Third-Party Bureaucracies Cannot Discipline Healthcare Prices

One of the least substantiated notions behind the modern American doctrine that people should allow insurers or governments to control our health spending is that these third parties can negotiate fees with hospitals and physicians that are better than those which would prevail if patients controlled these dollars ourselves.

Years of evidence show that these third parties have little idea what they are doing when they fix fees paid to providers.

Read the entire entry at the Independent Institute's Beacon blog.

French Doctors Lose Strike Against "Free" Health Care

After a long and arduous fight, French politicians have approved a law abolishing patients’ upfront payments to physicians, which was a promise of President François Hollande’s Socialist Party.

Currently, patients usually pay about £23 ($25) when they see a general practitioner. However, some of this fee is reimbursed by the national health scheme or private supplemental insurance. I suppose the closest comparison to the United States would be Medicare and Medicare supplemental (Medigap) insurance.

The Socialist Party promised eliminating this co-pay would increase access to care. Remarkably, it is doctors who resisted.

Read the entire entry at the Independent Institute's Beacon blog.

Health Services Spending Continues To Grow Faster Than Gross Domestic Product

The third estimate of Gross Domestic Product for the third quarter indicates growth in health services spending is maintaining a disproportionate share of still slow GDP growth. Over the four quarters, growth in health services spending accounted for one fifth of GDP growth. This means that health services spending continues to devour more of our budgets.

Read the entire entry at NCPA's Health Policy Blog.

Obamacare Beneficiaries' Bleak Future

One might be forgiven for thinking health insurers are cracking under the strain of Obamacare’s broken insurance exchanges. But don’t be fooled: it is the 10 million Obamacare enrollees who are in trouble, not the insurers.

To be sure, new nonprofit cooperative insurers, set up with special subsidies to compete in the exchanges, have had a terrible run. They deliberately underpriced their premiums to gain market share, expecting the federal government to bail out their losses. Once the Republicans took over the House of Representatives, then the Senate, this became unlikely. As a result, the administration announced in November that 12 of 23 nonprofit cooperative insurers were shutting down.

However, these nonprofit cooperative insurers, which did not exist before Obamacare, are not important overall. That is why UnitedHealth Group’s November 19 announcement that it is losing $500 million on the Obamacare exchanges and might withdraw from Obamacare in 2017 is a big deal. Just a few weeks earlier, UnitedHealth Group had announced it would expand into 11 new states’ Obamacare markets.

Read the entire column at NCPA's Health Policy Blog.

What is Driving Health Prices Up?

The recent arrest of Martin Shkreli, former CEO of Turing Pharmaceuticals, for securities fraud, reminds us that high prescription drug prices are today’s whipping boy for the costs of health care. Hillary Clinton and other politicians have promised to impose federal controls on pharmaceutical prices.

However, prescription drugs have not been the fastest growing item in health care since the economy started to enter the Great Recession in 2007. That distinction belongs to health insurance (specifically, medical and hospital insurance, not workers’ compensation, income replacement, or long-term care).

Read the entire entry at NCPA's Health Policy Blog.

Congress Set to Deficit Fund Obamacare Almost $40 Billion

I had always feared that Congress’ alternative to Obamacare was deficit funded Obamacare, and it looks like that is coming to pass. This is being done through the so-called “taxibus”, a legislative package that combines popular “tax extenders” (items like research and development tax credits that are legally temporary but practically permanent) with funding the federal government through September 2016.

The bill proposes a couple of years delay in three Obamacare taxes: The medical-device excise tax, he health insurance fee, and the excise tax on high-cost employer benefit plans. All three taxes are bad. However, the bill just delays them without cutting any Obamacare spending.

Read more at NCPA's Health Policy Blog.

CPI: Hospitals Under Pressure as Physican Prices Rise

November’s Consumer Price Index (CPI) indicates health prices are moderating, though still increasing higher than non-heath consumer goods. In the third piece of bad news for hospitals (from their perspective, at least, after the Quarterly Services Survey and the Producer Price Index), prices for hospital services actually dropped.

However, physicians’ fees jumped significantly, by 1.1 percent on the month.

Read more at NCPA's Health Policy Blog.

Tomorrow! Health Technology Forum: DC - Financing Health Technology Ventures in the National Capital Area

We have three great speakers scheduled for tomorrow evening's Meetup of the Health Technology Forum: DC. The topic is "Financing Health Technology Ventures in the National Capital Area.

More info and RSVP at the Meetup site.

Trans-Pacific Partnership Deal Undercuts Biologic Invention

For want of a nail the shoe was lost; for want of a shoe the horse was lost; for want of a horse the battle was lost; for the failure of battle the kingdom was lost — All for the want of a horse-shoe nail.”

That proverb reflects what could be the fate of the Trans-Pacific Partnership, the multilateral trade agreement the United States and 11 other Pacific Rim countries recently signed after seven years of negotiation. What all of the countries have in common is a commitment to overcome domestic political obstacles to expanding free trade. Unfortunately, what U.S. negotiators appear to have agreed to in October is a final draft that might not pass Congress.

An important part of the deal is protection of intellectual property — including copyright, trademarks and patents — which are necessary for commercial and scientific innovation. The biggest obstacle to congressional approval, however, appears to be the deal’s inadequate protection of intellectual property in “biologic” medicines.

Read the entire op-ed at the Washington Examiner.

QSS: Dramatic Drop In Hospital Profitability in 3rd Quarter

The latest Quarterly Services Survey (QSS) showed a dramatic turnaround in hospitals’ fortunes. Quarterly revenues dropped two percent from the 2nd quarter, while offices of physicians and home health services grew over three percent (see Table I). Hospital revenue grew only 5.3 percent from 2014 Q3 to 2015 Q3, but that was still significantly lower than growth for most other health services.

For tax-exempt general medical and surgical hospitals (which comprise almost 90 percent of hospitals’ revenue), net revenue (revenue minus expenses) dropped from $390 to $207 per inpatient day, and net revenue per discharge dropped from $2,083 to $1,113.

Read the entire entry at NCPA's Health Policy Blog.

PPI: Pharmaceutical Prices Finally Tame In November

November’s Producer Price Index (PPI) finally saw a slowdown in pharmaceutical price increases, which increased 0.3 percent, month on month. This was the same as the overall PPI increase. Price increases for health goods and services were very slight, compared to general PPI. Indeed, two categories (X-Ray & electromedical equipment and biological products including diagnostics) actually experienced price deflation.

Read more at NCPA's Health Policy Blog.

How Obamacare Crushes Working Class Job Opportunities

The Congressional Budget Office recently confirmed its estimate that Obamacare will shrink the workforce by 2 million full-time equivalent (FTE) jobs in 2025. When the CBO first published its (initially somewhat larger) estimate, in February 2014, it felt compelled to wriggle around the headline, claiming that it did not really mean what it said.

It is strictly true that some of this job loss will be “voluntary,” in that Obamacare’s subsidies will cause them to seek less work than otherwise. Those individuals will probably feel better off than if they had been laid off or fired. However, cutting back working hours because government subsidies encourage it is not quite the same as cutting back because you have changed your priorities – either economically or morally.

The new analysis allows us to see where the burden on employment lies – mostly on those eligible for tax credits in Obamacare’s exchanges. These are people who earn between 100 percent (or 138 percent, depending on the state) and 400 percent of the Federal Poverty Leve. For a family of four this ranges from $24,250 to $97,000 in 2016.

Read the entire entry at NCPA's Health Policy Blog.

Connected Care Cuts Costs, But Can It Overcome Inertia?

“Connected care” refers to a large and growing portfolio of digital tools, from video consultations with psychiatrists to in-home sensors passively detecting when a senior falls to devices that measure diabetics’ blood glucose and send messages to their families’ or doctors’ smartphones when intervention might be needed.

Beyond Electronic Heatlh Records, uptake of connected health is very low. According to a recent report:

• Less than half (45 percent) of patients receive even the traditional telephone appointment reminders.
• Only one in five (21 percent) have access to online appointment scheduling with their doctors.
• Fifteen percent use email to communicate with their provider.
• Just 14 percent have 24/7 access to medical advice.
• Fewer than one in ten (9 percent) receive reminders by text.
• Only a small percentage (3 percent) are able to send a photo of a medical condition over email.
• Just 2 percent have access to video visits.

Even more discouraging are physicians’ attitudes: Fewer than half believe telemedicine (delivering care over the phone or video) is an important evolution in the practice of medicine, while almost one third belief it is “not worth the hype.”

Read the entire column at Forbes.

Explaining The Fall (And Possible Rebirth) Of Doctors' House Calls

House calls used to make up 40 percent of U.S. doctors’ visits in the 1940s, before going into decline in the 1960s. These days, they comprise less than one percent of consultations. Many believe that more house calls would increase quality of care at low cost, which led Medicare to launch an “Independence at Home” demonstration project for seniors with multiple chronic conditions in 15 states. Starting in 2012, the project has had promising results.

