2005 Health Care Conference:
Empowering Patients, Controlling Costs
2005-07
On June 16th, Washington Policy Center hosted a major health care conference at the Red Lion Hotel in downtown Seattle. About 220 people attended. At the half-day event state lawmakers discussed recent health care legislation, followed by panel discussions on consumer-driven health care, medical malpractice reform and prescription drugs and biotechnology. Sally Pipes, president of the California-based Pacific Research Institute, delivered the keynote address at the luncheon session. Attendees qualified for five continuing education credits. Following is a summary of the main points covered in each session. The main conference sponsor was Premera Blue Cross.
Health Care Issues in the Recent Legislative Session
Panelists:
The 2005 Legislature considered a number of health-related issues. Senator Parlette said she is pleased with two of Governor Gregiore’s appointees: the new head of the Department of Social and Health Services, Robin Arnold Williams, and the new Director of the Health Care Authority, Steve Hill, and that she looks forward to working with them. A number of health policy-related bills were considered during the Session, many passed, while others were delayed until the next Session.
House Bill 1220, which passed, authorizes a task force to look at long-term health care financing and recommend practical reforms. The Legislature also approved Senate Bill 5064, instructing the Health Care Authority to create and implement an electronic medical record system. Senate Bill 5637, the “Pay or Play,” bill also known as the “Health Care Responsibility Act,” would have required businesses with fifty or more employees to provide either health care coverage or to pay for their workers to enroll in a state-run basic care plan. The “Pay or Play” bill failed this year, but will almost certainly return in the 2006 Session.
House Bill 2069, “Expanding Access to Insurance Coverage to the Small Business Assist Program,” would have allowed small businesses and groups to buy affordable insurance policies by reducing the number of mandates and regulations imposed by the state Health Care Authority. The bill failed to gain final approval.
Senate Bill 5202 also failed. The bill would have given state employees the option of acquiring a personal, tax-free Health Savings Account (HSAs). Senator Parlette said the Health Care Authority will instead conduct a study of this option and report to the Legislature before the end of the year.
Representative Schual-Berke, the bill’s prime sponsor, reported that House Bill 1154 was approved. The bill creates mental health parity in insurance coverge, and gradually phases in equal insurance treatment of mental health and physical health conditions.
The two lawmakers reported that substance abuse was addressed this Session with bills passed by the House and Senate. Also, over four million dollars was appropriated for children’s health and measures were taken to improve the eligibility system for families on Medicaid. A bill passed dealing with asthma treatment as well.
Panel One: Consumer Driven Health Care/Health Savings Accounts
Moderated by Bob Wiley, WPC Board Member
Panelists:
Paul Guppy explained that in the past two years there has been a major shift toward consumer-driven health care. Health Savings Accounts have been available since December of 2003 when they were signed into law at the national level. HSAs allow people to pay into a tax-free, interest bearing account to be used for routine medical expenses. Since January 2004, more than a million Americans have acquired HSAs, providing insurance for many individuals who could not otherwise get coverage, and giving cash-strapped small business owners an affordable way to provide health coverage for their employees.
Each HSA is accompanied by a high deductible insurance policy to cover catastrophic medical care. The account balances rolls over year to year and can be passed on to heirs as part of a person’s estate. Because the funds never expire, consumers have an incentive to manage their health care dollars wisely.
Gerry Hatler explained that while the individual is the owner of the HSA, banks are the custodians of the accounts. More and more banks are providing this service and each HSA owner can choose which bank to use. The funds in the account are subject to competitive interest rates paid by the bank. Banks also charge fees for managing the accounts. Mr. Hatler said consumers should check the fees charged when selecting a bank to make sure they are competitive and reasonable.
Mr. Hatler pointed to a few other considerations to keep in mind when selecting a bank. The HSA owner should receive a monthly statement and should be able to view it online. The account holder should also receive a year-end statement for tax record-keeping purposes. The bank’s services should be direct and simple, with easy-to-learn payment and withdrawal procedures. Direct deposit should also be an option. The consumer should be able to use a check or debit card to access HSA funds easily when purchasing health care services.
