How Pharma is So Successful in Keeping US Drug Prices Extraordinary High?

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The simple answer is: Pharma is a trillion dollar industry that uses their enormous power and profits (that are made on the backs of very serious & chronically ill patients) to buy loyal support and kill their opposition with the aid and assistance of lawmakers and regulators.

Who else is affected by the collateral damage from the US having the highest drug costs in the world? The answer is the vast majority of people including the primary payers of insurance such as public and private employers and employees (who are burdened with high drug costs via insurance premiums, co-pays, and deductibles); federal, state and local governments that pay for drugs via Medicaid, Medicare, VA, and federal, state and local: hospitals, nursing homes, schools, jails and prisons.

Who pays the most for the high cost of drugs? ….Everyone who pays local, state and federal taxes.

While pharma companies receive the biggest financial reward for their lucrative business model, there are other groups that also receive significant benefits from the high cost of drugs. These include insurance companies, their executives, and employees, Pharmacy Benefit Management (PBM) companies, who make money from deals arranged for insurance companies with pharmaceutical companies and pharmacies, hospitals that receive high profit margins on drugs that they administer, and the advertising and media industry that sells non-stop ads that bombards consumers with TV, radio and print drugs ads every 24 hours. In 2015, pharma spent a record $5.4 billion on direct advertising to consumers, primarily through television.

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Big Pharma tries to justify the high cost of new drugs due to the high cost of research and development. However, their claims are not supported by the facts. Big Pharma spends 170% more on marketing and sales of their drugs than research and development. Secondly, the same drugs that are available throughout the world, cost up to 300% more in the US. Why….because elected federal and state officials have sold out the American people to Big Pharma. Politicians accept millions of dollars in drug money and in exchange, let Big Pharma do whatever they want without any ethical or moral boundaries.

A number of well-documented articles in Kaiser Health News and other sources have described some of the very effective strategies that Big Pharma and their $270 million trade organization (PhRMA) use to buy loyal support from US elected officials, healthcare practitioners, and patient groups.

Common strategies include:

  • Eliminate product and price competition by successfully having federal and state elected and appointed officials ban re-importation of the brand name prescription drugs from Canada, Europe, and other counties at substantially lower costs to US consumers.
  • Restrict drug competition with lengthy drug patent protection, the extension of patents, allowing pharma to legally “pay to play” to influence FDA new drug guidelines/regulations and for pharma’s  “pay to delay” the release of generics by other companies resulting in substantially higher costs to consumers.

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  • Marketing their newest and most expensive brand name products, Big Pharma spent $5.4 billion in 2016 to market their drugs directly to consumers using TV, radio and print media. They focus on describing symptoms to create increased patient demand and encouraging individuals to talk to their doctor about prescribing their specific brand name prescriptions. By comparison, this sales practice is prohibited in the vast majority of other developed countries in the world and is opposed by the American Medical Association.
  • Pharma also tries to lure patients to use their expensive new drugs with coupons and low-cost trial offerings of their drugs.
  • Pharma has established a proliferation of complicated Patient Assistance Programs that are aimed at increasing demand for their individual drugs while deflecting criticism of their high cost. However, as patients explore these programs, they realize that the drug companies control access to these drugs with personal, financial and insurance eligibility hurdles. For example, they exclude almost half the population that receives Medicare or Medicaid.

