It is commonly believed that deliberate, careful price regulation by enlightened technocrats trumps the haphazard and chaotic regulation of prices imposed by the free market—especially when the market is subject to greed and corruption.
A most interesting case study challenging that belief comes courtesy of the largest Democracy in the world: India.
In 2017, an arm of the Indian Government, the National Pharmaceutical Pricing Authority (NPPA) took action to control the price of coronary stents in India by capping their retail price. The problem that stimulated this action was their exorbitant price that made them unaffordable to many Indians.
The retail prices of US made drug-eluting stents ranged from Rs 80,000 – 150,000 (~$1000 – ~$2000), while the price of Indian made drug-eluting stents ranged from Rs 45,000 – 90,000 (~$600 – ~$1200). Considering that a good job for 90% of the Indian labor force pays about Rs 180,000 per year, these prices put most coronary stents out of the reach of a vast swath of the populace.
What regulators knew, however, was that the price point at which coronary stents were being imported into India was a fraction of the price being charged to Indians. The up-charge had everything to do with what happened after the stent was brought onto Indian soil: The Indian subsidiary of the US stent manufacturer would sell its product to a domestic distributor that would then employ all means necessary to ensure their stent was chosen by cardiologists to be implanted.
The message comes in over the office slack line at 1:05 pm. There are four patients in rooms, one new, 3 patients in the waiting room. Really, not an ideal time to deal with this particular message.
“Kathy the home care nurse for Mrs. C called and said her weight yesterday was 185, today it is 194, she has +4 pitting edema, heart rate 120, BP 140/70 standing, 120/64 sitting”
I know Mrs. C well. She has severe COPD from smoking for 45 of the last 55 years. Every breath looks like an effort because it is. The worst part of it all is that Mrs. C just returned home from the hospital just days ago.
The day after NBC releases a story on a ‘ground-breaking’ observational study demonstrating caramel macchiatas reduce the risk of death, everyone expects physicians to be experts on the subject. The truth is that most of us hope John Mandrola has written a smart blog on the topic so we know intelligent things to tell patients and family members.
A minority of physicians actually read the original study, and of those who read the study, even fewer have any real idea of the statistical ingredients used to make the study. Imagine not knowing whether the sausage you just ate contained rat droppings. At least there is some hope the tongue may provide some objective measure of the horror within.
Data that emerges from statistical black boxes typically have no neutral arbiter of truth. The process is designed to reveal from complex data sets, that which cannot be readily seen. The crisis created is self-evident: With no objective way of recognizing reality, it is entirely possible and inevitable for illusions to proliferate.
Seema Verma, the Trump appointee who runs Medicare, has had an active week. The problem facing much-beloved Medicare is one that faces every other government-funded healthcare extravaganza: it’s always projected to be running out of money. Medicare makes up 15% of the total federal budget. That’s almost $600 billion dollars out of a total federal outlay of $4 Trillion dollars. The only problem here is that revenues are around $3.6 trillion. We are spending money we don’t have, and thus there there is constant pressure to reduce federal outlays.
This is a feat that appears to be legislatively impossible. The country barely is able to defund bridges to nowhere let alone try to reduce health care spending because, as everyone knows, any reduction in health care spending will spawn a death toll that would shame the black plague. The prior administration’s health policy wonk certified approach was to change the equation in health care from paying for volume to paying for value. This, we were assured, would allow us to get better healthcare for cheaper! And so we got MACRA, The Medicare Access and CHIP Reauthorization Act, that introduced penalties for doctors unable to provide ‘good’ care. Never mind that in some years good care means you treat everyone with a statin, and in others it means treat no one with a statin. When in Rome, live like the Romans. In 2018 parlance, that roughly translates to “check every box you can and everything will be all right.”Continue reading…
Everyone agrees that health care is bankrupting the nation. The prevailing winds have carried the argument that a system that pays per unit of health care delivered and thus favors volume over value is responsible. The problem, you see, was the doctors. They were just incentivized to do too much. This incontrovertible fact was the basis for changes in the healthcare system that favored hospital employment and have made the salaried physician the new normal. Yet, health care costs remain ascendant.
It turns out overutilization in the US healthcare system isn’t what its cracked up to be.
Figure 1. Utilization rates in different health care systems
A recent analysis (Figure 1) by Papanicolas et al., in JAMA demonstrates that while the United States is no slouch with regards to volume of imaging and procedures in a variety of different categories, it does not explain a health care system twice as expensive as its nearest competitor. The problem turns out not to be volume, rather its the unit price of healthcare in the United States.
