The Myth of the Medical-Device Tax - NYTimes.com

 

Not only can the medical-device industry easily afford the tax without compromising innovation, but the industry’s enormous profits are a result of anticompetitive practices that themselves drive up medical-device costs unnecessarily. The tax is a distraction from reforms to the industry that are urgently needed to lower health care costs.

The medical-device industry faces virtually no price competition. Because of confidentiality agreements that manufacturers require hospitals to sign, the prices of the devices are cloaked in secrecy. This lack of transparency impedes hospitals from sharing price information and thus knowing whether they are getting a good deal.

Even worse, manufacturers often maintain personal relationships (sometimes involving financial payments like consulting fees) with physicians who choose the medical devices that their hospitals purchase, creating a conflict of interest. Physicians often don’t even know the costs of the devices, and individual physicians often choose devices on their own, which weakens a hospital’s ability to bargain for volume discounts.

Such anticompetitive practices help generate a wide variation in the prices of medical devices — and contribute to higher prices in general. For example, the Government Accountability Office found that prices for cardiac implantable medical devices in the United States vary by several thousand dollars. And even the lowest-priced devices in the United States are expensive compared with those in other developed countries. According to the consulting firm McKinsey & Company, the United States spends about 50 percent more than expected on the top five medical devices, compared with Europe and Japan. McKinsey calculates that this amounts to $26 billion in excessive spending each year. Medicare, private health insurers and patients end up paying these inflated prices.

Excessive prices fuel enormous profits — profits that dwarf both the medical-device tax and the industry’s investments in research and development. Consider the device division of Johnson & Johnson, which in 2012 had an operating profit of $7.2 billion. By the company’s own estimate, the device tax would amount to at most $300 million, and its investment in research and development amounts to only $1.7 billion.

The Myth of the Medical-Device Tax - NYTimes.com

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High health care costs: It’s all in the pricing - The Washington Post

High health care costs: It’s all in the pricing - The Washington Post: Ezra Klein

...the International Federation of Health Plans — a global insurance trade association that includes more than 100 insurers in 25 countries — released more direct evidence. It surveyed its members on the prices paid for 23 medical services and products in different countries, asking after everything from a routine doctor’s visit to a dose of Lipitor to coronary bypass surgery. And in 22 of 23 cases, Americans are paying higher prices than residents of other developed countries. Usually, we’re paying quite a bit more. The exception is cataract surgery, which appears to be costlier in Switzerland, though cheaper everywhere else.

The PDF of the PowerPoint (of the trailer of the film...) from IFHP is here.

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25 Best Global Healthcare Rankings

Interesting web site with all these links on International comparative health care. 

25 Best Global Healthcare Rankings: Healthcare Infographics

These interesting infographics help you visualize various healthcare rankings, and can help you see just where your country of residence sits.

1. Global Health-Care Snapshot: Presents a ranking of countries by how much they spend as a percent of GDP. Includes comparisons of costs in 1980 and in 2006 so that you can see where health care costs have grown the most. Includes helpful information on how people are insured in developed countries, and tabs that illustrate life expectancy and infant mortality.
2. Health Care Expenditures: An International Comparison: This infographic ranks different expenditures on healthcare by country. Expenditures considered include nursing homes, administration, medications, hospitals and more. An interesting way to break down healthcare costs.
3. U.S. Healthcare Quality: Get a look at how countries are ranked in terms of health care quality. This infographic looks at different factors related to quality, and ranks different countries.

There are lots more...
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Physician Incomes Internationale

Responding to my post about doctors stepping up for health reform over at FireDogLake, wigwam linked to a couple great pieces from the NY Times. ( I have a Google Alert on "physicians salaries incomes," so I don't know how I missed them, but, here they are now.)

In order, Uwe Reinhardt pointed out in a post about Rationing Doctors' Pay

When Medicare reduces its payments to doctors, it rations money to them. It does not directly ration the health care the doctors might render patients.

If physicians refuse to treat patients at the lower fees, it is they who ration health care, even if the incentive to do so came from Medicare.

