Wednesday, December 3, 2008

How Much is Life Worth?

The simple answer to the question of why most Americans aren't getting any richer is health care costs. Although the median wage in America has stagnated or even fallen a little over the past decade, the amount companies pay out in compensation has risen. It's just that all of the increase in compensation has been in the form of rising health insurance premiums.

In Britain, where they take containing health care costs seriously, they have implementing a rigorous cost-benefit approach for new medical techniques:
RUISLIP, England — When Bruce Hardy’s kidney cancer spread to his lung, his doctor recommended an expensive new pill from Pfizer. But Mr. Hardy is British, and the British health authorities refused to buy the medicine. His wife has been distraught.

“Everybody should be allowed to have as much life as they can,” Joy Hardy said in the couple’s modest home outside London.

If the Hardys lived in the United States or just about any European country other than Britain, Mr. Hardy would most likely get the drug, although he might have to pay part of the cost. A clinical trial showed that the pill, called Sutent, delays cancer progression for six months at an estimated treatment cost of $54,000.

But at that price, Mr. Hardy’s life is not worth prolonging, according to a British government agency, the National Institute for Health and Clinical Excellence. The institute, known as NICE, has decided that Britain, except in rare cases, can afford only £15,000, or about $22,750, to save six months of a citizen’s life.
I am not sure that this is the right decision, but at least the British are trying to make it instead of ignoring the problem and hoping it will go away. We ought to have a public debate about how much to invest in health care. The problem with the American system is that the cost of everything we do is hidden behind a maze of payments and counter payments, insurance schemes and government subsidies. Neither the doctors recommending treatments nor the patients receiving them have much incentive to think about costs. Maybe in an ideal world they wouldn't, but we have reached the point that the more we spend on health care, the less we have to spend on other things, and we ought to face up to that.

Consider the question of drugs for heart disease. A few years ago a major study was released showing that for most patients, the cheapest class of drugs, diuretics, worked better than newer drugs costing 20 times as much. And now another study has shown that the first study had only a minimal impact on which drugs patients are taking. Why? Well, the drug companies are constantly pushing the more expensive drugs, doctors are conservative, and nobody else has much incentive to think about how much would be saved by switching patients to diuretics. Only in a crazy system would be spend billions more on drugs that work less well.

To me, the real advantage of a single payer system like they have in Canada would be that we would have to face up to what health care costs and have a real discussion about what we think people are entitled to.

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