It’s Friday, it’s still the late summer, and people are drifting back to work…few comments on any of the posts. But wait!
On one tiny post here on THCB, debate and comment fever has broken out with over 65 back and forth comments. If you’ve missed it, go look at the debate, largely inspired by Jack Lohman, who’s book on the corrupting influence of money on politics is the basis for quite some ranting—from a Republican who favors single payer no less!
The Minnesota Blues plan is floating a proposal for universal care. It looks at first glance like a Mass type individual mandate. Not so long ago Ken Melani, now CEO of Highmark, the dominant Western Pennsylvania Blues plan, had a similar idea.
So it appears that little by little the non-profit Blues are coming around to the fact that they have to have some plan in place to survive the coming revolution. This assumes that their future is a choice between being state regulated utilities in a multi-payer universal care system, or being replaced by the government in a single payer system. And there’s little doubt which one they’d rather take.
Of course these Blues have been denied the option of going for-profit, as the various state legislatures are now wise to the scam that enabled an earlier generation of Blues executives to make themselves rich beyond recognition while providing damn little back to the states that had allowed them that tax-free status for decades (see the experience in Maryland, for instance).
Those that have gone over to the dark side are of course adopting all of the tactics you’d expect, while of course the non-profit guys claim that they have to do the same to remain competitive. If they could construct a universal care multi-payer model in which everyone has to play by the rules of the big local state regulated utility, they’d do fine.
And apparently there are enough senior people, in at least Minneapolis and Pittsburgh, who are beginning to think that that’s the choice they’ll end up with in a few years. So they’re starting to float the proposals now.
Just when you thought you’d heard the last of it, Maggie Mahar, last seen over here abusing the health care system, pops up over at The American Prospect smacking down David Cutler’s study. Again well worth reading.
And in, I hope, the last comment on the Cutler piece, two venerable Univ of Chicago economists debate it on their blog, the Becker-Posner Blog
Posner ascribes the problem of the high cost of adding a year of life to an elderly person to the desire of people near the end of life to spend whatever it takes to stay alive. Other than that’s not how people at the end of their life usually feel, the problem with these rational analyses is that they don’t understand how health care works. Decisions about end of life care are not made by patients–they are made by doctors and health care organizations. Wennberg’s work clearly shows that. The enormous practice variation in end of life care is a factor of cultural variation amongst physicians not one of patient choice—the patient don’t know about it. And it applies whatever the insurance status of the individual because it’s ingrained in local medical cultures.Other countries have got their physicians somehow to accept that (for instance) heart surgery or kidney dialysis on a 95 year old with a life expectancy of 6 months is not good medical practice. Here we routinely do it (as in Posner’s father’s case).Stopping that absurdity is the solution to our health care crisis as that’s where the vast majority of the unnecessary spending is. But to do that we have to change medical culture, and rather more difficultly, health care system incomes!
The continuing fuss about the Cutler article rumbles on. Here’s the Scientific American article that I’m quoted in. You’ll note that I may seem a little extreme (“rubbish”) but I was interviewed before I’d seen the article (or even knew that it was coming out!) and the reporter told me that the number for a year of life was between $100,000 and $200,000. But the question is still “worth it compared to spending the money on what else?”
Meanwhile the answer from David Henderson at Hoover (the guy I challenged on the local NPR call in show —on the MP3, my piece is cut out totally! The response is at 44.14) remains “we’ve picked the low hanging fruit, so it will be more expensive to move the needle as the years go by.” I wasn’t given the chance to say a) the industry has co-opted the government so it’s not like there’s a real “choice” in how we spend the money, and b) perhaps we’d get better value for money picking low hanging fruit in some other area of our society. In other words there are diminishing marginal returns from the flat of the curve medicine—so perhaps we should think of spending the money elsewhere? Meanwhile a few others have picked up on that. In the Huffington Post, Merrill Goonzer (yes that’s really a name!) from the Center for Science in the Public Interest points out the other part of the problem—“we may be paying for an Aston Martin but we’re getting a Ford”.
And when the status quo proponents say “costs are going up in other countries too” you can note that in 1970, health care costs in Canada and the US were the same as a share of GDP—and they’re not now! And in the 1990s both Japan and Canada reduced health care costs as a share of GDP. So societies can make choices about this, even if ours politically won’t. In fact in the last decade the Brits made a conscious choice to increase the amount of money they spend on health care—with some interesting consequences.
Of course the whole thing is totally bogus, as no one thinks of these things other than as ex-post facto justifications, and pretty weak ones at that. There’s a perfect example in the NY Times this morning. It says that Cardiologists Question the Risks in Using Drug-Coated Stents, a story that’s been reported on for a while, and includes a new Swiss study that says that only one in three cases is the use of the drug eluting stent correctly indicated.
Of course three years ago a Stanford health services research group suggested that stents as a whole weren’t worth it on a cost-benefit level, and got totally ignored other than on this blog! So there’s a chance (and it’s a slight chance) that medical counter indications might, just might, slow the spread of a technology that is basically unproven. There’s no chance that saying it’s not cost-effective will slow it at all.
Which kind of proves that arguing about the Cutler article is a waste of time!
Health Plan CEO Georganne Chapin believes managed care can evolve with universal coverage! I thought her money quote was pretty amusing.
So then, if Americans are interested in universal coverage, the industry supports it, and the money is already in the system, when will it happen? “In 1996, I said it would come in 10 years,” Chapin says. “We still have four more months.”
Of course she runs a non-profit Medicaid HMO, so her attitudes may not represent those of a typical AHIP member CEO!
So David Cutler’s piece which I mentioned in passing because I was asked about it yesterday is now out. (Abstract is here). And although I don’t have access to the whole thing (being a mere blogger and too damn cheap to pay the NEJM’s freight), the results are what you’d expect:
From 1960 through 2000, the life expectancy for newborns increased by 6.97 years, lifetime medical spending adjusted for inflation increased by approximately $69,000, and the cost per year of life gained was $19,900. The cost increased from $7,400 per year of life gained in the 1970s to $36,300 in the 1990s. The average cost per year of life gained in 1960–2000 was approximately $31,600 at 15 years of age, $53,700 at 45 years of age, and $84,700 at 65 years of age. At 65 years of age, costs rose more rapidly than did life expectancy: the cost per year of life gained was $121,000 between 1980 and 1990 and $145,000 between 1990 and 2000.
And course so are the conclusions.
On average, the increases in medical spending since 1960 have provided reasonable value. However, the spending increases in medical care for the elderly since 1980 are associated with a high cost per year of life gained. The national focus on the rise in medical spending should be balanced by attention to the health benefits of this increased spending.
How anybody without the benefit of a tenured Harvard professorship can possibly describe spending $145,000 to gain one extra year of life expectancy from somebody who is over 65 as “reasonable value” boggles the mind. But I guess he’s not actually quite doing that. But he does say that the five fold increase in the cost of gaining an extra year of life over the period is reasonable value. But that of course is the money quote that will be picked up (see below for more).
Briefly, as I tried to explain to the Scientific American journalist, there are three main ways that economists try to ascribe value to life. (I hope I’ve got this right it was a long time ago when I looked at it!) Those are roughly what somebody spends, what somebody makes, and how much they would spend to avoid death. In a long article about him in the New York Times Magazine last year, Cutler estimated that it cost more than $100,000 to save a life by installing airbags in cars, and therefore that is a reasonable number. (I guess we should be thankful he didn’t base it on the cost of extending Terry Schiavo’s life, including whatever it cost to fly air force one from Crawford to D.C.!)
But of course no one sat down and prospectively calculated out the value of lives that would be saved by introducing airbags. Most safety innovations were forced on the automobile industry by people like Ralph Nader who couldn’t give a rat’s arse about cost effectiveness. And after that auto industry marketing people began to realize that safety was a feature not a bug and therefore used the power of commercials to explain to American housewives than you needed airbags and SUVs (even though it turned out that SUVs make driving less safe!).
In reality, the average American working income is just above $40,000 a year. That would suggest that the average working American’s life is worth somewhere below $50,000 a year. According to Cutler’s calculations, it has cost some $36,000 to gain an extra year of life. But of course all those years of life that are being gained are at the end of life, when incomes are considerably lower, so it’s hard to tell why that $36,000 number is a reasonable value, when it exceeds the total value that the economy as a whole places on an average retired individual (ignoring of course what the health care system makes off that average retired individual!).
