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Medicare, Medicaid, Veterans Health At High Risk For Fraud, Waste, Abuse

InsFormSmallThe Government Accountability Office (GAO) has published its biennial update of federal programs “that it identifies as high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement…”

Healthcare programs feature high on the list. Medicare, the entitlement program for seniors, and Medicaid, the joint state federal welfare program for low-income households, are longstanding members of the list; and the GAO notes that legislation will be required to fix them: “We designated Medicare as a high-risk program in 1990 due to its size, complexity, and susceptibility to mismanagement and improper payments.” “We designated Medicaid as a high-risk program in 2003 due to its size, growth, diversity of programs, and concerns about the adequacy of fiscal oversight.”

So, that would be 27 years for Medicare and 14 years for Medicaid. Seen any progress?

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Feb 23, 2017 | 13 comments | by

Health Spending & Prices to Rise Through 2025

Actuaries at the Centers for Medicare & Medicaid Services, a government agency, have just updated their estimate of future health spending:

For 2018 and beyond, both Medicare and Medicaid expenditures are projected to grow faster than in the 2016–17 period, and more rapidly than private health insurance spending, for several reasons. First, growth in the use of Medicare services is expected to increase from its recent historical lows (though still remain below longer-term averages). Second, the Medicaid population mix is projected to trend more toward somewhat older, sicker, and therefore costlier beneficiaries. Third, baby boomers will continue to age into Medicare, with some of them dropping private health insurance as a result. And finally, growth in the demand for health care for those with private coverage is projected to slow as the relative price of health care—the difference between medical prices and economywide prices—is expected to begin gradually increasing in 2018 and as income growth slows in the later years of the projection period.

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Feb 21, 2017 | 62 comments | by

American Patients Have Much, Much Greater Access to New Cancer Drugs Than Others Do

captureNew research by scholars at the University of Pittsburgh shows how much better access American patients have to new cancer medicines than their peers in other developed countries:

Of 45 anticancer drug indications approved in the United States between January 1, 2009, and December 31, 2013, 64% (29) were approved by the European Medicines Agency; 76% (34) were approved in Canada; and 71% (32) were approved in Australia between January 1, 2009, and June 30, 2014. The U.S. Medicare program covered all 45 drug indications; the United Kingdom covered 72% (21) of those approved in Europe— only 47% (21) of the drug indications covered by Medicare. Canada and France covered 33% (15) and 42% (19) of the drug indications covered by Medicare, respectively, and Australia was the most restrictive country, covering only 31% (14).

(Y. Zhang, et al., “Comparing the Approval and Coverage Decisions of New Oncology Drugs in the United States and Other Selected Countries,” Journal of Managed Care and Specialty Pharmacy, 2017 Feb;23(2):247-254.)

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Feb 20, 2017 | 9 comments | by

Repealing Obamacare Will Improve California’s Job Market

Confident Doctors(A version of this Health Alert was published by the Orange County Register.)

Obamacare was a cash cow for providers, which now argue it was a program for jobs and economic growth. They now say that repealing Obamacare will kill California jobs. That grabs any politician’s attention, but it is not true.

According to a study by the UC Berkeley Labor Center, which is promoted by the California Hospital Association:

“The majority (135,000) of these lost jobs would be in the health care industry, including at hospitals, doctor offices, labs, outpatient and ambulatory care centers, nursing homes, dentist offices, other health care settings and insurers. But jobs would also be lost in other industries. Suppliers of the health care industry, such as food service, janitorial and accounting firms, would experience reduced demand, leading to job loss. The lost jobs also include those lost due to the ‘induced effect’ of health care workers spending less at restaurants, retail stores and other local businesses.”

Such research relies on the so-called “multiplier effect,” a politically seductive but misleading type of voodoo economics.

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Feb 17, 2017 | 7 comments | by

Health Prices Up Two Thirds Less Than CPI

blsThe Consumer Price Index rose 0.6 percent in December, while medical prices rose only 0.2 percent. This is the fifth month in a row we have enjoyed medical price relief in the CPI. Even prices of prescription drugs rose by only 0.3 percent. Prices of three components – medical equipment and supplies, dental services, and care of invalids and elderly at home even dropped. No category rose more than 0.1 percentage point more than all item CPI. Medical price inflation contributed only three percent of CPI for all items.

Over the last 12 months, however, medical prices have increased much more than non-medical prices: 3.9 percent versus 2.4 percent. Price changes for medical care contributed 13 percent of the overall increase in CPI.

