PNHP

Cost-Sharing Causes Death

Cost-Sharing Causes Death

The Health Costs of Cost-Sharing; NBER Working Paper 28439

By Amitabh Chandra, Evan Flack, and Ziad Obermeyer
National Bureau of Economic Research, February 2021

Abstract

We use the design of Medicareā€™s prescription drug benefit program to demonstrate three facts about the health consequences of cost-sharing. First, we show that an as-if-random increase of 33.6% in out-of-pocket price (11.0 percentage points (p.p.) change in coinsurance, or $10.40 per drug) causes a 22.6% drop in total drug consumption ($61.20), and a 32.7% increase in monthly mortality (0.048 p.p.). Second, we trace this mortality effect to cutbacks in life-saving medicines like statins and antihypertensives, for which clinical trials show large mortality benefits. We find no indication that these reductions in demand affect only ā€˜low-valueā€™ drugs; on the contrary, those at the highest risk of heart attack and stroke, who would benefit the most from statins and antihypertensives, cut back more on these drugs than lower risk patients. Similar patterns exist for other drugā€“disease pairs, and irrespective of socioeconomic circumstance. Finally, we document that when faced with complex, high-dimensional choice problems, patients respond in simple, perverse ways. Specifically, price increases cause 18.0% more patients (2.8 p.p.) to fill no drugs, regardless of how many drugs they had been on previously, or their health risks. This decision mechanically results in larger absolute reductions in utilization for those on many drugs. We conclude that cost-sharing schemes should be evaluated based on their overall impact on welfare, which can be very different from the price elasticity of demand.

From the Conclusions

We find that small increases in cost cause patients to cut back on drugs with large benefits, ultimately causing their death. Cutbacks are widespread, but most striking are those seen in patients with the greatest treatable health risks, in whom they are likely to be particularly destructive. It is difficult to affirmatively establish that we have identified behavioral hazard, in the precise sense of a systematic failure to balance the cost with the benefit of care. But we emphasize that the size of the mortality increase cannot be reconciled with any current understanding of the value patients place on life.

We emphasize that our results do not capture the total impact of cost-sharing on health. We estimate only mortality, not morbidity, and only how December price changes affect 65-year-oldsā€™ December mortality: a very specific setting, and a very short time period. But patients face cost- sharing throughout the year, and the life-span. If they respond with cutbacks similar to the ones we observe here, they would experience similar increases in mortality in many other settings and over longer time periods. While these effects are as-yet undetected, there is no reason to think that they are not present and equally large.

One conclusion remains clear: patient cost-sharing introduces large and deadly distortions into the cost-benefit calculus. Payers should evaluate the merits of these policies in light of their impact on health, not just on health care costs.

https://www.nber.org…

Comment:

By Don McCanne, M.D.

The health policy literature is replete with studies that confirm that cost-sharing, including deductibles, copayments, and coinsurance, can cause individuals to forgo health care that they should have. This study expands on that concept to confirm that this “behavioral hazard” can result in death.

What is the purpose of cost-sharing? It is simply to save money by reducing the amount of health care that a person receives. Ideally it would cause patients to forgo only that care that is not beneficial, but it doesn’t work that way. The financial barrier of cost-sharing also causes patients to forgo beneficial care, and, as this study shows, they will cut back on life-saving medicines like statins and antihypertensives, with resultant premature death. That cries out for a change in policy.

We should eliminate cost-sharing in order to eliminate not only lethality but also other consequences such as potential financial hardship. We should remove all barriers to beneficial services, even though they may be of low value, as long as they have some potential value. The patients can always decline care they do not want. If services have no value, we simply do not include them under covered benefits. At the same time, prices should be government-administered so that we, collectively, pay only legitimate costs plus fair margins.

Cost-sharing is a business tool. What we want are patient care tools. When we finally enact and implement a single payer system of an improved Medicare for All, let’s be sure that it is the patient care community that dictates policy priorities, as long as they are on behalf of the patients. Good business also is fine if patient care is always placed first. Cost-sharing places the businessman first and not the patient, so that has to be changed. Death should not be an unintended consequence of health policy.

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.

Private Medicare Advantage plans continue to upcode for billions in extra payments

Medicare Advantage Chart Reviews Are Associated With Billions in Additional Payments for Some Plans

By David J. Meyers, Ph.D., M.P.H.; Amal N. Trivedi, M.D., M.P.H.
Medical Care, Official Journal of the Medical Care Section, American Public Health Association, February 2021

Abstract

Background: In the Medicare Advantage (MA) program, private plans receive capitated payments that are adjusted based on their enrolleesā€™ number and type of clinical conditions. Plans have the ability to review charts to identify additional conditions that are not present in claims data, thereby increasing risk-adjusted payments. Recently the Government Accountability Office released a report raising concerns about the use of these chart reviews as a potential tool for upcoding.

Objectives: To measure the extent to which plans receive additional payments for chart reviews, and the variation in chart reviews across plans.

Research Design: In this cross-sectional study we use 2015 MA Encounter data to calculate how many additional diagnoses codes were added for each enrollee using chart reviews. We then calculate how these additional diagnosis codes translate to additional reimbursements across plans.

Subjects: A total of 14,021,692 beneficiaries enrolled in 510 MA contracts in 2015.

Measures: Individual and contract level hierarchical condition category codes, total plan reimbursement.

Results: Chart reviews were associated with a $2.3 billion increase in payments to plans, a 3.7% increase in Medicare spending to MA plans. Just 10% of plans accounted for 42% of the $2.3 billion in additional spending attributed to chart review. Among these plans, the relative increase in risk score from chart review was 17.2%. For-profit plans engaged in chart reviews substantially more frequently than nonprofit plans.

Conclusions: Given the substantial and highly variable increase in payments attributable to chart review, further investigation of the validity of this practice and its implications for Medicare spending is needed.

https://pubmed.ncbi.nlm.nih.gov…

Billions in Estimated Medicare Advantage Payments From Chart Reviews Raise Concerns

U.S. Department of Health and Human Services, Office of Inspector General, December 2019

Our findings highlight potential issues about the extent to which chart reviews are leveraged by MAOs (Medicare Advantage Organizations) and overseen by CMS. Based on our analysis of MA encounter data, we found that:

  • MAOs almost always used chart reviews as a tool to add, rather than to delete, diagnosesā€”over 99 percent of chart reviews in our review added diagnoses.
  • Diagnoses that MAOs reported only on chart reviewsā€”and not on any service recordsā€”resulted in an estimated $6.7 billion in risk-adjusted payments for 2017.
  • CMS based an estimated $2.7 billion in risk-adjusted payments on chart review diagnoses that MAOs did not link to a specific service provided to the beneficiaryā€•much less a face-to-face visit.
  • Although limited to a small number of beneficiaries, almost half of MAOs reviewed had payments from unlinked chart reviews where there was not a single record of a service being provided to the beneficiary in all of 2016.

https://oig.hhs.gov…

Covered in a previous Quote of the Day:
https://pnhp.org…

Chapter 13: The Medicare Advantage program: Status report

MedPAC, March 2020

Encounter data

The Commission has long been interested in using MA encounter data to gather information about MA plan practices and utilization that can then be used to inform Medicare policies, by improving MA payment policy, providing a useful comparator with the FFS Medicare program, or generating new policy ideas that could be applied across the entire Medicare program. However, we previously found that the encounter data submitted for 2014 and 2015 (preliminary) lacked completeness and accuracy, making them insufficient for these purposes.

