What Have They Been Smoking? Tax Supporters versus the Truth

July 7, 2004 by Linda Gorman · Comments Off
Filed under: Issue Backgrounder 

IB-2004-Q (July 2004)
Author: Linda Gorman

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Amendment 35 would raise the state tax on cigarettes and tobacco products. The money would be redirected to groups working to expand enrollment in Medicaid and CHP, to anti-tobacco programs, and to community health centers.

The statements in bold are from the Citizens for a Healthier Colorado Amendment 35 backgrounder, published in September 2004 and prepared for Colorado editors, publishers and reporters. Citizens for a Healthier Colorado supports the passage of Amendment 35.

High taxes do not drive smokers to buy their cigarettes in other states or on the black market. Though some may try to buy out of state, “those cross-order purchases generally fade as smokers go back to their usual habit of buying cigarettes at the corner store.”

Or may be to someone around the corner selling black market smokes. In England, an island with the second highest cigarette taxes in the world, surveys of empty cigarette packs in the litter left after soccer games show that in 1998/1999 only 5 percent of empty packs had not had tax paid on them. By 2001, rates were as high as 41 percent. 1 American smokers can also purchase from Indian reservations and international retailers via the internet. A 2002 population-based New Jersey telephone survey found that internet cigarette purchases grew from 1 percent in 2000 to 6.7 percent in 2002.2

“Because Colorado’s tobacco tax rate is so low currently, we are the source for the black market in other states.” Amendment 35 would bring our taxes in line.

Perhaps Amendment 35 advocates can explain why the U.S. General Accounting Office reports that cigarettes have been smuggled into the U.S. from China, Malaysia, Korea, Russia, Latvia, Mexico, Brazil, Paraguay, Uruguay, and the Philippines, even though Colorado is much more convenient for an American traveler. 3

“Smoking-attributable productivity losses…[are] $218 per each pack of cigarettes sold..”

If this is true, a pack a day smoker produces productivity losses of $79,570 a year. In 2002, very high estimates of annual productivity losses were published in the federal government’s Morbidity and Mortality Weekly Report. The federal figures were $2,278 and $1,193 for male and female smokers respectively— vastly less than the preposterous figure touted by Amendment 35 advocates. 4

Community Health Centers provide low cost health care. Community Health Centers charge the taxpayers a very high rate. Although Community Health Centers receive lavish federal subsidies, the Centers still charge Colorado Medicaid roughly $130 for a basic visit. 5 In contrast, Colorado Medicaid pays private physicians just $27 for the same service. Private urgent care centers that take cash-paying patients charge only $100. One physician, whose office is in a community but who is not a “community health center” (because he pays his own way), estimated that his local community health center charged twice as much as he did, even to the most generous private insurance. Community Health Centers are cheap for patients, but extremely expensive for taxpayers, especially compared to other physicians who provide health care for poor people.

“CHP+ has provided comprehensive health care
coverage to nearly 100,287 children who previously
had no access to other coverage…”

Compulsory Evidence-Based Medicine: An Unproven Idea That Shouldn’t Be Law

March 5, 2004 by Linda Gorman · Comments Off
Filed under: Issue Backgrounder 

IB-2004-F (March 2004)
Author: Linda Gorman

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I. What is evidence-based medicine (EBM)?

Proponents like EBM originator David Sackett say evidence-based medicine is simply a tool to further the “conscientious, explicit and judicious use of current best evidence in making decisions about the care of the individual patient. It means integrating individual clinical expertise with the best available external clinical evidence from systematic research.”

II. So, who could possibly have a problem with using “the best evidence from systematic research?”

No one. That is what medicine does. The last 300 years of medical progress haven’t come about because physicians use Ouija boards to make decisions. But what, exactly, is “the best?” Real science is a messy social endeavor. It mixes observation, experiment, controlled trials, and seemingly farfetched proposals into an ongoing conversation that takes place in papers, meetings, talks, informal conversations, and formal education. Progress occurs when the good ideas are separated from the bad ones through a process of ruling out other possible explanations. Over time, informed judgment, careful observation, repeated trials, elegant
experiments, inelegant experiments, and pure serendipity have uncovered the medical miracles we now take for granted.

Evidence-based medicine proponents think that imposing their standards on physicians will improve clinical treatment. In the normal course of scientific inquiry, physicians will voluntarily adopt EBM standards when they are convinced that they are an improvement. But converting physicians takes clear and convincing evidence, and amassing that takes time. Envidencebased medicine proponents are impatient with the messy discursiveness of real scientific inquiry. They seek to streamline it by having the law empower a handful of experts to dictate which sources of information clinical practitioners must revere and which can be safely ignored. A typical information hierarchy from the University of Washington’s evidencebased toolkit is shown below.

Cochrane systematic reviews are systematized meta-analyses, studies in which researchers use a specific process when they combine a number of different study results into one overall conclusion. “Other SRs and Meta-Analyses” refers to combination reviews done by organizations other than the Cochrane Collaboration.

Evidence guidelines are papers containing their recommendations for best practices. Evidence summaries explain what is and is not known about a particular problem. RCT stands for randomized controlled trials, studies that use statistical techniques to compare results when two similar groups of patients receive different treatments.

