Kaiser Daily Health Policy Report
New York Times Series Examines Fraud, Abuse in New York State Medicaid Program
Some House Members Warned of VA Health Deficit as Early as Last Year
Senate Approves Bill To Allow Re-Exportation of Controlled Substances
New York Times Looks at Federal Officials' Tour To Promote 2003 Medicare Law
Australia, New Zealand To Join Illinois' I-Save Rx Reimportation Program
Minnesota Supreme Court Orders Review of State Attorney General's Request for Review of GSK Documents
AP/Long Island Newsday Examines Celebrity Promotion of Prescription Drugs Through Disease Awareness
FDA To Make Decision on Plan B Application by Sept. 1; Senators Lift Holds on Crawford's FDA Commissioner Nomination
Chiron Lowers Production Estimate for German-Made Flu Vaccine
Many Large U.S. Companies Likely To Shift More Health Care Costs to Employees Next Year, Survey Finds
Two Newspapers Examine Increased Popularity of Health Savings Accounts
Health on the Hill from kaisernetwork.org and CQ
CQ's Schuler Addresses Embryonic Stem Cell Legislation, Health IT Bill, Medical Error Legislation, Crawford's Nomination
The Latest Reports in Health Policy
Updated Medicare Health Plan Tracker Provides 2005 Data
Opinion Column Addresses Debate Over Coverage for 'Lifestyle Drugs'
U.S. Health Care System Should Pay for Only Cost-Effective Treatments, Editorial States
Medicaid
Governors Discuss Concerns About 'Clawback' Provision in Medicare Law, Medicaid Reform
[Jul 18, 2005]
The National Governors Association on Monday during its annual meeting in Des Moines, Iowa, is expected to approve a slate of cost-saving proposals for Medicaid, the Arkansas Democrat-Gazette reports. Proposals under consideration from NGA include: - Changing how Medicaid programs purchase prescription drugs by increasing the amount of drug company rebates collected by states, obtaining discounts from drug makers and incorporating methods currently used by Medicare to save money on drugs;
- Limiting the types of assets that can be transferred to family and friends to qualify for Medicaid-funded long-term care;
- Encouraging seniors to use "reverse mortgages" on their homes to refund Medicaid for services;
- Allowing states more flexibility to reduce spending; and
- Granting "broad discretion" to states to establish Medicaid copayments, deductibles and premiums (Bleed, Arkansas Democrat-Gazette, 7/18).
Support for Plan
Governors on Sunday at a meeting with Senate Finance Committee Chair Chuck Grassley (R-Iowa) said their proposal has the support of all 50 governors. However, concerns expressed from health care advocates "have some governors, particularly Democrats, warning that opening the door to copays must be accompanied by limits that don't drive the poorest recipients off government-provided health insurance," AP/Long Island Newsday reports. Illinois Gov. Rod Blagojevich (D) said, "There's a moral component to a budget," adding, "What do those numbers do? How do they help people?" Blagojevich said he supports the flexibility proposed by NGA, but he does not favor raising costs for poor and working families. Some governors said that they would not implement some of the changes to copays or coverage, "regardless of what [NGA] or Congress agrees upon," AP/Newsday reports. Grassley said the NGA proposals are "really key to getting something done," adding, "We will not get a bipartisan agreement in Congress without a bipartisan agreement from the governors" (Tanner, AP/Long Island Newsday, 7/18). However, "Congress has shown little interest in embracing" the NGA plan, the Washington Post reports (Balz, Washington Post, 7/17). Governors Oppose Medicare Drug Policy
NGA on Sunday also voiced concerns about how the 2003 Medicare law will affect dually eligible beneficiaries and states, AP/Newsday reports (AP/Long Island Newsday, 7/17). Under the 2003 law, drug coverage for dual eligibles will be transferred from state Medicaid programs to the new Medicare benefit. The so-called "clawback" provision requires states to pay the federal government 90% of the estimated amount they would have paid in drug expenses in 2006, and therefore states could experience savings of 10% from their current prescription drug spending levels for dual eligibles (Kaiser Daily Health Policy Report, 7/8). However, many governors said their states ultimately will pay more for dual eligibles' drugs under the new law. Virginia Gov. Mark Warner (D), the outgoing NGA chair, said, "This is coming down the pike at us real quick," adding, "In January, it's going to be on our doorstep." Michigan Gov. Jennifer Granholm (D) said, "We're all talking to our attorneys general and contemplating a suit." She added, "There are about 17 governors who are exploring all possible options" (AP/Long Island Newsday, 7/18). Huckabee To Become NGA Chair
In related news, Arkansas Gov. Mike Huckabee (R) on Monday is scheduled to be named chair of NGA. Huckabee has served as vice chair for the past year. Huckabee has "indicated that his one-year term ... will focus on making the nation's health better, with a heavy emphasis on placing more responsibility on individuals," the Democrat-Gazette reports (Arkansas Democrat-Gazette, 7/18).
