Health care waste deconstructed: Fraudsters and patients aren’t the problem
Posted Oct. 18, 2012, at 1:03 p.m.
If anybody ever tells you we can’t afford health care for everybody, consider the following: Every other wealthy country in the world provides health care for all at an average of about half the per-person cost in the United States.
Their health care systems are more popular than ours and get better results for all their people. In those countries, there is no such thing as medical bankruptcies and there is no job-lock due solely to health care coverage.
Last month, the National Academy of Sciences reported that in the U.S. we waste $750 billion on health care, or about one in every three dollars we spend. Apologists for our dysfunctional health care system blame fraud and inadequate prevention — “blame the patient” — for most of that. But those two factors accounted for only 17 percent of the waste, according to the NAS.
The rest of the waste, 83 percent, was accounted for by other factors. Unnecessary services accounted for 28 percent. Unnecessarily high prices accounted for 14 percent. Excess administrative costs due to too many private insurance companies and types of insurance accounted for 25 percent.Inefficiently delivered services due to a lack of coordination among doctors, hospitals and other providers accounted for another 17 percent.
Many of these problems can be solved, and have been in other countries and in parts of this country. But they will not be solved anytime soon unless we fundamentally transform the ways we finance and deliver health care.
The mission of a public financing system, such as Medicare, is to facilitate the delivery of medical care. Medicare has an administrative overhead of less than 5 percent. The mission of private health insurance companies is to create wealth for their owners. To do so, they spend a lot of time, effort and money impeding the delivery of medical care in order to insure that they minimize payouts and maximize profits. In doing so, they have overhead approaching or exceeding the 20 percent limit imposed by the Affordable Care Act.
This is where much of the $190 billion in administrative spending that does little or nothing to improve health goes.
Americans have to wake up to the fact that most prices charged for medical care in the U.S. are simply too high — far higher for most products and services than in any other country. Technology companies are accustomed to charging far higher prices than are necessary to sustain a sound business. While there is a large range of incomes among doctors and other health care professionals, many are making far more money than is necessary to maintain a perfectly comfortable lifestyle.
Health care waste deconstructed: Fraudsters and patients aren’t the problem
Posted Oct. 18, 2012, at 1:03 p.m.
If anybody ever tells you we can’t afford health care for everybody, consider the following: Every other wealthy country in the world provides health care for all at an average of about half the per-person cost in the United States.
Their health care systems are more popular than ours and get better results for all their people. In those countries, there is no such thing as medical bankruptcies and there is no job-lock due solely to health care coverage.
Last month, the National Academy of Sciences reported that in the U.S. we waste $750 billion on health care, or about one in every three dollars we spend. Apologists for our dysfunctional health care system blame fraud and inadequate prevention — “blame the patient” — for most of that. But those two factors accounted for only 17 percent of the waste, according to the NAS.
The rest of the waste, 83 percent, was accounted for by other factors. Unnecessary services accounted for 28 percent. Unnecessarily high prices accounted for 14 percent. Excess administrative costs due to too many private insurance companies and types of insurance accounted for 25 percent.Inefficiently delivered services due to a lack of coordination among doctors, hospitals and other providers accounted for another 17 percent.
Many of these problems can be solved, and have been in other countries and in parts of this country. But they will not be solved anytime soon unless we fundamentally transform the ways we finance and deliver health care.
The mission of a public financing system, such as Medicare, is to facilitate the delivery of medical care. Medicare has an administrative overhead of less than 5 percent. The mission of private health insurance companies is to create wealth for their owners. To do so, they spend a lot of time, effort and money impeding the delivery of medical care in order to insure that they minimize payouts and maximize profits. In doing so, they have overhead approaching or exceeding the 20 percent limit imposed by the Affordable Care Act.
This is where much of the $190 billion in administrative spending that does little or nothing to improve health goes.
Americans have to wake up to the fact that most prices charged for medical care in the U.S. are simply too high — far higher for most products and services than in any other country. Technology companies are accustomed to charging far higher prices than are necessary to sustain a sound business. While there is a large range of incomes among doctors and other health care professionals, many are making far more money than is necessary to maintain a perfectly comfortable lifestyle.
Lapses at Big Drug Factories Add to Shortages and Danger
By KATIE THOMAS
Weevils floating in vials of heparin. Morphine cartridges that contain up to twice the labeled dose. Manufacturing plants with rusty tools, mold in production areas and — in one memorable case — a barrel of urine.
These recent quality lapses at big drug companies show that contamination and shoddy practices extend well beyond the loosely regulated compounding pharmacies that have attracted attention because of their link to an outbreak of meningitis.
In the last three years, six of the major manufacturers of sterile injectable drugs — which are subject to rigorous inspections by the federal government, as opposed to compounding pharmacies, which are generally overseen by the states — have been warned by the Food and Drug Administration about serious violations of manufacturing rules. Four of them have closed factories or significantly slowed production to fix the problems. Nearly a third of the industry’s manufacturing capacity is off line because of quality issues, according to a Congressional report.
The shutdowns have contributed to a shortage of critical drugs, and compounding pharmacies have stepped into the gap as medical professionals scramble for alternative sources. But several serious health scares have been traced to compounding pharmacies in recent years. Authorities said 19 people had died from meningitis in an outbreak traced to a contaminated steroid made by the New England Compounding Center in Massachusetts. Supplies of the steroid, methylprednisolone acetate, became short earlier this year after two generic manufacturers, Teva and Sandoz, stopped making it.
