RSS Feed MenuIs 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.
Rabiner // Jul 27, 2010 at 2:50 pm
Stanley Goldfarb:
“Not unless our country is willing to accept a breast cancer survival rate that is some 30- 50% lower in the U.K. compared to the U.S and a slew of lawsuits that would go with such an outcome.”
When you standardize detection rates I’ve read that survival rates are equal. The discrepancy comes from late detection not treatment for disease found at the same stage.
“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.”
How can you argue for cost/benefit analysis only after criticizing it by mentioning different breast cancer survival rates which are the result of early detection and screening? That detection and screening has been shown to be highly inefficient and unreliable (mammograms come to mind).
“a CT of the head has a less than a 1% chance of uncovering a problem that would require any active intervention”
I hear that if you change recommendations so mammograms are for people after 50 and every 2 years after instead of at 40 and every 2 years after you reduce the false positives significantly and it has little impact on breast cancer killing anyone although that rate would increase.
“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..”
It isn’t a scheme, it’s a system.
mikewaz // Jul 27, 2010 at 3:14 pm
I see a lot of vague hand-waving as to the solution, but no actual description of what we should do. Just saying “physicians should follow the guidelines” doesn’t cut it; look at what happened when the U.S. Preventive Services Task Force recommended changing the starting age for routine mammograms from 40 to 50. Even when they specifically said that people who have significant risk factors like the breast cancer gene, extensive chest radiation exposure, or relatives who had breast cancer should still start at 40, people flipped out. Many doctors said they would not follow that directive. Thousands of ailments are treated differently across the country.
The two Medicare pilot programs that I think have hope for reforming how we pay for health care are the bundled payment pilot that’s scheduled to start in 2013 and the pay-for-performance pilot that was started back in 2005 but appears to still be going. More than anything else we can do, those two changes would change the emphasis in health care from throwing everything against the wall and seeing what sticks to doing it right the first time.
LFC // Jul 27, 2010 at 3:17 pm
There are many excellent of examples of the common sense benefits of considering costs in clinical decision-making:
Sounds great, but unfortunately they are currently politically impossible.
Can you imagine if a gov’t organization like the NIH came up with an annual set of guidelines for health care professionals to follow? Since it’s highly inefficient for every medical professional to keep up on all of the literature and research that would go into this each year, it seems like a great idea, right? Well just wait for the right-wing shrill and shrieking voices screaming “DEATH PANELS!” in 3, 2, 1…
Madeline // Jul 27, 2010 at 3:20 pm
It isn’t a scheme, it’s a system.
“Scheme” has a slightly different meaning in the UK. When I was working in London, my employer handed me some information on the “health care schemes” they offered. I was wondering what was so fishy about them until I realized the “health care scheme” meant the same thing as “health care plan”.
RedSonja2000 // Jul 27, 2010 at 3:34 pm
“Not unless our country is willing to accept a breast cancer survival rate that is some 30- 50% lower in the U.K. compared to the U.S…”
Mr. Goldfarb fails to mention that 10 European countries (according to the WHO) have lower breast cancer mortality rates than the US in spite of their “national healthcare schemes.”
“But if you have invasive skin cancer, be prepared to wait to see the specialist.”
Like a lot of right-wing apologists, Mr. Goldfarb appears to know nothing at all about medical triage. Every country in the world from Zimbabwe to Austria sees the most serious patients first. That’s even exactly how we do it here in the USA and there would be no reason at all to change the practice regardless of who was paying the medical bills.
Oh, and mentioning Nancy Pelosi’s name in the last sentence made me run out the door screaming in terror just as it was supposed to.
Rabiner // Jul 27, 2010 at 3:44 pm
Madeline:
““Scheme” has a slightly different meaning in the UK. When I was working in London, my employer handed me some information on the “health care schemes” they offered. I was wondering what was so fishy about them until I realized the “health care scheme” meant the same thing as “health care plan”.”
That may be so, but he’s writing for an American website. Scheme is very different in American English.
LFC // Jul 27, 2010 at 3:48 pm
Maybe I’m being incredibly naive about their purpose, but shouldn’t the AMA be pushing for a guide to basic standards as a service to their members?
Oldskool // Jul 27, 2010 at 4:19 pm
“if you have invasive skin cancer, be prepared to wait to see the specialist”
Until the new plan goes into effect, you may not get your cancer treated at all unless you produce a boatload of cash or a top notch insurance plan. Suggesting that waiting for care would be something new is disengenuous.
GEValle // Jul 27, 2010 at 4:28 pm
The best, and proven way to lower healthcare costs is to get the government OUT of healthcare…PERIOD.
