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Selected news articles which highlight important policy issues.

News: Weekly Archives

News for the week of 07-18-2006

Latest Retail Niche: Clinics
Los Angeles Times, 7-18-06

Editor's Notes: For the latest development in health care look no further than your local Target or Wal-Mart. Retail health clinics are growing in popularity as Americans look for cheaper and more accessible ways to treat simple health problems, without the frustration of insurance paperwork and long waits.

Retail clinics are small, typically no bigger than a sandwich shop. They are open seven days a week and treat minor, non-urgent illnesses including strep throat and ear infections. Appointments are not necessary and most visits last 15 minutes for treatments that cost $40 to $70, which are clearly posted on menu-style boards on the wall.

"Imagine if Starbucks was running your doctor's office," said Dave Mandelkern, chief executive of Burlingame, Calif.-based QuickHealth Inc., which has three clinics in Northern California and plans to open seven more before year's end, including one in Los Angeles.

Doctors and some consumers have raised concerns that these clinics may jeopardize the quality of care in the name of convenience and cost cutting. Most facilities are staffed by nurse practitioners, not physicians.

But proponents say retail clinics could be the answer for millions of patients, including the uninsured and underinsured who often can't afford medical care even when their illnesses are easily treatable. For the insured, the clinics are mainly a convenience, a better option than waiting for a doctor's appointment or waiting hours at an emergency room over a minor ailment.

[permanent link]

A Windfall From Shifts to Medicare
The New York Times, 7-18-06

Editor's Notes: According to the Times, drug companies are profiting from the shift in millions of poor elderly patients from Medicaid to Medicare in the wake of the Medicare drug benefit. The argument is that the private benefit managers in charge of negotiating prices for seniors enrolled in the benefit are paying higher prices for drugs than Medicaid programs did. It is unclear, at least right now, how price competition in the program will play out over time. But it is wrong to assume that lower prices automatically redound to the benefit of consumers. Price controls reduce incentives to innovate, and the Times fails to note that any increased profits will be directed into the research and development of new life saving drugs for American patients.

The windfall, which by some estimates could be $2 billion or more this year, is a result of the transfer of millions of low–income people into the new Medicare Part D drug program that went into effect in January. Under that program, as it turns out, the prices paid by insurers, and eventually the taxpayer, for the medications given to those transferred are likely to be higher than what was paid under the federal-state Medicaid programs for the poor.

About 6.5 million low–income elderly people or younger disabled poor people were automatically transferred into the Part D program for drug coverage. Because their other health needs are still covered by Medicaid, they are called dual eligible.

The advent of Part D has not affected the drug coverage for the 45 million other low–income people whose drugs are still paid for under state Medicaid programs. Those programs closely monitor drug prices, and drug makers often typically end up paying rebates to the states.

It is too early to calculate the full effect of the shift of the former Medicaid patients now covered by Part D. But analysts expect it to generate hundreds of millions of additional dollars this year for the drug companies, which have long chafed under the pricing restraints of the state programs.

The underlying assumption of this article is that lower drug prices are always better. But this is a dangerous assumption, at least for anyone who cares about medical progress.

[permanent link]



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