Consumer Power Report: The Growing Case for FDA Reform

The new term of the Supreme Court opens this week with a significant case on Medicaid – one that has split Democrats in Congress from the White House and raises key questions as to state powers when it comes to rate cutbacks. An excerpt from Sarah Kliff’s interview with an attorney on the case:

SK: One interesting thing about this case is that it’s split Democrats. Some Congressional Democrats have written an amicus brief in support of your case, while the Obama administration has supported California’s right to make the rate cut without challenge. Are you worried to go into the courtroom with the White House supporting the other side?

LB: We found that decision by the White House, besides very disheartening, also very curious. Health and Human Services hasn’t signed onto the solicitor general’s brief, which is unusual. It indicates to us that there’s some disagreement within the administration about what the outcome should be. We did do some research though, looking at previous cases that have been supported or opposed by the solicitor general, and frankly it doesn’t seem to matter. Although we’d obviously prefer to have them on our side, we’re not thinking it will affect the material outcome.

SK: What’s at stake here? What changes if the Supreme Court says that Medicaid providers don’t have a right to challenge rate cuts?

LB: If this case is decided adversely to our clients, it could have very significant implications for the Medicaid program and health reform. Medicaid is one of the largest budget items and, since it’s hard to cut benefits, it’s easier, politically, to cut provider rates. Fear of litigation is one of the only things holding states back from making rate cuts right now. Absent that, we think we’d see a lot more. Medicaid beneficiaries won’t be able to get access to services, hospitals could go out of business. I’m really fearful an adverse decision can cause a domino effect that could lead to a really compromised Medicaid program.

Reuters reports to expect this on October 7:

The Department of Health and Human Services has asked the influential Institute of Medicine, an independent agency in Washington, to recommend how HHS should determine the basic health benefits for millions of Americans who will qualify for coverage sold through insurance exchanges beginning in 2014.

IOM spokeswoman Christine Stencel on Thursday said the agency will release the report on October 7, just a week later than the self-imposed deadline of the end of September.

Stencel has previously told Reuters that IOM will not produce specific benefits standards for the exchanges. Instead, the group is working toward recommendations on criteria and methods that would allow HHS to determine and update the essential health benefits package.

The lack of specificity here, at this late a date, should concern the states considering exchanges.

Jeffrey H. Anderson outlines the possibilities. I believe these middle three are the likeliest:

2. It could decide not to strike down any part of the legislation, ruling that the individual mandate is not really a mandate but rather is a new tax (on those who don’t have insurance), which Congress was authorized to institute under its power “To lay and collect Taxes … to … provide for the … general Welfare.” The problem with this is that President Obama emphatically insisted on national television that the individual mandate “is absolutely not a tax increase.” Moreover, Obamacare’s text doesn’t refer to the mandate as a tax. As the 11th Circuit Court panel put it, “[T]he individual mandate … was not enacted pursuant to Congress’s tax power” and therefore cannot be sustained on those grounds.

3. It could affirm the lower court’s ruling, by holding that the individual mandate is unconstitutional and allowing the rest of the legislation to stand. The problem with this is that – as the Obama administration itself has argued – without the individual mandate, the legislation would become “cost prohibitive.” In fact, because of the legislation’s requirement that insurers cover those with preexisting conditions at the same premiums that healthier people pay, the White House says that “the only way to keep people from gaming the system and raising costs on everyone else is to ensure that everyone takes responsibility for their own health insurance” – and the way that the legislation achieves this is through the individual mandate.

In light of these White House comments, it seems somewhat farfetched to believe that a bill that overcame a filibuster with no votes to spare in the Senate, and which passed by only 7 votes in the House, would have passed either chamber with the individual mandate removed and everything else left in place.

4. The Supreme Court could declare the individual mandate unconstitutional and also void the law’s “guaranteed issue” and “community rating” provisions (provisions that, in tandem, would require insurers to cover all applicants without charging higher premiums to those with expensive preexisting conditions), while upholding the rest of the legislation. No court has yet taken this position, but it would seem to be a tenable one. In the drafting of the legislation, these mandates were inextricably linked. Without the individual mandate, the requirement that insurers cover everyone with expensive preexisting conditions – without charging them higher premiums – would simply lead to people waiting until they are already ill or injured before signing up for “insurance” to pay for their care.

Good news from Arkansas, where Democrat Gov. Beebe is pushing forward with approval for his Medicaid waiver, but is responding to political pressure on health exchanges.

Gov. Mike Beebe is unlikely to seek a $3.8 million grant to research how to establish a health insurance exchange for Arkansas because several top Republican lawmakers have told him they oppose the plan, the governor’s spokesman said Tuesday.

The decision is the latest setback in efforts to set up the exchange, which is required under the federal health care overhaul and which Beebe and state insurance officials have said they want to keep under state rather than federal control.

