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TECH/POLICY: Why health care costs so much, part 37

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Bend OR, pop 100,000, now has 8 MRI machines. That compares to the fact that all 97 million Canadians have to share one MRI in downtown Saskatoon that’s only available on Tuesday mornings when they take the cow that shares the barn they keep it in out for a walk. But don’t worry about that having any impact of practice patterns or health care costs — Oh no.

The idea that physicians will inappropriately order MRIs as a way to make money, said Jim Kronenberg of the Oregon Medical Association, is a bit of a leap in judgment.

Meanwhile the New York Times reports on the ongoing case of proper fraudulent medical embezzlement, rather than the legal kind going on in Oregon and the rest of the nation.

BLOGS: Hospital impact

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Hospital Impact is an interesting new blog that has several issue areas mostly, but not exclusively, of interest to hospital admin folks. Worth checking out.  I can’t quite figure out who’s behind it, but it seems to have some connection to the HFMA…. or I might be imagining that.

HEALTH PLANS: Mckinsey on CDHPs

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McKinsey, a very smart firm that should be trusted about as far as it can be thrown in terms of putting its clients’ interests above its own, is out with what looks a pretty well researched report on CDHPs.  My less well researched opinion is that the CDHP is an intermediate step on the employer’s retreat from offering health insurance, and that the HSA is a foolish tax-deductible sop to the people who would have put that money aside anyway. But then again I’ve got one, as there’s no better alternative.

Essentially the report says that the employees who had CDHPs (connected to HRAs not HSAs but it’s the same sort of thing) were more cost conscious in their health choices than they had been in the good old days of more generous plans, but that they were less satisfied with their health plans. However, the lower spending on care for patients is similar to the introduction of managed care back in the 1990s, other than initially managed care recipients were happier with their plans — as they had lower out of pocket costs than in FFS. One thing I do know is that high out of pocket costs correlates with higher patient dissatisfaction, so as the employees are left more and more on their own, dissatisfaction will likely increase. Still I suspect at least one of my commentators (can anyone guess who?) will tell me that I’m wrong.

And despite some long and complex correspondence with a couple of advocates I still can’t understand why an employer would give their healthy employees money for an HSA and then let them keep it if they didn’t spend it. (In an HRA, it reverts back at year end).

HEALTH PLANS/POLICY: Individual health insurance — going cheap!

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Two people have mentioned this report from eHealthinsurance.com, so I thought I’d better address it. The first is from "friend of THCB" Brian Klepper at the Center for Practical Health Reform. He writes:

Here’s a report, issued a couple days ago, that is a striking example of the power of transparency information, applied to current individual health insurance pricing. eHealthInsurance.com ran a study to determine the lowest quotes available to non-smoking 30 year olds who purchased a $1,000 max deductible, 20% co-insurance, $3,286 out-of-pocket max plan.

They did this around the country, and then selected the lowest premium available for this profile in each location. Long Beach, CA had the lowest monthly premiums, coming in at $54. The lowest 10 cities – 7 are in California, 2 are in Arizona and 1 is in Ohio – all come in at less than $59. Pricing goes up from there: My hometown of Jacksonville, FL is 29th at $89.03. Las Vegas is 34th at 113.38. Dallas, Miami, Boston and NYC are 47-50, at $146.42, $151.20, $267.57, and $334.09 respectively. (The authors note that Boston and New York are subject to state-mandated guarantee issue and community rating). Still, the Long Beach premium is 61% of Jacksonville’s, 37% of Dallas’, 36% of Miami’s, 20% of Boston’s and 16% of NYC’s.

It is difficult to believe that even the combined differences in care and regulatory costs can account for such huge disparities. This type of information is a starting point for inquiry and action by industry leaders, regulators, and legislators. Congratulations to eHealthInsurance for publishing this revealing look at the industry.

The other post about the study is from a new heath care blogger (but a regular blogger on other subjects), Elisa Camahort, how is getting sponsored to blog about health care from the consumer’s view point, by eHealthinsurance.com. The blog is called Healthyconcerns and  has some discussion of the same study.  Elisa figured out that she could have saved a little if she’d used her sponsor’s service.

Interestingly Elisa’s Pilates teacher who was unable to get coverage because of a pre-existing condition, managed to sneak in the backdoor into insurance coverage by using short term coverage….that’s not a real solution. First it deliberately excludes people with virtually any major disease, then it runs out after a year or six months and can’t be renewed with that company.  You can usually renew it with another company, but over time you’ll run out of insurers.  Finally, you’ll want to get onto more stable long term insurance. 

