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OK, we need to save money on healthcare. But how shall we do it? With rationing that hurts? Or with research that cures?

Posted Jul 15 2010 12:00am
Healthcare rationing is on the way.   The "fix" is in, at least as far as the DC-NYC Establishment is concerned.   And while most of the thinking and commentary on the deficit issue is disappointingly reductionist, as we shall see, some signs of fresh thinking about controlling healthcare costs the right way--which is to say, by helping people to be healthier and more productive--are sprouting up.

But first, the oldthink.   Jon Ward, reporting for The Dally Caller this morning, quotes Erskine Bowles, co-chair of President Obama's Deficit Commission, as saying of the Obamacare bill:

"It didn’t do a lot to address cost factors in health care. So we’ve got a lot of work to do,” said Erskine Bowles, former White House chief of staff to President Bill Clinton, speaking about the new health law, which was signed into law by Obama this past spring after a nearly year-long fight in Congress.  Bowles, speaking at an event hosted by the U.S. Chamber of Commerce, said that even with the passage of Obama’s legislation, health care costs are still going to “really eat us alive” unless dramatic changes are made. 

Interestingly, for all of his volubility now, Bowles didn't seem eager to make himself heard on the issue of spending on the Obamcare legislation, when his voice might have made a difference on the course of that legislation.  All through 2009 and into 2010, as the bill zigged and zagged its way to passage, Bowles, a Democrat, was quiet.  Then he was appointed to the deficit commission in February, and finally, just last weekend, in a presentation to the National Governors Association meeting in Boston, Bowles compared the deficit to "cancer. "   Why did it take him so long? 

But in any case, all we know for sure is that Bowles and commission co-chair Alan Simpson--the body is formally known as the National Commission on Fiscal Responsibility and Reform --seem determined to push the healthcare cost control issue to the top of the national agenda.  This might, of course, be a hard slog, since the latest CBS poll shows that Americans put "economy" and "jobs" way ahead of the deficit.  

No matter.  David Broder, the Ultimate Journalistic Establishmentarian, attempts to give the commission some momentum by writing nice things about many of the members in The Washington Post this morning .   And Broder adds a tiny bit of news, concerning Democratic willingness to, as Broder put it, "strengthen badly needed cost controls": 

Health care will be the biggest challenge on the spending side, with some Democrats -- and apparently the White House -- resigned to the fact that the painfully negotiated 2010 law will have to be reopened to strengthen badly needed cost controls, no matter how awful the prospect of resuming that debate.

There's plenty that needs to be redesigned about Obamacare, of course, but what's striking about so much of the elite commentary on the deficit is that the commentary is focused on just one variable--the deficit in "out years," that is, a decade or more in the future.  All other considerations--the economic well-being of the country, the health and well-being of the American people, inside and outside of the Obamacare program--seem to have taken a back seat to the single issue of spending over the long run.   

And, we should note, moreover, that the Broder-type Establishment is not even dealing with spending in the short run.  In the short run, many members of the deficit commission were enthusiastic proponents of more spending, as well as supporters of Obamacare.  And of course, so was the President, who created the commission by executive order.   The emerging Establishment consensus seems to be that the US spent what we had to in the past to save the economy, and to provide healthcare.  And maybe we need to spend more in the near future, to improve the recovery/avoid a "double dip." But absolutely positively, for sure, we must cut spending in those faraway "out years."

Which is to say, the Establishmentarian consensus, such as it might be, is pretty thin gruel.  The Establishment seems to have reached the conclusion that it should reach a conclusion on something, and so it has settled for the lowest possible common denominator on the deficit.   

Yet even this "LPCD" is not popular with the voters.   As my New America Foundation colleague Michael Lind has pointed out , there's scant evidence that such deficit reduction is popular, especially if the proffered deficit solution is spending cuts in popular programs, such as Medicare and Social Security.  

Meanwhile, on the other side stands Grover Norquist and his powerful anti-tax/Tea Party forces.  This is probably not the year, most experts agree, to talk about raising taxes. 

In other words, in political terms, the Bowles-Simpson commission is a "suicide mission," as the always quotable Simpson described it in February.   But of course, Simpson won't be the one committing suicide, since he is retired.   Indeed, Simpson himself is a media favorite--he'll do fine.  The real victims will be politicians who follow this track.  And while such "followership" will be hailed as "leadership," the political reality is that deficit cutting, left at that, is a political lemon.  

And so the Establishment should be warned: As a matter of basic political science, a paper deficit solution is just that--a paper tiger.  Cuts in the mythical "out years" made by elected officials who are soon thereafter ex-elected officials are not permanent cuts.   If some "grand compromise" is reached in the next few years, spreading pain far and wide--well, that compromise can be unreached by the next president, or the next Congress, to say nothing of the "exogenous" factors that always seem to spoil carefully laid plans.   The ex-elected officials might all win a "profile in courage" award for that putative deficit-closing, but they will be in no position to stop their successors from undoing their handiwork.   

