This article in the Post-Dispatch identifies a regulatory barrier to opening birth centers in Missouri:

Another challenge in Missouri is the state’s licensing requirements for birth centers, which Henman and others are trying to change[.] Birth centers are licensed as ambulatory surgical centers even though no surgeries take place. Many of the requirements are expensive and unnecessary, says nurse midwife Rachel Williston, 34, who wants to open a birth center in Independence, Mo.

Complying with all the regulations for ambulatory surgical centers is no simple task. The regulations can make the difference between a facility being profitable enough to operate and being forced to close. This was evident in 2007, when Missouri law was changed to impose the ambulatory surgical center regulations on abortion clinics, which challenged the law in court. They argued that imposing such onerous regulations was a ploy to shut them down.

It’s unfair to regulate birth centers the same way as surgery centers, when no one performs surgery in them. Women can legally give birth at home, and their houses need not meet all the code specifications of a surgery center. Births in birth centers should be regulated more like births in homes.

On Monday, the St. Louis Post-Dispatch ran this opinion piece discussing the amount of public health spending by state. The article points out that Missouri spent just $9.26 for each resident, which is the second-lowest amount of all the states, higher only than Nevada. The author is concerned because “public health is one of the most cost-effective investments any state can make.” To support this assertion, the piece cites a 2008 study which, “found that investing in public health and disease prevention can reduce rates of chronic illnesses such as cancer, [heart] disease and diabetes.” This study also estimated “that every $1 invested in those programs would return $5.60 in benefits over five years.”

What the article doesn’t mention is that the study it cites also concluded that an investment of $10 per person per year in “proven community-based programs” would give us the aforementioned rate of return. Furthermore, according to this study, “evidence shows that implementing these programs in communities reduces rates of type 2 diabetes and high blood pressure by 5 percent within 2 years; reduces heart disease, kidney disease, and stroke by 5 percent within 5 years; and reduces some forms of cancer, arthritis, and chronic obstructive pulmonary disease by 2.5 percent within 10 to 20 years.” Missouri spends almost $10 per person per year, the figure observed in the study, but still has poor health outcomes. This tells me that we are probably not spending our money in the most effective way.

There is further evidence of that in a comparison of four measures of public health in Missouri and Nevada, the one state that spends even less than we do in this area:

* Information on high blood pressure from CDC; all other information from statehealthfacts.org

So, even though we spend more than Nevada on public health, we still have higher numbers in all four of these categories. This is admittedly an overly simplistic analysis, but the point is that amount of state public health spending is obviously not the only factor that matters for health outcomes in Missouri. The programs themselves should be evaluated for effectiveness, to determine whether investment of additional resources in them is worthwhile.

The larger point here is that using state taxpayer funds to address public health problems might not be the best strategy, given the frequent ineffectiveness of state-run programs. Instead, we should end the tax benefit for employer-provided health insurance, which would allow individuals to have control over their health insurance. People would then have a direct financial incentive to become more sensitive to the effect that their lifestyle choices have on their premiums. As a result, a greater number of people would make healthier choices, in addition to the obvious incentive of health in and of itself.

There is an ironic tension between two health care bills currently pending in the Missouri Senate. One seeks to create an amendment that would increase health care freedom, while another would add to an already lengthy set of health insurance mandates. The latter bill, S.B. 618, would require state-regulated private health insurance companies — approximately 40 percent of the Missouri market — to cover expensive screenings and therapy for children with autism spectrum disorders. (The House version, H.B. 1311, recently passed.) Although well-intentioned, this mandate would necessarily raise the cost of premiums for Missourians, making it more difficult for individuals and small businesses to keep health insurance plans.

S.B. 618 would require insurance plans to cover up to $55,000 annually for autism diagnosis and treatment for children up to the age of 21. A mandate of any amount increases health insurance costs, and the bill’s substantial commitment would assuredly have a noticeable effect. Its proponents argue that it would increase the price of health care premiums by less than 1 percent, while insurers believe it could raise premiums up to 3 or 4 percent. Although the bill would exclude small businesses if it raised their premiums by more than 5 percent, any increase would necessarily price some marginal number of people and companies out of the insurance market, forcing them to cut coverage or reduce hiring.

Autism is a problem in Missouri, and it is not difficult to be swept up by the heart-wrenching stories of families with autistic children. But there are many disorders and diseases that afflict people — children and adults alike — and mandated coverage of all or even most of these problems would make insurance prohibitively expensive. These kinds of mandated coverage makes insurance more expensive especially for those with diseases that are not given state protection.

It’s important to note that some forms of autism aid already exist. Although not as comprehensive as an insurance mandate, there are publicly and privately funded resources for Missouri children with autism spectrum disorders, including Medicaid waivers for families who would not otherwise qualify for assistance, and a nonprofit private school for children with severe autism.

A large part of the argument in favor of the mandate lies in the unpredictability of health insurance when it is attached to employment — a problem only exacerbated by the current economic climate — and the difficulties involved in obtaining a plan that covers autism. Instead of government-imposed mandates about coverage, families should be free to choose an insurance plan that best fits their needs. Politicians cannot know the optimal equilibrium point between price, risk, and security for any type of insurance coverage, let alone for autism, because that equilibrium will differ for everyone.

The bill in question adds a much-needed amendment allowing Missourians to purchase out-of-state insurance that does not mandate autism coverage, although Missouri already has a mechanism that would help all families find affordable health insurance. Health savings accounts (HSAs) allow policyholders to become consumers, giving them the power to choose an appropriate coverage level. HSAs are portable, and therefore less dependent on job stability that may not always be available in an uncertain economic climate. Both employers and employees can contribute pretax funds to HSAs, which can then be used toward paying most basic health expenses. With an HSA and an accompanying high-deductible plan, consumers can budget their health care expenditures more effectively than bureaucratic cost-cutting is able to do.

State mandates raise health insurance costs across the board, and decrease people’s access to affordable coverage. In the long run, the most effective solution for families with autistic children — or any other disorder — is to open the insurance market to further competition, giving them a practical economic incentive to cater to such niche markets. Small businesses — at any point, but especially during a recession — are extremely cost-sensitive to changes in premiums like the one that would assuredly occur following a large mandate on autism treatment and diagnosis. Although this insurance mandate aims to help families with autistic children, it would simultaneously hurt another group of Missourians who would face significant cost increases, or even the potential loss of their own health insurance coverage.

The National Center for Health Statistics has released a report on out-of-hospital births. In 2006, 64.7 percent of such births occurred in homes. Another 28 percent took place in birthing centers.

The report includes a few maps that allow readers to compare states; one categorizes states according to percentage of home births in 2005 and 2006. Missouri’s percentage was above the national average, and ahead of all neighboring states’ percentages with the exception of Iowa. (Wisconsin and Oregon, two other states I’ve written about a lot, had higher percentages of home births than Missouri.)

The next map shows each state’s change in percentage of home births between 2003–2004 and 2005–2006. Missouri saw no significant change during this period. This is not surprising, considering that Missouri’s General Assembly didn’t pass a bill legalizing midwifery until 2007. I would expect to find an increase in Missouri’s percentage of home births after that bill’s midwifery provision finally became law in 2008.

Competition and choice are characteristics of a free and open marketplace. Some have suggested that a more open market for health care insurance could resolve a few issues in the present health care debate. That would help, because increased competition among health care insurance suppliers might reduce costs. This came to mind during the recent California health insurance shock. If you hadn’t noticed, many people were surprised when a leading California health care insurer proposed a 39-percent rise in the price of premiums for those individuals who buy their own insurance. It was noted that this price increase came at a time when the largest health care insurers had an average profit increase of 56 percent, even though the economy was down. As those insurers indicated, the profit had resulted from the prior year’s activities, while the proposal to raise premiums was related to an expected change in future costs.

