The study fails to take into account the full economic equation that people face when selecting health insurance, including the cost of the insurance premiums, the size of the deductible, and the co-payments or co-insurance they face. Some people choose to pay higher premiums in order to have lower co-payments and deductibles. Others choose to have higher-deductible plans with lower premiums. Looking only at the size of the deductible distorts the full picture. If people have the choice of spending $8,000 for a comprehensive plan or $3,000 for a high-deductible plan, that may be the more economical choice. The premium savings must be factored in when considering the buyer's full out-of-pocket costs.


  • Further, the authors acknowledge that many employers help to fund the HSA (or HRA) to offset the deductible and reduce their employees' out-of-pocket exposure. To quote the authors: "Our estimates may exaggerate liability because families covered by HSA qualified HDHPs may receive a contribution from their employer to an HSA, reducing their out-of-pocket exposure. Uninsured working families whose employers offer HSA contributions, regardless of whether the employer directly offers the policy, would generally experience lower out-of-pocket liability; thus, our estimates may overstate the cost sharing these families would face." (Our emphasis.)


  • Finally, people may decide to purchase a higher-deductible health insurance policy in order to buy a policy they can afford. They generally will not face the full deductible every year. But in the event of an illness or accident, they would have insurance coverage to protect them so they would not face medical bills that could run into the tens or even hundreds of thousands of dollars and could quickly bankrupt them. That is what insurance is for. Those with low incomes likely will need additional help in paying routine bills, but putting both problems in the same basket distorts the policy question and discourages people from fully considering all of their options.

Bottom line: Don't believe every headline you read!




You will recall my testimony of two weeks ago about the administration's rules designed to curb some of the most obvious abuse of the Medicaid program. Well, the House Energy and Commerce Committee on Wednesday approved by a vote of 46-0 a bill that would stop the new rules from going into effect.

Health and Human Services Secretary Leavitt warned that President Bush will veto the bill if it reaches his desk. The ranking Republican on the committee, Joe L. Barton of Texas, said he did not think Republicans would vote to sustain the veto. "I don't think the veto threat was appropriate, and I don't think it will be successful if vetoed, because the votes simply aren't there," Barton said.

The wild card could be the Senate. Sen. Charles Grassley, ranking Republican on the Senate Finance Committee, does not support blocking the rules. "We ought to let them move forward instead of just delaying all of these Medicaid regulations all at once," Grassley said.

So the Senate, of all places, may be the place we look to protect taxpayers from having Medicaid dollars be used for expenses that clearly are not medically-related, like transportation to bingo games, and for states determined to game the system.



BlackBerry Friendly

I know when I am trying to read newsletters like this on my BlackBerry, the text is interrupted by strings of annoying links. But, when you read the newsletter on your desktop, the links and the nice graphics are welcome.

We'd like to offer you a choice: If you would like to receive the newsletter in a text-only, BlackBerry-friendly format, we'd be happy to send it to you that way. Just send a quick note to Tara Persico at and she will make the change here.

Grace-Marie Turner

Recent News Articles and Studies

Medicare's Bad News: Is Anyone Listening?
George Shultz and John Shoven's Big Fix
Former Senators Tackle Health Issues
'Evidence-Based' Rx Miscues
Dollars to Doughnuts Diagnosis
Code Red
Single-Payer Health Care for Maryland: Two Analyses
Use of Health Savings Accounts Grows

Medicare's Bad News: Is Anyone Listening?
Joseph Antos
American Enterprise Institute, 04/16/08

Unlike the mortgage crunch, Medicare's fiscal crisis does not seem real to most people. The difference in the public reaction to these two serious financial problems reveals three major issues with the way Medicare's bad news is communicated and perceived: it fails to connect on a visceral level with the public and the press; the trust fund concept in Medicare instills a misleading sense of confidence in the program's financing; and, no simple, easily understood number adequately captures the magnitude of Medicare's financing crisis. Yet, if the current trends continue, Medicare's Hospital Insurance trust fund will be depleted in 2019 and future generations will face a tax bill of $85 trillion to make good on the health care benefits promised to Americans. Antos suggests that structural reform — not merely tinkering around the edges of the current program — is needed. We need to replace Medicare's culture of entitlement, which distorts the decisions of patients and providers alike, with a culture of individual responsibility and efficient delivery of care.

