Orac has a great post on the cost-effectiveness of cancer treatments, particularly Avastin, an extremely expensive angiogenesis inhibitor.
Basically, what is being discussed here is whether a drug affects overall survival (OS), which is mortality from all causes in a cancer patient, versus whether it affects progression-free survival (PFS), which is the period of time before a given tumor progresses. Surprisingly, at least to non-oncologists and lay people, OS and PFS are often unrelated. If, for example, a drug slows tumor growth sufficiently to demonstrate a significant affect on PFS, it doesn't necessarily mean that OS will be better too. Sometimes it will, sometimes it won't. Moreover, it's long been a debate over whether PFS is a valid endpoint for approving a drug. Traditionally, the thinking has been that if a drug does not improve OS, then it probably shouldn't be approved as a first line agent given up front to new cancer patients who have not been treated yet, although it can be approved as a second-line or third-line agent, to be tried after first line agents fail.However, thinking has been evolving over the last few years towards accepting a somewhat looser standard of valuing PFS. . .
. . . resources are not endless, and one has to ask how much a few months of PFS without a concomitant increase in OS are worth. I don't know the answer to that one, as this is a very difficult debate that we in the U.S. have thus far been able to avoid. Our colleagues in nations with nationalized health care systems cannot avoid it, though. For example, in Canada, it's been estimated that the addition of Avastin to breast cancer and lung cancer treatment would add $299 million a year to Canada's health care costs. In a country like Canada, the only choices are to cut money out of other programs to pay for this or to raise taxes. In the U.S., our insurance premiums just go up.
Everyone in the healthcare debate is looking for a villain: heedless consumers, careless doctors, grasping pharma companies. But the truth is, most of the increase in health care costs comes from new treatments, not abuse of the system. And a lot of those new treatments raise a question: how much are we willing to pay for marginal improvements in survival, or quality of life?
As Orac says, so far we've ducked that question because we have no central planner that has to make it. But eventually, we're going to have to face it through the mechanism of rising premia. And there's no easy answer. It's easy to dismiss these improvements as marginal, but marginal is not the same thing as "insignificant". Baby steps will eventually bring you to the same place as one giant leap--it just takes a little longer. My understanding is that the reason we've made such immense advances in pediatric oncology is that the oncologists just kept grinding away, producing minor improvements that over time added up to a gigantic increase in life expectancy for children with cancer.
Maybe its just me but the idea that letting some health-care equivalent of the DMV ladies deciding who gets to live and die is chilling.
Ain't saying the current system is super... but hell no. Uh-uh.
And I agree that one of the fundamental problems in health care is the rage, rage against the dying of the light mentality. But its pretty hard not to feel that way when its YOUR family or yourself on the line, and thus pretty hard to justify telling other people that their grandpa needs to die because he's exceeding his cost/benefit ratio.
Basically my own policy recommendation is that we get on with legalizing euthenasia for terminally ill patients who go through various legal formalities, are of sound mind, etc. to ensure they aren't coerced.
This is only likely to get worse. American Society of Pediatrics is now clling for cholesterol lowering drugs to be given to kids as young as 8.
My understanding is that the reason we've made such immense advances in pediatric oncology is that the oncologists just kept grinding away, producing minor improvements that over time added up to a gigantic increase in life expectancy for children with cancer.
And it's worth noting, again, that even though the Canadian Health Service may not pay for such treatments when they are expensive, Canadians ultimately get the benefits of having the U.S. act as the 'early adopter'. But when/if the U.S. gets out of that business?
I think arguing OS vs PFS is still avoiding an important issue: Can someone who's spouse or parent faces a terminal cancer make rational decisions about the cost of treatments vs. a marginal increase in survival or quality of life? Could you put a dollar quantity on the number of extra days a loved one is worth?
The big-gov't thinker inside me says, let Big Brother decide whats allowed, and save us the heart-break and trouble of having to either decide for ourselves when to pull the plug or go bankrupt trying to keep the person alive.
And this is all assuming health care consumers are really exposed to the costs of their decisions. Either way someone is paying, but the decider isn't capable of making rational decisions.
But the health-care equivalent of the DMV *is* currently making those decisions, toxic, in the guise of HMOs and insurance companies.
In fact, it's really worse, because the DMV people at least are generally just indifferent - how they treat you really doesn't affect them in any way.
But when it comes to profit-based health insurance, every treatment they authorize is money coming straight out of their bottom line. The minute you end up in the hospital, you stop being a profit center for them and start being a cost center. They have an active incentive to cut you off as quickly as possible.
I'm not saying that government-run single-payer is the perfect answer, either. But making the DMV argument isn't persuasive, because health insurance corporations have long since proven they care even less about their customers than the DMV does.
I lost my wife to lung cancer this past winter. She was diagnosed a year prior in stage IV (metastises to her brain).
After she died, I asked the guy who had been our first line doctor (and who had administered Avastin in conjunction with CarboPlatin and Paclitaxel), "What's the longest you've seen a patient survive who came to you with stage IV NSLC?
His answer: 14 months. My wife made 12.
And she was progression free for six months. Then it exploded.
So, yes -- it is an important question: If a drug doesn't add to overal survival time, what's the use?
