Category Archive: Healthcare
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Is human blood a “public resource”? Prof. Peter Jaworski argues that your bodily fluids belong to you, and governments should let you sell them.
Comments Off on The dirty word that gives us our freedom
Competition is often considered a dirty word, with many critics of free market ideas emphasizing the cutthroat competition of Wall Street as an example of how competition brings out the worst in people, encourages us to cut corners, and undermines our altruistic tendencies.
Proponents of competition often talk in terms of innovation: competition spurs innovation, giving consumers options they didn’t have before. But even that defense isn’t enough for people who don’t understand the true importance of competition and innovation. Take Bernie Sanders’s derision of innovation as just a way to get lots of different deodorant on the shelves, for example.
The Problem with the Way We Think about Competition
What’s problematic about both the criticism and the common defense of competition? Both underestimate precisely why competition is so important. Competition does more than spur innovation or provide people with different kinds of deodorant. In some cases, competition provides us with the powerful freedom to decide what happens to our bodies and is the only thing that makes informed consent meaningful. This connection is particularly important in health care, but the importance of competition to human freedom applies in other areas as well.
A particularly painful and poignant case study came out of Kentucky earlier this month: after one birth center owner spent many hundreds of thousands of dollars fighting the state’s Certificate of Need process, a Kentucky Appeals Court ruled that birth centers cannot compete with hospitals for maternity patients. This decision ignored that pregnant women in Kentucky want birth centers, are demanding birth centers, and that birth centers provide higher quality and lower cost care for low-risk pregnant women than hospitals do.
The Broader Implications of Kentucky’s Ruling on Birth Centers
While this may seem like a narrow case that applies just to pregnant women in Kentucky, its implications are far broader. What this case really does is tell pregnant women in Kentucky what they are allowed to do with their bodies. It tells entrepreneurs who are providing a safe and effective service that they are not allowed to make a living helping other people. It condemns birthing women to worse outcomes, higher rates of interventions, and worse treatment than they want, expect, and demand. And cases like this happen all over the United States each day, affecting everyone from children to the elderly. Government at all levels controls the options you have access to for urgent care clinics, surgical clinics, hospitals, and other health-care providers.So what’s the point? Competition doesn’t just allow for innovation. Competition prevents us from being hemmed in by what other people want for us. It provides us with choices about what happens to the things we hold most dear. Without the diversity of options competition provides, freedom is literally meaningless.
Pregnant women in Kentucky have been denied the opportunity to make basic decisions about what happens to their bodies. If you think this kind of intervention only applies to pregnant women, you’re wrong. Once you peel back the layers of other kinds of government regulation, you’ll find that the government controls a lot more than you realize about what happens to your body, your livelihood, your family, and your community.
So let’s stop talking about competition as the thing that provides us with lots of different brands of deodorant. Instead, let’s start talking about competition as perhaps the most necessary component of a free society.
Comments Off on Reddit AMA with Professor Ilya Somin of George Mason University
Ilya Somin is Professor of Law at George Mason University. His research focuses on constitutional law, property law, and the study of popular political participation and its implications for constitutional democracy.
Professor Somin has written extensively on constitutional theory, federalism, political ignorance, property rights, immigration, and a wide range of other important policy issues. He is a prolific contributor to the Volokh Conspiracy blog hosted by the Washington Post, and his work has been featured in other major publications such as the Wall Street Journal, New York Times, Los Angeles Times, CNN, USA Today, and Forbes. He’s also the author of several well-received books, including Democracy and Political Ignorance: Why Smaller Government is Smarter (Stanford University Press, Second Edition, 2016), and The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain (University of Chicago Press, 2015).
Fans of Learn Liberty will recognize Professor Somin as the star of our popular video, I Can’t Breathe: How to Reduce Police Brutality, and as a regular contributor to our blog, where he has written about the politics of sci-fi and fantasy series such as Star Wars, Star Trek, and Game of Thrones.
Mark your calendar for Tuesday, September 19th at 3:00pm ET and join us for a conversation at Reddit.com/r/Politics where you can ask him anything!
Update: The AMA is now live!
Comments Off on Will voters punish Republicans for not changing health care?
Republicans are fretting over their failure to repeal Obamacare. President Donald Trump claimed Senators who voted against its replacement, the American Health Care Act (AHCA) had “let down Americans.”
The Club for Growth and Tea Party Patriots are targeting Republican senators like Lisa Murkowski, Susan Collins, and Rob Portman, who opposed one or more versions of the GOP bill. Several others face serious primary challenges from irate activists. A Republican donor from Virginia Beach has even sued the party, claiming its inability to terminate Obamacare constitutes fraud.
