Healthcare Compromise

[Phi for All]

ABC News ran a piece tonight saying that the health care insurance companies are already reaping a windfall from the hobbled health care bill in the form of stock values, which are way up since November, in some cases as much as 33%. With the loss of the public option and the addition of 30 million new customers subsidized by almost half a trillion dollars in government money it's not hard to see why.

This is the surest indicator to me that this is not the healthcare bill the American consumers need. A plan that's in our best interest should not have insurance companies breaking out the champagne.

[Mr Skeptic]

This is the surest indicator to me that this is not the healthcare bill the American consumers need. A plan that's in our best interest should not have insurance companies breaking out the champagne.

 

Agreed. Time for pitchforks and torches, or at least angry letters for those of you not healthy enough for rioting

[doG]

By logical extension, then, you are against public roadways, public water treatment, libraries, public schools, universities, and countless other similar services. Such a position is untenable, and seems to ignore how you personally benefit from those exact same services paid for by all of us collectively, even though some people cannot contribute.

 

No, that's not a logical extension at all.

 

Yes, we have public highways that we the people, ie the State, pay for as an asset for the State. We all share equal ownership and service. We do not have public driveways at our houses though. We are each responsible for our own personal roadway needs.

 

Yes, we have public water reservoirs that we each may draw water from, at the expense of our individual usage. The man that uses 10 gallons a month to flush his toilet twice pays for his 10 gallons and the man next door that puts 100,000 gallons in his swimming pool does so at his own expense. Never is the man that uses only 10 gallons required to contribute to the man's bill next door.

 

Yes, we have public libraries and everyone is entitled to the same equal usage. They are State property that belong equally to each of the people for equal usage by the people.

 

Yes, we have public schools and I do not endorse that concept at all.

 

Yes, some health needs of the State should be treated the same as those above like vaccinations for the general health of the State as a whole. Other needs should not be. Individual needs should be treated as just that. The man that needs a band aid can by one, the same as the man next door that needs a heart transplant but the man that needs only a band aid should never be robbed on the bread earned from his own labor to pay for the man's heart transplant next door.

 

You would do well to review the ideals the country was founded on, liberty and freedom. The founders of this country fled a country where things were taxed to pay for entitlements for others. That's why they founded this country. The Boston Tea Party is an example of how they felt. They felt no need or desire to build any mechanisms into the Constitution of their new country any provisions for stealing from one man to aid another. Every man was given exactly the same liberty and freedom to do the best that he could for himself without the burden of the Queen's taxes that was taken from them by force in the land they fled. Why now should we undo what they did for us?

[iNow]

Your argument requires that we ignore the fact that we've already begun caring for our people in ways which have evolved beyond the original intent of our founders. The argument you're making would have been better directed at legislation passed decades ago, not at what we're doing now. The current healthcare approach is not a new concept, as you implicitly suggest in your post. It is, however, an improvement/extension of a system already long in place. We have veterans benefits. We have Medicare. We have Social Security. We have Medicaid, and we have the DEA, the EPA, the FDA, and countless other agencies who exist for the express purpose of protecting our citizenry beyond just militarily and for national defense. Healthcare is not somehow independent of those things, nor is what we're doing now an isolated approach which is unique in its kind.

 

What was it right-wingers used to say to folks like me while Bush was in office and we'd express our disagreements? It was really helpful... and seemed to do an adequate job of respecting those with differing viewpoints and perspectives. What was that they would say? Oh yeah... Of course... How could I forget? If you don't like it, move.

 

I'm fine if you disagree with extending the current system we have in place to offer a safety net for our populace. However, please stop misrepresenting the situation by pretending that the safety net itself is something new, and only a result of current healthcare legislation.

 

 

 

 

 

 

 

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iNow; This 8% of your income represents one of the largest tax increases ever for someone who does not have health insurance.

 

Kaiser has put out a calculator to help people figure out what subsidies they will be eligible for to help paying for healthcare. The numbers are contingent on their income levels, and those with hardship will receive greater assistance than those without.

