03/2002: The Pulse

Published March 1, 2002

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Republican Opportunities in Health Care

At a recent meeting on Capitol Hill, Bob Moffit of The Heritage Foundation encouraged Republican officials to take the offense on health reform.

He said they should press the advantage revealed during the debate on the stimulus package. During the debate, the Republicans clearly had the better position, calling for tax credits for all workers without employer-sponsored coverage.

The Democrats were on the defensive, offering a weak-kneed proposal for huge financial support for those few workers eligible for COBRA, and putting everyone else on Medicaid. Moffit said this opportunity to change public perceptions is too important to squander.

An article in USA Today bears him out. A recent USA Today/CNN/Gallup poll found the Republican Party has gone from a nine-point deficit to a six-point advantage over Democrats since September 11. Currently 61 percent have a favorable view of the Republicans and 55 percent have a favorable view of the Democrats.

The Republicans do especially well on defense, fighting terrorism, and foreign policy. They also do better on taxes, the economy, and the federal budget. The big weakness for Republicans was in health care, where the Democrats held large advantages on issues like prescription drugs in Medicare, Medicare reform, and the Patients Bill of Rights.

If Republicans can roll out an aggressive health care agenda, the Democrats wouldn’t have any issues left.

Source: http://www.usatoday.com/news/2002-01-15-usat-poll.htm

Congressional Staff Out of Touch

Unfortunately, Congress is still focused on issues like the Patients Bill of Rights and prescription drugs for Medicare, according to an article by Julie Rovner in Reuters.

She reports on a Congressional staff panel discussion at the National Health Policy Conference, which also discussed such burning issues as cloning.

Largely absent from the discussion were the issues that are really on people’s minds these days, such as premium increases, the collapse of managed care and the small group market, the growth of consumer-driven health plans, the problems with Medicaid and SCHIP, and the cost of complying with all of Congress’s regulations.

In fact, Dean Rosen, health advisor to Senator Bill Frist (R-Tennessee), is quoted as praising HIPAA and the BBA as great bipartisan successes. Has Washington ever been more out of touch?

Source: http://www.reutershealth.com/frame2/eline.html (look for the January 17 stories)

Hawaii Legislators to Make Bad Problems Worse

Perhaps no state is in a bigger health care mess than Hawaii, the one state with an ERISA waiver allowing the state to mandate employer-provided coverage.

The “Prepaid Health Care Act” requires that workers pay no more than 1.5 percent of their wages for their share of the cost of coverage. But premiums have increased much faster than wages, so the employee contribution now amounts to only 7 percent of the cost—compared to 30 percent of the cost when the law was passed in 1974. Curiously, the state itself pays only 60 percent of the cost for state employees, with state workers paying the other 40 percent.

Naturally there are consequences. People who work only 20 hours a week are exempt from the law, so many companies employ only part-time workers, and unemployment is high. The act also requires a single benefit design, which has helped create a near-monopoly among health insurance providers. The Hawaii Medical Service Association (the local Blue Shield plan) has the bulk of the market with a local Kaiser plan taking almost all the balance.

This near-monopoly has given the insurance commissioner the excuse he needs to demand new power to control premium rates. Commissioner Wayne Metcalf says “the health care plan marketplace is totally dysfunctional with virtually every competitor … fallen by the wayside in the last several years.”

Rather than opening up the market, many legislators in Hawaii are looking in exactly the opposite direction. The chairman of the Health and Human Services Committee has proposed a “universal reimbursement fee schedule” that would require all payers—including auto, workers’ comp, and health plans—to pay providers at 120 percent of the Medicaid rates.

Another legislator wants to create a “universal long-term care insurance plan” that would require all adults over age 25 to pay for LTC coverage.

Source: This information is based on a series of articles by Kristen Sawada in Pacific Business News. See: http://pacific.bcentral.com/pacific/stories/2002/01/21/story8.html http://pacific.bcentral.com/pacific/stories/2002/01/07/story3.html http://pacific.bcentral.com/pacific/stories/2002/01/14/story3.html

Self-Insured Employers Hurting, Too

Things aren’t a whole lot better for self-insured employers, according to an article in Employee Benefit News. Premiums for stop-loss reinsurance are going up 40 percent to 50 percent, partly because of the losses reinsurers experienced on September 11, and partly because of several major companies leaving the market, according to Don Gasparro.

He says employers are responding by moving to defined contribution solutions as well as partnering with other players to help assure greater efficiency of their health care dollar with quality assurance programs, performance audits, and better employee education.

Source: http://www.benefitnews.com/subscriber/Article.cfm?id=37880513

Consumer-Driven Plans in Austin

Amy Schatz writes a story in the Austin American Statesman about some of the new health plans available in Central Texas, including those of Lumenos, Destiny, Aetna, Humana, and United Healthcare.

In a bit of a twist, Schatz says, “Consumer groups are concerned that health care providers aren’t prepared for the kind of scrutiny that defined-contribution plans would bring upon them.” She also says “insurers are keen to break the perception that a doctors visit costs $10,” and quotes Scott Keyes, a Watson Wyatt consultant, who says, “We’ve got a generation of people who have gotten used to the idea that health care doesn’t cost anything.”

Source: http://archives.statesman.com/ January 20, 2002.

Consumer-Driven Plans in Rhode Island

The Providence Journal-Bulletin is interested in “a whole new world of health care,” too. It focuses on local company Textron, which has adopted Definity’s health plan. Out of 1,700 local employees, 1,320 have signed up for the plan as of January 1, 2002.

Most of the rest get coverage from their spouses or other family members. Because the Textron program is so new, the article looks at the experience of Medtronics, which also has a Definity program. If the approach works, Textron intends to offer it to all its 36,000 employees.

Source: http://archives.projo.com/ January 16, 2002.

Consumer-Driven Plans Get Cynical Response

A more cynical view is offered by Stacey Bradford in SmartMoney.Com. It isn’t that she says anything inaccurate or even especially critical. It is more that she uses a condescending tone that dismisses the favorable aspects and lends credence to the critics.

“Forewarned is forearmed,” she says, “these newfangled plans … are coming your way.”

“To its proponents, these plans represent the Holy Grail of health-care cost containment,” she writes.

Essentially, the article is an example of how difficult it will be for some people to become accustomed to the idea that health care isn’t free, and that having consumers involved in the cost of their care is not an evil plot.

Source: http://aol.smartmoney.com/consumer/index.cfm?story=20020124

Greg Scandlen is senior fellow in health policy at the National Center for Policy Analysis in Dallas, Texas and assistant editor of Health Care News. To sign up for his free weekly e-newsletter, Scandlen’s Health Policy Comments, log on to . Scandlen can be reached by email at . http://www.ncpa.org/sub[email protected]