March 23, 2020—At the beginning of the last decade, there was great excitement about the future of medicine. Advances in biotechnology, nanotechnology, diagnostics, information technology, stem cell treatments, vaccines, and organ transplants were poised to radically improve the health prospects of Americans. Looking back from 2020, we can see that most of these major biomedical advances failed to materialize. What happened? Three words: health care reform.
Thanks to the health care reform legislation, a higher percentage of Americans are now covered by health insurance than ever before—up from 83 percent in 2010 to nearly 95 percent of the legal population now. About half of the newly insured are covered by Medicaid and Children’s Health Insurance Program. Most of the remainder purchased subsidized coverage through the new state insurance exchanges. There have been some improvements in the overall health of Americans. Cardiovascular disease continued its decline because cholesterol lowering statins, which are no longer under patent protection, are more widely prescribed under new federally set treatment guidelines. Over the past 10 years, cancer mortality rates have also continued to decline, at least in part because people now covered by government programs or subsidized insurance now receive earlier cancer screening. Nevertheless, in 2020, cardiovascular disease and cancer remain the leading causes of death among Americans.
It seems like 2020 is a good time for American health care. But these benefits are what 19th century economist Frederic Bastiat would call the visible, or “seen” effects of health care reform. Bastiat pointed out that the favorable “seen” effects of any policy often produce many disastrous “unseen” later consequences. Bastiat urges us “not to judge things solely by what is seen, but rather by what is not seen.” A bad economist looks only at seen effects, according to Bastiat, while a good economist tries to foresee the unseen effects of a policy. So trying to play the role of a good economist, what were some of the deleterious unseen effects of health care reform enacted back in 2010?
Since 2010, insurance companies had been turned essentially into public utilities with the feds setting strict minimum benefits requirements. The health reform bill also limited the administrative costs of insurers, which has ended up basically guaranteeing their profits. With competition all but outlawed, the increasingly consolidated insurance industry has had very little incentive to pay for new treatment regimens outside those specified by government standard-setting agencies. Federal government health agencies have been reluctant to authorize newer treatments because they often lead to higher insurance premiums that then must be subsidized by higher taxes.
Then there is the doctor dearth. The signs of the impending shortage were already clear back in 2010. For example, as reimbursement rates from government health care schemes tightened, more and more doctors were refusing to accept Medicaid and Medicare patients. After health care reform passed, the physician shortage was exacerbated when many doctors faced with declining incomes simply chose to retire early. Already bad in many areas back in 2010, waiting times for a doctor’s appointment 10 years later have nearly quadrupled, reaching the Canadian and British average of about 110 days.
The hardest unseen effect of health care reform to evaluate is what it did to biomedical innovation. Innovation is a trial-and-error process, and making predictions about what might have been is speculative at best. But let’s take a look back at where budding biomedical technologies to treat cancer, replace damaged organs, and develop new vaccines stood back in 2010.
Big pharmaceutical companies initially did fairly well under health care reform, but as the cost of health care rose partly as a result of covering more Americans, Congress enacted legislation allowing government health care schemes to “negotiate” pharmaceutical prices. The negotiation requirement quickly devolved into price controls that have ultimately turned the big drugmakers into little more than cost-plus government contractors. In addition, the feds have established a comparative effectiveness evaluation commission similar to the British National Institute for Health and Clinical Excellence which limits patient access to treatments based on their overall cost-effectiveness. The result of these restrictions is that investments in pharmaceutical and biotech research and development have fallen off sharply.
In his first address to the nation, President Barack Obama promised to seek “a cure for cancer in our time.” In 2020, the five year survival rate from cancer has marginally improved as standard treatments have been more widely deployed, but there is no “cure.” It didn't have to be this way. For example, back in 2010 the biotech startup InCytu was developing a very promising technology that aimed to educate and harness a person’s immune system to destroy tumors. BIND Biosciences was creating a nanoparticle therapy that targeted and destroyed tumor cells while leaving normal tissue alone. Numerous startups were pursuing cancer immunotherapies using cancer vaccines. A couple of treatments, like Dendreon’s prostate cancer vaccine, made it through government approval process. But as health care budgets tightened, private research and development (R&D) funds for new cancer therapies dried up. Sadly, InCytu went out of business in 2014. In 2020, a “cure” for cancer seems as far away as ever.
Hoping to address the shortage of transplant organs, Congress changed the law in 2015 on organ donation to a system of presumed consent. This change did boost the availability of organs, but eventually donations leveled off and tens of thousands of patients needing organs remained on the waiting lists. Back in 2010, treatments using stem cells to repair damaged organs looked promising, especially induced pluripotent stem cells that matched the immune systems of individual patients. An even more visionary proposal was using three dimensional printers to print organs to order, as explained in this retro YouTube video from the startup Organovo. Of course, these possible therapies might have come to nothing, but we’ll never know since private R&D investment funding became scarce as increasing government price controls made the prospects for profiting from new treatments much riskier.
Finally, there's the flu. The 2010 flu epidemic turned out not to be nearly as severe as many at first feared, which is fortunate since vaccine production fell far short of initial goals. Production relied on an 80-year-old technology using inoculated chicken eggs that didn’t work well with the new virus strain. Ever risk-averse, government agencies rejected newer cell-based technologies that could produce flu vaccine three times faster than old-fashioned egg-based technology. In addition, R&D on a universal flu vaccine was put on the shelf for lack of funding. As we now know, this shortsightedness turned tragic when the long-predicted bird flu pandemic finally broke out in 2018, killing over one million Americans. The foregone development of innovative vaccine production techniques could have greatly speeded up the process of inoculating people against the disease.
The seen aspect of health care reform is that it has had some success in providing more Americans with access to vintage 2010 medical therapies. The unseen aspect is that more people are suffering from and dying of diseases that might well have been cured had the Obama version of health care reform never been enacted. As a result of health care reform, Americans forfeited 2020 medicine in favor of more equal access to 2010 treatments.
Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is available from Prometheus Books. This column first appeared at Reason.com.