Your Health Insurance, Designed by Lobbyists
Christopher Weaver of Kaiser Health News has an excellent article in today’s Washington Post on the various government agencies that will now be deciding what health insurance coverage you must purchase, and how many of those decisions will ultimately fall to lobbyists and politicians:
For years, an obscure federal task force sifted through medical literature on colonoscopies, prostate-cancer screening and fluoride treatments, ferreting out the best evidence for doctors to use in caring for their patients. But now its recommendations have financial implications, raising the stakes for patients, doctors and others in the health-care industry.
Under the new health-care overhaul law, health insurers will be required to pay fully for services that get an A or B recommendation from the U.S. Preventive Services Task Force…[which] puts the group in the cross hairs of lobbyists and disease advocates eager to see their top priorities — routine screening for Alzheimer’s disease, diabetes or HIV, for example — become covered services.
And it’s not just the USPSTF that will be deciding what coverage you must purchase:
[P]lans must also cover a set of standard vaccines recommended by the Advisory Committee on Immunization Practices, as well as screening practices for children that have been developed by the Health Resources and Services Administration in conjunction the American Academy of Pediatrics. Health plans will also be required to cover additional preventative care for women recommended under new guidelines that the Department of Health and Human Services is expected to issue by August 2011.
The chairman of the USPSTF says the task force will try “to stay true to the methods and the evidence… the science needs to come first.” A noble sentiment, but as my colleague Peter Van Doren likes to say, “When politics and science conflict, politics wins.” Witness how industry lobbyists have killed or neutered every single government agency that has ever dared to produce useful comparative-effectiveness research. (You’re next, Patient-Centered Outcomes Research Institute!)
When government agencies are making non-scientific value judgments–e.g., are these studies reliable enough to merit an A or B recommendation? what should be the thresholds for an A or B recommendation? will the benefits of mandating this coverage outweigh the costs?–politics does even better. Witness Sen. Barbara Mikulski (D-Md) overruling a USPSTF recommendation when she “inserted an amendment in the [new] health-care law to explicitly cover regular mammograms for women between 40 and 50. ”
Speaking of value judgments, the one flaw in Weaver’s article is that it inadvertently conveys a value judgment as if it were fact. He writes that the mandate to purchase coverage for preventive services is “good news for patients” and that 88 million Americans “will benefit.” Whether the mandate is good news for patients depends on whether patients value the added coverage more than the additional premiums they must pay. (The administration estimates that premiums for affected consumers will rise an average of 1.5 percent. One insurer puts the average cost at 3-4 percent of premiums. Naturally, some consumers will face above-average costs.) Whether the benefits outweigh the costs is ultimately a subjective determination. (The best way to find out, as it happens, is to let consumers make the decision themselves.)
You Say You Want Comparative-Effectiveness Research?
Over at CongressDaily, Julie Rovner has a great piece on the difficulties involved in generating and using comparative-effectiveness research (read: evidence that can improve the quality and reduce the cost of medical care). Rovner cites a recent New England Journal of Medicine article about the obstacles to conducting CER, and a recent article from Health Affairs that finds consumers tend to trust their doctor’s judgment more than evidence-based treatment guidelines.
In a paper titled, “A Better Way to Generate and Use Comparative-Effectiveness Research,” I explain how a string of government interventions — from state licensing of medical professionals and health insurance, to the tax preference for job-based health insurance, to Medicare and Medicaid — have reduced both patients’ demand for evidence about which medical interventions work best, as well as the market’s ability to supply that evidence. In that paper, I predict that efforts like the CER funding in the “stimulus” bill and ObamaCare’s “Patient-Centered Outcomes Research Institute” will fail, just as all such government efforts have failed in the past.
If you want to generate evidence about which medical interventions work best, and have people use that evidence, then you need to liberalize the U.S. health care sector.
Should Congress Even Try to Achieve Universal Coverage?
If the goal is to improve health, then the answer is clearly no.
Ironically, even though universal coverage is presumably about helping the sick, the Democrats’ pursuit of universal coverage demonstrates not how much, but how little they care about their neighbors’ health.
Economists Helen Levy and David Meltzer explain, in a book published by the Urban Institute, “There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than on…other possibilities,” such as clinics, hypertension screening, nutrition campaigns, or even education. In the Annual Review of Public Health, they explain further:
The central question of how health insurance affects health, for whom it matters, and how much, remains largely unanswered at the level of detail needed to inform policy decisions…Understanding the magnitude of health benefits associated with insurance is not just an academic exercise…it is crucial to ensuring that the benefits of a given amount of public spending on health are maximized.
