CER: A (Slightly) Different Perspective
My colleague, Michael Cannon, makes several good points about comparative effectiveness research (CER), both in his letter to USA Today and in his excellent paper on the subject. I strongly agree with him that we should not reflexively oppose CER—much of health care spending is wasteful or unnecessary, and it makes sense, therefore, to test and develop information on the effectiveness of various treatments and technology, giving consumers tools to evaluate the value of the care they receive. There is also a case for the use of CER in taxpayer-funded programs like Medicare and Medicaid. Taxpayers should not have to subsidize health care that has not proven effective, nor can Medicare and Medicaid pay for every possible treatment regardless of cost-effectiveness.
However, I am more skeptical in general about CER than he is for several reasons.
- First, “quality” and “value” are not unidimensional terms. In fact, such concepts are highly idiosyncratic with every individual having different ideas of what “quality” and “value” means to them, based on such things as a person’s pain tolerance, lifestyle, feeling about hospitalization, desire to return to work, and so forth. For example, a surgeon may tell you that the only way to ensure a cure for prostate cancer is a radical prostectomy. But that procedure’s side-effects can severely impact quality of life – so some people prefer a procedure with a lower survival rate, but fewer side effects. Who is better suited to determine which of those procedures represents “quality” and “value,” a government board or the person directly affected?
- Second, comparative effectiveness research too often has a tendency to gear its results toward the “average” patient. But many patients are outliers, whose response to any particular treatment, for either good or ill, can vary significantly from the average. This matters little when the research is simply informative. However, if the research becomes the basis for more prescriptive requirements, for example prohibiting reimbursements for some types of treatment, the impact on patient outliers could be severe.
- Third, comparative effectiveness research can create a time lag for the introduction of new technologies, drugs, and procedures. The FDA, for example, has already caused delays in introducing drugs that have resulted in unnecessary deaths. Depending on how the final program is structured, comparative effectiveness research could create another layer of bureaucracy and testing between the development of a new drug, for example, and its introduction into the health care system. One only has to look at the difficulty in expanding Medicaid drug formularies to see how this could become a problem.
The advocates of government-sponsored CER clearly intend for it to be used as a basis for rationing care, not just in government programs, but for private insurance as well.
Cannon points out that government-sponsored CER is likely to be corrupted under pressure from special interest lobbies and politicians. I couldn’t agree more. Government-sponsored CER, therefore, is liable to yield the worst of all possible worlds, not only rationing, but rationing that is based on special interest lobbying rather than science.
Health care, is of course, a finite good. Therefore, it will always be rationed in some fashion. But, it is far better if the rationing agent is the consumer himself, rather than the government or any other arbitrary agent. The private sector is already undertaking CER. To the degree that consumers, insurers, and providers make use of this information, that is a good thing. If consumers don’t like how an insurance company, for example, uses CER in determining its reimbursement policy, he or she can choose a different insurer.
Government-imposed fiat rationing allows for no such choice. Therefore, we should oppose any government involvement in CER, and any efforts by the government to use CER to restrict reimbursement, especially in private insurance plans.
LTE re CER in USA Today
I’ve got a letter to the editor in today’s The USA Today on comparative-effectiveness research:
Commentary writer Kevin Pho misrepresented my views on comparative-effectiveness research (CER), which is the analysis of which medical treatments work best (”Unbiased research for doctors is good medicine,” The Forum, March 26).
Pho wrote that “drug companies, medical device makers and think tanks such as the libertarian Cato Institute have expressed concerns that health care rationing and denial of certain treatments or drugs would follow” taxpayer-funded CER.
In the Cato Institute study linked to in the piece, I write that rationing is the intent behind such research, but I do not express concern that it will lead to rationing. Indeed, I express the opposite concern: that taxpayer-funded CER will not eliminate low-value services, just as it has failed to do so in the past.
Pho uses AARP executive Bill Novelli’s words to suggest that Cato, as well as drug and device makers, use “scare tactics” to oppose taxpayer-funded CER. Far from engaging in scare tactics, my paper makes precisely the same observations that Novelli does.
By contrasting Cato to CER “champion” Hillary Clinton, Pho also gives the false impression that libertarians support CER less than those who support taxpayer funding.
