First off, Medicare Part D plans are run by private insurers and they certainly do negotiate on price. In fact, they tend to get better prices than commercial plans. Those savings are used to compete for Medicare dollars to cover those patients (i.e. savings are passed on to Medicare).
Second, physician administered drugs are paid for at a rate that is the average of what private payers pay. So no negotiation, rather a piggybacking on discounts to private insurers.
Finally, if you roll in the 340B discount (23% minimum), Medicare is getting a pretty good deal on drugs.
I would argue that unless Medicare threatens to NOT cover some drugs, it won't reduce costs one bit. Currently there are a number of protected classes where Medicare HAS to cover those drugs. That needs to be fixed first.
If you don't believe me, look at the CBO estimate of savings if Medicare is allowed to negotiate. Their findings were "minimal savings".[1]
CBO estimates that enacting S. 3 would have a negligible effect on direct spending and would result in spending from appropriated funds of $2 million in 2008 and less than $500,000 annually in subsequent years. Enacting S. 3 would have no effect on revenues.
[1]https://www.cbo.gov/sites/default/files/110th-congress-2007-...
Medicare Part D plans are run by private insurers and
they certainly do negotiate on price.
physician administered drugs are paid for at a rate
that is the average of what private payers pay.
From http://www.cnn.com/2015/09/28/health/us-pays-more-for-drugs/
-- Gleevec (a cancer treatment): $6,214 (per month/per customer) in the United States, compared to $1,141 in Canada and $2,697 in England.
-- Humira (for rheumatoid arthritis): $2,246 in the United States, compared to $881 in Switzerland and $1,102 in England.
-- Cymbalta (for depression): $194 in the United States, compared to $46 in England and $52 in the Netherlands. In fact, there is also a generic version of Cymbalta so these prices reflect having a cheaper alternative.
Some molecule. Different price.
Look back at the last paragraph in my response above. Medicare is required to cover a number of classes of drugs. they can't say "no, we're not paying for it."
As a result, Medicare has no negotiating power. Unless you can walk away from the table, why would drug companies budge?
And if Medicare did have the power to say "no", how would that work politically? I'm guessing the AARP would be up in arms if Medicare said "no, we're not paying for that drug, find an alternative."
And the price you quote are comparing list prices in the US to net prices (that's usually what's published in the EU and Canada).
Humira is significantly discounted in the US. 40 to 50% discounts are not unusual for large payers.
A great example are the HCV drugs. When a 2nd class of products entered the market, the drug manufacturers rushed to discount their products to maintain market share. As a result, the US price is lower than the prices in Europe.[1]
[1]http://www.forbes.com/sites/johnlamattina/2015/12/04/for-hep...
Those statements are only true for drugs with no alternatives - which doesn't apply to all (most?) drugs. And, even for those, couldn't the government say "we're not going to pay $(RANSOMPRICE) for drug X. If you insist that we do, we will not buy any other drugs from you but will instead source from your competitors at all times."
Private payers are free to do that, but don't. The reason why they don't is because they have customers and telling someone "no you can't have this drug" makes people really upset.
I'm not sure Medicare would have much more success in that area. I could imagine politicians phones ringing off the hook with call from retirees stating "why won't you pay for my drug"?
Lets be honest, apart from generics, are you able to dive through source material to find older, equally effective, but with different side effect drugs?
https://www.congress.gov/amendment/115th-congress/senate-ame...
You can see who voted for / against it: https://www.congress.gov/amendment/115th-congress/senate-ame...
12 Democrats said No
Feinstein (D), Sessions (R) refused to vote.
(Roughly)
US suppliers sell to Canada at a different price than they sell in the US.
If 'borders were open' - the price in US would go down, the price in Canada would go up, roughly to the same price.
I understand that it seems odd, but I reject the idea that it's 'corrupt' to sell to one country at a different price than another.
Drugs are essentially IP, so it would be like the US selling Canada the 'Superbowl' and then Canada selling and broadcasting it to the rest of the world at a discount.
I think something should be done about that - but drugs are not like most goods. And of course, many goods have different controls and regimes.
Another aspect: it's not really 'free trade' when a government entirely regulates the economy for a good. So when gov of Canada 'sets prices' for a good, it kind of flies in the face of regular trade rules and potentially gives one side or another advantages, so it really doesn't fit well under things like WTO or NAFTA.
Surely we could have some new thinking about this though ...
Seriously, if drug companies were making a net loss in European and other countries, they'd just stop supplying in those countries and subsequently enjoy higher profits. Unless you're suggesting companies like Pfizer and Merck & Co do it anyway out of the goodness of their hearts. And prices the US pay are in no way related to what other countries pay: it's simply a function of market power and being in a much weaker bargaining position.
Most of these countries have 'single buyers': essentially a panel of medical practitioners and economists who negotiate prices on the basis of cost-benefit ratio on behalf of the entire country. So the lower drug prices in European countries (and other single buyer/universal insurance countries like Britain, Australia, Canada etc.) is simply drug companies supplying the market at the price it will bear. They are price takers in such countries, because those countries are monoponsy markets.
I realise Pfizer (net income: $7.74 billion) and Merck & Co (net income: $4.44 billion) are really doing it tough, but I think they'll be OK if Americans realise it's insane to pay close to double (>15%) the OECD average (7-8%, medical spending as a % of GDP). Although I hear US medical treatment is top notch if you're rich, otherwise statistically (and conservatively) 25% of the time it will send you bankrupt, assuming you make it out of the waiting room alive (compared to, say, the UK where medical costs account for %5 of households that report 'financial difficulty'). [0]
It truly baffles me when I hear Americans talk about this issue, as they always argue it's actually really a good thing that they're getting rogered by most of the private medical industry in their country (hey, they're nice people, we cuddle afterwards). There's some crazy mental gymnastics going on if you truly believe that paying double the 'rich country club' average on health care costs for basically the same outcomes (apart from the much higher bankruptcy rate) is in some way a good thing.
It's almost like some weird form of buyers' remorse: 'Yeah, but we treat cancer better that anyone. USA #1!'
[0] http://www.snopes.com/643000-bankruptcies-in-the-u-s-every-y...
You're treating this as if it's a question of "fairness" to the drug companies, and it's not about that at all. If you could drive drug company profits to $0 with no collateral effects, it'd be unambiguously the right thing to do.
The question is, though, what does that do to the market? If you're an investor that has a billion dollars lying around, do you put it into drug development or social media? Both are highly risky, but the former is burdened by a regulatory regime that thinks companies in that sector should just "scrape by," while the latter has unlimited upside.
You're basically sending a signal to the market that the more valuable your business is to society, the less money you're going to make from engaging in it. That's ass backwards.
> Seriously, if drug companies were making a net loss in European and other countries, they'd just stop supplying in those countries and subsequently enjoy higher profits
They continue to sell in European countries because they don't make a marginal loss there. But if their revenue levels in the U.S. were at the level they are in Europe, they absolutely could not justify their enormous fixed costs.
> And prices the US pay are in no way related to what other countries pay: it's simply a function of market power and being in a much weaker bargaining position.
It's true that drug companies are in a much weaker bargaining position in European countries, but only because European governments exercise seller-side market power to artificially drive prices below what they would be in a market with many buyers and many sellers.
> I realise Pfizer (net income: $7.74 billion) and Merck & Co (net income: $4.44 billion)
Fun fact: Facebook's net income is about 30% higher than Pfizer's even though its total revenue is only about half. Obviously Facebook's product is much more valuable to the world and should be incentivized accordingly.
Maybe the public could help them substantially lower the costs by not allowing to advertise prescription drugs to laypeople?
Agree with the GP. There is some massive Stockholm syndrome going on here.
Some countries have well-functioning health care systems since the 18XX, not just since the feel-good story of "Murica is subsidizing other countries because we are such a great nation" became a thing.
Working health care is not rocket science, but it looks like everything that doesn't fit the American narrative of exceptionalism is conveniently ignored these days.
That argument, though oft-repeated, is mathematically non-sensical. Unless companies are currently operating irrationally, one less dollar spent on advertising will result in more than one dollar lost in revenue.
See the Opioid epidemic that is still taking lives in the US for more than 20 years. Imagine what an economic benefit it would be for the populace if all those average middle-class Jane and John Does wouldn't have had their life shattered by addiction and instead would be holding down a steady job paying taxes.
Or imagine how much cheaper it would be if the US' reckless abuse of antibiotics in both humans and livestock wouldn't cause such a rise of multi-resistant strains of diseases.
As a result, a lot of pharmacies (and some gov'ts) restricted sales to out-of-country patients to prevent shortages in their own countries.
The question for me is how how inelastic this relationship is. The pharma companies would have you believe that if some kind of price controls of some kind were put in place, and the total amount of profit to be had was reduced, then the inexorable result would be a scaling down of the whole process: a sinking tide lowering all ships. Is that a realistic model? I don't know. Is there way to know? I don't know that either.
It's easy to make religious claims from either side, but it would be nice to have a better sense of the system dynamics here.
Those same comapnies then sell the same drug with pure profit (minus marketing & regulatory cost) in the US, for 4x the price because they have a monopily on it.
GP was being rhetorical, but if you really want to know, Medicare has 55 million beneficiaries in the US.
Medicare is socialized medicine, and should be single payer, yet insurance still manages to get in the middle and increase costs while reducing patient outcomes.
Specific example that almost no one talks about: Medicare Insurers come to town and start buying up primary care practices, then, then the Insurer cancels contracts to the remaining providers and those who don't sell. This means patients lose their doctors of years and are stuck going to the primary cares the Insurance companies own, and then provide waterdowned care to patients (e.g. RX that is cheaper for the insurance company even when the Med is proven less effective, less refferals to specialists than the market average, etc...).
There have been some lawsuits against Medicare insurers for this specific behavior, but to my knowledge those have resolved in settlements where the insurers temporarily agree to allow existing patients to continue seeing their doctors, but unfortunately the reality of those cases are the doctors aren't fighting for their patients but seeking their own buyout from the insurers.
Wait, what? Medicare Advantage (the portion of Medicare that is privatized) consistently beats Original Medicare on cost, medical outcomes, and patient satisfaction scores.
Amusingly, when people talk about the high patient satisfaction of Medicare, they're talking about the high patient satisfaction of privately-insured Medicare patients, because even the very lowest satisfaction score of all the major injurers who provide Medicare plans is still higher than Original Medicare's satisfaction rates.
http://thehill.com/policy/healthcare/237492-poll-seniors-mor...
Ironically it was GW Bush who got Medicare Part D done (which is the antithesis of fiscal conservatism, and many might remember Bush losing a lot of support from his own party, though many say it was just politicians in the pockets of insurers). Alternatively, Obama originally wanted to do away with Part D because of the cost/waste (forcing millions into situations where again they would lose drug coverage would have been the antithesis of social liberalism, for this reason it was controversial within the party). Luckily there was compromise and instead of dismantling Part D Obama tried to flush out the waste using tools like Star Ratings and mandates to insurers to provide services like Medication Therapy Management to Advantage Chronic Care Patients, which alone has had substantial positive impact on patient outcomes, costs, and the competitive nature of the insurance markets (now insurers are rated based on quality metrics, insurers lose contracts with Medicare due to poor outcomes and only those with the best metrics and ratings can serve the market year round). Still its an inefficient system because of these middlemen, in fact it is arguable many of the "quality metrics" that give insurers better ratings are actually the things leading to bad behavior like buying up medical practices and cancelling contracts with other primary cares in the area to drive down the cost of care.
I'm talking about Medicare Advantage, not Medicare Part D. Most Medicare Advantage plans do include a Part D plan, but not all do.
> not because of insurance companies or the market is privatized.
People like Medicare Advantage because they are actually able to book appointments without horrendous wait times, and they're able to see a better selection of higher-quality doctors. And the outcomes back this up - Medicare Advantage consistently outperforms Original Medicare on medical outcomes, not just on patient satisfaction.
I would have thought 9 out of 10 advantage plans have part D drug coverage but its actually 82% at an average cost of $40/month.
>Medicare Advantage consistently outperforms Original Medicare on medical outcomes, not just on patient satisfaction.
Outcomes is a buzz word, if you want to talk Star Ratings and Quality Metrics, then we can begin to discuss what "outcomes" really mean.
Just one example where a quality metric has both positive and negative patient effects simultaneously: say I'm Blue Cross Blue Shield, thru MTM I somehow manage to get all my Medicare Advantage Part D Chronic Care Patients to switch an average of 10 Rx/patient from 30 day to 90 day fills.
Its these little things inherent in the Star Rating/Quality Measure system that people regularly refer to as patient "outcomes". In my example, the Blue Cross Blue Star Star Rating might even go to 5 allowing me to sell insurance year round. Why? It starts with medication related incidents costing billions/year and resulting in millions of hospitalizations and that being some of the lowest hanging fruit to correct, so "medication adherence" is heavily weighted in Star Ratings, and somewhere there is a study concluding 90 day fill improve medication adherence by x% over 30 day fill (i.e. improved outcome). It all sounds great until you peel back the layers and find a doctor who refuses to change the script because morally the doctor wants to see that patient every 30 or 60 days (again these are all Chronic Care Patients so diabetes, blood pressure, cholesterol, etc...) before writing a refill. When these objections regularly occur from doctors, insurance has deemed them to expensive and drops them from the network, and as I stated in my initial post those patients will regularly be redirected to a practice owned by the insurer themselves.
Now in all fairness we all know there are doctors who do in fact milk the system with unnecessary patient visits but it is undeniable from the court cases by groups of doctors who have been dropped against the insurers and the reactions of patients losing a doctor they know and trust, there is very unsavory behavior by insurers.
Here is my final diatribe on my bone to pick with "outcomes", naturally one way to drive down costs care (thus improve Star Ratings and outcomes) is switching from name brand to generic. However, even when doctors feel a generic may be fine they may not want to change a therapy in instance when the patient has been on a continuous therapy successfully managing their chronic care condition just to save a few dollars, improve the insurers Star Rating, and claim better patient outcome. Though this debatable issue becomes a clear problem when insurers start pushing the doctor (and even the patient thru cold calling) to change the Rx to a generic that is clinically proven to be harmful to patients to save money (which may actually be happening with the diabetes Statin therapy).
If you want to talk about how metrics are imperfect, fine, but you can't claim that Original Medicare is somehow better unless you actually propose some concrete metrics on which it actually does outperform Medicare Advantage. As it stands, Medicare Advantage consistently beats Original Medicare on pretty much every metric you can conceive of.
Take my 1 example MTM, Medicare Advantage patients don't get that benefit because the private market is driving competition and better care, it's because by law the Avantage plans have to provide MTM under penalty of losing their Medicare contacts.
I'm not denying Avantage is better than original Medicare, but to claim the reason Advantage may be better is insurance companies and not the legally mandated benefits and costs of Advantage plans isn't good faith, especially when you already minimized >80% of the patients get mandated drug coverage. Yes it's good but is has nothing to do with insurance creating the market conditions that created the drug coverage, its law and subsidies. Though it will become clearer as the insurance continues to consolidate and Medicare patients will only be able to go to doctors, hospitals and pharmacies owned by the insurer, because that's where it's going for Medicare Avantage patients, costs will go down but I'll be damned if I call that a "good outcome".
Again, it seems you're confused about what Medicare Advantage is. Medicare Advantage essentially replaces all Medicare coverage - parts A, B, and (usually) D. So no, Part C patients are not enrolled in Original Medicare in any sense. They are enrolled in Medicare, but not Original Medicare.
> Yes it's good but is has nothing to do with insurance creating the market conditions that created the drug coverage,
I'm not talking about drug coverage. Medicare Advantage provides a superior (in every measurable sense) way to obtain Part A and B benefits than Original Medicare does. That has nothing to do with drug coverage.
> its law and subsidies.
It's not a matter of "subsidies". Medicare Advantage is not subsidized by the government. The government pays private insurers a fixed amount that corresponds to what Original Medicare would "receive" for each patient, but that's not a subsidy. And when we say that Medicare Advantage outperforms Original Medicare on cost, we're saying that Medicare Advantage is able to achieve better outcomes for the same amount of money.
If you think that's just a fluke, then look at Medicaid. The same pattern holds with Medicaid, where privately managed plans again consistently outperform the government plans, even though the array of requirements differs widely.
> especially when you already minimized >80% of the patients get mandated drug coverage.
The drug coverage isn't "mandated" for Medicare Advantage patients, any more than it is "mandated" for Original Medicare patients who enroll in a Part D plan or a Medigap plan. Medicare Advantage patients who don't receive prescription coverage can get a Part D plan just like Original Medicare patients can.
Maybe you're trying to say that there's a beneficial selection occurring, but that's also wrong. Part D is well-segemented
That argument would basically boil down to "Medicare Advantage is only better than Original Medicare because most Medicare Advantage patients receive drug coverage", which makes no sense because (a) the same companies provide Medicare Advantage and Part D benefits (and oftentimes using same plans), and (b) Medicare Advantage provides superior coverage and quality (and at a lower price) when compared to Part D enrollees with the same prescription coverage.
Honestly, the existence of Part D is, if anything, proof positive of this effect, because it makes it so easy to tease out the difference between receiving Part A/B coverage through Original Medicare and receiving equivalent coverage through Medicare Advantage.
> Though it will become clearer as the insurance continues to consolidate and Medicare patients will only be able to go to doctors, hospitals and pharmacies owned by the insurer, because that's where it's going for Medicare Avantage patients
That's the way the entire industry is headed as a direct result of the ACA. But even that's still a lot better than Original Medicare where patients struggle to get appointments at all.
Define it however you want, it leads to watered down care. Naturally, the Insurers have incentive to identify the primary care physicians who don't see their patients (especially chronic care) or don't order referrals to specialists. Have you followed a single lawsuit against the Medicare Advantage plans by physicians and physician groups? Insurers identify these practices (the ones that have minimized costs through watered down care) buy them/cancel other physicians out of the networks/funnel remaining patients to the doctor.
