Friday, June 19, 2009

Health Reform and Competitiveness

Democrats have spent years arguing that corporate tax rates don't matter to U.S. competitiveness. But all of a sudden one of their favorite arguments for government-run health care has become . . . U.S. corporate competitiveness. Political conversions on this scale could use a little scrutiny.

"Businesses now recognize that if we don't get a handle on this stuff then they are going to continue to be operating at a competitive disadvantage with other countries," President Obama recently remarked. "And so they anxiously seek serious reform."

Sure enough, many business leaders who should know better have picked up the White House theme. "You won't fundamentally solve the problems in business until you solve the problem of spiraling health-care costs, which is driving everybody crazy," said Google CEO Eric Schmidt the other day.

Messrs. Obama and Schmidt need to brush up on their economics. Employers may write the checks to the insurance companies, but workers still pay for the coverage they get from those employers. The total cost of an employee is what matters to businesses, and fringe benefits are as much a part of compensation as cash wages. When health costs rise, firms don't become less competitive, as if insurance were lopped out of profits. Instead, nonhealth compensation drops. Or wages rise more slowly than they otherwise would.

A recent study from none other than the White House Council of Economic Advisers notes exactly this point: If medical spending continues to accelerate, it expects take-home pay to stagnate. According to the New York Times, White House economic aide Larry Summers pressured CEA chairman Christine Romer to make the competitiveness argument, "adding that it was among the political advisers' favorite 'talking points.'" Ms. Romer pointedly retorted, "I'm not going to put schlocky arguments in there." How the schlock gets into Mr. Obama's speeches is a different question.

It's certainly true that the U.S. employer-based insurance system can dampen entrepreneurial spirits. There's the "job lock" phenomenon, in which employees fear leaving a less productive job because they're afraid to lose their health benefits. Another problem is that insurance costs more for small groups than the large risk pools that big corporations assemble, meaning that it's harder to form new businesses that can offer policies. But all this is really an argument for developing the individual health insurance market, where policies would follow workers, not jobs.

As for the competitiveness line, it's nonsense for most companies. The exceptions are heavily unionized businesses like auto makers that have locked themselves in to gold-plated coverage, especially for retirees. They have a harder time adjusting health costs and wages. Other companies might get a bit more running room in the short run if government assumed all health costs a la the single-payer systems of Western Europe. But over time the market would clear -- compensation being determined by the demand for and supply of labor -- and wages would rise. Or they might not rise at all if health-care costs are merely replaced by the tax increases necessary to finance Mr. Obama's new multi-trillion-dollar entitlement.

This is where the real competitiveness argument is precisely the opposite of the one pitched by Messrs. Obama and Schmidt. Consider the European welfare states, where costly entitlements and regulations make it extremely expensive to hire new workers. The nearby table lays out the tax wedge, the share of labor costs that never reaches employees but instead goes straight to government. In Germany, France and Italy, the tax wedge hovers around 50%, in part to pay for state-provided health care.

By contrast, the U.S. tax wedge was around 30% in 2008, according to the OECD. In other words, the costs of providing insurance would merely be converted into a larger wedge, which would itself eat into compensation. This is why Europe has tended to have higher unemployment and slower economic growth over the past 30 years.

If Democrats really want to increase U.S. competitiveness, they could look at the corporate income tax, which is the second highest in the industrialized world and a major impediment to U.S. job creation when global capital is so fluid. Or drop their proposals to raise personal income-tax rates, which affect thousands of small- and medium-size businesses that have fled the corporate tax regime as limited liability companies or Subchapter S corporations. Or cut capital gains rates, which deter risk taking and investment. Or rethink their plans to rig the rules in favor of organized labor by doing away with secret ballots in union elections.

On all these issues and more, Democrats want to increase, not reduce, the burdens on U.S. business. Their health-care line is, per Ms. Romer, "schlocky" political spin.


VA inspections show continued hospital flaws

Proper training lacking at many centers. Amazing inattention to asepsis

Fewer than half of Veterans Affairs centers given a surprise inspection last month had proper training and guidelines in place for common endoscopic procedures such as colonoscopies - even after the agency learned that mistakes may have exposed thousands of veterans to HIV and other diseases. The findings, from the VA's inspector general and obtained by Associated Press, suggest that errors in colonoscopies and other minimally invasive procedures performed at VA facilities may be more widespread than initially thought.

The report was slated to be released Tuesday at a hearing before a House Veterans Affairs subcommittee, in which VA officials are scheduled to take questions. Rep. Harry E. Mitchell, Arizona Democrat, chairman of the hearing, on Monday called the situation a "damaging blow to the trust veterans place in the VA." Mr. Mitchell said he wants to learn what changes have been put in place to prevent similar mistakes.

Howard McIntyre, commander at one of two Disabled American Veterans chapters in Augusta, Ga., called the findings "disturbing" and said "there shouldn't have been any low level of training at all. "As soon as it was caught, the training should have been stepped up instantly," the 67-year-old Navy veteran said. Medical care for veterans, he said, "shouldn't be any less than perfect, because these are lives we're talking about."

Agency spokeswoman Katie Roberts said the VA is strictly enforcing a requirement that each facility verify that it's implementing correct standard operating procedures. "We are outraged at these results, of course, and are taking aggressive action to fix this problem quickly and effectively," Miss Roberts said.

The random inspections were conducted May 13-14 at 42 VA medical centers across the country. They found that 43 percent of the centers have standard operating procedures in place and have properly trained their staffs for using endoscopic equipment.

