FYI: An Important Newspaper Article On the US Health Care Mess

FYI:  An Important Newspaper Article On the US Health Care Mess

In my last entry, I began a discussion of the US health care system.  I had planned to work my way through the various issues, ending with a plan to control costs.  That is still my plan but I want to let you know about a very interesting and important article published recently in the New York Times (Wednesday, December 3, 2008).  The article is entitled “British Balance Gain Versus Cost Of Latest Drugs,” and was written by Gardiner Harris.

How does information about the British health care system help those of us in the US?

As I discussed earlier, the “big ticket” problems in the US health care system are access and costs.  I submit that it is not possible to assure universal access to high quality health care for all people in the US without controlling costs.  By controlling costs I mean not just slowing the rise in health care costs (greater than the rate of inflation over the past 30 years) but actually cutting current costs by quite a bit- 25-50%.  That’s quite a challenge.

So, the New York Times article discusses the British efforts to control their costs by rationing drugs.  The British government has an agency, the National Institute for Health and Clinical Excellence, known as “NICE,”  which is responsible for determining if a prescribed treatment is affordable; that is, whether or not the British government will pay for the service.  The institute has carried out rather fancy economic analyses and has determined that the British government can afford only about $23,000 to save a citizen’s life for 6 months.  Basically, NICE has calculated what a life is worth.  The agency’s policy has generated considerable controversy.  The newspaper article discussed the case of a British citizen who has kidney cancer with metastases to his lung.  The patient’s physician prescribed a new and very expensive pill which has shown some promise in clinical trials and offers, on average, 6 months longer survival  at a cost of more than $50,000.

Is NICE a nice idea?

The issue of rationing health care is a very complicated one but there is no question that rationing services will be necessary if the US has any hope of controlling health care costs.  I’m not sure “rationing” is really the right term for what the British are doing or what the US will need to do.  Britain unlike the US actually has a health care budget (almost all people in Britain receive medical care paid for by the  government and they have been struggling to control costs.  NICE has been around for about 10 years and its purpose is to decide which services will and will not be covered for patients within the British National Health Service.  Their policies are based on both medical necessity determined on evidence-based medicine principles and costs.

The British Dilemma

The problem the British have is how to best control their health care costs best given that they actually are supposed to operate within the constraints of a health care budget.  Should expensive services be denied even if they are effective in prolonging life or in providing symptom relief?  There are no easy answers to such questions.  One problem, which is addressed in the newspaper article, is how difficult it can be to determine if the cost of the service in question is a reasonable one.  For example, should a $10 pill really cost $10; is the cost of production such that $10 per pill is an appropriate charge?  We know quite a bit about drug pricing in the US.  Typically, when a generic drug is introduced, the price for the drug drops by up to 90% (that’s not a typo- a huge drop in price).  So, how much of the current high and steadily increasing costs for health care services in the US and around the world are more or less price gouging?  Clearly, some of the cost increases are the result of new and better therapies, but no matter what the service, governments and insurers must find ways to get services at reasonable costs (probably a better term would be “appropriate costs”).  Only then will it be possible to determine how much rationing is actually necessary (I still don’t like that term, “rationing”).  What’s interesting is that drug companies and device manufacturers around the world are already anticipating major efforts by payers to assess costs for individual services rather than just accept them as has been the case in the past- the result has been a quiet deflation in costs for many services on a “voluntary” basis.

Back to the US health care system

The New York Times article is well worth reading and if nothing else it makes clear how difficult a task it will be to control health care costs.  I will come back to this issue when I get into the details of how we can achieve universal health coverage and afford it (I promise it won’t be “smoke and mirrors”).

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