Medicynic

Interesting article in the NY Times about costs of the criminal justice system. Missouri has taken the radical step of informing judges the cost of various sentence options:

For someone convicted of endangering the welfare of a child, for instance, a judge might now learn that a three-year prison sentence would run more than $37,000 while probation would cost $6,770. A second-degree robber, a judge could be told, would carry a price tag of less than $9,000 for five years of intensive probation, but more than $50,000 for a comparable prison sentence and parole afterward. The bill for a murderer’s 30-year prison term: $504,690.

One presumes somewhere in the system is a mechanism to look at value and efficacy!?

“One of the flaws in the operation of our criminal justice system is not only the failure to be attentive to cost but an arrogance that somehow you can never put a price on justice. Long missing has been a sober realization that even if we get significant benefits from incarceration, that comes at a significant cost.”

Where have I heard something like this before?

“No one can put a price tag on being a victim,” said Scott Burns, executive director of the National District Attorneys Association.

What’s fascinating is the parallel issue of cost in medicine. In medicine, prices are rarely revealed and considered in the treatment decision. As a matter of fact, we (patients, providers, and payers) are price insensitive when treating serious medical problems and will readily accept very costly approaches that have little efficacy.

Medicynical Note: Patients aren’t informed, have infinite expectations of treatment and cure, and insurers pay whatever is demanded. As a result we are going bankrupt, individually and as a nation.

The FDA will decide shortly whether to continue Avastin’s metastatic breast cancer indication. The article in the Post puts it in terms of “freedom” to choose any treatment regardless of cost or efficacy. However when a drug doesn’t work for the indication, what’s the rationale for it’s use?

An FDA advisory committee voted 12 to 1 on July 20 to withdraw Avastin’s authorization for advanced breast cancer based on two new studies that the advisers concluded had not shown that the drug extends life. Not only that, the committee concluded that the studies indicated the drug slowed tumor growth for even less time — perhaps as little as about a month. “The vast majority opinion of the committee was that the drug was not doing very much, and what it was doing was more than offset by the negative,” said Wyndham Wilson of the National Cancer Institute, who chaired the committee. Avastin can cause a variety of potentially serious side effects, including blood clots, bleeding and heart failure. “In our best judgment, we did not feel this drug was safe to give relative to its benefits,”

And of course the republican response:

“I fear this is beginning of a slippery slope leading to more and more rationing under the government takeover of health care that is being forced on the American people,” said Sen. David Vitter (R-La.).

Medicynical Note: There may be some utility for Avastin in breast cancer but the studies show no survival benefit. Desperate cancer patients will try virtually any therapy that may offer a benefit, this is particularly the case where there is no or little financial participation in covering the costs. The irony in Senator Vitter’s “concern” is that his party’s solution to health care, the so called free market, formalizes economic rationing of care (if you don’t have the money you don’t get the care). Our non-system is bankrupting patients, insurers, and the country. We need some rationale, like efficacy, to decide which treatments to use and pay for. Of course individuals should be free to buy whatever therapy they wish whether it works or not–and considering the boon in the Mexican cancer hospitals along the border, they do.

Economix continues the discussion of the inappropriateness of free market health care. Reinhardt’s discussion includes references to Kenneth Arrow’s 1960’s work on the characteristics of a perfectly competitive market.

Arrow explored in the early 1960s what the characteristics would be of a perfectly competitive market for an ordinary commodity, how the medical care industry deviated from those characteristics and what aspects of health care might explain these deviations.

And:

On the other hand, as medical science and practice advance rapidly, the information gap between physicians and their patients increases. Many transactions in the market for health care therefore still proceed on the basis of trust in the expertise and integrity of physicians and other health workers, rather than on the countervailing power of equally well-informed buyers and sellers, each looking out only for their own self-interest.

And Arrow in a recent interview:

I think the basic analysis hasn’t changed. There are wars over the details, but the basic analysis is accepted. Some specifics have changed. If you look closely at my argument there is a sociological structure. There is a kind of sociological thesis. The market won’t work –it doesn’t work well in the health context. But something else supplements the market, and the thing I put stress on in the paper are the elements that put a non-economic influence on the market: professional commitments to provide a service, to engage in services that aren’t self-serving. Standards of caring decided by non-economic actors. And one problem we have now is an erosion of professional standards. In a way there is more emphasis on markets and self-aggrandizement in the context of health care, and that has led to some of the problems we have today. (medicynical emphasis)

Medicynical note: So as the blind faith movement pushes for “free” i.e. less regulated markets in health care we should be painfully aware of the failures of this movement in the financial area (both in the 80’s and more recently), the deregulation of electric power (Enron, in case you forgot) etc. We shouldn’t forget that money makes people do funny things.

Health care is different than other commodities, it’s not optional; often there are no alternatives; shopping for care is difficult because of the urgency of needed care and the information gap — “both the diagnosis of and the likely consequences of treatment are asymmetrically allocated between the sell-side (providers) and the buy-side (patients) of the health care market.”

In the free market of ideas it’s buyer beware of those selling a free market idea for health care.

In and op-ed Representative Ryan of Wisconsin outlines his play for taking Medicare apart.

Given that we spend one and a half to two times as much on health care than other industrialized nations it’s clear we have to change. Indeed as Ryan notes there is predicted “38 trillion shortfall” over the next 75 years.

So there is a problem and Ryan seems to object to the savings outlined in the recent health care reform bill even if it’s savings attained through smarter spending and choosing the best most efficient treatments.

Instead his radical solution is to gut Medicare and replace it with “vouchers” to be used to “apply” to a list of medicare certified coverage options. No discussion of the amount of money the voucher will provide; the coverage it will buy; whether it will cover the premium; whether it will suffice if the premium is raised because of illness; whether the “certified coverage option” can turn the beneficiary down for coverage; and so on.

There is no discussion of what he means by “additional support” for those who have low incomes and higher health costs, and what he means by high-income beneficiaries–what is high income in the context of retirement? He is therefore proposing a replacing a simple system of insurance which has very low administrative costs with one that will have to evaluate and adjudicate the level of government support for, I would predict, the great majority of beneficiaries.

Left unclear is how this will cut costs in our very inefficient health care system other than create a system where economic rationing of care is the rule.

Medicynical note: There must be a better way. This may be a way to start a discussion but is a totally inadequate solution to the problem. The U.S. is the only country in the world without a national health care system. Ryan’s solution won’t change that.

This is not rocket science but simply how markets work.