May 21, 2017

Money Down the Drain

This month, the Commonwealth Fund, a private foundation that supports independent research on the health care system, released a report on just how much Medicare beneficiaries pay out of pocket for health care. The news is sobering: on average, they spend $3,024 and that doesn’t exclude what they pay for premiums.

I’m not sure why premiums are considered separately, but they’re pricey, too. While Medicare part A (hospital coverage) is free for almost everyone over age 65, Medicare part B (doctors’ fees, outpatient care, and lab tests) costs $134 per person per month. That is, if you’re single and earned less than $85,000 in 2015, or married and jointly earned no more than $170,000. After those thresholds, the premium rises steeply, first to $187 per person per month (for joint incomes of up to $214,000) and then on up to a maximum of $429 for the most affluent. Then there’s part D for medications. The average monthly cost for a drug plan this year is $42 per person. And finally, there are Medigap plans if people want coverage for their deductibles and co-pays—the national average for those plans is $183 per person per month.

Looking at averages is not terribly enlightening, but fortunately, the report delves far deeper. It turns out that among  people with three or more chronic medical conditions (30 million of the 56 million people enrolled in Medicare), 29 percent spent at least 20 percent of their incomes on out-of-pocket medical care plus premiums. Among the nearly 14 million people with a serious physical and/or cognitive impairment, 38 percent spent at least 20 percent of their incomes on out-of-pocket medical care plus premiums. The poorest people are particularly hard hit: among the 17 million people with three or more chronic conditions or functional limitations whose incomes is less than 200 percent of the federal poverty level, 42 percent spend at least 20 percent on medical expenses.

After reading the report, I had two questions. First, how do Medicare beneficiaries in Medicare Advantage plans fare compared to those in conventional, fee-for-service Medicare? They pay part B premiums plus a part C premium—which is instead of Part D but also includes more comprehensive coverage with fewer co-pays and deductibles. The actual part C premiums vary tremendously, both within a given insurance company (in Massachusetts, for example, Blue Cross offers 6 different Medicare Advantage plans, with monthly premiums ranging from 0 to $295 per person; a middle-of-the-road plan costs $79 per month) and across companies. My suspicion is that people with multiple chronic conditions or functional impairment are less likely than their healthier peers to choose Medicare Advantage—but that they would have lower out-of-pocket costs if they did. Someone should do the analysis.

Second, how would the ACA-Repeal-and-Replace bill passed by the House of Representatives affect Medicare? The answer seems to be that it would only affect it indirectly, mainly by  cutting federal spending on Medicaid by $880 billion over ten years. This would profoundly impact the 11 million people who are currently enrolled in both Medicare and Medicaid. It would also worsen the overall solvency of the Medicare program. The ACA levies an extra payroll tax of 0.9 percent on individuals earning over $200,000 a year ($250,000 for couples), a tax that is due to expire in 2018. The new bill would end the payroll tax a year early—thus ensuring that the Medicare trust fund, which pays for part A, will run out of money before 2025.

The take home message? Find out if there’s a good Medicare Advantage program available to you and what it costs. It just might be a better deal than regular Medicare. And lobby your senators to make sure that any new variant of repeal-and-replace doesn’t gut Medicaid or bankrupt Medicare.

May 15, 2017

Brave New World of Genetic Testing

In a provocative piece in the NY Times last week, science writer Gina Kolata suggests that the long term care insurance industry may be in a “death spiral.” The culprit, she argues, is genetic testing, which got a boost last month when the FDA approved testing by the company 23andMe. Previously best known for providing genealogical information to those who send in a saliva sample and a $99 fee, the personal genomics company is now authorized to provide information about genetic risk factors as well—for only an additional $26.

One of the ten conditions about which companies may offer information is Alzheimer’s disease. And perhaps the best established genetic risk factor for late-onset Alzheimer’s disease (sometimes called LOAD) is apoE. A gene that codes for a protein involved in cholesterol metabolism, apoE comes in three varieties, prosaically named apoE2, apoE3, and apoE4. Everyone has two copies of the apoE gene, so there are six possible genotypes, of which the most common are E2/E2, E3/E3, E4/E4, E2/E3, and E3/E4. The majority of people (63 percent, in one study of the distribution of the allele in 9 different populations) are E3/E3.

