Saturday, December 3, 2011

Rationing Health Care: good or bad it's necessary

Book Cover 
"Pricing Life" by Peter Ubel

The USA is going to have to decide what to do about the rampant acceleration in the cost of health care on a national basis, and I am fearful that, lacking the knowledge and courage to do it correctly, the government will simply continue cutting payments across the board to doctors and hospitals, encourage the use of cheaper but less effective care, and continue to ignore the growing tens of millions of citizens without health care insurance.  
PRICING LIFE is one of the few books to use the "R" word (rationing) even though we are already  rationing care in this country; just doing it irrationally.  My daughter, K put me onto this book almost a decade ago, and it is every bit as valid today as when it was published in 2001.

Ubel reviews the many ways rationing has been attempted (with noteworthy experiments in Oregon that were well conceived but still unsuccessful), including prioritizing with cost-effectiveness analysis (CEA) and cost-benefit analysis (CBA) as means to determine the utility of different medical treatments in adding a quality year of life (QALY.)  He comes to the conclusion that these efforts have failed because they don't reflect all community values and only address the average patient.  He contends that only by primary physicians limiting use of and access to marginally beneficial care can substantial reductions in medical utilization and cost be achieved.  He discusses the way physicians are already rationing care by the use of situational examples.

Ubel also talks about the "Moral Hazard" of insurance, even when individually purchased.  This is a phenomena well known by waiters in high priced restaurants.  When there is no splitting of the check, the overall bill will invariably be higher than if individual checks are given.  When Bill is dining with 5 other friends at an expensive restaurant, he is more likely to order his third expensive scotch after dinner since he will be responsible only for $10 (1/6) of the actual $60 cost of his three drinks, while Mary may have the fancy desert she thinks is overpriced and would not otherwise order, but because she sees Bill having all that expensive Scotch she also wants to get her own "fair share."  

This same process acts with insurance, especially when employer or government provided.  If your doctor says there is a test that cost $500 to detect a rare disease that you have only a 1 in 10,000 chance of having, you will probably decline to have the test if you have to pay the $500 out of your own pocket.  However, if covered by insurance and you only have to pay $10 to have the test, you are far more likely to ask you doctor to go ahead with the test.  Thus the "moral hazard" of medical insurance works just like the expensive dinner with a single check.

I do think there is an important component missing in Ubel's book, and it is perhaps because his experience is as a government-employed VA doctor, and because the "business" of medicine has increased in dominance since the '90s when he wrote the book.  I know of no hospital that does not operate on a profit basis; especially a "non-profit" hospital that is in competition with another non-profit in the same community.  

As I have commented earlier, medical groups are also operating on the profit model.  Urologists buy a complete radiation therapy installation, since there is much more to be made from the technical fee for a course of radiation therapy for prostate cancer than from a surgical fee for a prostatectomy.  Orthopedic surgeons install MR scanners in their office and make more money from sending patients to the MR than they would ever make from consultations and examinations in their clinic.  Ditto for Cardiologist, oncologists, etc. etc.  The financial incentives for over-utilization are tremendous.

I see nothing in the behavior of our government members to suggest that they possess the moral fiber to tackle and solve the health care cost and availability problem anytime in the near future.  Only when a crisis brings a consensus in the citizenry that we must accept some degree of rational rationing, and we make it clear to congress and the President that we are willing to accept a fair and rational national health care policy for all our citizens will there be any chance at all to alter the path we are currently on to a complete implosion of  health care in the USA.

No comments: