Taking Note

Unintended Consequences of Medicare Drug Benefit

In 2006, when the government began offering prescription drug coverage for seniors through Medicare Part D, the goal was to increase utilization of prescription drugs by the elderly who may not have been able to afford them before, and also to lower the average price of these drugs. The idea was that insurers—representing all the new Medicare Part-D recipients—would be able to use the clout of having this huge market to negotiate price discounts with pharmaceutical companies.

Studies since then—like this one from The Annals of Internal Medicine—have found that Medicare Part D “appears to have led to modest savings and modest increases in drug use by older people.”  With a new provision coming from the Affordable Care Act that aims to help “fill the donut hole” that seniors experience in coverage, these effects should be heightened.

But two new studies have revealed some unintended consequences of Medicare Part D. According to an AARP Rx Price Watch report released today, the retail prices for some of the most popular brand-name drugs sold to seniors increased 41.5% over the last five years, while the consumer price index rose only 13.3%. For example, the drug Flomax (which began facing generic competition this year and is usually prescribed for incontinence due to prostate problems), had the biggest price jump, climbing 24.8% in 2009. Over the past five years, Flomax increased in price by an alarming 92%. Other popular name brand drugs that experienced sharp price increases over that time span include the respiratory drug Advair (40%), the Alzheimer’s drug Aricept (40%), Nexium (28%) and Lipitor (24%)

EMR Technology Experiences Growing Pains

Last week I had my first visit with my new primary care doctor. I picked him based on recommendations (plus he’s one of the few that accepts my insurance), and also because he seemed to be an eager adopter of electronic medical records (EMR). On his website, there was a portal for making appointments on-line, asking questions of the doctor and staff by e-mail and once a registered patient, I could also use a secure system to access my medical records. With EMRs being portrayed as key drivers of quality and savings in health reform, I felt encouraged by my new doctor’s embrace of the technology.

But when he greeted me in the examining room, I was surprised to see the medical assistant hand my doctor a pad of paper with my height, weight and blood pressure written on it. As we talked and he examined me, he wrote notes down on the same pad—even though there was a computer in the room. When I asked how he felt about his EMR system, he said it was a great advance for his practice—but unfortunately it had crashed  that morning and the “tech guy” said it might take a while to get it back on track. “By next week or so we should have you in our system,” he sheepishly explained.

Putting a Lid on Health Care Inflation Is Possible

Over the past ten years the amount that health care insurers pay out to hospitals, doctors and patients has spiraled, risng by 5% to 11% each year, from roughly $1.3 trillion in 2000 to $2.5 trillion in 2009..  Yet few patients would say that the care they receive today is twice as good as the medical attention they received in 2000.

Quite the opposite.  A Greek chorus of doctors, nurses, and hospital patients tell us that, despite pockets of excellence, the overall quality of U.S. healthcare has declined over the past decade. They are the eyewitnesses who know how chaotic our hospitals have become, and how little time doctors have to spend with patients. Both caregivers and patients are less and less satisfied with the process.  Yet health care bills continue to rise.  In 1990, we spent 12% of GDP on medical services and products.  Now we spend 17% --without comparable improvement in the health of the population.

That is why I was intrigued when Jeremy Engdahl-Johnson sent me a report from Milliman, the actuarial firm, titled “Imagining 16% to 12%.”  (Since then health care spending has jumped, so the title needs to be revised: “Imagining 17% to 12%.”)

This may well sound pie-in-the-sky-- and I’m not suggesting that we’ll do it. Still, if you believe the many observers who suggest that at least one-third of our health care dollars are squandered in ways that provide no benefit to patients, in theory, we should be able to slice spending by 25%.

On Regulating Insurers: Affordable Care Act

Over at the New Republic, Jon Cohn reports that the Affordable Care Act gives Kathleen Sebelius great latitude in regulating insurers. And Cohn thinks that she is likely to use it.

“It's not impossible,” to regulate private sector insurers, Cohn writes. “Countries like the Netherlands and Switzerland both have adopted this model with considerable success. But it's a difficult task, particularly in a country like ours without the same tradition of strong regulation and enlightened corporate management.

“The architects of the Affordable Care Act understood this and, to the extent they could, they packed the law with regulations designed to force insurers change their behavior. But, by design and necessity,” Cohn notes, “the law was relatively vague on a lot of matters, leaving final determination of the rules to the Secretary of Health and Human Services and her department.”

Passage of $26 billion State Aid Package Is Merely a Stop-Gap Measure For Medicaid Woes

After the House voted last week to approve a $26 billion aid package to states—$16 billion of which will go toward helping keep strained Medicaid programs limping along—Rep. Joe Barton, of Texas, the ranking Republican on the House Energy and Commerce Committee who voted against the measure said; "There is no emergency," "There is no pending financial catastrophe." House Republican leader John Boehner called the aid package a “payoff to union bosses and liberal special interests.”

What alternate universe do Barton, Boehner and many of their fellow Republicans who opposed the aid package live in? States of all stripes—red and blue alike—are facing a deep crisis in their Medicaid programs.Women and children are losing benefits, and eligibility requirements have only gotten more stringent.

