Category: Government

Dog Health Insurance Is Simpler and More Transparent Than Human Health Insurance

Why is dog health insurance simpler and more transparent than human health insurance?

Dog healthcare is mostly provided in a true marketplace, while human healthcare is provided in a hyper-regulated mishmash of market and government. Because there are more regulations and more risks of malpractice for human healthcare, more and more providers work for large healthcare firms. It’s much easier to have a small independent veterinary practice than a small independent human healthcare practice. So we find more competition in veterinary practices, resulting in prices that are lower and more transparent.

For humans the mega-providers gain with lack of transparency. Insurers are vertically integrated with hospitals, doctor practices, and obscure middlemen called Pharmacy Benefit Managers (PBMs). I would like to confirm my strong guess: few dog health insurance firms own veterinary practices.

(p. A24) I rushed around the patient as he lay motionless with his eyes closed in the emergency room. He was pale and sweaty, his T-shirt stained with vomit. You didn’t have to be a health-care worker to know that he was in a dire state. The beeps on the monitor told me his heart rate was dangerously slow. I told the man that he was going to be admitted to the hospital overnight.

After a pause, he beckoned me closer. His forehead furrowed with concern. I thought he would ask if he was going to be OK or if he needed surgery — questions I’m comfortable fielding. But instead he asked, “Will my insurance cover my stay?”

This is a question I can’t answer with certainty. Patients often believe that since I’m part of the health-care system, I would know. But I don’t, not as a doctor — and not even when I’m a patient myself. In the United States, health insurance is so extraordinarily complicated, with different insurers offering different plans, covering certain things and denying others (sometimes in spite of what they say initially they cover). I could never guarantee anything.

. . .

The killing of Brian Thompson, the chief executive of UnitedHealthcare, the country’s largest health insurer, has reignited people’s contempt for their health plans. It’s unknown if Mr. Thompson’s tragic death was related to health care, and the gleeful responses have been horrifying. But that reaction, even in its objectionable vitriol, matters for how it lays bare Americans’ deep-seated anger toward health care. Around the country, anecdotes were unleashed with furor.

Among these grievances is the great unknown of whether a treatment recommended by a doctor will be covered. . . .

Unsurprisingly, despite my platitudes, my patient did worry. Instead of resting on the stretcher, he and his wife began calling his insurance company. To keep him from leaving, I tried to be more persuasive, even though I didn’t know what kind of health plan he had: “I’m sure your insurance will pay. I’ll document carefully how medically necessary this admission is.” I added that social workers and other advocates could also assist in sorting out his insurance once he was admitted. And worst-case scenario, if they couldn’t, I crossed my fingers that the hospital’s charity care would help.

I said what I could to get him to stay, but I understood why he wanted to be certain. The average cost of a three-day hospital stay is $30,000.

. . .

My one family member with solid insurance is my dog. He got elective surgery recently, and I was astounded by the straightforward nature of his insurance. Once we meet the deductible, everything is simply covered by 80 percent. This is clearly described in a packet I received when I first signed him up. It’s an imperfect comparison to insurance for humans — I pay in full first, then get reimbursed — but it’s incredible to think that insurance for pets and possessions is easier to navigate and more consumer-friendly than insurance for people.

For the full commentary see:

Helen Ouyang. “What I Know About Americans’ Anger at Health Care.” The New York Times (Thursday, December 12, 2024): A24.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 8, 2024, and has the title “What Doctors Like Me Know About Americans’ Health Care Anger.”)

Mainstream Approach to Alzheimer’s Is Built on Doctored Data

Widespread fraud among highly credentialled, and richly financed, medical researchers results in fewer and slower cures. Many millions of dollars are required to bring a major drug to market, much of it due to the hyper-costly and mandated Phase 3 randomized double-blind clinical trials. There are more good ideas than can receive such financing. The intense competition creates a temptation to cut various corners, as the book review quoted below emphasizes.

Aaron Rothstein, the reviewer of Piller’s Doctored book, emphasizes the sad revelation of widespread fraud. But in an earlier entry on this blog, I quoted an essay of Piller’s that suggests that Piller also has something substantive to say about how to cure Alzheimer’s. The current system is broken, vastly reducing the diversity of approaches to curing important diseases like Alzheimer’s. Piller suggests that the ruling clique among Alzheimer’s researchers may in effect be silencing other approaches that could bring us a better faster cure.

Rothstein downplays this substantive aspect of Piller’s book. (It probably reflects too much cynicism on my part to wonder how close Rothstein himself is to the ruling clique?)

I look forward to reading Piller’s book, both for what it has to say about widespread fraud and for what it has to say about Alzheimer’s. Doctored is scheduled for release in a few days, on February 4, 2025.

(p. C9) In 2023 my colleagues and I were preparing to enroll patients in a clinical trial of a new drug that promised to mitigate brain damage in stroke victims. The National Institutes of Health, a governmental organization that funds billions of dollars of research every year, had committed $30 million to the trial. The drug was, in part, the brainchild of Berislav Zlokovic, a neuroscientist at the University of Southern California.

