Sally Pipes
Sally C. Pipes is president and chief executive officer of the Pacific Research Institute, a San Francisco-based think tank founded in 1979. Prior to becoming president in 1991, she was assistant director of the Fraser Institute, based in Vancouver, Canada.
Ms. Pipes addresses national and international audiences on health care, women’s issues, education, privatization, civil rights, and the economy. She has been interviewed on CNNfn, “20/20,” Fox News, “The Today Show,” “Dateline NBC,” “Politically Incorrect,” “The Dennis Miller Show,” and other prominent programs.
She has written regular columns for Investor’s Business Daily, and the San Francisco Examiner. And her opinion pieces have appeared in the Washington Post, USA Today, Financial Times of London, New York Times, Los Angeles Times, San Francisco Chronicle, Sacramento Bee, and Boston Herald.
A Canadian who has become a naturalized United States citizen, Ms. Pipes writes, speaks, and gives invited testimony at the national and state levels on key health-care issues facing America. Topics have included the false promise of a single-payer system as exists in Canada, pharmaceutical pricing, solving the problem of the uninsured, and strategies for consumer-driven health care. Over the past year she has participated in prominent debates and public forums, testified before five committees in the California legislature, appeared on popular television programs, participated in talk radio shows nationwide, and written several dozen opinion pieces on the issue of drug importation.
Her book, “Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer” was released September 28, 2004. It is available on Amazon.com.
Monday, June 9, 2008Give Them an Eye ChartBy Sally PipesCategories: Individual MandatesThe campaign trail is awash with promises to make universal health care a reality. Candidates claim they can lower costs — and insure everyone — through legislative mandates and increased government intervention in the healthcare market.
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Friday, May 30, 2008Two Visions and the Big Picture of Health Care PolicyBy Sally PipesThere are two main visions for the American health care system. One is based in government, mandates and taxes. The other is grounded in free markets, free will and innovation. I expanded on these two different visions in a talk I gave to some high-school students at a conference held by the Young America's Foundation. You can listen to it here.
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Tuesday, April 1, 2008Have you Fallen for the Five Myths of Health Care?By Sally PipesCategories: Individual Mandates, PharmaceuticalsFictions don't become facts through repetition.Keep that in mind next time you hear a politician breathlessly decry the horrors of the American health-care system and then explain how he intends to fix it. Some of the most popular talking points in the health-care debate pass as the gospel truth simply because, well, they're popular — not because they're true. Below, I debunk the five most prominent health-care myths: (1) Forty-seven million Americans do not have health insurance. This figure comes from the U.S. Census Bureau. What most people don't know, however, is that the Bureau counts anyone who went without health insurance during any part of the previous year as "uninsured." So if you weren't covered for just one day in 2007, you're one of the 47 million. That also includes 10.2 million illegal immigrants, and about 14 million people who are eligible for public health-care programs like Medicaid or the State Children's Health Insurance Program but have yet to enroll. And nearly 10 million of the "uninsured" have household incomes of more than $75,000 — so they can probably afford to buy health insurance but choose not to. (2) Universal health-care coverage can be achieved via "individual mandate." According to the federal census, nearly two-thirds of the uninsured are aged 18 to 34. This makes sense — healthy people aren't going to pay for expensive insurance they'll never use. Those who support an "individual mandate" — like Sen. Hillary Clinton and several governors — believe by legally requiring all Americans to buy health insurance the young and the healthy will increase the size of the risk pool and therefore lower premiums for everyone. As a way to enforce an individual mandate, Mrs. Clinton has suggested garnishing wages. But many states require insurers to charge everyone the same rate. So young people would end up paying far more in premiums than they should — or could — pay. It's patently unfair to force people to purchase insurance they can't afford. Even in Massachusetts, which offers substantial premium subsidies for low-income residents, the government had to exempt a fifth of Bay Staters from the individual mandate because insurance was still so expensive. And, the plan is already $147 million over budget. The real way to attract young adults into the insurance market is to lower premiums — not to impose draconian sanctions. This can be done by having states reduce costly mandates like coverage of in-vitro fertilization and by allowing people to buy insurance across state lines. (3) Expensive