In a New York Times column this week, David Leonhardt reflects on how “any deficit strategy needs to focus on Medicare.” Excerpt:
“The treatment of prostate cancer offers a good example of the trouble with the current system. I devoted a column to prostate cancer last year, and the Health Affairs article — by Steven Pearson of Massachusetts General Hospital and Peter B. Bach of Memorial Sloan-Kettering Cancer Center — uses it as a case study, too.
The brief version is that the options for treating prostate cancer include three forms of radiation. One of them, three-dimensional radiation, costs Medicare about $10,000. Another treatment, a targeted form of radiation known as I.M.R.T., came along a decade ago and initially cost about $42,000. Lately, Medicare has also started covering a third, proton radiation therapy, for which it pays $50,000.
No solid research has shown I.M.R.T. to be more effective at keeping people alive, with minimum side effects, than three-dimensional radiation. The backing for proton therapy is weaker yet. As Dr. Pearson says, “There is even less evidence on whether proton therapy is as good as other alternatives than there was for I.M.R.T. when it was the new kid on the block.”
But Medicare today doesn’t pay for good outcomes. It pays for any treatment that it deems reasonable and effective.
Obviously, the medical industry — drug makers, device makers, hospitals and, depending how they’re paid, doctors — has an incentive to promote the most lucrative treatment. So too many people end up persuading themselves that the most lucrative one is the best one.
As a result, I.M.R.T. has supplanted three-dimensional radiation as the standard. Urologists have spent millions of dollars buying I.M.R.T. machines, which then become profit centers for their practices, as Stephanie Saul of The New York Times reported. Most recently, proton therapy has been making inroads.
Similar stories exist throughout medicine. Genentech has not shown that its expensive vision-loss drug is better than a cheaper alternative, but taxpayers still pay the bill. Implantable cardiac defibrillators have become increasingly intricate and expensive, without evidence that the more intricate versions are better at restarting a stopped heart.
Then there are drug-coated cardiac stents. They cost much more than the uncoated kind and were gaining market share — until evidence suggested that the coated stents sometimes harmed patients.
In many of these cases, you can argue (and companies do) that the more expensive treatment will prove the better one once all the evidence is in. And sometimes it will. But sometimes it won’t. In the meantime, life-and-death decisions are too often made based not on the best reading of the evidence, but on the best profit margin.
The plan from Dr. Bach and Dr. Pearson would try to change this.
It is from far the most radical out there. The full costs of treatments would be covered for three years, which would still give companies an incentive to innovate.
After three years, absent evidence that a treatment was better, Medicare would pay no more than it paid for equally effective treatments. Only $10,000 of the bill for proton therapy, for instance, would be covered. The blank checks would not go on forever. New treatments would bring a windfall only if they improved health.
“To me, this is the way you make the market work,” says Karen Davis, president of the Commonwealth Fund, a health research group. Recently, private insurance companies, including Aetna and Cigna, have begun experimenting with similar policies, notes Mark McClellan, the former head of Medicare.
Of course, any such Medicare system would have some downsides. Dana Goldman, a University of Southern California economist who likes the general idea, says he thinks five years may be a better window than three. That would allow more time for research into a treatment’s effect on different subgroups. Even so, Mr. Goldman adds, no window could ever guarantee answers to every question.
The point is that all systems have their downsides. If we spend large sums on treatments that don’t make us healthier, as we are now, we waste resources that could have been used productively. Instead of going toward health insurance premiums, the money could have lifted our salaries. Or it could have paid for medical research and treatments that would have improved health.
Unfortunately, today’s political debate doesn’t seem to have room for downsides. It conjures a world of free lunches — unlimited Medicare, vague spending cuts, low taxes and balanced budgets.
It’s a nice world, until it isn’t.”