Decoding Health Reform 2.0
As I write this column, it’s the final Super Tuesday primaries in eight states, including here in New York, before the big mid-term elections in November. And if the Sunday morning news shows are right, the Democrats are in for a spanking. Given the present state of the economy, the stagnant job market and the American electorate’s need to find someone to blame, it’s really kind of inevitable.
Certainly, health reform hasn’t proven to be the societal glue keeping the country together that many in Washington had hoped it might be. More and more the polls indicate that Americans are unsure of what ObamaCare really means for them—whether it means less or more for people who already have health care. An August Kaiser Health survey found that 43% of Americans still had a favorable view of the health-reform act; 45% had an unfavorable view.
I have been fairly certain that the Patient Protection and Affordable Care Act of 2010 would morph and evolve into something quite different from its present form long before we have reached the official implementation date in 2014. While HHS, CMS, the GAO and every other fancy acronym that interprets the laws Congress writes and the President signs figures out how to take the massive piece of legislation from words to action over the next few years, the shift in power this November will feed something I have called Health Reform 2.0.
To be sure, it will be called something else, something MUCH longer by the time it becomes law. And while I can’t predict everything the new version will contain, I am certain it will favor the use of more private sector-driven solutions—like retail clinics.
The introduction of a Senate resolution in late July designating the first week of August as National Convenient Care Clinic Week is a good sign that the ladies and gentlemen on the Hill are aware of the important role clinics will play in the future.
I also believe that Health Reform 2.0 will reintroduce eligibility for tax deductions for over-the-counter purchases under flexible spending accounts. Why? Because eliminating OTC eligibility from FSA plans stands in diametric opposition to the overarching spirit of health reform.
Under the old rules, depending upon what tax bracket you were in, you could save anywhere from 15% to 20% on every healthcare dollar spent by allocating a certain amount of pre-tax dollars to an FSA each year—including most OTC remedies. Under ObamaCare, OTC eligibility has been scrubbed from FSA plans to help pay for the total cost of the plan.
But eliminating OTC eligibility from FSA plans will drive up total out-of-pocket costs for millions of Americans who have come to rely on the exemption to make health care more affordable. According to the Bureau of Labor Statistics, as of March 2007, 33% of American workers who worked for companies with 10 or more employees participated in FSA programs.
This is precisely the kind of thing Americans don’t like about ObamaCare. But it is a relatively easy thing to undo.
In 2003, the Republicans took the Clinton White House’s vision for universal health care and turned it into the Medicare Modernization Act of 2003, creating the Part D drug benefit. It isn’t perfect, but it is an example of a market-based solution that has helped make the cost of healthcare more manageable for the average senior.
Maybe that’s the new definition of bipartisanship: the Democrats made health reform an issue; now it’s up to the Republicans to figure out how to pay for it.
Either way, I believe Health Reform 2.0 will favor more private-sector solutions that incentivize consumers to make smarter, more cost-efficient healthcare purchasing decisions that save real dollars for patients and payers. Kind of the way it worked when you could use tax-free dollars to pay for your OTC purchases if you were on an FSA plan.
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Re-evaluating Chinese currency remains a bad idea
WHAT IT MEANS AND WHY IT’S IMPORTANT Herbert Hoover is alive and well — and picking up his prescriptions at the local drug store.
(THE NEWS: Retailers urge Congress to reject Chinese currency legislation. For the full story, click here.)
Of course, he isn’t. But if he were, he might have some advice to offer current members of Congress and occupants of the White House based on his experience with the Smoot-Hawley Tariff Act of 1930, which attempted to rescue the U.S. economy by imposing tariffs on imported goods, but instead ignited a trade war that many historians blame for deepening the Great Depression.
The legislation to impose tariffs on Chinese imports as a way to force it to revalue the yuan is based on the assumption that China manipulates its currency to make its manufactured goods more competitive in the U.S. market. Thus, the reasoning goes, if China were to revalue the yuan, it would help American manufacturers by making Chinese imports more expensive and American goods more competitive in China, thereby helping to ease the U.S.-China trade deficit, which totaled $226.9 billion last year and has so far reached more than $145 billion this year, according to U.S. Census data.
But it’s not that simple. In 1930, the United States manufactured most of its own consumer goods; but that’s no longer true, and the bulk of consumer goods, from toys to digital cameras, now come from China. Also frequently lost in the melee is the fact that most of the supposedly Chinese goods are not Chinese at all, but rather products with American, Japanese, Korean and European brands that are assembled in China. Unlike in the 1970s and 1980s, when such Japanese companies as Sony were eating the lunch of such American counterparts as General Electric, the “Made in China” label now graces the products of both.
For that reason, if legislators imposed big tariffs on Chinese goods or if China dramatically revalued the yuan, it would simply force retailers to pass the extra costs to consumers. So after picking up his prescriptions, Hoover would find the digital camera he had planned to buy from behind the counter noticeably more expensive. While this would not likely lead to another Great Depression, it would certainly diminish consumers’ purchasing power.
As for the manufacturing jobs, many experts have said they would simply migrate to cheaper countries rather than returning to the United States. This trend already is under way in textiles, as many clothing companies have started moving factories from China to such countries as Bangladesh in response to the increasing costs of manufacturing in China.
Perrigo seeks approval for generic Zegerid OTC, Schering-Plough files suit
ALLEGAN, Mich. Perrigo has filed for regulatory approval of a generic version of an over-the-counter medication for frequent heartburn, prompting a lawsuit from the branded version’s manufacturer.
The company announced Friday that it had filed for approval for omeprazole and sodium bicarbonate in the 20 mg/1,100 mg strength. The medication is a generic version of Zegerid OTC, made by Schering-Plough HealthCare, a subsidiary of Merck.
Schering-Plough filed a lawsuit Monday alleging patent infringement in the U.S. District Court for the District of New Jersey to prevent Perrigo’s commercialization of the product.
Zegerid had sales of around $60 million during the 12-month period ended in the “most recent month,” according to SymphonyIRI Group.
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