HSAs are available to any individual not covered by Medicare (that is, every adult American under age 65), and who are not covered by other health insurance and are not claimed as a dependent on someone else’s taxes.
Carolyn Logue said HSAs are a much needed solution for individuals without health care coverage and for small businesses who cannot afford high insurance premiums. Many small businesses that today have minimum or zero coverage can help their employees stay healthy and prepare for future health care needs by using these accounts. She pointed out that HSAs are affordable. Forty percent of the accounts have been sold to families making less than $50,000 a year. The law allows people age 55 and over to make additional “catch-up” payments into their HSAs each year.
Ms. Logue also pointed out that in Washington over-regulation and artificial state rules are preventing many people from gaining access to HSA-based health coverage. In our state, she said, limitations on high-deductible insurance place a burden on small businesses who just cannot afford a $3,000 or $5,000 deductible for employees. Eliminating or streamlining state insurance regulations would make these policies more affordable, she said. Washington also needs to re-evaluate its rating system for premiums and the number of insurance mandates the state imposes. Less regulation would allow people who are genuinely trying to save money and responsibly plan for the future to benefit from lower-cost coverage offered in the marketplace.
Panel Two: Prescription Drug/Biotech Issues/Evidence-Based Medicine
Moderated by Sally Pipes, Pacific Research Institute
Panelists:
Sally Pipes said the price of prescription drugs continues to increase year after year. Many people have tried to avoid the high cost of prescription drugs in the United States by traveling to Canada, or ordering drugs over the internet where prices are much lower. Such illicit importation, however, carries significant risk and is not a workable long-term solution.
Drug Re-importation
In Canada, drug prices are calculated using special government-imposed formulas that keep prices down. The consequence of government price fixing is reduced funding for research and development to develop new medical treatments. Ms. Pipes said an estimated $18 billion of research and development funding would be lost if similar price controls were imposed in the United States.
An even greater concern surrounding importation is the possibility of patients receiving counterfeit drugs. When drugs are imported illegally from other countries there is no way to tell what is in them. There have been numerous cases of people receiving drugs that only have a fraction of the needed active ingredient. People who order drugs from a foreign country, even Canada, are hoping for an honest seller on the other end and putting their health at risk.
Medicare Part D
Nona Bear illustrated Medicare Part D, an insurance product designed to reduce the burden of prescription drug costs. As part of the Medicare Modernization Act, Part D will soon offer better options than are available now. One of the biggest challenges looming over Medicare’s changes is communication. Ms. Bear noted that with such an utterly complex system based on so many variables, helping people understand their Medicare options and how to go about receiving benefits is crucial. As Medicare changes, the 41 million people in the program must stay informed and be ready to adjust as their benefits change. Part D will make buying drugs more affordable, but only if beneficiaries enroll within a specific time period, making widespread information about this new program even more important.
Part D begins on January 1, 2006, although enrollment will commence November 15th of 2005. Part D has all the elements of a traditional insurance plan, with a premium, deductible, co-payment, maximum out-of-pocket limit, catastrophic benefit and a yearly open season. This makes the program easier for most people to grasp and makes enrollees more comfortable with their decision. Open enrollment will continue through May 15, 2006, after which premiums will increase and will be paid for life at the higher rate.
Beneficiaries of Part D will see lower drug costs and be protected from increased costs. Total prescription drug spending will decrease even for those with lower than average costs. If a beneficiary’s health condition worsens, drug costs will not be affected—this is the basic safeguard under Part D’s insurance policy. Those who have prescription drug coverage prior to enrollment will incur no additional penalties unless their current coverage is not as good as Part D and they neglect to enroll by a set date. Those without any current prescription drug coverage must enroll during an open season. The program is operated by a variety of providers. A selection of plans are available, some of which are all-inclusive and include hospital and doctor benefits.
Rx Help for Washington
Todd Myers discussed a free, private prescription drug service that is available for people in Washington state. Rx Help for Washington is a cooperative effort created by drug makers that provides free or reduced cost prescription drugs to low-income people. Since its inception in November 2004, Rx Help for Washington has been so successful that a national version of the program is in the works.
