Health Status Related to Income Not Insurance

An extremely thorough analysis of changes in incomes and mortality in the United States, 2001 through 2014 presents some sobering conclusions for those who think fixing our health system will make us healthier. The research, let by Raj Chetty of Stanford University, ran data on incomes and mortality through a battery of statistical tools.

The latest research demonstrates how important incomes are to health status. Forty-year old men in households in the highest quartile of income (mean = $256,000 annually) had an average life expectancy just under 85 years in 2001. This increased by 0.20 years (a little over ten weeks) by 2014. For those in the lowest quartile ($17,000), life expectancy was about 76 years in 2001, and it only increased 0.08 years (a little over four weeks) by 2014.

Obamacare is likely to accelerate this gap, because it significantly reduces incentives for people in low-income households to increase their incomes.

Read more at NCPA's Health Policy Blog.

Flash GDP: Health Services Over One Third of Growth

This morning’s advance (flash) estimate of GDP for the first quarter (usually subject to significant future revision) showed very weak growth dominated by spending on health services. Health services spending of $19.5 billion (annualized) comprised over one third of GDP growth. However, there was shrinkage in personal consumption expenditures on goods, private domestic investment, and exports. This meant personal expenditures on services grew almost twice as much as GDP growth. Growth in spending on health services amounted to a little less than one fifth of growth in services spending. Nevertheless, the quarterly growth in spending on health services indicates health services continues to consume a disproportionate share of (low) growth.

Read more at NCPA's Health Policy Blog.

Happy World Intellectual Property Day!

Tuesday, April 26 is World Intellectual Property Day. Coordinated by the World Intellectual Property Organization (WIPO), World IP Day celebrates “the role that intellectual property rights (patents, trademarks, industrial designs, copyright) play in encouraging innovation and creativity.”

In health policy, we are mostly concerned with patents, which protect investment in innovation in medical technology, especially drugs and biologics. In honor of World IP Day, here are some of the publications I have written to make the case for good patent policy:

Read more at NCPA's Health Policy Blog.

Are Prescription Prices Becoming As Meaningless As Hospital Charges?

Professor Jack Hoadley of Georgetown University recently gave an excellent presentation discussing prices of prescription drugs. Two slides stand out. First, a slide showing how much prescription spending is controlled by insurers and governments versus patients directly. The second slide shows rebates given by drug makers to insurers in Medicare Part D, the prescription benefit that was launched in 2006.

Read more at NCPA's Health Policy Blog.

Health Reform Through Tax Credits

Lost in the blur of the presidential campaign is evidence that the Republican replacement for Obamacare will include refundable tax credits. In its purest form, this means that each person who has employer-sponsored benefits or an individual health plan, or is dependent on a welfare program like Medicaid or the Children’s Health Insurance Plan (CHIP), will start with a fixed sum of taxpayer money with which to choose health coverage. The Republican proposal will not likely go that far, but it will go a long way toward making the tax treatment of health benefits fair.

Read the entire op-ed at RealClearPolicy.

Administration Still Bailing Insurers Out of Obamacare Exchanges

The Obama Administration refuses to concede defeat in its struggle to save Obamacare’s exchanges. The exchanges lost one quarter of their members in 2015. The Blue Cross Blue Shield Association has reported its insurance plans have enrolled people significantly sicker (and more expensive) than anticipated. Finally, UnitedHealth Group, the nation’s largest insurer, will drop out of most of the exchanges in which it is participating.

Desperate to induce insurers to continue participating in exchanges, the Administration suggested it would make illegal payments from “risk corridors,” a risk-mitigation mechanism that moves money between insurers to stabilize their profits in Obamacare’s first three years. Republicans in Congress put a stop to that in 2014. So, the Administration proposes apparently illegal payments from another risk-mitigation fund, called “reinsurance."

Read more at NCPA's Health Policy Blog.

U.S. Health Spending Not An Economic Burden

Health spending consumes a higher share of output in the United States than in other countries. In 2013, it accounted for 17 percent of Gross Domestic Product. The next highest country was France, where health spending accounted for 12 percent of GDP. Critics of U.S. health care claim this shows the system is too expensive and a burden on our economy, demanding even more government intervention. This conclusion is misleading and leads to poor policy recommendations.

But compared to larger developed countries, Americans have higher income per capita after subtracting health care spending. For example, in the United Kingdom, GDP per capita after health spending was only $34,863 in 2013. So, even though Americans spent significantly more on health care than the British, 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.