For the first time the average cost of health care for the typical American family of four has surpassed $20,000.

What accounts for this? Well, it turns out that care in America is extremely expensive. The average inpatient admission to the hospital cost $14,662 in 2010. If you were admitted to the hospital for a surgery, the average cost was $27,100. The average newborn delivery – if things went well – cost $7,371. Instruments like cost sharing and high deductible health plans that are designed to empower consumers lose much of their appeal when confronted with numbers like these. If you have a baby, or need to go to the hospital just once in a year, you’ve likely already spent as much as allowed out-of-pocket, meaning that any cost-sharing incentives to reduce spending are gone.

Moreover, it appears that prices, not utilization are the cause of increases in spending:

Read the post for details.

Medicynical Note:  Utilization is decreasing but costs increasing.  Our republican friends will say this is the marketplace—people becoming more cost conscious.  

Yes, indeed, increased costs decrease utilization, but it also decreases access—over 50 million and rising uninsured in the U.S.  In the short and long run quality of care and patient’s lives suffer.  We lead the world in uninsured citizens and costs.  That’s the American “system.”

Even as Americans debate whether President Obama’s health-care law and its promise of guaranteed health coverage should be scrapped, many far less affluent nations are moving in the opposite direction — to provide medical insurance to all citizens.

China, after years of underfunding health care, is on track to complete a three-year, $124 billion initiative projected to cover more than 90 percent of the nation’s residents.

Read the article for more examples.

Medicynical Note:  Is it any wonder that other nations sense our social and moral decline. 

We bring new definition to the term leading from the rear.  We are the worst in the world in assuring access to care; we lead the world in costs for health care; we lead the world in health care related bankruptcy.

Even people with good insurance coverage know how hard it can be to figure out how much they owe after a visit to the doctor or, even worse, the emergency room, which can generate multiple bills. But as patients become responsible for a growing share of costs — not just co-payments, but also deductibles and coinsurance — bill paying is becoming ever more complex.

In a study being published this week in the Journal of the American Medical Association, those treated with bevacizumab and chemotherapy did not live significantly longer than those simply treated with chemo.

Patients aged 65 and older who received Avastin in addition to a standard chemotherapy regimen had a median overall survival of 9.7 months, according to the study to be published tomorrow in the Journal of the American Medical Association. While that was longer than the 8.9 months and 8 months for two groups of patients receiving chemotherapy only, the finding wasn’t statistically significant, said the researchers from the Dana- Farber Cancer Institute in Boston.

Avastin, a $5.8 billion-a-year product also known as bevacizumab, won U.S. Food and Drug Administration approval for non-small cell lung cancer in 2006, after a study found the therapy improved survival by a median of two months. That research showed no benefit among patients aged 65 and older, who are covered by Medicare, the government health-insurance program for the elderly and disabled. At least two-thirds of patients with lung cancer qualify for Medicare, which has covered Avastin for that use since FDA approval, the authors said.

And:

Patients in the Avastin group had a 39.6 percent probability of surviving one year, compared with 40.1 percent getting chemotherapy from 2006-2007 and 35.6 percent for those treated earlier than 2006, the study found. More recent data might yield different results, the researchers said

Medicynical Note:  Roche may dispute the findings but what is clear is that bevacizumab (Avastin) has a minimal if any beneficial effect in elderly lung cancer patients.

This drug brings in 5.8 billion dollars in revenue to Roche, about the same amount as the cost of malpractice litigation in the U.S. (See previous Medicynic for details)  We’re talking big bucks for a drug with limited benefit. 

We have a non-system of care that costs too much.   Drugs such as bevacizumab (Avastin) are part of the problem.

More here: 

Bevacizumab should not be considered part of the “backbone” of treatment or the standard of care for older patients with advanced disease, said lead author Deborah Schrag, MD, MPH, from the Dana-Farber Cancer Institute in Boston, Massachusetts. She spoke at a press conference, held in Washington, DC, on the journal’s new issue, which centers on comparative effectiveness research.

Medicynical Note:  The costs are tiny (5 billion) when compared to the 2.5 trillion spent on health care in the U.S. but, as noted in the piece by Aaron Carroll, they are very real to the physicians lawyers and patients involved. 

But “malpractice reform,” i.e. limiting judgments, will have little to no effect on the total spent on health care.  For that we need to look elsewhere…..patent reform, increased efficiency, systematic coverage, better choices, behavior (doctors and patients) modification.

