The Tough Cost-Benefit Choices Facing Policymakers Regarding Coronavirus

Right now, the United States, like most of the rest of the world, faces two critical, yet diametrically opposed, priorities: Stopping a global pandemic without causing a global economic depression.

Balancing these two priorities presents tough choices—all else equal, revitalizing the economy will exacerbate the pandemic, and fighting the pandemic will worsen economic misery. Yet, as they navigate this Scylla and Charybdis, some policymakers have taken positions contrary to their prior instincts.

In his daily press briefing Tuesday, Gov. Andrew Cuomo (D-NY) discussed the false choice between the economy and public health. He made the following assertions:

My mother is not expendable, your mother is not expendable, and our brothers and sisters are not expendable, and we’re not going to accept the premise that human life is disposable, and we’re not going to put a dollar figure on human life. The first order of business is to save lives, period. Whatever it costs….

If you ask the American people to choose between public health and the economy then it’s no contest. No American is going to say accelerate the economy at the cost of human life because no American is going to say how much a life is worth.

On this count, Cuomo is flat wrong. Entities in both the United States and elsewhere—including within his own state government—put a dollar figure on human life on a regular basis.

Rationing on Cost Grounds Already Happens

Consider the below statement describing the National Institute of Health and Care Excellence (NICE), a British institution that determines coverage guidelines for the country’s National Health Service (NHS). NICE uses the quality-adjusted life year (QALY) formula, which puts a value on human life and then judges whether a new treatment exceeds its “worth” to society:

As a treatment approaches a cost of £20,000 [about $24,000 at current exchange rates] per QALY gained over existing best practice, NICE will scrutinize it closely. It will consider how robust the analysis relating to its cost- and clinical-effectiveness is, how innovative the treatment is, and other factors. As the cost rises above £30,000 [about $36,000] per QALY, NICE states that ‘an increasingly stronger case for supporting the technology as an effective use of NHS resources’ is necessary.

Entities in the United States undertake similar research. The Institute for Clinical and Economic Review (ICER) also performs cost-effectiveness research using the QALY metric. The organization’s website notes that “the state of New York has used [ICER] reports as an input into its Medicaid program of negotiating drug prices.” In other words, Cuomo’s own administration places a value on human life when determining what the state’s Medicaid program will and won’t pay for pharmaceuticals.

Cost-Effectiveness Thresholds

Cuomo represents but one example of the contradictions in the current coronavirus debate. Donald Berwick, an official in the Obama administration and recent advisor to the presidential campaign of Sen. Elizabeth Warren (D-MA), infamously discussed the need to “ration with our eyes open” While many liberals like him have traditionally endorsed rationing health care on cost grounds, few seem willing to prioritize economic growth over fighting the pandemic.

Conversely, conservatives often oppose rationing as an example of government harming the most vulnerable by placing an arbitrary value on human life. Nonetheless, the recent voices wanting to prioritize a return to economic activity over fighting the pandemic have come largely from the right.

The calls to reopen the economy came in part from an Imperial College London study examining outcomes from the pandemic. The paper concluded that an unmitigated epidemic (i.e., one where officials made no attempt to stop the virus’ spread) would cost approximately 2.2 million lives in the United States. Mitigation strategies like social distancing would reduce the virus’ impact and save lives, but would prolong the outbreak—and harm the economy—for more than a year.

The paper’s most interesting nugget lies at its end: “Even if all patients were able to be treated”—meaning hospitals would not get overwhelmed with a surge of patients when the pandemic peaks—“we predict there would still be in the order of…1.1-1.2 million [deaths] in the US.” Based on the Imperial College model, shutting down the economy so as not to let the virus run rampant would save approximately 1 million lives compared to the worst-case scenario.

A Cost of $1 Million Per Estimated Life Saved

Some crude economic math suggests the value a pandemic-inspired economic “pause” might place on human life. Based on a U.S. gross domestic product of approximately $21 trillion, a 5 percent reduction in GDP—which seems realistic, or perhaps even conservative, based on current worldwide projections—would erase roughly $1.05 trillion in economic growth. The Imperial College estimate that mitigation and social distancing measures would save roughly 1 million lives would therefore place the value of each life saved at approximately $1 million.

Of course, these calculations depend in large part on inputs and assumptions—how quickly the virus spreads, whether large numbers of Americans have already become infected asymptomatically, whether already infected individuals gain immunity from future infection, how much the slowdown harms economic growth in both the short and long-term, and many, many more. Other assumptions could yield quite different results.

