Tiering the Government

You may have seen The New York Times' April 17 article on insurance companies "tiering" their pharmaceutical coverage so that for some of the more expensive drugs patients can't use the standard flat plan co-payment, but instead need to pay out of pocket a percentage of the (very high) underlying cost of the drugs.

Alyssa Rosenberg looked into a related issue for Government Executive and found that many of the Federal Employees Health Benefits Program plans are doing this now. Stranger, the Office of Personnel Management seems to have managed to approve these plans without people quite realizing what was happening. It's a reminder, among other things, that when we talk about everyone having health insurance that still leaves a broad range of possible scenarios that hinge on the issue of what "health insurance" amounts to. In other words, how generous will the coverage be? With underlying medical costs soaring, there's tons of pressure to simply save money by making the coverage not-so-generous. But a brave new world in which we all have health insurance but it's bad insurance isn't such an appealing scenario.

Comments

Hopefully this will be the straw that breaks the camels back of resistance to single payer. Shortly before the current plans kills/bankrupts too many.

Posted by Jeffrey Davis | April 18, 2008 11:57 AM

This is a bizarrely lazy post, effectively glibertarian in its conflation of Bush government giveaways to corporations and proposed healthcare plans made by Democrats.

It seems obvious that what we have evidence of is yet another little hidden rule or regulation enacted by Bush cronies for the sake of funneling wealth from ordinary Americans to big pharmaceutical companies and insurance companies.

It seems equally obvious that this really isn't all that related to the quality of healthcare that would be provided under either Obama's or Hillary's plan.

If you felt like actually making a substantive point about health care, it might help to actually know whether such regulations are a part of the proposals put forward by Obama or Clinton. As best as I can tell, this is not the case.

Posted by DivGuy | April 18, 2008 11:58 AM

My wife is disabled with a lifelong and chronic disease. The disease and some of the meds themselves cause multiple problems. It's nearly impossible to keep up with "changes to the formulary" because they can occur at any time and there is no notice. I have a good job and an "eh" medical plan, and we were surprised when a required drug to keep her functional (and possibly alive) went from a $25 copay to nearly $300 for 30 days supply without warning. (After a year or so, a generic was finally available.)

For Medicare patients, this makes it impossible to determine which drug plan is best for you because what's best today could suck tomorrow. There are no gov't limitations on formulary changes and no notification requirements. Imagine if you're on a fixed income and get hit with that for multiple drugs.

The GOP, including McCain, will tell you that the market is efficient. And that's true, except they're efficient at making a profit. That means they'll do a great job covering the healthiest 70-80% of the population but if you want full coverage, the market will never do the job. So McCain should just be honest and say he doesn't believe in universal coverage rather than lying about how market forces will deliver it. They've failed to do so since health insurance has existed, so their track record on the issue is worse than McCain's on the Iraq war.

Posted by LFC | April 18, 2008 12:00 PM

My guess is that before too long, banks will start changing fees for their own customers to make ATM withdrawals. And my prediction is that patriotic Americans will bend over and take it without complaining.

Posted by James Gary | April 18, 2008 12:06 PM

There is no easy solution to this, unless one wants to drive private capital out of the drug development industry, and please, can we not introduce the inaccuracy that drug companies use their capital for marketing instead of bringing drugs to market? Adjusting intellectual property protection to the sweet spot which balances innovation and price competition is very hard, and the fact that the rest of the world benefits from the profit margins available in the U.S. doesn't inform us much as to what the best U.S. policy would be.

Posted by Will Allen | April 18, 2008 12:07 PM

"But a brave new world in which we all have health insurance but it's bad insurance isn't such an appealing scenario."

Well, this certainly isn't an ethical concern for folks like Matthew. After all, it doesn't rise to the level of God or the environment.

And in Barack's unbrave old world without universal healthcare, at least the Yglesias family can continue to monopolize the supply of Tier 4 drugs with their wealth, should any health concerns arise.

Posted by Petey | April 18, 2008 12:11 PM

...can we not introduce the inaccuracy that drug companies use their capital for marketing instead of bringing drugs to market?

Just because one writes in well-composed complete sentences doesn't make one any less of a troll. The problem here is that lots of people in the U.S. are not benefitting from the profit margins available in the U.S., which is what Matt's post is about.

If you're just going to assert that the free market's already produced the optimum solution, please go post on Megan McArdle's blog instead of this one.

Posted by James Gary | April 18, 2008 12:16 PM

It's always struck me that one of the benefits of having universal government health-care in the US might be to help keep rising health-care costs down.

Obviously there's not a lot to be done in terms technological advances leading to more expensive procedures, but insofar as pharmaceuticals and medical equipment companies rely on diddling the patent system and using pressure sales techniques (which, as I understand it, is quite a lot), wouldn't social medicine at least put some political weight in the balance against that?

Posted by Pete | April 18, 2008 12:18 PM

Petey, please. There's nothing in Hillary's plan that gives access to guarantees drug coverege at all tiers.

All it does is force you to buy in surance. Completely in keeping with the massive amounts of money she takes from insurance companies. You used to be skeptical about shit like that, until the prospect of being ruled by a black guy scared you under her skirt.

