07/2003: The Galen Report

Published July 1, 2003

A Washington Post/ABC News poll reported the American people trust President George W. Bush, by a 55 to 37 percent ratio, to handle the major problems facing Americans … except health care. The poll reported 57 percent of them disapprove, and only 34 percent approve, of the way Bush is handling the “cost, availability, and coverage of health insurance.”

The problems facing the U.S. health care system have deep and complex roots and will not be solved by next year. Change does not come easily when 45 percent of the nation’s health care is financed through government programs and the remaining 55 percent is heavily burdened by federal and state benefit and procedural mandates.

The main legislative initiative to help some of the uninsured keep or get coverage–the refundable tax credits contained in the Trade Adjustment Act of 2002–will be an important start. Yet they also are extraordinarily complex to implement, and only 250,000 to 500,000 people will be eligible. The Bush administration is determined to make the tax credits work and to expand–and improve–the program to cover millions more of the uninsured.

A recent briefing sponsored by the Healthcare Leadership Council provided insights into the heroic efforts to make tax credits work by officials at Treasury, Health & Human Services, Labor, and the Internal Revenue Service, plus outside groups like the National Association of Health Underwriters, the Lewin Group, and others.

These smart people are working very hard to create the necessary financial infrastructure and to help the states create purchasing options to meet the August 2003 deadline.

It’s never easy to create new free-market options within the regulatory morass of the health care system, but these smart and dedicated people are doing it. It’s an important start, but the credits need to be made available to millions more of the uninsured–and soon–to begin to energize the private market for health insurance.

That, coupled with the creativity of employers in structuring consumer-directed health care options, can begin to turn things around … and not a moment too soon!

— Grace-Marie-Turner


Washington and the States
Michael S. Greve
American Enterprise Institute, April 24, 2003

Michael Greve of the American Enterprise Institute says the fiscal crisis facing many states is not a revenue crisis, as the National Governors Association asserts. Rather, he says, it is a systemic problem plaguing “cooperative” federalism: States cannot turn down federal matching funds, and thus they increase spending in times of economic prosperity. In Medicaid, this means states expanded optional benefits and eligibility in the 1990s beyond what would be sustainable in slower economic times.

Instead of giving states more money, Greve suggests separating federal and state functions by having the federal government take over long-term care and prescription drugs in exchange for caps on all other federal payments to states for Medicaid.

Source: www.aei.org/publications/pubID.17053/pub_detail.asp

Lifetime Social Security and Medicare Benefits
Eugene Steuerle and Adam Carasso
Urban Institute, March 2003

Eugene Steuerle and Adam Carasso of the Urban Institute examine the value of lifetime Social Security and Medicare benefits promised under current law. They argue “a lifetime approach reflects both the growth in annual costs and number of years of benefit receipt [which] gives the most comprehensive picture of what government is being asked to provide.”

The authors find the value of lifetime Medicare benefits for an average-wage worker and low-wage spouse would be $490,000 if they retired in 2030. But the couple will have paid only about one-fifth that amount in payroll taxes over their lifetime.

“While a shifting of tax burdens to future generations is possible for a very long time, it is not sustainable–hence the call for reform,” conclude Steuerle and Carasso.

Source: www.urban.org/urlprint.cfm?ID=8356

An analysis of the 2003 Medicare Trustees Report by Matt Moore of the National Center for Policy Analysis also discourages the concept of intergenerational transfer. “When today’s workers retire, their benefits will be paid only if the next generation of workers agrees to pay even higher taxes,” writes Moore.

Source: www.ncpa.org/pub/ba/ba436

Medicare Reform, French Style
Robert Goldberg
The Washington Times, April 30, 2003

Tom Scully, director of the Centers for Medicare and Medicaid Services (CMS), could hinder President Bush’s plan to improve Medicare because “rather than finding important ways to move Medicare into the marketplace, he is adopting the French method of cost containment called reference pricing,” says the Manhattan Institute’s Robert Goldberg.

In an effort to control costs, Scully’s method of “functional equivalence” extends rationing and price controls to prescription drugs. “But in the weird science of Mr. Scully’s ‘functional equivalence,’ lawyers, not doctors, lobbyists, not scientists, politicians, not patients, determine what drugs are used and paid for,” says Goldberg.

Source: www.washingtontimes.com/op-ed/20030430-4497420.htm

A New Consensus for NHS Reform
UK Health Policy Consensus Group
May 2, 2003

The UK Consensus Group, consisting of experts from prominent Labour Party members to representatives of market-oriented think tanks, has issued its final report on how best to reform the British National Health Service.

The group recommends four possible funding solutions: 1) evolutionary reform of primary care trusts; 2) a tax-funded core service with treatment vouchers and top-up insurance; 3) social insurance with individual payment; and 4) social insurance with consumer health purchasing cooperatives, modeled after the United States’ Federal Employees Health Benefits Program.

The group also recommends converting all government-owned hospitals into independent foundation hospitals “at the earliest possible date.”

Source: www.civitas.org.uk/nhs/prHPCGApr03.php

Caught in an Unhealthy Trap? Get Health Care Costs under Control Now
Grace-Marie Turner
Hispanic Trends, Winter 2003

Spiraling premium costs and a sluggish economy are causing employees of small firms to lose their coverage faster than any other group, writes Grace-Marie Turner of the Galen Institute. In response, “Innovative firms are rethinking how they set up benefits, creating programs that give employees more incentive to be cost conscious.”

Medical Savings Accounts and Health Reimbursement Arrangements can get employees more involved; Association Health Plans could help small businesses by pooling their exposure to risk and avoiding costly mandates and regulations; and refundable tax credits could help the uninsured, who are disproportionately Hispanic and working for small businesses.

Source: www.hispaniconline.com/trends/2003/winter/managing/index.html

Material for this report is provided by The Galen Institute, PO 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.