This all presents an interesting question. Will the failure to expunge President Barack Obama’s signature legislative achievement cost Republican candidates in elections for federal office over the next few years?
It’s just one bill … right?
If we think of this episode as merely the inability to pass a single bill, it is difficult to imagine the AHCA’s defeat making much of a difference. As elected representatives are wont to do, Republican legislators gauged their constituents’ views and voted accordingly.
Most of the 20 House GOP members who voted “no” came from districts with relatively few conservative voters, and the rest of those Republicans already had a history of bucking the party — just like John McCain in the Senate. In other words, the specific Republicans who voted “no” probably did so because they think a large number of their voters actually wanted them to.
But Obamacare hurt Democrats at the polls — will it hurt Republicans too?
Democratic politicians who voted for Obamacare in 2009–10 suffered at the polls in the 2010 midterms, costing them votes and, by one analysis, around 25 seats — enough to give Republicans the majority.
But Obamacare repeal is different from Obamacare passage in two important regards.
First, non-repeal is the absence of action and therefore a failure to change the status quo. Republican voters might be upset that their congressional party did not kill the policy, but that surely is not the same as establishing it in the first place. It was Democrats who did that, and they presumably maintain significant “ownership” of any future problems in the health-care sector.
Second, President Obama signed the Obamacare bill (the Affordable Care Act) in March 2010, only eight months or so before the midterms. Republicans aborted their effort much earlier in the Congress and therefore at a point considerably more distant from future elections. A lot can happen between now and November 2018.
But Republicans tied themselves to repeal!
Still, this wasn’t just a vote. Republicans have been trying to reverse Obamacare for seven years. There have been over 50 votes in the House to repeal one aspect or another of it. Getting rid of the ACA was a central feature of the legislative agenda of the current 115th Congress, and the failure has had significant negative effects on the remaining items the Republican leadership and White House would like to see passed, particularly tax reform.
Research shows majority parties in Congress pay a price at the polls for failing to pass their legislative agenda. The public expects the legislature to be productive and use policy to solve economic and social problems. Over the past 40 years, as the parties have polarized and Congress become more partisan, Americans have increasingly associated the institution’s collective performance with its majority party. If the Congress isn’t doing anything to change the country, it must be the Republicans’ fault. Obamacare repeal was a pivotal test of the party’s capacity to govern.
Or do voters mostly care about their own lives and wallets?
But there’s also an argument that it is the effects of government action that really matter to voters. A veritable library of research reveals the electoral performance of a governing party is closely related to the country’s general health, largely the state of its economy. By virtue of its partisan connection to the president, during unified government the congressional majority will pay for bad times and be rewarded for good ones — although these effects tend not to be symmetrical (the American public prefers retribution).
Policy is nothing but an instrument, and Americans respond to the impact it has on their lives. They do not pay particular attention to the process of making it.
In this way, Obamacare caused Democrats problems in 2014 and 2016. Many Americans were clearly pleased to gain coverage, but much of that feeling was dampened by the high premiums, deductibles, and co-payments that accompanied the introduction of the ACA. For those who already had insurance, these cost hikes were especially bad news — average policy premiums more than doubled between 2013 and 2017 in 24 of the 39 states that use the national healthcare.gov exchange.
The danger for Republicans here is that Trump now has an expressed strategy to let Obamacare die through neglect. His administration plans to do nothing to prevent insurers hiking premiums and leaving many markets across the country. Despite his assertions to the contrary, many Americans may now believe he and his party are responsible for health care policy.
And — exhibiting their innate status quo bias and temperamentally conservative approach to change rather than a deep love of the program — Americans are increasingly saying they like Obamacare. A July Gallup poll reported that for the first time a slight majority of respondents approved of the ACA.
Would the GOP have been better off passing any kind of ACA repeal?
In the long term, a health care system that increases competitiveness by allowing insurers to cross state lines and that uses cost-containment rather than mandates and taxes to broaden coverage would probably be more popular than Obamacare. But passage would have meant short-term disruption and problems for Republican candidates in 2018 and 2020.
Given that “repeal and replace” now seems dead, it’s not certain how voters will treat Republicans, especially those who voted against it, in 2018 and beyond. Will they think of the failure to repeal as a failure to govern? Will they punish Republicans for high health-insurance prices? Or will voters have more pressing issues on their minds when the next election rolls around?
