Unsafe Drugs Were Prescribed More Than One Hundred Million Times in the United States Before Being Recalled

By Sonali Saluja, Steffie Woolhandler, David U. Himmelstein, David Bor, Danny McCormick
The International Journal of Health Services, June 14, 2016

Abstract

For some drugs, safety concerns are only discovered after they have been on the market, sometimes for several years. The U.S. Food and Drug Administration (FDA) has adopted several policies that could increase the likelihood of approving a potentially unsafe medication. We attempted to quantify the number of exposures in the United States to drugs that were newly approved but later withdrawn from the market. We obtained a list of all drugs approved and subsequently withdrawn from the U.S. market due to safety concerns between 1993 and 2010. Using a representative sample of outpatient physician office visits in the National Ambulatory Medical Care Survey, we estimated the number of visits in the United States at which these unsafe drugs were prescribed. Seventeen drugs were approved and later withdrawn during this 18-year period and were prescribed at 112 million physician office visits in the United States. Nine of these drugs were prescribed more than 1 million times before their market withdrawal. New drugs that are later withdrawn due to being unsafe are frequently prescribed in the United States. To minimize the negative health consequences of prescribing potentially unsafe medications, we should reconsider some of the FDA policies that encourage the rapid approval and dissemination of new drugs.

From the Introduction

Each year more than 2 million serious adverse drug reactions occur in the United States, causing an estimated 100,000 deaths. Many safety problems emerge only after drugs have received Food and Drug Administration (FDA) approval. Indeed, in the first 16 years after approval, 27 market withdrawals and serious new safety warnings—so-called black box warnings (BBWs)—are issued for every 100 newly introduced drugs. For withdrawn drugs, the median time from FDA approval to removal from the market is five years.

The FDA initiated a series of programs in the 1980s and 1990s that allowed the expedited review of certain drugs. Perhaps as a consequence of these programs, the FDA approves new drugs significantly faster than the regulatory bodies of Europe, Canada, and Japan. Unlike the United States, most European Union countries require that new drugs undergo a secondary review process comparing their efficacy to the existing standard of care before health insurance plans will pay for them. Furthermore, the European Union, Canada, and Japan prohibit direct-to-consumer advertising, which is known to increase prescribing of the advertised drug.

Pharmaceutical firms often heavily market newly approved medications in the United States, and doctors frequently prescribe them. After the FDA relaxed regulations on direct-to-consumer advertising in 1997, including allowing less reporting of product risks, pharmaceutical spending on advertising increased more than three-fold. Patients commonly ask for advertised drugs in the United States and clinicians often feel pressured to prescribe them. Hence, many Americans may be exposed to drugs that pose a risk to their health before their dangers are adequately appreciated.

From the Discussion

This descriptive study is the first systematic attempt to quantify the extent to which the U.S. population is exposed to unsafe drugs in the outpatient setting.

Special FDA programs that allow for the expedited review of some drugs are now commonly used by industry to gain quick access to the U.S. market. Expedited reviews were initiated in the 1980s to allow for rapid approval of HIV drugs. These programs were intended for drugs used in exceptional circumstances: for life-threatening, untreatable, or rare diseases. However, the pharmaceutical industry now frequently uses these programs in non-exceptional circumstances; currently, the majority of new drugs qualify for expedited review. This year the U.S. Congress will consider additional legislation, the 21st Century Cures Act, that would further accelerate approval of some drugs and could expose millions more Americans to medications that have been only briefly studied for safety.

Several policy steps might reduce patients’ exposure to unsafe drugs, including: returning to a more stringent FDA approval process, increasing post-marketing surveillance, and eliminating direct-to-consumer advertising.

http://joh.sagepub.com/content/early/2016/06/10/0020731416654662.abstract

***

Comment:

By Don McCanne, M.D.

Since it is impossible to read all of the research studies on new drugs, we can be thankful that we have the Food and Drug Administration (FDA) to collate and evaluate all of that information so that we know that new drug products released on the market have been demonstrated to be both effective and safe. Or can we? This new study adds to our concerns.

With the politics in our nation being under the control of the pro-market neoliberals and conservatives, the pharmaceutical industry and insurance companies have been given a most favored status under the belief that markets will serve the public better if not constrained by supposedly excessive government oversight.

In the case of pharmaceuticals, the public can experience the benefits earlier of the new blockbuster miracle drugs if the government (FDA) will just get out of the way, or so they say. More recent laws and regulations have allowed pharmaceutical firms to pay fees to enter an accelerated process for new drug approval (like buying their way to the front of the queue). This accelerated process has been expanded to include most new drugs, ignoring the fact that there may be a conflict of interest when firms can buy off government regulators to expedite approval of their products.

To be sure that the information evaluated truly represents the value of the new drugs, pharmaceutical firms have agreed to register all studies in advance and not just the studies with favorable results. But research studies with adverse results are still being filed away without public oversight, explaining some of the reason that drugs on the market do not have the same benefits and safety margin as the pre-marketing studies submitted to the FDA show. Also the firms have promised close post-marketing surveillance, but that seems to disappear once the drug is approved. Also the firms are not required to compare new drugs with existing drugs even though many turn out to be inferior. Yet with our lax rules on direct-to-consumer advertising, a demand can be created for these new drugs in spite of their typically outrageous prices. Now Congress is advancing the CURES Act to further benefit the biomedical firms, potentially at a cost to the public’s health that may offset the benefits.

This problem is serious. The study by Saluia et al. shows that over 100 million prescriptions were issued for drugs that had to be withdrawn from the market because they proved to be unsafe. About 100,000 people die each year from drug reactions, and this is particularly tragic when it is from a drug that never should have been on the market in the first place.

The stewards of a well designed single payer system would demand much better performance from the pharmaceutical industry – drugs and other biomedical products that are effective, that are an improvement over existing treatments, that are reasonably safe, and that are priced appropriately based on legitimate costs and a fair profit margin. Regardless, the government has to step up if we want better quality and value in our nation’s drug supply.

Unsafe Drugs Were Prescribed More Than One Hundred Million Times in the United States Before Being Recalled

By Sonali Saluja, Steffie Woolhandler, David U. Himmelstein, David Bor, Danny McCormick
The International Journal of Health Services, June 14, 2016

Abstract

For some drugs, safety concerns are only discovered after they have been on the market, sometimes for several years. The U.S. Food and Drug Administration (FDA) has adopted several policies that could increase the likelihood of approving a potentially unsafe medication. We attempted to quantify the number of exposures in the United States to drugs that were newly approved but later withdrawn from the market. We obtained a list of all drugs approved and subsequently withdrawn from the U.S. market due to safety concerns between 1993 and 2010. Using a representative sample of outpatient physician office visits in the National Ambulatory Medical Care Survey, we estimated the number of visits in the United States at which these unsafe drugs were prescribed. Seventeen drugs were approved and later withdrawn during this 18-year period and were prescribed at 112 million physician office visits in the United States. Nine of these drugs were prescribed more than 1 million times before their market withdrawal. New drugs that are later withdrawn due to being unsafe are frequently prescribed in the United States. To minimize the negative health consequences of prescribing potentially unsafe medications, we should reconsider some of the FDA policies that encourage the rapid approval and dissemination of new drugs.

