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Sunday, January 8, 2017

Russian meddling in US affairs

We appear to have entered a new phase in international relations, with likely intervention of the Russian intelligence services in our recent Presidential elections. However, I would argue that this is nothing new. The Russians have been meddling in our politics for decades and similarly, we have been meddling in their politics and the politics of a host of countries for at least 70 years.

I must admit that the approaches to influencing events have changes but the underlying goals are the same; to influence political leaders and their constituencies in order to create environments more favorable to Russian goals. There is overwhelming evidence of efforts during the Soviet era dating back at least to the pre-WWII Stalinist regime. The US government cracked the Soviet encryption of communication in the early 1940's. This was kept secret until the early 1990's but the information was released under the name of Venona papers.

Additional supporting evidence of Russian attempts to influence American politics also came from the Mitrokhin Archives compiled by Vasili Mitrokhin, a KGB archivists who smuggled a vast trove of materials from the KGB archives over the span of decades. There is also substantial evidence of Soviet backing of pacifist movements post-WWII until the fall of the Soviet Union in 1990. The highest profile organization supported was the World Peace Council but monies were purportedly directed to a host of organizations. How successful their efforts were in terms of influencing events is another story.

The US also has deployed efforts to influence politics and elections in a host of countries, both within and outside of Russian and nations making up the former Soviet Union. This was detailed in a Paul Musgrove commnetary in the Washington Post from last summer (Musgrove):

The United States also has a long and active history of interventions in other countries’ politics. We have toppled governments by supporting coups, fueling revolutions and sending in our troops. We have employed more subtle tactics, too, to influence the outcome of elections.
In 1948, U.S. policymakers feared that Soviet-backed communists would win power in Italy. In response, as John Lewis Gaddis discusses in “The Cold War: A New History,” the role of the newly created CIA was extended beyond intelligence-gathering to allow the agency to funnel money and organizational support to pro-U.S. parties. American assistance may have included forging documents to discredit the Communist Party.
After Washington’s favored party won the Italian elections, such interventions became a staple of global-power politics. Political scientist Dov Levin estimates in International Studies Quarterly that Washington and Moscow intervened in a third country’s elections 117 times between 1946 and 2000. Sometimes, those interventions were overt, as when U.S. officials went out of their way to show favor to Chancellor Konrad Adenauer in West Germany’s 1953 elections. At other times, the interventions were kept secret, as with American support for Thai political parties in 1969.
The United States and Russia (or the Soviet Union) have meddled in elections because it has served their national interests and because the inherent risk has often paid off. Levin estimates that an overt intervention by a superpower yields a tilt toward its desired outcome equal to about 3 percent of the total vote. In a close election (such as West Germany’s in 1972 or Israel’s in 1992), that effect could easily be large enough to tip the balance.
There is a certain irony in our present circumstances in that the tables have been turned. During the latter part of the 20th century, it was the conservative right which highlighted potential Soviet influence over US and western European politics and it was the left which discounted their concerns. Now it appears to be just the opposite.

Foreign governments and other non-political entities will always try to influence events in the US to their advantage. To expect otherwise is foolish. Similarly, our government and US corporate entities will also try to use their resources to influence events. I would hope that US entities, both state and non-state, are more constrained in terms of what they will try to do and will draw the line before they cross into political assassinations (although we have gone there before). We simultaneously celebrate our own hackers and are dismayed when we are hacked.  The new cyber domains and cyber attacks will likely require development of new diplomatic rules or engagement, which we should expect to be broken when it appears to be in the best interests of parties to do so.

Saturday, January 7, 2017

Fallacy of misplaced concreteness


I was introduced to a concept this week referred to as "Fallacy of misplaced concreteness". According to Wikipedia:
According to Alfred North Whitehead, one commits the fallacy of misplaced concreteness when one mistakes an abstract belief, opinion, or concept about the way things are for a physical or "concrete" reality: "There is an error; but it is merely the accidental error of mistaking the abstract for the concrete. It is an example of what I will call the 'Fallacy of Misplaced Concreteness.'"
This has substantial implications in the practice of medicine, especially in terms of diagnostic concepts and diagnostic tools. Let's say a patient has some sort of discrete and observable finding such as a growth on the skin or a subtle finding on an imaging study. These represent concrete findings in that there is something observable. That lesion may undergo biopsy which might reveal some other morphological observations. The lump on the skin may reveal it's structure as being a cyst or a solid mass of cells. A lesion seen on mammography similarly may consist of a cyst or a collection of cells. These are concrete findings.

However, almost invariably, the pathologist who examines the tissue goes beyond simply describing the findings under the microscope and goes on the apply some sort of label. The label represents an abstract concept which implies a host of properties and future behavior (or risk of future behavior). The physical reality is still the lump or cyst which represents the current "concrete" reality. The diagnosis is not a concrete thing but instead is prediction of what future reality might be.

There are times where the current reality is not simply some subtle clinical and microscopic finding and the label used by a pathologist is more concrete. A patient may present with hemoptysis and found to have a large lung mass on chest x-ray. Further evaluation may show multiple nodules of the bone and biopsy shows features diagnostic of lung cancer. The abstract concept of a malignant tumor diagnosed by the pathologist aligns with the concrete current reality of multiple invasive tumors.

I guess my point is cancer is characterized by a concrete functional impact of malignant biological behavior. This can only really be defined by the behavior itself. All other markers are surrogates. We have gradually and falsely substituted morphological observations, many increasingly subtle, as a substitute for biological behavior in defining disease. The problem is we have started using the same terms, previous reserved for something very concrete (disease states previous characterized by concrete illness and morbidity and very high risk of death), but use them to describe states without overt illness. There is nothing concrete about the so-called illnesses of people who by almost all measures are symptom free and whose disease states fail to progress.

Sunday, January 1, 2017

Defining health care - a fundamental but thorny problem

There are two articles published in this week's NEJM highlighting the importance of caregivers in the outcomes of health care delivery (NEJM1) (NEJM2). The come on the coat tails of and NAS report titled "Families caring for an aging America" (NAS report). They should be required reading for anyone interested in getting our arms around the health care delivery monster we have created.

In some sense these reports state the obvious. What those of us involved in health care delivery accomplish in our offices represents a miniscule fraction of what goes into the production of good health outcomes. Our interactions with patients are transient and many respects trivial. The vast majority of patient's lives are experienced in the vast swaths of time outside of our care delivery environments, either inpatient or outpatient clinic based. Few if any of our transient office or hospital encounters are likely to result in meaningful impact if patients are sent out into environments that do not facilitate enduring support of our common goals.

The NAS report delivers a series of recommendations as to how to address these current and looming expanding problems as the population ages. There are host of recommendations touching upon additional data collection, legal and policy supports, and changes in funding mechanisms. It is hard to argue with any one of these recommendations, but they tend to miss a larger point.

Once one gets outside of what has been defined as health care delivery over the past 100 years, it will become almost impossible to define the boundary between what is health care delivery and what represents everything else. One hundred years ago, it was relatively easy to draw this distinction. For the most part, people did not engage physicians unless they were extremely ill. The time and money directed toward health care was substantially less than our current fraction of GDP (18%), estimated in 1929 to be around 4% (1). This percentage of GDP remained relatively stable for more that 40 years. Once expansion of social insurance was injected into the health care economy, we experienced massive expansion of cost.

At least part of this expansion was due to a change in was health care delivery entailed and what goals were embraced. No longer were interventions primarily short term to address acute illnesses, the end result being either resolution or death. Care delivery needed to account for the management of chronic conditions over extended periods of time, something that previously made up only a trivial portion of health care expenditures. This transition occurred during a time of unprecedented wealth and productivity gains in the US and the world and the costs of delivery of the expanded scope was absorbed into the these gains, if not effortlessly, with limited economic disruption that was observable.

The current papers cited above are calling for another redefinition of what health care entails. To be fair, there is no clear discontinuity here and the transition proposed is a natural extension of trends which have been ongoing for the last 50 years. I have no quibble with where these various authors want our care delivery to move toward. We need to cultivate mechanisms which facilitate continuous care and enlist caregivers closer to where patients live. My concern is the idea that we need to expand the current payment mechanisms to cover the costs.

I am an unabashed supporter of market based mechanisms to meet human needs. No other mechanism in history has been nearly as effective in allocation of scarce resources to meet human needs. In my humble opinion, the looming bankruptcy of the health care delivery system in the US can be traced directly to the injection of third party payment into an ever growing segment the health care economy and the overall economy in general. This injection disrupted effective market based pricing mechanisms and have tended to both distort resource allocation and insulate the public from many individual instances of these distortions. To expand the scope of what entails health care services while simultaneously remove market discipline and expanding third party payment in even larger segments of the broader economy is a recipe for disaster.

Ultimately meeting the health needs of people as they age cannot be done via command and control approaches and will require what meeting human needs and wants always requires; efficient allocation of scarce resources, continuous improvements in productivity,  understanding that there are tradeoffs involved, and that no matter what system is in place, it will be imperfect in that some legitimate wants and needs will go unfulfilled. Health care goods and services for the most part is no different from and cannot not inherently be distinguished from services in general. Deploying a terribly flawed payment system to an ever broadening segment of the economy in general will create the unintended consequence of making all of us poorer and shrinking the pool of resources which we can tap into to improve the lives of those who need help. 

1. Paul Starr. 1982. The Social Transformation of American Medicine. New York: Basic Books, pp. 261-62. Quoted in Greg Scandlen, 2003. 100 Years of Market Distortions.

Sunday, December 18, 2016

Uncertainty and how problems and solutions are framed

I would like to direct my readers to a recent piece published in the NEJM entitled "Tolerating Uncertainty" (NEJM). The issue identified and the article has implications well beyond the delivery of health care. We humans love certainty and hate ambiguity. Until recently, medicine didn't really have to address uncertainty since our roles were fairly straight forward. We measured our successes and failures based upon a hard endpoint: were are patient dead or alive within days or at most weeks after we were asked to evaluate and intervene. Because of our successes, the dead or alive bar is no longer the primary goal of our efforts. Simply finding that our patients did not die after we touched them is not adequate to justify our efforts. 

Our metrics and particularly timelines to measure successes or failures have changed dramatically. Our endpoints may be measured years or even decades into the future and that creates all sorts of problems. We are not so good at predicting the future and the longer we try to look out, the more uncertainty we need to face. Some view this problem of prediction as a problem which can be addressed with the application of enough data and enough technology. However, I believe that uncertainty will always be with us and the longer we attempt to peer into the future, the more inherent uncertainty we will need to acknowledge. 

I find myself explaining this to patients every day. People come to me in various states if ill health and it is my role to evaluate their circumstances and provide them with options in terms of intervention. In each case, decisions are made in terms of doing something based upon trying to peer into the future and estimating whether any given course of action is likely or unlikely to leave them better off. For any given decision, there is always a possibility of catastrophe, whether the decision is to act or not act. There are no certain outcomes, just ones we estimate to be more likely to be generate better or worse outcomes. There are always trade offs involved and it is always about probabilities, not certainties. 

The trade off reality is not limited to health care. While there may be uncertainty regarding which particular trade offs will come into play, there is absolute certainty regarding the inherent existence of trade offs. Thus, the blindness to the presence of both uncertainty and required trade offs influences how humans address problems, both current and future. I see this particular problem poisoning thoughtful exchanges in all realms which are potentially contentious, which is basically everything. 

I would like to highlight how the desire for certainty and the blindness to trade offs has totally poisoned any discussion regarding climate science. I am listening to a Great Courses audio course given by Dr. Robert Hazen of George Mason University entitled "The origin and Evolution of Earth". The basic premise of the course is that the geosphere and the biosphere have been interacting for literally billions of years and that life on earth has changed the earth in fundamental ways. These life driven changes have preceded human existence, again by billions of years and have resulted in the modification of rocks and minerals, makeup of the atmosphere, and changes in climate. The earth has varied in the past from being covered with ice to tropical environments at the poles, all without any human intervention. We are only now recognizing this to be the case.  We are also now recognizing that like life forms which preceded us on earth, we are influencing our environment. All of life on earth past and present and future have and will do the same, no matter what we as humans do.