prescription drugs are a big reason health-care costs increase. The real price of prescription drugs is actually decreasing. In 2007, inflation rose more than 4 percent, while drug prices increased just 1 percent. So in real terms, drugs were 3 percent cheaper last year than in 2006, on average. What's more, drug spending is but a small slice of total health-care spending — less than 11 cents out of every health-care dollar goes to prescription meds. And drugs actually reduce health-care costs in the long-term. Medicare, for instance, saves $2.06 for every additional dollar it spends on pharmaceutical drugs, according to a paper recently published by the National Bureau for Economic Research. Prescription drugs often obviate the need for expensive surgeries and hospital stays. (4) Drug importation will save patients a fortune. At most, according to the Congressional Budget Office, foreign drug importation would save Americans 1 percent over the next decade. Brand-name drugs are cheaper in foreign countries because their governments impose price controls. Drug-makers can only afford to sell pills at cut-rate, controlled prices in Europe and Canada because Americans pay full price. If American politicians allow foreign drugs to enter the U.S. market, they'll in effect import price controls too. Such action will not only create practical problems, like shortages but also deny firms the return on investment necessary to plunge into the next round of research and development into new cures. It takes nearly $1 billion to bring a new drug to market. Investors are willing to make such a risky investment because the rewards of developing a cure for Non-Hodgkin's lymphoma, AIDS or diabetes are considerable. If the profit motive vanishes, the miracle cures for which America's drug industry is responsible would vanish. (5) The state-run health-care systems in Canada and Europe are better and cheaper than America's. People who make this claim usually note that life expectancy is higher in Canada and Europe. But life expectancy is influenced by a number of variables aside from the quality of a country's health-care system — like diet, genetics, exercise, smoking, pollution and even marital status. A study published last year in the British medical journal the Lancet suggests America is much better at treating cancer than Europe or Canada. Researchers found Americans have a better survival rate for 13 of the 16 most prominent cancers. An American man has nearly a 20 percent better chance of living for five years after being diagnosed with cancer than his European counterpart. This study's findings tell us a lot more about the quality of a health-care system than life expectancy rates do, because the relationship between treatment and outcomes is tighter, clearer and more direct.
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Thursday, February 28, 2008Candidates Need Better VisionBy Sally PipesCategories: Insurance Regulation, PharmaceuticalsCandidates from both parties claim they can lower costs — and insure everyone — through legislative mandates and increased government intervention in the health-care market. Unfortunately, Lasik is a rare exception to the general rule. In most of health care, the government is far too heavily involved. In fact, the government now pays over 60 cents of every dollar spent on health care.
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Wednesday, February 6, 2008NY Plan Puts Patient Health at the Mercy of the Fiscal CycleBias against prescription drugs counterproductive By Sally PipesCategories: PharmaceuticalsTo help close New York's $4.4 billion budget deficit, Gov. Spitzer has put prescription drugs on the chopping block. His budget proposal for the next fiscal year would axe drug spending by $172 million from the $1.9 billion otherwise expected.The governor describes this as a way "to control the cost of government." In fact, cuts like these simply guarantee that long-term health-care expenses will actually increase. And in the short term, there's a very good chance that they'll deny Medicaid patients the medications that would help them the most. Spitzer's mistakes start with his claim that drug prices have "increased dramatically." In fact, the price of prescription drugs has fallen. In 2007, inflation grew by more than 4 percent, while drug prices rose by just 1 percent. So, in real terms, drugs averaged 3 percent cheaper last year than in 2006. What's more, drug spending is a small fraction of overall health-care spending. New York's Medicaid program only spends 5.3 percent of its budget on medicine. So slashing it nearly 10 percent, as Spitzer proposes, would barely dent the deficit. More important, buying prescription drugs is a good investment. Studies show that spending more on prescription drugs today reduces total spending on health care tomorrow. A recent paper from the National Bureau of Economic Research (NBER) found that Medicare, the government health-care program for seniors, ultimately saves $2.06 for every dollar it spends on medicines. The main reason: prescription drugs often obviate the need for expensive surgeries. Another recent NBER study estimated that switching from older, cheaper medicines