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July 12, 2007

Does Rationing Makes Us Healthier?

Merrill Goozner thinks so:

Using $1 million to give 50 seniors artificial hips may help those 50 people get around better, but that’s less effective than using the money to administer 200,000 seniors flu shots, which would probably save more than that number of lives.

In countries on fixed budgets like Canada and Great Britain, medical payment authorities are forced to make such comparisons and ration care accordingly. The result is that their physicians are more likely to deliver care that most people really need while skimping on expensive and marginally effective treatments. Yes, people wait on line for those latter treatments, but they can take comfort in the fact that it is the price for ensuring that their fellow citizens get needed care on a timely basis.

The way [medical cost-benefit analysis] is used in the U.S., on the other hand, incentivizes providers to increase the use of marginally effective services whose prices have been inflated to the arbitrary payment threshold. Meanwhile, less costly but highly effective treatments get ignored. In practical terms, we get a lot more orthopedic surgeons making a half million bucks a year replacing a couple of hips a day, while there’s a shortage of primary care docs willing to make the rounds of nursing homes immunizing seniors.

All true. Our health system incentivizes "high intensity," rather than "high value," medicine. There's no money in prescribing and relying on low cost drugs and treatments, but enormous amounts of money in performing complex surgeries and offering cutting edge pharmaceuticals. That doesn't mean, of course, that no tylenols are ever offered, or that everyone who complains of the sniffles is rushed in for an angioplasty. Rather, the incentives of a system that pay doctors (and hospitals) based on how much treatment they offer create an at-the-margin push for expensive interventions. When it's a tough call between providing treatment and doing nothing, all the forces are aligned to encourage the costly intervention.

Moreover, because of the way insurance is set up, there's no incentive to redirect some money from paying for expensive claims to pursuing broad public health initiatives. It's not even particularly possible to do so within such a fractured system. We're utterly focused on providing care at the point of trauma or illness -- there's nearly nothing pushing for heavy investments in preventive care, despite the evidence showing that such efforts are far more cost effective.

July 12, 2007 | Permalink

Comments

Ezra,

Completely agreed. Its just a question of who does the rationing.

A single-payer system has one body make decisions on which treatments are worthy and what methods by which to ration. The reality is the data is not so black-and-white in the former, and extremely unknown and complex for the latter. A multi-payer approach allows for the realities of these gray areas, a single-payer does not.

Posted by: wisewon | Jul 12, 2007 10:53:06 AM

Also important to note, before this debate begins. Even in a worse case scenario under a universal system you're not denied the ability to get a hip replacement. You just have to wait, or use your private insurer, which many UHC systems encourage you to get in addition.

Posted by: phil | Jul 12, 2007 10:54:58 AM

It's not even particularly possible to do so within such a fractured system.

Yes it is. Its called regulation. I wish you'd stop saying this.

Posted by: wisewon | Jul 12, 2007 10:56:28 AM

Ezra, the anecdotal power of "my rich grandfather was told he'd have to wait 9 months for a hip replacement until he deicded he was willing to front the $2000 (Cdn) for the operation himself" far exceeds the anecdotal power of "1000 late-middle aged retail clerks in the city died of the flu because they couldn't afford the vaccine this year."

What turned me against the private insurance system: my insurance company would not pay for vaccines that would prevent future diseases or dental work that would prevent future damage because the insurance company figured that by the time I contracted the disease or required more extensive dental work, I would have switch jobs and be on a different insurance plan.

Posted by: Tyro | Jul 12, 2007 11:06:16 AM

Do orthopedic surgeons really only make $500K a year? A few years ago, I heard a lot of the details of one's divorce: in my hometown of 40K people (but many retirees- damn that low Medicare reimbursement!) and three full-service hospitals, this guy was apparently pulling down $1.2 million a year. Still not enough to live there, IMO, but I guess being a huge economic fish in a small pond makes it worthwhile for some.

Posted by: latts | Jul 12, 2007 11:30:59 AM

Here's wisewon again with the same canard saying that a multi-payer approach has anything to do with multiple choices.

I currently have no idea if I will need a hip replacement. I don't even know if my insurance would cover it. I am not about to test the waters of getting self-insured by dropping my employee-paid insurance just to make sure that the hip-replacement-I-may-never-need is covered. If I do need hip replacement it will be out there for any insurer to see and they will either charge an extreme premium for switching into their plan (making the point of having their insurance useless) or they will deny me outright.

