Archive for category Restructuring Health Care
Ralph Waldo Emerson is not usually associated with healthcare. However, his famous quote about consistency may apply. The US healthcare system seems to be quite consistent, in a bad way.
The Perspective section of the September 7, 2017 edition of the New England Journal of Medicine featured an opinion article by Eric Schneider and David Squires. The essence of the article is to point out the US healthcare system has a lot of potential, receives lots of money, discovers great treatments and has some institutions that really deliver good care. The authors suggest with a change in focus US healthcare could be number one in the world. Yet, it is not. And, it maintains a poor rating CONSISTENTLY.
The authors state key strategies for improving healthcare:
- Timely access to care (preventive, acute and chronic)
- Delivery of evidence-based and appropriate care services.
They note several things that stand in the way of delivering care of any type:
- Cost of care (US is number one)
- Administrative burden (US is number one)
- Disparities in the delivery of care (US rates very high)
In any large US city the profusion of stand-alone emergency rooms is testament to the failed notion of high-cost rescue treatment rather than low-cost prevention or ongoing monitoring and early intervention. The US tends to invest in high-cost drugs, treatments and surgeries and under-invests in primary care and social services. The failure to adjust the focus of healthcare efforts has become a financial train wreck.
The authors of the above article present four prescriptions for US healthcare:
- Improve access to care
- Increase investment in primary care
- Reduce the administrative burden
- Make healthcare more equitable, so all people can receive good healthcare
However, those lofty goals require something else. The US must stop the foolish consistency of accepting poor health care, of paying too much for healthcare and believing great inventions automatically lead to great healthcare.
Perhaps the Emerson quote is too painful. An Albert Einstein quote may be better:
“The world we have created is a product of our thinking; it cannot be changed without changing our thinking.”
What an opportunity! A design for American Health Care that is badly needed, a blank slate, an open door, a blank check. So what blogger could resist the obvious invitation. First is the logo — I hope you like it. No more Medicare, Medicaid, Indian Health Service, Veterans Administration, Blue Cross or United Health.
Who gets AHC? Well, every US citizen.
How much does it cost? The annual out of pocket cost is limited to just $1000.
Is there any paper work? NO. No paperwork, no bills, no EOB, and no insurance claims.
What do you need for healthcare? Just your AHC card.
What is the price list?
- Office visits: $25
- ER visits $50
- Thirty day prescription $10
- Surgery $100
- Hospitalization $200
- Medical equipment $75
- Medical devices $75
- Ambulance $100
What is the national healthcare budget? It’s set by congress. Initially budget neutral at three trillion dollars (or whatever budget neutral at this time).
Where does the money come from? Taxes. Instead of insurance premiums it’s included in your taxes.
Do insurance companies go out of business? No. They process claims from healthcare providers, pharmacies, hospitals etc. The person getting healthcare does not need to be involved with all the paperwork.
What government agency runs the program? Medicare, under the AHC name. Providers bill the claims processor and AHC pays the processor.
Is great American health research affected? No. This is a health care system. Research is not health care and is outside the system.
Can people obtain health services, like for cosmetic surgery? Sure. Any services you want to purchase yourself outside AHC is fine. But, you still pay the same taxes. AHC does not pay for private care.
Are the States excluded? No. The States are responsible for managing AHC in their States. The Federal Government sets the standards for the country. The States make it happen.
Why would national costs be lower? Because America as a country negotiates prices and because cost would be capped by the congressional budget for care. The cost would be the same the first year. Waste is a major problem — with better management of a system waste can be addressed. Since about one half of US healthcare cost is consumed by waste there is lots of room for improvement.
What about poor people? The deductible would be lower than $1000 — but because the deductible is low to begin with not many would need this help.
Now would be a good time for the applause. Your humble blogger thanks you.
The people in the United States pay more for drugs than any other country. And, they pay more to universities to do drug research than other countries. In a nutshell, it is due to a lack of regulation in the U.S.
Drug companies constantly complain regulations are hurting profits. Now it appears without enough regulation drug companies are hurting sick patients. As big pharma points out, it’s all legal. Basically, big pharma points a finger at the US Congress for not imposing restrictions common in the rest of the world. Sounds like a circular argument!
Between the two articles linked above and this author’s experience here are the reasons:
- Abuse of patent laws
- Driving small drug companies and generic companies out of business with frivolous but highly expensive suits.
- Release of a similar drug before a patent expires and manipulating doctors and patients to change to the new drug suggesting the similar drug is “MUCH” better (evergreening).
- Paying new drug makers to delay marketing their competitive drug (pay-to-delay). While at the same time asking for a fast track through the FDA approval process.
