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1. Very nice post. I simply stumbled upon your blog and wanted to mention that I’ve really loved surfing around your weblog posts.
   After all I’ll be subscribing on your feed and I
   hope you write again soon!

2. Bob and Don,

   My training is in economics, finance and investment analysis and I’m keenly interested in the issue of efficient resource allocation because resources are finite, we have lots of unmet needs and it would be good to see our economy operate as efficiently as it can with the resulting prosperity, hopefully, widely shared.

   However, even I recognize and accept that there is more to life than money both in healthcare and more generally. With respect to end of life care specifically, I think the appropriate level of care can vary considerably not just based on individual values but on whether the patient is a baby or child, an adult in the prime of life with young children, or an elderly person who has already lived a normal lifespan and then some.

   My concern about the cost of end of life care specifically is that patients and families are generally willing to spend someone else’s money much more profligately than they would spend their own. My own attitude is that if I would not spend my own money for futile or marginal end of life care even if I were wealthy and could afford to, I don’t think I should spend taxpayer or insurer money either. If I could be kept alive for an extra two months of low quality life at a cost of, say, $200,000 or I could use that money instead to pay for my granddaughter’s college education, I would choose the latter in an instant. Unfortunately, most people just don’t think this way, especially when they are spending someone else’s money. Yet, they are quick to complain about high taxes to fund Medicare and Medicaid or high contributions toward employer provided health insurance or high premiums for health insurance they buy for themselves in the individual market.

   In the end, sometimes we just need to say NO whether that means not covering ultra expensive specialty drugs that only extend life by a few weeks with low quality or marginally useful preventive tests like PSA blood tests for healthy men because it can create more problems than it solves. I do think that QALY metrics can play a useful role in this context.

3. Peter1,
   You point to a main component of the engine of health care cost escalation. Another is the profit motive that drives the relentless development and marketing of medical treatments for the already ‘pretty well healed’, ie those with means, whether that be good third party coverage or just bucket loads of cash. Who knows where the upper limit of spending may be of other people’s money to try a cure we have been taught to believe may save us or our loved ones?

   This is why it is so important that those of us who know better reframe the task as value toward health improvement and not just health care cost control. The health care cost control conversation just leads to ever finer points of analysis in that ‘box’ and ever more creative (and expensive) methods of engagement with Medical care. That framing of the problem keeps us barking up the wrong tree. In my state we are already well past the point where any more medical spending will improve health as much as more spending on early learning, job training and a host of other social interventions. We have strong evidence for example that drug and alcohol treatment and disciplined programs of nurse home visiting improve health and actually lower medical costs, yet these programs struggle to survive even as we build inflation adjustments into billions of dollars of medical spending before they even look at demand for these social services. Tell me, where is the evidence that keeping salaries ahead of growth in the economy among insurance company executives, medical providers, marketing companies, administrators and others in the health care establishment improves health? Yet that is what we do even as we continue to admire the health care cost problem on these pages.

4. Thanks Don.

   I sometimes wonder if there is any economic value at all in extending lives.
   (not emotional value, a separate and very important discussion.)

   What David Cutler and others have said, I believe, is that extending life for a year has a value of $100,000, and heart surgery costs $50,000 so we are ahead.

   You suggest that maybe heart surgery costs $50,000 and the indirect costs to family members is $50,000, so maybe we are even.

   My point is maybe the $100,000 is value is completely false, and we are actually $100,000 in the hole from live saving medical care.

   Most persons whose lives are saved do not come back and earn higher salaries and pay taxes. This is due to age and disability.

   This does not mean we should not do it. If we spend $50 billion extending lives and it is pure spending, well there are worse things for a rich society to do. Gambling is worse, war is worse, heroin is worse, there is a long list.

   I am saying, let’s call it charity, let’s call it consumption. Just don’t call medical care an investment.

5. “We need to reframe the health care cost debate to focus on health improvement per dollar: value.”

