A Public Plan: NEJM Presents Three Points of View

Three perspective articles from noted economists in this week’s New England Journal of Medicine   review the pros and cons of offering a government-sponsored health plan as part of health care reform.   In a previous post, I talked the future of health plans in the context of calls for a national health plan.

 

Jacob Hacker favors a public health plan – saying that “competition between the public and private sectors will ensure lower costs and better access.”  He notes that it will be important to be sure the public and private plans compete on a level playing field.  The level playing field, for Hacker, includes 3 Rs – the same Rules, Risk adjustment, and Regional pricing.

 

Mark Pauly  also favors a public health plan – noting that choice is good, and some Americans don’t trust the market to deliver what they want, while others don’t trust the government    He suggests that there are not “advantages tgo a large plan’s dominating the market,” a position many providers in states with dominant health plans would contest.  Pauly worries that politicians might lobby to influence plan design – but feels reassured that true competition will only draw patients to plans that address their wants and needs.  Pauly says that all government plans should start small to make for neutral competitive markets.  Of course, a SMALL public plan playing by the same rules as private plans would not be able to exert much downward force on unit prices. 

 

 

Victor Fuchs says that the whole discussion of a public health plan is beside the point.  He points out that more Americans get insurance through self-insured employers than via any other method (30%, vs. 24.5% fully insured).  A government-run plan would only be relevant to this group if the government offered administrative services.   Even for Medicare, CMS actually farms this out to private contractors – so it’s not likely that the government has a competitive advantage in this space. He says that the main challenges are lack of universal coverage, cost increases and poor quality – and is not convinced that a public health plan will be a good solution to any of these issues. 

Interestingly, the point of view missing altogether from NEJM was one opposing a public plan outright, as opposed to merely saying that it is irrelevant.   

Ted Kennedy had a recent op-ed article in the Boston Globe setting out his vision for national health reform – which includes a public plan.  

 

I find Fuchs’ arguments most compelling.   We need to think about how to change the way we deliver care to make that care of higher value; it matters less whether the check is written by a plan owned by the government or by a private health plan.   A public plan that had real leverage would be opposed vociferously by the health plans and by providers - enough so that it would be VERY difficult to get through Congress.  On the other hand, a public plan with little leverage wouldn’t matter.  I believe that the final health care reform bill will have a trigger to implement a public plan in the future,  if costs are not reined in, rather than right away.   

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Generic Drugs – Good Deal... or a MENACE?

There is a long article in this month’s Self magazine with a scary title: “Bad Bargain: All of us want cheaper medicine- but not if it costs us our health.”  The title suggests that generics are evil, and the article opens with case reports of suicidality returning in patients on the generic version of the extended-release antidepressantbupropion (Wellbutrin™) and recurrence of seizures in a patient switched to a generic antiseizure medicine.

 

The article, by Katherine Eban, a credible reporter with good credentials, sites many anecdotes about lack of therapeutic equivalency.   She goes on to report in depth about what appear to be fabricated reports from the Indian generic pharmaceutical giant Ranbaxy. The Ranbaxy CEO recently resigned over this issue, and the FDA has blocked importation of some (but not all) medicines from Ranbaxy.  The Self article quotes many physicians who believe that generics are not a good idea for their patients.  Most of these physicians have pharmaceutical company ties. 

 

Eban makes it clear that the FDA does not have adequate resources to inspect international manufacturing sites, and Aaron Kesselheim previously reported in the Annals of Internal Medicine that “the most effective way to decrease drug costs overall is the appropriate use of domestic generic drugs, which are available for almost every major therapeutic class."

 

 

 

The Today Show on NBC picked up the story – and Matt Lauer interviewed a pro-brand-name pediatrician and the Self magazine editor (not the reporter). Lauer gasped when he heard that pharmacists are allowed, and even required, to substitute generic medications for brand name medications. 

