We Need to Begin A Conversation About “Cost Effectiveness”

As any policy-maker knows, catering to public opinion, ensuring the public interest, and managing costs can seem an impossible task–especially when what the public thinks it wants is at loggerheads with what it needs. But in the case of health care, there may be an opportunity to do all three at once according to a proposal in the September/October Health Affairs.

The proposal argues for cost-effectiveness analysis (CEA) “to set priorities for Medicare coverage of new or costly interventions” through a citizens’ council made up of “a cross-section of users” who can provide leadership with “well-considered social-value judgments.” This citizens’ council model is borrowed from the UK, where a group of 30 men and women advise the National Institute for Health and Clinical Excellence (NICE) on behalf of the public.

The British experience shows that there are likely to be practical complications with implementing a citizens’ council, but it’s still an idea that’s on the right track. We need to turn “cost-effectiveness” from a bad word into a public interest issue in the US.

The authors of the proposal, Dr. Marthe Gold from CUNY, Shoshanna
Sofaer from Baruch College, and Taryn Siegelberg from CUNY, envision
the American citizens council as being an advisor to the Medicare
Evidence Development Coverage Advisory Committee. The council would
advise on the criteria for CEA—in other words, how to decide whether
the effectiveness of a new intervention justifies its cost, and thus
warrants coverage under Medicare. Issues to be deliberated would
include: How should we assess weigh factors such as a patient’s level
of suffering or disadvantage, behavioral choices, and age when  making
a decision? How effective must a treatment be to warrant coverage?
Should we give a higher priority to preventions or cures?

These are profoundly difficult questions to answer definitively,
particularly for members of the general public who lack medical
expertise. As the authors note, information is a major concern—the
council needs to know enough to function effectively. 

Unfortunately, striking the right balance between information/education
on the one hand and deliberation/ autonomy on the other has proven
difficult. A 2005 study from the Open University showed that the UK
citizens council has “struggled less than successfully with
understanding its role…and understanding the questions set.”

The council, caught between being the voice of the people and needing
to understand complex health care issues, often lacks the right mix of
“knowledge base, role, authority, and the design of the social
situation.” It’s not always clear where the council fits into the
decision-making process, in part because the council is expected to
simultaneously learn about issues and comment on them.

Because of these difficulties, NICE pays “more attention to the process
than the product [i.e. citizens’ advice] and the way in which that
product would be used.” Procedure trumps output. As a result, the
citizens council is sometimes relegated to “abstract core tasks”—such
as issuing general declarations rather than providing substantive
guidance—a pattern that incurred the wrath of patient advocates who
called the council a “toothless tiger.”

Anyone who wants to understand 21st century health care faces a steep
learning curve. Balancing public input with the expertise and nuance
needed to provide meaningful guidance is a tricky business, and the
challenge of doing so should not be underestimated.

Still, the UK citizens council has only been around since 2002, and the
Open University report notes that with every installment of the
council, more and more kinks are worked out. And even if public input
in health priorities represents a challenge, it’s by no means a fool’s

Conventional wisdom assumes—without proof, as Gold et al. note—that
Americans do not want to discuss health care costs because they view
cost-cutting as a synonym for quality-reduction. But the absence of CEA
in the US is due more to a lack of conversation rather than to

Polling data shows that Americans are ready to talk about cost. Indeed,
it’s hard to argue that cost is a non-starter when the public views it
as the nation’s most important health care problem. Back in 1999,
Americans thought AIDS and cancer were bigger concerns, but today it’s
the cost of health care that keeps Americans up at night. The average
American is just as worried about cost as is the policy wonk, making
now the perfect time to institutionalize a role for the public in cost

Requesting public inputs while setting health priorities can begin to
demolish the misconception of “more care is better care” that conflates
cost-effectiveness with stinginess. By opening the insular world of
cost management to public priorities, we defuse the possibility of
Americans viewing CEA as a means to “cheat” them out of care.

Will it be a bumpy ride? Maybe. But if democratizing cost-effectiveness
helps the US move toward smarter, more sustainable health coverage,
then it’s worth the effort.