New "Small Area" Data From Census Reveal Wide Fluctuations in Insurance Coverage

The U.S. Census Bureau released a report last week that includes the latest figures on the number of uninsured in each county, of each state. It’s an exhaustive breakdown that highlights the wide fluctuations both between states and among individual localities. At 26.8%, Texas has the highest rate of uninsured residents under 65 in the nation—there are a whopping 6.1 million uninsured residing there. New Mexico (26.7% ) and Florida (24.2%) round out the top three. The state with the fewest uninsured residents is, not surprisingly, Massachusetts (7.8%) where the state mandates health coverage for most residents. These figures, which are from 2007 “do not include the impact on millions of people who lost their jobs and health insurance after the recession began in December 2007,” according to this piece in The Washington Post, so are likely to underestimate the problem.

The Individual Mandate: A Reply to the Cato Institute’s Report on Health Care Reform

In “Bad Medicine” the Cato Institute white paper exploring “The Real Costs and Consequences of the New Health Care Law,” Cato senior fellow Michael Tanner declares the individual mandate "perhaps the single most important piece of health care legislation.” By insisting that citizens have insurance --or pay a penalty-- Congress has taken an “unprecedented” step, says Tanner. Like many who object to the mandate, he argues that “The government has never required people to buy any good or service as a condition of lawful residence.”

In fact, that isn’t quite true.

But before getting to what the federal government has or hasn’t required of its citizens in the past, let me say that I agree with Tanner on his first point: the individual mandate is the lynchpin at the center of the Accountable Care Act (ACA). 

5 Myths and Facts about Medicare — In Pictures

Summary: Not long ago the Medicare Payment Advisory Commission (MedPac) came out with a data book on Medicare spending. The information is condensed into tables and charts.  As I looked at the charts, I found some surprises. Below, myths and facts about:

• how hard it is for Medicare patients to find a doctor
• where most of our Medicare dollars go
• increases in Medicare payments to physicians-- and whether doctors automatically hike the volume of services they provide when Medicare cuts reimbursements for services.
• hospitals losing money on Medicare patients
• which hospitals make a profit on Medicare, and which hospitals cannot break even on Medicare reimbursements

Summary: Not long ago the Medicare Payment Advisory Commission (MedPac) came out with a data book on Medicare spending. The information is condensed into tables and charts.  As I looked at the charts, I found some surprises. Below, myths and facts about:

• how hard it is for Medicare patients to find a doctor
• where most of our Medicare dollars go
• increases in Medicare payments to physicians-- and whether doctors automatically hike the volume of services they provide when Medicare cuts reimbursements for services.
• hospitals losing money on Medicare patients
• which hospitals make a profit on Medicare, and which hospitals cannot break even on Medicare reimbursements

A Reply to the Cato Institute’s Report on Healthcare Reform

This week, the Cato Institute released a 52-page report on health care reform titled: Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law. The tract was written by Michael Tanner, a senior fellow at the Institute, and it rests on the thesis that the Patient Protection and Affordable Care Act (ACA) is both unaffordable and unfair. Inevitably, Tanner’s claims about affordability are shaky; in truth no one can project how much reform will cost over ten years—and how much it will save. There are too many variables involved.

Nevertheless, Tanner seems sure: the legislation will add to the deficit, he asserts, and force insurance premiums higher. Moreover, he stamps the legislation “unjust:" it would turn private insurance companies into regulated “public utilities,” forcing them to insure sick people, while “redistributing income” from families earning “over $348,000” to families earning “$18,000 to $55,000.”  Ultimately, he argues, reform represents yet another step toward transforming the U.S. into a “Nanny State.”

Why a 52-page report on health care reform now? Tanner makes his purpose clear in the introduction, where he suggests that conservatives will make the new health care legislation the “centerpiece of Republican campaigns this fall,” as they push for repealing the Affordable Care Act, or at the very least, replacing it. Bad Medicine is meant to serve as a playbook for those who hope to kill reform.   

With that in mind, The Century Foundation decided that the document deserves scrutiny.  In the weeks ahead, I will be analyzing and rebutting the report’s many arguments against individual and employer mandates, insurance regulation, subsidies, reductions in Medicare spending, and the CLASS Act -- a much-needed national long-term care program.

This installment focus on CATO's analysis of polling data related to public attitudes toward the health care bill.

Obama's National AIDS Plan Is Short on Funding For Most Vulnerable

This week the White House unveiled its new national plan to cut HIV infections and curb the AIDS epidemic. The plan, the first ever since AIDS emerged on the scene some 30 years ago, has the goal of  "intensifying HIV prevention efforts in communities where HIV is most concentrated;” specifically in the gay and African-American communities who are disproportionately affected by the disease. It also aims to increase access to treatment and mount "a more coordinated national response to the HIV epidemic."

Some specific goals from the National AIDS Plan include:

• Reduce new infection rates by 25 percent by 2015.
• Devote $30 million from the health care reform law to reducing infection rates.
• Link 85 percent of those who are HIV-positive to care within three months of being diagnosed.
• Provide $25 million in funding to help states pay for drugs to treat HIV

This plan, which took 15 months to draw up and included input from 14 community forums around the country, is a good start and helps put the fight against AIDS back on the national radar. Some 1.1 million Americans are currently infected with HIV and infection rates haven’t budged since the mid-1990s. After hitting a peak of 130,000 new infections a year in the 1980’s, the rate dropped to 49,000 a year in the early 1990’s, according to the Centers for Disease Control. But in the past decade this number has increased and remains at 56,000 new infections each year. Meanwhile, in 1995, 44% of Americans indicated that HIV/AIDS was the most urgent health problem facing the country; in March 2009 that number had plummeted to only 6%.