Category Archives: Health Economics

A recent Archives of Internal Medicine study of primary care physicians noted:

Forty-two percent of US primary care physicians believe that patients in their own practice are receiving too much care; only 6% said they were receiving too little. The most important factors physicians identified as leading them to practice more aggressively were malpractice concerns (76%), clinical performance measures (52%), and inadequate time to spend with patients (40%). Physicians also believe that financial incentives encourage aggressive practice: 62% said diagnostic testing would be reduced if it did not generate revenue for medical subspecialists (39% for primary care physicians).

It was also noted in a Reuter’s piece about the Archives article that:

Four in 10 also believed that other primary care physicians would order fewer tests if those tests didn’t provide extra income. (Of course, just three percent thought that financial considerations influenced their own practice style.)

“I’m not saying that physicians do tests in order to make money — there is a potential to be a real cynic here — but I think that the reimbursement model for most healthcare encourages utilization in a variety of way,” Sirovich said.

Medicynical Note: It’s not cynical to acknowledge reality.

Back from a wonderful trip to Botswana and Zambia.

I noted a remarkably skewed analysis of the impact of the health care bubble on gains in household income the last ten years in Health Affairs.

They note:

Although a median-income US family of four with employer-based health insurance saw its gross annual income increase from $76,000 in 1999 to $99,000 in 2009 (in current dollars), this gain was largely offset by increased spending to pay for health care. Monthly spending increases occurred in the family’s health insurance premiums (from $490 to $1,115), out-of-pocket health spending (from $135 to $235), and taxes devoted to health care (from $345 to $440). After accounting for price increases in other goods and services, the family had $95 more in monthly income to devote to nonhealth spending in 2009 than in 1999.

The analysis is unrealistic and understates the impact of health inflation by focusing primarily on those with employer based insurance. The population without such insurance has almost certainly lower income and higher insurance costs, if they are covered at all.

More here:

Copays have increased as well, the authors pointed out. In 1999, the average copay for a doctor’s visit was in the range of $5 to $10, but by 2009, it ranged from $20 to $30. Copays for visits to the emergency room were rare in 1999, but a decade later, they cost $100 or more.

In addition, taxes devoted to healthcare — for Medicare, Medicaid, the military health system, and the Department of Veterans Affairs — increased from $345 to $440 from 1999 to 2009, Auerbach and Kellerman wrote. They added that the tax hike is “misleadingly modest” because actual growth in government spending on healthcare was much larger: 140% at the federal level and 76% at the state level. The authors said Bush-era tax cuts caused the government to collect only $6 for every $10 it spent during that 10-year time frame. (medicynical emphasis)

Medicynical note: The median household income in the US is significantly lower than stated in this article which as noted refers to those with employer based health insurance. It approximates $60,000 and has not risen much if at all over the past ten years.

As we’ve emphasized previously health care costs over ten years have inflated by 130%.

It’s amazing how much more we pay for health care than any other place in the world. It’s dubious that this will change dramatically in the near future with both parties in the pay of the medical industrial complex–though I still hold out hope that health reform is a first step toward cost containment.

It’s hard to imagine that our non-system could subvert the concept of Hospice care. But as we know, money make people (and corporations) do funny things. Hospices lobbying:

The nation’s two largest for-profit hospice companies, Vitas and Gentiva, have together spent $1,188,100 on lobbying this year, records show. Their top priority is a bill by Sen. Ron Wyden, D-Ore., that would require the Centers for Medicare and Medicaid Services, which runs the Medicare program, to test a new payment system for two years

and:

Vitas paid $390,000 to Washington lobbyists, according to lobbying reports. The company receives 90% of its revenue from Medicare and Medicaid, according to its filings with the Securities and Exchange Commission. The document shows they are lobbying because “Medicare and Medicaid programs are increasing pressure to control health care costs and to decrease or limit increases in reimbursement rates.”

Medicynical Note: Lobbying to keep their profits up, Medicare costs up, and to presumably protect themselves from a series of fraud investigations for which they have paid multiple fines. These institutions care more for the “comfort” of their bottom lines than that of their patients.

One would think that drug company pricing to government health care programs (Medicare and Medicaid) would be the same. Guess again!

Medicaid gets much deeper discounts on many prescription drugs than Medicare, in part because Medicaid discounts are set by law whereas Medicare prices are negotiated by private insurers and drug companies, federal investigators said Monday in a new report.

And:

Medicaid and Medicare receive discounts in the form of rebates, which are paid by drug manufacturers when their products are dispensed to people enrolled in the programs.

The inspector general, Daniel R. Levinson, found that rebates reduced spending on 100 widely used brand name drugs by 19 percent in Medicare and by 45 percent in Medicaid. After taking account of the rebates, Mr. Levinson said, Medicaid paid significantly less than Medicare for the same drugs.

Medicynical note: Negotiating for higher discounts would save an estimated 49 billion dollars over ten years.

A billion here and a billion there, soon we’ll be talking real money.

It’s an amazing fact that we pay more, much more than any other country in the world for medications(read the Incidental Economist link). More than double what New Zealand pays:

Medicynical note– Our republican congress during the Bush years wouldn’t agree to negotiating prices with drug companies when Medicare part D passed. After all we wouldn’t want to stress the poor drug company’s profits. Health care? Quality? Value? Not our department.