Grassroot Perspective – March 20, 2003-A New Political Calculus; State Opportunities To Provide Affordable Health Coverage Under the Trade Law; Forum on Prescription Drug Promotion; States Crack Down on Families That Shed Assets to Get Benefits; Democrats Focus on Health Care for All

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“Dick Rowland Image”

”Shoots (News, Views and Quotes)”


– A New Political Calculus

Author: Grace-Marie Turner

Source: Galen Institute, 2/21/03

Political leaders have been struggling for decades to provide citizens with access to health coverage. Legislators have expanded government programs like Medicaid to cover more and more people and have allocated tens of billions of dollars for new programs, like the State Children’s Health Insurance Program. Despite these attempts, the number of uninsured remains stubbornly high. It seems clear that new approaches are needed. Coupled with deregulation, federal tax credits are needed to empower an army of consumers to shop for the health policies that best suit their personal needs.

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– State Opportunities To Provide Affordable Health Coverage Under the
Trade Law

Authors: Nina Owcharenko and Edmund Haislmaier

Source: The Heritage Foundation – Backgrounder #1626, 2/25/03

Nina Owcharenko and Edmund Haislmaier suggest the health care tax
credits in the Trade Act of 2002 provide an important “opportunity to
think creatively about how to improve existing private health insurance markets and to enhance choice, competition, and portability.” They recommend that the Federal Employees Health Benefits Program serve as a model for states to set up a system that creates a health insurance “service center;” determines a core group of participants; establishes rating rules that ensure portability of coverage offered through the service center; and sets in place a reinsurance pool mechanism to cope with adverse selection. “Through such a system, states could allow tax credit recipients to select the health plan that best suits their financial and medical needs, offering them a choice of plans while developing an infrastructure that could be extended to and benefit other populations,” say the authors.

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– Forum on Prescription Drug Promotion

Authors: Joel S. Weissman et al., Robert Dubois, and John E. Calfee

Source: Health Affairs Web Exclusive, 2/26/03

Two new papers, by Joel Weissman of Harvard Medical School et al. and by Robert Dubois, senior vice president of Zynx Health Inc., offer new data and insights on the effects of direct-to-consumer (DTC) advertising. Weissman and colleagues conducted a national phone survey to discern the effects of DTC advertising and found that the majority of patients who talked to their doctors about advertised drugs “felt better, encountered reduced symptoms, and obtained improved diagnostic test results.” Dubois questions whether drug promotion leads to inappropriate drug use and finds “DTC advertising probably confers substantial benefit and little if any harm.”

In his response to these two papers, John Calfee, a resident scholar at the American Enterprise Institute, says, “The emerging evidence on DTC advertising is therefore consistent with a larger pattern in which marketing has been found to improve markets and increase consumer welfare.” Calfee also notes that health care analysts may eventually view DTC advertising “not as an exception to the benefits of advertising but as a striking example of those benefits. The strongest impact of DTC advertising may prove to be not the initiation of prescriptions but the improvement of drug therapy compliance, an extraordinarily costly problem that has eluded all efforts to assuage it.”

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– States Crack Down on Families That Shed Assets to Get Benefits

Author: Michelle Higgins

Source: The Wall Street Journal, 2/25/03

In the arcane loopholes of the Medicaid law lie opportunities for people to divest themselves of income, essentially choosing to become poor, in order to qualify for the program’s health benefits. Among the practices the Journal points out are people transferring assets to relatives, putting all their assets in an annuity, and splurging on a nice house and car because these items are excluded in most states. But during times of budget deficits, states are cracking down on this practice. Studies show that as much as 22 percent of the $47 billion Medicaid spends pays for nursing home care for those who could afford to pay for months or even years of care, but have sheltered assets to qualify for government assistance. “We make people poor,” boasted Jennifer Cona, an elder law
attorney in Jericho, New York.

Full text (requires subscription):,,SB1046113343874461543,00.html

– Democrats Focus on Health Care for All

Author: Ronald Brownstein

Source: Los Angeles Times, 2/24/03

“The competition now under way in the Democratic race virtually
guarantees that the argument over how best to cover the uninsured will play a larger role in the 2004 presidential race than it did in 2000,” says reporter Ron Brownstein. The article highlights the health-care plans of presidential hopefuls Rep. Richard Gephardt and former Vermont governor Howard Dean. Gephardt’s plan would require all employers to offer coverage for their workers, but would give employers a tax credit worth around 60 percent to 65 percent of the cost of the insurance. Even those employers currently providing coverage would receive the tax credit, which would replace the current tax benefits for employment-based health insurance. The plan would cost the government close to $2 trillion over 10 years, predicted Sarah Bianchi, a Democratic health care analyst. Dean’s plan would expand Medicaid to all Americans younger than age 23 and give subsidies to small employers for health coverage.

