Medical care and comparative effectiveness

The idea is to have a commission examine which procedures should not receive full Medicare reimbursement.  I favor spending cuts for Medicare so for me it's a go.  Megan McArdle considers some basic issues.  I'll add or second a few points:

1. When it comes to health care, it's very hard to tell what works.  That's one reason why we don't pay doctors for results in the first place but rather we pay them for procedures.  Having a commission look at statistics only partially remedies this problem. Sometimes looking at outcome statistics from the broader population pool makes the estimate of treatment efficacy clearer and other times it makes the estimate of treatment efficacy fuzzier (you have more data points, but not everyone responds to a treatment in the same way). 

2. Where will the burden of proof be put?  Will the common procedures be the only ones to receive the funding axe (they're expected to prove themselves in the statistical court, so if they can't the funds dry up?)  Will "small numbers" medicine receive the benefit of the doubt or be required to prove itself?  The answer to this question will make a big difference.  

3. Let's
say a treatment for 1000 people helps only 20 of them and so the
aggregate statistics for that treatment are not so impressive.  If you
take those same results and define the population pool ex post as the
20 people who respond positively, suddenly the same treatment has a
success rate of one hundred percent.  Again, framing will matter a
great deal for the results.

4. This commission, if it sticks to its statistical mandate, will be able to recommend many more possible cuts than any vote-maximizing administration will be likely to make.  Some other principle will be used to determine cuts.  Many defenders of the Obama administration are overestimating how scientific this process will be.

5. What does the public choice equilibrium look like?  Should Medicare "strand" some chronic ailments, with large numbers of people suffering only moderately, or should the occasional person be allowed to "die in the street"?  Any spending cuts policy will generate news stories of one kind or another; which will have greater political resonance?

6. The fairly arbitrary cuts we get will in some ways resemble means-testing.  The discretionary procedures are mostly enjoyed by higher-income and higher-education groups.

7. Imagine an analogy from broader life.  Imagine a government that would cut (some) subsidies for any input which could not be shown, statisically, to causally produce better outcomes in life.  You can see how open-ended this would be.  What if you applied this same metric for your personal spending?  Would there be much left to spend your money on?

Addendum: Read the highly intelligent Arnold Kling.


One problem with state intervention in medical care is that people are really troubled by the idea of the government deciding who lives and who dies. Of course the alternative is a large corporation deciding who lives and who dies but that's somehow more palatable because a person can choose a corporation, so if a corporation doesn't provide a treatment that a person needs not to die we can tell ourselves that it was the person's lack of foresight in determining which disease they would get that's responsible (this is sort of a joke but not completely a joke).

With regard to 4. I think it would be possible to create an ordered list of prospective cuts based on a combination of absolute medical effectiveness, cost effectiveness, or a combination of the two (or more realistically different packages of procedures targeted for different levels of spending). This wouldn't completely eliminate the problem but would substantially mitigate it.

re. 7. on personal spending, do you mean "better outcomes in life" to be higher utility or do you mean something like longer life or higher income? I think that for medical procedures, using longer (quality adjusted for pain etc.) life is a good metric because improved quality and length of life is pretty much the only reason for medical care and thus is a decent proxy for greater utility. For personal expenditures, utility is the clear metric to use, and that does seem to be a decent thing to consider when making personal expenditures. That said, the absolute drop off in marginal utility must be quite high, or members of our society would be a lot happier than 50 years ago. Because we live much longer, though, flat point in time happiness measures suggests that the hard-to-measure total utility of life has increased for people, because we get more years of utility each.

A few years ago I had a middle-ear problem that, if left untreated, could lead to meningitis and potentially to death. This condition has been correctable for some time, but traditional surgical intervention left the patient completely deaf in the affected ear basically, it amounted to cleaning everything out of the middle ear.

Now, however, microsurgery allows reconstruction of the middle ear and eardrum to restore close to normal hearing.

So the question is whether the microsurgery makes the cut. Either technique prevents the medical complications, and one could make the case that deafness in one ear is just a lifestyle adjustment (don't laugh - I've seen bloggers make just that case for delaying hip replacements), so the government plan shouldn't pay for the more-expensive surgery.

