Original links are included though some may have expired.

In This Issue:

1.) Bush Administration to Push up Health Care Prices?
2.) Equal Opportunity for Mediocre Health Care
3.) Healthier Employees Save Money

1.) Bush Administration to Push up Health Care Prices?

President Bush has begun to push doctors and hospitals to disclose their prices so patients can make cost-conscious choices about their care. But health care prices are fiercely negotiated with health insurance plans and kept confidential. In fact, one health care expert, Paul Ginsberg, president of the Center for Studying Health System Change, fears that forcing the disclosure of confidential negotiations could drive up prices because providers won't cut a good deal with a health plan if everyone is going to know about it.

Yet that's exactly what President Bush aims to do. The White House has announced that health plans in the Federal Employees Health Benefits program and military health insurance program will have to disclose the prices they have negotiated with health care providers for several medical procedures.

Why would the administration take such a radical and risky approach? Because they believe they can put consumers in charge of their health care by having them do price negotiations instead of insurance companies.

That's also the idea behind the push to expand health savings accounts (HSAs). HSAs are an alternative to comprehensive health insurance policies. People with HSAs instead purchase catastrophic insurance to cover major emergencies, while paying for routine medical expenses out of their own pocket. The president wants to make HSAs more attractive by doubling the amount of money individuals can contribute to them tax free.

If HSAs were working as designed, then why wouldn't doctors and hospitals voluntarily disclose their prices in order to attract patients? After all, Best Buy doesn't need a tax break to advertise its low prices on computers, TVs, etc. The unfortunate truth is HSAs don't fundamentally change the dynamics of the marketplace. Even if everyone had an HSA, the bulk of health care costs would still be paid by insurance companies -- since 80 percent of health care spending covers the expensive treatment of major illnesses and chronic conditions, such as heart disease and diabetes, not routine doctors' visits. So in order to keep up the pretense that HSAs can be a market power, the administration is lurching toward government mandates to pursue their agenda of radical individualism.

Consumers can and should become more cost conscious, but the administration's agenda of radical individualism that is leading them toward mandatory disclosure of privately negotiated prices is flat wrong because it will undermine what market forces are already holding down prices.

For more information:

"Bush Administration Expected To Announce Plan To Increase Transparency of Health Care Prices,"
Daily Health Policy Report, Kaiser Family Foundation, March 14, 2006:
http://www.kaisernetwork.org/daily_reports/
rep_hpolicy_recent_rep.cfm?dr_cat=3&show=yes
&dr_DateTime=14-Mar-06#35998

"Survival of the Fittest? Bush's Darwinian Health Care Agenda,"
By David B. Kendall, PPI, March 2, 2006:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=111
&subsecID=137&contentID=253771

2.) Equal Opportunity for Mediocre Health Care

You may remember the study by RAND that showed U.S. patients do not get the recommended care about half the time. The same research team took another look at the data, this time to see whether race, sex, and other demographic factors make a difference in the quality of care patients receive. The latest study published in The New England Journal of Medicine shows demographic differences, some surprising, but the differences pale in comparison to the fact that every group of Americans are suffering from mediocre health care.

It turns out African Americans, Latinos, women, and young adults on average get slightly better care than whites, men, and seniors. Insurance coverage and education level don't make a difference, and income makes a difference only when it's more than $50,000 per household.

None of these differences, however, are big enough to shield any demographic group from mediocre care. Young adults (ages 18 to 30) have the best chance of any group of getting the right care, but it's only a 57 percent chance compared to a 55 percent chance for the average American.

Numerous other studies on specific treatments like kidney transplants have revealed race and sex disparities in health care quality, and the RAND study doesn't fully contradict them. RAND researchers found whites receive better care for a limited subset of their quality indicators that had previously shown racial disparities, but the difference was not statistically significant. Theses results could mean disparities are decreasing because RAND's research is more recent, or that there were differences in the way the studies were conducted.

In any case, here's the bottom line: It's critical to push for quality improvement across the board while remaining vigilant about disparities.

