On cost-effectiveness

I spent the last 2 days in Atlanta attending the Society for Medical Decision Making 26th annual meeting. My first academic presentation occurred at the 2nd annual meeting, and I have only missed 1 meeting since then.

Since my early days doing this research, we (the members) have discussed the importance of cost-effectiveness. We have always assumed that we would have to prioritize resource utilization in health care because we (society) could not pay for every possible technologic advances.

Yesterday, AHRQ sponsored a very interesting symposium on health policy and cost-effectiveness. Speakers came from OMB, CMS and NICE (the latter being the British medical advisory council). The speakers, all admitted bureaucrats, would only talk about cost-effectiveness obliquely.

Cost-effectiveness makes theoretical sense as a method for spending our health care resources. If we reimburse the most cost-effective studies and treatments then we maximize society benefit. But cost-effectiveness has at least two problems. First, using purely cost-effectiveness analysis may recommend not paying for treatments that might lead to complaints of equity. Balancing cost-effectiveness and equity becomes a political rather than an economic issue. Second, cost-effectiveness analyses require great precision and reproducibility if we are to use them for medical decision making. Can we trust the analysts? Can we carefully review their assumptions and agree with their conclusions? Cost-effectiveness analyses often depend on assumptions which one can challenge. We must be careful to critique these analyses just as we critique randomized controlled trials.

The CMS speaker denied using cost-effectiveness analysis, but rather stated that they put treatment which either had high costs or minimal effectivness under greater scrutiny. Thus, they are using qualitative cost-effectiveness rather than quantitative cost-effectiveness.

One method for controlling health care costs is to adopt a cost-effectiveness principle for routine coverage. If you want more expensive care, then you must either buy a more expensive policy (which covers more expensive care) or pay “out of pocket”. But given our national obsession with health care equity, this approach would create a tiered system of health care (some would argue that all countries already have a tiered system). Thus, the politics of controlling health care costs, while trying to provide everything to everyone are doomed to failure. We will only control costs when we adopt the UK principle of disapproving coverage for unreasonably expensive care. And we are probably years away from accepting that realization. In the meantime, we will publish cost-effectivness studies; read those studies; and watch other countries use those studies. We would criticize any US health care plan that explicitly used the principle of cost-effectiveness to make health care decisions. And we will continue to complain about rising health care costs.