An interesting bill was just introduced in Congress with the goal both of controlling prescription drug costs and improving care. The bill proposes a program to better educate medical professionals about prescription drugs – including training experts who would make house calls to doctor’s offices. Those of you who have been in medical waiting rooms with (usually attractive) pharmaceutical sales reps and their samples know where this idea is coming from.
It is part of an effort by the Prescription Project, a non profit (funded by the Pew Charitable Trust), the stated purpose of which is to eliminate conflicts of interest through education and policy change. Now, I wouldn’t argue that pharmaceutical sales reps should not help educate doctors. There is a legitimate role there much like the legitimate role many lobbyists play on Capitol Hill. But it is good to see these smaller efforts to effect change in the system in advance of the larger reform effort.
Now that Senator Obama’s trip overseas is done, he has signaled a shift in emphasis back to the home front and the US economy . . . which brings us back to healthcare. The fact is that if we are going to enact meaningful health care reform – including the efficiency and other cost saving measures in Senator Obama’s plan – we are going to have to come to grips with the potential effect on the US economy.
For better or worse health care has become one very major growth sector in terms of jobs and spending. See this 2006 Business Week article for some background: What’s Really Propping Up the Economy. By at least one calculation, the health care sector accounts for over 15% of US GDP. That is staggering. What happens if we cut a big chunk of that spending off?
Of course I’m not saying this should slow health care reform down. Providing health care more effectively and efficiently will have enormous benefits, economic and otherwise. The question is how we deal with the potential short to medium term economic side effects of reform. Do we depend on the free market to reallocate resources efficiently? Does major health care reform need a major economic policy element? What should that be?
Monday Google launched Google Health, its entry into the online personal health record sweeps. Google joins several other entrants, most notably Microsoft, in an effort to create complete, updateable, accessible yet secure online health records. Check some of the early entrants out: http://www.healthvault.com/ (Microsoft health vault); https://www.google.com/health; http://www.webmd.com/phr; http://www.revolutionhealth.com/my-revolution/promo; http://www.medicalrecords247.com/.
Some early features of these systems include apps to allow you to import medical records from various sources, allowing access and updating by authorized health care providers, interfacing with certain health care devices, providing a gateway to services like prescription refills and maximizing your health benefits through interface with health plan providers, building community around health care.
What may be most important in all of this is how standards develop for hospitals and other health care providers to update information and talk to each other about patients. In the end these consumer directed sites are windows (with varying functionality to be sure) on what will be an enormous back end system of information storage and exchange. Whether Google and Microsoft themselves (or Oracle or others) are the ones who create the standard remains to be seen.
What features would you look for in a personal health record system? How do they need to work truly to make a difference in creating a more effective and efficient health care system?
At the risk of getting ahead of ourselves just a little bit (but isn’t it about time!) let’s talk John McCain and health care. I’ve been listening to what McCain says about health care reform and reading his website on the subject. It is truly underwhelming stuff. What you have from him essentially are a bunch of bullet point level platitudes form the old Republican play book. The core of it – to the extent there is one – seems to be this: encourage portability which will create more insurance company competition which will solve all problems. Right.
What McCain’s “plan” reflects is not a desire to solve the health care problem, but rather a desire to say something sufficient and then get off the subject. As with so many other issues, that just won’t fly this time around. We need solutions.
You can read McCain’s supply side speak on health care here. Also see Paul Krugman’s critique which really got me going on this here.
Any comments out there on McCain’s plan or related alternatives you’ve seen out there?
So on the one hand there will probably be downsizing in certain sectors of the health care system but, on the other, we may also be looking at some shortages. For example, as this article from the Times points out, people in Massachusetts are facing long delays before seeing general practitioners. Some of the problem is a part of a larger trend; nationally, particularly in rural and many urban areas, there is a widening gap between the number of general practitioners and the need for their services. But the situation is exacerbated in Massachusetts, where you suddenly have a large number of newly-insured people who are looking to make appointments with doctors when they previously would have gone to the emergency room or just forgone treatment altogether.
