Tuesday, June 14, 2011

Cut Health Costs? Not in the US of A, Thank You

If you want to know the prospects of trimming out-of-control health costs in the US in our lifetimes, you can read the depressing forecast in three articles from the media, all noted in today's Kaiser Family Foundation health policy report.

First let's check out the good news:
--where we learn that there's huge opportunity for profit in the future of health care in America, according to a new report from PricewaterhouseCoopers (linked in the article). Tellingly, the article is titled, "The New Gold Rush." Several types of companies are poised to share the wealth, say the gurus. Some promise actually to help save money through innovative strategies for better management and information flow. But one of the four groups is called "retailers." The description: "Retailers prosper in high-volume, standardized markets with low margins. They use their deep customer relationships and ubiquitous access to serve new markets..."

Sound like anyone we know? Notice there's no mention among this group of any contribution to cost containment.

Now, you may ask, just why are "retailers" facing a New Gold Rush? And what's this about their "ubiquitous access"? For an illustration we next turn to Oregon:

Nick Budnick at The Oregonian tells us about the failure of a legislative provision to try to trim $17M out of the total $240M savings the state needs to achieve in Medicaid. The proposal is consistent with a pile of scientific evidence we've reviewed in several posts here--the general equivalence of older, generic psychiatric medications to newer, more expensive meds.

Defenders of the provision note several things. Other states have developed formularies to cut costs through generic substitution and have achieved similar savings with no apparent downside. It's true that once a complicated patient is stabilized on a particular drug combo, most psychiatrists are leery of messing with success by then trying to switch drugs--so the provision called for exempting patients now on meds and applying only to new patients just starting.

But those sensible observations, and the solid science, could not hold sway against a determined drug industry lobby and their cronies. The industry contributed more than $300,000 to candidates for the state legislature; and to be sure that the so-called patient advocacy groups were on board, the industry also gave $23M to the National Alliance on Mental Illness between 2006 and 2008 (though the state NAMI chapter says it's independent and gets nowhere near that much money). Eventually defenders of the cost-saving provision figured this fight was not worth it and moved on. And this was in Oregon, generally considered one of the most progressive states in the nation.

And why does the public continue to play into the hands of the New Gold Rush gang, rather than insisting on sensible, science-based reforms? A clue is found in the third article:

Here, Jay Bookman in a blog at the Atlanta Journal-Constitution notes that all the opposition to "Obamacare" relies on the ideology that the so-called "free market" will save money for Medicare a lot better than any government plan. So he trots out the data on how free-market systems compare to government run systems in the cost control area, and finds predictably, as any respectable health economist would tell you, that they do much worse.

One telling graph, showing that costs have risen much faster in private insurance than in Medicare between 1969 and 2009, is taken from economist Paul Krugman's blog. Bookman obviously fears a backlash here so he says carefully: "Some will no doubt attempt to discredit the above chart by noting that it originated with Paul Krugman, a Nobel-winning economist and a columnist with the New York Times. However, Krugman built the chart using publicly available and noncontroversial government data, referenced in the caption. If you have grounds to question the accuracy of that data, please do so. Otherwise, you’re attempting to sidestep the issue."

So guess what one of the first comments I saw below the posting said? "Get Real" commented, "You are right Jay; you should have stopped after the words Paul Krugman and the NYT…."

I gather that means that for "Get Real," and others of her/his ilk, the mere fact that something was said by Krugman, or even appeared in the NY Times, is sufficient grounds to dismiss it. When that is what passes for political discourse in the US, then none of the rest of the news we've reviewed here should be of any surprise.


Judy B said...

Thank you Dr. Brody. I don't know when any one will realize that the medical service industry cannot survive if it remains for-profit. (I am not talking about salaries for medical professionals here.) The continued looting of our medical dollars cannot continue as it has in the recent past with CEO's and industry heads taking huge compensation packages....

1boringoldman said...

I'm usually a lurker here, but I wanted to peep out and laud this effort. I particularly appreciated your calling out the Krugman = Liberal = Wrong comment. I don't think people have any idea how much the Medical Industries are responsible [$$$] for our current political turmoil [and problems]. Thanks for the post...