But, there's an even better question -- one that's rarely asked. Should we even bother with chemo for my condition?
These hellacious treatments maybe extended my wife's life by a couple of months -- MAYBE. Were they worth it? Well, it gave us hope (false hope).
1. Patients should pay a portion of costs, even when their premium has been paid. 10% or so seems reasonable. So you can have that $10,000 procedure to extend Grandpa's life by 3 months average if you're willing to pay $1,000.
2. I had a friend on the Gershin diet who has so far managed to reverse his cancer. (no symptoms except enlarged lymph nodes)
I only have a slight knowledge of evaluating the efficacy of cancer drugs, but isn't 5 years survival considered survival? This seems to create a bias towards short term strategies versus long term survival. We have good reason to believe that those who survive without chemotherapy may have significantly expanded lifespans.
3. Regarding reporters and credulousness; My 'senior project' in college was on the scientific rhetoric of the Human Genome project and I've had a longstanding interest in how scientific debates are portrayed in the popular press. I've found that 99% of reporters, including those who have dedicated themselves to scientific topics (but do not themselves have a technical background), tend to have a great deal of difficulty actually analyzing scientific claims. Either they are mindlessly paranoid, skeptical without evidence, or simply entirely credulous. I don't think I can recall a single newspaper article outside of perhaps columns by Dr. Weil, that even managed to evenhandedly recount the strengths or weaknesses of a particular theory. The linked article seems a good bit better than most.
But when it comes to profit-based health insurance, every treatment they authorize is money coming straight out of their bottom line.
So what? The same is obviously true of any kind of for-profit insurance, whether it's health insurance, car insurance, homeowner's insurance, life insurance or any other kind of insurance. And more broadly, all companies have an incentive to maximize profits and minimize costs, whether the thing they're selling is insurance, pharceutical drugs, microwave ovens or anything else. That's why we have markets and competition. Any health insurer who routinely failed to pay on legitimate claims, or who charged significantly more than his competitors for the same level of health care coverage, probably wouldn't stay in business very long.
"Everyone in the healthcare debate is looking for a villain: heedless consumers, careless doctors, grasping pharma companies."
Yes. And the same goes for the debate (such as it is) about energy costs: greedy oil companies, speculators, price-gouging gas stations. One of many reasons for limiting the sphere of government is that politicians get elected by promising to punish villains, even when there are none.
And more broadly, all companies have an incentive to maximize profits and minimize costs, whether the thing they're selling is insurance, pharceutical drugs, microwave ovens or anything else. That's why we have markets and competition.
Sorry Mixner, brainless cheerleading about competition and "free markets" hardly applies to Big Pharma - and particularly to drugs like Avastin, made and patented by only one company(Genentech with partner Roche). Which also patented the gene sequence it got from US taxpayer-funded basic research at two universities, as a further barrier to competitors entering the market.
Any health insurer who routinely failed to pay on legitimate claims, or who charged significantly more than his competitors for the same level of health care coverage, probably wouldn't stay in business very long.
Any insurer would not be doing his duty to other policy-holders if they failed to fight against extravagent health or lawsuit damages claims that the policy purchase-holders wish to prevent their own premiums going up over.
Thus it is sound business to fight against enormously expensive largely minimimal-results treatments, to parents claiming their health insurance should pay out 85,000 a year for a full-time "interpreter/therapist" and assistant for their autistic child between ages of 5-18, and why victim families of an aviation crash do not deserve 10 times more than minimum settlement.
Holding the line against rare and ruiniously expensive claims actually attracts MORE customers that feel comforted knowing that their already high premiums aren't going in part to trial lawyers and incredible high costs of medical conditions that they know their family is in no risk of getting...
Which also patented the gene sequence it got from US taxpayer-funded basic research at two universities, as a further barrier to competitors entering the market.
As it happens, I'm an attorney with more than a passing familiarity with patent law, that being my bread and butter. Can you explain to me how it's possible to get a patent on something you didn't invent?
Rob Lyman - I'm not any kind of exert in this area, but didn't the baye-dole act and technology transfer acts allow universities to file patents for publicly funded research and encourage cooperation with private entities?
Is it possible for a company collaborating with a university on research which is partially publicly funded to get a patent from such collaboration?
But when it comes to profit-based health insurance, every treatment they authorize is money coming straight out of their bottom line.
So what? The same is obviously true of any kind of for-profit insurance, whether it's health insurance, car insurance, homeowner's insurance, life insurance or any other kind of insurance.
The big difference here seems to be;
1. Car insurance isn't that dynamic.
2. If someone doesn't give you enough money to repair your tile floor, that's obvious. Critically examining medical information, on the other hand, is terribly difficult, even for those with a medical or scientific background.
Chris Ford-
Aside from your comments about the gene patent, Avastin competes with other cancer drugs, and will compete with drugs currently in development or on the drawing board, not necessarily with other drugs that work in exactly the same way. Moreover, Genentech/Roche will not have an infinite patent lifetime covering Avastin. So what's the problem?
