White House Domestic Policy Advisor Allan Hubbard has been making waves of late, speaking out on behalf of consumerism in health care, advocating bigger tax breaks for health savings accounts, and demanding hospitals disclose their pricing information so consumers can make better decisions.
I’ve been blogging on consumerism in health care, the lack of useful data on prices and outcomes, and the complexities of health care buying decisions for well over a year, so no need to review those issues.
Except, one of his statements manages to simultaneously be both blatantly jingoistic and completely misleading. Here’s the quote from Sunday’s NYTimes “”no consumer is better than the American consumer at driving prices down and quality up.”
I’m not sure if Hubbard’s statement is a tortured call for patriotism as the solution to health care’s ills, or if he actually believes this drivel. Doesn’t really matter.
Every other country has some variation of nationalized health care, with some entirely nationalized (Canada), others mostly public (Britian), and others with a strict national requirement for care delivered by private providers (Switzerland). Yes, there are lots of variations and permutations, but every other country uses government to set prices for health care, not consumers.
And by the way, Allan, if you knew anything about health care you would know that the single most significant factor causing US health care to be more than 50% more expensive than other developed countries is price. And somehow you think that each individual citizen will be better equipped to demand and obtain lower prices for drugs than, say, the VA?
If that’s your position, Alan, than why are small businesses pushing so hard for Enzi’s AHP bill to allow them to capture the purchasing power of big companies?
My guess is Hubbard is another of the “every complex problem has a simple solution” guys.
What does this mean for you?
More wasted time as the Administration refuses to engage in meaningful efforts to address the health care crisis.

Contrary to popular belief, most of the patients in emergency rooms have insurance, but are there because they can’t get in to see their regular physician or are waiting for an inpatient bed. A new study released today by the American College of Emergency Physicians (and reported in the LA Times) indicates that about 15% of patients in ERs were people without health insurance.
The statistics hold true across the board, even for high utilizers of ERs (those who visited 4 or more times per year).
The report refutes a common misconception that the uninsured make up a substantial percentage of ER admissions.
What does this mean for you?
The lesson I take from this is to always question your assumptions (to quote one of Ayn Rand’s heroes), and question your most basic assumptions about health care most aggressively.

Yesterday’s New York TImes includes an excellent primer on avian flu (A(H5N1)), one that executives at managed care firms would be well-advised to read and file away. For those without the time or inclination to do so, here’s a couple interesting take-aways.
To get your attention, the World Health Organization estimates that if the bird flu becomes contagious among humans, an infection rate of 25% is possible. Estimates are that this would lead to deaths totaling 400,000 in Europe and 200,000+ in the US.
1. To date, bird flu has infected about 200 humans and killed approximately 100 that we are aware of. This last qualifier is key; as most of the infections have occured in underdeveloped countries, reporting may well be suspect. However, for a disease that has been in existence for over ten years, the death toll has been very low indeed. This leads some experts to surmise that avian flu is not likely to “jump” to human-human transmissability – if it hasn’t in ten years, it likely never will.
2. The death rate may not be nearly as high as indicated above, as some infected people may have relatively mild cases for unknown reasons. Again, under-reporting would skew the numbers.
3. BUT. The disease also did not move out of southeast Asia for ten years, then exploded across the entire continent in the space of a few months. This somewhat refutes the argument that since the disease has yet to become transmissable between humans it won’t over the long term.
4. Flu pandemics are unpredictable, vary widely in their lethality and the profile of victims, can occur any time of year, and are very difficult to prevent via vaccine and treat via drugs, as the virus is highly adaptable.
Fitch Ratings has doen their usual excellent work preparing a review of the potential impact of bird flu on the insurance industry. While Fitch notes that most of the financial impact of a pandemic woudl hit life insurers and reinsurers, it also provides its perspective on the effect on other lines of insurance, notably health.
What does this mean for you?
Better to be aware and prepared for something that never happens than unprepared for a crisis.

A survey by a small business trade association in California found that 91% of respondents rated health care cost and availability as their chief concern, outweighing workers comp, energy costs, and governmental regulations. Only 2% of the 430 respondents said health care was a low priority.
Amazingly, 44% don’t require any employee contribution for insurance. It could be that this 44% primarily includes businesses where all employees are family members.
Equally amazing, fully 52% supported a Canadian-style single payer system; 90% also support purchasing pools for smaller employers.
11% of the respondents offer HSA-based health insurance.
What does this mean for you?
Even more evidence that likely voters want the health insurance mess solved.

I am no economist. Some will likely howl in agreement, others knowingly nod their heads while tapping out their pipes so as to not get ash on their tweeds (them are the economists). I do know a good bit about health insurance, health care, and the rather messy intersection of the two. With that disclaimer/caveat, here goes my take on an esoteric economic theory.
Jason Shafrin’s post on Baumol’s cost disease was picked up by Kate Steadman for the latest Health Wonk Review – as a few other bloggers and commentors on Managed Care Matters had been bludgeoning me with this economic term, I figured I better find out what it is. So, here’s the definition.
Basically, it holds that when there is little or no growth in productivity the result is that unit costs tend to inflate. As docs and nurses can’t increase productivity as fast as it increases in other industries, prices have to go up faster to make up for that differential.
OK – I’m not sure I agree w Jason’s underlying premise – which seems to be predicated on clinician time as the key determiner of health care cost. What about technology adoption rates, the rise in pharmaceutical utilization and pricing, the aging population’s increased demand for services, etc. While I will grant that labor costs are a major driver of hospital expenses (see California’s minimum nurse staffing headaches), and hospital costs are one of the biggest influences on total medical expense, there are so many other factors that one cannot attribute the sickness of our system to one single factor.
I’d also point out that physician cost inflation has held relatively steady at about 7.7% for several years (although costs jumped last year due to higher Medicare utilization by docs) , while Rx and hospital costs have varied widely. And, as physician expense is s relatively small part of the overall health care cost equation, I don’t see how Baumol’s cost disease is the over-riding factor here.
That said, I certainly agree with Jason’s conclusion that health care costs will continue to grow as a percentage of individuals’ expenditures.