Posted by soullite | April 18, 2008 12:20 PM

Also, while I'm feeling cranky, I'd like to suggest Petey (if it is actually Petey) refrain from further posting of his beyond-tired comment about how Matt's family is wealthy and Obama's healthcare policy sucks. We get your point, dude.

Posted by James Gary | April 18, 2008 12:23 PM

But a brave new world in which we all have health insurance but it's bad insurance isn't such an appealing scenario

Gold plating for everybody! And a pony!

Seriously, though, the most important thing in health care is not whether it is universal, nor whether it is provided by the government or by private insurance, but rather the cost. Neither Obama's plan nor Clinton's plan (nor McCain's plan) do anything important to reduce health care costs, and we can expect those costs to continue to spiral no matter who is elected. And with spiraling health care costs, you are going to get reductions in benefits, regardless of universality or who provides the coverage.

Posted by Al | April 18, 2008 12:23 PM

Hopefully this will be the straw that breaks the camels back of resistance to single payer.

Huh? Why on earth would it "break resistance to single payer?" Single payer health care would be even more restrictive in its funding of drugs. American insurers routinely pay for all sorts of drugs that are denied to Britons and Canadians because they are deemed to be too expensive under those nations' single-payer health care systems. A recent Economist article highlights the problem in Britain's single-payer NHS:

“If you were diagnosed with kidney cancer tomorrow, after you had stopped crying the first thing you'd do is type ‘kidney cancer’ into Google,” says Nick James, an oncologist who specialises in the disease. “The first thing you'd discover on your computer is that there are new drugs that could help. The second thing is that the NHS won't pay for them.”

Rationing in the National Health Service is nothing new, but those making the hard choices used to do so behind the scenes. The internet has now made clear what they are passing up, and at an awkward time. A tidal wave of costly new drugs is about to break: around 40 will be licensed to treat just cancer in the next few years, says Karol Sikora, a cancer specialist at Imperial College London. The National Institute for Health and Clinical Excellence (NICE), which decides whether treatments are sufficiently cost-effective for the NHS, will, he thinks, reject most or all of them.

Posted by Mixner | April 18, 2008 12:24 PM

James Gary, apparently, on your planet, the phrase...

"Adjusting intellectual property protection to the sweet spot which balances innovation and price competition is very hard, and the fact that the rest of the world benefits from the profit margins available in the U.S. doesn't inform us much as to what the best U.S. policy would be."

....is synonymous with the phrase....

"the free market's already produced the optimum solution".

Let me know if you want to employ a language commonly used on this planet, and I will be happy to have a discussion.

Posted by Will Allen | April 18, 2008 12:26 PM

It's always struck me that one of the benefits of having universal government health-care in the US might be to help keep rising health-care costs down.

There are two other side benefits I can think of off the top of my head.

First, the "hidden tax" of pushing off the cost of treating the uninsured onto emergency rooms (the most expensive place to treat somebody) goes away. We pay that tax in our premiums. Also, having an ear infection treated on day 3 rather than week 3 is vastly cheaper. That speaks to your point of how it can reduce healthcare costs.

Second, it keeps businesses from being crushed under the weight of supplying health insurance. Some people say we need to cut business taxes. How about figuring out how to alleviate a bit of the single largest fringe benefit cost for the majority of businesses of any size? Wouldn't that be an even better cut since businesses that don't have a paper profit would also benefit?

Posted by LFC | April 18, 2008 12:27 PM

Will Allen, what do you do for a living and who do you do it for?

I am totally convinced that blog comments are the next frontier in perception manipulation (marketing).

Posted by cw | April 18, 2008 12:32 PM

I've been self employed, operating enterprises in a variety of industries, for nearly all my adult life, and for a few years in adolescence, not that it is any of your business.

I'm totally convinced that people, when they have nothing substantive to say, ask questions like this.

Posted by Will Allen | April 18, 2008 12:37 PM

"First, the "hidden tax" of pushing off the cost of treating the uninsured onto emergency rooms (the most expensive place to treat somebody) goes away. "

There is more to the hidden tax than emergency room visits. Everytime you go ot the doctor for a check up or whatever, part of what you pay for is the $300,000 heart transplant of some 65 year old guy in kentuky (or wherever). The way insurance works is that everone pools their money and risk. So if you have apool of three people and one guy needs a heart transplant then your share is $100,000 (plus 20% profit for the insurance co.) But as the pool size goes up, you premiums go down. That's where you could save a lot of money in a single payer plan. Theoretically the pool could be the population of the united states.

That is one reason health care is so much cheaper in canada and england etc... Better outcomes too.

Posted by cw | April 18, 2008 12:44 PM

bullshit

Posted by cw | April 18, 2008 12:45 PM

Bullshit to Will Allen I mean. Not to me.

Posted by cw | April 18, 2008 12:48 PM

First, the "hidden tax" of pushing off the cost of treating the uninsured onto emergency rooms (the most expensive place to treat somebody) goes away.

No it doesn't. No serious health care analyst believes that universal coverage would save money without a reduction in the quality of coverage. Hillary and Obama estimate their "universal" plans would cost around $100 billion a year. We can probably safely double that number to get a more realistic estimate.

Second, it keeps businesses from being crushed under the weight of supplying health insurance.

And instead crush them under the weight of higher taxes. American businesses are among the most competitive in the world.

