Medical services must be rationed but in a sensible way

The federal government recently reported that health care spending has surpassed $1.5 trillion. Roughly 15 percent of our gross domestic product goes to health care, a far higher percentage than in any other nation. Yet life expectancy is lower in the US than in Sweden, Japan, Iceland, Italy, Israel, France, Australia, and several other countries. It would seem that some of our health care dollars are not well spent.

Part of the problem is that, as health care consumers, we want every service, every pill, every treatment we can get. But the inescapable fact is that there is no way everyone can get every medical service they want. It would cost billions more than employers and insurance companies, and ultimately American citizens, are already paying. And it wouldn’t make sense. Not every medical service that is conceivable under a particular set of circumstances is worth doing.

Medical services have to be rationed–somehow. Now, rationing is a dirty word in medicine, something we would never want to take place. But it’s already happening. The problem is, rationing is happening in a haphazard way that that doesn’t prioritize the types of health care that will provide the most benefit with the most efficient use of limited dollars. One form of rationing we tolerate, to our shame, is to allow 15 percent of Americans to go without health insurance. The rest of us get a bigger piece of the medical care pie because the uninsured get only the barest emergency treatment.

We are experiencing other forms of rationing as well. There are many medical services that insurers limit or simply don’t cover at all. Among these are certain preventive screening procedures and treatments. Most of us don’t complain about not getting these services because we feel OK, and we don’t realize they could make us healthier in the long run. Health insurers limit which pills they’ll pay for, and impose co-payments and deductibles to discourage us from seeking expensive care. Insurers and providers erect bureaucratic obstacles that make it more inconvenient and time-consuming to get medical attention, imposing burdens on our time and patience. The high cost of nearly everything limits the procedures and medicines we can afford and forces us to make choices about health care even though we may not know which treatments we can most afford to do without.

There is a more rational way to ration health services. We have the scientific tools to help us figure out which investments in health care will provide the most benefit in the most efficient ways. Value analysis can quantify the health improvement in terms of the number of years of life expectancy gained, in relation to the cost of various health improving strategies. Analysts can even adjust for the quality of those lives by a measure called the quality-adjusted life year (QALY), which reflects the relative value people attach to various states of health, from symptom-free to living with chronic or episodic acute pain, or to being sightless, paralyzed by stroke, afflicted with Alzheimer’s dementia, etc.

Not every medical service that’s conceivable is worth doing.

With such information, it is possible to rank medical services according to how much benefit they offer per dollar spent–that is, how much health value they produce for the money. The services that offer the most health value for money would be delivered most freely, and other forms of treatment could be dispensed starting from the top of the list, until the money runs out. This would be rational rationing.

Consider some widely recommended cancer screening tests. Mammograms to detect breast cancer do save lives, but given on an annual basis they cost the health care system $50,000 to $100,000 per quality-adjusted year of life. In contrast, a colonoscopy administered once every five to 10 years to screen for colon cancer, which ranks just behind breast cancer as a cause of death among women, buys a quality-weighted life year for only about $15,000 to $20,000 apiece. Dollar for dollar, it would save more years of life to give mammograms every two years instead of every year, and use the money saved to give every woman a colonoscopy.

Here is another example. Compare the costs and benefits of taking Pap smears every year to detect signs of cervical cancer versus every few years. The extra life expectancy obtained by yearly Pap tests rather than every three years is just a few hours. But the expense of all those extra tests–and the abnormal results that some of them produce, requiring still more follow-up tests–is huge, $20 billion nationally, an enormous amount to pay for negligible benefit.

More examples of relative valuation: Flu vaccine for the elderly is actually a cost saver; more value is recovered in health care savings than the intervention costs. A diabetes screening program for adults costs between $50,000 and $100,000 per quality-adjusted life year saved. Computed tomography and MRIs for children with headaches and intermediate risk of a brain tumor cost more than $500,000 per quality-adjusted year of life.

There is resistance from patients, who want all the treatment available.

Hundreds of these analyses have been conducted on a wide universe of health care interventions. A growing library of such studies allows us to compare the costs of various approaches to improving health with the value we get for the money. These studies could guide wiser health care spending and go a long way toward controlling the spiraling cost of health care in the United States. Value analysis can help us stretch our health care dollars so they’ll do us more good, and it can make the health care rationing we’re already doing much more informed, rational, and fair.

Although we have these tools, so far we have shied away from putting them to work, for a number of reasons. Physicians, who have an ethical responsibility to offer the best available medical care to each patient they see, can’t be expected to weigh the well-being of the patient in the office against efficiencies and cost control which might inure to the benefit of anonymous patients elsewhere in the future. There is resistance from patients, too. They may like the idea of cost control when it comes to keeping premiums down, but when it comes to receiving medical care themselves, they want all the treatment available.

As for policy-makers, they know full well the political dangers in the valuation approach. Valuation analysis was rejected as a criterion for covering new medical technologies in Medicare, and the attempt to ration health care services in Oregon had to drop cost-effectiveness analysis as a way to figure out how. The only thing harder, it seems, than telling people their health care costs are going up is telling them they can’t have every last form of health care available.

This has to change–and it’s beginning to. Doctors are now starting to think in terms of value for the money. Major medical journals publish cost-effectiveness studies on a regular basis, and expert committees that develop clinical practice guidelines cite evidence of value for money to support their recommendations. And we should encourage this, through medical education that reinforces the responsibility of physicians as gatekeepers of resources. We should want our doctors to help us get the most value from our health care dollars. Consideration of the value-for-money aspects of health care will help us maximize the availability of the most effective forms of care for all of us–including the millions of Americans who are currently uninsured.

Of course, physicians alone cannot be expected to bear the full burden of allocating health care resources. Their primary responsibility lies with individual patients. Surely, the organizations in which they deliver health care, including hospitals, and the ones that pay for it–including government and health insurance companies and the employers who, in many cases, pay the bulk of the insurance premiums–have to play a role. But American consumers trust their doctors to make health care decisions, more so than they trust these organizations. The more that physicians, rather than insurance executives or government officials, support and apply a valuation approach, the more the public will accept it as in their best interest.

Meet the Author
Meet the Author
Decisions about how to spend our health care dollars will always be challenging. They will never be made purely on the basis of economics. They are emotional, often life-and-death issues, and in a democracy, decisions about who can get what kind of health care and when must take into account moral values, not just economic ones. But resources are finite. Just ask the 15 percent of Americans who have no health insurance, and the millions more who struggle to pay for theirs.

Politicians campaign on promises to solve the health care crisis, by which they mean the health care cost crisis. The “value” crisis is largely ignored. With a little courage, our political leaders can adopt valuation analysis as a powerful approach to optimizing the value of our health care spending.

Peter J. Neumann is associate professor of policy and decision sciences and Milton C. Weinstein is Henry J. Kaiser professor of health policy and management at the Harvard Center for Risk Analysis, which is part of the Harvard School of Public Health.