It seems that some people think because drugs are so valuable, they should be free, or so cheap as to be essentially free. Huh? We've been over these anti-pharma arguments a dozen times here, and whenever the same tired arguments (pharma doesn't invent drugs, the government does most of the work; drugs don't cost that much to discover and bring to market, etc.) are met with data and reasonable explanations, everyone goes back into the woodwork. Then they come back a week or month later with the exact same arguments. It says something about the poor quality of the anti-pharma arguments, I think.
Baye-Dole allows small businesses and non-profits which invent something with federal funds to patent it, provided they both give the feds a non-exclusive license and make serious efforts to bring the invention to market. I don't know if Genentech qualifies as a "small business" or not.
It still requires you to be the "inventor," though, not just patent things that someone else invents. The most likely path is that Genentech licensed a patent from a university (a non-profit) which did at least some of the work on the taxpayer dime. In which case they bought intellectual property, as anyone is entitled to do.
I could be wrong; I'm just speculating.
Is it possible for a company collaborating with a university on research which is partially publicly funded to get a patent from such collaboration?
I should have said: the university will get a piece of that action, too. You simply will never get an (enforceable) patent unless you put all the inventors on it.
The big difference here seems to be; 1. Car insurance isn't that dynamic.
I don't know what this means. "Dynamic," how? And why is this alleged difference relevant to the point in dispute?
2. If someone doesn't give you enough money to repair your tile floor, that's obvious. Critically examining medical information, on the other hand, is terribly difficult, even for those with a medical or scientific background.
This seems like another nonsequitur. The complaint was that health insurers have an incentive to refuse to pay for health care services in order to maximize their profits. The complaint doesn't make sense because all for-profit insurers have the same kind of incentive. The incentive is there whether the risk being insured against is a health problem, the theft of your car, the loss of your house, or anything else.
There is a substantive difference between getting less than the value of your totaled car, and having your insurance policy canceled because you forgot to mention that you caught the flu 10 years ago when you signed up for the policy (pre-existing condition!)
Health insurance companies employ entire staffs devoted to figuring out ways to deny their customers coverage - not because the treatment is unproven or because there's no hope of saving the person's life, but because someone didn't cross a t or dot an i on some paperwork.
That strikes me as an utterly broken way of administering health coverage. I suppose that makes me a left-wing fringe loony socialist, though.
There is a substantive difference between getting less than the value of your totaled car, and having your insurance policy canceled because you forgot to mention that you caught the flu 10 years ago when you signed up for the policy (pre-existing condition!)
Another nonsequitur. Yes, those things are different. Again, so what? A health insurer who makes a habit of using trivial oversights in applications as an excuse to cancel policies is likely to find itself at a competitive disadvantage in the market for health insurance. Just like a car insurer who plays the same kind of games with its customers. You seem to have this strange notion that prospective customers for health insurance are incapable of shopping around and comparing the costs and benefits of different policies and business practises offered by different insurance companies. Again, any health insurer that routinely refuses to pay on valid claims, that routinely gives its customers the runaround, that makes promises to its customers and then fails to deliver on them, and so on, is likely to lose business to its competitors. Just as any car insurer, home insurer, life insurer, etc. would likely lose business if it treated its customers in that way too. In fact, if the insurer behaves in ways that clearly violate its written agreements with its customers, it's likely not only to lose business, but to suffer legal penalties also.
But that assumes that the health care market is truly free. It's not, not in the least.
The vast majority of Americans get their insurance (if they get any at all, which is a whole separate issue) from their employers. The "customer" of the plan, then, is not actually the person benefiting from the insurance - but the employer, which has a primary goal of keeping its health benefit costs from shooting out of control (a reasonable goal, granted.)
But the employer, not the employee, selects which plans might be available in a given open-enrollment period... and actually doesn't have to have any selection of plans at all. They can just give you one choice and take it or leave it.
If your employer gives you a choice of Terrible Insurer A and Terrible Insurer B, that's not really a choice at all.
Furthermore, one's ability to select caregivers of one's choice is severely limited, and can tie a person to an insurer. Develop a great relationship with your doctor? Guess what, she's exclusive to MegaHealthCorp. If you choose to switch to GiantCrossCo, tough luck, you'll have to find someone else.
Your argument only makes sense if one pretends that the health care industry is absolutely nothing like it actually is today. Since it isn't, your argument is moot.
In fact, if the insurer behaves in ways that clearly violate its written agreements with its customers, it's likely not only to lose business, but to suffer legal penalties also.
The plaintiff's bar gets a lot of bad press (justly, at least some of the time) but the class action lawsuit does have a place in our system.
I'd also note that 'likelihood' is in the eye of the beholder. Our so-called 'strict constructionists', tradition-bound members sitting on the highest court of the land have ruled time and again to make such law suits harder to press.
This keeps on being said without the slightest attempt to ever justify it. I'll note, again, that if this were the case, paper hospital gowns wouldn't cost $20 plus, that butterfly bandages wouldn't be going for that same $20, that procedures like a simple tonsillectomy would be going down in price, not up.
Needless to say, that doesn't happen.
