POLICY/POLITICS: The McLaughlin Group Library : Transcript

You probably know The McLaughlin Group. It’s that political talk show where a panel of extreme right-wing Republicans (Buchanan & Blankley) argue with a pair of extreme right-wing Democrats (Clift & O’Donell), and they call it representing the spectrum of American politics. God knows, it probably does.

So last weekend while I was in the gym in NYC I noticed that they were having a special on health care. Filling in for the extreme right wingers were HHS Sec Leavitt and Pfizer CEO Hank McKinnell. Filling in for the right-wing Democrats were Susan Denzter, the PBS health reporter, and Jay Crosson from Kaiser Permanente. I guess they pass for liberals these days!

I spoke with Humphrey Taylor at WHCC and he told me that the Harris data shows now that 36% of the nation thinks that the health care system needs to be completely dismantled and rebuilt — and that basically no one thinks it’s going well. That number was at 40% when Clinton was elected, so we’re on our way!  But of course that point of view wasn’t going to get represented in our mainstream "liberal" media. Here’s the transcript

As you might expect, there was a fair load of pap talked. What was said on the show is italics, my comments are in between

McLaughlin–This HSA plan puts the individual in charge of health spending, not the insurance company, so the consumer becomes the buyer, and the buyer will pay attention to the price of medical services. Patients will shop. Patients will negotiate. Patients will put the economy of the market to work. Health care will suddenly become transparent.

Grace-Marie Turner sure got to him. Has he never heard of PPO contracting?

Question: How essential is the market dynamic for health cost containment and quality? Jay Crosson.

MR. CROSSON: Savings accounts are a great deal.

Someone from Kaiser said that? Can he do basic math? Isn’t his organization reeling from the problems of competing with the HDHPs? His buddy Robbie Pearl certainly thinks so.

They’re a wonderful deal for people, and they make a lot of sense. We just need to make sure that the deductible part of these plans does not interfere with patients’ access to those very services we need to prevent the complications of heart disease, hypertension and the like.

And why oh why would that be a problem for a pre-paid HMO with lots of chronically ill people? (Don’t answer, it’s rhetorical). And if it is, why are HSAs a "great deal".

Don’t worry, there’s a journalist here to talk some (and I mean only some) sense. 

MS. DENTZER: It’ll help at the margin. Most of these plans essentially are high-deductible health insurance plans. But broad coverage is going to kick in for people at $5,000 or $10,000. So if you have a serious chronic illness, you’re going to shoot through that in no time. So it’s not going to influence — if we think about the fact that 80 percent of health spending is related to 20 percent of individuals who are high-cost, very sick individuals, as Hank says, it’s not going to affect those people. It’ll help, but it reminds me of a bumper sticker I saw recently that said, "You should buckle your car seat belt because it will keep aliens from snatching you out of the car." I mean, it’s a good idea to buckle your seat belt, but it’s not going to create these enormous effects that some people claim.

But who needs sense when a pharma CEO who’s presided over his company’s stock going into the tank can rehash some real rubbish, that is coincidentally, bad news for his company!

MR. MCKINNELL: Well, an informed consumer, in a free market with choices, improves quality and reduces costs. We have many, many examples of this; two, actually, in the medical field. One is cosmetic surgery. The other is Lasik surgery, where, in the last four years, the quality has improved and the cost to the consumer has fallen by half. It does require transparency in pricing and quality, and that’s an enormous hurdle that we’re going to have to —

Let’s ignore the fact that Lasik surgery not only doesn’t represent the major problem–dealing with chronic care–but that actually the "proof" of its price decline has been shown to be bullshit by Paul Ginsberg. And that when you get to the many examples, it’s not two out of many; it’s two–Lasik and boob jobs. 

MR. MCLAUGHLIN: Well, as a matter of public policy, would you recommend to the president that he make mandatory health insurance for 45 million Americans who don’t have it, on the basis — MR. CROSSON: Yes. Not now.  I think it’s a reasonable plan, but we need to see how it works in Massachusetts. They have some big problems they have to overcome first.

Very brave Mr. Crosson. But don’t worry, if you want to hear some real ignorance ask a pharma CEO.

MR. MCKINNELL: Well, there’s two important characteristics of the Massachusetts plan. One is it was a bipartisan effort. I can’t see that happening in Washington today, unfortunately. Secondly, it is a way to solve what we call the problem of the uninsured.

<Here comes the real rubbish

But the uninsured don’t have a problem. They get access to health care. It’s a problem for all of us who pay taxes and all of us who pay medical bills.

The uninsured get access to health care? In the middle of "Cover the Uninsured Week", and with the IOM saying that 18,000 Americans die a year from being uninsured, McKinnell couldn’t think of a single qualifier to put in that sentence?

