I shouldn't have to waste my time writing a response to Ezra Klein's latest blog about The High Cost of Medical Procedures In the US compared to other countries. I won't waste yours by summarizing it either. You can read it at the risk of wiping out some brain cells...
http://www.washingtonpost.com/wp-srv/special/business/high-cost-of-medical-procedures-in-the-us/
His blog is a textbook case of how most health care policy research is a combination of liberal bias and mythic numbers that support a point of view.
Here's the reason medical procedures cost more in the US. The cost per procedure does not reflect the government subsidy that artificially reduces prices and drive up demand. Second, the cost per procedure is not the only thing that's controlled. Waiting is part of the cost per procedure in Europe, Canada and elsehwere. Ask someone who has to wait for cancer surgery if the lower cost per procedure is worth it. Would people pay more to get care faster? They do quite often. Yeah, neonatal intensive care in the UK or Canada is cheaper. So if infusion of biologics. But there's a reason people come to the US from Canada to get neonatal care. There's more of it when you need. You see Ezra, if price doesn't reflect both the true cost - and value -- of a product, people won't produce it. Unless you are Solyndra or GM's Chevy Volt. Both are -- or were heavily subsidized -- products that no one wanted.
Which is sort of like health care around the world. And medical innovation. Government controls also skew what will be produced. Innovation and its diffusion is stifled by things like price controls and comparative effectiveness reviews. Both raise the risk and cost of development and CER delays and reduces market access. So the way to make a buck is to pump out marginally better products that will get you a slightly higher launch price.
The US still leads in the number of new drug launches compared to other nations because we reward biomedical innovation, at least for now. Meanwhile, medical device adoption is faster in Europe. Cycle times matter more in medical devices and Europe is not as anal-retentive about follow on devices as is our FDA. Add a medical device tax to the equation and the decline in innovation will accelerate.
Klein rehashes the 'research' of Gerard Andersen, a hack who makes a living producing memos for congressional Democrats that confirm their belief that price controls would work just fine. Andersen pushed having Medicare 'negotiate' drug prices like the Veteran's Administration. ( Here's a link to a Frank Lichtenberg study I sponsored a few years ago. http://democrats.veterans.house.gov/hearings/Testimony.aspx?TID=59775&Newsid=470&Name=%20Frank%20R.%20Lichtenberg,%20Ph.D. ) And the association between controls on innovation and reduced health care well established. Lichtenberg has looked at access to new cancer drugs in Europe and Australia and concluded that for most types of cancer, newer drugs save lives and displace most costly care.
That's the same VA whose formulary and price controls reduce access to new drugs and reduce the life span of seniors. Which I guess saves money too.
I don't mean to single out Klein. It's just that his blog -- a blog! -- is an example of the confirmation bias that passes for policy analysis. Blogs are thought experiments, not science. And when they rely upon leftwing ideologues with tenure -- like Gerard Andersen -- to prove a point they reduce the sum of human knowledge each time they are read or written.
http://www.washingtonpost.com/wp-srv/special/business/high-cost-of-medical-procedures-in-the-us/
His blog is a textbook case of how most health care policy research is a combination of liberal bias and mythic numbers that support a point of view.
Here's the reason medical procedures cost more in the US. The cost per procedure does not reflect the government subsidy that artificially reduces prices and drive up demand. Second, the cost per procedure is not the only thing that's controlled. Waiting is part of the cost per procedure in Europe, Canada and elsehwere. Ask someone who has to wait for cancer surgery if the lower cost per procedure is worth it. Would people pay more to get care faster? They do quite often. Yeah, neonatal intensive care in the UK or Canada is cheaper. So if infusion of biologics. But there's a reason people come to the US from Canada to get neonatal care. There's more of it when you need. You see Ezra, if price doesn't reflect both the true cost - and value -- of a product, people won't produce it. Unless you are Solyndra or GM's Chevy Volt. Both are -- or were heavily subsidized -- products that no one wanted.
Which is sort of like health care around the world. And medical innovation. Government controls also skew what will be produced. Innovation and its diffusion is stifled by things like price controls and comparative effectiveness reviews. Both raise the risk and cost of development and CER delays and reduces market access. So the way to make a buck is to pump out marginally better products that will get you a slightly higher launch price.
The US still leads in the number of new drug launches compared to other nations because we reward biomedical innovation, at least for now. Meanwhile, medical device adoption is faster in Europe. Cycle times matter more in medical devices and Europe is not as anal-retentive about follow on devices as is our FDA. Add a medical device tax to the equation and the decline in innovation will accelerate.
Klein rehashes the 'research' of Gerard Andersen, a hack who makes a living producing memos for congressional Democrats that confirm their belief that price controls would work just fine. Andersen pushed having Medicare 'negotiate' drug prices like the Veteran's Administration. ( Here's a link to a Frank Lichtenberg study I sponsored a few years ago. http://democrats.veterans.house.gov/hearings/Testimony.aspx?TID=59775&Newsid=470&Name=%20Frank%20R.%20Lichtenberg,%20Ph.D. ) And the association between controls on innovation and reduced health care well established. Lichtenberg has looked at access to new cancer drugs in Europe and Australia and concluded that for most types of cancer, newer drugs save lives and displace most costly care.
That's the same VA whose formulary and price controls reduce access to new drugs and reduce the life span of seniors. Which I guess saves money too.
I don't mean to single out Klein. It's just that his blog -- a blog! -- is an example of the confirmation bias that passes for policy analysis. Blogs are thought experiments, not science. And when they rely upon leftwing ideologues with tenure -- like Gerard Andersen -- to prove a point they reduce the sum of human knowledge each time they are read or written.
