Health-care inefficiencies ctd: Scary graph dept.

Check this very scary projection of what current trends in health-care spending will mean for our economy: a growing weight that will account for half of GDP by 2082:


Peter Orszag, Obama's budget director, shows that slide in his standard talk on what's wrong with our budget. It shows why, as Ezra Klein puts it,

an odd bedfellows coalition of centrist economists ranging from Dean Baker to Henry Aaron to Paul Krugman to, well, Peter Orszag and Jason Furman have been forcefully arguing that there is no such thing as an "entitlement crisis." Social Security is safe. The crisis is in Medicare. But more than that, the crisis is in health care.

These folks argue that absent real reform that not only gives universal coverage but cuts out our most inefficient health-care spending, the health-care sector will sink the economy. Health-care reform, therefore, should get much higher priority than entitlement reform.

Where's the fat? Much of it is in expensive treatments that studies have shown bring no real benefit. As David Leonhardt describes in his Times Magazine piece on the budget crisis,

Seltzer has collected large amounts of data from his clients on how various doctors treat patients, and his numbers present a very similar picture to the regional data. Seltzer told me that big-spending doctors typically explain their treatment by insisting they have sicker patients than their colleagues. In response he has made charts breaking down the costs of care into thin diagnostic categories, like "respiratory-system diagnosis with ventilator support, severity: 4," in order to compare doctors who were treating the same ailment. The charts make the point clearly. Doctors who spent more -- on extra tests or high-tech treatments, for instance -- didn't get better results than their more conservative colleagues. In many cases, patients of the aggressive doctors stay sicker longer and die sooner because of the risks that come with invasive care.

A lot of this comes from aggressive marketing of drugs, devices, and therapies by industry -- some of that aggravated by payments to doctors for using or advocating use of such therapies. Cleaning that arena up via the FDA will help. But the key, suggests Leonhardt, is identifying the inefficient treatments and then knocking them off the lists of reimbursable expenses: a much tougher job.

The first step toward turning "less efficient" doctors, in Seltzer's euphemism, into "efficient" doctors would be relatively uncontroversial. The government would have to create a national version of his database and, to do so, would need doctors and hospitals to have electronic medical records. The Obama administration plans to use the stimulus bill to help pay for the installation of such systems. It is then likely to mandate that, within five years, any doctor or hospital receiving Medicare payment must be using electronic records.

The next steps will be harder. Based on what the data show, Medicare will have to stop reimbursing some expensive treatments that don't do much good. Private insurers would likely follow Medicare's lead, as they have on other issues in the past. Doctors, many of whom make good money from extra treatments, are sure to object, just as Mancur Olson would have predicted. They will claim that, whatever the data show, the treatments are benefiting their patients. In a few cases -- though, by definition, not most -- they may be right. Even when they are not, their patients, desperate for hope, may fight for the treatment.

Klein's post, by the way, is mainly about how the appointment of Judd Gregg as commerce secretary should not be seen as necessarily a signal that the traditional entitlements like Social Security are on the block; just as likely, Klein says, that Obama means to bring Gregg's cut-the-fat energies to bear on the health care problem.

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"A lot of this comes from aggressive marketing of drugs, devices, and therapies by industry"

True in some cases, but not really generalizable. In the age of automation, "new=more expensive" doesn't always compute. After 2 years in the diagnostics industry, I can say our life would be easy if marketing was that much a piece of cake. The reality: Doctors are rarely aware of the statistical implications of their work and, like most humans, tend to follow the motto "seeing is believing" - shortcomings demonstrated by statistics and perception psychology be damned. It's much nicer to look at "real cells" than reading a chart off an automated analyzer - and being more personnel intensive and requiring more training, it's more expensive as well.

The preference of the visual is one thing. Another is sticking to the seemingly "tried and true". Looking at Wikipedia, where medical articles are dominated by MDs, it's easy to find a bunch of statements that have been debunked or qualified 5, 10 or even 15 years ago. CME or not, the general practitioner next door doesn't always know what's new and even the hospital MD far too often is way too busy to do a thorough review of the pertinent literature.