Posted by Mixner | April 18, 2008 12:50 PM

It's always struck me that one of the benefits of having universal government health-care in the US might be to help keep rising health-care costs down.

Obviously there's not a lot to be done in terms technological advances leading to more expensive procedures, but insofar as pharmaceuticals and medical equipment companies rely on diddling the patent system and using pressure sales techniques (which, as I understand it, is quite a lot), wouldn't social medicine at least put some political weight in the balance against that?

I've always wondered why people think that is. Why would the government be any better at reducing the rate of increase in health care than insurance companies are?

We already know, for example, that having the government (as opposed to insurance companies) negotiate pharmaceutical prices will result in a savings of... zero.

Posted by Al | April 18, 2008 12:55 PM

That is one reason health care is so much cheaper in canada and england etc... Better outcomes too.

Ha ha ha! Good one.

Posted by Mixner | April 18, 2008 12:56 PM

cw, are you familiar with cancer survival rates in the U.S., compared to england?

Folks, the U.S. system has little or nothing to do with a free market, and a free market in health care just isn't possible, but don't pretend as if the U.S. system is inferior by every measure, thus the transition to what you prefer will only cause pain to your bogeymen, be it insurance companies, or doctors, or somebody else besides patients. There is no better place on earth to be a 75 year old fat diabetic with a heart condition and a severely arthritic hip, and that person's vote is very highly sought by both parties. A nonpoor 65 year old diagnosed with cancer gets better care here than in many of the places that have systems which are often herarlded, like Canada or the U.K.. Just because you advocate dramatic reform of the U.S. system doesn't mean you are well served by denying the realities of whose ox is going to get gored by changing.

Posted by Will Allen | April 18, 2008 12:58 PM

mixner

Facts are facts

Posted by cw | April 18, 2008 12:59 PM

Canadian prices for Rx drugs average about 40% of what they are in the U.S. for IDENTICAL products. (Google some of the online Canadian pharmacies - it'll make you puke). Canada negotiates prices for its citizens, Uncle Sam doesn't. The real problem isn't the insurance companies, it's (as usual) our whore-a-ticians who are just doing what big pharma is paying them to do.

Posted by kafka | April 18, 2008 12:59 PM

http://www.sedgwickcounty.org/chap/_private/costs.pdf

"After World War II the United States had average health spending compared to other
developed nations. Today, the U.S. spends far more money and GNP percentage on health than
any other nation. At 13.6% of the GNP in 1994, the U.S. is trailed by Canada (10.3%), France
(9.4%), Germany (8.7%), Japan (6.9%), and the United Kingdom (7.1%), just to name a few
similar countries. "

"The U.S. Department of Health and Human Services publishes an annual report on health
each year. In 1994, that publication compared us to 12 similarly developed countries. In terms
of infant indicators, low birth weight, neonatal mortality, and infant mortality, we were LAST! "

"For adults, we didn’t do much better. Our age adjusted death rate was 9th among the 13
nations compared. "

Posted by cw | April 18, 2008 1:03 PM

There is no better place on earth to be a 75 year old fat diabetic with a heart condition and a severely arthritic hip

And isn't it interesting that this voter is covered by a single-payer plan in the form of Medicare?

Posted by Tyro | April 18, 2008 1:05 PM

Yep, Tyro, and to extend universal coverage to the rest of the population, that 75 year old will have his care be made more consistent wth what similar 75 year olds experience elsewhere. That's politically problematic, and ignoring that reality doesn't make change any more likely.

Posted by Will Allen | April 18, 2008 1:13 PM

The cancer survival rates are biased by the amount of screens performed in the US. Our cancer mortality raters are comparable, which is what matters.

Posted by mpowell | April 18, 2008 1:19 PM

will allen

yes, there are better outcomes in the US for most cancers. But how mcu of that is due to structural things is way way up in the air. Fro what I have read health systems in europe could easily (and are) imporve their results without changing thier systems. Eairlier diagnosis, diffiernet kinds of treatments.

But the fact remains that overall, US health care outcomes are at the bottom of developed countries (and some undeveloped countries) and cost by far the most.

Posted by cw | April 18, 2008 1:22 PM

I apologize for the lack of proofreading on that last post. I'm trying to do two things at once here and am failing at both.

Posted by cw | April 18, 2008 1:26 PM

cw: Facts are facts

For someone so concerned with facts, would you care to share with us where you got this one:

plus 20% profit for the insurance co

I know it's easy to just blame everything on your own personal bogeymen, the eeeeevil insurers and drug companies, but making up ridiculous numbers is not going to convince anyone of anything except that you don't have a clue. Health insurers typically earn profit margins in 3-7% range.

But I guess I shouldn't have expected much since you seem to think we are all so clueless that we needed a rudimentary explanation of the concept of pooling. And as for this choice bit:

But as the pool size goes up, you premiums go down. That's where you could save a lot of money in a single payer plan. Theoretically the pool could be the population of the united states.

That is one reason health care is so much cheaper in canada and england etc... Better outcomes too.

There's so much ignorance there I'm not even sure where to begin, but I guess I'll start with this: Wellpoint has 35 million members, Canada has a population of 33 million. Chew on that one for a while and see if you can figure out why your comment was silly. When you're finished we can address the "better outcomes" nonsense.

