Wednesday, January 21, 2009

Why would the Med-Fed board be immune to "regulatory capture" and undue influence

Tom Daschle is promoting the idea of a Federal Health Board that would in his words:

" set standards for benefits and quality for federal program and insurance." he continues:

Just as the Federal Reserve ensures certain standards, transparency and performance for our banking industry, the Fed Health would ensure harmonization across public programs of health-care protocols, benefits, and transparency. Ultimately, the Fed Health would offer a public framework within which a private health-care system could operate more effectively and efficiently.


See here for some more of his comments on the virtues of his plan.

If I were arguing for such a board, this last analogy I would want to make is reference the agency that was said to ensure standards and transparency and performance of the banking section. If the proposed Fed-Med lived up to the Federal Reserve's performance in regard to credit and loans, no one would be able to get medical care even though the government had just thrown billions into the health care industry to "shore it up'"

Thanks goodness, we had the Federal Reserve Bank and the FDIC and the SEC as well as several banking regulatory agencies or we would have a had a frightening financial meltdown.

While there are many folks and organizations that rightfully share the blame for recent financial meltdown there is a strong case that can be made by a major element being regulatory failure. See here for a discussion of that.

One of the reasons that can lead to regulatory failure ( but not the only one) is the phenomenon of regulatory capture.

Wikipedia explains the term "regulatory capture" this way:

Regulatory capture
is a term used to refer to situations in which a government regulatory agency created to act in the public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating.

A national board with the power and influence that a Med-Fed would have will attract what economists called rent-seekers like flies to honey or some similar Dan Rather simile.(Basically we are talking about the efforts to cut one's self a bigger piece of the pie)
Medical equipment manufacturers, drug companies, rehab centers, managed care companies might all see the opportunity to score big.Medical Associations, hospital organizations etc etc- just about anyone and anything that wanted a bigger piece.

The Interstate Commerce Commission is often highlighted as the poster child for a regulatory agent that did more favors for the alleged regulated entity than acting in some nebulous public interest. However, the history of the FDA strikes closer to medical home. See here for the most recent expose of how that agency failed to monitor potential conflicts of interests in investigators who contributed to research used to support the approval of medications. Further, it is hard to forget their track record in the matter of telithromycin. OK some of that is more properly the typical bureaucratic way of doing things and not actual capture. It took the FDA about a year to re-analyze the Vytorin data and conclude that folks on that med and doing ok need not stop and that lower cholesterol is really better.Wow,only a year and somehow a federally mandated organization will- according to Daschle- be able "harmonize benefits and health care protocols" presumably for everything.

The health care protocol idea is being promoted by David Snow, CEO of Medco. Medco is the same organization that,as explained in this Sept 30, 2003 NYT report,that was accused by the federal government of destroying medical prescriptions,not filling prescription bottles with the ordered number of pills,lying about contacting physicians,coercing pharmacists and paying bribes to get contracts. DrRich has commented on Mr Snow's recommendations suggesting that an additional benefit would be solving the country's shortage in primary care physicians.(Warning for readers offended by frontal irony and sarcasm).

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