But if these types of calculations, particularly when performed with varying assumptions and inputs, replicate the results of the crude math above, policymakers likely will sit up and take notice. Given that Britain’s National Health Service makes coverage decisions by valuing life as worth tens of thousands of pounds, far less than millions of dollars, it seems contradictory to keep pursuing a pandemic strategy resulting in economic damage many multiples of that amount for every life saved.

Tough Cost-Benefit Analysis

Unfortunately, lawmakers the world over face awful choices, and can merely attempt to select the least-bad option based on the best evidence available to them at the time. Slogans like “Why put your job over your grandmother?” or “If you worry about the virus, just stay home” belie the very real consequences the country could face.

Consider possible scenarios if officials loosen economic restrictions while the pandemic persists. Some individuals with health conditions could face the prospect of returning to work in an environment they find potentially hazardous, or losing their jobs. Individuals who stay home to avoid the virus, yet develop medical conditions unrelated to the virus—a heart attack, for instance—could die due to their inability to access care, as hospitals become swarmed with coronavirus patients. And on and on.

The president said on Tuesday he would like to start reopening the economy by Easter, a timeline that seems highly optimistic, at best. If by that time the situation in New York City deteriorates to something resembling Italy’s coronavirus crisis—and well it could—both the president and the American people may take quite a different view towards reopening the economy immediately. (And governors, who have more direct power over their states, could decide to ignore Trump and keep state-based restrictions on economic activity in place regardless of what he says.)

Nonetheless, everyone understands that the economy cannot remain in suspended animation forever. Hopefully, better data, more rapid viral testing, and the emergence of potential treatments will allow the United States and the world to begin re-establishing some sense of normalcy, at the minimum possible cost to both human life and economic growth.

This post was originally published at The Federalist.

Meet the Radical Technocrat Helping Democrats Sell Single-Payer

If anyone had doubts about the radical nature of Democrats’ health care agenda, they needn’t look further than the second name on the witness list for this Wednesday’s House Ways and Means Committee hearing on single-payer health care: Donald Berwick of the Institute for Healthcare Improvement.

If that name sounds familiar, it should. In summer 2010, right after Obamacare’s passage, President Obama gave Berwick a controversial recess appointment to head the Centers for Medicare and Medicaid Services (CMS). Democrats refused to consider Berwick’s nomination despite controlling 59 votes in the Senate at the time, and he had to resign as CMS administrator at the end of his recess appointment in late 2011.

Berwick’s History of Radical Writings

Even a cursory review of Berwick’s writings explains why Obama’s only option was to push him through with a recess appointment, and why Democrats refused to give Berwick so much as a nomination hearing. As someone who read just about everything he wrote until his nomination—thousands of pages of journal articles, books, and speeches—I know the radical nature of Berwick’s thinking all too well. He believes passionately in a society ruled by a technocratic elite, thinking that a core group of government planners can run the country’s health care system better than individual doctors and patients.

Here is what this doctor believes in, in his own words:

  • Socialized Medicine: “Cynics beware: I am romantic about the National Health Service; I love it. All I need to do to rediscover the romance is to look at health care in my own country.”
  • Control by Elites: “I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do.”
  • Wealth Redistribution: “Any health care funding plan that is just, equitable, civilized, and humane must—must—redistribute wealth from the richer among us to the poorer and less fortunate.”
  • Shutting Medical Facilities: “Reduce the total supply of high-technology medical and surgical care and consolidate high-technology services into regional and community-wide centers … Most metropolitan areas in the United States should reduce the number of centers engaging in cardiac surgery, high-risk obstetrics, neonatal intensive care, organ transplantation, tertiary cancer care, high-level trauma care, and high-technology imaging.”
  • End of Life Care: “Most people who have serious pain do not need advanced methods; they just need the morphine and counseling that have been available for centuries.”
  • Cost-Effectiveness Rationing of Care: “The decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”
  • Doctors Putting “The System” over their Patients: “Doctors and other clinicians should be advocates for patients or the populations they service but should refrain from manipulating the system to obtain benefits for them to the substantial disadvantage of others.”
  • Standardized “Cookbook Medicine”: “I would place a commitment to excellence—standardization to the best-known method—above clinician autonomy as a rule for care.”

For those who want a fuller picture of Berwick’s views, in 2010-11 I compiled a nearly 30-page dossier featuring excerpts of his beliefs, based on my comprehensive review of his prior writings and speeches. That document is now available online here, and below.

Where’s the Political Accountability?