New York Times Series Examines Fraud, Abuse in New York State Medicaid Program
[Jul 18, 2005]
The New York Times on Monday examined how the $44.5 billion New York state Medicaid program has become a "target for the unscrupulous and the opportunistic" in the first of a series of articles on the security, effectiveness and cost of the program. A one-year investigation by the Times found that the state Medicaid program -- "the most expensive and most generous in the nation" -- "has been misspending billions of dollars annually because of fraud, waste and profiteering." Summaries of examples of the practices appear below. - The Dentist: Dolly Rosen, a dentist, has billed the state Medicaid program for more than $7 million since she began to participate in 2002, although an investigator said in a criminal complaint that 80% of the services for which she billed the program "were not performed, were unnecessary or were improper," the Times reports.
- The AIDS Drug: Mikhail Makhlin, a physician, illegally prescribed Serostim -- "a very expensive" medication manufactured by Serono Laboratories used to treat wasting syndrome, a side effect of AIDS -- more often than "even prominent AIDS specialists with large practices," the Times reports. The medication also has been sold on the black market for bodybuilding purposes. The practice cost the state Medicaid program $11.5 million between 2000 and 2003, according to a Times analysis of billing records.
- The Ambulettes: Many reimbursements made by the state Medicaid program for rides provided by ambulettes, vans that transport beneficiaries who "cannot walk without help" or use a wheelchair to physician offices and hospitals, appear "unnecessary," the Times reports. According to the Times, many Medicaid beneficiaries who received such rides, which cost about $25 to $31 each, "walked easily, without assistance."
- The School Districts: School districts in the state "misspent $1.2 billion in Medicaid payments on speech services" between 1993 and 2001, according to federal audits, the Times reports. Over that period, 86% of school districts in the state that received reimbursements from the state Medicaid program for such services "lacked any explanation for why the services had been ordered or violated other program rules," according to the Times.
- The Executives: Executives of the state nursing homes and clinics are "among the biggest beneficiaries of the Medicaid program," as 70 had annual incomes of more than $500,000 in 2002 and 25 had annual incomes of more than $1 million, according to the Times. Meanwhile, nursing home advocates maintain that staffing levels at state nursing homes are "lower than the national average" and that the facilities have a "long-standing record of poor care," the Times reports (Levy/Luo, New York Times, 7/18).
Capitol Hill Watch
Some House Members Warned of VA Health Deficit as Early as Last Year
[Jul 18, 2005]
Former Chair of the House Veterans' Affairs Committee Christopher Smith (R-N.J.) and several Republicans warned House Speaker Dennis Hastert (R-Ill.) and Majority Leader Tom DeLay (R-Texas) last year that the government would have a budget deficit of at least $750 million for veterans' health care programs in fiscal year 2006, the AP/Richmond Post-Dispatch reports (AP/Richmond Times-Dispatch, 7/17). President Bush on Thursday asked Congress for $1.98 billion for the Department of Veterans Affairs FY 2006 health care programs to address the budget deficit. VA Secretary James Nicholson and other department officials in June testified before Congress that the budget deficit for health care programs could reach at least $1 billion in FY 2005 and at least $2.6 billion in FY 2006 (Kaiser Daily Health Policy Report, 7/15). In March 2004, Smith warned House leaders of an impending VA budget shortfall of $2.5 billion. The Senate approved a measure with the increase, but the House's bill included $750 million less. Smith and 30 other Republican legislators wrote to Republican leaders to voice their concern about the situation, but Smith was "rebuked by several Republicans" for warning of the deficit, the AP/Times-Dispatch reports. In addition, Smith, Rep. Rob Simmons (R-Conn.) and Rep. Rick Renzi (R-Ariz.) -- who all signed the letters to Hastert and DeLay -- were removed from their positions on House committees with some oversight of VA issues. Smith declined to blame the House leaders or discuss the details of his removal, the AP/Times-Dispatch reports. A spokesperson for DeLay said House leaders will "make sure that every veteran will receive the coverage they need." Hastert's office did not comment, according to the AP/Times-Dispatch (AP/Richmond Times-Dispatch, 7/17).