The real answer here is to provide an insurance mechanism, which they’ve done, but it also needs to be able to purchase a high-quality plan. That high-quality plan has not been defined yet.

But what he didn’t say is "if you let us write the bill like we did in 2003 we’ll make sure that the ‘high-quality health plan’ covers all our expensive drugs, and that the tax payer gets screwed".

Meanwhile he’s still speaking the mantra of "I want to be a consumer goods company":

MR. MCLAUGHLIN: If you carry your thinking to its logical conclusion,
you’re going to recommend the elimination of employer- sponsored or
underwritten health insurance for employees. Is that correct?

MR. MCKINNELL: I do think that would be a good idea, for the simple
reason that employers aren’t particularly good at providing health
benefits to their employees. We don’t provide life insurance or
automobile insurance. Why would we provide health insurance? Let’s put
that in the hands of the consumers spending their own dollars.

Given the very effective job pharma’s done running up its profits at the hands of third party payers over the years, I’m baffled as to why they think they’re going to do better given that the margins of a typical consumer goods company are way below theirs. Perhaps he thinks a 40% decline in their stock price isn’t enough…or is he just possibly saying something he doesn’t really mean. If so that habit was catching, and Leavitt was getting infected:

MR. MCLAUGHLIN: The president likes bold moves. Will you recommend to
him, Mr. Secretary, that he mandate health insurance for 45 million
Americans and the other Americans who don’t have it? LEAVITT:
It’s (the Mass plan) a powerful idea, and it needs to be tried. And
if it works, other states will follow. And who knows? Maybe the United
States will.

On the other hand he forgot to say….."err, no. We don’t believe in that communistic single payer government run health care nonsense".

Then of course they went on to the real issue of health reform–or at least the one everyone can agree to agree on. More IT please. And then McKinnell actually said something sensible:

MR. MCKINNELL: Well, you won’t get any disagreement on this panel of
the need for electronic medical records. But let me caution you that it
will take a lot longer than we think.

And then we’re onto the predictions–

SEC. LEAVITT: In five years, that irritating medical clipboard they
always hand you when you walk into the clinic will be a thing of the

Maybe we should be buying Phreesia stock then.

MCKINNELL: My prediction: During our lifetime, the pharmaceutical
industry will eliminate the risk of cancer and heart disease for our
children and grandchildren.

And put itself out of business! But don’t worry I’ll be long retired

MR. CROSSON: This time the health-care crisis is real. The country will
solve it. We always get to the right answer.

Gotta love an optimist. After all we’ve cracked the problems of the Middle east, energy, education, the drug war, etc, etc. What’s this little nugget compared to those!

MS. DENTZER: Medical research will lead us to universal coverage,
because people won’t stand for giving up the benefits that it will show
us in the next 15 years.

And I think she may well be right, but it’ll  be coverage that either McKinnell and the industry or the taxpayer is not going to likeMR. MCLAUGHLIN:  The Massachusetts experiment will work and it will spread.

So a show just like our health care system. Everyone screaming stuff that they heard they ought to be saying without thinking whether it benefited them. The lone journalist having to play the sensible analyst without a real industry critic being let in the room. And no discussion or thought about those who are really getting the shaft. Then again, a show just like Washington.

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gadflyTom LeithBarry Carolanonymoushebisner Recent comment authors
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If Medicare were allowed to negotiate drug pricing and administer the program it would have been easy to understand and would have covered more people then MedD seems to be. I don’t think the 40-60 providers per state is a plan designed for patients but one engineered for business and to keep tax money going to business and very high administration costs and ultimately going to Republican campaign donations. It is also easier for drug companies to keep prices up when dealing with so many distributors rather then one large institution. Adding another layer of profit takers is not what… Read more »

Tom Leith
Tom Leith

Peter had said:
> The VA [negotiates drug prices] while the Bush
> administration has banned Medicare from that
> same option.
The VA and Medicare are really two different ideas: the VA delivers services, and determines what those services are. Medicare was supposed to be a financing mechanism with total patient-choice (which short-term at least was good for everyone except the taxpayers). As it is, the PBMs that manage Part D benefits do the negotiating.


Barry & Tom, I’m reading your posts and appreciate the dialog.