Evidence-based medicine proponents are comfortable discarding evidence that does not come from randomized controlled trials and meta-analysis. In fact, Sackett and his co-authors advised people to ignore observational studies. “If you find that [a] study was not randomized,” they wrote, “we’d suggest that you stop reading it and go on to the next article.”1

Health Care For The Mentally Ill

September 13, 2001 by Linda Gorman · Comments Off
Filed under: Issue Backgrounder 

IB-2001-F (September 2001)
Author: Linda Gorman

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Transcript of a speech delivered by Linda Gorman at Putting Patients First, a health care symposium held Aug. 29th, 2001 in Evergreen, Colorado and sponsored by the Rocky Mountain Center for Health Care Policy, an affiliate of the Independence Institute.

Im here to tell you, since were quoting P.J. ORourke right now, he said that Giving more money to government was like giving teenage boys whiskey and car keys. And even though you work as hard as you can to make government programs work, there are certain reasons why they will not work no matter how you work, so were going to get a little lesson this morning in public choice economics.

But to start with I can, yes, give an example at the end of this talk of a drug that has indisputably, or a class of drugs, saved money in hospitalization costs. There are studies out there that do it so if the person who had that question, we can help you.

One of the things I find as I go around and talk about health care in this state, is Im still talking to a lot of people who think that the socialized systems where the government controls health care are still the best. And they really, what they usually will do to me is quote to me or for me, or to argue with me, is quote statistics on things that I think are very bad measures of how health systems in developed countries perform. The classic statistics that are quoted to you are infant mortality, OK? Well, what people dont know is that definitions of live births vary over different countries and so the number of babies born alive depends on where you are. So infant mortality is going to depend on where you are. A one-pound premature baby in some countries in Europe is not considered alive, its not counted. So when somebody quotes you infant mortality to say that the U.S. health care system is bad, ask them if theyve done it by birth weight categories. Other things that are used, our life expectancy, U.S. health care system gets beaten up: Oh, life expectancy is way too short compared to other countries and look how much we spend.

Well, a more useful measure is probably the number of years of useful life, because life expectancy depends on how many risks people take and it can be changed by behavior. Extremely promiscuous people may catch diseases that shorten their lives, people who like to bungee jump may shorten their lives, and so forth, and depending on your culture, youre going to get life expectancy that may change having nothing whatsoever to do with the medical care system. The other things consumer surveys, well, everybody in Canada likes their health care system, I saw a survey that said that 89% of the people thought it was great. Well, at any one time, only about four percent of the people in any given developed country have been in the hospital or needed sophisticated care. So consumer surveys of that kind are worthless, because people dont know what theyre talking about.

Coloradans Can’t Afford The ‘Prescription Drug Fair Pricing Act’

January 26, 2001 by Linda Gorman · Comments Off
Filed under: Issue Backgrounder 

IB-2001-A (January 2001)
Author: Linda Gorman

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House Bill 01-1108. Prescription Drug Fair Pricing Act. Creates a new state health insurance program that is not means tested. Makes the state a prescription drug wholesaler, politicizes prescription drug pricing, creates a new bureaucracy to act as a commercial middleman, gives the state full access to retail pharmacy business records, puts small bio-tech firms at risk by creating a new category of business crimes.

Synopsis: This bill creates a state health insurance program that is not means tested. It also creates a new set of business crimes. Any Colorado resident without prescription drug coverage would be eligible to participate. The bill does not specify whether the drugs covered under the major medical or stop loss provisions of many private health care plans would count as prescription drug coverage. It requires the state to maximize enrollment by eligible residents.

Any pharmaceutical manufacturer selling prescription drugs in Colorado through any state program would be required to agree to sell its prescription drugs to the state at prices negotiated by the Colorado Department of Health Care Policy and Financing. The difference between the list price and the negotiated price would be given to the state in the form of a cash rebate. The rebates would be put in the prescription program cash fund. The legislation lets the Department of Health Care Policy and Financing claim an annual management fee of one percent of the funds assets for expenses in 2001-02. After that, the monies in the fund would be removed from the control of the state treasurer and would be continuously appropriated to the executive director of the Colorado Department of Health Care Policy and Financing. Though this program represents a potentially huge new entitlement, there is no language stipulating that the programs costs cannot exceed the amount of rebates collected.

All retail pharmacies licensed by the state must sell prescription drugs to program participants at prices determined by the Colorado Department of Health Care Policy and Financing. The state will give the pharmacies a $3.00 professional fee for each prescription handled. The pharmacies will recoup the difference between the list price they pay and the mandated state price by filing claims. The bill requires the state to reimburse them on a weekly or biweekly basis. There is no provision for reimbursing pharmacies for the interest lost on their funds while waiting for rebate payments. The bill would make it legal for the Department to collect from the retail pharmacies any utilization data necessary to calculate rebates and require it to keep only trade secrets, work product, or proprietary information confidential.

If after all of the paperwork has been processed discrepancies between the rebate paid and the rebate claimed still exist, the state or the manufacturer must hire a mutually agreed upon independent auditor. If the auditor cannot resolve the discrepancy the side owing the money has to justify why the discrepancy exists within sixty days. If agreement still cannot be reached, a lawsuit may be filed before the district court of the City and County of Denver. No provision is made for reimbursing either side for the cost of funds tied up for the 60-day period.

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