This invites the question: Why did house calls decline?

Read the entire column at Forbes.

Why Are U.S. Prescription Drug Prices Higher Than Other Countries'?

Jeanne Whalen of the Wall Street Journal has written a feature article comparing U.S. prescription drug prices to those overseas. Unsurprisingly, she find prices in other developed countries lower, and credits government price controls in other countries with (pretty much) all the difference.

I do not dispute the facts of the article, but the article’s misidentifying the primary reason why drug prices are different.

Read the entire entry at NCPA's Health Policy Blog.

Health Technology Forum: DC December 17 - Financing Health Technology Ventures - Third Speaker Announced

Our third speaker will be Steven Gravely, Partner at Troutman Sanders. Mr. Gravely will address an important risk entrepreneurs need to address when raising funding:

Under the Microscope: Cybersecurity and Funding

Health IT is attracting a lot of interest from Private Equity, Venture Capital and specialized lending.  Increasingly, these sources of funding are very focused on data privacy and security as part of their due diligence.

Driven by the explosion in data breaches, investors and lenders want to be sure that companies have implemented sound data privacy and cybersecurity programs. Mr. Gravely will discuss steps that companies should take now to be ready for this increased scrutiny.

Mr. Gravely joins our two previously announced speakers, Andy Richman and Pratik Patel.

More information and RSVP at the Health Technology Forum: DC Meetup group.

Hospitals Dominate Health Jobs in November

The November Employment Situation Summary came in as expected, with 211,000 nonfarm civilian jobs added. Last month’s report was dominated by health jobs, which was not the case today. The increase of 24,000 health jobs comprised only 11 percent of the payroll hike, and both health and non-health jobs rose by 15 percent on the month.

However, hospital jobs, which increased 13,000, comprised over half the growth in health jobs. This is something we view with concern.

Read the entire entry at NCPA's Health Policy Blog.

Health Technology Forum: DC December 17 Meetup - Second Speaker Announced

Our next Meetup will address financing health IT ventures. According to Rock Health, $2.1 billion in funding was committed to digital health ventures in Q2 alone. Learn from and speak with experts in financing new health technology ventures.

Our second speaker will be Andy Richman, Partner at ProductSavvy and Managing Partner of Relevant Health. Relevant Health is the new accelerator in Bethesda, MD, which recently announced its first class of health tech startups. Mr. Richman will discuss: What's It Going to Take To Build The Health Tech Capital?

Mroe info and RSVP at the Meetup link.

Big Jump in Public Health Facilities Construction in October

After a significant drop in September, health construction starts increased significantly in October: A 1.3 percent increase versus a 1.0 percent increase for other construction starts (see Table I). On a twelve-month basis health facilities construction is still positive, but has been running slower than the booming non-health construction market: 6.1 percent versus 13.3 percent.

Read the entire entry at NCPA's Health Policy Blog.

One in Five Doctors Say: "No New Medicare Patients"

If you learned that 93 percent of non-pediatric primary care physicians took Medicare patients and 94 percent took patients with private insurance, you would likely conclude that Medicare is doing just fine.

Unfortunately, such data do not describe physicians’ behavior at the margin, which is what will determine future access to Medicare. The Kaiser Family Foundation/Commonwealth Fund 2015 National Survey of Primary Care Providers also asks which physicians are not accepting new patients: 21 percent are not taking new Medicare patients and 14 percent are not taking new privately insured patients. That is, the proportion not taking new Medicare patients is 1.5 times greater than the proportion not taking new privately insured patients.

Read the entire entry at NCPA's Health Policy Blog.

Prostate Screening: Can the Government Get it Right?

Prostate Specific Antigen (PSA) tests are back in the news, as they are one entry point for the government to start micromanaging how it pays doctors in Medicare. To set the stage:

• Currently, Medicare pays for an annual PSA test for men 50 and older as “preventive care.”
• However, Obamacare does not consider an annual PSA test for men 50 and over as “preventive care.”
• The U.S. Preventive Services Task Force’s current guidelines (updated in 2012), recommend against PSA tests.
• PSA testing has declined significantly since the 2012 guidelines were updated.
• The American Cancer Society favors PSA tests for men over 50, and as early as 40 for men with more than one first-degree relative diagnosed with prostate cancer.

You can be forgiven for being confused.

Read the entire entry at NCPA's Health Policy Blog.

GDP: Health Services Accounts for 30 Percent of Health Spending Growth

Today’s second estimate of Gross Domestic Product for the third quarter indicates growth in health services spending is maintaining a disproportionate share of still slow GDP growth.

Spending on health services grew faster (5.0 percent, annualized, in current dollars) than spending on non-health services (3.9 percent) or non-health personal consumption expenditure (3.0 percent) from the second quarter. The growth in health services spending ($25.1 billion, annualized) accounted for 17 percent of all GDP growth ($151.0 billion), one fifth of personal consumption expenditure ($130.2 billion), and 30 percent of all services spending ($85.5 billion).

Read the entire entry at NCPA's Health Policy Blog.

Broad Coalition Calls for Congress not to Hand Health Insurers' Losses to Taxpayers

UnitedHealth Group’s proposal (threat? promise?) to withdraw from Obamacare’s health insurance exchanges, and the failure of Obamacare’s COOPs are both events which NCPA has been predicting for a long time (see here and here).

Two years ago, we identified Obamacare’s “risk corridors” as a vehicle through which the Administration would expose taxpayers to unlimited liability for insurers’ losses in Obamacare. Due to our research and testimony, Congress prevented this exposure last December.

What with the exchanges unravelling so quickly, we are not surprised to learn that lobbyists are pressuring Congress to restore unlimited liability. We joined a broad-based coalition to write a letter to Congress urging the current policy be maintained.

Obamacare must be completely renegotiated from root to branch. Just handing taxpayers’ money to insurers for losses they incur will not solve the problem.

Read the entire letter at NCPA's Health Policy Blog.

Obamacare's Slacker Mandate: Sleep & Socializing Up, Work Down

What with Obamacare’s health insurance exchanges unraveling pretty quickly, Americans might be excused for having forgotten one of Obamacare’s first intrusions: The “slacker mandate.” This was the provision that requires employer-based health plans to cover “children” on their parents’ plans until they are 26.

It took effect in 2010. The results are in, according to a new study published by the National Bureau of Economic Research. The young adults are sleeping and socializing more, but working less.

Read the entire entry at NCPA's Health Policy Blog.

Health Technology Forum: DC December 17 - First Speaker Announced

ur next Meetup will address financing health IT ventures. According to Rock Health, $2.1 billion in funding was committed to digital health ventures in Q2 alone. Hear from and speak with experts in financing new health technology ventures.

Our first speaker will be Pratik Patel:

Raising Capital for Health Startups in our Nation's Capital

Venture financing for health innovation is maturing in our nation's capital. Pratik Patel is a business builder, angel investor, advisor, and marketer who will show us how to navigate the fundraising landscape in the Washington DC, Maryland, and Virginia area.  Pratik's presentation will help you avoid rookie mistakes and employ all-star methods to fund your venture.  For more details on Pratik's bio please click his  LinkedIn profile here.

More speakers will be announced in the next few days. Please join us and invite your colleagues, too.

Learn more and RSVP at this link.

Hospital Ownership of Physicians Drives Up Costs

New research published in the JAMA Internal Medicine journal supports, with rigorous data analysis, that hospital ownership of medical practices drives up costs.

Read the entire article at NCPA's Health Policy Blog.

Connected Care: Moving (And Keeping) Patients Out of Hospitals and Nursing Homes

One of the greatest frustrations in health care is that technology tends to drive up costs. In pretty much every other area of our lives, technology reduces costs. Increased health spending is associated with better health outcomes (as recently summarized by Cynthia Cox of the Kaiser Family Foundation). Nevertheless, we would like to get these benefits at less cost.

The opportunity to achieve this is at hand. A host of technologies promises to significantly reduce costs by eliminating friction in the flow of clinical data between providers and patients, making sense of data from different sources, and allowing patients and providers to interact in new, cost-effective ways. This will allow patients to get more care where they want it, and not where the system demands they show up.

Read the entire column at Forbes.com

CPI: Medical Prices Rose Three Times Faster Than Others; Hospitals Stand Out

October’s Consumer Price Index (CPI) confirms medical prices continue to spring ahead of prices for other goods and services. Overall CPI increased 0.2 percent on the month and also 0.2 percent, year on year. Medical prices, on the other hand, increased 0.7 percent on the month and 3.0 percent, year on year.

Read the entire entry at NCPA's Health Policy Blog.

PPI: Health Prices Continue to Rise Faster Than Others

October’s Producer Price Index declined 0.4 percent, month on month, and dropped 1.6 percent, year on year. Mild deflation continues to take hold in the general economy. However, it is not so in health care. Of the 14 sub-indices for health-related goods and services, only three declined month on month. Only six declined year on year.

