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6
The Social Perspective
Uwe E. Reinhardt
THE PRESENT SCENARIO
Expenditures on health care outgalloped the Gross National Product (GNP)
by about 3 percentage points per year, on average, during the 1980s. At
that rate, it will take 82 years for 100 percent of the GNP to be eaten up by
health care.
In response to these prognostications, people tend to say, in effect, "What
is the big deal? We have got a long time to figure this problem of health
care expenditures out-82 years in fact." It is true: it would take only 82
years. Even if we did end up spending 100 percent of our GNP on health
care, what would be wrong with that? When people ask, "What would it be
like?" I say, "Very simple king-size beds from coast to coast, two Americans
in each, giving each other health care, and the Japanese feeding us intrave-
nously, as they do now."
COSTS OF HEALTH CARE
This scenario sounds comical, but not everyone is laughing at it. One
person who is not laughing is an employee benefits manager of a typical
American corporation. This person is 30 years old, works for General
Motors, and just made a payroll entry crediting cash for $800 million in
health care for people who do not work for General Motors. One can
imagine him asking, "Where do I put the debit? If these people aren't
working, it can't be payroll. It has got to be something else." That $800
million is in fact what General Motors pays per year for retired General
Motors workers and their families, and indeed there is no clear place to
record the debit.
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PERSPECTIVES ON EFFECTIVENESS AND OUTCOMES RESEARCH
35
In 1980, employers paid $60 billion in health care premiums for working
and nonworking employees; now they pay $135 billion. This does not
include what corporations pay toward Part A Medicare. In 1987, U.S. Steel
spent $125 million of its $219 million net income on retirees 57 percent.
Anything over 20 percent will catch a chief executive officer's attention:
that 57 percent is being noticed by the CEOs of big corporations.
The Health Care Financing Administration (HCFA) forecasts expenditures
of $1.5 trillion in the year 2000. We can afford that amount, but is it really
worth spending? That question is what gets us into this Effectiveness Initiative.
Much outcomes research has shown that there seems to have been no
indication for many of the procedures that have been done. In fact, patients
would actually have been better off medically if they had not been done.
The issue, then, is really one of appropriateness. On some cost-quality
curve, is point B. which identifies a point of diminishing marginal returns
to care, appropriate? Is it more appropriate than point A, where the curve is
still rising? Physicians say, "If you go past B it is not appropriate, but up to
B is always appropriate." Economists would not agree, for the very reason
that the National Academy of Sciences gave for not putting seatbelts in
school buses: it would cost $40 million a year to save the life of one 10-
year-old. Therefore, an economist would say, if that is true for youngsters,
it must be true for the aged, too, and we ought to stay at point A. Appropriateness
means we stop short of the maximum attainable quality. Citizens have said
so with votes on roads, on seatbelts, and on many other things, and they
will learn to say' so for health care. That is, a raging debate will soon be
upon us regarding the rationing of health services: Going from B to A
means withholding beneficial services, and we will ration them. But since
we are willing to ration safety on school buses, we should be willing to
ration services in health care, too.
VARIATIONS IN MEDICAL COSTS AND PRACTICE
Why did this come about? Well, in 1972, John Wennberg found that Part
B Medicare spending by counties in Vermont varied enormously, and he
could not explain it.
Those geographic variations in practice persist to the present. For ex-
ample, hysterectomy rates vary inexplicably across counties. In 1982, age-
adjusted Part A hospital expenditures in Iowa City for hysterectomy were
$734 per patient; in Des Moines, they were $1,300. How can the health
care in Des Moines be twice as expensive as the health care in Iowa City,
particularly when residents of each city insist that health care there is the
best in the world? The answer will be "practice style." Why are there so
many more operations in Boston than in New Haven? Why are there far
more coronary bypasses in New Haven than in Boston? Physicians answer,
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36
EFFECTIVENESS A1VD OUTCOMES IN HEALTH CARE
"In Boston, they have different theories about what works than in New
Haven, and after all, New Haven is some 200 miles south of Boston."
Which explains a lot.