Comments Off on How this screwy IRS policy kickstarted the American health care crisis
Have you ever wondered why, in the United States, we get our health insurance through our employers, but not our car insurance or home insurance? A 1943 New Deal decision making health benefits tax exempt is the answer.
As a believer in small government, I usually favor anything that reduces taxes. But this tax break has wreaked havoc on American health care. As Congress struggles to fix, or “repeal and replace,” the Affordable Care Act (ACA, or “Obamacare”), probably no single policy change is more important than getting rid of that tax break.
Because the health insurance premiums employers pay on their employees’ behalf are tax exempt, your employer can give you what amounts to extra income without paying the additional Social Security and Medicare taxes it would pay if you got a bigger paycheck instead. And employer-provided health insurance isn’t taxable to you, the employee, either, so you save on income taxes, Social Security taxes, and Medicare taxes.
It sounds innocuous, doesn’t it? It even sounds good!But it’s not, because taxing people differently, depending simply on whether they or their employers pay for their health insurance, distorts people’s incentives so as to distort the health insurance market in ways that have far-reaching, destructive consequences. The consequence we’ll discuss here is that it causes sick people to lose health insurance.
This article gives a brief history of how and why this tax break came to be, and explains how it leads, ironically, to people losing their health insurance just when they need it most.
From wage controls to widespread employer-provided health insurance
Like so many other government interventions, this tax break resulted in part from a previous intervention.
The original act of government that set the whole sorry process in motion was the wage and price controls implemented in World War II. The New Deal involved government limits on the wages companies could pay employees.
Those wage controls did what all binding price ceilings do: they caused shortages. Companies could not get as many qualified workers as they needed at the wages they were allowed to pay.
So some companies attracted the workers they needed by offering fringe benefits in addition to pay. One such fringe benefit was health insurance.
The question then arose as to whether the health insurance premiums employers paid for their employees, which clearly were a part of the employees’ total compensation, would be treated as income to those employees for tax purposes. In 1943 the IRS ruled that they would not.
That fateful decision made employer-provided insurance less expensive to workers than insurance they could purchase for themselves.
A simple example shows why: Suppose that you want a health insurance policy that costs $200 a month, your employer is willing to spend $1,200 a month for your services, and your income tax rate is 20 percent. If your employer gives you your $1,200 compensation entirely in the form of cash each month, you will have to pay $240 in tax on it, and then you will have to buy your health insurance with your after-tax income of $960. That would leave you, each month, with a $200 health insurance policy and $760 in cash.
But if your employer gives you $1,000 in cash plus a $200 payment for your health insurance, then you only pay $200 in taxes. So you’re left, each month, with the $200 health insurance policy and $800 in cash rather than only $760.Even after the New Deal wage restrictions were repealed, the differential tax treatment remained, so employers continued to offer health insurance, employees continued to take it, and employer-provided health insurance became widespread. We accept it as a matter of course now: when considering a new job, we ask, “What are the health benefits?” as if it’s natural for employers to offer health insurance.
But absent the tax exemption, it would make no more sense for our employers to buy our health insurance than to buy our home or car insurance.
Employers have no special knowledge about health insurance, and they can offer us fewer options than we could find in an undistorted individual marketplace. But here we are. Like most people, I buy my health insurance through my employer; it is much cheaper that way than buying it for myself. But as we’ll see next, it is riskier in an important way.
Why very sick people lose their employer-provided health insurance
Unfortunately, there’s a dreadful unintended consequence of having so much health insurance provided by employers.
When people get sick and stay sick long enough to lose their jobs, they also lose the health insurance that goes with those jobs. The irony is painful. The main reason we buy health insurance is to protect us if we get really sick. But if we do get really sick, we lose our insurance. It’s crazy.
This craziness is caused, ultimately, by our government’s policy of not taxing pay in the form of health insurance premiums. Absent that wrong-headed policy, people would pay for health insurance themselves, as they do home and car insurance. And most would certainly choose policies that are “guaranteed renewable,” meaning that if the insured person does get sick, the insurer agrees not to cancel the contract as long as the insured keeps paying the premiums.
In short, the problem of people losing their insurance when they get very sick (or get laid off, or change jobs, or for a number of other job-related reasons), is caused by the special tax treatment of employer-provided health insurance. Congress needs to end this. It could eliminate the tax exemption for employer-paid premiums, or exempt the premiums individuals pay, but it must treat them the same.
If Congress were to do that, people would stop buying health insurance through their employers and start buying it individually, as they do their home and car insurance. They would buy guaranteed renewable policies. And they would stop losing their health insurance when they get sick.