Read the entire entry at NCPA's Health Policy Blog.

Why Does Obamacare Over Invest in Spanish Customer Service?

The Center for Medicare & Medicaid Services (CMS) has started to publish its weekly reports on Obamacare enrollment via the federally facilitated exchanges.

A little over half a million people have selected a plan for the third open season. What is interesting is the exchanges’ overinvestment in Spanish capabilities. We first noted this last January.

The Snapshot reports that the average wait on the phone for a Spanish-speaking customer-service representative is 11 seconds, versus four minutes and 38 seconds for an English speaker. That’s 25 times longer.

Read the entire entry at NCPA's Health Policy Blog.

Jeb Bush's Positive Plan to Reform Medicare

Jeb Bush's Medicare reform contains two proposals — premium support and Health Savings Accounts — that will have a significant, positive effect on seniors' access to care and Medicare's finances. In particular, the proposals will address four flaws in Medicare Advantage, an alternative to traditional Medicare in which seniors choose a plan from a private insurer.

Although Obamacare tried to cut seniors' access to private plans, the use of these plans continues to grow. Before Obama took office, one-quarter of beneficiaries chose Medicare Advantage plans. Today, about one-third do. But despite their popularity, private Medicare plans do not live up to their potential for cost-effectiveness.

Read the entire op-ed at RealClearPolicy.

Health Jobs Dominate Great Jobs Report

Observers cheered the October Employment Situation Summary, which reported 271,000 civilian nonfarm jobs added. This is a big turnaround from the September report, which was very disappointing. Nevertheless, the two months have one thing in common: Jobs in health services dominated the growth in jobs. Whether job growth overall is strong or weak, health care keeps increasing its share.

Health care accounted for 45,000 of the 217,000 jobs added overall in October. That’s a rate of growth of 0.29 percent, much higher than 0.18 percent growth in non-health jobs.

Read the entire entry at NCPA's Health Policy Blog.

Hillary Clinton Profits from Big Pharma, Insurance

Chris Jacobs of the Conservative Review has an interesting review of Hillary Clinton’s business income from health insurers and pharmaceutical manufacturers.

My own conclusion is that the health insurers will get what they paid for, if Mrs. Clinton is elected President, whereas the drug-makers will be reminded of the old adage that “you cannot buy politicians; but only rent them.”

Read the entire entry at NCPA's Health Policy Blog.

Rock Star Physician Rebels Against Medicare Bureaucracy

Rebekah Bernard, MD, who wrote a book titled How to Be a Rock Star Doctor:  The Complete Guide to Taking Back Control of Your Life and Your Profession, has written an open letter to her Medicare patients.

As a policy analyst, not a physician, I have to report a mixed response to this letter. I have great sympathy for the message: It hits two policy issues that I have addressed forcefully: So-called Meaningful Use of Electronic Health Records (EHRs) and the fundamental reforms to physician payment in this yeare’s “doc fix” legislation, MACRA.

Read the entire entry at NCPA's Health Policy Blog.

Health Construction Lags

After an uptick in August, health construction starts declined significantly in September: A 0.1 percent decline versus a 0.6 percent increase for other construction starts (see Table I). On a twelve-month basis health facilities construction is positive, but running slower than the booming non-health construction market: 9 percent versus 14.3 percent.

Read the entire entry at NCPA's Health Policy Blog.

Hospitals' Uninsured Patients Rising Again

Remember how Obamacare was supposed to reduce the burden of so-called “uncompensated care” from uninsured patients that was driving hospitals bankrupt? Well, two years into Obamacare it hasn’t worked out that way.

Read the entire entry at NCPA's Health Policy Blog.

Health Services Accounts for One Fifth of Weak Q3 GDP Growth

Today’s advance estimate of Gross Domestic Product for the third quarter indicates growth in health spending is maintaining a disproportionate share of weak GDP growth. Commenters noted that the weak estimate was largely due to shrinking inventories. This explains why personal consumption expenditure (PCE) growth ($135.7 billion) was actually higher than GDP growth ($121.1 billion), quarter on quarter.

Nevertheless, spending on health services grew faster (1.22 percent) than spending on all services (1.13 percent) or PCE (1.11 percent.) The growth in health services spending ($25.1 billion) accounted for one fifth of all GDP growth.

Read the entry at NCPA's Health Policy Blog.

Health Care And The Budget Deal: Three Steps Forward, One Step Back

Yesterday, the White House and Congressional leaders announced a last-minute budget agreement that avoids a so-called government shut-down for now. The deal has four health-related items, and is expected to reduce net federal health spending by about $4.5 billion over five years, and $15.5 billion over ten years. Overall, it is not a bad deal with respect to health care. However, some of its budget savings are fragile and it largely avoids reforms that will actually reduce the growth of health spending.

Read the entire column at Forbes.

The U.S. is the Third Lowest Health Spender of 13 Developed Countries

Scholars affiliated with the Commonwealth Fund recently published another report in the Fund’s series of international comparisons of U.S. health care. These reports are always well received by the media, which run articles lamenting how expensive U.S. health care is, and how great a burden on the country. Encouraged by the Commonwealth Fund to conclude that the major difference between health care in the U.S. and other developed countries is that they have “universal” health systems, many reasonable people understandably conclude that such a reform could reduce the cost of U.S. health care.

These results certainly invite us to question whether we are getting our money’s worth. However, it is not clear that this spending is a burden on the U.S., given our very high incomes. Table I shows that when we subtract U.S. health spending from our Gross Domestic Product (GDP), we still had $44,049 per capita to spend on everything else we value. Only two countries, Norway and Switzerland, beat the U.S. on this measure. In the United Kingdom for example, GDP per capita after health spending was only $34,863 in 2013. So, even though American health care is significantly more expensive than British health care, the average American enjoyed $9,185 more GDP after health spending than his British peer, and just under $6,000 more than his Canadian neighbor.

Read the entire column at Forbes.com.

Another Day, Another Obamacare COOP Closes

Did the sun come up this morning? That must mean another Obamacare COOP has closed. This time, it is in South Carolina.

Read the entire entry at NCPA's Health Policy Blog.

A Brief Note on the Canadian Election and Health Care

This is a screenshot of an ad run by the New Democratic Party (NDP) in the Canadian federal election held last Monday, October 19. Although the single-payer Canadian system is run by the provincial governments, the question of funding it dominates federal elections.

Read the entire entry at NCPA's Health Policy Blog.

High Deductible Health Insurance Crushes Health Spending

A new working paper published by the National Bureau of Economic Research (NBER) shows how much high-deductible health plans reduce spending. Sarah Kliff of Vox.com summarized the details:

Average per-patient spending fell from $5,222.60 in 2012 to $4,446.08 in 2013. That's about a 15 percent decline in a single year — and it held true across all types of health services. Between 2012 and 2014, there was a 25 percent drop in emergency room spending, an 18 percent decline in physician office visits, and a 6 percent decrease in mental health services.

Ms. Kliff indicates “this study is forcing economists to rethink high-deductible health insurance” for a few reasons. The two most important ones are that sick people cut spending as much as healthy people; and that patients did not shop around for better prices, but simply did not seek care.

I don’t think this research demands a do-over for high-deductible health plans at all

Read the entire entry at NCPA's Health Policy Blog.

Physicians for a National Health Program's Red Herring

The tireless Dr. Steffie Woolhandler, American champion for government monopoly, so-called “single-payer” has contributed a blog entry to a New York Times “Room for Debate” discussion on whether the U.S. should be more like Denmark (as suggested by Senator Bernie Sanders in the recent Democratic presidential candidates’ debate):

By the end of the 20th century, the U.S. was the lone hold out for private, for-profit health insurance, and its health statistics lagged behind dozens of countries. Meanwhile, costs soared to twice the average in other wealthy nations.
Other countries have seen huge savings by evicting private insurers and the reams of expensive paperwork they inflict on doctors and hospitals.
Obamacare will direct an additional $850 billion in public funds to private insurers, and boost insurance overhead by $273.6 billion.

One interesting thing about the fight against Obamacare is that the single-payer extremists and the free-market advocates agree that Obamacare is fundamentally unjust, in that it compels citizens to hand their money over to private health insurers.

Read the entire entry at NCPA's Health Policy Blog,

Colorado Health Insurance COOP Closed

Last Friday, Colorado’s Division of Insurance ordered the state’s Obamacare COOP not to offer policies in the state’s Obamacare exchange next year. Obamacare’s COOPs are cascading into collapse quite quickly. NCPA has been studying them since last June, and our research has been prescient.

Obamacare COOPs were specifically stood up by the Affordable Care Act with government loans. They cannot hide their Obamacare losses like larger, incumbent insurers (for which Obamacare exchanges are small parts of their businesses) can.

To show how fast the fall of this COOP has happened, I’ll share three stories.