 

Below is the percentage of insurance premiums on the individual market that would be covered by subsidies at different levels of income measured as a percentage of the poverty line (all calculations are for a family of 4 headed by a 40-year-old):

 

 

http://healthreform.kff.org/SubsidyCalculator.aspx#tableLinkDiv

 

 

 

Note: In general, full-time employees with employer coverage available that meets specified requirements are not eligible for premium subsidies, unless the employee would have to pay more than 9.8% of income for the employer-provided coverage.

Edited December 26, 2009 by iNow
Consecutive posts merged.

[doG]

It is, however, an improvement/extension of a system already long in place. We have veterans benefits. We have Medicare. We have Social Security. We have Medicaid, and we have the DEA, the EPA, the FDA, and countless other agencies who exist for the express purpose of protecting our citizenry beyond just militarily and for national defense.

 

Thank you for reminding us of the failures we have in our current system. The inefficient agencies that continue to sink deeper and deeper in their own holes....

[bascule]

Thank you for reminding us of the failures we have in our current system. The inefficient agencies that continue to sink deeper and deeper in their own holes....

 

Kind of like those inefficient private insurance agencies and the multi-tiered private insurance bureaucracy?

 

Yes, inefficiency and bureaucracy exist in the private sector too, despite what tired right-wing cliches would have you think.

[doG]

Kind of like those inefficient private insurance agencies and the multi-tiered private insurance bureaucracy?

 

Yes, inefficiency and bureaucracy exist in the private sector too, despite what tired right-wing cliches would have you think.

 

That's capitalism. Private companies should be allowed to be as efficient or inefficient as they are. That is NOT acceptable from government. Inefficiency in private companies drives them out of business but it never does that in government. With government it just costs the people more and more and more ad infinitum.

 

Do you ever ask yourself why insurance rates and policies are what they are in this country. Medicine costs what it costs because of the liability it carries and in a country where the pharmaceutical companies can get sued to Kingdom Come it drives up the cost of liability insurance which is incorporated in the cost of medicine in the U.S.

 

Doctors face higher and higher malpractice insurance rates because of the rate of litigation against them and the expense they incur which is passed on to their customers.

 

Consumers face higher and higher health insurance premiums because of the upstream costs related to medical litigation.

 

It is that very litigation that is enabled and driven by the policies of the lawyers in Washington we call our representatives and now you want to endorse their workaround legislation that still enables them to foster a litigated society. The evil you are hunting for is not the insurance companies, it is Congress. Wake up.

[iNow]

While tort reform and caps on litigation payouts would be useful, it's hardly the panacea (or root cause of costs) you suggest.

 

 

http://washingtonindependent.com/55535/tort-reform-unlikely-to-cut-health-care-costs

Amid the obstructionists’ claims that health care reform is “socialist” or a means of speeding Grandma towards her deathbed, a large focus of the conservative position on health care reform has been that frivolous lawsuits drive up health care costs and require doctors to practice “defensive medicine” that’s costly and wasteful.

 

<...>

 

The health economists and independent legal experts who study the issue, however, don’t believe that’s true. They say that malpractice liability costs are a small fraction of the spiraling costs of the U.S. health care system, and that the medical errors that malpractice liability tries to prevent are themselves a huge cost– both to the injured patients and to the health care system as a whole.

 

“It’s really just a distraction,” said Tom Baker, a professor at the University of Pennsylvania Law School and author of “The Medical Malpractice Myth.” “If you were to eliminate medical malpractice liability, even forgetting the negative consequences that would have for safety, accountability, and responsiveness, maybe we’d be talking about 1.5 percent of health care costs.

 

<...>

 

“If you were to list the top five or ten things that you could do to bring down health care costs [tort reform and changes to liability structures] would not be on the list,” said Michelle Mello, a professor of Law and Public Health at Harvard.

 

<...>

 

Although damage award caps could slightly limit the future growth of liability insurance premiums – about 6 to 13 percent over time, says Mello, “it tends to be oversold as a solution and it’s pretty unfair to patients.”

 

Annual jury awards and legal settlements involving doctors amounts to “a drop in the bucket” in a country that spends $2.3 trillion annually on health care, Amitabh Chandra, another Harvard University economist, recently told Bloomberg News. Chandra estimated the cost of jury awards at about $12 per person in the U.S., or about $3.6 billion. Insurer WellPoint Inc. has also said that liability awards are not what’s driving premiums.

 

And a 2004 report by the Congressional Budget Office said medical malpractice makes up only 2 percent of U.S. health spending. Even “significant reductions” would do little to curb health-care expenses, it concluded.

 

A study by Bloomberg also found that the proportion of medical malpractice verdicts among the top jury awards in the U.S. declined over the last 20 years. “Of the top 25 awards so far this year, only one was a malpractice case.” Moreover, at least 30 states now cap damages in medical lawsuits.

 

The experience of Texas in capping damage awards is a good example. Contrary to Perry’s claims, a recent analysis by Atul Gawande in the New Yorker found that while Texas tort reforms led to a cap on pain-and-suffering awards at two hundred and fifty thousand dollars, which led to a dramatic decline in lawsuits, McAllen, Texas is one of the most expensive health care markets in the country.

 

Note: There are plenty of links within the above supporting their assertions and numbers.

[bascule]

Private companies should be allowed to be as efficient or inefficient as they are. That is NOT acceptable from government.

 

I think you'll find it's inevitable in any large organization of humans, be they government or private sector. Organizing a lot of people towards accomplishing a common goal is hard.

 

Inefficiency in private companies drives them out of business

 

More tired conservative cliches. Look at the entire US health insurance system. It's arguably one of the most inefficient multi-tiered bureaucracies in existence. I don't see that affecting their bottom line though, do you? Their approach to "efficiency" is denying claims.

 

Medicine costs what it costs because of the liability it carries

 

No, medicine costs what it costs because it's subsidized by our private insurance system. Also, in 2003 the Republicans forbade Medicare from seeking bulk discounts. Go anywhere else in the world and medicine is cheaper.

 

where the pharmaceutical companies can get sued to Kingdom Come it drives up the cost of liability insurance which is incorporated in the cost of medicine in the U.S.

 

So you think people shouldn't be allowed to sue pharmaceutical companies who pedal dangerous drugs? Oh, poor poor Big Pharma, boo hoo, why can't the people who had their heart valves damaged by Vioxx just take some Personal Responsibility for their situations, huh?

 

Here's a question for you: if liability is the primary reason pharmaceuticals are so expensive, then why are generic drugs so much cheaper? There are many factors at play and liability is certainly one of them, but it is far from the primary reason. The primary reason is that pharmaceuticals want to maximize their profit margins, and the private health insurance industry, along with recently enacted legislation from Congress, is allowing them to do that to an absurd degree.

 

The evil you are hunting for is not the insurance companies, it is Congress. Wake up.

 

Yes, part of the blame does fall on Congress, for passing legislation like this:

 

http://en.wikipedia.org/wiki/Medicare_Prescription_Drug,_Improvement,_and_Modernization_Act

Edited December 27, 2009 by bascule

[doG]

Here's a question for you: if liability is the primary reason pharmaceuticals are so expensive, then why are generic drugs so much cheaper?

 

Across the board drugs are cheaper in Canada than the U.S.. Why? The only difference is the cap on litigation in Canada. Pharmas do not need billions of dollars of liability insurance to cover their ass from the Canadian legal system.

 

As long as we have lawyers in Washington writing legislation in favor of lawyers our own judicial lottery(er legal) system will never straighten out and the downstream costs on the people will continue to grow. Just how much money do insurers and medical providers have to add to their products to cover their potential litigation liabilities in the U.S.? Without tort reform any healthcare reform will still be domed because even if you created a single payer system the costs associated with medical litigation will still get passed on to the people since the government will have to collect enough to cover it.

[Pangloss]

Across the board drugs are cheaper in Canada than the U.S.. Why? The only difference is the cap on litigation in Canada. Pharmas do not need billions of dollars of liability insurance to cover their ass from the Canadian legal system.

 

That is not the only difference between Canada and the US. Canada also bargains for its drug purchases as a unit, with the underlying premise of that bargaining being "pay this price or you won't get to sell your product in this country".

 

This seems like a larger impact on price to me than litigation caps.

[Mr Skeptic]

From iNow's link:

Insurance costs about $50-$60 billion a year, Baker estimates. As for what’s often called “defensive medicine,” “there’s really no good study that’s been able to put a number on that,” said Baker.

 

So basically they don't know what sort of cost it actually is.

 

However, I would say that the fault of "defensive medicine" is due to our insurance system, as the customer does not have to pay for any excessive service so has minimal interest in avoiding wasteful medicine, nor the doctor in saving money for them (since the patient doesn't care and it could make him look bad if he misses something).

[doG]

That is not the only difference between Canada and the US. Canada also bargains for its drug purchases as a unit, with the underlying premise of that bargaining being "pay this price or you won't get to sell your product in this country".

 

This seems like a larger impact on price to me than litigation caps.

 

That is certainly a factor on meds but who knows which has a bigger impact. I don't have the data to prove or refute such a claim. Do you?

 

On a wider scale I think litigation is a much bigger factor throughout the medical healthcare system than most realize. At all levels of health care in the U.S. providers of services and products are faced with litigation in front of jurors that statistically favor the little guy. Only in the U.S. can someone order hot coffee, spill it in their lap and sue because it was hot and win. Their only safety net is the insurance companies that hope to get enough from all of their clients in order to cover the losses of those that get sued. No one can blame this environment on the insurance companies. It is the legislation written by lawyers for lawyers that drives the need for insurance to cover such litigation and when that need exists at all levels of the healthcare tree it's cost is going to get compounded and passed onto the consumer, whomever that consumer is, the patient or their responsible party.

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From iNow's link:

Insurance costs about $50-$60 billion a year, Baker estimates. As for what’s often called “defensive medicine,” “there’s really no good study that’s been able to put a number on that,” said Baker.

 

So basically they don't know what sort of cost it actually is.

 

And what exactly is covered by that insurance figure? Is it inclusive of all personal health policies, all malpractice policies and all associated product liability policies(including directly and indirectly associated products)? Insurance costs are buried in every single product that is used anywhere in health care and the primary reason is that the manufacturers of those products want protection from getting sued.

[iNow]

I don't know why I bother sharing links if nobody is going to read them or adjust their position based on the facts they contain. As evidenced from numerous sources in the link I shared previously, litigation accounts for only 1 to 2 percent of health care costs. If that's where you wish to place your focus, then you are the epitome of being penny wise and pound foolish.

 

 

Just in case there are some of you out there who still care about ensuring arguments align with reality, here's more.

 

 

http://www.cleveland.com/nation/index.ssf/2009/09/would_tort_reform_make_much_di.html

The push for tort reform rests largely on anecdotal evidence of the occasional large jury verdict or outrageous lawsuit. Despite the perception that "jackpot justice" has fueled soaring costs, hard data yield a much different picture.

 

The most reliable estimates peg the costs of malpractice litigation at 2 percent of overall health care costs. And while tort reform measures have helped tamp down malpractice premiums, national health spending continues to rise.

 

"If you're talking about payments made on behalf of doctors or hospitals to plaintiffs, that's actually a drop in the bucket compared to the nation's $2.2 trillion in health care costs," said Amitabh Chandra, a professor of public policy at Harvard University.

 

<...>

 

A tort system run amok is, at best, only a small contributor to the nation's health care costs.

 

<...>

 

So how much do the costs of malpractice lawsuits -- defined to include verdicts, settlements and the costs of defensive medicine -- contribute to health care spending? In 2004 the nonpartisan Congressional Budget Office pegged those costs at less than 2 percent.

 

More recently, a study by WellPoint, a large insurer, found that medical malpractice "is not a major driver of spending trends."

 

Tort reform, WellPoint said, would lower health insurance premiums, "but medical malpractice is not currently driving the rate of increase."

 

<...>

 

While some studies have shown that caps on non-economic and punitive damages have led to lower malpractice premiums, most experts say the savings don't have a significant effect on overall health care costs. The CBO, for instance, noted that "even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small."

