Mike Kueber's Blog

January 25, 2013

Crying wolf, but not crying uncle yet

President Obama’s inaugural address has been widely acknowledged as a full-throated defense of liberalism, and nary a pip has been made in the mainstream press questioning the ethics of someone who runs one way and then attempts to govern another way.  Remember how Mitt Romney was castigated in the media for running to the right in the Republican primaries and then attempting to shift to the center for the presidential election?  Is that as bad as running for president as a moderate and now promising to govern as a liberal?

Columnist Paul Krugman of the NY Times certainly is not concerned about Obama’s leftward tilt.  In his column today, Krugman gushingly praised Obama’s inaugural address for (a) its support of gay rights and big government and (b) most importantly, its rejection of deficit spending as a problem.

Krugman has been one of the strongest advocates for a Keynesian solution to America’s economic doldrums – i.e., a huge government stimulus.  He has been consistent in arguing that the stimulus of 2008 was too little too late, and relentless in arguing for more deficit spending.  By contrast, conservatives respond that America’s stagnant economy is a result of the tax & spend government and are loathe to consider any additional deficit spending. 

Like most liberals today, Krugman is brimming with hubris and feels safe to declare victory over the deficit hawks, or what he calls deficit scolds.  According to Krugman, the scolds in America have lost their clout because of four reasons:

  1. They cried wolf too many times.  That’s what they say about all bubbles until they eventually burst.
  2. Deficit and public spending are declining as a share of GDP.  That is not surprising since the emergency spending has tapered off and the revenues have naturally increased as America came out of its recession.  But the deficit and public spending remain at levels that are relatively high.   
  3. A policy of fiscal austerity during a recession has proven to be bad policy.  Conservatives are not talking about immediate fiscal austerity; rather, they want a glide path to a balanced budget.
  4. Deficit scolds were exploiting the economic crisis to advance their political agenda – i.e., a smaller government.  Talk about the kettle calling the pot black.  Liberal Rahm Emmanuel famously admitted that Obama took advantage of the economic crisis to advance the liberal political agenda – i.e., bigger government.

I am currently reading a book by conservative economist John B. Taylor, “First Principles,” and in the book Taylor agrees with Krugman’s position that deficits and debts are not the most important economic issues confronting America.  Instead, he suggests that a robust economic future requires – (a) predictable policy framework, (b) rule of law, (c) strong incentives, (d) reliance on markets, and (e) clearly limited role of government.

I’m going to entertain the possibility that Krugman and Taylor (and Dick Cheney) are right about deficits not mattering, economically speaking.  That doesn’t, however, address the moral issue of borrowing money to support the level of government that we want and then bequeathing that debt to our children.  Yes, it is sometimes dangerous to compare how you conduct yourself to how you expect government to conduct itself, but until someone explains to me otherwise, I’m going to think the right thing is to leave our kids a surplus, not Chinese debt.

April 27, 2011

Comparative-effectiveness research and healthcare rationing

A few days ago I blogged about the Independent Payment Advisory Board (IPAB), which was created by ObamaCare to reduce the rate of growth in the cost of Medicare.  Although IPAP is intended to recommend changes to Medicare reimbursement rates and is specifically prohibited from making any recommendation to ration health care, Republicans and some Democrats are actively attempting to terminate the Board because they believe that draconian cuts to reimbursement rates would be equivalent to rationing. 

Rationing is currently a dirty word in Washington.  Any program that arguably leads to healthcare rationing is at risk.  Although Republicans are loathe to admit it, RyanCare is a variation of rationing because its Medicare vouchers will not be adequate to buy today’s full-coverage Medicare.  We can fully expect partisan Democrats to demagogue this issue as much as Republicans do.  Let’s hope this bipartisan demagoguery fails to damage the invaluable comparative-effectiveness research (CER) contained in ObamaCare.

CER has been defined as the generation and synthesis of evidence that compares the benefits and harms of alternative methods to prevent, diagnose, or treat a clinical condition or to improve the delivery of care. CER attempts to measure the relative effectiveness of treatment, whereas standard research focuses on efficacy (whether the treatment works or not). 

