US healthcare cost solutions

[Admin]

While it might have disadvantages, at least this kind of stuff isn't likely under a single payer system:

HAVING spent the last year reporting for a series of articles on the high cost of American medicine, I’ve heard it all. There was Fred Abrahams, 77, a skier who had surgery on both ankles for arthritis — one in New York for more than $200,000 and one in New Hampshire for less than $40,000. There was Matthew Landman, 41, billed more than $100,000 for antivenin administered in an E.R. after a small rattlesnake bite. There was Robin Miller, a Florida businessman, who needed to buy an implantable defibrillator for his ill brother, who was uninsured; the machine costs tens of thousands of dollars, but he couldn’t get a price for a make or a model. Extreme anecdotes, perhaps. But the series has prompted more than 10,000 comments of outrage and frustration — from patients, doctors, politicians, even hospital and insurance executives.

Health Care's Road to Ruin NYT

There is stuff that can be done about this, but that requires, you know, government..

There are plenty of interesting ideas being floated to help repair the system, many of which are being used in other countries, where health care spending is often about half of that in the United States. For example, we could strictly regulate prices or preset payment levels, as is currently done for hospital stays under Medicare, the national insurance program for people over 65, or at least establish fair price corridors for procedures and drugs. We could require hospitals and doctors to provide price lists and upfront estimates to allow consumers to make better choices. 

We could stop paying doctors and hospitals for each service they performed and instead compensate them with a fixed monthly fee for taking care of each patient. We could even make medical school free or far cheaper and then require service afterward. But the nation is fundamentally handicapped in its quest for cheaper health care: All other developed countries rely on a large degree of direct government intervention, negotiation or rate-setting to achieve lower-priced medical treatment for all citizens. That is not politically acceptable here.

Health Care's Road to Ruin NYT

Government is always the problem, never the solution, as rightwingers have it.. And this forces suboptimal solutions:

With that political backdrop, Obamacare deals only indirectly with high prices. By regulating and mandating insurance plans, it seeks to create a better, more competitive market that will make care from doctors and hospitals cheaper. But it primarily relies on a trickle-down theory of cost containment. The Princeton health economist Uwe E. Reinhardt has called it “a somewhat ugly patch” on “a somewhat ugly system.”

Health Care's Road to Ruin NYT

[Admin]

And could it be that markets produce at least some problems here? Noo..

With half a billion dollars spent by medical lobbyists each year, according to the Washington-based Center for Responsive Politics, our fragmented profit-driven system is effectively insulated from many of the forces that control spending elsewhere. Even Medicare is not allowed to negotiate drug prices for its tens of millions of beneficiaries, and Americans are forbidden by law to re-import medicines made domestically and sold more cheaply abroad.

Health Care's Road to Ruin NYT

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Why healthcare is so expensive in the US? Drug prices, for starters:

The news that Aetna, UnitedHealthcare and Humana are pulling back on commitments to sell insurance on Healthcare.gov was greeted with utterly predictable reactions: Republicans yelling that they told us Obamacare wouldn’t work, while Democrats say the GOP has cried wolf about the Affordable Care Act for years. But no one is listening to what Aetna  and United actually said: The problem’s not really Obamacare. Their biggest challenge in individual insurance is the cost of super-expensive new drugs, especially to fight hepatitis C and HIV — both markets dominated by erstwhile Wall Street darling Gilead Sciences. The fight over the exchanges is everything wrong with Washington in a nutshell, because it’s clear that a large percentage of the problem is something specific and fixable, but no one is listening because the answer doesn’t fit ideological preconceptions.

How Gilead ‘broke’ Obamacare - MarketWatch

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More on the high drug prices in the US:

Grassley can ask Mylan to explain its prices, and he can express concern. But there’s not much he can do beyond that. The American government is exceptional in that it has no power to regulate drug prices.

The story of Mylan’s giant EpiPen price increase is, more fundamentally, a story about America's unique drug pricing policies. We are the only developed nation that lets drugmakers set their own prices, maximizing profits the same way sellers of chairs, mugs, shoes, or any other manufactured goods would.