Rather than paying this high premium, some purchasers may want to shop for something less expensive. Those insurance policy purchasers might want another company — perhaps one that reinvested some of its profits in a way that kept its premium prices lower. While trying to visualize how this might play out in Missouri, the question arose: Would people who find coverage unaffordable in this state buy less costly policies from another state, if available? Then, if some lower-priced policies were available, would some of the currently uninsured take advantage of that situation? If that were so, would that resolve some of the problems in our health care dilemma? Are we seeing a situation develop in which marketplace competition might benefit our community? To learn more about this, I thought it reasonable to see how this would express itself in Missouri.

My first concern was whether there were any significant barriers to such competition. This was examined by the O’Neill Institute at Georgetown University recently. As many know, states have a primary role in regulating their own health insurance industry. The federal McCarran-Ferguson Act spells out “the respective roles of the federal and state governments in regulating health insurance.” However, the O’Neill Institute’s answer, in rather general terms, is that this barrier can be bypassed. Although the existing act separates federal and state roles in regulating health insurance, the people at the O’Neill Institute believe that legislation could be designed around the business end of insurance, specifically relating this to interstate commerce. But the key point is that yes, it can be done.

Given that it can be done, is that what we want to do? What will happen if many people from Missouri buy less-expensive health insurance policies from a company headquartered across state lines called, say, Out-of-Missouri Co. (OOM)? One can imagine that if everyone purchasing OOM insurance stays healthy, more people would be insured but at a lower immediate cost. At first, that appears good. But what if my neighbor with hypertension and diabetes buys an OOM policy, too? If that happened, the managers at OOM would need to raise the premiums for everybody; that is because OOM Co. would be insuring more sick people. That could cause two results: 1) the people in OOM’s home state would have to pay a higher premium price, and 2) so would we. If the resulting price remains lower than any comparable Missouri price, we are better off; but we may have harmed our out-of-state neighbors by causing their prices to increase.

Perhaps we need to look at why the OOM policy was lower than the Missouri policy in the first place. There could be several reasons for this. Those that are most common are the following.

1. The people in the state where OOM is registered might be healthier than the people of Missouri. That could be true, but if OOM Co. were swamped with sick Missourians purchasing their policies, its costs would increase.
2. The insurance regulations in the state where OOM is registered might be different, and the insurance coverage being offered might not be the same as what is needed in Missouri. The regulations in the state where an insurance company is registered are ostensibly intended by that state to protect the residents from their most common problems. The distribution of disorders in Missouri may not be the same as in that other state, so the insurance may not satisfy Missouri’s regulatory requirements.
3. Health care costs vary geographically. As a result, insurance purchased in a state with less-expensive health care costs might not be sufficient in another state. As a result, the purchaser of OOM may have a greater out-of-pocket expense.

So, what would happen if we were to go ahead with this? It is expected that the first people that might take advantage of this are those who are currently uninsured. Those uninsured that are young and healthy would be rapidly accepted by the OOM insurer. Those that are less healthy might not be accepted by an OOM insurer, because of their preexisting disorders. A great many sick Missourians might be unable to buy this less expensive OOM insurance. That means that you and I could end up having to contribute to their care, and the result may be an additional expense to be borne by everyone in the state. But, in reality, this expense is not something new; we are already paying it now.

Interestingly, the Congressional Budget Office looked at this issue about five years ago. They found that if the benefits available from states with the lowest costs were in effect nationally, the price of individual health insurance policies for those able to purchase them might be reduced by an average of about 5 percent. So, it seems that Missouri’s young healthy uninsured would be able to purchase OOM health insurance, and each purchaser might save about 5 percent. But an unintended consequence could be an increase in health care costs for everyone else.

Well, that is one choice. As the health care debate continues, we will have to look at some of the others before deciding which option we want.

Two op-eds, attributed to different members of the Missouri Dental Association (MDA), appeared in the Columbia Missourian and the Examiner in response to my op-ed about dental therapists (which appeared in both the Columbia Missourian and the Examiner). Although these responses were textually the same, they have different credited authors: In the Missourian, the op-ed is attributed to Dr. Rob Coyle, DDS, and in the Examiner, the authors are  Matt Niewald, DDS, president of the MDA, and Scott Roberson, DDS, trustee of the MDA. One can only wonder why the same piece is attributed to different authors, but a reasonable conclusion may be that the MDA asked its members to submit a pre-written op-ed to these newspapers. The MDA’s purpose is not secret, given that the last line of both pieces reads:

We would encourage others, both inside and outside of the profession, to contact your legislators and ask them to support the MDA agenda. Working together, we are confident we can bring common sense solutions that will improve the oral and overall health of our state.

The MDA suggests other factors, like Medicaid reimbursements, that may be contributing to the problem of providing access to dental care for Missourians. These are valid points, but they do not provide an adequate reason for their offhand dismissal of the value of dental therapists. The MDA implies that dental therapists “would compromise the safety” of patients. I’ve addressed the issue of the quality of dental therapists in the comment section of previous posts, and within the op-ed itself. The studies of dental therapists, from New Zealand, Australia, the UK, and Alaska, have so far shown that they provide quality in patient outcomes that is comparable to that of professional dentists, and studies show that altering licensure rules to allow dental therapists to practice could improve access to care for children in the United States.

This opposition by the dental lobby despite the lack of evidence to support their position, evidenced in op-eds like these from the MDA, or in legislation to prevent teeth-whitening in kiosks, is an attempt to keep market share by using government power rather than by providing a better service at a better price. Artificially protecting a profession from competition — especially high-quality competition — does not help keep patients safer. Arbitrary rules that prevent qualified mid-level professionals from entering the market only hurt the people they are purporting to help: the patients.

The Missouri Chamber of Commerce conducted an interesting survey of business owners back in December about their thoughts on the proposals for health care reform. This article in the Springfield Business Journal details some of the responses to the survey questions, as well as some of the concerns shared by restaurant and hotel owners in particular. These industries typically have a lot of part-time workers, many of whom one hotel owner said would have to be laid off in the event of a mandate requiring that employers provide health care for their employees. If an 8-percent payroll tax were charged as a penalty to employers who did not provide insurance, 47 percent of the businesses surveyed would pay the fine and 51 percent said they would provide insurance. So barely half of these businesses would provide insurance, while the rest would be unnecessarily crippled with a higher tax burden and leave their employees without health insurance — not to mention the employees who would lose their jobs as a result. All this would follow from a benevolent attempt on the part of the government to help more people obtain health insurance.

An individual mandate would be similarly counterproductive. The Wall Street Journal reports on an analysis by the Heritage Foundation showing that “roughly 93 percent of uninsured households under age 35 who face a penalty for remaining uninsured would rather pay the penalty than buy health insurance.” As the article points out, paying this penalty would require money that would have otherwise been spent or saved, causing an unnecessary drain on both the economy and the individuals who are forced to pay this fine.

This is a perfect example of the unintended consequences that so often occur as a result of well-intentioned legislation. It seems like legislators are usually more focused on how their proposals sound, rather than on the actual results of those policies. Unfortunately, this never ends well; we all know the saying about the road that’s paved with good intentions.

Last year, the American Journal of Medicine included a disturbing story about bankruptcy in America. In that study of five states (California, Illinois, Pennsylvania, Tennessee, and Texas), it was found that medical expenses had become a causal factor in almost 50 percent of all personal bankruptcies. That investigation revealed that these financial catastrophes had been occurring for some years, but the proportion related to health care appeared to have grown over the same period of time as many of our other health care concerns. In fact, a logistic regression analysis of the data revealed that the odds "that bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001." That report became more disconcerting when it described the average person impoverished by medical debt. The typical individual was a 41-year-old with a job and some college education, who was working to support a family with young children. In addition, that research indicated that the strongest predictor of a working person developing a catastrophic combination of severe illness and bankruptcy was the loss of health insurance during the preceding two years. As we all know, situations like that are not uncommon in the current economic climate, because many existing jobs have had their benefits reduced.