Risk adjustment and coding intensity

Most claims in FFS Medicare are paid using procedure codes, which offer little incentive for providers to record more diagnosis codes than necessary to justify ordering a procedure. In contrast, MA plans have had a financial incentive, since the current risk adjustment model was introduced, to ensure that their providers record all possible diagnoses: Higher enrollee risk scores result in higher payments to the plan.

Our updated analysis for 2018 shows that higher diagnosis coding intensity resulted in MA risk scores that were more than 8 percent higher than scores for similar FFS beneficiaries.

In 2018, the adjustment reduced MA risk scores by 5.91 percent, leaving MA risk scores and payments about 2 percent to 3 percent higher than they would have been if MA enrollees had been treated in FFS Medicare. In 2019 and subsequent years, the minimum adjustment for coding intensity will be 5.9 percent.

http://www.medpac.gov…

Sidley, August 2019

On August 6, 2019, the United States District Court for the Western District of Texas granted a motion to dismiss filed by Baylor Scott & White Health (ā€œBaylorā€), a network of inpatient short-term acute care hospitals, in a False Claims Act suit alleging that Baylor submitted ā€œmore than $61.8 million in false claimsā€ by upcoding certain diagnosis codes.

In finding that the allegations did not satisfy the FCAā€™s pleading requirements, the Court reasoned that the alleged ā€œschemeā€ to identify and code MCCs was ā€œnot in and of itself one to submit false claimsā€ and was ā€œequally consistent with a scheme to improve hospital revenue through accurate coding of patient diagnoses.ā€ The Court noted that CMS has encouraged hospitals to code diagnoses accurately and completely and has acknowledged that taking advantage of coding opportunities to maximize payments supported by the medical record is not inappropriate.

The Courtā€™s decision represents another significant victory for Medicare Advantage providers.

https://fcablog.sidley.com…

Comment:

By Don McCanne, M.D.

We’ve been reporting for years on the upcoding of diagnoses which has allowed the private Medicare Advantage plans to cheat taxpayers out of billions of dollars. MedPAC has also been following this, but insufficient action seems to have been taken so far. There has been some success at obtaining partial refunds, but, as the Sidley report indicates, the courts seem to think that it is fine to add additional diagnosis gleaned from charts though not specific to the services billed for, since they state that “taking advantage of coding opportunities to maximize payments supported by the medical record is not inappropriate.”

Rather than continuing to pay the private Medicare Advantage plans billions of dollars extra, it seems more logical to dismiss them and move on with an improved, single payer version of the traditional Medicare program instead. As taxpayers we would certainly do better.

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.

Reining in health care costs

Building Health Care Better Means Reining in Costs

By David Cutler, Ph.D.
JAMA Health Forum, January 28, 2021

(Excerpts)

From 2007 to 2019, the 2 most recent business cycle peaks, the growth of inflation-adjusted GDP per person averaged only 1.0% annually. That is down from 2.2% per year in the 1990s. An enormous share of this economic growth was taken by health care, about 32% of increased GDP between 2007 and 2019.

In addition, the richest US individuals received the vast bulk of the benefit from the income growth that was not taken by medical care. Income of wealthy individuals has increased, whereas income in the lower and middle income parts of the distribution has stagnated.

If President Biden wants to improve the economic fortunes of people with low or middle incomes, he will have to address the cost of medical careā€”and doing so is not easy.

Areas to Save

There are 3 areas that the Biden administration could focus on for health care savings that could improve health even as they save money. These are administrative expenses, excessively high prices, and overuse of health care services.

Administrative expenses command about one-quarter of total health care spending in the US; in other countries, even those with multipayer systems, administrative expenses comprise less than one-eighth of their total health care spending. Advocates of a single-payer system note that their plans would reduce administrative costs. Those who are opposed to single-payer health care need to demonstrate that health care can be made administratively more efficient or the chorus for a single-payer approach will continue to grow.

The second area the Biden administration should look to for curbing spending is the excessively high prices related to health care in the US. The cost of brand-name pharmaceuticals, hospitals, and physicians are all higher than elsewhere.

The third area where savings may be found is reducing unnecessary medical care.

Helping the Less Fortunate First

Tackling these issues will take time. No industry as big as health care changes rapidly, but that does not mean that short-term savings are impossible. One concrete step that can be taken in the interim is to link payments for pharmaceuticals with income. The idea is that US residents with low incomes should be charged no more than people in lower-income European countries, and US residents who have middle incomes should be charged no more than people in the richer European countries.

The Biden administration is putting all resources possible into the fight against COVID-19, something everyone hopes is successful. But that is not the only health care challenge that the administration will need to tackle. It should devote just as many resources to lowering unnecessary spending on medical care. Doing so is among the most important steps the new administration can take to promote widespread economic prosperity.

David Cutler, PhD, is the Otto Eckstein Professor of Applied Economics in the Department of Economics and holds secondary appointments at the Kennedy School of Government and the School of Public Health at Harvard University.

Published Comment:

By Don McCanne, M.D., Physicians for a National Health Program
February 1, 2021

The three sources of potential savings mentioned by Dr. Cutler are very real but differ significantly in magnitude.

The overuse of health care services can be trimmed slightly, but it is very difficult to eliminate low value care, such as imaging procedures or elective surgeries if the patient finds those to be of personal value. Though people keep looking, the savings here will be small.

Prices have been confirmed to be high in the United States and can be reduced by government-administered pricing, much like the VA, saving hundreds of millions of dollars.

Administrative costs of the private insurers and the administrative burden placed on the health care delivery system are massive, and the recoverable amount by eliminating this industry is underestimated in most studies of single payer. The savings are potentially in the hundreds of billions of dollars (1).

Because of large income and wealth inequality funding does have to be progressive, but not through an administratively complex and expensive method such as setting drug prices based on income, as Dr. Cutler suggests. It is much more efficient to do it through progressive taxes instead.

That is why, as Dr. Cutler suggests, “the chorus for a single payer approach will continue to grow.”

Reference

1. Himmelstein, Campbell, and Woolhandler https://doi.org/10.7326/M19-2818

CONFLICT OF INTEREST: Unpaid volunteer for PNHP

https://jamanetwork.com…

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.

Clustering of out-of-pocket spending can produce financial hardship

Annual Out-Of-Pocket Spending Clusters Within Short Time Intervals: Implications For Health Care Affordability

By Steven Chen, Paul R. Shafer, Stacie B. Dusetzina, and Michal HornĆ½
Health Affairs, February 2021

Abstract

The distribution of out-of-pocket spending throughout the year is an important determinant of health care affordability that has received little attention. We used 2017 data from a large database of US commercial insurance claims to study the distribution of patient-level out-of-pocket spending throughout the year, highlighting potential hardship due to temporal clustering of spending. We found that although most commercially insured people had several health care encounters throughout the year, their out-of-pocket spending was mostly concentrated within short time intervals. Nearly one-third of people with above-the-median total annual health care spending (plan plus out-of-pocket spending) incurred half of their annual out-of-pocket spending in just one day. Policy makers working to improve the affordability of care should focus on innovative approaches to cost sharing that prevent dramatic financial shocks to household budgets due to medical bills.

From the Discussion

Our study examined the intrayear dynamics in out-of-pocket spending among people with commercial insurance. We found that a substantial percentage incurred large dollar amounts and large percentages of their annual out-of-pocket spending within short time spans. This pattern could reflect low demand for care among generally healthy enrollees needing limited services, where spending is naturally clustered. Alternatively, this pattern could reflect limited health care use by patients with high demand for care who either delay or forgo care because of costs. Finally, this pattern could also reflect high demand for care among patients who meet their deductibles or out-of-pocket maximums with a single encounter and subsequently face little or no cost sharing for the remainder of the year.

