Sunday, September 20, 2009

The Challenge of Health Care Reform

... was eloquently outlined by economist N. Gregory Mankiw, in his article that appeared in the New York Times this morning. He uses the primary prevention of heart disease by taking daily statin drugs to lower cholesterol to make his point about the costs of prevention that leads him to ask a central, but very complicated, question festering in the background of much of the health care debate:
"Despite all the talk about waste and abuse in our health system (which no doubt exists to some degree), the main driver of increasing health care costs is advances in medical technology. The medical profession is always figuring out new ways to prolong and enhance life, and that is a good thing, but those new technologies do not come cheap. For each new treatment, we have to figure out if it is worth the price, and who is going to get it.

The push for universal coverage is based on the appealing premise that everyone should have access to the best health care possible whenever they need it. That soft-hearted aspiration, however, runs into the hardheaded reality that state-of-the-art health care is increasingly expensive. At some point, someone in the system has to say there are some things we will not pay for. The big question is, who? The government? Insurance companies? Or consumers themselves? And should the answer necessarily be the same for everyone?"
In answer to his Big Question, I'd vote for the consumer (and I mean the patient rather than hospitals) since they have to pay the tab one way or the other. To that end, price transparency of goods and services should be required for anyone involved in health care delivery. In short, every effort should be made to empower patients in such complicated decision making.

Until then, special interests will continue to wield far too much influence (and price pressure) over those most affected most by the health care delivery transaction.



Anonymous said...

Hi Dr. Wes - I think the professor could have made a much better case. My husband and I both take statins - Simvastatin (generic Zocor). Works ok for us. Last RX at Costco was $9.43 for 100. Not likely to break the bank (for an individual or a society). There are drug prices people can get PO'd about - but statins aren't in that category (as long as you're not taking the "high price" brand name simply because you/your doctor hasn't explored the low price generics - perhaps some of the higher priced brand name statin drugs are more appropriate for some people - but I suspect the cheap generics are ok for most people). FWIW - most of my doctors think that statins should be put in drinking water - like flouride. Then they would probably cost about 50 cents a year. Robyn

Anonymous said...

And now I will lob one back into your court. Statins for $30/year is peanuts. My only experience with your specialty was with my FIL - an 80+ year old widower who we moved to an excellent SNF near us after a stroke. He did ok with rehab after the stroke - but still had CHF - and 2 kinds of metastatic cancer (a common one - bladder cancer - and an exotic one - an angiosarcoma - great teaching opportunity at Mayo JAX). Because of the CHF and other heart problems - his cardiologist recommended an ICD. It was then that we learned that Medicare pays for ICDs only for certain conditions - and that the criteria vary from one Medicare region to another. Anyway - his cardiologist tweaked him enough so he could qualify for the $35k+ Medicare ICD - and then he wanted to do carotid artery stents too due to carotid artery blockage. We said - enough. He's already dying of 3 things - why add another possibility? What do you and others like you do in cases like this? What would you do absent contraints like medical malpractice concerns - families bugging you - etc.?

FWIW - the cardiologist was right. My FIL died of a massive stroke as a result of his carotid blockage. But it was a quick peaceful painless death - 2 day morphine drip post stroke - it would have been a lot worse had he died as a result of either of his cancers.

Living in NE Florida - Terry Schaivo land - and having lost 3 of 4 parents/inlaws in recent years - I wonder how doctors really think about these things. I am glad to say that we had access to wonderful doctors skilled in palliative care who made our decisions easy - and the death of our folks as painless and peaceful as possible to them. Which was a comfort to us as well.

And FWIW - the CEO of the SNF where my FIL spent the last 2 1/2 years of his life said the kids who never see their parents are the worst. They try to counterbalance their lack of contact with an insistence that everything be done at the end of life - out of guilt. Having spent 2 days a week with my FIL for the last years of his life - I had no guilt. Only a desire to see that his end was peaceful and painless.

