Thursday, September 02, 2004
Going for the gold has a price
[Arnold Kling, "Winning the Health Care Olympics?," Tech Central Station, 31 August 2004.]
Do health care spending comparisons with other countries really provide valuable insights into value? As Arnold Kling explains, focusing on one aspect of health care - costs vs. longevity, for instance - would likely translate into a reduction in quality of life:
This is probably the most common articulation of the problem with the U.S. health care system. That is, the United States spends more than other countries, both in absolute dollars and as a percent of GDP, yet our life expectancy is no higher. This formulation of the problem suggests that our goal should be to minimize the health care spending per capita needed to achieve the level of life expectancy prevalent in other OECD countries. I call this the Health Care Olympics.
Many people argue that we could win the Health Care Olympics through rationing of health care. In fact, as Edward Lotterman points out, in the case of government-paid health care, rationing is inevitable. It takes place through the definition of treatable diseases and reimbursable treatments.
Suppose that we were rationing health care in order to try for a gold medal in the Health Care Olympics. We could reduce spending on procedures that do little to prolong life. For example, when breast cancer is caught early, after surgery the woman's five-year survival probability might be 94 percent. Additional treatment might increase that survival probability to only 96 percent, which on average would add only 1/10 of one year to her life expectancy (5 times .02). Standard medical protocols call for giving her the additional treatment, because it reduces her risk of death by one-third. Instead, we could deny her additional treatment, because the increase in life expectancy is small relative to the expenditure.
Or consider my father, who uses expensive hearing aids and has had laser eye surgery to remove cataracts. None of this improves longevity -- it only keeps him from being deaf and blind. To win the Olympics, we ought not to spend money on his eyesight or hearing. More generally, we should stop spending on non-life-threatening ailments, such as depression and back pain, that today account for a lot of health care costs.
Another way to win the Olympics would be to try to reduce the share of spending that takes place during the last year of life, which may account for as much as 25 percent of Medicare spending.
Overall, I think that it is a mistake to define the health care problem as the need to reduce the ratio of expenditures to life-expectancy gains. I think that the policy implications of such a definition are mostly unacceptable.
[Arnold Kling, "Winning the Health Care Olympics?," Tech Central Station, 31 August 2004.]
Do health care spending comparisons with other countries really provide valuable insights into value? As Arnold Kling explains, focusing on one aspect of health care - costs vs. longevity, for instance - would likely translate into a reduction in quality of life:
This is probably the most common articulation of the problem with the U.S. health care system. That is, the United States spends more than other countries, both in absolute dollars and as a percent of GDP, yet our life expectancy is no higher. This formulation of the problem suggests that our goal should be to minimize the health care spending per capita needed to achieve the level of life expectancy prevalent in other OECD countries. I call this the Health Care Olympics.
Many people argue that we could win the Health Care Olympics through rationing of health care. In fact, as Edward Lotterman points out, in the case of government-paid health care, rationing is inevitable. It takes place through the definition of treatable diseases and reimbursable treatments.
Suppose that we were rationing health care in order to try for a gold medal in the Health Care Olympics. We could reduce spending on procedures that do little to prolong life. For example, when breast cancer is caught early, after surgery the woman's five-year survival probability might be 94 percent. Additional treatment might increase that survival probability to only 96 percent, which on average would add only 1/10 of one year to her life expectancy (5 times .02). Standard medical protocols call for giving her the additional treatment, because it reduces her risk of death by one-third. Instead, we could deny her additional treatment, because the increase in life expectancy is small relative to the expenditure.
Or consider my father, who uses expensive hearing aids and has had laser eye surgery to remove cataracts. None of this improves longevity -- it only keeps him from being deaf and blind. To win the Olympics, we ought not to spend money on his eyesight or hearing. More generally, we should stop spending on non-life-threatening ailments, such as depression and back pain, that today account for a lot of health care costs.
Another way to win the Olympics would be to try to reduce the share of spending that takes place during the last year of life, which may account for as much as 25 percent of Medicare spending.
Overall, I think that it is a mistake to define the health care problem as the need to reduce the ratio of expenditures to life-expectancy gains. I think that the policy implications of such a definition are mostly unacceptable.
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