Antiquated Kidney Care System Shows Single Payer’s Poor Care

Earlier this month, President Trump signed another executive order on health care, this one related to the treatment of patients with kidney disease. The administration estimates the measures will ultimately save billions of taxpayer dollars, and up to 28,000 lives per year.

Critics highlighted that Trump’s order relies upon authorities in Obamacare to reform the kidney care system, even as his administration argues that federal courts should strike down the entire law. But these critics omitted another, even greater irony: At a time the left wants to create a single-payer health care system, the deplorable condition of kidney care in this country—with high death rates, and patients unnecessarily suffering because they continue to receive outdated and inefficient treatments—illustrates perfectly all the flaws of government-run health care.

Health Care ‘Innovation,’ Circa 1973

  • Only 12 percent of American patients undergo dialysis at home, compared to 80 percent in Hong Kong. Even Guatemala has a 56 percent in-home dialysis rate.
  • A total of $114 billion in federal spending, just to treat this one condition.
  • Half of the patients who undergo dialysis die within five years.
  • We’re currently using “Decades-old models of care,” as described by one kidney care administrator: “The last 30 years as a country all we’ve done is wait for kidneys to fail and we put people on dialysis.”

As Health and Human Services Secretary Alex Azar, whose father received a transplanted kidney five years ago, noted in a speech in March: “One of the key reasons for our failing policies is that kidney care in particular has some of the worst incentives in American health care.”

Why does kidney care have some of the worst incentives in a health care system plagued with all sorts of perverse disincentives? Even Vox stumbled across the truth in an article on the issue: “Medicare has covered all end-stage kidney disease treatment since 1973.”

Because Medicare provides full coverage for most kidney care patients, providers have very little incentive to innovate. The two largest dialysis providers—DaVita and Fresenius—get paid more for providing care in clinics rather than at home. As a result, American patients (as opposed to patients in other countries) must endure the hardship of taking hours out of their day several times per week to go to dialysis clinics, rather than receiving the treatment in the comfort of their home while they sleep.

But because dialysis providers have little qualms charging the federal government beaucoup bucks for substandard care, and because the federal government does not adapt nearly as quickly to new care models as the private sector, kidney patients—and taxpayers—have suffered. It’s but another example of how government-run health care inflicts its greatest harms on the most vulnerable patients.

Health Care Run by Bureaucrats

The Trump administration’s executive order envisions new delivery models for kidney care proposed by the Center for Medicare and Medicaid Innovation (CMMI). As noted above, some pointed out that Obamacare created CMMI, meaning that if federal courts strike down all of the law, the authority to implement these changes would disappear. The critics ignore one key fact: Congress enacted Obamacare into law nearly a decade ago—yet neither Congress nor CMMI took action on kidney care issues until this point.

The fact that it took a self-proclaimed “innovation” center nearly a decade to propose reforms to kidney care reinforces the inability to change within the entire federal health care bureaucracy. Just before Obamacare’s enactment, Sen. Max Baucus (D-MT), then-chair of the Senate Finance Committee, called officials within the Centers for Medicare and Medicaid Services “hidebound, not very creative, a crank-turning bunch of folks.”

The lack of progress on kidney care for so many years reinforces the accuracy of Baucus’ assessment. Yet the left wants to empower these same “hidebound” bureaucrats with authority not just over Medicare, but all Americans’ health care treatments.

Note to American patients: If you want the best health care money could buy as of 1973—the year when Medicare began coverage of end-stage renal disease—then you’ll love single-payer health care. If, on the other hand, you prefer access to modern, 21st-century medicine, then you might want to stick with another type of health care system—one run by doctors and patients rather than government bureaucrats.

This post was originally published at The Federalist.

Medicare’s Corporate Welfare

On Friday, the Washington Post published a lengthy front-page expose regarding the billions of dollars Medicare spent on anti-anemia drugs that studies eventually determined had “wildly overstated” benefits and “potentially lethal side effects, such as cancer and strokes.”  The story reads like a case study of the influence of the healthcare-industrial complex in putting its own interests ahead of patients:

Unlike medications that a patient picks up at the store, drugs administered by a physician, as these were, can yield a profit for doctors if there is a “spread” — a difference between the price they pay for the drug and the price they charge patients.