Once we have health care reform, any shortage of general practitioners/primary care providers is likely to become a bigger problem. It would be a tragic irony to trade a system where people can get in to see their doctor relatively easily (at least in part) because so many cannot afford health care for one where everyone can afford health care but no one can get in to see a doctor. The Times article touches on a few possible solutions: recruiting more foreign medical school graduates, student loan forgiveness for those who go work in underserved areas, and altering the reimbursement scheme for primary care providers. What are some other possibilities? Perhaps we could take some of the resources that are freed up as a result of having a more efficient system and reinvest in programs that would make sure there are enough primary care providers?
Oh, and speaking of job training programs, also noted in the Times is President Bush's proposal to eliminate $48 million in federal support for primary care training programs . . . .
In my post yesterday I talked about our most expensive healthcare system in the world and how, according to one commentator at least, about 20 to 35 % of our $2.1 trillion annual healthcare bill represents unnecessary care and simple inefficiency. Do that math and you have $400 to $700 billion a year in unnecessary cost.
This points to another important consideration for health care reform. If we reform the system to provide better care and eliminate inefficiency we could be looking at a serious downsizing of a huge sector of the economy which employs many people. There are real economic implications. Of course, I am not suggesting we avoid meaningful reform to keep the money flowing artificially -- and the savings from lower health care bills (for business, government, individuals) – should free up resources for more efficient spending/investment elsewhere – but the displacement that would occur is something to be planned for.
Is this a real potential problem? A legitimate part of the debate? How do we deal with these issues?
You often hear the old saw “the US has the best health care system in the world” with the follow on being that we need to be very careful not to ruin all that quality care through health care reform. But read Overtreated: Why Too Much Medicine is Making the US Sicker and Poorer, by Shannon Brownlee of the New America Foundation (the New York Times’ 2007 economics book of the year). Her essential point is that we don’t have the best medical care in the world, just the most expensive. In fact if you look at typical quality of care measures, Ms. Brownlee says, our system ranks somewhere in the mid-30’s.
Among the book’s most interesting points: We spend $2.1 trillion per year on health care (greater than the entire GDP of Italy) with about 1/3 of that being for care that is unnecessary. We pay 2X per capita what Western Europe pays for healthcare. We rank low in the developed world in infant mortality, life expectancy and other key measures.
Why the low ranking and waste? Among the reasons the book cites: a fee for service system the encouraged procedures rather than managing outcomes (some of the best outcomes come from facilities that have salaried doctors . . . see the Mayo Clinic), lack of overall good case management (for example, we tend to go to a disparate group of expensive specialists rather than GP’s who know us and manage the big picture), and flat out chaos in the system (citing especially lack of strong care management in hospitals and of good electronic medical records).
There’s a road map for reform here reflected, though still high level, in the initial Obama and other Democratic health care plans. We should follow it. In doing so we won’t be ruining a best in class system but establishing one.
As noted in the Times' article, reaction has been mixed. Groups representing employers and health care providers indicate approval because of the plan's proposal to lower costs. Union and consumer groups, however, expressed concern with the plan's underlying proposal to shift costs from a shared responsibility between employers and employees to one between consumers and taxpayers, which could cause employers to drop their health care plans.
I think both groups have it right: clearly, lowering the cost of coverage has to be a top priority of any health care reform. But I'm not sure if that will make as much of a difference in a system that from the beginning eliminates employer involvement. If employers were to dump their health care plans in response to the availability of the state-run plan, the result could be a (possibly significant) gap in coverage – at least initially.
This also raises a broader question: if we were to have a single, state-run plan (or, possibly, any well-regulated private market system) that has lowered costs so that they are affordable or subsidized for all, should employers still be a part of the equation? What do you think?
My 8 year old son had a run in with a brick wall the other night playing football in the dark. He had a nasty looking bump on his forehead and was complaining about a little dizziness. Normally I'd let a kid-wall collision like this go with only some ice. But the dizziness got me and I took him to the nearest emergency room.