I'm all for stripping the chaff out of public health system catalogues - as long as it doesn't turn them into a medical museum catalogue.

Oliver, thanks for writing. Clearly new does not always mean inefficient or overly expensive. What's needed is some way to rapidly gather empirical data on which new treatments bring substantial new benefit (compared not to placebo, but to existing treatments) and which don't, so we can discard those that don't add benefit. It's natural for doctors to use things that they've seen work (or been led to see work...). That's why we need larger evidence bases, esp of actual treatment rather than FDA trials, so we can see more quickly which Txs work in real populations. And we can't do that efficiently without some sort of standardized records and appraisal system.

While it is certainly true that there are issues with reimbursement, it seems the issue of "how much are we willing to spend on one person?" is rarely even brought up in the US.

If reimbursement was the only issue, costs would eventually reach some sort of equilibrium. Much of the rising cost has to be attributed to advancing technology and how we pay for it. As technology gets more advanced, existing treatments tend to become cheaper but newer ones tend to become increasingly expensive as there appears to be a diminishing return on investment.

By Scott Conger (not verified) on 09 Feb 2009 #permalink

There seems to be some contradictory expectations. If excessive expense is caused by expensive treatments, why are not the insurance companies (remember those evil corporations) putting the brakes on it? Whenever they pull something back, the consumer backlash is enough to make them think twice.

Will Congress be any better at the hard decisions? I have my doubts.

The excessive treatments may be from a fear of being sued. Doctors want to be able to say that they did everything. It seems like they do it so they don't miss the one person who needed the test or procedure.
Note: I'm Canadian so may not have a true picture of the American systems. In Canada, I teach medical school and we promote evidence-based medicine. When I lived in California, I was amazed at how quickly the big and expensive tests were brought out but my experience may not have been representative.

I think this sort of self-protecting 'defensive medicine' plays a factor, but not as big as is often thought or alleged; my guess is it's one factor among many, and that it doesn't weigh as much as a broader cultural inclination (both U.S. and medical) to use everything in the belief that more is better. Add to that a long list of other candidates: constant advertising and other marketing to both consumers and doctors; the repeated, ubiquitous message that newer drugs, devices, and other treatments are both more effective and superior; direct incentives, conflicts-of-interest, and fees; the natural inclination to want to try something. The list is long and includes the full range from best intentions to cynical profiteering and self-protection.

But it's clear too that many doctors use expensive treatments because the patchy evidence they're exposed to -- some combination of a few studies they've read, a few cases they've dealt with or heard about, and the original efficacy trials that compared the treatment only to placebo -- suggest the treatment works, and works better than something else, and should therefore be tried. (I imagine this accounts for most of the prescriptions written for the modern antipsychotics and most recently patened antidepressants that were inaccurately touted as more effective than the far less expensive drugs they replaced.) Meanwhile the reality is we don't have the data, or it takes years -- until someone can compare several large, expensive studies -- to get it.

That's the point of using electronic medical records and comparative medical statistis to collect and analyze the data on the fly. We'll learn a lot faster what works better than what -- and be able to compare Drug A to Drug B, which at this point rarely gets explored with real rigor, and only years after both A and B have been on the market.

RE:SEA 2/19 Two are on the short list for Secretary of
FDA; they are still looking for a Sec.--H&HS, and some have major doubts about Surgeon General hopeful: TV Doctor Sanja Gupta. I can suggest many names that come to mind. But, they may not be interested. I list some, suggesting you poll them for their favorite picks.
Rep. Diana DeGette; from Science in the Public Interest: Caroline Smith Dewaal; Sen.Tom Harkin; Dr. Dean Ornish.
I wish I could get your US postal address ... since I have a limited time using this computer. over&out
Carolyn Clark

By Carolyn Clark (not verified) on 19 Feb 2009 #permalink