Comments Off on Expert Answers on the Drug War: Highlights from Prof. Jeff Miron’s AMA
Last week, Professor Jeffrey Miron joined us on Reddit for an “Ask Me Anything” conversation as part of the Learn Liberty Reddit AMA Series.
The conversation focused on Dr. Miron’s 30+ years of study on the effects of drug criminalization. Check out some of the highlights below.
Comments Off on Innovation in healthcare could be dangerous, but the alternative is worse.
While the politicians debate healthcare reform (again), let’s take a moment to consider how the basic flaws in our current system of “health insurance” put someone important at risk last week. That someone was me.
I felt sluggish for a while, and I said to my wife that I felt like I had a jellyfish lodged in my chest. She suggested it might be walking pneumonia. That seemed to make sense, so I spent some time on the Internet looking up that ailment, including its symptoms.
I got to thinking about how regulation is responsible for the enormous gap between the expert and the amateur. A lot of sites counseled me to consult a physician for an official diagnosis, but noted that walking pneumonia tends to go away without treatment.
I decided I would take the second route rather than suffer the time, the hassle, and the copay that comes with visiting a doctor.
The problem is that healthcare consumers have limited options. At the two ends of the spectrum, they can see a licensed doctor, or they can do it themselves. One option is extremely expensive, time-consuming, and reliable, and the other is free and still time-consuming but not as reliable. In between, there are few other choices. It’s possible to use a service like Teladoc or visit a drugstore clinic in some areas for minor issues like strep throat, an earache, or a sprained ankle, but in the absence of the current system of occupational licensing, there’d be a much broader continuum of possibilities between my unlettered amateur visits to Dr. Google and visits to an actual doctor’s office.
The problem is compounded by the fact that we pay for healthcare via “insurance” coverage, which isn’t really insurance but just prepaid healthcare. This system requires lots and lots of rules about what can and can’t be covered and what constitutes medicine. The entire healthcare market would function much more efficiently if there were more options. For treating a lot of conditions, you don’t need someone who went to four years of medical school and worked through a grueling residency. Better to save that talent for more challenging stuff and allow people to seek marginal improvements over DIY diagnosis.
Worried about quality assurance? There’s an app for that, and it’s called the market. Just as Underwriters Laboratory and Consumer Reports test products rigorously and vigorously, a free market would lead medical practitioners to sensitively vet service providers. The American Medical Association, for example, might offer its own certification course.
Note that certification is distinct from licensing. A license means government permission. Doing business without a license could land you in jail. Certification merely says that the certifying organization vouches for the quality of the product or service. If quality differences matter a lot to patients, the AMA certification will be extremely valuable.
But who’s going to protect people from charlatans? It’s a valid concern, but market mechanisms can complement existing rules against fraud. Courts and professional associations should be able to arrive at enforceable standards. Moreover, the relevant alternative to a cheap healthcare provider for a lot of people isn’t a medical doctor. The relevant alternative is doing it oneself. It’s hardly clear that a society of patients making decisions after consulting the Internet is safer and healthier than a society with lots of different healthcare professionals providing lots of different levels of service.
Comments Off on How thinking harder will let you eat more bacon
Last week, after I returned home from the grocery store — bags of bacon, lunch meat, and hot dogs in tow — my wife announced, “There’s a documentary you need to watch. It’s all about how this food is bad for us.”
The film in question was What the Health, a documentary by Kip Andersen of Cowspiracy fame. Among the film’s central claims is that processed meat — and to a lesser extent, nonprocessed beef — can give you cancer, according to the World Health Organization. In fact, the WHO classifies processed meat in the same carcinogenic category (Group 1) as cigarettes, asbestos, and plutonium.
According to Anderson and his research sources, such a classification means that “Processed Meats Cause Cancer.” This is an extraordinary claim that affords us an opportunity to clear up some confusion about how scientists talk about evidence.
Let’s talk about where the confusion lies.
Precision vs. “Oomph”
When assessing the world, scientists (at least, in the life and social sciences) are primarily concerned with two things: the amount of confidence in a given finding, and the strength of that finding. The two sound very similar, but they are not the same. The difference is outlined by the economists Stephen Ziliak and Deirdre McCloskey, who delineate between what they call precision and “oomph.”
Say a drug company has developed a new blood pressure medication and submits it for the requisite clinical trials to obtain FDA approval. In its simplest form, this process might involve conducting an experiment wherein 500 people with high blood pressure are recruited and randomly split into two groups. Half of all participants would be given the real drug (the experimental group), and the other half would be given a placebo (the control group). After a specified amount of time, blood pressure levels would be measured and the differences between the groups would be compared.