Well, that’s sad, but my interest was in whether that had any special meaning for the people of Missouri. When I examined the issue, I found that it is difficult to perform a similar data analysis within this state. Nevertheless, for those interested in this subject, there are other links that can be used to learn about the local situation. At the Federal Reserve Bank of St. Louis, people have been concerned about local bankruptcy problems for many years. Interestingly, as far back as in 1998, research performed at the Federal Reserve Bank of St. Louis found that the medical expenses of the health care uninsured were a leading cause of bankruptcy in this region. More recently, such bankruptcy problems were re-examined and a relationship to medical expenses was found to continue to exist. Then, another study discovered an additional relevant factor: The average national personal bankruptcy filing rate in the United States in 2004 was 380 out of every 100,000 people. If one examines each individual state, Missouri wins again. In Missouri, in the year 2004, there were 700 personal bankruptcies for every 100,000 people. That was found to be the highest rate of personal bankruptcy in the United States that year.

So, what does this mean to you? Some may recall my October 2009 post. There, I showed that Missouri spends a larger portion of the state GDP per person for health care than most other states. Compared to the U.S. average, that is about $500 more per person in this state. At the same time, average life expectancy in Missouri is two years less than the U.S. average. That means we are spending more and getting less. Now, the personal bankruptcy data implies that some of those who are surviving this health care dilemma are being driven into poverty. As the original report showed, these are hardworking, educated people trying to support their families.

Previous reports from the Show-Me Institute revealed that certain types of insurance programs, like Health Savings Accounts, can be used to prevent such health care–related financial catastrophes. Because this has become a greater problem now than it was when those reports were written, one would expect the insurance market to respond to this need. Some of the brightest people work in the insurance industry, and they need to create a product that addresses this issue. An additional problem is that most of the people that need this type of insurance are not aware of their danger, so some public education is needed. Now that there is a bit of a breather in the rush to health care reform, perhaps there is time to look at this situation, and the other free-market ways that can be developed to help the people of Missouri.

State Rep. Ellen Brandom of Sikeston has proposed for the third time in as many years that welfare recipients be tested for illegal drug use, and the editorial board of the Post-Dispatch thinks this is such a good idea that it should be extended even further:

There’s a logic to this, of course. Many employers conduct drug screenings as a routine matter. And Ms. Brandom has noted that taxpayers object to subsidizing drug use. No doubt they do.

But if Ms. Brandom is intent on protecting taxpayers, why just go after poor folks? And why screen only for drugs?

Lawmakers, like TANF recipients, also feed at the public trough, and plenty look as though they don’t lead the healthiest lifestyles. Given their grueling schedules and the rich food that lobbyists feed them, it’s no wonder.

This can drive up the cost of public employee health insurance. So why not, as a matter of routine, assess senators’ and state representatives’ body mass index and screen them for blood cholesterol levels?

Those found not to be taking care of themselves shouldn’t be automatically punished. But they shouldn’t be a burden on taxpayers either. Those found to have LDL (“bad”) cholesterol of, say, 200 or more, should be given a second chance before the public subsidy for their health insurance is suspended. Maybe free oatmeal, too.

What’s more, barely a year goes by without a lawmaker being involved in an alcohol-related driving offense. If welfare recipients can be cut off from public benefits for substance abuse, what about top state officials?

Read the whole thing here.  What a world it would be if politicians were actually constrained by the rules they force on the rest of us.

Thanks to the Columbia Missourian today for publishing my op-ed about dental therapists and professional licensing laws in Missouri. It’s an issue we have debated here on the blog before.

The recent Massachusetts election confirmed the fact that the health care debate is far from over. The people in the one state where every citizen nominally has health care insurance have extended their influence to the health care of the nation. Those voters may not have been addressing that issue alone, but their actions will have some effect on us all. Interestingly, depending on one’s political perspective, anxiety had been expressed about every plan being brought forward, not the least of which was the concern about the potential effect of these proposals on constitutional liberties. That may no longer be a problem. Nevertheless, even if another alternative is developed, the evolution of the discussion has helped us all.

In our open free society, there is a benefit associated with the debate itself.  Some see an increased awareness of these health concerns as a potential stimulus for continued economic growth. As we know, the United States is in the midst of a profound demographic change. There has been an aging of the population characterized by an increased proportion of persons aged 65 and older. The Congressional Research Service’s demographic charts reveal a great upsurge in the number of older people in this country. By keeping that population healthy, we should all benefit from this preserved human capital. By improving the health and well-being of the generations to follow, additional benefits accrue. As others have indicated, “the accumulation of human capital—in the form of increased knowledge and skills and improved health and longevity” will continue to play an essential role in the economic growth of this country. My contention is that making people aware of these issues has offered some benefit to our society, regardless of the outcome of the debate.

If the investments in American health care that already exist work as expected, there should be a measurable improvement in the long-term functional status of many citizens, both young and old. Not only will the Medicare generation continue to receive benefits, but people that are newly aware of these issues will have a better chance of a healthy life extending into their old age. With many people continuing to be healthy, a small part of the future demand for health care may become reduced over time.

But there is another activity occurring, one discussed less often. In many cases, as people grow older, they continue to work and contribute to the GDP. This had been noted in the past, but few paid attention to it. However, even before people were aware of the developing “sea change” in American health care demographics, there was an increase in the proportion of the workforce older than age 65. Most of those workers are people who are not obligated to work because of reduced economic circumstances. Instead, these individuals have chosen to continue on their jobs, and contribute to society in other ways, because it gives more meaning to their lives.

Going forward, one expects still another “sea change” to develop as a result of the health care debate, but this would be in the doctor-patient relationship arena. What had been a paternalistic situation, with the physician in the role of an all-knowing father, is in the process of shifting. When most patients are older (and more experienced) than their primary care providers, physicians will need to explain their activities in greater detail. The Internet has created a standard of health care knowledge that is free and open to the public. As a result, at every patient interaction, physicians will have to show that their expertise is greater than what one can look up online. Otherwise, why would a patient want to participate? That is, the doctor encounter has to continue to be a “value added” experience that the patient can measure.

At present, from an economic perspective, the prices of health care are not informative, and consumers cannot use dollar-related data to compare physicians and/or hospitals. The existing problem of health care information asymmetry has kept patients at a disadvantage.  Reforming that situation may be an added benefit developing from within the current discussions. This seems to be included, to some degree, in every version of the health care bills. No matter on which side of the aisle one sits, everyone appears in favor of improving knowledge.

John Combest linked today to a very well-written story by Fox 4 in Kansas City. I commend them for asking tough question about the autism legislation that is almost certainly going to be passed and signed into law this year. The answer to the Fox question is that yes, autism mandates will cause premiums to rise for everyone. It may well be a very small increase, and the public good of covering autism may indeed be worth it, but let’s not pretend that this legislation won’t increase insurance costs for everyone.

The New York Times has a nice analysis of health care cost control using the insights of economist William Baumol, whose work reminds us to be wary of indulging in excessive optimism about cutting health care costs with new legislation. Essentially, Baumol has argued that technological improvements do not significantly reduce the demand for health care professionals. Given the inflation of wages and other commodities relevant to health care, Baumol’s work predicts that health care costs are unlikely to rise slower than inflation.