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  • In 2016, Pharma spent over $57 million in contributions to the state, congressional and presidential candidates and office-holders. When members of Congress, especially in leadership positions, receive millions of dollars in drug money, do you really think they are going to bite the hand that feeds them?
  • Pharma also spent more than $2 million in donations to various non-profit organizations that provide education, support, and direct services to individuals/families (current & potential customers) that are afflicted with serious and chronic diseases that align with their pharma products. Some of the major groups that have received over $100,000 in 2016 include the American Autoimmune & Related Disease Association, the Lupus Foundation, the Juvenile Diabetes Research Foundation and the American Lung Association.
  • Individual pharma companies and the PhPMA trade organization also employ doctors and nurses to build relationships and “educate” other practitioners on the specific pharma products that they represent. Relationship building with prescribing practitioners is also pursued by funding “medical education” lunches/dinners, sponsoring conferences and providing honorariums to individuals for providing “medical education” and sharing their client user data.
  • Pharma has launched a new $7 million pharma campaign (Go Boldly) that is designed to shape a positive public opinion of the pharma industry.
  • PhRMA and individual pharma companies have spent over  $175 million to defeat a California proposal that would have required California agencies to pay no more for drugs than does the federal Department of Veterans Affairs.
  • In Louisiana, where policymakers were considering proposals to make drug prices clearer to consumers, PhRMA gave more than $600,000 in campaign contributions directly to scores of state and local legislators last year and were successful in defeating the legislation.
  • PhRMA also gave hundreds of thousands of dollars to help defeat a ballot proposal for single-payer health care in Colorado.
  • PhRMA also aimed significant spending in other states including Arizona, Connecticut, Ohio, Michigan, Maryland, Massachusettes, New York, New Jersy, New Mexico, Oregon and Washington where legislators are considering pharma-related regulations that propose drug price limits and greater price transparency.
  • Pharma has established a very effective job training and recruitment program in which they financially invest in politicians and their staff;  evaluate their performance and loyalty in carrying out pharma priorities, and after they have proven themselves (at taxpayers expense), they hire a select group, at lucrative salaries to work as lobbyists for the pharma industry. These former elected officials and staff members come with a network of government insider relationships and intelligence which pharma exploits to their advantage.
  • Pharma and other industries have also been very effective in placing their loyal people in strategic federal governmental departments at executive levels often serving as senior policy advisors, where they develop budgets, write legislation and develop policies and procedures that favor pharma while dismantling other laws, regulations and procedures that pharma doesn’t like. Recently, pharma employees and lobbyist have been appointed by the Trump administration into  leadership positions in key federal agencies including the Food & Drug Administration, Department of Health & Human Services and the Drug Enforcement Administration
  • Big Pharma has effectively restricted competition with the assistance of elected and appointed officials and dismisses federal and state penalties and lawsuits for violations of laws and regulations including fraud and marketing unauthorized uses of medication as insignificant compared to the revenue that their actions generate. Ultimately, these financial penalties are viewed as the “cost of doing business” that is passed on to patients, taxpayers and employers and has little impact on their profits, sales, reputation and investor interest.
  • Pharma has also been routinely criticized for their brazen price-gouging of generic and life-threating treatment and maintenance drugs, needed by both acutely and chronically ill patients without any change in their behavior. Pharma continues to be very lucrative with minimal regulation, competition, oversight and the absence of ethical standards.

Trump’s Commitment to Drain the Swamp and Lower Drug Prices

Although Republican presidential candidate Donald Trump has boasted that he could save $300 billion in lowering drug costs, two years later, Trump has not taken any executive or legislative action to lower the costs of prescription drugs that continues to personally bankrupt many Americans and substantially adds to the accumulated debt of states and the federal government.

However, in his State of the Union speech on January 30, 2018, Trump once again stated that he will dramatically lower the high cost of prescription drugs for the American people under the leadership of newly appointed Alex Azar, Secretary of the US Department of Health and Human Services.

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Azar replaced Tom Price MD, former Georgia Congressman and previous Trump HHS Secretary, who resigned in disgrace after only 7 months of repeated issues of unethical behavior.

It should be noted that Mr. Azar is very familiar with Big Pharma and the high cost of prescription drugs. Mr. Azar has served on the board of Biotechnology Innovation Organization, a pharma lobby and was the hired by Eli Lilly as its top lobbyist in 2007. Azar continued to advance within Lilly and in 2012, became President of Lilly USA.

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During Azar’s tenure at Lilly, their drug prices rose substantially, especially for insulin which is necessary to sustain life. Insulin was discovered, as a life-sustaining treatment of Type 1 diabetes, by two Canadian research physicians who were awarded a Noble Peace Prize over 90 years ago. Ninety years later, the US consumer cost and drug company profits derived from insulin in the continues to rise dramatically, while millions of people with diabetes, in the world, needlessly suffer and die as a result of not having access to affordable insulin.

