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Health Care Reform: More Than The Money

Much of the debate this week over health care reform centers on the money: Will reform place undue burden on some silos of the health care sector? Will we need new taxes on the middle class to fund this thing? Will providers choose to pass on added costs (to consumers and others) rather than change habits to become more efficient?

Fair questions, all. This is America and money is king. But far more important right now is enacting measures that require wholesale changes in health care training, delivery, tracking and accountability.

A Bipartisan Model

At a press conference in Washington, D.C., a bipartisan triad of former Senate majority leaders yesterday unveiled a model of what those changes could look like. Former Sens. Howard Baker, Tom Daschle and Bob Dole, all of whom are among the founders of a think tank called the Bipartisan Policy Center, released a broad spectrum of policy suggestions that includes mandatory health insurance for all Americans, zero premiums for people in poverty and a revised payment system that rewards providers who heal the sick and prevent illness in the well.

Baker, Daschle and Dole insist their plan is “budget neutral” – i.e. will break even over 10 years. And, like seasoned parents trying to teach their kids to play nice, they highlighted compromises made in drafting the plan.

Daschle, for example, wanted a public plan (government-run health care) but said he “compromised significantly” on that issue (the proposal as released includes a moderate public plan run by states with federal seed money). Dole opposed mandatory health insurance for every American but he backed away from that.

As Dole said at the briefing, “If we can’t compromise…how can we expect to get a bill passed?”

Nice gestures and sound bites but, as Baker, Daschle and Dole readily acknowledge, they have no legislative power – or riled up constituents lighting up their phones – so it remains to be seen if their goodwill will inspire similar flexibility in current members of congress.

The fairly detailed plan consists of four pillars.

1. Promote high-quality, high-value care by:

  • Investing in information technology that will greatly raise efficiency in the system – and reduce medication and hospital errors;
  • Developing reliable measurements on how to define “quality care” and how to ensure patients are receiving it;
  • Reforming provider payments in Federal programs to reward high-value care;
  • Focusing on prevention of chronic diseases – like diabetes and heart disease – by rewarding providers for early recognition of risk factors and effective intervention.
  • Investing in the healthcare workforce (for example, through enhanced training and continuing education).

2. Make health insurance available, meaningful and affordable by:

  • Guaranteeing coverage, even to the very poor – for example, no premiums for those at or below the poverty line and tax credits for those living at up to 400 percent of the poverty line.
  • Guaranteeing access regardless of health status – i.e., no more denial of coverage for pre-existing conditions!
  • Creating state or regional insurance exchanges so consumers and businesses could easily comparison shop for plans.

3. Emphasize and support personal responsibility and healthy choices by:

  • Mandating purchase of insurance.
  • Offering premium reductions for healthy behaviors.
  • Creating a public health and wellness fund – $50 billion over 10 years – to invest in evidence-based prevention and wellness programs (through schools, community organizations, state agencies and even employers).

4. Develop a workable and sustainable approach to health care (this is the money part) by:

  • Charging companies – 1 to 3 percent of payroll – that do not offer insurance to employees.
  • Modernizing delivery and payment systems.
  • Reducing payments to home health and skilled nursing facilities “to address overpayment and inappropriate utilization concerns.” This is in line with recommendations from Med PAC.
  • Creating an approval pathway for generic versions of biologics.

Looking Beyond the Money

The total plan would cost $1.2 trillion over 10 years. Again, the former senators insist that their plan would pay for itself, through savings from increased efficiencies and fees for certain players.

I will not delve into the money debate because, honestly, it is over my head and best left to experts. But I do know human behavior, and I know that good habits are very hard to establish and bad ones even tougher to break.

And, to me, that means that whatever legislation emerges from congress better include strict and crystal clear requirements to prod insurance companies, hospitals, doctors, nurses et al to act in the best interest of patients, at all times and without loopholes to do otherwise.

Sharing the stage yesterday with the former senators was Mark McClellan, director of Engelberg Center for Health Care Reform and Leonard D. Schaeffer Chair in Health Policy Studies at the Brookings Institution.

McClellan, who has a deep health policy resume, including a stint as Food and Drug Administration commissioner and administrator of the Centers for Medicare & Medicaid Services, said this about Medicare: “We don’t get there by cutting provider payment rates and assuming they can do the rest. Payments are tied to measureable improvements in value [and] in care.” If your patients get better results and you slow down costs, he added, you get paid more. “Not the opposite like we have today.”

New Standards for Hospitals?

This is soothing to hear, and I’d like to add one brief rant on a related topic: Health care reform legislation must include strong mandates for reforming how we run our hospitals.

In 2008 two patients – one in Brooklyn, N.Y., and another in Goldsboro, N.C. – died in waiting rooms after being neglected for hours by hospital staff. In the Goldsboro case, a security camera records workers sitting in the waiting room playing cards while the patient, who had not been fed or attended to in 22 hours in the hospital, slumps in a nearby chair. In the Brooklyn case, a camera captures a woman collapsing and convulsing on the floor – after 24 hours in the waiting room; two guards and a member of the hospitals medical staff stop to observe her briefly before walking away.