But while there is no way to definitively predict who will develop Alzheimer’s disease, fully 40 percent of people who develop LOAD are among the 25-30 percent of people who carry the e4 variant of the gene. And roughly half the residents of nursing homes have Alzheimer’s disease. As a result, according to spokesmen from the industry, a growing number of people are seeking testing from 23andMe to see if they have the e4 gene. If they have it, they buy long term care insurance. If they don’t, they take their chances.

If this trend continues—and as of 2017, 2 million people have obtained the direct to consumer genetic analyses---the pool of people buying long term care insurance could be heavily weighted towards those who actually will develop the disease. The health insurance industry, however, as consumers are perhaps finally coming to understand in the ongoing Obamacare wars, depends on pooled risk; it only works if the people who buy insurance include some people who will get sick and others who won’t. 

The reason the direct-to-consumer marketing of genetic information potentially spells doom for the long term care industry is that Americans are protected by the Genetic Information Nondiscrimination Privacy Act, which prevents insurers from requiring gene tests or using the results of genetic testing in coverage decisions. That means that ordinary people, without any physician input, can find out if they are at high risk, they can make decisions about buying coverage based on that assessment—and the insurance companies are powerless to intervene. If most of the people who are destined to get Alzheimer’s disease end up with insurance, the insurance company will end up paying out a lot more than they originally anticipated—leading to enormous increases in the rates or bankruptcy of the industry.

Now there are plenty of other reasons that the long term care insurance industry may collapse, and a good number of pre-existing reasons why it’s a poorly designed program. The amount of money it actually provides people is rarely enough to cover their actual costs, whether of home or institutional care. There are many barriers in the way of people using their benefits—for example, many policies require three months of disability before they kick in, which may be three months too long, especially if they are only going to be in a nursing home for three months. And Medicaid is currently available as a back up to pay for institutional care, provided people have “spent down” their personal savings, so the value of long term care insurance derives from its ability to shelter assets.

Analyzing the value of long term care insurance is a conversation for another blog post. But the point I want to make today is that before you rush out and get tested for Apo E, you should be aware of the limited predictive value of the test. While the likelihood of getting LOAD if you are one of the 2.6 percent of the population who have two copies of E4 is 91 percent, the likelihood of getting LOAD if you are one of the 22 percent of the population with one copy of the E4 allele falls to 47 percent. And if you are one of the 76 percent of the population with no E4 alleles, you still have a 20 percent of getting Alzheimer’s. Because the poor “negative predictive value”—because even with a negative test, you have a substantial risk of getting the disorder—physicians and organizations such as the Alzheimer’s Association have for years recommended against routine Apo E screening.

Interestingly, Apo E determination has been available to Europeans as a direct to consumer test for years. A study to find out what the short- and long-term psychological consequences were for patients with a positive test. Though the study only looked at people who requested testing, it found that there were no significant adverse consequences of getting bad news. So fear that you will become anxious or depressed is probably not grounds for resisting the impulse to be tested for Apo E4. But you should remember that it’s just a risk factor—and one over which you have no control—and plenty of people who test negative will still develop Alzheimer’s disease.



May 07, 2017

Falling Down on the Job

In the sixties, physicians routinely prescribed bed rest for patients who had suffered a heart attack. Then along came the recognition that bed rest led to clot formation in the lower extremities, clots that sometimes broke off and traveled to the lungs, causing potentially life-threatening pulmonary emboli. Bed rest also led to deconditioning—when patients finally were allowed to get up, they found they were often weak and wobbly. And so bed rest was out and early mobilization was in. But now, concurrent with a vigorous attempt to prevent falls among older hospitalized patients, bed rest is back in—and with more complications than ever, as reported in a thoughtful article in JAMA Internal Medicine last week.

