Kansas Health

Employers looking for alternatives as insurance costs continue to escalate

[Ceci Connolly, "Higher Costs, Less Care," The Washington Post, 28 September 2004.]

A new report indicates no relief in sight for rising insurance premiums:

From 2001 to 2004, the proportion of workers receiving health coverage through an employer fell from 65 percent to 61 percent, according to the latest Kaiser data. That decline translated into 5 million fewer jobs providing health benefits, with the sharpest drop in small businesses.

The impact on businesses cuts across the board, however, according to a survey of 900 businesses by Mercer Human Resource Consulting. The report projects a 9.6 percent increase in health care spending per employee in 2005.

"For many employers, an increase of this magnitude -- four times the rate of general inflation -- is painful to consider," said Mercer spokesman Blaine Bos. "And some just aren't going to sit still for it."

Consumer-driven health care options such as health savings accounts may provide an answer for employers seemingly faced with an all or nothing situation. If you have not already registered, consider joining us tomorrow in Wichita or Thursday in Kansas City to find out more about these tools. For more information, visit our homepage at: http://www.flinthills.org.

Kansas Health will be on a short hiatus during the events, but new entries will be posted next week.

[Greg Scandlen, "Choice is revolutionizing health care," The Wichita Eagle, 28 September 2004.
Matthew Hisrich, "HSAs are increasing Americans' health coverage," The Topeka Capital-Journal, 26 September 2004.]

Half right on health care

[David Nicklaus, "America's health care problem? Actually, the nation must confront two," The St. Louis Post-Dispatch, 26 September 2004.]

Post-Dispatch columnist David Nicklaus is correct when he states that socialized care will drive up costs, but his discussion of HSAs reveals a misunderstanding of how they work:

The health savings accounts embraced by President George W. Bush, for example, depend on market competition to address the rising costs. This approach forces people to pay for most routine care out of their own pockets, with catastrophic-care insurance kicking in only after one has spent $1,000 or more. In theory, most of us would be less likely to demand unnecessary tests or visit the doctor for every case of the sniffles.

But if these individual policies replaced employer-provided insurance as our primary method of paying for health care, many low-income workers could not afford the catastrophic-care premiums, let alone the $1,000 deductible. The ranks of the uninsured would swell.

On the other hand, any massive government program to help the uninsured is likely to increase overall medical costs. Sen. John Kerry favors this approach, with a plan to spend $650 billion over 10 years to expand Medicaid and children's health insurance programs.

Independent experts say this plan would reduce the number of uninsured by about two-thirds, providing coverage to about 27 million people who now have none.

But the laws of supply and demand are inexorable. The supply of hospitals and doctors is fixed in the short run, and 27 million new customers is a big increase in demand. The likely result would be even more upward pressure on health care costs.

Nicklaus gives the impression that if HSAs were widely implemented, the uninsured would swell as employers stop offering coverage and premums and deductibles prove too expensive for many. The reality is that people pay out of pocket for health care costs up to that deductible over time, and research indicates the costs are similar to those paying for more comprehensive coverage. As well, higher deductibles mean lower premiums, which makes insurance a more attractive option not only for the uninsured, but for employers. Catastrophic coverage is certainly better than none at all since a person's liability is capped. HSAs are a tool to expand coverage availability, not reduce it.

New book: NCPA's John Goodman on single-payer health care

["The Right to Health Care Gone Wrong! How National Health Insurance Fails Patients," NCPA, 27 September 2004.]

NCPA president John Goodman, known as the "father of MSAs," has just released a new book on the failure of single-payer health care and managed competition:

Lives at Risk is a definitive analysis of single-payer health care systems, especially managed competition – the centerpiece of Sen. John Kerry’s health care proposals. Lives at Risk shows that national single-payer health care systems in countries such as Great Britain, Canada, Australia and New Zealand have not delivered on the promise of a right to health care.

Evidence presented in Lives at Risk shows that patients in single-payer countries routinely face a reduction in the quality of health care:

- Lower quality of care, especially for the sick.

- Lack of access to the best doctors and medicines.

- Lack of access to new medical technology.

- Unreasonable waiting periods.

Single-payer health care systems, including Sen. Kerry’s managed competition model, lead to some of the same bad consequences as national health insurance – too many services for the healthy and too few for the sick and the poor.

[Matthew Hisrich, "Additional Medicaid Spending is Irresponsible," The Flint Hills Center, 22 July 2004.]

Wharton professors like the sound of consumer-directed plans

["Why Bush and Kerry are Wrong on Health Care," Knowledge@Wharton, 22 September 2004.]

While they remain skeptical about top-down political solutions, professors at The Wharton School believe that the answer to many of America's health care problems may be found by empowering consumers:

[Mark V. Pauly and and Lawton R. Burns, professors of health care systems at Wharton] believe that one of the most promising approaches is "consumer-directed health care." At its heart, it means consumers pay more out of their own pockets. Although many people resist this, the only other proven way to restrain growth in costs is managed care such as health maintenance organizations, and people don't like this much, either, Pauly says. "If we're going to control spending, we're going to have to go to one or the other of those. At the moment, the winds are blowing in the direction of patient cost-sharing."

Consumer-directed plans are "as good as any idea out there," adds Burns, who is writing a book on four such plans. Essentially, he says, the idea is "to empower, engage and enlighten the consumer ... to make the consumer a more active chooser of these products and providers." Plan participants are given extensive information on prices for drugs, procedures and other services. They get training so they can assess what kind of care they are likely to need. And they get the information required to compare one provider with another.

Humana, a health insurer in Louisville, Ky., has had good results experimenting with such a plan on its own employees, Burns says, adding that this model looks more like auto insurance than health insurance. Employees choose which elements of coverage they want from a wide-ranging menu, based on their willingness to pay out of pocket expenses and their assessment of likely need. "You let people customize how they use health benefits."

In such a plan, employees typically have the first $500 of annual health care expenses covered, as well as anything above $2,000 a year. Thus they can spend as much as $1,500 a year on their own. Humana has found that this approach does cut health care spending, Burns says, noting that "people become much better consumers."

More doctors tacking on "malpractice surcharges"

[Sandra G. Boodman, "Insuring Controversy," The Washington Post, 21 September 2004.]

As malpractice insurance costs continue to climb, some doctors are looking to their patients for help:

Rising expenses and static reimbursements have led a growing number of physicians, most of them in the less lucrative primary care specialties of pediatrics, family practice and internal medicine, to begin charging so-called access fees for services they once provided for free. These include filling out camp and disability forms, taking after-hours phone calls, and answering e-mail questions. Some are also dunning patients for canceled appointments.

Health care goes online

[Fred L. Smith, Jr., "The Internet as Medical Adviser?," The Washington Times, 22 September 2004.]

The internet provides individuals with a host of information on virtually any topic. Medicine is no exception. How that reality will play out remains to be seen:

The energetic role of the Internet is beginning to supplant the priestly physician in the medical advisory role.

The hierarchic medical structure of the past—the doctors as high priests dispensing their knowledge in oracular fashion—is rapidly being replaced by the noisier, but vastly more knowledgeable Web.

It's possible some people may find this new, decentralized world a bit confusing. No one, however, is likely to be more confused by it than the Food and Drug Administration. After all, such a Web-centric world will challenge FDA's basic operating premise, which is centralized control over drug and device use. Such control is unlikely to survive the pressures of this "take charge" Web-world.

The Internet offers great hope for a healthier tomorrow. It has emerged when the centralized health technology gateway role of the FDA is already crumbling. For those of us who believe the FDA's regulatory rigidity has disserved the public, by delaying need therapies and raising the cost of new drugs and devices, this emergence comes not a moment too soon.

Don't blame the Twinkie

[Steven Milloy, "Snack Foods Don't Fatten Kids," Fox News, 24 September 2004.]

