Not necessarily the best...

Much of the battle over health care reform is the persistent belief that the current US system is hands-down the best in the world, despite considerable and growing evidence it's barely average for a developed nation and getting worse in comparison.

Aaron Carroll does yeoman work on educating laymen on medical statistics, and this is one of his best.


This is the overlooked consequence of not engaging in efforts to make our system better, but simply stop any change: we will be stuck with an expensive, and increasingly ineffective health care industry that will crowd out other economic activity.

No good answer...

One of the manifold reasons why I haven't been posting much at all is trying to support a close friend with cancer treatments (esophageal). The outlook is problematic and I am deeply worried.

Suddenly as well, some information I had considered in abstract becomes more difficult to judge as well - for example, the cost of cancer drugs vs. their efficacy.

No one knew the price of Zaltrap at that point, but Leonard Saltz, who heads the gastrointestinal oncology group at Memorial Sloan-Kettering Cancer Center, had a sense of what was coming. Zaltrap’s effectiveness, in his opinion, was almost identical to that of Avastin, an FDA-approved cancer drug that had also been targeted at that same patient population. Several weeks earlier, Saltz had traveled to Chicago to inflict a little premonitory sticker shock on his medical colleagues. He reviewed the recent clinical results of both Zaltrap and Avastin when used as a “second line” treatment, after initial treatment had failed. As Saltz reminded the other oncologists, Avastin was modestly effective as a second-line treatment—it extended median overall survival by 42 days, the same as Zaltrap—but it cost about $5,000 a month and, like Zaltrap, would have to be taken for many months to achieve that modest clinical benefit. The overall cost was so high that Saltz devoted the end of his talk to a back-of-the-envelope calculation, delivered via PowerPoint, that recast the question in terms of health-care costs: If you extended the 42 days survival to a year, “what is the cost of Avastin for one year of human life saved?”
The answer was astounding, even to doctors who have grown inured to the zero-gravity economics of cancer pharmaceuticals. As Saltz worked his way through slide 73 of 78, he arrived at the bottom line: $303,000.
“Now, that’s essentially the cost of the bare-bones drug,” Saltz later explained to me in his office at Sloan-Kettering. “It’s parts, not labor. No money for doctors; no money for nurses; no money for pharmacists; no money for real estate, heat, and lights; no money for the needles, the IV tubing, the IV fluids, the anti-nausea medicines, the other chemotherapies that are given, because Avastin doesn’t do anything by itself. It has to be given with other drugs … I want to emphasize it’s not that we can have a year of life saved for $303,000. That’s probably less than half of what the actual cost would be when you factor in everything.” Zaltrap, he figured, was probably going to be in the same range.
Saltz’s message was not entirely unexpected. He has been warning about the danger of rising drug prices, to patients and to the health-care system in general, for the last decade. Having made this point to his colleagues, Saltz packed up his computer, took the next flight back to New York, and, after the FDA approved Zaltrap in early August, began to prepare—“not with great enthusiasm,” he conceded—the Zaltrap presentation he would deliver to the hospital committee responsible for approving any new drugs for Sloan-­Kettering’s pharmacy. [More well worth reading]

As we all get upset one way or another about Obamacare and the website issue, it is important to keep in mind that our status quo has some enormous problems - not the least of which is loss of consumer influence due to third-party payers. For example, my friend is looking at a second round of chemo, and I would almost bet he has no idea what it will cost - or the possible surgery either.

Say what you will about the ACA, but one thing I think is a step in the right direction is the introduction of consumer choices in how much they want to pay in premiums as well as out of pocket costs. Transparency will change consumer behavior, I think quickly. At the same time, many people insured by employers are finally getting some idea how expensive their medical coverage is.

Of course, this is not a discussion I would broach with my very sick friend, but it is clearly one of the biggest reasons we spend so much on medical care in the US compared to other countries.Cancer drugs have become a very big business, even though they serve what one expert has described as a “boutique” market. An estimated 1.7 million Americans will be diagnosed with cancer this year, according to the National Cancer Institute, and more than 580,000 people will die from some form of malignancy. In 2012, the overall market for “oncologics” reached nearly $26 billion a year in the U.S. alone, and annual global sales are projected to total $85 billion by 2016, according to the IMS Institute for Health Informatics.

