Galen Institute

Massachusetts Struggles

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Massachusetts Gov. Deval Patrick has been boasting that his state's health reform initiative has reduced the number of uninsured by half, with nearly 300,000 more people added to the health insurance rolls. What he doesn't say is that four out of five of them are relying heavily on taxpayer subsidies for their coverage.

Of the 293,000 people newly insured in Massachusetts:

  • 160,000 earn less than $63,600 (for a family of four) and are enrolled in taxpayer-subsidized plans. More than half of them pay no premiums, and most others pay only a modest amount.
  • 70,000 people were added to the rolls through expansion of the state's Medicaid program.
  • Only 63,000 — or about one in five — have purchased private insurance.

Further, about 60,000 are being exempt from the mandate that all citizens must buy coverage, showing how elusive the goal of universal coverage will be, even for a state that had a relatively low uninsured population to begin with.

And costs are still an issue:

  • Massachusetts now estimates that its spending on the new program for the uninsured may exceed its budget by nearly $150 million.
  • The penalty for not complying with the mandate is steep. Individuals who don't get insurance this year — or don't get an exemption — will face a fine of $912, four times last year's penalty and scheduled to increase each year.
  • The state "negotiated" with the health insurers participating in the Commonwealth Connector to keep premium increases to about 5% this year. But the insurers said in order to keep their prices down, they warned they have to increase copayments and/or deductibles and/or cut benefits. Many newly-insured say they have trouble finding primary care physicians who will see them.
  • And to show how hard it will be to get to a point that everyone will be able to get "coverage as good as members of Congress have," in Massachusetts, a gold-plated Blue Cross Blue Shield plan in the Connector would cost a family of four about $23,000 a year.

Further, the state is trying to figure out what to do with those businesses that already are offering coverage but whose policies don't comply with the higher standards set by the government. Should they be exempted, forced to pay for more expensive coverage, or be fined?

Gov. Patrick and other governors were in town this week pleading with Congress to reverse the administration's Medicaid and SCHIP reform policies, saying they would threaten their ability to expand or even sustain coverage. That's because Massachusetts and other states rely heavily on federal payments for their expansion plans. The president wants them to focus on covering poor children and needy citizens first.

Since the Bay State's initiative is being seen by many as a model for the nation, it's important to pay attention. There is clearly no Massachusetts miracle here. Other states should certainly be cautious before proceeding.

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And today a new poll on health care finds that "a majority of Americans are backing key elements in the health reform proposals of Democratic presidential candidates Hillary Clinton and Barack Obama."

When asked whether they would support an individual mandate for health insurance, 59% said yes, as long as employers were required to provide coverage or pay a fee, and as long as there were subsidies for those with low incomes and insurance companies were required to take anyone who applies.

"But when the question was asked a different way — without emphasizing government subsidies, employer mandates and requirements on insurance companies — support dropped to 47 percent in favor and 44 percent against. That's an even split, given the poll's margin of error of plus or minus 3 percentage points.

"The finding suggests that support for requiring everyone to buy insurance may be iffy," according to the release issued by the poll's sponsors, NPR, the Kaiser Family Foundation and the Harvard School of Public Health.

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There are gremlins at TurboTax thwarting people trying to enter their tax deductible Health Savings Account contributions. A number of people have been frustrated in dealing with the software, including a top HHS official, who recounted this experience:

In TurboTax's on-line tax form, "their system logic doesn't allow you to enter HSA contributions. With TurboTax, you go through items of income and then deductions, and it prompts you with every item on a 1040. But it does NOT prompt you to enter HSA contributions.

"I had to call them, wait on hold for 15 minutes, and then talk to some person who didn't even know what an HSA was. Finally, he figured out how to do it, but you have to search for the form and fill it out which, in total, took nearly an additional 15 minutes.

"In prior years, the system logic just defaulted me to the form where I have spent a grand total of 30 seconds entering my information. And when I asked him why they had changed their system logic, he told me that he didn't know.

"When I pointed out that entering my contributions had saved me $900, but that there were likely taxpayers who didn't understand that they would need to look for the form and would wind up overpaying their taxes due to TurboTax's negligence, I was greeted with silence."