George Shultz and John Shoven's Big Fix
Malorye Allison, 04/10/08

Economist and former Secretary of State, Treasury, and Labor George P. Shultz has leapt into the reform fray with a bold new plan that aims not just to fix the health care system but also to solve the impending entitlement cost crisis and even to reinvigorate the economy, reports Shultz and Stanford University economist John B. Shoven are co-authors of the new book, Putting Our House in Order. Their prescription includes more responsibility and authority for individuals, greater competition among insurers, and new kinds of "smart" means testing for public programs.

Former Senators Tackle Health Issues
Kevin Freking
The Washington Post, 04/16/08

Former Senate majority leaders Bob Dole, a Republican, and George Mitchell, a Democrat, may be facing their biggest challenge to date — reforming the nation's health care system, writes The Washington Post. The two senators said this week they would be joined by two other former Senate majority leaders, Democrat Tom Daschle and Republican Howard Baker, in crafting a series of health policy recommendations that would be delivered in 2009 to a new president and Congress. The senators will each oversee forums on four key pillars for reform: improving quality and value, improving access, ensuring a strong role for consumers, and finding a way to finance it. They will get technical advice from Dr. Mark McClellan, who recently oversaw the Centers for Medicare and Medicaid Services under President Bush, and Chris Jennings, former health advisor to President Clinton. While advisers will provide technical expertise, the senators stressed that they will be the ones responsible for the recommendations and will have final say on what's in the package. Sen. Daschle will lead the project's first health care forum on April 24 in Washington, D.C.

'Evidence-Based' Rx Miscues
Peter J. Pitts, Center for Medicine in the Public Interest
The Washington Times, 04/15/08

Hillary Clinton, Barack Obama and John McCain all favor increased federal funding for so-called "evidence-based" medicine to address the problem of escalating health-care costs, writes Pitts. The theory behind evidence-based medicine is simple: If government were to run clinical trials testing the effectiveness of drugs and medical technologies, and then use the results to determine what to cover, taxpayers would avoid paying for treatments that aren't effective enough to justify their price tag. Too bad that in practice, evidence-based programs are largely driven by the political imperative to cut costs — not the medical imperative to give patients the best care possible. Medical treatment should be based on the specific genetic, clinical and demographic factors of an individual patient. In an era of personalized medicine, one-size-fits-all health care strategies are dangerously outdated.

Dollars to Doughnuts Diagnosis
Albert Fuchs
Los Angeles Times, 04/16/08

Many physicians feel that it's their mission to serve as many patients as possible rather than to provide the best care possible, writes Beverly Hills internist Albert Fuchs. Most significantly, doctors today are preoccupied with the bureaucracy of insurance companies. When Fuchs began his own private practice in internal medicine, volume grew quickly and so did his work hours. So he dropped an insurance plan — one that gave him the least compensation. Almost immediately, he had fewer patients but more time and energy for those he maintained. Like hundreds of doctors across the country, Fuchs now does not receive a single dollar from any insurance company. When doctors break free from the shackles of insurance companies, they can practice medicine the way they always hoped they could, he writes. And they can get back to the customer service model in which the paramount incentive is providing the best care.

Code Red
Sally Satel, M.D., American Enterprise Institute and Benjamin Hippen, nephrologist and member of UNOS ethics committee
National Review Online, 04/14/08

A few weeks ago, the Washington Post broke the dramatic medical news that as many as one third of all people waiting for an organ transplant are actually ineligible to receive one. Suggesting that the organ shortage is a manufactured crisis is misleading, write Satel and Hippen. Strikingly, most patients who are designated by their physicians as ineligible for immediate transplant were once fit enough to receive an organ. Tragically, they deteriorated during the years-long wait and became too sick to transplant. According to the United Network for Organ Sharing (UNOS), there are 98,517 people &mdas
h; transplant candidates — waiting for an organ. By summer, the queue will reach a daunting 100,000, with three quarters seeking kidneys. And the waiting time to renal transplantation is getting longer. Today it is five to eight years in major cities and by 2010 it will be ten years for some patients. With about one in three waitlisted patients on dialysis not surviving beyond five years, the majority of candidates just don't have that kind of time. This very trend is potent evidence why those who say the need is not so pressing are dead wrong. If the list had so many ineligible patients, then time-to-transplantation would be getting shorter not longer.

