05/2002: The Galen Report

Published May 1, 2002

Senior Capitol Hill staff members outlined prospects for passage of a Medicare prescription drug benefit this year during an April Commonwealth Fund conference on “Options and Possibilities.”

Julie James of Health Policy Alternatives gave an excellent overview of drug coverage options, from competing private plans (Thomas, Breaux/Frist), to a drug benefit add-on for existing Medicare (Daschle, Graham), to drug cards (Bush, Galen Institute), to a “benefit swap” (Senate Finance 2000) that would allow people to select a redefined comprehensive benefit package for Medicare that includes prescription drugs.

John McManus, staff director of the House Ways and Means Subcommittee on Health, said the House leadership wants a vote on a drug benefit bill by the end of May to give the Senate time to pass a bill of its own. He outlined areas of agreement with Democrats, including making sure the benefit provides assistance for all Medicare beneficiaries, with special subsidies for those with low incomes, and assuring government will serve as a back-up so plans or other options are available in all areas of the country.

Further, McManus said there was basic agreement on the cost of a benefit: $350 billion for the House and $400 billion for the Senate ($500 billion budgeted, minus $100 billion for the uninsured).

Liz Fowler, chief counsel on health for Democrats on the Senate Finance Committee, agreed that, “Once you get to agreement on costs, it is easier to get a bill.” She also said Democrats are comfortable with the concept of prescription drug management firms and the need for incentives for efficiency. But she said the structure of the program would need to track current Medicare benefits, with a government-defined benefits package, low deductibles, and small co-payments on drugs. Fowler said Senator Charles Grassley is leading a tri-partisan group of Senators to develop a Senate bill.

Patrick Morrissey, deputy chief of staff for the House Energy and Commerce Committee, focused on the problems involved in new federal funding for state-based programs, as the Bush administration has recommended, “which make it more difficult to reform the program in the long run” and may drain resources from those who need help the most.

Our perspective: Democrats and Republicans are too far apart to come to agreement on a drug benefit this year; there is too much political capital in play to take this off the table as an election issue; and senior citizens are simply not educated enough about their options for Washington to be spending this kind of money. If Congress acts without properly educating seniors about the options and trade-offs, they could be faced with a repeat of 1989’s Catastrophic Coverage failure.

Some good news from the West Coast: California Governor Gray Davis and Republican challenger Bill Simon squared off recently in a debate before the California Medical Association. Davis defended the status quo. Simon called for “wholesale changes,” including “tax incentives that will empower individuals to seek the care that is right for them.”

“We have the finest hospitals, physicians, and nurses the world has ever known, but you’re mired in a system that doesn’t work. We need fundamental reform, and let that process begin with this campaign between Gray Davis and me.”

Simon’s bold and visionary speech earns three cheers. You can read it at http://www.simonforgovernor.com/showArticle.php?id=380

As California goes …

— Grace-Marie Turner


Racist Doctors? Don’t Believe the Media Hype
Sally Satel
Wall Street Journal, 4/4/02

“The institute’s case for prejudice in the March 20 report is weak,” says Dr. Sally Satel in response to the recent Institute of Medicine report, “Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care.” The report identified racism as a major culprit in perceived health disparities of minorities.

Satel identifies the lack of investigation of the underlying causes of differential care to be a major problem of the IOM report. Unanswered questions remain, such as whether black patients refuse treatment more often than white patients, whether black patients have higher rates of other conditions that would prohibit treatment, and the marriage rates of black patients.

“All the hype surrounding the study is most disturbing because it diverts us from the far more important causes of the health gap: access to care, health literacy, and attitudes toward health. We can do much to improve the health of African-Americans. Inciting their distrust of the medical profession with misleading claims about physician prejudice can only hurt,” Satel said.

Full text of article: http://www.galen.org/news/040402.html

The Medicare Police
Wall Street Journal, 4/1/02

Layers of regulations, price controls, and coverage limits added by Congress have not been able to control costs in the Medicare program, says the Wall Street Journal. Instead, these confusing, overbearing regulations have led to a misguided campaign by federal prosecutors to find fraud in the program. Innocent doctors are dropping out of the program for fear of criminal investigations.

The Wall Street Journal recommends the Medicare program be reformed to introduce market-based competition into the system. “The cause [of Medicare reform] needs to be revived, especially with politicians clamoring to add drug benefits to a broken system. America’s medical profession needs to be liberated from red tape and the Medicare police.”

Full text of article (requires subscription): http://online.wsj.com/article/0,,SB1017624050915409400,00.html

Prescription Drug Payola
Merrill Matthews Jr., Ph.D.
Institute for Policy Innovation, 3/12/02

The old payola scam has reappeared, but this time it is prescription drugs not radio airplay, says Merrill Mathews of the Institute for Policy Innovation.

Drug manufacturers are being told by government officials and politicians that the only way the poor will be given access to the companies’ drugs is if each company hands over additional cash. Matthews says they are essentially telling the drug companies, “If you want the poor to have access to your product, cross my palm!”

Louisiana’s Department of Health and Hospitals exemplifies the new version of payola. It recently contracted Provider Synergies to negotiate state rebates drug companies agree to pay in return for getting their drugs on a list for Medicaid reimbursement (The Advocate, 4/4/02). Matthews points out that supplemental rebates are merely an attempt to generate revenues without raising taxes and asks, “Wouldn’t it make more sense to let competition, rather than rebates and price controls, drive costs down?”

Full text of article: http://www.ipi.org/ipi/IPIPublications.nsf/PublicationLookupFullText/ECBC26550DB51EA686256B89006A8280

Changes in Insurance Coverage: 1994-2000 and Beyond
John Holahan and Mary Beth Pohl
Health Affairs, Web Exclusive, 04/03/02

New data from the Current Population Survey for 2000 shows that between 1994 and 2000, lower-income Americans were likely to move up the income scale and get jobs that provided health coverage, while middle-income Americans were net losers in health insurance coverage.

In 1999 and 2000, there was a significant shift among children below 200 percent of poverty from private coverage to government programs, showing the shift from private insurance to the State Children’s Health Insurance Program among lower- and middle-income children.

While the rate of uninsured was virtually unchanged during the period, there were significant shifts within the population. “A major change took place in the income distribution. … There were fewer low-income Americans, but those whose incomes stayed low were more likely to have employer coverage,” the authors write.

The net loss of health insurance coverage by middle-income Americans could signal a major shift in the debate over the uninsured as this more politically powerful constituency feels the pinch of a system that needs repair.

Full text: http://www.healthaffairs.org/WebExclusives/Holahan_Web_Excl_040302.htm

Material for this report is provided by The Galen Institute, P.O. Box 19080, Alexandria, VA 22320, http://www.galen.org. Grace-Marie Turner is president. This report is produced by Elizabeth Lamirand, who can be reached at 703/299-9550, and edited by Conrad F. Meier, managing editor of Health Care News.