Posted by AB | April 18, 2008 1:35 PM

Awesome! You busted out the old infant mortality myth! Thirty seconds of googling could have told you that that is 100% false.

Posted by AB | April 18, 2008 1:44 PM

AB

So you are saying pool-size is not a factor in insurance premiums?

And you are saying that there are not countries that pay substatially less per capita than the US for health care with better overall health outcomes?

You will have to show me something that contradicts what I posted above (which I've seen reported in a million different places in various forms).

Posted by cw | April 18, 2008 1:50 PM

"Hopefully this will be the straw that breaks the camels back of resistance to single payer."

Let's hope not. A "single payer" would cut costs on existing drugs by fiat, which would dry up incentives for the discovery of new drugs and medical technologies. The better way to deal with the high cost of prescription drugs is to get the rest of the first world to pay its "fair share" (to borrow a phrase beloved by the Left). With $115 per barrel oil, Canada, our largest supplier of foreign oil, can afford to pay more for American drugs. There's no reason that a rich country like Canada should be free-riding on American consumers.

One way to lower health insurance costs would be to let more insurance companies offer scaled-down plans without, say, mental health and chiropractic coverage. My sister's insurance even covers acupuncture. Although this makes sense, chiropractors and mental health providers have successfully lobbied many state legislatures to mandate coverage for their services.

Posted by Fred | April 18, 2008 1:51 PM

Oh good lord.

yes, there are better outcomes in the US for most cancers. But how mcu of that is due to structural things is way way up in the air. Fro what I have read health systems in europe could easily (and are) imporve their results without changing thier systems. Eairlier diagnosis, diffiernet kinds of treatments.

So let's summarize what you've said:

1. Health care in Europe is better than the US because they spend less money
2. Outcomes for cancer in the US are better
3. Europe could match our outcomes if they spent more money
QED, health care in Europe is better

Step 1. Collect underpants
Step 2.
Step 3. Profit!

Posted by AB | April 18, 2008 1:52 PM

So you are saying pool-size is not a factor in insurance premiums?

When you have millions of people in the pool already, yes, pool size becomes quite irrelevant. A bigger pool reduces the variance, not the mean, and in the magnitudes we are taking about the marginal value of adding more people is not all that significant (assuming similar populations of course). What part of "Wellpoint has 35 million members, Canada has 33 million people" did you not understand? Rising health care costs in the US are not caused by the pool being too small.

And you are saying that there are not countries that pay substatially less per capita than the US for health care with better overall health outcomes?

Yes, that's exactly what I'm saying. They pay less, but the outcomes are not better. The whole "US ranks below Slovenia" line or argument relies on a ranking system that essentially says "How socialist is the health system", not "How good is the quality of care". The problem in the US is cost and availability, not outcomes, because we have the best quality care.

Posted by AB | April 18, 2008 2:03 PM

ab

Come on dude, can you not read, or is that not the point here?

Posted by cw | April 18, 2008 2:04 PM

I'm just waiting for you to state an actual fact. So far you've said:

-health insurers make 20% profit margins - false, you're off by a factor of 4

-infant mortality in the US is worse than other developed countries - false, the numbers cited are not apples to oranges because we count all live births n the denominator while they leave out preemies and other problem pregnancies

-health costs in the US are high because the pool of people covered is too small - false, as evidenced by some large insurers covering more people than entire countries with single-payer

- health care in the US is inferior as evidenced by our lower life expectancy - false, when you adjust for homicides, accidents, and other non-health-related fatalities the US has the highest life expectancy of all OECD countries

Any other myths you want to trot out there?

Posted by AB | April 18, 2008 2:15 PM

mpowell,

The cancer survival rates are biased by the amount of screens performed in the US.

U.S. cancer survival rates are superior to those in Europe for almost all cancer types, not just the ones for which mass screening has large benefits, such as breast cancer. Of course, cancer screening is one of the services of a health care system, and the greater screening in the U.S. is one of the ways in which the U.S. health care system is superior to those of Europe.

Our cancer mortality raters are comparable, which is what matters.

Not to an evaluation of the quality and performance of a health care system. Cancer mortality is greatly influenced by the rate at which cancer occurs in the population, which is dependent on a vast array of variables that have nothing to do with the health care system. Cancer survival rates, in contrast, provide a much better measure of the performance of the health care system. Cancer survival rates measure the effectiveness of a health care system at detecting and treating cancer. The "outcomes" of the U.S. health care system are clearly superior to those of Europe.

Posted by Mixner | April 18, 2008 2:16 PM

cw,

But the fact remains that overall, US health care outcomes are at the bottom of developed countries (and some undeveloped countries) and cost by far the most.

I'm still waiting for you to provide a shred of evidence that health care outcomes are better in any other country than in the U.S.

And please don't repeat the tired nonsense about average life expectancy. Average life expectancy is the "outcome" of a huge array of variables that have nothing to do with health care, from dietary and exercise patterns to rates of crime and accidents. Unless you control for these other variables in order to isolate the effect of the health care system specifically, you cannot draw any meaningful conclusions about the quality or performance of the health care system from average life expectancy data.

Posted by Mixner | April 18, 2008 2:23 PM

OK so we are cross posting here. You last post had actual information in it and it was interesting.

