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Sometimes, good news comes with complications. In this case, KFF Health News reported on a breakthrough drug that slows the progression of Alzheimer's. Apparently, the average cost to US taxpayers (most patients who could use the drugs would likely be on Medicare or Medicaid) could run over $82,000, with almost $27,000 of that being the cost of just the drug (other costs include genetic tests and frequent brain scans). Additionally, the drug does not actually cure or even prevent Alzheimer's, just slow its progression (in one study, an average of five months over an eighteen month period). Given the cost and the incremental benefit near the end of patients' lives, is paying for this treatment the best use of Medicare and Medicaid funds?

Sometimes, good news comes with complications. In this case, KFF Health News reported on a breakthrough drug that slows the progression of Alzheimer's. Apparently, the average cost to US taxpayers (most patients who could use the drugs would likely be on Medicare or Medicaid) could run over $82,000, with almost $27,000 of that being the cost of just the drug (other costs include genetic tests and frequent brain scans). Additionally, the drug does not actually cure or even prevent Alzheimer's, just slow its progression (in one study, an average of five months over an eighteen month period). Given the cost and the incremental benefit near the end of patients' lives, is paying for this treatment the best use of Medicare and Medicaid funds?

For family members who are taking care of these patients, they might feel that Medicare and Medicaid should absolutely cover this treatment. However, if many patients take this drug, would the Centers for Medicare & Medicaid Services (CMS) need to divert funds from elsewhere that might save other lives? Policy researchers often try to answer questions like these by using a concept known as quality-adjusted life year (QALY for short). Probably using QALY analysis, one institute suggests that the treatment might be cost-effective if it cost around $10,000 to $20,000 per year.

For now, rollout of this treatment seems to be gated by the availability of specialists who can manage the medication. Additionally, CMS is requiring that patients on Medicare and Medicaid who take this medication be entered into a registry to track their clinical outcomes in hopes of better understanding the efficacy of the medication.

People have heard about how strong the healthcare lobby is in the US, and KFF Health News published a piece that gives an overview of how agreed-upon funding cuts have been delayed for over a decade. As helpful background, when Medicaid was enacted in 1965, the program was required to pay the same rates as Medicare. Starting in 1981, states were granted flexibility in setting Medicaid reimbursements. One concern was that hospitals that served a disproportionate number of Medicaid patients would be heavily affected by the drop in reimbursement. Government funds (including federal funds) were made available to compensate those hospitals through what is known as Medicaid Disproportionate Share Hospital (DSH) payments. As the Affordable Care Act (ACA) was being negotiated, one of the selling points was that the the decrease in uninsured would mean more system-wide savings. Since more patients would seek treatment, hospitals "agreed to accept $155 billion in Medicare and Medicaid funding cuts over 10 years." However, the start of those cuts have been delayed 13 times.

People have heard about how strong the healthcare lobby is in the US, and KFF Health News published a piece that gives an overview of how agreed-upon funding cuts have been delayed for over a decade. As helpful background, when Medicaid was enacted in 1965, the program was required to pay the same rates as Medicare. Starting in 1981, states were granted flexibility in setting Medicaid reimbursements. One concern was that hospitals that served a disproportionate number of Medicaid patients would be heavily affected by the drop in reimbursement. Government funds (including federal funds) were made available to compensate those hospitals through what is known as Medicaid Disproportionate Share Hospital (DSH) payments. As the Affordable Care Act (ACA) was being negotiated, one of the selling points was that the the decrease in uninsured would mean more system-wide savings. Since more patients would seek treatment, hospitals "agreed to accept $155 billion in Medicare and Medicaid funding cuts over 10 years." However, the start of those cuts have been delayed 13 times.

Hospitals have pointed out that the uninsured rate has not reached the projected 5% that was predicted before the the passage of the ACA. However, it is unclear whether the agreement was predicated on reaching the 5% threshold, or simply a meaningful reduction of uninsured patients. Additionally, because of some legacy policies, some hospitals benefit from DSH payments even when they might not be serving as many Medicaid patients. The KFF article also notes that "Despite record-high hospital profits and record-low uninsured rates in recent years, the hospital industry again says this is not a good time for cuts." It seems like the policy might have been considerably more straightforward if Medicaid simply kept Medicare rates and did not try to mitigate the discrepancy through DSH payments.

KFF Health News published a heartwarming story about doctors banding together to provide their community with primary care, supported in part by community donations. Unfortunately, the background is a bleaker picture: a number of rural hospitals have closed, and others have cut services. This trend highlights challenges that rural areas might have in affording adequate health care.

