Category Archives: Health Economics

15 years ago my wife needed a stem cell transplant and was treated at Swedish Hospital in Seattle. At the time we had great difficulty getting our health insurance to cover the cost of treatment. On the same hospital floor was a man with testicular cancer, guarded by police from our local jail,  having  his transplant.

Times haven’t changed!

Convicted rapist Kenneth Pike, of Auburn, N.Y., is expected to undergo a life-saving heart transplant that could cost up to $800,000 — a price that will be paid courtesy of New York state taxpayers.

Medicynical Note: I don’t object to providing anyone access to healthcare. It’s a humane approach to our fellow humans. Others seem to think it’s somehow the patient’s fault that he/she is sick and, regardless of their insurance or financial status, that they must bear the burden of their care or do without.

Is that the new American way?

Incomes have declined in the past 10 years (see below for 25 years data). The median income of families is now just under $50,000/year. That means half of American families live on less than $50,000 and the great majority on not much more than that. This from the Daily Kos.

Yet Ryan in his budget proposal wants to balance the budget by increasing taxes on this group (those with incomes under $50,000) while decreasing taxes on those whose incomes and wealth have increased dramatically in this era (incomes over $125,000)

Medicynical Note: It’s enough to make a medicynic cynical.

The good news is that there  may be a drug that improves, somewhat, the survival of patients with malignant melanoma.

The bad news is that the drug company marketing the drug, Bristol Meyers,  is charging $120,000 for a course of treatment, four injections over three months.

In that randomized clinical trial, patients with metastatic melanoma treated with Yervoy lived a median of about 10 months, compared with 6.4 months for patients in a control group, who received a treatment believed to have had little effect.

And:

More than 20 percent of the people who received Yervoy in the trial lived at least two years, and some of them much longer. But there is no way at present to predict which patients will benefit from the drug.

But, always a but:

The drawback is that loosening the restraints on the immune system can lead to dangerous side effects, the most worrisome being colitis and diarrhea, but also hepatitis, endocrine dysfunction and skin problems. The F.D.A. said that 12.9 percent of patients treated with Yervoy suffered severe or fatal autoimmune reactions.

Medicynical Note:  The drug in this early study appears to have some efficacy and significant toxicity. Half the patients treated get less than a 4 month survival benefit–if this study’s finding hold up in the future.  (It should be noted that  first studies often show better results than confirmatory studies)

Can our non-system of care afford a $120,000 drug that improves survival just 4 months?  Can 99% of our citizens afford such a drug if insurance doesn’t cover.

The pharmaceutical industry deserves credit for helping develop an  drug with some efficacy.  But charging 3-4 times the average person’s income/year, takes the pay us or die ethic to a new extreme.

The question is not whether we will ration care by cost to most people but how.  It should be understood that whatever the approach we take,  republican or democratic, the wealthy will be more able to afford that which is not covered by insurance. 

We may have the opportunity in future elections to decide. 

The CBO sent Representative Ryan a letter analyzing his proposals.

Federal payments for Medicaid under the proposal would be substantially smaller than currently projected amounts. States would have additional flexibility to design and manage their Medicaid programs, and they might achieve greater efficiencies in the delivery of care than under current law. Even with additional flexibility, however, the large projected reduction in payments would probably require states to decrease payments to Medicaid providers, reduce eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay more themselves than would be the case under current law. (Medicynical emphasis: The indigent will either get less care or  to pay for it themselves (really!)

A private health insurance plan covering the standardized benefit would, CBO estimates, be more expensive currently than traditional Medicare. Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare. Those higher costs would be offset partly but not fully by savings from lower utilization…..  (Medicynic: meaning people who can’t afford care won’t get it) Moreover, CBO projects that total health care spending for a typical beneficiary covered by the standardized benefit under the proposal would grow faster than such spending for the same beneficiary in traditional Medicare under either of CBO’s longterm scenarios.

Medicynical note:  Yes, this is the same CBO that Representative Ryan and his followers criticized when it projected significant budgetary savings for the Health Reform package passed by the last congress.

As noted yesterday, there is nothing in this regarding insurability, community rates for the insured, and mandating coverage of pre-existing illness.  It seems a license for insurance companies to cover the healthiest and leave the rest to no or inadequate  coverage.   It’s a cynical and somewhat sophisticated way to ration care by monetary resources and wealth.

It should be noted that almost half of baby boomers and succeeding generations of retirees have inadequate retirement savings:

Excluding their homes, 24 percent of boomers say they have no retirement savings. Those with nothing include about 4 in 10 who are non-white, are unmarried or didn’t finish college.

At the other end, about 1 in 10 say they have banked at least $500,000. Those who have saved at least something typically have squirreled away $100,000, with about half putting away more than that and half less.