Here’s a good bit:

Dr. Baumol and a colleague, William G. Bowen, described the cost disease in a 1966 book on the economics of the performing arts. Their point was that some sectors of the economy are burdened by an inexorable rise in labor costs because they tend not to benefit from increased efficiency. As an example, they used a Mozart string quintet composed in 1787: 223 years later, it still requires five musicians and the same amount of time to play.

Despite all sorts of technological advances, health care, like the performing arts, suffers from the cost disease. So do other public services like education, police work and garbage collection. While some industries enjoy sharp increases in productivity (cars can be built faster than ever, retail inventory can be managed better), endeavors like health care are as labor-intensive as ever.

Here’s another:

At the same time, demand for health care never lets up. So while slow sales of video games or clothing can reduce prices, health care prices never ease. And while the robots that help build cars have replaced human beings on the assembly line, robots that help out in modern operating rooms are not as economically efficient.

“We do now have robots performing surgery, but the robot is under constant supervision of the surgeon during the process,” Dr. Baumol said. “You haven’t saved labor. You have done other good things, but it isn’t a way of cheapening the process.”

It’s important to note, then, that the most effective ways to cut cost inflation given Baumol’s insight is through market-based means: shock the supply or rein in demand in the market. The current health care proposals passed by the United States Senate and House of Representatives do the opposite. As I’ve written before, both proposals would, by expanding coverage or insurance, impose an economic wedge between the price consumers pay and the price producers receive. When this wedge occurs, over-consumption of resources is all but guaranteed. So, effectively, the health care bills will increase demand and thus increase costs beyond the baseline level of inflation.

Fortunately, there are other options. The Show-Me Institute has written before about certain health care reform proposals, like health savings accounts (HSAs), that restrain demand without exacerbating the harmful effects of an economic wedge. Unfortunately, the House bill and especially the Senate bill attack HSAs and make them significantly less attractive.

It would be nice if every person had health insurance that covered every possible medical expense. Unfortunately, that sort of insurance would cost an astronomical amount of money. That is a simple fact in a world with scarce resources. However, that fact does not deter politicians from trying to force everyone into insurance plans that cover an ever-wider array of treatments and thus cost ever-greater amounts of money. The most recent effort for expanded coverage focuses on treatments for autism. From the Political Fix:

About one in 100 children are diagnosed with some form of autism, studies have shown.

The bills’ sponsors, Sen. Scott Rupp, R-Wentzville, and Rep. Dwight Scharnhorst, R-St. Louis County, want to make sure families can get coverage for expensive therapy known as Applied Behavioral Analysis, which often involves 20 to 40 hours a week of one-on-one sessions with therapists.

As filed, the bills would require insurance policies to cover $72,000 a year in treatment for children and adults up to age 21.

There is absolutely nothing wrong with buying insurance to cover treatments for autism, but not everyone needs or wants this insurance, so they should not have to pay for it. For example, as I read the article, a family of four would be forced to continue paying for this insurance even if neither of their children showed any signs of autism. Not everyone requires the same kind of medical coverage, but by mandating that everyone buy similar high-end insurance policies, the only thing we ensure is higher prices for everyone.

Here’s some good news for consumers: Schnucks is dispensing free prenatal vitamins to women with prescriptions. The offer builds on Schnucks’ free antibiotics program, which brought positive publicity and new customers to Schnucks pharmacies.

This is an example of market forces lowering health care costs. Schnucks wants to draw people to its stores, and to do that it has to stand out from its competitors. Other pharmacies will probably follow suit — if not with the same promotions as Schnucks, then with discounts on other medical services or products.

In the policy debate over the cost of care in hospitals, much of the discussion deals with putting medicine under regulatory control. Instead, we should be asking: How can we make hospitals operate more like Schnucks?

It does not get much more exciting than this in government (and I honestly speak here with no hyperbole or sarcasm). The governor’s office has announced plans to eliminate numerous boards and commissions. This is great, for a number of reasons. It will save the state some money, but, more importantly, it will reduce the number of people who have some say — no matter how small — in regulating our lives. Gov. Jay Nixon and the legislative sponsors of this proposal, Sen. Delbert Scott and Reps. Steve Hobbs and J.C. Kuessner, deserve a great deal of credit for doing this. In a small but important way, the freedom of Missourians will take a step forward with this act.

Eliminating the Interior Design Council would mean five fewer people with the potential to direct how we can live and who can be an interior designer, and modifying the Head Injury Advisory Council would reduce by 10 the number of people who have some type of authority to demand that we wear helmets from the moment we wake up until the moment we go to bed. I admit, it may be a small step — but it is a worthy one.

I am so excited about these proposals that, after my son goes to bed tonight (my wife and other son are out of town visiting relatives), I am going to stay in the hot tub for longer than the recommended time period — and I no longer have to give a damn what the state’s Medical and Technical Advisory Committee has to say about it!

It appears that the Missouri state Supreme Court may be poised to strike down the $350,000 cap on damages for pain and suffering in medical malpractice lawsuits. I’m fairly certain that some here will disagree with me, but I for one hope the cap is eliminated. From a legal perspective — keeping in mind that I am not a lawyer — the law seems inherently unequal, as it carves out a special exception in tort law for doctors. Furthermore, if doctors have this special exemption, they have less economic incentive to be careful in their work.

On the other hand, not having a cap can encourage too many lawsuits and add to medical cost inflation. However, it is important to keep the costs of excessive lawsuits in perspective. The Congressional Budget Office estimates that the savings for instituting a typical set of tort reforms (including but not limited to a cap on damages) saves 0.5 percent on total medical spending. This is not completely insignificant, but those savings would be totally swamped by a single year’s medical inflation.

There is a way to reform the tort system without giving anyone special privileges. Outside of the United States, most of the developed world uses what is usually referred to as the “loser pays” system, whereby whoever loses the lawsuit must pay both sides’ legal expenses. This system would have the salutary effect of eliminating frivolous lawsuits and lowering total lawsuit expenses. A 2008 Manhattan Institute study found that when compared to countries with the loser pays system (e.g. Britain, Australia, Germany), the United States spends at least twice as much on tort litigation as a percentage of GDP. If Missouri instituted loser pays, we could reap the benefits of lower litigation costs without creating a privileged legal class.

H.B. 1293 would include dogs that perform therapeutic services under the legal definition of “service dog.” The current definition lists specific jobs that dogs can do — acting as a guide dog, a mobility dog, or a couple of others — and the change would grant dogs that perform other therapeutic services the same legal protection. Dogs that volunteers bring with them when they visit patients would still be excluded by the new definition.

This change would improve the law. Dogs are used to treat an increasing number of medical conditions, and confusion over which animals are really service dogs can lead to disputes. This was apparent this past year in Illinois, where an appeals court decided that a boy with autism may bring his dog to school. The school district had argued that the dog was just a pet and not a service dog.

We can’t expect legislators to keep up with every medical advance and to update the definition of “service dog” each time a dog is used in the treatment of another condition. It would be better to have a more general definition, like the one proposed in Missouri’s H.B. 1293.

Many people would like the relationships in health care to follow a straightforward economic pattern. They imagine that the doctor-patient relationship should look like an Intro to Economics price to quantity graph, with physicians as suppliers and patients as demanders. If that were the case, simply adding more doctors could shift the supply curve and create a new equilibrium. They think that would produce a lower price for health care and resolve many of America’s health care concerns. The real world, however, is not quite like that.

The first, and most obvious, problem is that the physician supply has not kept up. That is one of the many reasons why the United States is being inundated with foreign-trained physicians. As another post showed, the number of U.S. physicians is inadequate for our country’s needs now. The most reliable resources indicate that there may be a shortfall of 150,000 by the year 2025. If the economics of health care followed the simple model described above, then the supply curve would shift in the undesired direction. In that case the price of health care would become even greater than the dollar figures mentioned in the current political debate.