The article cites the case of a hemophiliac boy with drug costs exceeding $100,000/year.  His family cannot afford increased payments of up to 1/3 of the drugs price.

State lawmakers are stepping in:

Spurred by patients and patient advocates like Ms. Kuhn, lawmakers in at least 20 states, from Maine to Hawaii, have introduced bills that would limit out-of-pocket payments by consumers for expensive drugs used to treat diseases like cancer, rheumatoid arthritis, multiple sclerosis and inherited disorders.

Needless to say drug companies who reap excessive profits from these expensive drugs are ecstatic at the notion of lowered copays, anticipating an increase in utilization. 

The article notes that these patent holding companies take advantage

Such drugs account for only 1 percent of total drug use, but 17 percent of drug spending by private insurers, according to IMS Health.

And costs are soaring as more such drugs come to market and as manufacturers raise prices. In 2010, spending on specialty drugs jumped 17.4 percent, compared with only 1.1 percent for other drugs, according to Medco Health Solutions, a pharmacy benefits manager that merged this month with Express Scripts.

Medicynical Note:  The issue here is monopoly, and not the board game.  Our government in hopes of spurring “innovation” provides a generation long monopoly to drug manufacturers who develop  new drugs.  In the past such exclusivity was used judiciously  by drug companies.  Prices for patented agents were high but not so high that they were unaffordable.

In the late 80’s and early 90’s, after the passage of the  Dole-Bayh act, manufacturers were allowed to take private new drug advances developed at universities with government funds.  Everyone, the researchers, the universities and the drug companies became owners of the patent and drove the price of advances up.  More entities on the patent means more people wanting a share of the profits.

The free for all has indeed resulted in new drugs, some very effective, the medication cited for hemophilia and imatinib mesylate (Gleevec) for chronic myelogenous leukemia for example.  But the patent protection afforded  allows companies to apply monopoly pricing to their agents.

Before the 90’s no drug approached a yearly cost of even 1/3 the median U.S. income.  Now on a regular basis for a variety of serious illnesses, drug companies price their agents in the range of $100,000/year and more.  An amount that is almost twice the U.S. median income.  It should be noted that just a few of these new drugs are major advances.  Most offer an incremental benefit  for a small proportion of the patients treated.  But all are marketed to desperate patients willing to try anything to ameliorate their symptoms and/or live longer. 

The irony is that we’ve developed a new medication “system” that we can’t afford.  Insurers, patients and our government are going broke trying to accommodate drug company pricing. 

It’s a little like trees falling in the woods.  If you have a drug that you can’t afford, is there really a drug?

The study notes:

Cancer patients in the United States who were diagnosed from 1995 to 1999 lived an average 11.1 years after that, compared with 9.3 years for those in 10 countries in Europe, researchers led by health economist Tomas Philipson of the University of Chicago reported in an analysis published Monday in the journal Health Affairs.

Those extra years came at a price. By 1999 (the last year the researchers analyzed), the United States was spending an average of $70,000 per cancer case (up 49 percent since 1983), compared with $44,000 in Europe (up 16 percent). Using standard figures for an extra year of life, the researchers concluded that the value of the U.S. survival gains outweighed the cost by an average $61,000 per case. The greater spending on cancer care in the United States, they conclude, is therefore “worth it.”

But critics believe:

“This study is pure folly,” said biostatistician Dr. Don Berry of MD Anderson Cancer Center in Houston. “It’s completely misguided and it’s dangerous. Not only are the authors’ analyses flawed but their conclusions are also wrong.”

The heart of the problem is that the authors naively forgot about lead time bias and effect of earlier diagnosis of often times benign behaving tumors that would never cause a patient problems.  Since the U.S. has a more aggressive disease screening program and diagnoses more of these benign growths their patients appear to survive longer but the improved survival has nothing to do with treatment benefit.

As the critics note:

If a tumor is diagnosed very early in its existence – if it has a long “lead time” – the patient may survive, say, two years if the tumor is very aggressive. If an identical tumor is found in that patient’s identical twin later, the twin will survive, say, six months. But the twins die at the same age. The first survived longer with cancer due to lead-time bias, but did not have a longer lifetime.