In 2009, Lilly pleaded guilty and paid a record settlement of $1.4 billion for criminal and civil charges for marketing the unapproved uses of Zyprexa, a powerful antipsychotic Lilly drug. Zyprexa was heavily marketed by Lilly during the period of 1999-2003 to seniors and their families, nursing homes and healthcare professionals for the treatment of Alzheimer’s and other symptoms. However, Lilly never requested nor received the required FDA approvals for these expanded uses.

 

So, time will tell how committed and effective Trump and Azar in actually lowering the cost of prescription drugs to tens of millions of Americans. We are in the second year of Trump’s term and waiting to see if his actions will match his words.

References:

  • Drug Watch
  • Kaiser Health News
  • Kantar Media Intelligence
  • Open Secrets
  • Public Citizen’s Health Research Group
  • Stat News
  • The Washington Post
  • The New York Times
  • US Department of Justice
  • World Health Organization

 

 

 

updated 2.3.18

 

Forty-Five States Sue 18 Generic Drug Makers for Price-Fixing Collusion

 

Reuters News has reported that forty-five states and the District of Columbia have joined forces in accusing well-established generic drug makers and their executives of personally engaging in a broad price-fixing conspiracy involving more than a dozen medicines that are used to treat debilitating chronic diseases.

The suit alleges that companies and specific executives have colluded to limit competition and dramatically raise prices of maintenance drugs that are used by millions of people to treat infections, and debilitating diseases such as diabetes, glaucoma, epilepsy, high blood pressure and anxiety.

While the initial response to the allegations was a denial of wrongdoing, former executives from Heritage Pharmaceuticals pleaded guilty in January to conspiring to price fixing and limiting competition. In addition, the former Heritage Pharmaceutical President and the Board Chair & CEO reached a plea deal, agreed to pay fines and cooperate with the broader investigation of generic drug maker pricing practices.

The suit against the generic pharma companies has broadened to include well-known established companies and their executives including  Mylan, Sandoz, Teva , Emcure and Sun. In addition to the suit by the State Attorney Generals, the US Justice Department has begun a parallel criminal investigation into these allegations.

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While most of the generic drug price hikes were between 100% and 500% over the 7 year period, approximately 1000 generic drugs had increases of a minimum of 500% to more than 1,000%

Unregulated and rapidly rising US pharmaceutical prices have had a negative impact not only on individuals and their private employers and but also on taxpayer-funded village, town, county and state governments including their health insurance costs for teachers, police and other public employees.

And finally, the rapidly rising cost of medications is passed on to taxpayers in the form of increased local and state taxes.

Elected US politicians, who talk about wanting smaller government and lower taxes need to be held accountable for giving Big Pharma an unconditional pass while they accept huge campaign contributions and allow the pharma industry to write the laws and regulations that serve their financial interest over US citizens, who need access to affordable, life-sustaining medications like the rest of the developed world.

 

 

 

 

 

10 Things You Didn’t Know about EPIC -NYS’s Prescription Assistance Program for Seniors

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NYS, like 15 other states, has a wonderful prescription assistance program for seniors called EPIC. It can make a huge difference for seniors, if they only knew about it.

10  very important things that you probably never knew about EPIC

1.The EPIC plan is used by more than 300,000 New York seniors who are over 65. However, EPIC members only represent 10% of New York’s 3 million seniors and there are many more people who are eligible and could benefit from the program.

2. EPIC is not a substitute for a Medicare Part D drug plan, but rather a supplement for low to moderate income individuals. In many cases, EPIC will actually pay for part or all of your Part D premium.

3. The EPIC program income eligibility is $75,000 for an individual and $100,000 for couples. Income is based on your last year’s federal 1040 tax return, line 22 (total income). EPIC does not look at your assets (cash, investments, property etc) or your expenses, only your reported income and they verify what you report with your tax return.

