The Price is Right! Trump’s Choice Indicates Push to Repeal and Replace Obamacare

Donald Trump’s choice of Dr. Tom Price as his nominee for U.S. Secretary of Health & Human Services indicates the Trump Administration will make a serious effort to repeal and replace Obamacare with patient-centered health reform.

After some initial signs of hesitation at actually trying to achieve this six-year old campaign promise, Obamacare’s opponents can now be confident that skilled leadership will wage a sophisticated and likely successful effort to restart health reform. Here are four reasons why:

Tame Health Spending Confirmed in Strong Q3 GDP

For those (like me) concerned about how much health spending continues to increase after Obamacare, the second report of third quarter Gross Domestic Product confirmed good news. Although GDP growth was revised up $10 billion, only a scratch was due to health spending. It is good to have a breather from the second quarter, which was dominated by growth in health services spending.

Overall, real GPD increased 3.1 percent on the quarter, while health services spending increased only 2.3 percent, and contributed only 9 percent of real GDP growth. Growth in health services spending was also in line with other services spending and personal consumption expenditures (PCE). However, the annualized change in the health services price index increased by 1.7 percent, lower than the price increase of 1.3 percent in non-health GDP but less than the 2.8 percent price increase for non-health services.

(See Table I below the fold.)

Health Technology Forum: DC Third Speaker Announced December 5

Please join us in Washington, DC on December 5 at 6 p.m. for Crossing the Chasm from Analog to Digital Health.

There is a lot of digital technology being deployed, but is it actually succeeding in disrupting health care in a positive way, to increase quality and cut costs? Our speakers will discuss digital opportunities are succeeding in achieving this.

As usual, our format will present three speakers: Our third will be Mark A. Cochran, PhD, Executive Director, Johns Hopkins Healthcare Solutions. Professor Cochran will discuss Using Digital Health Tools to Manage Population Health.

The White Man's Burden: Drugs, Drinking, Suicides Up Since 2000

More nonsense has been written about white nationalism/supremacy in the wake of Donald Trump’s election than anyone should have to read. So, it is a pleasure to find some actual data analysis on the role of the non-college educated white citizen in the success of the Trump candidacy, especially versus Mitt Romney’s failed 2012 campaign.

The Economist has determined health status explains the Trump vote better than being a non-college educated white citizen does. The sicker you are, the more likely you are to have voted for Trump. Non-college educated whites are also likely to be sicker, so the two variables are not independent. Nevertheless:

Will Trump Really Kick 22 Million Off Health Insurance?

(A version of this article was published by Forbes.)

Now that repeal of Obamacare is within striking distance, Obamacare’s supporters and the media are aghast at over 20 million people potentially losing their overly expensive health insurance.

If Republican politicians cannot overcome this objection, they will never move forward with repealing and replacing Obamacare. U.S. Senator Lamar Alexander, Chairman of the Senate’s Health, Education, Labor, & Pensions (HELP) Committee anticipates it will take “several years” to transition out of Obamacare to a patient-centered health system.

Why would Republican politicians balk at fulfilling a promise on which they have campaigned successfully since 2010? The answer lies in the swamp which President-elect Trump promises to drain – Washington, DC. Remember every industry in the health sector acceded to Obamacare in 2010 because it would permanently divert funds from the rest of the economy into the health sector.

Widespread Government Failure in Health Care

The Commonwealth Fund has published yet another survey comparing health care in the United States to health care in other countries. The title emphasizes US Adults Still Struggle With Access To And Affordability Of Health Care.

Really? As I’ve previously written, I agree fully with the Commonwealth Fund scholars that health care in the U.S. is inefficiently delivered and over bureaucratized. 

Nevertheless, suggesting U.S. health care is the worst overall is not consistent with the data. The latest survey compares 11 developed democracies. The relationship between government control of health care and various measures of health status is not at all clear, despite other countries having so-called “universal” health systems.

When it comes to actual access to care, 35 percent of low-income Americans (with household incomes below one half the median income) had to wait six or more days to see a primary-care doctor or nurse the last time they needed care. However, so did 38 percent of low-income Germans and 32 percent of low-income Swedes.

Big Pharma and Access to Medicines

Having written critically about a decision made by a philanthropic organization to reject a donation of vaccines by Pfizer, Inc., I am grateful for a new report which ranks research-based pharmaceutical companies on a number of measurements of how they make medicines available to patients in low-income countries.

Jointly funded by the Bill and Melinda Gates Foundation and British and Dutch taxpayers, the Access to Medicine Index ranks 20 large drug makers: "The 2016 Index used a framework of 83 metrics to measure company performances relating to 51 high-burden diseases in 107 countries."