KFF Health News published a heartwarming story about doctors banding together to provide their community with primary care, supported in part by community donations. Unfortunately, the background is a bleaker picture: a number of rural hospitals have closed, and others have cut services. This trend highlights challenges that rural areas might have in affording adequate health care.

Hospitals and clinics in rural areas likely have challenges with a sparser population, and perhaps also a lower-income population (on average), meaning that they might not be able to simply raise prices. Viewing health care as a utility service to be provided, it makes sense that the federal government (and perhaps state governments as well) are subsidizing these healthcare institutions -- perhaps similar to how the government might have previously subsidized utility companies to encourage them to offer services in rural areas.

Some non-profit hospitals have garnered a reputation of being greedy and not serving the poor. People may especially feel this way if a hospital uses aggressive collection techniques or sues low-income patients to recover unpaid charges. KFF Health News published an article where a local hospital was converted to a tax-exempt non-profit entity. The loss of local property taxes meant that a nearby school district had to cut expenses. The school district challenged the non-profit status of the hospital and a state court agreed that the hospital should not be considered non-profit, citing "eye-popping" compensation for executives. The article also referenced a study that found that non-profit hospitals provided charity care worth 2.3% of their expenses, while for-profit hospitals provided 3.8%. Understandably, the "American Hospital Association strongly disagrees with the... analyses."

Some non-profit hospitals have garnered a reputation of being greedy and not serving the poor. People may especially feel this way if a hospital uses aggressive collection techniques or sues low-income patients to recover unpaid charges. KFF Health News published an article where a local hospital was converted to a tax-exempt non-profit entity. The loss of local property taxes meant that a nearby school district had to cut expenses. The school district challenged the non-profit status of the hospital and a state court agreed that the hospital should not be considered non-profit, citing "eye-popping" compensation for executives. The article also referenced a study that found that non-profit hospitals provided charity care worth 2.3% of their expenses, while for-profit hospitals provided 3.8%. Understandably, the "American Hospital Association strongly disagrees with the... analyses."

Theoretically, governments offer tax incentives to encourage hospitals to provide more charity care. However, when non-profit hospitals provide less charity care than for-profit hospitals, people might rightfully ask whether the tax incentives are appropriate. Non-profit hospitals might have a number of reasonable responses. For example, if non-profit hospitals tend to be much smaller than for-profit hospitals, their fixed costs might account for a larger percentage of their budget, making it more difficult to provide as much charity care on a percentage basis.

Nevertheless, the tax incentive does raise questions of accountability, especially when the amount of the charity care ends up being less than the value of the tax breaks (which appears true of the industry in 2020, per the article). It might be easier to account for care by not allowing any hospitals to have non-profit status, and instead, have local and state governments directly subsidize hospital operations. Such a scheme would still require accountability, but would making accounting somewhat easier in that governments (and people in general) can more clearly see how much each hospital is being subsidized.

KFF Health News published an article describing the practices of "white bagging" (where infusion medications are sent to pharmacies to send to medical facilities) and "brown bagging" (where infusion medications are sent to patients). These practices are meant to curb costs, compared to the practice of the medical provider or facility buying the medication and then being reimbursed for it. Understandably, while these practices may save insurers money, they create more overhead for providers to manage. The article discuss delays in treatment and increased administrative burdens on patients; additionally, some patients may end up paying more via cost sharing. The article also points out that some providers have come to rely on profits from reselling costly infusion drugs. Some providers have responded by refusing to treat patients whose insurers require either of these practices.

KFF Health News published an article describing the practices of "white bagging" (where infusion medications are sent to pharmacies to send to medical facilities) and "brown bagging" (where infusion medications are sent to patients). These practices are meant to curb costs, compared to the practice of the medical provider or facility buying the medication and then being reimbursed for it. Understandably, while these practices may save insurers money, they create more overhead for providers to manage. The article discuss delays in treatment and increased administrative burdens on patients; additionally, some patients may end up paying more via cost sharing. The article also points out that some providers have come to rely on profits from reselling costly infusion drugs. Some providers have responded by refusing to treat patients whose insurers require either of these practices.

From a systems perspective, these optimizations from both the insurers and the providers seem to yield an inefficient outcome overall. If true costs were publicly known, the government might be able to design a system where everybody comes out better off. With different parties able to hide costs, at least one party is likely to complain about being penalized unfairly when any government regulation is applied.