If Democrats were serious about improving health, they would first gather evidence about which of those strategies produces the most health per dollar spent. (As I recommend elsewhere, the $1.1 billion Congress allocated for comparative-effectiveness research should just about do the trick.) Democrats would then fund the most cost-effective strategies, which may or may not include broader insurance coverage.
But the fact that Democrats are pursuing universal coverage without any such evidence necessarily means that they are willing to sacrifice potentially greater health improvements to achieve…whatever else they hope universal coverage will achieve.
Universal coverage is not about improving public health. It is about subordinating health to some X-factor that supporters value even more.
Which leads to an even more intriguing question: what is that X-factor?
Financial security? (If so, would universal coverage achieve that? Or are there better strategies?) Political power? Dependence on government? Industry subsidies? The appearance of compassion?
I’d like to see that question put to the group.
(Cross-posted at National Journal’s Health Care Experts Blog.)
The Health Care Battle Begins
Sen. Edward Kennedy (D-Mass.) has begun circulating drafts of his proposed health care reform legislation. Initial reports, including an op-ed in the Boston Globe by Kennedy himself, suggest that the bill will contain every one of the bad ideas that I outlined in my recent Policy Analysis on what to expect from Obamacare.
Among other things, the Kennedy bill will call for:
- An employer mandate;
- An individual mandate;
- A so-called “Public Option,” a Medicare-like plan that will compete with private insurance;
- The use of comparative-effectiveness/cost-effectiveness research to restrain costs;
- Subsidies for families earning as much as 500% of the poverty level ($110,250 for a family of four).
- Insurance regulation, including guaranteed issue and community rating. (He would also establish a Massachusetts-style Connector); and
- Government-directed health IT.
There’s no indication yet of how much the plan would cost or how Sen. Kennedy plans to pay for it.
The bill will be formally presented to Senator Kennedy’s Committee on Health, Education, Labor & Pensions (HELP) sometime next week. Hearings could be held around June 10, and committee “mark up” could begin on June 17.
Senate Finance Committee chairman Max Baucus (D-Mont.) is expected to introduce his health care bill shortly before the Finance committee begins its scheduled mark up on June 10.
Meanwhile President Obama’s campaign apparatus is planning rallies and demonstrations around the country to build support for health care reform.
The battle over the future of health care in this country has begun.
Cohn vs. AFP
The New Republic’s Jonathan Cohn accuses Americans for Prosperity (AFP) of “lies” for running an ad that claims “Washington wants to bring Canadian-style healthcare to the U.S.”
AFP’s ad is more defensible than Cohn’s criticisms of it.
Cohn elides the question of whether Shana Holmes (the woman featured in the ad) was almost killed by Canada’s Medicare system. For a supporter of single-payer like Cohn, that is tantamount to admitting that, yeah, socialized medicine sometimes kills people.
Cohn argues that the ad is unfair because Canada has many advantages over the U.S. health care sector. That may be true, but the ad doesn’t appear to defend American health care. It merely says, “government should never come in between your family and your doctor” and “Don’t give up your rights.” That’s not pro-American health care or anti-reform. It’s just anti- the type of reform that Cohn wants. And it points to one area where our semi-socialized U.S. health care sector appears to be superior to Canada’s: quicker access to intensive treatments. Sometimes, that saves lives. In fact, AFP could go farther and say that the United States has another edge over Canada, in that we develop nearly all of the best new medical technologies. In fact, our medical technologies save Canadian lives, but Canada’s health care system (and its supporters) steal the credit.
Yet “the real lie,” Cohn claims, is that the ad suggests that “Washington” wants to impose a Canadian-style system on the United States. Cohn calls that claim “demonstrably false.” But consider:
- President Obama has said he would prefer single-payer and has hinted that he would like to make incremental changes in that direction.
- Many people who support a new public plan (e.g., Paul Krugman) do so because they believe it will lead to single-payer.
- Massachusetts, which has already implemented most of the reforms that Obama and congressional Democrats are considering, is now contemplating a large leap toward Canadian-style health care by imposing capitation on its entire health care sector.
- Government rationing becomes increasingly likely as government revenues fail to keep pace with the cost of government’s health care promises. (See again, Massachusetts.)