   Don, insurance companies are great at doing that calculation. However every time an insurance company refuses to pay for a procedure the patient and their family screams to the media about “heartless” insurance companies. For patients (or their families) who aren’t paying the bills this is about emotion. I have found though that most people don’t want their own lives extended by “heroic” means when the outcome does not improve their quality of life or when they will deplete their family’s fortune.

   I’m not in favor of insurance based “death panels” nor am I in favor of hospitial or government based end of life panels. People need to be encouraged (as the ACA does) to write living wills and discuss this with their family. Doctors need to be trained and compassionate in their discussions with family members about the treatment and outcome.

   The two wrenchs in this debate that does no one any good is a religious belief that somehow “God” will intervene and save the patient, and the media’s sensational reporting of “miracle” recoveries. That seed planting in the mind of a religious person will cost us a lot of money.

6. Bob,
   I don’t have time right now to find the references, but the Partnership for Prevention is one group that has published on QALYs. Their website http://www.prevent.org, as I recall, had a nice piece a few years ago about value. That’s where I remember reading of the Phillip Morris study. I am sorry to say I cannot recite the factors considered in the cost side of the equation and whether they included costs to family members, voluntary care givers, lost productivity etc. But I believe most health investment studies look simply at the direct costs of medical care. So you may have a point that they under value the total costs to society of an extra year of disabled life to society.

7. Thanks Don, but I have had a problem with QALY for some time.

   My arguments are not grounded in any academic discipline, so I may be out of line. If so, I will not be offended if any reader tells me to bug off.

   Anyways —

   As I understand QALY, an extra year of life is valued at some number, say $100,000, and if a health care treatrment costs less than $100K then we as a sociaty are ahead.

   My problem with this is that I helped do counseling for Alzheimers caregivers.

   An extra year of life for their spouse or partner might COST them 100K, whether this is measured in their foregone inheritance or lost home or lost wages.

   I have been popping up on several good blogs for the last few years, and no one ever gets back to me on my challenge to the idea that longer life spans make us better off.

   thanks, bob hertz

8. Interesting that this thread has gone on this long about cost with little discussion of value. Phillip Morris famously analyzed health care costs for one eastern European country years ago and demonstrated smoking lowered health care costs by killing people off at earlier ages. That coupled with less heroic end of life care in that country made encouraging smoking a great policy option. That is ridiculous of course because encouraging smoking misses the point of all this spending and technology and concern. The useful debate is about quality adjusted life years (QALY) per dollar. That’s why I think the author’s original post is so important. We need to reframe the health care cost debate to focus on health improvement per dollar: value. And we need to expand the scope of health investment options to include the social and and environmental interventions proven to move the numbers on population health. The very useful emphasis of the author’s post, it seems to me, is to remind us that the convenient political framing of the health care cost/outcomes that has been so widely used by all sides tends to guide us away from what we already know about health and social investment. It shows us that we have been having the health equivalent of a detailed discussion about how to make energy less expensive by trying to figure out how to build cheaper nuclear power plants, when most of the evidence seems to point to insulating our homes and using more energy efficient appliances as more cost effective solutions.

9. Begging respectfully to differ with Kellermann’s read of the author’s post, the point about misplaced health spending priorities was not missed. It just wasn’t the main point of the post as the author himself indicates below.

   A more important point about is that the recent national reform debate missed that central point that health care is not the main road to health improvement in the US now. It is heartening to see Kellermann, IOM and many others finally ‘coming out’ about this in recent years. Sadly the framing of the debate and the policy in the ACA, and the overwhelming bulk of the money now flowing in reform is flowing to medical care and medical risk management corporations. Meanwhile public health, education, economic development and other social factors are being robbed, just as Kellermann has lately been pointing out. The horse is out of the barn. Closing the gate may be better than not, but it will do little to control the horse!

10. Everyone who has posted so far seems to be wrestling with a troubling
    thought……….

    namely, if health care can save lives (which it does in e.r.’s every day), and can make life better in terms of pain relief (which it does with joint replacements et al), then why are we having such trouble affording it?

    Our minds naturally drift to the idea that if something makes life better, it ought to make our society more prosperous.

