Physicians’ Political Contributions Switched from Republican to Democrat in Twenty Years


One of the most interesting things about health politics and policy is that those mostly responsible for driving health costs — physicians — are the least concentrated interest group. If we want to know what the research-based pharmaceutical industry, the generic drug industry, the health insurers, the hospitals, or the medical-device makers want, we know where to go to find a fairly unified answer.

Physicians have no unified voice. The closest thing to a professional association for all physicians should be the American Medical Association, but it is not. It is a business that profits from a government-sanctioned monopoly on billing codes.

There is a Market for Human Organs, Whether You Like It or Not


The buying and selling of human organs was in the news this weekend, via an investigative report in the New York Times. People tend to be moved when they learn about someone donating an organ to someone else who needs it, but they also tend to be disgusted by the notion of a market where people can sell their organs to strangers. Naturally enough, this market consists of high-income patients and low-income donors.

The NYT profiles an Israeli woman who bought a kidney from a Costa Rican donor, for a total cost of $175,000. A donor gets about $5,500. The rest goes to middlemen and medical staff. It doesn’t sound like a great deal for the donor, does it?

How We Once Provided Medical Benefits


Our country suffers from amnesia about how we used to solve problems in the not-so-distant past. It is something I hope to help correct in a new paper published by the Citizens’ Council for Health Freedom, “Safe Haven: How Mutual Aid Can Protect Families in Times of Trouble.”

This paper shows how fraternal associations once provided the vast bulk of medical benefits and life insurance in the United States and Britain. These associations were formed by working class men and women from all ethnic groups. In some cases they owned and operated their own hospitals. They also provided schools and orphanages for the children of deceased members, sickness funds for members who were unable to work, relocation assistance to help workers go where the jobs were, and moral support to families in times of trouble.

Drug Discounts Should Go to Poor Patients, Not Hospitals


In 1992, the federal government mandated discounted drug prices for certain “safety-net providers”. The purpose was to ensure that these facilities, which served low-income patients, could acquire medicines at low prices to dispense to those patients. The drug-makers finance the discounts.

The 340B program is a roundabout way to finance a welfare benefit. The primary beneficiaries are hospitals, although only outpatient drugs are discounted via the 340B program. Evidence suggests that the program has become a profit center for hospitals. The number of sites benefitting from the program has doubled in ten years, to 16,500 across the country.

Cost-Conscious Patients: Why Is That a Bad Thing?


An article in Modern Healthcare discusses the uneasy feeling doctors experience when patients ask awkward questions about the medical care recommended for them. Among the uncomfortable questions doctors are expected to answer: “How much is that going to cost?” “Do I really need that MRI?” “Why do I have to get that?” “Can it wait?”

Imagine how any other profession would respond when the purveyors of goods and services are expected to suffer the indignity of customers quizzing them about the merits, demerits and costs of their products. Oh, I forgot, every other profession does suffer the indignity of having to convince buyers that their services are valuable.

Are Patents Leading to Drugs that Cure the Wrong Patients?


A version of this Health Alert appeared at Forbes.

That’s not a headline you’ve read before, I’ll bet. New evidence suggests that drug companies invest too much in therapies targeting diseases at late stages and not enough on prevention or early-state therapies.

It is emotionally satisfying and socially acceptable to say that buying an extra few months of life is priceless, but if resources invested in such drugs could have been invested in drugs that would have dramatically increased the quality or length of lives of other patients, it is not evil to suggest that the resources were misallocated.

Eric Budish of the University of Chicago, and colleagues, have observed that drug companies invest significantly more in researching and developing therapies for late-stage than early-stage cancers. They have identified the patent system as the culprit. As summarized in the Economist’s Free Exchange blog:

The economists find that pharmaceutical companies conduct 30 times more clinical trials for recurrent cancer drugs than for preventive drugs (the effect persists even after adjusting for market size). The authors also show that firms divert their R&D expenditures away from more curable, localised cancers and focus on incurable metastatic and recurrent cancers instead. The patent system encourages pharmaceuticals to pump out drugs aimed at those who have almost no chance of surviving the cancer anyway. This patent distortion costs the U.S. economy around $89 billion a year in lost lives.

