The National Heart, Lung, and Blood Institute (NHLBI) of the National Institutes of Health has stopped a clinical trial studying a blood lipid treatment 18 months earlier than planned. The trial found that adding high dose, extended-release niacin to statin treatment in people with heart and vascular disease, did not reduce the risk of cardiovascular events, including heart attacks and stroke.

The DSMB also noted a small and unexplained increase in ischemic stroke rates in the high dose, extended-release niacin group. This contributed to the NHLBI acting director’s decision to stop the trial before its planned conclusion.


Who’s the ATM Machine for Obamacare?

Based on what I’ve been reading, the type of healthcare plan I prefer when I’m consulting would be outlawed under Obamacare. The last catastrophic coverage plan I had, an HDHC from Blue Cross, cost me approximately $1450.00 per year. This plan would not fall under the acceptable plan guidelines of Obamacare, so once the mandate kicks in holders of such plans would be fined by the I.R.S. to the tune of 2.5% of taxable income. The alternative would be to purchase a plan that falls within the minimum plan guidelines, (e.g. a “bronze plan”) which the CBO estimates would cost around $5000.00 per year. Similarily, families that use such plans would also see their premiums rise, to around $13,000.00 per year. According to eInsurance, an HDHC plan for a family of three currently runs around $4500.00 per year.

Healthcare Reform shaping up better than expected

This is really starting to shape up far less disastrous than Obama’s original proposal, specifically –

Expanded Medicaid – The original income levels this was to be expanded to have been scaled all the way back to the poverty line for adults, and around 133% for kids. Subsidies will be phased in over a few years, which is basically a way for Congress to hide true costs at the time of enactment.

Insurance Subsidies – Eligibility has been scaled back to around 300% of the poverty line. This is still way too high in my opinion. I’d much rather see reform that cuts costs vs. simply having government pay the bills. However, future reforms will have the ability to decrease costs by regulating the level of care, so it gives future politicians the opportunity to scale this back.

Public planIt’s looking more and more like this is not going to be part of the plan, with some sort or consumer run co-op non-profit corporation taking its place. This is really good news IMHO. The public plan (which was based on Medicare) was flawed in a thousand different ways, so it’s good to see Congress is finally making some changes. IMHO whatever this “co-op” thing is, the idea that it’ll be “consumer governed” seems like a great idea. Another good thing about this is that the financials would likely be completely separate from the general accounting of the federal government. (Like a Freddie or Fannie for health.) The details though are still thin, so we shall have to see.

Mandates – A foregone conclusion. It’s unfortunate we have to implement stuff like this as its basically playing Robin Hood with health, but it’s also easy to understand the financial issues revolving around not having it.

Insurance regulation – In return for mandates, insurance companies would be regulated more. For example they would not have the ability to refuse coverage for those with pre-existing conditions. IMHO trading the mandate for this is probably a worthy trade.

Employer provider / funding mandates – It may get scratched completely, or phased back significantly.

Misc. “preventative health measures” – Mostly provided through existing systems or tax incentives for business who provide preventative health service for employees. Note that last part.. Congress it seems, is not filled entirely with idiots.

Funding – A whole host of major tax hikes are under consideration. Predictably Obama wants to tax the rich, but it seems Congress is thinking that something a little more fair might be the right solution. Options range from payroll tax hikes (fair), VAT taxes (fair), taxes on the rich (not fair), taxes on company provides health benefits (levels the playing field). It’ll be interesting to see what they come up with. Tax hikes are inevitable, so if I had to choose I’d go with a payroll tax (so everybody pitches in their fair share and gets a feel for the cost) or even better, a new VAT tax that could be leveraged down the road to implement a more broad based “fair tax” at the federal level.

Senate Finance Committee PDF Link

All-in-all, it seems some real progress is being made.

Playing Dominos With Healthcare

Here’s the scenario, I’d welcome anybody explaining to me why this wouldn’t happen.

1) We pass laws stating that private healthcare companies must cover all patients that walk in the door, regardless of illness.
2) We also pass laws that state every healthcare company must maintain a base level of health benefits for a minimal cost.

Healthcare companies compete by offering better benefits for less cost to consumers. So as soon as these laws are passed, sick people looking for better benefits pack up their policies and take them to the healthcare company providing the best benefits at the mandated minimal price. That company, in order to stay afloat, drops health benefits for all its customers down to the minimum level at a maximum cost in order to stay in business. Consumers then leave this company and head to the next company offering the best benefits. This continues until all private healthcare companies are offering the same minimal level of benefits required by law for the maximum price allowed by law. What we end up with is basic care for all, with incredibly high priced premium benefit policies only very few can afford. This would also accelerate the current trend of companies giving up offering health benefits, since those policies would rise in cost as healthcare companies look for ways to increase revenue.