Senate Approves Bill To Allow Re-Exportation of Controlled Substances
[Jul 18, 2005]
The Senate on Thursday passed a bill (S 1395) that would allow the U.S. attorney general to authorize the re-exportation to other nations of Schedule I or II drugs -- such as morphine and OxyContin -- or Schedule III or IV drugs -- such as Xanax, Lortab and Vicodin -- for medical or scientific purposes, CQ Today reports. Under the practice of re-exportation, a U.S. company exports products to a company in another country and that company can re-export the products to a different country. The legislation, sponsored by Sen. Orrin Hatch (R-Utah), also would allow pharmaceutical companies to seek approval from the attorney general to establish central distribution points abroad to facilitate the re-exportation of such drugs. Under current federal law, pharmaceutical companies cannot re-export such drugs. The bill would apply only to nations that have agreed to international rules on narcotic and psychotropic drugs. The House Judiciary Committee in June approved similar legislation (HR 184) (Schuler, CQ Today, 7/14).
Medicare
New York Times Looks at Federal Officials' Tour To Promote 2003 Medicare Law
[Jul 18, 2005]
In the first four stops of the Bush administration's national campaign to promote the new Medicare drug benefit, officials encountered "skepticism" from some beneficiaries, the New York Times reports. Last week, CMS Administrator Mark McClellan, Surgeon General Richard Carmona, CDC Director Julie Gerberding and NIH Director Elias Zerhouni visited Maine, New Hampshire, Massachusetts and Rhode Island. This week, they will visit Chicago, Milwaukee, Cincinnati and Dayton, Ohio. According to the Times, the officials -- who call themselves the "four docs" -- hope their tour will help educate consumers and prompt community groups to assist in the promotional effort. Speaking in Scarborough, Maine, on July 15, the officials emphasized that the typical Medicare beneficiary will receive $1,300 annually to help with drug costs under the new benefit, and low-income beneficiaries will receive additional aid. McClellan said, "What matters most is not what happens in Washington, but what happens all over the country as people make decisions about their health care and prescription drug coverage." Reaction to the officials' visit was mixed, the Times reports. Consumers expressed skepticism about the value of the new benefit, with some healthy beneficiaries saying they did not need the new coverage and some ill beneficiaries saying the Medicare prescription drug benefit was inadequate. Meanwhile, Carol Rancourt, coordinator of health insurance counseling at the Southern Maine Agency on Aging, said, "My biggest fear is that people will be confused by the large number of options, will be shocked into inertia and will just do nothing." Jude Walsh, an adviser to Maine Gov. John Baldacci (D), said, "This is not the drug benefit we would have designed. But we have no choice. It's coming, whether we want it or not. We are trying to make it work for vulnerable people in the state of Maine" (Pear, New York Times, 7/17). Effect on Businesses
In related news, the Bergen Record on Sunday examined how different business sectors will be affected by the Medicare prescription drug benefit. According to the Record, the "prime players" in the new drug benefit -- including health insurers, pharmacy benefit managers, pharmacies, prescription drug manufacturers and employers -- are "gearing up to make the most" of the new benefit before it begins officially on Jan. 1, 2006. According to some analysts, health insurers, which will be the primary providers of the new coverage, could benefit the most from the coverage because Medicare beneficiaries represent one of the few areas for managed care growth. PBMs, which will administer the drug benefit, are expected to increase their "clout" by bringing in new members through the expanded coverage, the Record reports. Meanwhile, pharmacies also are expected to benefit from the influx of new customers who previously did not have prescription drug coverage and who likely will purchase other products at stores once they are drawn in for their medications. Pharmaceutical companies expect to see an increase in sales resulting from the Medicare drug benefit, although some analysts say the companies will have to make tradeoffs in drug pricing in order to win approval for drug plans' formularies. Finally, employers that already offer retiree prescription drug coverage will benefit from a federal subsidy intended to persuade businesses to retain such coverage. However, Sam Fleet -- president of National Employee Benefit, a benefit administrator and consulting firm -- said the administrative burden and resulting cost of applying for the subsidy could outweigh its value for some businesses (Krauskopf, Bergen Record, 7/17).