In 2008, in response to the observation that “injurious falls” were responsible for increased hospital costs and were clearly bad for patients, the Centers for Medicare and Medicaid Services introduced a program incentivizing hospitals to prevent falls. Currently, a fall resulting in significant injury (such as a fracture) is one of eight hospital-acquired conditions that collectively determine whether hospitals will be penalized for poor performance. To address the CMS initiative, hospitals introduced a variety of techniques designed to keep older patients from falling such as bed alarms and “fall risk” signs on the door. According to Growdon and colleagues, the result has been a “national epidemic of immobility among hospitalized older adults.”

Paradoxically, the means used by hospitals to prevent falls don’t work. Bed (and chair) alarms are ineffective—which is not entirely surprising, as by the time a nurse responds to the buzzer indicating the patient has gotten out of bed (or chair), the person is probably already on the floor. Even a multi-prong study from Australia using a variety of different approaches simultaneously was unsuccessful.

But all those bed alarms and signs on the door do achieve something, and that’s to keep patients at bed rest. And just as bed rest was bad for heart attack patients in the sixties, it’s bad for older patients today. Bed rest promotes the development of confusion (delirium) and worsens mobility, so when patients finally do get out of bed, either late in their hospital stay or after they get home, they are more likely to fall.

Growdon, a resident in internal medicine at a major Boston teaching hospital, and his colleagues at a VA Hospital in Florida and at Hebrew Senior Life, a teaching nursing home, are rightfully indignant. They advocate promoting mobility rather than penalizing falls, arguing that “although hospital falls can lead to harm, treating them as ‘never events’ has led to over implementation of measures with little efficacy for falls [prevention] yet profound contribution to immobility.” They are, no doubt, correct. But why? Why should an incentive program based on outcomes lead to the adoption of a strategy that does not lead to the desired outcome?

If CMS had used a process measure, if it had offered extra payments to hospitals that introduced fall prevention programs, I wouldn't have been surprised that it resulted in hospitals adopting programs for the sake of having something, regardless of efficacy. But instead it opted to penalize hospitals for performing poorly, which should by rights have led to hospitals choosing to take steps that made a difference. What is it about the culture of hospitals or the leadership of hospital CEOs or the knowledge base of physicians and nurses that lets them make such irrational choices?

I wish I knew the answer. In the meantime, perhaps CMS would do well to offer carrots rather than sticks, and to be specific about the kind of carrots that it likes the most. If programs that promote mobility work, directives to get patients out of bed early and to consult physical therapy—both to prevent falls and to maintain function—then it’s those specific programs it should endorse and pay for.
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April 26, 2017

Quack, Quack--if it Sounds Like a Duck....

When Lydia Pinkham (1819-1883) began selling her patent medicine in the mid-nineteenth century, she advertised it as a panacea for all sorts of “female complaints.” Whether you suffered from “neurasthenia,” from menstrual cramps, from infertility, or from postmenopausal depression, Lydia Pinkham’s Vegetable Compound was the drug for you. It made Mrs. Pinkham and her descendants a bundle: as described by James Harvey Young in his book, Toadstool Millionaires, the remedy grossed $300,000 in the year of her death and in 1925, it earned a profit of $3.8 million. I’m not sure what that is in 2017 dollars, but it’s a lot.


Other patent medicines made similarly broad claims of effectiveness and were likewise lucrative for their developers. Warner’s "Safe Cure" stated on the label that it treated “Bright’s disease (nephritis), urinary disorders, female complaints, general debility, malaria,” and “all disorders caused by disordered kidneys and liver.”



These potions remained unregulated until the passage of the Pure Food and Drug Act in 1906, at which point the labels were required to be “truthful” about their ingredients. In particular, 11 dangerous substances including morphine, cocaine, and alcohol, which were frequently found in patent medicines (even in cough syrup for children) needed to be explicitly listed. There would be no evidence of efficacy required for another 32 years.