See Figure I and Table I below the fold:

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Feb 15, 2017 | 6 comments | by

PPI: Health Prices Mixed Amidst Inflation

blsJanuary’s Producer Price Index rose 0.6 percent. However, prices for many health goods and services grew slowly, if at all. Nine of the 16 price indices for health goods and services grew slower than their benchmarks.* Prices for six of the categories of health goods and services deflated in absolute terms.

The outlier was pharmaceutical preparations for final demand, which increased by 1.1 percent (0.7 percentage points more than final demand services (less trade, transportation, and warehousing.) The largest decline (relative to its benchmark) was for prices of health and medical insurance for intermediate demand, which declined by 0.8 percentage points versus services for intermediate demand (less trade, transportation, and warehousing).

With respect to diagnosing whether health prices are under control, the January PPI is more mixed than December’s was. Nevertheless, although pharmaceutical prices stand out, most excess inflation is in health services, not goods.

See Table I below the fold:

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Feb 14, 2017 | 4 comments | by

Celebrity Apprentice And Medical Innovation Have Something Important In Common

696012-f43ef348-7dbf-11e3-89a5-f01a1cd39a6c(A version of this Health Alert was published by Forbes.)

A new report should help President Trump find his way out of the confusion suggested by his very mixed signals on the role of medical innovation to American prosperity and patients. Last month, he said research-based drug-makers’ practices were “disastrous,” the industry was “getting away with murder,” and suggested the federal government should dictate prices of medicines.

A couple of weeks later, he told pharmaceutical executives: “You folks have done a terrific job over the years … The U.S. drug companies have produced extraordinary results…” To cap it off, he promised to end “global freeloading.” “Foreign price controls reduce the resources of American drug companies to finance drug R&D and innovation.”

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Feb 10, 2017 | Leave a Comment | by

Republican Medicaid Reform Would Save $110 Billion to $150 Billion in 5 Years

money-rollsArguably more important than repealing and replacing Obamacare, a longstanding Republican proposal to change how Congress finances Medicaid would reduce the burden on taxpayers by $110 billion to $150 billion over five years, according to a new analysis by consultants at Avalere.

Currently, state spending on Medicaid is out of control because Medicaid’s traditional funding formula incentivizes the political class to overspend. For every dollar a state politician spends on Medicaid, the federal government pitches in at least one dollar via the Federal Medical Assistance Percentage (FMAP). This actually rewards states for making more residents dependent on Medicaid.

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Feb 08, 2017 | 8 comments | by

Fixed-Dollar Tax Credits Would Reduce Individual Health Insurance Premiums

UntitledghgSonia Jaffe and Mark Shepard of the National Bureau of Economic Research (NBER) have written a new paper, which compares the effects of fixed-dollar subsidies for health insurance to subsidies that are linked to premiums. They conclude fixed-dollar subsidies reduce taxpayers’ costs and improve access. Unfortunately, the structure of subsidies in U.S. health insurance has moved in the other direction.

Tax credits that subsidize health insurance offered in Obamacare’s exchanges are based on the second-lower cost Silver-level plan in a region. Intuitively, this implies insurers will not compete too much because that would drive down subsidies. As long as subsidies chase insurance premiums, premiums will be higher than otherwise.

Jaffe and Shepard examine evidence from Massachusetts’ health reform (“Romneycare”), which dates to 2006. Its costs are still spiraling, and Jaffe estimates one factor is its design of subsidies, which is similar to Obamacare’s:

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Feb 06, 2017 | 72 comments | by

Slow Growth, Downward Revision in Health Jobs

blsLast month’s job report showed an explosion in health jobs versus non-health jobs. Revisions to previous data in this morning’s very strong jobs report indicate those data were not correct.

Health jobs increased only 0.12 percent in this morning’s jobs report, versus 0.16 percent for non-health jobs. With 18,000 jobs added, health services accounted for only eight percent of new nonfarm civilian jobs.

This is a welcome development. The previous disproportionately high share of job growth in health services was a deliberate outcome of Obamacare. If this trend persists, it will become increasingly hard to carry out reforms that will improve productivity in the delivery of care.

Ambulatory sites added jobs at a much faster rate than hospitals (0.41 percent versus 0.21 percent). This was concentrated in outpatient care centers and home health. This is a good sign because these are low-cost locations of care.

See Table I below the fold:

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Feb 03, 2017 | Leave a Comment | by
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