But there is more. The demand for health care has increased much more than expected. A look at the Congressional Research Service’s demographic charts shows that there are many more older people in this country. The United States is in the midst of a profound demographic change, and has had an overall aging of its population; this has been characterized by the increased proportion of persons aged 65 and older in our population. In general, as people get older, they use more health care. The result may be a shift of both the supply and demand curves. Using that old economics diagram, the resulting equilibrium will be higher and much more costly.

However, some argue that physicians are more than just the suppliers of health care. Those people feel that physicians may be a part of the problem themselves and some physicians may stimulate overuse of the heath care system. In the recent past, President Barack Obama spoke to the American Medical Association about this issue, and implied that physician behavior may be one of the factors driving up costs. He suggested that some doctors create a demand for services, and their intervention has contributed to the problems of the health care market. The difficulty with that argument is in separating issues that relate to demand from the physician role as the gatekeeper to health care system. Physicians are often the means that patients use to initiate access the health care system. However, the health care demand exists in and of itself; it is an independent factor. All that physicians do is show they care for patients by responding to the existing demand.

If physicians are not the cause of the problem, is physician supply a factor of concern? It is important to be aware that some believe an increase in physician supply does not translate into better care. In fact, as counter-intuitive as it may seem, some recent reports indicate that patients’ satisfaction with care, and patients’ perceptions of access, are no better in high physician supply regions than in low physician supply regions. With that understanding, many argue that more physicians may not result in better care for patients. People who follow that argument believe that what we need is improved efficiency, not more doctors, to produce a more cost-effective result. (See: Skinner et al, “The Elusive Connection Between Health Care Spending and Quality.” Health Affairs 28, w119–w123, 2009.)

Could it be that what we need is both more doctors and more efficiency? In some countries with different health care systems, demographic predictions of this variety have resulted in significant changes in hospital design and physician education. The demographic details for our country present a pretty strong argument showing that there will not be enough physicians for your care when you get older. At the same time, every one could use more efficiency. How will the combined House and Senate bills respond to these issues?

This Post-Dispatch article about the H1N1 vaccine mentions that St. Louis city sent most of its vaccine supply to hospitals and pharmacies. Some doses have been distributed for free in schools and existing public clinics, but the city didn’t open any new free vaccine clinics like the ones in other cities.

It was a smart move on the city’s part. Offering free vaccines is a recipe for shortages. Charging for the cost of administering the vaccine — as pharmacies do — prevents demand from skyrocketing and depleting the vaccine supply. And allowing people to buy the vaccine at their local retail pharmacies is better than forcing everyone to come to a few central clinics. People are used to going to those retailers for prescriptions or other vaccines, so they don’t have to go out of their way to find a clinic they’ve never been to before.

And, while it’s true that taxpayers paid for the H1N1 vaccine, as the people quoted in the article stated, that doesn’t mean that they should all receive it for free. Administering the vaccine would require the city to hire nurses. Taxpayers shouldn’t be made to incur yet another flu-related expense, especially considering that new H1N1 cases have been declining for weeks.

The Senate has finally passed a health care reform bill, after months of heated debate. The $871 billion plan, according to a CNN article by Alan Silverleib, must now be merged with a $1 trillion House bill passed in November, which should provide the president with a bill to sign before his 2010 State of the Union address.

The two bills share some commonalities. From the article:

Among other things, the House and Senate have agreed to subsidize insurance for a family of four making up to roughly $88,000 annually, or 400 percent of the federal poverty level.

They also have agreed to create health insurance exchanges designed to make it easier for small businesses, the self-employed and the unemployed to pool resources and purchase less expensive coverage. Both the House plan and the Senate bill would eventually limit total out-of-pocket expenses and prevent insurance companies from denying coverage for pre-existing conditions.

Insurers would also be barred from charging higher premiums based on a person’s gender or medical history. However, both bills allow insurance companies to charge higher premiums for older customers.

Medicaid would be significantly expanded under both proposals. The House bill would extend coverage to individuals earning up to 150 percent of the poverty level, or roughly $33,000 for a family of four. The Senate plan ensures coverage to those earning up to 133 percent of the poverty level, or just over $29,000 for a family of four.

One of the issues disagreed upon most strenuously by the two bodies of Congress is how to pay for the plan:

The House package is financed through a combination of a tax surcharge on wealthy Americans and new Medicare spending reductions.

Specifically, individuals with annual incomes over $500,000 — as well as families earning more than $1 million — would face a 5.4 percent income tax surcharge.

The Senate bill also cuts Medicare by roughly $500 billion. But instead of an income tax surcharge on the wealthy, it would impose a 40 percent tax on insurance companies that provide what are called “Cadillac” health plans valued at more than $8,500 for individuals and $23,000 for families.

The article points out that the president predicts the final bill will include a little of both proposals.

Another major divide is that the House bill includes a public option, but the Senate bill does not — instead, it includes nonprofit private co-ops overseen by the government.

Both bills would penalize those who do not purchase coverage.

The House bill would impose a fine of up to 2.5 percent of an individual’s income. The Senate plan would require individuals to purchase health insurance coverage or face a fine of up to $750 or 2 percent of his or her income, whichever is greater. Both versions include a hardship exemption for poorer Americans.

Businesses would also see an even greater penalty under both plans.

As for now, we can only sit back and wait as the House and Senate fight it out for a final bill of reform, and see whether it meets with any other roadblocks.

Supporters of increased government involvement in health care — such as Michael Moore, as seen in his film Sicko — are always keen to show private insurers denying legitimate claims for medical care. That does happen, but it’s less than half the story. As Mary Theroux at the Independent Institute points out, Medicare denies claims at a far higher rate than private insurers:

According to the American Medical Association’s National Health Insurer Report Card for 2008, the government’s health plan, Medicare, denied medical claims at nearly double the average for private insurers: Medicare denied 6.85% of claims. The highest private insurance denier was Aetna @ 6.8%, followed by Anthem Blue Cross @ 3.44, with an average denial rate of medical claims by private insurers of 3.88%

In its 2009 National Health Insurer Report Card, the AMA reports that Medicare denied only 4% of claims—a big improvement, but outpaced better still by the private insurers. The prior year’s high private denier, Aetna, reduced denials to 1.81%—an astounding 75% improvement—with similar declines by all other private insurers, to average only 2.79%.

Maybe there’s something to be said for the need to keep your customers satisfied in order to make that profit after all.

And not only is Medicare more likely to deny claims, it is also driving up health care costs for everyone. Our August policy study on health insurance reform shows that Medicare and other government health care expenditures drive a wedge between consumers and producers that fuels price inflation.

Government interference in health care markets only gives Missourians higher costs while leading to coverage of fewer claims. Effective health care reform must go in the direction of markets, but now that the Senate seems set to vote for cloture on the health care bill, that seems very unlikely in the near future.

[Author's Note: I incorrectly reported that the agreement with the ADA ended Alaska's program; it is, in fact, still thriving, and the second class graduated this past week. Thanks to Fiona Brosnan of the ANTHC for this correction. — Caitlin Hartsell]

Oral health is a huge public health issue in Missouri: The state is 47th in the nation for the percentage of the population that visited a dentist last year. The St. Louis Post-Dispatch recently ran an article highlighting the lack of dentists in rural Missouri and its effect upon dental health.

