Category Archives: Health Economics

Conflicts of interest in medicine abound. Some arise simply from the structure of our non system. You get paid more if you do more. Other conflicts are more onerous and come from money accepted, for whatever reason, from suppliers–a regular practice of the pharmaceutical industry.

This, however, goes into the category of unbelievable but true. The AAFP (American Academy of Family Practice), the organization that represents family doctors, announced in October that it accepted a six-figure grant from the Coca-Cola Co. to create content about beverages and sweeteners for the academy’s consumer Web site, FamilyDoctor.org.

You may recall that:

• “Soda and other sweetened beverages are the No. 1 source of added sugars in the U.S. diet, the American Heart Association says, and many health experts blame the drinks, at least in part, for the soaring U.S. obesity rate. A 12-ounce can of soda can contain up to 10 teaspoons of sugar.”

Medicynical note: Money makes people do funny things.

Even if the AAFP’s intentions are entirely pure, there is the undeniable appearance of a conflict.

The house passed health reform but it is not certain that the Senate will follow suit. The bill will help with access but it is questionable how it will control costs and improve quality. We’ll need more action later, in all likelihood, to further address that issue.

The Times magazine has a terrific article discussing quality of care. Interestingly when quality and outcomes improved costs declined. Is there a lesson here?

Boehner, after months of foot dragging revealed his comprehensive plan to reform health insurance:

• Number one: let families and businesses buy health insurance across state lines.
• Number two: allow individuals, small businesses, and trade associations to pool together and acquire health insurance at lower prices, the same way large corporations and labor unions do.
• Number three: give states the tools to create their own innovative reforms that lower health care costs.
• Number four: end junk lawsuits that contribute to higher health care costs by increasing the number of tests and procedures that physicians sometimes order not because they think it’s good medicine, but because they are afraid of being sued.

Number 1: What does it mean to allow insurers to sell coverage “across state lines?”

Insurers could sell their products to Americans in any state. The insurer would have to follow the rules and regulations in the state where it is based or “domiciled” — not the rules of the state where the consumer or policyholder lives. Allowing the state laws chosen by the insurer rather than the laws of the state where the consumer lives to govern health insurance regulation is what makes this policy so controversial.

• Premiums? Health insurance premiums may decrease for many young, healthy individuals. Yet, premiums would like go up for many other Americans, especially those people with health conditions or individuals who prefer comprehensive insurance policies.
• Benefit Mandates? Most benefit mandates would be eliminated by an across state lines proposal. In fact, selling health insurance across state lines would eliminate any guarantee that important benefit mandates like maternity care would be included in insurance packages in the future. Consumers would get little in exchange — overwhelming evidence shows that benefit mandates per se are not why health insurance costs so much.
• Access to Coverage? Many people would find it more difficult to access health insurance if health insurance were sold across state lines. This is because there would be fewer guaranteed issue policies and because insurers would have an increased incentive to deny people coverage and charge people more based on their health history.

Medicynical note: Any plan that doesn’t mandate use of community ratings rather than individual ratings is a waste of time and money. It’s tantamount to licensing insurers to charge those with illness more, which is no different from what we have now.

I’m not sure what a medical bankruptcy is but it has been reported that 60% of people filing in the U.S. cite medical expenses as part of their problem.

See this for more info:

This American Life is doing two programs on health care. The first is a rather depressing look at over utilization and cost containment. Check it out.

I very occasionally have cup of coffee at Starbucks. I’ve found their offerings to be mediocre and expensive. But yesterday while on the town I stopped at one. The coffee was fine but nothing special. While there I noted they had instant coffee packets available at about $1.00/cup. I’m not talking about a cup of instant at the local Starbucks but somehow they think you will pay a dollar for powder/crystals of instant coffee that you are to purchase and take with you to have at home or elsewhere.

If anyone wonders why the Starbucks brand is in decline it is the serial loss of focus on it’s basic product. They’ve failed at breakfast sandwiches, bagels, donuts, music marketing, internet at the store and now are certain to fail with $1.00/cup instant coffee.

In the coffee biz, prices are obvious, competition easily evaluated and accessed. I know for example, that I can get at least as good a cup at lower cost at a local espresso place, and even have a decent bagel along with the free internet access if I choose.

Now why is this different than health care? In health care prices are obscure, choices are limited and the decision far more complex than whether to have a mocha or latte. Competition is stiffled by the complexity of the decision process, conflicts of interest of providers and a patent system that guarantees exclusivity for a generation. And lastly there is nothing discretionary about health care when you need it.

The lack of a viable open market in health care, the strength of the health lobby that works mightily to keep it that way and the lobby’s influence over legislators explains why people are selling Starbucks stock and buying shares in health related businesses–that’s where the money is and is likely to remain.

I attended a group meeting in favor of health reform and was struck by the lack of realistic thinking. In some ways those favoring reform are as impractical and perhaps naive as those strongly opposing. This in turn got me to think about false assumptions and expectations.

1. Rationing— (the R word) Somehow our conservative friends don’t think there is rationing of care now and that there will be with health reform. In fact health care is now explicitly rationed by cost. It’s a little like the supreme court’s concept that money=free speech (campaign contributions). If you’ve more money you have more speech, and in health care………. In neither case is it appropriate.

The challenge of health reform is to “ration” care by appropriateness and efficacy, a concept opposed by our conservative friends.

2. Have access to everything: The evil twin of rationing. Many available interventions are minimally effective and prohibitively expensive. Neither the consumer nor the health industrial complex fully appreciates either of these truths. Until they do we are doomed to have double digit increases in health expenditures as we do “everything” for everyone.

We need comparison and cost efficacy studies to guide us. Wouldn’t you know this is opposed both by drug companies and our conservative brethren.

3. Socialized Medicine–Medicine has long been “socialized”. We have around 100 million citizens receiving government sponsored health care. Our soldiers serve and retire, guess what one of their benefits is………. Our elderly priced out of the market by “private industry” have been well served by medicare. Those without insurance who are cared for for “free” at emergency rooms are indeed receiving a the most expensive and inefficient socialized medical service–paid for by someone else. Ironically or perhaps hypocritically the ER access rule is cited by our conservative friends as the answer to health care access.

4. Don’t want Government making decisions about health care (a variant of #3)— Instead we have profit driven insurance companies controlling our access and charging excessive premiums to maintain their profits. In an ideal world there would be neither. And indeed for the wealthy no such limitation exists. They simply pay whatever is necessary.

By accepting the need for third party payers we cede our “complete” control and are to some extent dependent on the good offices of the insurer–government or private. That’s life.

5. Health Savings Accounts are the answer: The question is the answer to what? If you said a means of the wealthy to shelter money for their health care I’d agree. If you think it’s an answer to the health insurance problems of the great majority you’d be mistaken. (as noted here and here)

Do you have any false health Gods?

One of the republican/conservative shibboleths is that we have the best health care system in the world. Medicynic has long noted the only thing systematic about our health care establishment is that it follows the money. We found this article with some blatant false conclusions: The World Should Catch Up With Our Health Care:

The article from Real Clear Politics notes:

• “Now it’s clear, as one example, that longevity is only partially connected to health care in the first place and that when you subtract homicides and accidents, we in America live longer than anyone, despite President Obama’s constant reiteration of the reform-encouraging and utterly deceptive thesis that we do not.”
  Except that’s not true.

The author doesn’t tell on which data his broad statement is based but an AEI document makes this case here (http://www.aei.org/docLib/9780844742403.pdf) based on the above table. If indeed this is what his comments are based upon, the data is being misused.

The OECD has looked at the data on which this conclusion was based and it states: (See p. 20-21–“OECD Economic Surveys: United States 2008”, p. 1370)

“It has been claimed (Ohsfeld and Schneider, 2006) that adjusting for the higher death rate from accident or injury in the United States over 1980-99 than the OECD average would increase US life expectancy at birth from 18th of of 29 OECD countries to the highest. In fact, what the panel regression estimated by these authors shows is that predicted life expectancy at birth based on US GDP per capita (Medicynical observation: HEALTH SURVIVAL DATA FACTORING IN GDP IS NOT PURE SURVIVAL DATA, it’s skewed by the incorporation of income) and OECD average death rates from these causes is the highest in the OECD. The adjustment for the gap in injury death rates between the United States and OECD average alone only increases life expectancy at birth marginally, from 19th on average among 29 countries over 1980-99 to 17th. Hence, the high ranking of adjusted life expectancy mainly reflects high US GDP per capita, not the effects of unusually high death rates from accident and injury.”

Medicynic: in other words the data interpretation by Real Clear Politic is anything but clear–it’s flawed and the conclusion wrong.

• “We know that our treatments of serious disease produce better outcomes than elsewhere in the world, that everyone can get treatment at least in emergency rooms, that most Americans are satisfied with their care, that insurance net profits are a relatively low 3.3 percent and that the actual number of citizens without access to insurance is closer to 10 million than the 46 million number so often heard. We also know that Medicare and Medicaid have accumulated trillions of dollars in obligations to future recipients that we have no way of paying.”

Our outcomes of serious disease after diagnosis are indeed as good as elsewhere but at twice the cost. What other consumer good do we willingly buy at twice the price for the same product? Yet that’s what those opposing reform wish on us.

Regarding emergency room care. Our reliance on this has resulted in delays in care; diseases being treated at later stages than in other health care systems; it is by far the most costly inefficient care available;and is used when most problems could have been more economically treated. Guess who pays?

Use of ER care in place of assured regular access to care delays treatment and results in people dying for problems they might otherwise avoid. The following is from Commonwealth Fund, Health Affairs, World Health Organization

HOW THE US STACKS UP ON PREVENTABLE DEATHS

1. France — 65
2. Japan — 71
3. Australia — 71
4. Spain — 74
5. Italy — 74
6. Canada — 77
7. Norway — 80
8. Netherlands — 82
9. Sweden — 82
10. Greece –84
11. Austria — 84
12. Germany — 90
13. Finland — 93
14. New Zealand — 96
15. Denmark — 101
16. UK — 103
17. Ireland –103
18. Portugal –104
19. US — 110

The U.S. ranks at the bottom of 19 industrialized nations in the number of preventable deaths by conditions such as diabetes, epilepsy, stroke, influenza, ulcers, pneumonia, infant mortality and appendicitis. The number at the right represents the number of preventable deaths per 100,000 population in each country in 2002-2003.

That “most Americans are satisfied with their health care is probably true, since most Americans fortunately are healthy and a large number of these satisfied folks receive their coverage from the government, one way or another. What is also undeniable is that most Americans without such coverage and/or with significant illness are dissatisfied.

Medicynical Note: I don’t think the world in interested in inequity and inefficiency. The facts are we pay twice as much for health; have 50,000,000 uncovered by insurance; have no better and in many areas worse outcomes than other countries; and are being asked by our conservative brethren to accept this as the best we can do. 60% of bankruptcies have a medical bill component. In this, our (non) system is number 1.