Obesity and the "culture of fear" have been topics of discussion on Kansas Health in the past. As Steven Milloy points out, the assumed link between snacks and overweight children does not necessarily hold up to scrutiny:

Snack foods, as it turns out, may not be an important cause of weight gain in children after all. Harvard University researchers followed the snack food intake during 1996-1998 of almost 15,000 children aged 9 to 14 years. Their results were reported online in the International Journal of Obesity on Aug. 17 — and virtually no place else since.

After statistically controlling for stage of development, age, height change, activity and inactivity, the researchers reported no relation between intake of snack foods and subsequent changes in bodyweight among the 6, 774 boys and an inverse relation (meaning snack food intake was associated with lower weight gain) among the 8,203 girls.

The researchers concluded, "Our results suggest that although snack foods may have low nutritional value, they were not an important independent determinant of weight gain among children and adolescents."

The Harvard study data may have its limitations, but at least its researchers aren't trying to use poor quality data to support weak statistics. The researchers studied almost 15,000 kids for several years in an effort to link snack foods with weight gain. They couldn't do it. I find that to be a significant "non-result."

The Harvard study does not justify bad eating habits among children. But neither does it justify the demonization of snack foods. There are no "good" foods or "bad" foods. There are, however, "good" and "bad" eating habits. Snack foods can be part of a healthy diet.

New JAMA study: Switzerland's consumer-driven approach paying off

["Swiss health care system offers middle path," NCPA Daily Policy Digest, 21 September 2004.]

Standing out amidst a host of countries dominated by a heavily socialized approach to medicine in Europe, Switzerland's attempt to incorporate an understanding of human behavior into their health care has resulted in a more stable system:

Switzerland’s consumer-driven health care (CDHC) system offers an alternative to the American model for health care that avoids some of the pitfalls of a government-run system, say Regina Herzlinger and Ramin Parsa-Parsi, writing in the Journal of the American Medical Association.

CDHC combines three major elements:

- Freeing demand: Consumers buy health insurance plans (rather than their employers) and they know the full cost of care.

- Freeing supply: Insurers freely design and price insurance plans and providers freely design and price their services.

- Market efficiency: Consumers have excellent information about the quality and cost of insurers and providers, thus look for the best value for their money.

Switzerland has adopted a CDHC-styled system and has enjoyed a fair degree of success, say Herzlinger and Para-Parsi. Some of the more notable characteristics of the Swiss system include:

- Swiss citizens are required to buy health insurance; no insurance plans are complete, leaving out incidental expenses which must be paid out of pocket.

- Means-tested subsidies are available for compulsory insurance; 33 percent of the insured receive subsidies, accounting for 19 percent of all insurance premiums.

- The largest market share for insurance plans is held by high-deductible plans, while managed care plans have a relatively small market share.

- The Swiss system achieves 30 percent lower per capita health care costs and universal coverage than the United States and provides reasonable quality of care.

The Swiss experience provides a number of lessons for nations looking to pursue CDHC such as permitting experimentation in insurance policies, rewarding efficient health providers to encourage innovation in the delivery of health care, and limiting the number of mandatory benefits included in insurance policies, say Herzlinger and Para-Parsi.

Biosciences "investment" a risky scheme

[John A. Dvorak, "Kansas sets aim at leadership in bioscience," The Kansas City Star, 23 September 2004.]

When policymakers start out by justifying spending taxpayer dollars with the logic that "other states are doing it," you know you're in trouble. Unfortunately, this is apparently the motivation behind a new biosciences "investment" program in Kansas:

Saying “you can't succeed without a dream,” Gov. Kathleen Sebelius on Wednesday kicked off a plan to make Kansas a pacesetter in bioscience.

The goal, she said, is nothing less than world leadership in an industry on the brink of possibly enormous growth.

A law passed by the Kansas Legislature earlier this year creates the Kansas Bioscience Authority, an 11-member group that will hold its first meeting today and will eventually allocate millions of dollars in an attempt to stimulate bioscience.

Sebelius met informally with nominees to the group, along with business and political leaders, at the headquarters of ScriptPro, a Mission-based company that typifies what can happen in the bioscience industry.

ScriptPro, which makes robotic dispensing systems for prescription drugs, didn't exist a decade ago, Sebelius said. Today, she said, it employs about 500 people.

“Our plan for Kansas will see many more successes like this one,” she said. “We're ready to roll up our sleeves.”

Bioscience refers to a broad range of activities, including the use of different kinds of research and manufacturing processes to promote health care and improve veterinary medicine, agriculture and the environment.

Money from new taxes paid to the state as the bioscience industry expands will provide a financial backbone for the effort, with estimates suggesting that as much as $500 million will be raised in the next decade.

So, the plan seems to be that government officials will tax successful companies in order to subsidize those that they hope will be successful. Rather than playing at Wall Street hotshots, a better approach to fostering bioscience investment is to create a business environment that encourages growth.

According to the Kansas Bioscience Initiative, "Numerous states are staking their claims on the future of the bioscience industry by dedicating hundreds of millions of state dollars to drive research and commercialization in their states including Georgia ($350M), Wisconsin ($317M), Texas ($850M), Ohio ($1.6B), Missouri ($190M), and Washington ($750M)."

Of the examples listed, Ohio is apparently spending the greatest amount on bioscience and high-tech jobs. Spending is one thing, though, and success is another. Should Kansas follow the example of a state whose investment efforts have largely been a failure?

Government intervention is not an incubator of business, the lack of intervention is.

Anarchy in the UK's health care system

[Jeremy Laurance, "Increases in funding for NHS may not improve care," The Independent, 21 September 2004.]

More news from Britain that their system of socialized medicine is no model for the U.S. to follow:

Spending on the NHS is rising at least 50 percent faster than the number of patients being treated, a think-tank report said yesterday.

There was no way of telling if the extra cash is improving care for patients or disappearing down a black hole, the Office of Health Economics (OHE) said.

Studies of health care activity - the number of patients treated in hospitals - showed that on the most optimistic measure it had increased by almost 4 percent a year between 1999 and 2004. But spending had increased by between 6.1 percent and 7.3 percent.

"Health care activity has therefore not increased at a comparable rate to spending on the NHS," the OHE said. "This would seem to imply that the Government has not achieved value for money. Yet the simple answer is no one knows. NHS productivity, or value for money, is not being measured."

When will Congress remove roadblocks to cheaper insurance?

[Jerry Heaster, "Talent plan would help uninsured," The Kansas City Star, 22 September 2004.]

Health Savings Acounts are a positive step toward reducing the cost of insurance. But there are certainly other angles from which leaders at the federal and state level can approach the problem of the uninsured. Today's column from The Star's Jerry Heaster reveals a growing exasperation regarding the unwillingness of Senate leaders to follow through on one of those proposals - association health plans:

If anyone were interested in discussing the really important issues this election campaign, much of the debate would focus on Sen. Jim Talent's efforts to help the uninsured.

The bill would allow small businesses to join forces nationally through their trade associations to purchase health-care insurance. By coming together as major purchasers, small-company groups could achieve enough buying clout to give them access to the same quality health-care coverage at rates similar to those paid by America's largest corporations.

With so many worthies in influential positions so concerned about the uninsured's plight, why isn't Talent's proposal getting more serious discussion in high places?

The sad answer is that there are some who hypocritically decry the uninsured problem while hoping to use it as a justification for greater government involvement in the health-care market. They hope making Americans more dependent on government in every way will translate into greater political power, and they're right. This is why they fought so hard against the concept of medical savings accounts and, later, health savings accounts.

Proposals that give Americans more control over their lives are anathema to these Big Government disciples. The problem is especially noteworthy in the Senate, which once was known as the world's greatest deliberative body.

Now it's a graveyard for a dozen or so major legislative proposals dealing with issues ranging from health care to tort reform to taxes. Many of these stalled initiatives already have passed the House with large bipartisan majorities.