7 thoughts on “We Need to Begin A Conversation About “Cost Effectiveness”

  1. Maggie;
    On target.
    Efficacy(DOES IT WORK?)is way understudied because much of what we do in Medicine doesn’t work at best- at worse-does harm.
    We must define efficacy as improving quality or length of a quality life-not changing a lab value.We are measuring the wrong outcomes!. You know the old joke- The operation was a success but the patient died.
    My favorite writer in this arena is Dr. Nortin Hadler who wrote the most important book since Illich’s “Medical Nemesis”.Hadlers book is “The Last Well Person”
    We need to read and listen to Hadler.
    Dr. Rick Lippin

  2. I just recently finished reading Hadler’s book, and I thought it made a lot of sense. I wish it would find its way into the hands of healthcare and health insurance policymakers.

  3. Niko and the rest of the gang:
    Enough already.
    I propose the following medical delivery/financing system:
    1. Divide the populace into 4 categories, with the higher categories getting first crack at medical care over the lower categories. The 4 categories are:
    A. Pregnant women under 21 years old.
    B. Pregnant women 21 to 64.
    C. Everybody else under 65 with exceptions.
    D. All those 65 and older and those with incurable disease, i.e. diabetes, asthma, cancer, MS, CF, etc.
    This rationing/triage criteria greatly favors the breeding stock while rapidly winnowing out the unproductive burden. If you view the populace as a “collective,” then collectivist rules must apply (the good of the many over the good of the one).
    2. The total amount the collective can spend on the medical care of any individual is limited to 50% of that individual’s Present Value of Lifetime Earnings (PVLE) for their current age. Based on the paper by Max, Rice, Sung and Michel from the University of California, San Francisco (2004), the maximum that could be spend on a man would be about $758k in 2000 dollars at age 20 and for a woman about $543k in 2000 dollars at age 20. By age 85, men are only worth about $1400 and women $390. Once you hit your limit, medical services end and you go to Priority D. A subset of this rule is, Priority D consumers get only palliative care. No sense wasting valuable resources on people no longer contributing to the collective.
    3. The pay of medical personnel is set by the Office of Personnel Management, but cannot exceed GS-12.
    4. Payment for this system shall be via income tax, with the lowest income strata paying a 50% health tax and the highest strata paying a 98% health tax.
    I think this is a good, simple system with defined objectives and criteria. All we need now is a ruler that can get put into office and implement it.

  4. The Citizens’ Council model is interesting, but as noted in the article needs a long gestation period to become effective. In the U.S. the conversation on cost-effectiveness needs to begin soon.
    One of the techniques frequently proposed is evidence-based medicine (EBM), which relates scientific studies of the effectiveness of various treatments, drugs, medical devices with the degree of coverage by health programs. A major block in using EBM is disseminating the scientific results to physicians in such a way that they incorporate the findings into their practices.
    One idea on how effective dissemination might begin uses preferred drug lists as a model, especially the Preferred Drug Program enacted in New York State for its Medicaid and EPIC programs. The proposal might work in this way.
    For drugs, treatments and medical devices in each region*, there would be an expert committee to review the studies, hold hearings and receive input from other professionals and consumers and to establish a preferred list for its specialty, treatment etc..
    There would be an electronic ‘prior approval’ procedure where the prescriber would answer predetermined questions which would clarify why the preferred treatment was inappropriate or medically contra-indicated for the patient and would produce evidence of good outcomes with non-preferred approaches.
    This would start a conversation between professionals which is on a specific topic and which highlights evidence-based arguments for preferred treatments.
    After all is said and done the New York law allows the prescribers’ determinations to prevail. While that seems to defeat the ability to constrain costs, it might be the way in which the initial conversations have to be conducted to break through the fear that consumers have that cutting costs will deprive them of the care that they need.

  5. If anybody wants to have civil control on cost-effectiveness in healthcare-spending and set up a kind of council for that, the entrance question in the field of economics for the candidates should be quite simple:
    If financial sources are limited and you want to cure the patient you actually have in front of you by all costs, then you have to take away money needed for that from the other patient(s). Do you agree or disagree with the above?
    If the answer is YES, the candidate passed the exam.