Weekly Newsletter: November 12, 2008

Medicaid Bailout Once Again on Congressional Agenda

This Thursday, the House Energy and Commerce Committee will hold a Subcommittee hearing on various ways to “stimulate” the economy during the current downturn. Witnesses are expected to focus on both additional federal spending, in the form of an enhanced federal Medicaid match and higher funding for the National Institutes of Health, as ways to promote economic growth.

Some conservatives may be skeptical of the effectiveness of both approaches. An enhanced federal Medicaid match would merely substitute federal dollars for state spending, and provide a perverse disincentive for states not to undertake structural Medicaid reforms. Higher NIH funding would similarly lack any short-term “stimulative” effect, as long lead times to evaluate and conduct research trials would likely preclude any impact on economic growth for years. With some experts predicting the federal deficit this fiscal year could top $1 trillion, conservatives may question whether and why Congressional Democrats are attempting to enact all manner of increased federal spending under the guise of economic “stimulus.”

The RSC has prepared a new one-pager articulating 10 reasons why conservatives may oppose a Medicaid bailout for states; the document can be found here.

British U-Turn Illustrates Problems with Comparative Effectiveness

Last Tuesday, the British Department of Health announced a reversal of a ban on “top-up” payments within the National Health Service (NHS). Previously patients who wished to use their own money to purchase drugs not deemed cost-effective by the NHS needed to forfeit their right to basic NHS care. The Government’s reversal will allow patients purchasing their own therapies to maintain their right to NHS care under certain conditions. In addition, the report proposed to raise the National Institute on Clinical Effectiveness’ (NICE) cost-effectiveness threshold for certain drug therapies, potentially allowing British patients access to some cancer drugs which the NHS had previously refused to pay.

Conservatives may view both these developments as illustrative of the premise that comparative effectiveness research may not yield the potential savings its adherents claim. Practical political concerns, sparked by an outcry from the British public over rationed health care, prompted the Government’s reversal of measures designed to save NHS funds. Given that efforts to tie Medicare reimbursement and coverage decisions are likely to prompt the same response from the American public as it did in Britain, some conservatives may argue that market-based reforms to Medicare, rather than government-imposed rationing, would have a more beneficial and long-lasting effect at slowing the growth of health care costs.

The RSC has previously issued a Policy Brief analyzing comparative effectiveness research in greater detail; the document can be found here.