Then, suddenly, the NIH paused the trial. Charles Piller, an investigative journalist for Science magazine, had published an article alleging that multiple papers from Dr. Zlokovic, including many supporting the new drug, contained seemingly altered data. Though Dr. Zlokovic disputed some of the concerns, this news stunned us. We might have put patients at risk, while offering groundless hope. A fraud of the sort Mr. Piller described would violate the basic ethics of clinical trials and overturn the presumption of trust on which the practice of medicine relies.

I thought of this episode often as I read Mr. Piller’s “Doctored,” which brings together his long-form journalism about neuroscience-research malfeasance, including that alleged of Dr. Zlokovic. Though the book sometimes attempts to do too much—diving into scientific theories about the causes of Alzheimer’s, for example—its strength lies in Mr. Piller’s dramatic and damning investigation of scientific transgression. The author’s reporting is largely based on the research of Matthew Schrag, a Vanderbilt neurologist who uses technical expertise to identify episodes of misconduct.

. . .

Mr. Piller thoroughly double checks Dr. Schrag’s work. He asks researchers and image analysts to confirm Dr. Schrag’s findings, and they concur.

. . .

“Doctored” demonstrates how some of the most accomplished and elite scientific gatekeepers may have lied, cheated, squandered trust and endangered lives. How did this happen? The temptations of ego and fame perennially entice humans, but our system of peer review, grant funding and administrative oversight is meant to check these temptations.

The scientific publication process does not contain all the safeguards one might expect. Peer reviewers do not always see the original data from authors. Thus they trust that numbers or images in a manuscript accurately reflect the experiment. And determining whether an image is fraudulent requires skilled image analysis that peer reviewers may not possess. Furthermore, digging for such mistakes is costly: It takes time away from other research, from teaching, from seeing patients and from home life.

What can be done about this? Making raw data available to peer reviewers and giving them time to review articles could help. Mr. Piller suggests a less professionally incestuous relationship between researchers, the Food and Drug Administration, the NIH and pharmaceutical companies could reduce favoritism in funding. A major overhaul of the finances and administrative swell of our system would help, as well.

For the full review see:

Aaron Rothstein. “Medical Promise Betrayed.” The Wall Street Journal (Saturday, Jan. 25, 2025): C9.

(Note: the online version of the review has the date January 24, 2025, and has the title “‘Doctored’ Review: Medical Promise Betrayed.”)

The book under review is:

Piller, Charles. Doctored: Fraud, Arrogance, and Tragedy in the Quest to Cure Alzheimer’s. New York: Atria/One Signal Publishers, 2025.

The Free Market Gets a Bum Rap When Blamed for High and Chaotic Drug Prices

The Law of One Price in economics says that in the absence of transaction costs, similar goods will have the same price. If the price of a Tesla truck is $100,000 in Omaha and $200,000 in Des Moines, some enterprising arbitrager will buy a few in Omaha for $100,000, and sell them for slightly less than the going price in Des Moines. As the arbitrager arbitrages, the price of the truck in Omaha will converge with that in Des Moines, a close-enough confirmation of the Law of One Price. If this does NOT happen then either transaction costs are very high or we are not dealing with a free market. As the article quoted below shows, prices of medical drugs vary widely and persistently. Medical drugs are NOT sold in a free market. Arbitrage is NOT allowed. Who can sell to whom is highly regulated. To blame the free market for high and chaotic drug prices is an outrageous bum rap.

(p. A1) The cost of prescription drugs in the U.S. isn’t like the tabs for other products. The price for a single medicine can range by thousands of dollars depending on the drug plan.

It is a symptom of America’s complicated—and costly—system for paying for medicines.

Medicare is paying wildly different prices for the same drug, even for people insured under the same plan.

. . .

Take commonly used generic versions of prostate-cancer treatment Zytiga. They have more than 2,200 prices in Medicare drug plans. The generics ring in at roughly $815 a month in northern Michigan, about half of what they cost in suburban Detroit, while jumping to $3,356 in a county along Lake Michigan, according to a recent analysis of Medicare data.

The same is true with other popular medicines such as psoriasis treatment Otezla, blood thinner Xarelto and generic versions of the cancer drug Tykerb, known as lapatinib, which has 460 prices, according to the analysis by 46brooklyn Research, a nonprofit drug-pricing analytics group.

. . .

(p. A2) The reason for the huge price differences: America’s complicated drug-reimbursement system, which uses middlemen to negotiate prices.

. . .

Not only is it confusing and costly for seniors, the wide range of drug prices costs Medicare. The program, which farms out drug-price negotiations to the firms, pays tens of millions of dollars extra for prescriptions.

“It’s a broken system. It’s really confusing for seniors. It’s really confusing for providers. It’s costing the government way too much,” said Dared Price, who owns eight pharmacies in the Wichita, Kan., area, and complains the stores are underpaid.

The middlemen [are] known as pharmacy benefit managers or PBMs, . . .

. . .