    I am not a historian of science by any means, but I suspect that the history of technology is not so one-sided.

    In the third world, I think there are numerous instances where technology lowered infant death rates and made childbirth much safer…….and the result was massive overpopulation and perhaps a poorer society.

    In America, the success of health care means that more people survive to age 90, which has its own costs.

    I am not quite articulate enough to capture the whole paradox, but we need a kind of Malthusian skepticism here.

11. “Then why do insurance companies rate obese and smokers higher if they will cost less? Why is CVS wanting to know the BMI?”

    Because a dollar is a dollar, no matter where it comes from. When it was acceptable to penalize people with preexisting conditions, or women with small children, they got their money there. Now that it’s becoming acceptable to penalize “lifestyles”, they get their money this way. Same old MO with different packaging.

    And also, the “savings” from the obese and smokers dying sooner do not accrue to CVS; they accrue to taxpayers, so CVS has no dog in this fight, other than of course trying to nickle and dime people as usual.

12. Not sure about your low estimates of non-medical costs (transportation).
    http://www.reuters.com/article/2012/04/30/us-obesity-idUSBRE83T0C820120430.

    I guess I meant senior care facility not necessarily nursing home. If nursing home then the obese would, due to ill health, get there first where as a healthy person would be in assisted living, not requiring nursing care.

    I guess I’ll wait til all the numbers are as obesity just gets worse and medicine finds ways to keep the fat ones consuming care.

13. Peter1 –

    I’m not sure what you mean by a “healthy” nursing home patient / resident. People are in nursing homes because they can no longer perform most of the normal activities of daily living (ADL) to live independently. Skilled nursing facilities are extremely labor intensive operations which is why they are so expensive to operate even though wages are comparatively low for most employees. Most spending for nursing home care comes from the Medicaid program. Many residents start out as private payers but most spend down their savings within a couple of years or so and then look to Medicaid to cover their bills. Relatively few people have long term care insurance because it’s quite expensive and you need to pass underwriting to be able to buy a policy.

    I also question the impact of people who are obese, who smoke or have diabetes on commercial and industrial productivity. The kind of job I had, for example, just waited for my return when I was out of the office on vacation or out sick. The company did not hire a temporary worker or maintain extra staff to do my job when I wasn’t there. For secretaries who were out, sometimes we would hire a temp and sometimes we wouldn’t. Millions of people who are obese as defined by a BMI above 30 or who have diabetes can do their jobs and generally function perfectly fine and their attendance at work is within normal ranges.

    At the end of life, plenty of people still die quickly of heart attacks. Almost half of all deaths are due to heart disease or cancer. Many thousands more die in accidents. If a smoker dies 7-10 years sooner than a non-smoker on average, it’s likely that his lifetime healthcare costs were lower than a healthy person’s.

    Add in social security payments, which for me are currently a bit over $30K per year, and you can see that the numbers add up quickly. As for the energy cost of transporting healthy people, a plane with 200 passengers each weighing 30 pounds more than average, or about 5 BMI points, would add all of three tons to the weight of the aircraft vs. a planeload of normal weight people. Its impact on fuel cost is nominal at worst.

14. I’m not ready yet to blindly accept what you say or accept the results of one study. Social Security is not medical care, nursing homes do not necessarily provide more care to healthy residents – like your mother. I assume your mother is paying for her own nursing home accommodation. Both healthy and un-healthy have end of life care with the unnecessary costly heroics.

    I’m reading about obesity speeding up onset dementia and macular degeneration. Diabetes causes blindness. Hospitals are now having to provide larger beds and washrooms with larger more robust toilets, not to mention the physical effects on hospital staff handling the obese.

    If you want to expand this to non-medical care issues try estimating how much extra fuel we burn in cars and planes just carting them around add in loss wages and productivity.

15. Peter1,

    You are confusing yearly cost (which is higher for smokers and obese) with lifetime cost.

    Non-smoking, normal weight people (like my mother) live longer than smokers and the obese. The live long enough to develop macular degeneration, dementia, etc. They live long enough to require nursing home care, etc. etc. And, they keep getting Social Security.