Alaska had a similar dental problem in the tribal areas, which had the worst rates of oral health in the country. Alaskan dental therapists — trained to do most basic dental work, except for oral surgery — became a much-needed solution to the problem. The New York Times ran a story last year about that program:

After two years of training in a program unique to Alaska, Ms. Johnson performs basic dental work like drilling and filling cavities. Some dentists who specialize in public health, noting that 100 million Americans cannot afford adequate dental care, say such training programs should be offered nationwide. But professional dental groups disagree, saying that only dentists, with four years of postcollegiate education, should do work like Ms. Johnson’s.

The American Dental Association (ADA) sued the Alaskan Native Tribal Health Consortium (ANTHC), and they ultimately reached an agreement that essentially ended the program. The ADA argued that dental therapists cannot adequately provide health care. Some groups have argued that there are too many dentists already; this site features a quote from a dentist in Missouri who argues that a dentist is at most an hour from all rural areas.

But, if dentists are so accessible, why are Missouri’s oral health outcomes so low? Cost and access are both issues; even if a person can get to a dentist, they may deem dental services to be too expensive when money is tight. Dental therapists, because they need only two years of training rather than four post-college, are able to provide comparable care at a more affordable rate. Anyone who needs more than basic drilling and cleaning can then be referred to a professional dentist.

Dental therapists have been successful in England, Canada, and Australia at providing quality dental care. Dental therapists in Australia are proving their worth beyond just basic oral health care. A recent study found that 95 percent of restorations done by dental therapists were successful, and patients were satisfied.

Dental therapists provide more than just quality, affordable health care. They also provide jobs, especially in depressed economies in rural areas that have trouble attracting professional dentists on a permanent basis. Unemployment in Missouri, while lower than the national average, is still higher than 9 percent. A change in the law would benefit both those newly employed therapists and their patients, who would have significantly better access to dental care.

The health care reform debate has focused primarily on health insurance. The majority of people who have health insurance, though, still do not have dental coverage. The best way to improve the dental health of Missourians is to lower the cost in order to improve access. Dental therapists provide an economical way to combat tooth decay, and plans to implement training programs in the United States have already been suggested. The only obstacle to their introduction in Missouri — and to subsequent improvement in the oral health of Missourians — is the regulatory barrier of professional licensing.

Among the elements of the health bill being considered by Congress is a requirement that every adult would either have to purchase a health insurance policy or face punitive fines to be collected by the Internal Revenue Service. There has been widespread debate in legal circles about whether the courts would uphold such a requirement, but lawmakers in several states are trying to do what they can to insulate their citizens from such a requirement. In Missouri, state Sen. Jane Cunningham has already persuaded half of her colleagues to cosponsor Senate Joint Resolution 25, an amendment to the state Constitution that would recognize the citizens’ right to decide for themselves whether they will participate in any health care system.

Under this amendment, the government would be denied the authority to prevent citizens from offering or accepting direct payment for health care services, and it would not be permitted to substantially limit the purchase or sale of health insurance in private health care systems. In addition to recognizing that this is a sort of common-sense freedom that ought to be enshrined in the Constitution, the proponents of SJR 25 are aware that state constitutions are permitted to afford liberties above and beyond those secured under the U.S. Constitution, and that there is a possibility the courts might find that even a federal statute cannot violate those additional rights.

This proposed amendment has sparked the interest of some in the media, including an article from the St. Louis Beacon (authored by William Freivogel, director of the School of Journalism at Southern Illinois University–Carbondale) with a headline suggesting that, if passed, SJR 25 would itself violate the U.S. Constitution. I quickly posted a rejoinder in the comment section of that article, but I felt it would be worthwhile to restate in this forum the points I made in those comments.

There are four major constitutional issues raised by the potential federal health insurance mandate and Sen. Cunningham’s proposed amendment: 1) Does the proposed law fit within the powers that the Constitution gives to Congress? 2) Does the proposed law infringe upon powers reserved to the states by the Tenth Amendment? 3) Does the requirement to buy health insurance unconstitutionally infringe upon the individual liberties secured to American citizens under the First, Fifth, and Ninth Amendments? And, 4) Does the Supremacy Clause allow for the enforcement of a federal statute even if that statute conflicts with individual rights protected under a state constitution? I’ll address these points in order.

As we all remember from high school, congressional authority is limited to those powers explicitly granted by the Constitution. In this case, the question would be whether the Constitution gives Congress the authority to punish citizens for refusing to purchase health insurance.

Those backing the bill suggest that this authority is part of part of Congress’ power “to regulate commerce … among the several states[.]“ It is true that courts have generally interpreted this power very broadly, resulting in the decision that a farmer named Filburn was bound by agricultural regulations even though he was not taking his grain to market, as well as the decision that Angel Raich was subject to federal drug laws even though her medical marijuana was homegrown and neither bought nor sold.

But courts have also recognized limits to congressional authority under the Commerce Clause. In U.S. v. Lopez, the Supreme Court held that the Commerce Clause did not permit Congress to create a federal law banning possession of firearms in a school zone. In U.S. v. Morrison, the court struck down a law that addressed the subject of gender-based violent crime. The primary reason that the court struck down the laws in Lopez and Morrison was that the subjects Congress sought to regulate lacked a clear impact on commerce among the states.

While much of the health insurance industry is handled within the bounds of individual states (it is very unusual to be able to purchase insurance from a company in a state other than the one in which you are domiciled), I believe that courts will be inclined to find that health insurance as a whole is an issue with a sufficient connection to interstate commerce to permit congressional regulation. But, if Congress passes a bill mandating that individuals must either buy health insurance or face financial sanctions, courts will have to answer a very specific question: Does the power to regulate interstate commerce give Congress the authority to penalize citizens who do not wish to engage in commerce? As Prof. Randy Barnett pointed out at a recent Heritage Foundation debate, the Supreme Court has never faced such a question, so we cannot be certain how it will be answered. I tend to agree with Barnett that the Court’s response will likely hinge on the solicitor general’s ability to explain which aspects of citizens’ lives (if any) would remain beyond the reach of congressional regulation if the Court permitted these mandates to be enforced.

One of the law professors cited by Freivogel argued that even without relying on the Commerce Clause, authority for the health insurance mandate could be found in Congress’ power “to lay and collect taxes … [to] provide for the … general welfare of the United States[.]” I disagree. While this provision might permit the creation of a tax-based public health insurance system like Medicare that all workers pay into, this is not what is anticipated in the insurance mandate under consideration, which is neither tax-based nor public. Nor would the alleged “tax” be collected from all workers. Furthermore, even if the fees for failing to purchase health insurance were classified as a tax, Congress is specifically denied the authority to impose capitation taxes “unless in proportion to the census,” a requirement that this proposal does not seem to meet.

Assuming the courts were to determine that Congress does have the general authority to impose a health insurance mandate, the next question would be whether the issue should be reserved to the states under the Tenth Amendment. While Congress has for decades been active on the subject of health care, this does not necessarily imply that Congress may remove state governments’ ability to decide whether their citizens should be punished for failing to purchase health insurance. In fact, this is an issue that several states have previously dealt with, in which at least one state (Massachusetts) has adopted such a mandate and a number of other states have considered — yet refrained from — doing the same. Federal courts have previously been very willing to permit congressional interference even in areas that were traditionally the sole province of the states, but considering the current ideological composition of the Supreme Court, it is possible (although, admittedly, unlikely) that a majority might take this opportunity to redefine (or restore) the balance of power between the federal government and the states.

Most of the arguments I’ve heard so far regarding the proposed health insurance mandate have neglected to address whether it might violate the First, Fifth, or Ninth Amendments, but I think this is an oversight. The Supreme Court has previously recognized that the Constitution protects citizens’ rights to associate with others of their choosing, to enter into contracts, to make their own decisions regarding health care, and, of course, their right to privacy. A violation of any one of these rights could be sufficient to invalidate the health insurance mandate.

