Health Insurance Is Not The Same As Healthcare

“Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm; but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.”  ― T.S. Eliot

For more years than I have been writing this, politicians have been ranting about the cost of healthcare and how to fix it. Unfortunately, the conversation does not center on healthcare, instead they keep talking about insurance. The reason is simple: Insurance is much easier to fix; just throw money at it. Healthcare itself is a complex mechanism with many moving parts. But fixing insurance does not change the underlying issues. In some cases it makes them worse.

 

People often talk about how healthcare was good, but not great, back in the 1960s; and it was affordable. Some doctors still made house calls. They yearn for the good old days. Along these lines, an interesting comparison occurred to me.

 

Back in 1960 a typical television looked like this.

Just over half the population owned a black & white tube television, and you were lucky if you could get five channels.  The TV had no remote, and there was no cable, so you needed an outside antenna or an inside antenna known as "Rabbit Ears".  In 1960 an RCA black & white 21 inch console TV cost $268, most people financed this for about $10 a month.

Today the equivalent of $268, adjusted for inflation is about $2400, and here is what you can buy for a little more than half that!

But the costs of medicine and the education moved in the opposite direction. Today we live longer and healthier due to medical advances, but the price has increased faster than inflation. The cost of becoming a medical professional has likewise soared.

One reason for both, ironically, is government interference: low cost insurance on one hand and student loans on the other. This greatly reduced competition. Make it easier for citizens to pay for something, and the people who sell it have no incentive to control costs.

 

The only way to control cost, any cost, is to focus on the reasons behind the high cost. Politicians are silent about these underlying reasons for soaring healthcare costs, and have made no plans to deal with them. The primary reasons for the high cost of healthcare are summarized below. (A thorough explanation was given back in the spring of 2012.) 

• Insurance Design:  Insurance companies separate the provider from the patient. 
• Innovation: New medical technology and treatments save lives but add cost. 
• Lack of open competition.
• Over-testing.
• Billing and coordination issues.
• Regulations and Restrictions: Rules vary from state to state. 
• Liability: The high cost of malpractice insurance affects all patients' bills.
• Lax eligibility rules and outright fraud.

Unless someone comes up with a plan and makes a serious effort to address these issues, all the insurance or Medicare-for-all schemes will not succeed. The alternative would be for the government to fix a price on everything and see how many drug companies continue to innovate, how many doctors stay in business and how many students chose to get a medical degree.

But politicians will continue to promise the easy non-solution to give the appearance that they care about fixing the problem.

Flashback – Hating the Rich

Millionaires, billionaires and highly paid executives are favorite targets for someone trying to garner support for a new program. We should hate the rich merely because they are rich. The government should take away their money to help the poor. In this stirred-up state of envy no one wants to think about how the anger is selective. Nor do they want to hear how such a move would dampen motivation at all levels while not really solving any problems. 

I pointed this out right before the 2016 election, and nothing has changed since then:

[Maybe hating is too strong a word for it. Maybe being angry or envious is a better description of those feelings, the feelings various politicians and organizations vigorously promote. But since those same organizations and advocacy groups freely use the words “hate” and “haters,” it’s probably not completely unfair. In this case the hating is not only selective, but also difficult to justify.

Here is a graphic that has been going around on social media. It shows the total compensation of health insurance company CEOs. The caption and comments imply that this is the reason for the sharp increase in Obamacare (ACA) premiums for 2017. Let’s take one example and see what’s going on.

Let's not quibble over the fact that the information is three years old or that they calculate daily pay based on 341 days in a year. If these folks have moved on, they were likely replaced by others who were equally well compensated. Instead take the first gentleman, Joseph Swedish as representative.

He is the CEO of WellPoint, which operates Blue Cross Blue Shield plans in 14 states. Here is some information from a CNBC report from 2014. “The company had 37.5 million members at the end of the quarter, up 2 million members from a year earlier.” Apparently he is doing a good job of growing the company and meeting analysts’ expectations. But is his pay driving up premiums?

Take the $17 million shown above and divide by the number of customers, 37.5 million, and get 45 cents per customer. Divide that by 12 to calculate the effect on monthly premiums and we find that if he were paid nothing, each customer might see a 3.8-cent reduction in monthly premiums – 3.8 cents!  (By saving this up for 10 years each customer could afford one trip to Starbucks.)

