Vouchercare for Cancer

The health care cost debate takes place on two stages using two languages, one scientific, the other economic. The net result is a failure to communicate.

The scientific texts emanated over the weekend from the American Society of Clinical Oncology meeting in Chicago. Ongoing clinical trials showed that science has come up with new drugs that can reduce the incidence of breast cancer and prolong life for people with skin cancer. The former is an estrogen inhibitor that would have to be taken by tens of millions of older women to have a major impact on reducing the rate of breast cancer. The latter would only be given to a subset of the 68,000 new cases of melanoma each year, and would extend life from a few months to a few years for some of the 7,700 who die from the disease each year. Again, most of those people are older, although there are a number of younger people, especially young women, who disproportionately get advanced skin cancer.

For both groups, the cost to the health care system when these drugs are approved, as they inevitably will be, will be calculated in the billions. Medicare will pick up the lion’s share of the tab, since most of the patients in both groups will be over 65.

Now let’s step around the corner to stage two, where the debate in this morning’s papers (if you read the Washington Post and New York Times every day, as I do) is over Rep. Paul Ryan’s plan to turn Medicare into a voucher program. Paul Samuelson, the top economics columnist in the Post, essentially endorses the plan saying “under Ryan’s plan, incentive would shift. Medicare would no longer be an open ATM; the vouchers would limit total spending.” What he doesn’t say is that it would only limit total spending by government. It would require seniors to pick up a growing share of the bill, and limit their own purchasing of health care, either by purchasing plans that didn’t cover expensive end-of-life care, or simply denying themselves routine treatments to avoid co-pays and deductibles.

Paul Krugman properly attacks this as a radical shift of costs onto seniors (which it would be), and goes on to say:

Medicare has to get serious about cost control; it has to start saying no to expensive procedures with little or no medical benefits, it has to change the way it pays doctors and hospitals, and so on. And a number of reforms of that kind are, in fact, included in the Affordable Care Act. But with these changes it should be entirely possible to maintain a system that provides all older Americans with guaranteed essential health care.

That, of course, begs the question of what’s essential. Is a cancer prevention drug that cost $1,000 a year and will, if reimbursed by Medicare, cost billions annually to reduce the incidence of breast cancer from 14 per 1000 to 10 per 1000 “essential”? Is a drug that extends the life of a few thousand people an average of six months or so at a cost of $500 million a year “essential”?

America’s love affair with scientific medicine shows no sign of ending. Incremental improvements in cancer care and other advanced technologies are inevitable in the years ahead, since the government ($31 billion a year) and the private sector (over $50 billion a year) continue to make health R&D the nation’s number one priority when it comes to science (it’s 20 times greater than what we pour into energy R&D, for instance, even though a good argument could be made that man-made climate change due to excessive burning of fossil fuels poses the greatest planetary threat to human health).

Somebody in the not too distant future is going to be given the job of rationing this expensive health care (I’ve given up on even having a national or rational discussion about limiting the outrageous prices that the private sector charges for these treatments). Samuelson is right in his conclusion that “the only questions are when and on whose terms” this rationing will take place.

For my money, I’d rather have a government-appointed panel, chosen by our elected leaders, that has to submit its recommendations to Congress do it. The alternative is having an insurance company’s hidden panel make those decisions. Those decisions will be made without public oversight, and then announced to the world through the mechanism of price, with those who can’t afford the tariff being the ones who experience the rationing.

Merrill Goozner has been writing about economics and health care for many years. The former chief economics correspondent for the Chicago Tribune, Merrill has written for a long list of publications including the New York Times, The American Prospect, The Washington Post and Financial Times. You can read more pieces by him at GoozNews, where this post first appeared.

10 replies »

  1. So this week a man with low back and sciatic problems comes in to see me. I make treatment recommendations to attempt to improve the biomechanical function of his low back. But he also sees a spinal specialist who’s an MD. Within the blink of an eye he’s already had Xrays, MRI’s and CAT scans. I can understand that from a certain perspective, all of these tests are rational and represent the “responsible” practice of medicine.

