Slashing doc pay « The Enterprise Blog

October 27, 2011

Scott Gottlieb has a clear and trenchant piece this morning in the NY Post. He argues that a decision by a government panel this month to “whack what Medicare pays most doctors” is an important step on the way to “European style” healthcare by slashing the pay of U.S. doctors. And he further posits that: “The only way ObamaCare is going to bring our health benefits and spending to European levels is to also adapt European payment rates.” Scott blames doctors themselves—at least the AMA—for “this mess.” Thus, doctors entered into two Faustian bargains—first, allowing the government to cap total payments to doctors through price controls in the 1990s, and then agreeing to support ObamaCare in 2009-2010.

My question runs along the following lines: while there is much to criticize (severely) about ObamaCare, isn’t some form of cost cutting inevitable in the future for all elements of the healthcare community—doctors, hospitals, insurance companies, medical device manufacturers—and patients? Republicans and independent analysts rightly criticized the Democrats for hugely increasing the medical entitlement population while irresponsibly ducking any serious steps to “bend the cost curve” on future public obligations. But whether it’s through the much-feared Medicare Payment Advisory Commission or through some other means, isn’t it inevitable that “doc pay” is going to take a hit down the road? As an outsider in this debate, I am unclear how one protects doctors in the coming medical care squeeze—or whether this should even be the goal.

via Slashing doc pay « The Enterprise Blog.

AEI | The Importance of the Meaning and Measurement of “Affordable”

October 27, 2011

This paper focuses on whether “affordable” in the Affordable Care Act refers to the cost of single coverage alone, or to family or single coverage as applicable to the worker, in determining the employer’s mandated coverage requirement and workers’ (and their dependents’) access to subsidized exchange coverage. Since the average annual total premium for family coverage is substantially higher than that for single coverage (on average $12,298 vs. $4,386 in 2008) this is a non-trivial distinction.

Using data on workers from the Current Population Survey merged with estimates of employer and exchange policy premiums, we investigate the impact of the affordability decision on the fraction of workers who could then access exchange coverage subsidies and on the correspondingly lower employer sponsored insurance (ESI) coverage rates. We do via a series of calculations for each worker that first shows the financial incentives at stake in deciding between ESI and subsidized exchange coverage. We then show how many of those who stand to gain from exchange coverage could do so under two these alternative affordability rules and different levels of employee contributions. Finally, we show the extent to which a single affordability rule would cause the dependents of low-income workers with families to fall into a “no-man’s land” with no source of affordable coverage.

We estimate that a family affordability rule could initially lead to as many as 1.3 million more workers accessing exchange subsidies for themselves and their families than under a single affordability rule. If employees pay 50 percent of the premiums in the future, this number increases to 6 million. Increased use of exchange subsidies would be accompanied by reductions in ESI coverage and increased costs to taxpayers. Alternatively, a single affordability rule would initially result in close to 4 million dependents of workers with affordable single coverage not having affordable health insurance. This would grow to close to 13 million if employees pay 50 percent of the premium.

via AEI – Speeches.

How Rick Perry’s Flat-Tax Plan Would Accelerate Health Reform – Forbes

October 26, 2011

On a conference call this morning, members of Perry’s domestic policy team explained that they are deciding between three approaches to Medicare reform: Paul Ryan’s Path to Prosperity, which was incorporated into the 2012 House budget; Jim DeMint’s Retirement Freedom Act, which would allow seniors to opt out of Medicare and obtain private insurance; and the bipartisan reform proposal put forth by Sens. Tom Coburn (R., Okla.) and Joe Lieberman (I., Conn.), which preserves traditional Medicare but reforms the program’s cost-sharing, means-testing, and eligibility-age features.

