Will health care reform stop the rising cost of health care?

As we get into the nitty-gritty of health care reform, critcs from both left and right are asking whether current proposals will reduce costs. Here we have a historic opportunity to make major changes in health care, but it appears no one is willing to address the problem of escalating costs.

The public insurance option might reduce the cost of insurance by competing with for-profit insurers. But this doesn’t reduce the number of unnecessary procedures. As David Brooks points out in a NY Times column, the public option, as it’s currently formulated, would have no effect on the fundamental incentives that lead to higher costs.

Legislation may cut Medicare and Medicaid payments to hospitals, but that savings could be offset by hospitals raising prices for patients who have insurance.

Comparative effectiveness measures have no teeth. No one is willing to say that health care providers must abide by the findings of comparative effectiveness research. If a patient wants the most expensive treatment, and a doctor has a financial incentive to favor that treatment, no one will deny that choice to the patient or doctor. As Alec MacGillis writes in a Washington Post column, “In a country where ‘rationing’ is a dirty word, who will say no?”

Are current proposals too tepid?

At the beginning of health reform discussions, controlling costs was considered as important as expanding coverage. “The priority on controlling costs seems to have fallen by the wayside,” according to Steve Wojcik, vice president for public policy at the National Business Group on Health, quoted in the LA Times.

Critics want bolder initiatives. Doctors and hospitals who receive Medicare and Medicaid payments should be rewarded when they are efficient. Those who don’t make the grade should have their payments cut.

Part of the hesitancy is political. It’s not just the lobbyists from the insurance and pharmaceutical industries, but the medical profession itself. If the administration or Congress insists that doctors abide by guidelines that stipulate the most beneficial and cost-effective way to treat patients, the Amercian Medical Association could withdraw its support. Doctors are professionals, and they want to make their own decisions on a case-by-case basis. From Noam Levey’s article in the LA Times:

“There are enormous opportunities to save money,” said Ken Thorpe, an Emory University healthcare economist who has been advising Democratic lawmakers on the legislation. “What has been proposed is much too tepid.”

The fundamental problem of our medical system, according to David Leonhardt, is that costs are increasing while results remain mediocre. If legislators don’t address this issue, “the medical system will remain deeply troubled, no matter what other improvements they make.”

Options for treating prostate cancer: Which one is best?

Leonhardt uses prostate cancer to illustrate the problem. Treatments for prostate cancer run the gamut from watchful waiting, which costs a few thousand dollars for office visits and tests, to surgery ($23,000), through IMRT radiation ($50,000), to proton radiation therapy (over $100,000).

Some doctors swear by one treatment, others by another. But no one really knows which is best. Rigorous research has been scant. Above all, no serious study has found that the high-technology treatments do better at keeping men healthy and alive. Most die of something else before prostate cancer becomes a problem. …
[I]n our current fee-for-service medical system — in which doctors and hospitals are paid for how much care they provide, rather than how well they care for their patients — you can probably guess which treatments are becoming more popular: the ones that cost a lot of money.

Between 2002 and 2006, the use of IMRT radiation increase by a factor of ten. New proton treatment centers are opening around the country.

The country is paying at least several billion more dollars for prostate treatment than is medically justified — and the bill is rising rapidly.
You may never see this bill, but you’re paying it. It has raised your health insurance premiums and left your employer with less money to give you a decent raise. The cost of prostate cancer care is one small reason that some companies have stopped offering health insurance. It is also one reason that medical costs are on a pace to make the federal government insolvent.

There is no incentive to control costs

Could we determine which treatment is best? Yes, but there is no incentive for drug companies or device makers to pay for the clinical trials. After all, insurance companies pay for expensive treatments regardless of their effectiveness. Although there’s some government funding for comparative effectiveness studies in the stimulus bill, the funding is only temporary.

So far, Congressional efforts on health care reform have not addressed “the incentives that drive behavior,” according to Senator Wyden of the Finance Committee. The reason: Extensive lobbying by the health care industry to preserve the status quo.

Leonhardt mentions a few alternatives Congress could mandate: Punishing hospitals for costly errors, giving consumers a greater choice of insurance options, paying doctors a set fee. He concludes:

Even if Congress did all this, we would still face tough decisions. Imagine if further prostate research showed that a $50,000 dose of targeted radiation did not extend life but did bring fewer side effects, like diarrhea, than other forms of radiation. Should Medicare spend billions to pay for targeted radiation? Or should it help prostate patients manage their diarrhea and then spend the billions on other kinds of care?
The answer isn’t obvious. But this much is: The current health care system is hard-wired to be bloated and inefficient. Doesn’t that seem like a problem that a once-in-a-generation effort to reform health care should address?

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