- The Left wants government to ration care. That’s the point of the comparative-effectiveness research funding. That draft House Appropriations Committee report committed a classic Washington gaffe when it said that certain treatments “would no longer be prescribed,” because it was admitting the truth.
Cohn is correct that no politician of influence is saying she wants to impose a Canadian-style system on the United States. But I prefer to pay attention to what they’re doing.
AFP: 1. Cohn: 0.
CER: A (Slightly) Different Perspective
My colleague, Michael Cannon, makes several good points about comparative effectiveness research (CER), both in his letter to USA Today and in his excellent paper on the subject. I strongly agree with him that we should not reflexively oppose CER—much of health care spending is wasteful or unnecessary, and it makes sense, therefore, to test and develop information on the effectiveness of various treatments and technology, giving consumers tools to evaluate the value of the care they receive. There is also a case for the use of CER in taxpayer-funded programs like Medicare and Medicaid. Taxpayers should not have to subsidize health care that has not proven effective, nor can Medicare and Medicaid pay for every possible treatment regardless of cost-effectiveness.
However, I am more skeptical in general about CER than he is for several reasons.
- First, “quality” and “value” are not unidimensional terms. In fact, such concepts are highly idiosyncratic with every individual having different ideas of what “quality” and “value” means to them, based on such things as a person’s pain tolerance, lifestyle, feeling about hospitalization, desire to return to work, and so forth. For example, a surgeon may tell you that the only way to ensure a cure for prostate cancer is a radical prostectomy. But that procedure’s side-effects can severely impact quality of life – so some people prefer a procedure with a lower survival rate, but fewer side effects. Who is better suited to determine which of those procedures represents “quality” and “value,” a government board or the person directly affected?
- Second, comparative effectiveness research too often has a tendency to gear its results toward the “average” patient. But many patients are outliers, whose response to any particular treatment, for either good or ill, can vary significantly from the average. This matters little when the research is simply informative. However, if the research becomes the basis for more prescriptive requirements, for example prohibiting reimbursements for some types of treatment, the impact on patient outliers could be severe.
- Third, comparative effectiveness research can create a time lag for the introduction of new technologies, drugs, and procedures. The FDA, for example, has already caused delays in introducing drugs that have resulted in unnecessary deaths. Depending on how the final program is structured, comparative effectiveness research could create another layer of bureaucracy and testing between the development of a new drug, for example, and its introduction into the health care system. One only has to look at the difficulty in expanding Medicaid drug formularies to see how this could become a problem.
The advocates of government-sponsored CER clearly intend for it to be used as a basis for rationing care, not just in government programs, but for private insurance as well.
Cannon points out that government-sponsored CER is likely to be corrupted under pressure from special interest lobbies and politicians. I couldn’t agree more. Government-sponsored CER, therefore, is liable to yield the worst of all possible worlds, not only rationing, but rationing that is based on special interest lobbying rather than science.
Health care, is of course, a finite good. Therefore, it will always be rationed in some fashion. But, it is far better if the rationing agent is the consumer himself, rather than the government or any other arbitrary agent. The private sector is already undertaking CER. To the degree that consumers, insurers, and providers make use of this information, that is a good thing. If consumers don’t like how an insurance company, for example, uses CER in determining its reimbursement policy, he or she can choose a different insurer.
Government-imposed fiat rationing allows for no such choice. Therefore, we should oppose any government involvement in CER, and any efforts by the government to use CER to restrict reimbursement, especially in private insurance plans.
LTE re CER in USA Today
I’ve got a letter to the editor in today’s The USA Today on comparative-effectiveness research:
Commentary writer Kevin Pho misrepresented my views on comparative-effectiveness research (CER), which is the analysis of which medical treatments work best (“Unbiased research for doctors is good medicine,” The Forum, March 26).
Pho wrote that “drug companies, medical device makers and think tanks such as the libertarian Cato Institute have expressed concerns that health care rationing and denial of certain treatments or drugs would follow” taxpayer-funded CER.
In the Cato Institute study linked to in the piece, I write that rationing is the intent behind such research, but I do not express concern that it will lead to rationing. Indeed, I express the opposite concern: that taxpayer-funded CER will not eliminate low-value services, just as it has failed to do so in the past.
Pho uses AARP executive Bill Novelli’s words to suggest that Cato, as well as drug and device makers, use “scare tactics” to oppose taxpayer-funded CER. Far from engaging in scare tactics, my paper makes precisely the same observations that Novelli does.
