Bradford Plumer of Mother Jones on Kerry health care proposals:
Posted by DeLong at July 30, 2004 05:19 PM | TrackBack | | Other weblogs commenting on this postSubstance over Style: Health Care. The good news is that Kerry's health care plan (PDF) is as solid and as sensible as advertised. Kerry plans to expand eligibility for Medicaid and State Children's Health Insurance Program (S-CHIP), a long overdue move that will all but eradicate the number of uninsured children in America.
But the second, most expensive, part of his proposal -- the plan to have government insure catastrophic illness -- is the main event. Everyone has his or her own pet candidate for "the big problem" with health care in America. To give an example: health care costs rise dramatically simply because there will always be new health services, and people will pay nearly anything to get them. So in the absence of any financial disincentive, doctors will provide a lot of unnecessary -- even inappropriate -- care. On the other hand, look what happens if the government uses market competition to put bottom-line pressure on HMOs and insurance companies. The companies reduce unnecessary coverage, but they also try to avoid covering catastrophic illnesses. (This is known as "adverse selection"; a more detailed paper can be found here.) Furthermore, a few big illnesses can ratchet up premiums in a company pool, as The Washington Post recently discovered.
Under John Kerry's proposal, the government would pay for 75 percent of medical bills over $50,000 a year. Because the costs of covering catastrophic illness would be greatly reduced, insurance companies would no longer have incentive to avoid those who need health care the most. Insurance rates would fall, and younger, healthier people would be more likely to buy health insurance, since they no longer have to pick up the tab for the less fortunate. Kerry's plan attacks the worst aspects of private insurance, while preserving its benefits. If Kerry can stress this point, and allay fears about a government takeover of health care, he could well convince moderate Republicans to sign on.
Kerry has a number of other, smaller ideas for health care. Perhaps most significant is his plan to close the legal loopholes that allow "brand-name" pharmaceutical companies to stop cheaper, generic drugs from entering the market. Ever since the Hatch-Waxman Act was passed in 1984, drug companies have used hordes of lawyers to exploit the patent laws and extend their protections. It's high time to end corporate welfare for the drug industry.
In over 25 years in healthcare following my graduate work in Economics, I have seen little evidence of any benefit to Government intervention into healthcare financing. It just doesn't work.
The largest growth in healthcare began following the implementation of Medicare and Medicade and continues to grow with every subsiquent Government healthcare program. Government's means of controlling healthcare costs such as Stark legislation and monopoly protection initiatives such as certificate of need programs, just add more cost. Now this. Another well meaning program of unclear consiquences.
In this case, don't ask an Economist on what is best, ask an RN. It's realy pretty simple.
Healthcare is expensive because life is prescious and worth sticking around for. People like feeling well over feeling poorly and there is plenty of sickness just waiting to grab our attention. Problem is that when we cure one disease, people live long enough to be aflicted othere disease processes they would not have experienced had they died earlier. Alzheimers is a good example as are total hip surgeries and other joing replacement procedures, all of which post no financial burden when people die in their 50's. No how is more Government involvement going to change that when nearly half of all Medicare payments go to people in the last three months of their life?
Here is where Economists can participate..... Help medicine figure out a way to measure healthcare productivity. Just do that and we'll handle the rest.
Thomas A. Coss, RN
Posted by: Tom on July 30, 2004 07:48 PMIf all government had to do is get out of the way, why is the US way down on any measure of health and longevity compared to other developed countries? The problem with Tom Cross's analysis is that government health care works and is less expensive than the system the US has now.
Posted by: Eli Rabett on July 30, 2004 08:24 PMSimple decision rule, which has proved remarkably accurate for many years: if Mother Jones thinks it's a good idea, it's a bad idea.
Posted by: momma smith on July 30, 2004 08:30 PMHow about flooding the market with foreign doctors who are used to living within the means of the countries they came from? Do to the medical industry what has been done to the manufacturing industry, import what you can't afford to produce locally. I would think that a doctor from overseas would be happy to have a new Toyota and a moderate priced house here. Perhaps our doctors have overpriced their abilities and need some serious competition.
Posted by: Vaughn on July 31, 2004 01:04 AMKerry’s plan is going to cost people money. Your taxes will go up more than your health insurance premiums (whoever pays them) will go down. From the standpoint of improving the health of Americans, is this the best way to spend the money? And we do we expect anything from the people who will get this new benefit?
There is little doubt that lifestyle has a significant effect on human health. Someone with a body mass index (BMI) greater than 30 (the break point for obesity) is at much greater risk of diabetes and circulatory problems. Even a BMI greater than 25, (the breakpoint for being overweight) carries additional risk. You can control your BMI. Would it be unreasonable to ask the people who will receive this extra benefit to at least make an effort to change their lifestyle to help control costs? Or are we supposed to subsidize gluttony and sloth? A modest proposal. To qualify for this new benefit we require the recipients to put their BMI (if excessive) on a downward trajectory. And give them help to do this. How the politicos deal with something like this modest proposal will tell you if they are really interested in improving human heath, or just trying to buy votes with another free goodie.