The distribution of out-of-pocket spending throughout the year is an important determinant of health care affordability. Many Americans have less than $2,000 in liquid assets and report facing challenges with affording an unexpected expense of $400 or larger. As a consequence, a large health care expense at a given moment may be unaffordable, particularly for households at the lower end of the socioeconomic ladder. Previous work documented that the financial burden of sudden out-of-pocket health care expenses was higher among low-income families and persisted even after potential anticipatory savings or payment delays that may reduce the burden were accounted for.

Temporal clustering of considerable out-of-pocket spending pertains especially to high-deductible health plan enrollees as deductibles expose them, at least initially, to the full up-front cost of health services each plan year. Commercial plans feature deductibles for several reasons. First, by shifting health care expenses to consumers, deductibles decrease plan premiums, which may lead to greater take-up by people whose expected health care spending is low. Second, increased patient cost sharing through high deductibles is designed to reduce moral hazard, although the evidence shows that high-deductible health plan enrollees reduce the use of both needed and potentially wasteful care. Last, increased patient cost sharing may also steer patients toward lower-cost providers. Because of generally high health care prices, however, our findings suggest that many people reach or come close to reaching their deductibles or other cost-sharing limits within just a few health care encounters that are often clustered in time. As a consequence, the desired incentive for patients to reduce moral hazard or price-shop is undermined.

Hospitalizations are costly, and patients admitted for an inpatient stay have a high chance of reaching their deductible during the hospitalization. Although moral hazard may increase the use of inpatient care, most patients are admitted because of their complex health care needsā€”a situation in which health insurance, in its core purpose, should shield beneficiaries from large expenditures.

Conclusion

Many people with employer-sponsored insurance incur substantial out-of-pocket spending within a short time span, leading to potential challenges to affording health care. Policy makers working to improve the affordability of care should focus not only on curbing the growth of health care prices but also on innovative approaches to cost sharing that prevent dramatic financial shocks to household budgets as a result of medical bills. For example, instituting monthly rather than the current annual out-of-pocket spending limits could improve access to care and financial security while encouraging judicious use of health care services by patients.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

Cost sharing with high deductibles, coinsurance, and copayments not only exposes patients to potentially unaffordable costs, the clustering of the required cost sharing payments may also create financial hardship for the patients.

The authors suggest various tweaks that might reduce the clustering of the payments, but it does not reduce the affordability of health care for those with limited means.

We have to have a health care financing system since health care must be paid for, but the financing of the system can be achieved through equitable, affordable, progressive taxes. We want people to have the care that they should have, but we do not have to design systems that prevent that care in order to reduce spending.

Medicine is a science and an art. We simply should not offer care that is not beneficial. If outliers are working the system to increase profits, we can take care of them through appropriate disciplinary actions, but let’s not take it out on the patients. Let’s do all we can to see that everyone gets the health care that they should have.

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.

Why America is overpaying for health care

By Robert Funke, M.D.
Kingsport (Tenn.) Times News, February 3, 2021

Interest in Medicare for All during the primary campaigns last spring was typically met with the wrong question: ā€œHow can we afford it?ā€ The better, more urgent question is ā€œHow can we afford our current system?ā€

In 2019, the U.S. spent over $3.7 trillion on health care. Thatā€™s 18% of the gross domestic product of the worldā€™s largest economy, over $12,000 for every man, woman and child ā€” and rising. Much of that is spent on the very sick and the elderly, but even the average healthy family of four today spends $28,653 annually on health insurance.

It was not an efficient use of $3.7 trillion. Thirty percent went to overhead and administration, more than double the percentage of any other country in the world. Thatā€™s over a trillion health care dollars that did not go to a hospital, doctor, pharmacy or any other health care provider but instead to a huge and largely private bureaucracy that comprises 22% of our health care work force.

In my first decade of practice, the number of physicians in the U.S. grew by 50%, while the number of health care administrators grew by 2,000%.

Hereā€™s what that looked like on the ground: 30 years ago my solo medical practice ran smoothly and efficiently with two employees, a nurse and a secretary. As the insurance system grew in complexity, my expenses rose so I joined a group to share those expenses.

Subsequently, we hired more employees, not to heal the sick, but to review complicated insurance contracts, handle copays, denials, prior authorizations and to track differing compliance rules and ever-changing medication formularies from each insurance plan.

By my retirement last year, each physician in the group had seven employees and was hiring more ā€” for paperwork. Similarly, many hospitals openly acknowledge they employ more billing staff than nurses.

Prior to the Affordable Care Act, private health insurance companies had 30% overhead, so only roughly 70 cents of every dollar collected paid a medical bill. The ACA is supposed to cap their overhead at a still generous 20% with the surplus being refunded (though itā€™s unclear to whom).

The public/private partnership of Part C Medicare Advantage plans has done nothing to reduce waste. Quite the contrary. These private Advantage plans cost U.S. taxpayers approximately 10% more per beneficiary than traditional government-run Medicare. Yet traditional recipients are generally sicker.

Currently, these plans can only be administered by a private insurance company and are extremely profitable, as the dollars they put into marketing and advertising illustrate. Thus they pay shareholders and reward CEOs with salaries in the tens of millions annually. Traditional Medicare does not pay shareholders and has an overhead of just 4%. For that remarkable achievement the Medicare director earns just $250,000 annually.

Another reason for high costs is simply high prices. U.S. prices are higher than necessary for a normal profit, and are driven by the market power of providers and by the difficulty we have assessing prices and quality.

Hospital care consumes the largest portion (33%). Mergers and consolidation have helped the hospital bottom lines, but no savings are passed along to patients. And again, administrative costs in U.S. hospitals are double those of other countries.

Drug prices ā€” famously higher in the U.S. ā€” account for about $400 billion annually. Tests and procedure costs are higher too: The average price of an angioplasty in the U.S. is $28,400 compared with $7,500 in Israel. Our angioplasties are no more effective than theirs, and their facilities are state-of-the-art. A patient seriously injured while in Israel told me heā€™d gladly return there for all his future care.

As for physician fees, U.S. doctors are well paid. However, most specialties are equally well paid in Canada. Today more doctors move to Canada to practice than leave Canada.

Another cause of our high costs is our inadequate investment in public health ā€” never more apparent than the past year. As the saying goes, an ounce of prevention is worth a pound of cure, so other countries achieve value by spending 6% of their health care budgets on public health. U.S. public health spending has fallen over the past 20 years to below 3%. We task our frontline doctors with addressing smoking and obesity whereas public health campaigns would be more effective and less expensive.

Responsible governance means taking a hard look at wasteful spending and making the changes necessary for our economic well-being. We donā€™t have to accept an overpriced system that does not meet our needs. How can we pay for a better system? We already do.

