December 27, 2019 By Deane Waldman
As U.S. healthcare slides toward collapse, Americans are looking in the wrong direction for a cure. They are trying to cut costs and save money in order to make healthcare affordable. No one is focusing what really matters: dollar efficiency.
To avoid miscommunication, terms should be clearly defined. Healthcare, one word, refers to a complex system that cost Americans $3.65 trillion in 2018 (19.4 percent of U.S. GDP). That amount is 130 percent of Great Britain’s GDP.
Health care as two words includes the services or work product of health professionals as well as the goods and devices involved in diagnosis and treatment. Health care is a legally protected fiduciary relationship between a patient and a care provider..........As a nation, the U.S. expended $3.6 trillion in 2018 on healthcare. Using latest available data, Table 1 compares U.S. spending on healthcare to other nations...........
The federal bureaucracy, the largest consumer of healthcare dollars, does not provide patient care. Thus, it is the primary driver of dollar inefficiency. If the Washington no longer dominated healthcare and Americans were free to decide their own healthcare, an approach called StatesCare, more than a trillion “healthcare” dollars would no longer be spent inefficiently and could be used for patient care. StatesCare combined with market-based medicine could dramatically improve healthcare dollar efficiency..............To Read More....
Showing posts with label Health Costs. Show all posts
Showing posts with label Health Costs. Show all posts
Saturday, December 28, 2019
Saturday, August 3, 2019
Bernie Sanders, Don't Call Scientists in Pharmaceutical Industry 'Crooks'
By Alex Berezow — July 31, 2019
I've decided not to watch any of the presidential debates because I just can't take it. If a politician isn't saying something stupid, he or she is saying something insulting. Oftentimes, it's both.
Take Senator Bernie Sanders, for instance. Last night, he decided to call the hard-working scientists in the pharmaceutical industry a bunch of crooks. That's right, the same people who produce antibiotics, vaccines, HIV antiretrovirals, chemotherapies, and countless other lifesaving drugs are criminals. Why? Mr. Sanders said:
Why Are Drug Prices So High in the United States?
Before explaining why drug prices are so high, let's first acknowledge that there are some "crooks" in the pharmaceutical industry. Martin Shkreli comes to mind. That little dweeb jacked up the price of an HIV drug (Daraprim) from $13.50 per pill to $750. Why? Because he could. The company that manufactured the drug, Turing Pharmaceuticals, basically had no competition, so Shkreli could charge whatever he wanted.
It's worth pointing out that Daraprim is no longer protected by a patent and can be made generically. But if only one company manufactures it, they have a monopoly, even if other companies are allowed to make it. That is why encouraging the development of more generic drug manufacturers (as well as speeding up the approval process for generic drugs) is one key to lowering drug prices.
But crooks like Shkreli are the exceptions that give Big Pharma a bad name. High drug prices are due to some combination of the following:
(1) The exorbitant cost of R&D. Developing a drug can cost billions of dollars and take 10 or more years. Clinical trials (in which drugs are tested in humans) are particularly expensive. If a drug makes it to market, the company that developed it needs to recoup these costs. If the drug fails during clinical trials and does not make it to market, the company needs to make up for those losses by increasing the prices of other successful drugs.
(2) Insurance. If your company takes you out for dinner, do you care how much you spend on your meal? Probably not. Somebody else is paying for it. The same goes for drug prices (and healthcare as a whole). Because insurance companies often pay the bulk of our costs for us, we are not incentivized to seek out or demand lower prices.
(3) Patents. The protection of intellectual property is crucial to innovation. (An interview I conducted with Patrick Kilbride of the U.S. Chamber of Commerce goes into further detail.) R&D is simply unsustainable if a company spends billions of dollars developing a drug only to have another company steal all that knowledge. Patents allow a company to profit -- for a limited time -- from the extreme risk they took. The question is how to balance intellectual property protection with society's interest in low drug prices. That may involve preventing companies from gaming patents, as Dr. Josh Bloom explained in this article about Nexium.
(4) Desire to maximize revenues. Even if a drug is protected by a patent, a drug company can't set the price too high, otherwise few people would buy it. So a company charges as much as they think the market can tolerate. An article by Senior Fellow of Medicinal Chemistry Dr. Christopher Gerry explains further.
