Healthy Policy

Fixing Part D

The Senate has set dates for Medicare Part D hearings, and not a moment too soon:

Medicare officials will testify before the Senate Committee on Aging on Thursday about how they are addressing various problems with the Medicare prescription drug benefit, the Washington Post reports. According to the Post, many lawmakers "got an earful" from beneficiaries about the drug benefit while visiting their districts over the winter congressional recess, and they will now consider whether to make legislative adjustments to the program or "wait and see whether the glitches work themselves out." Lawmakers' "big concerns" with the drug benefit include the "dizzying array" of drug plans from which beneficiaries can choose and the "coverage breakdown" for beneficiaries who are eligible for both Medicare and Medicaid, the Post reports.     Next Wednesday, the Senate Finance Committee will address the drug benefit in a follow-up hearing to a meeting last week with committee members and HHS Secretary Mike Leavitt.

The question here is what legislators can come up with for long term viability.  As I discussed over at TPMCafe, not enough seniors have enrolled so far, or are planning to by the May deadline.  But the May deadline isn't the problem -- it's the program itself. 

There are several options, most not very likely and some extremely unlikely.  The grandest option, of course, would  be to repeal the whole thing and  start from scratch.  I think we all accept that's more of a "when pigs fly" kind of likely. 

But what if we changed the legislation to allow HHS to negotiate drug prices?  Ezra summarizes Economist Dean Baker's analysis:

Baker, clever economist that he is, compared Medicare Part D's projected pharmaceutical costs to Congressional Budget Office data on what other countries pay. In 2006, Medicare beneficiaries will spend an estimated $113 billion on drugs. If their costs were equivalent to the next most expensive country, they'd be paying only $86 billion. If they got the prices of the cheapest country, they'd spend $61 billion. And if, as one would expect, they used their larger size to get proportionately larger savings, they'd only spend $42 billion. Over a seven year projection, the standard benefit would cost $1.361 trillion, the high estimate in a single-payer system would cost $834 billion, the middle estimate $602 billion, and the low estimate $418 billion. And those numbers include adjustment for increased drug usage due to lower costs. Add in, too, the $38 billion savings in administrative costs and you've got quite a chunk of money -- in the optimistic estimate, almost a trillion dollars -- the Bush administration passed up on.

So a cool trillion or the program's total collapse?  Unfortunately the Administration, unlike AARP, probably won't be doing an about-face on that policy anytime soon.   I hate to be doomsday about this, but it seems like the only solution we can expect to see right now is an extension on the enrollment date until Dec. 31st, but that won't fix a thing.  Unless we see some kind of turn around in the 2006 elections, the program  is probably doomed.  Premiums will rise, but it will take a few years for it to totally collapse, and take its place  history as one of many failed U.S. health care experiments.

Med school teachings

Graham has an excellent post on changes to be made in medical school curricula:

But one area where I think we’re lacking—because medicine has changed so much—is the treatment of the chronic disease. We focus so much on the acute still in medicine, when our patients have primarily shifted to the chronic. Sure, as residents we have clinic time where we see patients as outpatients in a chronic disease setting—but most of our residency (and much of our medical school) training is still focused on the acutely ill patient. While this definitely hammers home important concepts in many diseases, which can then be translated to the outpatient basis, I wonder if there’s more we should be learning. If you look at physicians as a whole, they’re not working in hospitals, taking care of acute patients. They’re working in private practices, seeing outpatients.

In terms of care, the U.S. is great at acute treatment and really lousy at preventative care.  Perhaps the focus of medical school is reinforcing this problem? 

I have to think, however, that this is a difficult balance to strike, there only being so many years we can keep people in medical school.  But our system produces much less general practitioners and primary care physicians than other nations, another  undesirable result of the medical school curriculum (and also of market distribution, of course -- specialists get paid a lot more).  Both of these facts are costly in our health system -- specialists are more expensive than generalists,  and poor management of chronic illness can result in hefty costs over time. 

I think Graham's onto something...

HSAs and the uninsured

Matthew Holt has an excellent post on why HSA's won't solve our insurance blues:

We have had “cheap” high deductible insurance products for years and years. I personally have had one off and on since 1998 and they were around for long before that. And as the old high deductible “major medical” policies were around when health care was cheaper, and therefore were less expensive than they are now, according to Hubbard’s logic we should never have had any uninsured in the first place. And yet in California we have more than 6 million uninsured who somehow have failed to buy one. Is it possible that price isn’t the only issue here?

He's absolutely correct -- most people envision health insurance as something  that covers medical expenses.  The majority of people with catastrophic plans aren't going to see their worse-case scenario of $50,000 medical bills.  What they will see are cases of the flu, annual exams, random aches or pains. And catastrophic plans don't cover those expenses.

Besides the fact that certain aspects of these plans are unappealing, there's no evidence that HSA's are going to solve our "uninsured problem".   Studies estimate that 2.9 million more people will enroll in health insurance via HSA-type plans.  That's 2.9 out of our 46 million uninsured, or approximately 6%. 

Make no mistake, HSA's will be lauded as a cure-all in tomorrow's SOTU.  They're anything but.

Cross Posting Time

If you haven't dropped by the new TPMCafe Drug Bill Debacle Blog, I strongly recommend you do. We've assembled a great team of posters with some really interesting topics popping up.

I'm still adjusting to this two blogs thing, so I'm going to go ahead and cross-post today's submission over at TPM after the jump.

HSAs on the horizon

A few more points on CDHC.

The New York Times is reporting on banking industries and their plans to get in on the CDHC gold:

By 2010, more than 15 million Americans, or about 10 percent of all those insured, will have a health savings account, according to an estimate by DiamondCluster International, a management consulting firm.

The average individual's account balance, it projects, will grow from $1,500 today to about $3,500 in 2010. Even if people pull out some or all of their money to pay their medical bills, the ballooning balances may mean that $75 billion or so in new money to manage will soon be at stake.

So here's the thing.  We've already discussed the 80/20 rule, and why HSA's don't make a lot of sense when you factor in the way health costs are distributed.  But we're talking about a substantial period of time to even see HSA's supposed effects if only 10% of the population is projected to have them in 5 years. 

Further, the amount of money in most accounts is projected to be $3,500?  That will barely cover an individual's deductible, and only about a third of a family's.  Looking at those stats, I really can't see how they'll make a dent in actual spending. 

Trends, however, catch on easily.  And the trend of shifting costs to employees is already among us. 

VA, threeprise

Looks like I'm not the only one extolling the virtues of the VA:

Well, I know about a health care system that has been highly successful in containing costs, yet provides excellent care. And the story of this system's success provides a helpful corrective to anti-government ideology. For the government doesn't just pay the bills in this system — it runs the hospitals and clinics.

No, I'm not talking about some faraway country. The system in question is our very own Veterans Health Administration, whose success story is one of the best-kept secrets in the American policy debate.

That's Paul Krugman in today's Times (select) column. 

Best-kept secret huh?  I'm not so sure about that. 

