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Cost Effectiveness

What do most Americans think of cost-effectiveness research in health care?

By March 20, 2015 No Comments

My impression is that explicit data on the cost-effectiveness of different health care services are not valued highly by US policy makers. An example is a recent decision to approve ipilimumab for the treatment of metastatic melanoma. The extra health benefit over standard treatment is 2.1 months in previously untreated patients and the cost is $120,000 for 4 doses. This is poor value for money. Had $120,000 been allocated to an intensive lifestyle modification programme for diabetes risk (Diabet Med. 2004 Nov;21(11):1229-36) then 67 years of life or 800 months could have been returned. A massive increase in health benefits for the same costs.

There were big pushes at Harvard and Tufts in the late 1990s to build a culture of cost-effectiveness in health services research. But sadly value for money is not part of the DNA of US health services today. One reason is that consideration of cost was excluded from the 2009 $1.1 billion stimulus package for comparative effectiveness research. The ‘bang’ was measured but not the ‘buck’.

This past month I have given talks about cost-effectiveness at the Cleveland Clinic, University of Utah and Columbia University, all US research powerhouses, and the feedback was that cost-effectiveness information is discretionary. Other things dominate when the rubber hits the road for health policy; quality, patient safety and implementation science drive decisions and so drive the research agendas.

There is distrust of cost-effectiveness estimates. They offer a slippery slope toward socialised medicine; the right of individuals to choose his or her own care is diminished, inefficient governments own the means to produce health care, they become paternalistic and choose the services that are available. If you want to end a conversation about US health policy quickly then mention this. There is a flicker of eye, a tiny twitch but it means everything, it means you are not American.

The UK NHS is the most flagrant socialised medicine system we have for comparison. Mention rationing and scarce resources in Britain and you unleash a torrent of health bureaucrats, academics and clinicians chomping at the bit to discuss incremental cost-effectiveness ratios, maximum willingness to pay for a marginal QALY and probabilistic sensitivity analyses. British people grumble and complain because they have to queue for their healthcare, but they had affection for the NHS, and it was celebrated in Danny Boyle’s opening ceremony of the 2012 London Olympics.

The statistics show in 2011 every American generated $8,500 of health care costs yet every British person used up only $3,400 of resources. Life expectancy in the US was 78.7 years, but in the United Kingdom it was 81.1 years. I know this is crude but you must get the point ‘spend less and get more’ is better than ‘spend more and get less’. Australia has bits of a US health care system, embracing private health insurance and private provision of services. There is no real competition in health care services (that notion is a façade) but some smart regulation means private insurers do have to behave themselves. Australia has a wonderful public system, a socialist utopia that should be celebrated, and strengthened with improved health services research. That’s what AusHSI does.

If the US wants to get better value for money from its allocation of scarce resources for health care services, it needs to measure the costs and health benefits of competing health alternatives and regulate supply by government intervention. Once US health care is reformed then perhaps we can move onto something easy, like starting a colony on Mars.
Away from the office I hiked to the top of Angels Landing in Zion National Park, an amazing experience. And had dinner later that day at the Bellagio Hotel in Las Vegas watching the famous fountains. I am really enjoying my time here.

Nick Graves
Academic Director, AusHSI