health reform

A Cure Worse than the Disease

by Greg Conko on October 22, 2009 · 2 comments

in Culture, Features, Health and Illness, Healthcare, Insurance, Nanny State, Personal Liberty, Regulation, Zeitgeist

With Democratic support coalescing around Sen. Max Baucus’s (D-Mt.) health care reform proposal, passage of a comprehensive overhaul now appears more likely than ever.  Opponents had their summer of protests.  But, Democrats have shown a renewed sense of energy since discrediting Sarah Palin’s “death panels” and Sen. Charles Grassley’s claim that ObamaCare would “pull the plug on grandma.” Still, while those charges may have been a little overwrought, there is plenty to be concerned about with the Democratic health reform effort.

As I explain in a new Competitive Enterprise Institute paper out today, “A Cure Worse than the Disease: Obama Care Won’t Cut Costs, But May Cut Quality,” most of the alleged cost-cutting measures in the Baucus bill merely shift costs from the federal government onto the states or private payers, without affecting long-term health care inflation.  The only measures that could reduce the annual rate of growth in health care costs would erect government barriers between patients and their doctors, while jeopardizing long-term medical innovation.

Skeptics have made hay arguing that the so-called Sustainable Growth Rate can’t be counted on to cut $245-billion in Medicare spending. But Senate Finance Committee negotiators have designed a Medicare Commission—what the White House previously called an Independent Medicare Advisory Commission—to make similar cuts in physician and hospital payment rates in a more opaque way.

In an April New York Times interview, President Obama suggested that such a group, working outside of “normal political channels,” should guide decisions regarding that “huge driver of cost…the chronically ill and those toward the end of their lives.”  That’s not exactly a death panel roving the country to pull the plug on innocent grandmas who’ve survived past their sell-by dates, but the effects could be equally pernicious.

What the Medicare Commission is likely to do is work with the Patient-Centered Outcomes Research Institute also established by the Baucus bill to incorporate comparative clinical effectiveness recommendations into Medicare and Medicaid payment policies.

In theory, there’s nothing wrong with comparative effectiveness research, or what used to be called evidence-based medicine.  Good research comparing the clinical effectiveness, risks, and benefits of two or more medical treatments can help doctors better understand the likely benefits of the treatments they prescribe and improve the quality of care they deliver.  But patients vary substantially in their individual physiology, their response rates to drugs and surgical procedures, and their willingness to tolerate side effects.  Doctors know this, and they realize that one size definitely does not fit all. That’s why, in practice, evidence-based medicine in the U.S. and abroad has produced incrementally useful information, but has failed to systematically change the practice of medicine.

Generally, we should encourage efforts to eliminate waste and reduce the use of ineffective treatments, especially when we’re talking about public programs and taxpayer money.  But the only way these programs would result in significant savings is if legislation or subsequent implementation tries to force the square peg of comparative effectiveness research results into the round hole of clinical practice by requiring physicians to always pick the treatment deemed best for the average patient.

That’s not just bad for patients in the near term, it would also wreak havoc on long term medical innovation.  If every new medicine were required, immediately upon gaining regulatory approval, to be effective and cheap enough to get the support of bureaucratic bean counters, research on the next generation of treatments for cancer, heart disease, and countless other serious conditions would slow to a snail’s pace.

Get used to the innovative medical treatments that we already have today.  If these programs become part of our health care system, we’ll be seeing a lot fewer treatment innovations tomorrow.

Health Insurer Competition and Democratic Saber Rattling

by Greg Conko on October 20, 2009

in Culture, Health and Illness, Healthcare, Insurance, Regulation, Zeitgeist

Last week, after the industry association America’s Health Insurance Plans released a study showing that premiums would rise 18 percent under the Senate Finance Committee’s reform proposal, top Democrats took to the airwaves to condemn the industry for standing in the way of health care reform.  President Obama used his Saturday radio address to accuse the industry of using “deceptive and dishonest” attacks to derail reform legislation.  And Obama and congressional Democrats threatened to repeal the McCarran-Ferguson Act, which exempts insurers from most federal regulation, including antitrust laws.

It is true that a handful of states have highly concentrated markets.  In Hawaii, Rhode Island, and Alaska, for example, 95 percent or more of the health insurance market is served by just two insurers.  But, federal intervention would do nothing to address this problem.  After all, insurers are still governed by state competition law, which prohibits anticompetitive practices.

The main benefit insurers get from McCarran-Ferguson is antitrust immunity for sharing the actuarial data on which firms individually base their premiums.  Ordinarily, information sharing of that kind of  would be a big no no, since it suggests pricing collusion.  But, state insurance laws permit it because it helps small insurers gain access to a sufficiently large pool of information to set premiums at an appropriate level.