Re point #3, framing effectiveness in a post-hoc way is completely dishonest. It's not so much a different framing as it is simply incorrect. Any study that attempted to do so would be attacked, and rightly so.

Also, I suggest not believing the hype about personalized medicine. If such a thing will ever exist, it's far enough away that we don't need to worry about it.

Finally, I believe that most analyses showing a benefit for a particular population but not overall are fallacious. The multiple comparisons problem figures heavily here.

One of his other points has to do with marginal cost effectiveness. Suppose that treatment X is cost effective when compared to doing nothing, but that it's not cost effective in terms of marginal effect compared to treatment Y. Now suppose that treatment Y is invented later, and that treatment Y is somewhat less effective but much cheaper. Do we suppose that anyone will come along and say, "Well, we used to pay for treatment X, but now that there's treatment Y we don't pay for treatment X, even though some people that used to be cured now no longer will be?" In the case of certain advanced diseases, performing treatment Y then treatment X if Y doesn't work is not an option, as the disease will have progressed too much by then if Y doesn't work.

Tyler, the commission's name is CMS. I used to date a girl who does this reimbursement dollar determination for a living.

First of all, it's extraordinarily political -- only nominally related to the actual dollars spent vs dollars compensated. The RVU metric *originally* was an accurate track of actual labor and supplies expenses used in the performance and recovery from procedures.. but then was corrupted by morons who wanted their care for free.

Tyler, hospitals have a ONE PERCENT margin - they're not growth businesses. Spouting out gratuitous rhetoric doesn't help the situation - it gets nurses fired and inpatient wings shut permanently. The ONLY deep pockets in health care are health insurance companies.

Arnold Kling, from his blog: "Doing research on medical effectiveness gives people the means to restrain their use of medical services, but it does not give them the motive."

I disagree. If Arnold is meaning that they have no purely financial motive to reject surgeries with a low likelihood of success, then perhaps that is true for some patients. But consider that:

- even routine surgery disrupts lives and adds enormous stress to patients and families;
- though patients are often compensated for days away from work, their families often are not.

IMO, if a patient learns that a procedure is effective only 5% or 10% of the time, the patient is unlikely to take the risks and accept the life disruptions which accompany the surgery.

1) To John Dewey: I agree with your statement that many things (especially in emergency medicine) are causally well-known; however, when it comes to internal medicine, what works is not always well known. Remember the adage, "You don't look for a zebra in Texas." But failing to find the right horse, you start looking for the zebra. The search occurs through tests and their interpretation using statistical findings summarized in little books that every doctor keeps handy and plain intuition (the human element--why robots do not make good doctors).

2) Has anyone looked at the veterinary industry, especially small-animal (pets) predominant practices?

A) The insurance industry for veterinary care is 1970's vintage human insurance; it is geared toward catastrophic insurance, with a reasonable rider available for wellness care. Less than 10% of clients have pet insurance. The rest have to dig into their own pockets and ration care according to their means.

B) Many, many euthanasias take place because the pet will die without care, but the owner cannot afford that care.

C) Most veterinarians provide full hospital services, including dentristry, surgery, pharmacy, behavior counseling, and more. Medicare is not there to tell them that the doctor will not be reimbursed for referring to themselves (this is a big problem for the docs I know well). There is some economy of scale in a one-doctor practice, but equipment is better utilized (and the practice is more profitable) when more than one doctor shares the assets.

D) Veterinarians are considered to be trustworthy and compassionate, and perform well medically, but generally are considered to be poor business people. I suspect the same could be said of most doctors in human medicine.

E) I suspect that people take pet obesity much more seriously than they do their own. It is easier to change a dog's diet than it is your own. This is called "compliance". Non-compliant patients (a majority, in fact) get to receive the same lifestyle and medical advice from their doctor repeatedly, without any improvement in outcome, thereby taking up time that is needed by compliant patients, and transferring more dollars from the patient's (or insurer's or government's) coffer to the doctor's. When deciding what works and what should be paid for, compliance should be part of the equation.

3) Medicare is the big fish in the pond, controlling about half of all healthcare dollars in the U.S. As Medicare reimburses, so follow the insurance companies. We have had a government-dominated healthcare system for many years now, so expecting the healthcare industry to innovate under these circumstances is like expecting a politician to vote other than the party line. Doctor's are very good at medicine, and at innovating to make procedures and outcomes better.

