Health Business Blog

The Republican Party is having a hard time dealing with the rebuke it received in the November elections. Party leaders pretty quickly determined that the growing Hispanic vote could not be ignored and that immigrant bashing might not be the wisest policy to pursue. That’s led to talk of some compromise on immigration reform with the Democrats, although I’ll believe it when I see a law passed by Congress.

Many Republicans see Hispanics as a natural constituency: socially conservative, business-oriented, etc. And there may be some truth there. 

But there’s another issue that stands squarely in the way: health care policy. Latinos have the lowest rate of health insurance coverage of any ethnic group and are big supporters of ObamaCare. Maybe health care was equally or more important than immigration in Obama’s success in November. I have no doubt that continued opposition to the Affordable Care Act will cost the GOP support at the national level. Resistance to Medicaid expansion at the state level is likely to hurt Republicans among Hispanics in places such as Texas, where Governor Perry’s rejection of ObamaCare has a direct and noticeable effect on the Hispanic community.

Universal health care is something people expect, even in middle income countries, never mind in the US. After all Mexico has found a way to offer health care coverage to everyone. Maybe we’ll soon hear of Americans  seeking entry to Mexico to get health insurance.

Share

The Sardonic Edition of the Health Wonk Review blog carnival has been posted at Wright on Health.

Share

The New York Times Bits blog has one of the better articles I’ve read about caregiver robots for the elderly. The aging population plus fewer family caregivers, fewer available human aides and relentless advances in technology are making the routine use of robotic assistants for the elderly all but inevitable.

One way or another we should expect to see robots enter the home to take care of the elderly. Certain tasks are less controversial. For example, a robot that clears dishes from the table, loads them in the dishwasher and then unloads them when they’re done isn’t that big a deal. That’s only a step or two beyond what a dishwasher does today. But even there you encounter issues of learned helplessness. If the robot can do it, why make the effort, even if effort is what provides purpose in life and staves off physical and cognitive decline?

Then there will be robots that keep track of medications and encourage people to take them on time. Those are probably good, even for non-elderly patients, because they could help boost adherence, reduce medication administration errors, and order refills in a timely manner.

It gets a little spooky when we start thinking about robots that do personal tasks, such as giving baths. And what about robots that act human to engage elders in conversation? It’s pretty clear that a lot of patients develop a relationship with such creatures, especially if they are dressed up like humans or have a human voice. On the one hand that’s a great relief to a remotely located adult son or daughter. The parent will have someone to talk to all day who keeps his/her patience and has plenty of time. But there can be feelings of guilt, too, as the son or daughter realizes they’ve delegated something critical to a machine and may even be unwittingly tricking their parent into thinking it’s human.

Things get even dicier when robots are used to monitor activities and behavior, which may lead to resentment by the parent and loss of autonomy.

I think we’ll just need to get used to these issues and work through them and that if we do so we can get to a generally happier place. The typical model I’ve seen of elders spending their last years accompanied by hired caregivers can sometimes be wonderful, but often has serious downsides.

If and when I get old and am on my own, I’ll be ready for my robot or robots.

Share

Mid-sized, low wage companies will feel the effect of Affordable Care Act (ACA) implementation. Currently, many of their workers are uninsured but that is meant to change next year. Health insurance will be an added cost for these employers, but government subsidies will soften the blow.

Opponents of the law have been making a big deal out of how it will harm businesses and stop their growth plans. But even though today’s Wall Street Journal article (Eateries Fear Health Law’s Bite) starts to take us down that well-trod path, if you read it closely you’ll see there’s little to fear.

The article leads off describing East Coast Wings & Grill, which is temporarily limiting its franchisees to ownership of 3 to 5 stores due to uncertainty about whether the stores are viable when they need to pay for insurance. The International Franchise Association shares survey data indicating 72 percent of franchisees say the law creates “some” or “significant” uncertainty for long-term planning. Rat burger purveyor White Castle is also planning to slow down its expansion.

Overall it’s a pretty feeble argument against ACA expansion. Certainly there are other things prospective Wing operators and franchisees in general are uncertain about, including the cost of food and how the sequester will impact the economy. It’s convenient to blame the Affordable Care Act for a chain’s problems. But if it weren’t that we might be hearing some other explanation, like bad weather.

