09/2001: The Galen Report

Published September 1, 2001

There is reason for some optimism on the health care front.

The Centers for Medicare and Medicaid Services issued guidelines to give states much greater flexibility in using Medicaid and S-CHIP funds to increase health insurance coverage, “including substantially more private health insurance coverage options.” You can read more at http://www.hcfa.gov/medicaid/hifademo.htm.

The U.S. Census Bureau is changing its methodology for estimating the number of uninsured so we can have clearer data on who the uninsured actually are. The more accurate calculations would mean that the numbers released last year would have been 39.3 million instead of 42.6 million. The new figures will be released in late September.

The new Coalition for Affordable Health Insurance Coverage is gathering steam in its work to expand private health insurance. The Bush administration has this issue at the top of its agenda for helping the uninsured, with the refreshing support of knowledgeable, competent, and enthusiastic officials inside the White House, at Treasury, and at HHS. How refreshing!

President Bush took a first step toward a new conversation on Medicare reform yesterday, listing eight reform principles before an audience of about 200 people from the health sector on beautiful summer day in the Rose Garden (including yours truly).

The eight principles are supportive of the premium support model of Medicare reform developed by Sens. Breaux and Frist and Chairman Bill Thomas, all three of whom had front-row seats in the Rose Garden. The President’s talk was refreshing for what he didn’t say — no demagoguery of the drug industry, no calls for price controls, no stories of people eating cat food to pay drug bills. He talked about the value of medical innovation and the need for Medicare to keep up. His talk may have played a role in the huge run-up in the stock market yesterday.

Bush also backed a drug discount card program for seniors. But instead of focusing on the need for targeted subsidies to low-income seniors, as his original Immediate Helping Hand would have done, he instead said Medicare would give a stamp of approval to private drug discount cards that meet certain criteria.

The drug discount card that the president is proposing is a far cry from the bolder and more workable approach proposed by the Galen Institute. In our model, the drug card would be a vehicle to target subsidies to low-income seniors without drug coverage, and it ties the subsidy to participation in an insurance program for high-end coverage. The Galen plan would involve a number of potential competing players, including insurance companies, drug companies, financial intermediaries, disease management groups, retail drug chains, PBMS, state risk pools, etc. To read the latest version of the Galen Prescription Drug Security Card plan, go to http://www.galen.org/news/071001.html.

Grace-Marie Turner


A Bill of Health? In Patients’ Name, Congress Could Cause Them Injury
Sally C. Pipes
Investors Business Daily 8/1/01

The enduring result of the Patients’ Bill of Rights will be “increasing costs, increasing uninsured, and increasing calls for the federal government to do something,” writes Sally Pipes of the Pacific Research Institute.

The debate over the bill ignored the fact it gives the federal government the mandate to establish health benefits. The harm then comes from the “slow and cumbersome” political process. “By requiring certain procedures, with the promise of more to come, the federal government will stifle innovation and experimentation with new delivery systems.”

The full text of Pipes’ article is available on the Pacific Research Institute Web site at http://www.pacificresearch.org/oped/2001/01-08-01sp.html.

Failing Patients: Medicare is the worst of the lot
Robert Goldberg
National Review Online

Robert Goldberg tells the story here of Max Burghauser, a 92-year-old man with failing kidneys who received substandard care due to cost-cutting measures by his health plan: traditional fee-for-service Medicare.

“For all the hot air about how horrible HMOs are,” Goldberg notes, “Medicare is the worst of the lot: No right to sue for pain and suffering, claims denied as medically unnecessary at ten times the rate in private health plans, administrative reviews of disputes that run for months and years, sloppy and substandard treatment that becomes the norm for 90 percent of ‘plan’ members.”

Goldberg argues lawsuits are not going to improve care. The solution will come when we change how we pay for health care to “encourage people and plans to invest in and reward quality and compassion and encourage the use of better technologies.”

The full text of Goldberg’s article is available on the Internet at http://www.nationalreview.com/comment/comment-goldberg062501.shtml.


Perspectives on the European Health Care Systems: Some Lessons for America
Robert E. Moffit, Ph.D., Philippe Manière, David G. Green, Ph.D., Paul Belien, Johan Hjertqvist, and Friedrich Breyer, Ph.D.
The Heritage Foundation

The Heritage Foundation and the Centre for the New Europe cosponsored a conference in Washington this spring to assess what Americans can learn from the European experience in health care and pension policy. This paper offers presentations by health care experts from France, Great Britain, Belgium, Sweden, and Germany. It should be a mandatory read for anyone who thinks socialized systems are the answer.

The experts each offer lessons that should be heeded by U.S. policymakers as the information age, medical innovation, and consumer empowerment begin to collide with centralized control-and-command health care systems. The Galen Web site soon will have a more complete report on this important conference and paper.

In the meantime, the full text of the paper by Moffat et al. is available on Heritage’s Web site at http://www.heritage.org/library/lecture/hl711.html.

Covering America: Real Remedies for the Uninsured
Economic and Social Research Institute

This new publication contains 10 chapters by health policy experts describing proposals to move toward universal health coverage, including chapters by our colleagues Stuart Butler and Mark Pauly.

In “Reforming the Tax Treatment of Health Care to Achieve Universal Coverage,” Butler proposes replacing the current exclusion for employment-based health coverage with a refundable tax credit targeted to individuals and families, based upon income and household health costs. Employers would help to organize coverage, supplemented by health policy offerings from other organizations, such as churches and labor unions. Pauly presents an “Adaptive Credit Plan for Covering the Uninsured” that would target refundable tax credits or “coupons” to lower-middle-income families redeemable for insurance premiums, with permission to use the coupons for coverage that costs no more than the value of the credit. Very low-income households would be eligible for publicly provided or contracted insurance.

Other papers also offer tax credits as a way to expand access to health coverage, but too many others simply rehash stale approaches of drawing more Americans into government-run health plans like Medicare and Medicaid.

The full text of the book is available in Adobe’s PDF format, chapter-by-chapter or in one fell swoop, at http://www.esresearch.org/index-future.html#Covering.

The Galen Report is a monthly review of health policy matters provided by The Galen Institute, P.O. Box 19080, Alexandria, VA 22320. Grace-Marie Turner is president of The Galen Institute; this report is compiled by editor Elizabeth Turner. Turner can be contacted at 703/299-9550, or visit Galen’s Web site at http://www.galen.org.