Read the entire entry at NCPA's Health Policy Blog.

Jeb Bush Health Plan: Innovation and Patient Care

By avoiding sound bites and respecting voters’ ability to understand issues, Governor Jeb Bush’s health-reform proposal demonstrates strong leadership. Repeal and replace Obamacare? Sure, Bush is for that, but no Republican politician should win points simply by regurgitating what many citizens fear has become little more than a slogan.

What is especially impressive is that Bush leads with a non-Obamacare issue  – fundamental reform of the Food and Drug Administration (FDA): “It should not cost $1.2 billion to $2.6 billion nor take 12 to 15 years to advance a medicine from discovery to patients, but that is the case under the Food and Drug Administration’s current regulatory mess.”

Read the entire op-ed in The Hill.

Peak Obamacare? We're Almost There

The administration has released a report estimating that enrolment in Obamacare will reach only 9.4 million to 11.4 million at the end of 2016. Back in 2010, when the law was passed, the Congressional Budget Office estimated exchange coverage would be 21 million next year (Table 4).

One year ago, I coined the term “Peak Obamacare” to describe this phenomenon. Although the administration’s cheerleaders have twice celebrated very high Obamacare enrolment during open season, the administration has finally decided to accept reality: We are on the verge of Peak Obamacare.

Read the entire entry at NCPA's Health Policy Blog.

Obamacare COOPs' Loans Are "Assets"

My colleague Devon Herrick was prescient about the collapse of Obamacare’s COOPs (nonprofit cooperative insurers set up with government loans to compete unfairly in Obamacare’s exchanges), writing an Issue Brief on the topic last June.

Since, then Obamacare’s COOPs have continued to collapse, stranding almost half a million Obamacare beneficiaries. Chris Jacobs of the Conservative Review has written about the administration’s latest attempt to rescue the remaining COOPs, by rebranding their liabilities as “assets”.

Read the entire entry at NCPA's Health Policy Blog.

CPI: Deflation Except in Health Care (Again)

I admitBLS this is getting a little repetitive, but it is not my fault the Bureau of Labor Statistics (BLS) releases the Consumer Price Index one day after the Producer Price Index. The CPI confirms (once again) the price behavior indicated by yesterday’s PPI.

While consumer prices were down 0.2 percent, month on month, and flat year on year, medical prices increased 0.2 percent and 2.5 percent (Table I). However, prescription drugs experienced quite moderate price increases last month. This means that while prices of medical goods and services overall increased, month on month, there was no sticker shock versus the CPI. Unfortunately, yesterday’s PPI suggests that price increases are flowing through the system again, and we can expect to see a pick-up in health prices versus overall inflation, in future CPIs.

Read the entire entry at NCPA's Health Policy Blog.

PPI: Deflation Except in Health Care

September’s Producer Price Index declined 0.5 percent, month on month, and dropped 1.1 percent, year on year. A mild deflation appears to be taking hold in the general economy. However, it is not so in health care. Of the 14 sub-indices for health-related goods and services, only five declined month on month. Only three declined year on year (see Table I).

Read the entire entry at NCPA's Health Policy Blog.

Hillary Clinton is Wrong on Prescription Drugs

With perfect timing, Hillary Clinton's presidential campaign announced a proposal to impose federal price controls on prescription drugs the day after Turing Pharmaceuticals declared it was raising the price of Daraprim, a medicine to combat the "toxoplasmosis" parasite, from $13.50 to $750 per pill.

Politically, Clinton may be on to something: In an August poll conducted by the Kaiser Family Foundation nearly three quarters of respondents said prescription costs are "unreasonable." Four in ten favored government regulation to keep costs down.

Daraprim's huge price increase, which was condemned by the pharmaceutical industry, has nevertheless thrust prescription drug prices into the political limelight after years of calm.

Read the entire op-ed at the Washington Examiner.

Jeb Bush's Health Plan

Jeb Bush’s health plan is out – and it is very good. Bush leads with fundamental reform of the Food and Drug Administration. “It should not cost $1.2 billion to $2.6 billion nor take 12 to 15 years to advance a medicine from discovery to patients, but that is the case under the Food and Drug Administration’s current regulatory mess.”

In recent weeks, we’ve read stories about drugs that have been around for decades, for which prices have been hiked sky-high. These price hikes are carried out by executives taking advantage of obscure FDA rules that impede competition.

Read the entire entry at NCPA's Health Policy Blog.

Castlight Health: Pricing for Medical Services is All Over the Map

Castlight Health has published its second annual U.S. Costliest Cities Analysis, which shows astonishing variation for prices of medical procedures. This year’s report focuses on women’s preventive health, finding remarkable variance.

Read the entire entry at NCPA's Health Policy Blog.

A Symptom, Not the Sickness: Health Insurance Consolidation

(A version of this Health Alert was submitted as testimony to the U.S. Senate Judiciary Committee.)

Chairman Lee, Ranking Member Klobuchar, thank you for the opportunity to submit this testimony on the impact of mergers in the health insurance industry. The two combinations of greatest concern are Anthem’s announced takeover of Cigna and Aetna’s announced takeover of Humana. Although tis hearing is narrowly focused on antitrust as enforced by the Department of Justice, it is also necessary to understand Obamacare as a cause of this consolidation.

Read the entire Health Alert at NCPA's Health Policy Blog.

FDA Driving Drug Prices into Stratosphere

BloombergBusiness has another story of a jaw-dropping price hike for a very old medicine. In this case,

Colchicine, a gout remedy so old that the ancient Greeks knew about its effects, used to cost about 25 cents per pill in the U.S. Then in 2010 its price suddenly jumped 2,000 percent.

How did this happen? Colchicine is one of a small number of drugs that were marketed before 1938. That year, the Food, Drugs, & Cosmetics Act was passed to require new drugs to be approved for “safety” as well as be “pure” (that is, not adulterated or misbranded as required since 1906).

Read the entire entry at NCPA's Health Policy Blog.

Improper Payments Up 18 Percent; Mostly Medicare & Medicaid

The Government Accountability Office (GAO) has just reported that “improper payments” (that is fraud and abuse) are up to $124. 7 billion in 2014 from $105.8 billion in 2013. Most of this is Medicare and Medicaid.

Read the entire entry at NCPA's Health Policy Blog.

Health Jobs Dominate Terrible Jobs Report

No good words were used to describe last week’s Employment Situation Summary: “Every aspect of the September jobs report was disappointing,” wrote Michelle Girard, chief U.S. economist at RBS (quoted in Forbes). This is largely a repeat of the August jobs report, although those and previous months’ figures were also revised downwards.

One quarter of September’s new jobs were in health services: 34,000 of 142,000 added to nonfarm payrolls (see Table II). Of those 34,000 health jobs, 37 percent were in ambulatory facilities, and 45 percent in hospitals. This is a change from the last few months. Because of a long-term shift in the location of care, there are now almost seven million people working in ambulatory settings, versus just under five million working in hospitals.

Read the entire entry at NCPA's Health Policy Blog.

Selling Health Insurance Across State Lines

(A version of this Health Alert was published by The Hill.)

Here we go again: Republican politicians are rolling out an easily digested sound bite: Allowing health insurers to sell coverage across state lines would solve the problem of high premiums. In the current presidential race, Donald Trump, Sen. Marco Rubio (R-Fla.), Sen. Ted Cruz (R-Texas), Sen. Rand Paul (R-Ky.), Rick Santorum, Gov. Bobby Jindal (R-La.), and the recently departed Gov. Scott Walker (R-Wis.) all proposed it. It has been a feature of Congressional Republican proposals since at least 2010.

The only problem is that such a reform has no effect. Back in 2010, Georgia sacrificed its sovereignty to regulate health insurance, but premiums didn’t change. The reason is that if a health plan wants to offer coverage in a state, it already can easily do so. Health insurers enter and exit markets all the time. Aetna and Cigna are domiciled in Connecticut, but that does not prevent them from offering plans in other states. Insurance commissioners do not discriminate between in-state and out-of-state insurers when they issue insurance licenses.

Health Construction Picks Up in August

After a few months lagging behind other construction, health facilities starts finally showed some life in August (See Table I). Although on a twelve-month basis health facilities construction is still running slower than the booming construction market overall, health construction grew by 1.9 percent from July. Other construction grew by only 0.7 percent.

Read the entire entry at NCPA's Health Policy Blog.

Cancel, Don't Delay, Meaningful Use Stage 3 for Electronic Health Records

Over one quarter of the members of the U.S. House of Representatives – 116 of them - just signed a letter to the U.S. Secretary of Health & Human Services urging delay of the next step in the federal government’s struggling effort to impose uniform federal requirements for health information technology.

The rule in question is Meaningful Use Stage 3 (MU3), imposed by the federal government via the HITECH Act of 2009. The so-called “stimulus” act committed almost $30 billion to induce physicians and health facilities to install Electronic Health Records (EHRs) and move patient records beyond clipboards and manila file folders. This proved a huge boon to companies selling EHRs.