Interestingly, the more well-established chains don’t seem overly worried about ACA. Wendy’s, Dunkin Donuts and McDonald’s are all aware of ACA and making plans for the modest impact it is likely to have.

—-

By David E. Williams of the Health Business Group.

Share

Generic drugs have been an effective cost containment solution for traditional, small molecule pharmaceuticals. As large molecule biologics proliferate and take up a growing share of medical spending, we also increasingly need cost containment.

The path we’re on now in the US and Europe is to ape the experience with small molecule products by introducing generic versions as patents expire. As I’ve discussed in the past, this is a bad idea. Development costs are high, manufacturing is notoriously difficult, and the products won’t be identical anyway. That’s why the products are called “biosimilars.” As a result the products are going to be expensive –we won’t see nearly the costs savings as we do with small molecule products, and FDA will be stretched too thin monitoring the manufacturing facilities. Instead I propose to allow branded products to maintain their monopoly after patent expiration, but to regulate pricing.

Recently I’ve been thinking this through a little bit more and have become even more troubled by the idea of biosimilars. In particular I’m concerned about the ethical and practical issues of conducting clinical trials for these products.

Patient recruitment is a challenge for most clinical trials, and as a result studies are frequently delayed. A key problem is that few development-stage therapies offer significant improvements over what’s already on the market, so there is limited enthusiasm to participate in a study that has little reward but also includes risks. Doctors don’t feel comfortable recommending that patients enroll, and patients are understandably hesitant, too.

The challenge for bio-similar trials will be even harder. It’s hard for me to understand why a patient would want to join a trial just to help prove that a new therapy is very similar to an existing therapy. I suppose it’s possible that a biosimilar product could be a little better in specific instances, but mostly these trials will just attempt to prove a new drug is the same as the old.

The ethical issue is related to the practical one. If there’s no upside to joining a trial, is it reasonable to ask a patient to take on any extra risk, such as the risk that the product doesn’t work or makes them sicker? I kind of doubt it.

At the end of the day, I feel more strongly than ever that biosimilars and biogenerics  are a foolish and pricey prospect.

—-

By David E. Williams of the Health Business Group.

Share

Older people with short life expectancies often receive aggressive, expensive treatment for non-threatening skin cancers, receive little benefit from the treatments, and experience inconvenience, side effects and complications. This news is hardly surprising — I’ve written before about people with low life expectancies receiving unneeded screening and treatments (The overuse of mammography in elderly women with cognitive impairment) — but it’s disturbing.

The JAMA article indicates that only three percent of these cases were not treated. To me that indicates three things: a general bias toward action in American medicine, a special fear of cancer, and the financial incentives to perform procedures. I agree with the NY Times suggestion that we use the term “abnormal cell clusters” rather than cancer, since they are so unlike other more dangerous cancers.

It’s worth keeping situations like this in mind when considering how to restructure Medicare, which will be necessary in order to get the federal government’s finances in line.More cost sharing and the promotion of shared decision making for conditions like this would be a good first step.

—

By David E. Williams of the Health Business Group.

Share

Check out the Health Wonk Review blog carnival on Joe Paduda’s always-excellent Managed Care Matters.

Share

Conventional wisdom is that cutting Medicare rates shifts the burden to the private sector, but an intriguing article in Health Affairs reaches a counterintuitive conclusion:

“Cuts in Medicare payment rates have not caused the rapid rise in private rates. In fact, private rates might have grown even more rapidly if Medicare had not kept its rates in check.

The Affordable Care Act permanently slowed the growth in Medicare hospital payment rates, producing large savings for the federal government. One criticism of those rate cuts is that private insurers will get stuck with the tab. My results indicate the opposite: Private insurers may actually see the growth in their payment rates slow as a result of the act…”

The author, Chapin White, of the Center for Studying Health System Change isn’t definitive in his conclusion about the mechanism by which these results are occurring, but has a theory:

“Intuitively, when Medicare cuts its payment rates, Medicare patients become relatively less financially attractive, and private patients become relatively more financially attractive. Hospitals then seek to increase private volume, and the way to do that is by lowering the private payment rate.”

