Is Waiting on Line Good for Your Health?

Waiting on line for medical services is the horror-filled future conjured up by opponents of a single-payer health insurance system. Look at Canada. Look at Great Britain, the opponents warn.

But what if those lines actually improve health care outcomes? What if they are one reason why citizens of those countries live longer lives than their American counterparts?

Those thoughts come to mind after reading a commentary on cost-effectiveness analysis in the latest Journal of the American Medical Association (subscription required). Cost-effectiveness analysis is an economists' tool for judging the value of a good or service in markets where pricing signals are inoperative (health care, underwritten by third party payers who stand between the providers and consumers, is a classic case). Written by two Canadian physician/economists, the commentary points point out how most efforts to rationalize health care expenditures via cost-benefit analysis are fatally flawed because they use use that tool in isolation from other considerations.

Most cost-effectiveness analyses rely on a measure called the quality-adjusted life year. A QALY for a given therapy is determined by placing a value on a medical therapy’s clinically-proven outcomes that has been adjusted for how much surveyed patients think it is worth in terms of living longer, reduced pain, greater mobility and other quality variables. Those quality-adjusted outcomes, measured in increased years of life per patient treated, are then divided into the cost of treating a patient. It yields a QALY ratio for that particular therapeutic approach.

In the U.S., paying organizations like insurance companies use QALY ratios to determine whether they’ll pay for a new technology (Medicare by law is prohibited from using this tool; it uses a “reasonable and necessary” standard when making coverage decisions). But, in most cases, insurers use an arbitrary benchmark such as “we’ll pay for anything under $20,000 per QALY.” That’s not true cost-effectiveness analysis, Allan Detsky and Andreas Laupacis of the University of Toronto argue.

Using cost-effectiveness ratios in this way may lead to inappropriate decisions, because funding may not be provided for therapies that have more economically attractive ratios but have not been considered when the decision maker looks at 1 program in isolation. Simply adding all programs with known ratios below a threshold will inevitably lead to a never-ending increase in the health care budget, because very few new therapies are cost-saving or cost-neutral. In addition, one speculation is that the identification of an arbitrary economically attractive or "cost-effective" ratio may have the effect of encouraging drug companies to charge a price that achieves that ratio, even if they could make a profit at a lower price.

True cost-effectiveness analysis, they argue, compares the cost benefit of a therapeutic approach to other approaches for the same medical problem. Or, a centralized payer on a fixed budget (a government agency or an insurance company that wants to hold rates steady while continuing to make a profit) uses the information to maximize the health care gains for a certain level of expenditures. Using $1 million to give 50 seniors artificial hips may help those 50 people get around better, but that’s less effective than using the money to administer 200,000 seniors flu shots, which would probably save more than that number of lives.

In countries on fixed budgets like Canada and Great Britain, medical payment authorities are forced to make such comparisons and ration care accordingly. The result is that their physicians are more likely to deliver care that most people really need while skimping on expensive and marginally effective treatments. Yes, people wait on line for those latter treatments, but they can take comfort in the fact that it is the price for ensuring that their fellow citizens get needed care on a timely basis.

The way the QALY tool is used in the U.S., on the other hand, incentivizes providers to increase the use of marginally effective services whose prices have been inflated to the arbitrary payment threshold. Meanwhile, less costly but highly effective treatments get ignored. In practical terms, we get a lot more orthopedic surgeons making a half million bucks a year replacing a couple of hips a day, while there’s a shortage of primary care docs willing to make the rounds of nursing homes immunizing seniors.

From a public health standpoint, that's not cost-effective medicine. And it may be one reason why on average we live shorter lives in the U.S. than those line-sitting Canadians and Brits.

Posted by gooznews at July 12, 2007 08:14 AM