Graham to Testify at House Ways & Means Oversight Subcommittee January 24

 

NCPA Senior Fellow John R. Graham has been invited to testify in person to the U.S. House of Representatives Ways & Means Oversight Subcommittee on January 24 at 2 p.m. The topic is Obamacare’s individual mandate to buy health insurance, which Graham concludes is a burden without benefit.

Learn more at this link. Come in person, or watch online.

Council of Economic Advisers’ Bad Obamacare Economics

 

CEAPresident Obama’s Council of Economic Advisers (CEA) has issued its valedictory report on the state of Obamacare. The gist of the argument is that Obamacare is doing fine, on the verge of overcoming its growing pains since 2014.

The CEA claims critics who suspect the 25 percent increase in premiums for 2017 are a problem are off-base. In a normal insurance market, this would indicate a “death spiral”: The sick enroll and the healthy stay away, causing next year’s premiums to increase. The cycle repeats itself until only the sickest enroll. The CEA asserts this cannot be occurring because 11.3 million people enrolled in Obamacare last December, which was 300,000 more than in December 2015. Further, insurers underpriced their policies in 2014 because the market was new. However, they have learned since then and are pricing policies more realistically.

While it is true enrollment in Obamacare’s market is a little higher than last year, it is still well below the Congressional Budget Office’s estimate of 21 million enrollees in 2016, which it made as recently as March 2015. Even in January 2016, it estimated 13 million would enroll last year, which was almost one fifth too high.

PPI: Pharma Prices Are Dropping!

 

BLSDecember’s Producer Price Index rose 0.3 percent. However, prices for most health goods and services grew slowly, if at all. Fifteen of the 16 price indices for health goods and services grew slower than their benchmarks.*

The outlier was health and medical insurance for final demand, which increased by 0.2 percent, the same rate as final demand services (less trade, transportation, and warehousing.) The largest decline (relative to its benchmark) was for prices of new health care building construction, which declined twice as fast as prices of overall building construction did.

Prices of hospital outpatient care and nursing home care declined versus their final demand services (less trade, transportation, and warehousing) and also absolutely. Pharmaceutical prices decreased 0.1 percent, a 0.4 percent drop versus the price increase for final demand goods less food and energy.

See Table I below the fold:

Veterans Deserve Better Health Care

 

man-in-wheelchair(A version of this Health Alert was syndicated by the Tribune News Service.)

President-elect Trump has nominated David Shulkin, MD, to be the next Secretary of Veterans Affairs. In 2015, Doctor Shulkin was nominated by President Obama to be Under Secretary of Health in the VA (the position he currently holds). It is an interesting choice, not only because Mr. Trump is calling on an Obama appointee to take the top job in the VA, but also because it recognizes veterans’ health care is the major pain point in the department.

Congress Should Take Steps to Make Drugs More Affordable

 

gencompAs Republicans squabble about how to repeal & replace Obamacare, lost in the debate is the way most Americans actually access our health care system. In any given year, most people don’t ride in the back of an ambulance heading to the ER. Nor do they convalesce in a hospital bed. Most of the medical care Americans receive is not even provided in doctors’ offices. The most common way Americans access our health care system is by taking a pill.

Zika in Florida: A Case of Government Failure

 

Happy Older Couple in Beach ChairsAs readers know from a previous post, I was in Florida for Christmas, trying to unwind. Do you know who else was in Florida? Mosquitoes carrying the Zika virus! How did the U.S. government fail in its fundamental duty to protect us from this invader?

Most agree that government has a role to play in preventing and suppressing epidemics, a classic public-health problem. Viral or bacterial infections are not passed from animal to person, or person to person, by voluntary exchange. Instead, proximity to another’s infection can lead to an individual’s becoming infected, notwithstanding any market interaction.

So, even the most freedom-oriented individuals accept government spending and restrictions on individual choice when the threat of epidemic increases. In 2014, the arrival at Dallas-Fort Worth airport of a man carrying the Ebola virus caused some lawmakers to seek a ban on air travel from countries where Ebola had broken out.

Health Jobs Explode Versus Non-Health Jobs

 

blsHealth jobs exploded in this morning’s jobs report, growing more than three times faster than non-health jobs (0.28 percent versus 0.09 percent). With 43,000 jobs added, health services accounted for over one quarter of 156,000 new nonfarm civilian jobs.

The disproportionately high share of job growth in health services is a deliberate outcome of Obamacare. While this trend persists, it will become increasingly hard to carry out reforms that will improve productivity in the delivery of care.

Ambulatory sites added jobs at a much faster rate than hospitals (0.41 percent versus 0.21 percent). This was concentrated in offices of physicians, which alone added. Ambulatory sites added 30,000 jobs, versus 11,000 in hospitals. This is a good sign because hospitals are high-cost locations of care versus doctors’ offices and other ambulatory sites.

See Table I below the fold:

Questions On Medicare For Dr. Tom Price, Our Next Health Secretary

 

220px-Tom_Price(A version of this Health Alert was published by Forbes.)

It looks like Tom Price, MD, Donald Trump’s nominee for U.S Secretary of Health & Human Services will get his first Senate confirmation hearing on January 18. According to Morning Consult, Democratic Senators are planning to focus on Price’s support for turning Medicare into a system of “premium support.”

Fair enough: It will be a relief from all the arguments and counter-arguments about whether “repealing and replacing” Obamacare means “repeal and delay,” “repeal and de-regulate,” or “delay and delay” (as advocated by some who fear Republican politicians will repeal Obamacare immediately and never get around to a replacement bill.)

Why Did The FDA Approve 57 Percent Fewer New Medicines Last Year Than 2015?

 

captureThe Food and Drug Administration has reported it approved only 19 innovative new medicines last year, versus 51 in 2015. To be sure, 2015 was a high-water mark. Nevertheless, such a dramatic drop signals a problem for patients eager for new treatments. These new drugs, though few, represent advances in the treatment of ovarian cancer, Hepatitis C, and multiple sclerosis, among other diseases.

The FDA excuses itself for the slowdown, claiming it is receiving fewer applications from drug makers. However, this is symptomatic of a vicious circle. The regulatory burden of approval has increased so much, it is contributing to a significant reduction in the rate of return on capital invested in pharmaceutical development. According to new research by Deloitte, the rate of return has collapsed from 10.1 percent in 2010 to 3.7 percent last year.

Drop in Health Facilities Construction Continues in November

 

Census2October’s construction trend continued in November. Overall, health facilities construction starts declined 0.1 percent, versus an increase of 0.9 percent for other construction. Health facilities construction accounted for almost 6 percent of non-residential construction starts. However, there was greater gap between health and non-health starts in private than public construction.

Construction of private health facilities dropped 0.2 percent, versus an increase of 1.0 percent for private non-health facilities. Private health facilities construction starts accounted for less than 4 percent of private nonresidential construction starts. Construction of public health facilities increased by 0.4 percent, while construction of public non-health facilities increased 0.8 percent. In other words, non-health facilities construction outpaced health construction by 1.2 percentage points in the private construction market, versus only 0.4 percentage points in the public construction market.

For the twelve months ending last October, there was a significant difference in trend between private and public construction. Non-health private construction increased 4.3 percent, but private health facilities construction dropped 1.5 percent. On the other hand, non-health facilities public construction increased 2.6 percent, while public health facilities construction increased by 2.9 percent.

This suggests private investors are nervous about future revenue growth in hospitals and other facilities.

See Table I below the fold: