Tuesday, November 2, 2010

Health Care and the Cost Curve

In a recent article in The Fiscal Times they report on ways to control health care costs, namely charging a larger co pay for procedures that some SEIU member or other type of Government employee deems inappropriate. They state:

Grabbing those numbers, White House Budget chief Peter Orszag and health care adviser Ezekiel Emanuel argued in the latest New England Journal of Medicine that “from a purely ‘green eyeshade’ viewpoint, the bill will significantly reduce costs.” Total health care spending by 2030 will be 0.5 percent percentage points of gross domestic product (GDP) below where it otherwise would have been.

As we have argued and demonstrated before, see our book on health care in the blog, the other Emanuel, Ezekiel, was the one who in effect set up the "death panel" paradigm that the Republicans made hay on. No it was not in the Bill but the good doctor wrote about denying treatment, not just coverage, to the young, old, and infirm. Again I suggest you just read his words, we covered them well over a year ago,

Now we are not against co pays and in fact we are aggressively for them, the patient should understand the costs and participate in them. There are many medications prescribed which have marginal effectiveness, and I have seen many myself, and if the patient knew of the costs, and if they shared in them, and knew of alternatives, then informed cost based decisions would be essential to cost control.

For example if you have a choice between a colonoscopy for $1400 versus occult blood tests for say $75, and you had some form of co pay then you get to participate in the decision. But what if you had a history of adenomas and two first degree relatives with colon cancer, should you pay the same as someone with no such history. The same we have argued earlier today with prostate cancer. We would argue that perhaps there should be some sliding scale. The patient should be aware and participate but the cost for the at risk patient should not become a disincentive.

The article continues:

Comparative effectiveness research that will let physicians and patients know what works best will be diffused through the medical system by an independent Patient-Centered Outcomes Research Institute. Pilot projects encouraging accountable care organizations and bundled payments will, if successful, be spread through the entire system through a new Innovation Center at the Centers for Medicare and Medicaid Services (CMS).

But most important of all, they said, the reform law creates an Independent Payment Advisory Board (IPAB) that will make annual recommendations for holding down Medicare spending any time it rises at a rate that, after 2018, is greater than general inflation plus 1 percent. Congress must either accept the recommendations whole, or vote a comparable set of savings. Otherwise, it will take 60 votes in the Senate to override the automatic reforms.

As we have demonstrated many times already, CER performed via a staff of GS 9s is really a death panel. The decision should be between the physician and the patient and the issue is to educate both. Not mandate what some GS 9 ultimately dictates. Anyone who has spent any time in DC knows what will happen. The GS 9 gets some contractor, who develops some useless but justifiable methodology to reach the answer that is sought, regardless of the facts.

The IPAB will be, as we all know from experience in DC, a political entity supported by some staff people, who will be the ultimate arbiters of what is written. I have sat on may a Government panel and it is the staff who create the document, the rules, the regulations. The panel opines and discusses, but via some political hack like process the rules are developed. DC is not a rational place, try it for a week, and you too will understand that rules from Washington are rules from Hell!