4) What makes government any better than the individual at choosing whether to pay for a treatment? The fundamental difference between the two is that the government has (seemingly) deeper pockets.

Imagine a government that would cut (some) subsidies for any input which could not be shown, statisically, to causally produce better outcomes in life. You can see how open-ended this would be. What if you applied this same metric for your personal spending? Would there be much left to spend your money on?

That sounds like an excellent plan for government spending on health care. I'm nervous about government involvement, but would be jump right in if the guiding principle was "do nothing which hasn't been proven."

And no, I wouldn't spend much privately on stuff if I had to know ahead of time that it would always pay off. But the government shouldn't spend like a private party.

Ian: "The first thing we need to do in the United States of America is to get people to take better care of themselves"

I agree completely. If our schools spent as much time teaching health and nutrition - and the consequences of ignoring them - as they do teaching multiculturism, acceptance of physical condition, and environmental zealism, perhaps we would have a healthier population.

Ian: "When you see stores like Wal Mart offering scooters for customers because they are too obese to shop"

On this point I disagree. WalMart offers scooters to customers who cannot walk around the many aisles of its large stores. Some who take advantage of this benefit are obese. But there are other reasons for mobility disabilities: degenerated or injured limbs and joints; muscular dystrophy; cerebral palsy; muscle weakness due to aging; paraplegia.

I don't know what the wal-mart where you shop is like, but when I worked there 99% of the people who used the scooter were on it because they were obese. Granted this was in a rural setting where most work was related to ag, so it didn't get used much.

The UK has been doing (or trying to do) something similar for while now:

John Thacker: "For a life-threatening illness, John Dewey? ... Perhaps people will decide against, say, hip replacements for that reason, but for cancer treatments? I don't think it's all that unlikely that people will say, "If it's got a 5% chance, let's try it."

I agree with you, Mr. Thacker. But I also believe that the overwhelming majority of surgical procedures are not directed at life-threatening illnesses or injuries. That's based on observations of my wife, a 31 year veteran of the operating room.

I'll amend my original statement:

"if a patient faced with a non-life-threatening illness or injury learns that a procedure is effective only 5% or 10% of the time, the patient is unlikely to take the risks and accept the life disruptions which accompany the surgery."

Brian Slesinsky: "There are costs to procedures other than money (inconvenience, risk of complications, and so on) so people would be less likely to try them if they've been shown to be ineffective."

That's a much more concise statement of the point I was making. Thank you.

Tyler wrote: "That's one reason why we don't pay doctors for results in the first place but rather we pay them for procedures. "

Actually, the US government has applied economic theory and implemented policies to pay for results, not procedures. For example, for a diagnosis of heart blockage or broken hip, some providers are paid a fixed amount for dealing with the diagnosis, a price that is set at slightly less than the median cost of all such responses. The medical group with these contracts profits by making sure that they avoid as many complications as possible.

HMOs were very much based on paying for results, not procedures. The medical practice was paid a fixed amount for each person covered no matter what course their health took. They don't exist because the insurance companies were allowed to cherry pick and collect the largely healthy patients while leaving the patients with more health issues to the HMOs.

And the doctors and hospitals that didn't have the desire to deal with results, only profiting from doing procedures, were more than happy to support the insurance companies and kill off HMOs.

Managed care is a term used for paying for procedures but on a discount schedule. Basically, its a tying agreement that says "if you reduce your price for X, I'll direct lots more business to you so you can do twice as many X's."

I was part of an HMO for more than a decade, and my PCP was quite active in telling me why he was doing things. One year he'd say "we're doing PSAs because studies suggest that this leads to earlier diagnosis of prostate cancer." Two years later he was saying, "we no longer believe that PSA tests are worth the expense because it looks like there are too many false positives." Then it was "the cost of the PSA test is low enough we include it in your annual tests so we can monitor it because your father died from prostate cancer." The messages I was getting from my HMO PCP were several years ahead of the public information for the factors relevant to me. And it was clear that my PCP was part of group discussions with other PCPs and with data analysts and the people doing the research. I think certain PCPs were given time to work on public health issues - mine was focused on pulmonary and spent a lot of time on public policy on smoking cessation. As the HMO covered over half the poor in the state, basically the poor with health coverage, his time devoted to reducing smoking was of benefit to the HMO.