 

And when the CBO took into account the larger, albeit harder-to-measure, costs of defensive medicine, it found no significant difference in per capita health care spending between states with and states without limits on tort liability.

[doG]

I don't know why I bother sharing links if nobody is going to read them or adjust their position based on the facts they contain. As evidenced from numerous sources in the link I shared previously, litigation accounts for only 1 to 2 percent of health care costs.

 

That's perfectly well understood. The point I'm making that you're not understanding is that the bulk of liability insurance in health care products and services is driven by the threat of potential litigation. Manufacturers and providers buy the amount of insurance that they do because of the threat, not actual lawsuits. It's their safety net in a environment where any of them could get sued out of business at any time. It is their way to pass on any losses incurred in litigation to someone else, ie the insurer. It is the threat of potential litigation that drives much of the health related insurance industry and that threat is made possible by the policies, er legislation, written by lawyers for lawyers. In an environment where the people and their lawyers game the system like a lottery the only protection from that risk is insurance and you can't blame that on the insurance industry can you?

[iNow]

The point I'm making that you're not understanding is that the bulk of liability insurance in health care products and services is driven by the threat of potential litigation.

But we're not talking about liability insurance for doctors. We're talking about health insurance for patients. In short, you seem to be arguing a completely separate topic.

 

 

 

With that in mind, a point similar to yours, but more related to what we are all discussing herein this thread, was covered by my last link, as well.

 

 

Physicians frequently cite a higher figure -- 10 percent -- as the share of overall health care costs attributable to malpractice litigation and defensive medicine. The figure appears to come from a 1996 study by two Stanford economists that estimated the costs of defensive medicine at 5 percent to 9 percent of health care spending and the costs of litigation at 2 percent.

 

The authors found wasteful defensive medicine in the treatment of elderly heart disease patients and extrapolated their findings to other areas of health care. But other experts, including the CBO and researchers at Dartmouth College, have been unable to replicate those findings.

 

"The fact that we see very little evidence of ... dramatic increases in the use of defensive medicine in response to state malpractice premiums places the more dire predictions of the malpractice alarmists in doubt," the Dartmouth researchers wrote.

 

Now, if you're trying to suggest that the liability premiums doctors pay ultimately get passed on to health insurance premiums patients pay, then those numbers which I shared previously are DIRECTLY relevant, and the fact that it only counts for 1-2% of costs shows the argument you are presenting to be somewhat misguided.

 

 

 

Here's the CBO study which both of my previous links have cited for more. I've quoted a few bits I found similarly relevant to better understanding the points you are putting forth:

 

 

http://www.cbo.gov/doc.cfm?index=4968&type=0

Proponents of limiting malpractice liability have argued that much greater savings in health care costs would be possible through reductions in the practice of defensive medicine. However, some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients. On the basis of existing studies and its own research, CBO believes that savings from reducing defensive medicine would be very small.

 

<...>

 

In short, the evidence available to date does not make a strong case that restricting malpractice liability would have a significant effect, either positive or negative, on economic efficiency. Thus, choices about specific proposals may hinge more on their implications for equity.

 

 

Now, just to again clarify my own position, I think that tort reform would be useful and should be pursued. However, it accounts for such a tiny percentage of the overall problem we are here trying to resolve that those who focus so heavily on that aspect alone tend to be missing the forest for the trees.

[doG]

But we're not talking about liability insurance for doctors. We're talking about health insurance for patients. In short, you seem to be arguing a completely separate topic.

 

One is related to the other. Health insurance for patients is directly proportional to the cost of providing health care to those patients. That cost includes the costs of all health related insurance upstream. Every doctor, every facility, every product manufacturer puts the cost of any and all insurance they buy into the prices of their services or products, including that which they buy to protect themselves from litigation like liability policies. That means the patients, or their insurers, are ultimately paying for all of the insurance purchased throughout the health care industry. Can you not see how that directly effects the cost of health insurance for patients, the topic we're discussing?

