The art of medicine consists in
amusing the patient while nature cures the disease. ~ Voltaire
Laughter is the best medicine – unless
you're a diabetic, then insulin is pretty high on the list. ~ Jasper Carrott
The continuing debate about the efficacy of
the 2010 Affordable Care Act (ACA) places inordinate and misplaced focus on the
role of government in US health care. No matter what its role, we continue to
spend more on health care than any other
developed nation. The most recent information indicates that US health care
expenditures in 2012 were about $2.7 trillion or 17.2% of our GDP. This expense is expected
to grow to 20% within 7 years. I discuss 3 reasons why health costs will keep
rising. One is demographics; second is the cost consequences of utilizing
ever-more sophisticated medical technologies to fight nasty diseases. And
finally, most federal government health care policy decisions cannot take costs
into consideration when assessing new drugs and medical procedures, whose pricing is controlled by powerful, giant companies.
Some of the significant macroeconomic
consequences of this health-care cost growth have been much discussed – and not
at all resolved because solutions will require agreeing to thorny inter-generational
decisions involving very large amounts of money. Namely, will our children (and
probably grandkids) be willing to pay for our ever more-expensive health-care
during our retirement? Time will tell. As it stands, no politician wants to make
those decisions.
Departing from this crucial macroeconomic
perspective, I offer here a very micro viewpoint about health-care and its costs,
based on my personal circumstances.
I was diagnosed with juvenile diabetes (now
known as Type 1) more than 5 decades ago. At this point I don't remember not
being diabetic. Because we don't produce any, Type 1 diabetics (T1Ds) require daily
dosages of insulin – the hormone that allows the body to metabolize
carbohydrates and fats. Before insulin was first synthesized in 1921 by two
Canadian doctors – Fredrick Banting and Charles Best – early death was a certainty
for every T1D, very soon after prognosis. Without receiving insulin, T1Ds' blood
glucose inexorably rises and within a relatively short time causes death from
diabetic ketoacidosis. Drs Banting and Best sold their insulin patent for $1 to
extend and improve the lives of now countless T1Ds, including me.
Successfully living as a T1D requires
conscious and continuous "balance" on a 24/7/365 basis. For me, balance
means matching my food intake, my insulin dosage and my activity level (both
mental and physical) so my blood glucose is well managed and daily glucose
variability is reasonably low. In effect, living as a T1D is akin to forever
walking on a tightrope. Most of the time I remain balanced on the rope
(maintaining decent blood glucose levels); but like many diabetics, on occasion
I fall out of balance and off the line.
Possible longer-term consequences of not well-controlled
blood glucose include a litany of medical horrors: blindness, circulatory
problems that can lead to amputations, kidney and liver failure and elevated
risk of heart attacks, to mention a few. Evidentiary data strongly demonstrate that the better
a diabetic controls and manages his/her blood glucose, the less likely such
complications become. The life expectancy of any diabetic is shorter than most
non-diabetics, as the quotes I once got for a life insurance policy attest. Fortunately,
I have avoided these nasty consequences due in large part to being a disciplined,
conscientious diabetic and having impressive support in this quest.
I have gained much from the support and
assistance of my family and friends. Ever since I was diagnosed, my parents and
brother, school classmates and then my spouse, children, friends and co-workers,
have selflessly assisted me in times of medical need –during atypical bouts of
hypoglycemia (low blood sugar). Thank you all. And, during the past 30+ years I
have also greatly benefited from expert and systematic care provided by my
Kaiser Permanente doctors and staff. Thank you as well.
Mercifully, long-gone are the days when I gave
myself insulin injections using a glass syringe that I sterilized each time I
used it, hand-sharpened the syringe's needles with a whetstone and tested my
urine sugar in a test tube. In the beginning there were no “diet” or sugar-free
foods available, none. The introduction of Diet Rite cola in 1958 by RC Cola Co.
and Coca-Cola's 1963 introduction of TAB diet cola were game-changers. Times
have indeed changed for the better for me and other diabetics.
As a T1D, my continued good health requires
more effort, support and expense than a non-diabetic. A recent New York Times article mentions that annual costs associated
with being an uninsured T1D can exceed $25,000, depending on the type and level
of treatment and insurance coverage. No matter what the level of treatment, all
T1Ds require daily insulin via injection or a pump. Economists characterize our
demand for insulin as highly price-inelastic. That is, a change in insulin's
price has next to no change in the quantity demanded and bought because it's a necessity.
For T1Ds, purchasing insulin is ultimately a buy-or-die decision.
A bottle of insulin now can cost $200 with no
insurance coverage. In 1975 a bottle of insulin cost $3 (or $13 in 2013 dollars). What
changed? The technology of producing insulin changed. In 1982 it was one of the
first biosynthetically-made drugs to be sold. The purer, more stable,
recombinant, analog insulins now produced are covered under a variety of
patents. There is no generic insulin sold in the US, although Walmart sells less
expensive, off-patent insulin.
New medical advances, including those that
involve new technologies, are improving the lives of many people, including me.
Microeconomics textbooks describe the introduction of new technology as a means
of reducing costs. Think about automated manufacturing using robots that has improved
such processes' efficiency and effectiveness. But health care isn't like car manufacturing.
Medical technologies' introductions have usually increased the cost of medical care. This has been the case for improved
treatment of T1D.
When the insulin pump was first introduced in
the US in the early 1980s, it revolutionized the administration of insulin in a
T1D's body by more closely mimicking the pancreas's real-time provision of
insulin. For over a decade, I have used an insulin pump to administer my
insulin dosages, providing insulin 24 hours a day, as well as whenever I
consume calories from food. Using an insulin pump has improved my blood glucose
management dramatically. For decades I have used home-test devices to measure
my blood glucose. Blood glucose test strips can cost $2,000/year
depending on how many are used per day. I also utilized an integrated
continuous glucose monitor (CGM) – that measures blood sugar every 5 minutes – for
quite a while but stopped because the monitor did not compute accurately enough
my actual blood glucose. More precise CGMs are now becoming available.
"Retail" insulin pump prices can
exceed $5,000; pump supplies can cost $20 every 3-4 days. A CGM system can cost
$500; CGM supplies can cost over $40 per week. My pump has a 4-year warrantee;
after that service and support stop being "free" and many pumpers
(diabetics who use insulin pumps) get a new one. Many, but not all, insurance
plans provide co-payment for insulin pumps and supplies. Fewer plans offer
co-payment for CGM systems and supplies.
Would I pay $200 for a bottle of insulin?
Absolutely. Would I pay $500 a bottle? If I had to, yes because my life depends
on it. I can hardly say, "No, that's too expensive," if I want to
keep living. My buy-or-die need for insulin fundamentally changes the market
dynamic for insulin and every other life-essential drug. Such drugs aren't
options, they're necessities. For these drugs and many others, pharmaceuticals companies can
charge what the market will bear. Without insurance (or even with it) it's going
to be expensive, sometimes very expensive. Why?
In part because the US Food and Drug
Administration (FDA) only considers whether
a new medical drug, test or device is "safe and effective," not
whether it's cost-effective. Other nations – like Britain – consider drug
pricing and drug cost-effectiveness as factors when making public decisions
about health-care options. Not the US.
Defying common sense (and cents), the federal
government cannot purchase drugs and pharmaceuticals via Medicare and negotiate
on drug prices. As a consequence, the market price for drugs in the US can be
very high. Health-care providers can negotiate,
but not Medicare. Dr Elisabeth Rosenthal, a New
York Times journalist and medical doctor, is writing a series of articles
under the title "Paying 'Til It Hurts," about US health care costs.
As she states, "How much is it [the drug] going to cost? It’s a simple
question that goes unuttered throughout the American health care system. It’s a
taboo subject. Our failure to ask costs us dearly, experts say. We approve
drugs and devices without considering cost-effectiveness, or even having a clue
about price. We don’t ask for estimates and then are surprised when the nation
is stuck with a $2.7 trillion annual health care bill." And whose
interests are not considered by keeping cost a "taboo subject?" Yours
and mine.
This legislative and regulatory inability to
assess, let alone manage, drug costs and cost-effectiveness is a basis for much
apprehension regarding whether we can "turn the health cost curve" so
that the growth in these expenses might be reduced. Medical research and
technology have been producing noteworthy improvements in health care therapies,
and the cost of some new health care treatments is beyond breathtaking – like
the $86,000 expense to cure someone of hepatitis C (for a 6-week treatment using
a drug called Sovaldi – about $1,000 per pill). Further confirming
it's a sellers' market where pharmaceuticals companies exercise dominant control, especially for
unique, life-saving remedies, the revenues for the first 3 months of sales for Sovaldi
are a record-breaking $2.3
billion.
Despite the impressive political feat of
passing the ACA, I'm not sanguine about the Administration trimming future
health-care costs. First, the government's plan for reducing health care costs
seems to be based on a general hope, "Don't worry, we'll figure it out"
by launching a series of pilot programs designed to reduce costs. Perhaps they
will, but it smacks of kicking the health-care-cost can down the road for
someone else to deal with – when such costs are even higher. Giant pharmas rule
the US drug market and giant hospital networks rule that market. Both enjoy
plenty of pricing power – and have significant influence on the FDA and HHS as
well. When strong market power and new technology are prescribed for essentials,
higher drug prices and medical techniques often result.
Second, as ever-more baby boomers
become covered under taxpayer-supported Medicare, the public expense of health
care will continue to rise due to straightforward demographics. In 2011,
Medicare accounted for 47% ($182.7 billion) of total aggregate
inpatient hospital costs in the US. This percentage will grow as boomers age.
According to the US Census Bureau, there are
more than 77 million boomers. Last year, 14% of Americans were 65 years or
older; by 2030, 65+ year-old boomers will represent an estimated 20% of the population.
This means that for the next 19 years every
day more than 10,000 baby
boomers will turn 65. At the same time, the
ACA has rightfully encouraged millions of previously-uninsured people and
families to gain health insurance. A RAND study calculates that the ACA so far has
lowered the percentage of people without health insurance from 20.5% to 15.8%. This
is an important and needed change in health care policy, with direct
consequences on future health costs. The hope is that by having access to
health insurance, these people's health-care costs can be reduced over the
longer-term. There's a lot riding on that hope being realized somehow.
Because my visits to the hospital
emergency room have decreased and no serious complications from being diabetic
have emerged – due to my conscientious blood glucose control and care regimen –
I believe my longer-term health-care costs have been reduced by using new drugs
and medical technologies even though it's more expensive in the shorter-term.
Ultimately, improving our national health and managing health-care costs will
depend on disciplined, responsible personal behavior as much as policies that
promote appropriate and cost-effective new therapies. Here's hoping we're privately
and publicly responsible enough to reduce the future fiscal burden.
contributed less and
less over time as shown in the figure and now it's 7%. Yup, a mere 7%. And
they're complaining? What about those of us who file 1040 forms to calculate
our individual income taxes without the help of Olympic CPAs? Individuals pay
nearly 7 times as high a percentage of federal spending as corporations: 47% of
federal spending now comes from individual income tax receipts. These corporate
wolves are crying Canis lupus. 