(5) Medicare can't negotiate prices with drug companies. By law, the Department of Health and Human Services is not allowed to negotiate drug prices for Medicare patients. Currently, there are efforts to change that.
(6) Other countries can negotiate drug prices, so they freeload off the United States. Canadians, for instance, are a bunch of freeloaders. Who says so? Some Canadians themselves admit it. This op-ed in Canada's Financial Post refers to its drug policy as "parasiti[c]." But it's not just Canadians. Japan and Western Europe are also freeloading off the U.S.
Bernie Sanders, Don't Call Scientists in Pharmaceutical Industry 'Crooks'
The problem of high drug prices is multifaceted and complex. Referring to the pharmaceutical industry as "crooks" might be good for some cheap applause, but it is insulting and demoralizing to the thousands of scientists who work for it. Bernie Sanders should apologize.
Take Senator Bernie Sanders, for instance. Last night, he decided to call the hard-working scientists in the pharmaceutical industry a bunch of crooks. That's right, the same people who produce antibiotics, vaccines, HIV antiretrovirals, chemotherapies, and countless other lifesaving drugs are criminals. Why? Mr. Sanders said:
"I took 15 people with diabetes from Detroit a few miles into Canada, and we bought insulin for one-tenth the price being charged by the crooks who run the pharmaceutical industry in America today."Yes, drug prices in the United States are very high. The reasons have less to do with ethics or criminality and more to do with our convoluted R&D and healthcare systems.
Why Are Drug Prices So High in the United States?
Before explaining why drug prices are so high, let's first acknowledge that there are some "crooks" in the pharmaceutical industry. Martin Shkreli comes to mind. That little dweeb jacked up the price of an HIV drug (Daraprim) from $13.50 per pill to $750. Why? Because he could. The company that manufactured the drug, Turing Pharmaceuticals, basically had no competition, so Shkreli could charge whatever he wanted.
It's worth pointing out that Daraprim is no longer protected by a patent and can be made generically. But if only one company manufactures it, they have a monopoly, even if other companies are allowed to make it. That is why encouraging the development of more generic drug manufacturers (as well as speeding up the approval process for generic drugs) is one key to lowering drug prices.
But crooks like Shkreli are the exceptions that give Big Pharma a bad name. High drug prices are due to some combination of the following:
(1) The exorbitant cost of R&D. Developing a drug can cost billions of dollars and take 10 or more years. Clinical trials (in which drugs are tested in humans) are particularly expensive. If a drug makes it to market, the company that developed it needs to recoup these costs. If the drug fails during clinical trials and does not make it to market, the company needs to make up for those losses by increasing the prices of other successful drugs.
(2) Insurance. If your company takes you out for dinner, do you care how much you spend on your meal? Probably not. Somebody else is paying for it. The same goes for drug prices (and healthcare as a whole). Because insurance companies often pay the bulk of our costs for us, we are not incentivized to seek out or demand lower prices.
(3) Patents. The protection of intellectual property is crucial to innovation. (An interview I conducted with Patrick Kilbride of the U.S. Chamber of Commerce goes into further detail.) R&D is simply unsustainable if a company spends billions of dollars developing a drug only to have another company steal all that knowledge. Patents allow a company to profit -- for a limited time -- from the extreme risk they took. The question is how to balance intellectual property protection with society's interest in low drug prices. That may involve preventing companies from gaming patents, as Dr. Josh Bloom explained in this article about Nexium.
(4) Desire to maximize revenues. Even if a drug is protected by a patent, a drug company can't set the price too high, otherwise few people would buy it. So a company charges as much as they think the market can tolerate. An article by Senior Fellow of Medicinal Chemistry Dr. Christopher Gerry explains further.
(5) Medicare can't negotiate prices with drug companies. By law, the Department of Health and Human Services is not allowed to negotiate drug prices for Medicare patients. Currently, there are efforts to change that.
(6) Other countries can negotiate drug prices, so they freeload off the United States. Canadians, for instance, are a bunch of freeloaders. Who says so? Some Canadians themselves admit it. This op-ed in Canada's Financial Post refers to its drug policy as "parasiti[c]." But it's not just Canadians. Japan and Western Europe are also freeloading off the U.S.