Prescription Drugs
Australia, New Zealand To Join Illinois' I-Save Rx Reimportation Program
[Jul 18, 2005]
Illinois Gov. Rod Blagojevich (D) on Monday is expected to announce that within the next six to eight weeks, Australia and New Zealand will join the state's I-Save Rx program, through which residents can order lower-cost prescription drugs from other nations, the Chicago Sun-Times reports (Ritter, Chicago Sun-Times, 7/18). Illinois began I-Save Rx in October 2004, and Wisconsin, Missouri and Kansas later joined the program. The states contract with CanaRx, a Canadian pharmacy benefit manager that operates a network of online pharmacies, to allow residents to connect with a clearinghouse of 45 pharmacies and prescription drug wholesalers in Canada, the United Kingdom and Ireland. U.S. residents can purchase only prescription refills, and most generic medications, narcotics and treatments that require refrigeration or other special care are excluded (Kaiser Daily Health Policy Report, 3/10). About 10,300 orders have been placed though I-Save Rx, mostly by Illinois residents. A Blagojevich spokesperson said state agencies are increasing their efforts to raise awareness about the program. The announcement comes as Canada has announced a desire to "clamp down on drug sales" to the U.S., the Sun-Times reports (Chicago Sun-Times, 7/18). U.S. Consumers Turning to Israel
In related news, the South Florida Sun-Sentinel on Monday examined how U.S. residents are ordering lower-cost prescription drugs from Israel, which offers "lower prices and solidarity" among supporters of the Israeli economy. According to Avi Fadida -- marketing manager for IsraMeds.com, an online, mail-order prescription drug company based in Israel -- two-third of the company's clients are Jewish and support helping Israel financially. Tom McGinnis, director of pharmacy affairs at FDA, said that ordering drugs from other nations is "more of a threat to public health of U.S. citizens because we don't know anything about these medications, how they are made, how they were stored and how they were shipped, as opposed to your state-licensed pharmacy" (Huriash, South Florida Sun-Sentinel, 7/18).
Minnesota Supreme Court Orders Review of State Attorney General's Request for Review of GSK Documents
[Jul 18, 2005]
The Minnesota Supreme Court on Thursday ordered the state Court of Appeals to reconsider a request by state Attorney General Mike Hatch (D) to unseal 45 documents related to allegations that GlaxoSmithKline and other pharmaceutical companies attempted to block the reimportation of lower-cost prescription drugs from Canada, the Minneapolis Star Tribune reports (Phelps, Minneapolis Star Tribune, 7/15). Hatch in 2003 filed a lawsuit that sought to require GSK to produce documents related to a company policy implemented in January 2003 under which GSK refused to sell products to Canadian pharmacies and wholesalers that market the products online to the U.S. and other nations. In the lawsuit, Hatch argued that AstraZeneca, Wyeth and Pfizer implemented similar policies within a three-month period, which appeared "too much of a coincidence." In May 2004, Hennepin County District Judge Peter Albrecht ruled that GSK must produce Canadian and British documents that Hatch said indicate collusion among pharmaceutical companies to limit prescription drug supplies to Canadian pharmacies and wholesalers. GSK had offered to allow state attorneys limited "viewing" and "note-taking" of the documents, but Albrecht said that such an offer was "a grossly inadequate substitution for production." However, Albrecht ruled that the documents must remain confidential (Kaiser Daily Health Policy Report, 6/1). The state appeals court had denied a request by Hatch have the documents unsealed (Minneapolis Star Tribune, 7/15).
AP/Long Island Newsday Examines Celebrity Promotion of Prescription Drugs Through Disease Awareness
[Jul 18, 2005]
The AP/Long Island Newsday on Saturday examined the "seven-year-old practice of celebrities promoting drugs" and the trend toward advertisements that seek to make consumers "aware" of potential "suffering," rather than promote specific medications. According to TNS Media, spending on direct-to-consumer prescription drug ads decreased by 1.5% in the first five months of 2005, but the percentage of disease-awareness ads that do not mention specific medications doubled to 4.6% of all network television prescription drug ads from January through April. Experts maintain that the shift from celebrity endorsements of specific medications has resulted from safety concerns and criticism from some groups that prescription drug ads minimize risks, as well as the potential for a one-year federal ban on DTC ads for new medications. Mark Bard, president of Manhattan Research, said that disease-awareness ads are beneficial for pharmaceutical companies that hold the largest share of the market for specific medications. In addition, FDA, which has encouraged disease-awareness ads, issued guidelines for such ads last January. Pharmaceutical companies do not disclose celebrity endorsement fees for disease-awareness ads, but they range about $200,000 to $500,000, according to AP/Newsday (Johnson, AP/Long Island Newsday, 7/17).
Administration News
FDA To Make Decision on Plan B Application by Sept. 1; Senators Lift Holds on Crawford's FDA Commissioner Nomination
[Jul 18, 2005]
HHS Secretary Mike Leavitt on Friday in a letter to Sen. Mike Enzi (R-Wyo.), who chairs the Senate Health, Education, Labor and Pensions Committee, said that FDA will make a decision by Sept. 1 about whether to approve Barr Laboratories' application for nonprescription sales of its emergency contraceptive Plan B, the AP/Las Vegas Sun reports (Freking, AP/Las Vegas Sun, 7/15). In the letter, Leavitt said the decision on Plan B "rests solely with the FDA and must be made according to the scientific evidence and FDA's authority." Leavitt clarified that he is "not part of this decision-making process" and said that based on "feedback" he had received from FDA officials, the agency will rule on Barr's application by Sept. 1 (Pear, New York Times, 7/16). The agency in May 2004 issued a "not approvable" letter in response to Barr's original application to allow Plan B to be sold without a doctor's prescription, and FDA in January delayed its decision on Barr's revised application, which would allow EC to be sold without a doctor's prescription to women ages 17 and older but be dispensed only with a doctor's prescription for girls ages 16 and younger. During a confirmation hearing in March, Crawford told the Senate health committee that FDA would approve the application "within weeks" (Kaiser Daily Health Policy Report, 6/16). Rodham Clinton, Murray Lift Holds
In response to the letter from Leavitt, Sens. Hillary Rodham Clinton (D-N.Y.) and Patty Murray (D-Wash.) have agreed to lift their holds on Crawford's nomination (AP/Las Vegas Sun, 7/15). Rodham Clinton and Murray in June blocked a full Senate vote on Crawford's nomination and said they would maintain the hold until FDA made a decision on Barr's Plan B application (Kaiser Daily Health Policy Report, 6/16). In a joint statement, Rodham Clinton and Murray said, "It is long past time that the American people had a decision on Plan B, and the FDA has finally agreed to give women across the country what we have fought for from the beginning -- a 'yes' or 'no' decision. While we continue to have concerns about the lack of leadership and independent decision-making that Dr. Crawford and the FDA have shown in this case, we have been clear all along that our hold on this nomination is about one thing only: the FDA's failure to provide an answer on Plan B." Coburn Lifts Hold; Vote Expected Soon
Sen. Tom Coburn (R-Okla.), who had placed a hold on Crawford's nomination because of concerns about FDA failing to implement congressionally mandated labeling for condoms that clarifies the limits of their effectiveness, also has lifted his hold on Crawford's nomination, according to Coburn spokesperson John Hart (Kaufman, Washington Post, 7/16). Coburn has said current condom labels are not accurate and that the packages must specify their effectiveness in preventing pregnancy and sexually transmitted diseases (Kaiser Daily Health Policy Report, 6/16). According to Hart, FDA has assured Coburn that it will implement the law requiring more accurate condom labeling (Washington Post, 7/16). However, a Senate leadership aide said there could be other senators who might place a hold on Crawford's nomination, although he did not say who or specify what their concerns might be. However, the aide said he was hopeful that a vote on Crawford's nomination will occur this week (CQ Today, 7/15).
Coverage & Access
Chiron Lowers Production Estimate for German-Made Flu Vaccine
[Jul 18, 2005]
California-based Chiron on Friday announced that production of Begrivac, its German-made flu vaccine, will be "scaled back sharply" -- by about eight million doses -- because of contamination at the company's German manufacturing plant, Reuters/New York Times reports. The company also said it might delay shipments of the vaccine until early October (Reuters/New York Times, 7/16). According to the Wall Street Journal, the announcement has "fueled suspicions among analysts that the company may have a broader quality-control problem in its vaccine-production business" (Hamilton, Wall Street Journal, 7/18). The U.S. experienced a flu vaccine shortage last flu season after the British Medicines and Healthcare products Regulatory Agency in October 2004 suspended the license of a Chiron manufacturing facility in Liverpool, England, because of contamination issues. In late February, MHRA ended the suspension, a move that will allow the facility to manufacture flu vaccine for the U.S. market for the 2005-2006 season, contingent on FDA approval. However, Chiron last month announced plans to manufacture only 18 million to 26 million doses of Fluvirin vaccine for the 2005-2006 season, down from an April estimate of 25 million to 30 million doses (Kaiser Daily Health Policy Report, 6/28). Chiron sells flu vaccines Agrippal S1, Fluad and Begrivac outside the U.S. (Philadelphia Inquirer, 7/16). Prudential Securities analyst John Sonnier said he did not expect FDA to issue a decision on Chiron's Liverpool plant until early September (Reuters/New York Times, 7/16). Chiron Comments
A Chiron spokesperson said the problem at the Marburg, Germany, plant is unrelated to issues at the Liverpool facility. According to the Journal, Chiron is considering relocating vaccine supplies from poorer nations, where the vaccine is sold at lower prices, to major markets in the United Kingdom and Germany to address the Begrivac shortfall. The spokesperson said the company is evaluating options and will relocate vaccine only from countries where other vaccines can take the place of Begrivac (Wall Street Journal, 7/18). Implications
The announcement "continued the uncertainty for Chiron," USA Today reports (Appleby, USA Today, 7/18). Sanford Bernstein analyst Geoff Porges said, "The news that they now have flu vaccine product problems in Germany was a surprise, and it adds to the sense that this company can't operate its own business." Chiron, after receiving a letter from U.S. regulators, also announced that more studies are needed for the company's lung transplant drug, Pulminiq (Reuters/New York Times, 7/16). National Preparedness Plan
In related news, federal vaccine advisers on Tuesday will vote on a revised version of the Pandemic Influenza Preparedness and Response Plan, which outlines the response the U.S. should take in a worldwide flu pandemic. Under the "nearly completed" federal draft plan, "[f]ront-line health care workers" and vaccine and drug plant employees would be vaccinated first in a flu pandemic. The next group to be vaccinated would be those at highest risk of contracting the flu, beginning with those over age 65 with chronic medical conditions, followed by pregnant women and other groups. Experts still must determine who would first receive limited supplies of flu vaccine and antiviral drugs and how many doses the government should purchase. Two federal vaccine advisory committees on Tuesday will take up those issues. The plan will be finalized by Aug. 1 and sent to HHS Secretary Mike Leavitt for approval, according to Carolyn Bridges of the CDC National Immunization Program and contributor to the plan (Wahlberg, Atlanta Journal-Constitution, 7/18). Editorial
If an avian influenza pandemic occurs "anytime soon," neither the U.S. nor international health authorities "will be prepared to cope with it," a Times editorial states. Vaccine and antiviral supplies are inadequate to protect "more than a handful of people," and there is "no industrial capacity to produce a lot more of these medicines quickly," the editorial continues. Although many experts have said it would be difficult to detect and contain an outbreak of transmissible influenza before a pandemic develops, controlling the disease in poultry and other animals that might spread the virus to humans might "be the best hope we have until we are able to upgrade today's fragile and unreliable vaccine production system with new processes that can expand output quickly to meet a crisis," the editorial concludes (New York Times, 7/17).
Many Large U.S. Companies Likely To Shift More Health Care Costs to Employees Next Year, Survey Finds
[Jul 18, 2005]
More than three-fourths of large U.S. companies next year likely will require employees to pay more for health insurance and about one-fourth likely will reduce wage increases for employees because of increased health care costs, according to a survey released on Monday by PricewaterhouseCoopers, the AP/Detroit Free Press reports. According to the survey, which involved 150 companies, 70% of respondents said that increased health insurance deductibles for employees would reduce their discretionary health care expenditures, although 60% said that the practice would prompt employees to avoid necessary care. More than 80% of respondents cited financial incentives for employees to adopt healthier lifestyles as the most effective proposal to reduce health care costs, but 48% said that employees with unhealthy habits such as smoking should have to pay more for health insurance, the survey found. In addition, the survey found that about one-fourth of respondents attributed reductions in profit growth to increased health care costs and that about 20% likely will hire fewer new permanent employees next year. According to survey respondents, per-employee health care costs increased by 12% this year and likely will rise by 11% next year without reforms. PWC consultant Barry Barnett said health care currently accounts for between 12% and 15% of payroll costs for large companies, compared with about 8% in 2000. "Health care costs are the reason job growth isn't where the Bush administration would like it to be," Barnett said (Agovino, AP/Detroit Free Press, 7/18).
Two Newspapers Examine Increased Popularity of Health Savings Accounts
[Jul 18, 2005]
Two articles recently examined the increased popularity of health savings accounts and other health care payment options. Summaries appear below. - New York Times: The Times on Saturday examined how new health care payment options -- such as health savings accounts and prepaid medical cards linked with flexible spending accounts -- have begun to receive "wider acceptance in the workplace" and represent "a philosophical shift toward consumer-directed health care." According to recent surveys, awareness of HSAs is "quite low," and "confusion runs high" about the accounts, in part because health insurers, third-party administrators and banks can offer them and because the "infrastructure to support the accounts is in some cases a work in progress," the Times reports. In one case, UnitedHealth Group has established a bank, Exante, to offer HSAs, which pay 4% interest and include a MasterCard debit card. Meanwhile, some employers have begun to offer prepaid medical cards linked with FSAs. The cards function similar to credit cards but only work for purchases authorized under FSAs to ensure that "there is never a question of whether the outlay is covered," according to the Times (Kingson, New York Times, 7/16).
- AP/Pittsburgh Post-Gazette: The AP/Post-Gazette on Monday examined how a "growing number" of health insurers have begun to offer HSAs. According to a recent survey conducted by America's Health Insurance Plans, more than one million individuals have enrolled in HSAs since 2003, when the accounts first became available. Some employers have replaced older catastrophic coverage plans with HSAs to make employees more aware of their health care costs, Christopher Calvert, a senior health consultant with Segal, said. He added that HSAs are most attractive to younger, single individuals, those with higher incomes who can afford higher out-of-pocket costs and healthy individuals. According to Steve Kroll, executive vice president of Answer Financial, the main limitation with HSAs is that individuals must have the financial resources to cover the high deductibles associated with the accounts (Alt Powell, AP/Pittsburgh Post-Gazette, 7/18).
