The Cost Curve Probably Won’t Bend Downwards. But That’s Ok.

flying cadeucii

To control the nation’s overarching fecundity the government of India raised mass awareness of condoms; the chief effect of which were a load of giggling school boys and a load of giggling school girls. Further, in an initiative by Sanjay Gandhi, vasectomies were performed, nearly en masse, through a mixture of cajolement, economic incentives and coercion.

The fertility curve remained unbent.

Then along came color TV. Paul Ehrlich’s doomsday prophecies were forestalled. I know correlation is not causation, let alone abstinence. I’m just saying.

Policy is a strange and lucky beast. It can survive its futility. It is not so much occasionally inept as often incidental. And it has the epistemological luxury of not being easily falsifiable: i.e. it’s hard to prove that it was not responsible for the effect for which it was instituted.

Can you prove that it was not condoms but color TV that derailed India’s logarithmic fecundity? Good luck randomizing to the television arm.

Yes I can hear you muttering “ahem seatbelts.” This is not to say policy never achieves its desired aims. It’s to say that it’s not easy to distinguish policy’s true successes from pseudo successes.

It’s very unappealing attributing success to those dullards that are time-tested truisms – natural variation and regression to the mean. Or, even worse, to Rumsfeldian unknown unknowns that arise from the market. Color television; where did that spring from? Malthus might be wondering in his grave, shocked that we are not eating each other’s livers yet.

Seriously, think about it. To what would you rather attribute the dent in growth rate of health care spending? The writ that germinated from regression equations of clever economists or the correction of that inevitable error when ascribing permanence to geometric and arithmetic trends?

I would love to credit the former, particularly as I am aspiring, and so far ineptly, to be a handler of regression equations myself.

Rationalists might ask data to arbitrate. What does the data say? You may as well ask: what does the fox say? Data can be more incoherent than a whole lot of “…dingeringding…pa-pa-pa-pow….hatee-how…”

The Affordable Care Act (ACA) is a Manhattan of towering policy writs, each gagging for credit. Ceci Connolly and Rick Judi singled out the usual suspects that might be steering us (although they admit we are far from there presently) to the utopian dream of a cost curve bent downwards. These include integrated systems (with a wonderful neologism of nuptial serenity: “systemness”), health IT, early treatment and preventive services, transparency and consumers shopping for value.

The analysis is excellent. I read it twice. The second time for the sheer pleasure that one derives from unbridled optimism.

The trouble with their analysis is not that it is wrong (see earlier comments about the epistemological carapace in which policy analysis resides). It is that it tilts heavily in favor of “ought” in the “ought-is” dilemma. And history tells us that “ought” has never had an upper hand over “is.”

Let’s take consumers shopping for value.  Oh, so now we’ve defined value have we?

Oscar Wilde quipped that a cynic knows the price of everything but the value of nothing. In healthcare we know neither the value (ex ante) nor price of anything. Just saying “value not volume” a thousand times at major medical meetings doesn’t mean that value will suddenly awaken like the Giant yelling “fee fie for value, I smell the blood of a wasteful physician.”

And WHEN exactly are “price conscious” consumers shopping for value?

Is it in the last six months of their lives? Or in the 48 hours before their family consents to the switching off of the norepinephrine drip in the intensive care unit? Or those idyllic lengthy conversations with cash only primary care physicians on whether they should start atorvastatin or have a calcium CT scan of the heart; fretting about infinitesimally low hypothetical risks of radiation-induced malignancy versus greater consumption of unpalatable broccoli.

Oh to have first world problems. How dreadfully underappreciated are thee!

Here is a hypothesis for upstarts in health policy research to investigate. “Value shoppers” are more likely than the rest of the population to run five miles a day, shop at Whole Foods, and have a “Free Tibet” bumper sticker.

How about consolidated healthcare systems? Surely that will lower the costs. Surely?

There’s just one problem. Thus far we have not seen prices of goods and services fall when small units are swallowed by larger units in healthcare. You give hospitals a mile and then you wonder why they don’t charge you by the inch. Economies of scale, Cheesecake factories, yadi yadi yadi. Yes, I know the theory (ought). But it just doesn’t seem to work in practice (is).

Talking about prices how is that latest meme “transparency” working out?

