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Unhealthy spending

March 17, 2010 - Jim Anderson
A recent article in Newsweek (“This won’t hurt a bit,” March 15) touches on one of the most under-discussed factors in rising health care costs — dubious treatments.

Newsweek’s Sharon Begley reports that at least $500 billion a year goes towards tests and treatments that do not benefit patients. If accurate, that represents nearly one-fourth of all health care spending.

One example cited is spinal fusions — 351,000 procedures in 2007 at a cost of $26 billion. Critics claim they are helpful only in rare cases where back pain is caused by a fracture or tumor.

“At $75,000 per spinal-fusion procedure, medical-device makers, hospitals, and surgeons have every reason to keep the gravy train rolling,” Begley writes.

If such treatments are sometimes unwarranted, what’s the solution?

Insurers, Begley suggests, are “battle-weary” — more willing to raise premiums than to refuse coverage. And who’s to rule unequivocally that a spinal fusion is wrong?

Free market enthusiasts would suggest that the patient holds the final decision. If patients had a greater direct price to pay, there would be less waste in the health care system, they say.

That’s a good argument, but one that ignores the fact that the doctor generally holds sway as the “expert.” A patient in pain, unable to work, is hardly in the same market position as a leisurely customer shopping for a dishwasher.

My aim is not to point fingers, but merely to note that health care is a complex and — in terms of economics — unparalleled service.

If the incentive for doctors and hospitals to gain a profit (and protect against lawsuits) outweighs the incentive for insurers and patients to cut costs, it’s probably no surprise that you end up with excessive treatment. And this problem isn’t confined to the private insurance market — Medicare rewards many dubious treatments as well.

Begley suggests that one step in pushing back is to acknowledge that some tests and treatments may deserve a much higher percentage of coverage than others.

If that sounds like “rationing,” I suppose it is —whether the decision comes from public or private payers. There can’t be much argument against “rationing” what’s inappropriate in the first place.

It’s agreeing on what’s unnecessary that’s the hard-to-impossible part.


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