From the reaction to new guidelines released this week recommending that women under 50 may not need annual mammograms, some might conclude the government-named panel of experts had decided the lives of a few hundred women with breast cancer didn’t matter.
The new recommendations are certainly controversial, with the American Cancer Society, the Mayo Clinic and others backing existing standards.
And while this particular panel specifically excluded money costs, the discussion raises an important question about how to achieve the best possible health relative to resources expended. Regardless of how health care is financed, at some point some person has to decide whether any individual health care procedure or drug or service is worth it or not.
Because more than 16 percent of all the goods and services we produce now go for medical care, compared to 11 percent or less for most other wealthy countries, it is not a trivial issue.
How much health can be improved with a given use of resources is a key question for society as a whole. But, as for the mammogram panel, someone must balance the hard-to-measure costs of additional exposure to X-rays from more frequent mammograms and of hundreds of false-positive mammograms, with related further tests, biopsies and related emotional stress, for each case of actual breast cancer detected somewhat earlier.
Understand that whether monetary costs are included or not, the choice involves human life. In a nation with nearly 100 million women of ages where breast cancer is possible, even small reductions in treatment recommendations will, at the margin, cause some greater number of women to die of breast cancer.
One also must recognize opportunity cost, however. At some point, resources are limited. Money spent on expensive routine tests for tens of millions of people is money that cannot be spent on other treatments for other diseases where the return in terms of improved health and prolonged life may be far greater.
So how do we decide?
For many goods or services, it is simple and economically efficient for the consumer to make the benefit versus cost decision. If we want onion in our chili tonight I can buy one or decide it is too expensive. We don’t need expert committees to advise us on new shoes, a midwinter get-away or softer toilet paper. We pay the cost, we receive the benefit and we can decide.
Modern health care is different because of what economists call an “information problem.” The average layperson doesn’t know the probabilities of success or failure of a bewildering array of possible treatments. Even highly trained physicians don’t know this. Hence, we have expert committees to develop treatment guidelines.
Decisions are further complicated by how we finance medical care, with multiple administrative layers separating patients from the entity footing the bill.
A century ago, doctors told patients what was wrong with them, how it could be treated and what that would cost.
Patients then made their own decisions, taking into account likely consequences as explained by the doctor versus the monetary and nonmonetary costs.
Many people died who might have lived much longer had money not been a major consideration. (Today, those without insurance face similar decisions.)
Early health insurance was like home or auto insurance. Services covered were strictly specified. If a particular treatment was not specified, then the patient defaulted back to a private weighing of possible benefit versus money and nonmoney costs.
People dislike such limits, especially when they perceive someone else is paying the bill.
Legislation in many states forced health insurance companies to include nearly all procedures in their policies. And patients who knew how to pull legal, political or public-relations strings could often force companies to pay for excluded procedures.
Insurers reacted by devoting great effort to finding ways to screen out higher-risk clients or deny treatment on such bases as preexisting conditions.
That back and forth between the public, government and insurance companies is one reason our total spending grew past 16 percent of GDP, with an enormous portion going for administration.
Now we are in a desperate political battle over how to provide better coverage for uninsured people and how to reduce costs.
Most participants in this dogfight prefer not to mention the basic underlying issue of scarcity. If households directly pay only a small fraction of the cost of treatment, then there’s little disincentive for them to get additional tests or procedures.
Inevitably, someone must decide which treatments are worth the monetary and non-monetary costs to society and which are not. It may be health insurance administrators, legislative bodies or “death panels.” But the decision has to be made.
All countries face the same problem, even ones like Switzerland that have private-sector-based health care with enviable outcomes costing only 10 or 11 percent of GDP. Switzerland has a defined process by which government mandates what must be included in basic packages offered by all private insurers and what is excluded. Households can buy supplemental coverage for excluded services or go without.
Regardless of the final bill we enact here, now or in the future, the question of whether any specific treatment is “worth it” will never go away.
© 2009 Edward Lotterman
Chanarambie Consulting, Inc.