This includes serious tort reform that limits the ability of trial lawyers to rape insurance companies and pharmaceutical companies. Gee…Now WHY was tort reform NOT in Obama’s “plan”???
msmilack // Jul 27, 2010 at 4:30 pm
Berwick has no interest in rationing.
Rabiner // Jul 27, 2010 at 4:30 pm
GEValle:
“The best, and proven way to lower healthcare costs is to get the government OUT of healthcare…PERIOD.
This includes serious tort reform that limits the ability of trial lawyers to rape insurance companies and pharmaceutical companies. Gee…Now WHY was tort reform NOT in Obama’s “plan”???”
umm, can I have what you’re smoking?
easton // Jul 27, 2010 at 4:33 pm
RedSonja, absolutely right:
“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..”
Is a baseless and unsupportable assertion, in other words a damnable lie. And why the focus always on England is beyond me… look around your house and see how many things say “Made in England.”
How about compare our system to Japan or Germany? The reason Republicans don’t is because they know it will only make them look like fools. Japan pays 60% of our health care costs, have better outcomes (highest life expectancy), and has universal coverage. Has Mr. Goldfarb ever heard of Japan? How about a detailed contrast between our two systems and see what we can learn from them? What about Germany, which at less than 11% is far below the US 16% and which also has better outcomes than the United States. In fact by life expectancy the US is down at 38, much, much lower than Japan at 1 and Germany at 23. In fact, most European nations are above the US. Does Mr. Goldfarb believe Europeans or Japanese do not get sick?
Selective statistics (find one area where the US is slightly better than extrapolate it to the whole) and baseless assertion. Rubbish. The worst thing is I agree with his central thesis of cost consciousness, sad he had to throw in baseless opinion.
easton // Jul 27, 2010 at 4:36 pm
GEValle, then how do you explain how all of the countries that have much more Government involvement spend less and have longer life expectancies? Seriously. You can’t, so you will ignore it.
msmilack // Jul 27, 2010 at 4:47 pm
I think this article raises many good points about cost consciousness but the doctors I know feel it puts them in a bind not just because of a fear of lawsuits but because they care about the patients and use some of these expensive tools for diagnostic purposes. In other words while what you say sounds practical, I’m not sure how many physicians would agree with you that under those circumstances they can still provide the best care.
To everyone who thinks tort reform will make such a big difference: from all the reading I’ve done since the campaign and up until today, it seems clear that the majority of experts agree that tort reform is unlikely to make a dent in healthcare costs; the highest number I’ve seen is 2 percent at most. Now, 2 percent is still an improvement — and by the way, Obama for one has no objection to tort reform which he has explained since the campaign — but I would be willing to bet that if Obama creates legislation to that effect, the GOP will vote no. Why? Well, have they voted yes on any other domestic policy?
You may recall that the health care bill was largely based on Republican ideas which the Republicans nonetheless automatically rejected because it came from the Democrats. I don’t believe for a second that the Republicans currently in office care at all about poor people in this country; the plan they came up with only addressed 3 million people instead of 300 million. I’m still waiting for the GOP to come up with a plan that truly addresses the people who elected them to office.
seeker656 // Jul 27, 2010 at 4:48 pm
“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..”
As T.R. Reid details in his book “The Healing of America” there is no example in the world of a free market health care system that provides adequate health care to the general population of a given nation. The runaway “government spending” in Europe is still 50% t0 60% of what we spend in the United States on health care when measured on a per capita or percentage of GDP basis.
msmilack // Jul 27, 2010 at 4:50 pm
easton // Jul 27, 2010 at 4:36 pm
You wrote: “GEValle, then how do you explain how all of the countries that have much more Government involvement spend less and have longer life expectancies? Seriously. You can’t, so you will ignore it.”
In fairness to GEValle (and others), while I know that what you say is factually true, it is not easy to understand. I don’t think it’s so much that people ignore that reality as that they simply don’t understand the economics of it. In America, we are used to believing that you get what you pay for so how is it that we pay more and get less? It’s confusing to most Americans, myself included though I absolutely know that other civilized countries have figured out how to do it right.
mikewaz // Jul 27, 2010 at 4:51 pm
GEValle:
“The best, and proven way to lower healthcare costs is to get the government OUT of healthcare…PERIOD.
This includes serious tort reform that limits the ability of trial lawyers to rape insurance companies and pharmaceutical companies. Gee…Now WHY was tort reform NOT in Obama’s “plan”???”
