Tag: Comparative

Will America Keep “Bending the Productivity Curve”?

Most international comparisons conclude that America’s health care sector under-performs those of other advanced nations.  Aside from other serious flaws, those studies typically ignore each nation’s contribution to medical innovation – the discovery of new knowledge and practices that improve health in all nations. Today, the Cato Institute releases a new study – the most comprehensive study of its kind – that helps fill that void.

In “Bending the Productivity Curve: Why America Leads the World in Medical Innovation,” economist Glen Whitman and physician Raymond Raad conclude that the United States far and away outperforms other nations on medical innovation, but that the legislation moving through Congress threatens America’s ability to innovate.  From the executive summary:

To date…none of the most influential international comparisons have examined the contributions of various countries to the many advances that have improved the productivity of medicine over time…

In three of the four general categories of innovation examined in this paper — basic science, diagnostics, and therapeutics — the United States has contributed more than any other country…In the last category, business models, we lack the data to say whether the United States has been more or less innovative than other nations; innovation in this area appears weak across nations.

In general, Americans tend to receive more new treatments and pay more for them — a fact that is usually regarded as a fault of the American system. That interpretation, if not entirely wrong, is at least incomplete. Rapid adoption and extensive use of new treatments and technologies create an incentive to develop those techniques in the first place. When the United States subsidizes medical innovation, the whole world benefits. That is a virtue of the American system that is not reflected in comparative life expectancy and mortality statistics.

Policymakers should consider the impact of reform proposals on innovation. For example, proposals that increase spending on diagnostics and therapeutics could encourage such innovation. Expanding price controls, government health care programs, and health insurance regulation, on the other hand, could hinder America’s ability to innovate.

Raad will discuss the study this Friday at noon at a policy forum at the Cato Institute.

The Health Care Battle Begins

Sen. Edward Kennedy (D-Mass.) has begun circulating drafts of his proposed health care reform legislation. Initial reports, including an op-ed in the Boston Globe by Kennedy himself, suggest that the bill will contain every one of the bad ideas that I outlined in my recent Policy Analysis on what to expect from Obamacare.

Among other things, the Kennedy bill will call for:

  • An employer mandate;
  • An individual mandate;
  • A so-called “Public Option,” a Medicare-like plan that will compete with private insurance;
  • The use of comparative-effectiveness/cost-effectiveness research to restrain costs;
  • Subsidies for families earning as much as 500% of the poverty level ($110,250 for a family of four).
  • Insurance regulation, including guaranteed issue and community rating. (He would also establish a Massachusetts-style Connector); and
  • Government-directed health IT.

There’s no indication yet of how much the plan would cost or how Sen. Kennedy plans to pay for it.

The bill will be formally presented to Senator Kennedy’s Committee on Health, Education, Labor & Pensions (HELP) sometime next week. Hearings could be held around June 10, and committee “mark up” could begin on June 17.

Senate Finance Committee chairman Max Baucus (D-Mont.) is expected to introduce his health care bill shortly before the Finance committee begins its scheduled mark up on June 10.

Meanwhile President Obama’s campaign apparatus is planning rallies and demonstrations around the country to build support for health care reform.

The battle over the future of health care in this country has begun.

Cohn vs. AFP

The New Republic’s Jonathan Cohn accuses Americans for Prosperity (AFP) of “lies” for running an ad that claims “Washington wants to bring Canadian-style healthcare to the U.S.”

AFP’s ad is more defensible than Cohn’s criticisms of it.

Cohn elides the question of whether Shana Holmes (the woman featured in the ad) was almost killed by Canada’s Medicare system.  For a supporter of single-payer like Cohn, that is tantamount to admitting that, yeah, socialized medicine sometimes kills people.