From the Introduction

Each year more than 2 million serious adverse drug reactions occur in the United States, causing an estimated 100,000 deaths. Many safety problems emerge only after drugs have received Food and Drug Administration (FDA) approval. Indeed, in the first 16 years after approval, 27 market withdrawals and serious new safety warnings—so-called black box warnings (BBWs)—are issued for every 100 newly introduced drugs. For withdrawn drugs, the median time from FDA approval to removal from the market is five years.

The FDA initiated a series of programs in the 1980s and 1990s that allowed the expedited review of certain drugs. Perhaps as a consequence of these programs, the FDA approves new drugs significantly faster than the regulatory bodies of Europe, Canada, and Japan. Unlike the United States, most European Union countries require that new drugs undergo a secondary review process comparing their efficacy to the existing standard of care before health insurance plans will pay for them. Furthermore, the European Union, Canada, and Japan prohibit direct-to-consumer advertising, which is known to increase prescribing of the advertised drug.

Pharmaceutical firms often heavily market newly approved medications in the United States, and doctors frequently prescribe them. After the FDA relaxed regulations on direct-to-consumer advertising in 1997, including allowing less reporting of product risks, pharmaceutical spending on advertising increased more than three-fold. Patients commonly ask for advertised drugs in the United States and clinicians often feel pressured to prescribe them. Hence, many Americans may be exposed to drugs that pose a risk to their health before their dangers are adequately appreciated.

From the Discussion

This descriptive study is the first systematic attempt to quantify the extent to which the U.S. population is exposed to unsafe drugs in the outpatient setting.

Special FDA programs that allow for the expedited review of some drugs are now commonly used by industry to gain quick access to the U.S. market. Expedited reviews were initiated in the 1980s to allow for rapid approval of HIV drugs. These programs were intended for drugs used in exceptional circumstances: for life-threatening, untreatable, or rare diseases. However, the pharmaceutical industry now frequently uses these programs in non-exceptional circumstances; currently, the majority of new drugs qualify for expedited review. This year the U.S. Congress will consider additional legislation, the 21st Century Cures Act, that would further accelerate approval of some drugs and could expose millions more Americans to medications that have been only briefly studied for safety.

Several policy steps might reduce patients’ exposure to unsafe drugs, including: returning to a more stringent FDA approval process, increasing post-marketing surveillance, and eliminating direct-to-consumer advertising.

http://joh.sagepub.com/content/early/2016/06/10/0020731416654662.abstract

Since it is impossible to read all of the research studies on new drugs, we can be thankful that we have the Food and Drug Administration (FDA) to collate and evaluate all of that information so that we know that new drug products released on the market have been demonstrated to be both effective and safe. Or can we? This new study adds to our concerns.

With the politics in our nation being under the control of the pro-market neoliberals and conservatives, the pharmaceutical industry and insurance companies have been given a most favored status under the belief that markets will serve the public better if not constrained by supposedly excessive government oversight.

In the case of pharmaceuticals, the public can experience the benefits earlier of the new blockbuster miracle drugs if the government (FDA) will just get out of the way, or so they say. More recent laws and regulations have allowed pharmaceutical firms to pay fees to enter an accelerated process for new drug approval (like buying their way to the front of the queue). This accelerated process has been expanded to include most new drugs, ignoring the fact that there may be a conflict of interest when firms can buy off government regulators to expedite approval of their products.

To be sure that the information evaluated truly represents the value of the new drugs, pharmaceutical firms have agreed to register all studies in advance and not just the studies with favorable results. But research studies with adverse results are still being filed away without public oversight, explaining some of the reason that drugs on the market do not have the same benefits and safety margin as the pre-marketing studies submitted to the FDA show. Also the firms have promised close post-marketing surveillance, but that seems to disappear once the drug is approved. Also the firms are not required to compare new drugs with existing drugs even though many turn out to be inferior. Yet with our lax rules on direct-to-consumer advertising, a demand can be created for these new drugs in spite of their typically outrageous prices. Now Congress is advancing the CURES Act to further benefit the biomedical firms, potentially at a cost to the public’s health that may offset the benefits.

This problem is serious. The study by Saluia et al. shows that over 100 million prescriptions were issued for drugs that had to be withdrawn from the market because they proved to be unsafe. About 100,000 people die each year from drug reactions, and this is particularly tragic when it is from a drug that never should have been on the market in the first place.

The stewards of a well designed single payer system would demand much better performance from the pharmaceutical industry – drugs and other biomedical products that are effective, that are an improvement over existing treatments, that are reasonably safe, and that are priced appropriately based on legitimate costs and a fair profit margin. Regardless, the government has to step up if we want better quality and value in our nation’s drug supply.

Impact of Increased Cost Sharing on Utilization of Low Value Services

By Jonathan Gruber; Catherine Maclean; Kevin G. Volpp; Bill Wright; Eric Wilkinson
American Society of Health Economics Sixth Biennial Conference, June 13, 2016

Given rising healthcare costs in the United States and the relatively poor health of Americans, research on cost-effective benefit designs that do not impede patient outcomes is critical.  Value-based insurance design (VBID) programs hold great promise as they align patient out-of-pocket spending with service value, and can thereby direct health dollars away from wasteful services, and improve patient outcomes through better alignment of treatment and patient need.
 
The existent VBID literature focuses primarily on reducing patient cost sharing for high value care and has tended to be limited to medications.  There is scant information on the effectiveness of raising patient cost sharing for low value care (e.g., unnecessary imaging services).  Moreover, insight from behavioral economics suggests that the latter benefit design may be more effective in changing behavior as it penalizes those patients using services of low value.  Better evidence on VBID programs is needed, given that such programs are embedded in the Patient Protection and Affordable Care Act and numerous employers across the U.S. are implementing such programs.
 
In this study we evaluated two innovative VBID programs implemented by public employers in the state of Oregon between 2010 and 2012.  The VBID programs we evaluated increased cost-sharing for low value healthcare services.  Specifically, patient co-payments were increased by $100 to $500, representing a much more substantial rise in out-of-pocket spending than has typically been evaluated in the past.  Targeted services included a number of services believed to offer limited benefits to patients (for example, inpatient sleep studies, upper GI endoscopies that are not viewed as medically necessary, and over-used imaging services and surgeries), and emergency room episodes.
 
