Categories

Tag: Policy

POLICY/INDUSTRY: HSC on 10 years of change

Whe I was first figuring out the private sector in health care about 10-12 years ago while Hillary was trying and failing to get reform done, I heard a gazillion people, usually in the strategy or policy dividions of big plans and drug companies tell me that we didn’t need government reform because the market was going to sort it all out itself. And ten years after we got the market reform that meant we didn’t need governmnet reform. What happened?

"In a decade that saw the rapid rise and hard fall of tightly managed care, there was plenty of change but little progress in solving the cost, access and quality problems in the health care system," says Paul Ginsburg in the release about HSC’s 10 year retrospective.

 

You can read the full report here. It’s taken me ten years to figure out what went wrong. Let’s not have that happen again next time, eh.

PHARMA/POLICY: In this game of monopoly drugs the market is working, oh yes

So the new maker old off-patent drug that is needed badly but only by a few people, and for some reason isn’t in the Part D or most other private formularies “notices” that it has a monopoly. So what does it do?  It puts the price up nearly ten fold . (The drug is called Mustargen and the company is called Ovation Pharmaceuticals). And of course this behavior is matched by other companies that have monopolies bestowed by patents.

Presumably if the market price is that high on the non-patented drug some smart Indian generic will start making it and bring the price down, but that’ll take a little while. And in the meantime 5,000 patients are getting screwed to the wall.

We should have a rational debate about whether there ought to be coverage for certain drugs (and in the UK for instance there is such a debate).  But if there’s an egregious monopoly or market-distortion like this, then we know the solution, and it’s called monopsony — or, if you like, price-fixing. Of course this nation’s government doesn’t like to intervene in these types of cases even when it means a bunch of crooks steal blindly from a whole state and help push its economy (and by consequence that of the whole nation) into recession. And I suspect the people who need this drug view Ovation Pharma as Enron wearing lab coats.

But eventually if Pharma (both big and small) continues to abuse its monopoly power, there will be a predictable response. You can argue that making hay while the sun shines is Pharma’s best financial course (if not exactly its best ethical one), but I suspect that whoever sits in the C suites in New Jersey (and South San Francisco) and has to pick up the pieces under the next Democratic Administration may wish that a little restraint had been shown while that sun was shining.

POLICY/HOSPITALS/PHYSICIANS: Wennberg found wearing concrete boots at bottom of Lake Michigan

No, not really. But Wennberg’s disciples at Dartmouth are coming out with so many uncomfortable facts for the medical-industrial complex that it’s hard to keep count. Starting by introducing the notion of practice variation 30 years ago, the group is now turbo-charging its research production, and basically all of it is bad news for anyone pretending that “American health care is the best in the world”. To paraphrase Uwe Reinhardt, how can the American healthcare not be as good as American health care?

In just the last couple of years not only has the Dartmouth crowd found that care delivered in areas with fewer doctors, and using less advanced technology, leads to better outcomes at lower costs, but they’ve also found that academic medical centers vary threefold in their efficiency of inputs (and costs) to get the same outputs, and most recently that hospital system and location is a better indicator of resource use than population acuity.

And, for the medical establishment, the news gets worse. For the last five or so years, those of us who think that we’ve already got plenty of doctors per head, as we doubled the number in medical school in the 1970s and 1980s and are still waiting for the smaller generations trained in the 1960s to retire, have been drowned out by hysteria from the medical establishment about an impending “physician shortage”. That is of course code for the taxpayer (via Medicare which funds most medical education) to support the creation of new physician residency slots, creating more specialists, who’ll then start applying more medical technology to all of us, which will contribute to more flat of the curve medicine. But I won’t give you a potted Fuchs/Enthoven class here (although you can search around plenty in THCB if you want more).