Crediting medical care with “improving survival” is therefore misleading, cancer experts have long argued. Lead-time bias makes it seem patients live longer, but the only thing that is longer is the number of years they know they have cancer, not their lifespan.

Read the rest of the article to learn more of the flaws of this dangerous biased study.

Medicynical note:  It is not an accident that this study is drug company sponsored and that the results overstate the benefit of treatment.  While there has been some progress in decreasing cancer mortality  it comes mostly from prevention (smoking cessation) and earlier diagnosis. 

What’s most interesting is the amount of money the authors propose as reasonable to spend to extend a person’s live one year—$150,000 to $360,000.  As Ewe Reinhardt notes:

“Are American taxpayers willing to pay $150,000 in added taxes (Medicyncial addition: and insurance premiums) to purchase an added life year for some poor person?” asked health economist Uwe Reinhardt of Princeton University. “Does the urge to cut government spending on Medicare and Medicaid suggest Congress is willing to purchase added life years for anyone who cannot purchase it with his or her own money at a price of $150,000 per year?”

Rather than try and justify our exceptionally expensive and inefficient health care non-system we should be working to find what works best and is the most cost efficient. 

Our problem with health care in the U.S. is that we can’t afford the non-system that we have created.  It’s a monster that’s eating us alive.

The world’s largest banks have been accused of many things in recent years, including taking excessive risk in the run-up to 2008, doing great damage to the American economy by blowing themselves up and then working hard to resist any sensible notions of financial reform.

All of this is true, but it misses what is likely to be the most profound negative impact of the banks’ behavior on most Americans. The banks’ actions led directly to an increase in government debt, which in turn has made the reduction of that debt by “cutting runaway spending” a centerpiece of the Republican presidential campaign to date.

As a result of this pressure, Medicare now stands on the brink of being eliminated as a viable form of social insurance. Yet the executives who lead these banks – and the politicians with whom they work closely – will not be held accountable this election season.

Read the entire piece.

Medicynical Note:  The republicans longstanding dream has been to undo the social programs of the New Deal and Medicare.  They’ve worked unceasingly over the past 50 years to accomplish this goal and thanks to the banking disaster believe they can reach their goal—if they control congress and the presidency after the next election.

Imagine rolling back the programs that allowed unprecedented prosperity and security to our population.  In the end we’ll get what we deserve, and are willing to fund. 

Consider this:  

The patient in the emergency department smelled of advanced cancer. It is the smell of rotting flesh, but even more pungent. You only ever have to smell it once.

She had been bleeding irregularly, but chalked it up to “the change.” Peri-menopausal hormonal mayhem is the most common cause of irregular vaginal bleeding, but unfortunately not the only cause.

She hadn’t gone to the doctor because she had no health insurance. The only kind of work she could get in a struggling rural community was without benefits. Her coat and shoes beside the gurney were worn and her purse from another decade. She could never afford to buy it on her own. She didn’t qualify for Medicaid, the local doctor only took insurance, and there was no Planned Parenthood or County Clinic nearby.

Medicynical Note:  The opponents of health care often point out that people sooner or later can get care in our non-system.  The problem is the later part. 

This woman at one time had curable disease. 

Justice Alito said that if he didn’t buy a Volt, the price of Volts would go up. Where did he learn that? Yale Law School? I hope not; I was there with him and I don’t remember learning that if demand falls, then prices go up. It’s the other way around: if customers won’t buy at a certain price, suppliers lower the price. It’s not that complicated — for most goods and services.

The same is true of vegetables, which is what Justice Scalia cared about. Better he should eat them than make a metaphor out of them.

But insurance is an exception to the normal rule of price being determined by supply and demand. That is because the price of insurance is determined by the risk pool, or in other words the likelihood of needing insurance among the group of purchasers of insurance. Insurers try to avoid selling to those who will actually need the insurance, and cause the insurer to make payments. They wish to deny insurance to those who will likely need it, or they want to charge more money for insurance to those who are likely to need it. (This was why part of Obamacare was to preclude insurers from denying insurance to those who are already sick.)

Read the rest of the article!

Medicynic:  I would have hoped that four of the five conservative justices were smarter than they demonstrated at the hearings on health reform  The fifth, Justice Thomas, is hopelessly compromised as his wife has publically opposed health care reform and the Thomas family has received income from the Liberty Lobby a group opposed to reform.  Amazingly unethical but not surprising that he chose to hear the case.