But the HMO's acceptance of community responsibility was open to the free ride of the insurance companies and the doctors seeking to increase their earnings. The insurers didn't want to pay for the community cost of covering everyone nor the public education and policy costs that HMOs pursued. Doctors didn't want the constraints of not profiting from becoming an expert in an area and then using that expertise for the benefit of the HMO and the community.

What I saw politically was conservatives promoting the use of HMOs because it would cut the cost of Medicare, but then supporting the insurance companies and doctors in private practice by arguing that insurers shouldn't be forced to insure the sick that would be unprofitable, and that doctors shouldn't be told what to do, and patients should not have any care they want denied to them. This opened the way for insurance company "managed care" which was touted as the free market alterntive to the socialist HMOs. Then I watched my HMO get transformed into a "managed care" institution with all the negative consequences. The HMO was destroyed and the cost of health care, or least health insurance, in NH has gone up dramatically.

By the way, the theme seems to be that government can't do anything about finding the optimal health-outcome cost-benefit equation. That is like saying the market can't find the optimal cost-benefit point when economic theory is basically built on the assumption that the market is in the aggregate good at doing just that.

I believe the Swiss has a market solution in that the insurers work with government to set prices for the insurance policies, the insurers don't get to discriminate but the individuals do, within limits. An individual signs onto an insurer for a minimum time of several years, not the one year used in the US. This means that the insurer can seek ways to improve the health of those it covers with increased expectation that it will reap the rewards of its investment. This mixes the visible market price mechanism imposed by the government with the invisible selection of the best insurance care management or HMO to deliver the health care that the people are most satisfied with.

If a doctor tells you the "whole truth" which is that the best judgement of those who have looked at your situation is that this is the preferred course, because it offers these benefits and these costs relative to the other options. While many once believed that doctors were gods or had a direct channel to god (including the doctor), and thus he could deliver the miracle cure, not many people believe that today and so they seek validation. By conveying the evidence that the recommendation is the result of a group consensus by revealing the decision making process, patients are going to be better able to make what choices apply to them, and have a lot more confidence in the choice they reach with their doctor.

The doctor as shaman is past, and instead the doctor become the face of an institution. By promoting the delivery of health care by many institutions, government can change the nature of the system and bring competition into the process of finding the more optimal health care system.

However, given a hundred or a thousand managed care insurers or HMOs with doctors as the face of these institutions, some common problems will be faced by all. For example, in the past, smoking was a common problem and government then acted to benefit all health care providers by working to not just condemn smoking, but also to fund research into the best ways to change behavior, like higher taxes, fighting the smoking is cool image with advertising, the nicotine patches. No single institution will fund those efforts because of the free rider, but given the public context, the institution which most actively leverages the public effort will reap benefits. So, if each of its doctors 1) asks about smoking, 2) reinforce not smoking or offers help stopping, and 3) rewards the doctor for success and seeks to help him find a way to succeed after failure.

To argue that changing behavior in order to promote long term health benefits won't work or that the public sector can't be the driver of that process, flies in the face of the record on tobacco use. It is true that many people fought the public effort, but the people who most notably fought the government doing things about tobacco use are the pretty much the people who fight the government having a larger role in health care.

Mr. Dewey, with all respect to your wife and other family members, your amended statement still doesn't hold up. A hip going bad is not life-threatening, but it is still extremely painful and debilitating. If a procedure is only 5% - 10% effective, people will still opt for it if that procedure is the only available treatment option. Same with hearing loss. Same with other joint injuries. Heck, it's even true with tennis elbow.

The issue is not only life-threatening illnesses - you have to factor in pain, discomfort, social unease (i.e., deformities), etc. It really does not matter whether something is only 5% to 10% effective - if it is the only option for a cure (rather than management) people will almost invariable opt for it, regardless of life disruption. People are able to arrange their affairs quite effectively for the temporary disruption that surgery causes. People are also pretty incapable of assessing odds for/against in any rational way when the situation is personal. And hope always springs eternal in the heart of those afflicted by pain or disease.

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