How to Cut Health-Care Costs: Less Care, More Data

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Are We the Change He Seeks?
In the coming weeks, millions of dollars will be spent on the health-care debate because trillions of dollars are at stake. Lobbyists are already warning that Obamacare will empower bureaucrats to reject new drugs and procedures on the basis of shadowy cost-effectiveness formulas that place a monetary value on life. Ads will soon transform the seemingly innocuous push for comparative research into a nightmarish vision of Big Government telling doctors what to do, suppressing the development of lifesaving technologies, ignoring the needs of minorities in pursuit of one-size-fits-all "cookbook medicine," destroying an American tradition of personalized care. "It's a $2 trillion industry with blood in the water," says James Weinstein, head of the Dartmouth Institute. "You can't be surprised that the sharks are circling."

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Helping organize the pushback against the drive for data has been former House whip and legendary Democratic operator Tony Coelho, an epileptic who helped write the Americans with Disabilities Act and now leads the Partnership to Improve Patient Care. The partnership is an odd coalition of the drug companies, devicemakers and medical specialists who stand to lose the most from evidence-based medicine, joined by a variety of patient groups (some of whom also receive industry funding) concerned about access to care. Coelho says he welcomes effectiveness research if it can help doctors and patients make more informed decisions, but he argues with passion that it should never be used to limit treatments, modify reimbursements or otherwise cut costs. "If you come at this trying to save the almighty dollar because you think we're spending too much money on drugs and devices and Sally and Joe, the American people will revolt," Coelho says. "You'll get your jollies because you're bringing down the cost of health care, but you won't really be solving problems." The partnership's official position is essentially that more public research is great as long as it doesn't affect public policy.

It's true that information alone can be helpful. Anesthesiologists sharply reduced mortality rates after their association published evidence-based guidelines; emergency-room nurses have reduced infection rates by following clinically proven to-do lists. After one pharmacy benefits manager sent letters urging customers with high cholesterol to check out the evidence-based Consumer Reports site Bestbuydrugs.org, 4.3% switched to cheaper but equally effective drugs, for savings of $12 million. Similarly, when doctors and patients are fully educated about the costs and benefits of various treatment options for prostate cancer, surgery rates drop by half.

But without incentives to use it, information alone will not lead to reform. Obama wants to make evidence-based medicine financially attractive so that providers are rewarded rather than punished for reducing readmissions and unnecessary procedures. "We can't just do research and let it sit on a shelf," Orszag says. It is fair for industry groups to insist on an independent agency to oversee the effectiveness research, so that decisions about what to study are separate from decisions about what to reimburse. And some of Obama's quality incentives are fairly straightforward, like extra dollars for primary care, prevention and computerization; to discourage wasteful defensive medicine, he seems willing to limit malpractice lawsuits when doctors stick to best practices. But ultimately, rewarding quality rather than quantity will require daunting changes in Medicare reimbursement policies. That could mean lower patient costs and higher provider revenues for proven treatments, but when patients want more expensive options unsupported by data, they may have to pay the difference themselves.

In the past, industry lobbyists have persuaded Congress to squash even mild reimbursement reforms; former Health and Human Services Secretary Donna Shalala recalls a futile effort to reduce overpayments and promote competition among oxygen providers. "Congress stops anything that's going to gore anybody's ox," Shalala says. "If Congress is going to be involved in the nitty-gritty payment details, reform is dead." Obama wants to let another independent agency, similar to the military-base-closing commission, recommend how to pay for quality, which would limit political haggling. But even if such a panel focused on clinical effectiveness rather than cost-effectiveness — so that taxpayers would cover vastly more expensive approaches as long as they were slightly more effective — the shift would still be dramatic for Medicare, which currently covers just about any possibly effective treatment with virtually no regard for cost. If Medicare takes the lead in reform, private insurers should follow.

This would probably qualify as "rationing," but anyone who's ever had an insurer refuse to pay for something knows that health care is already rationed, in the sense that you can't always get everything you want. Still, oxen would be gored, and the backlash could be nasty. The ultimate success of Obamacare might depend on a cultural change among doctors and patients, a national realization that more care isn't better care. "We've got this ethos that the best doctors do everything under the sun and rule out every zebra," Emanuel says. "And hey, they get paid more to do it. But we've got to change all that."

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