Suppose you are terminally ill with few months to live if untreated. There is a new drug that has a 5% success rate that if successful, will leave you completely cured. But 95% of the time it won't work and you will get no benefit. Should the government pay for these 5% cures?
On the face of it, this is a case where pure cost/benefit analysis would most often return a big fat NO. This result occurs because 95% of the costs will be effectively wasted such that cost per unit of life extension will seem really high relative to other things under consideration. It gets even worse if the cure ends up being say a 3-year life extension on average because those patients end up dying from something else in that time frame due to their weakened initial state. Or if the cure rate was even lower, say 3% or even 1%.
At the same time, the cost to the person whose life is saved appears ~20x lower to them because they would not incur individually the costs for the other 19 people (on average). I don't pretend to have the answer to the question, and would be interested in your thoughts, but I think this is an interesting case that shows the complexities we will soon increasingly face as well as one potential pitfall of cost/benefit analysis that pundits love to push.
We ration health care already, both privately and publicly, so I'm not too interested in the question of will we ration care of not. I believe that debate to be a false one. What I am interested in, however, is how our rationing will change under proposed reforms. It seems that we are headed towards some sort of quasi-public body that will decide, at least for public options, what care will be approved for varying reimbursements. Of course, this is similar to what we do now, but this new body will presumably have more power and be trying a lot harder than we do now to squeeze costs out of the system.
No one really cares about unnecessary costs because they are by definition unnecessary, e.g. duplicate tests. And I suspect existing Medicare benefits will end up being frozen in time, i.e. no current benefits will be cut. Yet that is only a short term win since new drugs enter the market place all the time. It is around these new drugs where some interesting debate will occur, which brings me back to the case of what I'm calling the 5% cure.
These cures pose additional problems beyond the initial cost/benefit debates. Suppose we stop covering 5% cures as a rule. Further suppose, and I don't know if this is the case but I suspect such, that a lot of great treatments that end up being 50% cures start out as 5% cures. By shutting down (or at least hampering) the 5% cure market we will be effectively telling pharma not to invest in these cutting edge treatments. From their perspective, what's the point? That could lead to less important disruptive innovation in health care, which is the very thing we want to encourage.
Data Kitteh is a new site I put up to house my personal data visualization projects. Today I'm adding a third project to the site: a free listing of what sites are behind IP addresses.