The unwillingness of major candidates to challenge the do-nothing Senate to answer for its disregard of the voters' interests is making a joke of this election campaign.

Soda and milk and the government

[Radley Balko, "What Does a Body Good?," Tech Central Station, 20 September 2004.]

America's struggle with obesity must be some big industry's fault, it's just a matter of determining who is to blame:

The most recent contribution to the obesity debate comes from the Journal of the American Medical Association, which purported to link soda consumption to weight gain and risk for diabetes, though the study's conclusion -- that women who switched from drinking one or fewer sodas per week to one or more per day would gain weight -- is hardly earth-shattering. Adding 150 calories per day of anything to a standard diet will on average amount to about a pound-and-a-half of weight gain per month. The study in question took place over the course of four years.

The JAMA study also does little to link soda consumption to the obesity problem. As George Mason University professor Todd Zywicki shows in this graph, over the same period obesity prevalence has allegedly taken off, soda consumption has remained relatively stable. In fact, the only beverage we seem to be buying more of in the last 15 or so years is bottled water, which has no calories. Sales have nearly quadrupled.

Nevertheless, demonizing Big Soda has proved to generate headlines for nutrition activists and anti-corporatists.

It's also been a boon for the dairy industry. The makers of whole milk, heavy cream, cheese, and sour cream and their advocates in Congress have of late been making the case that not only is soda bad for you, but that an extra serving or two of dairy in its stead could help put a dent in the obesity problem. The theory, propagated by dairy state Senators Patrick Leahy, Jim Jeffords, and Tom Harkin -- among others -- is that kids today drink too much soda.

The odd thing about all of this is that there's little evidence that kids actually are substituting soda for dairy. According to the American Dairy Association and the Dairy Council, annual milk consumption of children 6 to 12 years of age is at its highest level in 10 years.

This isn't to say that soda is or isn't better than milk and dairy, or even that either is or isn't a major contributor to childhood obesity. There's abundant literature to support the position of every interest group with a dog in the obesity fight. Even within the community of nutrition activists and anti-fat warriors -- all of whom seem to loathe soda -- there's contention about the role of milk in the obesity problem, and how much dairy we can (or should) consume as part of a healthy diet.

But the milk-soda face-off does show us that when lawmakers and activists invoke the obesity problem to push legislation regulating, taxing, or otherwise restricting our choices as food consumers, the healthiest thing we can do is exercise some skepticism. It's probably of no coincidence that dairy state senators insist that our kids need more dairy, and are willing to meddle with the schools to make sure they get it. Government agents aren't benevolent, they're self-interested -- even when they claim to be legislating to improve our health, or on behalf of chubby children.

Perhaps the real lesson here is that government ought to stay out of the obesity fight altogether. Choosing what we eat each day is not only an intimate and personal decision, it's a very important one, with obvious repercussions on our health and happiness. Guidance and influence for those decisions should probably come from parties whose main interest is our health -- our doctors, for example. Policymakers may claim to be legislating for our well-being, but their primary interest lies with the constituents who elect them, and with the interest groups who keep them in power. We should be wary of government attempts to influence those decisions, and we should be intolerant of efforts to restrict them through taxes, regulation, or outright prohibition.

A better route would be to allow Americans to freely make their own decisions about what they eat, but also be sure that they and only they bear the consequences of those decisions.

Charitable health care

[Karen Shideler, "Doctors offer free cataract surgeries," The Wichita Eagle, 21 September 2004.]

Kansas Health has included information on the charitable efforts of dentists in the past, and now there is an opportunity for those in need of eye care to receive assistance as well:

Low-income Kansans who need cataract surgery and Kansans 65 and older who need any kind of eye care may be eligible for two programs designed to help.

Four Wichita ophthalmologists and their support staffs hope to perform 50 to 70 free cataract surgeries Nov. 6 for people in need. They're seeking patients for the program.

EyeCare America's Senior EyeCare Program is making available eye exams and treatment for up to a year for those 65 and older who don't have an ophthalmologist and haven't seen one for three years or longer.

Kansas has 66 ophthalmologists in the Senior EyeCare Program. They have agreed to accept Medicare or other insurance as payment in full, so the patient has no out-of-pocket expenses. To check on eligibility for a referral, call (800) 222-3937.

The cataract program, called Gift of Sight, is a new one, organized by Team Vision Surgery Centers and Grene Vision Group.

Judy Brown, a nurse who is administrative director for Team Vision, said more and more people who are uninsured or facing financial hardships need cataract surgery.

Surgeons Michael Bolt, Dasa Gangadhar, Mark Wellemeyer and Terria Winn will perform the surgeries. Patients who don't already have an optometrist will be referred to one from Grene Vision Group for free follow-up care and glasses.

Brown hopes participants will be referred by their optometrists or physicians, but they're also welcome to call if they've been told they have a cataract. The number is 681-2020.

Potential candidates will be asked to submit a hardship form and will be evaluated in the surgeons' offices.

Team Vision Surgery Centers, 6100 E. Central, is 60 percent owned by Via Christi Health Systems and 40 percent owned by Grene Vision Group doctors.

For more information about EyeCare America's Senior EyeCare Program, which helps those 65 and older, call (800) 222-3937.

For more information about Gift of Sight, which provides cataract surgery and follow-up care, call 681-2020.

[Also, see the archived entry, "Charity organizations work to address dental care needs," 12 July 2004.]

The importance of understanding a problem before trying to solve it

[Alice Thomas, "Not all the uninsured fret about it," The Columbus Dispatch, 21 September 2004.]

Some organizations are using the "45 million uninsured" number as a rallying cry for government intervention to solve a health care "crisis." Others, though, are working to figure out what is really behind that number.

More and more signs point to a subset of the population that simply is not interested in obtaining insurance. For those who indicate that insurance is just out of their price range, tax credits, health savings accounts, or bare-bones policies may be the answer. For others, there may be no policy change that will make insurance an attractive buy:

No one knows how many people are happily uninsured, but an estimated 10 million have incomes exceeding $50,000, meaning money is likely not a factor in purchasing coverage, according to America’s Health Insurance Plans, an association of companies that collectively insure 200 million Americans.

That 10 million doesn’t include another segment of the population referred to as "the invincibles" — 5 million 20-somethings who don’t think they need health insurance, said Mohit Ghose, a spokesman for the association.

Some are health nuts who are vegetarian and do yoga. Others eat meat and anything else they want. Many are self-employed. Some say they’d have insurance if it were affordable; others just plain don’t want it.

All say they don’t fit into the system and have quit worrying about it.

[Matthew Hisrich, "State Mandates reduce insurance affordability," The Flint Hills Center, May 2004.
Matthew Hisrich, "Greatest increase in uninsured found among wealthy," The Flint Hills Center, 10 May 2004.]

Is the drug industry overrated and under-regulated?

[William Hathaway, "The Truth About Drug Companies," The Hartford Courant, reprinted in The Wichita Eagle, 19 September 2004.]

Fortunately, this review of Dr. Marcia Angell's "The Truth About Drug Companies" recognizes that there are some flaws in her arguments, but the author may not realize the extent of them:

There is no gray in Angell's analysis, but there should be in the public debate.

For instance, Angell seems to suggest that dramatically trimming drug companies' profits would limit their ability to buy legislators and regulators, an argument that would lead to the collapse of the U.S. economy if applied to all industries with lobbyists in Washington.

There still will be arguments among those who read this book on the best path to take. But there will be few Bush, Kerry or Nader supporters who advocate the status quo in how we regulate the pharmaceutical industry. Angell raises important issues that should be addressed by presidential candidates.

The Hoover Institution's Dr. Henry Miller is a bit more harsh in his review:

The pharmaceutical industry has structural problems, to be sure. As Dr. Angell points out, drug companies do develop too many "me-too" drugs that differ little from earlier products, and spend disproportionately on marketing and promoting them.