The ACA nearly achieved that remarkable feat of missing chargemaster rates in its statutes of biblical scale. But for one homeopathic paragraph that shines modestly unlike the brilliant Ecclesiastes in the Old Testament. It was not until Steve Brill alerted the nation to the toxic nature of the laughably absurd hospital charges, and its effect on bankrupting people (incidentally medical bankruptcies were a major motivation for ACA, and yet no one asked what was done to deal with the high charges), that policy makers paid attention.

Now we have movements creating awareness of the hyperprices. CMS forced hospitals to release their charges. NY times has a whole series on inflated charges for medical procedures. With all this awareness and that deadly public indignation that comes from awareness, the chargemaster rates “ought” to be falling precipitously? Dropping a little? A teensy weensy bit? I’m all ears. Please tell.

How about early treatment and preventive services? You know the old chestnut: a stitch in time saves nine. It makes so much cognitive sense. Catch cancer when it’s a dot and then you can save on costs of expensive chemotherapy that has an aggregate of four month of incremental survival when the dot becomes a football.

There’s just one problem. You don’t know whose nine a stitch in time will save. The net has to be cast wide. Many people have these “dots.” This is an information problem. There is little evidence that screening for malignancy saves overall costs. It may be cost-effective but does it reduce net costs?

What happens to the person who is saved from lung, prostate, colorectal, breast and esophageal cancer? Presumably frolicking merrily in the garden ready to obey at once the calling from Thanatos.

May be.

Or on the PET scanner being screened for pre-Dementia (there is something capacious about the definition of “pre-Dementia”, which semantically speaking, I have as well), before commencing Aricept, which will defer Dementia, but not permanently. And thence a life in a long term care home, which might culminate in an indwelling urinary catheter, rounds of blood in the urine that will lead to investigation of neoplasm of the urinary tract (admittedly with EMR recurrent hematuria will only be investigated once a year), then infection of the kidneys, and then death by a thousand lines in ICU.

This costs. Many more dollars than if big tobacco were left unfettered. Sorry, it’s not a nice thing to say. But economics “is” amoral.

Life is no longer that Hobbesian reality: nasty, brutish and short. That’s an achievement. But in the process we have made death nasty, brutish and long, and very expensive.

Notwithstanding health information technology’s millenarian promise (“one day it will be paradise Comrade Guevara, until then the revolution will be bloody”), there is little evidence that in the short run it’s clipping costs. In the long run, as Keynes warned, we are all dead; and the sun will have blown its patience.

No, I don’t think the cost curve will be bent downwards. We live only once. And people are coming to terms with John Lennon’s “above us only sky”. Scientific determinism is replacing religious fatalism. Religion does wonders for the healthcare costs of a nation. Just take a look at India. Scientific determinism is an expensive indulgence.

People, in general, want to live for as long as they possibly can. The market gives them choice. Choice in the permutations by which the grim reaper can temporarily be deferred. But the permutations feed off each other. Polypharmacy and the device industry have ensured that we not only have multiple ways to live slightly, very slightly, longer, but multiple paths to regret, and to be sued for, if we forfeit them.

The view from 29, 000 feet is that we are dancing on the asymptote of clinical irrelevance. The reality on the ground from the individual perspective is a lot more rational.

Because incremental survival benefits fall. And marginal costs rise with falling benefits. It’s the law of diminishing marginal returns. Since costs are diffused why would one care about the marginal costs? And even if marginal costs were internalized, unlikely given that it would be sure political suicide even for Ted Cruz, it’s not clear that people won’t sell their houses to live an extra fortnight.

USA spends nearly 18 % of its GDP on healthcare. UK spends 9 %. The spending in UK may reach US levels but it’s unlikely that US spending will ever reduce to levels in the UK. This would violate the Second Law of Thermodynamics. It is easier to never have what is not present than it is to subtract what is there in abundance.

How many octogenarians voluntarily forfeit mammograms? Ah, I see we are waiting for payment advisory board to say “not indicated.” Sarah Palin, are you listening? Earth calling demagoguery.

Here is an equation. Please cite it as the “Jha Equation of Immortality of Healthcare Spending in a Democracy.”

Calvinist Determinism + Diffusion of Costs + Large healthcare system + Zero political will = Large amount of GDP Spent on Healthcare forever.

Healthcare spending of 18 % of GDP is the new norm. We can nibble about the edges, like rodents, but wholesale reduction in healthcare spending is improbable.

This is fine. It’s not great but it’s fine. Ask yourself this. Which other sector of the economy is so vigorous?

Military? Well the number of sovereign nations with formerly most favored nation status that can be invaded is dwindling rapidly. We are left with Canada, and their coffee sucks.