The top Republican in the House and five other lawmakers asked Beebe in a letter Tuesday to not apply for the planning grant. Friday is the deadline to apply, and Beebe has said he won’t seek the money without lawmaker support.

In the letter, House Minority Leader John Burris and the other GOP lawmakers said it’s ultimately up to Beebe to decide whether to seek the money. But they said the state should not seek the money at this point. Beebe is a Democrat, and his party controls both chambers of the state Legislature

Professor Karol Sikora, medical director of CancerPartnersUK, is one of the 37 authors of the Lancet Oncology Commission report published last week:

This week’s report from The Lancet Oncology Commission on the cost of cancer care in high-income countries, written by a series of experts, patient advocates and economists, provides a stark conclusion. Quite simply, no healthcare system can afford to pay for the huge increases involved in prolonging cancer patients’ lives for a few weeks. We are truly at a crossroads.

The fact that the populations of the Western world are ageing, together with our increasingly unhealthy lifestyles, is dramatically increasing the incidence of cancer. The cost of the new technology to deal with this could be staggering.

The last eight drugs approved this summer by the US Food and Drug Administration will cost an average of nearly £10,000 (S$ 20,191) a month per patient – and that’s not counting the cost of their administration or treating their side effects. This is a new level of expenditure for little overall gain: Between two and seven months’ life, depending on the drug.

Sixty-five per cent of all cancer drugs are sold in one country that is home to less than 5 per cent of the world’s population. Yet now even the US is baulking at the high cost of the new cancer drugs. Dendreon shares plummeted from US$40 (S$52) to US$10 this summer when Provenge, its vaccine for prostate cancer, simply wasn’t selling because of its high cost. Until we can get regulators, payers and providers of care together with those that make and sell the drugs, it’s going to be difficult to move on.

Perhaps the next step for New York City?

Starting Oct. 1, Danes will see a price increase in products that are high in saturated fats, which researchers at Denmark’s Institute of Food and Resource Economics have attributed to the cause of 4% of the country’s premature deaths.

Butter, oils, and high-fat dairy products will see the biggest price increases; products with more than 2.3% saturated fat will be taxed 16 kroner per kilogram ($2.90 USD) of saturated fat. Shoppers should be ready to pay up to 30% more for a pack of butter, 8% more for a bag of chips, and a liter of olive oil will cost 7.1% more than usual.

The results of this tax will no doubt be closely watched by Britain, as more than 20% of the British population is obese. According to a 2007 study by Oxford University’s Health Promotion Research Group, if this fat tax were instituted in the UK, with tax breaks given on fruits and vegetables, up to 3,200 lives could be saved.

Dr. Milton Wolf in the Washington Times:

Of course, while each of these three lies is damning in its own right, they barely scratch the surface of the Obamacare duplicity. And let me be clear: These are lies. There’s normally something generous about our human nature that seeks to avoid that word – lies – but we are in an existential crisis in America, and it demands blunt and precise language. We did not get here because of simple distortions or exaggerations or even misrepresentations. Obamacare is the product of statements known by their makers to be untrue and meant to deceive – lies.

Mr. Obama promised on at least eight occasions that he would open his health care hearings to the public. Invite the C-SPAN cameras in, he said, so Americans would know who’s on their side. C-SPAN Chief Executive Brian Lamb said the network certainly would have covered the meetings, but the president “never asked us.”

The Obamacare lies are mounting: You could keep your current insurance. You could keep your doctor. The plan would cost less than a trillion dollars. Medicare would be protected. There would be no health care rationing. No one earning less than $250,000 per year would see an increase in his taxes. Tax credits would alleviate the burdens placed on small businesses. The plan would create 4 million new jobs, 400,000 almost immediately. Americans would love Obamacare once they saw what was in it.

The crumbling of Obamacare is now so unmistakable that its supporters have become the dog that didn’t bark. It’s difficult to find anyone outside the administration who is still willing to defend it publicly.

I’d encourage you all to attend a Cato event on Wednesday in Washington, DC. Speakers include Katherine Baicker, Harvard School of Public Health; Robin Hanson, George Mason University; Michael F. Cannon, Cato Institute; Rachel Garfield, Kaiser Family Foundation. Julie Rovner of National Public Radio will moderate. A description:

The Oregon Health Insurance Experiment is the first study ever to measure the effects of health insurance by randomly assigning subjects to receive Medicaid coverage or no coverage. At this forum, lead investigator Katherine Baicker will present the Oregon Health Insurance Experiment’s first set of results and discuss further data that this revolutionary experiment will produce. The panelists will comment on the study’s results and what the Oregon Health Insurance Experiment means for medicine, Medicaid, and health care reform.

I hope you’ll join in online or in person.