Wrong on all counts

Via Matt Holt, it appears that HSA's aren't the only thing on Bush's SOTU agenda this year (from WSJ):

President Bush: The government must work to reduce costs through the spread of information technology, which many in the health field say will help reduce the rising costs substantially; litigation reform to prevent these frivolous lawsuits from running up the cost of medicine, either through the practice of defensive medicine and/or premium increases, and actually drive good docs out of business. I'm particularly concerned about OB/GYNs; we have an OB/GYN crisis in states because of these lawsuits.

This is excellent.  Bush is proposing not one, but two completely inept approaches for reigning in health care costs.  I'll refer to my Medical Malpractice Myth series, but here's your handy bullet-point approach to refuting medical malpractice:

• The vast majority of patients injured in malpractice do not sue.  Research has found that 3-4% on average end up filing lawsuits, and many of these are simply to glean what happened

• Malpractice awards are lower in the United States on average than other countries

• Research indicates no jury bias towards patients, in fact juries tend to be biased in the favor of doctors. 

• Research shows that juries aren't awarding any more money (adjusting for inflation and the cost of injury) than they did 40 years ago, nor are there more lawsuits

• The idea of defensive medicine is almost impossible to measure, but studies ambitious enough to do so have found very slightly higher rates of increased intervention.  States with tort reform have slightly lower rates of increased spending (5-7%), but that benefit appears to disappear after 10 years

• All spending related to malpractice is estimated to equal less than one half of one percent of all health care spending

• There is no evidence of a rash of doctors leaving practice because of malpractice costs

Issues like tort reform and buzz-worthy insurance plans easily gain traction with the public.  But neither of these solutions will make a dent in rising costs.  They're only prolonging substantial reform, exposing more and more families to financial ruin in the meantime. 

What do you want to do?  Keep trying things we know won't work?  Or something that does? 

Medicare vs. private sector

Ezra has a fantastic post deconstructing Robert Samuelson's WaPo column. From Sameulson:

Now, some say that because the "market" has failed, greater government control is the answer. Private insurance has high overhead costs and generates too much paperwork. True. Still, there's not much evidence that over long periods government controls health spending any better. From 1970 to 2003, Medicare spending rose an average of 9 percent annually, reports the Kaiser Family Foundation. In the same years, private insurance costs rose 10.1 percent annually. Part of the gap reflected private insurance's greater generosity. It covered drugs while Medicare didn't.

And Ezra lays down the smack:

First, Samuelson didn't read the study. It evaluated "common benefits," or benefits provided by both Medicare and private insurers.  Prescription drugs were not included.  Moreover, the apparent closeness comes from the so-called "managed care revolution", where private insurers switched from traditional insurance to HMO's, creating a one-time drop in growth during the mid 90's. Where growth had previously hovered between 10-12 percent, it plummeted to the low single digits through the 90's.  As the decade closed, however, growth, well, grew.  Between 2000 and 2003, private spending has grown at an average of 8.8%, with increases each year (2003 hit 9.6%).  Medicare averaged out 5.9%, with 4.7% growth in in 2003. 

The VA, reprise

Several of you (via email and comments here and at Ezra's) seem to think I'm claiming the VA's superiority based solely on customer satisfaction information.  I understand your concern about this claim, because to do so would be utterly ridiculous.  Just because people like something better doesn't mean it works better. 

I used the patient satisifaction information on top of the information I've read several places about the VA's excellent patient results and treatment standards.  I've dug some of it up to prove I'm not that crazy.

From the New England Journal of Medicine:
 

In fiscal year 2000, throughout the VA system, the percentage of patients receiving appropriate care was 90 percent or greater for 9 of 17 quality-of-care indicators and exceeded 70 percent for 13 of 17 indicators. There were statistically significant improvements in quality from 1994–1995 through 2000 for all nine indicators that were collected in all years. As compared with the Medicare fee-for-service program, the VA performed significantly better on all 11 similar quality indicators for the period from 1997 through
1999. In 2000, the VA outperformed Medicare on 12 of 13 indicators. 

The quality of care in the VA health care system substantially improved after the implementation of a system-wide reengineering and, during the period from 1997 through 2000, was significantly better than that in the Medicare fee-for-service program. These data suggest that the quality-improvement initiatives adopted by the VA in the mid-1990s were effective.

From the Washington Monthly:

The Annals of Internal Medicine recently published a study that compared veterans health facilities with commercial managed-care systems in their treatment of diabetes patients. In seven out of seven measures of quality, the VA provided better care. It gets stranger. Pushed by large employers who are eager to know what they are buying when they purchase health care for their employees, an outfit called the National Committee for Quality Assurance today ranks health-care plans on 17 different performance measures. These include how well the plans manage high blood pressure or how precisely they adhere to standard protocols of evidence-based medicine such as prescribing beta blockers for patients recovering from a heart attack. Winning NCQA's seal of approval is the gold standard in the health-care industry. And who do you suppose this year's winner is: Johns Hopkins? Mayo Clinic? Massachusetts General? Nope. In every single category, the VHA system outperforms the highest rated non-VHA hospitals.

Substantive research, along with patient satisfaction, shows that the care delivered at the VA, once the worst in the country, is now among the best. 

Something else the VA has that rest of us non-vets don't?  Electronic medical records, which have transformed efficiency and standards of care.  It's the only example of in-the-U.S. totally government-run medicine, and it works.  Bettter than Medicare, and much better than the private sector. 
 

Thanks to Martin for digging up the NEJM article

Movin' on up

HPites, it's a big day for your leader.

I've been asked to contribute to the new TPMCafe Blog Drug Bill Debacle.

The reason I didn't post anything today is because it took me practically all day to write this book-long Medicare Primer.  So head over and read it.

Just for clarification:  I'll still be posting here, albeit with slightly less frequency.  So don't take me out of your bookmarks just yet...

VA -- more than fine

WaPo reports on the sixth year in a row that the VA has outperformed the private sector in customer satisfaction:

Inpatient care received a rating of 83 on a 100-point scale; outpatient care got a rating of 80. In comparison, a similar survey of patients receiving private care found they rated their satisfaction at 73 for inpatient care and 75 for outpatient care.

Nicholson attributed the high ratings to the changes in the system, such as implementation of electronic records to reduce the risk of errors.

"Our system has become not only much more efficient, but safer," Nicholson said.

The VA is the only completely insulated government-run system in the U.S.  Medicaid and Medicare, although their growth of spending tends to be much more predictable than the private sector, still exist within it.  They rely on our fractured care delivery system, lack of preventative care, and inefficient system of paperwork and hard copy medical records.  In the private sector, that means to uncontrolled spending, bad health outcomes, and especially medical errors.

The VA not only routinely out-performs the private sector, it arrived at that level of quality after years at the bottom of the barrel.  When conservatives harp about Medicare Part D and conclude "government can't do anything right" -- here's another direction to point them.  The only truly government-run system in the U.S., and it provides better care than all the others.  Or, you know, we can keep playing "Bush's vision of health care" and let insurance go the way of the drug benefit.

When drowning, cry "partisan!"