Some of Berwick’s greatest admiration is saved for Britain’s National Health Service on the grounds that it was ultimately politically accountable to patients. For instance, Berwick said his “rationing with our eyes open” quote was “distorted,” claiming that

Someone, like your health insurance company, is going to limit what you can get. That’s the way it’s set up. The government, unlike many private health insurance plans, is working in the daylight. That’s a strength.

When running for governor of Massachusetts in 2013, Berwick claimed he “regrets listening to White House orders to avoid reaching out to congressional Republicans.” But that doesn’t absolve the fact that Berwick went to great lengths to avoid the political accountability he previously claimed to embrace.

It also doesn’t answer the significant questions about why Obama waited until after Obamacare’s enactment to nominate Berwick—deliberately keeping the public in the dark about the radical nature of the person he wanted to administer vast swathes of the law.

Thankfully, however, Wednesday’s hearing provides a case of “better late than never.” Republicans will finally get a chance to ask Berwick about the extreme views expressed in his writings. They will also be able to raise questions about why Democrats decided to give him an official platform to talk about single payer (and who knows what else).

This post was originally published at The Federalist.

Single Payer’s Road to Rationing

The reintroduction of Democrats’ single-payer legislation has some families contemplating what total government control of the health-care sector would mean for them. Contrary to the rhetoric coming from liberals, some of the families most affected by a single-payer system want nothing to do with this brave new health care world.

As this father realizes, giving bureaucrats the power to deny access to health care could have devastating consequences for some of the most vulnerable Americans.

Determining the ‘Appropriate’ Use of Medical Resources

To summarize the Twitter thread: The father in question has a 12-year-old son with a rare and severe heart condition. Last week, the son received an implantable cardioverter defibrillator to help control cardiac function.

But because the defibrillator is expensive and cardiologists were implanting the device “off-label”—the device isn’t formally approved for use in children, because few children need such a device in the first place—the father feared that, under a single-payer system, future children in his son’s situation wouldn’t get access to the defibrillator needed to keep them alive.

The father has reason to worry. He cited a 2009 article written by Zeke Emanuel—brother of Rahm, and an advisor in the Obama administration during the debate on Obamacare—which included the following chart:

The chart illustrates the “age-based priority for receiving scarce medical interventions under the complete lives system”—the topic of Emanuel’s article. If a picture is worth a thousand words, then this chart sure speaks volumes.

Also consider some of Emanuel’s quotes from the same article, in which he articulates the principles behind the allocation of scarce medical resources:

Adolescents have received substantial education and parental care, investments that will be wasted without a complete life. Infants, by contrast, have not yet received these investments.
The complete lives system discriminates against older people….[However,] age, like income, is a ‘non-medical criterion’ inappropriate for allocation of medical resources.

If those quotes do not give one pause, consider another quote by Zeke Emanuel, this one from a 1996 work: “[Health care] services provided to individuals who are irreversibly prevented from being or becoming participating citizens are not basic and should not be guaranteed. An obvious example is not guaranteeing health services to patients with dementia.” When that quote resurfaced during the debate on Obamacare in 2009, Emanuel attempted to claim he never advocated for this position—but he wrote the words nonetheless.

The Flaw in Centralized Decision-Making

The father in his Twitter thread hit on this very point. Medical device companies have not received Food and Drug Administration approval to implant defibrillators in children in part because so few children need them to begin with, making it difficult to compile the data necessary to prove the devices safe and effective in young people.

Likewise, most clinical trials have historically under-represented women and minorities. The more limited data make it difficult to determine whether a drug or device works better, worse, or the same for these important sub-populations. But if a one-size-fits-all system makes decisions based upon average circumstances, these under-represented groups could suffer.

To put it another way: A single-payer health care system could deny access to a drug or treatment deemed ineffective, based on the results of a clinical trial comprised largely of white males. The system may not even recognize that that same drug or treatment works well for African-American females, let alone adjust its policies in response to such evidence.

A ‘Difficult Democratic Conversation’

The chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here….There is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place.

Some would argue that Obama’s mere suggestion of such a conversation hints at his obvious conclusion from it. Instead of having a “difficult democratic conversation” about ways for government bureaucrats deny patients care, such a conversation should center around not giving bureaucrats the right to do so in the first place.

This post was originally published at The Federalist.

Lowlights of Democrats’ New Single-Payer Bill

Some might think that, having embraced socialism and taking away the health coverage of millions of Americans, the Democratic Party couldn’t move further to the left. Think again.

House Democrats introduced their single-payer bill on Wednesday, and claimed that it’s a “significantly different” bill compared to versions introduced in prior Congresses. It definitely meets that definition—because, believe it or not, it’s gotten significantly worse.