CPI: Flat Medical Prices Lower Than Inflation

The Consumer Price Index rose 0.4 percent in October. Remarkably, medical prices were flat overall. This is the second month in a row we have enjoyed medical price relief. Even prescription drugs rose by only 0.2 percent, half the rate of headline CPI, while prices of non-prescription drugs dropped significantly. Even the price of health insurance dropped a smidgeon!

Prices for inpatient hospital services rose the most, by 0.6 percent. As noted in my discussion of the Producer Price Index, this bears closer watching as President-elect Trump promises more spending on infrastructure, including hospitals.

Over the last 12 months, however, medical prices have increased three times faster than non-medical prices: 1.4 percent versus 4.3 percent. Price changes for medical care contributed 22 percent of the overall increase in CPI.

Many observers of medical prices decline to differentiate between nominal and real inflation. Because CPI is has been low until recently, even relatively moderate nominal price hikes for medical care are actually substantial real price hikes. More than six years after the Affordable Care Act was passed, consumers have not seen relief from high medical prices, which have increased over twice as much as the CPI less medical care since March 2010, the month President Obama signed the law.

(See Figure I and Table I below the fold.)

Health Coverage the Same As Ten Years Ago

The best measurement of people who lack health insurance, the National Health Interview Survey published by the Centers for Disease Control and Prevention (CDC), has released early estimates of health insurance for all fifty states and the District of Columbia in the first half of 2016. There are three things to note.

First: 69.2 percent of residents, age 18 to through 64, had “private health insurance” (at the time of the interview) in the first half of this year, which is which is the same rate as persisted until 2006 (page 1, Figure 1; and page A5, Table III). Obamacare has not achieved a breakthrough in coverage. It has just restored us to where we were a decade ago.

Health Technology Forum: DC Meetup December 5, 2016. All Welcome

I am happy to announce the second speaker for our Health Technology Forum: DC Meetup on December 5, 2016 will be Dieter Schuller of Radiant Logic, who will discuss how The Digital Experience Begins with Authentication and Authorization.

Please join us in Washington, DC. Learn more at RSVP at this link.

Bill Clinton Is Right: Obamacare Is Crazy For Workers

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

Bill Clinton’s pre-election criticism of Obamacare reflected a good understanding of labor economics. In October, he explained:

So you've got this crazy system where all of a sudden 25 million more people have health care and then the people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half. It's the craziest thing in the world.”

Clinton was referring to high marginal income tax rates that Obamacare imposes on workers through the design of its tax credits, which get clawed back in a very unfair way. The Administration recently confessed premiums for the benchmark Obamacare plans are going up 25 percent, on average. Trying to appease angry enrollees, the Administration feebly claims tax credits reduce net premiums people pay.

Nobody is satisfied by this excuse. However, even if Obamacare premiums were reasonable, they would still punish the people for whom Bill Clinton claims to speak. The more you work, the more you earn; and the more you earn, the higher net premium you pay. This is not a characteristic of the employer-based group market in which most of us participate.

PPI: Health Prices Tame, Inflation Flat

October’s Producer Price Index was flat. However, prices for most health goods and services grew slowly, if at all. Seven of the 15 price indices for health goods and services declined (Table I). The major exception was prices for dental care, which increased 1.5 percent. Dental care is dominated neither by government nor private insurance, so dental price increases are not explained by my usual theory of health inflation. I addressed dental price increases in a previous article.

Should Medicaid Pay Family Members to Care for Disabled Patients?

We now take a break from incessant discussion of the Trump transition, to bring up a very delicate subject: How to ensure severely disabled patients do not become victims.

What politician could ignore the pleas of families caring for disabled members, asking for some help with the burden they carry? Unfortunately, government funding this type of personal care cannot deter significant unintended consequences.

The Office of Management and Budget (OMB) has designated 16 programs as “high error” which means money goes offside due to fraud, waste, and abuse. Medicaid, the joint state-federal program that subsidizes medical services for low-income people, ranks highly on the list. $29.1 billion, or almost ten percent of the $297.7 billion federal contribution is considered by the U.S. government to be paid “improperly.”

The Department of Justice under President Obama has had significant success tracking down and charging those who bill Medicaid and Medicare falsely. However, there is an even worse type of abuse happening in Medicaid: Actual physical abuse of the most vulnerable patients in the system. This often goes hand-in-hand with financial fraud in the area of personal-care services.

Despite Six-Figure Starting Salaries, FDA Can't Hire Reviewers

Would a starting salary of over $160,000 turn you off? Well, maybe if you had a scientific PhD and had to wait four months before the employer could decide whether to hire you or not, you would find a spot elsewhere.