Center for Medicare and Medicaid spokesman Gary Karr is sticking to the Administration's talking points:

"It is disappointing to see this level of partisan politics enter the equation." He said, "The expression we are hearing from nursing homes is generally very positive, but that doesn't mean people aren't having problems. Some have prepared very early for the transition, and they are having even fewer problems."

Not than we can expect anything different, but to suggest nursing homes didn't prepare enough ahead of time, and that's the problem, is flat out lying.  That's because most of the people struggling with getting their medications are so-called "dual eligibles", or people who are enrolled in both Medicare and Medicaid.  Unlike standard Medicare enrollees, dual eligbiles were randomly and automatically assigned to prescription plans.  70% of nursing home residents are enrolled in Medicaid (and the vast majority of those are elderly, and thus enrolled in Medicare).  As this New York Times article reports, all the preparation in the world won't help when the government keeps changing its mind, doesn't enroll the people it's supposed to, and allows private companies to decided which drugs should be covered:

Lights burn way past business hours at Sarah Neuman, where six months of preparation, including a new computer system, has proven all but useless. Clarifications arrive from the federal government faster than even a team of professionals can keep up with them.

''Nobody at the moment understands what they're doing, and not for lack of trying,'' said Elaine Healy, the medical director at Sarah Neuman, the smallest of three campuses of the Jewish Home and Hospital Lifecare System.

The first priority for the beleaguered staff at Sarah Neuman is figuring out what happened to a group of residents, now whittled down to 26, who should have been assigned a plan but fell through the cracks. Next they must assess the random assignments of residents to plans, decide whether to appeal the drugs not covered, prescribe different ones or switch plans.

This isn't bad government, this is bad plan design.  Refer again to Jon Cohn's article on the unbelievably smooth roll out of Medicare in 1966.  Remember, as well, that Medicare was the first time everyone over 65 had government-guaranteed access to doctors and hospitals -- substantially more complex than adding a prescription benefit.  Legislators have made every aspect of this bill, from its choice (52 plans in some areas for Medicare enrollees) to its non-choice (dual eligibles being randomly assigned plans), a labyrinth. 

Biased reporting at its best

Recent pharmaceutical scandals have left Americans further questioning pharma's motives.  They want answers.  Will they be next?   Should their child be taking that ADD medicine after all? 

Thankfully Reuters has figured out the perfect way to carry the drug companies' message on safety: quote only drug industry executives:

"Drug safety in the U.S. definitely needs improvement. It needs a careful, focused treatment, but I would argue not radical exploratory surgery," said Geoffrey Levitt, chief counsel for regulatory and research at Wyeth

"We think that moving oversight of safety to another federal agency seems extreme and could significantly stall incremental progress," said James Nickas, senior director of development at Genentech Inc.

These excerpts, from a brief article on a panel testifying before the FDA, are a nice illustration of the problem.  Here we have executives from Wyeth and Genetech saying, "no, no, everything's fine.  A little tweaking here and there would be great, but anything worse might cause a disaster!" 

But these companies just don't deserve anymore slack.  And their executives, who have an intense interest in preserving the status quo, are the last people we should be listening to in terms of safety.  It's like asking the polluter, "What do you think about pollution?  Do we need to be using less hazardous materials or just dump them somewhere less noticeable?"

Little tweaks aren't going to work.  As we saw with the new clinical trial registry, drug companies will do everything they can to avoid changes.  Only major reforms will force them to shape up here.  That starts by consulting people other than industry execs as to how to improve safety. 

Are doctors quitting because of malpractice?

This is another segment on Tom Baker's The Medical Malpractice Myth, you can view the rest of my series here.

Another oft-mentioned part of the medical malpractice puzzle is the flood of doctors leaving the system because they can no longer afford malpractice premiums.  Here (as opposed to defensive medicine and the number of lawsuits) the picture is somewhat unclear.   The number of doctors in practice has remained steady and even increased.  But some areas of the country don't have enough doctors, especially regions with large population growth and rural areas.  There isn't any direct evidence showing doctors are leaving practice because of malpractice rates.  Nor is there research showing they aren't. 

What's clear is the economics of physician supply and demand are at work in these trends, and in some places, malpractice premiums will have an effect on which doctors decide to stay in practice.

There was this saying in the 19th century that a doctor had a 50/50 chance of helping or hurting you.  We've come quite far from those days, thanks in part to the vice-like grip physicians have historically kept on supply and demand.  This stems from a number of reasons, including gaining professional credibility (and creating associations to grant it), preserving salaries, and excluding other types of medical practice (osteopathy, chiropractic, etc) from gaining respectability. 

But these controls on the number of rears in med school seats any given year have helped retain a regionally  fractured care system.  Most doctors prefer to live in populated areas. Salaries are also higher in populated areas.  And most doctors are able to find a position in said metropolitan areas, thus decreasing the likelihood that economic necessity will drive enough practitioners out to rural areas.

When it's already economically and emotionally unappealing to practice in rural areas, bloated malpractice premiums can act as a proverbial feather to tip someone off the edge of the cliff.  Some doctors will leave their practices because of it.  But is tort reform the answer?  No. Using tort reform to get  at the system's supply constraints is like only taking dessert out of your all-McDonald's diet to lose weight.  You might lose a couple pounds, but the real problem is still there.

That said, one study found that states with caps on damages had a 3% increase in the number of doctors per capita, and states with other tort reforms had a decrease in doctors per capita.  Not convincing research either way, except to say that a very slightly larger number of doctors will stay in practice with tort reform. 

Either way, malpractice itself isn't enough of a problem to send doctors running, nor is tort reform enough of fix to attract them in droves.  The malpractice/tort reform dichotomy is, however, a grand distraction in talking about the actual problems with medicine. 

Lobbying and Part D

I know I've done a lot of pharma bashing lately, but this is just so messed up (from Krugman):

Consider the career trajectories of the two men who played the most important role in putting together the Medicare legislation.

Thomas Scully was a hospital industry lobbyist before President Bush appointed him to run Medicare. In that job, Mr. Scully famously threatened to fire his chief actuary if he told Congress the truth about cost projections for the Medicare drug program.

Mr. Scully had good reasons not to let anything stand in the way of the drug bill. He had received a special ethics waiver from his superiors allowing him to negotiate for future jobs with lobbying and investment firms - firms that had a strong financial stake in the form of the bill - while still in public office. He left public service, if that's what it was, almost as soon as the bill was passed, and is once again a lobbyist, now for drug companies.

Meanwhile, Representative Billy Tauzin, the bill's point man on Capitol Hill, quickly left Congress once the bill was passed to become president of Pharmaceutical Research and Manufacturers of America, the powerful drug industry lobby.

That's not including Mark McClellan, secretary of the Center for Medicare and Medicaid Services (CMS) whose former job was as an economist, and whose brother Scott is our beloved Press Secretary. 

WSJ vs. NEJM

Via Health Care Renewal, the Wall Street Journal goes after the New England Journal of Medicine:

The New England Journal is joining the ranks of academic publications risking their reputations as non-partisan arbiters of good science in order to rumble in the political tarpits.