Health Care Costs and Glass Houses
There are many stones cast by all the various players in healthcare when it comes to cost, and of course, everyone bears some degree of responsibility, but it’s also clear that some folks live in larger glass houses than others. The most beautiful of all the glass houses are those built by hospitals. From 1996 to 2013, it was not population growth, health status, doctors visits, or prescription drugs that drove spending increases. Sixty-three percent of the increase in cost over an almost 20-year time span can be attributed to hospital stays and testing during doctor visits. Consider that the average hospital stay in the US costs $18,142, and lasts 4.9 days compared to other industrialized countries where average hospital stays last 7.7 days, and cost $6,222. But despite these exorbitant prices hospital systems in the United States complain they barely stay afloat.
As CVS-Aetna merger talks fill the air this Christmas season and experts weigh in on the impact this will have on the economy and consumers alike, I’m sitting at a little desk in a little office contemplating health insurance.
I run a little shop that’s about as far from CVS-Aetna as you can get in the health care space : a solo practice doctor with four full time employees and revenues a little south of $65 billion dollars. I shouldn’t feel too alone. Small businesses account for 99% of US firms and employ almost half of all private sector employees. But knowing my problem is one shared by many provides only partial solace.
Prior to arrival of the ACA, I provided health insurance to everyone through the company. At the time I had 3 full time employees and the insurance broker I worked with got me a quote for $1300 / month. Now, I really didn’t want to be in the providing healthcare business, so when the ACA arrived with its individual market I was happy to facilitate buying health insurance from the exchanges. So initially, I chose to pay for my employees plans on the individual market. I was quickly told by my accountant that paying for my employees insurance in this manner was running afoul of a three letter entity of the federal government called the IRS.
Apparently the individual ACA market premiums were allergic to being deducted in this pre-tax manner. Fine. So I went ahead and paid each employee $6000 per year extra with the understanding that they would use that money to buy health insurance on the individual market.
I’m sitting amidst a number of cardiologists to go over the most recent trials presented at the interventional cardiology conference in Denver. The cardiology fellow presenting goes quickly through the hors de oeuvres until finally getting to the main course – ORBITA.
ORBITA sought to test the very foundations interventional cardiology was built on – the simple idea that opening a stenosed coronary artery was good for patients. The trial was a double blind randomized control trial of patients with tightly stenosed arteries who either had a stent placed or had a sham procedure. Before the results are presented, the lay media headlines from cardiobrief, the New York Times, and the Atlantic are presented to guffaws from the audience. The indignant smirks are audible as the accompanying editorial remarks from Rita Redberg and David Brown are displayed :
”The results of ORBITA show unequivocally that there are no benefits for PCI compared with medical therapy for stable angina, even when angina is refractory to medical therapy.”
The trial results follow – no statistically significant difference in the primary outcome of exercise time increment between sham and stent, and no difference in angina between the two groups. The meat of the presentation involves the limitations of the trial that make the trial inapplicable – 200 patients total, 6 week follow up, the underlying heterogeneity of the patient angiograms that were randomized, and the wide confidence intervals of the primary outcome that swallowed the actual effect size. Two different angiograms were shown to the audience from the ORBITA appendix.
The images demonstrate two ‘blockages’. To the eye, at least, one appears tighter than the other. The audience was polled on each image – everyone voted to stent the tighter blockage and medically manage the lesser of the blockages. It could be all perception but I could feel the relief in the room as ORBITA was being made irrelevant. The implication clearly was that some angiograms used to show the lack of benefit from stents would not have needed stenting in the first place.
There was no real challenge to the presenter save for one:
“One of the authors – Rita Redberg – is very sharp – why do you think she wrote that editorial?”
There was no good answer – the presenter shrugged and muttered something about an anti-interventional cardiology bias.
It was at that moment that I realized why cardiologists were having such trouble with ORBITA – we were arguing like puritans. Everyone in the room already ‘knew’ stents worked. This was an exercise in bias confirmation when what was needed was an examination of the source of bias. Faced with the ultimate epistemological challenge we were resorting to authority to dismiss findings we didn’t like. Now I think cardiologists have authority with good reason, and certainly ORBITA may have limitations inherent in any small randomized control trial that’s performed, but we can do a better job answering the fundamental question raised here that relates to the primary evidence opening a narrowed artery actually can relieve angina.