This is the situation the Food and Drug Administration finds itself in, according to the Washington Post:

The Food and Drug Administration has more than 700 job vacancies in its division that approves new drugs, and top officials say the agency is struggling to hire and retain staff because pharmaceutical companies lure them away.

“They can pay them roughly twice as much as we can,” Janet Woodcock, who directs the FDA’s Center for Drug Evaluation and Research (CDER), said at a rare-diseases summit recently in Arlington, Va.

(Sidney Lupkin & Sarah Jane Tribble, “Despite ramped-up hiring, FDA continues to grapple with hundreds of vacancies,” Washington Post, November 1, 2016.)

As I’ve discussed before, the FDA is not short of money. On the contrary, its budget for drug approvals has increased significantly over the years. However, one reason it cannot hire enough staff to review applications is that it is too slow to process hiring.

If it cannot hire regulatory staff efficiently, how will it ever process drug approvals efficiently?

The fundamental problem is that the FDA is a monopoly, protected by government. Its staff do not suffer if new medicines and devices are not approved in a timely manner. Rather, patients, investors, and innovators suffer. The FDA has lots of reason to complain, because that is how it increases its budget.

However, it has no incentive to become more productive or efficient in approving new therapies. A bigger budget just makes the FDA bigger, but not better. Patients need more freedom to use new therapies without having their access strangled by the FDA.

Health Technology Forum: DC Meetup December 5, 2016: Crossing the Chasm from Analog to Digital Health Care

Our next Health Technology Forum: DC Meetup will be December 5. All are welcome to join us in Penn Quarter, Washington, DC. Join the Meetup at this link.

There is a lot of digital technology being deployed, but is it actually succeeding in disrupting health care in a positive way, to increase quality and cut costs? Our speakers will discuss digital opportunities are succeeding in achieving this.

As usual, our format will present three speakers. Our first speaker will be Phil Newman, Co-Founder & CEO of Viimed.

Health Jobs Grew Twice As Fast As Non-Health Jobs in October

This morning’s jobs report maintained the trend of high growth in health services, with those jobs growing twice as fast as non-health jobs (0.21 percent versus 0.10 percent). With 31,000 jobs added, health services accounted for almost one fifth of 161,000 new jobs.

The disproportionately high share of job growth in health services is a deliberate outcome of Obamacare. While this trend persists, it will become increasingly hard to carry out reforms that will improve productivity in the delivery of care.

Obamacare Coverage 10 Percent Less Expensive Than Job-Based Benefits

Scholars at the Urban Institute have previously struggled to find ways to report Obamacare’s good news by pointing out “thereis no meaningful national average” of premium hikes. More recently, they have concluded that Obamacare coverage is 10 percent less expensive than employer-based coverage.

Comparing average employer-based premiums to the second-lowest cost Silver benchmark Obamacare plans, the Urban Institute scholars found lower Obamacare premiums in 38 states plus Washington, DC. These are the unsubsidized Obamacare premiums, adjusted for age, actuarial value, and utilization associated with actuarial value.

What to make of this finding?

Divided on Obamacare, Trump and Clinton Both Threaten Medical Innovation

(A version of this column was published by Forbes.)

The recently announced 25 percent rise in Obamacare health insurance premiums has brought renewed attention to health policy. As this is my last column before Election Day, it is time to review how the presidential candidates would address the continuing challenge of skyrocketing health costs.

We should not kid ourselves that Obamacare’s failure is enough to cause the next President or Congress to act energetically to fix the problems Obamacare exacerbated. The interest groups which brought us Obamacare have cut bait and moved on. The health care sector – interests for which the $3.35 trillion spent on health care counts as revenue rather than cost – has bigger fish to fry.

Although insurers are losing money in Obamacare’s exchanges, they are far more concerned with employer-based group benefits, Medicare Advantage, and Medicaid managed care than Obamacare exchanges. Obamacare exchanges cover fewer than 13 million people at any time during the year; and only about four million stick with Obamacare coverage throughout the year. Those poor souls comprise a powerless political constituency, unlike employers or seniors on Medicare.

Divergence in Private Versus Public Health Facilities Construction Continues in September

Construction of health facilities slowed in September, along with other construction. Overall, health facilities construction starts declined 0.3 percent in September, versus a drop of 0.4 percent for other construction. Health facilities construction accounted for 6 percent of non-residential construction starts. However, the divergence between private and public continued.

Construction of private health facilities dropped 1.0 percent, versus a drop of 0.2 percent for other private construction. Private health facilities construction starts accounted for almost 8 percent of private nonresidential construction starts.

Construction of public health facilities increased 2.4 percent, versus a drop of 1.0 percent for other public construction. Is this what they mean by “infrastructure” spending – broken bridges and roads, while more VA and county hospitals spring up?

(See Table I below the fold.)