You get what you pay for in health care

Proponents of Obamacare believe that reforms to the health care system can bring down or eliminate unnecessary costs in health care and that by facilitating these changes, the government can bring overall health spending under control and create economic stimulus and universal insurance coverage in the process.

No one is foolish enough to deny that there are unnecessary costs in health care, as there are in any sector of the economy, nor does anyone argue that it wouldn’t be better if these costs, which come from corruption and fraud, could be brought under control.

But that isn’t what causes health care spending to increase much faster than the rate of inflation each year. Rather, progress in medical technology, procedures and pharmaceuticals, which are expensive — but effective — account for most of the cost increases America sees each year. The Washington Post has an excellent article using treatment for heart attacks as an example.

While some medical discoveries are high-yield and cheap — such as the discovery that taking aspirin increases the chance of survival of a health attack — most of these “low-hanging fruit” discoveries have been made already and instead health care improvements are happening at a slower and more expensive rate.

… the fight against heart disease has been slow and incremental. It’s also been extremely expensive and wildly successful.

In the 1960s, the chance of dying in the days immediately after a heart attack was 30 to 40 percent. In 1975, it was 27 percent. In 1984, it was 19 percent. In 1994, it was about 10 percent. Today, it’s about 6 percent.

Over the same period, the charges for treating a heart attack marched steadily upward, from about $5,700 in 1977 to $54,400 in 2007 (without adjusting for inflation).

So although health care has become significantly more expensive, the cost has produced significant improvements in patient well-being.

Government bureaucrats deciding which treatments qualify as “efficient” use of health care dollars would never question an expense such as administering aspirin after a heart attack. Something as simple as taking a three-cent pill to decrease mortality from heart attacks by six percent is a no-brainer. Less clear, though, is what bureuacrats will decide when the discussion surrounds a treatment that quadruples costs while only lowering mortality by, say, one percent.

Soon another clot-dissolving drug, called TPA, came on the market. It cost $1,200 compared with $300 for streptokinase. The new question was: Is TPA worth it? By 1994, the conclusion was: Yes.

Several studies showed that TPA shaved mortality by 1 percent (to 6.3 percent) compared with streptokinase. The cost of treating a heart attack went up another notch.

Doctors and patients have overwhelmingly shown that they believe that these large investments are worth making for even marginal improvements in health. For doctors it’s a matter of protecting their patients, and for patients it can be a matter of life and death. But once government middlemen get in the way, it’s realistic to expect them to act with a degree of detachment from individual patients and cases. (Or, rather, it’s unrealistic to presume that they would be attached to each individual case.)

On the contrary, some legislators, such as Paul Kucinich, seem to believe that rationing is actually necessary and desirable — that everyone needs to make significant sacrifices in their health care consumption to ensure that the government’s noble goals can be met. To them, these medical advances might not seem worth the extra cost imposed on the system, since spending could have instead been used to buy cheaper treatments for these patients and others. The problem with this is that this diverted spending is at the expense of those whose lives could have been saved if they had their choice of medical treatment.

It’s no secret what happens once rationing takes hold of a health care system. Horror stories abound from countries where they are already in place. Costs can and should be cut by doing all that can be done to root out corruption in the health care system, but cutting care to cut costs isn’t worth it.

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