In the intervening years, both physicians and the public gradually began to appreciate that any drug that was touted as the treatment or even the cure for as many as ten distinct diseases was almost invariably a fraud and the disseminator of claims of its miraculous properties a quack. No one drug can plausibly have so many unrelated beneficial properties. Today, we are afflicted with the inverse of the one-drug-many-cures scam. We are bombarded with claims that a single disease can have many unconnected causes. And the disease for which such assertions are most commonly made is Alzheimer’s disease.

A few years ago, the media was all riled up by an article purporting to show that the anti-anxiety drugs, benzodiazepines,  were associated with an increased risk of Alzheimer’s disease. A year later, we learned that anti-allergy medicines and some antidepressants had also been associated with developing Alzheimer’s. Last year, the culprit was the class of anti-ulcer medications, proton pump inhibitors (drugs such as omeprazole). And now, instead of a medication, we have soda and other sugar-laden beverages allegedly leading to stroke and dementia.

Really? Do all these substances launch innocent people on the path towards dementia?

To be fair, there are disorders with multiple well-established risk factors. Coronary artery disease, for example, is associated with elevated cholesterol, diabetes, high blood pressure, and smoking. But in this case, we understand something of how the disease develops and how each of these risk factors affects that pathway. High blood pressure damages the lining of the coronary arteries, and the resulting areas of inflammation tend to trap cholesterol, producing plaques, etc. 

There are also single substances that produce diffuse toxicity: cigarette smoking has been associated with lung cancer, bladder cancer, and cancers of the head and neck (three very different types of cancer), as well as with heart disease and stroke. But again, we understand the mechanism of action that is responsible for the disparate effects. 

In the case of dementia, the connection between benzodiazepines and dementia, allergy medicine and dementia, proton pump inhibitors and dementia, and now soda and dementia, is purely statistical. Nobody has made a plausible argument for how each of these agents might work to trigger Alzheimer’s—even though we now know quite a bit about how the disease develops. No one has made a good argument because they haven't found one.

Nor is there a persuasive statistical argument. The studies based on which all these factors have been implicated in causing dementia are retrospective, non-randomized studies. The authors try to control for various “confounding factors” that might be the real explanation for the association, but they might not know what the relevant factor is or they might not be able to figure out if it was present or not. For example, maybe people who were ultimately diagnosed with Alzheimer’s disease were more likely than others to have taken benzodiazepines a few years before their diagnosis because they were already exhibiting very early symptoms, and those symptoms created anxiety.

Much exciting research is underway on Alzheimer’s disease, research that may someday result in treatment, prevention, or even cure. But fishing expeditions to come up with a commonly used drug or other substance as an explanation of this complex disease are a distraction. We don’t need people abandoning their ulcer medication or their allergy treatment out of an ill-founded fear that they are bringing dementia upon themselves. Stirring up hysteria—and potentially depriving individuals of good drugs—is a really bad idea.

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April 23, 2017

Advantage, (Medicare) Advantage

I said last week that I was a statistics junkie. A related penchant is for reports, especially government reports.  And few reports pull together more interesting facts about health care in the older population today than MedPAC, the Medicare Payment Advisory Commission. The Commission just sent its mandatory report on payment to Congress last month—it sends such a document every March, this most recent one totaling 483 pages. The report begins by telling us that total spending on health care in the US in 2015 was a stunning $3.2 trillion, or 17.8 percent of GDP. Of that, Medicare accounted for $642.2 billion, representing a rate of growth that has actually fallen in recent years. But the chapter I want to focus on today is the one on Medicare Advantage plans, those capitated, private plans that constitute an alternative to traditional Medicare.

My question is simply: how well do Medicare Advantage plans work? Do they save money? And most importantly, are they good for patients? How do clinical outcomes compare between Medicare Advantage (MA) plans and standard, fee-for-service (FFS) Medicare? What other benefits, if any, accrue to patients from enrollment in such plans?