But that assumes that the health care market is truly free. It's not, not in the least. The vast majority of Americans get their insurance (if they get any at all, which is a whole separate issue) from their employers. The "customer" of the plan, then, is not actually the person benefiting from the insurance - but the employer, which has a primary goal of keeping its health benefit costs from shooting out of control (a reasonable goal, granted.) But the employer, not the employee, selects which plans might be available in a given open-enrollment period... and actually doesn't have to have any selection of plans at all. They can just give you one choice and take it or leave it. If your employer gives you a choice of Terrible Insurer A and Terrible Insurer B, that's not really a choice at all.
Another argument that makes no sense. Yes, most Americans don't purchase their health insurance directly, but obtain it through their employers, who purchase group plans from health insurers for their employees. How does that mean the market is "not truly free?" Businesses purchase all kinds of products and services from other businesses, not just health insurance. When I buy a TV, I don't purchase it directly from the manufacturer. I purchase it from a retailer who purchases it from the manufacturer. My choice at any particular retailer is limited to the models he is selling. Does this mean the market for TVs is "not truly free?"
And yes, obviously employers have an incentive to minimize their health care costs. But again, so what? Health insurance is part of the compensation package employers offer to employees. If the employer provides substandard coverage it will be at a competitive disadvantage in the labor market. Just as it would be at a disadvantage if it offered substandard salaries or substandard retirement plans. And just as a TV retailer would be at a competitive disadvantage if it offered substandard TVs at its stores.
Furthermore, one's ability to select caregivers of one's choice is severely limited, and can tie a person to an insurer.
No, one's ability to select caregivers of one's choice may be severely limited, depending on the details of the policy. Just as your choice of auto repair shops may be limited by your car insurance policy or your choice of home repair services may be limited by your homeowners' insurance policy. In general, the more expensive the policy, the greater the choice.
Also, your choice of caregivers and your coverage for health care services is going to be limited in some way whether it's funded publicly or privately. This may be news to you, but Canada's Medicare and Britain's National Health Service do not pay for every kind of drug or test or surgery that a doctor may be willing to prescribe to a patient. In fact, they place very severe restrictions on covered services. If you want to see a doctor who is not covered by those services or obtain a drug or surgery that is not approved, you have to pay for it yourself, just as you would for a service that is not covered by your private health insurance in the United States.
SOV,
This keeps on being said without the slightest attempt to ever justify it. I'll note, again, that if this were the case, paper hospital gowns wouldn't cost $20 plus, that butterfly bandages wouldn't be going for that same $20, that procedures like a simple tonsillectomy would be going down in price, not up.
Making unsubstantiated claims about inflated prices for health care products immediately after complaining about alleged unjustified claims by others isn't terribly persuasive.
Of course, even if it were true that the prices of everyday products like gowns and bandages are inflated, that wouldn't establish your claim that it is those everyday expenses, rather than the huge costs associated with developing and providing new drugs and tests and surgeries to large numbers of people, that are responsible for most of the increase in health care costs.
Another absolutely terrible analogy, Mixner. I'm beginning to think you've got a degree in these things.
A person is, at any given time, free to choose to purchase a television from any of dozens or hundreds of different retail outlets. There is a wide array of instantly available competition looking to provide exactly what a customer wants. Best Buy, WalMart, Target, Amazon.com, Woot!.com, Sears, whoever.
Show me the person who is free to, at any time, choose from hundreds of different employers, any of whom will immediately provide exactly what an employee wants - a position commensurate with the person's skillset and experience, competitive wages, benefits and a work location convenient to the person's existing home and family.
If you can't see the difference between a retail store-customer relationship and an employer-employee relationship, then this conversation is over because there's no sense arguing the point.
A person is, at any given time, free to choose to purchase a television from any of dozens or hundreds of different retail outlets. There is a wide array of instantly available competition looking to provide exactly what a customer wants. Best Buy, WalMart, Target, Amazon.com, Woot!.com, Sears, whoever. Show me the person who is free to, at any time, choose from hundreds of different employers, any of whom will immediately provide exactly what an employee wants - a position commensurate with the person's skillset and experience, competitive wages, benefits and a work location convenient to the person's existing home and family.
You've got to be kidding. The vast majority of TV sales are made by just a few large retailers--a few Big Box electronics chains and a few large department and discount store chains. Those few retailers effectively define the choice of TVs available to the vast majority of Americans in the market for that product. And for many other kinds of product and service, the range of sellers is even smaller.
If the market for a product or service is "truly free" only if most end-user consumers of that product or service purchase it directly from the original provider rather than through some kind of intermediary or middleman, then virtually no market qualifies as "truly free," and your complaint is trivial. If your goal is to maximize choice and competition to allow end-user consumers of health insurance the greatest freedom to shop around and get the best deal for their money, then a single-payer publicly-funded health care system would be the antithesis of your goal, since it obviously represents a huge restriction on choice. Indeed, if it has a monopoly or near-monopoly on the funding of health care--as in Britain and Canada, for example--then it effectively eliminates almost all choice.
Mixner -
So what? The same is obviously true of any kind of for-profit insurance, whether it's health insurance, car insurance, homeowner's insurance, life insurance or any other kind of insurance.
How well informed are people when they purchase insurance? I couldn't tell you whether one
insurance company might raise my rates for a small accident relative to another and I'm at least as informed as most.