- Claiming a new drug is novel when by any reasonable standard it is not (asthma inhalers are a good example).
- Coupling devices to drugs to double the difficulty for competition (like insulin pumps).
- Failing to pay their fair share of basic drug research, funded by the US government instead.
- Happily doing “inversion” deals to move headquarters to other countries to evade US taxes — into the very countries that strongly regulate drug company profits.
- Voluntarily limiting profits in many countries due to the threat of regulation, but failing to offer the same deal to the US.
- Lobbying successfully to prevent Medicare (a larger health program than the NHS in the UK) from negotiating prices as the UK has done for many years.
- Blackmailing patients to pay for old drugs at exorbitant prices because generic companies are afraid to compete (pricing because-they-can, oral beclomethasone is one example).
- Preventing drugs from other countries to be sold across borders because of unfounded safety concerns (crocodile tears).
- Actively avoiding drug comparison research — forcing others to do that type of research after the drug is already marketed.
- Doing cancer drug research with endpoints (such as tumor size) rather than life expectancy. 85% of cancer drugs now have no connection to the most basic expectation of patients, to live longer.
- The WSJ review of 40 drugs administered in physicians offices: 39 cost less in the UK, 37 cost less in Norway and 28 cost less in Ontario Canada. The price gouging in the US certainly suggests racketeering.
- Drug company profits are 17% in the US and 7% elsewhere.
- Actively avoid cost-effectiveness research — prescribers don’t know whether a new drug is better or worse than old drugs except by what is told to them by marketing. (Unlike the UK drug system which is strongly linked to cost-effectiveness)
- Drug companies hide special deals with large customers so other customers have no idea of the low end of the price spectrum. The companies are so large that a lone US State can not leverage deals needed to lower prices like countries can.
Perhaps I have missed some other corrupt practice or unethical behavior, there are just so many. This mess needs to be cleaned up! At very least the US Congress needs to institute controls similar to other countries. Feel free to send this blog to your congressional representative — with a copy of your drug bills!
The Affordable Care Act (ACA) does have some teeth to reduce drug prices. The ACA formed a 15 member group intended to restrain the growth in cost of Medicare without reducing benefits. The Independent Payment Advisory Board (IPAB) has powers to improve efficiency and prevent Medicare from being victimized by business interests.
Mergers of large pharmaceutical companies have created near monopolies for setting prices — the new specialty drugs are a case in point. Also, by repeatedly suing smaller companies and generic manufacturers the competition is under siege if not defeated. The huge rise in drug prices have become a national disaster because individuals and Medicare just can’t afford the price gouging.
The IPAB has some power to help the problem — hopefully they will act to implement reference pricing of new drugs. It forces drugs with a similar effect to charge the same amount — old drugs and new. So if a new wonderful drug “Neximabob” is no better for arthritis than ibuprofen then the prices must be the same.
The Federal Drug Administration can not require drug-comparison research. This has been a wonderful marketing loophole for big pharma. It’s time consuming to do comparison research. By the time “Neximabob” is found to be a sham, billions of prescriptions have been filled,billions of dollars have been paid and Medicare has lost billions. But, you will be happy to know, the FDA says “Neximabob” is safe and effective.
The IBAP can act on expert opinion rather than wait for full comparison research. One option for drug companies is to do the comparison research (which they fight) or do more lobbying (more that the hundreds of millions they already spend).
Guess where the money for drug lobbying comes from? the very tax payers and Medicare recipients who pay for the medications in the first place — it’s just not fair. Next time you hear the IBAP is so so bad you will know who is speaking — it’s not consumers!
Note: According to the Congressional Research Service the IBAP is not currently active because the rise in Medicare cost in 2015 is not enough to trigger actions by the committee. There is some thought it may become active in 2017 unless repealed by Congress.
Big Pharma blows the lid off the price for “specialty drugs”. Those drugs now cost more than an average American’s income. By 2020 the average specialty drug will cost $80,000 per year, just pray you don’t need two of them!
The data plotted above come from AARP. The raw data is concerning and three questions beg to be answered: WHY is this happening, IS THIS A PROBLEM and if it is a problem WHAT IS THE SOLUTION.
WHY? — because big pharma wants to make a lot of money. Somewhere, long ago and far away, some researcher wanted to help people with difficult medical problems. But, that altruistic thought was crushed as the drug was marketed.
PROBLEM? — absolutely, the US healthcare system can not afford the drugs and neither can average individuals. If a drug costs a trillion dollars it’s not a drug, it’s a joke. So where is big pharma going wrong? Here are some possible choices:
- Too much is spent on research
- Too much is spent on advertising
- Too much profit is paid to shareholders
Where is US healthcare going wrong?