Single-Payer Health Care for Maryland: Two Analyses
Marc Kilmer and Ian Munro
The Maryland Public Policy Institute and the Atlantic Institute for Market Studies, 04/08

This paper responds to a bill proposed by Maryland State Delegate Karen S. Montgomery (D-Montgomery), which would have established a "single payer" system in which the state would pay for all Marylanders' health care and no Marylander would be permitted not to participate in the system. Although the General Assembly did not adopt the Montgomery proposal, special interest pressure remains strong in Annapolis for government-financing of Marylanders health care. This report offers two analyses that address the flaws in a statewide universal health care system, including the high cost to the state budget that would inevitably lead to rationing of services by government officials. The study also issues strong warnings to Maryland from Canadians living under a single-payer system.

Use of Health Savings Accounts Grows
Jeremy Elwood
Springfield Business Journal, 04/14/08

In a market where health insurance costs continue to rise for employers, more companies are turning to high-deductible health plans — and the accompanying health savings accounts to defray costs, writes the Springfield Business Journal. An estimated 7 million people are covered by 2.2 million health savings accounts as of the beginning of 2008, according to a survey by industry publishing company Atlantic Information Services Inc. Those accounts hold $3.2 billion, up 60% from $2 billion at the beginning of 2007. Several banks that offer health savings accounts say the accounts' popularity is growing — especially among small businesses that want to reduce their costs while still offering insurance benefits to employees. And demand for HSAs is only expected to continue. The U.S. Treasury Department estimates that, assuming the laws regulating HSAs are unchanged, up to 30 million people will be covered by HSAs by 2010.

Upcoming Events

Grace-Marie Turner speaking on KDKA News Radio Show
KDKA-AM Radio Broadcast
Friday, April 18, 2008, 5:50 p.m. ET
Pittsburgh, PA

5th Annual World Health Care Congress
April 21-23, 2008
Washington, DC

Grace-Marie Turner speaking on The Scott Voorhees Show
KFAB-AM Radio Broadcast
Monday, April 21, 2008, 1:30 p.m. ET
Omaha, NE

Hospital CEO Roundtable: Balancing Cooperation and Competition
Oregon Health Forum Event
Tuesday, April 22, 2008, 7:00 a.m. – 9:00 a.m.
Portland, OR

Grace-Marie Turner speaking on the Bill Mick Live Show
WMMB-AM Radio Broadcast
Tuesday, April 22, 2008, 8:30 a.m. ET
Orlando, FL

A Roundtable Discussion with Mark Miller of the Medicare Payment Advisory Commission
Women in Government Relations Event
Tuesday, April 22, 2008, 10:00 a.m. – 11:00 a.m.
Washington, DC

Grace-Marie Turner speaking on The David Smith Exchange Show
WICC-AM Radio Broadcast
Tuesday, April 22, 2008, 2:30 p.m. ET
Bridgeport, CT

Grace-Marie Turner speaking on Senior LifeStyles Show
WBZT-AM Radio Broadcast
Wednesday, April 23, 2008, 3:00 p.m. ET
Jupiter, FL

2008 Leadership Development Breakfast
State Policy Network Event
Thursday, April 24, 2008, 8:00 a.m. – 10:00 a.m.
Atlanta, GA

Healthcare Policy Discussion: Cost vs. Coverage
National Federation of Independent Business Event
Thursday, April 24, 2008, 8:00 a.m. – 10:00 a.m.
Washington, DC
For more information, contact Christopher Dougherty
at 202-326-1746 or

Third Annual World Intellectual Property Day
Institute for Policy Innovation Event
Thursday, April 24, 2008, 9:00 a.m. – 2:00 p.m.
Washington, DC

Innovations in Health Care Delivery
Federal Trade Commission Public Workshop
Thursday, April 24, 2008, 9:00 a.m. – 5:30 p.m.
Washington, DC

Concho Valley Community Media Relations Training on the Uninsured
Texas Health Institute Event
Tuesday, April 29, 2008, 12:30 p.m. – 5:00 p.m.
San Angelo, TX

Engineering a Learning Healthcare System: A Look at the Future
Institute of Medicine Event
April 29-30, 2008
Washington, DC


Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Turner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus 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.