Rx Help for Washington allows people whose medication is not covered by insurance and who cannot afford to pay full price to find a practical way to get the medicine they need. Searching a data base of about three hundred programs, Rx Help for Washington finds free or discounted medicine. People can use the Rx Help website to find the discounts for which they qualify, or they can call toll-free and talk to a live representative. Users answer a few simple questions regarding age, average household income, the number of people in the household and current insurance information. By design the process is very non-bureaucratic – there are only about ten questions in total. Mr. Myers said, “This is not a cure-all” for affordable prescription drugs. Rather he called it a tool for people in need of drugs they cannot afford which can relieve the financial burden of high-cost medicines.
Evidence-Based Medicine
Twila Brase described her concerns over the increased use of Evidence-Based Medicine. Since the term lacks a concrete definition, she said it is difficult to respond or evaluate this new practice. The original definition as stated by David Sackett states that “Evidence-Based Medicine is the conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients.” This sounds harmless and commonsense, but in practice the method operates like managed care. Evidence-Based guidelines sometimes conflict with each other and medical research is often inconsistent, ultimately affecting the way a patient is treated.
Ms. Brase shared her thoughts as to why this trend is on an upswing. In her view Health Maintenance Organizations (HMOs) have taken this approach as their new strategy. Legislators are wooed by the appeal Evidence-Based Medicine has as apparently true science and a way to reduce certain costs, often missing its similarity to managed care and the possibility of increasing costs in other areas of care. Legislators are settling on the Evidence-Based option because they lack the will to deal directly with entitlement programs and the market distortions created by third-payer health care financing which, Ms. Brase said, are the two real problems driving the cost of care.
Biotechnology and Biomedical Research
Jack Faris, President of the Washington Biotechnology and Biomedical Association, presented a bright future for our state in regard to technological advances in medicine. Our universities, he said, have exceptional programs in research and with continued funding and support from philanthropists like Bill Gates and Paul Allen, the remarkable strides made in local research labs will continue.
Mr. Faris said Washington state needs to strengthen its relationships with commercial enterprise and ensure that research which arises locally is not kept local so that people around the world can benefit. He described three stages Washington state should follow in order to improve the relationship between research and the commercial sector. Universities should improve relationships with the commercial sector, move innovation out of laboratories and into the marketplace, recognizing its role and importance in bringing new treatments to the community. He concluded that this is a team effort and the “benefits are immeasurable and the challenges are almost equally significant.”
Panel Three: Medical Malpractice Reform Debate
Moderated by Robert Mak, KING-TV
Panelists:
Two competing medical malpractice initiatives have qualified and will appear on the November ballot; Initiative 330 and Initiative 336. Initiative 330 is designed to reduce health care costs and encourage doctors to stay in practice by limiting certain jury awards in medical malpractice lawsuits. Initiative 336 is intended to protect injured patients by preserving the ability to sue for large amounts and to force poor performing doctors to stop practicing medicine.
Tom Curry explained why he supports Initiative 330. The initiative addresses the high premiums paid by doctors for insurance coverage, which in turn contributes to the rising cost of health care. He said many doctors have had to leave the state because these expenses were so high. For example, he pointed out that in some Washington communities OBGYN services are no longer available. He said the initiative will set a cap on non-economic damages, such as pain, suffering and disability, that ranges from $350,000 to $1,050,000. Jury awards for economic damages, caused by the measurable loss of employment or property, would not be capped. Under Initiative 330, patients would receive the full amount due for economic damages, but attorney’s fees would be limited. Lawyer fees would be limited to 40% of the first $50,000 of a jury award, 33.3% of the next $50,000, 25% of the next $500,000 and 15% of $600,000 or more.
Dylan Malone said Initiative 336 takes a different approach. “If you want to lower the cost of medical malpractice insurance, you have to lower the incidence of malpractice itself,” he said. He related how his son died last year due to medical malpractice. Initiative 336 seeks to impose a “three-strikes, you’re out rule” for doctors. After three convictions within ten years a doctor’s license would be revoked. Initiative 336 also includes several other measures to protect patients, Mr. Malone said. There is also an anti-secrecy provision that would prevent victims in malpractice cases from having to sign a non-disclosure agreement, allowing patients to know a doctor’s medical history.