16. Then why do insurance companies rate obese and smokers higher if they will cost less? Why is CVS wanting to know the BMI?

17. Peter1,

    ??????? – I don’t think you understand what you are talking about.

    An obese smoker does not cost the same to take care of as an obese person, plus a smoker. An obese smoker likely cost LESS to take care of over their (shorter) than either an obese person or a smoker.

    My mother, who is 91 is neither obese nor did she smoke. She is in a nursing home which charges quite a bit every month to take care of her. If she had been obese or a smoker she likely wouldn’t have made it to 91, old enough to be demented and legally blind with macular degeneration, wheelchair bound with diabetes, etc. In other words, she is a healthy person who is at the end of a long life – the most expensive person to take care of over the long run.

18. Patrick,

    Amen

    The lowest hanging fruit in any attempt to reduce Health Care Costs is the last months of life. Not only does the HUGE amount of money we spend not extend life much, but frequently it INCREASES (rather than reduces) suffering.

    We need “Death Panels”. We need to take a rational look at what we are doing and why.

    Unfortunately, I don’t expect that politicians (Democratic or Republican) have the guts to act.

19. Steve Schroeder, in his 2007 Shattuck Lecture, told us that an individual’s health status is determined 40% by personal behavior (diet, exercise, smoking, drinking, etc.), 30% by genetics, 20% by socioeconomic status and environmental factors, and only 10% by the quality of healthcare that one has access to.

    Healthcare costs are higher in the U.S. than in other developed countries mainly because prices, especially for hospital based care, brand name prescription drugs, and medical devices, are much higher than elsewhere. Also, practice patterns are more aggressive in much of the country which probably relates to a combination of the fee for service payment model and defensive medicine. The combination of tort reform and moving away from fee for service payments in favor of bundled payments for surgical procedures and capitation where appropriate would be helpful, I think.

    Regarding lower life expectancy in the U.S., there is an article in the most recent issue of Health Affairs that singles out deaths before age 50 due to accidents ranging from auto and other transportation related accidents to drug overdoses, as well as murders and suicides as a significant influence on overall U.S. longevity statistics. None of these has anything to do with the quality or efficiency of our healthcare system.

    Just because some statistics are easy to measure doesn’t necessarily mean they provide any useful insights. This also applies to the infant mortality data as legacyflyer noted.

20. The best concise statement about how we spend money on health care in the US I have heard is: “The average American will spend over half of all their health care spending in the first 3 weeks and last 3 weeks of life.” And within those two brief spans we spend far more on the last three weeks.

    We spend enormous amounts on health care at the very end of life. Having administered corporate benefits it became clear that one reason the Canadiens spend less than Americans is that Canada just does not provide the infrastructure on heroic end stage care relative to the US.

    When I was studying to acquire my MBA it was drilled into students that in doing financial analyses one should look first to the biggest ticket items. In the US for health care, we spend lots of money on ideas like wellness but not that much addressing the enormous outlays we make for millions of people who are near death. I would instead look to figure out a way to cut down the astronomical outlays to defer death by a few days or weeks or months first. Unfortunately any suggestion to do that is demagogued with phrases like “death panels” and people are scared away from seriously addressing the matter.

21. “A very common misconception. ”

    Really?

    The lifetime costs were in Euros:

    Healthy: 281,000

    Obese: 250,000

    Smokers: 220,000

    Obese + Smokers = 470,000 euros
    Healthy = 281,000 euros

    http://www.forbes.com/sites/rickungar/2012/04/30/obesity-now-costs-americans-more-in-healthcare-costs-than-smoking/

    While we’re all alive the unhealthy are costing us money. If we’re dead, who cares.

22. No more false shibboleths!

    From here on we will only have true shibboleths!

23. Of course, Dr. Kellermann and I agree that it’s more than just health care. We also agree the value of health care has substantially improved and that health care expenditures are undeniably out of line. My central point in this post is we would do much better, move further forward, by conveying a true impression and not echoing false shibboleths. That’s especially so from knowledgeable professionals. No more false shibboleths please. Enough already!

