Markets in everything, death edition

by on October 27, 2008 at 10:54 pm in Economics | Permalink

Critics of the measure point to the story of Barbara Wagner,
a cancer patient in neighboring Oregon, whose [state-run] insurance company denied
her request for coverage of potentially life-saving drugs, and instead offered her money for lethal drugs.

Here is more.  I do not expect this to be the last story of its kind.

Doubtful WM Student October 27, 2008 at 11:04 pm

Insurance company? She was on a State Health Plan. Big distinction there.

Anonymous October 27, 2008 at 11:17 pm

If we get national health insurance via Mr Obama this (well hidden, mostly) will be commonplace.

JordanT October 28, 2008 at 12:06 am

This notion that a day of (my loved one’s) life is worth “whatever it costs (someone else)” has got to be ‘fixed’.

I’m trying to have sympathy for her, but I’m having a hard time. She is on free state-run health insurance for the poor. Considering that without the state-run insurance she wouldn’t have been able to afford the radiation and chemotherapy that put her lung cancer into remission in the first place, I think she came out ahead in the deal. Otherwise she would have died months ago from lung cancer that she couldn’t afford the treatments for. She’s essentially complaining that her free health insurance isn’t good enough. I’m not for free government health insurance that allows for unlimited expenditures per patient.

Mike M October 28, 2008 at 1:58 am

Someone should tell Oregon about the Internets. A quick google finds me Tarceva at half the price in Canada. Oregon is so close they should have regular supply runs north.

People are denied health care from insurance companies all the time. What makes this a newspaper article instead of a statistic is she was offered a drug to kill her in the same letter as being denied the drug she wanted.

Eliezer Yudkowsky October 28, 2008 at 3:11 am

And the solution is so obvious, too. In any sane world. What a hideous pity…

Andrew October 28, 2008 at 4:19 am

We won’t hear these stories with medicare until the taxpayer is tapped out. Then it will be all we hear.

Yes, the solution is obvious. Cryonics.

Otherwise, chemotherapies wouldn’t really “save her life,” and if they do, she should have to repay. I could come up with an ineffective treatment for half the cost! She should be allowed to sell her kidney, though organs riddled with metastatic cancer may not be in demand. Terminal patients should be paid to undergo experimental treatments. We need better personalized diagnostics that target chemotherapies that will actually work for your specific type of cancer. And, where are her friends and family?

People don’t get to live forever, even if they believe there are magical miracle cures that fall from heaven but for big mean insurance companies keeping everyone from having them.

Andrew October 28, 2008 at 7:10 am

“money for lethal drugs.”

This reminds me of the countries that require people to own guns. Government just doesn’t get it.

NGoldschlag October 28, 2008 at 8:03 am

Article that was forwarded to me recently on this topic:
“Cost-effective Medical Treatment: Putting an Updated Dollar Value on Human Life”
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1949

y81 October 28, 2008 at 11:19 am

meter, what are you talking about? Do you know how to read? It isn’t a for profit insurance company that is denying this woman care, it is the state. Get it? The state. The same entity that will be supplying insurance under any non-free market health care plan.

Interesting that ABC News is flat out dishonest in its coverage, referring to an “insurance company” rather than “the government.”

apostate October 28, 2008 at 11:22 am

Maybe free marketeers should focus more outrage on why a life-saving drug costs $4,000/month but one which will kill you costs $50.

Am I supposed to be outraged because it took an army of doctors and researchers and several hundred million dollars worth of drug trials to prove it’s saftey and efficacy? Or because those same people expect some compensation for it?

8 October 28, 2008 at 11:52 am

In poor countries, doctors will sometimes recommend that a patient save their money because their condition is terminal. It is up to the family whether to deplete life-savings to save a life, or accept fate and save their resources. In our system, the insurance company or state makes the decision, and it creates an antagonistic relationship. The family bears no cost, so they almost always choose to save the life, versus the cost bearer who wants to save money. I don’t know why anyone wants to further remove this decision from the family and leave it up to the state, with sovereign immunity, to decide. I’d rather we return control of the money to individuals and let this heartwrenching decision be made at the family level.

meter October 28, 2008 at 11:57 am

I thought my post was clear, but let me be clearer:

No, we don’t have a free market health insurance system. My comment is that were we to, this situation would have had the same result: the woman would have been dropped by her provider and would have had to either come up with $4k/month out of pocket or suffer the ravages of her illness.