But in large part these strategies are the result of the industry's being the victims of government policies, not, as Dr. Angell argues, their beneficiaries. In spite of increasingly powerful and precise technologies for drug discovery, purification and production, development expenses have soared: On average, including both out-of-pocket expenses and opportunity costs, it now costs more than $800 million to bring a new drug to market.

One important reason for these debilitating costs goes all but unmentioned in Dr. Angell's account: The highly risk-averse FDA keeps raising the bar for approval, especially for innovative, high-tech products and technologies. Immunotherapy tailored to individual patients, human gene therapy, and "biopharming" -- the production of drugs in gene-spliced crop plants and animals -- have been hit especially hard. But Dr. Angell's prescription is for regulators to become even tougher and less "accommodating" -- according to her, "there is now far too much emphasis on speed at the FDA." But this would only push R&D costs higher and reduce further the number of drugs approved.

Instead of Dr. Angell's snake oil, what we need is regulatory reform to lower the costs and time of drug development. That would stimulate the formation of new companies and enable them to pursue more drug candidates, including some that are medically needed but offer only modest revenues.

Dr. Angell's proposals to, in effect, nationalize the American system of drug development reflect almost inconceivable naiveté. They are reminiscent of economist Milton Friedman's example of a flawed syllogism: Capitalism has worked everywhere it has been tried; socialism has failed everywhere it has been tried; therefore, let us try socialism.

A spirited diatribe can educate and entertain, but in The Truth About the Drug Companies, Dr. Angell does neither. Her diagnoses are wrong, and her remedies -- which are reminiscent of the government controls and centralized planning of the old Soviet Union -- are far worse than the disease.

Leave experimentation to the market

[Editorial, "Health care due attention," The Wichita Eagle, 20 September 2004.]

Today's editorial in The Eagle seems to imply that doing something is better than nothing at all in health care. When it comes to government initiatives, though, this is rarely the case. Certainly, there is plenty of reform necessary to improve the health care system, but for the most part, this should involve removing barriers to market forces, not adding additional layers of bureaucracy.

The market is able to try new approaches and move on to others should they not pan out. For a variety of reasons, this is much less likely in the public sector. There, if something does not appear to be working the typical response is to devote still further resources in the hopes that more will equal more, whereas diminishing returns is the rule.

The governor should be commended for acknowledging the existence of a problem, and if she comes up with a workable plan to combat it, then further commendation is in order. The last thing politicians need is more reasons to "do something" without fully weighing the consequences.

Kansas to enact stronger estate recovery

[Fred Mann, "It's not too late to drop Medicaid," The Wichita Eagle, 17 September 2004.]

In the last session, legislators were successful in passing a necessary strengthening of the law regarding estate recovery in the Medicaid program. By federal law, states are obligated to recover funds from those able to cover some of their expenses incurred while enrolled, as Medicaid is intended to be assistance rather than an outright gift. Too often, though, enforcement is lax at the same time that Medicaid expenses threaten to overwhelm state budgets. Kansas legislators should be commended for taking this step.

[Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center, January 2004.
Matthew Hisrich, "Staying the Course: Medicaid Reform in Kansas," The Flint Hills Center for Public Policy, February 2004.]

As countries with socialized medicine continue march toward privatization...where is America headed?

[Clifford Krauss, "Canada Agrees to Increase Spending on Its Health Care," The New York Times, 17 September 2004.]

Canadian politicians have made the decision to throw more good money after bad by beefing up health care spending. Few believe that the increase will be sufficient to cover future costs, though, and more doctors are switching to private practice:

Prime Minister Paul Martin gained a major victory for his flagging government early Thursday by reaching an agreement with provincial and territorial leaders that would substantially increase federal spending for Canada's ailing $60 billion national health care system.

After three days of contentious negotiations, the officials agreed to send $14 billion in federal money over six years to the 13 provinces and territories that administer health care, with guarantees of additional 6 percent annual increases through 2015.

Still, the agreement will fall far short of fulfilling Mr. Martin's upbeat pledges in the recent election campaign to "fix the system for a generation," since the increases in spending will barely keep up with rising costs. It will also cut into the government's capacity to manage growing urban problems like homelessness, and to fulfill promises to improve education and rebuild the armed forces, especially if the currently robust economy slows.

Much of the meeting in Ottawa between Mr. Martin and the provincial and territorial premiers was televised, and it highlighted stark shortcomings in the health care system, including the growing shortage of doctors and nurses, the lengthening of waits for cancer care and surgery, and the mounting cost of drugs for an aging population.

"What it does is put the patient - the health care system - on life support, but it does not put it on the road to full recovery," said Senator Michael J. L. Kirby, an influential Liberal who led a commission that studied health care two years ago. He said he regretted that the officials did not consider restructuring how health care was delivered, even if this entailed allowing private clinics to provide services to those willing and able to pay.

"The way health care is structured is unsustainable," Senator Kirby concluded, adding that the country should also consider a national health care insurance premium.

The cost of the public health system is growing at a rate of 7 percent a year, while all government revenues are only growing by 5 percent.

To make up for the shortfall, privatization of medical services is creeping into the system in several provinces. The nation's first private emergency clinic is opening in Quebec next month. Faced with yearlong waiting lists for elective surgery, the Alberta government is considering allowing the establishment of private joint-replacement clinics.

"Events are overtaking the politicians, even if they refuse to acknowledge it," the conservative National Post argued in an editorial on Thursday.

The news comes at the same time that privatization efforts advance in Britain:

With the recognition that consumers should be able to escape bad service, whether that service is publicly or privately provided, there has been a cross-party clamor for greater competition and consumer choice in our public services. There is a new belief that ending public sector monopoly, at least on the supply-side, will help drive technological innovation, make providers more responsive to consumers, and lead to greater adoption of best-practices throughout the system.

Public private partnerships (between the NHS and for-profit commercial ventures) for vital health services are being established across the health system. For example, decontamination services (the collection, cleaning and delivery of sterile surgical instruments), arguably one of the most important elements of modern health care, are to be run by such partnerships.

The Government is also using private provision to make up for the shortfall in NHS care. In fact, on 12 April current Health Secretary John Reid awarded two private not-for-profit hospital groups, Nuffield Hospitals and Capio Hospitals UK, contracts to carry out nearly 25,000 hip, knee and other operations in 50 independent hospitals for the NHS in this financial year.

Waves of independent sector profit-making diagnostic and treatment centres (ISTCs) (which will specialise in orthopaedics, cataracts and so forth) are being launched between 2004 and 2006.

Private contracting is also set to be expanded to diagnostics (x-rays will be sent to India), and chronic disease management; even 'Big Pharma' is involved in some pilots. Private providers are determined to play a key part in the provision of integrated primary care services.

Federal employees to get HSA option

[Milt Freundenheim, "A Health Insurance Option Coming to Federal Workers," The New York Times, 16 September 2004.]

Aetna and other companies have agreed to a plan that will allow federal employees access to health savings accounts. Observers will no doubt be watching this rollout very carefully:

In the biggest test yet of an idea central to the Bush administration's health care policy, the government will offer more than three million federal employees and their families a new type of high-deductible health insurance that includes tax-free savings accounts, the federal Office of Personnel Management said yesterday.

Aetna, one of the nation's largest insurers, would take the lead, providing the insurance and administering the plans for federal employees in 32 states and the District of Columbia. Seventeen other insurers, including the Government Employees Hospital Association and the Mail Handlers Benefit Plan, will also offer the savings plans, as will Coventry Health Care in several states.

Cash-only catching on in Canada, as well

["Doctors to open private ER," Canada.com, 15 September 2004.]

From the country whose single-payer model some in the U.S. would like us to shift to comes news that some doctors are simply dropping out:

As Canada's premiers haggled into the night over the future of Canada's health-care system, three Montreal doctors announced yesterday they are joining the ranks of those opting out of medicare and will open the province's first private emergency medical clinic next month.