The emergency room docs and nurses did a great job looking my son over (he's fine, by the way). When they told me we were ready to go I asked them where to pay. They said I was all set. Wow. Seemless. No direct economic pain for me other than through my health care plan payments. This is how it should be right? Or is it?
Is it good for our system (and can we really get a handle on rising healthcare costs) if in many instances there is no direct economic connection between consumers and the medical services they consume. Can medical services be too frictionless? Certainly many of our Republican friends, and many economists, would answer "yes." Intuitively, if there is no economic pain people will be less discriminating about when and where they go for service.
But inserting economics can get very dicey very fast. Isn't it good to encourage medical decision making based only on perceived health care needs and not economics? This is why we believe all should have access to quality health insurance in the first place.
Where is the balance? Tough questions.
Would you get tested for genetic disorders if it would potentially save your life? Would you risk getting tested if you thought the results could be used to significantly raise your insurance premiums or lead to problems with potential employers? Too many people are choosing to avoid tests to avoid the risks. With no real clarity in the law on this point (no significant court cases have decided the matter and there is a bill pending in Congress which remains unpassed) there is still al lot of uncertainty out there. The result is that people and their doctors may not be getting what could be critical information in managing their health. The result also is cost on the backend for treating serious illnesses versus practicing prevention.
We have this great technology resulting in new medical prevention capabilities. Shouldn’t we get people comfortable enough so they can use it? How do we do that? What would you do if something serious ran in your family?
For more on DNA screening for genetic predisposition for illnesses see the Mayo clinic site here. Also see more general information on the issue here as well as the text of the Genetic Information Nondiscrimination Act of 2007, which has passed the House but is on hold in the Senate, here.
Coming out of this week’s Democratic presidential debate in Texas, there has been more focus on health coverage mandates as the defining difference in health care reform on the Democratic side. See the NY Times’ interesting review of the issue here. This focus at best is a distraction from the core issues in health care reform and at worst lead to a political arms race of punitive measures allowing someone to claim broadest coverage.
As the Times article points out, there is a lot of debate out there about how many people exactly would be “left out” of a plan that does not mandate that individuals purchase health insurance. And ultimately how effective a mandate is depends on two things – the price of obtaining coverage and the magnitude – and enforcement -- of the penalties. As the Massachusetts experience shows, this is not an easy balance to strike. The Massachusetts plan offers exemptions from its mandate for those who can demonstrate financial hardship and as of the end of 2007 fully half of the state’s uninsured remained uninsured. There are penalties in the plan but how far do they go to get people to join in?
Mandates simply are the wrong focus for the healthcare discussion. They distract from the main issues which are broader availability, improving quality of care, and overall cost containment (through better case management, better preventative care, better use of technology, among many other measures – all far more important than incremental savings from the next x people who buy insurance due to threats).
This blog is supposed to be reserved for discussion of health care issues and by and large we stick to that. But that is not the story tonight. I am sitting here watching Barack give his speech tonight in Houston after winning Wisconsin. It is substantive and inspiring. It is specific and visionary. It lays out disagreement with the old way of doing things while reaching across the aisle and without demonizing. It is the best State of the Union address I’ve heard in 7 years.
Along the way he also subtly started to shift to looking at the general election in how he articulated his program and addressing John McCain as someone to be admired but who is part of the old failing policies. And by the way, if you saw McCain’s speech tonight, as a Democrat you have to be heartened. He sounded a bunch of tired themes and is just awful on the stump. Will people buy the old Republican platitudes anymore? On healthcare or anything else?
Hilary Clinton spoke as well of course and touched on many of the same themes. But there wasn’t the same unifying vision. There was a laundry list of stuff trying to show that she is substantive. But it is Barack’s new overlay on all of this that has it making sense to many more people now. He is providing the substance and the vision that people will follow.
And on health care . . . again Hilary tried to differentiate her plan by citing people that Barack is “leaving out” of his health care plan by not mandating coverage for everyone. But as Barack said, he wants to make coverage available and affordable to everyone. Isn’t that really what is important here? If that is the kind of “substance” that she is hanging her hat on to differentiate herself now, then she has big problems.
Take a look at Barack's speech from Houston tonight. What do you think?
Another in the running series of measure proposing to change how Medicare works was delivered by the Bush administration last week. The Republican sponsored package includes the beginning of means tested premiums for the Medicare prescription drug benefit and requirements that better information be released to Medicare recipients on cost and quality of care (with the idea that consumers of health care will be empowered to make better choices). The former is designed to save money for the Medicare trust fund – currently on course to run out of money in 11 years – but is a drop in the bucket in the scheme of things. The latter is another piece of an admirable, though piecemeal, effort to look at ways to reduce long term costs and have the health care system operate more efficiently. Read more about the package, rejected by the Dems in Congress, here.
What we have here really is another piece of creeping incremental health care reform from the Bush Administration when what is needed is coherent, significant reform on a number of fronts as has been proposed by Senator Obama and the other Dems. The Republicans say they want to get to a more efficient system based more on private choice. I am not against that. The problem is the forgotten millions who don’t have the money or coverage to make choices. The problem also is the need to push the coordinated measures on many fronts likely necessary to get to a more efficient health care system which actually improves quality of care.
Why don’t the Republicans get that? I think in the back room they probably do. It is just more important for them politically to keep equating real health care reform with socialism than to join the discussion on real solutions. This is the test the new Democratic President will face in passing health care reform. Can we frame the debate differently this time and reach across constituencies to make it happen. I like Hilary and think her heart is in the right place on this. But I think Barack is more likely to make it happen. What about you?
The last Review, hosted by Doug Williams of Health Business Blog, was chock full o' postings on health care reform. Over at the Health Care Blog, for example, Jeff Goldsmith writes that all of the political discussion about health care reform is focused only on two of our health care "systems" – public and private financing systems – but does not address the third system, the public care system (such as safety net urban hospitals and community care centers). Of course, there are two interesting posts making arguments for and against the health care reform topic du jour – mandates. And, just for a change of pace, Michael Millenson writes at Health Affairs blog that "Huckabee seems to be saying that fixing American health care is as simple as getting smokers to put their butts down and fat people to pick theirs up."
So, have you read any interesting postings out there on reform? Also, do you think there is any way to use these well-informed blogs and bloggers to push for or help achieve health care reform?
The pharmaceutical company Eli Lilly announced strong Q4 ’07 results today -- $854.4 million in net income on $5.19 billion in revenue, a 10% earnings and 22% revenue bump over Q4 the previous year handily beating analyst estimates (yes, that is 5.19 billion with a B in the fourth quarter alone). See more detail on the results here. Nice job considering all the concern out there that generics will start to eat into profits.
I am a private sector guy who’s worked in high growth companies. So you will not find me railing against the system (too much) and generally begrudging a company pushing performance for its shareholders. But seeing these, and other drug and insurance company results, does raise a question as we think about the health care system. Isn’t there something out of whack when the system produces these kinds of numbers for companies and at the same time so many businesses, families and individuals are literally priced out of the market for fundamental products and services.
The drug market is a good example of how complex a question this is. Our system has depended on large drug companies to make money, reinvest big numbers in R&D, and bring resulting drug breakthroughs to market. This had resulted in an impressive record of innovation and an impressive cycle of profits for the drug companies. At the same time it is a system under which many people can’t afford, or otherwise get access to, the drugs that result.
How to remedy this? Don’t we need to allow the private R&D shops to continue to do their thing? How and how much can policy direct big research dollars versus letting the market do it? Are there levels of profit for drug, insurance and other health industry companies relative to access problems that really set off the alarm bells?
I think there are ways to make the supply and demand curves work better in areas like prescription drugs (for example, consortia to negotiate better rates, allowing Medicare to negotiate prices, among others). What about you? How do we reconcile this?
I am not a big fan of Wal-Mart because of its various, well-reported labor practices. I am willing to admit, however, that this is a step in the right direction. Of course, as pointed out in the linked-to article above, 7.3% of Wal-Mart's workforce still thinks it is better to have no insurance than to enroll in Wal-Mart's plan. This might be in part because some of the plans with low premiums have deductibles as high as $2000 for an individual – this equals 10% of the average Wal-Mart employee's $20,000 annual earnings. Still, a step in the right direction is always a good thing, as long as the company keeps working to increase participation.