Practice patterns vary along other dimensions, too. The Health Care
Coalition of Florida has some interesting data, by hospital, on the cesarean
section rate for commercially insured women and for Medicaid patients. In
many hospitals, 42 percent of commercially insured women have cesarean
sections, whereas women on Medicaid have none. What theory is compat-
ible with these data? Is it a medical theory are poor women thought to be
more robust than richer women? Could it be an economic theory, because
Medicaid reimbursement is likely to be one-third of commercial reimbursement?
Or could it be a legal theory do poor women sue for malpratice and poor
obstetric outcomes less often than rich women? No one knows.
REASONS FOR THE EFFECTIVENESS INITIATIVE
Canadians spend a lot less than Americans as a percentage of GNP, and
that raises the question, What do Americans get in health care that Canadi-
ans do not get? We know what Canada does not get; it does not have 30
million uninsured or any uninsured but what do they miss that we get?
That, again, leads to the question of what we actually buy for all this
money.
Why has this country, alone in the world, undertaken an Effectiveness
Initiative? One naive theory is that American medicine decided, "We had
better search what we are about. We want to be the best physicians in the
world, and we will research this and do good for mankind." One could hold
that null hypothesis, and one could wish it were so, but in fact I do not think
it is so.
I read a lovely little essay by John Ball, Executive Vice President of the
American College of Physicians. He lists the mistakes organized medicine
has made, and he reminded me of something that happened early in the
1980s. Medicine argued for and got the elimination of the Health Care
Technology Council that [Secretary Joseph] Califano had put in with the
idea that it should do outcomes and effectiveness research. The minute
President Reagan was elected, the Council's budget was zeroed out, and it
never met again. Up to that time, that was the only federal agency that
evaluated the appropriateness of medical technology from a medical perspective
and made recommendations about payment. Partly as a consequence of its
disappearance, organized medicine has had little voice when decisions about
payments are made, and a real opportunity to affect standards of practice
has been lost.
The alternative hypothesis is this: Concern over cost is without question
one of the major drivers in this field, but there is also concern over quality.
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37
Many researchers, led by John Wennberg, Robert Brook, David Eddy, Bar-
bara McNeil, Kathleen Lohr, and others who worked in the 1970s and 1980s.
were simply interested in quality. They realized something was wrong and
studied it, with support from the National Center for Health Services Research
and HCFA, to the credit of those federal agencies. These efforts were
certainly a harbinger of the Effectiveness Initiative.
HOW TO PROCEED IN EFFECTIVENESS AND
OUTCOMES RESEARCH
What is to be done? I am not expert in this particular type of research at
all, but I do have an idea. The traditional model was that the physician held
a theory: I do X, and Y happens. The "ideal" was that if every physician is
allowed to have his or her own theory and is just left alone, health care will
lumber toward the optimum. No one believes that notion any longer.
The next level up was to take a bunch of the smartest people, put them in
a room together, and let them come out with a consensus about good practice.
However, if we had done that 20 years ago, the smartest people would have
said that gastric freezing is a nifty idea. We now know that gastric freezing
should not be done. Period. One hundred years ago the smartest people
would have said, "Under these conditions, you bleed the patient." Thus, the
pure consensus approach is not adequate either. It might be better than this
current free-for-all, but it is not enough, in my view.
Ultimately what we need is an empirically tested hypothesis that links
medical intervention with observable outcome. We then must ask: How is
a good outcome defined? In whose mind? Some surgical procedures might
enable the patient to play golf or kick a soccer ball, but render him impotent.
The patient will have an opinion about this. Tell a German that he can play
soccer but will be impotent, and he will say, "Give me a Mercedes, I am all
right." Tell a Frenchman that and all hell will break loose.
I exaggerate a little to make a point: Patients' perspectives must be included
in any definition of a good outcome. We will need data, as Paul Ellwood
and others say, that track other data and allow us empirically to examine
medical practice issues without randomized trials. It should be possible
statistically to test a hypothesis without randomized clinical trials. We do it
in economics all the time, and we do it in other spheres.
This is the direction in which I see outcomes research going. We need
empirical tests, and they will take a lot of money. There has to be a sizable
investment in data bases, on the order of $50 million just for the first phase.
If we in this country end up spending $100 to $200 million a year on
outcomes and effectiveness research, we would not be wasting money, I
assure you. It is a trivial percentage of the national expenditures on health
care, and it is one of the finest investments we could make.
Representative terms from entire chapter:
commercially insured