The three aren’t incompatible with each other; one could easily incorporate the Coburn-Lieberman plan into Paul Ryan’s framework. The DeMint proposal that allows seniors to opt out of Medicare is attractive philosophically, though it will be important to consider the adverse-selection issues associated with such a plan: healthy people are the ones most likely to opt out, leaving the sickest and most expensive patients on the government rolls.

via How Rick Perry’s Flat-Tax Plan Would Accelerate Health Reform – Forbes.

CLASS Dismissed | The Weekly Standard

October 26, 2011

But the problem was even worse because CLASS itself was a ticking budgetary time bomb, and the administration knew it. Every actuarial analysis done on the program showed it would never last without a massive taxpayer bailout. That’s because it would only attract participants who expected to draw benefits, not those who are generally healthy today. Not only did CLASS create a phony $70 billion surplus in the CBO cost estimate, it also put taxpayers on the hook for a massive bailout down the line.

All of this was well known to the administration, even before Ryan pointed it out to the president. But no matter: The White House and its allies in Congress pressed ahead for Obamacare, with CLASS in tow, because the convenience of the budget trick was simply too tempting to resist.

Unfortunately for the White House, reality can only be ignored for so long. The CLASS provisions required the secretary of health and human services to certify that the program could be sustained only with participant premiums​—​and not even Obama’s HHS could find a way to do that. The administration thus had to pull the plug on the program and expose it as the budget gambit it always was. And just like that, $70 billion in supposed deficit reduction from Obama-care vanished.

via CLASS Dismissed | The Weekly Standard.

Americans Increasingly Think Repeal Is Likely

October 26, 2011

The latest Rasmussen poll of likely voters shows that, by a margin of 16 percentage points (54 to 38 percent), Americans support the repeal of Obamacare. Among independents, the margin is 30 points — 61 to 31 percent.

Moreover, Americans are becoming increasingly convinced that repeal is not only possible but probable. Fifty-eight percent of Americans now think that repeal is likely. Fewer than half as many (28 percent) think that it’s unlikely. Such confidence in the repeal movement represents a high-water mark to date: Rasmussen writes that the tally of those who think it’s “at least somewhat likely” that Obamacare will be repealed is “the highest ever measured since the bill became law 19 months ago.”

Jim Capretta explains that Republican presidential candidates’ pledges to use the reconciliation process, if necessary, to repeal Obamacare, offers further reason for voters to believe in the prospects of repeal. He writes,

“Reconciliation is a special legislative process established by Congress to provide for expedited [filibuster-proof] consideration of important budgetary legislation….

“Reconciliation didn’t play a small role in Obamacare’s passage, as has been suggested [by some of its supporters]. Without reconciliation, Obamacare would not have become law at all….

via Americans Increasingly Think Repeal Is Likely.

Women’s Health Policy Report: Role of Mammograms in Saving Lives Often Overstated, Study Suggests

October 26, 2011

About 25% of breast cancer survivors avoided death because they had a mammogram, while 75% would have had the same outcome if they detected the lump themselves or received no treatment, according to a study released Monday in the Archives of Internal Medicine, the Los Angeles Times’ “Booster Shots” reports (Kaplan, “Booster Shots,” Los Angeles Times, 10/24).

For the study, Dartmouth researchers Gilbert Welch and Brittney Frankel used National Cancer Institute software to estimate the 10-year risk of diagnoses with invasive breast cancer or ductal carcinoma in situ and 20-year risk of death for women of various ages (Phend, MedPage Today, 10/24). They also accounted for the benefits of early detection and improved treatments. They concluded that among the 60% of women with breast cancer who were diagnosed through screening mammograms, 3% to 13% of them were helped by the test.

The findings translate to 4,000 to 18,000 women who benefit from screening mammography each year, representing a small portion of the 230,000 women diagnosed with breast cancer annually and an even smaller fraction of the 39 million women who undergo mammograms annually.

via Women’s Health Policy Report: Role of Mammograms in Saving Lives Often Overstated, Study Suggests.