Dr. Robert Funke is a retired Kingsport family physician and member of Physicians for a National Health Program.

https://www.timesnews.net…

Medicare already improves access and affordability

The Impact Of Medicare On Access To And Affordability Of Health Care

By Paul D. Jacobs
Health Affairs, February 2021

Abstract

Medicare pays for roughly one in four physician visits in the United States, yet a rigorous understanding of how Medicare currently affects access to and affordability of care for its enrollees is unavailable. Using data from the Medical Expenditure Panel Surveyā€“Household Component and the National Health Interview Survey, I tested for changes in access to care and affordability around age sixty-five, when most people gain eligibility for Medicare. I found that Medicare eligibility is associated with a 1.5-percentage-point reduction in reports of being unable to get necessary care (a 50.9 percent reduction compared with the percentage at age sixty-four) and a 4.1-percentage-point (45.3 percent) reduction in not being able to get needed care because of the cost. Recently, policy makers have proposed various ways of extending Medicare coverage. These results suggest that incremental Medicare expansions could have positive access and affordability benefits for enrollees compared with the insurance options available to them before they turn sixty-five.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

Much of America currently advocates expanding Medicare to include everyone. Those who have studied the issue realize that Medicare is still not adequate and thus should be improved if it is to be used as the basis of a universal program.

Today’s report confirms that Medicare is nevertheless an improvement in both access and affordability over the typical coverage at age 64, just before the onset of eligibility for the existing Medicare program. Medicare is associated with a 1.5 percentage point reduction in reports of previously being unable to get necessary care (50.9 percent reduction compared to age 64). Medicare is also associated with a 4.1 percentage point reduction in not being able to get needed care because of the cost (45.3 percent reduction compared to age 64).

That’s not bad, but just think how much better those numbers would be if we replaced Medicare with a new and improved version and then expanded it to include everyone. What are we waiting for?

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.

Should Clinical Guidelines Incorporate Cost Pathways for Persons With Financial Hardship?

By David Goldberg, M.D.
AMA Journal of Ethics, Medicine and Society, February 2021

Abstract

The American Diabetes Association 2020 Standards of Care for the treatment of hyperglycemia in type 2 diabetes includes a treatment pathway when ā€œcost is a major issue.ā€ This pathway recommends use of 2 generic drug classes, thereby codifying differential treatment for those with financial hardship. This article explores 4 implications of incorporating the cost pathway into clinical recommendations: (1) the presence of a cost pathway might create the appearance of an evidence-based quality difference through activation of implicit bias; (2) screening for financial hardship to guide therapy has potential harms for patients; (3) concern that financial hardship warrants differing care might impact overall quality of care and patient-clinician relationships; and (4) applying the guidelines when caring for patients with financial hardship might demoralize clinicians.

Recommendations and Pathways

In December 2018, the American Diabetes Association (ADA) and the European Association for the Study of Diabetes (EASD) published recommendations for the treatment of hyperglycemia in type 2 diabetes for persons failing metformin monotherapy.1 These recommendations are incorporated in the ADA 2020 Standards of Care.2 This essay considers 4 ethical concerns about including patientsā€™ financial hardship as part of a treatment pathway (algorithm),1 a component of the algorithm I call a social pathway since it relies on assessing medication affordability. The social pathway is distinct from the 4 clinical pathway components of the algorithm, which depend on assessing clinical parameters for persons with type 2 diabetes. Two of these clinical pathways involve assessment of patients for atherosclerotic cardiovascular disease (ASCVD) or for either chronic kidney disease (CKD) or heart failure (HF). When ASCVD, CKD, or HF are not present, there are 2 additional clinical pathways for a ā€œcompelling need to minimize hypoglycemiaā€ or a ā€œcompelling need to minimize weight gain or promote weight loss.ā€1 The social pathway, which is indicated when ā€œcost is a major issue,ā€1 represents a third choice for those without ASCVD, CKD, or HF. The 2 drug classes in common for avoidance of hypoglycemia and weight-related risks in these groups are patented sodium-glucose cotransporter (SGLT2) inhibitors and patented glucagon-like peptide 1 (GLP-1) analogues. Dipeptidyl peptidase 4 inhibitors and thiazolidinediones are also included as medication options to avoid hypoglycemia. The social pathway recommends generic sulfonylureas and thiazolidinediones.1, 3

Evidence and Representation

The 2 clinical pathways for persons with ASCVD or either CKD or HF are supported by a number of placebo-controlled trials for individual SGLT2 and GLP-1 medications.4, 5, 6 By contrast, the literature guiding treatment of persons with type 2 diabetes without ASCVD, CKD, or HF is relatively weak. Most studies comparing drug classes to one another are of short duration, rely on surrogate outcomes, and are industry funded. In a 2016 review of comparative effectiveness studies, only 4% of 177 studies had a duration of greater than 2 years and 12% of 162 studies explicitly reported receiving no industry sponsorship.7 Although outcomes such as weight gain and rates of hypoglycemia are well suited to studies of short duration, for persons without cardiovascular or renal disease, we do not have comparative effectiveness studies with microvascular, macrovascular, or mortality outcomes to guide treatment preferences.7, 8 The text of the 2020 ADA Standards of Care recognizes the weakness of the data in stating: ā€œFor patients without established ASCVD, indicators of high ASCVD risk, HF, or CKD, the choice of a second agent to add to metformin is not yet guided by empiric evidence.ā€3 The ADA treatment algorithm graphic, however, does not convey the poor-quality evidence and lack of certainty guiding medication choices for persons without ASCVD, HF, or CKD.

The ADA/EASD treatment algorithm is not aligned with best practices of guideline presentation.9 There are other guidelines commonly used in primary care that more rigorously evaluate and display the evidence. For example, the American Heart Association and American College of Cardiology 2018 Cholesterol Guideline categorizes each evidence statement based on the class (strength) of the recommendation and level (quality) of evidence.10 Their recommendations include value statements when treatments might be supported by high-quality outcomes evidence but do not meet thresholds for cost effectiveness. Unlike the ADA recommendations, the graphic display of the treatment algorithms includes color codes for the strength of the recommendation or value of each branch point.10

Implicit Bias

How will clinicians read the treatment algorithm graphic? Specifically, for persons without ASCVD, CKD, or HF, will the juxtaposition of the 2 clinical pathways and the social pathway encourage the perception that there is an evidence-based quality difference between the choices for the clinical and social pathways? To understand how the algorithm might be communicating a quality difference between the clinical and social pathways, we must consider the nature of implicit bias and how the ADA/EASD treatment algorithm embeds implicit bias.

Research on implicit bias has described the tendency of people to see social groups through the lens of us and them, accentuating differences and thereby distancing the 2 groups. The negative attributes of ā€œthemā€ and their circumstances affirm the positive attributes of ā€œusā€ and our station. Implicit bias is activated when a socially held bias is anchored to a second set of preferred-less preferred dichotomous elements, such that the bias and second set of value judgments reinforce one another. Although some individuals may not believe in the bias and the differences between ā€œusā€ and ā€œthem,ā€ the strength of the anchoring of the social bias to a second set of value judgments can influence perception.11

There are long-standing biases against the poor that are reinforced by narratives that the poor are responsible for their status, are prone to dependence, and deserve less.11, 12, 13 In the ADA/EASD recommendations, the financially able (deserving) are anchored to the clinical pathways (a form of decision making preferred by clinicians) while the people with financial hardship (less deserving) are anchored to decision making that is less clinically grounded (and therefore less preferred by clinicians). The anchoring reinforces the social hierarchy. The anchoring also differentially frames perceptions of medication options: the patented medication options (SGLT2 inhibitors and GLP-1 analogues) in common for the 2 clinical pathways when ASCVD, CKD, or HF is not present are framed as more preferred, higher quality care, and the generic medication options in the social pathway are framed as less preferred, lower quality care, despite the absence of evidence regarding macrovascular and microvascular outcomes and death for this patient population. We come to perceive and value high-quality care for ā€œusā€ in part by defining and segregating a socially less deserving ā€œother.ā€ The social pathway of the ADA/EASD recommendations functions like a fun house mirror. On one side, it makes the medication options of the clinical pathways look larger and better, because on the other side are poorer people with diminutive care options. The ā€œmirrorā€ can prevent us from seeing gaps and biases in the literature, deviations of the ADA/EASD from best practices in writing guidelines, overreliance on expert opinion, absence of population assessment of costs and benefits of new therapeutics, and our collective failure to provide universal access to care.