We *do* have a free market in drug prices. So even with privatized health *insurance* that $4k/month figure doesn’t change.

mpowell October 28, 2008 at 12:45 pm

This story is very striking, but with a deep irony. This approach to healthcare is very reasonable. A 5%, 5 year rule is a perfectly reasonable standard. You could argue for a different standard, but the idea that there should be some kind of similar standard is pretty much indisputable. Once you recognize that, it also makes sense for the insurance company to offer a legally assisted suicide option. This is all independent of who is providing the insurance. Now, maybe it was a poor decision for the insurance provider to advertise the suicide option to the patient, but you are bickering over details at that point. I should add that I’m a liberal, not a libertarian and that I think universal healthcare would be a good way to go. This is an example of things working more or less the way that they should. The fact that it is regarding as newsworthy is what is striking. People need to come to accept that these are the kinds of cost saving measures that make the most sense in a healthcare plan.

meter October 28, 2008 at 1:15 pm

Where are the pro-lifers on this issue I wonder.

In a McCain system, millions of people go uninsured and the number of Barbara Wagners skyrockets. Maybe we should only save (non-poor) babies and leave the elderly/poor to die ignoble deaths.

apostate October 28, 2008 at 2:13 pm

meter-

A free market system (which we currently have only in fits and spurts) gives compensation for those who develop the “blockbuster” drugs that help extend or improve people’s lives. The newer ones will costs more because they have not had their R&D paid off yet and have not been adopted for mass market use. A private insurance carrier will weigh the benefits and risks associated with the new drug. If they feel it’s too expensive for the result, or the type of insurance, then yes they will drop you. You can still purchase it with your own money. If you believe this is going to be an issue in your life then you can buy better insurance, which results in competition and therefore higher levels of efficiency and ulitimately price reduction in goods and services. Or you can just save more in anticipation of the event.

A universal government insurance system will seek to keep costs down as well. However, they will do it in a much different way. They will restrict how much companies can charge for drugs. Or if they feel nice, negotiate for the drug on a national level. While that may make prices for that particular drug go down, it ends up both limiting competition as well as limiting the choices patients have. By limiting competition they cut into R&D budgets and any efficiency improvements that other competition brings. So in the long run you may not have nearly as many “blockbuster” drugs to prescribe.

So to answer your previous question, in a state run system the drug might not even exist to be denied. State run systems only exist because people don’t realize what they are losing. If there was some way to show people how many drugs were not developed due to state intervention there probably wouldn’t even be a debate.

Andrew October 28, 2008 at 2:59 pm

“I grant that it’s possible that more of the home run treatments might not make it to production in a state-run system.”

This could be the understatement of the next 4 years. Under a completely state-run system, this story would never run because the expensive drug simply wouldn’t exist.

Even now, she probably shouldn’t get the drug, but the way we find out today is we give them the drug, if the insurance company approves the kickback. I don’t know if accurate data even exists on effectiveness, but most chemotherapies as far as I can tell are simply high-priced placebos.

apostate October 28, 2008 at 4:36 pm

However, the model we currently have with regulated cable companies, wireless providers, etc. doesn’t make that a foregone conclusion. They are still innovating, rolling out new products, improving/expanding existing services even though they can’t charge “market rates” for these goods & services. Their capex isn’t exactly small either.

That is a good example. Where there is competition allowed, even if it is limited, there is still innovation. I’ve never been of the opinion government stops innovation. But it clearly inhibits it.

What kind of services would we have sans regulation? I would posit that we might have a vastly superior system than what we have. Perhaps everyone would have some sort of high end FIOS as a default, with options for much more. But again it’s not really easy to demonstrate exactly what would have been possible had things gone a different route. But since free markets historically provide higher levels of innovation, and the priority of doing more with less, I find it easy to speculate that their would likely be more advanced products the less restraints on the system.

Andrew October 29, 2008 at 5:22 am

Oh, and regulation and nationalization now would lock in overpriced, ineffective, highly toxic drugs. So, speculation is completely unnecessary.

Frank K. October 29, 2008 at 9:12 pm

Read the article, people, rtfa.

Has ANYONE here read the second page of the article before fuming off about evil insurance deathmongers?

The median survival among patients who took erlotinib was 6.7 months compared to 4.7 months for those on placebo. At one year, 31 percent of the patients taking erlotinib were still alive compared to 22 percent of those taking the placebo.

… the drug does not meet the “five-year, 5 percent rule” — that is, a 5 percent survival rate after five years.

So, you want to spend $48000 for a 9% extra chance in 1-year survival?

That’s $533,333 to give a statistical one patient one more year of life.

I’m sorry, but the same money can be spend elsewhere than a 64 year old smoker. Nobody has a right to immortality.

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