Maybe it’s the fact that the government forces us to buy health insurance that causes such a negative opinion of these CEOs. By contrast, we never seem to get upset about the amount paid to the Disney CEO or star athletes. We never hear people complaining that the ticket prices would be lower if their favorite quarterback made less money. We give these people our money freely, even line up to do it, in return for a limited amount of entertainment, and they also get rich.

Look at the recent Desert Trip concert in Palm Springs. Most of the 75,000 tickets were gone in less than five hours, with the good seats going for $1599 each. The promoter is expected to gross $160 million for the three-day event, while paying the headliners up to $7 million each (for showing up and playing for a few hours). The LA Times reports that these rock stars from the sixties continue to do very well for themselves. “Since 2000, the Rolling Stones have grossed more than $1.1 billion with their periodic tours, according to Pollstar, the concert-industry-tracking publication. [Paul] McCartney has racked up $761 million, [Pink Floyd’s Roger] Waters has pulled in $592 million, followed by [Bob] Dylan ($293 million), the Who ($200 million) and [Neil] Young ($153 million).”

We love to hate those one-percenters, the people making a lot more money than we do, but the outrage is selective. When it’s Mick Jagger, Bob Dylan, Lady Gaga, Peyton Manning, Rory McIlroy, George Clooney, Tom Cruise, or Oprah, then it’s OK. Making almost $50,000 a day is very impressive, but it pales in comparison to $500,000 - $750,000 for a single speech or an advance on a book in the millions. We love the ones who perform for us and hate the ones who help us pay our doctor bills. Objections to the rich being rich are both selective and difficult to justify.]

Flashback – (Mis)understanding Insurance

If they learn economics in journalism school, they must quickly forget everything upon graduation. Furthermore, when the facts don't make a compelling story, they resort to the usual tactic of trying to make stories fit their worldview or make things look scarier than they are. Here is a prime example I gave in December 2016.

[As I was reading the transcript of Scott Pelley’s "60 Minutes" interview with House Speaker Paul Ryan, I noticed that he seemed uninterested in hard news or in-depth information so much as he was interested in tripping up the Speaker, trying to put him in a position of disagreeing with his new boss, making one or the other of them look bad, or uncovering something potentially embarrassing.

He asked how often the two speak on the phone and who initiates the conversation. The answers were almost daily and both. No news there. How does he answer the phone? “He doesn’t say, ‘This is the president-elect?’” No. “Have you told him being president is not being CEO of the United States, that the Congress is going to have a say?” 

Instead of asking how the two got together after a contentious election, he asked, “Who apologized to whom?” It’s clear by now that Pelley has no liking or respect for Donald Trump, thinks he is a bully and a racist, and is searching for evidence to back up his views. Better yet, he would like to get Ryan to agree on any point that might make it seem he is of the same opinion.

The silliness and self-serving finally comes to a close, and Pelley asks a number of questions about policy issues. Soon he gets to the details about possible changes to Obamacare and the sniping continues. At one point Pelley says “And women will pay the same as men? That didn’t used to be the case.” This is a question designed to get an answer that will incite outrage. He is trying to get some admission of Republican bias against women, but showing in the process that he does not understand how insurance works and counting on the fact that many Americans don’t either.

Insurance usually works by assessing the risk and charging premiums accordingly. If you have homeowner’s insurance you expect a discount for having a working alarm system. Teen drivers are generally less safe than more experienced drivers, but boys have more accidents than girls. Auto insurance for a young man 16-25 is higher. There is no outrage there. It’s not unusual for companies to charge smokers more for their health insurance benefits. Owners of cars with higher repair costs pay higher premiums. Older cars are cheaper to insure due to the lower replacement cost. Those who don’t drive as many miles sometimes pay lower premiums. Costs of auto and homeowners insurance vary by what part of the country and by the size of the town or city you live in. And since women outlive men and take fewer chances, they pay less for life insurance. Older people pay more, as do those who participate in dangerous hobbies like skydiving or juggling chainsaws.