More About Ethics and Justice

Here, I discuss 3 additional implications for patient care of incorporating the ADA/EASD social pathway in clinical recommendations.

Potential harms of screening for financial hardship. The social pathway is aligned with efforts to promote cost-of-care discussions. Yet research on cost-of-care discussions is at best formative with respect to screening methods, clinician resistance, interventions, and outcomes.14, 15, 16, 17, 18 Screening for social determinants of health has shown promise,19, 20, 21, 22 but potential harms have been acknowledged.23 Some patients might find the screening questions intrusive, disrespectful, stigmatizing, or undermining of trust. However, the purpose of screening for social determinants is to mitigate their impact through structural change,21 a different intent than the ADA/EASD social pathway. Screening for financial hardship to guide diabetes therapy is untested, and absent an evidence base, it raises ethical questions: Should clinicians inform patients that they are asking about ability to afford medications in order to prescribe presumably ā€œlesserā€ therapy? Will patients feel devalued by being relegated to the social pathway?24 What should clinicians do when they learn that patientsā€™ financial hardship goes beyond paying for diabetes medications?

Patient-clinician relationship. Other quality of care factors can be affected by reinforcing tiers of care. Patient-clinician communication and trust may be impaired, eroding the foundations of just relationships. In a seminal study, Lisa Cooper and colleagues demonstrated that measures of cliniciansā€™ implicit race bias were associated with potentially harmful communication patterns between clinicians and patients and with poor care ratings among African-American patients.25 In addition, clinicians might make assumptions about who should receive less expensive, lower-quality care based on their ā€œpoorā€ appearance, diction, or behavior. In making such assumptions, they might inadvertently contribute to the burden of discrimination and resultant risk of adverse health effects among those with financial hardship.26

Clinician demoralization. Finally, clinicians are torn between their professional ethics to provide quality care to all patients and real-world financial constraints on practice. A colleague in a safety net practice, reflecting on the type 2 diabetes treatment algorithm, said to me, ā€œThe longer I work here, the further I fall behind the rest of primary care practice.ā€ Every prescription for a ā€œbadā€ generic sulfonylurea (perceived by clinicians as of lesser quality based on their interpretation of the ADA/EASD treatment algorithm) and institutional formulary restrictions for expensive patented medication become demoralizing. Clinicians react negatively to their home institutions as opposed to the expert panel that recommended the generic therapies for people with financial hardship or the health system that structures care as a privilege. Clinicians know their home institutions are imperfect, so it is easy to ascribe blame to them. Given their need for guidance in navigating the complex terrain of medical care, clinicians regard experts as having principled authority. They have difficulty discerning that expertsā€™ enthusiasm for progress and the appeal of innovation may perpetuate bias in medical practice. They may not perceive the marginalization and stigmatization of persons with financial hardship and how practice patterns might be promoted, in part, on the backs of the poor.

A Bigger Picture

Although I am critical of the function of a cost-of-care pathway in the ADA/EASD recommendation statement, financial hardship is a staggering issue. Prior to the coronavirus pandemic, nearly 41 million Americans lived below the federal poverty line, and nearly 140 million Americans (43%) were either poor or low income under the Supplemental Poverty Measure.27 Nearly 40% of Americans could not afford a $400 emergency,28 and 27.5 million Americans did not have health insurance.29 Among the insured, 43% reported that they ā€œstruggledā€ to meet their deductible, and 40% assumed debt from medical bills.27 Low income is part of the web of social determinants of health that also affects diabetes risk.30, 31, 32, 33 Survey data indicate that nearly 1 in 4 adults and seniors reported difficulty affording medications.34 Low income, poor health status, and being prescribed 4 or more medications were risk factors for difficulty affording medications34; each factor is associated with type 2 diabetes. Difficulty affording medications leads patients to make unpalatable decisions, such as taking medications less frequently than prescribed, buying less nutritious food to afford medication, or choosing between the needs of family members or their own needs.35

Furthermore, people with low income are subject to structural forces that suppress wages, create dangerous work environments, undermine social services, limit affordable and stable housing, create food deserts, contribute to disproportionate rates of incarceration or control by judicial systems, threaten the social fabric of early childhood, make health care less accessible, expose people to pollutants, undercut the quality of primary and secondary education, and limit access to higher education, thereby maintaining a skewed playing field.9 As described above, the poor are blamed for their poverty.11, 12, 13 Poverty is often racialized or gendered, strengthening the biases that harm persons of color, women, and the poor.12, 36, 37, 38, 39

The ethical concerns described here are predicated on understanding poverty or financial hardship as an individual characteristic warranting individual intervention. Alternatively, poverty can be understood as being rooted in the socioeconomic systemā€”as being a feature of the economy and the degree of social cohesion.40 That the ADA/EASD recommendations created a pathway for individual patients for whom ā€œcost is a major issueā€1 is one more indicator of a broken system in need of repair.41, 42 Instead of devoting a pathway in a treatment algorithm to the poor, we should bring urgency to eliminating cost as a barrier to high-value, cost-effective care.

It could be different. Imagine more of our health professional societies demanding universal access to care and single-payer health insurance.43, 44 Imagine expert panels applying best practices to writing clinical guidelines in the context of universal access to care, without conflicts of interest with the pharmaceutical industry, and sensitive to patient-centered and population health perspectives. Imagine our medical societies becoming advocates and allies for the elimination of poverty. Engaging issues of poverty and rooting out manifestations of bias within and outside our medical societies, while no doubt challenging, will make our medical societies more relevant and stronger.