Let’s imagine that the experimental group exhibited an average systolic blood pressure of 149, while those in the control group averaged 150. This outcome seems unimpressive, but what if every single person in the experimental group ended up one point lower than when they entered the trial, while every single person in the control group stayed exactly the same?
In this case, we can be fairly confident that the drug had a real effect. However, it wasn’t very powerful. It was reliably mediocre at reducing blood pressure.
Now let’s imagine that the experimental group exhibited an average systolic blood pressure of 130, while those in the control group averaged 150. In this case, we can be fairly confident that the drug has a real effect, and a strong one.
Hotdogs and Cancer Risk
As it turns out, the WHO’s conclusions about the effect of processed meat consumption on cancer risk are much more like the former (low oomph) case than the latter (high oomph). In fact, its Q&A explicitly states the following:
Q: Processed meat was classified as carcinogenic to humans (Group 1). Tobacco smoking and asbestos are also both classified as carcinogenic to humans (Group 1). Does it mean that consumption of processed meat is as carcinogenic as tobacco smoking and asbestos?
A: No, processed meat has been classified in the same category as causes of cancer such as tobacco smoking and asbestos (IARC Group 1, carcinogenic to humans), but this does NOT mean that they are all equally dangerous. The IARC classifications describe the strength of the scientific evidence about an agent being a cause of cancer, rather than assessing the level of risk.
So the WHO is confident that consuming processed meat causes cancer — presumably, just as confident as they are that smoking tobacco causes cancer. But they are not saying that the two are equally carcinogenic. As such, comparisons between the two are wholly inappropriate. Another way of thinking about this is in the adage many of us learned in high school chemistry: the dose makes the poison.
The WHO has gone to great lengths to clear up the confusion over the dangers of consuming processed meat — a fact that Anderson neatly skips over.
Why We Need to Understand How Scientific Findings Work
We are bombarded by unscrupulous, “scientific” claims every day. We are told that a certain substance is good or bad for us — summarized in plain terms by official-sounding bodies. Politicians do it, too: Harry Reid claimed that the Zika virus causes blindness (no). Attorney General Jeff Sessions has lumped marijuana in with other drugs and declared his intention to reinstantiate the drug war — a move that goes against all available evidence about marijuana’s supposed dangers.
Science is messy and complicated. Most of us — even the educated — are not trained to understand the nuances inherent to science. In statistics courses, I constantly urge my graduate students to attend to both precision and oomph, but the majority of them were unfamiliar with the distinction throughout their undergraduate years.
Getting people to attend to nuances in scientific findings is notoriously difficult, in large part because humans are what psychologists refer to as “cognitive misers” — we don’t like thinking too much about an issue if we can avoid it. After all, thinking is hard! As such, simple explanations like “X causes cancer, but Y does not” are incredibly appealing. It’s also a major reason why humans rely on heuristic reasoning, even when doing so is inappropriate.
Politicians, activists, and regulatory agencies take advantage of our natural proclivity for lazy thinking (or avoiding thinking altogether) in their attempts to influence our behavior.
Don’t let them. Do a little extra thinking. Explore the data for yourself. Ask questions.
And above all, enjoy your bacon.
 I am firmly of the opinion that “there’s a thing on Netflix you need to watch,” “there’s a book you need to read,” and “we need to talk” are among the most terrifying domestic utterances that occur with regularity. It’s worse in my case, as my wife is a well-educated, intelligent woman, so if she says I should look into something, I take her recommendation seriously.
Comments Off on How the FDA hides its true costs — dollars lost and progress delayed
How would you feel if you needed to slip the clerk at the DMV a $100 bill to get him to do the paperwork for your driver’s license renewal? Pharmaceutical and medical device companies face a similar situation when they want the FDA to review a product for marketing. Just to get the agency to evaluate a submission for drug approval — with success not guaranteed — they must pay more than $2 million. The government euphemistically calls this sum a “user fee,” but it’s really a tax by another name.
The fees, which constitute a large chunk of the FDA’s budget — about two-thirds of the cost of reviewing new drug applications and about a quarter of the agency’s total spending — are a boondoggle, because they enable Congress to finance much of the agency’s work “off the books.” The pharmaceutical industry agreed to the fees two decades ago in return for the FDA’s promises to meet certain reviewing timelines and milestones.
But fat budgets have enabled the FDA to waste resources. For example, the agency recently sought public comments about its use of focus groups, claiming they “provide an important role in gathering information because they allow for a more in-depth understanding of patients’ and consumers’ attitudes, beliefs, motivations, and feelings.” FDA officials seem to have forgotten that their mission is to make science-based decisions — primarily about product safety, efficacy, and quality — as expeditiously as possible, whatever the public’s beliefs, motivations, and feelings may be.