While I doubt that the payments to radiologists and cardiologists actually will be cut by 21 percent soon — more on that next time — let us suppose it were so. Would there then be “few radiologists and cardiologists working” after such a fee cut?

Presumably, the afflicted physicians would withhold their services only from Medicare and Medicaid patients, assuming that private insurers pay more. But
could most radiologists and cardiologists actually earn an adequate livelihood only from privately insured patients? I have my doubts.

Like everyone else, radiologists and cardiologists certainly can claim to be sorely underpaid relative to the extraordinarily high compensation of bankers and corporate executives, which appears to have little correlation with contributions to society. But relative to their colleagues in internal medicine, pediatrics and family practice, radiologists and cardiologists actually are very well paid.

...

So even if Medicare cut fees of radiologists and cardiologists by 21 percent, the income of these specialists would still exceed that of their colleagues in primary care by 60 percent or more.

...

The only question then is whether such fee increases [for primary care] will come at the expense of taxpayers or from other parts of the health care sector, perhaps even the more highly paid medical specialties, including radiology and cardiology. That is a political call.

Reading through just a few of the comments revealed this gem:

As someone who is training to be a radiologist, I have mixed feelings about what you’re saying. While you are correct that Radiologists and Cardiologists do make more than primary care physicians, there is also a reason for that. Specifically, it is that when primary care physicians can’t figure something out, who do they turn to? SPECIALISTS. We train for MUCH longer than primary care docs (often times greater than twice as long) and this is the reason that we are paid more per RVU. We also have more responsibility; in fact, the levels of responsibility are worlds apart. While a primary care doctor can always turn to a specialist for help, we have no one to turn to… The buck stops with us, we are the final authority.

Wow. Sounds like our friend suffering amongst us "less skilled physicians" from last year.

Subsequently, CATHERINE RAMPELL cracked open the Congressional Research Service's analysis of the OECD database to find out "How Much Do Doctors in Other Countries Make?"

As a country’s wealth rises, so should doctors’ pay. But even accounting for this trend, the United States pays doctors more than its wealth would predict.

According to this model, the 2007 report says, “The U.S. position above the trendline indicates that specialists are paid approximately $50,000 more than would be predicted by the high U.S. GDP. General practitioners are paid roughly $30,000 more than the U.S. GDP would predict, and nurses are paid $8,000 more.”

But it’s important to keep in mind, the report notes, that health care professionals in other O.E.C.D. countries pay much less (if anything) for their medical educations than do their American counterparts. In other words, doctors and nurses in the rest of the industrialized world start their medical careers with much less student loan debt compared to medical graduates in the United States.

Rampell also links to the MGMA report on American physician income, which you may find either eye opening or eye popping.

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T.R. Reid: Can We Really Fix U.S. Health Care?

From the Commonwealth Club of California Podcast is here.

Friday, September 18, 2009, 12:34:52 PM


T.R. Reid, Correspondent, The Washington Post; Commentator, National Public Radio; Author, The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care

For 100 years, U.S. presidents have unsuccessfully strived to provide universal health coverage. When LBJ created Medicare in 1965, he thought the program would gradually be extended – to people over 60, then 55, then 45, etc., so that everybody would have government health insurance by 2000. Decades later, the Clinton plan failed. George W. Bush created Medicare Part D. Barack Obama says we have the best chance ever this year to fix our health-care system. Is he right? Reid weighs in and reveals what we can learn from health-care models across the globe.

This program was recorded in front of a live audience at The Commonwealth Club in San Francisco on September 14, 2009.

A very good listen. Excellent tid bits about health promotion in Britain, insights into the minds of Canadians and more!

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The Health Care System Under French National Health Insurance: Lessons for Health Reform in the United States -- Rodwin 93 (1): 31 -- American Journal of Public Health

The Health Care System Under French National Health Insurance: Lessons for Health Reform in the United States -- Rodwin 93 (1): 31 -- American Journal of Public Health:

Keepin' it real. Every system comes with trade-offs...

