I’ve blogged in the past about the (small) impact of malpractice on health care costs. One of my former teachers, Joan Savitsky, MD, had a heartfelt piece in today’s New York Times on the (huge) impact an impending malpractice trial had on a then-practicing physician. It's not all about the economic costs!
Will eliminating the donut hole break the budget?
Between ¼ and 1/8 of Medicare beneficiaries with Part D coverage fall into this gap – which was established to lower the total cost of Part D coverage, and also as part of the Bush administration attempt to keep patients’ “skin in the game” so that they would comparison shop.
There’s been a sea change in Washington
The big problem with this plan is that the funding is in part from the $80 billion pledged by pharmaceutical companies, which will use this to subsidize 50% of the cost of brand name drugs prescribed for Medicare beneficiaries in the ‘donut hole.” This is a terrible idea, since many of these brand name medicines could be substituted, and the brand names remain a bad value even at half price. Some brand names, of course, offer unique advantages, and this will be a valuable break for Medicare beneficiaries on those medications.
Some have claimed that increased medication adherence will prevent hospitalizations and therefore save money. Since almost all medications are cost-effective and not cost-saving, this is not true. Purchasing medications so that beneficiaries follow their doctors’ instructions will buy us better quality – but will not save dollars to fund the increased pharmaceutical spending.
Politically, closing the donut hole is critical. Clinically, decreasing nonadherence among sick elderly is an excellent idea. This will likely raise the overall cost of health care, though, while improving quality.
The Senate Bill: Better for Cost Control than the Status Quo
Cost Control Implications
There has been substantial buzz about whether the proposed health care reform does enough to address the problem of health care inflation.
There is almost universal agreement that it does not do as much as we’d like it to do control costs, especially when we compare the health care reform in the Senate bill to each of our “ideal” version of health care reform. Compared to the status quo – the Senate bill does much more that might lower health care costs. This includes
- Medicare independent commission
- Substantial cuts in Medicare fee increases going forward
- Tax incentives to avoid overcoverage (Cadillac tax)
- Many pilots – each of which might show us the way to lower costs substantially. Here is Atul Gawande’s take on the importance of experimentation in controlling health care costs.
We have to start somewhere.
Nate Silver of fivethirtyeight.com http://www.fivethirtyeight.com/2009/12/insidious-myth-of-reconciliation.html has a good graphic showing his point of view about how preferable different health care reform proposals would be in his mind. I’ve taken his graphic approach – and applied the lens of “cost control” – so I am not giving “extra credit” for the dramatic decrease in the uninsured projected under health care reform.
There are a few things I would rank differently. I added “price controls,” since there is good evidence that price controls DO lower prices, although they often have unexpected consequences. Here’s an interesting take by Uwe Reinhardt, pointing out that if we import drugs from Canada, we are ‘outsourcing’ price control to the Canadian government. Remember, Japan is the home of the $98 MRI because the government price book says that’s the price.
I also ranked a ‘weak’ public option as worse than the current Senate bill in terms of cost control. I continue to be worried that a weak public option merely fragments the payer market further – and could lead to higher unit prices.
By the way, the market says the health plans “win” in the Senate bill, and their stocks are up sharply today.
