Making Progress


CONSUMER HEALTH WORLD: I spent the early part of this week in Las Vegas at the Consumer Health World conference at the Venetian Resort and continue to be awed by the innovative ideas and investment in solutions, technologies, and advances in health care and coverage.

Sally Pipes of the Pacific Research Institute and I did a keynote address with thoughts about how the policies of a new Republican or Democratic president would impact consumers and health care.

But the real news was from business and medical leaders who are leading market changes, including: Digital medical care, the globalization of medicine, medical tourism, the unstoppable demand for more personalized information from consumers, technologies to extend a medical home, sophisticated employee wellness programs, and ways to dramatically reduce health costs through efficiencies in the delivery of care.

My take away from the conference: More and more companies from other industry sectors are focusing their skills, technologies, and experience on the health care space, with the potential to produce dynamic, bottom-up change. The political climate matters a lot in being receptive to these changes, but these companies have the potential to be transformative in reducing costs and increasing quality if we will let the market work.

The next conference will be in Washington, Dec. 8-10, just after the presidential election, and it will be even more important then to see what these leaders see for the future.

Congratulations to Skip Brickley and his team at Transmarx for another great conference. It's hard work, but hugely valuable.


The conference happened to coincide with the opening night of the new Cher concert in Las Vegas, and my dear husband figured out how to get us tickets. Cher is a world-class performer with spectacular sets and at least a dozen even more spectacular costumes. At age 61, she is the quintessential performer.

She will be rotating with other performers (Elton John, Bette Midler) for the next three years at Caesars Palace. See the show if you can. It's not to be missed.


WYDEN-BENNETT BILL: The Wyden-Bennett health reform bill received a coveted "budget neutral" cost estimate from the Congressional Budget Office and the Joint Tax Committee last week, and the bi-partisan legislation is attracting even more attention as a result.

But let's look at the fine print:

  • The preliminary cost estimate is for just one year, 2014, when the analysts assumed the bill would be fully implemented. Why didn't they tell us the cost to get to 2014? There will always be transition costs, but one must assume the price tag is significant over the next six years to be completely left out of the report.
  • The bill relies on "a system of federal premium collections and subsidies" since the money to fund the new program comes from "premium payments collected from individuals through their tax returns." The bottom line: health premiums become a new federal tax to help finance the health insurance coverage that is mandated in the bill.
  • The report says that in 2014, "federal outlays for health insurance premiums would be on the order of $1.3 trillion to $1.4 trillion." This analysis confirms that virtually all funding for health care/insurance would flow through the federal government. So much for "private" health insurance.
  • It says that part of the money will come from "new tax payments by employers to the federal government." That's an employer mandate any way you look at it.
  • And finally, when you look at the estimates of revenues and savings, the prediction of budget neutrality rests on several shaky premises including "state payments to the federal government reflecting their savings on Medicaid and SCHIP." How long will this last, if at all?

Budget scorings are important. Former HHS Secretary Donna Shalala said during a Senate Finance Committee hearing this week that a CBO estimate of the cost of the Clintons' proposed Health Security Act in 1994 was "devastating. It changed the momentum of the discussion." Alluding to CBO's estimate that Sen. Wyden's Healthy Americans Act would be budget neutral, Shalala said that if one starts the debate with a score of budget neutrality, "you take a giant step." But the numbers also reflect the reality of the bill. And it would be a major, major change from the current system. The details matter.


AN OPEN LETTER FROM DOCTORS: Physicians are mad as hell and they're not going to take it anymore. That's the conclusion we draw from a new grassroots campaign by a group of physicians to get signatures on an open letter to Americans from physicians.

Their unifying theme: "We all desire to provide the best medical care possible to patients in our respective communities. This is at the heart of everything we do." But they are "alarmed by the current trends in our healthcare system…and the challenges we face in providing quality care to our patients."

The idea was proposed by Sean Khozin, MD, MPH, and gained 1,000 signatures just in the first day it was posted on the Sermo website (a very interesting, innovative, and important secure web-based discussion platform that allows doctors to consult with each other about medical cases).

The doctors say that "For decades the United States has led the world in healthcare. We have enjoyed the finest hospitals, medical schools, research, technology, and resources." But they say that as a result of high costs and third-party intrusion, "patients have lost their freedom of choice…As a result, it has become difficult for physicians to deliver the best possible care," and the doctor-patient relationship is being compromised.

The doctors don't make any policy recommendations in the letter, but it is a way for them to give a voice to their central concern about wanting and needing to put their patients first. That's the right place to start with any policy discussion.

Grace-Marie Turner

Recent News Articles and Studies

How Risky is Individual Health Insurance?
Drug Companies Win Alzheimer's Appeal Against Watchdog
UnitedHealth: HSA Enrollment Exceeds Traditional Accounts
What the Doctor Ordered
Obama's Health Care Record
Wal-Mart Expands Low-Price Drug Program
New Georgia Law Gives Best Health Insurance Options
The 2007 R&D Scoreboard
Saving on Surgery by Going Abroad

How Risky is Individual Health Insurance?