https://journalofethics.ama-assn.org…

References

  1. Davies MJ, Dā€™Alessio DA, Fradkin J, et al. Management of hyperglycemia in type 2 diabetes, 2018. A consensus report by the American Diabetes Association (ADA) and the European Association for the Study of Diabetes (EASD). Diabetes Care. 2018;41(12):2669-2701. View Article PubMed Google Scholar
  2. American Diabetes Association. Introduction: Standards of Medical Care in Diabetesā€”2020. Diabetes Care. 2020;43(suppl 1):S1-S2. View Article PubMed Google Scholar
  3. American Diabetes Association 9. Pharmacologic approaches to glycemic treatment: Standards of Medical Care in Diabetesā€”2020. Diabetes Care. 2020;43(suppl 1):S98-S110. View Article PubMed Google Scholar
  4. Cefalu WT, Gerstein HC, Holman RR, et al. Cardiovascular outcomes trials in type 2 diabetes: where do we go from here? Reflections from a Diabetes Care Editorsā€™ Expert Forum. Diabetes Care. 2018;41(1):14-31. View Article PubMed Google Scholar
  5. Nagahisa T, Saisho Y. Cardiorenal protection: potential of SGLT2 inhibitors and GLP-1 receptor agonists in the treatment of type 2 diabetes. Diabetes Ther. 2019;10(5):1733-1752. View Article PubMed Google Scholar
  6. McMurray JJV, Solomon SD, Inzucchi SE. Dapagliflozin in patients with heart failure and reduced ejection fraction. N Engl J Med. 2019;381(21):1995-2008. View Article PubMed Google Scholar
  7. Bolen S, Tseng E, Hutfless S, et al. Diabetes Medications for Adults With Type 2 Diabetes: An Update. Comparative Effectiveness Review No. 173. Agency for Healthcare Research and Quality; 2016. AHRQ Publication 16-EHC013-EF. Accessed December 9, 2020. https://effectivehealthcare.ahrq.gov/sites/default/files/pdf/diabetes-update-2015_research.pdf
  8. Qaseem A, Barry MJ, Humphrey LL, Forciea MA; Clinical Guidelines Committee of the American College of Physicians. Oral pharmacologic treatment of type 2 diabetes mellitus: a clinical practice guideline update from the American College of Physicians. Ann Intern Med. 2017;166(4):279-290. View Article PubMed Google Scholar
  9. Graham R, Mancher M, Miller Wolman D, Greenfield S, Steinberg E, eds; Institute of Medicine. Clinical Practice Guidelines We Can Trust. National Academies Press; 2011. Google Scholar
  10. Grundy SM, Stone NJ, Bailey AL, et al. 2018 AHA/ACC/AACVPR/AAPA/ABC/ACPM/ADA/AGS/APhA/ASPC/NLA/PCNA guideline on the management of blood cholesterol: a report of the American College of Cardiology/American Heart Association Task Force on Clinical Practice Guidelines. Circulation. 2019;139(25):e1082-e1143. Google Scholar
  11. Banaji MR, Greenwald AG. Blindspot: Hidden Biases of Good People. Delacorte Press; 2013. Google Scholar
  12. Abramsky S. The American Way of Poverty: How the Other Half Still Lives. Nation Books; 2013. Google Scholar
  13. Gaffney A. To Heal Humankind: The Right to Health in History. Routledge; 2019. Google Scholar
  14. Dine CJ, Msai D, Smith CD. Tools to help overcome barriers to cost-of-care conversations. Ann Intern Med. 2019;170(9)(suppl):S36-S38. View Article PubMed Google Scholar
  15. Carroll JK, Farah S, Fortuna RJ, et al. Addressing medication cost during primary care visits: a before-after study of team-based training. Ann Intern Med. 2019;170(9)(suppl):S46-S53. View Article PubMed Google Scholar
  16. Henrikson NB, Banegas MP, Tuzzio L, et al. Workflow requirements for cost-of-care conversations in outpatient settings providing oncology or primary care: a qualitative, human-centered design study. Ann Intern Med. 2019;170(9)(suppl):S70-S78. View Article PubMed Google Scholar
  17. Bradham DD, Garcia D, Galvan A, Erb C. Cost-of-care conversations during clinical visits in federally qualified health centers: an observational study. Ann Intern Med. 2019;170(9)(suppl):S87-S92. View Article PubMed Google Scholar
  18. Chino F, Peppercorn JM, Rushing C, et al. Going for broke: a longitudinal study of patient-reported financial sacrifice in cancer care. J Oncol Pract. 2018;14(9):e533-e546. View Article PubMed Google Scholar
  19. Davidson KW, McGinn T. Screening for social determinants of health: the known and the unknown. JAMA. 2019;322(11):1037-1038. View Article PubMed Google Scholar
  20. De Marchis EH, Hessler D, Fichtenberg C, et al. Part I: a quantitative study of social risk screening acceptability in patients and caregivers. Am J Prev Med. 2019;57(6)(suppl 1):S25-S37. View Article PubMed Google Scholar
  21. Byhoff E, De Marchis EH, Hessler D, et al. Part II: a qualitative study of social risk screening acceptability in patients and caregivers. Am J Prev Med. 2019;57(6)(suppl 1):S38-S46. View Article PubMed Google Scholar
  22. Krist AH, Davidson KW, Ngo-Metzger Q, Mills J. Social determinants as a preventive service: US Preventive Services Task Force methods considerations for research. Am J Prev Med. 2019;57(6)(suppl 1):S6-S12. View Article PubMed Google Scholar
  23. Garg A, Boynton-Jarrett R, Dworkin PH. Avoiding the unintended consequences of screening for social determinants of health. JAMA. 2016;316(8):813-814. View Article PubMed Google Scholar
  24. Ewing E. Ghosts in the Schoolyard: Racism and School Closings on Chicagoā€™s South Side. University of Chicago Press; 2018. Google Scholar
  25. Cooper LA, Roter DL, Carson KA, et al. The associations of cliniciansā€™ implicit attitudes about race with medical visit communication and patient ratings of interpersonal care. Am J Public Health. 2012;102(5):979-987. View Article PubMed Google Scholar
  26. Williams DR, Lawrence JA, Davis BA, Vu C. Understanding how discrimination can affect health. Health Serv Res. 2019;54(suppl 2):1374-1388. View Article PubMed Google Scholar
  27. Anderson S, Bayard M, Bennis P, et al. The Souls of Poor Folk: Auditing America 50 Years After the Poor Peopleā€™s Campaign Challenged Racism, Poverty, the War Economy/Militarism and Our National Morality. Institute for Policy Studies; April 2018. Accessed May 26, 2020. https://www.poorpeoplescampaign.org/wp-content/uploads/2018/04/PPC-Audit-Full-410835a.pdf
  28. Board of Governors of the Federal Reserve System. Report on the economic well-being of US households in 2018. Updated May 28, 2019. Accessed May 26, 2020. https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-dealing-with-unexpected-expenses.htm
  29. Berchick ER, Barnett JC, Upton RD. Health insurance coverage in the United States: 2018. US Census Bureau; November 2019. Current Population Reports P60-267(RV). Accessed December 9, 2020. https://www.census.gov/content/dam/Census/library/publications/2019/demo/p60-267.pdf
  30. Ross NA, Gilmour H, Dasgupta K. 14-year diabetes incidence: the role of socio-economic status. Health Rep. 2010;21(3):19-28. PubMed Google Scholar
  31. Gaskin DJ, Thorpe RJ Jr, McGinty EE, et al. Disparities in diabetes: the nexus of race, poverty, and place. Am J Public Health. 2014;104(11):2147-2155. View Article PubMed Google Scholar
  32. Thornton PL, Kumanyika SK, Gregg EW, et al. New research directions on disparities in obesity and type 2 diabetes. Ann N Y Acad Sci. 2019;1461(1):5-24. View Article PubMed Google Scholar
  33. Kirzinger A, Lopes L, Wu G. Brodie M. KFF health tracking pollā€”February 2019: prescription drugs. Kaiser Family Foundation. March 1, 2019. Accessed May 26, 2020. https://www.kff.org/health-reform/poll-finding/kff-health-tracking-poll-february-2019-prescription-drugs/
  34. Norris P, Tordoff J, McIntosh B, Laxman K, Chang SY, Te Karu L. Impact of prescription charges on people living in poverty: a qualitative study. Res Social Adm Pharm. 2016;12(6):893-902. View Article PubMed Google Scholar
  35. Bleich SN, Findling MG, Casey LS, et al. Discrimination in the United States: experiences of black Americans. Health Serv Res. 2019;54(suppl 2):1399-1408. View Article PubMed Google Scholar
  36. Findling MG, Bleich SN, Casey LS, et al. Discrimination in the United States: experiences of Latinos. Health Serv Res. 2019;54(suppl 2):1409-1418. View Article PubMed Google Scholar
  37. Findling MG, Casey LS, Fryberg SA, et al. Discrimination in the United States: experiences of Native Americans. Health Serv Res. 2019;54(suppl 2):1431-1441. View Article PubMed Google Scholar
  38. SteelFisher GK, Findling MG, Bleich SN, et al. Gender discrimination in the United States: experiences of women. Health Serv Res. 2019;54(suppl 2):1442-1453. View Article PubMed Google Scholar
  39. Oā€™Connor A. Poverty Knowledge: Social Science, Social Policy, and the Poor in Twentieth-Century US History. Princeton University Press; 2001. Google Scholar
  40. Woolf SH, Aron L, eds; National Research Council; Institute of Medicine. US Health in International Perspective: Shorter Lives, Poorer Health. Panel on Understanding Cross-National Health Differences Among High-Income Countries. National Academies Press; 2013. Google Scholar
  41. Woolf SH, Schoomaker H. Life expectancy and mortality rates in the United States, 1959-2017. JAMA. 2019;322(20):1996-2016. View Article PubMed Google Scholar
  42. Woolhandler S, Himmelstein DU. Single-payer reform: the only way to fulfill the presidentā€™s pledge of more coverage, better benefits, and lower costs. Ann Intern Med. 2017;166(8):587-588. View Article PubMed Google Scholar
  43. Gaffney A, Lexchin J; US/Canadian Pharmaceutical Policy Reform Working Group. Healing an ailing pharmaceutical system: prescription for reform for United States and Canada. BMJ. 2018;361:k1039. View Article PubMed Google Scholar
  44. Doherty R, Cooney TG, Mire RD, Engel LS, Goldman JM; Health and Public Policy Committee and Medical Practice and Quality Committee of the American College of Physicians. Envisioning a better US health system for all: a call to action by the American College of Physicians. Ann Intern Med. 2020;172(2)(suppl):S3-S6. View Article PubMed Google Scholar