Because medical insurance is significantly more complex than auto insurance, it becomes more likely that people will fail to represent their interests due to incomplete information.
Your argument is "if doctors, insurers, or some other professional abuse their clients, their clients will leave."
My point is that the recipient of benefits may not know enough to say "I've gotten substandard service because of my insurance provider."
They especially may not know enough 10 years in advance so that they can alter their decisions.
Further, many people get insurance through their employer. (Travis Mason-Bushman addressed this well) Who is the real customer in that case?
Therefore I'm not certain that the corrective mechanism that keeps other services in check will be as effective in this particular case because it's harder to get good information.
I don't know what this means. "Dynamic," how? And why is this alleged difference relevant to the point in dispute?
By dynamic I mean constantly changing. In auto insurance, there are clearer standards for how a particular claim should be handled. It is easier to compare apples to apples between two service providers and choose the superior choice.
But how likely is one insurance company to fund a certain cutting edge procedure I may need in 10 years (or may think I need) compared to another? The rapidly changing nature of medical insurance
means that it's harder to discern in advance just what paying our premium purchases.
This reinforces the earlier point, that it's harder for people to be intelligent consumers of medical insurance and medical services, meaning
that market pressures are not as effective.
I'm not going to buy some unknown medical startup's insurance if I don't know if they'll pay for my procedure. And friendly substandard doctors may still get plenty of patients who can't evaluate their ability. Why? Because people don't have perfect information.
On the other hand, it shouldn't be nearly as difficult for me to see if companies like, say, Geico, offer cost effective or substandard auto insurance. Or if an insurance-approved third party failed to repair my engine correctly. Those types of things are a bit more obvious, and we have more well established better tested objective standards of care. There are significant problems with other forms of insurance as well ( MetLife didn't pay for the water line which broke in my upstairs neighbor's apartment and flooded place. Metlife said that "it wasn't deliberate negligence." But he still had that policy.) But at least my neighbor clearly knew that he'd been screwed by his insurer.
Mixner -
The vast majority of Americans get their insurance (if they get any at all, which is a whole separate issue) from their employers.
Another argument that makes no sense...Does this mean the market for TVs is "not truly free?"
In your example, you are purchasing the TV. You are the customer. In Travis's example, his employer is
purchasing the health care. The employer is the customer. The employer's interests are more short term and may not match the employees'.
If the employer provides substandard coverage it will be at a competitive disadvantage in the labor market.
You are assuming people are nearly omniscient, as well as very flexible with their job choices. Personally, I don't buy the assertion that most real people behave that way. How many people do you know that have turned down a job because the employer didn't offer insurance from a company
that the employee liked? Maybe a small minority, but not a lot. The point here is that the market incentives which normally force an insurer to behave are very much muted in the health care industry because they are bundled with what should be unrelated relationships.
Note that I'm not arguing for some socialized health care system. I'm simply pointing out some (painfully obvious) flaws in the real-world current system which slow market-based correction. There would be other flaws in a socialized health care system. Probably more.
I live in Fairbanks, Alaska, a city of about 40,000 people 100 miles south of the Arctic Circle. And yet I can buy a television set from Wal-Mart, Fred Meyer, Radio Shack, Sears, Aarons, Rent-a-Center and more.
If I want to pay shipping charges, I can order just about any television set I want online from Amazon.com or other sites, and have it show up on my doorstep fresh off a jetliner.
When I lived in the San Francisco Bay Area, I could go to hundreds of brick-and-mortar electronics stores, including specialty shops devoted to high-end home theatre equipment.
Please, please don't tell me that a person's choice in TV sets is comparable to a person's choice in employers. It's just silly.
ryan w,
My point is that the recipient of benefits may not know enough to say "I've gotten substandard service because of my insurance provider."
Then I don't understand the point of your point. If the consumer doesn't realize he's getting substandard service from his private insurer, why would he realize he's getting substandard service if his health care were funded in some other way?
On the other hand, it shouldn't be nearly as difficult for me to see if companies like, say, Geico, offer cost effective or substandard auto insurance.
Huh? Why not? I doubt people are any better informed about modern automobile technology than you say they are about modern health care. If they're incapable of recognizing that their health insurer is cutting corners or using substandard products/services in their health care, why would you expect them to recognize that their auto insurer is using substandard parts or labor to fix their car?
In your example, you are purchasing the TV. You are the customer. In Travis's example, his employer is purchasing the health care. The employer is the customer. The employer's interests are more short term and may not match the employees'.
You missed the point. You don't buy a TV from the original supplier any more than you buy health insurance provided under a group plan purchased by your employer from the original supplier. In both cases, you're buying it through an intermediary that constrains your choice.
You are assuming people are nearly omniscient, as well as very flexible with their job choices.
No, I'm assuming that people--and employers--are generally capable of distinguishing between good and bad health insurance, just as they are generally capable of distinguishing between good and bad products and services of any other kind. This doesn't require "omniscience."
TMB,
Please, please don't tell me that a person's choice in TV sets is comparable to a person's choice in employers. It's just silly.
You're right. Most people have a vastly greater choice of employers than TV retailers. Only in very specialized professions are the number of potential employers likely to be as small.
But you've missed the broader point, anyway. If your complaint is that individual consumers do not have enough choice, and that there is not enough competition among health care insurers and providers for the business of consumers, how would any move towards more centralized funding and provision of health care services make that situation better rather than worse? Single-payer would be worst of all.
All I'm going to say about this is that the writer must not work with the government in any capacity, if he thinks that single-payer is going to change pettiness about paperwork in any way.
And yes, obviously employers have an incentive to minimize their health care costs. But again, so what? Health insurance is part of the compensation package employers offer to employees. If the employer provides substandard coverage it will be at a competitive disadvantage in the labor market.
Eh. Hahahahahahah!
Wow. Yeah. I know way too many people who will jump at jobs simply because they offer any benefits at all. When people are uninsured they'll grab any insurance they can get.
Maybe the employers offering no insurance are at a competitive disadvantage, which may or may not be true (given how many people I know who jump at the opportunity to get jobs with insurance, I'd say they are), but it doesn't follow that employees have much choice in the matter.
Sure we could try to find jobs that offer the medical plan we want, but frankly, that information is not even known by the employee until the interview, at best, and most often at the orientation after being hired, unless one knows an employee at the firm.
And as others point out, the choice I have is what the employer chose for me to have. I'm not shopping around for insurance. I don't have much option to go to a different employer just over benefits, and having searched for two years for a job with any benefits at all, I'm sorry, I'll take what I can get.
Ivory tower theorizing in absence of reality is fun and all...but ultimately intellectual masturbation.
If you really want a villain, how about Edwards-type lawyers make multimillions on questionable malpractice suits and class action vampires advertising on television, trolling for clients who will get a pittance while the lawyers make more than the CEOs we've been taught to hate. No attorney should get more than any single client, no matter how many are in the class. And lawyers should have to return any fees they receive if it can be proved they used false evidence.
There are a large number of people in health care who deserve criticism. Almost all of them are morally superior to anyone in trial law.
I agree with Ken Hahn (12:52 AM). Medical malpractice tort reform would go a long way toward improving the health system.
I think the bigger cause, and the one that is going to eventually burden us with the albatross of a government-run system, is that health care costs aren't being pushed up by any one single cause, or even by a small number of causes; health care prices truck along at about twice the rate of inflation due to a whole host of causes which effect barriers to competition, straight-out rent-seeking, and price-distortions. The too-short comments section list includes:
1. Health care must be produced by extremely highly trained professionals, so even under the best of circumstances will be expensive.
2. The AMA, arguably the most powerful union on Earth, uses it's market power and the power of the state to limit supply of providers even further, driving their prices even higher than high.
3. Health care is probably the most regulated industry in the US with the possible exception of the nuclear industry, licensed and governed in all fifty states by boards and commissions dominated by AMA members guarding the henhouse.
4. The insurance industry is also hyper-regulated, with collusion-based price-fixing regimes and state-level commissions or boards in all fifty states made up almost exclusively of industry insiders and insurance salesmen guarding their henhouse.
5. Government enforcement of prescription requirements for nearly all drugs, even common, highly safe drugs drives up the costs for treating even the most common ailments.
6. The FDA and their burdensome approval process that only gillion-dollar multi-national corporations can afford to participate in, and who do what every other producer does with every other cost of doing business, which is add it on to the price for their products.
7. Government tax structure providing the incentives that have created our current inefficient employer-based system.
8. Gresham's Law: bad money drives out good. In Free to Choose, Milton and Rose Friedman pointed out that in the mid-1940s, when the health care markets were more or less as free as any other market, the US spent about 4% of GNP on health care. By the '70s, with Medicare, Medicaid, etc. dumping billions upon billions into the heath care market, spending in the sector was up to 10% of GNP—with consumers still paying about 4% out of pocket and government making up the 6% difference. Since then the share of the economy going into health care has nearly doubled again.
Another market where we can see the exact same phenomenon in action is in higher education. Government dumps in so much money that universities can't build Subways and Pizza Huts on campus fast enough while they simultaneously cut entire humanities departments, all the while increasing tuition at about twice the rate of inflation.
So there really aren't any villains per se, just a bunch of mostly government-hatched chickens coming home to roost.
yours/
peter.
Simple solution:
Insurance companies should dedicate by contract 70% of revenues to reimbursement. The other 30% could go to marketing, administration, profit, etc. This way, the insurance company could not make more profit by denying care. It has to spend the money on treatment anyway. The job of the inusrance company would be to spend the money in a way that maximized the satisfaction of its customers. This would align interests perfectly between the insurance company and its customers.
The customer could then choose between different plans. The less expensive plans might only cover drugs that proved an increase in OS. Premium plans might cover drugs that proved better PFS. Each customer could make the tradeoff for herself.
My question is, why hasn't this happened yet? If such an insurance company existed, I would buy from it in a second. Perhaps I should start it myself ...
Well, sure, peter, if you want to go back to 1940s-level health care - meaning, a lot more people will die sooner and have much worse qualities of life - then you can make rational comparisons to that era.