24. Peter1,

    A very common misconception.

    Lifetime healthcare costs are greatest for THE HEALTHY (non-obese, nonsmokers), THE OBESE are LESS expensive over the course of their SHORTER lifespan and SMOKERS are the LEAST expensive over the course of their EVEN SHORTER lifespans.

    “Smoke ’em if you got ’em”

25. “there are no generally useful estimates of what percentage health care contributes to population health. That makes sense given the many causes and extrinsic factors leading to health outcomes.”

    Salt, sugar, fat, TV. Less of those and less health care expenditures and better outcomes. Duh.

26. I think the author made an excellent point, which often gets overlooked – that various measures of health such as longevity, infant mortality, etc. often have more to do with social issues than with health care per se.

    It is often stated that the US spends more on health care than other comparable countries, but our longevity is worse. That ignores the contribution of auto accidents, homicide, etc in our statistics.

    Our infant mortality rates are also compared to other countries (despite the fact that the statistics are not kept in the same way). Yet much of the infant mortality has to do with poor or drug addicted women who don’t get prenatal care, etc.

    Health care can only do so much for our health, the rest depends on a variety of factors such as drug/alcohol addiction, homicide, auto accidents, etc.

27. A response from Art Kellermann:

    “I’d point the author that I basically agree with him, and have all along. I’d offer, as evidence, the following recent publications:

    http://www.rwjf.org/en/blogs/human-capital-blog/2013/01/health_care_costsar.html

    http://www.rand.org/health/feature/health-care-cost.html

    http://www.rand.org/pubs/research_briefs/RB9690z4/index1.html

    Here are two excerpts from the third link:

    The Policy Challenge
    Social and behavioral factors influence the health of Americans as surely as do the efforts of physicians, nurses, and hospitals. To slow health care spending growth, we need to do a better job of addressing the determinants of disease, rather than waiting to treat its consequences. It is estimated that 70 percent of deaths in the United States and a comparable share of health care spending are due to behavioral or environmental causes,[1],[2] but only 5 percent of our nation’s annual spending on health is directed toward reducing key health risks.

    The nation pays a high price for neglecting the possibilities of prevention. For example, high blood pressure dramatically increases the risks of heart disease, stroke, and kidney failure — all of which are major causes of death, disability, and spending through Medicare. Yet, according to the Centers for Disease Control and Prevention (CDC), fewer than half of the 68 million Americans with hypertension are currently on an adequate regimen of treatment.[3] Analyses using RAND’s Future Elderly Model projected that Medicare could save up to $890 billion between 2005 and 2030 if high blood pressure were effectively controlled.[4]

    This brief presents insights from RAND research about the potential value of focusing on population health, particularly the risks of obesity and smoking. It also examines opportunities to promote health at the local level and within families…

    Conclusion
    A broad range of social, behavioral, and environmental factors influence Americans’ health as surely as does the treatment provided by doctors, clinics, and hospitals. But because population health measures typically have long lead times to produce results, they are rarely considered in discussions of policy options to limit growth of health care spending. If spending on health care crowds out national and state-level investments in public education, environmental protection, and other important contributors to population health, our nation’s downstream health care costs may be greater still. [emphasis added]

    What the author doesn’t get, and he’s pulled only passages from one of several documents I’ve written in recent months, is that our effort to “medicalize” everything as a target for high-tech, high cost U.S. healthcare isn’t working. True, we are doing much better at managing heart attacks than we did when I was an intern, which was in the oxygen – morphine – NTG and prayer era. But we’d do better still if we were more effective at reducing obesity, smoking, hypertension, diabetes and in selected patients, hyperlipidemia – the major causes of CAD.

    Because high health spending is crowding out other priorities, including state spending on education and ironically, public health, we’re driving further down this road. That’s a message both the IOM and I have repeatedly tried to state, and unfortunately, this well-intended author missed.”

28. No need to be offensive.

29. Wondering what date Mr. Kleinke and Mr. Goodman will dismiss this troll.