• Reflex: August 22, 2011

    “Reflex” is our mid-morning reaction to some of the day’s news. Today, some stories were brought to our attention by Igor Volsky and Ezra Klein.

    CMS is expanding competitive bidding for Medicare durable medical equipment, reports Sam Baker of The Hill. It’s expected to save $28B over 10 years. Austin’s comment: Here’s a quiz: presuming competitive bidding makes sense for DME and Part D, among other areas of government procurement, why does it not exist in Medicare Advantage?

    High-deductible CDHPs likely to gain popularity, writes Joanne Wojcik in Business Insurance. The excise (Cadillac) tax will encourage employers to reduce generosity of health plans, shifting more cost sharing and higher deductibles to employees. Austin’s comment: Correct. Next, higher cost sharing will encourage more to seek coverage from Medicaid and the exchanges, if eligible. 

    Social Security disability faces a shortfall in 2017, says the Associated PressDon’s commentThe solvency of the Social Security disability program can be extended until 2037 via a simple legislative fix that allows the disability (DI) portion of Social Security to be cross subsidized by the retirement portion of the program (OASI). The CBO has assumed this will occur in their recent Social Security projections.

    U.S. scrambling to ease shortage of vital medicine. The NYT reports on ways that many stakeholders are trying to fix the shortage of critical drugs for various illnesses, including cancer. Aaron’s comment: I’m always baffled at how people seem surprised when things like a free market and supply and demand can wind up screwing up things like life-saving drugs. When your life is on the line, sellers know. Kevin’s post on this issue here.

    Influenza vaccination coverage among health-care personnel — United States, 2010–11 influenza season. The CDC reports that 37% of health care workers don’t get the flu shot. Aaron’s comment: This is just really, really bad. Remember how we were all so scared of the swine flu just a short while ago? There’s a shot that prevents you from getting it. If you’re supposed to, you should have one every year. There’s a chapter specifically on this in my book.

    The Obama Administration is marketing the ACA, with adds targeted to black and Hispanic audiences, reports Fox News. Austin’s comment: Based on research relating to early enrollment in Medicare Part D, I expect that the degree to which people are receptive to such marketing will play a role in the variation in response and participation. Hispanics are among the groups with the highest rate of uninsurance in Massachusetts. 

    Trade commission challenges a hospital merger in Toledo, reports Robert Pear. Austin’s comment: Work by Cory Capps shows that hospital mergers are, in part, responsible for higher health care costs and have no positive effect on quality.

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    • “why does it [competitive bidding] not exist in Medicare Advantage?”

      Because every time HCFA got close to actually doing a demo program with competitive bidding to cover benes under Medicare+, Congress would step in and cancel it at insurers behest because the insurers knew they would make less money if they actually competed on cost.

    • “I’m always baffled at how people seem surprised when things like a free market and supply and demand can wind up screwing up things like life-saving drugs. When your life is on the line, sellers know.”

      Yes – because greedy nefarious drug sellers know all too well that that they can maximize profits by not making any drugs to sell to anyone.

      Sellers of life saving medications *and* medical devices *and* lifesaving medical interventions of every conceivable kind all know, and since the advent of scientific medicine always have known when a patient is desperately ill and needs a lifesaving intervention. Why is this shortage suddenly materializing now? Pharmaceutical companies suddenly discovered the profit motive in 2007? Why is it restricted to drugs? And why aren’t other sellers of life saving interventions withholding their goods and services and reaping the same windfall using the same supply-elimination strategy that their peers in the pharmaceutical industry have recently put into widespread use?

      Very puzzling, sir.