This afternoon, Reps. Kurt Schrader (D-OR), Ron Kind (D-WI), and Allyson Schwartz (D-PA) hosted a conference call to announce the Comparative Effectiveness Research Act of 2009. The lawmakers acknowledged that our current health care system wastes billions of dollars on unnecessary or ineffective treatments or procedures and argued that research that compares the clinical outcomes of alternative therapies used to manage the same condition could help lower the nation’s health care spending. The bill establishes an independent institute for comparative effectiveness research and a 21-member board of health care stakeholders to oversee the process.

The conference call announcing the legislation included Tony Coelho the chairman of the Partnership to Improve Patient Care (PIPC), the lobbying arms of the drug, device and biotechnology industries. The group seeks to “give industry a seat at the table when federal officials decide what to research” and during the call, Coelho emphasized the importance of a patient-centered approach to comparative effectiveness research:

I’m encouraged by inclusion of these safeguards in this bill…my concern is that cost containment will become the main goal [of research] leading to the misuse of comparative effectiveness studies to approve one size fits all polices that prevent patients from getting access to the care they need.

In January, a coalition of groups who accept money from the pharmaceutical industry sent a letter to Capitol Hill demanding “that any agencies conducting comparative effectiveness reviews be run ‘through an open and transparent process that allows for patients, providers and other stakeholders to participate equally in governance and input, starting from the research planning stage.”

The industry is interested in controlling the data, “how it is reviewed, evaluated, and whether the public and government find out about it and use it.” This is why their seat on the 21-member board is so critical. The lawmakers on the call indicated that the Governing Board would consist of 3 members from each interest group. The public, private industry, and health quality researchers would all be represented. But why should pharmaceutics companies “have a the right to veto controversial inquiries and limit the scope of the research that gets done?” As Merrill Goozner asks, “do publicly traded companies have a seat on the governing board of the Securities and Exchange Commission? Should we give Boeing and Airbus the right to determine the scope of the National Transportation Safety Board’s inquiry into airplane crashes? Does the current financial crisis suggest the banks should have more say over how they are regulated?”

Private industry should not be vetoing the decisions of health quality researchers and the government shouldn’t dictate a certain course of treatment. That should be left to the patient and her/his doctor.

But to reduce the waste in our system, the government can and should provide incentives for providers to focus on care quality. This bill, however, specifies that any research the institute produces “cannot be used to define policy guidelines or mandate any particular regiment or treatment.”

If we can’t guide providers towards adopting best policy practices, then what, after all, is the goal of comparative effectiveness research? If we’re really serious about lowering health care costs and enhancing care value, then the first step is comparative effectiveness research. But as the CBO points out, to really generate savings, “we will need legislation to provide incentives on penalties for following or not following where that information leads.” That isn’t health care rationing. It’s just smart medicine and good economic policy.

Blue Cross/Blue Shield of North Carolina’s (BCBSNC) ads that attack the public health plan as a mechanism for rationing health care are criticizing an idea, not a specific proposal. Recall that Democrats argue that a new public option should compete with private insurers for beneficiaries, but they have yet to agree on what that plan should look like. Some Democrats maintain that a new public health plan could be modeled on the experiences of state governments that currently offer their employees a choice between traditional private health insurance and a self-insured plan administered by the state.

Thus, given the company’s role in administrating the State Employee Plan in North Carolina, their ad seems all the more perplexing: BCBSNC may be attacking the very same kind of model that it now administers.

BCBSNC’s behavior has led to disaster in North Carolina. Recently, the State Health Plan “came in $137.6 million off its budget for fiscal year 2008, resulting in a $79.7 million loss.” Part of the problem was that BCBSNC’s administrative “expenses cost $200.1 million more than planned.” Its administrative expenses “have never been audited“:

The plan also underestimated administrative expenses by $36.3 million due to the fact that the consultant hired to forecast expenses did not have access to Blue Cross and Blue Shield of North Carolina’s costs to accurately predict expenses… The auditor’s report places much of the blame for the administrative expense overruns on the failure of State Health Plan officials to draft a reasonable contract with BCBSNC. The current contract does not specify what costs BCBSNC is able to charge to the plan and provides no incentives for BCBSNC to keep its costs down. In fact, according to the audit, it does the exact opposite. The plan agrees to pay BCBSNC its costs – plus a percentage of the insurer’s costs to provide a profit margin. Such a setup, however, means that BCBSNC makes more as the state’s costs rise. The audit report notes that the federal government stopped using such contracts in 1941.

Now, the North Carolina legislature is considering a “major fix” to the State Health Plan “that will cost taxpayers roughly $710 million, reduce benefits for state employees and teachers.” State employees would have to pay an average of more than “$600 per person over the next two years” and all premiums “would increase by 10 percent in each of the next two fiscal years.”

BCBSNC behavior suggests that reforms should be weary of using state-run plans as a model for the new public option (third-party private administrators dont’ have a record of lowering health care spending). But more importantly, BCBSNC’s attacks against health reform suggest that the company is afraid of being held to account.

Just days after promising to “work together” with President Obama and Congress “to provide quality, affordable coverage and access for every American,” North Carolina’s Blue Cross Blue Shield is “putting the finishing touches on a public message campaign” aimed at defeating a new public health plan option:

In three 30-second videos, the insurer paints a picture of a future system in which patients wait months for appointments and can’t choose their own doctors, according to storyboards of the videos obtained by the Washington Post.

Insurers are working hard to protect their monopoly for covering Americans under 65 and the threat of a public options if motivating insurers to support cost containment and embrace of tight government regulations. They figure: agree to modified community rating now, hold off (i.e. eliminate the need) a public option in the final legislation.

But ironically, by attacking the new public option the industry is showing its hand. They oppose the public plan not because it will do what they claim — force patients to “wait moths for appointments” and not allow them to “choose their own doctors.” If that were the case, who’d sign up for such a thing? If the public health care plan really rationed care, then most Americans would stay with their private insurers.

They fear a public option because it may actually provide comprehensive benefits at a lower price and attract new beneficiaries. They fear it, because it would force them to compete with it. And for most Americans that would be a good thing.