 

Generics are one of the few true successes in health care affordability. The Congressional Budget Office   concluded that generics saved $8-10 billion a year in 1994 dollars – and this was long before blockbuster medicines like Prozac (fluoxetine) and Prilosec (omeprazole) and Zocor (simvastatin) went off patent.  Pharmacy inflation has abated substantially in the last few years – and generics are the reason.

Saving money on prescriptions isn’t just about saving a few (or many) bucks. Patients facing huge bills for their medications are much less likely to follow their physician’s prescriptions – so generics will likely help us get better health outcomes. And it’s not just the evil insurance companies trying to plump up their profit margins by substituting inferior pills.  If we backpedal and make generic substitution more difficult, our health insurance premiums will go up and more Americans will find themselves priced out of the market.  Just today, Health Affairs posted a new article suggesting that almost 7 million more Americans will lose their insurance through 2010.

 

There are a few drugs where the toxic-therapeutic ratio is so narrow that physicians and pharmacists should choose to keep patients on medications from the same manufacturer (whether brand or generic).  Neither the Self article nor the Today Show noted that there have been problems with bioequivalence of brand name drugs, including Synthroid (thyroid medicine) and Dilantin (antiseizure medicine).  In both of these instances generics were at many points more reliable than brand name preparations.

 

Generic extended release bupropion is a troubling case –there are so many case reports of drug failure that I wouldn’t prescribe it.  But for the most part, generic drugs help us make health care affordable overall, and help individual patients gain the full benefits of what their physicians prescribe.  I’m staying on my generic simvastatin (Ranbaxy).

 

 

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Early Childhood Interventions Could Save Billions?

I watch for headlines that promise large health care cost savings – and in general, headlines about public health oriented interventions that are more credible than interventions within the medical care system.

 

Here’s a headline from UPI this weekend:  “Child health interventions save billions. “  You can imagine I found the headline pretty exciting.  Frankly, it’s not often that an article from Academic Pediatrics makes national headlines . 

 

This article is a literature review – and it suggests four areas of intervention in childhood that could lower future costs. 

 (Harvard full text) (NonHarvard PubMed)  These areas are

 

1)     Early tobacco exposures

2)     Accidental injury

3)     Obesity

4)     Mental health

 

Tobacco exposure, injuries, obesity and mental illness take a terrible toll in childhood – and increased costs continue well into adulthood.   The authors conclude that there is good evidence that efforts to lower parental smoking and decrease poisonings and accidental injuries work. They admit that the medical literature on effectiveness of interventions for mental health are limited to small clinical studies, and there is less evidence still for medical interventions for obesity.

 

The calculation of $65-$100 billion in costs is derived thus:

-          Assume cost of $50,000 per affected child. Note this “cost” is not limited to cost within the health care sphere – but also includes lost productivity loss and civil justice.  I’m not sure how civil justice is valued.

-          Assume that 1/3 to ½ of each birth cohort is affected

-          Multiply the  number of affected children by $50,000.

 

So – there are probably billions of dollars of excess costs (although the accounting is cloudier than suggested by UPI).   Are there billions of savings?

It depends.  How much will the intervention cost?  How effective will it be?  We need a lot more research before we assume that these savings could be realized.  These savings certainly can't be counted on to fund increased coverage for the uninsured, or improvements to the educational system.

 

The authors note that medical care in childhood is 1.6% of GDP, and projected to decline by 14-29% from 2006-2017.  There’s some demagoguery in that statistic– since children will represent a smaller portion of the population over the next decade, so we would expect pediatric care to decline as a portion of total medical spending.   Even so, most clinicians would agree that a dreadful shortage of child psychiatrists isn’t a good way of saving dollars.  

Our commitment to interventions in these areas cannot be judged by how many dollars are spent in pediatric care. Frankly, tobacco cessation and accident prevention efforts come out of public health funds - and they are not likely to be reflected in the percentage of GDP spent on pediatrics.  Public health efforts are also cheap compare to initiatives in the medical arena. 

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