It turns out I’ve been interested in this question for a long time because such plans have the opportunity to coordinate care, to mandate some services that are essential for the geriatric population (eg geriatric assessment for high risk patients), and to cover other important benefits (eg hearing aids and glasses). In fact, exactly 30 years ago I published an article in the Annals of Internal Medicine called, The Impact of Health Maintenance Organizations on  Geriatric Care. At that time, there were only 87 plans nation-wide (compared to 3500 today). Some were doing all right—as long as the patients they enrolled were all healthy older people. Others weren’t doing so well and several folded altogether. The challenge and, I suggested, the opportunity, was to decrease the rate of hospitalization among enrollees (the main way to cut costs), which in turn would require geriatric assessment in the ambulatory setting and geriatric consultation in the inpatient setting. It would work, I cautioned, only if HMOs provided case management, podiatry, and home physical therapy. They didn’t do those things and they never took off.

After two overhauls—the early capitated plans authorized by the Tax Equity and Fiscal Responsibility ACT (TEFRA) in 1982 were reborn as “Medicare Plus Choice” thanks to the Balanced Budget Act (BBA) in 1997, and then christened “Medicare Advantage”  by the Medicare  Modernization Act of 2003—capitated plans are finally on the upswing. In 2016, 17.5 million Medicare beneficiaries (31 percent) enrolled in such a program. The appeal is to some degree simplicity: instead of having to purchase separate coverage for physician care (Part B Medicare) and for prescription drugs (Part D Medicare) on top of free hospital care (Part A Medicare) along with Medigap insurance to pay for most of what Parts A, B, and D do not cover, you could sign up for a Medicare Advantage Plan that does it all. In exchange for restricting which hospital(s) patients can be admitted to and which physicians they go to, MA plans also offer some of those extras I advocated years ago, such as case management, and basic vision and dental care. So how good are they?

MedPAC mainly pays attention to costs. But it does devote a few pages to quality. It relies on HEDIS measures (Healthcare Effectiveness Data and Information Set) that plans are required to report as well as the quality measures that go into the star rating system of health plans used by CMS. And what it finds, over and over, is that FFS Medicare plans and MA plans are indistinguishable, whether in terms of objective measures (percent of enrollees who get flu shots) or subjective measures (percent of enrollees who say they can get an appointment quickly or who rate the quality as high).

I’d like to see the breakdown for individuals who are frail or who have advanced illness. I’d like to learn what services such as case management or palliative care consultation MA plans use (always, often, or sometimes) for this population. And I’d like to know whether seriously ill patients are apt to dis-enroll from MA plans once they become ill, as used to be the case, presumably because they were concerned about the limitations on choice of physicians they encountered. But in the meantime, at least for the average older patient, it seems that MA plans are an attractive alternative to conventional Medicare.

April 16, 2017

Counting what Counts

A confession: I’m a data junkie. I don’t generally collect data (though I have carried out a few empirical studies) and I don’t analyze data statistically. But I am fascinated by descriptive data, which often provide  remarkable insights into how things were or how things are. 

When I was working on my latest book (Old and Sick in America will come out in October), and I wanted to know what nursing homes were like on the eve of the introduction of Medicare, I consulted the report, “Characteristics of Residents in Institutions for Aged or Chronically Ill: 1963,” put out by the US DHEW (as the Department of Health and Human Services was called then). I learned there were just over half a million people living in 16,370 nursing homes (just about the same number of nursing homes we have today) and that they stayed there, on average for 3 years. 

When I wanted to know what hospitals were like in the 1960s, I read “Trends in Hospital Utilization: US 1965-1986” and found that circulatory disease, which has been the number one reason for hospitalization from the 1980s to the present, was only number 6 in 1965. Over the period from 1970 to 1986, the number of catheterizations done each year in people aged 65 and older would soar from 8,000 (or 3.8/10,000 people) to 275,000 (or 85.8/10,000) and that CABG (coronary artery bypass surgery) would likewise jump from 0 to 125,000 (or 42.9/10,000). So periodically, I check whether the National Center for Health Statistics has released any “Data Briefs” about older people. This past February, the agency published “Emergency Department Visits for Injury and Illness Among Adults Aged 65 and Over, US 2012-2013.” It is a compelling reminder that the emergency department is a key source of health care for older people.