I tired to do that via eHealthinsurance and my $70 quote became a $400 quote for the same coverage once they found that I’d had a prior knee surgery. So then I retreated to yet another short term insurance plan.  I presume that I could have kept playing that game for a while, but in the end I opted for a $200 a month premium for the same coverage via a small business coalition in California called PacAdvantage.  It’s not exactly a great rate, as everyone who can do better in the individual market is already in it, leaving a bunch of sickies in the pool, but I kid myself it’s better than the uncertainty of a short term policy.  And of course if the short-term guys figure out that sick people are using them to get access to insurance, they’ll extend those "excluded" groups to include more categories of potentially sick people.

Brian is right, though.  It’s good to have some transparency in pricing (although attempts to do that at the provider level are failing).  But the issue remains that in insurance we’re not really discussing apples to apples. And if you look at real health care premiums in different places, including underwriting averages et al, then they don’t match the vast discrepancies seen in this study — even though they are vastly different because of the difference in underlying health care costs, which are explained by Wennberg, not eHealthinsurance.

And  the idea behind these cheap health insurance products, promoted first by Blue Cross in California in the late 1990s, is theoretically to get more uninsured people into insurance.  But of course while we want to get them into the risk pool, these products are not going to remain viable if they let sick people buy them.  So that’s why they’re underwritten to death and why they’re not a solution to uninsurance. And of course you only really need health insurance if you’re sick. It’s the same old story of the bank only lending you the money if you can afford to pay them back — and then why would you want to borrow the money.

….and don’t start me on the impact of high deductible health plans on the community risk pool.

HEALTH PLANS: United not big enough, needs to buy Pacificare

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Some thing tells me that United thinks that the government trough for health plans will continue to overflow a while longer. Apparently it’s planning to buy Pacificare for a mere $7-8 billion. Pacificare shares jumped 10% and then were halted at around $82 on the news.

This means that despite Pacificare’s great run over the last year, United at least thinks, that government based plans (especially Medicare) will continue to see more than their fair share of growth. Pacificare’s stock was below $30 when the Medicare bill was passed and those fools who thought that HMO stocks were over the top then (i.e. me and Don Johnson at least), well it shows that we’re fallible!

Again, no one told me in advance, grump, grump.

In other buying news, Philips is adding to its PACS business by buying ASP PACS vendor Stentor.

PHARMA: What Peter Rost did over his holiday weekend

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While you were enjoying your burgers, beer and bangs, Peter Rost was writing a book review of his boss’ new book. And he decided to put in a very obvious place called Amazon.com. Here it is:

Pfizer’s CEO, Dr. Hank McKinnell has written an astonishing book in which he admits that he doesn’t always believe in what he’s saying [11], that drugs from Canadian pharmacies are safe [69] and that high US drug prices have nothing to do with past R&D expenses [46]. He also writes that "perhaps pharmaceuticals represent too low a percentage of total healthcare spending" [45] and he calls for "price controls to be lifted" around the world [64], because "It is time for Canadians and others to pay their fair share." [65]. He also calls for a doubling of drug patent life [185] which would result in a drastic reduction of new, low-priced generic drugs.

Dr. McKinnell starts his book with the surprising confession that he doesn’t always believe in what he’s saying. "They listened to my logic, but I could tell they weren’t convinced, and to tell you the truth, I wasn’t either." [11]

He also doesn’t shy away from embarrassing facts, "Branded drug prices are anywhere from 25-100 percent more expensive in the United States." [50] He even admits, "Drugs from Canadian pharmacies are as safe as drugs from pharmacies in the United States." [69]

But his impressive mea culpa doesn’t stop there. He slams everyone who makes a connection between drug prices and R&D. "It’s a fallacy to suggest that our industry, or any industry, prices a product to recapture the R&D budget spent in development." [46] Finally, in an astonishing intellectual somersault, Dr. McKinnell claims that "price controls always make prices higher in the long run." [64] And since he wants to give people lower drug prices, by eliminating price controls, he writes, "Starting with pharmaceuticals, I call for price controls to be lifted in Canada and elsewhere." [64] Dr. McKinnell ends his book with a wonderful quote by Gandhi, for those who desire change. "First they ignore you. Then they laugh at you. Then they fight you. Then you win." [193] Dr. McKinnell just doesn’t realize that he has become "them."

Here’s  a little context from Jim Edwards at Brandweek.

POLICY: What is it that we wonks argue about?

Tom Hillard — a new contributor over at the transmuted SignalHealth (which is in someway an offshoot of John Rodat’s Health Signals New York) — has this beautiful line about the managed competition versus single payer argument.

For aficionados of universal health coverage, arguing over competing models is a zestful yet strangely abstract pastime, kind of like theologians debating over who takes out the garbage in heaven.

Or as they say in Australia, at the moment it feels like we’re two fleas arguing over who owns the dog.