This is a bogus argument for most people. The only people who have a choice on their insurance are the wealthy and married couples who have two jobs with health insurance plans they can chose to jointly enroll in. Everyone else who doesn't get Medicaid or Medicare either takes what they can afford regardless of what it covers, goes with their employer-sponsored plan, or goes without.

Posted by: Ricky | Jul 12, 2007 12:03:28 PM

Regulation doesn't solve economies of scale.

Posted by: akaison | Jul 12, 2007 12:07:11 PM

"Do orthopedic surgeons really only make $500K a year? A few years ago, I heard a lot of the details of one's divorce: in my hometown of 40K people (but many retirees- damn that low Medicare reimbursement!) and three full-service hospitals, this guy was apparently pulling down $1.2 million a year. Still not enough to live there, IMO, but I guess being a huge economic fish in a small pond makes it worthwhile for some."

Survey says:

http://www.allied-physicians.com/salary_surveys/physician-salaries.htm

Orthopedic surgeon salaries by years of experience:

1-2: 260k
> 3: 342k
Max: 670k

Posted by: joe blow | Jul 12, 2007 12:15:46 PM

Ezra, the anecdotal power of "my rich grandfather was told he'd have to wait 9 months for a hip replacement until he deicded he was willing to front the $2000 (Cdn) for the operation himself" far exceeds the anecdotal power of "1000 late-middle aged retail clerks in the city died of the flu because they couldn't afford the vaccine this year."

Everybody who wants to see some sort of national health care plan enacted needs to get this idea completely, totally seared into his/her brain.

All the rational argument in the world isn't going to successfully counter this sort of "argument" in the hands of the wingnut noise machine.

Posted by: plymet | Jul 12, 2007 12:24:36 PM

I agree that hip replacements are not cost effective healthcare.

However, they do make you "feel" somewhat better, and if you told the members of AARP that you are going to restrict hip replacements for the greater good of vaccines, a riot would break out.

The old folks want it all, and they will get it all. Thats why we got this massive bloated Medicare drug program that does nothing but make big pharma even richer than they already are.

"Ask and you shall receive" is the motto of the federal govt when it comes to seniors. They will ask for hip replacements and they will get them.

Posted by: joe blow | Jul 12, 2007 12:37:22 PM

Of course the example only gives us the false choice of 50 new hips and thousands of flu shots. Why not pay the CEO of the insurance company $6.5 million instead of $7.5 million and have both? Or have him settle for gold-plated fixtures in his private executive washroom instead of actual gold? Or stop paying for his country club memberships?

Posted by: justawriter | Jul 12, 2007 1:05:06 PM

We're utterly focused on providing care at the point of trauma or illness -- there's nearly nothing pushing for heavy investments in preventive care, despite the evidence showing that such efforts are far more cost effective.

Sing it, brother. This is why you should be focusing on better public health measures to reduce the rate of smoking and improve diet and exercise instead of extending health insurance. Public health focuses on low-cost, high-benefit measures to keep people healthy; health insurance focuses on high-cost, low-benefit medical interventions to try and fix people after they get sick.

And the worst example of the latter is Medicare. Medicare spends billions of dollars on extremely expensive, high-tech medical interventions that produce little benefit at great cost--extending the lives of terminally ill elderly people by a few weeks or months.

Posted by: JasonR | Jul 12, 2007 1:22:38 PM

Saying hip replacements are not effective is an outright lie. What is the goal of surgery? Relief of pain and increased mobility. Total hip replacement has a patient satisfaction rate of nearly 95%. It has a higher satisfaction rate than any procedure done in any field of medicine.

Posted by: DIngo | Jul 12, 2007 1:27:31 PM

The rationing will first start with the 100,000 dollar ICU stays for the 95 year old alzheimer's patient that happens in every hospital, every day time and time again. That is the epitome of ineffective treatment.

Posted by: Dingo | Jul 12, 2007 1:30:37 PM

Ohhh- loooook- it's the normal parade of horribles being paraded out. So, sweet. Cute, if we weren't heading over the cliff. "if you get nationalized healthcare, then you will suffer a miserable horrible death, and no one will love you. EVER" I mean really guys. You could try to be a little bit more subtle

Posted by: akaison | Jul 12, 2007 1:35:10 PM

justawriter,

Of course the example only gives us the false choice of 50 new hips and thousands of flu shots. Why not pay the CEO of the insurance company $6.5 million instead of $7.5 million and have both?