THE FRENCH HEALTH CARE system has achieved sudden notoriety since it was ranked No. 1 by the World Health Organization in 2000.1 Although the methodology used by this assessment has been criticized in the Journal and elsewhere,2–5 indicators of overall satisfaction and health status support the view that France’s health care system, while not the best according to these criteria, is impressive and deserves attention by anyone interested in rekindling health care reform in the United States (Table 1). French politicians have defended their health system as an ideal synthesis of solidarity and liberalism (a term understood in much of Europe to mean market-based economic systems), lying between Britain’s 'nationalized' health service, where there is too much rationing, and the United States’ 'competitive' system, where too many people have no health insurance. This view, however, is tempered by more sober analysts who argue that excessive centralization of decisionmaking and chronic deficits incurred by French national health insurance (NHI) require significant reform.

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The Most Outrageous U.S. Lies About Global Healthcare | Foreign Policy

The Most Outrageous U.S. Lies About Global Healthcare Foreign Policy

As the U.S. Congress this summer holds its first serious health-care reform debate since the Clinton era, the resulting public furor has featured increasingly overheated claims about everything from so-called "death panels" to the supposed prowess of America's homegrown medicine. Many of the most wildly inaccurate statements have been directed abroad -- sometimes at the United States' closest allies, such as Britain and Canada, and often at the best health-care systems in the world.

The lies rebutted include:

1. Stephen Hawking and Ted Kennedy would be doomed outside the US.
2. Canadians come to the US for urgent care.
3. All European health care systems are single payer.
4. Canada and Britain restrict health care choices.
5. The US has The Best Healthcare In The World. (TM)

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TR Reid Busts International Health Care Myths

This was in my Pittsburgh Post-Gazette, but also in other papers as well. TR Reid, of PBS "Sick Around the World" has done the leg work and homework to become perhaps the most knowledgable journalist in the world on internation health care.

As Americans search for the cure to what ails our health-care system, we've overlooked an invaluable source of ideas and solutions: the rest of the world. All the other industrialized democracies have faced problems like ours, yet they've found ways to cover everybody -- and still spend far less than we do.

I've traveled the world from Oslo to Osaka to see how other developed democracies provide health care. Instead of dismissing these models as 'socialist,' we could adapt their solutions to fix our problems. To do that, we first have to dispel a few myths about health care abroad:

Myth 1: It's all socialized medicine out there.
Not so.

Read on about myths 2-5:

MYTH 2: Overseas, care is rationed through limited choices or long lines.
MYTH 3: Foreign health-care systems are inefficient, bloated bureaucracies.
MYTH 4: Cost controls stifle innovation.
MYTH 5: Health insurance has to be cruel.

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What do other countries do? - Kansas City Star

What do other countries do? - Kansas City Star:

"In Britain, famously, they wait.

"To replace a hip, for instance, means months before surgery.

"Spaniards and Italians have single-payer health care systems, but they leave it to the cities and villages, not the capitals, to run things. The Greeks demand all medical bills be covered by universal insurance, but let doctors hit up patients for more.

"The Swiss are required to buy health insurance, and virtually all do.
Health care systems around the world vary like cuisine, reflecting customs and history. Some ingredients travel better than others."

Bravo to writer Scott Canon of the KC Star for doing a piece on international health care systems.

I quibble with some of it, particularly the first line, and wrote Canon about it:

Thanks, Mr. Canon for your piece "A Universal Pain", which appeared in my Pittsburgh Post-Gazette today. This kind of reporting is in very short supply and should be front and center in our ongoing discussions on health care, not relegated to the disparaging remarks hurled at Canada by conservatives.

But, I am curious about where you got some of your information. Some seems more up to date than mine, and some less so.

The most glaring one is in the first paragraph regarding waiting times in the UK. Here is more recent news:
http://cmhmd.blogspot.com/2009/05/exclusive-nhs-hospital-waiting-times.html


Further, there are countries with universal health care unlike us, but without significant waiting times, and with better quality outcomes than our own (and I know you praised Germany's system, which is my favorite model):
http://cmhmd.blogspot.com/2009/05/oecd-waiting-times-study-executive.html

A final point, although health care is pushing budgets to the brink internationally, it is very important to remind the public that increasing expenditure from 8 or 9 or 10% of GDP by one or two percent, compared to our 17 or 18 or 19% in our system is a big difference.

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Snapshots: Health Care Spending in the United States and OECD Countries - Kaiser Family Foundation

Snapshots: Health Care Spending in the United States and OECD Countries - Kaiser Family Foundation:

"Health spending is rising faster than incomes in most developed countries, which raises questions about how these countries will pay for future health care needs. The issue may be particularly acute in the United States, which not only spends much more per capita on health care than any other country, but which also has had one of the fastest growth rates in health spending among developed countries. Despite this higher level of spending, the United States does not achieve better outcomes on many important health measures. This paper uses information from the Organisation for Economic Co-operation and Development (OECD)1 to compare the level and growth rate of health care spending in the United States with other OECD countries. In an increasingly competitive international economy, policymakers in the United States will need to be aware of how the health spending and spending growth in the United States compares to that of other nations."

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McKinsey: What Matters: Way too much for way too little

McKinsey: What Matters: Way too much for way too little

The title says it all. A great review of the American health care non-system.

Goes over administrative waste (83 cents of premium dollars go to actual health care at most in PHI market), outcomes, costs and prices, administrative burden, practice variation, and rationing (QALY's CER).

Some good response letters as well.

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Kaiser Family Foundation Health Policy Tutorials and Compendia

Tutorials:

KaiserEDU's tutorials are multimedia presentations on health policy issues, research methodology or the workings of government.

Here are a few to get started (I haven't yet, but put them here for reference and eventual use!)

Health policy experts provide overviews of current topics in health policy. Watch and download slides from these and other tutorials:
The Public and Health Care Reform
A Primer on Tax Subsides for Health Care
Expanding Health Coverage to the Uninsured

They also have Compendiums:

These modules include background summaries along with links to academic literature, policy research and data sets on current health policy issues, such as:
U.S. Health Care Costs
Health Information Technology
Addressing the Nursing Shortage
The Uninsured
International Health Systems

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The Globalist | Global Health -- What Obama Can Learn from European Health Care (Part I)

The Globalist Global Health -- What Obama Can Learn from European Health Care (Part I):

"Imagine a place where doctors still do house calls. When I was visiting my friend Meredith, living in the small rural town of Lautrec about an hour’s drive outside Toulouse, France, one day she was stung badly by a wasp, causing a sizable and painful swelling on her hand.

"She called her doctor, and to my great surprise within 15 minutes he had shown up at her door — the famous French doctor’s house call. I couldn’t get over it. “House calls in the United States went out when Eisenhower was president,” I told her, shaking my head."

Part Two of this article is here.

"The first overriding difference between U.S. and European healthcare systems is one of philosophy. The various European healthcare systems put people and their health before profits — la santé d’abord, “health comes first,” as the French are fond of saying.

"It is the difference between health care run mostly as a non-profit venture with the goal of keeping people healthy and productive — or running it as a for-profit commercial enterprise. "

And this section is well said:

Unlike single-payer Britain or Sweden, other nations like France, Germany, Switzerland and Belgium have figured out a third way, a hybrid with private insurance companies, short waiting lists for treatment and individual choice of doctors (most of whom are in private practice).

This third-way hybrid is based on the principle of “shared responsibility” between workers, employers and the government, all contributing their fair share to guarantee universal coverage.

Participation for individuals is mandatory, not optional, just as it is mandatory to have a driver’s license to drive a car.

These healthcare plans are similar to what Massachusetts recently enacted — but with two essential differences. First, in France and Germany, the private insurance companies are non-profits. Doctors, nurses and healthcare professionals are paid well, but you don’t have corporate healthcare CEOs making hundreds of millions of dollars. Generally speaking, the profit motive has been wrung out of the system.