Focusing exclusively on illness (as opposed to accidents), the report finds that the elderly go to the emergency room often and the older they get, the more often they go. Each year, 29 percent of people aged 65-74 have at least one emergency visit, as do 42 percent of those aged 75-84, and 57 percent of those aged 85 and up. About a third of these older patients arrive in the emergency room by ambulance—highlighting the role of ambulances as another locus of health care for this population.

These numbers don’t tell us what actually happens to older people when they reach the ER, but other data give a few clues. In the ER, the elderly are very likely to have some kind of imaging procedure (63 percent do), with about half of those getting a plain X-ray and a quarter getting a CT scan. And fully 32 percent of those presenting to the emergency department with an illness are admitted to the hospital; 5 percent to a critical care unit. There’s much that is left out if we focus only on descriptive statistics: we don’t know whether these patients typically have a friend or family member with them; we don’t know if anyone asks about their home situation; we are in the dark about whether anyone addresses their goals of care or checks if they can walk or determines their mental status. But the numbers are a place to start.

What is abundantly clear is that with 15.5 million visits to the emergency department by older people every year, it’s high time we pay more attention to what actually goes on there. We have the opportunity to figure our whether the hospital is the right place to take care of whatever the problem is and, if not, how to shore up the home environment to make it a viable alternative. To answer these questions, we need to make certain that older patients routinely undergo a brief assessment of both their cognitive and physical functioning. We need to involve a family member if support will be needed at home. I would bet that if we did all this, we’d make far more headway in avoiding hospitalization and decreasing the rate of readmission than many of the elaborate transitional care programs operating today.
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March 31, 2017

Now Hear This!

This week I'm posting a podcast I did for GeriPal about my forthcoming book, "Old and Sick in America: the Journey through the Health Care System."

March 27, 2017

Double, Double, They're In Trouble

The headlines on Tuesday, March 14 focused on two items: the blizzard that was belting the Northeast and the CBO report which predicted that 24 million Americans would lose health insurance coverage over the next 10 years if Trump Care became law. Far less prominently featured was the Senate confirmation of Seema Verma as head of the Centers for Medicare and Medicaid Services (CMS). Approved by a 55-33 vote, Verma could potentially have a major effect on the shape of health care for older Americans. So what do we know about Ms Verma?

We know she’s a first generation American and that she has a BA from the University of Maryland and an MPH from Johns Hopkins. She was the president and founder of SVC (which presumably stands for Seema Verma Consulting rather than superior vena cava, though I can’t find any reference on the website to what the letters stand for), an Indianapolis-based company that says it provides “strategic health policy solutions.” Her main claim to fame is that she (or SCV, Inc) came up with a strategy that enabled the Indiana Medicaid program to charge residents for premiums. She is widely expected to promote a similar strategy at the federal level as head of CMS. Medicaid is generally thought of as a program for the poor; how would Medicaid reform affect older individuals?

As of 2011, there are 10 million people who receive both Medicare and Medicaid, of whom 61 percent, or 6.1 million, are 65 or older. The remainder are younger people with disabilities. Just who are these people? The short answer is that they are the sickest, most impaired, and most vulnerable members of society. Nearly 3 in 4 have at least 3 chronic conditions. Over 60 percent need help with basic self-care activities such as eating, bathing, or dressing. And nearly 60 percent have a cognitive or mental impairment such as dementia.

And what does Medicaid provide for these “dually eligible” patients? Medicaid pays for nursing home care. It pays for long term care in the community. And it makes Medicare more affordable by helping cover Medicare premiums. The biggest chunk goes to long term care, with Medicaid allocating 62 percent of the $147 billion it spent in 2011 to long term care.

The amount that Medicaid pays for these services is considerable. Medicare beneficiaries account for 15 percent of Medicaid enrollment but 36 percent of Medicaid spending. Many states devote a considerable amount of their Medicaid spending to dually eligible, and 6 states spend over 45 percent of their Medicaid budget on the dually eligible.

What all this means is that Seema Verma could introduce policies that have widespread repercussions for 10 million people, over 6 million of them seniors. Within hours after being sworn in, she and DHHS Secretary Tom Price sent a letter to state governors urging them to impose premiums for the poor, charge Medicaid recipients for use of emergency rooms, and require many of those on Medicaid to get jobs. 