The only way federal antitrust enforcement could significantly reduce market concentration would be to break up the firms into smaller pieces—think of the dissolution of John D. Rockefeller’s Standard Oil trust, or the break up of AT&T’s local service monopoly into seven regional Baby Bells.  But, as Boston University health economist Austin Frakt  notes:

“Taxpayers will be best served by insurers with sufficient market power to bargain down provider rates, but with not quite enough power to keep the savings (“rents”) for themselves.  … How to balance the power of insurers and providers is far from simple. Many have pointed to the alleged dominant market position of insurers as a substantial source of high health care costs. However, the health economics literature supports the notion that recent increased market power of insurers does not lead toward monopolistic pricing, but rather it provides a counter-balance to the power held by hospitals and provider groups.”  (Hat tip, Tyler Cowen.)

Democrats know this of course.  And, in the end, it’s not clear that they really do intend to repeal McCarran-Ferguson, or if they’re just sending a signal to health insurers and other dissenters that “this is how we deal with people who stand in our way.”  As my wife said yesterday, they’re playing Chicago hard ball now.  They’ll do whatever it takes to win.

Senate Finance Committee Rejects Public Option

by Greg Conko on September 29, 2009 · 1 comment

in Culture, Features, Healthcare, Regulation, Zeitgeist

The Senate Finance Committee, by a 15 to 8 vote, rejected an amendment proposed by Sen. Jay Rockefeller (D-W.V.) to Committee Chairman Max Baucus’s (D-Mt.) health care bill that would have added a government-run, or ”public,” health insurance option to the overhaul proposal.  Joining all ten of the committee’s Republicans in voting “no” were five Democrats, including Baucus himself, Bill Nelson (Fla.), Kent Conrad (N.D.), Blanche Lincoln (Ark.), and Thomas Carper (Del.).  A second, and slightly less bad ”public option” amendment, sponsored by Sen. Charles Schumer (D-N.Y.) was also rejected by a 13 to 10 vote, with Sens. Nelson and Carper switching sides.

As I’ve written previously, the public option is not the worst aspect of the various health reform proposals, the purchase mandate is.  Still, these votes should be viewed as a strong positive, signalling broad concern about the extent of the Democratic position.

Of course, Liberal Democrats are fuming.  House Speaker Nancy Pelosi (D-Cal.) and House Commerce Committee Chairman Henry Waxman (D-Cal.) remain committed to a public option.  President Obama signalled his enduring support for it in his September 9 address to Congress, despite White House back-tracking from the public option during the August congressional recess.  And, now, two left-wing advocacy groups, the Progressive Campaign Change Committee and Democracy for America, have launched a television ad campaign condemning Baucus for his decision to move forward without a government-run health insurance option for the non-elderly middle class.

This should serve as a warning to conservative Democrats and liberal Republicans (Yes. I mean you, Olympia Snowe (RINO-Me.).  You may spend months negotiating a compromise with your Senate colleagues.  But, please remember that all that will be torn asunder once a bill is reported out of committee and gets to be amended after debate by the entire Senate, and again when the final Senate compromise goes to conference and has to be reconciled with the House bill.  You may think you’re playing nice with your Senate Finance Committee colleagues and getting as good a deal as can be expected from that nice old Max Baucus.  But, trust me, Henry Waxman is ruthless.

Obama Losing Youth on Health Care

by Greg Conko on September 25, 2009

in Culture, Healthcare, Nanny State, Personal Liberty, Precaution & Risk, Regulation, Zeitgeist

The National Journal had an interesting article this week describing the difficulty Democrats have been having getting young adults interested in the health care debate.  Two-thirds of voters 18 to 29 pulled the lever for Barack Obama last November, and over 40 percent of the uninsured are young adults age 18 to 34.  So, the Dems assumed they would be big proponents of the Obama agenda, including his hallmark proposal on health reform.  It turns out, though, that America’s youth were a lot more interested in high-falutin’ notions of Hope and Change–and defeating that old geezer running on the Republican ticket–than they were about tangible policy proposals.

Reform advocates have chalked up the under-30 set’s indifference about health care reform to an “information gap”.  But, with the White House’s extensive outreach on Twitter and other social networks, a full-court press by the DNC’s Organizing for America to reach young adults, and even an ad campaign by Rock the Vote featuring celebrities like Zach Braff and Perez Hilton, it’s hard to believe anyone in America has too little information.  More likely, we can chalk this indifference up to … well, youthful indifference to almost every sort of public policy debate.  No matter what the topic, when it comes to policy–as opposed to politics–young adults as a general rule just tend not to get involved.

Indeed, if they did learn more about the health care proposals being debated on Capitol Hill, one might imagine young adults would be pretty upset to learn that the Democrats want to force everyone in America to purchase an expensive health insurance policy that covers not just the benefits they most want, but the benefits a bunch of Washington bureaucrats decide they should have.  And, if they or their employers don’t buy such a health insurance policy, they’ll get hit with monetary penalties as high as $950 under the Senate Finance Committee plan or 2.5 percent of their income under the House proposal.

But one reason why so many young adults are uninsured is that they have chosen to forgo very expensive existing health insurance policies that have prices inflated by too many state and federal benefit, coverage, and premium regulations.  Those prices won’t come down under the Democrats’ proposals either.  Instead, they’ll climb even higher as the young and healthy get stuck in insurance risk pools with older and sicker Americans whose costs they’ll have to subsidize.  Indeed, to the extent that a mere 34 percent of those age 19 to 34 actively oppose the reform proposals (with another 34 percent in favor and 31 percent not sure), this probably CAN be attributed to an information gap–one in which America’s youth don’t fully understand what a raw deal this would be for them.