The only way to prevent this would be to include laws that place caps on the number of high cost consumers private insurance companies have to accept based on the size of their pool. But I don’t see that in any healthcare proposal out there.

HDHC Benefits

With an HDHC, the healthcare company will negotiate the service rates you’ll be paying out of your deductible, so you end up saving money both on the low monthly payment and on your typical healthcare costs like dental exams and annual checkups.

Free Stuff

A number of people, including Atrios (who happens to be a trained economist) and Matthew Yglesias have been wondering why, exactly, the Democratic plans for health care involve such complicated schemes. The generic Demoplan, which basically follows the template laid down by John Edwards, involves four moving pieces: community rating, requiring that insurance companies offer insurance to everyone at the same rate regardless of medical history; a mandate, requiring that everyone have insurance; subsidies to help lower-income people pay for insurance; and public-private competition, in which people have the option of buying into a plan run by the government.

I wish the Democrats were managing the auto insurance industry too, and I wish I could be 16 again when they ran it. I had a hard time finding insurance because of my horrible driving record, and unfortunately I had to pay for it. If the dems were running things back then, I wouldn’t have had to pay for my own liability, my parents would. I’d have a nice low rate through forced government coverage. That’d teach them for taking my car keys away after getting into yet another accident.


Whole Healthcare

Five years ago, the Whole Foods grocery chain switched to a high-deductible plan. If an employee has a sore throat or a sprained ankle, he pays. But if he gets cancer or heart disease, his insurance covers it.

Whole Foods puts around $1,500 a year into an account for each employee. It’s not charity but part of the employee’s compensation. It’s money Whole Foods would have otherwise spent on more-expensive insurance. Here’s the good part for employees: If they don’t spend the money on medical care this year, they keep it, and the company adds more next year.

It’s called a health savings account, or HSA.

CEO John Mackey told me that when he went to the new system, “Our costs went way down.”

Yet today, some workers have $8,000 in their accounts.

“That’s their money,” Mackey said. “It builds up over time because the money is compounding for them.”

It will cover all sorts of future out-of-pocket expenses.

Most important, since employees control the money, their behavior changed. Whole Foods workers started asking “how much things cost,” Mackey said. “They may not want to go to the emergency room if they wake up with a hangnail in the middle of the night. They may schedule an appointment now.”

There was no need to ask about costs before because the insurance company seemed to pick up the tab. But that drove up costs for everyone. Now, saving money makes sense to employees because the money belongs to them.

HSA critics ask whether individual accounts will encourage people to save money at the expense of their health.

Mackey has the right response. “The premise in those kinds of questions is that people are stupid. They’re not smart enough to make these decisions for themselves. It’s sort of an elitist attitude. The individual is the best judge of what’s right for the individual.”

Harvard Business School professor Regina Herzlinger says studies show that “people who have these high-deductible health-insurance policies take a lot better care of themselves. They have more yearly physicals. Because they’re saying, ‘If I keep myself healthy, in the long run, I’m going to be spending less money.'”


I’ve had an HSA in combination with a HDHC plan from Blue Cross for about three months now. The return on my HSA isn’t much yet, since my max contribution was only about $2800.00 for the year, but it has increased, and will continue to increase over time just like a 401K. The best part so far – going to the doctor and paying for an annual checkup using my HSA Visa knowing full well that’s a few less $ in Uncle Sam’s coffers. I guess we could all have the government pay for an all-you-can-eat healthcare plan, but how would that solve anything? Don’t get me wrong, I’m all for the government stepping in and dealing with the medical history discrimination, but I’d prefer our Nation State keep its nose out of running the whole shebang.

The Clinton Plan

The primary factors in the rising costs of our health care are as follows –

  • Increased cost of high tech treatments / frequency of use – Contrary to what you might have heard, modern, high tech treatments, diagnosis, and bleeding edge drug treatments are more readily available here in the United States than in any other health care system, and we like to make use of all of these options on a regular basis. We are the “consumer nation”, and that attitude extends into our use of our health care.
  • Drug development / treatment development cost – The cost of developing all these high tech treatments we love to use in copious amounts has become more expensive.
  • Throwing the book at patients to protect against law suits – doctors, faced with the threat of lawsuits throw every possible treatment at patients, even those who are elderly or have a miniscule chance of survival.

Combining these factors with the all-you-can-eat nature of our insurance coverage – and you get rising costs. There are other factors of course, but a lot of what I’ve read indicates these factors have a very profound effect.