to newer, more expensive ones reduced non-drug health-care expenses 7.2 times as much as it raised drug spending. Yet Spitzer's budget is stuffed with financial incentives for pharmacists and patients to use older, cheaper drugs. It would raise by $1 per prescription what pharmacists get from the state for doling out generics and brand-name drugs in Medicaid's "Preferred Drug Program." Patients who take these drugs would see co-payments cut from $3 to $1. Some of Spitzer's plans make sense - on paper. His budget expands the state's Clinical Drug Review Program, which tests whether newer drugs are more effective than their older counterparts. (Results from these tests factor into which drugs Medicaid covers.) And it creates a "physician education program" to give doctors "unbiased clinical information" to balance marketing efforts by manufacturers. Again, this sounds sensible - if the generic version of an older drug works just as well as a newer medicine that's still under patent, why use the pricier one? But these proposals ignore the government's inescapable conflict of interest here. If its primary concern is cost, it has a strong incentive to push older drugs even if tests show that newer versions work better. Just look at Britain's experience with a similar program. In 2001, the British equivalent of New York's Clinical Drug Review Program concluded that Gleevec, a molecularly-targeted medicine, didn't treat leukemia more effectively than its older counterparts. But in 2002, Americans with a rare stomach cancer started taking the new drug thanks to its ability to target and kill cancer cells without attacking healthy cells. It took almost a full two years after US approval for Britain's drug reviewers to approve Gleevec's use for those with the cancer. Cost concerns tainted - and trumped - the agency's scientific objectivity. If Spitzer's budget passes, Medicaid patients will become dependent upon Albany's fiscal swings. After all, those who qualify for Medicaid can't afford to pay retail prices for prescription drugs. So if Spitzer's bureaucrats won't approve the drug a Medicaid patient needs, his or her doctors will have no choice but to prescribe them older, less effective medicine. Per capita, New York's Medicaid budget is already the most expensive in the nation. Pinching pennies now by cutting spending on drugs will only exacerbate the state's bloated Medicaid budget down the road. And taxpayers and poor patients alike will pay the price. Blaming prescription drugs and their makers may be politically easy, but it's a foolish, counterproductive way to cut health-care spending. There may well be fat in New York's health-care budget - but it's most likely in the areas with strong political support.
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Saturday, January 19, 2008Counterfeit Prescription Drugs Threaten HealthBy Sally PipesCategories: PharmaceuticalsMillions of Americans will look to weight-loss drugs to help them keep their New Year's resolution to slim down. And if they can't get a prescription from a doctor, many will go online to purchase the pills from foreign distributors. But beware: Most of these Web sites are glossed-up fakes selling dangerous counterfeits. The World Health Organization estimates that around 10 percent of the global drug supply is counterfeit. When fraud expert MarkMonitor recently examined 3,160 online pharmacies, it found just four that were accredited by the Verified Internet Pharmacy Practice Sites, the industry standard for quality control. So if you illegally purchase prescription meds online, you're playing Russian roulette with your health. The FDA recently reported on a scam where customers made online purchases of what they thought was Xenical, a popular anti-obesity drug. What they received, however, were pills made of talc and starch. Considering the risks of online meds, they lucked out. In December 2006, a Canadian woman died from taking counterfeit anti-anxiety drugs and sedatives. The bogus e-pharmacy she bought them from claimed to be Canadian, but was based in Eastern Europe. Online scams are employing increasingly sophisticated tactics to dupe consumers and evade law enforcement. Some change their Web site and company name every few weeks. And most use packaging that's indistinguishable from the real thing. What's more, identifying and prosecuting perpetrators in the developing world, where many of these phony pharmacies operate, is next to impossible, especially since the FDA has yet to develop a reliable track-and-trace system of electronic purchases.Even if the letter of the law requires suppliers to be from trustworthy countries, fraudulent sites are incredibly adept at fooling people about where they're based. A 2005 FDA investigation at airports in New York, Miami and Los Angeles found that over 40 percent of the drugs imported from four selected countries to American buyers falsely claimed to be from "Canadian pharmacies.” So here's the reality we'll be stuck with if prescription drug importation is legalized: Frauds that can't be traced. Scam artists that can't be caught. Web sites that can't be trusted. And customers who can't discern what's genuine from what's genuinely dangerous.