“The inconsistent and disconnected way that PBMs arrive at drug prices makes Medicare look less like a trustworthy marketplace intended to yield low, sober prices and more like a casino,” said 46brooklyn Chief Executive Antonio Ciaccia.

. . .

To find out the prices that the big three and other PBMs negotiated, 46brooklyn looked at what standalone Part D and Medicare Advantage plans say they will reimburse pharmacies on behalf of Medicare for branded and generic drugs during the second quarter. They reported the prices that Medicare would pay.

Some 61 drugs had monthly prices that diverged by at least $30,000, including a $223,037 range for a drug, called nitisinone and sold under the brand name Orfadin, treating a rare metabolic disorder. About 300 medicines had more than 1,000 monthly prices when the difference between the lowest price and the highest was more than $1,000.

It didn’t matter that the same PBM was negotiating the prices. Prices varied widely among health plans, even if a plan used the same PBM.

The 30 mg dose of Otezla had among the most different prices among branded medicines. It had 633 different prices across health plans that used Express Scripts, while Optum Rx carried 569 different prices and Caremark had 431.

The largest PBMs notched some of the biggest number of different prices for lower-priced copies of Zytiga, which is sold as a generic under the drug’s chemical name abiraterone acetate.

Caremark has logged 643 different prices for Zytiga generics, while Express Scripts has 500 and Optum Rx carries 445. By comparison, Capital Rx, a PBM with fewer beneficiaries than the three largest firms, had two prices.

Capital Rx had few prices—either $106 or $117—because it pegged them to the benchmark that the U.S. government uses to calculate drug costs, called the National Average Drug Acquisition Cost, which is based on a survey of retail pharmacy prices, said Chief Executive Anthony Loiacono. Capital Rx’s prices were much less than the sums that many other health plans reported.

“We don’t make money on drug spend, and I do not set prices. I use what CMS gives us as the starting point,” Loiacono said.

For the full story see:

Jared S. Hopkins and Josh Ulick. “Medicare Payouts Vary Widely for Same Drug.” The Wall Street Journal (Wednesday, Nov. 27, 2024): A1-A2.

(Note: ellipses, and bracketed word, added.)

(Note: the online version of the story has the date November 26, 2024, and has the title “Same Drug, 2,200 Different Prices.” Where there is a slight difference in wording between the print and online versions, the passages I quote above follow the online version.)

The Last Lonely Night Watchman Blows His Horn, “Signaling That All Is Well”

When I was a graduate student in philosophy and economics the exciting new read for the liberty-inclined was Robert Nozick’s Anarchy, State, and Utopia. I was at first rejected from the philosophy graduate program at the University of Chicago because I had the audacity to praise Ayn Rand in my application essay. The rejection decision was eventually reversed. But imagine my reaction when then-young Harvard philosophy professor Robert Nozick had the guts to write a paper evaluating the philosophy of Ayn Rand. My memory is that he did not praise all that is Rand. But that is not the point; the point is that Nozick took Rand seriously. Regardless of the contents of his main book, Nozick was my hero.

The book is pretty good too. I still ponder much that Nozick pondered. Should we eat animals that think and feel? Should a libertarian society approve of people who voluntarily join an authoritarian community? If we could plug ourselves into a machine that would give us the false illusion that all is well, should we?

Not everyone I admired totally admired Nozick’s book. I remember reading (or hearing) Milton Friedman say that it was good but “too Talmudic.” (I assume that Friedman meant that there was too much back and forth nit-picking on minor issues, and too little dispositive empirical evidence on big issues.)

The main constructive section of Nozick’s book defends the libertarian’s minimal state, what Nozick memorably calls “the night-watchman state”–the fundamental justifiable function of government is to act as a conscientious night watchman. (Today many who call themselves “libertarians” are anarchists which is why I now sometimes call myself a “classical liberal.”) (For fans of The Lord of the Ring: I think of the Rangers, the unappreciated protectors of the Hobbits, as kin to night watchmen.)

Nozick solidified the heroic image of the night watchman going about his job.

(p. A11) Mr. Stein, a journalist and editor for BBC Travel, has globetrotting in his veins, but this book is much more than a travelogue.  . . .  . . . under the drizzle of a wet November, he climbs 14 stories to the belfry of a Swedish church with Scandinavia’s last night watchman and listens to the watchman’s call, on a 4-foot-long copper horn, signaling that all is well.

. . .

In reading about the night watchman, alone in the dark tower above Ystad, along Sweden’s southern coast, I felt the wind and rain, I awed at the sacrifice, I understood the power of tradition. Those who listen to his horn night after night, even cracking open their windows in subzero temperatures for the comfort of its lonely bellow, know that the world would be different without it. It would be poorer, less a home to mankind.

. . .

Mr. Stein’s great gift—his sensitivity and his dedication to capturing joy and hope, however fleeting—is worth giving to others.

For the full review see:

Brandy Schillace. “Bookshelf; The Great Chain Of Humanity.” The Wall Street Journal (Friday, Jan. 3, 2025): A11.

(Note: ellipses added.)

(Note: the online version of the review has the date January 2, 2025, and has the title “Bookshelf; ‘Custodians of Wonder’: The Great Chain of Humanity.”)