Wrong (at least on the tort reform side). Specifically, see Sec. 10607. State demonstration programs to evaluate alternatives to current medical tort litigation. Also, in case you’re wondering, Harvard released a study showing that the current tort system is exceedingly effective at policing out cases with no injury and no error. The press release for the article can be found at http://www.hsph.harvard.edu/news/press-releases/2006-releases/press05102006.html. Another study looked at states that capped damages. They found that in states with caps, malpractice premiums increased on average by 48% over ten years. In comparison, states without caps saw premiums increase by 36% on average. The study can be found at http://www.bmpllp.com/publications/articles.php?action=display_publication&publication_id=28.
forgetn // Jul 27, 2010 at 4:54 pm
GEValle:
If lower cost derive from lower government participation the US healthcare system should be the world’ cheapest and most efficient. Since America’s health care system has the lowest level of government intervention.
Your assertion is completely wrong, since America’s health care system is by any measure the world’s most expensive.
msmilack // Jul 27, 2010 at 4:59 pm
mikewaz
One program that has already gone into effect is the pooling of people who are unable to get health insurance because of pre-existing conditions.
forgetn // Jul 27, 2010 at 5:11 pm
Msmilack:
You ask a very good question. How do France and Germany achieve better results out of their health care system for less than 1/3rd of what Americans pay (as a portion of GDP)?
Three issues dominate the US healthcare system:
(1) Administrative costs are a huge drag on costs in America — this includes everything for the profit element to the insurance for lawsuits, to much higher salaries for physicians in the U.S. than elsewhere (not making a value judgment — stating a fact).
(2) Americans have poorer health habits, yes the smoke less, but they do face other constraints such as obesity which most foreigners don’t face at the same level (A day at Disney is a huge wake-up call on the scale of the problem).
(3) More is better, the example of mammography is an excellent point of reference. Early test will give rise to false positive — leading to either aggressive surgery or radiotherapy. However, operations carry very heavy risks that can dramatically reduce quality of life, and don’t change the overall survivor rate for those who do have cancer in their 40s. In general, the issue is that if you have heart surgeons (again an example) they will operate on heart patients — America’s medical practice is over specialized (because the incentives are there!)
These factors have a definite impact on the cost of America’s healthcare you don’t see in other jurisdictions. This of course a massive over simplification of the differences — there are many others.
msmilack // Jul 27, 2010 at 5:11 pm
mikewaz
Tort reform is not something Obama has ever objected to; his point has always been that it amounts to such a small percentage of the overall healthcare costs (2 percent savings at most) that to focus on it instead of coming up with more creative solutions that make a bigger dent was often used by the Republicans as a distraction and an attempt to look like they were making a big difference when in fact it was a tiny difference.
msmilack // Jul 27, 2010 at 5:18 pm
forgetn
Thanks for explaining that. I do recall Obama discussing the administrative costs and wasteful spending and we know the white house is focused on Americans living a healthier lifestyle. I personally do not object to physicians earning large salaries because they go to school for so many years to become specialized; if I have to go in for a heart operation, I’d like to know that in a competitive environment, the student who worked the hardest and got the best grades is operating on me. I think that financial incentive is necessary to producing the best doctors. Just my opinion.
easton // Jul 27, 2010 at 5:27 pm
forgetn, yes, thanks for that. Insurance companies also have massive advertising budgets.
I also noticed how GEValle never did bother to even attempt to rebut anything.
forgetn // Jul 27, 2010 at 5:44 pm
Mismack:
I didn’t say wasteful, the costs are simply there, not better or worse. With a largely private health care system, the profit element has to be there. America’s tort (and insurance premiums) are not about to disappear, these are part of the “American way of life”.
You nail one aspect in your latest comment: “The best doctors” is a major issue, American doctors are overspecialized — fewer general practitioners than almost anywhere else in the world (excluding Canada — which has its own wacky problems).
Again, its important to not look at anyone aspect as the culprit; the profit element is important if private healthcare is going to be part of the system. lawsuits are a good way or re-establishing justice for patients who have faced harm from doctors’ negligence. America is not about to police what people eat.
An average hospital in North America offers more than 6,000 services to its patients. Few business anywhere in the world offer than kind of diversity of services. Healthcare is a complicated service to offer in any country.
msmilack // Jul 27, 2010 at 5:47 pm
easton
With your point about the origin of costs: not only do insurance companies spend massive amounts on advertising; they also spend massive amounts on lobbyists. Lobbyists may be their biggest expenditure — at least it seemed so during the health care debate. I don’t suppose we can ever get rid of lobbyists though . . .