There were no "emergency rooms," no chemo/radiation therapies, the mentally ill were locked away in "insane asylums" for their entire lives, ambulances were little more than hearses with a siren, thousands of kids wound up dead or crippled from preventable childhood diseases...
You know, all things considered, I'd rather be spending more on health care, than not.
Then I don't understand the point of your point. If the consumer doesn't realize he's getting substandard service from his private insurer, why would he realize he's getting substandard service if his health care were funded in some other way?
I'm not saying that 100% of people will not realize that they are getting substandard service from their insurers or doctors.
I'm saying that a greater portion will not realize that they are getting substandard service.
If 90% of a market is highly discerning, the other 10% can effectively free-ride on their discernment.
If 30% of a market is highly discerning this is less likely.
If they're incapable of recognizing that their health insurer is cutting corners or using substandard products/services in their health care, why would you expect them to recognize that their auto insurer is using substandard parts or labor to fix their car?
Granted, I won't know if inferior parts are used and that's a legitimate similarity.
But a human body is far more complex than a car. We don't make auto mechanics go to school for 8 years, plus residency.
This suggests that medicine is a little bit more difficult than auto repair, and would suggest that it would be more difficult to
evaluate a doctor who is providing a 'standard of care' which is legal but substandard, or an insurer who effectively mandates such a standard of care.
So if an insurer says "we'll pay for x but not y" a person will have to have a bit more know-how and will to fight.
Granted, the motivation is far higher with medicine. And some people will have the knowledge to research their conditions.
But if my home insurance says that I don't need to tear down my walls because of mold, it's not too hard to at least understand that what they're saying is garbage.
Doing the same thing for a doctor is possible. I have friends who have done it. But it's a difficult, draining undertaking that most people are not up to.
You missed the point. You don't buy a TV from the original supplier any more than you buy health insurance provided under a group plan purchased by your employer from the original supplier. In both cases, you're buying it through an intermediary that constrains your choice.
That you're talking about "original suppliers" suggests to me you don't understand the point that Trevor and I are making.
My point is that bundling of services with other more important choices (jobs with insurance) decreases the ability of the market to correct problems with the less important choice (insurance.) Perhaps a few people with very serious illnesses might pick a job based on the type of insurance. But most people wouldn't know which type of insurance was even offered until they had accepted the job. Which means an employer gets benefit from offering insurance, but not necessarily good insurance.
No, I'm assuming that people--and employers--are generally capable of distinguishing between good and bad health insurance
Well, I'm honestly curious; what's your process for determining the quality of a given health insurance plan?
How do you decide which providers are higher or lower quality?
This doesn't require "omniscience."
1. Most jobs I've applied for don't advertise the specifics of their insurance plan in the same way they advertise pay.
2. Most people don't know, when signing up for any given plan, which treatments are likely to be approved or not approved, especially compared
to other providers in unusual cases when new technologies are developed in the future. It's easier to find out details ahead of time with auto insurance.
Travis - Going back to 1940s levels of spending doesn't mean going back to 1940s levels of knowledge. People could still afford vaccines and antibiotics with 1940s levels of spending, not to mention basic emergency care. You may not enjoy 1940s levels of medical spending, but your argument from 2:12am doesn't seem to address the real results of Peter's proposal. No chemo? Sure. But a lot of improvements in lifespan don't seem to have come from clinical medicine. Air conditioners reduced malaria, for instance. Improved food and water standards helped quite a bit as well.
In other words:
Dying is cheap. Survival costs money.
Megan,
I'd have thought that government payment for medical care (now pushing 60%) would have had something to do with cost increases.
Same thing happened with college tuition costs (sans the excuse of technological change).
Other businesses that didn't have massive government payments (most of them) haven't had the same rate of increase (even the high tech ones).
"But the truth is, most of the increase in health care costs comes from new treatments, not abuse of the system."
New treatments and new tests, many of which are no more accurate than the old tests. Yet, to avoid a malpractice suit (and to keep his malpractice insurance costs from jumping), the doctor has to prescribe every test possible.
Therefore, the boogeymen are the lawyers...QED.
I suppose an argument could be made that a big part of the motivation for devising new tests/treatments is the knowledge that they will 'attract' public healthcare money; but I won't go there.
This is an insightful post.
What you are describing is the seemingly insatiable demand for medical care.
It's not hard to understand. I mean, if you're alive, you generally want to stay that way. So demand for the increasing supply of newer, better, more effective medical treatments continues to grow.
It is a phenomenon happening across the world, in systems that are mixed like ours, and government-run, like Canada's. Changing who pays for it doesn't change human nature.
Free markets are the answer. Not government this that or the other. Not mandates, not national programs ... free markets having to compete for customer dollars.
At age 18, 1970 ... I paid for my own tonsilectomy with a check. Physician, hospital care, operation, anesthesiology, after care and follow up totaled just over $600 and even as a teenager I had that kind of money in the bank from working summers and after school jobs. Didn't take insurance, it just required cash and the cost of medical care was more in line in 1970 with what a customer could afford.
When medical costs have to compete ... actually compete without sidebar assistance ... costs fall dramatically. Service improves dramatically. But when "someone else" is responsbile for footing the bill, or providing assistance ... it will surely go to the dogs just as medical care has. My three recent instances of hospital and medical moments have been nothing less than horror stories. Unpeakably Dark Ages care, stupefying costs, and nothing to show for it afterwards. One relative died as a direct result of simply being in hospital and a jury agreed they killed him.