CITATION
AMA J Ethics. 2021;23(2):E175-182.

DOI
10.1001/amajethics.2021.175.

ACKNOWLEDGEMENTS
The author would like to acknowledge the thoughtful feedback of Alice Oā€™Connor, PhD, University of California at Santa Barbara.

CONFLICT OF INTEREST DISCLOSURE
The author(s) had no conflicts of interest to disclose.

Singapore fails to meet needs of marginalized

Improve equity of S'pore healthcare by better meeting needs of the marginalised: Panellists at Yale-NUS College forum

By Tessa Oh
Today, Updated January 31, 2021

Singaporeā€™s healthcare system can do better by taking into consideration the experiences of people from marginalised communities in order to more effectively meet their healthcare needs.

This point was raised by several speakers on Friday (Jan 29) during a panel discussion held at Yale-NUS College on how the healthcare system here can be made more equitable.

During the discussion, the panellists were asked to outline their vision for healthcare equity in Singapore.

Dr Tambyah (Dr Paul Tambyah, senior consultant at the National University of Singapore and president-elect of the International Society of Infectious Diseases) said his hope is for Singapore to switch to a single-payer universal healthcare system, where the costs of essential healthcare for all residents are covered by a single public system.

Raising the examples of the healthcare systems in Scandinavia, Taiwan and the United Kingdom, Dr Tambyah said a similar model can be explored here.

ā€œ(The Scandinavians) have a pretty good track record, and that may be something that we can look at,ā€ he said.

https://www.todayonline.com…

Singapore

By Lee Chien Earn
The Commonwealth Fund, June 5, 2020

Singapore has achieved universal health coverage through a mixed financing system. The countryā€™s public statutory insurance system, MediShield Life, covers large bills arising from hospital care and certain outpatient treatments. Patients pay premiums, deductibles, co-insurance, and any costs above the claim limit. MediShield Life generally does not cover primary care or outpatient specialist care and prescription drugs. MediShield Life is complemented by government subsidies, as well as a compulsory medical savings account called MediSave, which can help residents pay for inpatient care and selected outpatient services. In addition, individuals can purchase supplemental private health insurance or get it through an employer.

Patients who wish to obtain additional coverage for private hospitals or care in private wards in public hospitals can purchase private insurance. Integrated Shield Plan holders can also purchase insurance riders that provide additional complementary coverage. There are also private insurance options, offered by for-profit insurers, that are not integrated with MediShield Life.

MediFund is an endowment fund set up by the government in 1993 that serves as a safety net for Singaporeans who need further help with the remaining cash component of their health care bills at public health care institutions.

https://www.commonwealthfund.org…

Comment:

By Don McCanne, M.D.

Conservatives in the United States frequently praise Singapore’s method of financing health care. Actually it is a quite fragmented, dysfunctional system. Apparently it does not meet the needs of the medically marginalized, though they do have a safety net of sorts. You can learn further details by reviewing The Commonwealth Fund’s description of it.

What is interesting is that Dr. Paul Tambyah, a consultant at the National University of Singapore, expresses the view that Singapore would benefit by switching to a single payer, universal health care system. It appears that their current system is not so ideal after all.

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.

Medicare for All Explained Podcast: Episode 49

Interview with Holly Hatcher

February 1, 2021

Registered Nurse and Dane County (Wisc.) Board Supervisor Holly Hatcher discusses her effort to pass a local resolution in support of federal single-payer legislation, as well as the overall need for a national health program. ā€œAs a nurse I support Medicare for All because of the innumerable, avoidable medical crises that I find myself confronting every day.ā€

Additional episodes will be uploaded twice monthly. Subscribe in iTunes, or access a complete archive of the podcast, below.

https://medicareforallexplained.podbean.com

Exorbitant prices of brand name drugs

International Prescription Drug Price Comparisons

By Andrew W. Mulcahy, Christopher M. Whaley, Mahlet G. Tebeka, Daniel Schwam, Nathaniel Edenfield, Alejandro U. Becerra-Ornelas
RAND, Research Report, January 28, 2021

Conclusion

Although several prior studies compare drug prices in the United States with those in other countries, the most recent of these studies used data that are nearly a decade old. In our analysis using 2018 data, we found that, with the exception of unbranded generics, 2018 drug prices in the United States were substantially higher than those in other countries. The United States had lower prices for unbranded generics than most comparator countries. Unbranded generics account for 84 percent of U.S. prescription drug volumeā€”a much larger share than the 35 percent for the OECD comparison countriesā€”but only 12 percent of prescription drug spending at manufacturer prices. In contrast, brand-name originator drugs accounted for only 11 percent of U.S. prescription drug volume and 82 percent of U.S. prescription drug spending. Overall, the United Statesā€™ considerable unbranded generic market share and low average unbranded generic prices did not fully offset higher brand-name originator prices.

The magnitude of the difference between prices in the United States and those in other countries was substantial. For all drugs, U.S. prices were 256 percent of prices in other countries. U.S. prices for brand-name originator drugs were 344 percent of prices in other countries. U.S. prices for unbranded generics were 84 percent of prices in other countries. Although different methodological decisions did change the magnitude of results, the overall pattern of higher drug prices in the United States was generally consistentā€”again, with the exception of unbranded generics. All G7 comparator countries had lower prices than the United States; France, Italy, and the United Kingdom had particularly low prices across drug categories regardless of methodological decisions.

The results of our study provide evidence that prescription drug prices are higher in the United States than in comparison countries. These results are consistent with the existing literature. Although we apply an estimated adjustment to U.S. prices to approximate rebates and other discounts applied to manufacturer prices as one of our sensitivity analyses, we recognize that the resulting prices will almost certainly differ from the actual net price to payers for individual presentations. We also recognize that resulting price indices will understate differences between prices in the United States and other countries because they adjust only U.S. prices downward even though rebates and similar discounts are increasingly common in other countries.