This all happens without a stir. Everyone seems to understand that certain classes of people are at a higher risk for either the frequency or the size of insurance claims. Hence they should pay more. The ones in the classes with higher premiums don’t like it, but they pay. So why would people be upset that some women, especially those of childbearing age, might have to pay more? That “used to be the case” and it didn’t have anything to do with prejudice or victimization.

Apparently the government and some group of citizens have now decided that charging women more for health insurance can be explained only by prejudice. Everyone must purchase the same insurance for the same cost or there will be an uproar. And Scott Pelley and others in his profession are more than happy to incite and later fan the flames of that uproar, because it makes their job of reporting the news so much easier. Their job is not to inform or to educate; their job is to attract views and clicks. Nothing does that better than a good demonstration or protest, even those grounded in fundamental misunderstanding.]

P.S. I have often said that problems with healthcare costs must be solved on the basis of costs, not by tinkering with health insurance, but that’s for another discussion.

Flashback - Health Insurance

[My argument back in July 2011 was that people needed to better understand how health insurance works to keep from getting fooled by advertisers and politicians. Here is the entry in full.]

A flyer in the newspaper today reminded me how naïve consumers are about understanding the economic process, business and insurance, or at least how naïve advertisers think we are.

An ad from AARP promoting their Medicare supplemental insurance plan states that Medicare pays only about 80% of Part B (non-hospital) expenses and the other 20% is up to you.  (True.)  Right below is the statement that a supplemental insurance plan could save you up to thousands of dollars in out of pocket costs. That looks like a great deal, but where do those thousands of dollars come from, the AARP magic money tree? Perhaps the insurance company, out of the goodness of its heart, is going to make up the difference? – of course not.

The insurance company is going to collect premiums from everyone.  (Since premiums are not out-of-pocket costs in insurance language, maybe they are ignored when counting up the thousands in savings.)  The first thing the insurance company must do if it intends to stay in business is to pay its expenses (including the costs of the “free” brochure and of paying for all the people who work there and of other operating costs).  They also want to make a profit.  So already the total amount paid by everyone must be more than the total amount paid back to everyone (or to their doctor).

There will be winners and losers. The (financial) winners will be the people with high medical expenses for doctor visits, tests, etc. The losers will be the healthy ones. This may fluctuate, so in some years you come out ahead and in other years you may be part of the healthy bunch subsidizing the sickies – paying more in premiums than you receive in return.  Except for people who are chronically ill, this amounts to little more than a smooth-monthly-payment program similar to the installment plans offered by some electric and gas utilities. It is often a good budgeting tool to trade unknown payments for smooth, predictable ones, but you are hardly getting thousands of dollars for nothing as the flyer suggests.

This is a common tactic. It implies that the money is coming from somewhere else - but there is no money except our money. Companies and governments handle it, allocate it, and sometimes waste it, but their only source is to get it from us. Americans must listen to advertisers, news media and politicians with this always in mind to avoid getting tricked by this common something-for-nothing sales pitch that is really a smokescreen to disguise redistribution.

[Note that two and a half years after this posted, Jonathan Gruber, a professor at MIT and an architect of Obamacare said publicly: "And basically, call it the stupidity of the American voter or whatever, but basically [an intentional lack of transparency] was really really critical to get for the thing to pass." According to Snopes, the video footage of his remarks was deleted from the Internet in an attempt to hide it.]

Medicare for All – Part 2

With all the campaign promises about Medicare for all, I took the opportunity about two months ago to explain how Medicare actually works. Politicians give the impression that it’s a totally free health insurance program. Just walk into the doctor’s office or emergency room, tell them your number, get fixed up and leave with no expectation of receiving a bill. 

Real Medicare today is not like that at all. Why would they spend time on TV and in mailings advertising supplemental insurance that “helps pay some of the health care costs that Original Medicare doesn't cover, like: Copayments, Coinsurance, Deductibles”? Those extra costs can only be avoided by paying money up front as a premium for the additional insurance.

From recent news, though, it’s clear that this misimpression is not the only problem. Medicare fraud is another big issue. Sometimes this is a critical thinking issue where patients are lured in as unwitting participants. Sometimes it goes deeper.

