10/2001: The Galen Report

Published October 1, 2001

The magnitude of the losses for our country and the sadness, grief, and anger that all of us have experienced since September 11th’s incomprehensible tragedy have been extraordinarily difficult to bear. But the loss is far greater for those who suffered personal losses of loved ones as well.

A dear friend and colleague, Gene Steuerle of the Urban Institute, lost his wife, Norma, on the plane that crashed into the Pentagon. Norma was a clinical psychologist who was active in her church and community. Born in Pittsburgh, she had been a valedictorian of her class at Carnegie Mellon University and held a master’s degree from Temple University and a doctorate from the University of Wisconsin. Please keep Gene and daughters Lynne, 24, and Kristin, 28, in your prayers. We also pray for the many others of you who lost family members, friends, and colleagues in this catastrophic tragedy.

Those of us in Washington and New York experienced personal fear as the disasters were multiplying, not knowing if we would be next. Our offices at the Galen Institute are a few miles south of the Pentagon, and those outside our building heard the impact of the Pentagon crash. We felt we were in a state of siege.

As we all try to go forward, we share the pride in the uniting of our national spirit and patriotism, and we are heeding President Bush’s request that we try to get on with our lives.

What does this mean for the people’s business? Political leaders have clearly responded to the higher calling for our country, pulling out of the swirl of partisan debate.

Certainly, the agenda has changed dramatically.

Does it sound at all reasonable in this new world for Congress to be consumed in a debate over spending $300 billion for a Medicare prescription drug benefit, especially one that would cover the wealthiest seniors, when our national defenses and intelligence capabilities so need to be strengthened?

In addition, I think and hope that the American people would be furious if they saw Congress now wasting its time on the seriously flawed, harmful patients’ bill of rights.

Congress needs to act on certain targeted measures involving health care, particularly focusing on those who genuinely need help, like the uninsured and low-income seniors without prescription drug coverage. But political leaders also need to be concentrating on other initiatives that have not been at the top of the agenda before now.

For example, what initiatives do we need to put in place to encourage private companies to focus their considerable research capabilities on combating chemical and biological weapons and to redirect funds in the public sector to these areas?

Further, the nation must focus on developing a much stronger public health infrastructure to combat biological and chemical weapons. The nation’s medical personnel and hospitals are ill-equipped to deal with potential casualties from these weapons. Already, Senator Ted Kennedy has signaled these deserve the federal government’s utmost attention.

As we move forward, the states are likely to play a bigger role in the health debate than Washington, as will market-based solutions to health sector problems. We offer the following roundup of papers and articles, most of which were written before last the terrorists’ attack, but which still have relevance to the coming policy debate.

God Bless America!

Grace-Marie Turner


Is Tax Reform the Cure for the Ailing Health Care System?
Grace-Marie Turner
IPI Insights, July/August 2001

President George W. Bush has made expansion of health coverage to the uninsured a top priority of his health reform agenda. A key element in that initiative is providing refundable tax credits to the uninsured to assist them in purchasing private health insurance.

The idea has support on both sides of the political aisle, but it often is rejected by experts in tax policy as adding yet another layer of complexity to the tax code. In this excerpt of a chapter written for a forthcoming book on tax reform for the Institute for Policy Innovation, Grace-Marie explains how tax credits can help rectify distortions in the financing of health insurance while setting a proper course for overall tax reform. Without action and public education, the current favored tax treatment of employment-based health insurance could well be the Achilles heel of tax reform.

Health Care Quality: Would It Survive a Single-Payer System?
Merrill Matthews Jr., Ph.D. and Robert J. Cihak, M.D.
Washington Policy Center, July 2001 Policy Brief

Merrill Matthews and Robert Cihak, both contributors to Health Care News, examine the dangers of creating a single-payer health care system in Washington State. The study examines the meaning of health care quality and discusses the impact single-payer systems have on health care access, affordability, new technology, and patient satisfaction, as well as the role of physicians.

The study offers many examples of problems with single-payer systems abroad. For example, “The five-year survival rate for men with colon cancer is 41 percent in Great Britain, versus 64 percent in the U.S., in large part because of a lack of drugs routinely administered in the U.S.”

The authors conclude that if policymakers move toward a single-payer health care system, “[T]hey will find that Washington citizens will be left with neither care nor quality.”

Medical Savings Accounts Progress and Problems under HIPAA
Victoria Craig Bunce
Cato Institute Policy Analysis, August 8, 2001

In a new study published by the Cato Institute, Victoria Bunce writes, “The federal MSA program has been unnecessarily handicapped, if not permanently crippled, by HIPAA’s unreasonable restrictions on the MSA demonstration project.”

Bunce looks at the concept of MSAs, their history, and how they work in practice. She argues, for a “fairer test of MSAs Congress should peel away the remaining legislative and regulatory restrictions on federally qualified MSAs. Expanding the availability of tax-advantaged MSA plans with high-deductible insurance could allow many Americans to economize on insurance costs, save for future medical and long-term-care expenses, and still remain protected against the risks of catastrophic illness.”

New Workforce Survey Reveals Expense Control Is Most Critical Business Challenge Facing Employers in 2001 and Beyond
Total Health Advocacy Partners, Andersen, and CalPERS

The most critical business issue facing employers is expense control, specifically the rising cost of health care and disability and labor costs, finds a new Productive Workforce Survey.

The survey was administered in all 1,400 public agencies served by California Public Employee’s Retirement Systems (CalPERS). Respondents indicated, “The most effective [cost containment] strategy has been to implement a health benefit defined contribution plan.”

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. The report is compiled by editor Elizabeth Turner, who can be contacted at 703/299-9550. Or visit The Galen Institute Web site at http://www.galen.org.