The facts and timing of the Merck ambush certainly suggest as much. Late last year the New England Journal published an 'Expression of Concern' about a Vioxx study it carried in 2000, baldly accusing researchers of omitting key data to make the painkiller appear more safe.

What has Dr. Curfman [Executive Editor of the New England Journal] in a dither is the fact that three more participants [in the group treated with Vioxx] also suffered heart attacks - although only after the cutoff date that had been determined by an outside safety panel for the study.

In fact, as prominent scientists have since attested, the authors were simply following the rules of science. 'If the outcomes truly occurred after the close of the study, then they don't belong in the study,' Brian Strom, an epidemiologist at the University of Pennsylvania, told Nature magazine. . .

Unfortunately, the attack on Merck isn't isolated, but is part of a growing trend among scientific journals that have joined business-bashing and other liberal campaigns.

To the untrained eye, 3 more heart attacks doesn't sound like a big deal.  But in the context of the study, 3 additional heart attacks increased the rate of heart attacks from 17 to 20.  We call that statistically significant, my friends.  If an organization is supposed to stand up for science, doesn't that mean reporting it?  Not hiding it?  Pharmaceutical companies are the ones keeping science for the sake of science off the table.  That's through multiple efforts, most recently the realization that companies are excluding both the name of the drug studied and final results in several trials on the new clinical trial registry. 

WSJ's "anonymous" (read: pharma lobbyist) op-ed contributor doesn't like the negative press for pharmaceutical companies and decided to nit-pick on one unspoken rule of trial reporting.  But shame on the person arguing that severe events like heart attacks shouldn't be considered because they occurred after the study.  This isn't a game about when adverse events should "count" -- it's health.  Merck seriously paid for hiding their results -- billions of dollars in lost revenue and even more tarnished image. 

Even so, this is a curious op-ed from the WSJ, mostly because the NEJM basically pushed through this new clinical trial reporting system which is now aiding pharmaceutical companies.  NEJM is also chock full of multi-page bright colored pharmaceutical ads.  And historically, if the journal has had any bent at all, it's been to the right.  If anything, NEJM's "expression of concern" was an assertion of power, a declaration from that it won't be used as a pawn in pharma's games and be dragged down in the dirt of public opinion as well.

Reform watch: look to states

A new study (released by Families USA) estimating the economic impact for businesses under Massachussets' new plan is today's real life example for why passing federal health care reform is almost impossible. 

The study found that for every 1 company that suffers a net loss from the legislation, 18 will benefit.  That's great news and an impressive ratio.  But it also means businesses will still suffer, and that publicity is much too easy to capitalize on.  Stories from across the state of mom and pop establishments going under will leave a stark impression that this legislation is unfair. 

These anecdotes, though existing in a 1:18 ratio, will act like the frivolous lawsuits everyone reads about, and assume that tort reform is a mighty fix indeed.  But in health care, myth is hard to fight. 

Now, thankfully, Massachussets is a liberal state that recognizes some sacrifice is needed to get everyone covered.  The rest of the country, however, does not look at small businesses closing so kindly.  But between this and the Walmart bill, these renegade states might be able to tear a hole in our myths.  Especially in contrast to Bush's won't-fix-a-thing-solution: HSAs.   

Hindsight is not only 20/20 -- it's depressing

Jonathan Cohn has penned a smart piece examining the difference between Medicare's official beginning in 1966 and Medicare Part D's voyage into the world. 

Another difference between the two administrations is their willingness to take initiative. Last year, experts repeatedly warned the Bush administration that it had inadequate contingency plans in place, culminating in a December Government Accountability Office report that predicted with eerie accuracy exactly what has happened at pharmacies around the country these past two weeks. LBJ's team was far more cautious. Although confident that hospitals could handle any potential surges, it still drew up plans for transferring patients to overflow facilities, even lining up helicopters in Texas to provide speedy transport.

There were helicopters ready for the opening of Medicare.  Nevermind a category 5 hurricane predicted to come ashore for a few days.  It's painfully sad to draw this comparison.

Truly, LBJ was a different species than Bush, but there's a powerful meme in connecting these events.  This mess isn't Government's fault, it's the Bush Government's fault.  Just like the war, just like the hurricane -- planning is inadequate, unqualified individuals are put in positions of great influence and power, and the public suffers. 

I joked about it yesterday, but CMS officials decided that 150 phone operators would be sufficient for pharmacies' questions.  There's more than 150 insurance plans!  Yesterday they corrected that mistake and upped the number to 4500.  Any idiot could have told you that 150 operators for something as major as the drug benefit was grossly inadquate. 

It didn't have to be this way.  But with every road it laid on the way to the the benefit, the Administration made sure it left a little bomb. 

First, over a dozen plans could be offered in every state, and those plans can cover whichever drugs and pharmacies they see fit -- boom!

The government can't negotiate with drug companies, ensuring high prices and billions in wasted money for tax payers -- boom!

Pass a benefit, thereby ensuring all efforts to reimport drugs from Canada will be deemed unnecessary -- boom!

Decide 150 operators are sufficient to deal with the first two weeks of enrollment -- boom!

Let states become responsible for picking up the slack when thousands of people can't get their medications, and refuse to reimburse them for doing so -- boom!

It's no wonder this road is in shambles. 

In the end, we all suffer.  Because our taxes are paying for this -- our money is being wasted.  Cohn points to who's actually suffering here:

Worse yet, the majority of these people are so-called "dual eligibles," meaning that they are not only old and sick but also poor--in other words, exactly the kind of people who are most dependent on drugs and least able to afford them on their own.

Whether it's in the military without enough body armor, dying of dehydration and lack of medical care in the super dome, or being denied medications because of completely preventable glitches, it's the same people who are paying for these mistakes, over and over.

Kate Update

Well folks, I'm still dealing with my cold/flu/sick thing.  I'm trying to keeep up the blogging but it's going pretty slow.  In the meantime head to these much more interesting people:

Jonathan Cohn on Medicare Part D

Pharma's off to their usual shady business

AFL-CIO is calling for Universal Health Care

I'll add more as they come...

How do I want to mess you up, Part D? Let me count the ways...

Then: Decide having only 150 operators is adequate to deal with pharmacies' eligibility questions

Now: Oops! Actually 4,500 seems like it might work better

Then: Designing a drug benefit where "benefit" = $$$ for pharmaceutical companies

Now:  HHS secretary declares the benefit will be instated "One pill at a time,":

Leavitt added, "When there's change, there's an opportunity for things to go wrong. We are fixing them one pharmacy, one beneficiary at a time"   Leavitt and CMS Administrator Mark McClellan said "tens of thousands" of low-income beneficiaries have experienced problems obtaining drugs (USA Today, 1/18). "We are likely to see these problems on an ongoing basis until everyone has used their card at least once,"

Then: Witnessing the disaster unfolding, states come to the rescue!

Now:  The fed could care less -- they won't reimburse the states a cent!