    On the other hand, I help a lot of people. Not everyone. But a trial of therapy is also a “diagnostic test”, and in many respects a more useful one than an MRI or CAT scan.

    Directly or indirectly, we’re all paying for this nonsense.

    We don’t necessarily need a government panel to define those procedures that should be reimbursable. Instead, what about a panel that defines what health is supposed to be? Reimbursement would then be based on movement toward health, not on the particular procedure applied.

    If a heart surgeon makes $XX for treating a cardiac condition, what’s the value of a measure that would have prevented the condition from occurring in the first place?

    Here’s the answer – the same value – or more, because the individual wouldn’t have had to go through the trauma of the surgery.

  2. ” is that it is insurance coverage that you cannot lose. Unlike private sector insurance, Medicare does not depend on employment.”

    Actually you can lose it and people have lost it. Its dependent on politicians and could be taken away any day if there was a financial crisis or change in government.

    How many millions are going to lose their MA coverage, no one thought that would ever happen. What if they change the secondary payor rules again and you have no medicare if you have insurance through work?

    If you enroll in MA you lose your Traditional Medicare.

    What happens to Medicare when the government can’t borrom the money to pay back the IOUs?

  3. The huge difference that sets Medicare apart from all private insurance, and thereby differentiates its effect on income is that it is insurance coverage that you cannot lose. Unlike private sector insurance, Medicare does not depend on employment.

  4. ” I can personally cite many, many examples of folks over 65 who are still working”

    What relavance does that have? How many working people with cancer do you know under age 65 who filed BK?

    I can’t even see what argument your trying to make? Wouldn’t none working people over 65 who would be collecting social security be proof that it is SS not Medicare that prevents BK.

    “many younger cancer patients come from two income families ”

    How many two income families filed BK after one member came down with cancer?

    Second paragraph from the write up;

    “”Patients diagnosed with cancer may face significant financial stress due to income loss…”

    How does Medicare resolve income loss? What does resolve income loss? Oh that would be Soical Security. How can you claim Social Security is not the reason when even the study you cite alludes to it?

  5. Call it whatever you like, Mr. Ogden, I can personally cite many, many examples of folks over 65 who are still working (with or without serious health issues) – so Social Security is not the reason. In addition, as I’m sure you are aware, many younger cancer patients come from two income families – otherwise they would not have insurance or income – and the rate of bankruptcy would be even higher.

  6. ” The only exception to these findings were cancer patients over 65 years old. Why? Because they have Medicare.”

    I have to call BS on this doctor. The reason it declines is because they have Social Security, Medicare has little to nothing to do with it. If you have serious cancer how are you working? If your not working how are you paying your bills? Once you start collecting SS you have income and thus the decline.

  7. An interesting study that is especially germane to this discussion was recently presented at the American Society for Clinical Oncology meeting in Chicago. This study which examined bankruptcy rates among cancer patients was presented by Dr. Scott Ramsey of the Fred Hutchison Cancer Center. Cancer patients overall are twice as likely to file for bankruptcy as the general population. The bankruptcy rate increases the longer a cancer patient survives. The only exception to these findings were cancer patients over 65 years old. Why? Because they have Medicare. With ‘vouchercare’, this economic protection afforded to our seniors would be taken away. We have a choice, we can continue to pay for healthcare for our seniors, while improving the system, or throw them to the wolves (aka private insurers) and pay far morefor their increased use of social services and the loss of their productivity.

    As far as the discussion of rationing healthcare is concerned, we already have it. It is currently based on economic status. If you can afford to be sick, you might survive (physically and economically). If you don’t have the funds – nice knowing you. Any logical system going forward will have to place limits on access to costly treatments. But wouldn’t we rather have a system that weighs these decisions based on scientific and medical evidence rather than the current system, which decides based on your ability to pay?