What Remains

Abolition of Medicare—and Most Other Insurance Coverage: As I noted last year, the bill would still eliminate the current Medicare program, by prohibiting Title XVIII of the Social Security Act from paying for any service (Section 901(a)(1)(A)) and liquidating the current Medicare trust funds (Section 701(d)). Likewise, the bill would eliminate the existing insurance coverage of all but the 2.2 million who receive care from the Indian Health Service and the 9.3 million enrolled veterans receiving care from the Veterans Administration.

Taxpayer Funding of Abortion: As before, Section 701(b)(3) of the bill contains provisions prohibiting “any other provision of law…restricting the use of federal funds for any reproductive health service” from applying to the single-payer system. This language would put the single-payer system outside the scope of the Hyde Amendment, thereby permitting taxpayer funding for all abortions.

Lack of Accountability: As with the prior bill, the legislation would give massive amounts of power to bureaucrats within the Department of Health and Human Services (HHS). For instance, the legislation would establish new regional directors of the single-payer system—none of whom would be subject to Senate confirmation.

What Lawmakers Added

More Spending: Section 204 of the new bill federalizes the provision of long-term supports and services as part of the single-payer benefit package. Prior versions of the bill had retained those services as part of the Medicaid program, implemented by states with matching funds from the federal government.

In addition, the revised bill eliminated language in Section 202(b) of the Sanders legislation, which permitted co-payments for prescription drugs to encourage the use of generics. With the co-payments (capped at an annual maximum of $200 in the Sanders bill from last Congress) eliminated, the bill envisions the federal government providing all health services without cost-sharing. This change, coupled with the federalization of long-term supports and services, will result in increased spending—as more people demand “free” health care.

Faster Elimination of Private Coverage: Rather than envisioning a four-year transition to the single-payer system, the revised bill would eliminate all private health insurance within a two-year period. Over and above the myriad philosophical concerns associated with single-payer health care, this accelerated transition period raises obvious questions about whether the new system could get up and running so quickly. After all, Obamacare had an implementation period of nearly four years—yet healthcare.gov failed miserably during its initial launch phase.

In theory, moving away from a fee-for-service method of paying medical providers would eliminate their incentive to perform more procedures—a worthy goal. But in practice, global budgets could also lead to de facto rationing, as hospitals that exceed their budgets might have to stop providing care to patients—just as under-funding within Britain’s National Health Service (NHS) has led to chronic hospital overcrowding.

Compensation Caps: Section 611(b)(5) of the new bill would limit “compensation costs for any employee or any contractor or any subcontractor employee of an institutional provider receiving global budgets,” by applying existing pay restrictions on government contractors to hospitals and facilities in the single-payer program. These restrictions might lead some to wonder whether hospitals could truly be considered independent entities, or merely an arm of the state.

Effective Abolition of For-Profit Medicine: Section 614(a) of the revised bill states that “payments to providers…may not take into account…or be used by a provider for” marketing; “the profit or net revenue of the provider, or increasing the profit or net revenue of the provider;” any type of incentive payment—“including any value-based payment;” and political contributions prohibited by government contractors.

Liberals would argue that eliminating the profit motive will encourage doctors to provide better care, by focusing on patients rather than ways to enrich themselves. But the profit motive also encourages individuals to invest in health care—as opposed to other sectors of the economy—by allowing them to recover a return on their investment.

Effective Elimination of Patents: Section 616(c)(1) of the bill states that “if the manufacturer of a covered pharmaceutical, medical supply, medical technology, or medically necessary assistive equipment refuses to negotiation a reasonable price, the Secretary shall waive or void any government-granted exclusivities with respect to such drug or product,” and shall allow other companies to manufacture the product. By allowing the federal government to march in on a whim and seize a company’s intellectual property, the bill would discourage individuals from investing in such intellectual property in the first place.

“Reasonable” Prices and Rationing: As noted above, Section 616 of the bill requires HHS to determine when the prices of drugs and medical devices are “not reasonable,” by taking into account among other things “the therapeutic value of the drug or product, including cost-effectiveness and comparative effectiveness.” This provision could lead to the federal government denying patients access to drugs deemed too expensive, as occurs currently within Britain’s National Health Service.

This post was originally published at The Federalist.

What Is Government’s Role in Comparing Medical Treatments?

The personalized medicine initiative that President Barack Obama announced on Friday was previewed in the State of the Union address and is scheduled for inclusion in the budget to be released Monday. But in devoting federal funds to this, the administration may have made an argument against another type of medical research funded as part of Obamacare.