What is sobering about this booming business is that, as a group of oncologists wrote earlier this year, “most anti-cancer drugs provide minor survival benefits, if at all.” They often (but not always) reduce the size of inoperable tumors, but they rarely eradicate the disease. For relatively uncommon malignancies like testicular cancer, some forms of leukemia, and lymphoma, drugs effectively cure the disease; for the common “solid tumor” cancers (lung, breast, colon, prostate, and so on), which account for the vast majority of annual cases, drugs buy some time—precious time, to be sure, but time usually measured in weeks and months rather than years. And even though many of the newer drugs are less toxic, they often still have to be given with older drugs whose side effects include nausea, hair loss, fatigue, and decreasing blood counts. One anti-cancer drug produces a skin rash so severe and disturbing, according to Saltz, that some patients have been asked by employers not to come to work. [Same]

We are rationing already of course, but informally, and generally by economics, rather than some measure of return on the dollar. The very thought is distasteful, but our squeamishness could direct our economy into one dominated by end-of-life health care. Good news for drug makers and caregivers, but not an optimal or even desired outcome in my view.

Regardless, I know I cannot think rationally about this right now, but wish I could. Grief mixed with protracted suffering makes it hard to think well. And then I get angry for feeling sorry for myself, instead of Dan.

We are exactly the same age as well. Funny how that coincidence rivets your attention as well.

Well, enough sniveling. What I need to do is figure out actions what might ease his struggle, not mine.

Here to stay...  

But maybe not in its present form. While opponents of Obamacare still rage about its existence, the work of learning to live with it is picking up speed.  While it might seem this kind of debate/compromise could have occurred at the outset, I'm convinced that is a pipe dream. But with deadlines looming when the BIG milestones such as universal acceptance will really, really happen, the health care industry and government are moving to comply, even if grudgingly. Moreover, I'm betting we kludge this thing around to workability pretty fast.

In the process, thoughtful ideas and experiments could ease many of the most inefficient aspects of the law.

Of all the companies worried that the Affordable Care Act will be bad for business, H&R Block may lay claim to the most unique gripe.
The firm prepares millions of tax returns, one of every seven that gets filed to the Internal Revenue Service. The vast majority of its consumers receive a refund; all told, their 26.5 million customers received $50 billion in refunds in 2012.
The Affordable Care Act could change that: It charges a tax penalty to Americans who do not carry health insurance coverage. And that has H&R Block worried that some of those refunds will get eaten up – with a lot of angry customers pointing a finger at them.
“Eighty-five percent of our customers get a refund,” Kathy Pickering, who directs the H&R Block Tax Institute, says. “That refund could be offset by the penalty. And if that happens, they’re going to be understandably angry.”
Last year, the company started thinking about how to curtail those types of surprises; they did consumer research to understand how much people knew about the law, what they liked and what they didn’t.
Now, during this tax season, H&R Block is rolling out a Health Care Review product, a no-charge assessment of the subsidies and penalties they will likely face in 2014.
The health law’s subsidies for insurance coverage and penalties for not carrying a plan don’t start in 2014. But the income that will determine how big of a subsidy an individual or family will receive — that’s the income that’s being filed right now, in 2013. [More]

Given the intense tax-prep warfare being waged now, I don't see that being a stand-alone strategy got Block.  Meanwhile, governors are analyzing the new laws to see how best to respond. While this could simply gaming the system, it represents how we can best implement admittedly imperfect rules to get better results.

Wisconsin’s Scott Walker recently became the 13th governor to turn down federal money to expand Medicaid, opting instead to move Wisconsinites between 100% and 200% of the poverty line into the ACA health care marketplaces. [More of good two-sided coverage of this effort]

This reminds me of all the work by seed companies, land investors, and farmers to manage climate change on their own microeconomic level even as they deny much of the evidence for it.

People deal with reality, but they are not required to acknowledge they might have been mistaken or even cease to be irritated. Obamacare seems to be more permanent as an idea every day, but like the rest of our social safety net, it will constantly be evolving.

I still say opponents will rue the day they attached the President's name to it to capitalize on the antipathy toward a person. Universal health coverage will become as strong an entitlement in the public mind as Medicare or SS.  

Or crop insurance. We all demand a little socialism just for us.

Interstate health insurance...  

And other free market tinkering for healthcare reform.

A commenter suggests other reforms would have been better than Obamacare:

"It seems absurd to me to say Obamacare will bring us toward a freer market. If we all recognize a free market with consumers being aware of real costs and allowed to make a decision on their own that would collectively drive the market, than why not recognize that the conservative position of eliminating interstate insurance purchases would have been a great first step to introduce market forces. The other aspect you ignore that has been well-documented in many studies is that the reason US health care is expensive is in large part the built in costs and extra testing associated with our lack of liability reform. That was purposely omitted from Obamacare. Many democrats said they would deal with that separately, but of course they've forgotten all about that given the huge donations they get from trial lawyers."

Let's take these two ideas in turn. First the idea that if competition is allowed it will occur. There is no evidence for this whatsoever.

Allowing insurance sales across state lines comes up perennially as a way to drive down the cost of health care.
Conservatives argue that allowing a plan from a state with relatively few benefit mandates – say, Wyoming – to sell its package in a mandate-heavy state (like New York) would give consumers access to options that are more affordable than what they get now. 

Liberals tend to argue this is a bad idea, contending that it would create a “race to the bottom,” where insurers compete to offer the skimpiest benefit packages

A new paper from Georgetown University researchers suggests a third possible outcome: Absolutely nothing at all will happen. They looked at the three states – Maine, Georgia and Wyoming – that have passed laws allowing insurers from other states to participate in their markets. All have done so within the past two years. 

So far, none of the three have seen out-of-state carriers come into their market or express interest in doing so. It seems to have nothing to do with state benefit mandates, and everything to do with the big challenge of setting up a network of providers that new subscribers could see. [More]

Avik Roy argues it will just take longer, but so far the results are: nada. This idea also would not touch the "uninsurable" problem, which grows with each new diagnostic test.

As for tort reform, I think the idea is obscured by an availability paradox. We read about multimillion dollar settlements and see the lawyer ads, but don't have a handy comparison to total health care costs. The CBO checked this claim.

Elmendorf wrote that newly available research prompted CBO to update "its analysis of the effects of tort reform." The agency's conclusion: A package of reforms that included a $250,000 cap on damages for pain and suffering and a $500,000 cap on punitive damages "would reduce total national health care spending by about 0.5 percent."
The federal government would reap a substantial portion of those savings, the CBO said, primarily through reduced Medicare costs.  [More]

Tort reform isn't chump change, but it doesn't really move the needle. At about $5B per year saved it's really not a biggy. (At least that's what we say when they want to reduce crop insurance by a similar amount.) Keep this number in mind: $3T. That is our total health care cost estimate for 2014. (I picked that year because it's a round-ish number.)

Another issue is, as economists of all stripes point out, when you are paid per procedure (Fee For Service), you tend to get more procedures, regardless of "defensive" medicine or not. Personally, I also think American consumers want something done or prescribed, rather than hear, "You'll survive, just outlive it." Most doctor visits are for self-limiting or chronic complaints. Think of the antibiotic overuse (especially in children) that farmers point to when feeding antibiotics is linked to resistance.

I support both ideas. But because Republicans refused to negotiate during the passage of the ACA the ideas never got looked at seriously. When obstruction is your primary goal, why should your ideas be included? Davis Frum agrees. Much of Obamacare, and certainly the mandate, was a conservative idea back when I was a mainstream conservative.

“Nobody was saying that it was creeping socialism or unconstitutional at the time. A lot of conservatives were for it,” former GOP senator Bob Bennett told me yesterday, looking back to the 1993 fight against “Hillarycare.”

The roadmap for what was then the signature Republican approach to health-care reform was provided by the once quintessentially Reaganaut think tank, the Heritage Foundation, which now denounces “the cancer of Obamacare.”  The offending document was written in 1989, at the dawn of the first Bush presidency, and its rationale for the individual mandate was as follows:

1989 Assuring Affordable Health Care for All Americans
 [More]

There is no Republican plan for reforming our healthcare problem, and the two items listed above are good ideas, but hardly an answer. Besides, watch immigration reform. The right now has only one political skill/agenda: stop anything from happening.