The book under review is:

Stein, Eliot. Custodians of Wonder: Ancient Customs, Profound Traditions, and the Last People Keeping Them Alive. New York: St. Martin’s Press, 2024.

Nozick’s book, mentioned in my introductory comments, is:

Nozick, Robert. Anarchy, State, and Utopia. New York: Basic Books, Inc., 1974.

To Kill a Dam, Environmentalist “Scientists” Lied About the Existence of the So-Called “Snail Darter”

In the 1970s the building of a dam in Tennessee was delayed because environmentalists claimed that its construction would threaten the extinction of a small fish they called the “snail darter.” Now fish biologists have established that there is no snail darter. The fish previously identified as a “snail darter” has the DNA of a small fish called a “stargazing darter” which was not, and is not, endangered.

A co-author of a new study says that this was no innocent mistake.

Dr. Near, . . . a professor who leads a fish biology lab at Yale, and his colleagues report in the journal Current Biology that the snail darter, Percina tanasi, is neither a distinct species nor a subspecies. Rather, it is an eastern population of Percina uranidea, known also as the stargazing darter, which is not considered endangered.

Dr. Near contends that early researchers “squinted their eyes a bit” when describing the fish, because it represented a way to fight the Tennessee Valley Authority’s plan to build the Tellico Dam on the Little Tennessee River, about 20 miles southwest of Knoxville.

“I feel it was the first and probably the most famous example of what I would call the ‘conservation species concept,’ where people are going to decide a species should be distinct because it will have a downstream conservation implication,” Dr. Near said.

In other words environmentalist “scientists” deliberately lied in order to promote their political agenda of cutting energy production.

The New York Times article quoted above is:

Jason Nark. “How a Mistaken Identity Halted a Dam’s Construction.” The New York Times (Sat., Jan. 4, 2025): A13.

(Note: ellipsis added.)

(Note: the online version of The New York Times article was updated Jan. 4, 2025, and has the title “This Tiny Fish’s Mistaken Identity Halted a Dam’s Construction.”)

The academic paper co-authored by Near, that Nark summarizes in The New York Times article mentioned and cited above is:

Ghezelayagh, Ava, Jeffrey W. Simmons, Julia E. Wood, Tsunemi Yamashita, Matthew R. Thomas, Rebecca E. Blanton, Oliver D. Orr, Daniel J. MacGuigan, Daemin Kim, Edgar Benavides, Benjamin P. Keck, Richard C. Harrington, and Thomas J. Near. “Comparative Species Delimitation of a Biological Conservation Icon.” Current Biology. Published online on Jan. 3, 2025.

In 2023, Costs of Medical Care Rose 40% Faster Than Overall Inflation

If rising healthcare costs were clearly due to improving health outcomes, few would be angry. The anger arises from rising fraud, inefficiency, and inertia. Many healthcare workers are paper pushers and the paper pushed is often inaccurate and opaque. Other healthcare workers enforce protocols that slow innovation. And of course mandated regulations, most notably Phase 3 clinical trials, enormously increase costs.

(p. A3) The killing of a health insurance executive in New York City prompted a furious outpouring of anger over the industry and healthcare prices. So just how much have healthcare costs and spending been going up?

The short answer: a lot. National healthcare spending increased 7.5% year over year in 2023 to $4.867 trillion, or $14,570 per person, according to data released Wednesday by the Centers for Medicare and Medicaid Services.

. . .

The 7.5% rise represented a much faster pace of growth than the 4.6% increase in 2022.

. . .

Over the past couple of decades, the price index for what the Labor Department classifies as medical care—which includes visits to doctors, hospital stays, prescription drugs and medical equipment—has risen roughly 40% faster than the overall pace of inflation. Healthcare tends to rise more quickly than overall inflation because of high labor costs in the sector, as well as advancements leading to new and more expensive drugs and treatments. Demand for healthcare is also increasing as the population ages.

. . .

Hospitals are . . . adding billions of dollars in “facility fees” to medical bills for routine care at outpatient centers, according to reporting by The Wall Street Journal. That means patients are often paying hundreds of additional dollars for standard care like colonoscopies, mammograms and heart screenings.

. . .

Employers are shouldering a lot of those costs. For example, the average worker spent $6,296 in premiums for family coverage in 2024, according to KFF [a healthcare nonprofit]. Employers spent $19,276.

But when a company is paying more for insurance premiums for its workers, that leaves it with less money for giving out raises or reinvesting and expansion.

“It’s ultimately all of us who pay for [healthcare] either in the form of lower wages for people who have employer insurance or in the form of higher taxes to cover Medicare and Medicaid,” said Katherine Baicker, professor of health economics at the University of Chicago.

For the full story see:

Harriet Torry. “Nation’s Healthcare Tab Is Surging Amid Rising Wages, Hospital Fees.” The Wall Street Journal (Friday, Dec. 20, 2024): A3.

(Note: ellipses added. The first bracketed words were added by me; the second bracketed word was in the original.)

