Wednesday, October 22, 2008

NEJM Editorial on Health Care

Great editorial today in NEJM on our health care system. The author makes 3 major points (inconvenient truths):

1. Over the past 30 years, U.S. health care expenditures have grown 2.8% per annum faster, on average, than the rest of the economy. If this differential continues for another 30 years, health care expenditures will absorb 30% of the gross domestic product— a proportion that exceeds that of current government spending for all purposes combined.

He lists great reasons why this is occurring, but the thing I would like to point out is that the "free markets" have not contained health care costs, as so promised by Newt Gingrinch and the AMA in 1994, as they squashed "Hillary Care".

2. Advances in medicine are the main reason why health care spending has grown 2.8% per annum faster than the rest of the economy.

I agree with the author's points (not listed here- see article). To expand further, we need to incorporate COST-EFFECTIVENESS into the CMS/Medicare approved drugs, procedures, etc. All a company needs to get approval from the FDA and for reimbursement from CMS is to demonstrate efficacy (often only compared to placebo). New treatments should be compared to standard of care and be evaluated by cost-effectiveness as well.

3. Universal coverage requires subsidies for the poor and those too sick to afford insurance at an actuarially appropriate premium; it also requires compulsion for those who don't want to help pay for the subsidies or who want a "free ride," expecting that they will get care if they need it.

This point is so critical. People think that someone else is paying for their health insurance in the U.S., and that health care taxes as they have in other countries would be crazy. Money quote:

When a firm pays $3,000 to $7,000 per worker per year for health care, it can get that money in only three ways: reducing potential wage increases, increasing prices for what the firm sells (which means lower real wages for workers everywhere), or lowering profits. During the past three decades, health insurance premiums have increased about 300% (after adjustment for general inflation). Where did the money come from for higher premiums? Out of wage increases that would normally accompany growth in productivity. During these three decades, the average worker has not received any increase in inflation-adjusted wages. Corporate profits, by contrast, have increased by 232% before taxes (284% after taxes), adjusted for inflation.

The most efficient, equitable way to achieve universal coverage is to make basic health insurance available to everyone regardless of income, employment status, family circumstances, or other characteristics and to pay for it with a tax roughly proportional to income or consumption.

People, stop being fooled! You are paying just as much or more for your non-universal health care as you would if we had universal health care. Think of all of the premiums, co-pays for visits and meds, uncovered costs, and the lack of increase in wages and then you might realize it. Also, health care should not be tied to your employment affiliation! How many people do you know that are working at a job that they dislike, just "for the health care benefits". Get with the program.


Don said...

Maybe I can agree with you just as long as you don't take away the market incentives that keep the best doctors in America and keep the best medical innovations coming from America.

Will said...

WOW, that is a powerhouse editorial. Under truth one, I especially liked his discussion of how the %GDP climb is in part due to wages for the enormous, redundant, byzantine health care administration sector.

Under truth 3, he skipped one of the horrors of the employer based insurance system which is the HUGE tax subsidy it is for wealthy people. If your health benefit is provided by your employer, you basically have a tax shelter that increases proportionate to your salary.

Don - my sense is that the NIH is widely recognized as an effective and efficient innovation-driver. I would hope that whatever changes are made would at least preserve one of the few things that is working well. But you never know...

Anonymous said...

the NIH is a state of nothingness mr. north philly willy. love DON.

Don said...

Well, I think the private companies in America do much more than any governmental program, but NIH actually does a great job as well. Socialized medicine around the globe can kill market forces and still keep people alive by relying on the United States to continue making the breakthroughs upon which they rely. If we cripple innovation with price caps and socialism, upon whom will we rely to continue making those innovations? Europe gets a free ride from many US-provided subsidies. If we become more like Europe, who will do the same for us?

Don said...

I also don't think any country in the world has better doctors (one of my students is from a millionaire's family in London whose Mom just ran for mayor, and he says they can afford any doctor in England but still come to America for anything important), and I would like to keep that record. We already see what malpractice attorneys and runaway juries have done to doctors in places like West Virginia, and there is no need to scare more qualified people away from the profession.

Will said...

1)Tell her not to worry, there will always be boutique providers for people with cash.

2)The 'best doctors in the world' record is under its worst threat by continuing what we're doing now. Any reform on the table would be an improvement.

3)While there is definitely some connection, I think we need to make a distinction between socialized clinical medicine and socialized medical research; the former being IMO a necessity and the latter being a really bad idea. But unfettered capitalism in medical research leads to goofy stuff too -- anti-arrhthmic drugs that kill you, MRIs that are overused b/c the Orthopods referring you to them get a kick-back, unnecessary surgeries done to use devices that are patented, 16 brand name versions of the same blood pressure medications, direct-to-consumer marketing of EPOGEN for chrissakes. Good government brings enough oversight to keep things safe, major cash flow (taxation - it's the law!) but then allows talented researchers to come up with the innovations. But if David Geffen wants to take $100 billion to fund a med school to cure a disease he thinks he might get, he can do that too.

Don said...

1 - Ah, the promises of socialists and communists are so reassuring at first. Don't worry. This will only hurt a little.

2 - Please explain. How are we losing the best doctors under this system? Which country will have better doctors than America?

3 - I will take goofy things with the best cancer treatment in the world over a million doses of aspirin any day of the week. Again, which country has the "good government" of which you speak that will provide the best care at cheap prices?

Too often liberals think if we just have some smart people putting things in order for us, then we will have "good government" and we can frolic in utopia. hell. Sure, I agree that "good government" can accomplish anything and make our worlds heavenly. "Good government" can wipe my ass for me, give me a hairline, and cancel Dancing with the Stars. "Good government" is the left's answer to everything. What can "good government" not do?

The problem is that there is no such thing.

Will said...

Best cancer care in the world led by medical research from NCI. And who do you think funds the NCI, the capitalism fairy?

OK prospective medical student - here's what a career in medicine has in store: $200K in debt, declining real wages, decisions regulated by third party payors with warped notions of fairness, and a possible lawsuit or two decided by a lay jury who will be wildly influenced by a trial lawyer. We're losing the best doctors before they're doctors.

Don said...

NCI does a great job deciding which independent research initiatives could benefit from increased funding. Whenever we have the government competing against private groups, we typically develop the most outstanding outcomes in the world (i.e. higher education in America). NCI does help promote that competition (for grants in their case), and I certainly can support such initiatives from the government (or charities). Make no mistake, though, that the engine of that innovation is capitalism.

Kirk said...

I'll have to pull out our NEJM article "Controlling Health Care Costs". Remember that? How times have changed!!

Don said...

If the likes of Newt Gingrich, John Kerry (and ME of all people) can see merit in this health care proposal ...... what must be wrong with it?