Late last month, thirty-five individuals associated with dozens of telemedicine companies and laboratories were charged with fraudulently billing Medicare more than $2.1 billion for expensive cancer genetic tests. Nine of the defendants are medical doctors. “In addition, the Centers for Medicare & Medicaid Services, Center for Program Integrity (CMS/CPI), announced…adverse administrative action against cancer genetic testing companies and medical professionals who submitted more than $1.7 billion in claims to the Medicare program.”

One of the defendants in this case, who cost taxpayers more than $1 billion in illegal Medicare reimbursements, “has been under near-constant federal scrutiny for the past five years and was supposed to have been deported more than a decade ago.” That was billions lost to fraud as a result of only one investigation, due in part to government inaction.

Meanwhile, the U.S. Department of Health and Human Services Office Inspector General has issued an alert to the public about other genetic testing schemes. Medicare eligible patients are offered a free genetic screening for undetected conditions, but the real motive is to get their Medicare information “for identity theft or fraudulent billing purposes.” The screenings are unnecessary and are usually denied by Medicare. When they are, the individual could be responsible for the entire cost of these useless tests, sometimes thousands of dollars. 

They get nothing but the promise of some new information about their health with the selling point that, as Medicare recipients, it may be free to them. This promise of something for nothing – free testing or free devices all paid for by Medicare – is used so often it’s beginning to sound stale, but it must be working.

Advice from the Inspector General is to not volunteer any information to these genetic testers, don’t stop at their booths at health conferences, ignore their ads, and return unopened any testing kits received in the mail.

Medicare fraud is a huge problem. The AARP reported in March of last year “roughly 10 cents of every dollar budgeted for the giant health insurance program is stolen or misdirected before it helps any enrollee. Looked at another way, about $1,000 is lost per Medicare member through theft or waste each year.” That estimate is based on government reports, but a leading expert from Harvard University believes the real number could be much higher, 20% or more.

AARP used the figure of $60 billion in fraud for the 2018 calculations cited above. Other sources show exactly the same estimate for 2015 and 2011. The number hasn’t changed in eight years. Apparently as fast as they can lock people up or put them out of business, more fraudsters spring up to take their place.

Would the general public as a whole be less likely to become victims of Medicare-for-All fraud schemes? That’s doubtful, and it leads to so much waste. 

Medicare For All?

People who are excited about the idea of “Medicare for all” obviously have as meager an understanding of Medicare as they do of Social Security. In fact Medicare is much more complicated than Social Security. It’s not a matter of walking into the doctor’s office, showing an ID card, receiving services and leaving without a bill.

When Medicare was passed in 1965, the government tried to follow a private insurance model. As a result they came up with two parts. Generally speaking, Part A covers hospitalization, and Part B covers regular visits to the doctor. But just like private insurance there are many details about what is covered and what is not.

In most cases Part A has no premium, but it does have a deductible of $1,364 for the first 60 days of Medicare-covered inpatient hospital care. Note that it’s the same for one day as it is for 60 days, so several short hospital stays can become quite expensive. From the 61^st through the 90^th day a $341 per day charge applies. 

The standard monthly premium for Medicare Part B enrollees is $135.50 for 2019. Some pay less and some pay more depending on an income scale. The annual deductible for all Medicare Part B beneficiaries is $185.

This government website gives more details of both parts, but it is clearly not free healthcare with the government picking up the tab.

But there is more. “With Part B coinsurance you typically pay 20% of the Medicare-approved cost of most services, after your deductible is met.” The bill comes from the provider showing the standard charge, Medicare reduces it to the Medicare-approved charge and pays 80%, then the remaining 20% is the patient's responsibility.

But there are also three classes of doctors. The 20% applies to participating doctors. “Non-participating doctors have not signed an agreement with Medicare and therefore might not ‘accept assignment’ for all of their services. A non-participating doctor may take the payment…for 80% of Medicare’s approved cost. But he or she can charge you 15% of the approved cost on top of the 20%.” Doctors who do not accept Medicare assignment can charge in full at the time of the visit.

Part D was added early in this century to cover prescription costs. It is a nightmare of private insurance options, premiums and differing formularies (a list of what drugs are and aren’t covered at different levels by each insurer). And what is available differs by location.