PHARMA/POLICY: Steeves responds to McGarvey

Ayelish McGarvey is back with a follow up to her piece in The Nation on Plan B, which was the subject of a previous piece here in THCB.  The new piece called Plan B for Plan B explains the weird double application for joint "behind the counter" and prescription status, and suggests that it cannot be signed off on by FDA lawyers. She continues her thesis that this is mostly Galson’s fault. Robert Steeves is not so sure. He writes

There is nothing in the Ayelish McGarvey piece that went unconsidered in my piece.  I think she is wrong on the Galson "acting alone" and apart from Crawford. A new guy just appointed in a ‘acting’  capacity just would  not step out on his own and create this national storm certain to reach the White House.  Give me a break.  This casts Galson as a "suicide bomber" ready to sacrifice self for the cause (a certifiable disqualification to lead CDER if there ever was one). 

For sure, most FDA lawyers would not "sign off" on the distribution scheme, but who says they must. They are not barriers to a decision(unless the decision-maker wants a place to hide) but advisors. This is illustrated by the line authority for the lawyers at FDA coming from the HHS General Counsel, not the Commissioner. Usually, a legal warning that "if you go there, you are on your own legally" is enough to scare any one into a "revise" this policy mode, but it need not be.  Somebody at FDA must have a reasonable rationale for legal support for the policy which neither Barr nor FDA has revealed. However, this overlooks the possibility that the Bushites do not intend Plan B OTC to be approved in any event under any theory. 

As we will see with the State Law workarounds for Plan B, the first "religious right" lawsuit is likely to overturn any state law giving Plan B OTC status under the Federal Supremacy Clause of the U.S. Constitution.  And the same legal challenge is sure to come to any "unconventional" Federal OTC approval scheme like the bifurcated OTC/Rx status pending.  FDA has raised the issue of the under 16 women as a safety problem, so it seems unlikely that it can now go back and "admit error" to permit a legally correct approval.

If State Plan B workarounds were doable, we’d have marijuana, laetrile, and lots of other substances legalized in many states. No one can establish that Plan B is not in "interstate commerce", no matter where it is distributed today. The States work under the police power(denied the Feds??) to protect their citizens. In the past, this has meant a State can more rigorously regulate a drug product, but cannot relax that status. Perhaps the argument will be that a State "must act to provide Plan B to better protect its women and citizens because the Fed’s have failed to do so and . . . . .(this is the tough part).

Barr CEO Bruce Downey says Barr may turn to the States to get Plan B on the market but he is a lawyer and should know all the above. Importantly, I have never heard or seen him expound on his "legal rationale" for this position.  Nor can I understand Barr’s strategy in raising this faux solution unless, like Galson, he has some secret ally that we have not yet heard  about.

As for Hager, thanks to Ayelish McGarvey’s earlier article, we now know he’s a hypocrite or worse.  But I think she fails to understand the basic principle involved in both cases — do not put much weight in what is being said, watch what they actually do.  And FDA has not, and will not, approve Plan B.  The Congress might have a case to legislate the approval if it is to be done at all.

In any event, the interests of science and women’s health are not at the forefront of this FDA decision.

INDUSTRY: HealthcareRenewal skewers Health Affairs

John Iglehart’s rather soft questioning of Guidant’s CEO in Health Affairs comes under most excellent and accurate fire from Roy Poses over at Health Care Renewal.

A prominent editor of a prominent health policy journal devoted considerable effort to and published considerable pages of an interview with the CEO of a large device manufacturing firm, yet avoided asking skeptical or probing questions about a current problem that raises substantive concerns about the quality of the company’s products, and even bigger concerns about how the company has dealt with quality problems. The interviewer avoided asking any questions about a similar case from a few years ago. This is only one article, but it seems to indicate how deferentially the health services and policy literature may treat leaders of large health care organizations. 

Health Affairs has a delicate balance to tread. It publishes inter sting interviews with CEOs that a more than just puff pieces–and one doesn’t often see those these days.  However, in order to keep corporate CEOs coming to talk to them they can’t attack them directly. But, you would think that in the light of what’s gone on at Guidant recently, there’d be a bit more of an attempt to hold various feet to the fire, and I hope we’ll see more of it in the future.

POLICY: Thank God there’s no rationing here!

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Back with more a little later (Typepad’s been a bit problematic today) but to start, just a quick note to those who say that there’s rationing in Canada and the UK and that we’re so lucky it doesn’t happen here. You need to amend your statements to "it doesn’t happen here — to nice people like us". But if you’re poor, good luck on getting the rest of us to help out.

For those of you too lazy to clickthru, the story is about Mississippi limiting Medicaid recipients to 5 prescriptions each. Something similar was tried back in the early 1990s with anti-psychotic drugs in New Hampshire, and I seem to remember that the result was that whatever was saved on the drug side was wiped out by the consequent increase in nursing home admissions.  So if this is the future (again) of rationing for the poor — and Medicaid covers 25% of the population in Mississippi — it’s not too clever a way of going about it.

(BTW This isn’t an argument in favor of Medicaid’s continued existence in its present form–it needs serious reform and in fact abolition. I’m just crying bullshit on those who say there’s no explicit rationing in the US–again).

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