(Note: the online version of the story was updated December 18, 2024, and has the title “Why Are Americans Paying So Much More for Healthcare Than They Used To?” Where there is a slight difference in wording between the print and online versions, the passages I quote above follow the online version.)

The source for some of the data discussed in The New York Times article appears to have been:

“National Health Expenditures 2023 Highlights.” Centers for Medicare & Medicaid Services (CMS), Last modified on Dec. 18, 2024.

During the Covid Pandemic, “Public Health Officials Could Not Be Trusted to Tell the Whole Truth”

From the review quoted below, Rivers’s book is refreshingly open about the downsides of public health actions against epidemics. But in the end, I infer that Rivers still gives pride of place to public health actions in fighting epidemics. She wants public health actions to be reformed but believes that public health officials will be and should be the dominant actors during epidemics. I, to the contrary, believe that innovative medical entrepreneurs will be and should be the dominant actors. I believe that partly because medical entrepreneurship respects human liberty, while public health official commands do not respect human liberty, but also partly because medical entrepreneurship is more effective at ending epidemics.

(p. A15) As recently as 2019, confides Caitlin Rivers, an epidemiologist at Johns Hopkins, “I was confident that we knew how to navigate, if not control, a pandemic.” But within a year “that hubris was laid bare.” Covid-19 “overran us,” leaving in its wake a striking loss of confidence in public health.

“Crisis Averted” is Ms. Rivers’s ambitious and, given its charge, surprisingly successful attempt to reset our relationship with the field of public health. With a judicious blend of candor, hopefulness and pragmatism, she calls out its mistakes, reminds us of its historic accomplishments and emphasizes the need for the discipline to adjust its strategies if its full promise is to be realized.

. . .

. . . for every public-health triumph there are heartbreaking disappointments. In 2010, a lack of clean water and adequate sanitation allowed a cholera epidemic to rampage through Haiti after a catastrophic earthquake; worse, the disease, not endemic in the region, arrived through foreign aid workers. Human error was also responsible for the last recorded smallpox fatality, a medical photographer in the U.K. who died after the virus leaked from a sloppy lab on the floor below.

. . .

Animating much of Ms. Rivers’s narrative and analysis is the Covid-19 pandemic, a crisis that, as she laments, wasn’t averted.  . . .  She . . . describes early advice from public-health officials claiming that mask use was “not recommended” and “should be avoided” as “odd and brittle assertions that did not hold up to the slightest scrutiny” and left many with the impression that “public health officials could not be trusted to tell the whole truth.”

. . .

After years of relentless insistence that we “follow the science,” it’s refreshing to hear an expert illuminate all that remains unknown—from the vagaries of the common cold to the vexing challenge of coaxing healthy behavior change. Most epidemics of the past century, Ms. Rivers points out, “took forms that were slightly off-center from what epidemiologists expected”—the recent pandemic, for example, was caused not by an influenza virus, as anticipated, but rather by a coronavirus. Her advice: Expect a surprise.

For the full review see:

Shaywitz, David A. “Bookshelf; What the Doctors Ordered.” The Wall Street Journal (Wednesday, Oct. 2, 2024): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date October 1, 2024, and has the title “Bookshelf; ‘Crisis Averted’ Review: What the Doctors Ordered.”)

The book under review is:

Rivers, Caitlin. Crisis Averted: The Hidden Science of Fighting Outbreaks. New York: Viking, 2024.

Medicare “Advantage” Health Insurers (Especially UnitedHealth) Pressure Doctors to Recode Patients as Having Bogus, but Lucrative, Health Problems

The “advantage” in Medicare “Advantage” health insurance plans accrues to health insurance companies, not to patients or taxpayers. In an earlier entry I discussed an earlier Wall Street Journal article documenting how health insurers (especially UnitedHealth) sent nurses to patients’ homes for the purpose of harvesting diagnoses that would add to the health insurers’ payments. In an even earlier entry I discussed a Wall Street Journal article documenting how UnitedHealth has used vertical integration to game the system of Medicare “Advantage.”

(p. A1) Like most doctors, Nicholas Jones prefers to diagnose patients after examining them. When he worked for UnitedHealth Group, though, the company frequently prepared him a checklist of potential diagnoses before he ever laid eyes on them.

UnitedHealth only did that with the Eugene, Ore., family physician’s Medicare Advantage recipients, he said, and its software wouldn’t let him move on to his next patient until he weighed in on each diagnosis.

The diagnoses were often irrelevant or wrong, Jones said. UnitedHealth sometimes suggested a hormonal condition, secondary hyperaldosteronism, that was so obscure Jones had to turn to Google for help. “I needed to look it up,” he said.

The government’s Medicare Advantage system, which uses private insurers to provide health benefits to seniors and disabled people, pays the companies based on how sick patients are, to cover the higher costs of sicker patients. Medicare calculates sickness scores from information supplied by doctors and submitted by the insurers. In the case of UnitedHealth, many of those doctors work directly for UnitedHealth.