Probably because hip replacements are generally paid for by MediCare.

Posted by: SamChevre | Jul 12, 2007 2:00:32 PM

Expecting to live longer by having your hip replaced, is like expecting to get better gas mileage by taking your Hummer to the car wash. Its a quality of life procedure. How much is 9 months of your life worth? If its somebody else, not much. If its you your story will change. Why can't you give flu vaccines and replace hips? We spend 12 billion a month in Iraq and we can't replace hips and give flu vaccines for the whole populus? Why does the majority of money in medicare need to be spent on the last 6 months of life is a better question?

Posted by: Dingo | Jul 12, 2007 2:31:15 PM

I agree that hip replacements are not cost effective healthcare.

Just plain wrong. Every study that I've seen on total hip replacements show very good cost-effectiveness-- all are less than $50K/QALY and many below $20K/QALY-- these are great buys for medical treatments.

There are other treatments in orthopedics that are an absolute waste-- but this ain't one of them...

Posted by: wisewon | Jul 12, 2007 2:41:25 PM

"If its somebody else, not much. If its you your story will change. Why can't you give flu vaccines and replace hips? We spend 12 billion a month in Iraq and we can't replace hips and give flu vaccines for the whole populus? Why does the majority of money in medicare need to be spent on the last 6 months of life is a better question?"

Because old retired people on Medicare are the biggest voting block in the country and the politicians will give them whatever they want.

Posted by: joe blow | Jul 12, 2007 2:42:14 PM

We have had a single payor system in this country for years the IHS. And if you are an American Indian you can expect to live to 71, have a higher rate of diabetes and all of the complications associated with it such as kidney failure and amputations and the lowest survival rate from cancer of any group of people. They have unlimited access to healthcare and the panacea of access to primary care and prevention. I don't think any plan or even the current system can expect to make our statistics any different. The only thing that can truly be manipulated. The only way to truly cut costs is to pay salaries to physicians. Productivity will go through the floor, but so will costs. My neighbor gets paid 100,000 a year to not grow wheat and it is a similar enterprise.

Posted by: Dingo | Jul 12, 2007 2:42:31 PM

What treatments? "I'm sorry you broke your femur here is you sugar pill." "That fractured forearm will get better if you rub some dirt on it." If someone has a bum knee do you want to shoot them like lame horses. As far as arthroscopy is concerned I don't scope knees with OA, I replace them. What treatments are an absolute waste? What would you have us do?

Posted by: DIngo | Jul 12, 2007 2:49:14 PM

How many TKRs do you do annually?

Posted by: wisewon | Jul 12, 2007 3:02:25 PM

The only way to truly cut costs is to pay salaries to physicians. Productivity will go through the floor, but so will costs."

You are right on both counts and both of those things are GOOD outcomes. USA has far more procedures per capita than any other nation in the world. Basically we do a bunch of extra shit that nobody needs and which does NOT improve health to any measurable degree.

So reduced productivity is a GOOD THING not a bad thing. The costs will plummet under a salaried system AND we will have less needless procedures being done.

Its a double bonus.

Posted by: joe blow | Jul 12, 2007 3:38:50 PM

I don't think procedures are needless. I can say with confidence that I've never operated on an asympotmatic patient. I'm not sure what they would plan on having us do with these people with no intervention. "Hey, Betty. This one's got a bad knee. Get the Winchester."
I wouldn't be apposed to a salary. I'd quit taking trauma call. That would be someone else's problem. I'd show up 15 minutes late every day. See one patient. Take a coffee break. See another. Take two hours for lunch. See another. Take a Break. Paid vacation, benefits what't not to like. See another and go home. I'd see 4 a day compared to 80. Multiply this for every physician and costs will plummet that is guaranteed. You could also hope to get a physician appointment in about 3 years.
And wisewon I do around 500 cases a year. About 50 of them total knees. The largest portion of my practice is trauma.

Posted by: Dingo | Jul 12, 2007 5:29:09 PM

Dingo,

when you become an employee of hte federal govt, all your records will be electronic. Computer database will keep track of your patient logs and if somebody's productivity falls below some minimal level (say, less than 25 patients per day) then you will be warned and then fired if necessary.

this will give you enormous incentive to do as your told, because under this system, the fed will be the only game in town and you wont have hte option of working elsewhere.

Remember, big brother is watching you.

Posted by: joe blow | Jul 12, 2007 6:18:32 PM

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