Today in Health Affairs (or you can read the potted version in Forbes), Dartmouth researcher David Goodman and his team (including Wennberg) cry bullshit on the “we need more doctors” meme. While the big academic centers which get the money from training them would love to have more residents, by examining one type of intensive medical process — caring for patients at the end of life in ICUs — Goodman et al shows pretty logically that many major academic centers use far too many physician resources. In other words we could provide equally good (or probably better) care while using many many fewer physician “inputs”. Hence overall we need fewer physicians, more efficiently used.

Of course any English surgeon, whose workloads and consequently surgical speed massively exceed those of their American counterparts, could have told you that. And my father frequently did every time he came back from a “fact-finding” trip over here. And when Goodman et al invoke the most famous name in American medicine, it’s pretty hard to argue with their conclusions:

"We have benchmarks. We have academic medical centers which are highly successful in terms of the care they provide, and we need to start looking to those places as our examples," Goodman said. "We need to study them and understand them and emulate them. The Mayo Clinic has been studied very extensively and is fairly well-understood," he continued. "We should be at a point where we can emulate some of those systems."

Mayo of course has fantastic outcomes at relatively low cost. In this study it used 8.9 physician full-time equivalents per 1,000 patients in the six months before death, while at the other end of the spectrum New York University Medical Center had 28.3. Of course the system-wide implications of all of the Dartmouth research are too awful for the medical establishment to contemplate, because they in the end mean 20 of the 28.3 doctors at NYU going away – and there are enough cab drivers in New York City as it is. And it’s not just New York city doctors that suffer when you extrapolate:

Applying the Rochester standard to the nation’s elderly, the United States has an excess of physician input; it needs 30,163 fewer FTE inputs than were allocated in 2000. Indeed, the current rate of supply growth along with excess capacity is sufficient to accommodate the 56 percent increase (in the number of elderly-MH add) predicted for 2020, with 49,917 physicians to spare.

All this research of course reminds organized medicine, and the industries that feed off its members prescribing more and more technology without caring about the cost, of something Lenin said back in 1923 about “Better fewer but better”. And you know how the American medical establishment hates them commies. On the other hand, it also invites memories similar to what Maggie Thatcher did to the British steel-workers in 1980 — she basically fired 70% of the workforce, but the amount of steel produced stayed the same. Are they going to call Maggie a commie? I think not, but you may have noticed lots of major industries taking the same approach.

So this research will stay ignored. We spend too much on high-tech medicine, we have too many specialists doing too many heroic procedures, and everyone’s very happy about that. Until that is that we notice that we have a health care system that does a shitty job of basic primary care, doesn’t cover 45 million people and costs way too much.

But if word somehow sneaks out that the two sides of that equation might per chance be related, then the pillars of the medical establishment might choose to move to other tactics. And perhaps the Dartmouth crowd might find themselves wearing concrete boots and hanging with Jimmy Hoffa instead.

CODA: And in a quick reminder that doctors are doctors whatever their
passport cover says, this article explains how spending more on health care in
Canada has not
shortened waiting times

In the five years up to 2002-03, the number of angioplasties (to open
arteries) and bypass surgeries increased 51 per cent, the number of joint
replacements rose 30 per cent, and cataract surgeries 32 per cent. But demand
for care seems to have increased just as much, and it’s not just because the
population is aging. "We’ve got way more activity beyond what the demographics
would dictate," said CIHI Chairman Graham Scott:More research is needed
to understand the phenomenon, he said but new technology is probably a factor.
If there are new tools available, such as MRIs, doctors are likely to use them.
If techniques for a certain kind of surgery improve, the procedure will become
more popular.

Duh! They don’t need more research. When the NHS was introduced in
the UK in 1948, the politicians thought that demand would fall after the initial
rush from those who hadn’t had coverage before wound down. But it didn’t. 50
years of data tells us that in health care supply creates its own demand, and
the way to deal with that is to restrict supply.

