Jan
2

A response to a physician’s rant about health care costs…

I was reading a blog from a practicing generalist, who was making the point that health care costs are increasing due to technology, and that this was benefiting patients. There were no statistics to confirm this (longer life expectancies, better survival rates, improved functionality), but I take his point. There is no question technology is improving many people’s lives.
However, technolgy can be a two-edged sword, especialy for those who get a false negative or positive on a prostate cancer screen, and take/don’t take action based on what is acknowledged to be a very poor test.
As one from the “payer” side, I’d recommend we take the argument on health care costs a step further. Like it or not, employers pay a significant portion of health care costs, both directly (premiums) and indirectly (cost-shifting for uninsured, FICA taxes, income taxes, etc.)
The real issue employers have with health care costs is they have NO sense for their return on the investment. And that is the fault of the medical and managed care communities. Employers carefully assess each investment into plant and equipment, personnel and training, investment options and new products. They calculate RoIs carefully, assess performance constantly, and get as comfortable as possible with an expenditure BEFORE they make the investment.
Think about health care – what do employers get? Happy employees? Rarely – health insurance is a terrible “good” – people only use it when they are ill or injured, it is convoluted and difficult to understand, and they have to pay for part of it too!
Actually, what employers SHOULD be thinking about is the demonstrated ability of a health care provider to “deliver” healthy, fully functional employees and families, thereby enhancing productivity and, therefore RoI. Health insurance is an investment in productivity.
If we can evolve to this way of thinking, much of the present bickering about health care costs will end. Sure, there will be arguments about impact rates, who delivers what benefit, and what evaluation methodology makes the most sense, but that will signal we are talking about the right things.
So, the next time someone complains about charges, costs, or premiums, ask them how that “good” will help them function. They won’t know the answer, but perhaps they’ll start thinking about it.


Dec
31

The future of Medicaid

With the nomination of of Mike Leavitt to the post of Secretary of Health and Human Services, President Bush has sent a clear signal of his intentions to drastically reform the Medicaid system. Leavitt, a former governor of Utah, was instrumental in helping Utah secure a waiver from HHS that enabled the state to make significant changes in its Medicaid program.
These changes represented significant trade-offs, namely funding expanded coverage (adding populations not previously covered by Medicaid) by implementing cost sharing for beneficiaries and cutting some benefits.
Mr. Bush has made it quite clear that he intends to move the nation towards the “ownership society”. In the case of Medicaid, the implication is the states will receive block grants of funds from the federal government, funds that they will have significant discretion in regards to how they spend them. According to the LA Times, “In the past, the administration has proposed capping the federal share of Medicaid, currently about $180 billion a year…Medicare faces pressure to cut payments to hospitals and other providers.”
The net result – states will “own” Medicaid, be free to develop and implement their own programs, and do so with minimal interference from the feds.
While this sounds great at first blush, even Republican governors have serious concerns. In essence, their concern is that the President is making Medicaid a “defined contribution” program, thereby limiting the federal government’s future expenditures. This is a marked change from the present “defined benefit” form of Medicaid, where the governments (state and federal) are allocate enough funds to cover the benefits provided to qualified individuals’ costs. Remember, the feds took over the provision of health care to the poor in large part because some states were not doing what federal legislators deemed an adequate job.
In addition to his experience as Utah governor, Mr. Leavitt was head of the EPA and got his start as an insurance broker in Utah. Leavitt is known for his political prowess and willingness to stick to the task. While he will be tasked with Medicare reform and other issues, Leavitt will likely start with Medicaid.
This nomination is the clearest possible signal that Medicaid is in for the biggest change in its forty-some years of existence.