The pool size issue is interesting. I think there are way too many variables to use canada and wellpoint as examples, but you may be right about the other things that you said. I would have to look into it. I don't really have the time right now. If you have information that backs you up, post it.

About outcomes, this is what I posted above:

"The U.S. Department of Health and Human Services publishes an annual report on health each year. In 1994, that publication compared us to 12 similarly developed countries. In terms of infant indicators, low birth weight, neonatal mortality, and infant mortality, we were LAST! "

"For adults, we didn’t do much better. Our age adjusted death rate was 9th among the 13 nations compared. "

This information has been out there for a long long time and it is not changing. I'm talking about overall outcomes here, not one sector or another. There are different ways to judge it, but by no comprehensive measure do we get 30-50% better healthcare outcomes for the 30-50% more that we spend per-capita.

I'm basing the 30-50% figure ont his chart.

http://bigpicture.typepad.com/comments/2008/01/odd-chart-of-th.html

And about your misreading of my cancer comment. I am saying that outcomes for a lot of cancers are better in the US than in europe overall (they are similar in sweden, norway, and finland who spend way less) but people are unsure why. It is very likely that cancer survival rates could be improved in theser countries without changing their systems or even spending much more money. For instance, if it is just a matter of changing public attitudes about cancer screening that would cost very little money. Cancer screening is cheap.

I

Posted by cw | April 18, 2008 2:28 PM

The comments have gone onto a level of specificity that I can't keep up with, but on the broader issue I have a simple question:

Would it really be so bad if we had universal coverage, but the coverage didn't cover every new drug on the market? Why can't there be pretty good coverage for everyone and even better coverage for rich people who are willing to pay a premium?

Just a guess, but I think health insurance that was 5 (10?) years behind the times would be affordable and satisfiable to most. Sort of the way the rich get fancy new technology (i.e. plasma TVs) a few years before the rest of us, but then the technology trickles down to the rest of the common folk.

I'm all for the government guaranteeing everyone affordable health insurance, but I don't think it's unconscionable for that insurance to be somewhat less comprehensive than the best coverage out there.

Posted by cannatar | April 18, 2008 2:39 PM

"I'm still waiting for you to provide a shred of evidence that health care outcomes are better in any other country than in the U.S."

I provided evidence. You don't like the way it's measured but you have to measure it some how. What is your measurement showing that our health care is so much better? At that the extra quality is worth the extra expentitures?

And there are not that many different variables between countries in western europe and the US. Same basic population, same range of incomes. And those life expectancy measures are adjusted, are controlled.

So pony buddy. I put up evidence, you put something up to contradict it.

Posted by cw | April 18, 2008 2:41 PM

OK, you're just posting the same stuff again. Which part of "when you adjust for homicides, accidents, and other non-health-related fatalities the US has the highest life expectancy of all OECD countries" did you not understand? The data is here:
http://www.aei.org/docLib/20061017_OhsfeldtSchneiderPresentation.pdf

And re: infant mortality, I can give you multiple sources that show how flawed that data is. You can't compare the measures between countries, because everyone is reporting it differently (though the US is the one who reports it according the World Health Organization's standards, namely "all babies showing any signs of life, such as muscle activity, a gasp for breath or a heartbeat, should be included as a live birth").

Posted by AB | April 18, 2008 2:45 PM

there are not that many different variables between countries in western europe and the US

Sighs and shakes his head

those life expectancy measures are adjusted, are controlled

No they are not. See my previous comment.

Posted by AB | April 18, 2008 2:48 PM

One other thing: there are way too many factors that go into national life expectancy to use it as a measure of how effective a health care system is, so I don't cite it as evidence of the US being superior. I cite it to refute the people who suggest that ours is lower than other countries because of an inferior health care system. Not only is the argument flawed on it's face, the data used to support it is inaccurate.

Posted by AB | April 18, 2008 2:52 PM

"One other thing: there are way too many factors that go into national life expectancy to use it as a measure of how effective a health care system is, so I don't cite it as evidence of the US being superior. I cite it to refute the people who suggest that ours is lower than other countries because of an inferior health care system. Not only is the argument flawed on it's face, the data used to support it is inaccurate."

OK, use a different measure. A differrent group of measures. You say US health care is better. Show me how.

Here's one way the US system is worse that Canada:

"A 2003 study in The New England Journal of Medicine found that the United States spends 345 percent more per capita on health administration than our neighbors up north. This is largely because the Canadian system doesn't have to employ insurance salespeople, or billing specialists in every doctor's office, or underwriters. Physicians don't have to negotiate different prices with dozens of insurance plans or fight with insurers for payment. Instead, they simply bill the government and are reimbursed."

http://www.prospect.org/cs/articles?articleId=12683

Show me measures like that that show that we are better. Something that compares the US to specific countries like france or sweden for instance. COuntries with similar per capita income. Not better in proportion to the extra money we spend, but just better. That's a gift to you to make it easier.

We've already disscussed cancer, a small segment of a health care system and the I agree that the US is better. And I don't think you can win with wait times.

Posted by cw | April 18, 2008 3:10 PM

cw,

I provided evidence.

You haven't provided any evidence of health care outcomes. All you've cited is certain aggregate health indicators, which are not "outcomes" of the health care system, but outcomes of a vast array of variables, from diet to smoking rates to the rate of car crashes, that have nothing to do with the health care system. Unless you control for all these other influences on life expectancy, it is MEANINGLESS as a measure of health care outcomes.

