Category Archives: Health Economics

It’s difficult to believe anyone would want to deregulate control of drugs or for that matter medical devices. Without a neutral third party review of efficacy and safety, it’s anyone’s guess what would be foisted onto an unsuspecting public.

Consider that over the years defects have been very commonly found in such implantable devices. In fact thousands of recall notices/year are the norm.

Meanwhile, the number of items implanted in people’s bodies is soaring, as is the number of recalls. Nearly 2,500 medical devices were recalled for potential safety problems in fiscal 2008, according to the Food and Drug Administration. That was nearly double the number reported the previous year and a 164 percent increase since 2000.

With all this, we now have legislators who have accepted campaign contributions from venture capitalists working to undermine the oversight process:

Over the following month, Mr. Paulsen’s campaign committee took in $74,000 from people with a stake in device regulation, much of it from executives affiliated with venture capital funds and their spouses. Now Mr. Paulsen, a two-term Republican, is a sponsor of a bill that would make it easier to bring new medical products to market.

“They have this unwritten assumption that every new device is innovative,” Dr. Rita Redberg, who is the editor of the Archives of Internal Medicine, said, referring to the venture capital funds. But some devices, she said, “are killing people or causing significant harm.”

Further complicating the medical device business is the established fact that the gate keepers, medical providers, often take payment from device manufacturers to encourage use of their “innovations.” Without some brake in the system we have a recipe for development of faulty devices and their overuse and/or misuse.

Furthermore, these same forces want tort reform so as to protect these same manufacturers from being sued for bad outcomes from faults in the device and the selfsame overuse and misuse.

Note: Bringing devices to market without careful continuing oversight, when there is a money driven motivation, is a recipe for disaster.

This, from CBS, says it all:

A dozen pharmaceutical companies have given doctors and other healthcare providers more than $760 million over the past two years – and those companies’ sales comprise 40 percent of the U.S. market.

With bucks that big flying around, is the quality of care offered by providers accepting them compromised? “Absolutely,” said Dr. John Santa, head of the Consumer Reports Health Ratings Center.

Medicynical Note: Guess who pays for this largesse? Is it any wonder that drugs in the U.S. cost 30% more than elsewhere in the world. Drug companies are uninterested in efficiency and value. It’s about the money. Sad but true.

The Commonwatlth Fund’s review of U.S. health care provides assessments of our non-system’s efficiency, equity, access and quality.

Some good news can be found in an exception to the overall pattern of U.S. performance: rapid progress on quality metrics that have been the focus of national initiatives and public reporting efforts. Hospitals, nursing homes, and home health care agencies are showing marked improvement in patient treatment and outcomes for which data are collected and reported nationally on federal Web sites and as part of improvement campaigns. There has also been significant improvement in the control of high blood pressure, a measure that is publicly reported by health plans; increasingly, physician groups are being rewarded for improving their treatment of this and other chronic conditions. Better management of chronic diseases also has likely contributed to reductions in rates of avoidable hospitalizations for certain conditions, though rates continue to vary substantially across the country.

Of great concern, access to health care significantly eroded since 2006. As of 2010, more than 81 million working-age adults—44 percent of those ages 19 to 64—were uninsured during the year or underinsured, up from 61 million (35%) in 2003. Further, the U.S. failed to keep pace with gains in health outcomes achieved by the leading countries. The U.S. ranks last out of 16 industrialized countries on a measure of mortality amenable to medical care (deaths that might have been prevented with timely and effective care), with premature death rates that are 68 percent higher than in the best-performing countries. As many as 91,000 fewer people would die prematurely if the U.S. could achieve the leading country rate.

The summary also notes the cost burden and the lack of improvement in many health system indicators:

such as preventive care, adults and children with strong primary care connections, and hospital readmissions—likely stems from the nation’s weak primary care foundation and from inadequate care coordination and teamwork both across sites of care and between providers. These gaps highlight the need for a whole-system approach, in which performance is measured and providers are held accountable for performance across the continuum of care.

A nice chart shows some of the savings that would accrue if we actually had a system:

Medicynical Note: We spend more and have worse health care. Only in the U.S.

Administrative costs in health care are a silent epidemic. Our inefficiency is costly to patients, providers, insurers, and government.

Ewe Reinhardt observes:

In many ways, our health care system mirrors our tax code — especially in its financing and health insurance facets. These can be made so complex and have been made so complex in the health care system in the United States that many decision makers in health care — patients, physicians, hospitals, employers and so on — need in-house or external consultants to find their way through the maze.

and:

Consulting firms help physicians bill private and public insurers or help patients submit claims to insurers after an illness. Legions of insurance brokers help prospective clients through the maze of the nongroup or small-group health insurance market. Large employee-benefit consulting firms, helping large companies, establish what amount, in effect, to analogues of the health-insurance exchanges in the Affordable Care Act, and many more consultants of many stripes are involved.

Medicynical Note: Yes the U.S. has the number 1 health care system in the world–it’s the most inefficient by far.

Interesting Economix by Uwe Reinhardt on money flow in health care:

He notes:

In fairness, it must be added that traditional Medicare basically sets prices and then just pays bills. It makes no active attempt to manage care (utilization controls, disease management, coordinating care and so on), because it has not been allowed by Congress to do so. It is almost as if Congress did not want traditional Medicare to be a prudent purchaser of heath care for the elderly. (Medicynical emphasis)

From the viewpoint of prudent purchasing, most economists would probably judge these prices too low. On the other hand, the fact that traditional Medicare just pays bills more or less passively may be precisely the reason that it is still so popular among the elderly. Traditional Medicare still offers beneficiaries completely free choice of providers and therapy — a degree of freedom that many younger Americans in insurance plans with limited networks of providers no longer enjoy.

Medicynical Note: Until we approach the issue of value in medicine (What works? Bang for the buck?) we’ll have the most expensive least efficient health care non-system in the world. What’s bugging us, the US, now is how to get to such a system.

Is health care part of the package of being a US citizen? Providing Medicare to the elderly and many with chronic illness implies such a commitment. Does required access to ER care for all, whether they can pay or not, point to a civic responsibility to assure access to care to the rest of the population?

If our republican friends really believe that health care is not a “right” then a large swath of citizenry are going to be in trouble as republicans follow through on this philosophy. Interestingly these rightist purists for some reason tout ER access for all as adequate health care in our non-system. Why they would choose the most expensive, least efficient care in the world as their means of providing health care is unknown.

If there is an explicit right to health care in our country, more efficient ways to provide it must be found. It should assure affordable care to citizens, including the elderly and those with illnesses. One problem has been that private insurers, ironically, want little to do with either of those populations.