Yet, there remains one obstacle: The EHRs were supposed to be interoperable – to speak to each other.  They do not.

Read the entire column at Forbes.

Health Spending Growing Share of GDP

Last week’s third estimate of Gross Domestic Product for the second quarter confirms that growth in health spending might be moderating somewhat from its initial Obamacare fueled rush. Unfortunately, it is not a clear break in the trend of health spending consuming an increasing share of our national income.

Read the entire entry at NCPA's Health Policy Blog.

Congress Uses "Reconciliation" to Push Deficit-Funded Obamacare

Congressional Republicans are using a procedural tool called “reconciliation” to repeal a miniscule number of Obamacare provisions, according to Chris Jacobs of the Conservative Review. Most of these provisions are tax-related. Jacobs notes 14 other Obamacare taxes could be repealed through reconciliation, but have been ignored. They must have harmed less powerful interest groups than the taxes described above.

However that is really beside the point: Repealing Obamacare’s taxes does not repeal Obamacare. It leaves a deficit-funded Obamacare. And that assumes President Obama will sign these bills.

Read the entire entry at NCPA's Health Policy Blog.

Martin Shkreli A Creature of FDA Regulation, Not Pharma Industry Greed

Perhaps it is just unfortunate coincidence, but Hillary Clinton’s proposal to impose federal controls on prescription drug prices was perfectly timed to ride the public outrage over a hedge-fund manager turned pharmaceutical executive, Martin Shkreli, who raised the price of a  decades-old drug drug from $13.50 per pill to $750.

Mrs. Clinton lumps all nominally expensive prescription drugs into the same category of so-called “specialty drugs.” However there is a world of difference between Mr. Shkreli’s Daraprim and specialty drugs like Sovaldi and Harvoni. The latter are newly invented medicines that required many years and huge amounts of capital investment to achieve therapeutic advances for patients suffering Hepatitis C that radically increase their quality of life. They comprise intellectual property protected by patents, which allow the drug makers to compete without fear that their innovations will be copied immediately by manufacturers who made no comparable investment in R&D.

Read the entire column at Forbes.

Employee Health Benefit Costs On A "Winning Streak"?

Mercer, a leading firm of consulting actuaries, tells us that the cost of employee benefits in 2016 will grow slowly – a “winning streak”:

Early responses from a major Mercer survey still in the field show employers predicting that health benefit cost per employee will rise by 4.2% on average in 2016 (see Fig. 1) after they make planned changes such as raising deductibles or switching carriers.

A closer look indicates no real reduction in the rate of cost growth of employee benefits.

Read the entire entry at NCPA's Health Policy Blog.

Health Plan Deductibles Grew Seven Times Faster Than Wages

The Kaiser Family Foundation has just released its 2015 Employer Benefits Survey:

Single and family premiums for employer-sponsored health insurance rose an average of 4 percent this year, continuing a decade-long period of moderate growth, according to the Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2015 Employer Health Benefits Survey released today
The average annual premium for single coverage is $6,251, of which workers on average pay $1,071. The average family premium is $17,545, with workers on average contributing $4,955.
Since 2010, both the share of workers with deductibles and the size of those deductibles have increased sharply. These two trends together result in a 67 percent increase in deductibles since 2010, much faster than the rise in single premiums (24%) and about seven times the rise in workers’ wages (10%) and general inflation (9%).
“With deductibles rising so much faster than premiums and wages, it’s no surprise that consumers have not felt the slowdown in health spending,” Foundation President and CEO Drew Altman said.

I would state that a little differently: It is consumers who are causing some of the slowdown, because they are increasingly sensitive to health spending. So, the movement to faster growing deductibles and slower growing premiums as a good thing. However, I have to qualify that remark: There is still too much price-fixing conducted between health insurers and providers, and not enough price formation by consumers and providers directly.

Read the entire entry at NCPA's Health Policy Blog.

Oscar And The Changing Health Insurance Landscape

Yesterday, the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing on “Examining Consolidation in the Health Insurance Industry and Its Impact on Consumers,” at which the CEOs of Anthem and Aetna testified.  Both of these health insurers have announced friendly take-overs of two other insurers, Cigna and Humana.

One indicator regulators use to determine whether a business combination will reduce competition is whether there are significant barriers to entry in the industry. If there are, new competitors will not exploit openings created by incumbents’ consolidation. During the hearing, the CEOs of Anthem and Aetna each (independently) pointed to Oscar, a new health insurer with highly pedigreed investors, as evidence that health insurance is an easy business to enter.

Oscar is indeed an interesting enterprise, which has attracted fawning coverage in the business press both for its innovation and the quality of its investors. Nevertheless, Oscar is a curious start up, because it focuses exclusively on a market – Obamacare exchanges – in which insurers are taking on a lot of pain

Read the entire column at Forbes.

Health Technology Forum: DC Meetup September 24

The Final schedule is announced for our Meetup on Thursday:

6:00-6:40 PM - Networking & Refreshments

6:40-6:45 PM - Announcements & Introduction

6:45-7:15 PM - Leslie Heyer, Cycle Technologies

7:15-7:45 PM -  Dr. Huy Nguyen, MD, Care 24/7

7:45-8:15 PM - Dr. Berit Johne,  Royal Norwegian Embassy

8:15-9:00 PM - Networking & Refreshments

(If you are concerned about the Pope's visit, please don't be. He will be at Saint Patrick's and Catholic Charities, 10th St and G St, NW at lunch, but is scheduled wheels up at Andrews Air Force Base at 4 p.m. Metro is highly recommended, not car.)

We will start with 45 minutes of networking with soft and hard drinks, hot and cold food, provided by our generous hosts, Troutman Sanders. Full speaker bios are at our Meetup page.

There is still time to RSVP!

Hillary's Tweet Crushes Hopes and Dreams

Hillary Clinton has tweeted a teaser for her forthcoming proposal to lower prescription drug prices. See it and read my response at NCPA's Health Policy Blog.

Are Medicare ACOs Gaining a Foothold?

This blog has never gotten very excited by Medicare’s Accountable Care Organizations (ACOs). ACOs are risk-sharing arrangements between Medicare and providers, which are supposed to save money through efficiency. As a concept, they are fine – certainly an improvement over the incumbent, Soviet-style fee schedule. However, it is unlikely that the government has the incentives to get the risk-sharing incentives right.

I had anticipated that ACOs might end “with a whimper.” The Centers for Medicare & Medicare Services (CMS) have released results of Pioneer ACO’s third year of operation and 2014 results for Medicare Shared Savings Program (MSSP) ACOs which launched in 2012 through 2014. While ACOs are hardly taking off like the administration hoped, they seem to have gained a foothold.

Read the entire entry at NCPA's Health Policy Blog.

Consumer Price Index: Amid Disinflation, Medical Prices Increasing

Yesterday’s Consumer Price Index (CPI) release confirmed prices of medical goods and services continue to rise at a steady pace, despite the general deflationary environment. The CPI declined 0.1 percent from July to August (seasonally adjusted), and increased just 0.2 percent in the last twelve months.

Much of the disinflation is caused by dropping energy prices. Excluding food and energy, the CPI increased 0.1 percent last month and 1.8 percent over the last twelve months. Medical care, although flat last month, increased 2.5 percent over the last twelve months. This is moderate by historical standards, but still excessive relative to current CPI.

Read the entire entry at NCPA's Health Policy Blog.

Cross-Over Investors Key Players in Health Deal Boom

Silicon Valley Bank has published its mid-year report on the state of financing in biotech, medical devices, and diagnostics. The key take-away is that both private financing and exits continue to be strong. One development in the structure of the market that has made deals easier to move through the pipeline is the rise of cross-over investors. These are mutual funds or hedge funds (usually investors in listed securities) which are increasingly investing in private health deals.

Read the entire column at Forbes.

Health Technology Forum: DC September 24 Meetup - 3rd Speaker Announced

Please join us in Washington, DC on September 24 for Challenges & Opportunities in Global Health: International Perspectives. Our third speaker will be Dr. Berit Johne,

Dr. Johne is Counselor for Science at the Royal Norwegian Embassy in Washington DC.  Until recently she was Special Adviser for international cooperation for U.S. and Canada in the Research Council of Norway. Her scientific experience includes basic biomedical research; technology transfer, biotech start up; Health Technology Assessment, human biobanks program coordinator, and manager of a national foresight “Biotech Norway 2020”. Dr. Johne will present on:

US-Norway Cooperation in Medical Technology: Public and Private Funding, Financing & Market Opportunities

Read more and RSVP at this link.

British National Health Service Stops Paying for Lifesaving Drugs

Britain’s government-monopoly (single-payer) health plan, the National Health Service (NHS) has announced plans to stop paying for the most innovative, lifesaving drugs:

More than 5,000 cancer patients will be denied life-extending drugs under plans which charities say are a “dreadful” step backwards for the NHS. 