No Savings from Preventive Care

by Greg Conko on September 2, 2009 · 1 comment

in Healthcare, Regulation, Zeitgeist

A new study published in the journal Health Affairs calls into question claims by congressional Democrats and President Obama that mandatory coverage of preventive care services in public and private health insurance programs will lead to substantial cost savings.  The study looks specifically at diabetes care, an expensive to treat chronic condition, the worst side-effects of which can often be mitigated by early intervention and more coordinated care. It is often assumed that more and better preventive care could substantially lower costs associated with treating diabetes and its complications.  Not so, say the authors. Although better preventive care can lower the costs associated with treating the complications of diabetes, that preventive care isn’t free.  Adding in the cost of the preventive services raises the overall cost of care.

For people with diabetes, the cost of that extra care is arguably worthwhile.  Spending money to reduce the prevalence of debilitating and potentially life-threatening complications probably seems like good value for money.  But that’s decidedly not what the President and congressional Democrats have been claiming.  Instead, they argue that this extra preventive care will lower overall costs and help pay for health care reform.  But, as the results of this study suggest, that’s just not true.  And it’s not only untrue for diabetes, it’s also untrue for most other preventive care services.

More comprehensive studies, such as a literature survey published last year in the New England Journal of Medicine, suggest that, on balance, preventive care services add to health care costs, not reduce them:  “[S]creening costs will exceed the savings from avoided treatment in cases in which only a very small fraction of the population would have become ill in the absence of preventive measures.” Ironically, as Dartmouth University Professor of Medicine Gilbert Welch wrote in The New York Times, “Screening for heart disease, problems in major blood vessels and a variety of cancers has led to millions of diagnoses of these diseases in people who would never have become sick.”

Getting the Health Care You Pay For

by Greg Conko on July 27, 2009

in Healthcare, Personal Liberty, Precaution & Risk, Regulation

There was a good front page article in yesterday’s Washington Post on the history of advances in medical science and technology.  The conclusion:  Although the costs of treating many serious medical conditions has risen dramatically over the course of the last few decades, most of these cost increases have come hand-in-hand with significant improvements in health outcomes.  Take the article’s discussion of the evolving treatment of heart attacks:

“When I was in medical school, about all we had to offer was oxygen, morphine and prayers,” said Eric Topol, director of the Scripps Translational Science Institute in La Jolla, Calif.  Topol, who turned 55 last month, graduated from medical school in 1979. For 15 years he was head of cardiology at the Cleveland Clinic, where he helped run some of the clinical trials that have changed treatment so dramatically.  Today, someone having a heart attack who gets to a hospital in time is likely to get cardiac catheterization, angioplasty, the placement of a medicated stent, therapy with four anticoagulant drugs and, on discharge, a handful of lifetime prescriptions.  “There’s been a complete transformation in how it’s handled just since I’ve been in medicine,” Topol said.  That transformation has saved the lives of millions of Americans.

Of course, not every costly intervention works as well as the others.  Drug-eluting stents cost from $600 to $1,000 more than bare metal ones, but only provide a very small advantage.  The question is:  Who gets to decide whether the expense is worth it?  With millions of additional Americans about to be brought into taxpayer-subsidized or paid health care systems, we naturally want government to make wise spending choices.  But health care reformers who want to give government bodies greater power to deny health care choices over-simplify the ability to make these decisions.

President Obama, for example, has been characterizing the comparative-effectiveness concept as simply as choosing between two drugs, one of which works better than the other and costs half as much (You can watch the President on YouTube here).  But, like the drug-eluting stent example, most (thought admittedly not all) health care choices boil down to more costly interventions working very much better for some patients and providing little or no benefit for others. “It is safe to say that almost everybody who has a heart attack wants the best treatment available. Nobody wants to turn back the clock,” the Post article acknowleges.  But, for the Administration, there are no hard choices:

“No part of health reform is talking about rationing who gets this care and improvement in treatment,” said [David] Cutler, the Harvard economist, who is one of President Obama’s principal advisers on health care.

To the Post‘s credit, the aritlce offers us this bit of reality:

Experience, however, suggests that treating heart attacks is very unlikely to get cheaper in the future — either for individual patients or for the country as a whole.  “The low-hanging fruit has been largely consumed,” said C. Michael Gibson, a cardiologist and chief of clinical research at Beth Israel Deaconess Medical Center in Boston. “We are now facing the battle of a half- to one percent improvements in mortality that will come at very high cost.”

“If you like public housing, you will love public health care”

by Fran Smith on July 1, 2009

in Healthcare, Nanny State, Personal Liberty

Best line this week — should be a slogan for health care debate: “If you like public housing, you will love public health care.”

Read the opinion piece “Parsing the health reform arguments” by George Newman in the Wall Street Journal today for concise rebuttals of oft-repeated claims about government health plan.