Every other industrialized nation provides health care coverage for virtually it’s entire population.  Cutting access to care, providing inadequate  coverage for the aged, sick, disabled and infirm, and doing nothing about the 50 million uninsured appears to be the new American way.

More here: Representative Ryan Proposes Medicare Plan Under Which Seniors Would Pay Most of Their Income for Health Care

It’s fascinating to consider turning Medicare over to the private insurers, who don’t really want the sick and infirm as  customers.

The republican approach seems to be to provide a fixed “stipend” to Medicare recipients and allow them to enter the private insurance market.  This of course will lead to chaos as insurers work to minimize  costs.

The republican proposals make no mention of:

1. Guaranteed insurability for the sick and chronically ill.  Would community rates for insurance prevail or would these people be individually rated by insurers and either rejected or given unaffordable and/or inadequate coverage.  And of course there are those that think guaranteeing people insurance and access to care is in itself welfare (guess who?)
2. Affordability:   Those with pre-existing illnesses (possibly as high as 2/3 rds of the elderly, would be at the mercy of insurers.  Their rates would without doubt exceed the republican Medicare “stipend” for the insurance, if indeed insurers would offer such patients coverage
3. The 50 million people currently uninsured.

Medicynical Note: We shouldn’t accept the republican “modest proposal” (see Jonathan Swift) to financially eat alive our sick and infirm elderly and abandon the uninsured.

We need to cut health care costs.  Our non-system is the most expensive by an order of magnitude than any other in the world.  There are many reasons for this: inefficiency, over utilization, excessive administrative costs, a cost plus philosophy on charges, use of the most expensive diagnostic and treatment modalities when less expensive appproaches work equally well, excessive expectations of income from providers and suppliers, expectations of unlimited treatment by patients, underfunded public health and disease prevention activities.

There are problems, they are not insurmountable as indicated by the lower costs elsewhere in the industrialized world.

I recently read The first tycoon: The Epic Life Of Cornelius Vanderbilt.  In it, T.J. Stiles describes the infancy of the American capitalism.  Monopoly was the goal, and subverting competition, bribery, and bullying the means.  Read it, a terrific biography.

It’s been heart warming to read that  Vanderbilt’s legacy lives today in medicine. In Las Vegas, one heart device company literally owns the market, including the doctors.

Within the last few years, a little known company called Biotronik has cornered the market on pacemakers and defibrillators at the University Medical Center of Southern Nevada, Last year, 250 of the 263 patients, or 95 percent, who had a heart device implanted at the hospital center got one made by Biotronik.

The company’s hold at the hospital center is all the more striking because its implants were not used there before 2008, and its national share of the heart-device market barely exceeds 5 percent, according to industry estimates.

The devices’ sudden popularity was apparently not left to chance. In mid-2008, Biotronik hired several cardiologists who implant heart devices at the Las Vegas hospital as consultants, paying them fees that may have reached as high as $5,000 a month, company documents reviewed by The New York Times indicate. Those doctors then did the rest.

Medicynical Note:  Medical conflicts of interest are nothing new.  We’ve seen drug companies literally bribe generic companies with hundreds of millions of dollars to keep less expensive competitors off the market; drug prices increased to gouge seriously ill patients; patient care manipulated to maximize reimbursements; overuse of modalities of treatment to maximize reimbursements; exaggeration of benefits (Avastin)  of treatment to maximize reimbursement; conflict of interest (joint replacement) that maximize reimbursements.

Our non-system is devoted to maximizing income through manipulation of markets, not quality or efficiency of care.  Cost effectiveness is an almost unknown parameter in the U.S.  Cornelius Vanderbilt would be very pleased.

For some time I’ve noted the inappropriate behavior of the health insurance industry.  It works hard to increase it’s profits by decreasing coverage of those who need it most.  Our non-system of care not only allows this but a significant political party has made it part of their political goals.

This from an interview with a former insurance executive: (Wendell Potter author of “Deadly Spin”)

If you’re trying to buy insurance in the individual market, you should know that those insurers are looking to sell coverage only to young and healthy people. If you aren’t particularly young or healthy, you’ll be charged more or have limited benefits or both. And even if you get insurance through your employer, you need to read carefully.

And:

I’d be wary of these so-called mini-med or limited-benefit plans. These are sold largely to individuals or through small employers, but we’re also seeing more big companies, such as fast-food chains, offering these plans.

This is fake insurance, in my view. Most policies have low premiums but also unreasonably low annual or lifetime caps on coverage. Some don’t pay for hospitalizations.

Medicynical Note:  We have the least efficient most expensive health care non-system in the world.  It’s not even close.  And there are over 50,000,000 uninsured (rising rapidly).

The macro health care game is to make money, not necessarily provide care or improve health.  Scamming patients (buyer beware) seems part of it.  Those trying to do good are being undermined by a system that rewards those who want to do well.  Amazing.