[Cap'n Refsmmat]

Any estimate will, of course, neglect to include the cost of the cover-my-ass money spent: doctors requesting scans and tests they know are pointless just to protect themselves from malpractice claims or complaints later. How much might those extra tests cost us?

[padren]

Just one caveat - buying and negotiating with pharmaceutical companies as a block to get better prices is not a silver bullet. If the companies base their research costs and profits off of the US market and the money they can make domestically, they can afford to get into secondary markets at a lower cost because all the core investments are paid for in their primary US market.

 

If we refuse to pay the amounts needed to make the drug profitable domestically, and profits from overseas sales don't dent the core costs then we'd be in serious trouble. In other words, simply having a tool to cut a huge swath of their profits away from them does not magically save money anymore than a Union striking and winning "super free medical and free cars for all employees" magically cause those to spring into existence.

 

However, the pharmaceutical industry is far from hurting and is in fact one of (if not the) most profitable industry in the country. Just as an objective free market analysis - doesn't it seem odd that the most profitable (net profit) industry also happens to be selling a product that consumers are struggling desperately to pay for, and often suffer health-wise to go without? Doesn't that seem to imply something is just a little out of whack? That's after the cost of marketing and research, and to me it implies a failing of the free market for such a disparity to exist: consumers desperately want to pay less and are looking for every option on the free market to do so... yet the profit margin for that consumable goes up and up. That disparity implies something is wrong with the invisible hand.

 

 

With regards to Bascule's comment on name-brand vs. generic drugs:

There is a pretty major "hiccup" in the way regulations work here... if you can reverse engineer a drug and make something a tiny bit different that does the same thing, you can sell that as a generic and bypass the patent laws at the fraction of the cost of the original research. As such, the "life cycle" to make back the initial investment isn't about the expiration of the patent, but until generics are reverse engineered and decimate your sales. This means any new drug has to cost far more than it should because if they don't recoup the costs within that shrinking "time till generics hit" timespan they are simply screwed.

 

So generics are cheaper because it's cheaper to figure out what someone smarter than you did and rip them off, than do something novel yourself and try make enough money to pay for it before someone rips you off.

 

And yet - all that said - it's still one of the most profitable industries in the world, so what this really says is they do manage to get ahead on all this volatility. They do have to really charge more because of rip off generics - but probably not nearly as much as they do or they wouldn't be so super profitable. This is why it's such a tangled mess as they do have legitimate concerns and reasons to charge more (mitigate risk), but they are still in the business of maximizing profits at all cost and don't owe the consumer anything and owe the stockholders everything. If they mitigate that risk well the stockholders get the excess, as the consumers already paid to handle the contingency of a fast to market generic risk that never materialized.

 

 

Just a last note on the pharmaceuticals - does anyone know how much they spend on marketing? I only have anecdotal experiences but it creeps me right out when I go to the doctor and every single calendar, pen, pen holder, sticker and notepad is some piece of pharma swag. It seems entirely out of control to me, and the last thing a doctor needs to do is have the drugs they prescribe influenced by marketing. We don't tend to think of advertising as a huge influence but people wouldn't spend millions if they don't expect to see millions in net gains for the expense. The idea of doctors getting caught up in the whirlwind of the "Medirol Generation" marketing blitz runs completely counter to the sort of judgment they should be using when prescribing medications. I can't help but to think it's a factor that needs to be reigned in severely.

[iNow]

That means the patients, or their insurers, are ultimately paying for all of the insurance purchased throughout the health care industry. Can you not see how that directly effects the cost of health insurance for patients, the topic we're discussing?

I completely understand your logic, and don't disagree one iota with its accuracy. Where I am taking issue is with its relevance and scalability. As my numerous sources have demonstrated, the effect you describe only accounts for 1-2% of costs in the healthcare system.

 

By analogy, it's as if you're trying to change the course of an aircraft carrier cruising mid-ocean by 90 degrees, and you're arguing that we do so by sending out a single navy man to paddle a spork while hanging off one side of the ship. The logic is good, the magnitude of the effect is not.

 

Again, I'll restate... I don't disagree that it is something we should make better. I just don't think it's where our primary focus needs to reside right now. There are other much more meaningful and efficacious changes we can make, and tort reform should be a side issue, not the core one.