Yet two themes of my paper are that CER is crucial and that removing government obstacles to private production would provide a much more stable stream of research — and broader use of that research — than taxpayer funding would. I think that makes me the champion of CER, not Clinton.
At a minimum, it is misleading to suggest that libertarians oppose CER.
Filed under: Cato Publications; Health, Welfare & Entitlements
Democrats Agree on Health Plan Outline: Be Afraid, Be Very Afraid
The New York Times reports that key congressional Democrats have agreed on the basic provisions for a health care reform bill. And while many details remain to be negotiated, the broad outline provides a dog’s breakfast of bad ideas that will lead to higher taxes, fewer choices, and poorer quality care.
Among the items that are expected to be included in the final bill:
- An Individual Mandate. Every American will be required to buy an insurance policy that meets certain government requirements. Even individuals who are currently insured — and happy with their insurance — will have to switch to insurance that meets the government’s definition of acceptable insurance, even if that insurance is more expensive or contains benefits that they do not want or need. Get ready for the lobbying frenzy as every special interest group in Washington, both providers and disease constituencies, demand to be included.
- An Employer Mandate. At a time of rising unemployment, the government will raise the cost of hiring workers by requiring all employers to provide health insurance to their workers or pay a fee (tax) to subsidize government coverage.
- A Government-Run Plan, competing with private insurance. Because such a plan is subsidized by taxpayers, it will have an unfair advantage, allowing it to squeeze out private insurance. In addition, because government insurance plans traditionally under-reimburse providers, such costs are shifted to private insurance plans, driving up their premiums and making them even less competitive. The actuarial firm Lewin Associates estimates that, depending on how premiums, benefits, reimbursement rates, and subsidies were structured, as many as 118.5 million would shift from private to public coverage. That would mean a nearly 60 percent reduction in the number of Americans with private insurance. It is unlikely that any significant private insurance market could continue to exist under such circumstances, putting us on the road to a single-payer system.
- Massive New Subsidies. This includes not just subsidies to help low-income people buy insurance, but expansions of government programs such as Medicaid and Medicare.
- Government Playing Doctor. Democrats agree that one goal of their reform plan is to push for “less use of aggressive treatments that raise costs but do not result in better outcomes.” While no mechanism has yet been spelled out, it seems likely that the plan will use government-sponsored comparative effectiveness research to impose cost-effectiveness guidelines on medical care, initially in government programs, but eventually extending such restrictions to private insurance.
Given the problems facing our health care system-high costs, uneven quality, millions of Americans without health insurance–it seems that things couldn’t get any worse. But a bill based on these ideas, will almost certainly make things much, much worse.
Or maybe it’s all just a massive April Fool’s joke.
The Beginning of the End of All that Comparative-Effectiveness Research
In “A Better Way to Generate and Use Comparative-Effectiveness Research,” I predicted that taxpayer-funded research on which medical treatments work best would ultimately be defunded at the behest of those who make a living providing the less-effective treatments. Because, well, that’s what always happens.
Well, it turns out those folks have gone and formed themselves a coalition and launched a media campaign to ensure that comparative-effectiveness research doesn’t put a dent in their incomes. According to the Associated Press:
People’s lives and plenty of money are at stake when it comes to determining which medical treatments work best.
So some prominent health industry and patient advocacy groups are trying to reframe the debate over how such decisions are made in order to ensure their interests are protected…
It’s a big concern for drug and biotech companies too since they could lose out if a treatment they’ve developed is found to be less effective than a competitor’s. But a drug company’s bottom line isn’t likely to draw as much public sympathy as a disabled person’s needs.
That makes [former Rep. Tony] Coelho a good face for the Partnership to Improve Patient Care, which formed as the issue began to surface last fall and is funded by groups including the Easter Seals, Friends of Cancer Research, the Alliance for Aging Research, the Advanced Medical Technology Association and the powerful pharmaceutical and biotech industry lobbies.
It also makes the Partnership to Improve Patient Care the very type of “patient-provider pincer movement” of which Tom Daschle wrote in his book.
Filed under: Cato Publications; Health, Welfare & Entitlements
The Healthcare Economist on Comparative-Effectiveness Research
Jason Shafrin agrees with me that the public-goods case for government-funded comparative-effectiveness research is weak, though he argues that political constraints make my proposed solutions difficult.
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