MORE ON THE INSURERS WITH A SIDE-BAR ON BIG PHARMA

Here are some figures from the National Coalition on Health Care:

  •  Premiums for employer-based health insurance rose by 5.0 percent in 2008. In   2007, small employers saw their premiums, on average, increase 5.5 percent. Firms with less than 24 workers experienced an increase of 6.8 percent.
  • Workers are now paying $1,600 more in premiums annually for family coverage than they did in 1999.
  • Since 1999, employment-based health insurance premiums have increased 120 percent, compared to cumulative inflation of 44 percent and cumulative wage growth of 29 percent during the same period.

However, nonprofit doesn’t necessarily mean low cost. A piece by Louise in the Colorado Health Insurance Insider makes the point nicely.

Now, don’t misunderstand me—philosophically I’m a capitalist. I have no illusions that the collective wisdom of those that govern us is greater than the marketplace; nothing has made this clearer than present state of our economy. But profit and healthcare can be odd bedfellows. Our current insurance hierarchy is complex and inefficient and it’s as difficult to draw the line between greed and fair profit here as in other areas of the economy. However, the ramifications of abuse are greater when dealing with something as critical, necessary—and expensive—as our healthcare: spending in 2008 has been estimated as 17% of the GDP.

No discussion of the healthcare system could be complete without at least a mention of Big Pharma, the pharmaceutical industry. For purposes of discussion I’ll include under this heading the medical device manufacturers (pacemakers, implantable defibrillators, catheters, etc.). There’s no question that the high price of drugs and devices contributes mightily to the cost of health care. Once again, determining what fair profit is can be tricky. It takes many years of research and clinical trials, as well as many hundreds of millions of dollars, to get a drug or device to market, and there is the ever-present risk that they may fall out at the late stages. Also, most of these medications and devices will not reach the lucrative “blockbuster” status the maker hopes for. Furthermore, as many of the prior money-makers slip out of patent protection and become available as generics (as we’re seeing now), revenues drop further. It becomes more and more difficult for the pharmaceutical industry (perhaps more than the device manufacturers) to improve upon the current treatment armamentarium, and the studies undertaken have to be larger and more expensive to show a statistically significant benefit. If they do succeed, the patients may be unwilling or unable to shell out the extra cash for a real, but modest, potential benefit. High pharmaceutical costs can also be attributed to over-regulation, an archaic FDA drug approval process, and our dollars subsidizing other countries that cannot otherwise afford the treatments, or that have a single-payer system that can dicker down the price. On the bright side, the lavish offerings used to “bribe” doctors to pick an expensive therapy over a competitor’s product, or worse, a suitable effective generic, have declined dramatically over the course of my career. As we contemplate how much Big Pharma is a part of the solution or the problem of our health-care woes, we need to be mindful that we don’t regulate to the point of “killing the goose that laid the golden egg,” as research and innovation are the lifeblood of the battle against the real enemy, illness.

There’s a lot of controversy about how to go about fixing the insurance mess, but I think most of us can agree, like the overarching problem of healthcare in general, something needs to be done. As for the pharmaceutical industry, without a mechanism to assure that, internationally, those that can afford to contribute to the R&D of new therapies do so, I don’t see a simple solution. For the moment, a wait and see approach may be the most prudent as we untangle the rest of this mess. 

 

Next: The Patients

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