More diagnoses make for higher scores—and larger payments. A Wall Street Journal analysis found sickness scores increased when patients moved from traditional Medicare to Medicare Advantage, leading to billions of dollars in extra government payments to insurers.

Patients examined by doctors working for UnitedHealth, an industry pioneer in directly employing large numbers of physicians, had some of the biggest increases in sickness scores after moving (p. A8) from traditional Medicare to the company’s plans, according to the Journal’s analysis of Medicare data between 2019 and 2022.

Sickness scores for those UnitedHealth patients increased 55%, on average, in their first year in the plans, the analysis showed. That increase was roughly equivalent to every patient getting newly diagnosed with HIV, the virus that causes AIDS, and breast cancer, the analysis showed.

That far outpaced the 7% year-over-year rise in the sickness scores of patients who stayed in traditional Medicare, according to the analysis. Across Medicare Advantage plans run by all insurers, including UnitedHealth, scores for all newly enrolled patients rose by 30% in the first year.

. . .

In a series of articles this year [2024], the Journal has examined the practices of Medicare Advantage companies, including UnitedHealth, the largest. Among other things, the articles showed how diagnoses added by insurers increased payments from the government.

. . .

Jones, the Oregon doctor, said UnitedHealth didn’t suggest diagnoses for patients he treated outside Medicare Advantage, where it doesn’t pay.

Traditional Medicare patients treated by UnitedHealth doctors had much lower sickness scores, the Journal’s analysis showed.

A case of hyperaldosteronism—the obscure hormonal condition that sometimes appeared on Jones’s checklists—could trigger about $2,000 a year in Medicare Advantage payments during the period the Journal studied. The Journal’s analysis showed that doctors who didn’t work for UnitedHealth seldom diagnosed that condition, which involves elevated levels of a hormone linked to high blood pressure.

. . .

“The system is not primarily about taking care of the patient,” said Dr. Emilie Scott, who worked for a UnitedHealth-owned practice in California before leaving in 2016. “It’s, how do you get the money to flow?”

The Journal analysis is based on billions of Medicare records obtained under a research agreement with the federal government. The Journal also examined internal documents from medical practices owned by or under contract with UnitedHealth.

. . .

When Dr. Naysha Isom started working at a UnitedHealth medical group in the Las Vegas area in 2019, she said, she got two days of training on how to record diagnoses. At the training, a UnitedHealth employee suggested that Isom, who had practiced for more than a decade, should consider diagnoses she had never made before.

Isom said she was told that signs of bruising could be recorded as senile purpura, a condition that generated payments in Medicare Advantage but generally didn’t require treatment. Isom saw no point, since the finding didn’t change patients’ care: “OK, wear some sunscreen. Maybe stop bumping the wall.”

After she decided not to diagnose peripheral artery disease, a narrowing of blood vessels, based on a screening test she distrusted, she said, a supervisor pressed her to reconsider. UnitedHealth didn’t require her to make diagnoses, she said.

“You’re just encouraged to, because obviously, if you don’t, they come bothering you,” said Isom, who left UnitedHealth to start her own practice in 2022.

UnitedHealth’s doctors in the Journal’s analysis diagnosed the bruising condition, which triggered extra payments of about $1,900 a year at the time, 28 times more often with patients in UnitedHealth Medicare Advantage plans than those in traditional Medicare.

. . .

Jones, the former UnitedHealth doctor in Oregon, said the suggestions included diagnoses based on scant evidence, such as long-term insulin use for patients who had received the drug only once during a long-ago hospital stay.

. . .

The design of the system, he said, could lead to good-faith errors as doctors clicked through all the boxes. “The system is made to have these happy little accidents that end up resulting in a lot of money from taxpayers,” he said.

. . .

Andy Pasternak, an independent family doctor in Reno, Nev., has lower-than-average sickness scores across his practice, records show. He said he gets a per-patient bonus of $2 a month, or $2,256 annually, for the 94 Medicare Advantage patients covered by his contract with UnitedHealth.

Pasternak said UnitedHealth offered to send nurses to visit those patients to diagnose them more fully. The company would pay him $250 for each patient their nurses examined, he said.

“That’s more than I get paid for treating my own patients,” he said. He said the focus on diagnosing has soured him on Medicare Advantage, and made him grateful when patients younger than 65 come to his office.

One UnitedHealth document reviewed by the Journal projected Pasternak could receive as much as $23,250 a year in such payments. A UnitedHealth executive in his area told him in an email his practice also would benefit from any additional diagnoses made by the nurse.

Valerie O’Meara, a former UnitedHealth nurse practitioner, said she never provided treatment for the patients she saw in doctors’ offices in Washington state. “Your job is finding diagnoses, that was clear as a bell,” she said. “I was like, am I finding all these things that the doctors who are taking care of these people didn’t find?”

She said a Minnesota-based UnitedHealth manager urged her to make new diagnoses beyond what doctors had treated. Patients were often confused, she said, about why she, not their own doctor, was examining them. “They don’t tell the patient, the nurse needs to see you to make sure your high-scoring medical problems are checked off this year.”