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Thursday, January 17, 2008Redefining ObesityBy Sally PipesIf you're like most Americans, you've probably stuffed yourself like a holiday turkey during the past few weeks. So it should come as no surprise that the average American gains about one pound between Thanksgiving and New Year's, according to the National Institutes of Health. That pound a year really adds up over the decades. Today, 17 percent of children are overweight.By the time they reach adulthood, that number climbs to 66 percent. It's a common political refrain that America faces a childhood obesity epidemic that's turning us into a nation of blubbery diabetics. Underlying this is the premise that we're helpless before gingerbread cookies and honey-roasted hams – unable to resist these and other foods and incapable of putting down our forks. We can be cured, it seems, only by government intervention such as the banning of trans-fats and sodas from public schools. But is it the food, or is it us? Is it a proper role of government to tell us what we can or can't eat? And are we really as fat as the NIH numbers suggest? Before we let Uncle Sam into our kitchens, at school or at home, these questions deserve some exploration. For starters, government data about what constitutes "overweight" and "obese" are misleading. The standard metric for this measurement is a person's body-mass index, or BMI – the ratio of one's height to one's weight. But at best, BMI is a rough tool that does not take into account an individual's body type. A six-foot-two athlete who weighs 210 pounds would be classified as "obese" according to BMI charts – despite his 32-inch waistline, 17-inch biceps and his less than 6 percent actual body fat. If you believe the BMI tables, most of the best players in the NBA and NFL are "overweight," including superstar athletes Kobe Bryant and Tom Brady. Many Hollywood heartthrobs also qualify as fatties – Brad Pitt, Matt Damon, Tom Cruise and George Clooney, to name a few. What's more, the acceptable BMI continues to be ratcheted downward – transforming those who were considered perfectly healthy yesterday into "overweight" and "obese" today. Before 1998, a "healthy" BMI was anything less than 27. Then, suddenly, the government changed the "healthy" number to anything less than 25. Overnight, more than 25 million people who were previously considered to be a healthy or normal weight were reclassified as overweight. Looked at another way, the government artificially manufactured an obesity crisis by moving the BMI goal posts. This raises the question: Are supposedly overweight people in fact heavier than they ought to be? While more people might be overweight now, and it's true that people who are seriously overweight tend to have a higher risk of developing some illnesses, the government flip-flop suggests how difficult it is to determine what truly is overweight. Even the Centers for Disease Control and Prevention had to publicly concede in 2005 that its estimate a year earlier of "400,000 obesity-related deaths per year" should have been 112,000. But once prevented deaths are factored in, the figure is closer to 26,000 deaths per year – one-fifteenth its original estimate. The President's Council on Physical Fitness and Sports has stated that what matters most, in terms of overall health, is whether a person is active. People who happen to be a few pounds overweight but who exercise regularly "have a lower morbidity and mortality than normal weight individuals who are sedentary." More important, is it government's role to help us reduce our rolls? Or is it a matter of personal responsibility? We know that fries and cheeseburgers aren't healthy fare. And thanks in part to heightened concerns about obesity, we can now buy low-fat salads at just about every fast-food outlet in the country. The same supermarkets and convenience stores that sell popcorn and candy bars also sell healthful foods. People make choices. And government should protect – not restrict – the freedom to make those choices so long as we're not harming others. While we may not always like the choices others might make, it is essential that we all have the freedom to choose for ourselves. Once we accept the idea that the Nanny State should step in when it's "for our own good," we've taken a very big step down the road to something like the scene painted in George Orwell's "1984" – when citizens wake each day to mandatory exercise classes on the Telescreen. Most of us would prefer to choose for ourselves whether to exercise or have an extra helping of apple pie. And if we gain an extra pound over the holidays – so what? That's why we have New Year's resolutions.