Because Medicare doesn’t cover everything, private companies sell supplemental insurance, sometimes called Medigap plans. There are 10 plans available in most states. “These plans are labeled Plan A, B, C, D, F, G, K, L, M and N, and each plan covers a different set of basic benefits.” How’s that for an additional headache?

Besides the complexity and added costs, two additional problems arise: reimbursement levels and funding.

The Medicare reimbursement to doctors and hospitals is typically lower than private health insurance and much lower than the actual billed rate. (One of my recent bills for a simple annual checkup came in at 60% of the billed rate.) This can discourage providers, who must cover their costs. This source, for example, is not as current as I’d like but “a Kaiser Family Foundation analysis found that 93 percent of non-pediatric primary care physicians were participating providers with Medicare in 2015, but only 72 percent were accepting new Medicare patients.” In addition, a recent change to a flat rate payment program may discourage doctors from accepting Medicare for more challenging medical conditions. Will it soon become difficult, even under the current system, to find a participating doctor? Will fewer young people be inclined to study medicine if the program is expanded, further squeezing doctors' ability to earn an adequate living? All the insurance in the world does not help if you can't find a doctor.

Finally, there is the problem of funding. The money taken from each paycheck (with a matching amount from the employer) pays 88% of the cost of Part A, but the Part A trust fund is projected to be depleted in 2026. This may result in the institution of premiums for Part A. Premiums paid for Part B contribute only 26% to the cost with the rest covered by general government tax revenue. “Medicare spending was 15 percent of total federal spending in 2018, and is projected to rise to 18 percent by 2029.” (This website has some excellent graphs showing current and projected costs with no change to the system, particularly in Figures 6 and 7.)

As it is today the system is complex, and anything but free. It has many of the drawbacks of private insurance systems including waiting months for the paperwork to arrive. Already, many wonder how the government can afford to keep it up. 

This rather long explanation only scratches the surface. “Medicare for all” is easy to promise, but extremely difficult to explain. And, as I wrote years ago, the only way to reduce the cost of healthcare is to address the cost directly in ways that introduce transparency and competition, not by making it easier to pay ever-increasing prices.

Keeping an Eye on the Doctors

Over the past few weeks a number of shady healthcare situations have come up. There is often not a lot patients can do about doctors with bad intentions or to recognize their illegal behavior, but there are usually clues.

The first case involves medical fraud. A cardiologist was convicted on two counts of fraud for double billing insurance companies and using a procedure to treat problems it was not designed for.

The doctor administered an outpatient treatment known as External Counter Pulsation (ECP). “ECP involves the use of a specialized bed equipped with pressure cuffs, which exert pressure upon patients’ lower extremities as a means to increase blood flow to the heart.” Insurers only reimbursed doctors when this treatment is given to patients with angina and only when a physician is present.

The doctor operated 25 beds at numerous locations in three states where, in many instances, no doctor was supervising. Even for his patients who never experienced chest pain, he “instructed his employees to indicate that every patient had disabling angina on billing sheets that were used to support false insurance claims.”

Although they couldn’t do anything about the billing, the patients should have been very suspicious. It came out at the trial that in order to acquire new patients he advertised the procedure “as ‘the Fountain of Youth,’ claimed that it made patients ‘younger and smarter,’ and offered the treatment for a range of ailments other than disabling angina, including obesity, migraines, high blood pressure, low blood pressure, diabetes, and erectile dysfunction.” When a single medicine or procedure is advertised as curing so many unrelated ailments and uses come-ons like Fountain of Youth, patients should smell fraud miles away – not insurance fraud, but someone definitely trying to sell them snake oil.

In another case at the behest of the FDA, a judge issued a permanent injunction against a stem cell company “to stop...illegal behavior after several attempts to provide the clinic and the individual defendants the opportunity to work with the agency to come into compliance with FDA regulations and protect patients from harm.” In an inspection the government  found “significant deviations from current good manufacturing practice requirements” including failure to establish and follow procedures to prevent microbiological contamination. “The FDA has not approved any biological products manufactured by [the company] for any use.”

Again the patients cannot know all the details, but the products were being administered “to treat a variety of serious diseases or conditions, including Parkinson’s disease, amyotrophic lateral sclerosis (ALS), chronic obstructive pulmonary disease (COPD), heart disease and pulmonary fibrosis.” [Emphasis added.] 