To examine the effect of these VBID programs we estimate differences-in-differences (DD) models coupled with administrative claims data spanning 2009-2013 on approximately 300,000 public sector employees and their dependents.  Specially, we exploit programmatic changes that occurred across time, organization, and service, leveraging a quasi-experimental design to estimate the impact of the VBID programs.  To further strengthen our design, we utilize comparable data from three public employers in Oregon that did not implement a VBID program over the same time period as a comparison group.  Our outcomes include healthcare utilization (both on the extensive and intensive margins), healthcare costs, and patient well-being.  We also examine heterogeneity in treatment effects by patient characteristics.

Our findings suggest that increasing cost-sharing for low value healthcare services reduces utilization of some, but not all, targeted services.  However, we find that increased cost-sharing may lead to modest increases in overall healthcare spending.  Finally, we identify heterogeneity by patient characteristics.  These findings suggest that although VBID programs may steer patients away from targeted low value services, these programs may not lead to substantial reductions in healthcare spending overall, at least in the short run.  Future studies should examine longer term impacts of VBID programs and different types of VBID program designs on utilization and costs.

https://ashecon.confex.com/ashecon/2016/webprogrampreliminary/Paper4949.html

***

Comment:

By Don McCanne, M.D.

It seems intuitive that value-based insurance design (VBID), such as requiring much higher patient cost sharing for low-value care (e.g., much greater out-of-pocket payments for “unnecessary” CT or MRI scans), should help reduce our total health care spending without inducing a major negative impact on health outcomes. But the authors of this study find that “increased cost-sharing may lead to modest increases in overall healthcare spending,” even though it may reduce utilization of some, but not all, targeted services.

Thus it appears that VBID may not be a very effective tool for reducing overall health care spending. Besides, philosophically it does not seem right that patients must face a financial penalty for obtaining the care that their health care professionals have recommended.

If penalties were to be assigned for using low-value care, wouldn’t it be more appropriate to apply them to the health care provider who would profit by selling more health care services with very limited value? But then how would you determine the threshold of what care is of value and what isn’t? Regardless, this report seems to provide an argument for dispensing with penalties in health care.

Maybe since we haven’t had much luck with carrots and sticks, we should give up on relying on intuition in implementing health care reform and instead adopt a proven model that is highly effective in improving affordability and access to health care for all – a single payer national health program: Improved Medicare for All.

Impact of Increased Cost Sharing on Utilization of Low Value Services

By Jonathan Gruber; Catherine Maclean; Kevin G. Volpp; Bill Wright; Eric Wilkinson
American Society of Health Economics Sixth Biennial Conference, June 13, 2016

Given rising healthcare costs in the United States and the relatively poor health of Americans, research on cost-effective benefit designs that do not impede patient outcomes is critical.  Value-based insurance design (VBID) programs hold great promise as they align patient out-of-pocket spending with service value, and can thereby direct health dollars away from wasteful services, and improve patient outcomes through better alignment of treatment and patient need.

The existent VBID literature focuses primarily on reducing patient cost sharing for high value care and has tended to be limited to medications.  There is scant information on the effectiveness of raising patient cost sharing for low value care (e.g., unnecessary imaging services).  Moreover, insight from behavioral economics suggests that the latter benefit design may be more effective in changing behavior as it penalizes those patients using services of low value.  Better evidence on VBID programs is needed, given that such programs are embedded in the Patient Protection and Affordable Care Act and numerous employers across the U.S. are implementing such programs.

In this study we evaluated two innovative VBID programs implemented by public employers in the state of Oregon between 2010 and 2012.  The VBID programs we evaluated increased cost-sharing for low value healthcare services.  Specifically, patient co-payments were increased by $100 to $500, representing a much more substantial rise in out-of-pocket spending than has typically been evaluated in the past.  Targeted services included a number of services believed to offer limited benefits to patients (for example, inpatient sleep studies, upper GI endoscopies that are not viewed as medically necessary, and over-used imaging services and surgeries), and emergency room episodes.

To examine the effect of these VBID programs we estimate differences-in-differences (DD) models coupled with administrative claims data spanning 2009-2013 on approximately 300,000 public sector employees and their dependents.  Specially, we exploit programmatic changes that occurred across time, organization, and service, leveraging a quasi-experimental design to estimate the impact of the VBID programs.  To further strengthen our design, we utilize comparable data from three public employers in Oregon that did not implement a VBID program over the same time period as a comparison group.  Our outcomes include healthcare utilization (both on the extensive and intensive margins), healthcare costs, and patient well-being.  We also examine heterogeneity in treatment effects by patient characteristics.

Our findings suggest that increasing cost-sharing for low value healthcare services reduces utilization of some, but not all, targeted services.  However, we find that increased cost-sharing may lead to modest increases in overall healthcare spending.  Finally, we identify heterogeneity by patient characteristics.  These findings suggest that although VBID programs may steer patients away from targeted low value services, these programs may not lead to substantial reductions in healthcare spending overall, at least in the short run.  Future studies should examine longer term impacts of VBID programs and different types of VBID program designs on utilization and costs.

https://ashecon.confex.com/ashecon/2016/webprogrampreliminary/Paper4949.html

It seems intuitive that value-based insurance design (VBID), such as requiring much higher patient cost sharing for low-value care (e.g., much greater out-of-pocket payments for “unnecessary” CT or MRI scans), should help reduce our total health care spending without inducing a major negative impact on health outcomes. But the authors of this study find that “increased cost-sharing may lead to modest increases in overall healthcare spending,” even though it may reduce utilization of some, but not all, targeted services.

Thus it appears that VBID may not be a very effective tool for reducing overall health care spending. Besides, philosophically it does not seem right that patients must face a financial penalty for obtaining the care that their health care professionals have recommended.

If penalties were to be assigned for using low-value care, wouldn’t it be more appropriate to apply them to the health care provider who would profit by selling more health care services with very limited value? But then how would you determine the threshold of what care is of value and what isn’t? Regardless, this report seems to provide an argument for dispensing with penalties in health care.

Maybe since we haven’t had much luck with carrots and sticks, we should give up on relying on intuition in implementing health care reform and instead adopt a proven model that is highly effective in improving affordability and access to health care for all – a single payer national health program: Improved Medicare for All.

Hearing: The Need to Control Automatic Spending and Unauthorized Programs

U.S. House of Representatives, Committee on the Budget
June 9, 2016

Witnesses:

The Honorable David M. Walker, Former Comptroller General of the United States

It is clear that our federal fiscal challenge is so great that, unlike after World War II, we will not be able to “grow our way out of the problem.” Our global economic market share, demographic patterns and government commitments are very different today than at the end of World War II. We clearly need to take steps to enhance economic growth, increase individual opportunity and improve our competitive posture. However, the math does not come close to working by relying on growth alone. It is also clear that we will not be able to reduce our federal public debt/GDP to a reasonable and sustainable level without addressing “mandatory” spending programs and engaging in comprehensive tax reform. In that regard, I would respectfully suggest that we need to address both direct and indirect mandatory spending, including tax preferences.