Anyway - the cost of statins is garbage. Come here to JAX - where Mayo has morphed into one of the largest transplant centers in the US - possibly because we don't have motorcycle helmet laws. So we have a lot of young dead kids and a lot of (frequently alcoholic) people with shot livers getting transplants. This is one of the areas where the big money is being spent on medicine - not statins. Robyn

Keith said...

Again, I think we are actually in agreement but the method of getting there is where we seem to diverge.

It is indeed the ability of innovators to create new treatments, some that are marginally ineffective over the old treatments and some that actually are not proven effective at all at the time of there release that has increased the cost of healt care. Invent some medical gizmo that gives only incremental bnenfit over the old gizmo and sell it for three times the price!

Comparitive effectiveness, Wes. We need to know if that new gizmo is really worth its price tag or not. How else do you expect patients to make informed decisions as to cost and benefit if you don't have this information? I don't know about you, but if I want to buy a new car or TV set or whatever, I look at Consumers Reports that has unbiased ratings by an organization that has no or little advertising in its magazine and gives me an idea of the best item to buy on price and quality. Isn't this even more critical for medicine to know what we are paying for and if it is worth that cost?

Currently, the FDA approves pharmaceuticals or medical devices that offer minimal or no benefit over the old treatment or device, but they can sell it at a significant mark up since they have patent protection and the true cost is hidden by insurance as you point out. If you make it more risky for these companies to produce new products with minimaly improved efficacy, then you will likely stifle this incremental innovation, but maybe that is what we need to do at this stage.

Pay the big bucks for major innovations that save the health system money in other areas. H-2 blockers come to mind as an example years ago that made obsolete the gastric surgeries that were all too frequent for peptic ulcer disease; worse yet is the fact that the guy that discovered it was caused by a bacterium didn't likely make much money off his importatnt discovery, but saved the health care system tons of money. Who if not goverment funds such research if it does not have a profit motive attached to it?

I would agree with your other posters that statins are a bad example in that they are now relatively inexpensive or will be as soon as patents run out for Lipitor and Crestor, but even in this example you can see the incredible waste in the system since the makers of Crestor have spent large sums of money showing that their drug provides the best benefit, but they actually have not done so since they have not compared there product to generic simvastatin for fear they might not like the results. It would help to have goverment step in and see if paying 100 dollars a month for Crestor vs the 10-20 for Simvastatin is really worth the extra expense.

Let face it; there are some things that the private marketplace does not do well and it is in those circumstances goverment must step in to fill the void. This is one of those examples.

DrWes said...

Keith and Robyn-

I apologize for not having a lot of time right now to respond in full to your lengthy messages, but I would like to make one critical point. Until full tranparency of pricing is available from all parties in the health care debate, any attempt at "proving" comparative effectiveness is moot. How can we talk about "cost effectiveness" when we don't know the real costs of services or goods services delivered in our system. Markups, up-charging, profit margins, and the like (some of which are important to continued innovation in healthcare) must be available to all in order to begin to tease out the true cost-effectiveness of any care delivered. All medical centers use creative accounting to claim cost savings, but until the full cost of delivering that care is auditable, I suspect (like Robyn) that we're really not hearing the full story.

Anonymous said...