Let me ask you, how do you think an Advantage patient can set an appointment so easily when the networks have narrowed (less physicians, less patient choice) and the overall patients/doctor in network increases? Its because systematically the complicated chronic care patients are seeing the doctor less and less and the network doctors have more time to spread around and set appointments in 24-48 hours (you say improved outcome, I say yes for many but also watered down care for many). I will admit, patients like seeing their doctor in 24-48 hours and like seeing them 1-2 a year instead of 4-6, its convenient and cost them less (in co-pays if nothing else), but its still watered down care, especially to the chronic care Medicare Advantage patients.
I will predict this as well...the next step in all this is for Pharmacists to be labeled providers (can bill CMS under Parts A, B, C) and they will begin replacing physicians as the providers for Medicare Advantage chronic care patients. Again outcomes will go up because the patients are actually being seen and the Chronic Care CPT code will be billed/reflected on their EHR, but the care will be watered down (patients now forced to see pharmacists instead of doctors for chronic care management), but hey costs will go down right? Even the patients will be happy because they can just walk in to a pharmacy anytime without an appointment and see a pharmacist, plus the copay will probably be cheaper, again you/Insurers/even patients can say "improved outcomes", I'll maintain less choice and watered down care.
I can't even follow what you're trying to say anymore, because you're conflating unrelated topics. And again, you're still not really actually defining the metrics that you care about, so it's hard to respond because you're not offering any concrete and systematic method for evaluating effectiveness. I've mentioned a few metrics (which happen to be the industry-standard, first-order metrics). You don't have to agree with them, but if you're going to dismiss them, then you need to propose something else or it's impossible to engage with what amounts to a flurry of anecdotal problems. (Anecdotal doesn't mean that they're not real or important, but it does mean that there isn't a framework for discussing them).
> Its because systematically the complicated chronic care patients are seeing the doctor less and less and the network doctors have more time to spread around and set appointments in 24-48 hours (you say improved outcome, I say yes for many but also watered down care for many). I will admit, patients like seeing their doctor in 24-48 hours and like seeing them 1-2 a year instead of 4-6, its convenient and cost them less (in co-pays if nothing else), but its still watered down care, especially to the chronic care Medicare Advantage patients.
This is completely and utterly wrong. I founded a heath-tech company aimed at coordinating care for this exact space. That statement is completely off-base.
What metrics have you mentioned at all? You claim original Medicare patients can't get appointments and Advantage can, fine I'll chalk that up as a metric/outcome impacting insurance star ratings, but you ignore the fact people like advantage 8 out of 10 because they get drug coverage, that is not unrelated. Tell you what take away Part D drug coverage from 8 of 10 Advantage plans do you think the patients will still be happy with Advantage over Original Medicare (see my links below before you answer that the links below belie your statments appoint access/appointments between Advantage and Original)?
Moreover, Advanatage and Original Medicare patients report similar experience in getting primary care appointments, and in fact Original Medicare out does Advantage in getting Specialty appointments (only by 2% but still) [1] and the chart [2].
You completely ignored the metrics about I mention about: [1] 30 to 90 Rx transfers; or [2] Rx transfer to generics (including Statin which for Medicare Advantage Diabetes patients which is clinically proven fatal in a few cases out of every million).
[1] http://kff.org/medicare/issue-brief/medicare-patients-access...
[2] http://kaiserfamilyfoundation.files.wordpress.com/2013/12/85...
>This is completely and utterly wrong.
Please show me the data supporting any notion that on average Medicare Advantage patients have larger doctor networks than Original.
You were the one who brought up costs and patient outcomes:
> get in the middle and increase costs while reducing patient outcomes.
So I responded to that claim by talking about Medicare Advantage (Part C), at which point you bring up Part D, confusing it for Part C:
> Patients like Medicare Part D because millions of patients couldn't afford their drugs and now they can, not because of insurance companies or the market is privatized.
After I explain that, no, I'm talking about Part C (which provides Part A/B benefits) as opposed to Part D, and that the advantages to Part C are lower wait times and higher-quality doctors, which both lead to better outcomes, you go back and say that outcomes (which you initially talked about) aren't necessarily good, illustrated with an anecode:
> Outcomes is a buzz word... Just one example where a quality metric has both positive and negative patient effects simultaneously...
but don't actually propose any alternative metric to measure instead. I asked you to do that, and you demur, talking about costs but again dismissing outcomes, along with some other factual inaccuracies about Medicare
> Every single Advantage patient is enrolled in "oringinal medicare" parts A and B... additional benefits and cost savings by law.... but I'll be damned if I call that a "good outcome".