Expect to hear more about this. In the meantime, here is the (equally bewildering) "Help" page on the TurboTax website.

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And farewell to Bill Buckley, truly a Renaissance man and transformative person of our time. He graced everyone he knew with his elegant and warm spirit and inspired all of us with his love of ideas and his indefatigable passion for liberty.

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

WHO's Fooling Who? The World Health Organization's Problematic Ranking of Health Care Systems
Glen Whitman
Cato Institute, 02/28/08

The World Health Organization rankings, widely cited by critics of the U.S. health system, are not an objective measure of the relative performance of national health care systems, writes Glen Whitman. Whitman writes that using the existing WHO rankings to justify more gove
rnment involvement in health care is to engage in circular reasoning because the rankings are designed in a manner that favors greater government involvement. Additionally, the rankings are easily misinterpreted, or misrepresented, as simply measuring health outcomes irrespective of inputs. For example, when Costa Rica ranks higher than the U.S., that does not mean that Costa Ricans get better health care than Americans. Americans most likely get better health care — just not as much better as could be expected given how much more America spends.

Electronic Medical Records Really Do Work
BMC Medical Informatics and Decision Making

Electronic Medical Records (EMRs) can improve care, reduce costs, and improve survival, according to a nine-year study of dialysis patients. U.S. dialysis patient mortality has remained at approximately 23-24% annually for many years. Using the EMR, however, the study found mortality dropped by almost 40% (to 15% annually) and has remained low through today. The study of patients treated at The Rogosin Institute, a non-profit treatment and research institute in New York City, shows that its results are now better than 99% of U.S. dialysis units. Further, clinical staffing was 25% lower per 100 patients than the national average, thereby lowering costs.

The New York Times reports that New York City is ready to equip doctors with computer software than can track patients' medical records in order to provide better preventive care. Any doctor who has a practice where 30 percent of the patients are either uninsured or on Medicaid is eligible for the assistance, but the city is also asking that they provide their own computers, and contribute $4,000 to the Fund for Public Health in New York for continuing technical support. The new system, a software package developed with $30 million from the city and roughly $30 million from the state and federal governments, would let doctors do much more than is possible with paper charts by integrating a patient's medical history, lab results and current medications into one electronic interface. Two hundred doctors with 200,000 patients have committed to use the system, and the city hopes to have 1,000 doctors with one million patients using it by the end of the year.

Robert Wood Johnson Foundation Launches Commission to Look Beyond Medical Care System to Improve the Health of All Americans
Robert Wood Johnson Foundation, 02/28/08

The Brookings Institution's Mark McClellan, former FDA commissioner and CMS administrator, and Alice Rivlin, former OMB director, will co-chair a new two-year Commission to Build a Healthier America. The national, independent and nonpartisan health commission will focus on factors outside the health care system and identify non-medical, evidence-based strategies — both short- and long-term — to improve the health of all Americans. The group will investigate how factors, such as education, environment, income and housing, shape and affect personal behavioral choices through an extensive inquiry that will include regional field hearings. "For reasons that don't appear to have much to do with health care, there is a big gap between how healthy we are and how healthy we could be," said McClellan. "The commission will investigate practical strategies being developed and implemented around the country, in the public and private sectors, to strengthen our health and close the gap."

Running for the Exits
Regina Herzlinger, Harvard Business School and Manhattan Institute
National Review Online, 02/22/08

Health care consumers — not their employers — should choose their insurance plans, writes Professor Herzlinger. The good news is that all the major presidential candidates that remain in the race — Senators Obama, Clinton, and McCain — are offering alternatives to our current employer-provided health-insurance system. But the structure of the Democrats' proposals ensures that they will evolve into a government-provided, single-payer scheme, she writes. Although less detailed than the plans of his Democratic rivals, Senator McCain's plan has the best long-term potential. His is the only one that would end the employer deduction entirely and give all individuals a $2,500 tax credit ($5,000 for families) to purchase health insurance. He would also allow consumers to shop out-of-state for affordable policies and require hospitals and physicians to publish information on treatment outcomes and cost of services, encouraging patients to become informed health-care shoppers. In short, he envisions a health-care market that closely resembles other sectors of the economy.

The Need to Aggregate: What Should Come Next for Medicare Physician Payment?
Gail R. Wilensky, Ph.D., Project HOPE
Health Affairs Blog, 02/25/08

Congress urgently needs to decide on the basic direction of a future Medicare reimbursement system for physicians, writes Dr. Wilensky. Developing a more aggressive payment strategy for physicians is the key to resolving both the frustrations and the perverse incentives associated with the current disaggregated system and its more than 6,000 codes. Developing a program that encourages the provision of high-quality, efficiently produced care and that rewards clinicians who can produce such care remain important goals of the Medicare program and need to be reflected in the physician reimbursement system.

A Helping Hand for Vets
Sally Satel, American Enterprise Institute
The Wall Street Journal, 02/26/08

Satel writes about the serious consequences that can accompany a rush to judgment about a veteran's rehabilitative potential. Under the current system, veterans can go straight to a claims examiner and be granted psychiatric benefits without ever being treated for their mental illness. But new legislation would induce new veterans to embark upon a path to recovery. Any veteran diagnosed with major depression, post-traumatic stress disorder or other anxiety disorder stemming from military activity would be eligible for a new program that provides a financial incentive of $11,000 distributed over the course of a year in exchange for two commitments: the veteran must adhere to an individualized course of treatment; and he or she must agree to a pause in claims action for at least a year or until completion of treatment, whichever comes first. The great virtue of this legislation is that it offers an opportunity to receive payment as a condition of trying to get better. Imagine giving young men and women permission to surrender to their psychological wounds without first urging them to pursue recovery. For many young veterans, a "treatment first" approach could be their road to recovery and a rich civilian life.

Health Spending Projections Through 2017: The Baby-Boom Generation is Coming to
Medicare
Sean Keehan, Andrea Sisko, Christopher Truffer, Sheila Smith, Cathy Cowan, John Poisal, M. Kent Clemens, and the National Health Expenditure Accounts Projections Team
Health Affairs, 02/26/08

Health care spending is expected to double by 2017, reaching $4.3 trillion and consuming nearly one-fifth of the economy, according to federal analysts from the Centers for Medicare and Medicaid Services. Health care spending is expected to hit $2.2 trillion in 2007, growing on average 6.7% through 2017 and outpacing economic growth by about 1.9% each year. Although the outlook for national health spending growth calls for continued stability for the next ten years, the authors note that they expect the leading edge of the baby-boom generation to begin to affect the Medicare program. By 2017, Medicare spending is expected to account for $884 billion, or just over one-fifth of all national health spending. Medicaid spending is also expected to continue to rise at a faster rate than overall health spending in the coming decade, reaching $717.3 billion. The report also examines spending trends for hospitals, physicians, prescription drugs, and long-term care, as well as projected trends for various payers including consumer out-of-pocket payments and private health insurance.

UPCOMING EVENTS:

New Center Poll Highlights Importance of Acting Now to Protect the Public's Health and Safety
Burness Communications Event
Tuesday, March 4, 2008, 12:00 p.m. – 2:00 p.m. (Lunch included)
Washington, DC

Market Reforms and Reelection: Are They Compatible?
Cato Institute Policy Forum
Tuesday, March 4, 2008, 4:00 p.m. (Reception to Follow)
Washington, DC

2008 Women Business Leaders Summit
Women Business Leaders of the U.S. Health Care Industry Foundation Event
March 5-7, 2008
Washington, DC

Pulling the Trigger: How the Funding Warning Could Shape Medicare's Future
Kaiser Family Foundation Policy Workshop
Thursday, March 6, 2008, 9:30 a.m. – 11:00 a.m.
For more information please contact Tiffany Ford at tford@kff.org or 202-347-5270.

The Shortcomings of Government-Managed Health Care
Independence Institute Event
Thursday, March 6, 2008
Washington, DC

Life in Health Policy with Diane Rowland
George Washington University Department of Health Policy Event
Thursday, March 6, 2008, 6:15 p.m. – 7:45 p.m.
Washington, DC

Oncology Drug Development: Rethinking FDA Oversight
American Enterprise Institute Event
March 13-14, 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 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 htt;?www.galen.org.

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