In Europe, Canada, and Australia, governments view the market for cures as essentially uncompetitive and set the price as part of a bureaucratic process, similar to how electricity or water are priced in regulated US utility markets.

THE AMERICAN GOVERNMENT IS EXCEPTIONAL IN THAT IT HAS NO POWER TO REGULATE DRUG PRICES

Other countries do this for drugs and medical care — but not other products, like phones or cars — because of something fundamentally unique about medication: If consumers can't afford the product, they could have worse odds of living. In some cases, they face quite certain odds of dying. So most governments have decided that keeping these products affordable is a good reason to introduce more government regulation.

When drug companies set their American prices, they don't focus on the price of making the pills. Instead, they look at what their competitors already charge for similar products and try to land their price somewhere in the same range, regardless of production costs or how good the drug actually is. Since most drugs are already expensive, new drugs keep matching those prices.

And if you're a drug company that produces the best medication for a situation (as Mylan does for allergy attacks), this makes a ton of sense: You have consumers whose life, quite literally, depends on buying your product. This is what the now-infamous pharmaceutical executive Martin Shkreli talked about, quite bluntly, in a Bloomberg interview last year.

He was defending a decision to increase the price of Daraprim, a drug that treats a rare disease called toxoplasmosis, by 10,000 percent.
"We know these days that modern pharmaceuticals and cancer drugs can cost $100,000 or more," he said. "Daraprim is still underpriced compared to its peers."

The real question at the heart of the EpiPen outrage isn't why one drug company decided to hike a drug price. The real question is why other companies aren't taking advantage of the pick-your-price nature of American pharmaceutical policy.

Drug pricing follows a predictable pattern in most developed countries. In places like Spain, the United Kingdom, and the Netherlands, the government sits down with drugmakers and haggles over how much they will pay. Each country uses a different process, but the goal is the same — to balance drug companies' pursuit of profit with the public's interest in making useful treatments widely available and affordable.

In the United States, there's no such negotiation process to speak of. Federal law bars Medicare, the country's largest insurance plan, from even trying to negotiate bulk discounts with drugmakers. Once a pharmaceutical company sets its price, the government-run plan that insures 49 million seniors is required to accept it. "For Medicare, the sky is really the limit," said Jamie Love, who has studied drug pricing and directs the DC nonprofit Knowledge Ecology International.

Other federal programs get certain discounts from drugmakers. Federal law requires that Medicaid, the program that covers low-income Americans, get a 23 percent discount on of all brand-name drugs' sticker prices. Each state's Medicaid program also has the authority to negotiate even lower prices. The Department of Veterans Affairs also negotiates drug prices, as do private health insurance plans.

EpiPen’s 400 percent price hike tells us a lot about what’s wrong with American health care - Vox

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A useful primer into the enormous complexities of US drug pricing
The upshot is that the system is rigged in favor of the pharma companies, who can often charge almost what they want

From Bloomberg

The EpiPen Drama Shows What’s Wrong With How Drugs Are Priced

It’s like some overheated epic—except for the very real people suffering.

Peter Coy

September 1, 2016 — 7:00 AM ART

The EpiPen pricing controversy is enough to trigger mental anaphylactic shock. First, Mylan raised the list price of EpiPens to more than $600 a pair. When protests predictably erupted, Chief Executive Officer Heather Bresch went on TV to say that if she cut the price of EpiPens, some people wouldn’t be able to get them anymore. Which is weird, because usually a lower price makes things easier to get. Then, on Aug. 29, Mylan announced it will sell a generic version of EpiPens at half the price—but keep selling the identical brand-name version at full price. Because, um, some people will be happy to spend twice as much as everyone else for their EpiPens?

None of this, including the original price hike, makes sense if you think of brand-name pharmaceuticals as normal products whose prices are set by the forces of supply and demand. It does start to make sense if you picture drug pricing as a multisided, Machiavellian, long-running, high-stakes Game of Thrones involving drugmakers, insurance companies, pharmacies, pharmacy benefit managers, Congress, presidential candidates, and somewhere, down there in the smoke and dust, the children with life-threatening allergies who need to bring EpiPens to school this fall.

