I found physician Marc Siegel’s New York Times op-ed sufficiently thought-provoking that before completing it I immediately headed over to the Agency for Healthcare Research and Quality of the Department of Health and Human Service’s report on health care spending. Here’s the summary of its findings. The big health care spenders are more likely to be white, old, prosperous, female, and, unsurprisingly, sicker than the general population.
If an insurance plan premiums must be proportional to risk for the plan to remain viable. What we implement as a matter of policy, whether you’re talking about Medicare or the health insurances exchanges of the still-breathing Affordable Care Act, is not insurance. Basically, we’re subsidizing the health care of old white women at the expense of poor black men.
I don’t believe the real big spenders in our system are women like Dr. Siegel’s 60 year old patient who comes in for a checkup every couple of weeks because she’s worried that her seasonal allergies are pneumonia. I think they’re more likely to be Medicare beneficiaries who are desperately trying to preserve their lives but the point remains.
Here’s another fact, unmentioned in the op-ed: co-pays constitute a much higher proportion of health care spending in other OECD countries. You can find the statistic in an article I cited last week if you’re interested in tracking it down.
Our system will remain fundamentally unjust—not to mention horribly expensive and just plain bad policy—unless we take a number of steps:
- Create a single health care system rather than four or ten as we have now.
- Abandon the insurance metaphor in characterizing how we pay for health care.
- Patients pay for more of their own care.
- Subsidies are based more on need than political clout.
- We maintain a commitment to controlling the costs of health care.
We will also need to end the agonistic appeals to emotion and put on our green eyeshades. I am not hopeful. The Republicans’ plan is no more a step in the right direction than the ACA was.
Here are some observations about cost containment.
The government could and should to strictly limit the time a drug maker has a monopoly on a drug. Its a scandal that Humira’s main patent has expired yet AbbVie has used the legal system and secondary patents to delay any biosimilar’s to come on the market. In fact AbbVie’s plan is to use patents to keep a monopoly until 2022.
My proposal is that the longest any drug maker can keep a monopoly is 15 years after drug approval — after that point, the law would abrogate the right to sue for patent infringement. It would probably save a few billion dollars on any drug, but as we discussed, a few billion here, a few billion there, and it adds up.
The second one is that parts of health care industry are a national market, while other parts are not. For example, drugs are a national market, i.e. they can be produced anywhere and easily transported to where a consumer needs it. A GP services are not, i.e. patients very rarely travel 200+ miles to see a doctor. I think the parts that are national market can benefit in having close federal regulation to get economies of scale. The parts that do not have a national market, probably are getting dis-economies of scale from having federal regulation.
I think the necessary reform is to change the patent duration to base it on earnings rather than on time. The U. S. Constitution just says that a patent should be for a limited term monopoly rather than a fixed period monopoly. Our present patents illustrate our corrupt legal and political systems.
Another reality that the Free-Marketers need to acknowledge is that if states control the products sold, you cannot sell comparable goods. California has specific requirements for gas that is sold in California, and it costs more to produce. If California is allowed to place specific requirements for health insurance, “selling across state lines” becomes nonsensical.
This is not very difficult. If using wheat grown on your own land impacts interstate commerce (Wickard v. Filburn), I think that national companies selling health insurance might be included, also.