Monthly Archives: January 2007

Yet another view of the Bush plan for non-health care reform.

More on the Bush health care plan. 

The January 27th BBC From Our Correspondent podcast has a succinct description of the U.S. health care quagmire. (To listen click on the January 27th program)

The compassionate one, President  Bush, is proposing a new standard deduction for health insurance — $15,000 for families and $7,500 for individuals. If I understand it correctly,  employer health insurance benefits would be added to taxable income of the employee and then is eligible for the standard deduction. Those purchasing individual policies also qualify for the tax deduction.  The hope is that the tax deduction will help the uninsured purchase coverage.  The plan would raise taxes for about 30 million people with costs exceeding the standard deduction. 

Bush’s plan, which is said to make health insurance more accessible for the nearly 47 million Americans who lack health insurance, would start in 2009 and supposedly be revenue neutral over its first 10 years.

The Washington Post further states: "Others fear the plan would prompt more employers to drop health coverage and offer employees an immediate increase in wages to buy coverage on the individual market. But those plans tend to be more expensive, less comprehensive and harder to get for consumers who are already sick."  Given that many industries complain that they are uncompetitive because of the health insurance costs it seems  naive to expect that they will pass all or even a large part of their savings on to employees. A more likely scenario is that they will offer less or no insurance and pocket the savings.    

Bush’s plan also does nothing about the costs of care and indeed will increase the amount spent in our inefficient health care system.   Private insurers main fiduciary responsibility is to increase the company’s value for stockholders not to provide quality care efficiently.  If costs are higher, premiums increase.  Without addressing the conflicts of interest and inefficiencies in our system the new plan will fan the flame of health care inflation. 

Lastly Bush’s plan offers tax breaks for those with insurance but does little, if anything, for the working poor, a significant part of the 48 Million uninsured.   "While more than 100 million people would get a tax break, the administration estimates, more than 55 percent of the uninsured – about 25 million people – have such low incomes that they pay no income taxes, Davis said. So the tax changes would not make insurance any more affordable for them, she said." 

A trickle-down plan that works through tax cuts is doomed to fail if implemented.  The delusion that tax credits are health care reform is similar to the notion that introducing democracy to Iraq would be easy.  Health care reform is a multi-headed nasty beast.  The money driven marketplace hasn’t worked for innumerable reasons (see Medicynic’s archives).  Sadly Bush’s proposal is not even a first step toward taming it.

I’m tired of hearing about 4 hour erections and the amazing benefits of various drugs on TV.  In these ads  benefits are exaggerated, the side effects glossed over and costs ignored.  They drive bad practices in the medical community; encourage the use of expensive medications when inexpensive generics work just as well; and distort the already dysfunctional medical marketplace.

Every penny devoted to drug advertising must be paid for by the consumer–4.5 billion dollars this year.   Medicynic suggests:

1. Prohibit direct to consumer (DTC) advertising. In a 30 second ad provision of complete information is not possible. As a result manipulation of information is inevitable and patients do not fully understand the limited benefit and costs of any given product. It is a fact that few countries allow such advertising.

2. If we do not wish to completely prohibit DTC advertising, we must insist on  full disclosure. This would include mention and clear explanation of  risk of treatment, a summary of proven benefits and competing approaches in clear language that a lay person can understand. The price of the medication, with estimates of monthly and yearly costs both in absolute terms and in comparison with alternatives should also be provided.  Finally a measure of cost effectiveness (cost/unit of additional survival time or other approved measure) must be also be provided to fully inform the consumer.

We need to face the fact that uncontrolled market driven medical care is a luxury we can no longer afford–it also doesn’t work.  Write your Representative or Senator now!

Such visionaries as John McCain observe “I want to keep health-care costs down until I get sick, and then I don’t give a goddamn,”  McCain’s views, of course, reflect the complicated schizophrenic relationship the American public has with it’s health care system.  Stated another way, we are willing to pay  for a used Chevy but want a Mercedes’ performance.

Despite such feckless sentiment there is growing momentum to do something about health care.    Schwarzenegger’s plan is a variant of the solution being tried in Massachusetts. Another approach  provides universal coverage as a part of an expanded Medicare program. The President  has recently suggested this very limited plan using tax incentives.  It, of course, doesn’t address the issue of the working poor who have no discretionary income for health insurance or aggressive cost containment. There are other plans out there including one from the governor of Pennsylvania, and this from a coalition of private insurers.

There are many admirable aspects of the health plan proposed by the governor of California.   It recognizes there is a problem, provides a scheme for providing health insurance to all,  pays for it and puts the prestige of his office behind it. 

LA Times:  Among other provisions, the governor’s proposed health overhaul would:

•  Require every Californian to have health insurance.

•  Require employers with 10 or more workers to offer health benefits or pay 4% of the payroll to a coverage program.  It also taxes hospitals at 4% of revenue and doctors at 2%.

•  Extends government insurance for poor children to more families.

•  Ban insurers from denying coverage because of medical conditions, occupation or age.

Health care solutions are stymied by unrealistic expectations (see McCain above), conflicts of interest at every level of the system, and the ethos of profit driven private enterprises.  This last factor allows and even encourages insurers, providers, suppliers, and medical monopolists (the Medical Industrial Complex) to maximize profits at the expense of health care access and quality.   Add to that the fact that  sick patients are not rational consumers and are unable to shop for the “right” price we hear so much about in economic circles.  