Reforming Medicaid, Republican style, would take the form of block grants. This means that the federal government would dole out a fixed amount of money to the states and allow them to set their own eligibility criteria. But it also means that there would be a cap on what each state gets, regardless of growth in the vulnerable population or their needs. 
States then have a choice: they can raise the eligibility standards, they can cut back on benefits, or they can reduce payments to providers. For people living in nursing homes, the single largest group of older individuals receiving Medicaid, how would that translate into practice? Well, the state could decide that only people with deficiencies in 5 activities of daily living (rather than 3 or 4) will be admitted to nursing homes under their Medicaid benefit, keeping more people at home longer without providing the necessary support to make this safe. Or it could limit the number of months it will cover nursing home care, forcing the burden of care onto families that in many cases have already concluded they cannot bear that burden. Or it could cut back the already bare bones payments to nursing home facilities, jeopardizing the quality of care in those institutions.

Medicaid matters. Write to Ms. Verma. Let her know.




March 20, 2017

What We Pay

The Princeton health economist, Uwe Reinhardt, first said it in 2004. The private think tank, the McKinsey Global Institute, persuasively demonstrated it was true in 2008. But maybe now that the Wall Street Journal is saying the same thing, policy makers will listen. The elephant in the room, the main factor accounting for the high cost of health care in the US, is prices.

The spending gap between the US and other developed countries remains huge. We spend 17 percent of GDP on health care (that’s all spending, public and private combined); our closest competitor, Switzerland, manages to spend 11 percent. Other OECD countries, such as New Zealand and Norway, spend closer to 9 percent. And despite all the excess spending, we don’t have better outcomes across a broad range of measures, from infant mortality to life-expectancy.

The main culprit, the WSJ reports, is higher prices in the US. The average price of most prescription drugs is higher here—by a lot. Avastin (an expensive medication but not the most expensive medication there is) costs $4000 for a 400 mg vial in America and less than $2000 in western Europe. Ditto for procedures: the cost of coronary artery bypass surgery in the US is $80,000, compared to half that in other OECD countries. And so on, down the line.  Elsewhere in the world, the WSJ explains, state run health systems set limits on prices or refuse to pay a supplier if the cost is regarded as excessive. Our free market system, far from keeping costs down, drives them up.

The McKinsey Report, though a few years old now, makes further adjustments based on a country’s wealth. It argues that richer countries may want to spend a larger proportion of their income on health care. But even adjusting for greater GDP per capita, the US spent $650 billion more than “expected” in 2006. The fastest growing part of the excess, the study showed, was due to outpatient care, both office visits and ambulatory surgery. And what was driving up costs in these domains wasn’t the frequency of visits—Europeans tend to go to the doctor at least as often as their American counterparts—it was the cost per visit. Other major contributors to the high cost of American health care are drug pricing (McKinsey found, as did the WSJ, that we pay more in the US for a given drug than we would in other OECD countries) and the cost of health administration (all the spending on marketing and administration of multiple private health plans boosts costs way over what they would be with a single payer).

I think it’s fair to conclude that the high cost of American medicine isn’t solely—or even mainly—due to waste. Targeting the use of less-than-optimal therapies in outpatient practice, as the Choosing Wisely campaign does won’t solve the cost problem. Nor will targeting expensive, burdensome, and unwanted treatment near the end of life. These are important efforts to improve quality of care. But if we want to do something about cost, we need to have an impact on prices. That means cutting payments made by insurers (both Medicare and private insurance companies) to pricey specialists. It means allowing the biggest and most influential insurer of all, Medicare, to negotiate with drug companies about price. It means allowing insurers such as Medicare to pay for devices based on their cost-effectiveness, not based on what the manufacturer charges. 

Introducing single payer health insurance would help, too. It happens to be the only other way to cover all Americans and make health insurance affordable and get rid of pre-existing conditions riders without use of the “mandate” that Republicans find so very unpalatable. But that’s a topic for another day.