Dec
31

Health care blog worth watching

The Piper Report is a health-care oriented blog focused on Medicare, Medicaid, and some employer-based health programs. The author is well-read and well-informed about governmental programs, and seems to be on top of the latest research, with a heavy emphasis on governmental programs pertaining to drug coverage.
For example, Piper’s latest contribution summarizes some of the latest thinking regarding Medicare prescription drug programs.
Other links on Piper’s blog include the National Pharmaceutical Council’s health care cost:quality equation and a prognostication about possible Congressional action on Medicare.
As you travel through the blogosphere, you’ll encounter sites such as Mr. Piper’s that provide a depth of insight into a specific topic unobtainable anywhere else. Kudos to Mr. Piper et al for their willingness to share their perspectives.


Dec
22

The myth of drug reimportation

The panacea that is drug reimportation is finally getting its due. I’ve been wondering what the big hoopla is regarding “cheap” drugs from Canada and other foriegn nations. Sure, the Canadians and other countries use their monopolistic buying power to negotiate cheap prices from drug manufacturers, and some American consumers may be able to save significant dollars (barring a more significant decline of the US$) by piggybacking on those nations’ smart buying.
But on the whole, buying drugs from Canada is NOT an answer to the US drug cost inflation problem.
A just-published HHS study on the reimportation of drugs demonstrates that this “strategy” provides negligible savings.
Leaving aside the question of how a country that consumes 2% of the world’s pharmaceuticals can supply a nation that consumes over 50%, the real implication is clear – reimporting drugs is no solution. While it may be politically expedient, it is merely allowing US consumers to use the leverage of the Canadian government to buy drugs at a marginally lower cost.
Interestingly, the same US politicians that bought into the (at the time politically attractive) Medicare Drug bill also included provisions prohibiting the US government from negotiating with drug manufacturers. Thus, the politicians refused to allow the US government to employ the same “price lowering” tactics used by the Canadians, tactics that were delivering prices so attractive to voters that these politicians were in favor of allowing drug reimportation.
Have your cake, eat it too, and don’t get fat. Or in this case, please the big pharmas, protect the little guy, and thus preserve both campaign donations and votes. What a great country.
An excellent summary of the issues surrounding drug reimportation is provided by California HealthLine.


Dec
22

Prescription drug safety concerns

A recent post on the HealthBeat blog concerns a 2002 survey of employees of the US FDA. The survey indicates many FDA scientists are concerned about drug safety after approved drugs were on the market.
The study found that fully 2/3 of FDA scientists “lack confidence in the agency’s process for ensuring drug safety…(and) Nearly one in five said they had been pressured to approve or recommend approval for a drug despite safety and quality reservations.”
Other findings addressed drug labeling concerns:
“Only 12% of scientists were completely confident that FDA “labeling decisions adequately address key safety concerns” while 30% were not at all or only somewhat confident”
and perhaps most troubling, internal political pressure to approve new medications:
“Nearly one in five scientists (18%) said that they “have been pressured to approve or recommend approval” for a drug “despite reservations about the safety, efficacy or quality of the drug.”
The full study, conducted by the Office of the Inspector General of DHHS, reports on potentially dangerous gaps in the approval and marketing of prescription drugs.
As pressure grows on the FDA in the wake of the Cox-2 fiasco (Vioxx and Celebrex to the layperson), it is likely this survey will get increased attention.
Of note, the present head of CMS (Center for Medicare and Medicaid Services, Dr. Mark McClellan, was formerly the Commissioner of the FDA.
McClellan was Commissioner from 11/2002 to 3/2004, so his tenure post-dated the survey.


Dec
21

FDA improvements

The HealthLawProf blog has an interesting post about the need for the FDA to set up an independent testing arm. The post opines positively about this idea and makes a solid case.
The blog cites a NYT article, and provides a good synopsis (brief and to the point).