And there are not that many different variables between countries in western europe and the US.

Nonsense. Diet, exercise, rates of smoking, drug use, and alcohol use, rates of violent crime and accidents, climate, pollution standards and a vast array of other variables influencing health and longevity differ significantly between Europe and the U.S. The differences in these variables could easily account for the small differences in average life expectancy between Europe and the U.S.

Posted by Mixner | April 18, 2008 3:15 PM

cw,

Show me measures like that that show that we are better.

Cancer survival rates have already been cited. The evidence clearly shows that cancer survival rates in the U.S. are superior to those in Europe: Cancer Survival Rates Improving Across Europe, But Still Lagging Behind United States

Posted by Mixner | April 18, 2008 3:24 PM

I don't have much time to spend on this thread, but I did want to get a question / suggestion out there. There was discussion above about the profits of the pharma companies being the main incentive for research, and I agree. I've wondered for years now why the American people are being suckers, and funding drug research for the rest of the world. If we are the only major market in which prices are unregulated, we are subsidizing all of the others. It seems to me that it would be good to move to a single payer model, but separate out pharmaceutical funding. Establish a grant-based system. Frankly, I think that it would be in other nation's interests to donate to the pool as well. I'd tend to want to run it through the UN, as we seem to be the only ones reluctant to pay them. I know, I know, the UN has problems. But it strikes me as a better solution than the current "All the American market can bear" model. I also like the benefit of a grant-based system (the way we get useful science that isn't pharma) in that drugs could be researched based more on needs than on profits. Good malaria drugs might make more sense than a replacment for Viagra... Does this make sense to anyone else? It really seems that drugs are the spiralling cost, and this is a reasonable way to continue innovation without breaking our bank.

Posted by BethanyAnne | April 18, 2008 3:30 PM

cw, I've already said the problems in the US are cost and availability, not quality of care.

Let me ask you this: assuming you had excellent health insurance in the US, in which country would you rather be diagnosed with a potentially fatal disease: the US, Canada, France, or England?

Posted by AB | April 18, 2008 3:33 PM

BethanyAnne, I understand your point, and I'm not disagreeing with you on what might be better for the world overall, but do you understand what a political non-starter it is to say "No more pharma research into erectile dysfunction, and oh by the way we're going to instead use some tax dollars to help fund UN-led research into better malaria drugs"? There are many things I disagree with Ezra Klein about when it comes to health care, but one thing he hit right on the head is "Don't take away what people currently have." As unfortunate as it may be, we have to take a politically pragmatic approach to any health care reform.

Posted by AB | April 18, 2008 3:58 PM

Let me ask you this: assuming you had excellent health insurance in the US, in which country would you rather be diagnosed with a potentially fatal disease: the US, Canada, France, or England?

AB, we pay $400 a month to cover me and my daughter through my wife's employer's insurance plan. From eveything I've read, health care in France, austria, germany, sweden, norway, and finland is as good or better than the US and costs a lot less. So, I'm going to go with any of those countries over the US. When the quality is equal then "cost and availability" are what I would choose over.

And other than cancer care, which I have already conceeded, I have not seen anything that shows how health care in the US is better. My views are not set in stone. I could easily change my mind. It's a complex issue. But I got to have something to base it on.

Bethany Anne. Arn't a lot of those drug companies based in Europe? Phizer, etc... How does that affect what you are saying?

Posted by cw | April 18, 2008 4:29 PM

AB, I do understand that, but perhaps if it was phrased as "We spend tons for drugs, subsidizing European access. We aren't doing that anymore. Now we are negotiating with the companies for pricing, and making sure that research is taken care of separately. The combination of what you will pay in the future plus what we spend on research will be less than you pay now. And every country will pay their fair share.", maybe that would be a way that sold it? (woo for grammar?)

CW, The way that I think of it is, Pfizer, et. al. try to make as much profit as they can. If everyone but one customer is going to negotiate, then guess who pays more? If that one customer is willing to spend whatever you say, then you can afford to cut the negotiating folk more slack. Sorry if that is a bit incoherent - do you get the gist now? (Oh, and I do get that there are limits to even what we'll spend, but I think the point still holds.) I can make up an example with numbers if that'll make the point a bit clearer.

I'm not sure that this can be boiled down to a level where it doesn't scare the average covered person here in America. But it would be a win for most everyone except those that we subsidize by paying too much. Heck, I really don't think that even the Pharma companies would end up losing much if anything. But we really shouldn't be the only profit center they have. And if we are the only customer unwilling to negotiate for the majority of our purchases, that's exactly what we are.

Thanks for the responses :-)

Posted by BethanyAnne | April 18, 2008 4:50 PM

AB, I do understand that, but perhaps if it was phrased as "We spend tons for drugs, subsidizing European access. We aren't doing that anymore. Now we are negotiating with the companies for pricing, and making sure that research is taken care of separately. The combination of what you will pay in the future plus what we spend on research will be less than you pay now. And every country will pay their fair share.", maybe that would be a way that sold it? (woo for grammar?)