“President Obama’s speech last week really moved me. Despite what my colleagues think of me. If what he says is what will EXACTLY happen, how can I not hope and work towards that cause”? Mike Oliphant runs a small Utah health insurance website and whom deals with hundreds of people on a day to day struggle to be approved for health insurance. “I get hopeful that I can finally tell people they can qualify for coverage REGARDLESS of their pre-existing medical condition”. Mike’s concern is that Obama’s people won’t deliver what he urges on areas within his speech. “I really have been moved by this guy and wish we could just talk so he could understand the frustration of a health insurance agent. I have been involved on a political level within the state of Utah and their struggle for health care reform. I have seen and regrettably been part of politics at work. I have learned lessons through baptism of fire with politics. For instance, I struggled against House Speaker Clark and H.B. 188 because that was what I was urged to do from our industry (that was all I knew). But after awhile and countless meetings with state and private carriers in Utah, I began asking myself if I was doing the right thing. I realized over time that House Speaker Clark really means what he says and is hard nose about getting reform done in Utah. I got that there wasn’t any behind the scene conspiracy scheme or personal objective of Mr. Clark. His bill makes allot of positive changes in the “health insurance reform” world of Utah. He claims that reform just doesn’t stop there, it must continue through “health care reform”. You see, there is a major difference between the two reforms. Clark “gets it” but I really worry that Obama’s administration doesn’t because if you have noticed the subtle language change of dropping “health care reform” and going to “health insurance reform”. See more about what Utah has accomplished here which utilizes private carrier involvement with true reform. If you can believe it, they reached it with an objective of $500,000. Perhaps the feds should take a look at Utah and House Speakers Clark’s bill 188. Now I find myself on the “other side” of the fence furthering Utah’s cause. Let’s hope we don’t all have a mental breakdown nationally and just take a honest look at the proposals.

Keith said...


I await your full comments, but in the meantime, I would argue it is the job of the physician to prescribe treatment in a cost efficient manner for our patients. It is a constant point of ethical struggle for me that we may spare no expense for our patient standing in front of us, but in so doing may add so much burden to the expense of others that they may longer be able to afford the care they need. It is the proverbial lifeboat effect extending its way up the economic pecking order, and the costs have now extended up to the middle class of America, whose lifeboat has sprung a leak (how do you spend 15,000 on health insurance for your family when the you make ony 50 K per year?). It would be better if we paid greater attention to the costs of our actions from the economic standpoint. I have seen too many physician experts plying the wares of pharmaceutical and medical device companies to know that we as physicians are just as much to blame and we need to start paying attention to cost effective alternatives rather than selling the new and exciting gizmo to our patients. If we have this information as to cost effectiveness, maybe we will use it to help our patients make the right decisions!

DrWes said...

I would argue it is the job of the physician to prescribe treatment in a cost efficient manner for our patients.

You and I agree that the whole crux of our health care crisis is costs. Why then, don't we know them, publish them, and make them transparent for all to see?

If you or I do not know how much a therapy costs, how can we advise our patients? Take a simple white count. What's the cost to obtain the result at a hospital vs. a clinic? Is it cheaper to obtain from a complete blood count (CBC) panel that is automatically generated or as an isolated test? Who does it the cheapest? What IS cheap?

N-O O-N-E K-N-O-W-S. It's part of the game: make sure no one really knows so profits and margins can secretly be maintained.

One only has to look at Lasik surgery to see the power of transparency: what used to cost $5K an eye now costs $500 (a ten-fold decrease!) Did government policies or comparative effectiveness research make this happen? No.

So what happens now in our current system? Our current means of health care "reform" involves back-room deals being struck so special interests can assure their profits, even if it comes at the expense of those most affected by the very policies they enact. To suggest that government can do a better job than individual patients is ludicrous since their motivation is their livelihood: politics. I agree with you that doctors, like the pharmaceutical, device companies, hospitals, labs, radiology clinics - the whole shootin' match - must be transparent. If this could be accomplished, the rest would take care of itself.

After all, a patient's motivation for controlling costs is much different than politicians' motivation: it's their money and their life.

Anonymous said...

Hi Dr. Wes - From a consumer's point of view - not only don't I know the cost - I rarely know the price of anything in advance. Since my husband and I have $10k deductibles - we always ask. But get answers like "somewhere between $200 and $1000" - or no answers at all. Moreover - we are in a PPO - and usually can't find out in advance what our PPO discount is with a particular provider. This is one reason we try to find good doctors or facilities - and we stick with them as long as we can (usually until they retire). But finding a new doctor (because an old one has retired or we need a consult from a new specialist) - well I'd rather have a root canal. Of course - you can get a price in advance for a root canal - or anything not covered by insurance - because doctors/dentists don't want to treat people who can't afford what they charge. I have to shake my head when I hear anyone (mostly politicians) say that patients could save money by "shopping around" (I'm sure that people who say that have never actually done it).