The second key difference is in the area of cost controls. In France and Germany, fees for services are negotiated between representatives of the healthcare professions, the government, patient consumer representatives and the private non-profit insurance companies.

These are a nice pair of articles to send to people who need a basic primer on what "socialized medicine" really is, rather than what the Right wants you to think it is.

Cheers,

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SourceOECD: OECD Health 2007

SourceOECD: OECD Health 2007

Just a link to OECD data so I can get back to it easily...

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OECD Study of Physician Income in 14 Countires

"The Remuneration of General Practitioners and Specialists in 14 OECD Countries: What are the Factors Influencing Variations across Countries?
(Published 22-Dec-2008)"

This link takes you to the full PDF file of the document. It is interesting.

For primary care, most coutries get between $106k to $121K, US is $146K. Interestingly, the dreaded NHS of the UK is the $121, and France is a low outlier at only $84K! But keep looking through the graphs, they are interesting. For example, US PCP's are payed 3.4 times the average wage of our countrymen, and this is in line with the top half dozen countries or so.

Turns out the Netherlands has physician income for specialists higher than ours, by quite a bit ($290K vs $236K). But the rest of the countries fall off fairly quickly. They do not have the large disparity of specialist vs PCP income that we do.

I don't have the data (nor the skills!) to do the analysis, but I would be very interested in how wealth accumulation differs among the countries. Considering the large expense of American colleges and Medical Schools, I would make a guess that we are so far behind the eight ball when we finish our educations and training, that we probably don't catch up with our international peers until we're in our forties or fifties, except for the highly payed specialties.

So, would it be wiser to do as other countries do and heavily subsidize our educations so there is not so much pent up delayed gratification? And would that also lead to more PCPs and less income disparity among specialties?

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Health Care Reform Podcasts

5 Podcasts on Healthcare Reform found at the University Channel Web Site

Access to Universal Health Care Pt 1: New Jersey (Podcasts/Podcasts)
...Daniel A. Notterman, MD, MA, Department of Molecular Biology, Princeton University UNIVERSAL HEALTH CARE IN NEW JERSEY - Senator Joseph Vitale, Senator and Chairman, Health, Human Servi...

Access to Universal Health Care Pt 2: Worldwide (Podcasts/Podcasts)
Pt 2 UNIVERSAL HEALTH CARE WORLDWIDE - Uwe Reinhardt, PhD, James Madison Professor of Political Economy, Princeton University - Maggie Mahar, PhD, Fellow, The Century Foundation -

Access to Universal Health Care Pt 3: Keynote (Podcasts/Podcasts)
Pt 3 LUNCHEON SPEAKER - Len Nichols, PhD, Director, Health Policy Program, New America Foundation

Access to Universal Health Care Pt 4: Statewide Efforts (Podcasts/Podcasts)
Pt 4 UNIVERSAL HEALTH CARE IN THE NATION – THE MASSACHUSETTS EXPERIENCE & OTHER STATEWIDE EFFORTS - Nancy Turnball, PhD, Associate Dean for Educational Policy, Harvard School of Pub

How the Next President Can Deliver on Healthcare Reform (Podcasts/Podcasts)
...ive Vice President for Policy, AARP; Robert Moffit, Senior Fellow, Heritage Foundation; Joanne Silberner, Health Policy Correspondent, National Public Radio (Sep 26, 2008 at the National Pr...

For this last one, I highly recommend watching the Video so you can see Uwe Reinhardt's slides.

I will give them a listen soon, but didn't want to lose the links...

