Category Archives: Health Economics

Either we do something now while the situation is just terrible or we wait till it gets worse, a Hobson’s choice?

This from National Geographic:

(Click on figure for larger view)

They also comment:

The United States spends more on medical care per person than any country, yet life expectancy is shorter than in most other developed nations and many developing ones. Lack of health insurance is a factor in life span and contributes to an estimated 45,000 deaths a year. Why the high cost? The U.S. has a fee-for-service system—paying medical providers piecemeal for appointments, surgery, and the like. That can lead to unneeded treatment that doesn’t reliably improve a patient’s health. Says Gerard Anderson, a professor at Johns Hopkins Bloomberg School of Public Health who studies health insurance worldwide, “More care does not necessarily mean better care.”

Medicynical Note: Only an idiot would think we have the best “system” in the world. Unfortunately there appear to be no shortage of such in our culture.

Uwe Reinhardt points out that community rating in health insurance is the norm in virtually all industrialized nations. Community ratings in these countries include age which means the elderly are not charged more than younger people–a policy omitted from our current health reform legislation.

The health systems of Switzerland, the Netherlands and Germany are frequently cited as potential models for a reformed American health system. All three countries offer their citizens a wide choice of health insurers — none of which is a government-run health plan. Yet in all three countries full community rating is de rigueur.

Meanwhile in the “best” health system in the world, insurers have been free to overcharge those with risk including the elderly to discourage their purchase of insurance resulting in part, in the 50 million citizens without insurance.

In the article Reinhardt contrasts the sense of “community” in various countries and the ethic that allows, indeed facilitates, the implementation of universal health care.

Medicynical Note: Americans are outliers in the world in a number of ways. The near religious (read on) notion of “original” intent of the founding fathers, our love affair with guns, our aggressive literal “word of God” religious beliefs, and our non system of health care to name a few.

Financial rationing of health care has been with us for years and has worsened as our costs have skyrocketed.

This is the latest atrocity:

Miami’s public hospital system stopped paying for kidney dialysis for the indigent this week, officials said, leaving some patients to rely on emergency rooms for their life-sustaining treatments.

Emergency room dialysis!?

At Jackson, officials said patients could come to the emergency room for treatment, and eight have this week. “That’s the best we can do right now,” said Dr. Eneida O. Roldan, Jackson’s chief executive.

Federal law requires that emergency rooms treat patients in serious medical jeopardy, regardless of their ability to pay. For patients with end-stage kidney disease, going without dialysis can prove fatal in as little as two weeks.

To be treated in an emergency room, however, dialysis patients often must show up in severe distress. In an interview, Dr. Roldan said patients could be treated in Jackson’s emergency room as often as three times a week, the national standard for continuing dialysis.

Medicynical note: This is somewhat embarrassing news for the country with the “best” health care in the world.

This ABC piece by John Paulos points out how the public is misled about the magnitude and significance of medical results.

That being said, imagine that a headline announces that screening for cancer X reduces deaths from it by 25 percent. Imagine as well that another headline announces that screening cuts deaths from cancer X by about 1 in 1,000, reducing the rate from 4 in 1,000 to 3 in 1,000.

25% is much more impressive than a drop of 4 in 1,000 to 3 in 1,000

See this in a British newspaper touting the results of the Jupiter study. This article reads like a PR release from AstraZeneca the makers of Crestor.

The Jupiter study showed heart attacks were cut by 54 per cent, strokes by 48 per cent and the need for angioplasty or bypass was cut by 46 per cent compared with a placebo. Levels of ‘bad’ cholesterol were halved.

Experts say the results would not necessarily be found with other statins because some work differently.

But in another interpretations of the Jupiter study published in the New England Journal:

The relative risk reductions achieved with the use of statin therapy in JUPITER were clearly significant. However, absolute differences in risk are more clinically important than relative reductions in risk in deciding whether to recommend drug therapy, since the absolute benefits of treatment must be large enough to justify the associated risks and costs. The proportion of participants with hard cardiac events in JUPITER was reduced from 1.8% (157 of 8901 subjects) in the placebo group to 0.9% (83 of the 8901 subjects) in the rosuvastatin group; thus, 120 participants were treated for 1.9 years to prevent one event. (Medicynical emphasis)

Not nearly as impressive as the 54% reported in the news article.