Health officials have just announced sweeping restrictions on treatment, which will mean patients with breast, bowel, skin and pancreatic cancer will no longer be able to receive drugs funded by the NHS.

In total, 17 cancer drugs for 25 different indications will no longer be paid for in future.
Charities said the direction the health service was heading in could set progress back by centuries.

The Cancer Drugs Fund was launched in 2011, following a manifesto pledge by David Cameron, who said patients should no longer be denied drugs on cost grounds.

Drugs which will no longer be funded include Kadcyla for advanced breast cancer, Avastin for many bowel and breast cancer patients, Revlimid and Imnovid for multiple myeloma, and Abraxane, the first treatment for pancreatic cancer in 17 years.

(Laura Donnelly, “Thousands of Cancer Patients to be Denied Treatment,” The Telegraph, September 4, 2015)

This is the second round of cuts this year. All in all, reimbursement for 25 drugs used by about 8,000 patients has been cut off. Unfortunately, this is not surprising.

Read the entire entry at NCPA's Health Policy Blog.

15 Percent of Obamacare's 2nd Season Enrollees Were Gone By June 30

Obamacare’s second enrollment season closed around the end of February, with 11.7 million signed up. By March 31, that had dropped to 10.2 million who actually paid their first month’s premium. New data from the administration report that number dropped further to 9.9 million by June 30.

What is also notable is that the entire drop of paid enrollees occurred in states using the federal exchange, not state-based exchanges (for which enrolment stayed at 2.7 million). There is no word on whether the drop-outs got employer-based coverage, descended into Medicaid, or stayed uninsured. 423,000 were dropped by the administration because of lack of documentation of citizenship or immigration status.

A stable market? Not quite, I guess.

Read the entire entry at NCPA's Health Policy Blog.

Why No Car Care Crisis?

Our health care is in “crisis.” We seem to have achieved the remarkable result of spending too much money while not ensuring access for enough people. Every politician says so, and most citizens agree. Indeed, no presidential candidate can be viewed as credible without proposing a health reform “plan.”

Hillary Clinton has sworn to protect and uphold the Affordable Care Act against all right-wing conspirators; Bernie Sanders has long advocated a government-monopoly, single-payer system; and Republican contenders will continue to roll out plans to “repeal and replace Obamacare” that will immediately come under attack by conservatives and libertarians as “Obamacare-lite.”

Let’s put the crisis in perspective. According to actuaries at the federal government, spending on health care per person in 2014 was $9,176. Yet according to the American Automobile Association (AAA), the average cost of operating and maintaining an average sedan in 2014 was $8,876 — almost exactly the same as health spending. Of course, not everyone owns a car, but most of us do. According to IHS Automotive, an industry research firm, 253 million cars traveled America’s roads last year. According to the Census Bureau, there were 239 million of us aged 18 through 84; that’s slightly more than one car per person in prime driving years.

Read the entire op-ed at RealClearPolicy.

PPI: Gap Between Hospital Inpatient, Outpatient Prices

August’s Producer Price Index was flat, month on month, and dropped 0.8 percent, year on year, continuing the trend we saw last month. Producer prices for health goods and services are rising faster than other producer prices.

What is interesting is the difference in the rate of inflation for hospital inpatient versus outpatient services. Outpatient prices are declining, while inpatient prices are rising, resulting in quite a gap.

I’d like to believe the outpatient prices are under pressure from ambulatory clinics. As for inpatient prices – well, this data gibes well with the Quarterly Services Survey, which showed an increase in hospital profits.

Read the entire entry at NCPA's Health Policy Blog.

Health Plan Mergers: Clash of Lobbying Titans

One month ago, I noted that the market was pricing a very high risk premium into two of three take-overs among health insurers. In a volatile stock market, the merger-arbitrage spreads for the three deals currently in play are remarkably stable. Anthem's take-over of Cigna and Aetna's take-over of Humana continue to be viewed as highly risky, while Centene’s take-over of HealthNet is viewed as almost certain to take place as announced.

Two deals – Anthem’s takeover of Cigna, and Aetna’s takeover of Humana – are trading at spreads indicating rates of return of over 20 percent, an extremely high risk premium. Opponents of the mergers have started to launch their campaigns, designed to provoke public and political opposition to health plans’ consolidation.

Read the entire column at Forbes.

Hospital Margins Up 9 Percent

This morning’s Quarterly Services Survey (QSS), published by the Census Bureau, reported that:

The estimate of U.S. health care and social assistance revenue for the second quarter of 2015, not adjusted for seasonal variation, or price changes, was $591.3 billion, an increase of 2.2 percent (± 0.8%) from the first quarter of 2015 and up 6.4 percent (± 1.3%) from the second quarter of 2014. The fourth quarter of 2014 to first quarter of 2015 percent change was revised from -0.4 percent (± 1.1%) to -0.5 percent (± 1.1%).

The QSS adds important information to the more widely reported quarterly Gross Domestic Product (GDP) and Employment Situation Summary (ESS) releases that I frequently discuss on the blog.

Read the entire entry at NCPA's Health Policy Blog.

Health Technology Forum: DC September 24 Meetup - 2nd Speaker Announced

We have three great speakers lined up for our next Meetup on September 24 in Washington, DC.

Our second speaker is Dr. Huy Nguyen, MD,  Executive Chairman of Care 24/7 headquartered in Knoxville, TN, and expert consultant on cross-border business development and strategies for A-Team based in Munich, Germany. Dr. Nguyen will present on Value-Based Care for the Chronically Ill.

Dr. Nguyen, will discuss how the health system is evolving towards "value-based care" - focusing on provider efficiency and proactive patient outreach - to improve health outcomes and control costs for the most vulnerable patients, the chronically ill.

He joins our previously announced speaker Leslie Heyer, Founder & President of Cycle Technologies.

Please join us. More information and RSVP at Health Technology Forum: DC.

One Quarter of August Job Growth Was Health Services

This morning’s Employment Situation Summary, which showed slow job growth overall, contained a big jump for health services: 23 percent of last month’s jobs were in health services. Of the 41,000 health jobs, a little more than half were in ambulatory settings.

Because of a long-term shift in the location of care, there are now almost seven million people working in ambulatory settings, versus just under five million working in hospitals. This is a positive development, because hospitals are very expensive facilities and have very concentrated lobbying power that they bring to bear to keep their payments higher than they would otherwise be.

Read the entire entry at NCPA's Health Policy Blog.

Selling Health Insurance Across State Lines

Here we go again: Republican politicians are rolling out the easily digested soundbite of “selling health insurance across state lines” as a solution to high premiums.

In the New York Times, Margot Sanger-Katz examines the idea. The only problem? It makes no sense. “I’ve tried for 10 years to explain this to Republicans; it is a big problem,” said Merrill Matthews, a resident scholar at the Institute for Policy Innovation.

Read the entire entry at NCPA's Health Policy Blog.

Immigrants and Medicaid

The Center for Immigration Studies’ latest report concludes that 42 percent of immigrant households, both legal and illegal, used Medicaid in 2012. Only 23 percent of households headed by a native-born American used Medicaid.

The report also discusses other welfare, including housing, food stamps, et cetera. It is a very thorough report with a wealth of detail. For example, immigrant households from Latin America are more likely to claim welfare than the native-born, while immigrant households from Asia or Europe are less likely. However, when stratified by education or income, it appears that immigrants at the same level as the native-born are more dependent on welfare.

Medicaid is a serious burden on the nation’s prosperity, and if immigrants are a big factor that should certainly be a policy issue. Nevertheless, the report itself invites a number of questions for further inquiry.

Read the entire entry at NCPA's Health Policy Blog.

Occupational Licensing and Health Spending

In July, the Obama administration released an important report on the harmful effects of occupational licensing. Compiled by experts at the Department of the Treasury, the Council of Economic Advisers, and the Department of Labor, and bearing the imprimatur of the White House itself, the report concludes that:

There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines.

Reducing the burden of licensing would give consumers more choices at lower prices. Nowher Nowhere is this need more pressing than in healthcare, where licensing restrictions dominate.

Read the entire op-ed in The Hill.

Health Technology Forum: DC September 24 Meetup - First Speaker Announced

We have three great speakers lined up for our next Meetup on September 24 in Washington, DC.

Our first speaker is Leslie Heyer, Founder & President of Cycle Technologies. Her presentation will be: From Smartphones to Smart Birth Control: Can Mobile Technology Provide Effective Family Planning Solutions?

Cycle Technologies is a socially minded company focused on reproductive health.  Since 2002, the company has worked with researchers and health partners to bring to market sustainable family planning technologies globally.

Leslie received her MBA from Harvard Business School and was named a 2015 Top 50 Most Talented Social Innovator.

More information and RSVP at Health Technology Forum: DC.

