Controlling the Rising Costs of Health Care

The report I referenced on November 2nd and yesterday, The Challenge of Rising Health Care Costs — A View from the Congressional Budget Office, is from the November 1st issue of the New England Journal of Medicine (NEJM). Yesterday I listed the three reasons given in the report for the rising costs of health care. The November 8th issue has a continuation of the report. The November 8th report addresses how we could control the rising costs. The report mentions several methods but they all come back to one approach and that’s the first one mentioned. I’ve excerpted the following from the report.

“One approach that could reduce total health care spending (rather than simply reallocating it among different sectors of the economy) involves generating more information about the relative effectiveness of medical treatments and enhancing the incentives for providers to supply, and consumers to demand, effective care.”

The reality is that we have documented evidence about the effectiveness of less than half of the medical treatments in use today and little documented evidence whether the additional costs for expensive treatments justify their additional costs. Let’s look at how “generating more information about the relative effectiveness of medical treatments” would affect the three reasons given for the rising costs.

1. The bulk of the spending for health care is from the development and diffusion of new medical technologies and therapies.
   
   The effectiveness of new medical technologies and therapies are typically documented by the companies that developed the technologies and therapies. Their studies may be accurate but at this time we don’t know for sure because no independent research is done. Independent studies could certainly assist the doctors in making informed decisions.
   
   
2. The fee-for-service (rather than managed care) reimbursements to health care providers creates an incentive to provide additional or more expensive services.
   
   Obviously fee-for-service has built-in incentives for the health care providers. It’s very difficult to control costs when five tests can be performed or an expensive procedure done when three of the tests may have been all that was necessary or a less expensive procedure performed but there’s little data to support the use of specific tests or procedures. I’ve had experience with this. I heard about a test for diabetics that I was interested in. I mentioned it to my doctor and he told me the benefits of the test versus another test I was having. I was suggesting both because my insurance pays for both. He convinced me that the second test wasn’t beneficial. Another doctor may have said yes without any thought to the cost versus benefit. In this case, the test has been available long enough for the doctor to have some experience with its effectivenes.
   
   
3. The declining out-of-pocket costs paid by recipients for services. Consumers ask for more when they pay less.
   
   The example above applies here as well. When patients ask, typically doctors deliver. If the doctor has data to support their lack of recommendation for a test, drug, or procedure, they’re more likely to speak up.

I think we would all be more comfortable if some organization was “generating more information about the relative effectiveness of medical treatments.” There is another approach which I advocate and additional study information would help here as well. The other approach is for health care providers to do the right thing. Greed and self interest is almost encouraged by the public. So many people treat those with wealth as hero’s or royalty. It’s a power that can intoxicate anyone. Having the strength of character to do the right thing is rare. Providers would be more likely to find the strength of character if they know that the payer is going to question a treatment based on an unbiased study. The payers could provide a strength of character quotient for providers. A 10 means avoid because they cost us too much money and a 1 is very effective at controlling costs.