This has set off alarm bells among certain groups on the basis that any change which we might be driving could have catastrophic consequences, and they could. Like we have observed in health care, any time we act we might create serious problems. We also observe that when we act in attempts to prevent one outcome, we can also create unintended problems. It is that trade off thing. However, the discussions regarding climate change and possible outcomes rarely are framed with trade offs involved. How likely are the catastrophic outcomes to happen if we continue pursuing our current courses? Who will these outcomes preferentially affect? Similarly, if we intervene and apply some sort of carbon (energy) restrictive approach, what are the trade offs involved? Who will these outcomes preferentially affect and will these people be different from those affected if we do not change?

Like interventions for disease states which may occur in the future, we need to think about whether we will leave most people better off if we apply any particular intervention. There is often no right or wrong answer but only interventions which are believed to be more likely to leave people better off at a given point in time. Our current knowledge about climate change is that the climate is changing as it has been for billions of years. There is no surprise here. That humans may be altering the climate should also not come as any surprise. Our ancestors back to single cell oxygen producing organisms have been doing the same back to the great oxidation event. The questions are:

1. Are we actually screwing things up to the point of likely catastrophe?
2. Do we have any real idea that we can change our actions such that we are likely to move toward better outcomes? 
3. Specifically, what do the trade offs look like regarding following our current course and any alternative courses?  

We haven't any real clue as to the answers to these questions. As far as I am concerned the predictions made regarding what is going to happen 50-100 years into the future regarding highly complex and poorly understood systems are crazy. In the same sense that we crave certainty in medicine and will be disappointed because there are things which are unknowable until they happen, our world will also not yield to the desires for certainty that we may have. We are just humans, not gods. To think we can predict where chaotic systems will take us in an extended time frame and select interventions which will leave humanity and the earth better off represents arrogance and hubris. 

Our desires and attempts to scientifically change the future have yielded all sorts of Utopian nightmares, whether that be Scientific Socialism and mass murder, or eugenics and mass murder. My experience in the health care realm has taught me that we can always make things worse and create new problems. It is an experience which I believe has provided me with a broader understanding of the world outside of medicine as well. We are not inherently better off when we act than when we do not. 

Best intentions and unintended consequences

I read a story from the New York Times today (Cuban tourism) about an unintended effect of the surge of tourism on the lives of ordinary Cubans. It seems that the Cuban government failed to anticipate the flood of new tourists (3.5 million last year). One might think that in a normally operating economy these arrivals would result in some sort of positive effect on the island economy, with all of the external currency injected into the economy. However, that was not the case.

What happened is that in order to meet the needs of the visitors, goods (especially food) normally which met the needs of ordinary Cubans were diverted to feed the visitors. Cuban citizens were left with empty shelves and soaring prices. The response of the Cuban government was both predictable and maladaptive. The government placed price controls on basic staples which served to make the price on paper affordable but in reality made the unavailable to the average Cuban citizen.

There is an irony here. I suspect that those individuals now most likely drawn to Cuban travel are ones who have an element of good Samaritan motivation.  And yet, the immediate effect has been to make the lives of ordinary Cubans worse, at least in the short term. The market for supplying the tourism sector with what now are luxury goods is giving at least some Cubans an opportunity to better their lives, but not without more unintended consequences. The Times article describes the activities of Leticia Alvarez Canada, a nurse who gave up her job to sell snacks from a cart and increased her income by 10-fold. This does not bode well for health care delivery.

It seems that the tourists who visit Cuba are likely unintentionally undermining the very system they likely hold sympathy for. In contrast, the staunch anti-Castro elements which have successfully lobbied to keep Cuba isolated for more than five decades may very well have helped create an environment of isolation which was necessary to perpetuate the regime.