Yes, it's a bleak picture of intellectual, as well as political, paralysis, as recorded here at SMS in the past. 

So it was encouraging to see a newthink piece on the promise of biotech in The Fiscal Times, a publication launched by the Peter G. Peterson Foundation , the big player in Establishmentarian deficit-reduction discussions.   Author David Ewing Duncan, obviously a polymath , takes a long-term view of the benefits, as well as the cost, of biomedical spending.  

Duncan recalls that scientists were a lot more optimistic, a decade ago, that such breakthroughs as decrypting the human genome would lead to big medical breakthroughs. Scientists have made a lot of progress, but at the same time, they are being reminded of what Socrates once said: "The more I learn the more I learn how little I know."  

Noting that federal biomedical research, through the National Institutes of Health, is about $38 billion--part of an overall national budget, including private sources, of about $113 billion a year--Duncan begins with the obvious.   We can do better: 

Not all investments in research and development, however, succeed by creating new products in a reasonable amount of time. This seems to be the case with the unprecedented expenditures on R&D in the life sciences over the past decade, which includes biotechnology, pharmaceuticals and biomedical technologies. Since 2000, America has shelled out close to $1 trillion in public and private spending on life sciences — more than twice the amount spent in the 1990s — with surprisingly little to show for it in the way of tangible products.

Those are fair criticisms.  But at this point, I was afraid that Duncan would "Do a Broder," and simply call for cuts, as part of an overall "haircut" for federal agencies.   "Across the board cuts," after all, are the favorite tool of "deficit hawks" who are afraid, or unable, to separate stronger claims from weaker claims.    

Happily, instead, Duncan offered some useful thoughts on how to spend the biomed R&D budget in better ways.  Obviously Duncan is mindful that a single medical breakthrough has the potential to save a lot more money than all the faux budget deals put together.   We might, for example, think about how much we have saved on polio treatment because of the polio vaccine.  

As noted here at SMS many times, there's no automatic correlation between more spending and better results.  It's perfectly possible to spend more and get less--because of bad leadership from the top, because of bureaucratic bloat in the middle, or because outside groups--such as the trial lawyers--succeed in inhibiting the true spirit of effective inquiry.  And so Duncan's forward-looking policy suggestions about reversing the downward skid of medical productivity are valuable: 

The first and most obvious step is to assess what we’ve bought with all of these billions, and to create a coordinated strategy to test and validate discoveries that have the greatest chance of success. Currently, the NIH spends under a billion dollars for "translational medicine"— formal projects to convert basic science into applied medicine. This amount needs to be increased as part of a comprehensive plan — not with new money, but by redirecting money from basic research to implementation strategies. Basic research should continue to get significant funding, but not at the expense of applying what we have already learned.

An example would be to take the thousands of genetic markers that scientists have tentatively linked to a high risk for disease — which have cost taxpayers billions of dollars to identify — and systematically test them in the clinic to find out if they are useful or not. These include markers that help identify individuals that might experience dangerous side effects from drugs such as cholesterol-lowering statins, or individuals with a genetic variation that prevents certain drugs—including the antidepressants that include Prozac--from working.

The concept is called pharmacogenics, which if implemented could reduce health care costs by prescribing only those drugs that actually work for certain individuals. To date, most of these markers have not been validated in clinical trials and approved by the FDA, nor is there a comprehensive plan to test them.

The new master plan should encourage a closer relationship between scientists and doctors to smooth the transition from beaker to bedside. Regulators at the FDA and payers such as Medicare and Medicaid also need to focus on integrating translational projects that rapidly move research into the clinic.

In recent years, some of our greatest minds have spent a fortune on disassembling the human body and studying it like they would a very complicated automobile. Now it’s time for America, Inc. to take what’s been learned and use it to lower health care costs and to build a better product — that product being us.

These words are refreshing, indeed.   Duncan sounds Deming-esque , we might say, in his determination to seek "profound knowledge" as part of a solution.  But then, of course, he also sounds like everyone else who has thought about a Serious Medicine Strategy. 

And it's a Serious Medicine Strategy, built around the enlightened self-interest of the American people, that the voters will embrace.  Deficit reduction that loses at the polls is not true deficit reduction.   A healthier and more productive population, on the other hand, is real deficit reduction.  

Indeed, not only do we need constructive voices figuring out how to improve our healthcare, but we also need those same voices to help us create new industries, arising from better healthcare.  That's the key not only to better health for Americans, but also greater wealth for Americans.  And out of that greater wealth, we can solve the deficit issue.    

The answer will come from highest-common-denominator science, not lowest-common-denominator politics.  


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