What does the Clinton system do to address the points above? According to her web site, she will start cutting costs through “modernization” – to the tune of 50% of the overall estimated cost of the plan – 53 billion of the 110 billion price tag will come from savings through the “modernization of our system.” This level of savings is unrealistic, especially right out of the gate. If I’m right about that, somebody is going to have to foot the final bill when the numbers don’t add up. Which isn’t to say our system doesn’t need modernizing – it does. But I’d question whether 50 billion in annual saving can be squeezed out of our current system through reforms and the removal of “hidden taxes”.

The second cost cutting measure in the Clinton plan is a bit more hazy, but her site suggests the use of price controls. Essentially, governmentally mandated lower prices on treatment or premiums, with low income government premium subisides. Her site suggests two sets of price controls – one is the actual cost of treatment through premium caps, the other may involve regulating what percentage of a health insurance / drug company’s income intake can be directed toward profit. The drug price regulation is a foregone conclusion based on her overview. How will health insurance companies compensate for this?

  • They will mandate to providers what they will pay for treatments regardless of cost.
  • They will become much more heavy handed in regulating what treatments we can have under their plans – in effect, they will ration health care.
  • They will cut general costs by decreasing their overall level of service.

One of the side effects of price controls is obvious – If price mandates are lower than the costs of development and operation of treatment, those treatments will no longer be available, and rationing will decrease the overall availability of treatments we seek.

The third cost cutting measure takes into account that 47 million uninsured figure Democrats like to throw around, which includes about 20 million people who don’t want health insurance. (Side note – another 12 million in that figure aren’t even citizens of the U.S..) The argument goes – force these people into the insurance pool and you decrease costs overall. This argument is accurate – forcing a lot of healthy people into a pool system will lower costs overall. However the system also brings a lot of sick people (and ignores a number of illegal immigrants) into the system, which will raise costs. So the net-net of it is we don’t know how much this part of the Clinton plan will actually save the system.

As far as tort reform goes, there doesn’t appear to be anything in the Clinton plan at this point to address it. Klein suggests Clinton will create a new “Best Practices Institute”, which might play a part in this which would be a good thing – the best way to solve the tort issue is to set treatment standards that can be relied on in court by providers when they get sued. So far though that hasn’t been spelled out in any candidates plan as of yet from what I’ve read.

So what does this amount to in terms of what the plan ask of the American people?

  • If you’re one of the 250 million Americans enjoying all-you-can-eat coverage, the plan asks you to make a sacrifice – since the plan will negatively affect the level of care you currently enjoy.
  • If you’re one of the millions of Americans that are healthy and aren’t paying for health care, the plan will force you to get insurance you don’t feel you need.
  • If you’re one of the millions of Americans that can’t afford insurance or have been refused coverage by the health insurance industry, the plans tells you that the government will come to your rescue, it will force insurance companies to cover you and in cases where you have low income, the government will cover your overall costs through tax credits.
  • If you’re an illegal immigrant living in the U.S., this plan doesn’t take you into account. It’s been suggested that the I.R.S. might be responsible for insuring everyone has coverage, so illegal immigrant will continue to do what they are doing now – showing up at the emergency room seeking care.

This makes the Clinton plan a classic wealth redistribution system – realign the costs on those that can afford it, to pay for those that can’t. Within this context Democrats argue forcing health insurance on everyone is a collective good, a “shared responsibility” – that the actions of the few hurt those of the many, and therefore this justifies the added costs and government oversight into our personal lives.

Personally I’d much prefer a system of reform that doesn’t affect the types treatments available and doesn’t give the government an excuse to invade my personal life. But that’s just me, the rest of America will have to make up their own minds on the subject come November 2008.

Link – Hillary’s Shared Responsibility Plan

Update – For a different take – Paul Star’s “Hillary’s Own Plan”

That’s why Senator Clinton’s proposals to regulate the private insurance market are so crucial to the success of her approach. Whether they offer their plans through FEHBP or directly to firms and individuals, all insurers would have to follow new federal rules, including “guaranteed issue” (that is, they would have to offer coverage to anyone who applies), “automatic renewal” (they couldn’t drop someone because they get sick), and “strong rating protections” (they wouldn’t be able to charge “large differences” in rates based on age, gender, or occupation).

If the auto insurance industry worked this way when I was a kid, I could have saved a few dollars. My premiums where high because my driving record was horrible. Under a Hillary’esk auto insurance plan, my parents would have been burdened with the costs associated with insuring a high risk character like myself. Get it?