Sunday, November 13, 2016

Picking fights v. solving problems

I have been listening to much of the banter on XM radio since the surprising election results. I toggle between the POTUS channel, MSNBC, CNN, and Fox, trying to take a broad measure of what the Trump election means and how it will translate into specific decisions and course of action.

I did not see this coming, but I was not alone. In fact, the night of the election, I had turned off the TV early in he evening, believing things were essentially baked already and that Hillary would win with a comfortable margin in the Electoral College, that the House would remain under Republican control, and that the Senate was a toss up. As it turned out, we had a family medical emergency which prompted me to go to the Emergency Room around 11 pm and while I was in registration, I overheard the ED staff talking about a NYT prediction that Trump was going to win. I couldn't believe what I was hearing!

I find his words deplorable. He comes across as egocentric, hypercompetitive, and the opposite of reflective. No one has every accused Donald Trump of overthinking, anything.

He is now our president. Will he become any better or more likable as a person? I seriously doubt it but perhaps that is not as important as what his election will translate to in terms of positions, policies, and outcomes regarding the Federal government?  It is anyone's guess at this point. It is hard to hope he will be a disaster, although I have serious concerns. 

I believe we can get some insight into his priorities based upon his 100 day plan, summarized below (taken from  NPR website).   Already there are calls for resistance to anything and everything Trump. I am not into picking fights. Fighting rarely solves any problems. However, current politics is nothing but fighting and confrontation. I propose we attempt to make this into everything but Trump the person.  I suggest we all approach each of these initiatives using the following framework of questions:

1. What problem does this initiative address?
2. Is this a significant problem which warrants an intervention?
3. Do I believe the proposed solution will move toward a solution?
4. What are the likely unintended consequences? Is this approach dangerous and if you believe so, is it much more likely to create problems than to solve problems?
5. Is there a better approach? 


The first 100 days proposed (NPR)

* FIRST, propose a Constitutional Amendment to impose term limits on all members of Congress;

* SECOND, a hiring freeze on all federal employees to reduce federal workforce through attrition (exempting military, public safety, and public health);

* THIRD, a requirement that for every new federal regulation, two existing regulations must be eliminated;

* FOURTH, a 5 year-ban on White House and Congressional officials becoming lobbyists after they leave government service;

* FIFTH, a lifetime ban on White House officials lobbying on behalf of a foreign government;

* SIXTH, a complete ban on foreign lobbyists raising money for American elections.

On the same day, I will begin taking the following 7 actions to protect American workers:

* FIRST, I will announce my intention to renegotiate NAFTA or withdraw from the deal under Article 2205

* SECOND, I will announce our withdrawal from the Trans-Pacific Partnership

* THIRD, I will direct my Secretary of the Treasury to label China a currency manipulator

* FOURTH, I will direct the Secretary of Commerce and U.S. Trade Representative to identify all foreign trading abuses that unfairly impact American workers and direct them to use every tool under American and international law to end those abuses immediately

* FIFTH, I will lift the restrictions on the production of $50 trillion dollars' worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal.

* SIXTH, lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward

* SEVENTH, cancel billions in payments to U.N. climate change programs and use the money to fix America's water and environmental infrastructure

Additionally, on the first day, I will take the following five actions to restore security and the constitutional rule of law:

* FIRST, cancel every unconstitutional executive action, memorandum and order issued by President Obama

* SECOND, begin the process of selecting a replacement for Justice Scalia from one of the 20 judges on my list, who will uphold and defend the Constitution of the United States

* THIRD, cancel all federal funding to Sanctuary Cities

* FOURTH, begin removing the more than 2 million criminal illegal immigrants from the country and cancel visas to foreign countries that won't take them back

* FIFTH, suspend immigration from terror-prone regions where vetting cannot safely occur. All vetting of people coming into our country will be considered extreme vetting.