I correct those factual inaccuracies, and then you bring up insurance networks (which are related, but not the same as quality of care), and also go back to talking about wait times. You also say that this is "watered-down care", but don't actually define what that means (the only thing that's clear is that you don't mean "medical outcomes"):
> Define it however you want, it leads to watered down care.... you say improved outcome, I say yes for many but also watered down care for many
I say that no, your statement about wait times is wrong, and remind you that you still haven't defined the metrics that you're actually using to measure quality or effectiveness of medical outcomes. You respond by complaining that I haven't addressed your example of a bad metric:
> You completely ignored the metrics about I mention about: [1] 30 to 90 Rx transfers; or [2] Rx transfer to generics (including Statin which for Medicare Advantage Diabetes patients which is clinically proven fatal in a few cases out of every million).
...except that I'm actually willing to engage your point that some metrics are flawed - my whole question for you is what you're using to define medical quality if you're not using the industry-standard measures?
And to top it all off, you respond to my comment about wait times by saying:
> Please show me the data supporting any notion that on average Medicare Advantage patients have larger doctor networks than Original.
Except that I never said anything about larger doctor networks. Nor, for that matter, did you! I was responding to your claim about wait times, which is not the same thing as the size of the network.
I don't mind correcting misunderstandings about the fundamental structure of Medicare, because I understand that it's rather esoteric and most people here don't have any experience with it. But doing that while also trying to chase your goalposts in circles is immensely frustrating, and I don't have the time for that. Sorry.
>So I responded to that claim by talking about Medicare Advantage (Part C), at which point you bring up Part D, confusing it for Part C:
You used Advantage and I did respond using Part D, but its not for any misunderstanding. Literally there is no Part D without Advantage/Part C, and Part D is included in 82% of all Advantage/Part C Plans. Moreover, the rule is that Advantage Plans include Part D, it is the exception for Advantage to not have Part D. The truth is this point doesn't even matter, It just keeps getting in the way of proper discourse, it makes me believe you are minimizing the importance of drug coverage in Advantage Plans and it makes you think I don't understand the structure of Medicare.
>And to top it all off, you respond to my comment about wait times by saying:
I also responded to your comment about wait times with CMS patient data that shows Advantage/Original patients are equally satisfied for primary care wait times and Original are more satisfied with specialty wait times.
Its clear you know a good deal about Medicare, but I question your intimate knowledge of how the following and is gamed in the interest of claiming better medical/patient outcomes: Star Ratings, Quality Measures, MACRA, MTM, Managed Care, ACO, CPT codes, etc...
>my whole question for you is what you're using to define medical quality if you're not using the industry-standard measures?
I think that is a very fair question, because I didn't expressly state a new or better set of measures/metrics/outcomes, mostly because I don't believe in a one size fits all solution to care, it must be individualized (i.e. its not always an improved outcome to switch a Chronic Care Advantage patient to a Statin; or even though 90 day Rx may improve medication adherence of patients on average it also shows patients show up to the doctor less so in the case of Chronic Care patients the 90 day Rx should be a quality measure/improved outcome). However, in a one size fits all approach I would say it is a bad patient outcome when Insurers shrink their networks, patients lose their doctor(s), and patients are funneled to Insurance owned practices (I think you issue is that those measures/outcomes are unrelated to "quality of care" as you put it, but neither are many of the current measures most of which are based on costs or medication adherence, though I would argue the quality of care has gone down when a patient loses their doctor of years).
I like a nice website as much as anybody. I think YC has done real well with their websites. If they wanna move fast and break things, I'm gonna wish them godspeed. I still think they're crazy, but that's the point, right?
Of course, you can say "who cares if Medicare drives prices too low, the drug companies will just have to deal with it." But in the long term, that's bad for the customer. All around the country you can see regulated rates that are too low and drive out investment. A great example is water utilities. Almost everywhere, water rates are far lower than they should be, and as a result water infrastructure is crumbling, customers are drinking water through lead pipes that haven't been replaced in a century, etc.
This is literally our system:
When you're healthy, you get for-profit health care through your job. If you become infirm and cannot work, usually through age, but for whatever reason, you get expensive health care through the state after you have bankrupted yourself.
The entire premise of health insurance is having healthy people pay for the sick people to spread out the risk. But our system is "private insurance takes all the profits and the government takes all the costs".
And people wonder why things aren't working out.
It's too simplistic to blame this on government regulation. The rest of the world also regulates utilities, and far from all of it has the crumbling water infrastructure problem.
I'm not blaming the fact that government regulates utilities. I'm pointing out that using government regulation to simply drive prices lower is bad in the long term. Government regulation can work when prices are set at levels that balance investor incentives and consumer welfare. Doing that is really hard.