The federal government will not reimburse states that are covering the cost of prescription drugs for Medicare beneficiaries who are unable to obtain medications under the new drug benefit. . . McClellan said, "Under this program, [CMS doesn't] have the authority to pay states directly," adding, "People are in Medicare drug plans and it's the Medicare plans that are supposed to pay for the medications"

Then: Medicare Part D will open smoothly, no problems expected

Now: We're going to go temporarily single-payer and require that insurers cover a 30 day supply for all prescriptions taken before the benefit. 

Yes, Medicare, Bush loves you.  It might be tough, but it's love.

Pick an angle, buddy

Steve Pearlstein wants to have it both ways:

In other words, it's important to get it right this time, and a president nearing the end of his second term who is willing and able to take on the special interests is just the person to lead it. Unfortunately, by framing the debate as an ideological choice between individual control and more government, Bush is setting himself up for another Social Security-like failure...

Government -- in the form of Medicare, Medicaid and insurance coverage for employees and veterans -- already pays half of the nation's health bill. Those are among the most popular government programs, cherished by Republicans and Democrats alike. So to think government won't be heavily involved in health care is an economic and political fantasy.

Moreover, we know that by its nature, health care is a highly imperfect market.

It suffers from tremendous "information asymmetries" between sellers (doctors, hospitals and insurers) and buyers (patients).

It is rife with what economists call "principal-agent problems" -- like the doctor who benefits financially by providing more medical treatment than patients need, or health insurers that are always trying to get them to consume less.

In rural areas, there are often few providers and little or no competition.

And left alone, insurance markets will tend to lower costs for the young and healthy and raise them for the sick and aged -- an outcome that is as socially unacceptable as it is economically efficient.  So, please, let's dispense with the free market, personal choice rhetoric. Economically, its inappropriate. Politically, its just stupid. It didn't work with Social Security and -- trust me on this one -- it really won't work with health care.

So he does a fairly solid job laying out the reasons why health care doesn't respond to economic pressures, and why the government should be involved in health insurance.  All things progressives agree with.  But then he decides he wants to please conservatives as well:

That doesn't mean there aren't ill-advised government policies that need fixing, as Bush suggests, like the malpractice-tort system or the tax-free treatment of employer-provided health insurance.

Someone hasn't gotten the memo on the tort system, and why changing it won't fix anything.  But I digress...

Health savings accounts combined with higher-deductible catastrophic insurance -- the centerpiece of the Bush consumer-driven health care push -- are already gaining traction in the marketplace and show some real promise.

So here's the thing.  There's definitely an argument to be made about inducing more competition and making the health care system more transparent.  But if you spend the first half of your column bemoaning the belief that we don't need government in health care, or that competition and "individual choice" will fix things, it doesn't work very well to turn around and laud HSAs.  Especially when you think about the 80/20 rule, or that 20% of Americans use 80% of health care dollars.  That 20% will continue blowing their deductible, HSA or no. 

And how does he think HSAs are showing promise?  The only promise I see is in employer's eagerness to shift costs back to their employees.  Health care spending may have slowed in 2004, but that's mostly due to less consumption of brand name prescription drugs and more use of generics -- not because of lowered health care usage across the board caused by HSAs. 

It's great to call for universal health insurance.  But when Pearlstein first claims that consumer directed reforms will go the way of social security, he's right.  And that includes HSAs.

 

Predictable in more ways than one

Here at Healthy Policy, I like to point out that the Medicare Part D mess was entirely predictable based on the terrible policy design.  Well, according to some documents Jonathan Cohn dug up, our own government predicted just how bad it might get:

But one tidbit I came across in my research seems worth sharing now.  It's a Government Accounting Office report, issued in December, warning that the Bush administration hadn't done enough to make sure the most medically and financially vulnerable Medicare beneficiaries could actually get their drugs

Progressive policy wonks need to keep pounding the "there was a better way" and "this is what you get when Pharma writes legislation" drums.  This legislation was so poor that our own GAO felt compelled to issue a report warning of the coming mess.  That, and it made the Bush Administration temporarily go single-payer. 

Between this and Maryland's Walmart bill, it's great to see health insurance issues get back in the limelight.  But if State of the Union predictions are correct, and Bush unveils HSA's as his centerpiece, progressives have to be ready.  Medicare Part D illustrates how easily Republicans coopt liberal iniatives and turn them into disasters.  This time we'll have it as ammunition:  Don't let your insurance go the way of the Medicare Prescription Drug Benefit!

Not really insurance

Kaiser reports:

With rising health costs, "mini-medical" or "limited-benefit" plans that cover only routine physician visits and offer little to no coverage for hospitalization or emergency care have become popular options for some U.S. companies as an alternative to more comprehensive plans, the Wall Street Journal reports.

This is just genius. On top of all the other crap insurance companies and businesses are coming up with not to pay for health insurance, now we have insurance that excludes the whole point of having insurance! You know -- not being liable if you get in a terrible accident or have an awful disease. Remember how much my surgery cost? These plans cap at $10,000 annually. That's nothing you if you have a semi-serious health problem. It's a false sense of security, and until we have a viable catastrophic care market to accompany it, these kind of plans will just leave people open to huge financial risk.

Grand Rounds

Grand Rounds is up over at GruntDoc. Mosey on over, folks.

Posting will be light today as I'm feeling like crap and have to write my next column on top of it. Sorry!

Juries give outrageous rewards, right? Wrong.

Continuing my series on Tom Baker's The Medical Malpractice Myth, today we'll take at look at juries and frivolous awards.

The idea that juries sit around awarding hundreds of millions of dollars in frivolous medical liability lawsuits is one of the most pernicious aspects of the malpractice myth. That's because Americans are obsessed with lawsuits across the crime spectrum -- from OJ to Michael to that old lady who spilled coffee on herself and sued McDonalds -- and the idea that we're a culture ready to sue at the drop of a hat is quite enduring. What do medical malpractice torts have in common with those cases? Like the McDonalds coffee woman, who received third degree burns from the coffee and tried to settle for a measly $10,000 for her trouble, medical malpractice suits are prone to reaching celebrity-like status.

The claim that frivolous lawsuits are being brought, and its logical extension that juries are awarding unfair amounts, just isn't supported by the evidence. First, researchers found that only 3-4% of injured plaintiffs sue. It's not possible that we’re seeing rash of frivolous malpractice suits because just not that many people ever get to court.

It's important to realize that a good portion of lawsuits are settled out of court (thus by-passing the hundred million dollar jury awards), and a good portion of lawsuits are dropped. It’s extremely difficult to prove negligence caused injury. That's partly because of the complexity of practicing medicine -- experts must testify if a doctor followed (or didn't) reasonable practice standards. It can also be tough to determine the exact cause of injury, and even then deciding how to assign a monetary value to injury can be very subjective. Researchers took it a bit further though, to be sure that those who are being compensated aren't getting unnecessary amounts.