This system has never worked well, but it’s working even less well now because of the profusion of high-deductible health insurance plans. Many ordinary Americans who haven’t reached their deductible limits are being exposed to high list prices that were intended to be no more than a starting point for negotiations between powerful institutional sellers and buyers. In other words, a price that was basically fake has become all too real. This is what Bresch argued in an interview on CNBC on Aug. 25: “It was never intended that a consumer, that the patients, would be paying list price, never. The system wasn’t built for that.”

If the system wasn’t built right, why not build a new system? That would involve untangling a web of rebates, reimbursements, pass-throughs, copayments, and fees. “It’s not simple to fix or change this gigantic machine we’ve built,” says Adam Fein, president of Philadelphia-based Pembroke Consulting, which advises drugmakers on sales and distribution.

You can learn a lot about a system when it’s under stress and the cracks become visible. The EpiPen storm is that kind of a teachable moment. Each seemingly inexplicable step along the way makes sense once you understand the players’ financial incentives.

Start with the price hike, to $608.61 for a pair of EpiPens, the latest in a series that began after Mylan acquired U.S. marketing rights from Merck in 2007, when the autoinjectors cost around $100 a pair. Mylan chose to risk a backlash because it saw generic competition on the horizon and wanted to make hay while the sun was shining. Bresch has tried to defend the price as compensation for investment in the product, but in fact the device has been changed only slightly since Mylan took it on. (Mylan doesn’t even manufacture the pens; Pfizer does.) The main investment has been a successful marketing and lobbying campaign to make EpiPens more widely available—which is laudable but has the nice side effect of increasing sales. In 2013, President Obama signed the School Access to Emergency Epinephrine Act, which encouraged states to make epinephrine available in schools.

Bresch has been telling anyone who will listen that Mylan doesn’t keep the whole list price. That’s true. Mylan has to grapple with pharmacy benefit managers—the biggest being CVS Caremark, Express Scripts, and OptumRx—that negotiate discounts on behalf of insurance companies and employers. Last year, so much money was sapped by rebates paid to pharmacy benefit managers that Mylan’s revenue fell about 1 percent despite a 32 percent list price increase, according to a calculation by Elizabeth Krutoholow, an analyst at Bloomberg Intelligence.

Pharmacy benefit managers are powerful gatekeepers. On behalf of their clients, they can choose not to include a drug in their formulary, which means it won’t be covered by insurance. In the case of EpiPens, it appears that they have negotiated an average discount of as much as $300. Wholesaler fees cost Mylan another $25 or so. Mylan says it nets $274 for a pair at the new full price.

Bresch perturbed the gatekeepers when she said she couldn’t outright cut the price of EpiPens, as critics demanded, because doing so might prevent some people from getting them. To industry insiders, that was a broad hint that the pharmacy benefit managers would stand in the way—providing skimpier coverage for EpiPens if they received smaller rebates on them. Benefit managers don’t base coverage on what’s in it for them, says Mark Merritt, president of the Pharmaceutical Care Management Association, the industry trade group.

No one believes Mylan’s protestations of innocence, but the entire system is in on the plot

At the same time, Bresch offered “savings cards” worth up to $300 for EpiPens. Bloomberg Intelligence’s Krutoholow estimates that savings cards and other subsidies will cut EpiPen revenue by around 6 percent this year. But that’s before figuring in gains from the price hike.

Bresch’s latest move, to offer a generic version of EpiPens at half the price, also makes sense when viewed as another Game of Thrones gambit. Some insurers will still cover the more expensive brand-name EpiPens because they get such big rebates on them that they end up being cheaper—for the insurers—than the generics. It’s even possible that some insurers will refuse to cover the generic.

No wonder people are having trouble taking Bresch’s protestations of innocence seriously. “They benefited from federal legislation. Then they turned around and raised prices. There’s just something untoward about that,” says David Toung, an equity analyst at Argus Research in New York.

Epic drama, to be sure, even if there aren’t any dragons. Unfortunately, high prices for drugs hurt society’s most vulnerable citizens. Even $300 for a pair of generic EpiPens is steep for families that pay full price because their insurance doesn’t start kicking in until they’ve spent thousands of dollars. This is an issue that goes way beyond Mylan, of course. An employer survey by the Kaiser Family Foundation found that workers’ expected contributions in health plans rose 83 percent from 2005 to 2015.

Low-income families are least suited to high-deductible plans because they don’t have spare cash lying around to cover unexpected expenses. Yet they often sign up for high-deductible plans when given the chance because the premiums are the lowest. The bronze plans of Obamacare reimburse only 60 percent of all beneficiaries’ covered out-of-pocket expenses. In principle, high deductibles and copayments can rein in unnecessary spending on discretionary items. But for life-and-death items like EpiPens, they just shift costs from insurance companies and employers to families while raising the risk that families will go without—and suffer possibly fatal consequences.

What’s the answer? Hillary Clinton’s platform calls for a $250-per-month per person cap on out-of-pocket expenses for covered prescription drug costs “to provide financial relief for patients with chronic or serious health conditions.” The flaw in her plan is that insurers would have to raise premiums to compensate for losses on the cost cap. That could accelerate the “death spiral” in which healthy people drop insurance because of high premiums, leaving behind only those most costly to care for. “It looks good on the surface, but I hope the average American can see what it looks like on the back end,” says Tyrone Squires, founder of TransparentRx, a boutique pharmacy benefit manager in Henderson, Nev.

Donald Trump’s platform doesn’t even attempt to deal with the problem directly. It encourages high-deductible plans, coupling them with health savings accounts that families could use to set aside money for health expenses tax-free. Such accounts are of most value to families in high tax brackets.

The EpiPen episode is a small part of the very big problem of high and rising drug prices. But even this small problem is kind of intractable. “Everyone in the system has built their economics and contracts on the list price that exists. It’s incredibly difficult to unwind that structure,” says Pembroke Consulting’s Fein. “I can’t tell you there’s a simple solution. That’s why I’m not a politician.”

[Admin]

Article explains another plank in the malfunctioning American healthcare system that leads it to be almost twice as expensive as those in other advanced nations (whilst still leaving millions of uninsured people). Introducing the inaptly called pharmaceutical-benefit managers (PBMs)...

While it's easy to jump all over drugmakers, like EpiPen's maker, Mylan, other actors in the healthcare system ought to draw as much scrutiny. One group of companies, called pharmaceutical-benefit managers, or PBMs, serve as middlemen, and they touch every part of the purchase of a prescription drug.

And now there's a growing realization, from Washington to Wall Street, that PBMs have been a big beneficiary of soaring drug prices burdening Americans — profits of the largest companies have doubled in recent years — even as they pitch their services as critical to controlling costs.

It's what one Wall Street analyst described as a "perverse incentive" in the business. A recent Morgan Stanley analysis showed that PBMs' earnings would take a direct hit if drug companies began to slow down on price hikes.

The biggest of these companies is Express Scripts, but PBM services are also provided by CVS Health, UnitedHealth Group, and several smaller companies. Because of their complexity and opacity, they've managed to dodge the kind of intense scrutiny that drugmakers are facing. But that's changing, and it's bad news for the industry. PBMs are being sued by some customers for double-dealing, and they're now also starting to draw the attention of Congress.

Perhaps the biggest threat of all: They're facing a backlash from America's largest employers, some of which are working on a way to rewire the system. Below, we're going to try to explain how PBMs work for the more than 260 million Americans they serve, and because, unlike the other big companies, it is mostly a PBM, we're going to use Express Scripts to do this.

Scrutiny of PBMs, Express Scripts grows with drug-price fury - Business Insider

[Red Daniel]

I've got news for you guys, no matter what you write, most Americans still hate Obamacare..