The clinic will guarantee speedy service to anyone who can pay out of pocket. The doctors will take care of minor emergencies, like fixing a broken finger and stitching a cut, for a $100 fee.

Since 2000, 82 Quebec doctors have gone private, no longer billing the Regie de l'assurance-maladie du Quebec for medical services.

Putting a number on the uninsured

[Kenneth Daniel, "How Many Uninsured Are There?," KsSmallBiz.com, 15 September 2004.]

Kansas Health readers should certainly be familiar with varying interpretations of the number of uninsured in the U.S. Ken Daniel points out some problems with some of the major ways of determining that number in this recent column:

In August 2004, the U.S. Census Bureau released a report showing that the number of people in America without health insurance rose to 45 million in 2003, 1.4 million more than in 2002. The data upon which this report was based showed 294,000 Kansans under 65 without insurance.

The report may overstate the number of uninsured. Last year’s version of the report shows that in Kansas in 2002 there were 235,030 uninsured adults under 65. Another survey and report based on data by the Centers for Disease Control shows the number as 213,068. If the CDC survey is correct, the Census Bureau statistics are overstated by 22,000. Nonetheless, the Census Bureau report is by far the most extensive and detailed survey on the uninsured, and it has been done since 1987.

In contrast, a report released in June by Families USA pegged the number at 81.8 million. This report showed 624,000 Kansans under 65 without insurance.

Which of the reports is correct?

The Census Bureau survey questions whether the respondent was insured in 2003, but doesn’t ask how for how long. A 2003 study by the Congressional Budget Office concludes that the number of uninsured, as determined by the survey, represents the number of people who were uninsured on a given day and not the number that were uninsured all year.

The Families USA report is titled “One in Three: Non-Elderly Americans Without Health Insurance, 2002-2003”. This is extremely misleading. If, based upon the title of the report, one assumes that one-third of Americans under 65 are uninsured, one would be very wrong. The statistics represent the number of people who said they were uninsured at any time during 2002 or 2003. In other words, if the surveyed person thinks they were uninsured for even one day during the two years, they are part of the “one in three”.

One problem with the annual surveys is that they don’t ask whether the respondent is insured right now, it asks about the preceding year or years. Respondents can easily be wrong about when they were uninsured. Another problem is that those insured under Medicaid, Medicare or military health benefits tend to say they were uninsured even though they are.

[Matthew Hisrich, "No Crisis Ahead for Uninsured," Letter to the Editor, The Wichita Eagle, 30 June 2004.]

The wrong prescription for insurance needs

[Scott Rothschild, "Report reflects Kansans' insurance struggles," The Lawrence Journal-World, 15 September 2004.]

Kansas Action for Children just released a new study entitled, "Making Families Count: Increasing Access to Affordable Healthcare in Kansas." The report makes a number of excellent observations, including some consistent with earlier releases from Flint Hills:

[A] significant minority of uninsured people are not low-income.

- Of the uninsured children in Kansas, 71% are income-eligible for public assistance, reflecting low-income status.

- Of the uninsured adults in Kansas, 39% lived within 100% of the federal poverty level and 28% lived within 199% of the poverty level in 2001-2002.

- Reflecting moderate-income status, 32% of uninsured adults in Kansas had household incomes at or above 200% of the federal poverty level – making too much money to qualify for public assistance, but not enough to afford insurance.

The report does go astray, however, when it comes to policy recommendations. It makes sense to see that those who are uninsured but nonetheless eligible for public assistance are aware of the coverage available to them. It is important, though, to understand that any expansion of that eligibility will come at the cost of reductions in privately insured individuals.

As well, private insurance tools such as HSAs that increase accessibility to coverage are just becoming widely available. It is vital that the state not step in with co-pay and deductible caps that will undermine their effectiveness. With Medicaid and other social assistance programs already facing significant financial strain, policymakers need to take care that their actions do not needlessly shift individuals onto welfare programs that could otherwise provide for themselves.

[Matthew Hisrich, "A Backgrounder on Kansas Medicaid," The Flint Hills Center, 19 July 2004.
Matthew Hisrich, "State Mandates reduce insurance affordability," The Flint Hills Center, May 2004.
Matthew Hisrich, "Greatest increase in uninsured found among wealthy," The Flint Hills Center, 10 May 2004.]

Sally Pipes on the uninsured

["Myths of the uninsured," NCPA Daily Policy Digest, 14 September 2004.]

Pacific Research Institute president Sally Pipes explains some of the finer points of the uninsured data in a recent Investor's Business Daily editorial:

- A fourth of the uninsured are under 24, and half are under 35 years of age.

- Three-quarters of the uninsured remain so for less than a year.

- Americans without health insurance spend roughly the same amount of their own money on health care ($242) as do the fully insured ($211).

- One in three uninsured live in housholds with incomes of more than $50,000, one in seven live in households with incomes above $75,000.

Pipes will be speaking at a Flint Hills event this Fall on drug reimportation. Please check back here and at our homepage, www.flinthills.org, as we will be posting more information about the event soon.

Not all is lost

[Julie Thornton, "Insurance option," Letter to the editor, The Lawrence Journal-World, 14 September 2004.]

This recent letter in the Journal-World makes a good point - media coverage of the uninsured needs to include some context. What do the numbers really mean and are there any answers emerging?

Thank you for calling attention to the dramatic health insurance cost increases. An interesting note in the article was that small businesses employing 5 million American workers have been forced to eliminate health insurance benefits due to double-digit premium increases every year since 2000.

While the insurance news is bleak, Kansans have options through a program that became available to us this summer. Dubbed HSA (health savings accounts), this program couples much lower premiums with better access to necessary prescription and over-the-counter medications and medical goods. Available to individuals, families and employers, these programs pair specially designed health insurance programs with individual control to make monthly premiums affordable.

[Matthew Hisrich, "Greatest increase in uninsured found among wealthy," The Flint Hills Center, 10 May 2004.]

Should you buy long-term care insurance?

[Eileen Ambrose, "No matter how much you make, questions are the same," The Wichita Eagle, reprinted from The Baltimore Sun, 12 September 2004.]

Financial columnist Eileen Ambrose answers the most frequently asked questions of financial planners in this recent article. One of the top questions is whether there truly is a need for long-term care insurance:

Do I need long-term-care insurance?

Medicaid will pick up the cost of care for low-income individuals who can't afford to buy a policy. And wealthy individuals can pay for nursing-home care -- which now averages about $66,000 a year -- out of pocket should they need it.

It's all those who fall in-between who must decide whether to buy a policy. Policies aren't cheap -- costing about $2,000 to $2,500 annually for those in their mid-60s -- and the price only gets steeper the longer someone puts off the decision.

Garrett advises those who can afford a policy -- especially singles or those whose families won't be able to care for them -- to start shopping for a policy at age 50.

Choose an insurer that will likely still be in the long-term-care business decades from now when you may need to make a claim, experts said.

Wealthy individuals can probably pay for a lot of things out of pocket that they typically insure. Most will likely want to consider coverage nonetheless.

[Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center, January 2004.
[Matthew Hisrich, "Staying the Course: Medicaid Reform in Kansas," The Flint Hills Center for Public Policy, February 2004.]

"Fat tax" proposed in Germany

["'Tax the fat' says minister," Ananova, September 2004.]

Lest you think that warnings of future "fat taxes" are absurd, Germany's finance minister is calling for just such a measure to combat rising health care costs. There is no question that a healthier population will lead to cost-savings, but is helping us make food decisions a job we want to entrust to politicians? If insurance becomes a state function, it will be:

Hans Eichel said urgent measures were needed to close the 41 billion euro budgetary gap, and is now looking to increased insurance costs for overweight Germans as well as extreme sport fans.

Speaking to daily newspaper Die Welt, Eichel said: "The first question that we have to ask ourselves is if we really all need to burden the health insurers so much.

"Everyone is partly responsible for their health. This begins with what we eat and ends with whether we take part in risky sports or not."

The 62-year-old Finance Minister has the support of the country's doctors.

President of the German Chamber of Doctors, Dr. Guenther Jonitz, said: "Minister Eichel is on the right track when he talks about nutrition-based behaviour. But it would be difficult to control.

"We would literally need weight watchers to calculate how much health insurance people should pay depending on their weight."

Instead Dr. Jonitz suggested a 'Big-Mac tax' be introduced on foods that contain sugar, animal fats and salt as well as on alcohol and nicotine products.

"Those who don't eat many of these products will not notice the costs and those who do will," he said.

Is there "just no answer" to rising health care costs?

[Theresa Agovino, "Health care costs climb 11.2 percent," Associated Press, The Lawrence Journal-World, 10 September 2004.]

With continued growth in health care costs, insurance premiums are rising and forcing employers - and their employees - to make some tough decisions:

Health care costs continued to surge this year as family premiums in employer-sponsored plans jumped 11.2 percent, the fourth year of double-digit growth, according to a new study.

The cumulative effect of rising health care costs is taking a toll on workers: There are at least 5 million fewer jobs providing health insurance in 2004 than in 2001, according to the survey of 3,017 employers by the Kaiser Family Foundation and the Health Research and Educational Trust.

This year, 63 percent of employers offered health benefits to workers, down from 68 percent in 2001. The change is primarily driven by a decrease in the number of small employers, those with three to 199 workers, that offer coverage.

"Health insurance is becoming unaffordable, especially for small employers. We should expect the ranks of uninsured to grow as small employers can't afford health insurance," said Drew Altman, president of the Kaiser Family Foundation.

"There is a great sense that there is just no answer to this problem," Altman added.

Others are less melodramatic about the situation. Rather than dropping coverage altogether, some employers are taking a more proactive approach by turning to consumer-directed plans such as Health Savings Accounts. Flint Hills is hosting The Galen Institute's Greg Scandlen for luncheons on the topic of HSAs in Wichita and Kansas City later this month. For more information and to register, visit our homepage, http://www.flinthills.org.

Kansas drug card a non-starter

[Associated Press, "State's drug card proposal didn't pan out," The Wichita Eagle, 10 September 2004.]

Gov. Kathleen Sebelius' administration tried but failed to create a discount prescription drug card for uninsured Kansans, an official told legislators Thursday.

The office solicited proposals from companies in May, but only two responded, and one quickly dropped out, Braman said. An agreement with the other company could not be reached, and the office does not plan to try again, Braman said.

She outlined the office's efforts to create a drug card during testimony to the Legislative Budget Committee. She did not name the two companies.

"We found out it wasn't feasible," Braman said after the meeting.

A Kansas drug discount card may not be on the horizon, but as The Heartland Institute's Conrad Meier points out, there are a number of private discount options available:

Forty-eight U.S. pharmaceutical manufacturers, under the auspices of the Pharmaceutical Research and Manufacturers Association (PhRMA), offer prescription drug discount cards and patient-assistance programs. In 2002, PhRMA members provided free prescription medicines to more than 5.5 million patients in the United States. More information is available on the Internet at http://www.phrma.org, or contact PhRMA at 1100 Fifteenth Street NW, Washington, DC 20005; telephone 202/835-3400.

Together Rx, a consortium of eight drug makers, offers about 150 brand-name drugs at 15 percent off the manufacturers' wholesale list price. The Together Rx plan is available to individuals with annual incomes of $28,000 or less and families with annual incomes of $38,000 or less. More information is available on the program's Web site, at http://www.togetherrx.com/, which reports "over 1,021,392 cardholders have saved more than $202 million to date."

The Share Card offered by Pfizer Inc. is available with no annual fee to low-income Medicare recipients. Patients enrolled in the plan can get Pfizer prescription drugs at a cost of $15 for up to a 30-day supply. For more information on the Share Card plan--already used by 250,000 patients--call 800/459-4156, or visit the plan Web site at http://www.pfizersharecard.com/.

Eli Lilly's discount drug program, LillyAnswers, makes available all Eli Lilly drugs except controlled substances and those not distributed by retail pharmacies. Plan participants pay $12 for a 30-day supply. Medicare-enrolled seniors and persons with disabilities are eligible if they do not have other prescription drug coverage and meet annual income requirements: $18,000 or less for individuals, and $24,000 or less for households. The plan currently enrolls 100,000 patients. More information is available on the Internet at http://www.lillyanswers.com/ or toll-free at 877/795-4559.

Called the Orange Card, GlaxoSmithKline's discount drug program provides an average 30 percent savings on all outpatient prescription drugs made by the company. Orange Card is available to senior citizens and disabled persons enrolled in Medicare with annual incomes of $30,000 or less (individuals) and $40,000 or less (households). Enrollment in the program, which currently has 100,000 participants, is free. More information is available on the Internet at http://us.gsk.com/card/ or by calling toll-free 888-672-6436.

Novartis, a founding member of the Together Rx alliance, offers the Care Card. Plan participants with annual incomes less than $18,000 (individuals) and $24,000 (couples) pay just $12 for a 30-day supply of selected Novartis medicines. Participants with higher annual incomes--up to $28,000 for individuals and $38,000 for couples--can receive discounts of between 25 and 40 percent off selected Novartis medicines. The Care Card program currently enrolls 15,000 patients. More information is available on the Internet at http://www.careplan.novartis.com/index2.html.

Are we paying too much for health care?

[Arnold Kling, "Hating the Producers," Tech Central Station, 9 September 2004.]

Arnold Kling continues his analysis of the U.S. health care system, this time tackling the perception that Americans are overcharged for their health care:

In this essay, I look at another complaint about U.S. health care, which is that we pay too much for the services that we get. Princeton economist Uwe Reinhardt[...]is a prominent advocate of the thesis that suppliers are overpaid. His views on the nature of the health care problem influenced the infamous Hillarycare plan, and his work continues to be the basis for Democratic Party health care policy proposals.

Reinhardt and his colleagues arrive at a striking conclusion: none of the higher spending in the United States reflects more services! The basis of this claim is somewhat weak, however. In health care, it is difficult to measure output. In theory, you want to measure the impact that health care has on people's lives, but in practice this is difficult to quantify. The things that are quantifiable -- such as the number of x-rays taken, the number of prescriptions written, or the number of surgeries performed -- are only weak approximations of the "true" output of the health care industry.

Diagnosing high prices as the cause of high spending on the basis of imperfect measures of the quantity of services is an example of indirect inference. Such an inference is quite tenuous. In this context, it might be considered statistical malpractice.

[I]f a problem does not exist in the first place, then a "solution" is going to make things worse. And the evidence for price gouging by health care producers is not compelling. Hating the producers will not solve the health care problem.

Small business and health care

[Ken Daniel, "The Most Important Small Business Problems 2004," KsSmallBiz.com, September 2004.]

What is the top concern of small business owners? Health insurance costs:

Between January and March 2004, the National Federation of Independent Business Research Foundation conducted a nationwide survey of 4,603 small business owners. They were asked to rank 75 types of problems on a scale of 1-7, with 1 being a “critical problem” and 7 being “not a problem”. The responses were then averaged and ranked.

NFIB previously conducted these surveys in 1982, 1986, 1991, 1996, and 2000.

Cost of health insurance has been the #1 problem in all except the 1982 survey. Those who rated it “critical” rose from 47% in 2000 to 66% in 2004.

Daniel also offers a host of solutions in the article "Kansas Small Business Health Insurance Issues 2005":

The health insurance crisis is largely a small business crisis. More than 60% of the uninsured in the U.S. are owners or employees of small businesses and their families. The smaller the business, the less likely its workers are to have health insurance.