4. EPIC provides financial assistance in two areas- it provides a subsidy for individuals who’s income and resources are above Medicare’s Low-Income Subsidy (LIS) criteria but below EPIC’s limit of $23k (ind.) and $29k (couple), to pay for the cost of your Part D premium (up to $39/mo. in 2018). Secondly, EPIC subsidizes the cost of of your prescription drugs (after any deductible in the plan has been met). Your cost of medications with the EPIC subsidy will range from only $3 to $20 per monthly prescription.

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This benefit can be worth tens of thousands of dollars for people with expensive medications to treat chronic diseases such as hepatitis B, diabetes, inflammatory diseases, multiple sclerosis and various form of cancers. This includes medications that may be excluded from your Part D’s formulary.

5. EPIC can pay for either part of your Medicare Advantage’s drug component or a stand alone Part D plan that is used with original Medicare and Medigap plans

6. EPIC can even pay for Part D penalties in some cases if your drug plan premium is under $39/month

7. If you are eligible for an EPIC Part D subsidy, don’t quickly sign up for a zero premium Medicare Advantage plan. You should look at better plans with lower co-pays and added benefits- dental, health club that may cost you little or nothing to upgrade your health plan coverage and may not have a deductible.

8. Applying for EPIC is easy- just complete the half page application and mail it in.

9. EPIC has a small annual member fee for low-income people (under $20k (i) and $26k (c) who are eligible to receive the Part D premium subsidy up to $39/mo. For people with income over $20K (i) or $26k (c), there is no program fee but rather a deductible that needs to be met based on your income. The annual deductible starts at $62 (i)  and $182 (c) and increases with your income. The deductible needs to be met before you’re eligible to receive the subsidized prescription rates..

10. EPIC members are entitled to a Special Enrollment Period once a year, if they want to change their prescription drug plan. This could result in better medical and drug coverage or lower premiums.

For more information and an EPIC application call 800-332-3742

Buyer Beware in Selecting a Medicare Prescription Drug Plan (PDP)

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Individuals who use original Medicare A & B for their medical care, with or without a Medigap Plan (not a private Medicare Advantage plan), need to check the formulary and costs of various private insurer PDPs that are available in your area very carefully. And, don’t assume that an insurer that provides a good value for one type of plan (eg. MA or Medigap) provides the same quality, value and coverage in their PDPs. Unlike MA plans that include the same medication formulary, PDPs often have different medications, deductibles and co-pays among their various plans, so check carefully.

An example is United HealthCare, who is a leader in sales and value for their Medigap plans in NYS, ranks much lower in sales & value for their MA and PDPs. There are also dramatic differences in the drug formularies and subscriber cost among the 3 different UnitedHealthCare PDPs that are offered.

The UHC Rx Preferred plan includes over 3,500 drugs on their formulary and has their most expensive premium ($91/mo. but does not include a deductible). By comparison, the RX Savers Plus plan excludes over 400 drugs that are included in the Preferred plan for $55/mo. and includes a $405 deductible. And their lowest cost premium plan is the UHC RX Walgreens plan for $26.50/mo. with a $405 deductible, but it doesn’t cover 500 medications that are included in the high premium cost UHC Preferred plan.

Other popular insurers such as SilverScripts, Humana and Cigna that offer multiple PDPs in NYS also share similar issues which makes it difficult for an individual to clearly understand and choose a plan that includes their medications at a price they can afford.

Medicare.gov provides a valuable, free Plan Finder service that allows you to anonymously enter your medications and your preferred pharmacies and then compare the total cost of different plans (including MAs and PDPs) from different companies that you are considering.

Once you enter your medications You will also see differences in:

  • Your medications that are not included on the plan formulary.
  • Your medications that have restrictions.
  • Your brand named medications that have generic alternatives.
  • Your cost or a one month or a 3 month supply of medications from different pharmacies.
  • And, finally the total comparative cost differences of each plan including their premiums, deductibles and co-pays that you are considering.

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Another nice added feature is that your Plan Finder medication data can be printed and is stored anonymously online. It can be retrieved (with your assigned Drug List ID number and Password date for your future review and updating.

Investing some time in objectively comparing coverage and costs differences of your Medicare plan options can save you money and problems in the future.