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On Monday, the Centers for Medicare and Medicaid Services, which covers roughly 100 million Americans, reported on the drugs it spent the most money on in 2015, as well as how many people are using them. The intent of the report is to "to provide a better sense of the frequency and pervasiveness of these increases," the agency noted. The biggest price increases, not accounting for rebates, between 2014 and 2015 were: Glumetza, a diabetes drug made by Valeant Pharmaceuticals: 381.40% Hydroxychloroquine Sulfate, a generic drug that's used to treat arthritis and malaria: 371.80% Pennsaid, a topical drug used to treat osteoarthritis pain in the knee: 296.40% Econazole Nitrate, a generic antifungal cream: 275.70% Mitomycin, a generic chemotherapy drug: 163.10%

Centers for Medicare and Medicaid Services drug price increases - Business Insider

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One reason healthcare is so expensive in the US..

Unlike other rich countries, the U.S. doesn’t directly regulate the price of drugs. As a result, Americans spend more on prescription medicines than anyone else. The main U.S. government health programs for the poor and the elderly spent almost $195 billion on prescription drugs in 2015. Medicaid, the program for the poor, gets fixed rebates from drugmakers. Yet Medicare, the program for the elderly, spends almost three times as much and is prohibited by an industry-backed law from negotiating with drug companies.

Why Trump Faces Stiff Fight to Slash Drug Prices: QuickTake Q&A - Bloomberg

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Trump offered many more details about the ACA’s failures, describing large premium increases for this plan year affecting some parts of the U.S. He also criticized the high-deductible plans offered through the law, though many Republican health plans emphasize “catastrophic coverage,” which would require consumers to pay even more out of pocket for medical expenses.

On Obamacare, President Trump told Republicans ‘let it explode’ - MarketWatch

In response, Trump made numerous promises about what he said the Obamacare replacement would entail. He said he wanted "good coverage at much less cost" and "a much better healthcare plan at much less money." Yet perhaps the largest promise from Trump was the number of people he suggested his replacement would cover. Since the ACA's passage, more than 20 million Americans have gained access to health insurance, and the US uninsured rate has hit its lowest point ever. Despite these gains, Trump said he didn't think the ACA had provided enough people with coverage. He told Muir his replacement would cover those the ACA had not. "It's going to be — what my plan is is that I want to take care of everybody," Trump said. "I'm not going to leave the lower 20% that can't afford insurance." (Only about 10% of the US population currently does not have coverage.) Trump reiterated his promise later in the interview.

Trump makes a big Obamacare promise - Business Insider

The "state to state" part of this "backpack" has been touted by Republican leaders — from President-elect Donald Trump, to House Speaker Paul Ryan, to Trump's nominee for secretary of health and human services, Rep. Tom Price — as the idea of "selling across state lines." But such a provision could lead to other forms of baggage. It would allow private insurers to sell insurance in any state as long as they met the minimum requirements for the state in which their business was based.

For instance, an insurer could be based in Texas but sell their plans in Maine, as long as they met Texas requirements. Currently, state insurance agencies set the rules and minimums insurers must meet to sell plans in their states.  Aside from the conflict between Trump's promise to "give power back to the states" on healthcare and stripping away their ability to regulate plans in their own state, there is also a practical issue with the no-state-lines idea: It's been tried, and it hasn't worked

Selling across state lines GOP Obamacare replacement tried and failed - Business Insider

Here's another catch: While most Americans say they dislike Obamacare, they actually like most of its provisions. According to a recent Kaiser Family Foundation poll, every major part of the Affordable Care Act is exceedingly popular except for one—the imposition of fines for not having health coverage. This might explain why some Trump voters are reacting with alarm now that they realize some kind of ACA repeal looks likely.

If Obamacare is fully repealed, most Americans will see a modest tax cut, while tens of millions will face a loss of coverage or become uninsurable. And thousands could die from lack of access to medical care. As Obamacare slips back into critical condition, here's a look at these and other consequences of its possible demise.

The Brutal (and Fact-Checked) Numbers on Killing Obamacare | Mother Jones