But then again this is just a wonky economic argument, right? We all know that nobody sits down to figure out what the value of life is or what they’re adding to the general good when they implement a new healthcare technology. Instead the industry tries to figure out what they can get away with charging Medicare and other payers. No one makes the calculation about the value of a year of life, let alone whether that money would be better off being spent on something else entirely, like education, protecting the environment, handbags for Paris Hilton, or more frappuchinos.
But the industry is totally happy to use Cutler’s arguments — very much out of context — to praise ex-post all manner of technologies, procedures and services that they’ve foisted on the American patient and taxpayer. The ink was barely dry on the editions of the New England Journal, when Advamed, an umbrella group for all kinds of medical technology companies, was out with its press release. Its chief lackey, one Stephen J. Ubi, was certainly not looking this gift horse in the mouth:
"When health care dollars go toward procedures and products that make a difference, that’s when our health care system is at its most effective," Ubl said. "Medical device and diagnostic interventions have played and will continue to play an essential role in providing this value to the health care system and society through faster recoveries, improved treatments, and more precise diagnoses."
Ubl was commenting on the August 31 article by David M. Cutler, Allison B. Rosen and Sandeep Vijan. Studying health and spending trends from 1960 to 2000, they found that despite dramatic increases in health expenses since 1960, the return on medical spending is high.
It is by no means the first time the Advamed has come out with similar tosh — in cooperation with some other healthcare industry front groups they published something like this back in 2004. That was mostly remarkable for the fact that the instant video fake news clip that was distributed with it included “reporting” from one Karen Ryan who’s voice also showed up in a instant use fake news clip about the Medicare bill distributed by the Bush administration,much to the amusement of the leftie blogosphere. While rational academics like the Wennberg crowd, Enthoven, Fuchs, Steffi and David, et al will tell you that we are wasting huge amounts of money in the way we finance and deliver healthcare, as noted at length on THCB last week the loonies out in left or is it right field seem to have grabbed hold of the megaphone. Cutler is doubtlessly doing good work in terms of calculations of cost per increased year of life expectancy. But given that he won’t call a spade a spade, on the “value” issue, the overall ramification of the work he is doing — and the crazy statements made by a row Robert Fogel the noble laureate from Chicago which Gina Kolata wrote about last week — is that the real debate about how to fix our financing system and deliver some type of cost-effective medical care in this country is getting pushed to the sidelines. That of course is just how the industry wants it.Which of course makes me very suspicious about why the not exactly purer than pure New England Journal is one publishing this somewhat obscure economic analysis in its limited policy section, as opposed to some real debate about how to fix the healthcare system’s problems. Is it possible that they too are bending before their advertisers? Perhaps Roy Poses will find out for me!
Chemotherapy; Part B “reforms”; bribes to doctors; taxpayer and Medicare patients bilked. Have we heard any of this before?
(I’m sure we’ll hear from Greg soon!)
I don’t know why a bill that’s destined for a veto in a state he doesn’t live in gets Eric Novack so worked up, but it does. So here’s his take on Sheila Kuehl’s single payer bill getting past the state Senate. And I won’t even mention that a Lewin study (all hail the mighty and authoratitive Lewin) showed that single payer would save California $353 billion over ten years (oops I just did!). So guess what’s Eric’s verdict is.
Many of you are aware that the California State Senate has just passed ‘universal health insurance’ for California. The bill creates a single payer system with the details of funding to be worked out over time. But it requires that all current Medicaid dollars and Medicare dollars (that’s all Part A and Part B) go into the pool.It also creates an unbelievable bureaucracy—all unelected. The new unelected health czar would be given control (along with an remarkably specific number of various board members—all appointed by the way) over nearly every aspect of healthcare delivery in the state.The main beneficiaries – illegal immigrants, since the bill expressly states than anyone who resides in California is covered. American citizens traveling in California—who will actually be footing the bill through federal tax revenues – would of course be billed for the cost of services provided in the state.Fortunately, the Governor will likely veto this bill. For those of you who have a very strong stomach—read the bill yourself and marvel at the wishful thinking and special interest appeasement of a majority of California’s State Senate members.
I’m up at Spot-on about Why Health Care Costs So Much, Reason #581. This one is a little more personal and a lot more ridiculous. As ever please come back here to comment.
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