POLICY: , Yet again caught up in the bluster of the drug war

Last week I wrote a piece at Spot-on criticizing the Calvinists in the medicine cabinet —  the theocratic fascists social conservatives who use the DEA to dictate prohibition and are increasingly bringing this irrational posturing into mainstream Republican (and thus government) policy. One thing I touched on is the suggestion that buying up the Afghan opium crop and using it for medicinal opiates might be one way of mitigating the problems of opium being the only viable cash crop there, with the consequence that the Taliban et al benefit from controlling it. Harvey Frey, an occasional contributor to THCB, trotted out some very tired and just plain wrong comments about the drug war and prohibition:

The idea that legalizing and licensing opium in Afghanistan will decrease the illegal opium trade is fantasy. Medical morphine sulphate is cheap – far cheaper than the far less effective modern concoctions of Big Pharma. Why would any opium farmer sell his crop cheaply to legitimate buyers, when he can get orders of magnitude higher prices from the black market?

So, if we go with a social libertarian policy, and decriminalize recreational opium use, how will we deal with the medical and social problems of the vastly increased numbers of users? We seem to have trouble paying for medical care now. How will we pay for care for millions of unemployed, uninsured addicts? Will we end up like China after the Opium Wars?

I wouldn’t usually go after this type of comment here, but Harvey’s arguments are flat out wrong. And someone needs to try to convert those people who are reachable. Harvey’s a scientist, so presumably he believes in data. So here goes:

a) the concept that the farmers get more for illegal poppies than legal ones is bullshit. I have met illegal opium farmers in Laos living in huts with mud floors, and legal ones in Tasmania living in fabulous farm houses. No question who’s getting more for their crop. The difference in cost is due to the middle men’s cut which is huge, again due to the illegality of the end product…which boosts its cost to the end user. And of course that boosts the amount available for criminals (including some very nasty ones in the Middle East). This is one occasion when I’m much rather J&J and GSK had the money. If we bought out the crop then the opium farmers would have the same amount of money and the criminals/terrorists would have much less. (Hey we do it with all kinds of other agricultural crops….)

b) there is no evidence that regulating and controlling the distribution of any illegal substance increases its use compared to attempting (and failing) to maintain its prohibition. Countries that have a harm reduction policy (Switzerland, Germany) for heroin/opiate/methadone have lower addiction and use rates than those with prohibitionist policies (the US). Kids in Amsterdam use marijuana at lower levels than those in the US, while it’s freely and legally available there, and theoretically illegal here.

More importantly the costs of addiction are not predominantly those of caring for the unemployed addicts. Several programs (again see Switzerland, Germany, and even the UK in the 1990s) show that legitimized maintenance programs allow addicts to maintain a normal life, including working and holding down jobs. BTW one of the forefathers of American surgery, William Halsted,  was a morphine addict, which never prevented him from practically inventing much modern medicine. It’s driving addicts into the black market and into the hands of criminal pushers that causes them to descend into the state Harvey suggests causes so much social malaise. Furthermore, in the only ever successful case of a steep decline in the use of a highly addictive drug (tobacco in the US in the last 30 years), its use rate fell because of education about its health effects. It was and is a legal product. And should stay that way. And we should treat other drug use the same way.

Finally, the societal costs of drug addiction absolutely pale in comparison to the societal costs of prohibition. We spend some $90 bn a year trying and failing to prohibit drugs in this country. There are fewer than 3 million drug addicts. So we’re already spending around $30,000 per addict on attempting to prohibit drugs–way more than the cost of supporting addicits even if they were not contributing at all to society and the economy. And that doesn’t count the cost to society such as the crime they commit to fund their drug habits, which is eliminated in Switzerland, Holland, etc.

The whole way we approach this — justified by the type of wrong information that Harvey puts out — is completely irrational, unless of course you are one of those in the prison-industrial complex benefiting from that spending. But of course the other supporters of the drug war, the theocratic fascists, glory in being post-enlightenment and completely irrational anyway.

POLICY: HSAs, what are they really?

Buried in this somewhat balanced article about HSAs which postulates that the healthy & wealthy may get most out of health-savings accounts, is this gem from a leading “free-marketer” and HSA advocate:

John Goodman, the president of the National Center for Policy Analysis in Dallas and an advocate of HSAs, said that the tax incentives are appropriate because the accounts serve two purposes. “This isn’t just a savings account,” he said. “It’s self-insurance for health care.”

