Medical-Tort Law: Ranking the States

How much do a state’s laws governing medical malpractice and other torts relevant to health care affect the availability of care?  Plenty!

Lawrence J. McQuillan’s & Hovannes Abramyan’s 2010 edition of the U.S. Tort Liability Index, which has a number of measurements included in the U.S. Index of Health Ownership, ranks states according to 42 variables.

Eight of the measurements in the U.S. Tort Liability Index are relevant to the U.S Index of Health Ownership: One output and seven inputs. The previous edition of the U.S Index of Health Ownership included six measurements of medical tort, but McQuillan & Abramyan have discovered more variables for their 2010 edition of the Tort Liability Index, allowing more detailed measurement.

As a partial update of the U.S. Index of Health Ownership, this brief analysis calculates a medical-tort index from a simple average of the eight relevant variables.  Mississippi, Nevada, Michigan, Colorado, and Louisiana lead the pack; while Vermont, Rhode Island, Kentucky, Pennsylvania, and Iowa bring up the rear. Even the leaders, however, lag in some measurements.

Mississippi, for example, leads on procedural rules: Pre-trial screening or arbitration and conditions on the use of expert witnesses. However, it does not limit lawyers’ ability to abuse their privilege by limiting their share of awards. Colorado and Louisiana also fail to impose limits. Unfortunately, the laggards do not show a similar pattern: The bottom five states perform poorly in all eight measurements.

Reducing the burden of medical tort is critical to increasing Americans’ health ownership and reducing medical costs that curtail our access to care. Some progress is evident, but states aiming to improve their medical-tort laws still have a long way to go.

Government Health Plan Let You Down? There’s Always Wal-Mart

Government action always has unintended consequences, but some of them are positive – as long as they are brought into effect by the private sector.

In Great Britain, the National Health Service is infamous for denying cancer patients access to the most innovative drugs.  So, ASDA, which is Wal-Mart’s British subsidiary, has decided to sell those drugs at cost.  Competitors quickly followed suit.

Oops: I thought competititive markets don’t work in health care.  I guess they do if the government allows them to.

What’s interesting about this phenomenon is that British cancer patients, who generally have no private insurance, will benefit from price transparency, whereas U.S. cancer patients with private insurance have no similar opportunity.  They still have to launder their claims through an insurer, adding friction and bureaucracy for little value.

But be prepared: If ObamaCare is not repealed, U.S. patients will face similar challenges and opportunities starting in 2014,  because private insurers will become utilities merely delivering limited, government-defined benefits.

The lesson? Even with catastrophically expensive conditions, like lung cancer, competition works.

Ohio Expands Script-writing Authority of Some Nurses

It’s good to see a state doing something to make it easier rather than more difficult for people to get the medical help they need. The Ohio House has approved a measure that would let advanced-practice nurses authorize refills for some prescriptions.

The Poison Pill of Drug Importation

In recent testimony before Congress, Food and Drug Administration Commissioner Margaret Hamburg reiterated the agency‘s opposition to the importation of prescription drugs from foreign shores. “There are genuine safety concerns,” she explained.

For years, lawmakers on both sides of the aisle have supported legislation to legalize foreign drug importation. Yet FDA officials under both Republican and Democratic administrations have resisted such efforts.

Why the consistent opposition to a policy that many believe will dramatically lower health costs?

Simple: FDA regulators have seen the evidence on drug importation, and it shows that buying drugs from overseas endangers lives.

The argument in favor of drug importation goes like this: With health costs on the rise, why deny Americans access to the cheaper drugs being sold in places like Canada and Europe? Such access, after all, will improve health outcomes by giving low-income Americans better access to needed medicines.

This line of reasoning is as straightforward as it is incorrect. Drug importation could actually harm health outcomes, as pharmaceuticals that originate overseas are of dubious quality.

In Europe, for instance, counterfeit drugs represent a $14.3 billion-a-year industry.

Dropping the ban on drug importation won‘t just put lives in jeopardy; it will also stunt research into future cures. Drugs are cheaper in countries like Canada because of government-imposed price controls. Importing these price controls would make the business of drug research unprofitable.

Sad as it may seem, it‘s simply not worth it for pharmaceutical companies to invest more than $1 billion to develop a new treatment for Alzheimer‘s disease, for instance, if there‘s little hope of recouping that money.

What about the potential cost savings of importing foreign drugs? This, too, is widely misunderstood. In 2004, the Congressional Budget Office estimated that importation would “reduce total drug spending by $40 billion over 10 years, or by about 1%.” The most recent CBO 10-year savings estimate for such a policy is $19 billion, less than half the initial projection.

So far, those lawmakers aware of the high risk of importing drugs have successfully defeated efforts to legalize the practice. Just this past December, the Senate voted down an amendment, introduced by Sen. Byron Dorgan (D-N.D.), that would have permitted Americans to buy drugs from overseas.