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Monday, November 12, 2007Fixing Health Care Requires InformationBy Sally PipesThough I wrote the following essay back in July, its themes are current. THE U.S. health-care system was in a declared crisis in the 1970s, when President Nixon turned to managed care - and still there in the '90s, when Hillary Clinton turned to massively managed care. Surprise, it remains in "crisis" today - with academics, governors, legislators and presidential candidates all trying to come up with solutions that involve anything but managed care. Regina Herzlinger's impressive and accessible "Who Killed Health Care?" offers insights that could lead to real progress. In her previous books, "Market-Driven Health Care" (1999) and "Consumer-Driven Health Care" (2004), Herzlinger presented a vision of a decentralized, entrepreneurial health-care system filled with focused factories that specialized in providing excellent service. The trigger for her latest book was watching the health-care establishment again use the power of government to thwart innovation - specifically, seeing large hospitals get Congress to actually protect their business from competition by smaller, physician-owned specialty hospitals. Herzlinger deploys two devices to frame her book and move the narrative at a swift pace. One is the tale of Jack Morgan, a fictional self-employed man suffering from kidney disease. In his journey through the health-care system, we confront all today's villains. The other device is simply to note a conflict of visions on how to improve health care: "One group believes in the transformative powers of big, organized institutions such as governments and large insurance firms. The other camp believes that small is beautiful. To them, only consumers and the entrepreneurial institutions that serve them can transform health care." Herzlinger, of course, is in the second camp. She shows how the government dictates an ineffective treatment regime for Jack (and, in the big picture, for many others); how it pushes people into managed care, which makes an even larger mess of things. Not that good treatment regimes are even always available: The ostensibly non-profit hospitals (which make millions in profits and spend only token amounts on charity care while paying executives millions in compensation) have used government regulation to prevent competition. This entire toxic ecology, it turns out, is supported by academics and corporate human-resource professionals - all of whom tend to favor top-down approaches, mistrust markets and view the individual consumer as foolish and wrong-headed. She also shows the damage from the industry's continuing to get away with not producing public information on health-care outcomes. For consumers to effectively choose, they need quality information. Imagine if mutual funds didn't disclose their returns, or if brokers could prevent funds from marketing directly to consumers. In health care, this is the state of affairs. Which brings us to Herzlinger's vision for an alternative to the status quo. In it, individuals, not large institutions, control the dollars spent on health care. She understands that for markets to work, all consumers don't have to be knowledgeable about product features and cost-quality tradeoffs. Only a few, or marginal consumers, need to be informed, careful shoppers. She sets forth a world in which insurance companies compete on quality, product design and disease management - not on ability to attract healthy consumers. Entrepreneurs would create integrated disease-management systems that profit from excellent and effective service, saving patients' time and providing coordinated care for all aspects of a condition. Government's proper role in health care is not today's heavy-handed regulation, but as an information broker. Quality information is an essential ingredient for robust markets, and that information is all too scarce in today's health-care environment. Herzlinger calls for a health-care SEC - an agency that like the Securities and Exchange Commission to set standards for reporting and audit the quality of information. Entrepreneurs would take this information and provide it to consumers in useful formats. I have a few quibbles: Herzlinger pays homage to the ideal of universal health insurance, extols the virtues of the Swiss mandatory-insurance system and endorses Massachusetts' mandating that individuals purchase insurance or face fines. In my view, forcing people to purchase insurance is not essential to her vision of a health care marketplace that serves consumers, not producers, and makes us all healthier and ultimately wealthier and happier than we are today.
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Tuesday, October 23, 2007Failed Reforms in the StatesBy Sally PipesPresidential candidates would do well to look at what states such as Hawaii, Maine, Massachusetts, and Oregon have done. As I explain in an essay in National Review Online, "Most reforms either sink on the rocky politics of increasing taxes and spending, or falter when it's time to implement, which means actually getting real people to write real checks for insurance."