When the U.K. privatized British Telecom, it created a regulated monopoly (now BT Openreach) that owned the wires into peoples' houses. They spent a lot of time and intellectual energy into determining how to set BT Openreach's rates. As a result, that monopoly is more profitable than say AT&T (even including AT&T's lucrative wireless division). Unsurprisingly, BT Openreach has aggressively built out FTTN in the U.K. whereas U.S. telephone providers have been trying to limit investment in their networks.
It would mean that the US uses its leverage to push drug prices down to marginal costs, which would almost be the last domino in payers willing to pay for something like the value of new drugs. But drug development doesn't make sense if you can only charge marginal costs.
The downsides of such a policy are going to be felt long-term; nothing is as simple as "we pay less and they get less".
It also means that a large number of people could actually afford medication, doctors, etc. I have friends who can't afford going to the doctor, can't afford medication, so go without. Their quality of life would greatly improve by them being able to get into the system.
I was only trying to establish that it's not a matter of "here's a single, obviously bad policy that can be clipped out and which only has downsides for greedy capitalists".
Viagra was originally developed as a medication for cardiovascular disorders and hypertension, which are major problems in both the "third world" and in developed nations. It was only later on that they discovered its use for erectile dysfunction.
As for marketing Viagra - why is that a bad thing? Given that they've already done the bulk of the R&D for it, making money off the blockbuster drugs is exactly how pharmaceutical companies can afford to pour research into drugs that are a lot less likely to succeed, or which target poorer populations.
Or, if you don't want to look at Pfizer, look at Gilead. While it's easy to criticize them for charging so much money for Sovaldi (or charging so much for Tenofovir a decade ago) charging the patients who can afford it for the early years is exactly how they recover their costs and justify things like clinical trials for PrEP (which, it's easy to forget today, were a massive risk at the time), or direct market subsidizes of PrEP for people who can't afford it otherwise. I wouldn't be surprised if they did something similar for Sovaldi in the next decade as well.
I don't think anyone would dispute that that's a major way that research is currently funded, but it's fundamentally stupid. You've got a bunch of free riders, and it obscures where and why costs are actually incurred.
Allow negotiation, and then figure out clear, rational funding mechanisms.
It's exactly how normal (non-monopsony) markets work in every context, including markets for intellectual works/IP.
Note: in this context, "negotiating" means "turning the national market into a monopsony". It's generally recognized as not-a-pure-good-thing when e.g. Walmart comes close to doing that and forces sellers to nearly take a loss in return for access to Walmart's market.
(And before anyone makes the obvious point, yes, I know "health care ain't a can of beans etc etc etc". But with respect to the dangers of monopsonies, it's close enough.)
On the flip side, Medicare sets reimbursement rates for services essentially by fiat[0], which can be below the marginal costs of providing service. Most providers cannot legally refuse to treat Medicare patients, so they are forced to accept the rates that Medicare sets (they have no ability to properly negotiate). Medicaid is a whole different system, but in this aspect, it also works the same way.
This turns into a system in which privately insured patients subsidize Medicare patients through their premiums[1] (separately from their tax money, which also goes towards Medicare)[2]. Medicare has no incentive to change this, because it allows them to increase their (effective) operating budget without requiring Congressional approval.
The reason Medicare drug price negotiation was blocked is that people (both pharmaceutical companies and policymakers) were afraid that it would turn out just like Medicare's "negotiated" rates for inpatient and outpatient services.
[0] And private insurers are legally prohibited from reimbursing less than Medicare does
[1] And uninsured patients receive the same (inflated) bills that private insurers receive. (Whether or not they actually pay their bills is a separate matter).
[2] If you've ever wondered why the sticker prices for inpatient services seem so high, this is the underlying reason. Privately insured patients and uninsured patients aren't just paying for their own care (and for the care of others in the same risk pool). They also have to cover the amount of money that providers lose on Medicare and Medicaid patients.
Yes, private insurers don't pay entirely what they're billed. Though they still pay significantly more than Medicare pays. The negotiated agreements between private insurers and hospitals are almost always pegged at multiples of Medicare (e.g. "200% or 350% of Medicare rates for $X service").
My understanding is that doctors can choose not to take Medicare patients. Do you have a link or something that explains this?
Sort of. For example, most emergency rooms in which physicians have admitting privileges to an associated hospital are required to take Medicare[0]. And those emergency rooms are prohibited from refusing patients based on insurance status. So right off the bat, that's an enormous source of patients who could be publicly insured (Medicare/Medicaid) or uninsured, and they have no legal way to refuse them. (Once a patient is in the ER, if they need to be admitted, you can't (legally!) refuse to admit them based on their insurance status).