Keith - I think the situation with drugs is much worse than you describe. For example - my husband has had MS for over 25 years. We did a *lot* of research on the ABC drugs for MS (which are expensive and have unpleasant side effects). And guess what - there was/is very little evidence to support the sweeping claims of the companies that produce them. So my husband passed. Even independent studies have problems. I was part of a long term study from the University of Miami on HRT drugs. But when I moved from Miami - I was dropped from the study (which is ridiculous - I'm sure that many women would take the time to answer a questionnaire once a year for the sake of seeing a long term study completed).

And to Anonymous - I took a look at the Utah plan. Florida has tried similar plans in the past - and they have all been total failures. For a fundamental reason stated by George Will - people want 2009 health care at 1959 prices. TANSTAAFL. Robyn

Cat said...

Dr. Wes,

I agree that it would be nice to know just how much everything costs. Insurers, doctors, patients, hospitals... everyone could make better decisions (if they really wanted to). Markets do best when there aren't a lot of secret variables.

I'll take a tale from my personal life to illustrate why patients are not very likely to care what anything costs. My mother, you see, has stage IV ovarian cancer. Not a good prognosis. She's being kept alive with chemotherapy regiment after chemotherapy regimen for the past two years. They're starting to run out of options, which is the typical course for this sort of thing.

One particular agent they tried is experimental in ovarian cancer and cost about $20,000 per dose. I remember my mother being so amazed at the price, and how her insurance was paying the whole thing!

She knew exactly what it cost. She knows she's never put as much money into her medical insurance as she's getting back out of it now. She knows it comes out of a common risk pool and that everyone else's costs will be higher in the future because she got some $20k doses of the latest advance in chemotherapy. Yet it didn't trouble her one bit. Living a little longer is worth any cost, especially when she's only paying a tiny fraction of the true cost.

Sadly, the cancer grew instead of shrinking. The cost was high and the treatment was worthless. I can only hope that, somehow, her case will become part of general scientific knowledge for future researchers to use.

I'm guessing that price transparency, if it's going to help patients make informed decisions, is going to have to hit them in their wallet in some way (like paying a higher percentage of unproven or unlikely treatments). Otherwise, it's up to a doctor or an insurance company to make the call, which brings to mind the subject everyone seems to be panicking about -- rationing.

I know that some kind of rationing has to happen. It can be self-rationing by patients who simply cannot afford the highest-tech thing available, or it can be forced rationing by those who assess the likelihood of success and say yay or nay. We cannot support a system in which the patient is entitled to ask for anything regardless of cost and nobody is allowed to say "no" for any reason. I think we agree on this point.

Keith said...

Well said CAT

Its all how you want your rationing that we are arguing about. Either you ration by making people at the lower margins go without basic and often very effective treatment, or you make more rational decisions by trimming out ineffective treatments with marginal efficacy. I would find it more humnane to go with the latter.

Presently, we are moving toward higher cost insurance that covers soup to nuts, while pricing more and more people out of the market. The remaining insured get access to many unproven or marginally effective therapies like the end stage ovarian cancer treatment your mother received. We are gaining very small incremental improvements in health at markedly escalting costs, which is why we lag behind other countries in measurements of public health, yet pay nearly 70% more than the next costliest country.


I am all in favor of what you suggest, but until insurance providers agree to a given level of payment for a procedure or test, it won't matter since currently insurers pay more to some providers than others for no other reason than some providers can leverage their size and/or location. In other words, insurers are the ones that hide the true cost differences between providers and until that changes, consumers could care less what the total price is; only what they have to pay matters.