While those tragic cases may be extreme, tales abound nationwide of substandard hospital operations – including medication and procedural errors, physical and sexual abuse of patients, rodent and roach infestation and general filth. Some hospitals in this country have infection rates that top 20 percent, meaning more than one-in-five patients leave the hospital with an infection they acquired during their stay.

Yes, this is only one part of the big picture, and yes, many other silos of the health care system are equally ripe for attention. But I would hope that whatever legislation emerges from congress includes elevated standards for training all hospital staff, not just doctors and nurses, along with strict accountability measures and some way of penalizing hospitals that are not clean, orderly and welcoming to patients.

I caught Sen. Daschle after the briefing and asked him about this issue. He repeated much of what had been said on improving health care in general – tying payment to value, ensuring transparency, and relying on evidenced-based research to set policy – but he also told me this: “We need to encourage hospitals and doctors to use a more episodic [approach] to health care rather than a procedural [approach]. That will help.”

Translation: The system must reward providers who treat the whole patient and improve overall health/outcomes over time. Doctors should be paid to keep people well, not to keep people sick and in treatment, as is often the case under the current system.

A Brilliant Plan For Preserving Pharmaceutical Progress

Almost a decade ago, during the antediluvian period of the internet, on a now-defunct and little-read precursor to this blog (before actual “blogs” were even invented), DrRich wrote a piece entitled, “Phillip Morrissing The Drug Companies.”  In that piece he predicted that, since the American media and the American legal profession had just finished savaging the tobacco companies, they would turn their great engine of destruction (highly-tuned engines of destruction being a terrible thing to waste) on a new target, one that some might consider less worthy of destruction than the evil tobacco companies but a ripe target nonetheless, namely, the pharmaceutical industry.

Many of DrRich’s readers laughed at him, but a few wisely sold all their drug stocks. (These latter would be very happy campers today had they not re-invested their profits first in, then in REITs. If one is going to follow DrRich’s investment advice, one ought not jump too far ahead.)

Today the editors of the Wall Street Journal, for all practical purposes, have placed the official seal of validation on DrRich’s long-ago prediction (though, unaccountably, they fail to mention DrRich by name).   The WSJ notes that the big drug companies, in the few weeks since the Obama budget was sent up, have engaged in an incredible acceleration of mergers – though not in the manner of “creative destruction” that usually typifies such deals, but rather, in the manner of trying to construct a hardened shelter in which to survive the coming nuclear winter. The government price controls and the rationing of drugs which the drug company executives seem to have found in that proposed budget (apparently lobbyists take their jobs seriously enough to actually read legislation before it is voted upon, even if our congresspersons do not) appear to have convinced said executives that the game is about up.

Now, nobody needs to remind DrRich that drug companies are evil. DrRich has watched along with all his readers as the drug companies have fired off a never-ending parade of “me too” drugs mainly aimed at keeping the joints, bowels, bladders and genitalia of aging baby boomers nicely lubed up, then running a steady stream (so to speak) of television commercials regarding same, that render it far too embarrassing to watch prime time television any more with preadolescents. DrRich has watched the drug companies systematically fail to publish research that makes their products look less than spectacular; routinely over-hype research that suggests a modicum of effectiveness; callously corrupt doctors with plastic, logo’d ink pens, and legislators with huge campaign contributions and rides on private jets equipped with plenty of booze and bimbos (causing the indignant legislators to propose rules against logo’d ink pens); and most annoying of all, gouge American citizens with astronomical prices for their new drugs while selling those same drugs to Canadians and other undeserving foreigners at greatly discounted prices.

Still, most objective observers will reluctantly admit that, unlike the tobacco companies, every now and then a drug company will do some good. Here and there they manage to come up with a real breakthrough product that cures a disease, prolongs survival, restores functionality, or relieves suffering. That is, the pharmaceutical industry (in spite of all their evil behavior, which DrRich hastens to remind his readers he has formally acknowledged, as recently as in the prior paragraph) has done a lot of good over the years. Ask a parent whose child has survived acute leukemia, or the person who has survived a life-threatening infection, or the woman whose heart attack or stroke was aborted with clot-busting drugs, or – yes, this too -  the aging Lothario who once again can enjoy fine and durable erections upon demand. For such individuals, even if today they would join us in cheering on the demise of the pharmaceutical industry, recent advances in drug treatment have undeniably improved their lives.

But the real question we must address before allowing the pharmaceutical industry to roll itself into a ball and hide in the shadows for the duration, is not, “What have you done for me lately?” (since their inventions will live on even if they do not), but rather, “What can you do for me tomorrow?”  Some of us in the boomer class, for instance, would like to think that current research in the areas of Alzheimer’s, Parkinson disease, kidney disease, heart attack, stroke, arthritis, osteoporosis and cancer will allow us to remain healthy and functional for a few extra years. And judging from the massive amounts of money American citizens of all ages donate to medical research of all types, it is apparently not held among the whole of the populace that medical progress has already gone far enough. Many of us would not be entirely pleased to stand pat right here. Many of us would like to see more improvements.