Section 6301 of the health-care law creates a Patient-Centered Outcomes Research Institute (PCORI), designed to study the comparative effectiveness of treatment options for diseases. Comparative effectiveness research has proven controversial for several reasons. The idea that the price of various treatments are taken into account, using cost metrics to determine coverage decisions for government health programs, raises the specter of rationed care.

But beyond the potential question of government rationing–and whether the restrictions included in Obamacare are sufficient–lies a more nuanced problem: As one administration scientist noted ahead of the president’s announcement on Friday, “Throughout history most medical treatments were designed for the average patient, meaning they can be very successful for some but not for others.” Comparative effectiveness research involves comparing the effects of treatment on average patients or average groups of patients; others may not benefit, or may even be harmed, by the average treatment or course of action.

The challenge for policymakers and medical professionals is how to respond to the growing personalization of medical treatments. In creating PCORI, Obamacare attempted to acknowledge this trend, noting that the institute should engage in “research and evidence synthesis that considers variations in patient subpopulations.” The president’s new initiative may make such research obsolete. It also raises a different question: When personalized medicine may turn patient “groups” into a subpopulation of one, what is the proper role for the federal government in comparing treatments?

This post was originally published at the Wall Street Journal Think Tank blog.

Pediatric Research Bill: Obamacare’s Road to Rationing?

A PDF of this Issue Brief is available on the Heritage Foundation website.

Later this month, the House of Representatives could consider legislation regarding pediatric research.[1] Legislation regarding this issue (H.R. 1724) was first introduced in April, and a new version of the bill (H.R. 2019) was introduced in May.

Although largely similar, H.R. 1724 would require the director of the National Institutes of Health (NIH) to provide a justification for any existing grants studying health economics, and would prohibit new grants until “a federal law has been enacted authorizing the National Institutes of Health to use funding specifically for health economics research.”[2] Press reports indicate that H.R. 2019 excludes the restrictions included in H.R. 1724 “in order to please Democrats who favor the research.”[3]

This is a mistake. The House should ensure that H.R. 1724’s proposed restrictions on health economics research remain in any NIH-related legislation that comes to the House floor. To do otherwise would provide tacit approval to Obamacare’s road to government-rationed health care.

Proposed Restriction a Necessary Protection

The provision omitted from H.R. 2019 would have instituted an important and necessary protection on taxpayer-funded research on cost-effectiveness in health care. In recent years, the federal government has funded numerous such studies. For instance, a June 2011 Government Accountability Office report examining projects funded by the “stimulus” highlighted NIH grants studying the cost-effectiveness of various medical treatments, including:

  • “A Comprehensive Model to Assess the Cost-Effectiveness of Patient Navigation,”
  • “Cost-Effectiveness of Hormonal Therapy for Clinically Localized Prostate Cancer;”
  • “Clinical and Cost-Effectiveness of Biologics in Rheumatoid Arthritis,” and
  • “Cost-Effectiveness of HIV-Related Mental Health Interventions.”[4]

Liberals Favor Cost-Effectiveness Research

Setting aside the wisdom of using taxpayer funds to examine the cost-effectiveness of various treatments, such research could eventually be used to deny patients access to certain kinds of care. Quotes from key policymakers reveal how some would use cost-effectiveness research as a way for government bureaucrats to block access to treatments that are deemed too costly:

  • Former Senator Tom Daschle (D–SD), President Obama’s first choice for Secretary of Health and Human Services, wrote in 2008 that “we won’t be able to make a significant dent in health-care spending without getting into the nitty-gritty of which treatments are the most clinically valuable and cost effective. That means taking a harder look at the real costs and benefits of new drugs and procedures.”[5]
  • In a 2009 interview with The New York Times, President Obama argued that “the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.… There is going to have to be a very difficult democratic conversation that takes place.”[6]
  • Former Medicare Administrator Dr. Donald Berwick, in his infamous 2009 interview, strongly argued in favor of taxpayer-funded cost-effectiveness research when stating that “the decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”[7]

Lawmakers have already expressed their desire to use cost-effectiveness research to restrict access to certain treatments. A report prepared by the House Appropriations Committee in 2009, discussing “stimulus” funding for the types of projects highlighted above, noted that thanks to the research funding, “those items, procedures, and interventions that are most effective to prevent, control, and treat health conditions will be utilized, while those that are found to be less effective and in some cases more expensive will no longer be prescribed.”[8]

Road to Rationing

Although research comparing the relative merits and costs of medical treatments may sound appealing, past experience has demonstrated that such research can, and often is, used as a blunt tool by governments to restrict access to certain kinds of care. At a time when genetic advances have opened the door to personalized medical treatments, Obamacare has moved health policy in the opposite direction, expanding the federal bureaucracy in an attempt to micromanage the health care system.[9]

Imposing the restrictions on cost-effectiveness research included in H.R. 1724 would represent a good first step in restoring the balance between federal bureaucrats and patients.