“In the industry, everyone knows that all of the factories are in terrible shape,” said Erin Fox, manager of the Drug Information Service at the University of Utah, which tracks drug shortages. But the public, she said, is still in the dark. “I think people think this is a foreign outsourcing problem, but these factories are in our own country.”
Are Doctors Too Wary of Drug Companies?
By PAULINE W. CHEN, M.D.
Not long ago, I asked a colleague for advice on a patient. He offered up a couple of treatment options, then stopped to show me a new medical app on his electronic tablet. With a few swipes of his finger, he summoned a compilation of research articles, synopses and even entire textbooks that, printed and bound, would have filled shelves in a library.
"But do you know what the best part is?" he asked with a twinkle in his eye. I thought of the exhaustive reference material and the seemingly endless scroll of diagnoses that were all so easy to access on the small screen balanced on his knees.
"The best part is that none of this is sponsored by Pharma!" he said with a broad smile. "There's no bias."
My colleague is not the only doctor who feels that way, according to a recent study published in The New England Journal of Medicine.
For years, most doctors have had a predictable, if not close, relationship with the pharmaceutical industry. Companies handed out office tchotchkes, paid for staff lunches and distributed drug samples for patients. More significantly, drug companies were important sources of biomedical research money, particularly during periods when federal support wavered. It was understood that the companies providing funding would leave the researchers alone to design and conduct the study, analyze the data and write up the results.
That understanding began to fray about a decade ago when doctors, and patients, began to realize that drug companies were becoming too involved with the research they were supporting. For example, one major pharmaceutical firm manipulated data and underestimated the risk of heart attacks, strokes and deaths in a large study of a drug for arthritis. The drug was eventually withdrawn from the market, but not before 80 million patients had used it, with annual sales topping $2.5 billion.
The case highlighted the dangers of industry sponsorship of research into new drugs, and the public became eager to expose any potential conflict of interest, particularly for doctors. Within a few years, a new standard of transparency in medicine emerged. Brightly labeled drug company pens became an embarrassment; lunches on the drug company tab and sponsored conferences turned suspect; and editors at numerous medical journals published lengthy screeds detailing their disclosure requirements.
The new skepticism and transparency were no doubt good for patients and doctors, but this recent study reveals that in our zeal to single out the pharmaceutical industry's biases, we may have become blind to our own.
Scott’s Story and the Election
By NICHOLAS D. KRISTOF
I wrote in my last column about my uninsured college roommate, Scott Androes, and his battle with Stage 4 prostate cancer — and a dysfunctional American health care system. I was taken aback by how many readers were savagely unsympathetic.
“Your friend made a foolish choice, and actions have consequences,” one reader said in a Twitter message.
As my column noted, Scott had a midlife crisis and left his job in the pension industry to read books and play poker, surviving on part-time work (last year, he earned $13,000). To save money, he skipped health insurance.
A year ago, he encountered difficulties urinating and didn’t see a doctor in part because of the cost. By the time the prostate cancer was detected, it had spread to his bones.
“I blew it,” Scott told me several times. He repeatedly acknowledged that he should have bought insurance and should have seen a doctor as soon as his symptoms appeared.
Scott showed immense courage in telling his story. He worried that his legacy would be an unflattering article spotlighting his foolishness, yet he went ahead for two reasons. First, he said that readers might learn from his mistakes and call a doctor about that suspicious lump or mole. (If that’s you, do it now!) Second, he said he hoped that his story would help readers see the need for universal health care, so that others wouldn’t suffer as he has.
That’s in part what this election is about. If President Obama is re-elected, Obamacare will stay in place and health insurance will become close to universal in 2014. In contrast, Mitt Romney has promised if elected to work to repeal Obamacare — and any American who made a bad health care decision would continue to suffer.
To many of my readers, that’s fine.
“Not sure why I’m to feel guilty about your friend’s problem,” Terry from Oregon wrote on my blog. “I take care of myself and mine, and I am not responsible for anyone else.”
When following this link, take the trouble to have a look at the comments in response.
SPC
Insurance giant UnitedHealth reports 23% jump in quarterly profit
By Chad Terhune
8:58 AM PDT, October 16, 2012
The nation's largest health insurer, UnitedHealth Group Inc., reported a 23% increase in third-quarter profit on the strength of continued growth in its Medicare and Medicaid businesses.
The Minnetonka, Minn., company raised its full-year earnings forecast and said overall medical costs among its customers remained largely in check. UnitedHealth is the first major health insurer to report third-quarter results, and it often sets the tone for the industry.
UnitedHealth said net income for the quarter ending Sept. 30 was $1.56 billion, or $1.50 a share, compared with $1.27 billion, or $1.17 a share, for the same period a year ago. Revenue in the quarter grew 8% to $27.3 billion.
The company boosted its 2012 outlook to $5.20 to $5.25 a share, up from $4.90 to $5 previously. Shares of UnitedHealth were up 12 cents to $57.61 in midday trading Tuesday.
UnitedHealth is the largest U.S. health insurer with 36.5 million members. Like many competitors, UnitedHealth is finding much of its growth from government health programs.
In the last year, the company said it added more than 400,000 Medicare Advantage customers through internal growth and acquisitions. Medicaid enrollment grew by about 385,000 in the last year, the company said.
But UnitedHealth is also looking beyond the U.S. market for new customers. Last week, it agreed to acquire 90% of Amil Participacoes SA, Brazil's largest healthcare company, for about $4.3 billion, after certain tax benefits.
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