If you or your family members needs assistance, you can contact the free State Health Insurance Assistance Program at http://www.shiptacenter.org or 800-Medicare.

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Governor Brown signs California’s Drug Price Transparency Act and Big Pharma Kills Ohio’s Drug Price Reduction Referendum

Last month, California adopted a law that requires drug makers to explain and justify price hikes, making it only the third state in the country to demand some transparency in response to rising medicine prices. While this act does not control pricing, the pharmaceutical industry vigorously fought this effort over concerns that other states will take similar actions.

California’s action is a response to the failed leadership of congress and the president to control the outrageous growth of prescription drug costs. Other countries with national healthcare such as Canada, Germany, England, France, Italy and many others require financial accountability and transparency from pharma companies and then negotiate drug prices based on the value produced and the best interest of their country.

By comparison, the United States Congresses and presidents have developed a hands-off policy with Big Pharma and have legitimized excessive drug prices by prohibiting Medicare from negotiating drug prices, like the VA does. They have also prohibited Americans from reimporting prescription drugs from Canada, England and other countries at a fraction of the prices charged in the US.

It should also be noted that Big Pharma spends hundreds of millions of dollars in the US on: direct marketing of prescription drugs to consumers and healthcare providers; and campaign contributions and lobbying congress and state legislatures to oppose any change in pharma’s dominant position with federal and state governments.

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Big Pharma’s Success in Killing Ohio’s Referendum to Reduce Drug Prices

On Election Day, Big Pharma scored another victory by crushing a grassroots initiative to reduce the inflated pharmaceutical drug prices paid by the State of Ohio down to the rates paid by the VA for the same drugs.

Big Pharma spent more than $75 million to kill recent Ohio ballot initiatives that threaten pharma’s massive drug revenue. They flooded Ohio television with negative, misleading and deceptive ads with the intent of creating confusion and opposition to change and were successful in defeating this consumer initiative.

In the absence of any congressional or presidential leadership on controlling drug prices, federal, state and local deficits will continue to rise due to outrageously high drug costs along with rising employer, individual and family debt.

Maine Voters Over-Rule Governor on Medicaid Expansion

Sixty percent of Maine voters were successful in making history on Election Day in approving a referendum that expands Medicaid to low-income Maine residents over the staunch opposition of the republican Maine Governor LePage.

LePage has successfully “trumped” the will of the people and vetoed Maine’s Legislative approval of Medicaid expansion five times in the past. In effect, LePage has denied health care to over 70,000 Maine residents.

The Medicaid expansion has been an option of the Affordable Care Act that 31 other states have approved and, as a result, has provided insurance coverage to over 11 million more Americans.

The independent actions of Maine’s citizens in over-ruling Governor LePage sends a strong message that people are tired of autocratic politicians that place their partisan political interests over the needs and desires of citizens.

Advocates of Medicaid expansion in Republican Idaho and Utah (whose Governors have also been opposed expansion) have started similar efforts to place the question on the 2018 ballots in their own states.

photo credit: Robert F. Bukaty/AP

Why Insurance and Health Care is so Expensive in the United States?

And, What Congress Should Do to Increase Access and Lower Costs.

For the past nine years, a group of politicians and talk shows have flooded the media with doom, gloom and blame for the “impending implosion” of Obamacare.

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Ten Facts that your Congressional Representatives Doesn’t Want to Talk About:

1. US health insurance and health care is a $3 trillion-dollar industry with strong economic and political forces that focus on growing larger, increasing profits and having taxpayers assume their financial losses while they maintain control of their industry.

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2. The industry is led by special interest groups, that spends over $100 million a year on lobbying and contributions to politicians, healthcare providers and advocacy groups, in exchange for their loyal support.

This comes at the expense of patients, employers, state and local governments who pay for the outrageously higher cost of insurance, health care and prescription drugs than the rest of the world.

3. There are only a handful of large national health insurance companies. These include United Healthcare, Anthem, Aetna, Humana & Cigna.

These insurers are very concentrated in populated areas of the country and this leads to less competition, higher premiums and greater conflicts with health care providers.