 

 

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Any estimate will, of course, neglect to include the cost of the cover-my-ass money spent: doctors requesting scans and tests they know are pointless just to protect themselves from malpractice claims or complaints later. How much might those extra tests cost us?

 

Since you are directly asking about how much extra we spend due to defensive medicine practices, my own stance is that your question has been demonstrated irrelevant from the CBO link I shared, wherein it concludes the following:

 

 

[CBO] found no evidence that restrictions on tort liability reduce medical spending. Moreover, using a different set of data, CBO found no statistically significant difference in per capita health care spending between states with and without limits on malpractice torts.

 

The above shows that... even when defensive medicine is significantly less required due to the laws in the various states, those states show no statistical difference in spending with states lacking those tort protections for doctors.

 

 

Since you explicitly asked for numbers, though, here are a few:

 

http://lawblogs.slu.edu/healthlaw/?p=772

Of the $2.5 trillion dollars spent each year on healthcare, doctors say that 10 percent of this amount is attributable to practicing defensive medicine and paying for malpractice insurance, while lawyers attribute less than .5 percent of this spending on payments for medical malpractice settlement costs. Around 720 doctors who responded to a 2008 survey by the Massachusetts Medical Society reported practicing defensive medicine in fear of facing a malpractice lawsuit, estimating the cost of extra tests to be around $281 million and unnecessary hospital admissions around $1.1 billion. A study by researchers at the Harvard School of Public Health and Columbia Law School performed in 2005 found 93 percent of the 824 doctors who participated reported practicing defensive medicine. Lawyers attribute the rising costs of healthcare to “bad medicine,” insisting that medical malpractice suits protect patients from the devastating effects of medical errors. Lawyers also feel that the extra tests involved in the so-called practice of defensive medicine are really fueled by the self-interest of the doctor, arguing that many doctors have a financial interest in laboratories that conduct extra tests or procedures creating a conflict of interest which could add to the level of unnecessary tests.

 

 

 

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Just a last note on the pharmaceuticals - does anyone know how much they spend on marketing?

 

Roughly 25% of all revenues go to marketing and advertising, nearly double the 13% they spend on R&D.

 

 

http://www.sciencedaily.com/releases/2008/01/080105140107.htm

A new study by two York University researchers estimates the U.S. pharmaceutical industry spends almost twice as much on promotion as it does on research and development, contrary to the industry’s claim.

 

The researchers’ estimate is based on the systematic collection of data directly from the industry and doctors during 2004, which shows the U.S. pharmaceutical industry spent 24.4% of the sales dollar on promotion, versus 13.4% for research and development, as a percentage of US domestic sales of US$235.4 billion.

 

<...>

 

The industry spent approximately US$61,000 in promotion per physician during 2004, according to Gagnon.

 

“Even our revised promotion figure for 2004 is apt to be understated, as there are other promotion avenues that are not likely to be taken into consideration by IMS or CAM, such as ghost-writing and off-label promotion,” says Gagnon. “Also, seeding trials, which are designed to promote the prescription of new drugs, may be allocated to other budget categories.”

 

IMS and CAM data were used for comparison purposes because data from both are publicly available, both operate globally and are well regarded by the pharmaceutical industry, and both break down their information by different promotion categories. Most importantly, the two organizations use different methods for gathering their data, allowing the researchers to triangulate on a more accurate figure for each promotion category.

 

<...>

 

As well, note the authors, the number of meetings for promotional purposes has dramatically increased in the U.S. pharmaceutical industry, jumping from 120,000 in 1998 to 371,000 in 2004, further supporting their findings that the U.S. pharmaceutical industry is marketing-driven.

 

Thus, the study’s findings supports the position that the U.S. pharmaceutical industry is marketing-driven and challenges the perception of a research-driven, life-saving, pharmaceutical industry, while arguing in favour of a change in the industry’s priorities in the direction of less promotion, according to Gagnon and Lexchin.