So, let's try everything BUT the one thing that really truly works ... free markets honestly competing for dollars without interference or propping up.
But of coourse I'm mad as a hatter. It'll never happen.
The big-gov't thinker inside me says, let Big Brother decide whats allowed, and save us the heart-break and trouble of having to either decide for ourselves when to pull the plug or go bankrupt trying to keep the person alive.
And the normal compassionate human being inside me says anyone who thinks being told that my beloved family member could have their life extended or eased --- but won't because Big Brother says it's not cost efficient --- will be less heartbroken is a couple cubic yards short of a load.
I would love to see an analysis of capital spending by doctors on diagnostic and treatment equipment, and health care prices in general. Note however that most of this equipment is leased, so those costs would have to be included. As an attorney who represents several medical practices, I think competition for high-tech diagnostic and treatment equipment is the driving force for health care cost increases.
Plus, why oh why can't we open more medical schools so that doctors actually have to compete for clients? I haven't heard of a new medical school opening in the U.S. for many years. With population increases, it makes sense to train more doctors. I suspect the AMA and other lobbying groups are simply stifling competition.
When my wife was undergoing chemo for ovarian cancer, one 3 cc. shot she took every week cost about $960. We were glad to pay it and found a way to pay for it. We were paying for the research that developed that drug.
Megan:
ALL scientific progress is incremental! Look at computers, just to pick a non-medical example. We didn't go from Bill Gates garage directly to Windows XP.
Those thousand baby steps are the normal way that "progress" is made. It is so typical that I can't even think of a counter-example (well, maybe Einstein, but that's it-- the exception that proves the rule!).
"Maybe its just me but the idea that letting some health-care equivalent of the DMV ladies deciding who gets to live and die is chilling. "
The current situation is worse than this. People at the DMV have at least some incentive to do their job well beyond their own conscience.
Standards of care are set by ad hoc commitees from across the health care provision business. The vast majority of decisions of what healthcare you receive is decided by them, not your insurance company. It might seem on the surface to be a good way of doing it, but they have zero incentive to do it right. They have no responsiveness to pleasing voters or pleasing investors. They are supposed to be motivated purely by conscience. I may be cynical, but I don't believe any group of more than 12 people will do a good job purely due to conscience.
Funeral directors will tell you that people just don't die in their 50's of heart attacks in the numbers they used to .. now they get a bypass and live another 25 years.
This also explains why while heart disease hasn't abated much (if at all), more people are now dying of cancer .. in their 80's.
Costwise, a quick death by heart attack is cheaper than a long death by cancer.
No attorney should get more than any single client, no matter how many are in the class.
I see. So big companies should be free to screw as many people as they want, as long as they only screw them out of relatively small amounts of money, too little to pay a lawyer to work on the class action. So unless they're stealing a minimum of, say, $10,000/person or so, no redress is going to be available. Yes, brilliant plan.
There are many problems with the tort system, and with class-actions, but the notion of a class action wouldn't even exist if not for the need to respond to large numbers of small injuries.
And lawyers should have to return any fees they receive if it can be proved they used false evidence.
So we swing from the absurdly draconian to the absurdly lenient; lawyers who deliberately use false evidence may already: lose their licenses, return their fees, pay restitution, and face criminal penalties as well. What is the change you want to make?
I usually read to the end before leaving comments, but I'm too angry to wait:
DirewolfC, why don't you just give me your vote - and power of attorney, too - since you are obviously incapable of deciding anything for yourself under emotional circumstances and ALL major decisions are emotional.
You, and those who think like you, are the death of Liberal Civilization; the point of which, in case you missed the rational discussion in high school because you were too emotionally overwhelmed by hormones, is that INDIVIDUALS are responsible for their own choices. If you CHOOSE to mortgage your house to pay for a week of Mom's life, you must live with the CONSEQUENCES of that decision.
PLEASE do not breed. If you insist upon it, read your child Locke, Hume, and Smith as bedtime stories - you might learn something (and Roussoe (sp?) just to see what an idiot he was).
Now I have read all the comments ;-)
Great discussion.
While I mostly agree with TMB, Mixner does have a very good point: When choosing an employer and getting coverage X, the "choosing an employer" part usually has far more weight than "coverage X".
How about this for a short-term solution: The amount spend by an employer on behalf of employees must be disclosed on pay-stubs.
This will make the "invisible" Social Security tax visible. It will make health-care costs visible. It will make office costs visible.
Granted that cost is only a proxy for quality, but knowing that my employer is spending $200/month on my health-care whilst my friend's employer is spending $400/month is enough to make one ask questions.
It also makes the cost/benefit ratio of employer health-care comparable to both individual insurance and a government-run program. If my health-care is both my responsibility and tax-free, I now have a base-line to which to compare my costs. If I want government-run health-care, I now know how much I can expect my taxes to rise.
The office cost is another good one because I also pay to go the office (gas, time, etc...). It would make tele-commuting a much more attractive alternative.