Organizational Economics and Physician Practices

October 25, 2011

Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This paper analyzes these issues from the perspective of organizational economics. We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians. We conclude by considering the policy implications of our analysis – paying particular attention to proposed Accountable Care Organizations.

via Organizational Economics and Physician Practices.

The Effect of FDA Advisories on Branded Pharmaceutical Firms’ Valuations and Promotion Efforts

October 25, 2011

The US Food and Drug Administration (FDA) expends considerable efforts in regulating medications approved for use. Yet the impact of medication labeling changes on brand pharmaceutical products, and whether and what firms do to respond to increased information regarding the safety and efficacy of a drug, have not be characterized. We propose a behavioral framework for examining the effects of FDA advisories on branded pharmaceutical firms and their products. We empirically assess the impact of recent FDA advisories on the stock market valuations of a sample of branded pharmaceutical manufacturing firms using event study methods. We examine whether and how branded pharmaceutical manufacturers respond to an advisory by assessing changes in promotion compared to non-affected firms. We find firms targeted by an advisory have average stock price declines of 3% in three days and 11% in five days following the advisory release, and in turn appear to decrease total physician-directed promotion spending, journals ads and detailing visits significantly six months following the advisory release; the provision of free samples is unaffected. We find no changes among therapeutic substitutes unaffected by the advisory. Results of sensitivity analyses suggest firms with market dominant positions experience similar decreases in stock market valuations and physician-directed promotion compared to pooled results. The results are also robust to alternative definitions of the timing of advisory release dates and the severity of advisories’ wording. Theory and empirical results suggest the public release of FDA advisories negatively impacts firm’s short-term market valuations. The results suggest an additional rationale for previously documented declines in prescribing after FDA advisory releases – significant declines in physician-directed promotion following FDA advisory releases; the combined (and likely correlated) effects of the release of the advisory and declines in physician-directed promotion on prescribing behavior are likely larger than the sum of the independent effects.

via The Effect of FDA Advisories on Branded Pharmaceutical Firms’ Valuations and Promotion Efforts.

Social and Economic Costs of Violence – Workshop Summary – Institute of Medicine

October 25, 2011

Violence not only causes physical and emotional damage, but also creates a social and economic burden on communities. Measuring these costs can be difficult, and most estimates only consider the direct economic effects of violence, such as productivity loss or the use of health care services. Beyond these clear-cut costs, however, the pain and suffering of violence can affect human and social development and increase the risk of chronic outcomes later in life. Communities and societies feel the effects of violence through loss of social cohesion, financial divestment, and the increased burden on the health care and justice systems. Initial estimates show that the cost of implementing successful violence prevention interventions is usually less than the cost borne by individuals and society if no action is taken.

April 28-29, 2011, the IOM’s Forum on Global Violence Prevention held a workshop to evaluate the social and economic costs of violence. The workshop was designed to examine cross-cutting public health approaches to violence prevention from multiple perspectives and at various levels of society. Participants focused on exploring the successes and challenges of calculating direct and indirect costs of violence, as well as the potential cost-effectiveness of intervention. Speakers discussed social and economic costs of violence at four levels: individual, family, community, and societal. This document is a summary of the workshop.

via Social and Economic Costs of Violence – Workshop Summary – Institute of Medicine.

CLASS ACT | The CLASS Act: This is confidence-inspiring? | The Daily Caller

October 25, 2011

As it turns out, CLASS collapsed even before its 2012 start date. The same thing happened when Obamacare imposed the same sort of price controls on health insurance for children in September 2010: the markets for child-only coverage collapsed in a total of 17 states, and are slowly collapsing in even more.

Everyone with a rudimentary understanding of insurance saw this coming. The government’s non-partisan actuaries warned of “a very serious risk” that CLASS would be “unsustainable.” One wrote, “Thirty-six years of actuarial experience lead me to believe that this program would collapse in short order and require significant federal subsidies to continue.”

via CLASS ACT | The CLASS Act: This is confidence-inspiring? | The Daily Caller.