Far worse, the FDA declared jurisdiction over all “genetically engineered” animals, then took more than 20 years to approve the first one — an obviously benign, faster-growing salmon — and then made a colossal mess of the five-year review of a single field trial of a mosquito to control the mosquitoes that transmit the Zika, yellow fever, dengue fever, and chikungunya viruses. Finally, the FDA relinquished jurisdiction over that mosquito and other animals with pesticidal properties to the EPA!
FDA User Fee Reauthorization in ProgressCongress is in the process of reauthorizing the FDA’s ability to collect user fees from drug manufacturers. Although the FDA and the pharmaceutical industry have worked out an agreement regarding fees for fiscal years 2018 through 2022 (which would impose a burden of about $10 billion on the industry over that period), it might be in jeopardy because President Trump has said he wants to boost the fees by $1 billion in FY 2018. This stated desire is inconsistent with the goals of a president who says he wants to reduce the tax burden, boost innovation, and stimulate American industries. A basic rule of economics is that if you want less of something, tax it.
The user fees should be abolished, but not for the reasons once cited by the New York Times, which condemned them as “cozy cash-fed agreements [that] have given industry far too much influence over the regulatory process.” The truth is that if pharmaceutical companies are exercising undue influence, they must have a death wish.
The Increasing Difficulty of Drug DevelopmentIncreasingly risk averse, capricious, and at times even hostile, the FDA has made drug development progressively more difficult in recent years. Bringing a new drug to market now takes 12 to 15 years and costs more than $2.5 billion — in no small part because FDA policies and actions have increased the average length and complexity of clinical trials, and regulators keep moving the goal posts. Drug approvals are down: during the four-year period from 1996 through 1999, the FDA approved 176 new medicines; from 2013 through 2016, the number fell to 103, a decline of 40%.
These unfavorable statistics are not due to rookie mistakes or inexperience; even for top-tier drug companies, the costs can be staggering. For pharmaceutical giant AstraZeneca, the cost to get a new drug on the market is almost $12 billion per drug, and for GlaxoSmithKline, Sanofi, and Roche, it is around $8 billion. Perhaps it’s not surprising, then, that drug manufacturers recoup their R&D costs for only one in five approved drugs, a deterioration from one in four a decade earlier.
In addition, regulators have concocted additional criteria for marketing approval of a new drug — above and beyond the statutory requirements for demonstrating safety and efficacy — that could inflict significant damage on both patients and pharmaceutical companies. For example, they have sometimes arbitrarily demanded that a new drug be superior to existing therapies, although the Food, Drug and Cosmetic Act requires a demonstration only of safety and efficacy. And Phase 4 (postmarketing) studies are now routine, whereas the FDA used to reserve them for rare situations with subpopulations of patients for whom data were insufficient at the time of approval. The time and expense required to conduct clinical trials to satisfy regulators have been increasing inexorably.
A Poor Argument against FDA User Fees — and a Better One
Searching for any crumb that supports its bias against user fees, the Times doubles down: “In some cases, the agency seems to have been loath to bite the hand that finances it. A survey by the Union of Concerned Scientists found that 40 percent of the [FDA’s] scientists felt that the consideration accorded to business interests was ‘too high.’”
Impressive, right? Not when you consider the huge potential sampling error of the survey — there was only a 17% overall response rate — and that in such surveys, those most likely to respond are the most disaffected. Failing grades, as usual, to the UCS for publishing such a shoddy study, and to the Times for citing it.On one critical point, the Times and I agree: “The best approach would be for the government to fully finance the FDA.” But I support this approach not because, as the Times believes, user fees make regulators beholden to industry. Rather, I support it because drug and device user fees are a discriminatory tax on specific, research-intensive business sectors, a tax that ultimately will be passed along to consumers. I also support it because user fees disproportionately affect smaller companies and because the imposition of user fees is an underhanded way to fund government activities “off the books.” Congress should face up to its responsibilities, appropriate sufficient funds, perform its oversight role conscientiously, and then evaluate the results.
Comments Off on What to expect when you’re expecting: Lots of weird regulations and obscure laws
In one of the wealthiest and most technologically advanced countries in the world, how could maternal mortality be increasing?
The United States has the worst rate of maternal deaths in the developed world, NPR reports. Some of these deaths are due to poor maternal health, but a big part of the problem is high rates of intervention.
We often talk about the US health care system being broken, but usually the focus is on the problem of uninsured Americans or the costs of care in general. What gets less attention are the ways our health care system harms some of our most fundamental rights, including the right to control what happens to our bodies.
For starters, let’s look at how a typical American woman gives birth.
She contacts her insurance company or Medicaid (which pays for over 40% of US births) to find an in-network provider. The in-network provider is almost always an obstetrician, and the care setting is almost always a hospital.While in the hospital, more than 40% of these mothers will have their labor chemically induced, and more than 30% of all mothers will end up with a cesarean section.
Many more will be hooked up to machines and monitored, prevented from moving or even eating and drinking during labor, and in some cases subjected to vaginal exams and other invasions of their bodies they don’t meaningfully consent to. Most birthing women have little understanding of the risks and benefits of any of these procedures.
All these restrictions and invasions of the mother’s body are done ostensibly for the sake of her’s and the baby’s health, but no medical reason exists for this level of intervention for most of these women. In other words, the vast majority of childbirths could happen as or even more safely if the mother were able to move around, eat, drink, and avoid invasive interventions.
Why Women Can’t Use Hospital Alternatives for Childbirth
As it turns out, alternatives exist that lower intervention rates, lower costs, and provide more satisfactory care. These alternatives include freestanding birth centers and home births, and many European countries use these options as a foundational part of maternity care with great success. But most American women cannot take advantage of these options, either because they do not know they exist, insurance does not cover them, or they don’t exist in their area.
If all this hospitalization and treatment actually helped keep women and babies safe, maybe the economic and human costs would be worth it. But it doesn’t, and they aren’t.
So why do American women give birth like this? What the average new mother does not know is that her choices surrounding how her baby is delivered and how her body is treated during labor and delivery are limited by a tangle of regulations and laws.
Regulations Push Out Entrepreneurial Midwives and Obstetricians
In many states, birth centers must go through a certificate of need (CON) process. They have to ask the permission of their direct competitors — hospitals — to enter the market. Entrepreneurial midwives and obstetricians must pay tens, sometimes hundreds of thousands, of dollars in application and legal fees to navigate the CON process.
In New York State, for example, entrepreneurs must already have their space rented at the beginning of the CON process, which can itself take a year, thus forcing them to pay rent on an empty facility while they ask permission of their direct competitors to enter the market. Guess how often that permission is denied? Frequently.
In addition to getting through the CON process, birth centers in most states are legally required to have a written consulting agreement with a physician. Such agreements increase physician malpractice insurance rates, so many are unwilling to sign such agreements.
Moreover, birth centers must enter written agreements with hospitals to transfer their patients in case of an emergency, even though hospitals are already mandated by law to treat anyone who shows up in need. Birth centers cannot operate without these consultation and transfer agreements.Doctors and hospitals can pull out of an agreement at any time, which means birth centers are at the total mercy of their direct competitors not only to enter the market but to stay in business, even if they are financially successful and providing high quality care.
As a result of the regulatory tangles providers find themselves in, despite the 4 million women who give birth in the United States every year, only around 300 birth centers exist to provide out-of-hospital care. This despite the fact that hospitals in many rural areas are closing their maternity wards, leaving women to drive many miles while in labor to find adequate facilities to deliver their babies, putting themselves and their babies at risk.
How Medicaid Favors Hospital Births
Making the situation even more complex is that until recently, Medicaid did not reimburse patients for using birth centers at all, and now that it does (in some states), the reimbursement rates are laughable. Many birth centers do not accept Medicaid at all because the reimbursement rates are so low that they threaten the facility’s continued existence (in states like New Jersey, reimbursement is as low as $250 per birth for care that costs birth centers $2000 or more to provide). Yet Medicaid reimburses hospitals for the exact same birth at nearly 30 times that rate (an average of $7,000). Government insurers are therefore paying more for women to receive lower quality care.
Of course, part of the difference in reimbursement rates occurs because the reimbursement rates for hospitals do not just cover that average woman’s uncomplicated birth, but also more complicated ones. But another part of it is that government reimbursement policies are fundamentally broken. Because Medicaid payment rates do not clearly track or relate to the care being provided or its quality, they create dramatic access barriers to higher quality care.
Barriers to Home Birth
Some women decide that in order to get the birth experience they want, they will opt out of the system altogether, paying for birth out of pocket at home. That seems like a reasonable exertion of free choice. But government intervention doesn’t stop at hospital doors. Women in many states who want to give birth at home to may find that there are no legal providers to assist them.Until this month, home birth with a certified nurse midwife was illegal in Alabama, for example — any midwife who attempted to assist a woman in labor was subject to criminal prosecution. In still other states, birthing mothers who seek an alternative practitioner are limited to certified nurse midwives, who almost always operate in hospitals.
In many states, women who refuse unnecessary hospital procedures or who attempt home births are subject to state involvement, including threats from Child Protective Services. Things are even worse for women who want a vaginal birth after cesarean (VBAC), which many hospitals prohibit. But most American women, who don’t know that better alternatives exist or who don’t have access to those alternatives, continue to give birth in hospitals where their freedom to control their bodies is extremely limited.
This kind of government activity does not just affect birthing women. Government intervention affects your access to at-home care, urgent care centers, decent and high quality primary care, and a range of other options that can lower costs and increase the quality of care. Until we are fully aware of how our choices are limited — even before we step into the hospital — by CON laws, licensing laws, reimbursement policies, and other regulations, our bodies will continue to be used and abused by the monopolists who control them.
Correction Notice — June 29, 2017: A previous version of this article stated that 30% of induced mothers will have a cesarean section. In fact, it’s 30% of all mothers. The article has now been updated to reflect that fact.
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Comments Off on The health care shell game: Why not leave health care policy to the states?
Recent arguments against cutting federal health care spending — and letting states handle insurance regulation — reveal just how unaffordable the Affordable Care Act (Obamacare) is.
Law professor and Incidental Economist contributor Nicholas Bagley, reconstructing the arguments of the moderate Republican Tuesday Group, says that “it’s fine to give the states more authority to oversee their insurance markets,” but the states “don’t have the fiscal capacity to finance massive coverage expansions on their own.”
They’re required to balance their budgets every year, so any commitment to covering the uninsured will throttle their budgets when the next downturn comes.…
The states thus need federal money; it’s the lifeblood of health reform. And the real cleavage among Republicans is over how much money the federal government is willing to shell out. The Freedom Caucus wants to repeal the ACA’s taxes on industry and the wealthy, financing them with savage cuts to Medicaid and slightly less savage cuts to individual-market subsidies. The Tuesday Group likes the tax relief, but worries about the coverage losses associated with all the cuts.
State Budget Requirements
The case against letting the states fund Medicaid expansion on their own is that they have to run balanced budgets. But wait, I thought the Affordable Care Act actually reduced the deficit! That was, after all, the assertion of the Congressional Budget Office and the Joint Committee on Taxation in 2013.
So if federal ACA spending were cut or even zeroed out, why couldn’t states that like the legislation simply reinstate the same taxes and spending that the federal government currently uses under the law? If the net budgetary impact of the health care law really is zero, there is no inconsistency with state balanced-budget requirements.
What’s more, most states don’t have strong constitutional requirements that they actually run balanced budgets at the end of the fiscal year. More often, they just have statutory requirements that balanced budgets must be enacted — or even merely proposed — at the beginning of the fiscal year. Most states run balanced budgets because they want to, not because they are required to by law.
Federal and State Spending Constraints
Having the federal government pay states to run programs is just a complicated shell game — the states aren’t really winning if the federal government pays for the programs, because the federal government ultimately gets that money from taxpayers living in the states.
Now, perhaps Bagley’s response would be something like this: The ACA generally reduces the deficit, but there might be some years when its taxes bring in less than expected, and states would be tempted to cut spending in those years. The federal government doesn’t face the same constraint.
To this possible response, there are two counterarguments.
First, the federal government faces a stricter constraint than the states in one crucial respect: its total debt burden is much larger. Federal debt is already greater than 100% of GDP, leading to higher interest costs and crowding out private investment. Expanding the debt even further would only exacerbate these serious problems.
State and local debt is much lower, at about 16% of GDP. State and local governments are much more fiscally responsible than the federal government, and that’s precisely what gives them room to spend if there’s a good reason for it.
Second, states have a ready mechanism to deal with economic downturns and sudden revenue shortfalls: rainy day funds. States accumulate surpluses in good years and then use the saved funds to smooth out spending in bad years. Spending out of a rainy day fund violates no balanced-budget rules.
Desire vs. Ability
In short, state balanced-budget rules provide no good reason why states couldn’t fund health care spending on their own. Perhaps ACA supporters truly worry that states wouldn’t want to fund massive health-care programs, because states want to keep taxes low. (Even Vermont realized that it didn’t really want single-payer health care when it recognized the price tag.)
But isn’t this demand for hiding the costs of the ACA almost tantamount to admitting that the ACA isn’t good policy?