Stuart M. Butler, Ph.D., Senior Fellow in Economic Studies, The Brookings Institution

My testimony today focuses mainly on automatic spending, but let me begin with some remarks on the unauthorized programs.

Unauthorized Programs

Unauthorized programs and agencies are no small issue. As the CBO recently reported, the omnibus appropriations bill for FY 2016 appropriated over $300 billion to agencies and programs lacking authorization.

Authorizations are a very important part of the budget process. They create or redesign a federal agency or program, mapping out its activities and establishing federal obligations and expenditures. A major purpose of reauthorization is to conduct reviews and hearings and to refine the program or agencies’ activities based on that evaluation. With the climate in Congress undoubtedly making it more difficult for authorizing committees to move such legislation to the floor, the failure to review and reauthorize important agencies and programs underscores the growing failure of the budget process and the decline in the orderly functioning of Congress. It is embarrassing, to say the least, that many major agencies, such as the FBI and the State Department, have not been authorized for many years and must depend on the appropriations process for anything resembling a budget review.

On the face of it, the answer to this problem is quite simple – do not waive the rules.

Automatic Spending

The growth of automatic or mandatory spending within the federal budget is a similar but much larger problem. Like the growth of unauthorized programs, the rapidly growing proportion of federal spending for mandatory and other automatic spending escapes timely review. These programs also lack a real budget in the generally understood sense of a clear plan with specified spending and funding levels. This is a breakdown of responsible budgeting.

In conclusion Mr. Chairman, I believe the only way to achieve reasonable constraints on automatic spending is to do so within the context of an agreed long-term plan which becomes a default that is difficult – but not impossible – to alter over time. That procedure forces the discussion to take place in the context of the big picture that includes broad national objectives for the economy, broad fiscal goals, and decisions about the relative balance of protections needed for the elderly, the young, and working- age generations. That broad context, with the regular review and default feature of the proposal, provides sufficient political encouragement and protection over time for members to continue supporting the procedure.

Lily Batchelder, Professor of Law and Public Policy, NYU School of Law

My testimony makes three main points.

• Regardless of whether the goal in controlling automatic spending is reducing deficits or paying for important new investments, Congress should focus on cutting tax expenditures. Tax expenditures are simply a type of mandatory spending. With rare exceptions, tax expenditures continue automatically and anyone eligible can claim them, regardless of the budgetary impact. Tax expenditures are tremendously costly and are growing over time. Moreover, most are highly regressive and many are poorly structured. In contrast, almost all traditional mandatory spending programs are progressive and many are well designed.

• Deficit reduction will require compromise and tough policy choices. Budget process reform is not the answer, but rather bipartisan dialogue and compromise. In order to be bipartisan, deficit reduction will require both revenue increases and spending cuts, but it should be weighted towards revenues. Congress has made deep cuts in discretionary spending in recent years. In addition, the aging of the population, the retirement of the Baby Boom generation, and natural health care cost growth all mean we will need to spend more on traditional mandatory spending programs in the coming decades just to maintain our current commitments.

• Caps or limits, enforced by automatic across-the-board cuts, are a bad way to reduce traditional mandatory spending, and this is true of tax expenditures as well. Caps on traditional mandatory spending are pro-cyclical, automatically reducing spending at precisely the wrong time – during economic downturns. Caps on the annual cost of tax expenditures are unworkable. Such caps take a meat axe to complicated policy problems where a scalpel is needed. However, reforming multiple tax expenditures at the same time in a sensible way, such as limiting their value to 28 cents on the dollar, could be a promising approach.

Federal Government Spending, 2015

$1,442 billion   Tax expenditures
$889 billion   Medicare and Medicaid
$882 billion   Social Security
$583 billion   Non-defense discretionary
$582 billion   Defense discretionary

Share of Cost of Largest Tax Expenditures, 2013

8%  Lowest Quintile
10%  Second Quintile
13%  Third Quintile
18%  Fourth Quintile
51%  Top Quintile (17% for Top 1%)

Value of Tax Expenditures per Household, 2011

$635  Lowest Quintile
$2,333  Second Quintile
$2,897  Third Quintile
$4,559  Fourth Quintile
$24,045  Top Quintile
$154,856  Top 1%

Conclusion

As this Committee continues its important work on addressing our long-term budgetary challenges, I urge you to focus your attention on one type of automatic spending that is both enormously costly and too often overlooked: tax expenditures. The aging of the population, rising income disparities, and the natural growth of health care costs mean demands on federal resources are not going away. Cutting tax expenditures represents the fairest and most efficient way to address our nation’s fiscal needs. And within that category, I urge you to focus on cutting those tax expenditures that are the most regressive, the most distortionary, or the least beneficial for society as a whole.

Hearing:
http://budget.house.gov/hearingschedule2016/the-need-to-control-automatic-spending-and-unauthorized-programs.htm

Testimony of David Walker:
http://budget.house.gov/uploadedfiles/walkertestimony.pdf

Testimony of Stuart Butler:
http://budget.house.gov/uploadedfiles/butler_testimony.pdf

Testimony of Lily Batchelder
http://budget.house.gov/uploadedfiles/batchelder_testimony.pdf

***

Comment:

By Don McCanne, M.D.

Although this hearing was allegedly about programs for which spending is mandatory (such as Social Security and Medicare) and the failure of Congress to formally reauthorize public agencies and programs (such as the FBI and The State Department), it is really about the supposed need to cut spending in essential government programs. This process should be of concern to single payer supporters since, if we had a Medicare for All program, it would be on the chopping block as well.

Two of the witnesses represent the Republican majority. Former Comptroller David Walker has continued to harp on the fact that the growth in Medicare and in the interest payments on our national debt will bankrupt the nation, implying that spending must be reduced, including mandatory spending. Stuart Butler was formerly with The Heritage Foundation and was author of the opposition’s plan to the Clinton health care reform proposal – the plan that later became the basis for the Affordable Care Act. He too implies that budget deficits require that mandatory spending must also be subject to the budget process. Neither Walker nor Butler suggest new revenues (taxes) as a means of balancing the budget.

In sharp contrast, Lily Batchelder shows us that a change in tax policy can close the budget gap without the necessity of cutting mandatory spending for essential programs (and discretionary spending has already been cut to the bone). She would emphasize increasing revenues and doing that indirectly by reducing tax expenditures. Tax expenditures are the reduction in taxes paid as a result of deductions taken from taxable income. Those taxes avoided are disproportionately a benefit for the very wealthy and are paid by the rest of us, and they are massive – over $1.4 trillion in 2015!

Our politicians are wrong when they tell us that we have to cut Social Security, reduce Medicare payments by privatizing the program, and that we could never afford to pay for Medicare for All (even though we already spend on health care what the program would cost).

All we have to do is fix the tax code – the most important step being to reduce the tax expenditures disproportionately benefiting the very wealthy. Lily Batchelder explained that to Congress, but do you think they would ever listen?

