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INTERNATIONAL: Health care costs, and not just here!

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I spent rather more than I’d like of my Thursday night writing a piece I promised ABCNews for their week-long series on the health care system that starts Sunday. As I was finishing up I saw this. It’s not exactly what I was writing about, but it’s not far away—Medical costs push 78 million Asians into poverty

International health experts have estimated that 78 million more Asians than previously thought are living in poverty because of healthcare costs. Many people in Asian countries do not have health insurance and pay for doctor bills and medical treatments. But the out-of-pocket health expenses they incur are not included in conventional estimates of poverty.When researchers deducted the medical costs from total household resources in 11 Asian countries, millions more people fell below the internationally accepted poverty threshold of $1 per head per day. "If you allow for direct out-of-pocket healthcare payments, there are another 78 million counted as poor," said Dr Eddy van Doorslaer, a health economist at Erasmus University in the Netherlands who headed the research team."We calculated that an additional 2.7 percent of the population under study ended up with less than $1 a per day after they had paid for healthcare." The figures, which are reported in the Lancet medical journal on Friday, are based on information from national expenditure surveys of what people spend on medical care in the various countries. The researchers extrapolated the national, representative samples to cover the entire population. Overall the study showed the prevalence of poverty was 14 percent higher than other estimates that did not include out-of-pocket healthcare costs.

POLICY: Healthcare by Lobbyist By Eric Novack

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Das Kapital
Place this in the ‘toot my own horn’ category. And in the ‘you really ought to listen to The Eric Novack Show’ at www.ericnovack.com‘ category.

From the Wall Street Journal October 10, 2006 edition:

Competition is an issue that many patient-advocacy groups wrestle with as they struggle to raise funds for research, attract greater interest in their diseases, and speed up the search for a cure.

The article ostensibly discusses how there are over 140 advocacy groups for brain tumors alone— and how they actively compete against each other for members, funding, and the ear (and hopefully pocketbooks) of elected officials.

As we give more and more power over the administration, funding and regulation over to unelected bureaucrats appointed by our ever campaigning politicians, we head toward the only guaranteed outcome of ‘single payer’, ‘single pool’, ‘national’ healthcare:  the protected by law, expanded by lawsuit, and guarded by lobbyists development of healthcare-by-lobbying.

In the world of healthcare-by-lobbying, heart disease advocates fight against Alzheimer’s groups, child advocates fight against the AARP, hip replacement makers fight against pacemaker manufacturers.

There is no free market-no free market of ideas, no free market for patients, no free market for doctors. And busy legislators find themselves uncertain about what the greatest need is for patients because each group emphasizes different issues or aspects of the disease.

There is also recognition that as cancer research increasingly focuses on using costly, cutting-edge technology to identify genes and cellular changes as an avenue to new treatments, progress is going to take huge sums of money that small patient-advocacy groups are unlikely to be able to raise on their own.

I have yet to ever hear an argument from the single payer advocates how this can be prevented.  Rather, it appears as if this is an essential part of their plan.

Proof- spend 10 minutes reading the single payer bill vetoed by Governor Schwarzenegger in California last month.  80+ pages of committees and  bureaucracy.

POLICY: Aetheist pokes fun at religious institution not offering much charity

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Yup I’m at up at Spot-on talking about the nun who lost her health insurance. It’s called Get cancer? Get fired, become homeless and lose your health insurance!. As ever you can come back here to comment.

Here’s to the new road to ruin in America. Got cancer? Now you can get
fired, become homeless and lose your health insurance, and therefore
all your money too! Statistically, it’s unlikely to happen. But it’s
perfectly legal if your employer has very few scruples.

Being a member of one of America’s most despised minorities – atheists (or secular humanists as we’re now calling ourselves) – and being none too impressed with the New York Times in recent years with both its reporting of Iraq and its continued insistence on writing rubbish about how we get the health care system we want, I have been doubly gratified by a current Times series
on the unfair privileges which religious institutions receive in the
U.S. It illustrates, in passing, an important point about the
relationship between health insurance and employment – for the worse,
I’m afraid. Continue

PBMs: Some Employers Look to Break the PBM Habit

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wolverines!Earlier this week referring to the WSJ piece on PBMs (which one ex-reporter suggested to me was investigative journalism that pushed on open doors) I mentioned the University of Michigan which did the math and fired its PBMs, and is pocketing the savings. Here’s more from Jeremy Smerd at Workforce Management on how Some Employers Look to Break the PBM Habit. The somewhat indignant Chiara Bell of Clarus Consulting who’s got the PBMs in her sights, makes a noteworthy appearance in her quest to derail the monster.

