How Obamacare Harms Cancer Patients
by Scott Gottleib MD
Forbes Magazine contributor
Obamacare is going to degrade medicine but its ill effects will fall disproportionately on patients with serious conditions, especially those diagnosed with cancer.
The legislation contains provisions that directly target patients with cancer because their care is perceived as costly. These policies couldn’t be more badly timed.
We’re at a turning point in battling cancer. Doctors are finally able to reliably tailor treatments to the unique genetic composition of each patient’s tumor rather than by its location in the body alone. Other new drugs are able to prime our own immune cells to attack cancers. But Obamacare puts access to this progress at risk.
First, Obamacare blocks the ability of patients to seek out the specialist doctors who are most likely to prescribe these cutting edge treatments.
Obamacare coaxes health plans to reduce spending and healthcare utilization by limiting the choices patients will have of doctors. This is the primary way that health plans are being cheapened enough to meet Obamacare’s strict guidelines on the low value of the coverage that the plans can offer.
Insurers are barred from using the other tools that they’ve traditionally employed to keep the costs of policies in check: cost sharing, underwriting risk, adjusting premiums and benefits.
The only thing that health plans are permitted to do under Obamacare is narrow the networks of providers that they contract with. So that’s precisely what they’re doing.
By contracting with fewer providers, insurers can cheapen their coverage by clamping down on what doctors prescribe.
This will hit cancer patients especially hard.
If consumers go outside the narrow network of doctors that their plans offer, patients will be saddled with heavy co-insurance that can make these options absurdly expensive. While Obamacare caps a person’s total out of pocket costs, the price of getting care outside your restricted provider network isn’t subject to these limits (except for care delivered in an emergency room). If patients see doctors outside their narrow networks, they’ll have to pay out of pocket for that care. They could be stuck with the entire bill. There are no limits under the law (with the only exception being out-of-network medical care delivered in an emergency room).
Yet cancer patients often need the help of specialized doctors and cancer institutions that won’t make it into many of these cheapened networks. The latest cancer drugs, as well as new (off label) uses for existing medicines, will also be harder to get. Patients may not be able to see the expert doctors most likely to offer these options. New drugs are also slow to make it onto the “treatment pathways” that Obamacare plans are using as a way to narrow the menu of drugs they cover.
Next, Obamacare tries to coerce doctors to cut down on their use of costlier drugs and tests by changing the way that they’re paid. The law uses “bundled” payments, where doctors get lump sums of money to care for patients with particular medical problems. The idea is to pit the cost of the treatments doctors prescribe directly against their earnings and give doctors a potent incentive to use cheaper remedies.
But these schemes will slow adoption of new technology. This summer, Medicare announced $1 billion in “healthcare innovation awards,” to get help in designing these “bundled payments” for paying doctors to treat different kinds of cancer.
Those who bemoan the fact that payment schemes like Medicare’s reimbursement formula for injectable drugs give doctors incentive to prescribe more expensive treatments must realize that these same economic principles also work in the opposite direction. Paying doctors more to do less will also have consequences on patient care. Incentives to do less can be as bad as an inducement to do more.
Finally, Obamacare targets cancer drugs directly, by expanding a program called 340B, which siphons money away from drug developers in order to subsidize hospitals. The Obama Administration sees the program as a way to prop up the hospitals (a favored constituency) on the dime of less popular drug makers. But the oblique way the money is extracted from drug companies spawns a lot of harmful consequences that are increasing the cost of cancer care, and lowering its quality.
When this scheme first began in 1992, the law’s aim was to subsidize inner-city hospitals that cared for a lot of indigent patients.
Over the years, the program expanded, and has turned into a scam.
Under 340B, eligible hospitals get to buy cancer medicines from drug companies at a forced discount of at least 25 to 50 percent. The hospitals can then bill government and private insurers for the full cost of the drugs, and pocket the spread. None of the savings are passed on to patients, or the government. The costs end up getting foisted onto other patients and insurers who don’t qualify for the discounts.
Now, fully a third of all U.S. hospitals qualify for the program. Even rich hospitals like Cedars Sinai in Beverly Hills and Duke University feed off the subsidies.
To goose the windfall, hospitals are buying private oncology practices so that they can book more drug purchases at the discount rates. About 400 practices have been acquired since Obamacare’s passage. Between 2005 and 2011, the amount of chemotherapy infused in doctor offices fell from 87- to 67 percent according to a new analysis of Medicare billing data done on behalf of community oncology groups.
When cancer care to shifts to hospital clinics it’s not only less comfortable for patients, but also more costly. This wastes resources, making it harder to pay for the new technology that actually improves outcomes. Owing to hospital inefficiency, a patient treated in a hospital clinic costs $6,500 more than the same person treated in a private medical office. The cost of infusing the drugs alone rises by 55 percent.
Obamacare targets cancer drugs because they are pricey. But the fact is that spending on cancer medicines offsets other costs.
Over the last 20 years, total spending on cancer care was stable, at 5% of our total national healthcare budget (and about .8% of U.S. GDP). Yet how that money got spent changed dramatically. Spending on cancer hospitalizations dropped sharply, while spending on drugs rose. As I wrote recently, the proportion of spending on inpatient cancer admissions fell from 64% of total cancer spending in 1987 to 27% in 2001-2005 according to studies. Cancer drugs that used to leave patients very sick were replaced with targeted drugs with fewer side effects. The rates of long-term remissions for many earlier stage cancers are also climbing.
None of the Obamacare policies lower the actual cost of the drugs. We should be addressing the high expense of developing these medicines, where enrolling a single cancer patient into a clinical trial can top $90,000 owing to FDA regulations.
Instead, Obamacare limits access to specialist doctors in order to cheapen insurance products, uses financial schemes that pay doctors more to do less, and targets the drugs that represent so much of our recent progress against cancer.