Is rationing required to control healthcare costs? No. Not if you define rationing as denying care to a particular person with a specific illness. That is neither necessary nor even possible given our healthcare system or our legal system. Dr. Donald Berwick’s appointment as CMS Director may be a hoped-for step towards adopting the British system by some, but it won’t work.
Rather, we need a system that focuses on eliminating the moral hazard where neither patients nor doctors have a direct stake in the cost of care. This notion was widely discussed in the debate over Obamacare but seems to have fallen off the political radar screen.
What elements need to be in place to achieve this cost consciousness? First, physicians need to have some of the concerns about the cost of care be embedded in their clinical treatments. This need not pit physicians’ interests against patients’ interest, although clearly that risk needs to be closely monitored. Risk/benefit decisions now are almost entirely made on the concern of risk to the patient’s safety versus the possible uncovering of useful clinical information.
There are many excellent of examples of the common sense benefits of considering costs in clinical decision-making: Use of computed tomography of the head for minor trauma has been well studied and the data are quite clear that unless a patient has headache, vomiting, an age over 60 years, drug or alcohol intoxication, deficits in short-term memory, physical evidence of trauma above the collar bone, or a seizure, a CT of the head has a less than a 1% chance of uncovering a problem that would require any active intervention. It would be a mistake for a physician who still had some concerns about the patient despite the absence of these criteria from being enjoined to order the study. However, the physician should be not only free to follow these well documented guidelines but also free from the risk of a lawsuit if the guidelines are appropriately invoked. Right now, there is absolutely no economic reason for a physician to hesitate to order a CT scan in this setting. While many emergency room physicians are well aware of these guidelines and adhere to them, there are many who do not. Avoiding the CT scan would save costs and also lead to less radiation exposure. There are literally thousands of such examples.
The best way to have physicians concerned about the costs of their diagnostic tests and therapies is to create a competitive model in which both doctors and patients have to worry about how much they are spending. In fact, it may be the only way. While it will take a long time to achieve this type of payment system, it is likely the single most logical approach. The main Obamacare plan model is not to promote such individual responsibility but rather to maintain the piecemeal approach of fee for service care with either price controls or, in progressive-world nirvana, a central administrator determining allowable care. These two approaches will create a nightmare for physicians and patients. Remember that these national healthcare schemes in Europe are fine as long as you are not too ill or not ill at all and really do not care about runaway government spending… Of course everyone loves a “free” system that treats your poison ivy rash and gets you right back to work. But if you have invasive skin cancer, be prepared to wait to see the specialist.
The recently described reorganization of the National Health Service in the UK is not a plan that would be acceptable in the US. They plan to turn the entire healthcare system into the province of primary care physicians. This is a political response favored by progressives who really do not favor real progress. A modern, technologically advanced healthcare system needs knowledgeable and skilled specialists to provide optimal care. Sure, it is good to have coordination of care and treatment for less complex problems but that kind of care should supplement the care of complex and critically ill patients. The latter is more efficiently and more effectively delivered by specialists. A “new age” healthcare system will focus on diet and vitamins and other lifestyle nostrums that have rarely been shown to matter all that much (except for smoking). There are 17.9 million or so patients with cancer in the U.S. They need more than a daily helping of fruit.
In order to make a prepaid system work, a very difficult but achievable reform of the delivery system is required. Obamacare does propose some demonstration projects that look into some aspects of this idea but the whole plan lacks the one element that could make physicians and hospitals aggressively pursue reform models that could work — incentives and competition. Plans with these characteristics can be designed and created but they put far more responsibility in the hands of doctors and patients than Mrs. Pelosi finds acceptable.
msmilack // Jul 27, 2010 at 5:52 pm
forgetn
Thanks for responding. B/w, I do think there is an element of waste in administrative costs that could be curtailed though you are right, that was not the point you were making, so thanks for pointing that out; you are right, I had misunderstood you. I nonetheless remember that detail being part of the overall discussion before the vote on health care though I admit I don’t recall the details now. I’ll have to educate myself on the subject.
buddyglass // Jul 27, 2010 at 6:13 pm
Big agree. Health care costs more on a per-procedure business in the U.S. for sure, but that doesn’t tell the whole story when it comes to total spending. We spend more because we get more. The question is whether the “more” we get is actually beneficial in any meaningful way.
A perfect example of this is the flap last year over the change in mammogram guidelines from the U.S. Preventative Services Task Force:
http://www.cnn.com/2009/HEALTH/11/16/mammography.recommendation.changes/index.html
Essentially they recommended that women start getting routine mammograms starting at age 50 instead of age 40. Almost every other first-world country uses 50 as their guideline. The recommendation was based on the fact that starting routine mammograms at 40 (instead of 50) actually saves very few lives. Does it save some lives? Yes. Just not very many.
What was the response? People went crazy. OMG RATIIONING!!!