I'm kind of oversimplifying, because there are a lot of tricks that hospitals try to use to stop the bleeding - for example, Bellevue is a public hospital, and it operates an emergency room, but its private counterpart that is literally across the street does not. NYU can do some (perfectly legal) maneuvering to keep most of the patient population of Langone limited to privately-insured patients. As a result, Langone has undeniably better[1] care, despite having access to the same set of medical staff[2] and being associated with the same medical college.
It's true that private practices can refuse Medicare for outpatient services easily. And incidentally, many do. There's a reason that, except in "critical access" areas[3], most of the top physicians who operate purely private practices don't accept Medicare. However, private practices are a dying breed, so that's a moot point in 2017.
[0] Conversely, free-standing emergency rooms are prohibited from accepting Medicare. A rather cynical view of this would be that Medicare does not want to encourage free-standing emergency rooms, because it's much more difficult to use private emergency care to subsidize Medicare care than it is to use private inpatient care to subsidize Medicare care (the orders of magnitude in costs are vastly different).
[1] More expensive, but vastly better
[2] Well, sort of. Staff isn't shared between the hospitals day-to-day (a nurse at Langone will typically only work at Langone unless he or she also has a job at Bellevue), but the allocation draws from the same pool a priori.
[3] Rural hospitals that Medicare pays handsomely, because otherwise those regions would have no medical access at all.
It probably is; it's quite common for fair numbers of hospital staff (e.g., OR staff that are needed only for certain types of procedures), AFAIK, to be provided by third-party contractors that provide service to multiple hospitals in the same area, and the same staff may work at different hospitals on different days based on need.
Sort of, yes - in NYC, nurses are almost all members of 1199SEIU, for example, and the shift-work nature of nursing makes it easy for them to be employed simultaneously by multiple hospitals. Though my point is that this is usually handled on an individual level (by the nurses who choose where to work), rather than the hospitals themselves directly coordinating staff schedules in tandem.
One reason for the inflated chargemaster prices (e.g. $100 for a tylenol) is that payers (Medicare is a big one) simply negotiate by saying "I'll pay you 50% of your chargemaster". Then when the hospital updates their chargemaster, they tack on another 20% and the payer comes back and says "I'll pay you 25% of your chargemaster".
It's a vicious cycle where the chargemaster prices have no bearing on reality.
An insurer last month for a relative's pediatrics practice announced that they were having difficulties with their accounting system and so they would only be making a half payment on their outstanding AR (and naturally, they announced this problem right before the payment was due to be sent). My relative's practice has no practical recourse other than to wait for the full payment to be sent. This is not an uncommon occurrence. My relative's practice is regrettably not able to use the same argument for their bills that are due.
It costs my relative money to administer vaccines in their peds practice, i.e., most insurances pay less than what it costs to purchase and give the vaccine. My relative continues to offer many vaccines at a loss because they believe vaccines are one of medicine's greatest gifts and because they have good success in persuading unsure parents to vaccinate their children. From a pure numbers perspective, it is a mistake.
Insurance companies not paying physicians on time as agreed drives up costs. Insurance (Medicaid included) not paying what it actually costs for a procedure drives up costs. Insurance companies arguing against the best course of treatment for a patient, requiring additional staff to be hired in order to deal with the pushback, drives up costs.
Maybe we need to drop kiosks into pharmacies that can read biometric markers, get doctor approval, and deliver vaccines.
The vaccine itself. Medicare and Medicaid are notorious for this, as they have no mandate to cover marginal costs of supplies (and they have the ability to force providers to accept less than that).
So, depending on the practice, those providers could very well be losing money on every Medicare patient they treat before they even have a chance to think about paying for their office space, paying their staff, etc.
It's a really frustrating thing, as a physician you want to treat everyone, but accepting Medicare and Medicaid can really hurt the operation of your business.
Doctors take home a lot less than people think.
The "salary" numbers you usually see cited aren't comparable to salaries in fields like software engineering, because doctors still have to cover their own business costs (the big one is malpractice insurance, but other expenses like CME, etc. are all on their own dime). And these are almost invariably not tax-deductible, because AMT doesn't allow for deductions for business expenses.
In any case, physicians' earnings account for only about 10% of total medical spending in the country. In other words, even if every doctor decided to work for free and pay for all their business expenses out of their savings... we'd still be spending 90% of what we currently are.
Anybody thinking software is going to solve that is way in a bubble.
http://healthaffairs.org/blog/2016/09/19/the-politics-of-med...