Barack Obama’s administration spent much of 2009 preoccupied domestically with the political fight to extend health insurance to the millions of Americans who have none. Every other developed country provides universal health insurance, but the US debate highlights an issue that will worry almost all of them in 2010 and beyond: the struggle to control health-care costs.
PRINCETON – President Barack Obama’s administration spent much of 2009 preoccupied domestically with the political fight over extending health insurance to the tens of millions of Americans who have none. People living in other industrialized countries find this difficult to understand. They have a right to health care, and even conservative governments do not attempt to take that right away.
The difficulties that some Americans have with health-care reform tell us more about American hostility to government than it does about health care in general. But the debate in the United States highlights an underlying issue that will worry almost every developed country in 2010 and beyond: the struggle to control health-care costs.
Health care now accounts for about one dollar in every six of all US spending – private as well as public – and is on track to double by 2035. That is a greater share than in anywhere else in the world, but rising health-care costs are also a problem in countries that spend far less.
There are many places where savings can be made. Encouraging people to exercise, to avoid smoking, to use alcohol only in moderation, and to eat less red meat would help to reduce health-care costs. But, given developed countries’ aging populations, the cost of caring for the elderly is bound to rise. So we will have to find other ways to save money.
Here it makes sense to start at the end. Treating dying patients who do not want to go on living is a waste, yet only a few countries allow physicians actively to assist a patient who requests aid in dying. In the US, about 27% of Medicare’s budget goes towards care in the last year of life. While some of that is spent in the hope that the patient will have many years to live, it is not unusual for hospitals to provide treatments costing tens of thousands of dollars to patients who have no hope of living more than a week or two – and often under sedation or barely conscious.
One factor in such decisions is fear on the part of doctors or hospitals that they will be sued by the family for letting their loved one die. So, for example, patients close to death are resuscitated, against the doctor’s better judgment, because they have not specifically stated that they do not want to be resuscitated in such circumstances.
Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
Subscribe Now
The system by which doctors and hospitals are paid is another factor in providing expensive treatment that is of little benefit to the patient. When Intermountain Healthcare, a network of hospitals in Utah and Idaho, improved its treatment for premature babies, it reduced the time they spent in intensive care, thereby slashing the costs of treating them. But, because hospitals are paid a fee for each service they provide, and better care meant that the babies needed fewer services, the change cost the hospital network $329,000 a year.
Even if such perverse incentives are removed, tougher questions about controlling costs need to be faced. One is the cost of new drugs. Development costs of $800 million are not unusual for a drug, and we can expect to see more of a new type of drug – biopharmaceuticals made from living cells – which cost even more.
Development costs have to be passed on in drug prices, which may be exceptionally high when a drug benefits only a relatively small number of patients. Gaucher’s disease, for example, is a rare crippling genetic condition that, in its more severe forms, usually killed its victims in childhood. Now those with the disease can lead an almost normal life, thanks to a drug called Cerezyme – but it costs $175,000 a year.
New medical devices pose equally difficult dilemmas. The artificial heart machine, also known as a left ventricular assist device, or LVAD, has been used to keep patients alive until they receive a heart transplant. But there is a shortage of hearts for transplantation, and in the US, LVADs are now being implanted as a long-term treatment for heart failure, just as a dialysis machine replaces a kidney.
According to Manoj Jain of Emory University, every year 200,000 US patients could be kept alive a little longer with an LVAD, at a cost of $200,000 per patient, or $40 billion. Is that a sensible use of resources in a country in which there are officially 39 million people below the poverty line, which for a family of four is $22,000?
In countries that provide free health care to their citizens, it is extraordinarily difficult for officials to tell anyone that the government will not pay for the only drug or medical device that can save their life – or their child’s life. But eventually the point will come when such things must be said.
No one likes putting a dollar value on a human life, but the fact is that we already do, implicitly, by failing to give enough support to organizations working in developing countries. GiveWell.net, which evaluates organizations working to save the lives of the world’s poor, has identified several that can save a life for under $1,000.
The World Health Organization estimates that its immunization programs in developing countries cost about $300 per life saved – lives that are saved not for a year, but usually for a lifetime. Similarly, the World Bank’s Disease Control Priorities Report tells us that a program to treat tuberculosis in the developing world, promoted by the Stop TB Partnership, gives people an extra year of life at a cost ranging from $5 to $50.
Against that background, spending $200,000 to give a patient in an affluent country a relatively short period of extra life becomes more than financially dubious. It is morally wrong.
To have unlimited access to our content including in-depth commentaries, book reviews, exclusive interviews, PS OnPoint and PS The Big Picture, please subscribe
Iran’s mass ballistic missile and drone attack on Israel last week raised anew the specter of a widening Middle East war that draws in Iran and its proxies, as well as Western countries like the United States. The urgent need to defuse tensions – starting by ending Israel’s war in Gaza and pursuing a lasting political solution to the Israeli-Palestinian conflict – is obvious, but can it be done?