Chris Henretta, a UnitedHealth Medicare Advantage plan member who lives in The Villages, a retirement community in central Florida, was suspicious when his primary-care doctor diagnosed him as morbidly obese during his annual exam in October.

He is a lifelong weightlifter, plays water volleyball five times a week and has an athletic build.

“I told her I didn’t think I was obese,” Henretta said. When she recorded morbid obesity anyway, he said, he began to “suspect my doctor may have a financial incentive to portray people as higher risk.”

The diagnosis can trigger payments of about $2,400 a year to Medicare Advantage insurers.

For the full story see:

Christopher Weaver, Anna Wilde Mathews and Tom McGinty. “UnitedHealth’s Army of Doctors Helped It Boost Medicare Payments.” The Wall Street Journal (Tuesday, Dec. 31, 2024): A1 & A8.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date December 29, 2024, and has the title “UnitedHealth’s Army of Doctors Helped It Collect Billions More From Medicare.” In the passages I quote above, I do not include any of the subheadings that appeared in both the online and print versions of the article.)

Price Controls on Drugs Reduce Drug Innovation

Price controls on drugs may reduce some short-term healthcare costs for consumers, but will also reduce the innovation that brings us more cures, less pain, and fewer side effects. If we want to both reduce costs for consumers and increase innovation, we should end government mandates for the Phase 3 clinical trials–the phase of clinical trials that make up most of the cost of gaining regulatory approval.

(p. A19) The Biden White House has proposed requiring Medicare to “negotiate” drug prices.

. . .

Unfortunately, the debate is being informed by erroneous Congressional Budget Office analysis. CBO says . . . the supply of new drugs will only be reduced by 5% from 2021 to 2039, a loss of only two drugs a year.

The CBO minimizes the harmful effects on innovation, but the entire supply chain that funds medical R&D relies on rate-of-return assessments driven by future earnings. An analysis I released this week finds 10 times the effect on R&D, a loss of up to some 340 drugs over the same period.

The White House also claims that price controls won’t hamstring innovation because they only govern top-selling drugs. But the occasional blockbuster funds the roughly 90% of pipeline drugs that never pass Food and Drug Administration review. CBO even acknowledges that only the top 7% of Medicare drugs drive U.S. profits. Targeting financially successful drugs could make large segments of the development portfolio unprofitable, even if such drugs aren’t affected by price controls.

For the full commentary see:

Tomas J. Philipson. “Biden’s Price Controls Will Make Good Health More Expensive.” The Wall Street Journal (Thursday, Sept. 16, 2021 [sic]): A19.

(Note: ellipses added.)

(Note: the online version of the commentary has the date September 15, 2021 [sic], and has the same title as the print version.)

The research brief co-authored by Philipson and mentioned above is:

Philipson, Tomas J., and Troy Durie. “The Evidence Base on the Impact of Price Controls on Medical Innovation.” Issue Brief. Becker Friedman Institute, University of Chicago, Sept. 14, 2021.

Supporting Philipson’s argument is a 2024 working paper showing that Medicare-mandated price cuts in medical equipment has resulted in less innovation in medical equipment:

Ji, Yunan, and Parker Rogers. “The Long-Run Impacts of Regulated Price Cuts: Evidence from Medicare.” NBER Working Paper #33083, Oct. 2024.

To End Drug Shortages Make Healthcare a Free Market

Drug shortages are sometimes blamed on the free market. A bum rap. In a free market when supply declines or demand increases, prices rise, and the increase in price incentivizes a greater quantity supplied, eventually ending a short-run period where quantity demanded at the going price exceeds quantity supplied at the going price (in other words, a shortage). But healthcare in America is far from a free market. Every aspect is highly regulated. Prices are negotiated, often by middlemen called (Pharmacy Benefit Managers, aka PBMs), entry is not free, and the demanders (patients) often do not know (or care) about the prices, since they are paid by a third party (insurers, employers, or the government). Perverse incentives abound.

(p. A26) There’s been a bombardment of bad news for drug supplies. The American Society of Health-System Pharmacists found this summer that nearly all of the members it surveyed were experiencing drug shortages, which generally affect half a million Americans. Cancer patients have scrambled as supplies of chemotherapy drugs dwindle. Other shortages include antibiotics for treatable diseases, such as the only drug recommended for use during pregnancy to prevent congenital syphilis (a disease that is 11 times more common today than a decade ago), and A.D.H.D. medications, without which people struggle to function in their day-to-day lives. The toll on Americans is heavy.

Over half of the shortages documented this summer by health consulting firm IQVIA had persisted for more than two years. But even though drug shortages affect millions of Americans, policymakers and industry leaders have provided little to no long-term relief for people in need.

Shortages have occurred regularly since at least the early 2000s, when national tracking began. Hundreds of drugs, in every major therapeutic category, have been unavailable for some period. The average drug shortage lasts about 1.5 years. Even when substitute medications are available, they may be suboptimal (for example, deaths by septic shock rose by 10 percent during a 2011 shortage of the first-line medication, norepinephrine) or have spillover effects (such as possibly increasing the risk of antimicrobial resistance). In addition to harming patients, shortages have cost health systems billions of dollars in increased labor and substitute medications.