Hearing:  The Need to Control Automatic Spending and Unauthorized Programs

U.S. House of Representatives, Committee on the Budget
June 9, 2016

Witnesses:

The Honorable David M. Walker, Former Comptroller General of the United States

It is clear that our federal fiscal challenge is so great that, unlike after World War II, we will not be able to “grow our way out of the problem.” Our global economic market share, demographic patterns and government commitments are very different today than at the end of World War II. We clearly need to take steps to enhance economic growth, increase individual opportunity and improve our competitive posture. However, the math does not come close to working by relying on growth alone. It is also clear that we will not be able to reduce our federal public debt/GDP to a reasonable and sustainable level without addressing “mandatory” spending programs and engaging in comprehensive tax reform. In that regard, I would respectfully suggest that we need to address both direct and indirect mandatory spending, including tax preferences.

Stuart M. Butler, Ph.D., Senior Fellow in Economic Studies, The Brookings Institution

My testimony today focuses mainly on automatic spending, but let me begin with some remarks on the unauthorized programs.

Unauthorized Programs

Unauthorized programs and agencies are no small issue. As the CBO recently reported, the omnibus appropriations bill for FY 2016 appropriated over $300 billion to agencies and programs lacking authorization.

Authorizations are a very important part of the budget process. They create or redesign a federal agency or program, mapping out its activities and establishing federal obligations and expenditures. A major purpose of reauthorization is to conduct reviews and hearings and to refine the program or agencies’ activities based on that evaluation. With the climate in Congress undoubtedly making it more difficult for authorizing committees to move such legislation to the floor, the failure to review and reauthorize important agencies and programs underscores the growing failure of the budget process and the decline in the orderly functioning of Congress. It is embarrassing, to say the least, that many major agencies, such as the FBI and the State Department, have not been authorized for many years and must depend on the appropriations process for anything resembling a budget review.

On the face of it, the answer to this problem is quite simple – do not waive the rules.

Automatic Spending

The growth of automatic or mandatory spending within the federal budget is a similar but much larger problem. Like the growth of unauthorized programs, the rapidly growing proportion of federal spending for mandatory and other automatic spending escapes timely review. These programs also lack a real budget in the generally understood sense of a clear plan with specified spending and funding levels. This is a breakdown of responsible budgeting.

In conclusion Mr. Chairman, I believe the only way to achieve reasonable constraints on automatic spending is to do so within the context of an agreed long-term plan which becomes a default that is difficult – but not impossible – to alter over time. That procedure forces the discussion to take place in the context of the big picture that includes broad national objectives for the economy, broad fiscal goals, and decisions about the relative balance of protections needed for the elderly, the young, and working- age generations. That broad context, with the regular review and default feature of the proposal, provides sufficient political encouragement and protection over time for members to continue supporting the procedure.

Lily Batchelder, Professor of Law and Public Policy, NYU School of Law

My testimony makes three main points.

• Regardless of whether the goal in controlling automatic spending is reducing deficits or paying for important new investments, Congress should focus on cutting tax expenditures. Tax expenditures are simply a type of mandatory spending. With rare exceptions, tax expenditures continue automatically and anyone eligible can claim them, regardless of the budgetary impact. Tax expenditures are tremendously costly and are growing over time. Moreover, most are highly regressive and many are poorly structured. In contrast, almost all traditional mandatory spending programs are progressive and many are well designed.

• Deficit reduction will require compromise and tough policy choices. Budget process reform is not the answer, but rather bipartisan dialogue and compromise. In order to be bipartisan, deficit reduction will require both revenue increases and spending cuts, but it should be weighted towards revenues. Congress has made deep cuts in discretionary spending in recent years. In addition, the aging of the population, the retirement of the Baby Boom generation, and natural health care cost growth all mean we will need to spend more on traditional mandatory spending programs in the coming decades just to maintain our current commitments.

• Caps or limits, enforced by automatic across-the-board cuts, are a bad way to reduce traditional mandatory spending, and this is true of tax expenditures as well. Caps on traditional mandatory spending are pro-cyclical, automatically reducing spending at precisely the wrong time – during economic downturns. Caps on the annual cost of tax expenditures are unworkable. Such caps take a meat axe to complicated policy problems where a scalpel is needed. However, reforming multiple tax expenditures at the same time in a sensible way, such as limiting their value to 28 cents on the dollar, could be a promising approach.

Federal Government Spending, 2015

$1,442 billion   Tax expenditures
$889 billion   Medicare and Medicaid
$882 billion   Social Security
$583 billion   Non-defense discretionary
$582 billion   Defense discretionary

Share of Cost of Largest Tax Expenditures, 2013

8%  Lowest Quintile
10%  Second Quintile
13%  Third Quintile
18%  Fourth Quintile
51%  Top Quintile (17% for Top 1%)

Value of Tax Expenditures per Household, 2011

$635  Lowest Quintile
$2,333  Second Quintile
$2,897  Third Quintile
$4,559  Fourth Quintile
$24,045  Top Quintile
$154,856  Top 1%

Conclusion

As this Committee continues its important work on addressing our long-term budgetary challenges, I urge you to focus your attention on one type of automatic spending that is both enormously costly and too often overlooked: tax expenditures. The aging of the population, rising income disparities, and the natural growth of health care costs mean demands on federal resources are not going away. Cutting tax expenditures represents the fairest and most efficient way to address our nation’s fiscal needs. And within that category, I urge you to focus on cutting those tax expenditures that are the most regressive, the most distortionary, or the least beneficial for society as a whole.

Hearing:
http://budget.house.gov/hearingschedule2016/the-need-to-control-automatic-spending-and-unauthorized-programs.htm

Testimony of David Walker:
http://budget.house.gov/uploadedfiles/walkertestimony.pdf

Testimony of Stuart Butler:
http://budget.house.gov/uploadedfiles/butler_testimony.pdf

Testimony of Lily Batchelder
http://budget.house.gov/uploadedfiles/batchelder_testimony.pdf

Although this hearing was allegedly about programs for which spending is mandatory (such as Social Security and Medicare) and the failure of Congress to formally reauthorize public agencies and programs (such as the FBI and The State Department), it is really about the supposed need to cut spending in essential government programs. This process should be of concern to single payer supporters since, if we had a Medicare for All program, it would be on the chopping block as well.

Two of the witnesses represent the Republican majority. Former Comptroller David Walker has continued to harp on the fact that the growth in Medicare and in the interest payments on our national debt will bankrupt the nation, implying that spending must be reduced, including mandatory spending. Stuart Butler was formerly with The Heritage Foundation and was author of the opposition’s plan to the Clinton health care reform proposal – the plan that later became the basis for the Affordable Care Act. He too implies that budget deficits require that mandatory spending must also be subject to the budget process. Neither Walker nor Butler suggest new revenues (taxes) as a means of balancing the budget.