Next, I will work with Congress to introduce the following broader legislative measures and fight for their passage within the first 100 days of my Administration:

Middle Class Tax Relief And Simplification Act. An economic plan designed to grow the economy 4% per year and create at least 25 million new jobs through massive tax reduction and simplification, in combination with trade reform, regulatory relief, and lifting the restrictions on American energy. The largest tax reductions are for the middle class. A middle-class family with 2 children will get a 35% tax cut. The current number of brackets will be reduced from 7 to 3, and tax forms will likewise be greatly simplified. The business rate will be lowered from 35 to 15 percent, and the trillions of dollars of American corporate money overseas can now be brought back at a 10 percent rate.
End The Offshoring Act. Establishes tariffs to discourage companies from laying off their workers in order to relocate in other countries and ship their products back to the U.S. tax-free.
American Energy & Infrastructure Act. Leverages public-private partnerships, and private investments through tax incentives, to spur $1 trillion in infrastructure investment over 10 years. It is revenue neutral.
School Choice And Education Opportunity Act. Redirects education dollars to give parents the right to send their kid to the public, private, charter, magnet, religious or home school of their choice. Ends common core, brings education supervision to local communities. It expands vocational and technical education, and make 2 and 4-year college more affordable.
Repeal and Replace Obamacare Act. Fully repeals Obamacare and replaces it with Health Savings Accounts, the ability to purchase health insurance across state lines, and lets states manage Medicaid funds. Reforms will also include cutting the red tape at the FDA: there are over 4,000 drugs awaiting approval, and we especially want to speed the approval of life-saving medications.
Affordable Childcare and Eldercare Act. Allows Americans to deduct childcare and elder care from their taxes, incentivizes employers to provide on-side childcare services, and creates tax-free Dependent Care Savings Accounts for both young and elderly dependents, with matching contributions for low-income families.
End Illegal Immigration Act Fully-funds the construction of a wall on our southern border with the full understanding that the country Mexico will be reimbursing the United States for the full cost of such wall; establishes a 2-year mandatory minimum federal prison sentence for illegally re-entering the U.S. after a previous deportation, and a 5-year mandatory minimum for illegally re-entering for those with felony convictions, multiple misdemeanor convictions or two or more prior deportations; also reforms visa rules to enhance penalties for overstaying and to ensure open jobs are offered to American workers first.
Restoring Community Safety Act. Reduces surging crime, drugs and violence by creating a Task Force On Violent Crime and increasing funding for programs that train and assist local police; increases resources for federal law enforcement agencies and federal prosecutors to dismantle criminal gangs and put violent offenders behind bars.
Restoring National Security Act. Rebuilds our military by eliminating the defense sequester and expanding military investment; provides Veterans with the ability to receive public VA treatment or attend the private doctor of their choice; protects our vital infrastructure from cyber-attack; establishes new screening procedures for immigration to ensure those who are admitted to our country support our people and our values

Clean up Corruption in Washington Act. Enacts new ethics reforms to Drain the Swamp and reduce the corrupting influence of special interests on our politics.

Sunday, August 28, 2016

EpiPen craziness

My attention has been drawn to the Mylan labs controversy regarding its EpiPen product. This story epitomizes what is wrong with the pricing mechanism which permeates much of health care delivery.

The obvious front page story goes something like this:  "Greedy pharmaceutical companies lead by greedy CEO's take advantage of the public to reap out-sized profits."  This in turn leads to a cry for Federal intervention to fix this problem.

Is this really the problem and is the proposed fix going to be effective in solving the problem. I often hearken back to the words attributed to Albert Einstein who has been quoted " If I had only one hour to save the world, I would spend fifty-five minutes defining the problem, and only five minutes finding the solution." (Whether he actually said this is another story but beside the point). If we don't have the problem adequately defined or even worse, incorrectly defined, it is not likely that that the problem can be solved except by the injection of dumb luck.

It should come as no surprise that a profit seeking entity will be motivated by generating a profit and it will do whatever that is legally within its power to maximize its earnings.   Companies that sell any product or service will try to optimize the price structure. Companies that do a bad job at this tend to disappear. There are pressures to keep prices high enough to cover costs, the reasons being obvious. There are also pressures to pressures to keep prices low enough to compete with other parties who seek to take market share by offering the same or similar product or service at a more competitive price.