. . .

Large hospital chains can readily monitor shortage risks and preemptively place large orders. This panic buying can wipe out inventory, and leave hospitals with fewer resources strapped since they may get notice of a drug shortage only when it’s too late. There is little penalty for over-ordering because unused drugs can often be returned.

. . .

Addressing the underlying fragility of our essential drug supply will take structural change and investments. While all industries must grapple with how to build resilient supply chains, the pharmaceutical industry is unique. The people who are most affected by supply chain vulnerabilities — patients — are also those with least say in the choice to buy from reliable manufacturers. When people buy cars, they may pay more based on company reputation, ratings by outside testers and reviews from other customers. In contrast, patients bear the harm of drug shortages, yet they cannot choose the manufacturers of their essential drugs nor evaluate their reliability.

For the full commentary see:

Emily Tucker. “We’re Stuck in a Constant Cycle of Drug Shortages.” The New York Times (Thursday, December 7, 2023 [sic]): A26.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 6, 2023 [sic], and has the title “America Is Having Yet Another Drug Shortage. Here’s Why It Keeps Happening.”)

F.D.A. Should Allow Physicians and Parents the Freedom to Give Preterm Infants Probiotics

Substantial observational evidence shows that the status of a person’s microbiome can have a large effect on the person’s health. We still have a lot to learn about which bacteria are helpful and the details of how they help. But patients must act under uncertainty, or in the case of the preterm infants discussed in the passages quoted below, physicians and parents must act under uncertainty. Given the current evidence and the uncertainty, the F.D.A. is arrogantly wrong to ban probiotics.

(p. A5) For years, hospitals around the world have tried to protect prematurely born babies from life-threatening gut disease by giving them probiotics. Then . . . [in Oct. 2023], American hospitals stopped.

The Food and Drug Administration had linked an infant’s recent death to one of the products. It warned doctors about using them in preterm infants without getting agency permission first, and pushed Abbott Laboratories and another major manufacturer, Infinant Health, to stop selling them.

. . .

Neonatologists in the U.S. and other developed countries have learned to help smaller and smaller babies stay alive. As they treat tinier babies, the medical challenges mount, including a swift-onset disease known as necrotizing enterocolitis, or NEC.

. . .

To help prevent NEC, nearly all neonatal units in Australia and New Zealand give probiotics, as do a majority in several European countries. About 40% in the U.S. did before the FDA’s actions, according to recent surveys and neonatologists’ estimates.

Nearly all of the products consist of live bacteria intended to help create a healthy community of microbes in the gut. Scientists don’t know exactly how they work, but suspect they prevent harmful bacteria from overwhelming the bowels.

. . .

Neonatal units across the U.S. halted use of the probiotics because popular versions were no longer available and the FDA warned doctors against using probiotics for preterm babies outside of clinical trials.

“I was stunned,” said Jennifer Canvasser, who started a NEC patient advocacy group after her infant son died 10 years ago, weakened by the disease. “To think about families having one potential less way to prevent this devastating disease is just concerning.”

Probiotics supporters say the FDA disregarded the evidence favoring probiotics for preterm babies, saying that they likely save hundreds of infants for every one probiotic-caused infection, which can be treated with antibiotics.

An analysis of more than 100 studies involving more than 25,000 premature infants, published . . . [in Oct. 2023] in the journal JAMA Pediatrics, found that probiotics containing multiple strains of bacteria were associated with reduced deaths and NEC.

For the full story see:

Liz Essley Whyte. “Discord Arises Over Treating Preemie Babies.” The Wall Street Journal (Saturday, Nov. 17, 2023 [sic]): A5.

(Note: ellipses, and bracketed dates, added.)

(Note: the online version of the story was updated Nov. 16, 2023 [sic], and has the title “Doctors, FDA Fight Over Giving Probiotics to Premature Babies.” The passages quoted above omit the subheadings that appear in the print, but not the online, version of the story.)

The analysis published in JAMA Pediatrics and mentioned above is:

Wang, Yuting, Ivan D. Florez, Rebecca L. Morgan, Farid Foroutan, Yaping Chang, Holly N. Crandon, Dena Zeraatkar, Malgorzata M. Bala, Randi Q. Mao, Brendan Tao, Shaneela Shahid, Xiaoqin Wang, Joseph Beyene, Martin Offringa, Philip M. Sherman, Enas El Gouhary, Gordon H. Guyatt, and Behnam Sadeghirad. “Probiotics, Prebiotics, Lactoferrin, and Combination Products for Prevention of Mortality and Morbidity in Preterm Infants: A Systematic Review and Network Meta-Analysis.” JAMA Pediatrics 177, no. 11 (2023): 1158-67.

For a useful discussion of how current medical protocols, especially the over-prescription of antibiotics, harm the microbiome, see chapter 3 of:

Makary, Marty. Blind Spots: When Medicine Gets It Wrong, and What It Means for Our Health. New York: Bloomsbury Publishing, 2024.