But I love this quote:

The Pharmaceutical Care Management Association, the industry group representing the estimated 50 PBMs nationwide, says the marketplace has determined that PBMs save money for employers by offering a service outside the core expertise of most.

Well they would say that, wouldn’t they.  But the next quote is gambling on the dumbness of the American employer

"The reason everybody uses a PBM, though no one is required to, is because of the savings," says association president Mark Merritt. "If employers can do it and find a new way to build a better mousetrap, more power to them."

I know no one ever went broke underestimating the intelligence of the public, but that is pushing it! It reminds me of W’s line “Bring it on”. Well they might live to regret it.

POLICY/HEALTH PLANS: More evidence that HDHPs work, by Eric Novack

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Eric Novack has something to say about HDHP/HSAs, even more to say about who’s getting rich as a result, and little to mention about self-selection. But then I’m just a cynic.

Novack_sm_2>A simply fascinating report has come from Aetna recently. This from the company that has been about the worst in the Phoenix area for reimbursing physicians at well-below Medicare rates for services. Let me just copy some of the main findings (highlights mine).

Full replacement plans see the most significant savings from Aetna HealthFund. Health Reimbursement Arrangement (HRA) plans effective in January of 2003 experienced an average medical cost trend of 1 percent over three years, meaning that medical costs for these plans increased only 3 percent between 2002 and 2005.Employers who offered Aetna HealthFund as an option are seeing savings across all products offered. Those who offered an HRA option plan effective in January of 2003 experienced an average medical cost trend of 6.7 percent over a three-year period. Both Aetna HealthFund HRA and Health Savings Account (HSA) members with chronic conditions maintained or improved the level of care they received prior to joining the plan, including a 6 percent higher usage of inhaled steroids among asthmatics when compared to a similar population. Preventive care was also maintained or improved. For example, first-year HSA members received cervical cancer screenings at a 13.8 percent higher rate than PPO members. Generic drug utilization for HRA members was 4.5 percent higher than PPO members.

The essence is this: companies that only offered HSA/HRA saw health cost increases averaging only 1% per year over 3 years. Those that had an HSA as an option saw increases averaging only 2.3% per year over 3 years. All this while utilization of preventative services appears to have stayed the same or gone up. Now this is only a snapshot of proprietary data. But maintaining below inflation rates of health spending increases for more than one year deserves the attention of everyone genuinely interested in keeping the healthcare from going over the cliff (or further down the hillside, depending upon where you believe we are).

The really big question is this: Are the cost savings to Aetna being passed on to the consumer? In other words, are premiums getting that much more affordable compared to standard PPO, HMO plans? I do not know for sure, but I am suspicious that these savings are translating into much higher profits, at least for now—meaning that costs to the public are continuing to go up unabated. I shall try to contact Aetna and get the answer and update you.But for the anti-HSA crowd… this certainly does not help the arguments that are so vehemently against HDHP/CDHP.

UPDATE: A shot across the bow for the Medicare-for-all crowd.
From the story:

Medicaid officials comb applications to find Medicare recipients who work in such jobs, focusing on large employers most likely to offer health insurance. If the employee premiums are less than Medicaid’s costs for the same family, the state contacts the family and offers to reimburse their portion of the premiums.
Under the program, Medicaid pays only the employee portion of the premium, not the employer’s. Typically, employees pay about a quarter of the total insurance premium, with the employer paying the rest, according to the Kaiser survey.
Washington spends an average of $173 a month per person on Medicaid. But it pays only about $76 a month in premiums to put a person on an employer’s plan, plus another $16 a month for any services not covered by some employer’s plans, such as vision and dental.

It is still very flawed, since it relies on the employer tax exclusion for health benefits—but it is saving the state (and really, you, the taxpayer, money).
But, where is the Dad in the story… or is that not politically correct?

PBMs: Why I will stay poor forever

I just don’t understand Wall Street. The FirstDatabank/Mckesson story clearly was bad news for pharmacies/ PBMs are essentially big pharmacies and it was bad news for them as even your punk blogger here pointed out on Friday morning. But that was known at the open of the market on Friday and the stock fell heavily on Friday. But why the heck did it fall further today?

MEDCO HEALTH SOLUTIONS

Medco

Wasn’t that information already in the market? Apparently not—because a downgrade from an analyst based on that information meant that the stocks fell another 3–5% from Friday’s levels today?  So if you realized that the market was even dumber than the employers who use PBMs, then you too could have gone short on Friday and cleaned up this morning. (Yes of course I didn’t).