And here is where we run into a dilemma.

Everyone agrees that the cost of new prescription drugs has been kept obscenely high in the name of maximizing profits, and that the rising cost of drugs has been one of the prime drivers of healthcare inflation. Accordingly the plans that apparently have been included in the Obama budget proposal to check those prices – techniques such as federal price controls, drug re-importation and the like,  (but again, who’s actually read the thing?) – will greatly restrict if not eliminate the huge profits made by the evil men (and, one must say it, women) who run these drug companies.

The problem, of course, is that if the potential for reaping large (obscene, if you insist) profits from new drugs is significantly curtailed, the hugely expensive process necessary for drug companies to bring new drugs to market will be proportionally curtailed. So if we place price controls on drugs, then we’d better be happy with the drugs we have today, because those are likely the only drugs we’ll have tomorrow.

There are some who would be quite satisfied with this outcome, and who would readily sacrifice pharmaceutical progress to keep prices low. And judging from the recent election results, these may even constitute a majority of Americans. Still, others of us appreciate the fact that every few years some truly earth-shattering drug will hit the market, and would think it a shame if progress on such drugs – even if they are but a few scattered islands in a sea of boutique pharmaceuticals – were to come to a halt, and even if for a good reason.

So here’s the question: Can we have our cake and eat it too? Can we bring down the price of the drugs we buy, while at the same time allowing at least some pharmaceutical advances to continue?

DrRich is delighted to reply, “Yes, we can!”

And he hereby humbly offers a plan to achieve this very end. It is a system of voluntary price controls. Of course, DrRich is talking here about us doing the volunteering – we the consumers – and not the drug companies.

DrRich’s Voluntary Price Control System works like this:

1) Each American will make a formal declaration of whether or not he/she wants to participate in a system of voluntary price controls on drugs.

2) Those who opt to participate will receive immediate, substantial discount pricing on all available prescription drugs, such pricing to be fixed by a sympathetic government agency whose makeup includes a wide diversity of representation, except, of course, that drug company representatives and their physician shills will be specifically excluded.

3) “Available prescription drugs” under this price control system will be any drug whatsoever appearing in the U. S. Pharmacopoeia – that is, any legal prescription drug – as long as that drug has been on the market for at least five years.

4) Individuals who choose not to participate in the price control system will pay whatever price the drug companies feel like charging them for all their prescription drugs, but they will be allowed to receive any drug, as soon as it is approved for marketing, with no five-year waiting period for new drugs.

5) Individuals may switch their status (between participant and non-participant) only during one 30-day window every 2 years, determined by their month of birth.

Why DrRich’s Voluntary Price Control System is brilliant:

For drug companies it is the prospect of making large profits from new drugs, and only that prospect, that drives drug development. So as long as we want new drugs to be invented we’ve got to allow for the profit incentive to continue, as odious as we may believe that to be. The chief advantage of DrRich’s system is that it maintains at least some of the profit motive – to whatever extent citizens opt to be non-participants in the Voluntary Price Control System.

Given the growing hue and cry for price controls on drugs, one can confidently predict that only rich people will opt for this non-participant status. Therefore, a side benefit of this plan is that the rich – those who, after all, can afford it, and who, by virtue of the very fact that they are rich, owe much to the rest of us – will fund virtually all progress in drug therapy. Again, this is a burden they ought to feel obligated to bear, being rich and therefore, well, obligated.

In contrast, under the universal, mandatory price control system of the kind that many politicians seem to favor (and which may be voted into existence in a matter of days) drugs available to our citizens would be essentially “frozen in time,” and henceforth there would be little or nothing new under the sun.

Of course, under DrRich’s Voluntary Price Control System, access to new drugs would be similarly restricted for participants. Yet this voluntary system would be far better to even those who choose to participate than would be a universal price control system – because under DrRich’s plan at least some drug progress would continue. And as new prescription drugs matured in the marketplace, and once their hidden dangers and side effects – during the 5-year “shakedown period” -  manifested themselves on the physiology of the wealthy (nya-ha-ha), these drugs would (eventually) become available even to plan participants, and at a substantial discount to boot.

The bottom line: a five-year lag in gaining access to new drugs is vastly better than never having any new drugs at all, especially when the burden of paying for all that drug development, and the risk of becoming early adopters of new, relatively unproven, relatively risky pharmaceuticals, falls entirely on the rich.

So, while at first blush you may not like DrRich’s system – it being two-tiered and all – on further objective and logical reflection DrRich is confident you will see that it is far better for everyone than the universal system of price controls which now appears imminent.

DrRich suggests you contact your legislators immediately to recommend to them this brilliant new plan, before it is too late. In making your case, you might remind your dedicated congresspersons that a robust pharmaceutical industry is inherently good for America (what with all the campaign contributions, airplane rides, booze, bimbos, etc. it provides to grease the wheels of American democracy).

**This post was originally published at Dr. Rich Fogoros’ Covert Rationing Blog**

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