 



[1]Daniel Newhauser, “Mindful of Previous Defeat, Cantor Pushes Bill to Increase Pediatric Research,” Roll Call, June 10, 2011, http://www.rollcall.com/news/mindful_of_previous_defeat_cantor_pushes_bill_to_increase_pediatric-225436-1.html?zkPrintable=true (accessed June 13, 2013).

[2]The Kids First Research Act of 2013, H.R. 1724, § 4.

[3]Newhauser, “Mindful of Previous Defeat.”

[4]U.S. Government Accountability Office, HHS Research Awards: Use of Recovery Act and Patient Protection and Affordable Care Act Funds for Comparative Effectiveness Research, GAO-11-712R, June 14, 2011, http://www.gao.gov/new.items/d11712r.pdf (accessed June 13, 2013).

[5]Tom Daschle, Scott Greenberger, and Jeanne Lambrew, Critical: What We Can Do about the Health Care Crisis (New York: Thomas Dunne Books, 2008), pp. 172–173.

[6]David Leonhardt, “After the Great Recession,” The New York Times, April 28, 2009, http://www.nytimes.com/2009/05/03/magazine/03Obama-t.html (accessed June 13, 2013).

[7]Biotechnology Healthcare, “Rethinking Comparative Effectiveness Research,” June 2009, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2799075/pdf/bth06_2p035.pdf (accessed June 13, 2013).

[8]Helen Evans, “Comparative Effectiveness in Health Care Reform: Lessons from Abroad,” Heritage Foundation Backgrounder No. 2239, February 4, 2009, note 3, http://www.heritage.org/research/reports/2009/02/comparative-effectiveness-in-health-care-reform-lessons-from-abroad.

[9]Kathryn Nix, “Comparative Effectiveness Research Under Obamacare: A Slippery Slope to Health Care Rationing,” Heritage Foundation Backgrounder No. 2679, April 12, 2012, http://www.heritage.org/research/reports/2012/04/comparative-effectiveness-research-under-obamacare-a-slippery-slope-to-health-care-rationing.

Donald Berwick and Reducing Health Care Costs

Writing in the Boston Globe this morning, former CMS Administrator Dr. Donald Berwick opined on various ways to control health costs.  He endorsed proposals to cap health spending such that health care would grow more slowly than the economy – a growth rate even lower than that under Obamacare, and lower than the House Republican plan he has attacked.  Berwick claimed that both slower growth in costs and achieving universal coverage could easily be achieved by eliminating inefficiencies in the system: “It makes no sense to say we cannot afford to make health care a human right without rationing.  Don’t cut care.  Cut waste.”

Cutting waste in health care is all well and good.  However, Dr. Berwick’s prior writings make clear where and how he wants to reduce “waste” – by having bureaucrats limit access to patient treatments:

“As many as 80 percent of hysterectomies are scientifically unnecessary.  So are more than a quarter of the drugs used for ear infections, most of the ultrasound tests done in normal pregnancies, and almost half of the cesarean sections in the United States.  Isn’t this, with all due respect, some form of assault and battery, however unintended?”1

“One over-demanded service is prevention: annual physicals, screening tests, and other measures that supposedly help catch diseases early.”2

“Aim 10: Reduce the total supply of high-technology medical and surgical care and consolidate high-technology services into regional and community-wide centers…Most metropolitan areas in the United States should reduce the number of centers engaging in cardiac surgery, high-risk obstetrics, neonatal intensive care, organ transplantation, tertiary cancer care, high-level trauma care, and high-technology imaging.”3

“Most people who have serious pain do not need advanced methods; they just need the morphine and counseling that have been available for centuries.”4

“Are routine colonoscopies a social good?  What about routine pap smears?  Routine smoking cessation counseling?  Routine well-baby visits?”5

“Neonatal intensive care, like every other part of American medicine, has been swept into the rising tide of concern for health care costs.  The need to balance effectiveness against cost has shifted the burden of proof onto the shoulders of those who use or propose to use expensive technologies.”6

For Dr. Berwick to claim now that lowering health costs can be accomplished in a pain-free manner by reducing “waste” is to repudiate the vast majority of his writings over the past 30 years, most of which have focused on reducing access to specialized care like cardiac centers, ultrasounds in normal pregnancies, neonatal intensive care units, and many preventive services.  There is another way to lower health costs – by empowering patients, not government bureaucrats – but Dr. Berwick has consistently rejected this approach: “I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do.”7

It is perhaps unsurprising that Dr. Berwick would attempt to re-write history; he apparently would be following President Obama’s lead in that regard.  But a selective memory cannot hide the fact that the way liberals would control skyrocketing health costs involves many of the same reductions in access and/or care that Berwick himself previously described.