In this case, drugmakers worked diligently to make sure that doctors had an incentive to give large doses — that the spread was large.  They offered discounts to practices that dispensed the drug in big volumes.  They overfilled vials, adding as much as 25 percent extra, allowing doctors to further widen profit margins.  Most critical, however, was the company’s lobbying pressure, under which Congress and Medicare bureaucrats forged a system in which doctors and hospitals would be reimbursed more for the drug than they were paying for it.

The markup that doctors, clinics and hospitals received on the drugs given to Medicare patients reached as high as 30 percent, according to the Medicare Payment Advisory Commission, a group that advises Congress.

In other words, high-priced lobbyists, drugmakers, and physicians gamed the political system in order to perpetuate their gravy train of fat profits at taxpayers’ expense.  The story continues:

The industry’s success at beating back attacks by the Medicare bureaucrats to rein in costs would be repeated again and again.  It wasn’t just the drugmakers who were advocating for the drugs, either.  On Capitol Hill, the nation’s dialysis clinics, which were receiving as much as 25 percent of their revenue from using the drugs, were sometimes a key ally of the drugmakers.

One of the nation’s largest dialysis chains, in fact, in 2004 offered bonuses to its chief medical officer if he blocked efforts to reform the payment system.  According to a financial filing, Charles J. McAllister, chief medical officer of DaVita, the dialysis company, was to receive a $200,000 bonus if the rules for the drugs’ use being considered by regulators were dropped or delayed.  He was to receive an additional $100,000 if the then-new legislation, known as the Medicare Modernization Act, didn’t cut into the company’s revenue.  The Medicare proposal was “deeply flawed,” DaVita spokesman Skip Thurman said in a recent statement, because it limited dosing levels “without regard to the patient.”

At times, the companies would even enlist the patients to lobby on their behalf.  For example, in what may have been the drugmakers’ largest lobbying push, the companies sought to undo a Medicare proposal in May 2007 to restrict the use of the drugs in cancer patients.  The company spent millions trying to turn back this effort, including developing a Web site, Protectcancerpatients.org, that solicited testimonials from patients and instructed them on how to contact officials.  Johnson & Johnson set up a similar one called Voiceforcancerpatients.com.

Amgen lobbying expenditures and political efforts jumped that year.  The company ranked as the largest contributor to the campaign of House Speaker Nancy Pelosi (D-Calif.), which got $42,050.

Eventually, research proving the anti-anemia drugs produced serious side effects was enough to force regulators to limit the use of the drugs; Congress eventually stepped in to modify Medicare payment rules in a way that eliminated hefty price markups.

But the real scandal here involves far more than anti-anemia drugs.  It’s about the system that allowed this fiasco to happen for years – a system which Obamacare did very little to change.  Friday’s story was entirely predictable – Harvard’s Regina Herzlinger predicted it in a work five years ago, in fact.  And Herzlinger and others have identified the real culprit: Third party payment empowers bureaucrats, not patients.  In Medicare’s case, it gives federal officials at CMS, Members of Congress – and the high-priced lobbyists that try to influence both – a disproportionate impact on the health care decisions of millions of seniors.

Obamacare does nothing to change this government-centric culture; all it does is set up yet another board of bureaucrats to oversee the same centralized health system.  In the wake of Friday’s news story, liberals argued that the law’s new board of bureaucrats will succeed in wringing these kinds of abuses out of Medicare.  It’s a predictable response from the Left – government created the problem, so more government will “fix” it.  But any system fundamentally controlled by government is almost by definition subject to the political and lobbying pressures that created the scandal profiled by the Post.  The real solution is to empower patients, not bureaucrats.

President Obama continues to make clear that he wants no part of a solution that empowers patients.  So the story in Friday’s Post is likely to be repeated yet again, with another scandal costing taxpayers money, and harming more patients.  It’s not a question of if, but when.  And this broken-down, government-centric health care system is not change, and it’s not something the American people should believe in.