Thursday, July 28, 2011

A New Bargain for Drug Approvals - But for the Wrong Reason

The Wall Street Journal recently ran an op-ed by Professors Michelle Boldrin and S. Joshua Swamidass that proposed "A New Bargain for Drug Approvals" (July 25).  They recommended that the Food and Drug Administration allow new medicines to be used after they had been demonstrated "safe," but not necessarilly "efficacious."  I liked the article, and agree that the reform which they recommend would be very beneficial. However, I have a philosophical problem with one of their reasons.

Wednesday, July 27, 2011

Why the Utah Health Exchange is No Model for Health Reform

The Utah Health Exchange is the model some conservatives believe can be used to push back against Obamacare. Witness the Wall Street Journal (July 16) soundly rejecting regulatory guidance on what the Administration is now calling "Affordable Insurance Exchanges," but encouraging governors to get on the exchange bandwagon, in the hope they can build free-market exchanges that will blunt Obamacare's worst effects.

80% of Employers Concerned About Health Reform’s Administrative Obligations; 30% Think Exchanges Will Offer Worse Coverage

A new survey by Lockton, Inc.’s Health Reform Advisory Practice reports that 80 percent of respondents are concerned about federal health reform’s additional administrative obligations.

Read my entire article at The Apothecary.

Thursday, July 21, 2011

The U.S. Government Will Like the Express Scripts-Medco Takeover

Medco traded at a ten percent discount to the deal terms all day Thursday, reflecting skepticism that the U.S. government will let the deal happen. I don't see why. The government favors concentration in the health sector.

Read my latest column at The Apothecary.

PPACA's Raid on the Medicine Cabinet

There has been a lot of discussion of the Independent Payments Advisory Board (IPAB) lately, including pretty heated testimony at the House of Representative Energy & Commerce committee in the last few days.

IPAB is the primary vehicle whereby the Paient Protection and Affordable Care Act (PPACA) will deny new medicines to Medicare beneficaries, in a futile attempt to contain costs.
The Washington Times ran my column on IPAB.  Read the entire article here.

Wednesday, July 20, 2011

Health Benefit Exchanges: Regulations Versus Reality

Although Ohio governor John Kasich apparently deludes himself into believing that he can take federal grant money to establish a Health Benefits Exchange, but then somehow design an exchange that does not comply with Obamacare's regulations, most other governors have a more realistic perspective.

That is why the U.S. Department of Health & Human Services' recent release of 347 pages of regulatory guidance on exchanges is both exasperating and probably futile.  My analysis concludes that only about one third of Americans will be living in states that have imposed exchanges by the law's deadline.

Read the entire analysis in this month's Health Policy Prescription.

UnitedHealth Group's Earnings Call

I participated in UnitedHealth Group's earnings call today.  My conclusions:
  • Optum will continue to make well focused acquisitions;
  • UNH will continue to keep quiet about its lobbying efforts to shape the post-PPACA landscape;
  • Public budget crises will make the Medicaid managed-care business look much less attractive than it has been; and
  • UNH and (most) Wall Street analysts continue to ignore the likelihood of PPACA’s defeat, either through the Supreme Court or the election of a new president in 2012.
Read my entire column at The Apothecary.

Friday, July 15, 2011

Are U.S. Doctors Overpaid?

From Professor Christopher Conover at the American Enterprise Institute blog.

I’ve always known that doctors have a lower ROI on education than MBAs, for example, but I did not know it went all the way back to 1990, and (presumably) a good number of years before that. A related question that might be one way to address the question of the high share of health spending in GDP in the U.S. versus other countries might be to look at the cross-section of ROIs for different professions, rather than the longitudinal (time-period) ROI within the U.S.

To put it another way: The labor value of professionals is very difficult to measure. Many physician specialties (especially GPs) are limited in their ability to increase productivity. However, because the U.S. has been (until the last few years) more economically free than most other developed countries in Europe, Canada, Australia, etc., managerial professionals have been able to increase their productivity relatively faster in the U.S. than those countries.

Ergo, we may observe that the ROI gap between medicine and other professionals has increased faster in the U.S. than other countries. Nevertheless, if it is driven by productivity, professor Baumol’s insight leads us to conclude that physician pay in the U.S. must become increasingly higher than physician pay in other developed countries to compensate, thereby contributing to the higher share of GDP on health spending.

Wednesday, July 13, 2011

Big Government and Health-Care Stocks: A Happy Marriage?

What with the underwhelming market response to my previous article discussing the effect of the 2010 federal Patient Protection and Affordable Care Act (PPACA) on health insurers, I was pretty astonished (and relieved) to see Citigroup equity strategist Tobias Levkovich state many of the concerns which have occupied me.

Please read my latest column at's The Apothecary.

Wednesday, July 6, 2011

Bust or Bailout? The Future of Private Health Plans Under Obamacare: With A Focus on Massachusetts & Colorado

San Francisco (June 30, 2011) -- A new research study released by the Pacific Research Institute (PRI), a California-based free-market think tank, shows how ObamaCare threatens the solvency of private health plans, which will significantly reduce consumer choice and increase costs. The ultimate result will likely be either a massive taxpayer bailout of private health plans or continued momentum toward a single-payer government-monopoly system.

Bust or Bailout? The Future of Private Health Plans Under Obamacare was authored by PRI director of Health Care Studies, John R. Graham. Noting that the 1996 federal Health Insurance Portability & Accountability Act (HIPAA) also lead to consolidation of health plans, Graham concludes that “Repealing ObamaCare and replacing it with reforms that put the American people, instead of government, in charge of health dollars, is the recommended way to avoid either outcome. ”

Tuesday, July 5, 2011

Capped Federal Matching Funds: Washington State's Bipartisan Medicaid Reform

It’s a short law with big potential: SB 5596, signed by governor Christine Gregoire at the end of May, is only three pages long. Nevertheless it puts Washington State on a path to Medicaid solvency and sets an example for California and the nation.

Remarkably, the law, sponsored by conservative Republican senator, Linda Evans Parlette, passed with unanimous support in the state Senate and Assembly. Needless to say, the state’s Democratic legislators and liberal governor took some political risks in endorsing it. But we have to be careful in describing what SB 5596 achieves.