Monday, August 31, 2015

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.

Friday, August 21, 2015

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.

Thursday, August 20, 2015

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.

Wednesday, August 19, 2015

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.

Tuesday, August 18, 2015

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.

Monday, August 17, 2015

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.

Friday, August 14, 2015

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.

Thursday, August 13, 2015

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.

Wednesday, August 12, 2015

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
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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.

Tuesday, August 11, 2015

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.

Monday, August 10, 2015

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.

Friday, August 7, 2015

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.

Tuesday, August 4, 2015

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.