- In Kansas, no new mandated health insurance coverages have been passed in the last three years. Mandates fall hardest on small business. Self-insured big companies and unions don’t have to comply. Every mandate prevents at least some small employers from obtaining or continuing to provide health insurance, and runs up costs for the rest. No matter how well-meaning these are, they must be avoided.

- [Health Savings Accounts] are a reality and, at least in the short run, may prove to be the only solution to the continuing crisis in health insurance.

- Small Business Health Plans, previously called association health plans, have the potential to be THE key solution for the small business uninsured problem. Small business owners need to be able to buy health insurance through the associations they know and trust, groups that have their members’ interests at heart. NFIB and 170 other national organizations are members of a coalition supporting the federal legislation, which has passed the U.S. House of Representatives and is gaining support in the U.S. Senate.

- [The Kansas Health Partners Benefit Association] is a private, non-profit organization working with the Kansas Business Health Policy Committee, creating a public/private partnership to provide lower-cost health insurance for small businesses.

- Any small business that has between two and 50 employees and has not contributed to a health insurance premium on behalf of an employee in the previous two years is eligible [for the Kansas Health Insurance Tax Credit]. Businesses that have been in existence for less than two years and have not provided any health insurance for employees are also eligible. This tax credit operates against one’s income tax. However, if one’s income tax liability is less than the credit, the difference is refundable.

Lessons from a Presidential bypass operation

[Michael Cannon, "Clinton Got Quick Care, Unlike Canadian Heart Patients," The Cato Institute, 8 September 2004.]

This latest column from Cato's Michael Cannon explains how a recent news item shows why America's health care is better left to the private sector:

According to Nadeem Esmail and Michael Walker of Canada's Fraser Institute, the median wait for an appointment with a cardiologist in Canada's single-payer health care system was 3.4 weeks in 2003. The wait for urgent bypass surgery was another 2.1 weeks on top of that, while the wait for elective bypass surgery was an additional 10.7 weeks. Canadian doctors reported a "reasonable" wait would be 0.9 and 6.1 weeks, respectively. Great Britain and New Zealand have even longer waiting times for bypass surgery.



Esmail and Walker cite studies confirming that longer waits for heart surgery result in a higher risk of heart attack and death.

In fact, they report American hospitals act as a "safety valve" for Canadian patients who face life-threatening shortages: "The government of British Columbia contracted Washington State hospitals to perform some 200 operations in 1989 following public dismay over the 6-month waiting list for cardiac bypass surgery in the province... A California heart-surgery centre has even advertised its services in a Vancouver newspaper."

Had America had followed his lead ten years ago, President Clinton might not have been able to get his diagnosis and surgery appointment so quickly.

Instead of waiting overnight for an appointment with a cardiologist, he might have had to wait the 3.4 weeks Canadians do.

Instead of waiting three days for quadruple bypass surgery, he might have had to wait over two weeks.

Instead of receiving care from what Senator Clinton called "one of the great hospitals in the world," President Clinton might be looking for a safety valve.

Since the Clinton health plan was defeated, untold patients have been aided because America's health care system, whatever its faults, was not subjected to the shortages and waiting lines that plague other nations.

But the future is less certain. Democratic presidential candidate Senator John F. Kerry (D-MA) is aggressively promoting his $1 trillion health care plan that borrows heavily from the Clinton health plan. Senator Kerry too seems to believe that having government issue a paper guarantee of "coverage" is the same thing as having access to medical care.

Truth be told, presidents and senators will never have a hard time getting medical treatment. Esmail and Walker report "a profusion of recent research reveals that cardiovascular surgery queues are routinely jumped by the famous and politically-connected." It's the rest who have to wait. Despite the Canadian government's egalitarian rhetoric, "low-income Canadians have less access to specialists, particularly cardiovascular ones, and have lower cardiovascular and cancer survival rates than their higher-income neighbours."

I join all Americans of good will in wishing President Clinton a speedy recovery. And I hope they will join me in wishing Senator Kerry's health plan a quick, painless death.

[Matthew Hisrich, "A Better Alternative to Kerry Plan Already Exists," The Topeka Capital-Journal, 8 August 2004.]

New study: "The Realist's Guide to Medicaid and Long-Term Care"

HOW TO TAME THE MEDICAID FISCAL MONSTER

The Center for Long-Term Care Financing, a nonprofit think tank and public policy organization, released a new report today titled "The Realist's Guide to Medicaid and Long-Term Care."

The report explains (1) how America's long-term care service delivery and financing system became plagued by quality problems and bankruptcies, (2) why Medicaid, a welfare program, dominates long-term care funding and causes institutional bias, and (3) what must be changed in public policy to control explosive Medicaid costs and improve access to quality long-term care for everyone.

"The Realist's Guide to Medicaid and Long-Term Care" also highlights ten states, five of the worst and five of the best for long-term care policy.

The Council for Affordable Health Insurance and The American Legislative Exchange Council co-sponsored this study and are publishing an abridged, hard-copy version of the report titled "The Long-Term Care Dilemma: What States Are Doing Right - and Wrong."

[See Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center.
Also, Matthew Hisrich, "First Things First: Kansas Medicaid Program Must Get its House in Order Before Expanding Home-based Care," The Flint Hills Center, 20 August 2004.]

Current debt and future obligations

[Alan Fram, "CBO Projects $442 Billion Federal Deficit," Associated Press, The Wichita Eagle, 7 September 2004.]

While Kansas finances are improving, the reliance on federal funds through programs such as Medicaid may lead to trouble down the road unless changes are made soon. This year, the federal government will post its largest deficit in U.S. history:

When adjusted to erase the effects of inflation, the projected $422 billion deficit projected for 2004 would exceed the value of every annual shortfall since World War II.

And...

Though the budget office sees a healthy economy over the next two years, the report warned that the approaching retirement of the baby boom generation means that serious problems loom with growing pressure on Social Security, Medicare and Medicaid.

[Matthew Hisrich, "Staying the Course: Medicaid Reform in Kansas," The Flint Hills Center, January 2004.]

Clarifying the crisis

[Karen Garloch, "A growing ailment: No insurance," The Wichita Eagle (originally published in The Charlotte Observer), 1 September 2004.]

Media reports on the number of uninsured paint a picture of a nation in crisis. Take this article recently posted on The Eagle's sight:

After losing two jobs since 1999, Jim Samarco now works 20 hours a week for one of his former employers, but has no health insurance.

It's been hard for the 60-year-old Huntersville, N.C., man, who has suffered severe clinical depression and also needs prescription drugs to control high blood pressure, high cholesterol and acid reflux disease.

He said he doesn't earn enough to pay for medicines or buy insurance for himself and his wife, Debbie, 48, who also works part time. They have found help through a free clinic, but would rather not have to take handouts.

"It's been a very humiliating, humbling experience," Jim Samarco said.

The Samarcos are among 45 million people nationwide who have no health insurance.

That number increased by about 1.4 million people in 2003, according to Census Bureau statistics. That means 15.6 percent of Americans lacked health insurance last year, up from 15.2 percent the year before.

According to The National Center for Policy Analysis, however, this experience is the exception rather than the rule:

About 270 million people, accounting for about 94 percent of the population, either have health insurance or have access to it. The breakdown is:

- More than 84 percent (243.3 million) of the 288 million U.S. residents are privately insured or are enrolled in a government health program, such as Medicare, Medicaid or the State Children’s Health Insurance Programs (SCHIP).

- An additional 10 million to 14 million adults and children qualify for government programs (Medicaid and CHIP) but have not enrolled.

- Another 15 million live in households with annual incomes above $50,000 and likely could afford health insurance.

By these estimates, about 9 percent theoretically have access but have chosen to forgo insurance. The remaining portion, just over six percent of the population, earn less than $50,000 annually.