Despite all these factors, research shows that juries just aren't awarding any more money (adjusting for inflation and the cost of injury) than they did 40 years ago. One of the largest studies of this kind, by RAND, found this:

Our results are striking. Not only do we show that real average awards have grown by less than real income over the 40 years in our sample, we also find that essentially all of this growth can be explained by changes in observable case characteristics and cliamed economic losses (especially claimed medical costs).

Most tort reforms call for a cap on damages. But when you see the research it becomes clear: caps on damages are unnecessary at best. While there are certainly instances of frivolous lawsuits and awards, they're clearly not enough to skew the fact that damages have increased less than income. In fact, judges decide in favor of patients more often than juries, and there's evidence that juries actually have a bias towards doctors.

Tort reform will only make it more difficult for patients to sue (and with only 3-4% suing, that's quite an accomplishment), make it harder for the seriously injured to get adequate compensation, and it certainly won't slow health spending. It's a bad deal for everyone except insurance companies and negligent docs.

What Happens When You Design Horrid Policy

From the New York Times:

With tens of thousands of people unable to get medicines promised by Medicare, the Bush administration has told insurers that they must provide a 30-day supply of any drug that a beneficiary was previously taking, and it said that poor people must not be charged more than $5 for a covered drug.

The actions came after several states declared public health emergencies, and many states announced that they would step in to pay for prescriptions that should have been covered by the federal Medicare program.

Nice how disastrous policy is what finally gets the Bush Administration to go single payer. Too bad it's only temporary.

Again, I can't stress enough that this situation was completely avoidable. It was also completely predictable. When you design a benefit that makes seniors (who aren't particularly adept at using the internet) choose between dozens of plans, covering hundreds of different drugs, participating at a handful of pharmacies, you get chaos. And chaos prevailed.

Update: Health Care Renewal has a laundry list of Part D problems worth checking out.

Maryland, Walmart, and Medicaid

Ezra flushes out why targeting Walmart to pay more for health care doesn't fit:

Putting aside questions about the utility of entrenching the corporate welfare state, Wal-Mart simply does not abuse Medicaid. The retail sector as a whole sees an average six percent of its employees relying on Medicaid; Wal-Mart averages five percent. As for the children of employees, who do rely disproportionately on state services (though for perfectly good reasons), kids of Wal-Mart employees use government health care 27 percent of the time; for the retail sector as a whole, that number is 36 percent.

So not only is Walmart not causing a Medicaid problem, but Maryland doesn't have a Medicaid problem. (It does have a wage problem, however) Its growth in Medicaid spending from 1991-2001 is actually 1% under the national average. The state isn't struggling more than others under the weight of health spending.

It seems as though Maryland has come up with a very clever way to get more money in its Medicaid bank. Walmart is a favorite punching bag for the left and the myth that Walmart sends a large chunk of its employees to Medicaid is obviously still afloat. Maryland legislators are riding that wave.

If we're trying to "fix" health care, to reduce the number of uninsured, we need much broader solutions than demanding large companies demanding 8% of payroll to health insurance. That's partly because large companies usually offer insurance, while a number of small businesses don't. But rather than thinking about acutal reform, states are using political capital to kill off one or two bad guys. But this legislation could pass because it's not that intrusive. Wal-Mart claims it already spends near 8% on health care. If legislators really wanted to decrease the number of uninsured, they should have said, "You must provide insurance to 2/3 of your employees".

In terms of a viable solution for health care, this is just running in circles.

Surgery Blogging

It's Friday, so I figure it's time for something light, you know, like talking about my surgery. 

I had my second follow up appointment yesterday (I'm now four weeks out) and my first x-ray post surgery.  If you don't remember what they did to me, or were too lazy to follow the link, or new to the site, refresh your memory here.

I want to start off by saying that my doctor/nurse team is incredible.  My surgeon never makes me feel stupid, or like he's in a hurry, or like I'm just a bone detached from a body, he's not awkward, he makes jokes with me -- he's not the typical orthopedic surgeon.  The nurse is eminently capable, actually books my next appointment <i>for</i> me while I talk to the doctor, she's so bright and organized.  My mom and I always thank her profusely after appointments and she sticks by her refrain: "It's all because I've got a great doctor.  He treats me like an equal and we're a team."  It's heartening to know such great people are in charge of your care.

But enough gushing, it's time for the goods:

This is my super awesome badass new bionic femur.  As of yesterday. 

Now, if you take a close look at this x-ray (you can also click on it and open it in a pop-up window) you'll notice that where they did the actual osteotomy my bone is offset.  My doctor brought in my x-ray and I kinda cocked my head to the side, giving my most puzzled but trying not to freak 0ut that my bone is totally off look.   

Let's just give this some context now.  Don't forget that I'm the person who's been a little malpractice obsessed lately with Baker's book.  And here comes my doctor with an x-ray that looks like my bone wasn't put back together right.  I'm feeling a little sick.

The doctor looked from me to my mom (who is much better at just appearing concerned) and said, "Oh! Before I say anything else, the bone is supposed to look like that.  See, when I did the osteotomy, I shifted the bone over -- the plate will hold it in place as the bone grows in at the sides.  It won't look like that forever!"

Deep breath.  It's okay -- it's supposed to look like that.  I'm good. 

Then the usual appointmenty stuff -- I can now bend my knee 30 degrees, put approximately 25 pounds of  weight on that leg, and another 6-8 weeks on the crutches.  But everything's healing as it's supposed to, particularly my bone which is supposed to look that way.  I think.

There's a way we can all win...

Ezra makes a great point in the wake of the Administration's annoucement that they'll be focusing on health care in 2006:

But if [Bush's] proposals appear weird, that’s because The WSJ is complicit in an administration lie. There are two groups deeply concerned about health costs in this country: individuals and their employers. And individuals, as Kaiser’s polling found, are primarily worried about “having to pay more for health care.” Businesses, on the other hand, are worried that employees won't pay more for health care. This is a zero sum problem under the current system: individuals want their employers to stop shifting health costs onto their backs, and employers want to keep forcing their employees to pay more out-of-pocket. Barring a total restructuring that severs health insurance from employment, for one to gain, the other has to lose.

Ezra's got it right. One reason why it's so difficult to get minor reforms passed is because we're just shifting the costs of our bloated health system back and forth.

HSAs are just as complicated as any other head-scratching reform approach, so don't expect the public to take to them well. Any plan that boasts high deductibles (i.e. lots of $$ out of pocket if you get sick) as one of its key components will face a major struggle under the public's cost concerns. The Administration's attempts at social policy are falling flat -- even something as essential as a Medicare drug benefit was made into an unbelievable mess of paperwork and bureaucracy. Don't expect this initiative to be much different.

Malpractice and Insurance Companies

Today I'll be covering the third chapter in Baker's book, which focuses on insurance companies themselves and their role in rising premiums. You can see my posts on the book so far here and here.