This type “interpretation” of results is common. PhARMA companies maximize the “benefit” by using relative rather than absolute values. In addition to overemphasizing the medical benefit their interpretation also doesn’t factor in toxicity and cost. Somewhere, somehow in our “reformed” health care system we need to look at this.

The republican strategy to oppose and campaign against health reform is the best news the country could have as it will be disastrous for republican election hopes.

Consider the millions who benefit from the bill; the cost savings accruing from health reform; the disappearance of medical expense caused bankruptcy; the fact that we are the last industrialized nation to have some form of national health scheme.

If the bill had passed during the Clinton administration is likely the GM and Chrysler bankruptcies would have been avoided.

This in support of health reform from the December 2, NEJM article by Jonathan Gruber, Ph.D.

One common refrain of opponents of reform is that it represents a government takeover of health care. But reformers made the key decision at the start of this process to eschew a government-driven redesign of our health care system in favor of building on the private insurance system that works for most Americans. The primary role of the government in this reform is as a financier of the tax credits that individuals will use to purchase health insurance from private companies through state-organized exchanges. In Massachusetts, which passed a similar reform in 2006, private health insurance has expanded dramatically. The public insurance alternative that is included in the Senate bill simply adds another competitor — on a level playing field — to the insurance market, and the Congressional Budget Office (CBO) projects that it will enroll only a tiny minority of Americans.

And

A second criticism is that the bills are budget busters. This is simply incorrect. Both bills are completely paid for — indeed, both would reduce the deficit by more than $100 billion over the coming decade. And the CBO estimates that both would reduce the deficit even more in the long run, particularly the Senate bill with its strong cost-containment measures.

Regarding Medicare

In any case, there is substantial evidence that reducing these overpayments will not harm the health of Medicare patients — just the pocketbooks of those who profit from them. This reform would simply use market bidding to set the reimbursement rate for Medicare Advantage plans, rather than setting administrative prices, which have traditionally been much too high; and it would reduce payments to hospitals by a small percentage, while tying them to outcome measures.

and so on.

Medicynical Note: Perfect, NO. A good start, yes!

It’s too bad that health care reform has been gutted by special interests. In addition to the Nelson and Landrieu obscenities drug companies have taken advantage.

This is not new behavior for these guys. The patented drug pharmaceutical industry has always been in the forefront of dubious practices aimed at making money, not improving care.

I can recall as a senior medical student being taking for a weekend to New York, all paid for by a drug company. On graduation these so called “ethical” pharmaceutical companies gifted students with doctor bags, books, and instruments all for the purpose of maintaining brand consciousness.

It’s therefore a little disconcerting to watch these same interests work to undermine parts of health “reform” to maintain their grip on products and pricing. Included in the bill are:

extensive protections against generic versions of pricey biotech medicines, an incentive for Medicare recipients to use more brand-name drugs,

more, not less, patent protection for drugs costing more than most U.S. citizens make in a year.

Like the House bill, the Senate bill gives the Food and Drug Administration power to allow biogenerics onto the U.S. market. Such protein-based medicines treat cancer and other conditions but can cost tens of thousands of dollars a year per patient.
Generic makers welcomed the pathway to approval, but the bills provide for a 12-year period of exclusivity for brand-name drugs before a biogeneric can be approved. The Obama administration had sought just five to seven years of protection. (Medicynical emphasis)

Drug companies claim they need the protection to recoup research costs. But if they have to charge $10,000/month and more for new biotech drugs then they are either exceptionally inefficient (FYI they spend tens of billions on marketing which they have to also recoup), or the drug is simply too expensive for our system to afford. Sadly to this point most of these new agents offer only slight, if any (that is no proven survival benefit) over other therapies. Paying a premium for such agents is a little nuts.

The Senate seems to have outdone itself in protecting drug companies, how about something for U.S. taxpayers who will be paying the bills for these new but, so far, marginally effective drugs.

Alain Enthoven has a review of the problems of cost containment.

What should be done? I explained it in my “Consumer Choice Health Plan” articles in the 1978New England Journal of Medicine. The idea is also in a recent report by the Committee for Economic Development (CED). The general idea is for government to pay everyone’s way into the purchase of an efficient or low-cost health plan, meeting standards in their state or region but no more; if people want something that costs more, they must pay the difference with their own net after-tax dollars. Additionally, the creation of exchanges that broker multiple choices of health plans would drive the delivery system to produce better value through consumer choice and competition.