  8. “For my money, I’d rather have a government-appointed panel,”

    What would be different from this new government panel and the previous ones that have failed to control cost? We have had government panels going back 40+ years that are suppose to reign in Medicare Spending and have failed. How many decades of failure do you need to see before you start to wonder if government might not be capable?

    The other short coming in this argument is recognition that your still asking a disinterested third party to control cost, it doesn’t matter to this government panel what cost is or what is covered. We already have problems with special interest effecting Medicare coverage decisions, that will always be a shortcoming of any government panel, it will never achieve the optimal result only the most profitable for them.

    “The alternative is having an insurance company’s hidden panel make those decisions.”

    That’s “a” alternative. Why do you ignore the obvious and optimal solution? Why not allow insurance companies to sell policies that cover or don’t cover such treatment? If you want to pay extra for a policy that covers injectables and trial treatments then you pay $x more. Now you have returned the decision to where it belongs, with the person who is paying for it and the person who’s life it is. These are decisions neither government nor insurance company should be making.

    “with those who can’t afford the tariff being the ones who experience the rationing.”

    Very odd argument when you make it while supporting Medicare, the entire system which discriminates against those that can’t afford Medicare Supplement plans. Have you forgotten Medicare only covers a certain number of days in the hospital, and has limits from front to back of their policy? You have no problem with a basic plan that most people would find unacceptable without additional insurance as long as its government ran, impose the same rationing in a private system and suddenly it’s unacceptable? Medicare didn’t cover any drugs up until 2006 where can I find articles by you complaining about that rationing? You have quit the double standard when it comes to public plans and what you will turn a blind eye to.

    “The health care cost debate takes place on two stages”

    Science and economic and side stages to Politics, healthcare reform is always and foremost about politics, that is why Medicare was passed to save the shirt off grandmothers back while actually not covering catastrophic illness. Science and economics are just tools use to sell the politics.

    “It would require seniors to pick up a growing share of the bill,”

    This is dishonest, you can’t point to any place in the bill that requires seniors to pay more. Your assuming cost must continue to increase at its current pace, this is a false assumption. With simple changes we could easily reduce the cost of healthcare 10-20% overnight which would then mean seniors picked up less under the Ryan plan. Why is it you assume the Ryan plan will allow cost to continue to increase then claim PPACA and government reform can lower cost?

    “Paul Krugman properly attacks this as a radical shift of costs onto seniors”

    Well if Krugman who knows nothing about healthcare or economics outside of the liberal prospective says so it must be true. Every time Medicare increases reimbursements the 20% paid by members goes up, can’t say I have ever seen you call that a radical shift of cost. Every time CMS approves a new more expensive therapy why do you not complain of that radical shift of cost?

  9. This is one of the rare times I agree with Krugman when he says we need to learn how to say no to payment for expensive treatments for a marginal benefit. I would also be willing to trust the IPAB to take on this role. These are admittedly subjective and difficult calls but someone has to do it. People who contend that you can’t put a price on human life and those who want to fight to the very end should have their wishes respected and that someone else should pay for it are driving us toward bankruptcy. The only other potential alternative to IPAB or insurance company decision making about what gets covered and what doesn’t is explicit age based rationing. If you’re above, say, 75 or 80 or 85 and have already lived a normal lifespan and then some, you don’t get these treatments period unless you can self-pay. At least age based rationing has the advantage of being absolutely objective.

  10. Merrill- Thanks

    Rationing is inevitable – It must be done ethically , fairly and with as much compassion as possible.

    I agree that the government is MUCH better suited to lead on this than the private sector .

    The goverment must lead on issues of the common good like at least providing BASIC health care for all US citizens. That is what civilized nations do.

    Merrill- Also I personally think many patients are falling “out of love” with high-tech, high-cost medicine especially at the end of life