What galled me most about it was the fact that using a starting age of 40 is itself just as arbitrary as using 50. Or, for that matter, limiting routine mammograms only to women.
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Oldskool // Jul 27, 2010 at 7:01 pm
Not sure if it’s been mentioned but advertising drives up the cost of health care too. Drug companies spend more on it than they do research. And it probably costs more than lawsuits to boot.
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msmilack // Jul 27, 2010 at 7:45 pm
buddyglass
“Or, for that matter, limiting routine mammograms only to women.”
It is true that there is a significant increase in the number of men who get breast cancer but I do not think the number is high enough to warrant an automatic recommendation of a mammogram for a man. Rather, it is suggested if any lump is found. I’m not sure what the percentage of the population has to be to make it uniformly recommended to all but the number is surely higher than it is at present.
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buddyglass // Jul 27, 2010 at 10:08 pm
@msmilack:
That’s my point. I don’t think men should be getting routine mammograms either. But the argument raised in support of women 40-50 getting them is that “more people will die if this group doesn’t get routine mammograms, cost be damned”.
So if you’re going to push for routine mammograms for women aged 40-50, why not do the same for women aged 30-40? After all, this will save lives. Why not women aged 20-30? Why not men?
They tend to set the age cutoff based on cost. Its a bean counting exercise. Recommend a lower age and you catch more cases early, thus removing the need for expensive treatment later. Plus, you know, less people die. Make the age later and you spend less doing preventative mammograms (the vast majority of which will reveal nothing), but more money treating cases that could have been handled at less expense if they’d been caught earlier.
Bear in mind nobody’s saying that Jane Doe can’t go out and spend her own money to get routine mammograms when she turns 40. She can. The question is whether these mammograms should be subsidized (by everyone else on her insurance plan), given the fairly small likelihood they’ll actually do her any good.
gman // Jul 27, 2010 at 10:16 pm
“The best way to have physicians concerned about the costs of their diagnostic tests and therapies is to create a competitive model in which both doctors and patients have to worry about how much they are spending.” 820 words, and that one, non-specific sentence is the only hint of a proposal in the entire article. The country is desperate to get a handle on out of control healthcare costs, and that’s the best we’re getting? It’s no wonder Obama was able to pass his flawed healthcare proposal – nature abhors a vacuum. I also continued to be puzzled about the contention that European style healthcare leaves very sick people with long waits to see the doctors that they need. I don’t know whether that’s true or not, but somehow Canada, UK, France, Germany, Sweden, Italy, Spain, Norway, Greece, Jordan (!), Netherlands, Luxembourg, Belgium, Finland, Portugal, Ireland, etc, etc, ALL have longer life expectancies than the US. The US is 49th in the world, just ahead of Albania, Cuba & Panama. Sorry, I’m not buying that as a meaningful argument anymore.
msmilack // Jul 27, 2010 at 11:36 pm
buddyglass
Now I totally get your point. Thank you for explaining. As I was reading your response, I was also calculating in my head how much more radiation women would be exposed to if they started younger.
Gman
I was very struck by what you wrote: that we are 49th in life expectancy. There has to be a moral in that story related to the quality of our healthcare system.
I’d be curious how that number breaks down socio-economically because I have a feeling that at least right now, our healthcare system is better for some people than others i.e. people without healthcare die faster than people who can afford medical care — no question — so I wonder how many of those who die young are living in poverty in this country. Maybe that number is less in those other countries and that partly accounts for the difference in overall life expectancy. Certainly the number is an average of all the deaths.
msmilack // Jul 27, 2010 at 11:43 pm
I have a friend whose husband has been in the hospital for ten weeks. He has had emergencies that involved not only ambulances but medical helicopters because he was on an island and had to be taken to a city hopsital where he underwent over several weeks two major operations (life saving), many weeks in intensive care and is now having rehabilitation. I wouldn’t know how to begin to guess at the total cost of his medical bills with or without insurance — the cost is the same, just a question of who pays for it. In his case, he is a retired coach and teacher and with his retirement came medical insurance plus medicare.
I think of Dick Cheney and his multiple heart attacks and stints and life saving operations and his recent implant of a heart pump. I can’t imagine the cost of all his medical care (I’ve read the pump could be a couple hundred thousand dollars) but I have no doubt his is also paid for by his medical insurance from the government.
The difference between the two men is income. My friend lives on a small pension; if he had to pay out of pocket for his care, he would be long dead. In Cheney’s case, he has made millions of dollars over the years and could easily pay for his treatment.
Question: should Cheney (as a symbol) pay for his treatment? Should people of vast wealth pay the same amount of health insurance as the average Joe?
It seems fundamentally wrong to me that people who can afford to pay don’t have to pay.
I’m sure no one agrees with me and I’m not suggesting it would work as legislation. I’m just telling you how it makes me feel: like it is intrinsically wrong.
