Contained in the soon to be passed economic stimulus package is a provision creating a council which will make decisions and recommendations on the health care we receive. This is in the name of controlling the growth of health care spending.
The Federal Coordinating Council for Comparative Effectiveness and Research aims to compare outcomes, effectiveness and appropriateness of items, services and procedures used to prevent, diagnose or treat diseases, disorders and other health care conditions. While this sounds like a good idea on the surface, there is something lurking beneath.
Most of us are familiar with the notion of supply-side economics. Simply put, supply-side economics is the theory that we should advance policies that raise capital and labor output by increasing the incentive to produce. I contend there is a stronger and more organic supply-side force in health care. When pharmaceutical, device and biologics companies develop new treatments there is a natural tendency for us as consumers to want those innovative treatments regardless of whether there is an existing technology that is just as good.
Instead of encouraging the incentives to production, measures such as the Federal Coordinating Council threaten to choke off the supply of health care by managing the doctors you can see, the prescriptions they can write or the devices they can use to treat your condition. In my opinion, this is backwards. We need to encourage the discovery of new treatments and technologies, but this does not often happen with "blockbuster" drugs or devices. More often, it is an incremental advance and should be recognized as valuable, not dismissed as insignificant.
A more effective approach to controlling the cost of health care is to impact the demand side of the equation. A good example is what happens to health care treatments not covered by our health insurance - cosmetic surgery.
Because cosmetic surgery is rarely covered by health insurace, it is virtually the only sector of health care in this country where cost declines over time. The same is true of the eyesight correction procedures such as lasik. We pay for these procedures out of our own pockets so we are much more sensitive to the price. Are we sensitive to the price of a CT scan or X-ray? Does anyone really know how much these cost even after having one? Probably not.
In the end, let's focus our attention on where it ought to be - ourselves. I believe overutilization of health care in our country is the primary cause of increased costs to the system whether we pressure our doctors to perform tests or procedures or they are practicing defensive medicine to prevent a lawsuit. Only by being savvy consumers of health care can we have a significant impact on bending the growth curve of health care costs in our country.
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Hi Joe - good on ya for tackling Health Care! Definitely a "big nut", with almost everyone agreeing that it needs to be "reformed" in this country (whatever "reformed" means?). Anyways - since its common knowledge that the US spends the most on health care, and ultimately doesn't achieve results commensurate with that spending (compared to other industrialized nations), something needs to be done.
ReplyDeleteYour Supply Side argument is interesting, but is it simply coincidence your examples for declining costs are both considered "discretionary spending"? Makes sense to me that something people don't *need* can become cheaper over time (even as demand skyrockets). Yet, you're right - no one asks the cost of a CAT scan, when it will save their life.
BTW: I think an effective way to impact the demand-side, is to legislate against double cheeseburgers and DQ Blizzards... but that aint never gonna happen!
Lorne - thanks for commenting. You're right that cosmetic surgeries and eye procedures would be considered "discretionary," but my point was that we as consumers are more sensitive to those costs because we actually have more skin in the game. If we all had more incentive to limit our demands on the health care system we'd be able to lower overall cost significantly.
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