We’ve outsourced manufacturing. And notwithstanding the occasional and miraculously self-limiting perturbations of liberals by the working conditions in sweatshops, I can’t see a reversal.

So we are left with healthcare. Healthcare supports many. It employs lobbyists, lawyers, economists, political philosophers, historians, sociologists, ethicists, journalists, consultants, programmers, mathematicians, accountants.

It nourishes physicians, nurses, coders, bean counters, scientists, entrepreneurs, charity workers, porters, postal workers.

It feeds conservatives, liberals; Dr. Oz, anti-charlatans.

It creates social injustice and then employs people to solve it.

It regulates and then offers entrepreneurs opportunities to restore normalcy after regulations asphyxiate the workers.

And that lobbyist in the sweltering heat of Potomac summer will buy Gatorade from a local 7/11 store, as the congressman’s aide gives him the run around. This is the trickle-down economics at its most basic that the right loves to believe.

Healthcare obeys Keynesian economics that the left has raptures about. It is a perpetual Kahn-Keynesian multiplier. Yes I know Keynesian economics is shaky. But it does make sense in the very short run. And is the long run not just an integral of multiple very short runs? Plus Paul Krugman has got to be right about something, and maybe it is in the Keynesian mumbo jumbo that he has a point.

It’s no coincidence that the healthcare spending and overall performance of the economy are proportionately linked. If we are at the permanent end of double digit growth in healthcare spending then celebrate not. We may have permanently ended double digit economic growth as well.

Without healthcare, to quote Richard Gere from Officer and a Gentleman, we have nowhere else to go. Our preoccupation ought not to be how we can bend the cost curve but how high we can take it.

It may not be too late to take away our color TVs.


9 replies »

  1. Your writing style is highly annoying. The same things can be written with simpler terms without the weird and difficult to read sentance structure you employ.

    You seem to think you are reinventing the wheel with your prose but in reality your points are those a high schooler could both understand and synthesize.

  2. Indeed.

    Kerala has an annual background radiation of 70 msv.

    The last time I was there I don’t recall seeing Cyclops left, right and centre.

    (although they have democratically elected a communist party, so LNT might work in mysterious ways).

  3. Thanks for reading.

    I think you’ll find that one of the most innovative terms “patient-centeredness”, that courageous departure from unscientific conventionalism, is how medicine used to be practiced in the 60’s.

    There you have it. Orthodoxy is the new radicalism. Reason is the new faith. GK Chesterton has written much about this.

    As regards Senior Hefti, he must have one above the American Association of Physicists in Medicine, who are still unclear about the harms of low dose radiation.

    Such is the new age of reason. Anyone can believe he is Galileo.

    For kicks I sometimes google “moon landing hoax” and torment people with my reasoning.

  4. KahtOw,

    You are probably wrong about the risks of low level radiation. See population studies on levels of cancer in areas with high levels of natural radiation; parts of India, Iran, Brazil and China have levels of natural radiation well in excess of that from a single CT. In fact the levels of radiation are in many cases more than many CTs.

    How can a patient make a rational decision about risks and benefits of X Rays, when they don’t know the facts?

  5. Unsurprisingly, Dr. Jha, a conventional doctor, reiterates the typical disinformation of the medical establishment about the real toxicity of medical radiation when she equates a CT scan with “infinitesimally low hypothetical risks of radiation-induced malignancy.” Yet solid scientific data had revealed many years ago that low dose medical x-rays are a significant major cause of cancer, especially breast cancer (source: The Mammogram Myth by Rolf Hefti). How can a traditional doctor put real “value” on anything in healthcare when the profession is ignoring routinely relevant evidence about their interventions?

    And, “scientific determinism” has long replaced “religious fatalism” in orthodox medicine…..

  6. Thanks for reading Perry.

    Paul Starr puts it more succinctly in “Remedy and Reaction.”

    He calls it the “policy trap.”

    I’m surprised not more people refer to HC as a “quagmire.”

  7. “So we are left with healthcare. Healthcare supports many. It employs lobbyists, lawyers, economists, political philosophers, historians, sociologists, ethicists, journalists, consultants, programmers, mathematicians, accountants.

    It nourishes physicians, nurses, coders, bean counters, scientists, entrepreneurs, charity workers, porters, postal workers.”

    To most of these Saurabh, I would agree. Physicians, not so much.

    I also agree with your very astute theory. There are too many players with too much to lose (other than the patients) to bend this back the other way.