How else to explain the current costs of health care?  Price increases in the health care sector exceed inflation on a consistent basis. Many new drugs cost more each year than new automobiles (including the above mentioned Mercedes) or for that matter, than the median and average salaries in the U.S.  Over a lifetime there are single drugs that will cost the system more than the value of homes.   Hospital costs are 5-6 times those of just 20 years ago. Total health costs are expected to  be 1.9 trillion dollars this year and 2.9 trillion by 2009–that’s real money by the way!

Any new health plan will have to tamp down expectations and expenditures with improved efficiency and resource utilization.  The challenge is to do this without decreasing quality, and access while maintaining the support of the public.  Whether our culture is up to this task is very questionable given our track record over the past 50 years.

Ambien (zolpidem) Sanafi-Aventis’s blockbuster sedative was due to come off patent last October.  The FDA for whatever reason extended the patent 6 months to allow for further study of it’s use in children. 

This drug earns about a billion dollars a year for it’s manufacturer.  The company realizing it will be losing this revenue stream to generics recently received FDA approval for a controlled release version of Ambien (Ambien CR) which will be protected by patent for another two decades.  Releasing long acting versions of old drugs is almost standard practice in the pharmaceutical industry.  Long acting versions of old drugs extend the revenue stream with minimal investment.  In the case of Ambien CR there have been  no studies comparing it with either the original drug or other sedatives (it was approved after comparisons with placebos) so it is questionable that this new expensive medication offers any advantages.

To assure that patients will move from the original to the newly released drug Sanofi-Aventis raised prices.  According to AARP Ambien’s price increase during the first six-months of 2006 was the highest among the top drugs sold in the U.S.  It sounds counterintuitive but here’s how this works.  Ambien 5 mg went up 13.3% and Ambien 10 mg 9.9%. A  $100,000,000  increase in revenue from a one billion dollar seller.  The price of Ambien now exceeds that of the new medication, Ambien CR.  So, of course, it’s logical to switch your patients to the new medication, it’s cheaper–and also offers Sanofi a secured revenue stream.  Meanwhile, of course,  there are generic sedatives that work just as well for a small percentage of the  $3.00-4/pill Ambien.  Temazepam (generic Resteril), for example, sells for about $5.00/month.

Ambien’s development costs have long ago been amortized.   Despite this, prices for Ambien have been increased at rates that far exceed inflation.  As a matter of fact Ambien when originally released 100 pills cost about $150.  Now that $150 approximates the cost of 30 pills.  So over the course of the patent (since 1993) it’s price has more than tripled.  Overseas the cost of the drug is about 1/3 to 1/2 that which we pay here.

America is the monopolist’s dream.  A place where profits and patents trump the public good, where price manipulation is the norm and where negotiation (Medicare Part D) is a dirty word.

The Times has this sobering assessment of the distortion in priorities caused by the war in Iraq. 

It is routine for pharmaceutical companies to claim a huge amount, as much as $400,000,000, as the opportunity cost of investing in a new drug’s development and simply add that to the real cost.  While I question the validity of such an assumption when documenting the actual cost of a commercial product, should we, as a society, do the same with this war.  It’s 1.2 trillion dollar cost, does affect our other priorities and of course, adds to the national debt.  Is the real cost 2.4 trillion?

Interesting coalition for changes in health care.  It is essential that somehow we sift out the special interests of the Health Care Industrial Complex and arrive at a solution in which the patient is the  beneficiary.

But how do we deal with such insightful thoughtful observations as this from John McCain–"I want to keep health-care costs down until I get sick, and then I don’t give a goddamn." 

This story about companies offering clinics for employees reminds me of my Uncle Abe’s story about the man and the new suit.

(Told originally with yiddish interspersed) This man goes his tailor and after much bargaining has a suit made.  When he goes to pick it up he finds one arm too long, the other too short, one leg too short and the suit too long.  He asks the tailor to fix it but the tailor suggests that he do the following.  He should simply extend one arm, pull in the other, bend the knee of the leg that is too short and pull up the suit a bit by lifting his shoulder (this was much better with Abe demonstrating the fitting with a smelly dead cigar in his mouth). ” There” said the tailor, as he showed the man the door,”it fits perfectly!!”

Our health care system is being distorted in various ways and politicians keep telling us how well it fits (“best system in the world, etc”).  However, there are significant objections to employer organized clinics: 

1.  The clinic would have fatal conflicts of interest.  Who is the health care provider working for?  Will saving money for the employer trump the best possible care for the employee.  The appearance of a conflict undermines confidence in the provider and clinic. 

2.  Confidentiality is essential and also impossible in such a setting. 

3.  Should an employee become sick and need to stop working who provides care? 

4.  We talk about choice as being desirable, where is it? 

5.  There is no continuity of care–although this is becoming a fleeting goal of our non system–a little like a suit we’re told this will fit perfectly.

There must be a better way.  Our country spends more, by 50-100%, than other industrialized countries for health care yet our health care statistics are mediocre and 45 million of our citizens have no access.  Are we educable?  Can we learn from others or must we stumble through a wilderness of ill fitting expensive solutions for another 40 years?