In an earlier blog post, I noted that current Medicare policy misallocates resources by subsidizing expensive dialysis for the life of the patient but limits subsidies for immunosuppressant medication to only three years after a kidney transplant. I support the addition of lifetime coverage for antirejection drugs proposed in the House and Senate versions of the health care reform bill. I thought this was uncontroversial. However, the issue is more complex than I first believed.

A story in the Dec 14, 2009 New York Times points out that adding this coverage may have the unintended consequence of causing dialysis centers in rural areas to close. This is because the bill will reduce Medicare reimbursement rates for dialysis treatment. Dialysis centers with a higher proportion of Medicare patients will be hurt the most, as will smaller dialysis centers, which tend to have higher fixed costs, The centers most likely to be affected are in rural areas which serve sparsely populated regions and serve an older population that is less likely to have private insurance. Many of them may be forced to close. The Kidney Care Partners, a coalition that includes kidney patients, dialysis centers, pharmaceutical firms, equipment manufacturers, and the National Kidney Foundation, is lobbying Congress to not allow this to happen, even if this means dropping the increased coverage for antirejection drugs.

This is stupid. There is no reason to link these two actions. Increasing funding for post-operative medications will encourage more kidney patients to seek a transplant and make it more likely that patients that do get a transplant will adhere to their drug regimen. This will enhance patient quality of life, potentially increase longevity, and possibly even reduce overall Medicare costs. Reducing Medicare reimbursement rates for dialysis will reduce costs, but it does nothing to encourage patients to switch their treatment from dialysis to renal replacement.

[Update 1: I added a final paragraph explaining that the two funding decisions should be independent.]

[Update2: The Senate version of the health care bill, H.R.3590, passed on Dec 24. It does not contain the provision to extend Medicare coverage for immunosuppressive drugs or to reduce payments to dialysis centers.]