4. The major reasons why there are high cost and limited ACA Exchange insurance plans offered in some areas of the country (primarily in rural areas and less populated states) are:

  • (1) there has been no commitment by Congress to maintain the individual insurance mandate and provide ACA funding subsidies to insurers,

  • (2) insurers have no obligation to sell ACA health insurance policies for more than one year at a time and

  • (3) there is no public option insurance (like Medicare) to compete with private insurance for health care and prescription drugs that is available to adults under 65.

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5. Individuals, employers, federal, state and local taxpayers pay for the cost of healthcare for people who are uninsured or don’t want to pay for their insurance.

Allowing people to refuse to buy health insurance, without a substantial late enrollment penalty (like Medicare) will result in an increase in medical services bad debts and an increase in the cost to taxpayers and the majority of individuals and employers who buy insurance. There is no free lunch.

6. Nineteen republican governors (primarily from sparsely populated western and southern states) have followed their party’s leadership in refusing to accept  federal funding (since 2014) to expand Medicaid eligibility (with 90% federal funding) for their low-income, uninsured residents.

As a result, these states have substantially higher uninsured residents, higher costs and fewer insurers interested in selling plans in their states.

7. While the overall national uninsured population has been reduced from 20% in 2013 to 10% in 2016, republican governors that have refused to expand Medicaid have experienced substantially higher rates of uninsured residents.

These include; Texas, Oklahoma, Florida, Georgia, Mississippi and Idaho. Blocking people from receiving insurance results in higher premiums, medical expenses and taxes to cover the costs of services to people who are uninsured.

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8. However, the seven republican states that have accepted additional funds for Medicaid expansion have achieved substantially lower uninsured rates including: Iowa, Michigan, New Hampshire, Arkansas, Indiana, Arizona and Montana.

9. The ACA and Medicaid offers flexibility to states that take the initiative to modify ACA and Medicaid regulations with waivers to tailor these programs to their specific states’ needs and preferences.

A small number of large and small, republican and democrat states that have taken advantage of these opportunities and achieved much better-than-average results including: Massachusetts, Vermont, Hawaii, Minnesota, Iowa, Delaware and New York.

10. Over the past decade with the recession and growth of technology that has reduced the need for employees, 40% of workers are now classified as “contingent workers” in order to reduce payroll expenses including paying for a portion of health insurance and other employee benefits.2016-US-Employed-Labor-Force

What Your Federal and State Representatives Should be Doing to Maximize Insurance Coverage, Improve the Nation’s Health and Reduce Taxpayers Costs:

• Approve and enforce, meaningful state and federal ethics legislation that prohibits legislators from: voting on legislation, funding, or seeking preferential treatment for individuals or organizations that they or their family have a real or potential conflict of interest.

• Expand Medicaid Eligibility in the 19 Republican states that have blocked their residents from receiving health care.

• Propose waivers to Medicaid and ACA like other progressive states to better meet the needs and preferences of your local citizens to reduce costs and increase insurance coverage.

Why are New York and Minnesota the only states that have utilized an ACA waiver to establish a very popular Minimum Essential Health insurance plans that has provide coverage to hundreds of thousand citizen who were previously uninsured?

• Approve federal legislation to legalized to importation of prescription drugs from Canada and European counties and reduce the high cost of drugs in half.

• Approve federal legislation that allows Medicare to negotiate prices (on behalf of the 50 million Medicare recipients) with pharmaceutical companies like the VA, Medicaid and every other county in the world does.

• Approve federal legislation to allow all citizens under 65, the option to buy into Medicare.

Medicare is widely accepted across the country and will provide a public option to citizens that live in sparely populated states and regions that experience high costs and few choices, due to the limited interest of private insurers.

• Approve federal legislation to reduce the criteria and length of pharmaceutical & medical device patents like other counties have already done.

These actions will significantly increase competition and reduce the uninsured rate across the country, along with reducing insurance & health care costs for individuals, employers & state and local governments.

Ask your Congressmember, if he/she will support these legislative actions, and if not, why?