These too-good-to-be-true qualifications should be a warning signal to everyone seeking medical help, even the most desperate. For every two that the authorities catch up with and go through the long, legal process of shutting down, there are probably two hundred still operating and advertising. As long as this kind of outrageous advertising continues to attract patients, the practice will continue.

It is not surprising that insurance companies cause frustration by being as careful/fussy as they are even about reasonable practices. Some healthy skepticism and critical thinking on the part of patients are our best, and sometimes only defense against fraud.

Another Tax Day

With the beginning of a new election cycle there has been much talk about another change to what politicians refer to as the healthcare system. It is really just another modification to health insurance. It may improve access to healthcare as more people can afford the insurance, and it may restrict access as more doctors and medical students decide it’s not worth the hassle. Some critics complain that a government-run system will put most of the health insurance industry out of business. As usual the two sides have opposite opinions.

Since today is “tax day,” the deadline for filing personal income tax, I would like to make an alternative proposal. If the government is going to put any industry out of business, it should be the tax preparation business. Think about it; what value does it add to our lives or to society?

Now I have nothing personal against paid tax preparers. Some of my friends and relatives are in that business. And as one site that solicits tax preparers points out: “Tax preparation is BIG business employing hundreds of thousands of people, mostly small business, but with [total] estimated revenues last year of $11 billion. They are also recession resistant as every American is legally required to submit an income tax return.”

Do we get anything tangible and worthwhile from that $11 billion we spend each year? No. We get someone to follow complex rules and add up numbers for us to keep us out of trouble. That complexity is imposed by a government that refuses to simplify the system to a point where everyone could do it for themselves. (We are also required to pay sales tax in most states, but they don’t ask us to stand in the checkout line and calculate it ourselves – and then penalize us if we get it wrong!)

Some will recall back in 2009 several appointees to the Obama cabinet were found to have had tax problems. “Kathleen Sebelius, President Obama's nominee to become Health and Human Services secretary, said in a letter obtained by the Associated Press that she made ‘unintentional errors’ on her taxes and has corrected her returns from three different years.” Obama’s original nominees for HHS secretary and for chief performance officer “withdrew from consideration over tax issues.” Timothy Geithner, who became Treasury secretary, had to pay $42,702 in additional taxes and interest for tax years 2001 to 2004 around the time of his nomination. How user-friendly is a system that can trip up a potential Treasury secretary? 

The whole setup is flawed. It would be like having to hire someone to ride in your car and warn you to slow down because the speed limit signs were too complicated for someone without special training to understand. If that were the case, people would scream until the DOT fixed the problem so we could use our money for something more productive or enjoyable.  But when it comes to taxes, everyone likes their special little benefit, and the complexity persists.

Meanwhile the $11-billion industry adds about as much value to society as being forced by law to hire someone to shovel snow off your sidewalk in the summer. The money buys you a service to unload an unpleasant chore. But that chore is made necessary only by a totally fabricated set of regulations driven by a multitude of diverse special interests, most of which could easily be eliminated if lawmakers had the guts to do it.

Don’t Just Shrug

So often, especially on TV, a news story can go flashing by so fast that we hear the main point and don’t pay much attention to the rest and don't think too much about implications. Before we know it, they've moved on.

Last week the news came out with such a story, that the FDA has approved an exciting new cancer drug. According to an NBC report: “While several drugs are approved to treat a variety of different cancers based on genetic mutations, Vitrakvi, known generically as larotrectinib, is the first that is approved from the beginning to treat cancers solely based on the mutation.” Instead of being approved to treat specific cancers that arise in certain parts of the body, Vitrakvi goes after the genetic characteristic of a cancer arising anywhere in the body. Although it doesn’t work for all types of cancer, this appears to be a significant breakthrough.

But there is a huge downside. In the sub-headline NBC mentions that the wholesale cost is expected to be $393,000 a year.

Another website discussed the cost in a little more detail. “The wholesale cost for the children's syrup is $11,000 for a month's supply and the oral capsules for adults wholesales for $32,000 per month. With insurance, most patients would pay $20 or less for a 30-day supply.” (This last comment is the part that I think would blow past most people causing them either to shrug or to decide that the downside was minimal.) 