The investigation comes months after the discovery of a mistake at Murfreesboro, Tenn., led to a nationwide safety campaign at the VA's 153 medical centers calling attention to potential infection risks from improperly operating and sterilizing the equipment. Along with Murfreesboro, the agency has said mistakes were identified at a Miami center and at an ear, nose and throat clinic in Augusta. In February, the agency started warning about 10,000 former patients at those facilities, some who had colonoscopies as far back as 2003, to get blood tests for HIV and hepatitis.

As of Friday, the VA reported that six veterans taking the follow-up blood checks tested positive for HIV, 34 tested positive for hepatitis C and 13 tested positive for hepatitis B. There is no way to prove whether the infections came from VA procedures, and some experts say most or all of the infections probably already existed. The VA said the chance of infection was remote.

Sen. Richard M. Burr of North Carolina, the ranking Republican on the Senate Veterans Affairs Committee, said, "Too many questions surrounding the VA's handling of this issue remain unanswered."

The VA has acknowledged that the mistakes were caused by human error. A question has been whether the mistakes might have been repeated at other facilities using similar equipment. In Murfreesboro, officials think use of an incorrect valve may have allowed body fluid residue to transfer from patient to patient, possibly for more than five years after the equipment was installed in 2003.

In Miami, a tube that was supposed to be cleaned after each colonoscopy was instead cleaned at the end of each day, affecting patients between May 2004 and March 2009. And in Augusta, the ENT scopes used for looking into the nose and throat weren't properly cleaned, affecting patients between January 2008 and November 2008.

Since VA reported those mistakes, a key question has been whether they might have been repeated at other facilities using similar equipment.


NHS medication mistakes hitting kids on large scale

Ten thousand safety alerts over medication given to children are being issued annually in the NHS, including serious errors in the calculation of drug doses and health workers forgetting to give patients their medicine, research shows. The first report into health service safety incidents concerning children shows that 61,000 alerts were recorded between October 2007 and September 2008 in the care of patients under 18, with 18,200 involving babies aged under 1 month.

A quarter of the cases were the result of misuse of medication, including examples where patients received ten times too much of a drug owing to a dosing miscalculation. There were more than 2,800 alerts involving wrong or unclear dose or strength and children under the age of 4 were particularly affected.

The report, by the National Patient Safety Agency (NPSA), concludes that over the period there were 33 deaths of children and 39 deaths of newborn babies that had “indicators of avoidable factors”. The findings echo concerns raised in recent years over the lack of treatments tailored for children, and how nurses are often left to carry out complex calculations to ensure that the right amount of a drug tested for adults is given to a child.

The report is the first to calculate the impact of safety alerts on children. It uses information sent in from health trusts to the NPSA’s Reporting and Learning System (RLS) and analysis of key research papers. Of the 900,000 alerts issued annually, 7 per cent were found to involve people under 18. Researchers found that children up to the age of 4 had the second-highest percentage of medication incidents of all age groups, after the over-75s. Most of the incidents reported to the NPSA resulted in no harm or low harm to the baby or child.

Jenny Mooney, head of child health at the NPSA, said that one concern was the very small number of alerts from the primary care sector — only 4 per cent of the 61,000 total — suggesting that the figure was a substantial underestimate.

Dr Mooney said that the review showed that errors could occur when calculating and preparing drug doses for children. “It comes down to the availability in terms of drugs. You would always try to get them in liquid form, but sometimes you may not be able to. You end up having to crush up tablets . . . and it is fraught with potential problems.”

Other examples included confusion over milligrams and micrograms. Among babies, errors relating to treatment or procedure was the most common incident type (3,294 alerts), followed by medication incidents (2,881). Among children, medication incidents were the most commonly reported incident type (7,029), followed by treatment or procedure (5,416) and accidents involving the patient (4,576).

Dr Mooney added that she hoped that reporting of alerts would continue to improve, because a high number of reports did not necessarily indicate that a trust was performing poorly, but that its surveillance was thorough. “It is about changing the culture of reporting,” she said.

The report, called Review of Patient Safety for Children and Young People, said that more than half of accidents involving children related to slips, trips and falls. The report noted that 2,000 children a week are admitted to hospital with accident-related injuries and added: “It can therefore be anticipated that children will also be at risk of accidents while in hospital, and appropriate safeguards should be in place to protect children from accidental injury while receiving healthcare.”

The NPSA is urging NHS organisations to examine a range of best-practice guidance to help to cut the number of incidents, and better training for staff and a review of local procedures for managing medicines.

Kevin Cleary, the NPSA’s medical director, said that the agency had highlighted a range of recommendations for best practice to help to improve care and reduce safety problems: “The majority of patient-safety incidents involving children were reported to have resulted in no harm or low harm. However, we are hoping this constructive feedback will support all trusts and clinicians in delivering even safer clinical care to all NHS patients in the future.”

Case Study: Gentamicin

Gentamicin, an antibiotic used to treat bacterial infections in the very young, was the subject of 400 safety alerts between April 2007 and March 2008. It is administered intravenously for the treatment of neonatal sepsis, but has a narrow therapeutic range: slightly too little or too much can affect its toxicity and efficacy. An analysis of Reporting and Learning System data for neonatal medication incidents involving gentamicin identified 400 incidents. Two thirds of these were related to problems with administration of the drug, 23 per to prescribing and 6 per cent to insufficient monitoring. Gentamicin is the subject of a joint project between the National Patient Safety Agency and the Royal College of Paediatrics and Child Health relating to safe administration.

Best practice in neonatal care, being piloted, includes “no interruption” policies during prescribing, preparing, checking and administering; use of a 24-hour clock when prescribing; and administration of the dose to be given within one hour either side of the prescribed time.


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