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Wednesday, July 11, 2007You're Already Buying Health InsuranceNo such thing as "employer's funds" By Sally PipesThis election cycle's health policy debate has proven depressing. Leading Republican and Democratic candidates and the thinkers behind them appear to be in agreement on two issues: American health care is in crisis and the way to fix it is with more taxes, more regulations and more government care. The Democratic slate is in lockstep: increase taxes, regulate the market and hand out more government-sponsored insurance. The only disagreements are over how much to tax and from whom to collect the worker's revenue. Republicans are more circumspect. Yet two leading candidates have disturbing records. Sen. John McCain once teamed up with Democratic Sen. Edward Kennedy to further regulate the insurance industry under the auspices of the Patient's Bill of Rights. Mitt Romney, also in cahoots with Sen. Kennedy, kicked off the latest craze for individual mandates as governor of Massachusetts. One candidate, however, appears poised to offer voters a real choice -- Rudy Giuliani. Rather than increase the power of bureaucrats and politicians, he wants to devolve power back to the people. "It's your health," Mr. Giuliani said in a June Republican debate. "You should own your insurance." This is a strikingly different message than the standard political fare of telling people they have a right to health care and someone else has an obligation to pay for it. It will be politically effective, as it addresses the core anxiety most Americans experience with health care -- the insecurity of knowing that we could lose insurance if we changed jobs. Americans don't mind paying for health insurance. We already are. We just want security. Mr. Giuliani refers to this as a paradigm shift, akin to the shift from traditional pensions, which appeared to be employer funded, to self- and employer-funded retirement plans such as 401(k)s. Actually, all employee benefits are employee-funded. There is no "government" money handed out, only taxpayers to redistribute money from. Benefits, whether from retirement plans or insurance, are simply a component of an employee's total compensation package. A dollar spent on health care is a dollar that cannot be spent on cash wages or retirement plans. And a dollar spent by an employer, be it for health care or a traditional pension, is a dollar that the employee doesn't control and can access on only limited terms. A shift away from employer insurance, then, is not a shift to an increased financial burden, but rather an increase in freedom and choice for an employee: freedom to choose a health plan that fits an individual's needs and the freedom to keep it should he change jobs. Mr. Giuliani is no radical, and unlike the plans of Democratic candidates that would affect nearly everyone with increased taxes, his paradigm shift would affect many fewer people and in far more positive ways. The key is to provide incentives to reinvigorate the individual health insurance market, putting it on a level playing field with group insurance and giving the industry the incentive and ability to innovate. The first change would be to make dollars spent on health care tax deductible regardless of whether those dollars are spent by employers on group benefits or individuals on portable coverage. Putting individual insurance on a level playing field with group insurance will allow people to seriously compare the features and benefits of group versus individual insurance and make informed decisions. To further provide a real choice in the health insurance market, Mr. Giuliani would adopt an idea that's been proposed in Congress for years: free up the market in private health insurance. Rather than force people to buy plans approved by their state, he'd allow people to shop anywhere. One reason why health insurance in some states is very expensive is because they can't do so now. If New Jersey imposes expensive mandates on what health insurance must cover, Garden State residents can't buy insurance that's available in, say, Delaware. Under Mr. Giuliani's plan, you could. That would allow more people to buy the health coverage that fits them best. Teetotalers will no longer need to subsidize substance-abuse treatments. People can buy insurance for the risks they face. These two reforms -- tax parity and a national market for insurance -- would free up both consumers and the health insurance industry to design and acquire plans customized to individual and family needs. Some will elect Health Savings Account arrangements that allow them to accumulate money tax free for future use for heath expenses. Others will elect first dollar coverage of HMOs. Many will stay with what they know -- employer-provided plans. The key is that many Americans, for the first time, will have meaningful choices when it comes to health care. And when people have choices, good things happen. [Editor's note: This first appeared in the June 28, 2007 Wall Street Journal. ]
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