In sharp contrast, Lily Batchelder shows us that a change in tax policy can close the budget gap without the necessity of cutting mandatory spending for essential programs (and discretionary spending has already been cut to the bone). She would emphasize increasing revenues and doing that indirectly by reducing tax expenditures. Tax expenditures are the reduction in taxes paid as a result of deductions taken from taxable income. Those taxes avoided are disproportionately a benefit for the very wealthy and are paid by the rest of us, and they are massive – over $1.4 trillion in 2015!

Our politicians are wrong when they tell us that we have to cut Social Security, reduce Medicare payments by privatizing the program, and that we could never afford to pay for Medicare for All (even though we already spend on health care what the program would cost).

All we have to do is fix the tax code – the most important step being to reduce the tax expenditures disproportionately benefiting the very wealthy. Lily Batchelder explained that to Congress, but do you think they would ever listen?

Is Health Insurance Good for Your Financial Health?

By Nicole Dussault, Maxim Pinkovskiy, and Basit Zafar
Federal Reserve Bank of New York, June 6, 2016

What is the purpose of health care? What is the purpose of health insurance? When people fall ill, they seek health care in order to get better. But insurance has a slightly different function: Its main role is not to protect our health per se, but to protect our finances.

Protection against financial hardship was one of the drivers behind passage of the 2010 Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA). As President Obama said in a 2015 weekly address, “… that’s the whole point of health insurance. Peace of mind.”

In this blog post, we discuss the results of a research project that examines the effect of the Affordable Care Act’s Medicaid expansion on personal financial indicators. We find suggestive evidence that after the implementation of the ACA in the first quarter of 2014, counties with a high uninsurance burden pre-reform in states that subsequently expanded Medicaid had a decrease in average debt sent to collections agencies compared with such counties in states that did not expand Medicaid.

From the Conclusion

While the full effects of the Affordable Care Act on financial health are yet to be seen, and while the effects of the ACA — positive or negative — are not restricted to financial health, we offer suggestive early evidence that the Medicaid expansion is fulfilling the goal of health insurance: providing “peace of mind” by protecting against financial hardship.

http://libertystreeteconomics.newyorkfed.org/2016/06/is-health-insurance-good-for-your-financial-health.html

***

Comment:

By Don McCanne, M.D.

One of the most important purposes of the Affordable Care Act (ACA) was to make health care affordable. After all, “Affordable” is in its name. This study reported by the Federal Reserve Bank of New York confirms that, indeed, health care has become more affordable for new enrollees in Medicaid, as confirmed by the decline in debt sent to collection agencies in states that did expand Medicaid. But that’s not the full story.

One of the problems faced by the architects of ACA was that health care costs have become so expensive that insurance premiums would not be affordable without modifying the private health plans that were to be sold on the exchanges. Thus they established the benchmark silver plan at an actuarial value of 70 percent (the patient pays an average of 30 percent of the costs if not qualified for subsidies). The easiest way to do this was to require high deductibles. Other studies have shown that these deductibles have made health care less affordable and have resulted in a perpetuation of medical debt that frequently ends up being assigned to collection agencies.

Why then would Medicaid patients have a lower incidence of accounts assigned to collection agencies than do those with private plans? It is simply because most Medicaid patients do not have deductibles or other forms of cost sharing. They do not incur much in the way of medical debt. As President Obama said, “That’s the whole point of health insurance – Peace of mind.”

We can do the same for everyone else. We can prevent financial hardship from medical debt by providing first dollar coverage for everyone. With a well designed single payer system we can control costs through much more patient-friendly means. For those who say that we can’t afford that, other nations have first dollar coverage while spending considerably less than we do with our highly dysfunctional financing system. Single payer. It’s that simple.

Is Health Insurance Good for Your Financial Health?

By Nicole Dussault, Maxim Pinkovskiy, and Basit Zafar
Federal Reserve Bank of New York, June 6, 2016

What is the purpose of health care? What is the purpose of health insurance? When people fall ill, they seek health care in order to get better. But insurance has a slightly different function: Its main role is not to protect our health per se, but to protect our finances.

Protection against financial hardship was one of the drivers behind passage of the 2010 Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA). As President Obama said in a 2015 weekly address, “… that’s the whole point of health insurance. Peace of mind.”

In this blog post, we discuss the results of a research project that examines the effect of the Affordable Care Act’s Medicaid expansion on personal financial indicators. We find suggestive evidence that after the implementation of the ACA in the first quarter of 2014, counties with a high uninsurance burden pre-reform in states that subsequently expanded Medicaid had a decrease in average debt sent to collections agencies compared with such counties in states that did not expand Medicaid.

From the Conclusion

While the full effects of the Affordable Care Act on financial health are yet to be seen, and while the effects of the ACA — positive or negative — are not restricted to financial health, we offer suggestive early evidence that the Medicaid expansion is fulfilling the goal of health insurance: providing “peace of mind” by protecting against financial hardship.

http://libertystreeteconomics.newyorkfed.org/2016/06/is-health-insurance-good-for-your-financial-health.html

One of the most important purposes of the Affordable Care Act (ACA) was to make health care affordable. After all, “Affordable” is in its name. This study reported by the Federal Reserve Bank of New York confirms that, indeed, health care has become more affordable for new enrollees in Medicaid, as confirmed by the decline in debt sent to collection agencies in states that did expand Medicaid. But that’s not the full story.

One of the problems faced by the architects of ACA was that health care costs have become so expensive that insurance premiums would not be affordable without modifying the private health plans that were to be sold on the exchanges. Thus they established the benchmark silver plan at an actuarial value of 70 percent (the patient pays an average of 30 percent of the costs if not qualified for subsidies). The easiest way to do this was to require high deductibles. Other studies have shown that these deductibles have made health care less affordable and have resulted in a perpetuation of medical debt that frequently ends up being assigned to collection agencies.

Why then would Medicaid patients have a lower incidence of accounts assigned to collection agencies than do those with private plans? It is simply because most Medicaid patients do not have deductibles or other forms of cost sharing. They do not incur much in the way of medical debt. As President Obama said, “That’s the whole point of health insurance – Peace of mind.”

We can do the same for everyone else. We can prevent financial hardship from medical debt by providing first dollar coverage for everyone. With a well designed single payer system we can control costs through much more patient-friendly means. For those who say that we can’t afford that, other nations have first dollar coverage while spending considerably less than we do with our highly dysfunctional financing system. Single payer. It’s that simple.