I think he may be right. Another simple explanation is that health plans tend to follow Medicare rates and do little to independently establish and negotiate price levels. As mentioned yesterday I’d like to see the Affordable Care Act modified to give health plans greater incentives to control costs; hospital rate negotiations would be a prime way to do it.

On a related note, constrained health care spending is helping bring down the budget deficit from crisis levels. The Washington Post and others say this is a bad thing because it reduces pressure for a “grand bargain” on the federal budget. But I don’t see a grand bargain happening anyway (despite the sequester, which was supposed to be more than sufficient motivation), so anything that defers the need for a budget deal is fine with me. If we’re lucky things will continue to improve and we won’t need the Congress to come to its senses.

Share

The Affordable Care Act is a big step in the right direction but like any big complex new thing (think 787 Dreamliner) there are likely to be hiccups coming out of the gate. I’d like to see us learn from implementation of the law and make improvements along the way. Unfortunately many opponents take the opposite view –and would still rather repeal the whole law or resist implementation. For example, Eric Cantor is again vowing a House vote on full repeal, states are rejecting the Medicaid expansion and having the federal government run insurance exchanges in their states rather than doing it themselves.

In the spirit of improving the law, I’d like to see a modification to the minimum medical loss ratio rules for health plans. Under the law, plans have to spend at least 80 percent (individual and small group) or 85 percent (large group) of premiums on medical costs. On the positive side this ensures that health plans use their resources on medical care and reduces incentives to restrict access, but it also limits the incentives for health plans to contain costs. After all, if medical costs are contained “too much” then the plan has to pay a rebate.

But we really should want plans to contain costs: by negotiating hard with providers, by introducing better network designs, and improving payment methodologies. Plans should be rewarded financially for doing this.

One way to make it happen would be to let plans with a strong track record of cost containment escape the MLR, at least partially. For example, if a plan raised its premiums by less than the market rate or less than some external benchmark such as the Consumer Price Index, it could be allowed to have a lower MLR –and higher profit margin. That would encourage plans to do a better job of holding the line on costs because it would be the surest route to enhanced profitability.

Share

It’s hard for policy wonks, politicians or health plans to be viewed credibly when promoting health care cost containment. Discussion quickly turns to “rationing,” and “death panels,” which no one wants to be associated with, and as a result the federal government has done almost everything possible to make sure cost effectiveness and overall costs are ignored in policy making.

Those closer to the action know better. In particular:

• Many costly treatments aren’t worth the money
• New treatments with tiny or no benefits often cost a multiple of existing therapies
• Despite their reputation for penny-pinching, health plans are often not aggressive in negotiating price
• Patients are already suffering mightily from high costs –and it impacts quality of life and survival as well as financial health
• Society as a whole can not afford to pay the high prices charged for so many of the new therapies

So it’s encouraging to see a perspective in the journal Blood endorsed by more than 100 experts. The piece, The Price of Drugs for Chronic Myeloid Leukemia (CML); A Reflection of the Unsustainable Prices of Cancer Drugs: From the Perspective of a Large Group of CML Experts,  is very useful because it comes from people who know what they’re talking about and who have traditionally been sympathetic to drug makers and unperturbed about costs.

Here are some excerpts that are noteworthy for their candor and clarity:

“If drug price reflects value, then it should be proportional to the benefit to patients in objective measures, such as survival prolongation, degree of  tumor shrinkage, or improved quality of life. For many tumors, drug prices do not reflect these endpoints, since most anti-cancer drugs provide minor survival benefits, if at all.”

…

“In the US, prices represent the extreme end of high prices, a reflection of a “free market economy” and the notion that “one cannot put a price on a human life”, as well as a failure of government and insurers to more actively negotiate pricing for anti-cancer and other pharmaceuticals, in contrast to practices in other parts of the world.”

…

“In Europe and many developed countries, universal health coverage shields patients from the direct economic anxieties of illness. Not so in the United States (US) where patients may pay an average of 20% of drug prices out-of-pocket(about $20-30,000 per year, a quarter to a third of an average household budget), and where medical illnesses and drug prices are the single most frequent cause of personal bankruptcies. High drug prices may be the single most common reason for poor compliance and drug discontinuation, and the reason behind different treatment recommendations in different countries.”

—–

By David E. Williams of the Health Business Group.

Share