And yet, as Hamburg‘s testimony demonstrated, the issue continues to resurface. It’s a good thing that FDA regulators understand that the costs of legalizing drug importation are astronomical, and that the benefits are almost nonexistent.

Is Your Medication on the List?

Depend on an insurance company or government to pay all your medical bills, and you get … prescription drugs lists, such as those to be enacted in North Carolina.

“The state will cut prescription drug costs in Medicaid by limiting patients to mostly generics or brand names for which the state gets a rebate.”

Mississippi Raises Prices of Your Sudafed

From the Clarion-Ledger: “Gov. Haley Barbour has signed House Bill 512, making any medicine that contains pseudoephedrine — a key ingredient in methamphetamine — a controlled substance as of July 1.”

That in turn will mean that if you have a routine, it-comes-every-year, easily addressable condition popularly known as “hay fever,” you’ll have to pony up for a visit to your doctor.

One judge quoted in the article blithely waved off the extra cost, which he cited as a $20 copay.

And a box of Sudafed otherwise costs, what, $10?

Comparative Effectiveness Research Isn’t Always Effective

Saving money? Good idea. Conduct research? Good idea. Using research to save money? Again good–but not as easy as it first appears.

The health care reform preferred by the political class will create a bevy of new bureaucracies meant to conduct comparative effectiveness research (CER). To borrow language from President Obama, that’s the effort to determine whether you get the same bang for the buck from the blue pill as you do from the red pill.

But as Tomas J. Philipson of the Manhattan Institute says, it’s easy to get comparative effectiveness research wrong. In particular, it “is a good idea but can be harmful when done through centralized methods.” And what could be more centralized than health care dictated by Congress?

Philipson uses the history of antipsychotic drugs to illustrate how CER can lead to higher, rather than lower costs, and worse health outcomes: “Because of widespread variation in patient response, the more restrictive the payment policy the higher the lost value in human life and productivity from excess side effects or non-responsive drugs, even when the cheaper drug seems to be a good bargain.”

It reminds me of the knowledge problem, a fundamental insight of the economist Friedrich Hayek.

Any modern economy, capitalist or state-run, is a great soup of private “know-how” dispersed among the specialised participants. No one, he said, not even a state agency, could amass all the knowledge that each participant “on the spot” inevitably acquires. The state would have no idea where to invest. Only capitalism solves this “knowledge problem”.

The human body is, like the human economy, incredibly complex. It would be folly to think that any council of “wise men” could set out rules that would benefit each person.

Lessons from the Medicare Prescription Plan

The Wall Street Journal’s David Wessel ponders some lessons for health care policy from Medicare Part D, the prescription drug benefit enacted by Congress and President George W. Bush.

What have we learned?

• When government subsidizes something, people buy more of it.
• Patients do shop for premiums, but they ought to consider total expenses, by figuring out out-of-pocket spending.
• Insurance companies can and do negotiate lower prices.
• When people have money to spend on their own behalf, companies will advertise to reach them. (Is  this a bad thing? Some people think so.)

So the prescription drug plan is a qualified success. It didn’t cost as much as as expected, and it has reduced some hospitalization costs.  But Medicare is still going broke, and more government programs, even ones delivered  by private companies rather than government agencies, will still be financial problems that lead to  rationing or degraded care.

Kentucky Narcotics Cops Call for Crackdown on … Allergy Meds

When you’ve got a failed policy, there’s nothing like doubling down on it.

Kentucky is now “on track to have a record number of meth labs this year despite having various controls in place.” These controls include making people show an ID and register in an electronic log if they wish to buy a simple product to fight seasonal allergies.

Now the professional drug fighters–the Kentucky Narcotics Officers’ Association–wants more. It’s calling for the state to require prescriptions for allergy meds containing pseudoephedrine, a common ingredient that is also abused, in the making of methamphetamine.

This move would increase health care spending (getting a prescription requires a visit to a doctor). It’s also likely to increase the use of health insurance for predictable, minor, conditions, thereby increasing the warped way in which we pre-purchase medical spending and call it “health insurance.”

In addition, the criminal production of meth will continue (and perhaps become more lucrative), while thousands of ordinary, law-abiding citizens will be harassed.

And the “war on drugs” will continue to inflict collateral damage.

Existing Programs Unused

Lost in the controversy of the various health reform bills is the fact that there are already public programs out there that aren’t being fully used. Medicaid is one, as a certain portion of the uninsured (I forget the number) are eligible for Medicaid but haven’t signed up.

Another public program going unused is West Virginia Rx. According to one report, only 6% of the eligible population is using it. The program gives free medications to people with incomes that are 200% of the federal poverty level or less. They can’t, however, be enrolled in a government insurance program such as Medicare or Medicaid.