Future analyses should examine the association between purchasing power and drug prices across countries. We also recommend studying specific active ingredients and presentations that contribute most to the differences in aggregate prices between the United States and other countries, and we recommend long-term tracking of price indices that are relevant to the nascent U.S. biosimilars market.

The full study (71 pages) can be downloaded at this link:
https://www.rand.org…

News release:
https://www.rand.org…

Comment:

By Don McCanne, M.D.

This current RAND study confirms that U.S. drug prices were 256 percent of drug prices in other countries, while brand name originator drugs were 344 percent of prices in other countries. Although these brand drugs represented 82 percent of U.S. prescription drug spending, they accounted for only 11 percent of U.S. prescription drug volume. High prices indeed.

The one positive note is that 84 percent of U.S. prescription drug volume is for unbranded generics, but it represented only 12 percent of prescription drug spending at manufacturer prices. However the large volume of low cost generics does not make up for the exorbitant prices of the brand name originator drugs. We are continuing to spend way too much on brand name drugs. Think of all of the television ads that you see for these expensive drugs.

Although the authors recommend further analyses of these relationships, it really is time to switch to government administered pricing which we could easily do by enacting and implementing a well designed, single payer, improved Medicare for All. Decades of relying on markets has just not been effective.

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.

President Biden dodges health care reform

Biden signs orders aimed at expanding health care access, including abortion, and opening Obamacare enrollment

By Sheryl Gay Stolberg, Abby Goodnough and Margot Sanger-Katz
The New York Times, January 28, 2021

President Biden, seeking to expand access to health care and strengthen the Affordable Care Act, used his executive authority Thursday to order the reopening of enrollment in the health lawā€™s marketplaces and a re-examination of Trump administration policies that undermined protections for people with pre-existing medical conditions.

His aim, he said in a brief signing ceremony in the Oval Office, was to ā€œundo the damage Trump has done.ā€

Mr. Bidenā€™s first step is to reopen enrollment for health coverage offered through the federal marketplace created under the health law, also known as Obamacare. His intent is to offer coverage not only to those who lost it during the pandemic, but also to those who did not have insurance and now want it, according to a senior administration official who previewed the new policy during a conference call Thursday morning.

The so-called special enrollment period will run from Feb. 15 to May 15. The official said the reopening would be accompanied by the kind of robust patient outreach ā€” including ā€œpaid advertising, direct outreach to consumers and partnershipsā€ with community organizations and advocacy groups ā€” that was abandoned by the Trump administration.

Mr. Bidenā€™s actions take aim at a number of Mr. Trumpā€™s policies. In 2018, citing complaints about the price of Obamacare coverage, the Trump administration issued a rule that extended the length of less expensive ā€œshortā€ term policies from three months to up to three years. Such policies do not have to cover pre-existing conditions and can exclude common benefits like maternity care, mental health care or prescription drugs. The former administration also made it easier for small businesses to band together and offer plans that escape some of the requirements of the Affordable Care Act. Mr. Biden has asked federal agencies to re-examine these rules, which could take months to undo.

https://www.nytimes.com…

Comment:

By Don McCanne, M.D.

Open the enrollment period. Plus undo a number of Mr. Trump’s policies. More of the same.

Tens of millions remain uninsured and tens of millions more are underinsured. We continue to waste hundreds of billions of dollars on private insurer-induced administrative excesses. Not a hint of what he might do about that. Instead, we’ll have many months to undo Trump’s policies so that we’ll be left with … what? The same old system that hasn’t been working for tens of millions of us.

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.

It is not hard to cut waste in health care

Why Itā€™s So Hard to Cut Waste in Health Care

By Amy Finkelstein
The New York Times, January 22, 2021

Cutting waste while preserving critically important treatment is the holy grail of health care policy.

One of the pandemicā€™s startling effects is that despite the overwhelming need for Covid-19 treatments and vaccinations, health care spending in the United States has declined sharply.

This indiscriminate reduction in spending closely resembles the unfortunate effects of an array of policies over the past half-century intended to reduce unnecessary medical care. These too cut essential and inessential care alike.

Excessive administrative costs, high prices and inappropriate medical care are the three major culprits in wasteful spending, driving insurance premiums and taxes without helping patients.

For decades, the driving principle behind reducing needless medical care has been that if patients or their providers have financial ā€œskin in the game,ā€ they will make prudent decisions.

The economic theory is simple: If something becomes more expensive, people will buy less of it. And the empirical evidence is overwhelming: When patients have to pay more, they use less medical care.

To encourage only essential care, there has been a widespread shift to paying a fixed fee for a patient, regardless of what treatment is provided. A hospital might be paid $25,000 for a patientā€™s knee replacement. Or a network of health care providers might be paid $10,000 a year for all of a patientā€™s health care needs.

One reason it is so hard to trim waste is that physicians and regulators have already eliminated so many demonstrably harmful or useless treatments.

Low-value doesnā€™t mean no-value-ever.

But most medical procedures are different. They are a matter of judgment.

That doesnā€™t mean we should stop trying to cut waste. But a simple, miracle cure for excising most unnecessary medical care? Donā€™t buy it, with or without insurance coverage.

Amy Finkelstein is the John and Jennie S. MacDonald professor of economics at M.I.T.

https://www.nytimes.com…

Comment:

By Don McCanne, M.D.

The United States has the highest per capita health care costs of all nations, yet we are often receiving only mediocrity for our spending. For this reason, measures are often taken to reduce demand for care by making it more expensive, especially through high deductibles and other cost sharing. But excess demand is not the reason our costs are so high compared to other countries, rather it is due to high prices and, especially, excess administrative costs.

Using cost sharing is detrimental because it causes patients to forgo beneficial health care because of the out-of-pocket costs, especially if the cost sharing is truly unaffordable. We need to look at other methods of reducing spending – especially methods that have been successful in other countries with more reasonable levels of health care spending.

Also inappropriate medical care has been blamed for some of the excess spending, but that is not a feature specific to our nation. Much of it is low-value care, but that is not the same as no-value care. Forgoing a scan that has a low probability of detecting a serious problem for which effective intervention is available can be disastrous if diagnosis is deferred until intervention is not effective. It is for this reason that it would be difficult to reduce spending by forging low-value interventions and procedures. We cannot be expected to save money by cutting out what is considered waste only retrospectively.

High prices? Yes, we can use government administered pricing to pay legitimate costs plus fair profit margins. This should ensure that services and products would be available without spending exorbitant amounts. The primary objection to government administered prices is not based on economics, but rather it is based on politics. Other nations are effective in overriding politics; we can be too.

But the most important reason for our high spending is excessive administrative costs – a feature relatively unique to the U.S. health care system. We are heavily dependent on private commercial insurers. Not only are they responsible for tolerating the highest health care prices, they are also responsible for selling us excessive administrative services that they use to try to shift more of the costs to the patient – the exact opposite of what insurance should be doing. Not only do the patients pay more, but many of these administrative services are used to prevent patients from having the care that they should have.

This leads to the problem expressed in the title of Professor Finkelstein’s article: why it’s so hard to cut waste in health care. The fact is, it isn’t hard. The biggest waste is unneeded administrative services which we could dramatically reduce merely by getting rid of private insurers and enacting and implementing a well designed, single payer, Improved Medicare for All program. We could save literally hundreds of billions of dollars that could be used for unmet health care needs.

You don’t need to be a professor at M.I.T. to understand how simple that would be.

Stay informed! VisitĀ www.pnhp.org/qotdĀ to sign up for daily email updates.