 

[1] “Why the Vasa Sank,” speech to 9th annual National Forum on Quality Improvement in Health Care, December 1997, in Escape Fire: Designs for the Future of Health Care by Donald Berwick (Jossey-Bass, 2004), pp. 129-130

2 “We Can Cut Costs and Improve Care at the Same Time” by Donald Berwick, Medical Economics August 12, 1996, p. 186

3 “Buckling Down to Change,” speech to 5th annual National Forum on Quality Improvement in Health Care, December 1993, in Escape Fire: Designs for the Future of Health Care by Donald Berwick (Jossey-Bass, 2004), pp. 28-29

4 “Reforming Care for Persons Near the End of Life: The Promise of Quality Improvement” by Joanne Lynn, Donald Berwick, et al., Annals of Internal Medicine July 16, 2002, p. E-118

5 “Health Services Research and Quality of Care: Assignments for the 1990s” by Donald Berwick, Medical Care August 1989, pp. 769-770

6 “Techniques for Assessing the Impact of New Technologies in the Neonatal Intensive Care Unit” by Donald Berwick, Respiratory Care June 1986, p. 524

7 “A Transatlantic View of the NHS at 60” by Donald Berwick, speech at NHS Live, July 1, 2008

Obamacare’s Next Phase: Pay for Rationing?

The New Yorker’s Ryan Lizza is out with an extended feature article chronicling key moments of the Obama presidency, based in large part on a review internal White House memoranda not publicly released.  The piece features several enlightening vignettes related to health care, including one regarding a proposal never broached in public:  “In January, 2010,… [OMB Director Peter] Orszag and Ezekiel Emanuel, the chief of staff’s brother and a health-care adviser, recommended that the government pay federal employees to participate in a pilot program to study the most effective treatments for patients.”

Many would argue that, based upon the policy description included in the article, this policy would represent the worst of both worlds – giving already-overpaid federal bureaucrats additional dollars to sign away their right to access treatments that the government might deem too expensive.  But what did President Obama think of it?

Unfortunately I think the political guys are right about how it would be characterized.  Let’s go back at it in future years, when the temperature on health care and the economy has gone down.

Sadly, this desire to restrict access to treatment is consistent with the President’s prior history – along with the positions of the advisors who proposed it.  In a famous 2009 New York Times interview, the President called for a “difficult democratic conversation” about what he perceived as too much spending on end-of-life care.  Orszag was one of the prime architects of Obamacare’s IPAB, which he admitted will have “an enormous amount of potential power” and “the largest yielding of sovereignty from the Congress” in nearly a century.  And Emanuel offered the infamous chart for prioritizing scarce medical resources, in a journal article in which Emanuel admitted that his system “discriminates against older people….[However,] age, like income, is a ‘non-medical criterion’ inappropriate for allocation of medical resources.”

As indicated by the quotes above, this Administration has shown a proclivity towards reductions in health spending based upon cost-effectiveness – as well as a willingness to grant bureaucrats virtually unlimited power in the process.  The article confirms all those beliefs, while at the same time showing yet another way in which the Administration would use government bureaucrats to restrict access to treatments.  Federal workers – and the American people – should take note.

Obamacare Raises Taxes on the Middle Class — Again

This week sees yet another of Obamacare’s many tax increases take effect – this one a provision to fund comparative effectiveness research.  Officially, Section 6301 of Obamacare states that the tax will be imposed “on each specified health insurance policy for each policy year ending after September 30, 2012.”  Because many health insurance plans run on a calendar year basis, the new tax takes effect for most individuals beginning this week.