Baker explains the malpractice insurance business:

Liability insurance goes through a boom-and-bust cycle. In the early years of the cycle, insurance companies take a pessimistic view of future losses and set aside more reserves than they need. Toward the end of the cycle, they take an increasingly optimistic view of future loses and don’t set aside enough reserves. As a result, they begin charging prices that are too low in relation to the risk. Because medical malpractice claims take so long to resolve and contain such a high percentage of high-value claims, the shortfalls in the reserves to pay medical malpractice claims accumulate over a number of years. When the insurance climate shifts back toward a pessimistic view of future losses, insurance companies need to increase their reserves, sometimes quite dramatically to make up for the underreserving of the past, and prices rise accordingly. This means the swings of the malpractice insurance cycle are more dramatic for medical malpractice insurance than for most other kinds of insurance.

The key here is that the market is fairly unpredictable and susceptible to drastic price increases. Premiums increased substantially in 2002 as the insurance market realized it had undervalued the claims it would pay out, the stock bubble burst, and interest rates declined.

But doctors are poorly equipped to deal with price increases in malpractice insurance. That's because income and pricing for doctors is fairly inelastic -- their hands are tied at many levels -- hospitals, managed care organizations, and government payments. In these cycles, some doctors will have a difficult time affording malpractice insurance, especially small practices.

Besides doctor's inability to absorb premium increases, the current system doesn't do enough to prevent injury. The fact is, the vast majority of patients injured do not sue. Doctor's have a strong incentive to hide malpractice, and due to the complicated nature of medical practice, most families don't know if something went wrong. And some sue just to find out what really happened.

The malpractice insurance industry as it exists doesn't make sense. Business-wise, insurers must predict their costs up to 10 years before they're incurred and the industry is very susceptible to changes in medical practice, the market, and the number of lawsuits (which has remained fairly steady so far). For doctors, it causes pain when premiums increase and it fails to provide a sufficient incentive to reduce error. For patients, it discourages full compensation for injury. It's a bad deal all around.

Who Really Pays?

Warning: Blog quibbling detailed below. Proceed at own risk.

It seems a post of mine on state efforts to mandate health insurance has caused a stir. I started the controversy so I figure it's time to clarify my original statements and respond to my responses.

Paying or Playing

Matthew Holt explains why San Francisco's initiative to get employers to cover their employees will fail:

Half those employed in city businesses don’t live in San Francisco and many of those who live in the city work outside it. On top of that, many of the employees who do not get insurance at their businesses get it elsewhere as part of the employment package of a family member. . . But of course this isn’t really about the hard done-by small business that won’t be able to afford it. Real small businesses aren’t even covered by Ammiano's legislation, (and that’s a problem in and of itself). This is instead about the big businesses that employ lots of low-wage workers—in other words, fast food chains and Walmart.

That gets us to the next problem with state-wide solutions. They, too, are ineffective. Let’s face it, no one is locating in San Francisco for low labor costs, and restaurants here can pass on the extra costs to their customers — sorry, your $27 entree will now be $28.50.

It's a good discussion of the issue, and pertinent to some of my posts here at HP, mostly this one on states forcing employers to spend a portion of their income on health insurance. One key problem with state-wide initiatives is that they can cause some cost and spending shifting to surrounding states, whereas a nation-wide reform can't be absorbed in that way. Go read the rest of the column for more.

Pharma's faltering - what does it mean for the FDA?

The number of drugs approved by the FDA in 2005 fell to 20 from 36 in 2004:

The lower approval numbers have led some industry executives "to complain that the FDA is denying approval to good new treatments because of the criticism the agency has faced from lawmakers" over Merck's Vioxx, which was pulled from the market over safety concerns, the Times reports. Most of the drugs that did receive FDA approval in 2005 were treatments for relatively rare diseases, while the agency delayed approval for more prominent treatments, such as Bristol-Myers Squibb's diabetes drug Pargluva. FDA and drug companies both "seem to agree that the process for testing and developing new drugs needs improvement," the Times reports.

The FDA doesn't need to approve a certain amount of drugs every year in order to be a viable, competent organization. Clearly we're seeing fallout from Vioxx and other pharmaceutials pulled from the market -- drug companies have ample reason to be more careful with safety questions. That's not a bad thing.

It can quickly turn nasty, however, if the FDA is dragging its feet unnecessarily. In the case of the diabetes drug Pargluva, the AMA gave a warning not to approve without further investigation because a brand new study indicated a higher risk of adverse cardiovascular events. That's a legitimate reason for delaying.

On the other hand, Plan B is languishing eternally because of pure politics. That is unacceptable.

Drug companies are struggling with slumping sales and they won't put up with a spooked FDA for long. If you remember from this post on ethics, certain interest groups are calling for changes in the way the FDA approves drugs, namely by including variables like ethical concerns and cost. Major changes are a definite possibility, and you can't underestimate the impact of a redefined FDA. Thankfully public opinion is with safety and efficacy concerns -- Pharma can't pull a Medicare Part D on this one.

What to expect when you're expecting to be hospitalized

When I left the hospital a few weeks ago, I penned this post about all the annoying things hospital people will do to you during your stay. And here comes future M.D. Graham substantiating every part:

Kate says: Do not expect to rest in the hospital, especially post-surgery. Invariably someone will declare their presence five minutes after you nod off. This includes the physical therapy person who gleefully announces, the day after they cut open your leg and put a huge plate in, that it’s time to learn crutches and practice stairs!

Graham says: You will not get any sleep; people will constantly be bothering you with questions, physical exams, or lab draws.

Kate says: Do not expect to get any real information out of your doctor, as you will only see him/her for three minutes at 6:30 a.m. By the time they’re done, you will still be rubbing your eyes trying to figure out which health practitioner is bugging you this time.

Graham says: You will be told lots of things, by lots of people, often things that use medical mumbo-jumbo. It will be confusing, probably–which test you’re getting, or what medicine you’re on. Many times people suck at explaining this stuff in normal terms, so please, please ask.

Kate says: Plan ahead! The second you need to use the bathroom, do it! Invariably someone will come to take you to some test if you wait, and you will get stuck on the x-ray table for 45 minutes while they find someone to transport you back to your room. That also goes for your pain meds – order your next one an hour early. It will take an hour to get it, and it will feel like the longest hour ever.

Graham says: You will be poked and prodded, have your blood drawn–multiple times per day, from multiple arms and wrists.

Between the two of us, you'll know everything to expect before you go into the hospital. Think of our posts as primers of sorts.

Ah, medicine.

Guide to spending in 2004

Health care spending slowed in the last year, growing at 7.9% (see more commentary here, here, and here). For policy buffs, heading over to the Health Affairs article itself is fairly enlightening. So here's your guide to trends in health care spending, 2004:

• This is the first year researchers included investment in medical equipment and software. Considering all the hype about increased health care spending due to expensive technology, I don't really understand why they wouldn't include this in the past. In any case, these sunk costs are now incorporated into the estimate.

• Private health insurance benefits stabilized as slowing drug spending offset faster hospital and physician spending growth

• Private spending actually increased at a slower rate than public spending, at 7.6 and 8.2%, respectively. The Medicare Modernization act increased payments for certain providers, which explains part of the public increase. Also some disparity can be attributed to the fact that fewer employers are offering health insurance and more people are being excluded from the private system.