In Malone’s case, his wife was given a drug to induce contractions that was not safe for pregnant women. The drug led to their son being fatally injured. The Malones received a settlement, but the doctor responsible had a history of malpractice incidents and in this case was only fined $1,000 and continues his practice today.
While both initiatives deal with medical malpractice, each is very different in its effort to address expensive lawsuits filed in Washington state. Initiative 330 is focuses on patient compensation and reducing costs to doctors and the health care system. Initiative 336, on the other hand, seeks harsher penalties against doctors who have been convicted of malpractice.
Luncheon Keynote Address by Sally Pipes
President of the Pacific Research Institute and author of Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer
Ms. Pipes began her address by observing that many Americans look at rising health care costs, see the number of citizens who cannot afford coverage and conclude that the United States should move toward a mandatory, government-run health care system, like that of Canada. Sally Pipes, a Canadian, shared her insights into Canadian health care versus the consumer-driven care that is expanding now in the United States.
A Faulty Canadian System
National health care in Canada is not what most Americans think it is, Ms. Pipes said. It is a system with inherent problems such as lengthy waiting lists, outdated or inefficient technology and lack of needed drugs. Ms. Pipes shared numerous stories of Canadians getting enmeshed in its regulatory tangles.
Her mother had a bad knee. It took one year to get an appointment with an orthopedic doctor. Due to the mother’s advanced age the doctor implanted a plastic knee that was good for five years. She outlived it. In another incident a man called a clinic to schedule a regular check-up and was informed that in five years they could see him. Most people cannot wait that long. They should not have to, Ms. Pipes said.
The U.S. Medical Safety Net: If Canada Can’t Help, the U.S. Can
Many Canadians cross the border and pay out-of-pocket for medical treatment, even for simple check-ups. A women in Vancouver, B.C. went into labor with twins, but there was no space in any hospital or clinic in the city where she could give birth. Instead, the Canadian health authorities airlifted her to Edmonton, Alberta. She was fortunate. Many people are stuck waiting and waiting for what they need. Ms. Pipes’ uncle was in need of a very specialized drug which was not available within the Canadian system, so he jumped in his car and drove to Seattle. The average wait time for a standard visit to the physician in the last ten years increased from just over nine weeks to almost eighteen weeks.
Patients are not the only ones frustrated with the system. Doctors are not able to practice the medicine they were taught; in fact 250 doctors a year are crossing the border to practice in the U.S., Ms. Pipes said. Windsor, Ontario recently lost two of its four neurosurgeons to Detroit. The two doctors said they were tired of not being able to get the essential tests needed for their patients.
U.S. Health Care Myths
Pipes clarified some of myths about U.S. health care. Many Americans believe that 45 million citizens are without health care coverage. In fact, many uninsured people are either eligible for Medicaid or state children’s health insurance and have not signed up for these services. Many people without coverage have high incomes and simply pay cash for care. Last year alone Americans spent $125 million dollars of out-of-pocket for health care. Others are young and healthy and would rather spend money on things other than insurance. In these cases lack of coverage is a personal choice. Another common fallacy is that if a person does not have coverage, they do not receive care. Actually, the law requires hospitals to treat people who need it and emergency rooms are always open to all comers.
Many things can be done to alleviate health care costs and make the system operate more efficiently, Ms. Pipes said. Newt Gingrich and Senator Hillary Clinton have united on a bill called the 21st Century Health Information Act, which calls on medical administrators to increase use of computers and modern technology in medical record-keeping. This advance will help information to be passed along correctly and avoid having to decode doctor’s handwriting. Such technology improves the quality of care and saves money.
Ms. Pipes said the long-term solution is to put consumers in charge. Single-payer national health care is not the answer, she said. Americans deserve quality coverage and HSAs and other consumer-based reforms can help. Many Americans who pay too much for their health care can open HSAs and control where the money is spent. It also allows those without coverage to take care of themselves and their families. HSAs help small businesses provide for their employees, where before they could not afford high premiums. Ms. Pipes concluded keeping Americans healthy, keeps America moving forward.