Decline In Public Substance Use Disorder Treatment Centers Most Serious In Counties With High Shares Of Black Residents

By Janet R. Cummings, Hefei Wen and Michelle Ko
Health Affairs, June 2016

Abstract

Previous research has associated declines in health care resources such as hospitals and trauma centers with communities’ racial composition. However, little is known about changes in the substance use disorder treatment infrastructure in recent years and the implications for black communities. We used data for the period 2002–10 from the National Survey of Substance Abuse Treatment Services to describe changes in the supply of public and private outpatient facilities for substance use disorder treatment, and to determine whether these trends had implications for the geographical availability of these facilities in counties with high percentages of black residents. During the study period the number of publicly owned facilities declined 17.2 percent, whereas the number of private for-profit facilities grew 19.1 percent. At baseline, counties with very high percentages of black residents (that is, more than one standard deviation above the mean) were more likely than counties with less than the mean percentage of black residents to be served by public facilities and were thus disproportionately affected by the overall decline in public facilities. Future research should examine the effect of expanding eligibility for Medicaid on the supply of substance use disorder treatment facilities across diverse communities.

From the Discussion

Between 2002 and 2010 there was a decline in the number of public and private nonprofit outpatient substance use treatment facilities, but considerable growth in the number of private for-profit facilities. Among counties with at least one public facility at baseline, nearly half experienced a net loss in the number of public facilities by 2010. Counties with a large percentage of black residents were disproportionately burdened by the decline in public facilities, and these losses were not offset by an increased likelihood of gains in private for-profit or nonprofit facilities.

An overall decline in the supply of public and private nonprofit facilities has important implications for vulnerable populations across all communities. Compared to private for-profit facilities, public and nonprofit facilities are less likely to turn clients away based on their ability to pay.

Although public facilities constituted only 15 percent of the sample at the beginning of the study period, the decline in this sector is especially notable because these facilities were the most likely, at baseline and follow-up, to provide services to people who could not pay. In addition, previous research has reported that public facilities serve a significantly higher percentage of clients who are unable to pay for services than private (for-profit and nonprofit) facilities do. Furthermore, public facilities are more likely than private ones to offer important services such as HIV testing and more likely than private for-profit facilities to offer comprehensive care, including physical examinations and mental health treatment. Future research is needed to better understand the implications of these declines for the accessibility of outpatient care among low-income populations and for the availability of specific types of services.

The decline of public facilities has important implications for counties with a high percentage of black residents in particular. Nearly half of the counties with a public facility at baseline experienced a net loss in this resource, and counties with higher percentages of black residents were overrepresented among these communities. Regression results indicated that there was no significant association between county percentage of black residents and the likelihood of losing a public facility after other county-level characteristics were adjusted for. Nevertheless, counties with very high or extremely high percentages of black residents were disproportionately affected by the overall downward trend in the public sector because they were more likely to be served by public facilities at baseline than counties with less than the mean percentage of black residents.

The net loss of public facilities in counties with very high or extremely high percentages of black residents was not offset by an increased likelihood of gains in private facilities. Instead, the latter counties were less likely to gain a private (for-profit or nonprofit) facility than counties with less than the mean percentage of black residents, after other county-level social and demographic characteristics were adjusted for in the analyses. Considered together, these results suggest that public facilities may help fill infrastructure gaps left by the private sector, and that losses of public providers may not necessarily result in new investments from the private sector. As a consequence of the general decline in the public sector, coupled with the similar or lower likelihood that counties with very high or extremely high percentages of black residents experienced a net gain in private facilities, the counties with higher percentages of black residents had a lower likelihood of having any outpatient facility by the end of the study period, compared to counties with less than the mean percentage of black residents.

As of March 14, 2016, thirty-one states had opted to participate in the Medicaid expansion. However, it is worth noting that the decline of public facilities was even more pronounced among states that are not participating in the expansion. In addition, more than four-fifths of counties with more than the mean percentage of black residents are located in states that have not expanded Medicaid.

Conclusion

This study provides the first empirical information about trends in the ownership mix of facilities for substance use disorder treatment since the beginning of the twenty-first century and the implications of these trends for counties with a high percentage of black residents. The general decline in the number of public facilities, coupled with a similar or reduced likelihood of gaining private facilities in these counties, resulted in an overall disparity between them and other counties in the geographic availability of treatment facilities by 2010. As national policies for substance use control continue to shift toward prevention and treatment and away from more punitive approaches, it will be essential to ensure that enough treatment facilities are available across diverse communities.

http://content.healthaffairs.org/content/35/6/1036.abstract

***

Nearly all ACA benchmark plans violate rules on addiction treatment coverage

By Steven Ross Johnson
Modern Healthcare, June 7, 2016

More than two-thirds of state benchmark plans violate federal requirements to cover treatment for addiction disorders.

The National Center on Addiction and Substance Abuse surveyed addiction treatment benefits offered among 2017 Essential Health Benefits benchmark plans and found none offered a comprehensive array of addiction treatment benefits.

The report cites benchmark plans, which determine the minimum level of benefits available to those covered in state exchange plans, frequently “excluded or not explicitly covered benefits” related to residential treatment and the use of methadone as therapy.

Calls for more comprehensive coverage of addiction treatment services have grown louder over the past few years as the number of drug overdose deaths have reached record levels. More than 28,000 people died in 2014 from overdoses involving opioid drugs, including heroin.

Last year, the federal government suggested including coverage of the full range of approved medication-assisted treatments as part of the essential health benefits to ensure more access to such therapies. But the proposal faced opposition from insurers and pharmacy benefit managers and was struck down.

http://www.modernhealthcare.com/article/20160607/NEWS/160609927

***

Comment:

By Don McCanne, M.D.

Outrageous! While the public drug abuse treatment centers decline in numbers, and the private, for-profit centers are proliferating, “the counties with higher percentages of black residents had a lower likelihood of having any outpatient facility by the end of the study period, compared to counties with less than the mean percentage of black residents” (Health Affairs). Further, more than two-thirds of private benchmark plans offered in the ACA exchanges “violate federal requirements to cover treatment for addiction disorders” (Modern Healthcare).

According to the Modern Healthcare article excerpted above, “Last year, the federal government suggested including coverage of the full range of approved medication-assisted treatments as part of the essential health benefits to ensure more access to such therapies. But the proposal faced opposition from insurers and pharmacy benefit managers and was struck down.”

Who is responsible for this egregious disregard of addiction treatment needs, coverage of which is required by the Affordable Care Act – omissions especially neglectful of our black brothers and sisters? The private, for-profit addiction treatment centers; the private, for-profit insurers; the private, for-profit pharmacy benefit managers; and the anti-government legislators who have underfunded public treatment centers, and who have turned the funding of health care over to private, for-profit intermediaries.

A well designed, publicly-funded and publicly-administered single payer system would separately budget capital expenditures, including those for facilities offering addiction services, with distribution based on needs rather than on for-profit business ventures, and the services would be paid for on an equitable basis, ensuring access and affordability for everyone. It should be about patients, not business stratagems.