Mark V. Pauly and Robert D. Lieberthal, Wharton School at the University of Pennsylvania
Health Affairs Web Exclusive, 05/06/08

People in fair or poor health who have health insurance are less likely to drop or lose coverage if they have individual insurance than if they have small-group coverage, according to a study from Mark Pauly and Robert Lieberthal of Wharton. In particular, the study found that among workers in relatively worse health, those with small-group coverage who became unemployed were substantially more likely to also become uninsured than their counterparts with individual coverage. Among those with small-group coverage, 67% of workers in fair or poor health who became unemployed also became uninsured, while among those with individual coverage, only 9% of workers in fair or poor health who became unemployed also became uninsured, according to the study. The authors say this result stems largely from a unique policy feature generally included in individual health insurance policies: guaranteed renewability at class-average rates.

Drug Companies Win Alzheimer's Appeal Against Watchdog

Nigel Hawkes
The Times, 05/02/08

Tens of thousands of Alzheimer's sufferers and their families had their hopes raised last week as two drug companies won a landmark victory in the U.K.'s Court of Appeal, reports The Times. The National Institute for Health and Clinical Excellence (NICE), the powerful body that controls access to new drugs, was judged to have acted unfairly in making an appraisal of the Alzheimer drug Aricept. NICE had ruled that Aricept should not be prescribed on the NHS to patients with mild Alzheimer's disease because the economic model failed to show that it provided good value. But it refused to allow Eisai and Pfizer, who market the drug, full access to the model. The court ruled that NICE must give up its most precious secrets — how it measures the benefits that novel treatments bring. The ruling is the first case that NICE has lost in court and means that, in the future, it will have to be transparent in the way it reaches its decisions, revealing the inner workings of the models it uses to measure value for money, reports the Times.

UnitedHealth: HSA Enrollment Exceeds Traditional Accounts

Carissa Wyant
Minneapolis/St. Paul Business Journal, 04/30/08

UnitedHealth Group said last week that for the first time, enrollment by its members in health savings accounts (HSAs) have surpassed enrollment in more traditional health reimbursement arrangements (HRAs), reports the Minneapolis/St. Paul Business Journal. UnitedHealth said it had 2.7 million individuals enrolled in its consumer-driven health plans; 1.38 million were enrolled in HSA-qualifying insurance as of March 31, compared to 1.34 million members who were enrolled in HRAs. The figures include plans which are employer-sponsored as well as plans purchased by individuals and families. More than 22,000 employers now offer such plans through UnitedHealthcare, and it recorded an increase of 325,000 participants from December 2007 to March 2008, reports the Business Journal.

A new podcast from Deloitte on "Embracing Disruption: How Consumers Are Transforming the U.S. Health Care System" describes consumer activists who are searching for quality care and are willing to go outside the traditional health care system to get it.

What the Doctor Ordered

Sally Satel, M.D., American Enterprise Institute
National Review Online, 05/07/08

Do various financial relationships between doctors and the pharmaceutical industry — promotional marketing, paid speaking and consulting, and research funding — compromise patient care, bias medical research, and diminish the integrity of the profession, asks AEI's Sally Satel. Unfortunately, on many medical-center campuses, the verdict is already in: physicians who engage in any financial relationship with industry are not to be trusted. Such blanket condemnation of all associations with the companies that invent and produce countless life-saving healthcare products will surely have real costs to society, writes Satel. We can live without free pens and mouse pads. The real threat to medicine and the public interest is suppression of freedom of university-based researchers to interact with their scientific colleagues in the pharmaceutical industry, writes Satel. That might make anti-industry purists feel better — at least until they look for the next breakthrough drug only to find that it doesn't exist.

Obama's Health Care Record

Scott Gottlieb, American Enterprise Institute
The Wall Street Journal, 05/05/08

As a presidential candidate, Sen. Barack Obama says people lack health insurance because "they can't afford it." But he is also partly responsible for why health insurance is too expensive, writes Gottlieb. During Mr. Obama's tenure in the Illinois state Senate, 18 different laws came up for a vote and passed that imposed new mandates on private health insurance. Mr. Obama voted for all of them. A long list of studies shows that mandates like the ones Mr. Obama has championed drive up the cost of insurance for the very people priced out of coverage, writes Gottlieb. One way to make insurance more affordable is to allow people to purchase health plans across state lines. People could choose which state regulations to buy into, creating a market for the insurance mandates. This would give states more incentives to fix local problems that have helped make health insurance expensive in the first place.