Health Facilities Lag Booming Building Market

This morning’s release of a booming construction report from the Census Bureau once again shows lagging spending on new health facilities, especially in the public sector.

Total construction spending topped $1 trillion (annualized) in July, of which less than $41 billion was health care. Health construction spending shrank 0.5 percent from June and grew only 6.4 percent year on year, less than half the rate of growth of all other construction spending.

Separating the data into private and public spending, health construction spending was stagnant in July versus June, while other private construction grew. However, private spending on health care construction has increased 13.3 percent, year on year, versus 17.1 percent for other private construction spending. It still grew a lot, although less than other construction.

It is in the public ledger where health construction has collapsed, year on year, by 12.9 percent. Other public construction spending grew by 6.4 percent.

Read the entire entry at NCPA's Health Policy Blog.

Moderate Health Spending Growth in Q2 GDP A Welcome Break

Last week’s second estimate of Gross Domestic Product for the second quarter confirms that growth in health spending took a welcome break. Unfortunately, it is not a clear break in the trend of health spending consuming an increasing share of our national income.

However, when we compare 2015 Q2 to 2014 Q2 annualized spending, health care is still consuming a slightly disproportionate share of GDP. Health spending grew $106 billion, comprising 17 percent of the $632 billion change in GDP. GDP only grew 3.66 percent, while health spending grew 5.47 percent.

Read the entire enry at NCPA's Health Policy Blog.

Commonwealth Fund's Red Herring on Obamacare Risk Selection

One of this blog’s consistent themes is that Obamacare encourages insurers to seek to enroll health people in exchanges, and shun sick people. A new study from the Commonwealth Fund insists that is not the case, concluding that “insurers aren't seeking lower-risk customers outside the ACA exchanges as some feared,” and “the ACA's insurance reforms are working in the individual market.”

I will share the study’s conclusion, then explain the red-herring hypothesis it is meant to test.

Read the entire entry at NCPA's Health Policy Blog.

"Free" Canadian Health Care Costs $12,000 Per Family

The Fraser Institute has released a study estimating the costs of Canada’s government monopoly, a.k.a. single-payer health system. A typical Canadian family of four will pay $11,735 for public health care insurance in 2015.

The study also tracks the cost of health care insurance over time: Between 2005 and 2015, the cost of health care for the average Canadian family (all family types) increased by 48.5 per cent, dwarfing increases in income (30.8 per cent), shelter (35.9 per cent) and food (18.2 per cent).

Read the entire entry at NCPA's Health Policy Blog.

Jindal's Attack on Walker's Health Plan is Way Off-Base

Yesterday, I addressed Governor Scott Walker’s health plan in largely positive terms. Governor Bobby Jindal, a competing Republican presidential contender, has launched a broadside against Walker’s plan, describing it as a “new federal entitlement.”

The charge is way off-base. Governor Jindal proposed a health reform back in 2014, via his America Next policy shop. The point of contention is that Governor Jindal’s proposal would not offer everyone a refundable tax credit. Instead, it would eliminate the exclusion of employer-based health benefits from taxable income and replace it with a standard deduction.

I criticized the proposal when it was issued. True, it is an easier switch than a refundable tax credit. On the other hand, a deduction does nothing for low-income households – which means the welfare state continues to exist. Jindal himself proposed throwing $100 million more at states to fund their medical safety nets.

Read the entire entry at NCPA's Health Policy Blog.

Bundled Payments, Barely Hatched, Go the Way of the Dodo

Last month, I wrote about Accountable Care Organizations (ACOs), medical groups accountable to the federal government for management of healthy populations. Even Zeke Emanuel recognizes that they are failing. Dr. Emanuel advised Medicare should “lump together” all the services associated with a procedure, such as a hip replacement, and pay one fee for the entire services.

As I noted, Medicare already does this via its Bundled Payments for Care Initiative (BPCI) which launched in 2013. At the time, hospitals and other providers were offered voluntary participation. Just a few weeks ago, the Medicare decided to make bundled payments mandatory for some procedures in some areas. Now we know why: Providers are learning that the bundles don’t work.

Read the entire entry at NCPA's Health Policy Blog.

Republican Candidates Roll on Health Reform

Republican presidential candidates are starting to roll on health reform. I mean that in a good way, like when the pilot accelerates down the runway and says “Let’s roll”. Governor Scott Walker (WI) just released his 15-page “Day One Patient Freedom Plan.” U.S. Senator Marco Rubio (FL) has written an op-ed in Politico that needs more detail, but contains a significant reform similar to Governor Walker’s.

Read the entire column at Forbes.

Victory for Free Speech in Medicine

Judges are chipping away at government censorship of communications about prescription drugs. The Food and Drug Administration exerts great power over a medicine’s label, which describes the medicine’s therapeutic claims. Drug makers and the FDA sometimes spend years negotiating a label.

The FDA regulates both safety and “efficacy.” So, a drug maker has to prove its medicine works to the FDA before marketing it to doctors. However, the cost of clinical trials to prove claims is monumentally high, so drug makers will not always invest in clinical trials for every indication. Once a drug is used, doctors will find that it is effective for more claims than indicated on the label. The new indications are often supported by peer-reviewed, published research. However, the drug makers have not yet invested the time and money to negotiate with the FDA to get the new claims onto the label. The FDA says drug makers can’t talk about these off-label uses. A federal judge just decided they can

Read the entire entry at NCPA's Health Policy Blog.

Zombies Stalk The Health Care Landscape!

Accenture, the management consulting firm, has concluded that the flood of venture capital into digital health startups is not only maturing, it has created a race of zombies that will be bought up on the cheap by established players. In language not usually employed by the elite ranks of sober-minded management consultants.

Read the entire entry at NCPA's Health Policy Blog.

Elementary, My Dear Watson: IBM Enters Medical Image Storage

IBM has suffered declining revenues for 13 consecutive quarters. Although (like many U.S. companies) it attributes its poor results to the strong dollar, its once-praised pivot from hardware to software has put in into some crowded and stagnant markets. Nevertheless, it remains a company with great ambitions, largely built around Watson, the supercomputer which famously beat human beings on the game show Jeopardy! In 2011.

IBM has always hoped Watson would transform health care. It launched Watson Health as a strategic business unit in April, since which it has announced three small but significant acquisitions. Last week, IBM announced the friendly takeover of Merge Healthcare for $1 billion.

Read the entire column at Forbes.

Health-Related Producer Prices Tame in July

The Producer Price Index (PPI) for July increased more than expected, but was still benign. Health-related producer prices were very tame last month.

Prices for pharmaceutical preparations, which have increased faster than other producer goods in the long term (rising 9.4 percent since July 2014), finally turned around and actually dropped 0.4 percent last month. This was a bigger decline than prices for all final demand goods (-0.1 percent) or for all final demand (0.2 percent).

The 12-month price changes for health-related producer prices still show them increasing faster than other prices. However, July’s PPI (unless it is idiosyncratic) is good news for consumers of medical products and services.

Read the entire entry at NCPA's Health Policy Blog.

Gallup Confirms Obamacare Increases Welfare Dependency

I did not bother to discuss Gallup’s July update on the drop in uninsured Americans, because it was substantively the same as the teaser released in March, which showed most of the increase in health insurance was actually Medicaid, which is welfare dependency.

Gallup has just released a state-by-state report, concluding Medicaid expansion and establishing a state exchange almost doubled the reduction in uninsured. Of the two, I cannot imagine setting up a state exchange is a big factor, because beneficiaries get the same tax credits in state or federal Obamacare exchanges. Obamacare mostly increased Medicaid dependency.

Read the entire entry at NCPA's Health Policy Blog.

Price Transparency Laws Don't Work

In a functioning market, you know what you owe before you buy a good or service. That is not the case in health care, as we know. Because of increasing deductibles, the failure of price transparency is becoming increasingly irritating to patients.

Some believe a solution can be legislated. This has occurred in New York and Massachusetts; and one of my favorite state legislators, Senator Nancy Barto, has tried to legislate it in Arizona
.
Effective January 2014, Massachusetts law requires health providers to provide a maximum price for a procedure within 48-hours of a prospective patient asking. Well, it has not worked, according to a ”secret shopper” survey of professionals conducted by the Pioneer Institute.

Read the entire entry at NCPA's Health Policy Blog,

Obamacare Now Hurts Republican Politicians More Than Obama

(A version of this Health Alert was published in the San Francisco Chronicle on August 10, 2015.)

Polls consistently show that Obamacare is unpopular. Back in April 2010, the month before the law was signed, 46 percent of all adults surveyed had a favorable view of the Affordable Care Act, while just 40 percent had an unfavorable view, according to the Kaiser Family Foundations’ regular tracking poll. Things have not changed much since then.

Yet, the law now appears to be hurting Republicans politicians more than Democrats. It looks like Congressional Republicans, who have controlled both chambers of Congress since January, are running out of excuses for failing to advance a comprehensive proposal to repeal and replace Obamacare.

