Galen Institute

What They Agree On

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Now that it appears the Democratic presidential contest will keep going for some time, health care will continue to be a major topic of debate. While most of the disagreement between Sens. Hillary Clinton and Barack Obama has focused on universal coverage — and particularly an individual mandate — that dispute is actually overshadowing how many similarities there are between their two health policy proposals.

The sooner that voters focus on the larger picture, the better informed their decisions can be. There are a number of provisions in both of their plans which are not controversial, such as a greater emphasis on using health information technologies, offering a choice of health plans, better prevention and chronic care management, etc.

But here is a partial list of what Sen. Clinton and Sen. Obama are proposing that reveals their visions of a much larger role for government in our health sector. They both would create new health care purchasing arrangements and propose:

  • Requiring insurers to charge basically the same premium to everyone regardless of age, gender, or occupation, called community rating
  • Requiring insurers to offer coverage to anyone who applies through guaranteed issue and prohibiting denials for pre-existing conditions
  • Requiring insurers to offer health insurance that is at least as generous as the comprehensive coverage available to members of Congress
  • Requiring employers to contribute to the health coverage for their workers through a "pay or play" mandate, with small business getting added help to offset costs
  • The government would repay businesses for some of the catastrophic costs of employees with large medical expenses, providing certain conditions are met, a proposal similar to one offered in 2004 by Democratic presidential candidate John Kerry
  • Opening the Federal Employees Health Benefits Program to millions more workers and setting up other regulated health insurance purchasing exchanges
  • Expanding Medicaid and the State Children's Health Insurance Program
  • Allowing people to buy in to Medicare, thereby setting up competition between a taxpayer-subsidized program with federal pricing and policing authority and private health plans
  • Curtailing private competition in Medicare by scaling back payments for Medicare Advantage and allowing the government, rather than private companies, to negotiate prescription drug prices for the Medicare drug benefit
  • Allowing prescription drug importation from abroad, which means importing other countries' systems of price controls (as Sen. McCain also has proposed), and placing new controls on prescription drug prices
  • Greater government involvement in determining the comparative effectiveness of medical treatments and requiring doctors and hospitals to practice according to its evidence-based protocols.

Sen. Clinton has criticized Sen. Obama for proposing a plan that does not have universal coverage as its central goal, even though he would begin with a mandate that all children be covered.

This dispute is important, but it should not obscure the many, many other provisions in their plans over which there is little debate but which would inject a much larger role for the federal government in health care financing and delivery.

Most of the Republican presidential candidates' plans were organized around the idea of moving more power and control over health insurance and health care decisions to patients, as I described in my recent Wall Street Journal article. Because there was little debate in the GOP contest over health care, the issue received little attention. But to prepare for the general election, Sen. McCain must do more work to refine and develop his plan.

There will be much more time to analyze all of these provisions in the coming months, but it's important to see that there are two very different approaches here to health reform.

The question for voters this fall will be whether they think that the government will be able to inject greater efficiency and choice into the health sector or whether we should have a new approach that puts doctors and patients in charge and provides new incentives for competing plans and providers to offer more affordable care and coverage.

Grace-Marie Turner

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RECENT NEWS ARTICLES AND STUDIES:

2008 Study of Consumer-Directed Health Plans
American Association of Preferred Provider Organizations, 03/04/08

Enrollment in consumer-directed health plans (CDHPs) grew by 25% in 2007, from 10 million Americans to 12.5 million, according to a study commissioned by the PPO association. Other highlights from the study, which focused primarily on Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs):

  • In 2007, 7.5 million people were enrolled in HRA-based plans and 5 million in HSA-based plans.
  • 7% of all employers offered a CDHP, and 11% are very likely to offer the plans in 2008.
  • Employers offering consumer-directed plans are more likely to provide health information tools, such as information on health conditions and data on provider quality and costs.
  • More than 97% of all CDHP plans are built on preferred provider networks. The greatest growth in adoption is among employers with 500 or fewer employees.
  • Enrollment in CDHPs grows in each year the plan is offered. Among those companies that offered an HSA for three years, average enrollment grew significantly each year, reaching 29% in the third year.

Medicare Advantage: The Case for Protecting Patient Choice
Robert E. Moffit, Ph.D.
The Heritage Foundation, 03/06/08

Medicare Advantage, the new system of competing private health plans created under the Medicare Modernization Act of 2003, is a success, writes Bob Moffit. More seniors are getting a wider variety of health plan options with better benefits, lower cost-sharing, and more affordable health care coverage, as well as access to specialized programs that provide care coordination and care management. Some congressional leaders say that Medicare is paying too much to Medicare Advantage plans, and they want to cut funding for this option and thus reduce the number of plans that serve Medicare beneficiaries. But individual freedom, including personal choice of different health plans and benefit options, is not negotiable, writes Moffit. Instead of cutting payments to Medicare Advantage, Congress should re-target larger Medicare subsidies to lower-income persons and smaller subsidies to upper-income families.

The Urban Institute's Bob Berenson writes that, while the Medicare Advantage program's future remains contentious p
olitically, the Medicare Payment Advisory Commission ignores local market dynamics in important ways in its recommendation of financial neutrality at the local level between private plans and traditional Medicare. He explores alternative ways of setting benchmarks.

Telephone Medical Consults Answer the Call for Accessible, Affordable and Convenient Healthcare
Newt Gingrich, Ph.D., Richard Boxer, M.D., Byron Brooks, M.D.
Center for Health Transformation, 02/08

Telemedicine introduces opportunities for improved access to health care services for all Americans — regardless of geography — with lower costs and better outcomes, according to the Center for Health Transformation. TelaDoc Medical Services, which currently serves more than 1.2 million members, was used as a model for understanding the concept of telephonic medical consults. Key benefits of using telephone medical consults include: access, particularly for rural residents; quality; affordability; efficiency; convenience; patient satisfaction; productivity; and early intervention in the disease process — reducing morbidity, mortality, and saving money. Currently, more than 1.5 million Americans have access to this option with significant growth projected as more employers, health plans and other benefits payers recognize the opportunity for improving access to quality care and reducing expenditures.

The Real Reformer
Robert Goldberg, Center for Medicine in the Public Interest
The Weekly Standard, 03/10/08

Bob Goldberg explores Sen. John McCain's proposal to allow veterans to get care anywhere rather than just through the Veterans Health Administration (VA). In some VA hospitals, he says, veterans wait 18 months for surgeries — a record worse than Canada's or England's national health care systems. McCain would increase the opportunities for individuals to choose the care that's best for them by giving patients and doctors the dollars, information, and freedom to make medical decisions instead of being forced to operate through a government agency.

Obama's Health Plan — A Preview
Scott Gottlieb, American Enterprise Institute
The Wall Street Journal, 03/04/08

Former Senate majority leader Tom Daschle's new book, "Critical: What We Can Do About the Health-Care Crisis," provides a more detailed blueprint of the Democratic approach to overhauling American health care than either Mr. Obama or Hillary Clinton has offered on the campaign trail, writes Scott Gottlieb. The most important proposal Daschle offers is the creation of a "Federal Health Board," whose duties would include "recommending coverage of those drugs and procedures backed by solid evidence." Daschle admits that the board is loosely based on the National Institute for Clinical Excellence in Britain and the Federal Joint Committee in Germany, both of which are charged with managing the public's access to higher-cost drugs, medical devices and procedures. But both are growing increasingly unpopular in their home countries — precisely because they've become a triumph of cost-containment over patient access and choice. Gottlieb writes that one alternative to empowering government agencies would simply be to help individuals buy affordable private insurance. That effort might start by leveling the playing field between big purchasers, who get better rates for their employees, and individuals, who make up the bulk of the uninsured.

Sen. Hillary Clinton’s opening gambit to Congress for health reform would be a proposal for genuine, mandated universal health insurance coverage, and she would ask for as much as $110 billion a year to make the mandate affordable to all Americans, writes Princeton University Professor Uwe Reinhardt. By contrast, the assumption of Sen. Barack Obama appears to be that Congress would never be so bold as to cram mandated health insurance down the public’s throat, nor would it appropriate a sum as large as $100 billion or more a year for the subsidies needed to make if affordable to all Americans. If history is any guide, writes Reinhardt, neither candidate is likely to get out of the U.S. Congress even the less ambitious plan proposed by Obama. Most likely, Americans will have to suffer far greater misery in health care before reaching the maturity to embrace the idea of truly universal health insurance.

Patently Absurd
Doug Bandow, Citizen Outreach
The American Spectator, 03/06/08

As state and federal officials push for importation of American medicines from abroad to obtain cheaper drugs, they would do well to look at the experience of our nation's capital, writes Doug Bandow. The Washington D.C. City Council outlawed "excessive prices" for medicines in 2005, but shortly after its passage, a federal District Court of Appeals voided the law, concluding that it would undermine the federal government's authority to grant patents and allow inventors a fair return on their research. The city tried to appeal the decision, and lost again. Unfortunately, what makes price controls attractive politically is that the costs are invisible. People won't suffer the worst consequences of price controls for years, given the long lead time in drug development. And it is impossible to say what products won't be available since no one knows what cures otherwise would have been discovered. The trade-off is cheaper drugs for voters today versus unrecognized deaths and hardship for the unborn in the future. If public officials really want to help the sick, they will keep their hands off of drug production.

UPCOMING EVENTS:

2008 National Symposium on Health Care
Mayo Clinic Event
March 9-11, 2008
Leesburg, VA

New medicines and new technologies: A saving or a burden?
Centre for the New Europe Event
Monday, March 10, 2008, 12:30 p.m. – 2:30 p.m. (Lunch included)
Brussels, Belgium

A New Plan to Expand Primary Health Care Access Across America
National Association of Community Health Centers Congressional Briefing
Wednesday, March 12, 2008, 10:00 a.m.
Washington, DC

Responsible Health Reform: Competition, Innovation, and Individual Control
American Enterprise Institute Event
Thursday, March 13, 2008, 12:00 p.m. – 1:00 p.m.
Washington, DC

Roosevelt Rx: National Student Health Policy Forum
The Roosevelt Institution Event
March 13-14, 2008Washington, DC

Oncology Drug Development: Rethinking FDA Oversight
American Enterprise Institute Event
March 13-14, 2008
Washington, DC

Health Policy "Checkup" with Sen. Ron Wyden
Oregon Health Forum Event
Wednesday, March 19, 2008, 7:00 a.m. – 9:00 a.m.
Portland, OR

The Explosion of Health Scares: Everything Is Dangerous!
The Heartland Institute Event
Wednesday, March 19, 2008, 11:30 a.m. – 1:30 p.m.
Chicago, IL

Supporting Rural Family Caregivers
U.S. Department of Health and Human Services Satellite Broadcast
Wednesday, March 19, 2008, 1:00 p.m. – 3:30 p.m. EDT

Healthcare Cost of Quality: The Relationship between Performance Metrics and Financial Results
American Society for Quality Webinar
Wednesday, March 26, 2008, 1:00 pm. – 2:00 p.m. CDT

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 http://www.galen.org.

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