Dec
20

Avoidable hospital admissions

The Agency for Healthcare Reseach and Quality (AHRQ), recently published a study examining hospital admission patterns. The study indicates that a significant percentage of admits could have been eliminated if the patient had received appropriate care earlier.
It will be no surprise to faithful readers that there is significant variation across geography, with rates highest in the west. AHRQ theorizes that this is due at least in part to the greater distances people in rural areas have to travel to seek care; thus preventing them from receiving care earlier in the disease process.
Poverty, rural locations, and diagnosis are also key variables influencing the “avoidable admit” rate. There was much more variation for chronic than for acute conditions:
“Among the 10 chronic conditions, differences in admission rates between the lowest and highest income communities range from 76 to 278 percent.”
The report notes significant cost implications –
“Potentially preventable hospitalizations are a significant issue with regard to both quality and cost. During the year 2000, nearly 5 million admissions to U.S. hospitals involved treatment for 1 or more of these conditions; the resulting cost was more than $26.5 billion.1 While some hospitalizations were likely inevitable, many might have been prevented if individuals had received high quality primary and preventive care. Identifying and reducing such avoidable hospitalizations could help alleviate the economic burden placed on the U.S. health care system. Assuming an average cost of $5,300 per admission, even a 5 percent decrease in the rate of potentially avoidable hospitalizations could result in a cost savings of more than $1.3 billion.”


Dec
17

More on the Celebrex fiasco

Medpundit, a blog published by a practicing MD has an excellent and brief summary of the recent Celebrex news. The net is celebrex increases the risk of cardiovascular events significantly; and the higher the dose, the greater the risk increase.
While we can blame the FDA, the big pharmas, consumers, physicians, and the big bad wolf, our time will be much better spent learning from this fiasco.
Early lesson – stick with the proven meds, which in this case are Tylenol et al, and ibuprofen et al. They have the benefit of much lower cost, very similar outcomes, and a much longer track record.


Dec
6

Health care in the EU

The Global Medical Forum held their 2004 US Summit in Washington DC last week, focusing on the different systems’ approaches to health technology. Building on the 2003 Summit’s focus on Pharmaceuticals, the presentations provided compelling insights into the ways technology is reviewed, adopted, and reimbursed in the EU.
Some of the more intriguing points included:
—the evaluation process tends to be much longer in the EU than in the US, and involves stakeholders from the patient, provider, hospital, and governmental communities
—in Germany, this process includes consideration of appropriate reimbursement amounts (contrast this w the US “we approve, you pay” methodology)
cost-effectiveness is absolutely a consideration when reviewing new technology for possible reimbursement
—in Germany, only 20% of new health care technology applications are accepted..
I left with several other impressions and “take-aways”. First, the EU relies, to a surprising degree, on US health care data when evaluating their own situation or projecting into the future. Second, the evaluation of the cost-effectiveness of a specific technology makes a lot of sense, and is done rather well by the Germans. Third, in Great Britain’s much-maligned National Health System, there is surprising (at least to me) willingness to consider new technology, and to pay for expensive evaluations of same.
We can learn quite a bit from our colleagues in the EU. Health care systems in the EU tend to deliver excellent care for a lot less money than we do here in the US.
Paradoxically, I heard from several European experts that they see real value in some of the components and attributes of our system. For example, we are much better at collecting, analyzing, and using data.


Dec
2

Health care costs back on the rise…

Health care cost increases, which appeared to be moderating last year, appear to be stepping on the accelerator again. The Center for Studying Health System Change’s recent analysis indicates that health care costs continue to grow much faster than either overall inflation rates, or, more importantly, worker incomes.
CSHC’s analysis indicates that hospital price increases are one of the key factors driving health cost inflation, with prescription drug costs continuing to accelerate as well.
CSHC’s analysis and review of the numbers forecasts the impact of continued inflation, noting :
“Health care costs likely will continue to grow faster than workers’ income for the foreseeable future, leading to greater numbers of uninsured Americans and raising the stakes for policy makers to initiate effective cost-containment policies or accept the current trend of rapidly growing health care costs and gradually shrinking health coverage.”
With the number of uninsured exceeding 45 million by most counts, 18% of the non-Medicare population is now uninsured. This compares to an uninsured rate of 0.1% in Germany, a country with health care costs as a percentage of GDP some 50% less than ours.