The question is whether there is anything we can learn from what Wal-Mart has done. What do you think?
Two smaller points, though, deserve mention: first, data shows that spending on hospitals, doctors, and nursing homes grew at a slower rate in 2006 than it did in 2005, but that spending on administrative costs increased at a greater rate – almost twice as fast. "One reason [for this] is that private insurance companies have a larger role in Medicare, and they typically have higher administrative costs than the traditional fee-for-service Medicare program, federal health economists said."
Second, Medicare’s share of drug spending soared from 2 percent in 2005 to 18 percent in 2006, while Medicaid's share fell from 19 percent to 9 percent in the same period; this is because drug costs for six million people shifted from Medicaid to Medicare. As noted by the article, "[p]rivate insurers, which manage the drug benefit for Medicare, negotiate discounts with pharmaceutical companies. The discounts were generally smaller than those provided under Medicaid, the report said."
I call attention to these two smaller points because they implicate what tends to be a broader argument against health care reform that includes greater government participation: that the private market will be better at keeping health care costs and spending down. On at least a superficial level, these points appear to provide some evidence against that argument.
Only one thing to say about the results in Iowa and the latest poll numbers in NH. Wow. But back to healthcare . . .
One of the things you are hearing Hilary Clinton say to attack Barack coming out of his Iowa win relates to health care reform -- that Barack’s health care plan doesn’t go all the way since it doesn’t mandate that all adults get coverage while her plan does. She asks, why just mandate coverage for children (which his plan does) and not for adults?
Barack’s response to this is that if you make coverage affordable, most adults will make the choice to get it. You mandate for children because they don’t get their own choice. Good points, but I think Senator Clinton’s distinction is a false one in a more basic way. Her plan and others out there which set out a full mandate only barely touch on the real world implementation and enforcement of it. These are some very difficult questions left unanswered. And I believe this is where the differences will come out in the wash and Barack’s encouragement mechanisms and Hilary’s enforcement mechanisms will start to look an awful lot closer together (toward the encouragement side) than she is suggesting now. This is true both due to the political reality of what enforcement mechanisms will be palatable and the realities around what you can in fact force people to do on the ground in the very personal area of health care.
What do people out there think about whether a mandate is necessary? How would you enforce it?
This is one of those things that seems kind of obvious but, when thinking about it in terms of the broader health care reform debate, it's implications are huge. If there is such success at staving off poor health after the uninsured person turns 65 (e.g., as noted by the article, "[u]ninsured people with heart disease and diabetes radically cut their expected rate of decline, to a point where they were almost as healthy at 72 as they were at 65"), imagine what could happen if coverage were extended to everyone? Although the article does not get into this, intuitively it would seem that the costs associated with reducing the risk of declining health would rise in accordance with the rising age of the uninsured individual.
Also from the article: “
Our findings provide some of the strongest evidence yet that expanding health coverage to the uninsured improves their health,” said Dr. J. Michael McWilliams, the paper’s lead author and a research associate at Harvard, particularly older people with “conditions like hypertension, diabetes and heart disease, for which there are effective therapies.”
This seems obvious but, for some, I guess it hasn't been. Food for thought as we enter a new year. Let's hope that, as 2008 comes to a close, real health care reform is just around the bend.
The New York Times ran an interesting article this week updating state efforts on health care reform. Read it here. In short, there has been a lot of progress but not many have closed the deal mostly due to hang ups around financing mechanisms. I suspect the federal efforts at health care reform we will see over the next several years will mirror this state experience.
In other words, despite some strong consensus on need and high level policy direction, there is still the hard part left – paying for it. Is it about employer payments? Additional taxes? Better preventative care and case management? The right incentives? Better system efficiency? Maybe most importantly, what financing solutions can survive the political process? Since just about any financing solution will be very controversial, leadership from the top on this issue will be crucial.