PHARMA/PBMs: How dumb is the customer? Barbara Martinez tells you the answer

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Everyone knows that hospitals have a “list” price that only a very few totally powerless uninsured patients pay (and in California that hospitals are bizarrely required to report that price to the state). Then there’s an actual amount that Medicare pays them, which is a real “price”, and then there’s the amount that they actually get from insurers. All figured out by market power, and all being challenged by the transparency movement.

Now Barbara Martinez, continuing her swath through the nether reaches of the drug business in the WSJ, has figured out that AWP (avg wholesale price) which is the fictional equivalent of hospital “list” price for the pharmacy business, is actually a real number. Or rather not a real number, but a fake number with real implications. Real in that that several insurers and health plans are actually paying a discount from AWP for their drugs. So that when McKesson (the biggest wholesaler) told First Databank, the dominant price reporter, that it was putting up AWP by 5%, effectively it was increasing the amount the pharmacies got paid for the drugs they sold. (FDB apparently was supposed to be surveying all the wholesalers but was actually just taking McKesson’s pricing).

This increase happened in 2002. Now eventually some of those payers figured out that their prices had increased for no good reason, and went after the pharma manufacturers. But they weren’t getting the increase—that was sticking with the pharmacy. McKesson, the wholesaler which sells all manner of stuff to pharmacies, was happy enough to make its customers happy, and point it out to them when their wholesaling contracts came up for renewal. So the result was that after chasing down a null result at the pharma manufacturers, the payers went after First Databank, which today fessed up to doing a not-too-thorough job on finding out just what AWP actually really was, and agreed to give up publishing about it at all  in 2 years.

Here’s what Martinez writes about one “victim”

Mark Erlich, executive secretary-treasurer of the New England Regional Council of Carpenters, is one of the plaintiffs settling the case with First DataBank. He expects the settlement will save about $400,000 a year for his union’s health fund, which covers 22,000 people and spent $10 million on prescription drugs last year. Mr. Erlich calls the earlier rise in First DataBank’s published prices "a rip-off of consumers across the country." It affects the union, he says, because its contract with the company managing its pharmacy benefits specifies that the drug prices the union pays will be based on First DataBank’s AWP benchmarks.

Now I bet you a nickel that the “company managing its pharmacy benefits”  was a PBM, which meant that it also owned its own mail-order pharmacy, and so it too was benefiting from the increase in AWP. I’m also not too sure that even now Mr Erlich the chippy realizes that, but it’s the PBM he ought to be flipping mad with.

But here’s the real point. Why the hell is an end payer agreeing to pay a discount from a notional price that it allows someone else to control in the first place? And even more so, why is the middle man, that is after all being paid to allegedly lower its drug costs, allowing its client to be reamed in that way. This is the equivalent of boasting that you “got it on sale” without noting that the company was marking up the pre-sale price. Why wouldn’t you figure out what it cost at Costco (or the equivalent cheapest outlet) and see what your market power could get you in comparison. After all that’s how real market pricing works.

Well you don’t have to be too suspicious to think that the PBMs did fine out of this little arrangement—presumably because it allowed them to mark up the cost of the drugs they were selling at mail order—and that the more they can obscure both the true costs of the drugs that they allegedly get at such a discount and also their own incredible profitability, the better for them. And so long as they have clients dumb enough to not question what they’re buying and the way they’re buying it, what do you expect to happen?

But if the University of Michigan can figure it out, should the rest of corporate America be so far behind?

 

 

 

PHARMA/POLICY: When off-label drug use attacks! (Pharma profits, that is)

The NEJM, in an article called The Price of Sight — Ranibizumab, Bevacizumab, and the Treatment of Macular Degeneration catches up with a THCB contributor from 4 months ago. The issue is that Genentech has a new and to the unwashed un-sophisticates (i.e. me and apparently most opthamologitsts) seemingly identical drug (Lucentis) for which it wants to charge 20 times the amount of Avastin, when Avastin works fine or better. Although of course Avastin hasn’t had a clinical trial for exactly that indication, and Genentech is apparently restricting supplies of Avastin in order to force you and me (the taxpayer) to cough up for Lucentis instead (and for the poor patient who must pay 20% of a much bigger number than if they’d paid out of pocket for Avastin.

Genetech does appear to be gilding the lilly here. I mean seriously who ever heard about a drug company complaining about un-promoted off-label use of its product? Unless of course, the off-label use cuts into the sales of a much more expensive version of the same thing!

On the other hand if someone can explain if there’s a justifiable difference, you know where the comments button is.

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