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Achieving a High-Performance Health Care System with Universal Access: What the United States Can Learn from Other Countries -- American College of Physicians, -- Annals of Internal Medicine

Achieving a High-Performance Health Care System with Universal Access: What the United States Can Learn from Other Countries -- American College of Physicians, -- Annals of Internal Medicine:

"This position paper concerns improving health care in the United States. Unlike previous highly focused policy papers by the American College of Physicians, this article takes a comprehensive approach to improving access, quality, and efficiency of care. The first part describes health care in the United States. The second compares it with health care in other countries. The concluding section proposes lessons that the United States can learn from these countries and recommendations for achieving a high-performance health care system in the United States. The articles are based on a position paper developed by the American College of Physicians' Health and Public Policy Committee. This policy paper (not included in this article) also provides a detailed analysis of health care systems in 12 other industrialized countries.

Although we can learn much from other health systems, the College recognizes that our political and social culture, demographics, and form of government will shape any solution for the United States. This caution notwithstanding, we have identified several approaches that have worked well for countries like ours and could probably be adapted to the unique circumstances in the United States."

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Two Reports: Insure The Uninsured Project :

Insure The Uninsured Project : Recent Reports

Health Care Systems Around the World
(November 2008)

Now I'm embarrassed. I just posted my summaries of the OECD summaries and get this in my inbox. Somebody who knows what they're doing spent some real time investigating and writing about 10 systems from around the world. I haven't read it yet, but wanted to get it up here, along with the one below:

The Healthy Americans Act (S. 334)
(October 2008)"

Cheers,

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UK - OECD Summary

Summaries of summaries of healthcare systems based on the Commonwealth Fund reports.
Author(s) of the originals are:
Karsten Vrangbaek, Isabelle Durand-Zaleski, Reinhard Busse, Niek Klazinga, Sean Boyle, and Anders Anell

UK/NHS
• The UK, along with Sweden, is a prototypical socialized system.
• Essentially everyone is covered and all the funding takes place through a federal government taxes.
• General taxes account for 76% of the funding and then there are national insurance contributions to account for 19% of the funding. (I do not understand what the national insurance contributions are or where this money comes from.)
• User charges also account for a further 5% of the funding.
• Cost-sharing amounts to small drug co-pays of $14 but this is only for about 12% of all prescriptions written so it is therefore relatively small amount. In other words 80% of prescriptions require no co-pay.
• Dental requires up to $400 per year out of pocket before reimbursement occurs (I think).
• Out-of-pocket expenses account for 12% of the total health care expenditure.
• Primary care physicians are paid directly by the primary care trusts through capitation, salary, and fee-for-service arrangements.
• Hospitals are run by national health service trusts.
• Consultants and specialists are salaried.
• The private system in Britain covers approximately 12% of the population. It is a mix of profit and not-for-profit providers as well as supplementary insurance.

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Sweden - OECD Summary

Summaries of summaries of healthcare systems based on the Commonwealth Fund reports.
Author(s) of the originals are:
Karsten Vrangbaek, Isabelle Durand-Zaleski, Reinhard Busse, Niek Klazinga, Sean Boyle, and Anders Anell

Sweden
• The Swedish system sounds very much like the truly socialized systems that we have come to expect from right-wing fear mongers. Everyone is covered, everything is covered, and virtually everything is funded by the government through taxes.
• There are some co-pays and the deductibles and routine dental care for those over 18 is not generally covered.
• Co-pays for visits amount to about $20 for a general practitioner and $40 for a specialist. There is an approximately $12 per day co-pay for hospitalization and there is a deductible of about $140 annually for prescriptions. Once you go over this amount then there is a scaled re-payment or reimbursement (the higher the expenditure, the higher percentage the state pays.)
• Out-of-pocket expenses account for approximately 14% of total health expenditure.
• Funding is through federal and local taxes.
• The federal government is mostly responsible for prescription drug costs.
• County governments are responsible largely for hospitals, mental-health care, provider reimbursement etc.
• Municipalities are responsible for skilled nursing facilities and the like, as well as home care and some other things.
• Private insurance covers approximately 25% of the population and accounts for less than 1% of total health expenditures.
• Physicians are paid largely through capitation with some fee-for-service. Half of primary care physicians are private and half are employed or salaried.
• Hospitals are mostly county owned and the hospital-based physicians are generally salaried.

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