Meanwhile, veteran Democratic Congressman Jim McDermott tells the other side of the coin. But it’s the same coin.

A bedrock principle of this nation is to pool our resources and share the risk, because it benefits us all. That’s why we collectively support police and fire departments, national defense and a host of other essential services. The alternative would turn back the clock to the early 20th century, when people were wiped out by one moment of misfortune.

Is HSA any different? No. HSAs would accelerate a trend that has seen the percentage of employers offering health insurance drop 15 percent during the Bush Administration. A HSA would be an incentive for employers to transfer more of the burden to the individual. The outcome is inevitable, even for forward thinking, employee-focused, responsible corporate citizens. How long can they last when the competition abandons providing health insurance?

So the left and the right agree—HSAs et al move us to self-insurance or self-pay for health care and away from the idea of pooling. Of course rational people think that for health care with its uneven distribution of risk and costs, that’s nuts. The right (or at least the honest right) just thinks that it’s all OK. But at least we’re all agreed on what it is.

POLICY/POLITICS: The swiftboating of single-payer?

Here’s my FierceHealthcare editorial today

Last year the most viewed article in Health Affairs was an article suggesting that 50% of bankruptcies in America were in some part related to medical costs. The article was written by a group led by two of the intellectual leaders of the single payer movement, Harvard professors David Himmelstein and Steffi Woolhandler. This week their findings were challenged by two Northwestern-affiliated researchers, David Dranove and Michael Millenson, who reviewed their data and claimed that the number was closer to 17%. They also suggested that the not as many of people declaring bankruptcy were as solidly middle class prior to their medical catastrophe as the Harvard group had suggested. Himmelstein et al shot back saying that the Dranove and Millenson had got their math wrong, and that they were lackeys for AHIP the health insurance industry group that sponsored their study — even though it was a peer reviewed article which AHIP funded but didn’t control. Some of their supporters accused Dranove and Millenson of "swift-boating".

Why is this obtuse academic dispute so important? Whatever the facts, and facts are very malleable in our political debates, the role of the middle class in health reform is vital. There is incontrovertible evidence that lower-income Americans have disproportionately higher health costs out of pocket than poorer people in other countries. But 100 years of history shows that politically this doesn’t matter too much. If it becomes accepted that middle-class, middle income Americans are equally vulnerable to financial catastrophe due simply to bad luck with their health, then the political discussion might shift. So this is one of those occasions where, as Keynes said, the scribblings of some (not-yet) defunct economist might actually matter in terms of politics and policy.

UPDATE:  If you haven’t had a chance yet, you can listen to this week’s podcast of my converstation with Millenson on this very topic. 

POLICY/HEALTH PLANS: Shalala and the janitors (not a 60s doo-wop band)

Over at Health Care Renewal, Tony Poses has done some excellent digging into the tale of how the University of Miami, best known for the close to criminal behavior of its football players over the years, is (by proxy of a middleman) stiffing the janitors at its hospital from getting health insurance. Meanwhile, university President and former Clinton HHS secretary — not that she did much while holding that hot seat other than make the camera pan way down when she walked in the room for the State of the Union — Donna Shalala was profiled in the New York Times for her luxury lifestyle. It’s all in the story: A Tale of Three Ironies: University of Miami’s Janitors Still Have No Health Insurance. And Roy digs up the fact that she gets a decent chunk of change for doing basically nothing by being on UnitedHealth Group’s board. ($750 for listening to a summary of a phone call? Nice work if you can get it).

Of course, compared to the average take home pay of UnitedHealth board members, that’s chicken feed. But the average is somewhat distorted by the CEO.

POLICY: Read these comments

I’m too lazy, stupid, busy to post anything here today, (although I’ll have something up at Spot-on later) but the commenters on the piece about CDHP’s that Brian Klepper wrote a few days back are kicking up a storm, and it’s interesting stuff. So please go read them instead.

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