SFTor1 // Jul 28, 2010 at 2:00 am
I recently worked with a medical devices company. The VP of Regulatory Services could tell me that the company at all times had about 75–100 lawsuits going against other companies, and that they had about the same number of lawsuits facing them from other companies. Eye-opening numbers if you ask me.
And let’s face it, health care will always be rationed. We need to take care away from patients in their last months of life and replace it with hospice care and palliative care. Yes, doctors are competent to make the determination whether you are on your last legs.
And then, more social medicine. More initiatives against obesity, diabetes, and heart disease. More initiatives to increase the health status of the general population. That’s how we provide meaningful care and strengthen our economy to boot.
Bebe99 // Jul 28, 2010 at 2:30 am
it is mind boggling that there are no limits on the kind of care given to those nearing the end of life. Extrordinary measures are taken routinely to simply extend the lives of the terminally ill. In some cases these measures are only extending the suffering of the patient. Just because we CAN extend a life doesn’t mean we always should. This might be called rationing, but it is the issue most needed to be resolved in order to save our medical system.
forgetn // Jul 28, 2010 at 9:57 am
Bebe99:
It is very rare for hospital to undertake extraordinary measure on terminally ill patients. Not only is there a cost element, but within the medical community there is a realization that extraordinary measures (and I don’t mean keeping the patient comfortable) are cruel as most medical procedures are intrusive, painful and dangerous. The exception historically has been for ground breaking work — think heart transplants etc. But then the patient has decided to “donate” their body to science.
Other countries (than the U.S.) have a very well established “hospice” system, that provides end of life counselling for both patient and family (Ms Palin’s infamous Death Panels). This in not something that is common in North America because of the country’s litigious nature (again no criticism — just an observation). The reality is also that doctors are today much better trained to understand when end of life treatment is appropriate. These are complex ethical and moral problems with which doctors have to deal with.
As an example of the change in attitude, 15 years ago a treating physician would usually give to the patient and the family a positive statement as to the nature and progression of the illness. It was though that hope by the family and the patient would “improve” the healing, and increase the likelihood of recovery. Believe it not when this “view” was tested it proved to be false, because as soon as the patient faced a setback (which happens all the time), he became discouraged. Today, “failure is not an option attitude” is no longer part of the vocabulary of the treating physician, they will provide a forthright analysis of the outcome, providing the patient (and his family) with a clear outlook (the internet has also helped): This has proven to be the best outcome for patients since they can “trusts” their physicians — counterintuitive, yes but that’s the result of empirical analysis
busboy33 // Jul 28, 2010 at 10:20 am
So the plan is to achieve all the good things about reforming our Healthcare, without actually reforming it? What we’re going to do is, doctors will be super-good and patients will be super-honest and fair.
I got this plan right? Because if that’s the case . . . yes. That would totally work. If things got better, then things would be better. Yes.
. . . and a personal tip of the hat to throwing “British system” in the 1st paragraph. Totally irrevelant to your point, but really emotional trigger — saying “European Socialist” would have been too obvious, agreed.
Besides, you’ve got the commenters to pick up the ball and run with it. So well done in terms of professionally manipulating people. A skillful job, Mr. Goldfarb. If you want to make it less obvious next time, bury the British reference until about the 35%+ mark. Get at least one random objective point going, then call the trigger. Right in the opening is a tad gouche.
oldgal // Jul 28, 2010 at 10:22 am
Rather than worrying about who gets what when, we would be much better off developing health care delivery systems and tuning them – we have very few in this country and for-profit insurance companies, for various reasons, have little incentive to develop them. Kaiser Permanente and Cleveland Clinic are good examples of health care delivery systems that could be adapted. Anyone who has not studied these delivery systems should stay mute on the topic.
Stan // Jul 28, 2010 at 12:22 pm
It’s shocking but not surprising that Goldfarb omits mentioning the Independent Payment Advisory Board in his post. It’s discussed briefly in this article:
http://www.nytimes.com/2010/07/29/us/politics/29bai.html?hp
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buddyglass // Jul 28, 2010 at 2:38 pm
One way to make consumers “feel” the cost of health care would be to regulate the insurance industry and stipulate (generally) what sort of plans it can offer. For instance, require that all plans have a deductible of at least X and establish an acceptable range for the percentages at which they cover visits, procedures and drugs.
The goal of the plan’s structure should be to maintain the customer’s cost incentive not to utilize services unless they really need them, while at the same time preserving the reason we buy insurance in the first place: risk sharing.
Consider a plan for a single person with a deductible equal to the median per capita health care spending in the United States (say $3000) that covers all visits, procedures and drugs at 50% until the deductible is reached, then at 95% after that. Maybe add a max-out-of-pocket clause of $10,000 per year.
I know I would think twice about certain health care “purchases” if I were going to pay 50% of the cost. The deductible should be high enough that most people won’t reach it, otherwise everyone banks on hitting it and bases their decisions on the 95% post-deductible coverage.