The most successful development stories almost always involve major shifts in the sources of economic growth, which in turn allow economies to reinvent themselves out of necessity or by design. In China, the interplay of mounting external pressures, lagging household consumption, and falling productivity will increasingly shape China’s policy choices in the years ahead.
explains why the Chinese authorities should switch to a consumption- and productivity-led growth model.
Designing a progressive anti-violence strategy that delivers the safety for which a huge share of Latin Americans crave is perhaps the most difficult challenge facing many of the region’s governments. But it is also the most important.
urge the region’s progressives to start treating security as an essential component of social protection.
PRINCETON – President Barack Obama’s administration spent much of 2009 preoccupied domestically with the political fight over extending health insurance to the tens of millions of Americans who have none. People living in other industrialized countries find this difficult to understand. They have a right to health care, and even conservative governments do not attempt to take that right away.
The difficulties that some Americans have with health-care reform tell us more about American hostility to government than it does about health care in general. But the debate in the United States highlights an underlying issue that will worry almost every developed country in 2010 and beyond: the struggle to control health-care costs.
Health care now accounts for about one dollar in every six of all US spending – private as well as public – and is on track to double by 2035. That is a greater share than in anywhere else in the world, but rising health-care costs are also a problem in countries that spend far less.
There are many places where savings can be made. Encouraging people to exercise, to avoid smoking, to use alcohol only in moderation, and to eat less red meat would help to reduce health-care costs. But, given developed countries’ aging populations, the cost of caring for the elderly is bound to rise. So we will have to find other ways to save money.
Here it makes sense to start at the end. Treating dying patients who do not want to go on living is a waste, yet only a few countries allow physicians actively to assist a patient who requests aid in dying. In the US, about 27% of Medicare’s budget goes towards care in the last year of life. While some of that is spent in the hope that the patient will have many years to live, it is not unusual for hospitals to provide treatments costing tens of thousands of dollars to patients who have no hope of living more than a week or two – and often under sedation or barely conscious.
One factor in such decisions is fear on the part of doctors or hospitals that they will be sued by the family for letting their loved one die. So, for example, patients close to death are resuscitated, against the doctor’s better judgment, because they have not specifically stated that they do not want to be resuscitated in such circumstances.
Subscribe to PS Digital
Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive.
Subscribe Now
The system by which doctors and hospitals are paid is another factor in providing expensive treatment that is of little benefit to the patient. When Intermountain Healthcare, a network of hospitals in Utah and Idaho, improved its treatment for premature babies, it reduced the time they spent in intensive care, thereby slashing the costs of treating them. But, because hospitals are paid a fee for each service they provide, and better care meant that the babies needed fewer services, the change cost the hospital network $329,000 a year.
Even if such perverse incentives are removed, tougher questions about controlling costs need to be faced. One is the cost of new drugs. Development costs of $800 million are not unusual for a drug, and we can expect to see more of a new type of drug – biopharmaceuticals made from living cells – which cost even more.
Development costs have to be passed on in drug prices, which may be exceptionally high when a drug benefits only a relatively small number of patients. Gaucher’s disease, for example, is a rare crippling genetic condition that, in its more severe forms, usually killed its victims in childhood. Now those with the disease can lead an almost normal life, thanks to a drug called Cerezyme – but it costs $175,000 a year.
New medical devices pose equally difficult dilemmas. The artificial heart machine, also known as a left ventricular assist device, or LVAD, has been used to keep patients alive until they receive a heart transplant. But there is a shortage of hearts for transplantation, and in the US, LVADs are now being implanted as a long-term treatment for heart failure, just as a dialysis machine replaces a kidney.
According to Manoj Jain of Emory University, every year 200,000 US patients could be kept alive a little longer with an LVAD, at a cost of $200,000 per patient, or $40 billion. Is that a sensible use of resources in a country in which there are officially 39 million people below the poverty line, which for a family of four is $22,000?
In countries that provide free health care to their citizens, it is extraordinarily difficult for officials to tell anyone that the government will not pay for the only drug or medical device that can save their life – or their child’s life. But eventually the point will come when such things must be said.
No one likes putting a dollar value on a human life, but the fact is that we already do, implicitly, by failing to give enough support to organizations working in developing countries. GiveWell.net, which evaluates organizations working to save the lives of the world’s poor, has identified several that can save a life for under $1,000.
The World Health Organization estimates that its immunization programs in developing countries cost about $300 per life saved – lives that are saved not for a year, but usually for a lifetime. Similarly, the World Bank’s Disease Control Priorities Report tells us that a program to treat tuberculosis in the developing world, promoted by the Stop TB Partnership, gives people an extra year of life at a cost ranging from $5 to $50.
Against that background, spending $200,000 to give a patient in an affluent country a relatively short period of extra life becomes more than financially dubious. It is morally wrong.