By contrasting Cato to CER “champion” Hillary Clinton, Pho also gives the false impression that libertarians support CER less than those who support taxpayer funding.
Yet two themes of my paper are that CER is crucial and that removing government obstacles to private production would provide a much more stable stream of research — and broader use of that research — than taxpayer funding would. I think that makes me the champion of CER, not Clinton.
At a minimum, it is misleading to suggest that libertarians oppose CER.
Democrats Agree on Health Plan Outline: Be Afraid, Be Very Afraid
The New York Times reports that key congressional Democrats have agreed on the basic provisions for a health care reform bill. And while many details remain to be negotiated, the broad outline provides a dog’s breakfast of bad ideas that will lead to higher taxes, fewer choices, and poorer quality care.
Among the items that are expected to be included in the final bill:
- An Individual Mandate. Every American will be required to buy an insurance policy that meets certain government requirements. Even individuals who are currently insured — and happy with their insurance — will have to switch to insurance that meets the government’s definition of acceptable insurance, even if that insurance is more expensive or contains benefits that they do not want or need. Get ready for the lobbying frenzy as every special interest group in Washington, both providers and disease constituencies, demand to be included.
- An Employer Mandate. At a time of rising unemployment, the government will raise the cost of hiring workers by requiring all employers to provide health insurance to their workers or pay a fee (tax) to subsidize government coverage.
- A Government-Run Plan, competing with private insurance. Because such a plan is subsidized by taxpayers, it will have an unfair advantage, allowing it to squeeze out private insurance. In addition, because government insurance plans traditionally under-reimburse providers, such costs are shifted to private insurance plans, driving up their premiums and making them even less competitive. The actuarial firm Lewin Associates estimates that, depending on how premiums, benefits, reimbursement rates, and subsidies were structured, as many as 118.5 million would shift from private to public coverage. That would mean a nearly 60 percent reduction in the number of Americans with private insurance. It is unlikely that any significant private insurance market could continue to exist under such circumstances, putting us on the road to a single-payer system.
- Massive New Subsidies. This includes not just subsidies to help low-income people buy insurance, but expansions of government programs such as Medicaid and Medicare.
- Government Playing Doctor. Democrats agree that one goal of their reform plan is to push for “less use of aggressive treatments that raise costs but do not result in better outcomes.” While no mechanism has yet been spelled out, it seems likely that the plan will use government-sponsored comparative effectiveness research to impose cost-effectiveness guidelines on medical care, initially in government programs, but eventually extending such restrictions to private insurance.
Given the problems facing our health care system-high costs, uneven quality, millions of Americans without health insurance–it seems that things couldn’t get any worse. But a bill based on these ideas, will almost certainly make things much, much worse.
Or maybe it’s all just a massive April Fool’s joke.
The Beginning of the End of All that Comparative-Effectiveness Research
In “A Better Way to Generate and Use Comparative-Effectiveness Research,” I predicted that taxpayer-funded research on which medical treatments work best would ultimately be defunded at the behest of those who make a living providing the less-effective treatments. Because, well, that’s what always happens.
Well, it turns out those folks have gone and formed themselves a coalition and launched a media campaign to ensure that comparative-effectiveness research doesn’t put a dent in their incomes. According to the Associated Press:
People’s lives and plenty of money are at stake when it comes to determining which medical treatments work best.
So some prominent health industry and patient advocacy groups are trying to reframe the debate over how such decisions are made in order to ensure their interests are protected…
It’s a big concern for drug and biotech companies too since they could lose out if a treatment they’ve developed is found to be less effective than a competitor’s. But a drug company’s bottom line isn’t likely to draw as much public sympathy as a disabled person’s needs.
That makes [former Rep. Tony] Coelho a good face for the Partnership to Improve Patient Care, which formed as the issue began to surface last fall and is funded by groups including the Easter Seals, Friends of Cancer Research, the Alliance for Aging Research, the Advanced Medical Technology Association and the powerful pharmaceutical and biotech industry lobbies.
It also makes the Partnership to Improve Patient Care the very type of “patient-provider pincer movement” of which Tom Daschle wrote in his book.
The Healthcare Economist on Comparative-Effectiveness Research
Jason Shafrin agrees with me that the public-goods case for government-funded comparative-effectiveness research is weak, though he argues that political constraints make my proposed solutions difficult.
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