CW, The way that I think of it is, Pfizer, et. al. try to make as much profit as they can. If everyone but one customer is going to negotiate, then guess who pays more? If that one customer is willing to spend whatever you say, then you can afford to cut the negotiating folk more slack. Sorry if that is a bit incoherent - do you get the gist now? (Oh, and I do get that there are limits to even what we'll spend, but I think the point still holds.) I can make up an example with numbers if that'll make the point a bit clearer.

I'm not sure that this can be boiled down to a level where it doesn't scare the average covered person here in America. But it would be a win for most everyone except those that we subsidize by paying too much. Heck, I really don't think that even the Pharma companies would end up losing much if anything. But we really shouldn't be the only profit center they have. And if we are the only customer unwilling to negotiate for the majority of our purchases, that's exactly what we are.

Thanks for the responses :-)

Posted by BethanyAnne | April 18, 2008 4:53 PM

Bethany,

I see what you are saying. But one way you could look at that is, because our political system allows phamecutical companies to bribe lobby (bribe) congressmen, they can prevent the US from negotiating drug prices on a large scale, and so we subsidise the rest of the world. But if everyone could negotiate on a large scale then would other countries have to pay more? I mean, do drug companies cave into other countries because they know they can make it up in the US market? If it was an even playing field would they say to europe, we need more money or we can't do this?

It kind of remindes me of NATO. We pay more for NATO because... I actually don't know why we pay more now. Anyway...

Posted by cw | April 18, 2008 5:05 PM

Bah, double posting

"server error" my hindquarters... :-)

Posted by BethanyAnne | April 18, 2008 5:08 PM

CW,
That's exactly what I think. Pharma can afford to not negotiate so fiercly with Europe because they know they can make up the difference here. Looks to me like we're being played. And, come to think of it, saying it that simply is something that I think the voters *could* be sold on.

Posted by BethanyAnne | April 18, 2008 5:17 PM

AB, we pay $400 a month to cover me and my daughter through my wife's employer's insurance plan.

Then you should probably switch to another plan. Average monthly employee premium cost for family coverage (employee, spouse, and one or more children) in 2007 was around $240.

From eveything I've read, health care in France, austria, germany, sweden, norway, and finland is as good or better than the US and costs a lot less.

Show us your evidence.

Posted by Mixner | April 18, 2008 5:34 PM

"Good malaria drugs might make more sense than a replacment for Viagra... Does this make sense to anyone else? It really seems that drugs are the spiralling cost, and this is a reasonable way to continue innovation without breaking our bank."

Judicious use of DDT would probably save a lot more lives than new malaria drugs, but that aside, you forget that treatment with drugs is usually cheaper than other alternatives (e.g., surgery).

Erectile dysfunction drugs are to pharmaceutical companies what college football is to division 1 universities: they both provide a lot of enjoyment, and generate revenues that fund life-saving research in other areas.

Foreign price controls need to be addressed in trade negotiations. For example, we could probably get Brazil to back off from some of its price controls on drugs if we dropped our 55 cent per gallon tariff on Brazilian sugar cane-derived ethanol. That would also lower gas prices somewhat on the East Coast, and lower world food prices a little, so it would be a win all around (except, perhaps, for corn farmers who would still have plenty of demand for their corn).

Posted by Fred | April 18, 2008 6:22 PM

Fair points all, Fred, but I do like the idea of us actually negotiating prices with the pharma companies. And ethanol? *rolls eyes* oh, don't get me started on that boondoggle....

Posted by BethanyAnne | April 18, 2008 6:34 PM

BethanyAnne,

When a buyer also has the power to tax and regulate you, it's not really a negotiation.

You may be interested in the interview the WSJ published last year with Arthur D. Levinson, Ph.D. (in biochemistry), CEO of the big biopharma company Genentech. It's behind a subscription wall at the WSJ, but this blog posted it. Here is a relevant excerpt:

WSJ: How do you balance the high cost of innovation with the pressure to cut cancer-drug prices?

Dr. Levinson: Since 1976, when our company was founded, the biotech industry has lost $90 billion in aggregate. I think it's the biggest money-losing industry of all time. It is hemorrhaging. There are some exceptions: We are doing well, and Amgen is doing well. But for most of the 1,300 to 1,400 companies -- 300 or 400 of them public -- this is a money-losing enterprise.

You don't just crank these drugs out. My lab cloned a portion of the breast-cancer gene in 1982. And we started making antibodies to it in the mid-'80s. Then we got cell-culture results in the late '80s and by the early '90s we were getting animal results. And then approval was in December '98. So this goes back a long, long time. Unless these companies can get a return, we are not going to get the new medicines that are making such a difference to patients' lives right now.

There's another way to look at it -- look at how much society is investing in cancer. In the absence of better care, 42% of everybody out there is going to get cancer. And half of those 42% are going to die of cancer. It's the leading cause of death among Americans under age 85. So how much are we spending on drugs for cancer? We have a $12 trillion GDP [gross domestic product]. And we're spending $15 billion. If I do that math, 1/800th of GDP for the leading cause of death. And people say cancer drugs are bankrupting America! Give me a break.

WSJ: So what led you to cap the price of Avastin at $55,000 a year?

Dr. Levinson: That came out of a lot of feedback from payers and patients. We have patients on Avastin for a very long time. We have healthy margins on the drug. We have to have healthy margins because so few of the drugs make it....But at that point, we can afford to give the drug free. That was part of it.