Decline In Public Substance Use Disorder Treatment Centers Most Serious In Counties With High Shares Of Black Residents

By Janet R. Cummings, Hefei Wen and Michelle Ko
Health Affairs, June 2016

Abstract

Previous research has associated declines in health care resources such as hospitals and trauma centers with communities’ racial composition. However, little is known about changes in the substance use disorder treatment infrastructure in recent years and the implications for black communities. We used data for the period 2002–10 from the National Survey of Substance Abuse Treatment Services to describe changes in the supply of public and private outpatient facilities for substance use disorder treatment, and to determine whether these trends had implications for the geographical availability of these facilities in counties with high percentages of black residents. During the study period the number of publicly owned facilities declined 17.2 percent, whereas the number of private for-profit facilities grew 19.1 percent. At baseline, counties with very high percentages of black residents (that is, more than one standard deviation above the mean) were more likely than counties with less than the mean percentage of black residents to be served by public facilities and were thus disproportionately affected by the overall decline in public facilities. Future research should examine the effect of expanding eligibility for Medicaid on the supply of substance use disorder treatment facilities across diverse communities.

From the Discussion

Between 2002 and 2010 there was a decline in the number of public and private nonprofit outpatient substance use treatment facilities, but considerable growth in the number of private for-profit facilities. Among counties with at least one public facility at baseline, nearly half experienced a net loss in the number of public facilities by 2010. Counties with a large percentage of black residents were disproportionately burdened by the decline in public facilities, and these losses were not offset by an increased likelihood of gains in private for-profit or nonprofit facilities.

An overall decline in the supply of public and private nonprofit facilities has important implications for vulnerable populations across all communities. Compared to private for-profit facilities, public and nonprofit facilities are less likely to turn clients away based on their ability to pay.

Although public facilities constituted only 15 percent of the sample at the beginning of the study period, the decline in this sector is especially notable because these facilities were the most likely, at baseline and follow-up, to provide services to people who could not pay. In addition, previous research has reported that public facilities serve a significantly higher percentage of clients who are unable to pay for services than private (for-profit and nonprofit) facilities do. Furthermore, public facilities are more likely than private ones to offer important services such as HIV testing and more likely than private for-profit facilities to offer comprehensive care, including physical examinations and mental health treatment. Future research is needed to better understand the implications of these declines for the accessibility of outpatient care among low-income populations and for the availability of specific types of services.

The decline of public facilities has important implications for counties with a high percentage of black residents in particular. Nearly half of the counties with a public facility at baseline experienced a net loss in this resource, and counties with higher percentages of black residents were overrepresented among these communities. Regression results indicated that there was no significant association between county percentage of black residents and the likelihood of losing a public facility after other county-level characteristics were adjusted for. Nevertheless, counties with very high or extremely high percentages of black residents were disproportionately affected by the overall downward trend in the public sector because they were more likely to be served by public facilities at baseline than counties with less than the mean percentage of black residents.

The net loss of public facilities in counties with very high or extremely high percentages of black residents was not offset by an increased likelihood of gains in private facilities. Instead, the latter counties were less likely to gain a private (for-profit or nonprofit) facility than counties with less than the mean percentage of black residents, after other county-level social and demographic characteristics were adjusted for in the analyses. Considered together, these results suggest that public facilities may help fill infrastructure gaps left by the private sector, and that losses of public providers may not necessarily result in new investments from the private sector. As a consequence of the general decline in the public sector, coupled with the similar or lower likelihood that counties with very high or extremely high percentages of black residents experienced a net gain in private facilities, the counties with higher percentages of black residents had a lower likelihood of having any outpatient facility by the end of the study period, compared to counties with less than the mean percentage of black residents.

As of March 14, 2016, thirty-one states had opted to participate in the Medicaid expansion. However, it is worth noting that the decline of public facilities was even more pronounced among states that are not participating in the expansion. In addition, more than four-fifths of counties with more than the mean percentage of black residents are located in states that have not expanded Medicaid.

Conclusion

This study provides the first empirical information about trends in the ownership mix of facilities for substance use disorder treatment since the beginning of the twenty-first century and the implications of these trends for counties with a high percentage of black residents. The general decline in the number of public facilities, coupled with a similar or reduced likelihood of gaining private facilities in these counties, resulted in an overall disparity between them and other counties in the geographic availability of treatment facilities by 2010. As national policies for substance use control continue to shift toward prevention and treatment and away from more punitive approaches, it will be essential to ensure that enough treatment facilities are available across diverse communities.

http://content.healthaffairs.org/content/35/6/1036.abstract

***

Nearly all ACA benchmark plans violate rules on addiction treatment coverage

By Steven Ross Johnson
Modern Healthcare, June 7, 2016

More than two-thirds of state benchmark plans violate federal requirements to cover treatment for addiction disorders.

The National Center on Addiction and Substance Abuse surveyed addiction treatment benefits offered among 2017 Essential Health Benefits benchmark plans and found none offered a comprehensive array of addiction treatment benefits.

The report cites benchmark plans, which determine the minimum level of benefits available to those covered in state exchange plans, frequently “excluded or not explicitly covered benefits” related to residential treatment and the use of methadone as therapy.

Calls for more comprehensive coverage of addiction treatment services have grown louder over the past few years as the number of drug overdose deaths have reached record levels. More than 28,000 people died in 2014 from overdoses involving opioid drugs, including heroin.

Last year, the federal government suggested including coverage of the full range of approved medication-assisted treatments as part of the essential health benefits to ensure more access to such therapies. But the proposal faced opposition from insurers and pharmacy benefit managers and was struck down.

http://www.modernhealthcare.com/article/20160607/NEWS/160609927

Outrageous! While the public drug abuse treatment centers decline in numbers, and the private, for-profit centers are proliferating, “the counties with higher percentages of black residents had a lower likelihood of having any outpatient facility by the end of the study period, compared to counties with less than the mean percentage of black residents” (Health Affairs). Further, more than two-thirds of private benchmark plans offered in the ACA exchanges “violate federal requirements to cover treatment for addiction disorders” (Modern Healthcare).

According to the Modern Healthcare article excerpted above, “Last year, the federal government suggested including coverage of the full range of approved medication-assisted treatments as part of the essential health benefits to ensure more access to such therapies. But the proposal faced opposition from insurers and pharmacy benefit managers and was struck down.”

Who is responsible for this egregious disregard of addiction treatment needs, coverage of which is required by the Affordable Care Act – omissions especially neglectful of our black brothers and sisters? The private, for-profit addiction treatment centers; the private, for-profit insurers; the private, for-profit pharmacy benefit managers; and the anti-government legislators who have underfunded public treatment centers, and who have turned the funding of health care over to private, for-profit intermediaries.

A well designed, publicly-funded and publicly-administered single payer system would separately budget capital expenditures, including those for facilities offering addiction services, with distribution based on needs rather than on for-profit business ventures, and the services would be paid for on an equitable basis, ensuring access and affordability for everyone. It should be about patients, not business stratagems.