Full text:,1,2826405.story

Above articles are quoted from Galen Institute Health Policy Matters
Feb. 27, 2003

”Roots (Food For Thoughts)”

– Long-term Rx for State Budget

Take These 10 Ideas to Get on Road to Financial Recovery

Feb. 24, 2003

By Lawrence W. Reed

Gov. Jennifer Granholm and the Michigan Legislature are grappling with combined budget deficits of about $2 billion for the current and next fiscal years. Deep spending reductions will be required to meet the near-term shortfalls in revenue, but that also raises the question: What can be done to minimize the chances for similar crises in the future? Make no mistake. Lansing needs to focus on more than short-term fixes. No one can forecast when future economic downturns will occur or how deep and prolonged they will be, but state government can reduce their negative impact with some long-term structural changes in the way it conducts its budgetary affairs. Here are a few ideas worth consideration:

*1. Employ “sunset” provisions. Far too many budget items are introduced in one year and are automatically included in subsequent years with little legislative scrutiny. If more line items automatically expired in one, two or three years, the Legislature would be forced to take a hard look at them on a regular basis. Isn’t this why we pay legislators to be full-time?

*2. Adjust user fees to reflect real costs and inflation. User fees are assessed for a plethora of state government services and many of them are woefully below the real cost of service delivery. For example, the Secretary of State’s fee for notary public applications is still a mere $3, where it was set 61 years ago in 1942.

*3. Phase down revenue shared with local units of governments. In recent years, the actual percentage of revenue sharing has exceeded the state constitutional mandates. The state should meet its constitutional requirement but otherwise let local governments raise additional revenue themselves. When we send our money to Lansing first, it tends to have a night on the town before it comes back anyway.

*4. Cut the pork. Just one whopper bill in 2000 appropriated more than $600 million in pork barrel projects that included a polar bear exhibit for the Detroit Zoo. If that revenue had been banked instead, today’s deficit would be one-third smaller. An ongoing, independent commission would be one way to blow the whistle when legislators go hog wild to bring home the bacon.

*5. Revive the PERM process. An innovative program in the first Engler term required departments to analyze their work to determine which makes the most sense: Privatize, Eliminate, Retain or Modify. It died due to bureaucratic resistance and lack of strong directives from the governor’s office. It should be revived. The best private businesses subject their work to such scrutiny every day.

*6. Apply the “Yellow Pages test.” If someone suggests that state government do something but the same service can already be found in the Yellow Pages directory, that’s as far as the suggestion ought to go.

*7. Renegotiate state labor contracts. Governors in other states are leveraging budget crises into a case for modifying overly generous contracts with state employee unions, saving millions in health-care costs and outmoded work rules. With prescription co-pays now at a mere $7 and $12 for state workers, why shouldn’t Michigan?

*8. Consider a two-year budget. This idea has pros and cons, but policymakers in biennial-budget states focus more on long-term and strategic budgeting, rather than narrow “number crunching” for a single year. Most of Michigan’s Midwest neighbors work on two-year budgets. Ohio Gov. Bob Taft has already introduced executive budgets for fiscal years 2004 and 2005.

*9. Don’t crank up new initiatives. Granholm has properly emphasized spending cuts, but she proposed a dozen new programs in her State of the State speech. Any money spent on them means her cuts in everything else have to be even deeper. Nix the new stuff and focus exclusively on the deficit, just like families or businesses do when they overspend.

*10. Eliminate costly subsidies for special interests. The pain of budget cuts wouldn’t be so bad for schools if they didn’t have to spend $150 million more than necessary every year because of a 1965 handout to organized labor called the “Prevailing Wage Act.” The state itself spends more than necessary for its printing of everything from stationery to lottery tickets because of a similar law dating back to 1937.

While there’s always a temptation to think no further than the
here-and-now, today is the tomorrow that yesterday’s short-sighted
policy makers didn’t plan for. Let’s not make that mistake again.

Lawrence W. Reed is president of the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland. Write to him in care of the Free Press Editorial Page, 600 W. Fort St., Detroit, MI 48226.

Above article is quoted from Mackinac Center commentary

”Evergreen (Today’s Quote)”

“Naturally the common people don’t want war … Voice or no voice, the people can always be brought to the bidding of the leaders … All you have to do is to tell them they are being attacked and denounce the pacifists for lack of patriotism.” — Hermann Goering

”’Edited by Richard O. Rowland, president of Grassroot Institute of Hawaii. He can be reached at (808) 487-4959 or by email at:”’ ”’For more information, see its Web site at:”’