 

 

Here is a link to the actual study: http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050001

[doG]

I completely understand your logic, and don't disagree one iota with its accuracy. Where I am taking issue is with its relevance and scalability. As my numerous sources have demonstrated, the effect you describe only accounts for 1-2% of costs in the healthcare system.

 

And I disagree that the percentage is that small. Are hospitals in the red and closing their doors because they get $5 for each aspirin they administer or is the protective insurance they need on every single item driving their cost to unmanageable amounts. They can't buy a bedpan that doesn't have the manufacturers liability insurance buried in the price. Every single item throughout the health care business is insured and the cost of all of that insurance is ultimately passed on to the patients receiving products and services. Add up all of the premiums collected by health and medical insurance companies, all of their revenue collectively, and show me it's only 1-2% of the total cost of health care in this country. Insurance is big business and the end user is the one that pays for all of it since everyone buying it must pass on the cost to their customers.

[iNow]

I've offered evidence and citations in support of my claims, offering full transparency into how I am obtaining my numbers. You have offered little more than gut feelings and conclusions grounded in premises which are themselves wholly speculative. To repeat, I don't discount your logic, I discount the magnitude of the effect you are here suggesting, and I've used references showing why. Perhaps you can show some numbers of your own to help convince me (us) of the merit of your position?

[npts2020]

And I disagree that the percentage is that small. Are hospitals in the red and closing their doors because they get $5 for each aspirin they administer or is the protective insurance they need on every single item driving their cost to unmanageable amounts. They can't buy a bedpan that doesn't have the manufacturers liability insurance buried in the price. Every single item throughout the health care business is insured and the cost of all of that insurance is ultimately passed on to the patients receiving products and services. Add up all of the premiums collected by health and medical insurance companies, all of their revenue collectively, and show me it's only 1-2% of the total cost of health care in this country. Insurance is big business and the end user is the one that pays for all of it since everyone buying it must pass on the cost to their customers.

 

Nationalized health care would solve the problem of tort reform since any medical expenses from a resulting injury will already be covered. As for the percentages, take whatever figure you are using and divide it into the $2 trillion we spend every year on health care (let me know what your result is). This $2 trillion figure is more than double what any other nation on Earth spends per capita. All that money for a system that ranks near the bottom of the developed world by any measure you care to use.

 

iNow; Thanks for the graph & info in post #54. Let me know when your premiums start going down.

[bascule]

Here's a question for you: if liability is the primary reason pharmaceuticals are so expensive, then why are generic drugs so much cheaper?

 

Across the board drugs are cheaper in Canada than the U.S.. Why? The only difference is the cap on litigation in Canada. Pharmas do not need billions of dollars of liability insurance to cover their ass from the Canadian legal system.

 

As long as we have lawyers in Washington writing legislation in favor of lawyers our own judicial lottery(er legal) system will never straighten out and the downstream costs on the people will continue to grow. Just how much money do insurers and medical providers have to add to their products to cover their potential litigation liabilities in the U.S.? Without tort reform any healthcare reform will still be domed because even if you created a single payer system the costs associated with medical litigation will still get passed on to the people since the government will have to collect enough to cover it.

 

You quote my question then never answer it... strange. I think you need to step off your soap box for a second and think critically about your opinions.

 

Generic drugs made in the US and sold to US (not Canadian) citizens are substantially cheaper than their name brand counterparts, despite both carrying the same risk of litigation. Please think about this and get back to me. Thanks.

 

Regarding Canada, not only did I mention the reason US drugs are cheaper in Canada (bulk discounts to Health Canada) in the post you quoted, but multiple other people have also pointed this out.

[padren]

Generic drugs made in the US and sold to US (not Canadian) citizens are substantially cheaper than their name brand counterparts, despite both carrying the same risk of litigation.

 

The cost of making a generic only includes reverse engineering an already researched medication and modifying it slightly, usually by substituting a synthetic for one component or such. Generics directly drive up the price of non-generics because they have to recapture their investment and clear a profit before generics hit the market and their sales plummet.

 

 

Granted, the amount new drugs have to capture to be "profitable" includes insane net profit levels to be considered industry standard, but the brand name vs. generics pricing disparity is pretty plain.