To put it (a little too) simply, patents have a term of twenty years. If a drug-maker has to do a clinical trial that lasts ten years until it reaches its endpoints, it will have only ten years of patent life. If a trial for a late-stage cancer only takes one year to reach its endpoints, it will have up to nineteen years of patent life. Here is an example from the study:

Political Control of Obamacare Insurance Pricing Harms Those with Lower Incomes


When Obamacare kicked off, Colorado State government had grouped its ski resort  counties into a single rating area. This makes sense geographically. But everything is more expensive in the ski resort counties, and under Obamacare pricing rules resort county residents ended up with the highest health insurance exchange premiums in the country. The resulting town meetings were spirited, county commissioners threatened to sue, and Colorado Insurance Commissioner Marguerite Salazar began looking for ways to redraw the rating areas to lower the political angst.

Before Obamacare, someone in the mountain towns might economize on health costs by buying a high deductible health insurance policy and making regular contributions to an HSA. He might use a local physician, hospital, or clinic. He could also save money with in-state medical tourism. A few hours of driving would let him seek lower priced care in Denver’s more competitive health care market.

Medicaid Patients Use the ER Because They Have To, Not Because They Want To


It is well established that Medicaid patients use emergency rooms more than either uninsured or privately insured patients. What has been debated is whether their use of the ER is necessary or unnecessary. Well, it turns out that that depends on how you look at it. Obviously, not many people go to the ER because they enjoy the experience and have nothing better to do. However, medical problems that cause them to go to the ER could often be dealt with in a doctor’s office.

The Medicaid and CHIP Payment and Access Commission (MACPac) has just published a review of articles examining why Medicaid patients frequent the ER so much:

The majority of ED visits by non-elderly Medicaid patients are for urgent symptoms and serious medical problems that require prompt medical attention…

Wal-Mart Shakes Up Primary Care — and the Whole System


Wal-Mart has a new take on retail clinics. These newly launched clinics will charge patients $40 for a visit — but only $4 for Wal-Mart associates. Anybody, with or without insurance, can go into one of these clinics and be seen by a qualified health professional, without the usual paperwork. Although the mega-retailer has operated clinics in its stores for a few years now, the new ones are different in a couple of ways

First, Wal-Mart’s previous clinics were collaborations with local hospitals, which had “mixed success”. So, it appears to have decided to do it alone. I am not surprised. Can you imagine a company like Wal-Mart, which succeeds in an unregulated industry with ruthless price competition, trying to negotiate a deal with hospital executives? The communications challenges must be almost insurmountable — sort of a Mars and Venus situation.

Tax Expenditure from Employer-Based Health Benefits Hits $785.1 Billion, 2014-2018


How much tax revenue does the Treasury lose by exempting employer-based benefits from households’ taxable income? $785.1 billion over the next five years, according to the latest estimate by the Joint Committee on Taxation.

To put that in perspective, Obamacare’s exchange premium tax credits and cost-sharing subsidies are reckoned to amount to $276 billion over the same period. So the exclusion of employer-based benefits from taxable income costs 2.8 times more than the Obamacare tax credits.

I anticipate your objections: Yes, the exclusion is not a subsidy, whereas the Obamacare payments clearly are. Nevertheless, if everyone received the same tax credit, it would be a lot fairer and easier to navigate than taxing high-income households via Uncle Sam’s left hand to fund Obamacare subsidies (not to mention Medicare and Medicaid) for other households; and then giving them a significant tax break via Uncle Sam’s right hand for their own health benefits. A universal, refundable tax credit for every household would simplify our healthcare finances dramatically.