How to do this? The RAND researchers have found that veterans received the right care two-thirds of the time. These results followed an overhaul of the Veterans' Administration health care system under the Clinton administration. The overhaul included broad use of electronic medical-record systems, decision-support tools to help doctors make better clinical decisions, computerized order entry to prevent errors, continuous measurement and assessment of quality, and pay for performance to reward high quality care. The VA did all this while saving money from fewer hospitalizations.

That's the right agenda for the nation as well.

For more information:

"Medical Care Lacking but Equal: Blacks, Hispanics Fare Slightly Better Than Whites, Study Finds,"
By Rob Stein, Washington Post, March 16, 2006:
http://www.washingtonpost.com/wp-dyn/content/
article/2006/03/15/AR2006031502120.html

"Who Is at Greatest Risk for Receiving Poor-Quality Health Care?"
By Steven M. Asch, M.D. et al,
New England Journal of Medicine, March 16, 2006:
http://content.nejm.org/cgi/content/full/354/11/1147

"Fixing America's Health Care System: A Progressive Plan to Cover Everyone and Restrain Costs,"
By David B. Kendall, Progressive Policy Institute, September 22, 2005:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=111
&subsecid=298&contentid=253538

3.) Healthier Employees Save Money

Part of the solution to America's health care spending woes is more patient awareness of, and involvement in, their own health decisions. When patients who know full well the consequences of smoking or of an unhealthy diet do not change behavior, spending spirals out of control. When Americans afflicted with chronic diseases do not follow their doctors' orders, costs skyrocket. How can patient behavior be changed?

One way is to ask patients to take voluntary health assessments. That's what King County, Washington, Executive Ron Sims has asked of his employees. All King County employees have been invited to take a wellness assessment, wherein they meet with a specialist and analyze their health status. Based on the evaluation, patients are given an "individual action plan." If they smoke, the plan includes a smoking-cessation program, providing them access to free products like nicotine gum and patches to help them quit. If they don't exercise, the plan helps them develop a work-out regimen, and so forth.

What is particularly newsworthy about the King County program is the level of participation it has achieved. Far exceeding expectations, almost 90 percent of King County employees have taken the wellness assessment, according to a recent press release. That's over 17,400 individuals. As Dr. Jeffery Harris of the University of Washington explains, "The norm for participation in a wellness assessment is in the 20 percent to 40 percent range, with 70 percent being the norm with sizeable financial incentives."

So how did King County do it? Are Ron Sims' employees overeager health nuts? Not surprisingly, the level of participation is determined by the incentives. Any employee who takes the wellness assessment achieves "silver status" in King County's program. Any employee who completes the individual action plans achieves "gold status." Employees who do nothing get the bronze. With each of these effulgent designations come varying levels of deductibles, co-payments, and out of pocket maximums. And the difference between gold, silver, and bronze is significant -- significant enough to get 90 percent of King County employees off of their couches to fill out an assessment and get on track to a healthier lifestyle.

To be clear, the King County program is not about discriminating against people who have bad genes or bad behavior. "All members, regardless of chronic diseases or unhealthy behaviors like smoking, have an equal opportunity to be eligible for gold as long as they participate in the program." The bottom line is that patients who make an effort to live healthy lives should not be unduly burdened by patients who do not even try. The prices patient pay should reflect the effort they make to stay healthy. King County believes it will save millions of dollars through encouraging employees to live healthily and shifting the cost burden to them if they don't. Kudos to King County for lowering costs by promoting healthy behavior.

For more information:

"King Country Achieves Stunning Level of Participation in New Wellness-Focused Health Benefit Plan,"
Press Release, King County, Washington, March 1, 2006:
http://www.metrokc.gov/exec/news/
2006/0301wellness.aspx

"The Puget Sound Health Alliance,"
By Eitan Hersh and David B. Kendall, PPI, January 26, 2006:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=111
&subsecid=298&contentid=253694

Newsletter compiled and written by David B. Kendall, PPI's senior fellow for health policy and Eitan Hersh, Dutko fellow.