An Associated Press article last week alleged the new provision is a “fee” charged to health insurance plans.  But unlike the individual mandate penalty, the Obamacare statute includes specific language that “the fees imposed…shall be treated as if they were taxes” for purposes of IRS enforcement.  What’s more, the law amends the Internal Revenue Code to include the following heading:

CHAPTER 34—TAXES ON CERTAIN INSURANCE POLICIES

If the law treats this “fee” as a tax increase and the IRS Code calls it a tax increase, then it’s a tax increase.  And this particular tax represents a complete turnaround from an Administration that campaigned against taxing health benefits, yet is now raising them on struggling families.  It’s also particularly ironic given the President’s desire to fight for the middle class – taxing their health benefits is slightly incongruous with this newfound posture.

Worse yet is the fact that this new tax on health benefits will fund research that could be used to justify placing limits on costly medical treatments.  One medical group is now calling for the use of “cost-effectiveness research” to guide care, and a new ethics manual calling for physicians to be “parsimonious” is eerily similar to former CMS Administrator Donald Berwick’s comments in a June 2008 interview, in which he called for reducing the supply of machines and diagnostic equipment on the grounds of “parsimony.”

So while families are struggling to pay their insurance premiums, Obamacare is raising taxes on health benefits – even as Democrats CLAIM they don’t want to raise taxes on the middle class – to fund research that could limit patients’ treatment options.  It’s one more reason why Obamacare remains unpopular with the American people.

Correcting the Record on the Berwick Nomination

The end of Donald Berwick’s tenure as Centers for Medicare and Medicaid Services Administrator last week has resulted in several news stories, as well as points that need rebutting:

  • First, it is NOT correct to state that “Republicans refuse[d] to even have [sic] a hearing” on Berwick’s confirmation – for Republicans have no power to block the Senate Finance Committee from moving forward on Berwick’s nomination (or any other nomination).  Chairman Baucus could have called a confirmation hearing any time he liked, but chose not to do so.
  • Second, if the White House wants to claim that Berwick’s nomination was blocked because senators “put political interests above the best interests of the American people,” their criticisms should be focused on Democrats who did not want to call a hearing, and were afraid to discuss either Berwick or Obamacare at any point during the second half of 2010, their huge Senate majorities notwithstanding.  The White House should also look in the mirror – because according to key Democrat staffers, the Administration wanted to appoint Berwick in 2009, but decided not to, perhaps because it learned of his controversial views and did not want them publicized in the run-up to Obamacare’s passage.  Berwick had previously committed to delivering a public “point-by-point rebuttal” to his critics, but the New York Times noted this weekend that “for political reasons, the Administration did not want him [Berwick] to defend past statements” regarding rationing and British socialized medicine.  In other words, the White House censored Berwick, thereby playing politics with his nomination.
  • Third, the idea that Republican criticisms of Berwick were based on a “caricature” significantly understates the breadth and scope of Berwick’s comments regarding controversial issues.  In an interview with MSNBC’s Chris Hayes over the weekend, Hayes alleged that opposition to Berwick were based on one article about rationing and one speech about the NHS.  Berwick himself claimed his critics had “a lack of authenticity in inquiry.”  But in reality, the more one inquires into Berwick’s history, the more one finds controversial statements focused on a health system driven by government bureaucracy and centralized planning.  One publicly available document shows not just one article or one speech, but 158 separate quotes over 22 pages, and dozens of articles, highlighting Berwick’s troubling views – none of which have been publicly refuted.  Dr. Berwick wrote articles with such titles as “Cost-Effectiveness Analysis in Pediatric Practice,” which makes one wonder:  If these cost-effectiveness analyses were NOT designed with rationing health care in mind, then what exactly was the point of conducting the analysis in the first place?
  • Fourth, the notion that Republican concerns about Berwick were based upon gamesmanship, and that his nomination was merely “derailed by politics” understates the problematic nature of his nomination.  Berwick himself said this weekend that “I did not even know if I was fit for” the CMS post.  This concern about his managerial skills was shared by others in the health policy sphere, who “voiced concerns that Berwick lacked the administrative background for the position.”  Berwick in a 2006 interview admitted: “Inattention to detail is my biggest defect….I can create a mess.”  Couple his lack of managerial expertise with his controversial – and oft-repeated – views, and there were many substantive reasons, both practical and philosophical, for Republicans to question his nomination, not just a desire to score points.

Finally, it’s worth pointing out that in his New York Times interview, Berwick conceded the health care law remains unpopular: “It’s a complex, complicated law.  To explain it takes a while.  To understand it takes an investment that I’m not sure the man or woman in the street wants to make or ought to make….Somehow we have not put together that story in a way that’s compelling.”  That one of Obamacare’s key implementers, and biggest supporters, acknowledges the public continues to reject the law speaks volumes about the 2700-page measure.