While some people may not carry health insurance because it is unaffordable, many choose not to purchase health insurance. Some people’s religions may not permit the use of modern medicine, while others may not believe it to be effective. Still others are simply confident enough in their propensity for health that they are willing to risk the costs of illness or injury in order to direct their money to concerns that they believe to be more pressing. And there are some who, recognizing that most people pay far more to insurance companies than they are ever likely to need for their own treatment costs, would prefer to self-insure by creating their own health fund. For each of these people, a congressional directive to purchase a health insurance policy would mean giving up a huge amount of money — as well as a significant amount of privacy — committing themselves to a contract for goods and services that they do not want, and in some cases may be prohibited from using.

There is a principle in American law that says the government may not punish someone for exercising a constitutional right, and neither may it offer a benefit on condition of the citizen’s willingness to refrain from exercising a constitutional right. In the case of an individual health insurance mandate, the government would be telling its citizens that if they choose not to associate with an insurance company by entering into a contract under which they will be required to pay large sums of money while also disclosing private information about their health, they will be subject to very large fines. I think that this is clearly an infringement of some, if not all, of the constitutional rights listed above.

Unfortunately, establishing an infringement of rights does not end the analysis. In fact, the Supreme Court has long permitted infringement of these kinds of liberty, as long as the government could advance what the court considered to be a sufficiently important interest in doing so. In the case of the individual health insurance mandate, the goal advanced by the government would be to bring about slightly lower insurance premiums and, thus, to increase the number of people with access to health care. This is just a hunch, but I suspect that courts will not find this interest sufficiently compelling to justify forcing citizens to purchase coverage that they do not want and may have no intention of using, particularly when doing so necessarily requires an invasion of their privacy.

My final point is that if the courts find that the U.S. Constitution does not afford citizens protection from being forced to participate in a health care system, the courts will have to decide whether the Supremacy Clause permits a federal statute to be applied in such a way that it violates an individual freedom recognized by a state constitution. As I pointed out in my first comment, it is very possible — perhaps even likely — that the courts will decide that these state constitutional amendments do not bind the federal government. It is important to note, however, that this sort of holding would not strike these provisions down as “unconstitutional.” Rather, it would simply prevent their application against the federal government — perhaps foiling the hopes of the state constitutions’ drafters, but certainly not preventing the effectiveness of the provision against state governments and their subdivisions.

Before I get into the meat of this post, I should introduce myself because I am the new guy around here. My name is John Payne, and I am the Show-Me Institute’s newest research assistant. I graduated from Washington University in 2005 with a B.A. in history and then moved just down the road to attend Webster University for my teacher certification. I taught social studies for a year at East Carter County High School before I decided it was not for me, and left to pursue a career in writing, which brings us right up to the present.

My first Show-Me Daily post, appropriately enough, deals with my hometown, Poplar Bluff, and its never-ending quest to banish that devil methamphetamine. From Poplar Bluff’s Daily American Republic:

A request by police chief Danny Whiteley to adopt an ordinance requiring the sale of products containing pseudoephedrine by prescription only was moved by the Poplar Bluff City Council to its Dec. 21 voting session.

Whiteley told council members Monday night the proposed ordinance is based on one enacted July 6 in Washington, Mo.

“This will give our city another tool to fight the ongoing battle against methamphetamine in Poplar Bluff and Butler County. We are all aware of the destructive nature it has on society, families and our children,” Whiteley said. “Adopting this ordinance would be a significant step in thwarting the individuals who manufacture methamphetamine in our area.”

Back in October, my co-blogger Chaya Kristen Chopra pointed out that a similar ban in Union, Mo., would force people with nasal problems to seek out expensive prescriptions for what is for most people a very common problem. I would add that given the expense — both in time and money — of a doctor’s visit, most people would simply be inclined to drive to a neighboring town to purchase pseudoephedrine. Obviously, this will create a huge inconvenience for anyone suffering from a routine cold.

But, more to the point, the ban will not succeed in its goal of reducing methamphetamine use. If someone wants to cook meth badly enough, they will also drive to the next town (and the next, and the next) to purchase enough pseudoephedrine to cook their batch. But suppose the law were extended to cover all of Missouri, or even the country. Would that stop people from getting meth? It seems unlikely. There are no coca or poppy fields in this country, yet the supplies of cocaine and heroin never seem to disappear. The more likely scenario would be for production to get pushed into Mexico, where methamphetamine could be mass produced. In fact, that is what has already happened, to a large degree.

Where there is demand, there will be a supply. Poplar Bluff’s efforts to control methamphetamine are Sisyphean, and have been ever since I can remember. The police department constantly claims victory is around the corner, but they seem no closer to eradicating it than when I was in high school and people did lines in the back of shop class. All this law will succeed in doing is making one of the most common and effective forms of health care available, pesudoephedrine, vastly more expensive for honest citizens.

Prescription drugs: They come in little white bottles. They take the shape of tablets, gels, or liquids. And they can’t talk.

That last fact usually goes without saying. No one would expect medications to speak, right? Actually, proposed regulations seem to anticipate just that. If drug companies couldn’t advertise in the first three years after a drug’s approval, doctors and patients wouldn’t find out about them unless they somehow promoted themselves.

It’s hard to imagine a situation in which doctors don’t know about medical advances and patients don’t benefit from the latest drugs. But that’s because drug companies do a fantastic job of getting the word out. Prohibit companies from mentioning new drugs, and fewer people will know about them.

Somehow, amidst the politically charged health care discussions, it seems that some have overlooked one practical thing: If the health care insurance rolls increase, as some expect, will there be enough doctors in the future? The number of graduates from U.S. medical schools has been constant at about 16,000 per year in the recent past. But our country grew by 50 million people from 1980 to 2000, and the number of new doctors has fallen as a percentage of the population. Just a year ago, the American Association of Medical Colleges (AAMC) estimated that if there are no changes in the American demographic distribution, there will be a shortfall of more than 150,000 physicians by the year 2025. The number of new students enrolled in medical schools reached a new record of 18,036 this year (up only 1.6 percent from last year). But there will not be enough. In fact, the AAMC indicates that an increase in enrollment by more than 30 percent will not make up for the growing demand. If that is an expected demand, shouldn’t there be some indication of a supply-side response?

If one thinks about the AAMC report, it seems that there may be an even greater problem than the organization has estimated. That is because few medical students are choosing primary care specialties. The growth of the aging baby boomer population means there will be an even greater shortfall. In some states, people are concerned about these issues, but there seems to be little discussion in Missouri.

In Wisconsin, it was found that they were short 374 primary care physicians this year, and by 2030, there will be a 14-percent shortfall. In Massachusetts, the state’s health care experiment resulted in 440,000 new people with health care insurance, and their problems are going to be even greater given that about 52 percent of their medical residents in training are planning to move out of state after graduation. In Connecticut, just like in many other states, there is an aging physician population among those involved in “family practice,” and doctors are finding it difficult to recruit young physicians.

Both the House and Senate bills proposed to reform the nation’s health care system speak about the need to increase the numbers of primary health care practitioners. However, if one performs a comparison, a resolution to this issue does not appear to be addressed in a direct manner in either version. The bills under discussion now seem aimed at increasing incentives to providers, but not increasing provider numbers. It takes years to train competent physicians. If these bills (or some combination of them) pass into law, and if provider incentives attract more Americans to want to become physicians, this country will still continue to have an inadequate physician supply for many years. This lag period will harm us all.

In the past some have thought that physicians induce a service demand. How that figures into our current problem was discussed elsewhere recently. But physician-induced demand does not matter when there are not enough physicians. If things continue as they are now, someday you will be old and sick and unable to find a competent physician.

