Tag Archives: medicare

All Posts, deficit, health, medicaid

Replacing Obamacare

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President Trump and our Republican controlled congress have promised to quickly repeal and replace ObamaCare.  President Trump says that coverage will be better, cost will be lower, and everyone will be covered.

We should consider where we were before ObamaCare and where we are today as a basis for judging proposed replacements.  Using the years 2004 – 2009 as a baseline for how we were doing before ObamaCare and 2010 – 2015 as a measure of its effectiveness, here are some facts.

Each of the following statistics is for five years of change before and after ObamaCare.   All spending is inflation adjusted to 2010 dollars.

Below is similar cost data from a different source and a link that will allow you to browse a wealth of relevant information.

The cost of employer sponsored health plans has been growing slower since ObamaCare.
The cost of employer sponsored health plans has been growing slower since ObamaCare.

Evaluate performance data from the US and other developed nations HERE using tools developed by the Organization for Economic Cooperation and Development.

 

 

Some other changes brought about by ObamaCare are:

  • Before ObamaCare, important screenings like colonoscopies and mammograms were unaffordable for many people.  Now they are covered without deductibles.
  • Insurance companies and employers can no longer deny coverage or charge more for pre-existing conditions.  Previously, cancer survivors, diabetics and others likely to need expensive care were uninsurable on most family budgets.
  • Lifetime limits on coverage were banned.
  • Mental health services are covered on the same basis as other medical and surgical services
  • Dependents can stay on parents’ coverage up to age 26.

ObamaCare is a success compared to what we had before it passed.  But health care costs are still rising faster than our economy is growing and we still have over 28 million uninsured Americans so more improvement is needed.

The ObamaCare insurance exchanges where individuals and small employers should be able to purchase affordable coverage are not consistently working well .  Millions of young, healthy Americans are not buying coverage as required by the law.  That leaves a disproportionate number of unhealthy and older people in these insurance pools.  In markets where that has happened, premiums have risen at double-digit rates and several insurance companies dropped out, leaving meager choices for consumers.

That problem leads directly to critical questions about replacing ObamaCare.  Will congress decide that it’s acceptable for some Americans to have no health benefits?  If everyone is going to have benefits, is there a less expensive alternative than Medicaid expansion?  If so, will it be included in the Republican replacement for ObamaCare?  If not, will it then be acceptable for doctors, hospitals and other health care providers to deny services to those who can’t pay?  To be very clear to free market friends, “There ain’t no such thing as a free lunch.”  If the ObamaCare replacement does not include a way to pay for care of the uninsured then either they will die without care or the cost will be built into your bills and insurance premiums.

There are proven ways to provide more care for less money while covering the entire population.  Every other developed nation has adopted one of them and they are all more cost-effective than ObamaCare.  They range from price controls to “medicare for all” or government operated health care similar to the British model.  All of them require a larger role for government and that seems to be the antithesis of Republican thinking.  President Trump said that no one should be required to buy health insurance.  At present it appears that he intends to provide something (health care) for everyone without requiring anyone to pay for it – a miracle of biblical proportion.

We can hope that the post-election hostility will wane in favor of intelligent consideration of how to replace or improve ObamaCare. It can be done if legislators and the President are willing to forego political rhetoric for what is practical.  If they are not, then both human and economic catastrophes are likely.

All Posts, Congress, health

Drug Prices and Corporate Influence

Prescription drug prices are again in the news.  Prices are rising quickly, even for drugs that have been on the market for years.  This column quantifies the problem and presents ideas to improve the situation.

A good benchmark for “fairness” is to compare US prices to other nations.  The best objective research that I can find was done by the Organization for Economic Cooperation and Development (OECD) in 2011.  They looked at prices for the thirty most commonly prescribed drugs and found that for every dollar spent by Americans, residents of other nations paid $0.51.  In other words, we were paying twice as much, on average, as residents of other western democracies (Europe, Canada, and Australia).  Americans spent 13% more in 2014 than in 2013, so the situation appears to be getting worse.

There are many reasons why drug prices are higher in the US but underlying most of them is the influence of big campaign contributions and related corporate influence in our nation’s capital.  For example, when the George W Bush administration wanted to create the Medicare Drug benefit (Medicare Part D) there was concern in Congress about whether to expand the Medicare entitlement program.  Drug companies could have killed the idea if they had lobbied against it.  The price for their support was a provision in the law which prohibits Medicare from negotiating drug prices, setting prices or establishing a uniform list of covered drugs, known as a formulary.  That provision made Medicare Part D a goldmine for them.   Efforts to allow Medicare to negotiate prices have failed under both Republican and Democratic leadership due to inability to muster 60 votes to break Senate filibusters.

The negotiating power which Medicare was denied is the tool used by other nations to drive prices down.  When several effective drugs are available for a particular problem,  those nations pay only for the ones that are priced at an acceptable level.  Companies reduce prices in order to have their products covered.  Drug companies say that they need high American prices to pay for research and development.  The undeniable need for R&D does not justify charging Americans more than Europeans for the same drugs.   Medicare should be allowed to negotiate prices and to exclude over-priced drugs from the Medicare benefit.

A second action to drive down drug prices would be to increase government spending on research and development.  It would be good government policy to fund research in targeted areas (prevention of strokes and heart attacks and treatment of Alzheimer’s disease for example) under a policy where all resulting intellectual property such as patents belongs to the taxpayers who funded the research.  We could then allow production of resulting drugs by any drug company which would do the manufacturing here in the US but charge a royalty to companies doing the manufacturing outside the US. The net effect would be more R&D funding at American universities and corporations, lower drug costs and new US manufacturing jobs.  Strong opposition to such ideas can be expected from the US and foreign drug companies who are currently profiting from an American market where taxpayers and patients subsidize the world’s highest prices and have no ability to negotiate them down.

Another idea is to tighten intellectual property laws so that patents don’t seem to run forever and more companies can manufacture drugs at lower costs.  There are loopholes in current laws that allow companies to extend patents by making very minor changes in a drug and preventing expiration of the patent on the original.

A fourth strategy for driving down costs might be to reduce utilization of pharmaceuticals by banning or restricting direct-to-consumer advertising of prescription drugs.  Should corporations have free speech rights to promote prescription drugs directly to patients?  Do the ads encourage patients to imagine symptoms and ask doctors for unnecessary prescriptions?  Current research isn’t adequate to answer that question but most other nations don’t allow such advertising and many have lower utilization of heavily advertised drugs including antidepressants and sleep aids.  This is obviously another public policy question in the hands of legislative bodies that have a hard time saying “no” to corporate influence.

In each case, the barrier to action appears to be the influence of big corporations on American government.  Perhaps we need a prescription for raising the interests of consumers and taxpayers to be as important as the interests of drug companies.