Health on the Hill from kaisernetwork.org and CQ
CQ's Schuler Addresses Embryonic Stem Cell Legislation, Health IT Bill, Medical Error Legislation, Crawford's Nomination
[Jul 18, 2005]
Congressional Quarterly reporter Kate Schuler discusses legislation on embryonic stem cell research, health information technology and medical errors, as well as acting FDA Commissioner Lester Crawford's nomination to head the agency in this week's "Health on the Hill from kaisernetwork.org and CQ." Schuler notes that Senate Majority Leader Bill Frist (R-Tenn.) plans to bring to the floor six pieces of legislation addressing various aspects of stem cell research. According to Schuler, legislation with a chance of passing the Senate includes a bill by Sens. Arlen Specter (R-Penn.) and Tom Harkin (D-Iowa) that would allow federal funding for research on stem cell lines taken from surplus embryos from fertility clinics. Another bill that would promote umbilical cord blood stem cells for use in research also is expected to pass, Schuler says. Schuler also addresses expected action by the Senate Health, Education, Labor and Pensions Committee to mark up a bill that would expand health IT and the House Energy and Commerce Health Subcommittee's passage of legislation (HR 3205) that would increase patient safety by establishing a medical errors database. Finally, Schuler notes that Sens. Hillary Rodham Clinton (D-N.Y.) and Patty Murray (D-Wash.) have agreed to lift their hold on Crawford's nomination, as has Sen. Tom Coburn (R-Okla.). Rodham Clinton and Murray objected to Crawford's nomination because they were upset by FDA's delay in deciding whether to approve over-the-counter sales of emergency contraception, while Coburn objected to what he called inaccuracies in the agency's labeling of condoms (Schuler, "Health on the Hill from kaisernetwork.org and CQ," 7/17).
 The complete audio version of "Health on the Hill," transcript and resources for further research are available online.
The Latest Reports in Health Policy
Updated Medicare Health Plan Tracker Provides 2005 Data
[Jul 18, 2005]
Updated Medicare Health Plan Tracker, Kaiser Family Foundation: The foundation has updated its Medicare Health Plan Tracker with current year information about Medicare Advantage plans, 2005 payment rates and enrollment as of March 2005. The plan tracker service allows users to obtain facts about the plans, look at historic trends, and compare their state or county with others (Kaiser Family Foundation release, 7/15).
Opinion
Opinion Column Addresses Debate Over Coverage for 'Lifestyle Drugs'
[Jul 18, 2005]
It should not "have been a surprise" to drug companies when the House voted to ban Medicare and Medicaid payments for erectile dysfunction medications because the message of ED advertisements "is less about disease and more about delight," Boston Globe columnist Ellen Goodman writes. A "conversation about rationing" is at the core of this debate, Goodman writes, noting that although people focus on "cost containment for sex, we haven't even begun to think about what we'll do with the truly expensive drugs coming down the pike," such as cancer treatments that can cost as much as $100,000. Goodman writes, "It's possible and sensible to distinguish between the dysfunction caused by disease and the superfunction that urges 70-year-olds to behave like 40-year-olds." She adds, "We can fund one and not the other" (Goodman, Boston Globe, 7/17).
U.S. Health Care System Should Pay for Only Cost-Effective Treatments, Editorial States
[Jul 18, 2005]
The "outrageous prices" charged by drug firms for some cancer medications show that the "appealing assumption about medical research -- that more is always better -- turns out to be wrong," a Washington Post editorial states. The editorial continues, "Huge research budgets, financed by sky-high drug prices that reflect an absence of market discipline, come at the expenses of diminished corporate competitiveness, stagnant wages, growing numbers of Americans who can't afford insurance and higher taxes." According to the Post, the U.S. needs a health care system "that pays for only cost-effective treatment," under which "price signals would then refocus the research establishment on producing useful therapies." The editorial states that "[u]sefulness means not just producing drugs but extending and improving the quality of life at a reasonable price." The Post continues that managed care companies, "which were once regarded as the best hope for containing unjustified spending, have been more or less defeated," adding, "[b]ut faced with this failure of the private market, federal policy is to move Medicare toward a private model." The editorial states that the "Bush administration and Congress are passing up opportunities to create a more rational health care market," concluding, "Oh, for a political leader with the courage to take on this mess" (Washington Post, 7/17).
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