Candidates, Media Betray Their Ignorance on Health Care Policy

Published August 1, 2007

On June 14, Democratic presidential candidate John Edwards announced more details of his plan to guarantee universal health coverage on the national level.

What he had already announced is bad enough: An employer mandate and an individual mandate, expanding Medicaid and the State Children’s Health Insurance Program to put more people into government-run health programs, and micromanaging private health insurance.

These are all horrible ideas from the liberal recycle bin, but his new idea is even worse. Edwards would take away patent rights for companies that develop breakthrough drugs and would instead reward them with “prizes” from the government.

This betrays a shocking misunderstanding of how business operates. What investors would put hundreds of millions of dollars into already-risky research projects in anticipation that the government will throw a few dollars to them at the end?

Intellectual property is everything in research and development–which is the business pharmaceutical companies are in. We could all say goodbye to any new drugs if this nutty idea were to gain traction.

Misrepresenting HSAs

The Wall Street Journal in early June carried a big headline story, “Health Savings Plans Start to Falter,” that was incredibly one-sided. Yes, there are “speed bumps” as people figure out how to better manage their spending on health care, but millions of people and tens of thousands of companies find these plans help them get and keep health insurance that might otherwise be unaffordable.

The Journal reports only 19 percent of employees choose the “newfangled plans,” and the reporter managed to find mostly unhappy workers to interview. A little more balance, please. A 19 percent adoption rate is impressive for a program that has been around for only a couple of years and constitutes a big change from people’s previous coverage.

Only one paragraph offered clarity: “In cases where employers spend months informing workers about how the plans work and offer them more financial incentives than just cheap premiums, workers report higher satisfaction.”

Unfortunately, human resources directors, who make decisions about whether to add HSAs to their employees’ health benefits packages, read articles like this and become discouraged. This is not the full story, as study after study proves.

Deceptive Statistics

A study released in early June by the Kaiser Family Foundation and Georgetown University Health Policy Institute claims people with higher-deductible health insurance pay more when they have a baby.

According to the report, the cost for an uncomplicated pregnancy and delivery would be about $9,660. Under a traditional plan, a family would pay about $1,455 in out-of-pocket (OOP) costs, while OOP costs under consumer-driven health plans would be between $3,000 and $7,884.

But it’s essential that people look at the full cost of their health care and coverage. A family with traditional insurance may pay $12,000 a year for insurance, plus $1,455 in OOP costs. Another with an HSA may pay $5,000 for the insurance with $7,884 in OOP costs. The HSA holder still comes out $571 ahead.

And since most people don’t have a baby every year, their overall savings over the longer term can be much greater with an HSA than with traditional insurance.

Grace-Marie Turner ([email protected]) is president of The Galen Institute, a free-market think tank in Virginia.

For more information …

“Maternity Care and Consumer Driven Health Plans,” written by Karen Pollitz, Mila Kofman, Alina Salganicoff, and Usha Ranji and published in June 2007 by the Kaiser Family Foundation, is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to and search for document #21577.