05/2003 The Galen Report

Published May 1, 2003

The former director of the Congressional Budget Office, Dan Crippen, advised the Senate Aging Committee to understand a problem before spending hundreds of billions of dollars to fix it. What a novel idea!

The man who produced cost estimates for Congress for four years has suggested to Congress it might be wise to start by counting who most needs help with health insurance and prescription drugs before enacting hugely expensive new programs.

For example, Crippen said less than half of the 41 million uninsured are without coverage for 12 months or more. The other 20 million are between jobs, between spousal coverage, and between public programs. The average period without health insurance is seven months, and 40 percent are uninsured for fewer than four months.

We’ve said for years that many people are uninsured precisely because we so closely tie health insurance to the workplace in this country, forcing people to lose their health insurance when they change or lose their jobs and discriminating through the tax code against those who don’t have the option of job-based coverage.

The solution is not to give everyone the “stability” of government-sponsored health insurance–heaven forbid–but to fix the system that kicks people off the insurance rolls so arbitrarily!

“Until the nature of the problem is clear, the solutions we devise may be ineffective and unnecessarily costly,” Crippen said. This could suggest targeting new programs to people who are chronically uninsured and have low incomes.

Crippen made a similar point in talking about a Medicare drug benefit. He noted it’s important for legislators to recognize that three-fourths of seniors already have coverage. If the government has limited money to spend, even the Washington Post recommends a targeted, low-income benefit.

Health insurance and drug coverage are important for those who lack it. That’s why Congress should take a careful look at how it plans to spend taxpayer money to make sure we get the results we expect.

The conversation over health reform continues, even as Washington is consumed by plans for war. Please pray for our soldiers.

— Grace-Marie Turner


The Uninsured: a Study of Health Plan Initiatives and the Lessons Learned
National Institute for Health Care Management
March 2003

This study conducted by the National Institute for Health Care Management (NIHCM) examines 13 private-sector initiatives to analyze how private health plans have tried to cover the uninsured in recent years and to identify the lessons learned from these initiatives.

Successful health plans target small businesses and non-poor people who do not qualify for public programs. Successful plans are “characterized by aggressive marketing to the target population, affordable coverage choices, and flexible product design.” The results of the study demonstrate “the success of public/private partnerships in launching programs aimed at expanding health insurance coverage.”

Full text (pdf): www.nihcm.org/UninsuredFull.pdf

Increased Drug R&D through Increased Promotion
John R. Graham
Fraser Forum, March 2003

Canada and the European Union should follow the example set by the U.S. and significantly deregulate direct-to-consumer (DTC) advertising, says the Fraser Institute’s John Graham. Graham points to data from the U.S. that “shows a very positive relationship between spending on promotion and on R&D.” Graham says, “If it [DTC advertising] were prevented from communicating the value of its products to doctors and patients, sales would be reduced, and the incentive to conduct R&D would be much less. … More DTC advertising leads to better treatment of patients today and more R&D invested in finding new medicines for patients tomorrow.”

Full text (pdf): www.fraserinstitute.ca

The 2003 Medicare Trustees’ Report
Centers for Medicare and Medicaid Services
March 17, 2003

The financial stability of Medicare has declined from last year due primarily to lower-than-expected revenues and higher-than-expected hospital spending in 2002. The Hospital Insurance Trust Fund (HI) will face insolvency four years earlier than was projected last year, now expected to be exhausted in 2026. Expenditures will now surpass revenues in the HI program in 2013.

“Without changes in the Medicare program, closing the projected HI gap between revenues and expenditures would require that benefits be reduced by 42 percent, or income from the payroll tax would need to be increased by 71 percent,” the report said.

Full text: www.cms.hhs.gov/publications/trusteesreport

Demonizing Those Who Cure Us
Doug Bandow
Washington Times, March 15, 2003

Doug Bandow of the Cato Institute argues, “Americans can’t get something for nothing: Canadian-style prices in the United States would mean Canadian-style access to pharmaceuticals in the United States.”

In Canada, he says, “Pharmaceutical controls have sharply cut access to needed drugs. Of 400 drugs considered for reimbursement by the Canadian province of Ottawa between 1994 and 1998, only 24 were added.” This denial of new drugs has “horrible consequences for the sick.” He warns the U.S. against going down the path of price controls. “Canada manages by free riding off of the United States. Alas, there is no one off of whom Americans can free ride.”

Full text: www.townhall.com/columnists/dougbandow/db20030318.shtml

The Medicare Challenge: It’s Not Just about Prescription Drugs
Douglas Holtz-Eakin
Congressional Budget Office Testimony
March 20, 2003

“Any approach to Medicare should incorporate two features: A recognition of the larger economic and budgetary trade-offs, and consideration of the program structure that would best support Medicare’s overall objective of providing financing for high-quality medical care for the elderly and disabled,” said Doug Holtz-Eakin, director of the Congressional Budget Office, in recent testimony before the Senate Special Committee on Aging.

He discusses the value of improved decision-making by beneficiaries, the efficient use of Medicare dollars, and demographic trends in the Medicare population. Without change, Holtz-Eakin warns, Medicare “will cause a substantial deterioration of the fiscal position of the U.S. government.”

As an example, he cites the Medicare Trustees’ report estimate that Medicare will consume 9.2 percent of GDP by 2075. “If the Medicare program’s costs today accounted for 9.2 percent of GDP, they would equal half of what is now spent under the entire federal budget.”

Full text: www.cbo.gov/showdoc.cfm?index=4108&sequence=0

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. The report was produced by Elizabeth Lamirand, who can be reached at 703/299-9550, and edited by Conrad F. Meier, managing editor of Health Care News.