The Cost Of High Costs

American Prospect: Health-Care Cost Inflation Is Not A Good Thing

(The American Prospect)  The investigators looked at lifestyle factors to try to explain the difference, but it turns out that while we're fatter and exercise less, the British drink more. Smoking rates are similar. Researchers speculated that life in the United States may be more stressful — but the U.K. is hardly a Polynesian island. Polite to a fault, the British investigators refrained from suggesting that the problem might lie in our health-care system. Nor did they mention that we shell out twice as much for health care.

Why do we spend so much more to achieve only middling results? The best evidence available suggests that up to half of the $2.2 trillion that we lay out on health care is wasted on unnecessary — and often overpriced — products and procedures.

Consider cardiac care. According to the NEJM study, advances in cardiac care account for fully 79 percent of the gains we have made in life expectancy. At the same time, Cutler is quick to agree with most cardiac specialists that "we perform far too many cardiac procedures in the U.S."

How can he say both that the major benefit of health-care inflation has been the progress we've made in cardiac care and that we perform way too many bypasses and angioplasties? A closer look at Cutler's data helps to reconcile this seeming contradiction. In a study published in Health Affairs in 2006, researchers from Dartmouth discovered that although early advances in cardiac care brought great benefits, after 1996, survival gains stagnated, even while spending on lucrative cardiac procedures continued to spiral.

"The vast majority of the increase in 30-day survival rates [for cardiac patients] between 1975 and 1995 was the consequence of low-cost treatments such as aspirin, [and] beta-blockers," the researchers concluded. Meanwhile "the incremental benefit of more-expensive treatments such as invasive surgery" has shrunk.

This is not what device makers who sell bare-metal stents for $1,500 a pop want to hear. As blogger Matthew Holt pointed out, "the ink was barely dry" on Thursday's edition of the NEJM when Advamed, the chief lobbying group for the medical-device industry, published a press release referencing Cutler's study and touting its own pricey medical products and procedures. Last year, medical device makers raked in $36.5 billion in profits. No wonder they're the head cheerleaders for health-care inflation.

As for Cutler, in Friday's interview he conceded that we have learned much more about health-care waste in recent years, "and I've tried to include that in my latest research." In particular, he's now a bit less sanguine about health care inflation when it comes to spending on older patients. For this group, gains in life expectancy are much more expensive. Cutler calculates that the average cost of an additional year for a 65-year-old is $84,500. At that price, the quality of that extra year becomes central — but the NEJM study does not tackle that question. It simply assumes that living longer is a good in itself. After all, Cutler notes, "Everything that we know suggests that older people are healthier than ever before."

In general, this is true. But anyone who thinks that, with advances in technology, 95 is becoming the new 80 should consider this brutal fact: 40 percent of Americans over the age of 85 suffer from Alzheimer's — as do 20 percent of those between the ages of 75 and 84.

Finally, while the argument that if we spend more, we'll live longer and feel better is seductive, in many cases Americans are simply paying more for the same products and procedures that are available at half the price in other countries. In an article titled "It's the Prices, Stupid" published in Health Affairs in 2003, researchers concluded that, even after adjusting for differences in cost of living, we spend more than other countries, not because we're receiving more services, but because we pay higher prices for drugs, devices, hospital stays and doctor's visits.

In the end, the notion that if we overpay for health care, it can replace the railroad as the engine that drives the economy defies any common-sense understanding of what adds to the wealth of a nation. The point of health-care spending is not to fuel the economy, create jobs, spur new technologies, or provide profits for shareholders. The raison d'etre of health care is simply to improve our health. And the question, "How much is an extra year of life worth?" is an emotional red herring that distracts from the more important debate: How do we cut waste and get better value for our health-care dollars?


Maggie Mahar is the author of " Money-Driven Medicine: The Real Reason Health Care Costs So Much" (Harper/Collins, 2006).

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I be willing to consider limitations on mal-practice suits but I don't trust the Republicans to do it. Look what they did with the prescription drug program. Their only concern is massive corporate profits not the individuals well being. If the Republicans were to get their way and restrain litigation I would be highly suprised to see any reduction in medical costs.