Bernie Sanders, Don't Call Scientists in Pharmaceutical Industry 'Crooks'
The problem of high drug prices is multifaceted and complex. Referring to the pharmaceutical industry as "crooks" might be good for some cheap applause, but it is insulting and demoralizing to the thousands of scientists who work for it. Bernie Sanders should apologize.
Saturday, May 25, 2019
California Health Care Heist
Democrats rip off taxpayers through voter fraud and health care for illegals.
May 24, 2019 Lloyd Billingsley
Fresh off his visit to constituents in El Salvador last month, California Gov. Gavin Newsom wants to spend $98 million on health care for illegal immigrants ages 19-26 through the state’s Medi-Cal program. Assembly Democrats want to spend $3.4 billion to cover all illegals over the age of 19, and Senate Democrats want to cover illegals 19-26, plus those beyond the age of 65. Costs are not a factor, Democrats say, because the state has a projected surplus of more than $21 billion.
Los Angeles Democrat Maria Elena Durazo, who supports the senate bill, told reporters the illegals she wants taxpayers to support “work in our hotels, they work picking the fruit and vegetables, they work as landscapers, they work in hospitals. I don’t think they should be treated differently from other Californians.” It was classic stuff the Democrats never bother to unpack........To Read More.....
Fresh off his visit to constituents in El Salvador last month, California Gov. Gavin Newsom wants to spend $98 million on health care for illegal immigrants ages 19-26 through the state’s Medi-Cal program. Assembly Democrats want to spend $3.4 billion to cover all illegals over the age of 19, and Senate Democrats want to cover illegals 19-26, plus those beyond the age of 65. Costs are not a factor, Democrats say, because the state has a projected surplus of more than $21 billion.
Los Angeles Democrat Maria Elena Durazo, who supports the senate bill, told reporters the illegals she wants taxpayers to support “work in our hotels, they work picking the fruit and vegetables, they work as landscapers, they work in hospitals. I don’t think they should be treated differently from other Californians.” It was classic stuff the Democrats never bother to unpack........To Read More.....
Sunday, March 24, 2019
What's behind the increase in healthcare costs?
February 18, 2019
By Michael D. Shaw @ HealthNewsDigest.com
According to the Peterson-Kaiser Health System Tracker, the U.S. spends a disproportionate amount on healthcare. Health spending per person in the U.S. was $10,224 in 2017, which was 28% higher than Switzerland, the next highest per capita spender.
U.S. health spending has consistently outpaced economic growth, and now represents 17.9% of our GDP. The raw number for 2017 is $3.5 trillion. (The per capita number in the link is slightly different from Peterson-Kaiser’s.)
As to quality, the conventional “US care is mediocre, compared to other countries” mantra is a gross oversimplification. Here is an introduction to the topic, and as you can see, there are many parameters to consider. Moreover, we have no control over the quality of data promulgated by other countries—let alone the consistency of reporting within the US.
Okay, but why is healthcare so expensive? One reason is fraud, estimated at 3% of total healthcare spending, in 2011. Another study pegged it at closer to 10%. Eighty percent of fraud was committed by medical providers, followed by consumers (10%). The rest was by others, which included insurers themselves and their employees.
The National Health Care Anti-Fraud Association identifies some common types of fraud:
According to the National Community Pharmacists Association, PBMs engage in various deceptive tactics, that drive up costs…
Finally, we must consider the hospitals themselves. According to a recent study, from 2007-2014, hospital prices grew substantially faster than physician prices. For inpatient care the increase was 42% for hospitals and 18% for physicians. On the outpatient side, it was 25% for hospitals and 6% for physicians.
Study co-author Zack Cooper believes that this is the first analysis that systematically compared growth rates of hospital versus physician prices. Pricing of four different hospital procedures were analyzed: Cesarean sections, vaginal deliveries, colonoscopies, and knee replacements. The hospital component of the combined cost of care—physician plus hospital prices—ranged from 61% for vaginal deliveries to 84% for knee replacements.