The case of the EpiPen is one of a failed market, one that has failed because a third party has intervened. That third party is the Federal government in the form of the FDA. The FDA has a mandate to protect the public from unsafe and/or ineffective medications and devices. Who can argue with that mandate? As usual, the devil is in the details and with any intervention targeted to add value to the public, there is always the possibility that the unintended consequences of the best intended actions end up creating new problems.

Epinephrine, the drug platform behind the EpiPen has been around for more than 100 years. It is inexpensive to produce. The delivery device has been around for decades and vastly cheaper earlier versions are sold outside of the US for pennies on the dollar. Multiple Mylan competitors have attempted to bring alternatives to market in the US for years. Mylan, in some sense partnering with the FDA, has done the most reasonable thing to maximize their shareholder value. In the absence of competitive pressure to keep prices low it would be irresponsible not push the envelope on price and fulfill their fiduciary duties to their shareholders.

The FDA combines the worst of the precautionary principle with a blindness to cost. I do not have inside information on the specifics of decisions to impede the deployment of competitive products and I do believe there is a specific conspiracy. It is likely simply to convergence of perverse incentives within the agency which which prompt employees to avoid risks associated with approval of competing products. The net result is the cost of the injector rising from around $50 for a single unit to over $600 for the obligatory two pack.

A second but related element is the role of health insurance in the evolution of this problem. While the EpiPen is in the news, the peculiarities regarding its pricing is fare from unique in health care. Perverse pricing of health care related goods and services are more the rule rather than the exception. The perverse pricing structures are a consequence of the use of third party payment mechanisms which result is large segments (but not all) of the public being insulated from the cost of given goods and services. Her lies the source of so many issues we face in health care. Even in the absence of any competitor, there are limits in terms of how much Mylan could charge for the EpiPen and the presence of a large insured population allowed them to push the price hikes much harder than if the public had to pay out of pocket for the EpiPen.

When going back to define which problems we are facing, I believe the crux boils down to the role of insurance and its effect of shielding the paying public from awareness of the cost of delivery of goods and services. The question should be, should we insulate people from the costs of health care delivery and if so, which ones and when? One reason that the EpiPen cost could rise so steeply is that during the time where the cost increases were going into effect, much of the buying public was insulated from the cost. As Holman Jenkins wrote in his WSJ article (Jenkins):
Well, in the rest of the economy, when a consumer is spending out of his pocket, he has incentive to judge whether the service he’s buying is worth the price he’s being asked to pay.
Now you know why we offer coupons and rebates to individual consumers. This is our way of trying to re-desensitize customers to the price of EpiPen in order to counter the efforts of insurers to re-sensitize them by hitting them with copays and deductibles.
Then why does getting our coupons and rebates involve rigmarole? Because certain consumers won’t make the effort, and then we get to keep the money that would otherwise go to defray their out-of-pocket costs.


Extrapolate the EpiPen phenomena to the entirety of the health care economy. Jenkins goes on to do this...
It’s a great game and we have fun playing it. On average, however, it probably does not increase the health-care industry’s profit margins or the public’s health—but only the share of national income diverted to health care from everything else: beer nuts, wedding presents, automobiles. Our industry’s share of GDP is 17%, up from 13% two decades ago. Hooray, that’s $700 billion a year.
  Obviously, there are catastrophic events where insurance has a vital role. Heck, that is the purpose of insurance.  However, when the desire to insulate the public from the cost of mundane and predictable services they can and should plan for, and to use insurance to meet those ends leads to outcomes which become catastrophic when considered in aggregate. Where well functioning markets are relentless in driving down costs, regulated health care markets drive up costs, even of old products with little or no commensurate value added to the public. Despite the best of intentions, the results are not what virtually anyone desires, unless you are Mylan Pharmaceuticals benefiting from a governmental facilitated monopoly.