Once or twice a year we will bring in payers...patients, people who are complaining strongly and understandably about the high price of drugs. We bring them in for a two-day symposium, and you can audit our books. Our margins are respectable, but not off the chart. They are not Microsoft margins; they are not Oracle's margins, even. At the end of the day, it's not that everybody applauds and says we're happy paying the price of your drug. But they understand what goes into the equation. And the vast majority of them say this was a revelation, now we understand it.

Posted by Fred | April 18, 2008 6:46 PM

Hmmm, interesting data point Fred. I do want to ask about EU national health services. Do you say that they are not negotiating drug prices with the companies?

Posted by BethanyAnne | April 18, 2008 7:06 PM

Re: No serious health care analyst believes that universal coverage would save money without a reduction in the quality of coverage.

Some people (those with gold-lated health plans) would see a reduction of coverage. Most of those people can afford to pay more out of pocket. A great many other people would see an improvement--certainly everyone with no coverage at all, and those people can least afford to pay out of pocket. On the whole such a system would provide a net pluss for most people. Such at least has been the experience with mosr foreign countries. Or else how to explain the fact that support in those countries for junking universal coverage in favor of something the US' patchwork system is practically non-existent?

Re: There is no better place on earth to be a 75 year old fat diabetic with a heart condition and a severely arthritic hip, and that person's vote is very highly sought by both parties. A nonpoor 65 year old diagnosed with cancer gets better care here than in many of the places that have systems which are often herarlded, like Canada or the U.K..

Um, you realize that your hypothetical 75 year old gets his healthcare via Medicare, and the 65 year old probably does to. You're making a different argument than you think. You're just argued that US public-provided healthcare is superior.

Re: Yep, Tyro, and to extend universal coverage to the rest of the population, that 75 year old will have his care be made more consistent wth what similar 75 year olds experience elsewhere.

I see no reason why that should be true. If it isn't true now why should it be true under a different arrangement? Remember, there's no such thing as an unpaid bill. Our healthcare system already includes all the costs a universal system would-- they are just distributed in ways that outrage both justice and good financial sense. Overall we will spend no more (per capita of course). Anything we spend publicly will be an equal savings (perhaps more than equal) on the private side of the ledger.

Re: When you're finished we can address the "better outcomes" nonsense.

Yes, everybody in Canada drops dead at 55-- NOT! Sorry, dude, but facts are facts. People in other other First World countries have overall health care stats at least equal, and often superior, to our own. There's no way you can be anything but a liar in denial if you can't admit to that. Moreover those people prefer their system to anything remotely like ours. Come on, find some honesty in your soul and quick parroting a bunch of stinking lies. America' lack of universal healthcare is every bit as stupid and outrageous and injurious to our people as if we also rejected indoor plumbing or universal education.

Re: A "single payer" would cut costs on existing drugs by fiat, which would dry up incentives for the discovery of new drugs and medical technologies.

Have you considered that just maybe we have enough drugs and treatments for now, and what we really need to do is make sure everyone has access to them? Then, when we've got universality in place we can start working on the next big revolution in healthcare. Though I sometimes wonder if we humans are really meant to live to 300. That's the only really significant and costly research (radical life extension) I can see on the medical frontier. Everything else is just a mop-up operation.

Re: There's no reason that a rich country like Canada should be free-riding on American consumers.

I actually agree with this. And one way to force the issue is to allow drug reimportation. The law of supply and demand cannot be obviated by government fiat. Canadians will have to pay more for their drugs if Americans have large-scale access to their market too.

Re: U.S. cancer survival rates are superior to those in Europe for almost all cancer types

Define "survival". No one gets out of here alive after all. We could just be talking about a combination of earlier diagnosis and prolonged futile end of life care delaying the inevitable by a few weeks.

Posted by JonF | April 18, 2008 8:22 PM

Yes, everybody in Canada drops dead at 55-- NOT! Sorry, dude, but facts are facts. People in other other First World countries have overall health care stats at least equal, and often superior, to our own.

Oh really? Show me those stats.

Posted by AB | April 18, 2008 8:28 PM

It would also be helpful if you could point out where I "parroted a bunch of stinking lies". If you cannot then please troll elsewhere, the adults are trying to have a serious conversation here.

Posted by AB | April 18, 2008 8:34 PM

No, Jon F, that was my point. Tyro raised the same issue you did. See my reply.

Posted by Will Allen | April 18, 2008 9:36 PM

JonF,

On the whole such a system would provide a net pluss for most people.

Wishful thinking and guessing are not substitutes for facts and evidence.

Define "survival".

Not dying.

No one gets out of here alive after all.

I've seen you make this nonsensical point before. Yes, everyone dies eventually. Presumably, you neverthless believe that, say, a woman who gets breast cancer at 45 is better off if it is successfully treated and she lives to 80 than if it is not and she dies of the cancer at 46 or 48. I don't think the benefits of cancer detection and treatment are really very hard to understand. The bottom line is that if you get cancer, you are signficantly more likely to be alive 5 or 10 years later if you live in the U.S. than if you live in Europe, because the U.S. health care system is much better at diagnosing and treating cancer than European ones are.

Posted by Mixner | April 18, 2008 11:54 PM