Cohn argues that the ad is unfair because Canada has many advantages over the U.S. health care sector.  That may be true, but the ad doesn’t appear to defend American health care.  It merely says, “government should never come in between your family and your doctor” and “Don’t give up your rights.”  That’s not pro-American health care or anti-reform.  It’s just anti- the type of reform that Cohn wants.  And it points to one area where our semi-socialized U.S. health care sector appears to be superior to Canada’s: quicker access to intensive treatments.  Sometimes, that saves lives.  In fact, AFP could go farther and say that the United States has another edge over Canada, in that we develop nearly all of the best new medical technologies.  In fact, our medical technologies save Canadian lives, but Canada’s health care system (and its supporters) steal the credit.

Yet “the real lie,” Cohn claims, is that the ad suggests that “Washington” wants to impose a Canadian-style system on the United States.  Cohn calls that claim “demonstrably false.” But consider:

  • President Obama has said he would prefer single-payer and has hinted that he would like to make incremental changes in that direction.
  • Many people who support a new public plan (e.g., Paul Krugman) do so because they believe it will lead to single-payer.
  • Massachusetts, which has already implemented most of the reforms that Obama and congressional Democrats are considering, is now contemplating a large leap toward Canadian-style health care by imposing capitation on its entire health care sector.
  • Government rationing becomes increasingly likely as government revenues fail to keep pace with the cost of government’s health care promises.  (See again, Massachusetts.)
  • The Left wants government to ration care.  That’s the point of the comparative-effectiveness research funding.  That draft House Appropriations Committee report committed a classic Washington gaffe when it said that certain treatments “would no longer be prescribed,” because it was admitting the truth.

Cohn is correct that no politician of influence is saying she wants to impose a Canadian-style system on the United States.  But I prefer to pay attention to what they’re doing.

AFP: 1.  Cohn: 0.

Democrats Agree on Health Plan Outline: Be Afraid, Be Very Afraid

The New York Times reports that key congressional Democrats have agreed on the basic provisions for a health care reform bill.  And while many details remain to be negotiated, the broad outline provides a dog’s breakfast of bad ideas that will lead to higher taxes, fewer choices, and poorer quality care.

Among the items that are expected to be included in the final bill:

  • An Individual Mandate. Every American will be required to buy an insurance policy that meets certain government requirements.  Even individuals who are currently insured – and happy with their insurance – will have to switch to insurance that meets the government’s definition of acceptable insurance, even if that insurance is more expensive or contains benefits that they do not want or need.  Get ready for the lobbying frenzy as every special interest group in Washington, both providers and disease constituencies, demand to be included.
  • An Employer Mandate. At a time of rising unemployment, the government will raise the cost of hiring workers by requiring all employers to provide health insurance to their workers or pay a fee (tax) to subsidize government coverage.
  • A Government-Run Plan, competing with private insurance.  Because such a plan is subsidized by taxpayers, it will have an unfair advantage, allowing it to squeeze out private insurance.  In addition, because government insurance plans traditionally under-reimburse providers, such costs are shifted to private insurance plans, driving up their premiums and making them even less competitive. The actuarial firm Lewin Associates estimates that, depending on how premiums, benefits, reimbursement rates, and subsidies were structured, as many as 118.5 million would shift from private to public coverage.   That would mean a nearly 60 percent reduction in the number of Americans with private insurance.  It is unlikely that any significant private insurance market could continue to exist under such circumstances, putting us on the road to a single-payer system.
  • Massive New Subsidies. This includes not just subsidies to help low-income people buy insurance, but expansions of government programs such as Medicaid and Medicare.
  • Government Playing Doctor.   Democrats agree that one goal of their reform plan is to push for “less use of aggressive treatments that raise costs but do not result in better outcomes.”  While no mechanism has yet been spelled out, it seems likely that the plan will use government-sponsored comparative effectiveness research to impose cost-effectiveness guidelines on medical care, initially in government programs, but eventually extending such restrictions to private insurance.

Given the problems facing our health care system-high costs, uneven quality, millions of Americans without health insurance–it seems that things couldn’t get any worse.   But a bill based on these ideas, will almost certainly make things much, much worse.

Or maybe it’s all just a massive April Fool’s joke.