But it’s not, and it should make everyone slow down and ask where that money to pay the difference, that is, $31, 980 per month, is coming from. Initially it comes from the insurance companies, but ultimately it would come from premium payers, you and me - either directly or indirectly when employers count the benefit costs as part of total compensation.

Assuming that the estimate is correct and that this drug could benefit up to 3000 people a year, that’s $90 million a year that has to come from somewhere. And neither the insurance companies nor Bayer, the manufacturer, is going to foot the bill out of the goodness of their hearts. The cost will be distributed. Everyone must understand that this is true for all drugs that are covered in part by insurance. As newer, better and more expensive drugs are developed to treat or cure a wider variety of diseases, that same pattern is followed every time. This is basic economic understanding; there is no magic money tree.

This is the kind of information that slides by when we shrug it off without thinking it through.

Side comments: 

Is there any irony in the fact that the same company that makes this new cancer drug also makes RoundUp, a substance many people believe causes cancer and that some lawyers are now advertising about to solicit clients?

How would a member of the if-you-can’t-pronounce-it-don’t-eat-it crowd react if the cure to their cancer turned out to be larotrectinib? 

In other words, why clutter the courtroom and the dinner table with real science when you can rely on misinformation and Internet memes for guidance?

Food as a Human Right

When I saw the headline on LinkedIn that food is not a commodity, but a human right, I wondered why we weren’t trying to solve the food insecurity problem in the US the same way we are trying to solve the healthcare problem.  Now that both food and healthcare have become human rights, wouldn’t it make sense to treat them the same?

In that case, Congress should immediately start debating a bill to provide food insurance for everyone.  It’s not fair that some people with good jobs at big companies should be able to provide sustenance for themselves and their families while people without a job or with a minimum wage job struggle to do so and must rely on food stamps (SNAP) and a number of other government programs.  (Many of these programs are so obscure or complex that local food banks have strategies to educate the poor about what programs they may be eligible for and how to apply for them.)

If talking about insurance will solve the healthcare problem, surely it can do the same for food.  Just set up a system where citizens have to sort through a list of insurance providers (depending on the state they live in) and then sign up with the one that best matches their eating needs.  Of course everyone must be forced to participate and pay the same premiums regardless of the size of their family, how much they eat or how often they shop.  Each insurance company would negotiate prices of every food item with some of the grocery stores.  You would just go in, pick up your items and hand over a small co-payment at checkout.  Months later you would receive an Explanation of Benefits (EOB) from your insurance company telling you what amount was covered and what you owed.  Some time later you would receive a bill from the grocery store telling you what the insurance was paying for and what they think you owed.  If there were any discrepancy, you would spend hours on the phone trying to work it out (and no one could help you without written permission because of food privacy laws).

If you had one brand of insurance, you would be covered at Kroger and Target; but when you were on vacation you might have to shop “out of network” and pay higher prices.  (One insurance company has a policy that would cover you at home and on vacation, but it’s not offered in your state.)

The grocery stores could stop advertising prices, because only people with certain insurance would be covered at their store and not at the store down the street.  And you could only buy the brands of food available in your store.  As farmers and food companies increased prices to them, the stores could use that as leverage with insurers to increase prices.  This would force the insurance companies to increase premiums and force the government to increase the subsidies to those who couldn’t afford it.  Various groups would demand that the government require everyone, even vegetarians, to be covered for the purchase of steaks, and that those who chose to shop at more expensive or exclusive grocery stores offering all-natural, organic or health food items must have the right to do so (regardless of their personal financial situation).

Would that be a wonderful system to ensure that prices for food be kept under control and that everyone was treated fairly?  Of course not!  There is no incentive for anyone to worry about costs, prices or service.  Grocery stores would be competing with each other based on the size of the selection regardless of the cost of adding extra shelf space.  Lobbyists would be out in force to make sure every special interest (except the customer) got their piece of the action.  The paperwork would be a nightmare.  Customer service and responsiveness would drop like a rock, because those who used to be their customers and made choices (voting with their feet and their dollars) would be helpless participants.

This may not be the perfect analogy, but anyone who believes tinkering with insurance will solve the problems of affordability or quality with food, healthcare or anything else is missing the point.  Think about it.