And, it made no difference if the docs involved were hospitalists or not. Cooper was upset enough by the results to remark that, “We need to seriously think about regulating hospital prices.” However, based on past attempts to de facto regulate pricing (cf. Medicare or private insurance), this would likely become just another fool’s errand.
As it happens, a brand new requirement from the Centers for Medicare & Medicaid Services for hospitals to post their pricing has just gone into effect. But, since all they can do is post their “retail” prices, rather than what people actually pay out-of-pocket, this is not as helpful as one would like.
How many other items of unknown cost do you regularly purchase? Can you think of a better breeding ground for abuse?
According to the Peterson-Kaiser Health System Tracker, the U.S. spends a disproportionate amount on healthcare. Health spending per person in the U.S. was $10,224 in 2017, which was 28% higher than Switzerland, the next highest per capita spender.
U.S. health spending has consistently outpaced economic growth, and now represents 17.9% of our GDP. The raw number for 2017 is $3.5 trillion. (The per capita number in the link is slightly different from Peterson-Kaiser’s.)
As to quality, the conventional “US care is mediocre, compared to other countries” mantra is a gross oversimplification. Here is an introduction to the topic, and as you can see, there are many parameters to consider. Moreover, we have no control over the quality of data promulgated by other countries—let alone the consistency of reporting within the US.
Okay, but why is healthcare so expensive? One reason is fraud, estimated at 3% of total healthcare spending, in 2011. Another study pegged it at closer to 10%. Eighty percent of fraud was committed by medical providers, followed by consumers (10%). The rest was by others, which included insurers themselves and their employees.
The National Health Care Anti-Fraud Association identifies some common types of fraud:
- Billing for services that were never rendered
- Upcoding, whereby the service actually rendered is falsely inflated into something more expensive
- Misrepresenting non-covered treatments as medically necessary covered treatments
- Ordering unnecessary diagnostic tests
- Unethically manipulating co-pays
- Reimbursements favor the gross amount of services, and do not reward efficiency.
- Our population is becoming older, sicker, and fatter.
- We demand the newest in drugs, technologies, services and procedures. Newer is more expensive, but not necessarily better.
- Patients are not always well-informed as to their treatment options, and can be conflicted on end-of-life issues.
- Hospitals and providers are merging, thus gaining market share, and can demand higher prices.Although difficult to define precisely, defensive medicine increases costs.
According to the National Community Pharmacists Association, PBMs engage in various deceptive tactics, that drive up costs…
- Classifying certain generic drugs as brand drugs and charging brand prices
- Promoting drugs based on the rebate obtained by the PBM, rather than what would be in the consumer’s best interest. Sometimes PBMs will even switch patients’ prescriptions without the knowledge of the patient, just so the PBM can receive the rebate.
- Utilizing extortionate spread pricing to charge health plans much more than they reimburse pharmacies, and pocketing the difference.
- Using abusive audit practices and penalizing pharmacies for minor typographical errors on claims, forcing them to forego reimbursement due to small errors that posed no consequence to the claim.
Finally, we must consider the hospitals themselves. According to a recent study, from 2007-2014, hospital prices grew substantially faster than physician prices. For inpatient care the increase was 42% for hospitals and 18% for physicians. On the outpatient side, it was 25% for hospitals and 6% for physicians.
Study co-author Zack Cooper believes that this is the first analysis that systematically compared growth rates of hospital versus physician prices. Pricing of four different hospital procedures were analyzed: Cesarean sections, vaginal deliveries, colonoscopies, and knee replacements. The hospital component of the combined cost of care—physician plus hospital prices—ranged from 61% for vaginal deliveries to 84% for knee replacements.
And, it made no difference if the docs involved were hospitalists or not. Cooper was upset enough by the results to remark that, “We need to seriously think about regulating hospital prices.” However, based on past attempts to de facto regulate pricing (cf. Medicare or private insurance), this would likely become just another fool’s errand.
As it happens, a brand new requirement from the Centers for Medicare & Medicaid Services for hospitals to post their pricing has just gone into effect. But, since all they can do is post their “retail” prices, rather than what people actually pay out-of-pocket, this is not as helpful as one would like.
How many other items of unknown cost do you regularly purchase? Can you think of a better breeding ground for abuse?
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