Who knew healthcare could be so complex? The GOP proposal for health care reform rests on health savings accounts and high deductible health plans. The basic premise is that price opacity, and deep pocketed third party payers drive up the cost of health care. Giving patients dollars in health savings accounts they control should make them price sensitive, and thus help reduce the cost of healthcare. A recent analysis by Drs. Chandra and others provides an interesting perspective on the matter.
The researchers took a large self insured firm that required all of its employees to switch from an insurance plan that provided free healthcare to a nonlinear, high deductible plan. The switch worked. Health care spending was significantly reduced, but the concern was the mechanism by which spending was reduced. One would like to believe spending reductions related to price shopping, so patients were getting the same services just for cheaper. Unfortunately, it appeared that consumers reduced all spending regardless of whether it was worthwhile or not. Deciding what is worthwhile in healthcare is a complicated business that I will leave for another day but I agree with the general contention of the paper – giving a patient control over health care dollars does not make for a smart price shopper.
There are 80,000 new cases of primary brain tumors diagnosed every year in the United States. About 26,000 of these cases are of the malignant variety – and John McCain unfortunately joined their ranks last week. In cancer, fate is defined by cell type, and the adage is of particular relevance here.
Cancer is akin to a mutiny arising within the body, formed of regular every day cells that have forgotten the purpose they were born with. In the case of brain tumors, the mutinous cell frequently happens to not be the brain cell, but rather the lowly astrocyte that normally forms a matrix of support for brain cells. Tumors made up of astrocytes are called astrocytomas. Classification schemes for brain tumors in the era of molecular subtypes has grown enormously complex, but a helpful framework is provided by the appearance of these tumors under a microscope. Grade 1 tumors are indolent, with little invasive capacity, while Grade 4 tumors are highly invasive, marked under the microscope as dense, sheets of cells that can even be seen to grow their own blood supply. Senator McCain has a grade 4 astrocytoma, otherwise known a a glioblastoma (GBM) – the worst kind. Social media from all sides of the political spectrum lit up with well wishes – with most casting the disease as something to be defeated.
John McCain is an American hero & one of the bravest fighters I've ever known. Cancer doesn't know what it's up against. Give it hell, John.
Mehreen is right. GBM is a deadly disease, the 5-year survival rate for patients with GBMs is <3%. The majority of GBM patients live less than a year. Yet, the medical community of neurosurgeons and oncologists that treat these tumors go to battle with these tumors. Why?
I asked a very busy neurosurgeon this same question. I asked him what he told patients. He told me that he never mentions the word cure. There is no cure. The goal is to manage the disease and buy more time.
Median survival for GBM is measured in weeks, not years. Do nothing, and expect 14 weeks; combining surgery, radiation therapy, and chemotherapy may give you 45 weeks.
What we describe is median survival, of course, and as Stephen J Gould eloquently put in his diatribe against statistics in cancer – the median is hardly the message. The oncologist you want is the one who doesn’t tell you about median survival when breaking the news to you of your cancer – she implicitly understands each GBM has a different path. Here are three such paths.
Dr. Jha writes on these pages in typically stirring fashion about his views on the recent health care kerfuffle and rightly so fingers what the real focus of our efforts should be: Cost. He ends by slaying both sides because of their refusal to confront the hospital chargemonster – the fee schedule hospitals make that remarkably only really applies to the uninsured.
Unfortunately, the solution proposed ensures hospital fee schedules for the uninsured are no greater than Medicare reimbursements, which is far from perfect. Consider that the Medicare reimbursement for a stent placed to an ischemic limb is in the range of $15,000. While this makes for a less daunting bill for the uninsured, in reality for the vast majority of folks that are uninsured $15,000 is about as far away as $150,000.
But my major disagreement with the good Dr. Jha relates not to his attempt to slay the chargemaster, but his underappreciation for the attempts made in the GOP bill to control health care spending. A conservative mantra about the why of health care costs focuses on the existence of deep pocketed third party payers that make costs opaque to patients. Attempting to have patients understand what they’re being charged has been conservative dogma, and there are a number of studies that suggest patients with health saving accounts are more cost conscious when they interact with the health care system. Dr. Jha glosses over this important point – This is the Republican attempt to bend the cost curve! And at least to this physician who’s lived through the last eight years, a plan that has a considerably greater chance of success than any number of failed acronyms designed so far by enlightened theorists from the Acela corridor.
The policy experts are hard to convince about HSAs, and point to the above chart as evidence of the uselessness of HSAs.