Tom Leith
Tom Leith

> Isn’t the political pressure for drug importantion > and price controls for Medicare purchases of drugs > part of the fallout from aggressive drug pricing > over a long period? Importation is not the issue: there are lots of imported drugs. What do you want to bet that my Advair in England and Canada costs less than it does here, even though its from GlaxoSmithKline (a UK pharma)? Its usually drug re-importation that’s being talked about. If this ever gets serious, what will happen is that the pharmas will estimate the needs of Canada for their particular drugs, and… Read more »

Barry Carol
Barry Carol

Tom, great analysis as usual. One thing I’ve learned from you is that you are far more precise in your use of the language than I am. Take, for example, my statement about people buying drugs because they have to and not because they want to. I agree that once someone has a problem, he or she is grateful that there is either a cure, a medication that will relieve suffering, or, in the case of Viagra, address a lifestyle / quality of life issue. However, I’m sure these people would prefer to be well enough to not need any… Read more »

Tom Leith
Tom Leith

> people don’t buy these medicines because > they want to but because they have to Barry, you hinted at this, but I think you’re also contradicting yourself a bit. People don’t buy what medicines because they want to? Antibiotics? Sure. Insulin? Sure. Viagra? Hmmmmm. Maalox? Sure. Prilosec? Hmmmmm. Nexuim? Well… I can even point to myself. I have a very mild case of athsma. I could get along with no treatment — I’d feel bad a lot and couldn’t ride a bike. Sailing my very small sailboat might be a problem sometimes. I could treat with a generic inhaled… Read more »

Barry Carol
Barry Carol

Peter, You raise some interesting issues here. First, regarding drug pricing. I am certainly not an expert on this and perhaps Tom Leith can correct any misstatements that I make, but here’s my take: I’ve read recently that the drug industry pegs the average cost to bring a new drug to market at about $800 million including the R&D, clinical trials, and other associated costs. Once the patents are in hand and the FDA gives its approval, however, the cost to manufacture and package the drug can often literally be measured in pennies per pill. Thus, once the initial investment… Read more »


Barry, your first two “could be, maybe” points could be valid. I would think that given the bad PR drug companies have had they would have been on the airwaves pretty fast to give those results as offsets for the price. Reducing hospital stays is not something that would sell to all prescribers of the drugs. Do “for profit” hospitals really want shorter stays for insured patients? I tried to do some hostipal stay research but the variables are so wide it seems impossible to put a good number on it. The TV ads say nothing of those benefits. I… Read more »

Barry Carol
Barry Carol

Peter, Thanks for all of the interesting and informative stats from the KFF. I would like to make a few general points. 1. It is hard to know or quantify to what extent increased utilization of and spending for prescription drugs eliminated or shortened hospital stays thereby potentially saving the overall system money. 2. Even some of the drug approvals that were mere minor improvements over prior art may have made it possible to either reduce dosage frequency, reduce side effects, or increase the number of people who could tolerate the treatment. 3. When there is a comparable drug available… Read more »


From Kaiser Family Foundation – November 2005 “Factors Driving Increases in Prescription Spending Three main factors drive increases in prescription drug spending: 1.The increasing number of prescriptions (utilization) 2.Price increases 3.Changes in the types of drugs used Utilization: From 1994 to 2004, the number of prescriptions purchased increased 68% (from 2.1 billion to 3.5 billion), compared to a US population growth of 12%. The average number of retail prescriptions per capita increased from 7.9 in 1994 to 12.0 in 2004.3 The percent of the population with a prescription drug expense in 2002 was 61% (for those under age 65) and… Read more »

Barry Carol
Barry Carol

Anonymous, In one of her posts a few weeks back, Dr. Tuteur made the point that a number of diseases that used to be death sentences are now chronic diseases that can be managed. Others have said, including on Sunday’s show, that 75% of the health spend relates to management of chronic disease. Finally, Pfizer CEO McKinnell indicated that prescription drugs are still only 10% of healthcare spending, maybe a bit more. I am a classic example of the first two points. I take five prescriptions for heart disease plus aspirin. When I last saw my cardiologist, I asked him… Read more »


If the US really wants to get a handle on out of control medical costs it should start in one place: stronger regulations for big Pharma. There is the over reliance on medicines, as if the solution to everything is to pop a pill. Medicines and prescriptions should be the last resort, not the first. It is awful to turn on TV these days and see all of the drug companies ads. This direct to consumer advertising is causing a signifcant overuse of prescription medicines that may not even be necessary in many cases. The use of medicines and prescriptions… Read more »


I think there’s too many vested economic interests in the present system for any change to take place for quite a while. From posts here,”You go first, no you, no, you go first.” Know one (non-patients) knows what the new “system” will look like so the devil you know is best. I also don’t think the present corrupt two party political system will be pushed to do anything but pander to industry lobbyists and their bribes. New wonks would be easy, legislation will be a blood bath.


In regards to Jay Crossens praise of HSA’s, I suspect he is looking in the future after Kaiser’s EMR is fully implemented and Kaiser starts to offer large deductable plans to compete with the competitors who are skimming from the risk pool. However, Dr. Crossen is wrong on this, HSA’s are a terrible deal and don’t address Kaisers real problem with declining membership, the ongoing trainwrek that is the employer based healthcare system. Kaiser lives off of employer based healthcare on a middle to large scale, and that seems to be declining. They want a piece of that small business… Read more »