Wal-Mart Expands Low-Price Drug Program

Peggy Harris
Associated Press, 05/05/08

Wal-Mart Stores Inc., the world's largest retailer, announced Monday it would expand its discounted prescription drug program to offer 90-day supplies for $10 and add several women's medications at a discount, reports the Associated Press. The move marks the third phase of a company program that began in 2006 to provide a 30-day supply of generic prescription drugs for $4. With the expansion, the company began filling prescriptions Monday for up to 350 generic medications at $10 for a 90-day supply at Wal-Mart, Neighborhood Market and Sam's Club pharmacies in the U.S, reports the AP. Almost all the prescription generics in the company's $4 program were included in the expanded $10 offer. In addition, the company will add several women's medications to its list of prescriptions available for $9, including drugs to treat breast cancer and hormone deficiency. Wal-Mart also said it would lower the prices of more than 1,000 over-the-counter drugs to $4 or less in its pharmacies.

New Georgia Law Gives Best Health Insurance Options

Center for Health Transformation, 05/08/08

A new Georgia law will result in Georgia families having the best health insurance options available in any state, according to t
he Center for Health Transformation (CHT). The law makes premiums for health savings account-eligible plans 100% deductible against state income tax for individuals. It also allows a $250 tax credit per employee for small employers who offer HSAs to their employees. By creating opportunities for Georgia insurance companies to offer new, innovative products not only will the state benefit from a robust and competitive marketplace, but also a half million uninsured Georgians will soon have access to health coverage, writes the CHT.

The 2007 R&D Scoreboard

Department for Innovation, Universities & Skills in collaboration with the Department for Business, Enterprise & Regulatory Reform, 11/07

This report, published by the UK government, summarizes the 2006 data on investment in R&D and financial performance of the 850 most active UK companies and the 1,250 most active R&D companies globally. Key highlights include:

  • Pharmaceutical and biotechnology companies are now the biggest investors in R&D worldwide, having surpassed firms in the technology sector.
  • Globally, the 1,250 companies most active in R&D invested £244 billion in 2006-7, an increase of 10% on the previous year.
  • More than 81% of global R&D occurs in five countries: USA, Japan, Germany, France, and the UK.

Saving on Surgery by Going Abroad

Avery Comarow
U.S. News & World Report, 05/01/08

Medical tourism can produce significant discounts on care, writes U.S. News & World Report as part of its "Consumer's Guide to Medical Travel." Thousands of Americans — estimates range from 5,000 to 500,000 annually, if minor procedures are counted — leave the U.S. for surgery, especially if they are paying for the procedure themselves. For example, Brad Barnum, a 53-year old building contractor, had knee and hip replacement surgery in India for $23,000. Even after adding about $5,000 for airfare, passport, visa, and incidentals, the total was nearly 80% less than the $125,000 or more he expected it to cost in a U.S. hospital, reports the magazine.

Medical travel has captured the world’s attention and imagination, but a new McKinsey study suggests that the market isn’t as large as reported and that most medical travelers seek high quality and faster service instead of lower costs.

Upcoming Events

Grace-Marie Turner speaking on the Kirby Wilbur Show
KVI-AM Radio Broadcast
Monday, May 12, 2008, 6:00 a.m.
Seattle, WA

Racial and Ethnic Disparities: States and Feds to the Rescue?
Alliance for Health Reform Briefing
Monday, May 12, 2008, 12:15 p.m. – 2:00 p.m. (Lunch included)
Washington, DC

The Seniors' Entitlement Crunch: The Politics of Social Security and Medicare Reform
Woodrow Wilson International Center for Scholars Event
Monday, May 12, 2008, 3:00 p.m. – 5:00 p.m.
Washington, DC

6th Annual Health Care Conference
Washington Policy Center Event
Tuesday, May 13, 2008, 7:30 a.m. – 4:00 p.m.
SeaTac, WA
Grace-Marie Turner will discuss the presidential candidates' health care plans during her keynote address.

Health Reform and the 2008 Election: Opportunities and Pitfalls
Health Affairs Briefing
Tuesday, May 13, 2008, 8:45 a.m. – Noon
Washington, DC

National Medicare Education Program (NMEP) Coordinating Committee Meeting
Centers for Medicare & Medicaid Services Event
Thursday, May 15, 2008, 8:30 a.m. – 12:45 p.m.
Washington, DC

Whatever Happened to Medicare Reform?
Cato Institute Policy Forum
Thursday, May 15, 2008, 12:00 p.m. (Lunch included)
Washington, DC

Presidential Forum on Health Care Reform
Women in Government Relations Event
Monday, May 19, 2008, 10:30 a.m. – 12:00 p.m.
Washington, DC

Social Determinants of Health & Consequences of Disparities
Oregon Health Forum Event
Thursday, May 22, 2008, 7:00 a.m. – 9:00 a.m.
Portland, OR


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.