An expert in the field of CER who has studied geographic variation in healthcare that patients in the U.S. receive – a phenomenon called practice-pattern variation – has concluded that if unwarranted variation were eliminated, the quality of care would increase and healthcare savings up to 30% would be possible.

Another study has revealed that patients in the highest-spending regions of the country receive 60 percent more health services than those in the lowest-spending regions, yet this additional care is not associated with improved outcomes.

Council for Comparative-Effectiveness Research

President Obama is a big supporter of CER, and he took advantage of the American Recovery and Reinvestment Act of 2009 (the Stimulus Act) to set aside $1.1 billion for CER and to create a Council for CER to coordinate the research across the federal government.  In the development of the law, there was disagreement over whether CER could be used to limit (rationing?) healthcare options, and ultimately, the law provided that CER should only be used to increase the quality of treatment, not to limit options.  That doesn’t make any sense – why should government pay for treatment that is relatively ineffective? 

Because of the explicit prohibition on rationing and the fast-moving nature of the Stimulus Act, the $1.1 billion for CER stayed under the radar.  That changed, however, when President Obama made further changes to CER under the Patient Protection and Affordable Care Act of 2010 (so-called ObamaCare).  When Sarah Palin and her cohorts demagogued ObamaCare for rationing and death panels, they never identified the provisions in the law that prompted this concern.  Subsequent commentators, however, have focused on the Patient-Centered Outcomes Research Institute (PCORI), which replaced the Council for Comparative Effectiveness Research.

Patient-Centered Outcomes Research Institute (PCORI)

Section 6301 of ObamaCare provides, “The Secretary may [.....] use evidence and findings from research conducted [.....] by the Patient-Centered Outcomes Research Institute.”  According to Republican senator Kyl, “That means the government, not patients and doctors, has the power to make health care decisions that affect you. A bureaucrat decides if your health care is an effective use of government resources.”

ObamaCare also says the following about comparative-effectiveness research:

  • Defines comparative clinical effectiveness research as “research evaluating and comparing health outcomes and the clinical effectiveness, risks, and benefits of 2 or more medical treatments, services, and items.”
  • Establishes that the purpose of the Institute is “to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient subpopulations, and the dissemination of research findings with respect to the relative health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and items.”
  • Provides that the Institute “shall identify national priorities for research, taking into account factors of disease incidence, prevalence, and burden in the United States (with emphasis on chronic conditions), gaps in evidence in terms of clinical outcomes, practice variations and health disparities in terms of delivery and outcomes of care, the potential for new evidence to improve patient health, well-being, and the quality of care, the effect on national expenditures associated with a health care treatment, strategy, or health conditions, as well as patient needs, outcomes, and preferences, the relevance to patients and clinicians in making informed health decisions, and priorities in the National Strategy for quality care established under section 399H of the Public Health Service Act that are consistent with this section.”
  • Instructs that the Office of Communication and Knowledge Transfer, “in consultation with the National Institutes of Health, shall broadly disseminate the research findings that are published by the Patient Centered Outcomes Research Institute … and other government-funded research relevant to comparative clinical effectiveness research…. The Office shall provide for the dissemination of the Institute’s research findings and government-funded research relevant to comparative clinical effectiveness research to physicians, health care providers, patients, vendors of health information technology focused on clinical decision support, appropriate professional associations, and Federal and private health plans….   Shall not be construed as mandates, guidelines, or recommendations for payment, coverage, or treatment.”

Section 1182 of the Act explicitly limits the Secretary’s use of comparative-effectiveness research:

  • “The Secretary may only use evidence and findings from research conducted under section 1181 to make a determination regarding coverage under title XVIII if such use is through an iterative and transparent process which includes public comment and considers the effect on subpopulations.”  (This provision was quoted above out of context by the Republican Senator Kyl.)
  • Nothing in section 1181 shall be construed as (1) superceding or modifying the coverage of items or services under title XVIII that the Secretary determines are reasonable and necessary under section 1862(l)(1); or (2) authorizing the Secretary to deny coverage of items or services under such title solely on the basis of comparative clinical effectiveness research.”
  • The Secretary shall not use evidence or findings from comparative clinical effectiveness research conducted under section 1181 in determining coverage, reimbursement, or incentive programs under title XVIII in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill.”
  • “Paragraph (1) shall not be construed as preventing the Secretary from using evidence or findings from such comparative clinical effectiveness research in determining coverage, reimbursement, or incentive programs under title XVIII based upon a comparison of the difference in the effectiveness of alternative treatments in extending an individual’s life due to the individual’s age, disability, or terminal illness.”
  • The Secretary shall not use evidence or findings from comparative clinical effectiveness research conducted under section 1181 in determining coverage, reimbursement, or incentive programs under title XVIII in a manner that precludes, or with the intent to discourage, an individual from choosing a health care treatment based on how the individual values the tradeoff between extending the length of their life and the risk of disability.

Thus, the language appears to give the Secretary authority to rely on research from the Patient- Centered Outcomes Research Institute to assist in making coverage decisions.  But the Institute’s research focuses on the relative effectiveness of various treatment options, not on rationing coverage based on a cost-benefit analysis.  Thus, the 85-year-old guy appears able to get his knee replaced. 

Deficit hawks have complained that the Council for CER in the Stimulus Act had greater promise for slowing the growth of healthcare spending and that its replacement PCORI is currently precluded from examining the most important component of CER – i.e., cost-effectiveness.

Cost-effectiveness

Cost-effectiveness analysis considers the comparative effectiveness and costs of different treatments. The goal is to provide evidence of which treatments provide the most health benefit per dollar of expenditure. Deficit hawks argue that the expanded use of cost-effectiveness analysis is desirable and inevitable to limit growth in U.S. medical costs.  Incorporating costs into the analysis of comparative effectiveness can help focus resources on treatments and interventions that provide greater value for the money. But conducting and using formal cost-effectiveness analysis in treatment and insurance coverage decisions is highly controversial. Cost-effectiveness analysis raises the prospect of formal rationing of medical care because it costs too much.

The concept of cost-effectiveness is central in the economics of healthcare.  Although cost-effectiveness for Medicare is currently hugely controversial, it is already being applied by the Veterans Administration and, thought the states, in Medicaid.   Big-government types believe that cost assessments and judgments of benefits in relation to costs should be left to patients and physicians, but deficit hawks like me believe that a centralized government system for comparing cost-effectiveness is an essential part of CER.  American government has limited resources, and it needs to decide how much to spend on healthcare and how to most effectively spend it.

April 25, 2011

Hawks

Washington Post blogger Greg Sargent posted an interesting entry today about “deficit hawks.”  According to Sargent, the term has been unfairly appropriated by the Republican Right, even though the Right is often more interested in drying up all streams of government revenue than it is in eliminating the deficit. 

This deficit-hawking started with Ronald Reagan in the late 70s, when he argued for lowering taxes, balancing the budget, and rebuilding America’s defenses.  When pressed to prioritize these conflicting values, Reagan said there was no conflict.  This prompted a moderate Republican opponent (Bush-41) to coin the term “voodoo economics.”

I think blogger Sargent makes a good point.  If you claim to be a deficit hawk, that should mean that reducing or eliminating the deficit is so important to you that you are willing to sacrifice other values – such as your opposition to raising taxes – in order to address the deficit problem.  If you aren’t willing to raise taxes to reduce the deficit, then you are more accurately described as a believer in smaller government or an adversary of big government.  Paul Ryan is a believer in smaller government, not a deficit hawk.  By contrast, the Gang of Six senators are deficit hawks.

Sometimes I think the anti-war liberals are still resentful of being labeled doves during the Vietnam War, as opposed to the pro-war conservatives being labeled hawks.  Most alpha Americans think doves are a little squishy.  NY Times columnist Maureen Dowd has tried for years to get back at the hawks by name-calling those who didn’t serve in Vietnam – she particularly enjoys calling VP Dick Cheney a chickenhawk.  (Although that term is considered an epithet, the NY Times is apparently OK with its usage by columnists.)  I wonder, however, if Dowd has taken this labeling to its logical conclusion – i.e., under his classification, Bill Clinton and Barack Obama are chickendoves.  Don’t think they’d like that appellation.

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