A better way to look health coverage may be to count the number of people with health insurance for the past few years. The proportion of people without health insurance was about the same in 2003 (15.6 percent) as is was a decade earlier (15.3 percent in 1993). However, the number of people without health coverage increased by about 5.8 million people to 45 million, largely due to population growth. Typically, those who lack insurance are uninsured for only a short period of time — 75 percent of uninsured spells are over in one year or less.



Over the past 10 years, the fastest growing segment of the uninsured population has been among middle and upper income families. The ranks of the uninsured in households earning between $50,000 and $75,000 increased by 49 percent and for households earning above $75,000 increased by 128 percent. The numbers of uninsured among these higher income households actually increased by almost seven million.

Government policies that drive up the cost of health insurance partly explain why millions of people forgo coverage.

[M]any of the uninsured who don’t consider health care a “good buy” may change their mind now that health savings accounts (HSAs) are available. These personal health accounts allow unused funds to be rolled over for use in future years. HSAs will make coverage more affordable for healthy and young workers, who will find insurance more attractive if they know their money isn’t wasted if they don’t need care in any particular year.

[Matthew Hisrich, "No Crisis Ahead for Uninsured," Letter to the Editor, The Wichita Eagle, 30 June 2004.]

Cutting prescription costs in half

[Randall S. Stafford, MD, PhD; and David C. Radley, BA, "The Potential of Pill Splitting to Achieve Cost Savings," The American Journal of Managed Care, August 2002.]

As the cost of prescription drugs increases, some cost-conscious consumers are learning to take advantage of a loophole. The price of many drugs, it seems, is based on pill count, not dosage. So, at a patient's request doctors can prescribe double-dosage pills and the patient can then split them in two. While there are significant cost savings, it is important to recognize that some medications are better suited to this method than others.

According to a study in The American Journal of Managed Care,

Our analysis has indicated that significant cost savings are possible through tablet splitting for a set of medications selected using explicit criteria. We recommend that physicians talk with patients, review their medications, work with them to assess whether pill splitting is a viable option, and use this strategy when it can be carried out safely. The cost savings from this underused practice are significant and, if implemented judiciously, this strategy presents an opportunity to reduce healthcare costs without compromising quality.

Going for the gold has a price

[Arnold Kling, "Winning the Health Care Olympics?," Tech Central Station, 31 August 2004.]

Do health care spending comparisons with other countries really provide valuable insights into value? As Arnold Kling explains, focusing on one aspect of health care - costs vs. longevity, for instance - would likely translate into a reduction in quality of life:

This is probably the most common articulation of the problem with the U.S. health care system. That is, the United States spends more than other countries, both in absolute dollars and as a percent of GDP, yet our life expectancy is no higher. This formulation of the problem suggests that our goal should be to minimize the health care spending per capita needed to achieve the level of life expectancy prevalent in other OECD countries. I call this the Health Care Olympics.

Many people argue that we could win the Health Care Olympics through rationing of health care. In fact, as Edward Lotterman points out, in the case of government-paid health care, rationing is inevitable. It takes place through the definition of treatable diseases and reimbursable treatments.

Suppose that we were rationing health care in order to try for a gold medal in the Health Care Olympics. We could reduce spending on procedures that do little to prolong life. For example, when breast cancer is caught early, after surgery the woman's five-year survival probability might be 94 percent. Additional treatment might increase that survival probability to only 96 percent, which on average would add only 1/10 of one year to her life expectancy (5 times .02). Standard medical protocols call for giving her the additional treatment, because it reduces her risk of death by one-third. Instead, we could deny her additional treatment, because the increase in life expectancy is small relative to the expenditure.

Or consider my father, who uses expensive hearing aids and has had laser eye surgery to remove cataracts. None of this improves longevity -- it only keeps him from being deaf and blind. To win the Olympics, we ought not to spend money on his eyesight or hearing. More generally, we should stop spending on non-life-threatening ailments, such as depression and back pain, that today account for a lot of health care costs.

Another way to win the Olympics would be to try to reduce the share of spending that takes place during the last year of life, which may account for as much as 25 percent of Medicare spending.

Overall, I think that it is a mistake to define the health care problem as the need to reduce the ratio of expenditures to life-expectancy gains. I think that the policy implications of such a definition are mostly unacceptable.

New poll: HSAs viewed favorably by 7 in 10 respondents

["Health Savings Accounts: Awareness, Image Ratings and Attributes," America's Health Insurance Plans National Survey, Public Opinion Strategies, July 2004.]

Once people understand how Health Savings Accounts work, a majority are favorably disposed to them. Only four of ten respondents to this recent survey are aware of what HSAs are, but seven of ten view them favorably once the concept is explained. The work that remains is to increase awareness and understanding.

If you are interested in learning more about HSAs, consider joining us for our upcoming luncheons with Greg Scandlen of the Galen Institute. For more information or to register, visit our website, www.flinthills.org.

Long-term care debate

["Long-Term Care: Who Should Pay?," Sage Crossroads, 30 August 2004.]

This is an excellent debate available either as a transcript or as a video download online. Stephen Moses, President of The Center for Long-Term Care Financing discusses who should pay for long-term care with Josh Wiener of RTI International.

Today, it costs roughly $60,000 a year to provide long-term care to an individual in a nursing home. And, these costs are expected to rise at least 5 percent annually. But, in many states Medicaid's resources have reached their limit. How are we going pay for elderly care as the Age Boom approaches? Does Long-term Care Insurance offer the solution?

[Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," The Flint Hills Center, January 2004.]

Small businesses looking for insurance alternatives as rates rise

[Eve Tahmincioglu, "Tackling the High Cost of Health Benefits," The New York Times, 26 August 2004.]

Health insurance costs continue to rise almost universally, but small-businesses seem to be bearing the brunt. As this article suggests, one way to avoid dropping insurance altogether is to move toward consumer-directed options such as health savings accounts:

Since 2001, small-business owners across the country have had to come up with innovative strategies to cope with double-digit increases in their health insurance premiums, but this is the year that many of them are finally crying uncle, according to Mark A. Cesarano, a health consultant for the Savitz Organization, an actuarial and employee-benefit consulting firm in Philadelphia. More than in years past, Mr. Cesarano said, they are scaling back coverage, increasing workers' contributions and increasing co-payments and deductibles.

The pain is widespread, and deep. In a June study by the National Federation of Independent Business, a Washington-based small-business advocacy group, 65.6 percent of small-business owners surveyed deemed health insurance costs a "critical" issue, a level of anxiety that the federation says it has not seen in the 22 years that it has been conducting surveys.

Small businesses do seem to be bearing the brunt of the problem. According to a study by the Kaiser Family Foundation and the Health Research and Educational Trust, health care premiums for businesses with fewer than 200 workers climbed 15.5 percent last year, compared with 13.2 percent for larger companies. On average, small-business owners spent $3,432 on insurance for each employee in 2003, compared with $3,360 for bigger companies.

And the smaller the firm, the more it pays, especially if it has a high proportion of older or female workers. "Insurance companies have a hard time predicting claims for businesses with less than 100 employees because there are fewer bodies to spread the risk," said Mr. Cesarano of the Savitz Organization. To deal with this, many insurance companies ask workers for information about chronic illnesses and pregnancies. That may bump up rates, he said, although federal law prohibits the companies from denying coverage.

Over all, the share of small businesses with fewer than 200 employees that offer insurance declined to 65 percent last year from 68 percent in 2001, the study found, and experts fear that number will keep falling if things do not change.

Some health care experts view health savings accounts as promising. The accounts allow employees and employers to contribute to a tax-free account that is used to pay for routine doctor visits and deductibles on the catastrophic coverage that typically accompanies such plans. Similar plans, known as flexible savings accounts, have been around for decades but have had low participation rates, experts say, because of high deductibles and the fact that unused money in the plans is lost at year's end. Health savings accounts have lower deductibles and a rollover component so funds are not lost.