- Too little regulation exists to require cost effectiveness research before marketing drugs
- Too little drug price control is being exerted by the government.
- Too little mirroring of price controls in other countries that shift profit taking to the US.
SOLUTIONS? — if the trend is allowed to continue “Bronze” health insurance will not cover specialty drugs but “Platinum” insurance will. Sadly, only the top 1% will be able to afford the “Platinum” plan. The US will have more of a two tier healthcare system with a huge gap between the 99% and the 1%.
- Impose cost controls on drugs — extremely high priced drugs should trigger rules to lower profits so such drugs will either cost less or not be produced.
- Demand cost benefit analysis on all drugs before marketing — if the benefit is not worth the cost then don’t add them to the formulary for Medicare or Medicaid.
- Wrap drug costs inside health plans. That way other factors get consideration, like preventive care, hip surgery, simple childhood vaccinations, and pregnancy. The big pharma bill should not be coming “off-the-top”.
The author of this blog is willing to be the CEO of United Healthcare for a mere $60,000,000 / year. That would save the insurance company 6 million dollars a year — a real bargain. So why does United Healthcare need a new CEO?
The Wall Street Journal reported today that United Healthcare (the nations largest healthcare insurer) can’t seem to make enough money with clients who get insurance on the government exchanges. They feel other insurance companies should have those pesky patients, who cost more for a couple of years, because they did not have insurance before.
United Healthcare (NYSE:UNH) has been having a lackluster financial situation for the past few months, like almost all other stocks — perhaps a little worse. Reports show the health insurer will lower its earnings-per-share outlook to $6 per share, down from its earlier forecast of $6.25 to $6.35 per share.
Could it be that the 25 cent drop in earnings is due to business on the exchanges? — surely it’s not the fault of the CEO? But, why take a chance, get a new CEO. The company could get a new CEO for half the price and even might be able to snag someone with a PhD in economics to help figure out what to do. Duh — lower the operating costs!
Presidential candidate, Dr. Ben Carson*, says insurance companies should be low-cost non-profit operations simply to process claims. It makes a lot of sense. Why is so much profit being extracted from the US healthcare system by insurance companies? It does not need to be that way. The companies keep about 20% to 25% of premiums for CEO salary, expenses and profits. In France, insurance companies are limited to 6%. Yes, it can be done.
* This is not a political endorsement, just an observation.
Maryland and Medicare started a global payment scheme for hospitals January 1, 2014, and data on the program are now being reported (NPR and NEJM). Some success is noted for reducing unnecessary procedures and blunting the rise in costs for Medicare and the 28 Maryland health insurance companies.
Maryland is a small state but has 6 million residents. They have had a cost control system for hospitals for the past 40 years — up until now all insurance companies, except Medicare, paid the same amount for any given hospital service — Medicare paid less.
The “Maryland All-Payer Model” adopted in 2014 had 2 basic elements: 1) Hospitals would be paid the same rate by all payers including Medicare and 2) Hospitals would be paid a global fee rather than the previous “fee-for-service” model. The global fee is adjusted to some degree by quality targets. There is no adjustment for number of services.
Maryland healthcare overall was ranked 17th by the Commonwealth Fund within the 50 states and District of Columbia. But, the hospitals were ranked much lower at 33rd in the category of “Avoidable Hospital Use & Costs”. The All-Payer Model was designed to target the unnecessary services by hospitals.
The Hospitals liked the plan because Medicare would be contributing more money and they could get the same revenue without driving so hard to perform services (like cardiac catheterizations). The insurance companies liked the plan because it reduced risk and potentially could reduce cost — they could make more money.
Doctors are not very happy because they make money by charging fee-for-service associated with many of the services (like cardiac catheterization) — fewer services, fewer charges. Likely, a number of hospital physicians will look for positions elsewhere as services are reduced.
The program seems to be having some effect: the growth in Medicare service continued to rise but was reduced by about 1% whereas nationally the growth increased by 1%. From a patient standpoint the rates of potentially preventable conditions in Maryland made big improvements (except for catheter-related urinary tract infections and foreign bodies left in people after surgery which both had a big increase for unknown reasons).
The obvious future direction is to gradually reduce the payments to hospitals — to mitigate a potential huge windfall profit. Hopefully, quality monitoring will be expanded to make sure the hospitals are not just “studying for the test” and ignoring other areas with less scrutiny. It seems Maryland and Medicare have taken an important step away from fee-for-service. Hopefully other states will follow suit.
It is interesting to note that Colorado will have a ballot question next year to move to a single payer for health care in that state. Similar to Maryland, but circumventing insurance companies all together. Perhaps we are seeing the start of efforts to get rid of fee-for-service which is a huge driver of excess cost in the US health care system.