• The largest shift comes from decreased spending on prescription drugs. This bit on Medicaid drug spending gives some insight as to why:

Historically one of the fastest-growing Medicaid services, drug spending slowed significantly in 2004. States have been intensifying efforts to contain the rise in drug spending by instituting prior authorization policies; imposing quantity limits on drugs dispensed; requiring use of generics; negotiating higher rebates, including supplemental rebates; and joining multistate purchasing pools.

Keep in mind, however, 2004 (and possibly 2005) will be an outlier year as the new benefit kicked in January 1.

• Insurance is remaining profitable on premiums: "Private health insurance premiums amounted to $658.5 billion in 2004, compared with $563.5 billion in benefits paid."

• Payers have been encouraging the use of generics, which increased at double-digit rates for the third straight year.

And there you go. While you're armed to impress with your intimate knowledge of health care spending in 2004, the bottom line is that costs still increased. They've been proceeding much faster than inflation, taking up a greater proportion of families' income. A slowing this year means little in the long run in the context of 6 years of rising costs. With the new Medicare drug benefit, growing rates of uninsured, and a hospital construction explosion, don't expect this trend to last.

On the defense? Not exactly.

Yesterday I wrote my first post on Tom Baker's book The Medical Malpratice Myth. I talked about how the number of people injured every year is drastically larger than those who bring suits, as well as the fact that all malpractice spending (premiums, legal representation, awards, etc) amounts to less than one half of one percent of all health care spending.

A commentor was keen to pick up on another malpractice talking point -- the notion of "defensive medicine". So where does defensive medicine fit in the malpractice spending puzzle?

As far as we can tell, "defensive medicine" is one of those tiny puzzle pieces with the really strange shape (you know, the one that seems to have 2.5 sides?) -- you can't figure out where it goes until you've trudged your way through the majority of the puzzle.

That's because defensive medicine is notoriously difficult to study. First, researchers have to decide what constitutes defensive medicine. Then they have to tease out whether the effects of those actions were harmful or helpful. Given the fact that 100,000 people die per year because of medical error, some instances of defensive medicine will be helpful because they'll help reduce that number. Others will simply be unnecessary tests or more invasive procedures to ensure "certainty", leading to increased spending and even more risk.

The research that has been conducted indicates, for the most part, that defensive medicine has little effect overall and that states with tort reform have slightly lower rates of spending than those without. But one thing is clear -- malpractice fears aren't sending shock waves through the system.

Grand Rounds

The Clinical Cases blog is hosting Grand Rounds. Hop over for all your medblogging needs.

Doctor salaries today and tomorrow

Matthew Holt has a great post up about the effects of Medicare's cuts to physician fees:

But the problem physicians face is that they don't really have an alternative. Sure some will retire early, some will move to cash only practices. But given that Medicare is about a third of the money in the system, realistically they can grumble all they like but they'll end up taking it, and of course doing more things to those patients to make it up on volume. And that's not just my opinion, it's the findings of this five year study by the HSC folks. After all, they went to medical school and residency for all those years, what else are they going to do? There's only so much room on the poker circuit and only so many of them can run health plans.

That's why I say that physicians should be figuring out how they collude with government to reduce overall spending while maintaining as good a position as they can. That's what's happened in other countries, and one day it'll happen here. Of course there's lots of time for gnashing of teeth and entrepreneurial end-arounds before then.

Now "whether it will happen here" is certainly the eternal question. Doctors have dual stakes -- one in preserving the status quo and its high salaries, and another in high salaries in the future. Unfortunately humans as a general rule tend to plan for now, not "some day in the future", so I wouldn't expect to see doctors jumping on the single-payer bandwagon until things start looking really bleak.

But considering how much higher physician fees are here than the rest of the world, that's probably in the rest of country's best interest (in terms of costs) anyway.

Ethics and the FDA

Kaiser is reporting that certain interest groups are calling on the FDA to take different variables into consideration besides safety and efficacy when approving drugs:

The Baltimore Sun on Monday examined how some critics are saying that FDA or another government entity should "look beyond the safety of the foods and drugs it regulates and consider decidedly unscientific factors, including the ethics and health care costs of approving certain products." Such a move would "represent a radical departure for the FDA, which prides itself on making data-driven decisions free from political and industry influence," according to the Sun. The Sun reports that issues raising ethical and social behavioral issues include considerations of the emergency contraceptive Plan B for over-the-counter sales and the possibility of products that are derived from cloned animals being sold.

Somehow I doubt that those behind these propositions are actually concerned about cost. No, I'm quite sure that they're only concerned about "ethical" questions, like whether Plan B should be available over the counter (or, for that matter, available period).

But why should cost be considered in terms of actually approving treatment for production? Cancer and AIDS therapies are prohibitively expensive -- often tens of thousands of dollars a year -- but that doesn't mean they shouldn't be produced at all. It's up to insurance providers (be they private or publicly paid for) to decide what will be covered. Those decisions should depend on the efficacy of therapies. Cancer treatments save lives, and for most of us that multi-thousand dollar cost is worth life. Inevitably we pay for insurance and pay taxes because we know if we were in a situation requiring expensive care that we'd need (and want) help.

Any effort to alter the FDA's role as a certifier of safety, efficacy, and objectivity is a slippery slope. Approval centered on ideology or cost concerns should be left up to payers and representatives. The agency will become useless if it opens itself to these concerns -- it has enough trouble making decisions as is.

Malpractice -- it's worse than you think

I recently picked up The Medical Malpractice Myth by Tom Baker, thinking I'd enlighten myself about the whole tort-reform/medical error debate. Baker is one of few scholars to take a substantive look at the research surrounding medical malpractice in the United States. The book is his attempt to explode the idea that frivolous lawsuits are paralyzing our system and increasing health care costs:

Adding together all the premiums of all the different kinds of liability insurance together results in a big number -- about $215 billion in 2003 -- but that number is hardly exploding, and the medical malpractice share -- $11 billion --- looks pretty small by comparison. It looks even smaller next to the $1.5 trillion plus we spent on health care that year. Something that amounts to less than 1 percent of health care costs simply cannot have the impact that the medical malpractice myth would have us believe.

The stat missing from this paragraph is that more people are killed (cw is 100,000 people a year) due to medical error every year than auto and workplace accidents combined. There are much fewer lawsuits than we would actually expect given the number of patients injured every year. A look at the above numbers -- only $11 billion out of $215 billion in the insurance liability industry is for medical malpractice -- shows that the rate of death and injury isn't being reflected in premium costs.

Further, Baker actually overstates the amount of health care spending dedicated to malpractice costs -- it's not less than one percent, it's less than one half of one percent. So it's not just that we're seeing significantly fewer law suits than experts would predict, it's that the current malpractice spending in light of all health-care spending is laughably small.

That's why fixes like tort-reform won't make a difference except to make it even more difficult for injured patients to sue. Given the already infinitesimal spending on malpractice (and that stat includes premiums, legal costs, and awards), limiting lawsuits won't make