Incidentally about 20% of Americans have a BMI over 30 and nearly 2/3 have a BMI over 25. So this is no small effect. Even the cutoff at 25 was a political compromise (circa 1990). You don’t get to a relative risk of unity for a whole slew of diseases until the BMI drops to 22. This means that someone about 5’ 10” should weigh 153 pounds.
Some semi-random thoughts:
Health care expentitures certainly have gone up since Medicare, but it's not because of government waste or inefficiencies. Quite the contrary- Medicare administrative overhead is on the order of 3%, or about one-tenth of what some private plans' overhead is.
The simple truth is that we all use more health care services than we used to, and we do so because it's "free". As a coworker of mine has said, if private transportation were treated the same way as health care in the US, and we all had a "right" to have a car, we'd all decide we needed to drive Cadillacs, and we would.
In many ways, at present, we have the worst of all possible health care worlds- expensive and cost-ineffective. The rest of the civilized world has broader coverage and better objective results at one-half to one-third less cost. However, while I would personally support a government-run health care system like any of those that function well throughout the world, I think that this is probably politically impossible (at least now), so we need to take a realistic view going forward.
The bottom line with regards to this proposal is that if the government covers these costs, there must be some sort of a disincentive provision- some reason why doctors and other health care providers as well as beneficiaries shouldn't spend an unlimited amount of money once they get past this threshold. The 25% "copay" of the present proposal could provide this, but not if the insurance companies cover this last quarter of costs; in the latter case, there is still no economic reason why doctors would decline to provide ever more heroic but ultimately futile care to dying patients. Yet 25% of a million-dollar hospital bill is well beyond the resources of most Americans.
As much as we would like to, we cannot spend an unlimited amount of money on every patient, and given a limited amount of health care dollars, money spent on extraordinary (but often futile) care will necessarily decrease funds available for more cost-effective (often preventative) treatments for others. Our first step as a society, I think, must be to accept this reality, as well as the reality that medical care is and will continue to be rationed, either by cost, or availability, or by statute.
Posted by: Peter Benson MD on July 31, 2004 06:52 AMDr. Benson makes some excellent points. I’d like to add a few of my own as a Pharmacist and a retired director at an East Coast HMO.
The Pharmaceutical Industry’s latest gambit to increase consumption of it’s products is the sponsoring of research whose specious conclusion is either new guidelines recommending the use of chemotherapeutic agents as a first line response (where they had previously been second or third line)* or lowering the clinical bar and instituting drug therapy much earlier in treatment.**
Many useful agents on the market today are the result of basic research done at taxpayer expense (grants to universities, DOD). If this intellectual property is to continue be marketed by private industry, as it is today, it is time that we looked more closely at the method and price at which we sell it to private industry.
I do not think it unreasonable for government to tie length of patent life to a price expectations schedule.
Without giving CMS the ability to negotiate prices (rebates), the Medicare discount program is only a cash cow for pharmaceutical manufacturers.
* recommended new guidelines for treatment of ADHD
** treatment of “pre-hypertension”, “pre-diabetes”, “pre-hyperlipidemia” etc..
"* recommended new guidelines for treatment of ADHD"
Drugs have been first-line treatment for ADHD for quite a while.
Posted by: Jon H on July 31, 2004 10:38 AMThank you Jon H,
As I wrote the above I was thinking of the Bush administrations new proposal for evaluating the entire U.S. population for mental illness (see British Medical Journal website for June 19) with a new program based on the Texas Medication Algorithm Project which promotes the use of newer, more expensive psychotropic drugs. It is the stated intent of the Administrations to roll out the program in our schools.
Given that members of the school system, who will also play a key roll in the implementation of the Bush proposal, have a history of using the label of ADHD as a catchall for many forms of disruptive behavior, and my expectation that they will continue to co-op and use the label inappropriately, I have, in my mind, yielded to their “conventional wisdom” and used it inappropriately myself. Just as you noted that I have.
The clinical community may wind up renaming the condition (yet again) in an attempt to communicate a more specific diagnosis.
Sorry for being unclear.
jack
"Texas Medication Algorithm Project which promotes the use of newer, more expensive psychotropic drugs."
ADHD would seem to be a poor prospect for this, because there's a generic for Ritalin.
Granted, there are newer drugs, which are under patent, and that includes a non-stimulant drug which would be attractive to people wary of giving their kid "speed". But there's always going to be that cheap, very effective generic option.
Then again, one should never underestimate the capacity for corruption of the Bushes and their corporate cronies.
"But there's always going to be that cheap, very effective generic option."
True JonH, but isn't it frustrating how infrequently those options are exercised in practice. Speaks much more to the power of "marketing" to prescribers and consumers than to the corruption of politicians.
“Although 1,505 new generic products were approved by the FDA between 1994 and 2000, there has been virtually no increase in the overall market share of generic drugs since 1997”
Posted by: jackNYC on August 2, 2004 08:55 AM