Christine Harbin recently wrote an interesting post about the new mammography guidelines issued by the U.S. Preventive Services Task Force. This is a hot topic in the public health field at the moment, and we have talked about it in a number of my graduate classes. I agree with Chrissy’s ultimate reasoning: When something is paid for with tax dollars, the taxpayers should be getting the best bang for their buck. However, I disagree with the USPSTF’s new recommendations, because they did not use sound reasoning in formulating them. Their recommendations have potentially negative ramifications for future coverage when one considers them in light of the pending federal health care legislation.

The USPSTF based its guidelines on the results of a poorly conducted study. Some of the data is predicated on decades old studies, which were conducted when mammography was very different than it is today. The American Cancer Society looked at the all the data and additional studies, and came to the opposite conclusion. Out of all breast cancer deaths, 17 percent occurred in women who were diagnosed from ages 40 to 49, and deaths of similar women would substantially increase if women were not screened until their 50s.

Additionally, the USPSTF study did not take into account more recent studies or changes in health technology, like digital mammography, which is more effective for finding tumors in dense breast tissue — something more common in women aged 40 to 50, the very group that USPSTF recommended against receiving annual mammography. The group’s recommendation may have made sense a few decades ago, when some of the studies originally came out, but it does not make sense in light of today’s constantly improving technology.

Potential anxiety over false positives and overtreatment supposedly justify the USPSTF’s recommendation. Yes, overtreatment might be a problem, but most women (if they are going to get a mammogram) are trying to detect a potentially deadly disease. Personally, I would prefer to get a false positive than to miss a fatal true positive. When I turn 40, I want to be able to get a mammogram. I want to have the choice either to select an insurance company that covers it, or to be able to pay for the test out of pocket.

This may not be an option very soon. At the end of her post, Chrissy wrote:

Paranthetically, I want to point out that the guidelines issued by the U.S. Preventive Services Task Force are normative and non-binding. The panel isn’t banning anything. A person can get a mammogram or a PSA test at any age if she or he has both the desire and the ability to pay for them, either via insurance or out of pocket.

This is true — but not entirely true. The recently proposed federal health reform legislation specified that insurance companies and Medicare will cover what USPSTF recommends. Even now, certain insurance companies and Medicare base their compensation decisions in part on the USPSTF guidelines. This is a real problem. It is illegal to accept Medicare money outside of the Medicare system (if a doctor takes any Medicare patients), so it could conceivably become illegal for non-recommended breast exams. This may not have been USPSTF’s intention, but unintended consequences always need to be considered.

The USPSTF’s recommendtion is a great preview of what it would be like if the National Health Institute of Clinical Excellence (NICE) or a governmental group were making health decisions for the United States. The USPSTF’s study was poorly conducted — but it will still have repercussions for insurance coverage if it or any government entity chooses what constitutes a proper private insurance plan.

I completely agree with Chrissy that when taxpayer funds are involved, cost-effectiveness needs to be considered. But, when health is involved, most individuals would like to make the decision — and pay for it themselves — than to let a government organization like USPSTF base life-and-death decisions on questionable science.

Last month, the U.S. Preventive Services Task Force revised its guideline on mammograms, advising that women should wait until age 50 to get one. Last year, the same organization made a similar recommendation for prostate cancer screening in men — namely, that men 75 years and older should not get screened.

A recent article in the Wall Street Journal explains the group’s reasoning:

The task force said the new guidelines strike a better balance between the benefits of early cancer detection and the unnecessary anxiety and extra costs associated with false positives, which sometimes result from the tests.

The task force is doing the responsible thing, in my opinion. When we spend taxpayer dollars on keeping people alive, we should perform cost-benefit analyses like we would for any other transaction. If the amount that the United States would spend on nationwide testing is greater than the societal benefit that such testing brings, then it shouldn’t provide the funding. Medical services like prostate cancer screening and mammograms have more societal cost than societal benefit. The tests result in false positives, unnecessary anxiety, and overtreatment. According to an analysis published in the Journal of the National Cancer Institute, between 1986 and 2005, widespread prostate cancer screening resulted in 1.3 million additional diagnoses, but only 56,000 deaths were prevented.

This reminds me of an episode of This American Life that I heard in October, “More is Less,” that explored why costs are rising in the American health care system. In “Act Two. Every CAT Scan has Nine Lives,” it proposes that patients are responsible for rising costs because they demand more tests than is socially optimal. When the government gets involved, doctors can effectively forget about the idea of consulting with their patients in accordance to their individual needs and to make decisions. (The Show-Me Institute study by Arduin, Laffer & Moore Econometrics, “The Prognosis for National Health Insurance: A Missouri Perspective,” communicated this same concept: Patients will over-consume health care services when they are removed from the transaction — i.e., the health care “wedge.”)

Taxpayers should want the United States to perform these cost-benefit analyses; otherwise, their money is spent thoughtlessly and irresponsibly. The United States spends literally billions of tax dollars on end-of-life care for non-productive octogenarians, during which time they do little besides collect additional Social Security checks. Researchers at the Dartmouth Institute for Health Policy and Clinical Practice discovered that total Medicare spending during the last two years of life ranges from an average of $53,432 per patient at the Mayo Clinic in Rochester, Minn., to $93,842 at U.C.L.A. Medical Center. Approximately 27 percent of Medicare’s annual $327 billion budget is spent on patients in their final year of life.

That’s $88.29 billion! That’s 0.6 percent of GDP! That’s 19.4 percent of the budget deficit!

The United States would see a greater return on investment if it gave that money back to taxpayers, or spent it on alternative health care services, such as buying prenatal vitamins for low-income populations.

Paranthetically, I want to point out that the guidelines issued by the U.S. Preventive Services Task Force are normative and non-binding. The panel isn’t banning anything. A person can get a mammogram or a PSA test at any age if she or he has both the desire and the ability to pay for them, either via insurance or out of pocket.

On Sunday, one of my favorite economists, Greg Mankiw, used basic economic concepts to describe how the government reimbursement system distorts the health care market:

If a government policy increases the demand for a service, the price of that service tends to rise. If the government prevents prices from rising, shortages develop. The quantity provided is then determined by supply and not demand. In the presence of such excess demand, the result could be a two-tier market structure.

Mankiw’s point is that, by failing to reimburse providers for the full cost of providing services, the government is creating an artificial shortage. Some health care providers will stop seeing Medicare and Medicaid patients because they lose money on the services that they provide to them. The Mayo Clinic is already doing this. Unless the government starts to reimburse fully for the services performed, more providers will follow Mayo’s example.

Mankiw continues. Here, he describes the aforementioned two tiers of the market:

Consumers who can somehow pay more than the government mandated price will be able to purchase the service, while those paying the controlled price may be unable to find a willing supplier.

In other words, patients who rely on government reimbursements (i.e., Medicare and Medicaid patients) will have difficulty accessing services, but those who pay out of pocket will not.

I have seen this happen in my professional experience. Before I started working at the Show-Me Institute, I worked as an analyst in the business strategy department at a major health care system. In our expansion, we deliberately avoided populations with high proportions of Medicare and Medicaid patients. Instead, we targeted populations that were concentrated with fee-for-service patients, because they would pay for their services in full.

Parenthetically, this government reimbursement system raises health care prices. Providers charge more to fee-for-service patients then they would in a non-distorted market. In order to stay in business, they have to make up for those patients who cannot afford to pay more than the government mandated price. It’s just like how retail stores increase their prices in order to compensate for losses due to shoplifting.

I like Mankiw’s post because it illustrates how, contrary to popular opinion, health care does follow free-market mechanisms. Health care is subject to the same laws of supply and of demand as any other market. When the government intervenes, it creates a price floor or a price ceiling, and a shortage or a surplus.