Author Archives: SEH

Incentivizing comparative effectiveness research

Comparative effective research (CER) compares alternative methods of preventing, diagnosing, treating, and otherwise managing medical conditions.  The Patient Protection and Affordable Care Act authorized creation and funding of an independent agency, the Patient-Centered Outcomes Research Institute, to expand CER in the United States.  A key issue in the years ahead is the extent to which public investment in CER and related initiatives should be further expanded in an attempt to improve the efficiency of healthcare spending, limit cost growth, and reduce projected deficits for Medicare and Medicaid.  My paper Incentivizing Comparative Effectiveness Research, sponsored by the Ewing Marion Kauffman Foundation, provides an overview and analysis of public funding of CER and the desirability and feasibility of incentivizing additional CER in the private sector. It explores key impediments to higher private spending on CER, the rationales for increased public investment, the potential benefits and inherent limitations of publicly-funded CER, and the advantages of pursuing a multifaceted approach to increase private sector, entrepreneurial investment in CER.

The study makes three principal arguments. First, given the complexity and dynamism of modern healthcare and the inherent limitations of public investment in CER, it is desirable to encourage substantial and diverse private sector investment in CER. Second, although the public good characteristics of investment in information reduce private incentives for investment in CER, a more important impediment is the reduction in demand for CER attributable to the design of government and private health insurance and associated provider reimbursement. Third, even apart from the disincentives for CER from the insurance system, careful attention should be paid to possible policies for subsidizing CER without direct government funding and allocation of CER funds. In particular, consideration should
be given to promoting the open availability of research data on medical treatments and health outcomes and to expanding tax incentives to promote decentralized, non-governmental investment in CER. The overall conclusion is that well designed policies to increase incentives for private sector CER have the potential to increase substantially the evidentiary basis of medical decisions, including the stimulation of entrepreneurial investment in innovation to guide such decisions.

Congress’s long-term care bomb redux

As predicted by many, it looks as if the federal long-term care insurance program included in the health care reform law will be financially unsustainable without major fixes.  See, for example, “Long-term Care Needs Changes, Officials Say” in the Feb. 22 New York Times. I wrote about this program in my Dec. 2009 WSJ op-ed. Not to worry though — HHS Secretary Sebelius claims that she has the authority and know-how to fix the program.

Not what the Founders intended

From federal Judge Roger Vinson’s 1.31.11 decision (p. 48) in the Florida case on the constitutionality of the PPACA’s health insurance mandate:

It would be a radical departure from existing case law to hold that Congress can regulate inactivity under the Commerce Clause. If it has the power to compel an otherwise passive individual into a commercial transaction with a third party merely by asserting — as was done in the Act — that compelling the actual transaction is itself “commercial and economic in nature, and substantially affects interstate commerce” [see Act § 1501(a)(1)], it is not hyperbolizing to suggest that Congress could do almost anything it wanted. It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place. If Congress can penalize a passive individual for failing to engage in commerce, the enumeration of powers in the Constitution would have been in vain for it would be “difficult to perceive any limitation on federal power” [Lopez, supra, 514 U.S. at 564], and we would have a Constitution in name only. Surely this is not what the Founding Fathers could have intended.