Read the entire column at NCPA's Health Policy Blog.

Obamacare Exchanges: Trusted, Verified, Disliked

Remember Ronald Reagan’s principle on negotiating arms deals with the Soviet Union? “Trust, but verify.”

Well, Obamacare customers have trusted and verified the insurance policies they can buy on Obamacare’s exchanges, but they don’t like what they get. This according to a survey conducted by the Deloitte Center for Health Solutions:

Read (and comment on) the entire entry at NCPA's Health Policy Blog.

Obama Vs. Occupational Licensing

Occupational licensing occurs when the state government legislates that a person cannot practice a trade, for example law, medicine, or hair-braiding, without a license. For years, libertarian and conservative researchers have recognized that occupational licensing increases costs and reduces choices for consumers, and prevents entrepreneurs from entering the market.

Now look who’s joined the ranks of critics of occupational licensing: President Obama! In a welcome report bearing the imprimatur of the White House, the Department of the Treasury, the Council of Economic Advisers, and the Department of Labor note that:

Over the past several decades, the share of U.S. workers holding an occupational license has grown sharply. When designed and implemented carefully, licensing can offer important health and safety protections to consumers, as well as benefits to workers. However, the current licensing regime in the United States also creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job. There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines. Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing. In some cases, alternative forms of occupational regulation, such as State certification, may offer a better balance between consumer protections and flexibility for workers.

Read the entire entry at NCPA's Health Policy Blog.

Trans Pacific Partnership and Intellectual Property Protection

On July 31, trade ministers from countries (including the U.S.) seeking a final draft of the Trans Pacific Partnership (TPP) went home from Maui disappointed. Negotiations got hung up on a few things, especially intellectual property protection (patents) for pharmaceuticals.

The policy associated with the TPP that has been most controversial within the U.S. is Trade Promotion Authority (TPA or “Fast Track”). TPA is not a features of the treaty itself, but an entirely domestic policy defining the power of the Senate to ratify the agreement signed by the President’s men.

At NCPA, we were concerned that giving President Obama fast track authority would result in a poorly negotiated agreement, without adequate protection for intellectual property rights – the fuel of innovation. Congress went ahead and gave the president TPA, so all we can do is wait until we see what comes out of the hitherto confidential discussions.

There have been some positive signals that the administration is standing up for strong intellectual property rights. If that is why the negotiations broke up without a final agreement, then we should be glad to take a breather until other countries recognize the value of pharmaceutical patents like the U.S. does.

Read the entire entry at NCPA's Health Policy Blog.

Medicare Devours the Federal Government

In the last few years, the Medicare trustees' annual financial report has been met with complacency. Because Medicare's fiscal problems appear not to be worsening, people think they can stop worrying. Nothing could be further from the truth.

Indeed, the trustees themselves insist that, "notwithstanding recent favorable developments, current-law projections indicate that Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers."

Read the entire op-ed at RealClearPolicy.

Hospital Job Growth Up Vs. Other Health Jobs

The July Employment Situation Summary from the Bureau of Labor Statistics showed health services jobs growing at about the same pace as other jobs: 0.18 percent growth versus 0.15 percent growth. This is a break from most previous months, when health services job growth outpaced other nonfarm civilian jobs significantly. 28,000 of the 215,000 jobs added in July were in health services.

Read the entire entry at NCPA's Health Policy Blog.

Health Insurer Earnings and Merger Update

The major health insurers have announced their quarterly earnings. For UnitedHealth Group, the largest health insurer, plus the six which are currently engaged in take-over deals, the results were largely positive. The results, and the market’s reaction, indicate three things:

• Health plans have largely been able to pass increases in medical costs onto their members, challenging the notion that Obamacare’s regulations on profit have benefited consumers.

• The risk of participating in Obamacare’s exchanges is not decreasing and insurers continue to be challenged pricing premiums, even though the taxpayer funded training wheels (risk corridors and reinsurance) come off in 2017.

• Investors continue to assign very high risk premiums to two of the three recently announced mergers of health plans.

Read the entire column at Forbes.

Shrinking Health Construction Spending Confirmed in Public Sector

Yesterday’s release of construction spending from the U.S. Census Bureau indicates confirms that spending on health facilities is shrinking, as I noted in my entry on last month’s construction report. Total construction spending amounted to about $1 trillion (annualized)  in June, of which $40 billion was health care. Health construction spending shrank 0.9 percent from May and grew only 6.3 percent year on year, just over half the rate of growth of all other construction spending.

Read the entire article at NCPA's Health Policy Blog.

The Cost of Over Insurance: National Health Expenditures Rising Again

Actuaries at the Centers for Medicare & Medicaid Services, the government agency that runs those programs, have released their estimates of national health spending for 2014 through 2024:

Health spending growth in the United States is projected to average 5.8 percent for 2014–24, reflecting the Affordable Care Act’s coverage expansions, faster economic growth, and population aging. Recent historically low growth rates in the use of medical goods and services, as well as medical prices, are expected to gradually increase.
The health share of US gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024.

It is a little too easy to say that this outbreak of higher health spending is just due to Obamacare. To be sure, Obamacare has increased health spending with only marginal improvement in access to care. However, the population is aging, too; and the actuaries also take account the positive relationship between economic growth and health spending. The actuaries expect the economy to be relatively strong over the next decade, and estimate the rate of growth of health spending will exceed the rate of growth of Gross Domestic Product by only 1.1 percent. This is less excessive than in most recent decades.

Yet, it is still excessive, and a change for the worse.

Read the entire column at Forbes.

New Evidence That Obamacare is Working?

Obamacare supporters are excited by a research article suggesting Obamacare is working to increase access to care. In an article published in JAMA: The Journal of the American Medical Association, researchers followed up respondents to the Gallup-Healthways Well-Being Index (which I’ve discussed previously.)

Yes, in an absolute sense, their access to care improved. According to the Huffington Post’s Jonathan Cohn, this means “Another Argument From Obamacare Critics Is Starting To Crumble.”

Oh dear. Even Citizen Cohn admits “The picture from the raw data is a little muddled” and “like all academic studies, this one will be subject to scrutiny that, over time, could call its findings into question.” Well, I won’t call them into question, just point out what is obvious from the abstract itself: Obamacare is dong a terrible job increasing access to care.

Health Spending Growth Moderate in Second Quarter (Maybe)

A recent report by actuaries working for the Centers for Medicare & Medicaid Services estimates that the rate of growth of health spending, subdued for many years, is picking up again: “The health share of US gross domestic product is projected to rise from 17.4 percent in 2013 to 19.6 percent in 2024.”

Readers of this blog’s discussion of regular releases of GDP estimates by the Bureau of Economic Analysis knew this was coming. This morning’s release of the advance estimate of second quarter GDP confirms health spending is chewing up more and more of a slow-growing economy.

Comparing Q2 2015 to Q2 2014, GDP increased by $570.5 billion, of which $106.7 billion was health services. That’s about one dollar in every five.

Comparing Q2 2015 to Q1 2015, health spending growth looks a lot tamer: $21.6 billion of $191.2 billion GDP growth. That is only one dollar in ten, about half of what it has been running at. However, the advance estimate is subject to significant revision. Last quarter’s slow growth of health spending may be idiosyncratic and/or inaccurate.

Only 20-40 Cents of Each Medicaid Dollar Benefits Recipients

(A version of this column was published by Inside Sources on July 29, 2015, and syndicated to other media.)

Medicaid is the largest means-tested welfare program in the United States. Jointly funded by state and federal governments, its spending grows relentlessly whether the economy is adding or shedding jobs. Its ostensible purpose is to ensure access to medical care for households without enough income to pay for it. Yet new research suggests that only 20-40 cents of each Medicaid dollar improves recipients’ welfare. On the other hand, 90 cents of every dollar spent on the Earned Income Tax Credit (EITC) does so.

Blurring Boundaries Between Biotech, Digital Health, Patient Care Show Need For Regulatory Reform

When was the last time a billionaire entrepreneur en route to New York to raise a couple of hundred million dollars for biotech company stopped in Washington, DC to spend the afternoon in a panel discussion advocating the need for fundamental reform of the Food and Drug Administration?

Patrick Soon-Shiong, MD, founder of the NantWorks group pf companies, did just that on Monday afternoon. At the event, the Bipartisan Policy Center launched a report on advancing medical innovation in America. Written by a team led by former U.S. Senate Majority Leader Bill Frist, MD, and former Representative Bart Gordon, the report seeks support for a number of steps to reform regulatory processes and reduce the cost of medical innovation.

Read the entire column at Forbes.

Medicaid’s Poverty Trap Illustrated

The tragic story of a disabled woman trapped in poverty by the hodge-podge of ways the U.S. finances health care illustrates why we need to sweep the whole thing away and give everyone a universal, refundable tax credit: