Ambrose Evans-Pritchard, Serious Medicine Strategist, zeroes in on why, if present trends are allowed to continue, healthcare costs are headed higher, no matter who's in charge

In critically analyzing the Washington DC debate over the debt ceiling, Ambrose Evans-Pritchard, the well-known British journalist, makes a portion of Serious Medicine argument in a concise nutshell of a parenthetical paragraph.  In describing the difficulty of controlling federal spending, he suggests that the forces of the healthcare status quo--that is, the folks who currently gain from rising healthcare costs--are part of the problem.   Indeed, he is saying, they are the driver of the problem:

(The great health care cartel is in my view the villain here. It is the root cause of US ruin, and is itself responsible for the epidemic of diabetes, Alzheimers, and several other mass ailments afflicting America. It has systematically failed to keep up with the scientific literature, and refuses to abandon grievous policies when shown to be wrong. Americans need to confront this huge vested interest (nearly a fifth of GDP) before it destroys the country. But that is a rant for another day.)

Evans-Pritchard makes an interesting point.  Surveying the enormous cost of Alzheimer's--nearly $200 billion a year, according to the Alzheimer's Association--one has to realize that somebody is benefiting from the spending of all that money.   Nursing homes are one beneficiary, so are nursing home service workers.  So cui bono,  Evans-Pritchard is saying.

The answer, of course, is to raise up countervailing interests--starting with the American people as a whole--who understand that cures are a better health strategy than care.   We need both, of course, always, but if we have more of the former, we will need to spend less on the latter.

And that's the path to not only spending less money on healthcare, but to improving the lives of all Americans.  And the peoples of the world, too. 

Science can transform the budget and the economy, as well as medicine. But of course, Washington DC is unlikely to notice.

The front page of Friday's Wall Street Journal illustrates the opportunity--and the challenge--facing both the US federal budget and Serious Medicine.   One article details fiscal frustration; the other outlines medical hope.  It's too bad that those who are suffering the frustration don't look to science to alleviate that frustration.   And it's also too bad that those who are offering hope languish outside of the political system.  

The top Journal article is headlined, "Sights Set on Grand Debt Deal," and details yet another round of Washington DC budget negotiations.   If it seems to you as if these budget negotiations stretch on, year after year, decade after decade, with no real resolution--other than that spending goes up---you are right.   In other words, there's a cyclicality to the politics of such fiscalism--and a futility to the actual numbers.   

Of course: In our hyper-pluralistic system, everyone gets a say-so, and that means that there are no final victories.  Everything is an election away from being done, or undone.    The spending cuts, for example, that might be agreed to in this year can simply be repudiated in some future year--see, for example, Sustainable Growth Rate for Medicare.   It's easy to talk tough today, if the cuts come in a decade--but recent political history doesn't point to a very encouraging record that cuts are actually followed through on in some distant outyear. 

But if politics, like human nature, is cyclical, then technology, like science, is cumulative.  That is, for the most part, once something is learned, it is never unlearned.   And so that makes sci-tech qualitatively different from politics.  If we develop a new and better discovery and a process in its wake, those improvements will always stay with us.  With only rare exceptions, nobody, in seek to repeal it.    Every country in the world, for example, makes use of modern medicine--at least for some of its people.  

The bottom article is headlined, "A Lifesaver, Custom-Built in the Lab," and it details the creation of an artificial esophagus to replace the cancer-ridden esophagus of a 36-year-old man living in Sweden, thereby saving his life.   We might note that the new esophagus was frown from adult stem cells--the stem cells, in fact of the man himself.  So no ethical concerns here.  Meanwhile, Swedish science has not only saved the life of a young man, but it's easy to see a new industry being created in Sweden, making not only esophaguses, but every other kind of replacement organ. 

And so now we see something interesting: The budget news goes in one mental "silo," concerning politics and economics, and the medical news goes in another silo, concerning health and science.   For the most part, for reasons CP Snow outlined a half-century ago, the two silos don't really acknowledge each other.  

And so, for example,  it's unlikely that any of the budget negotiators, in either party, are going to come to the next round of negotiations and say, "You know, if we transform medicine, in the way that this news from Sweden suggests we might,  the cost of Medicare might fall, and the economic output of the health sector might increase."  That just won't happen, because as a casual glance at the DC news demonstrates, the political class is simply not very interested in science and technology--that's why sci-tech policy gets so little attention.   Moreover, even if a negotiator were to make that transformative argument, he or she would be dismissed, because, in DC parlance, the positive side science cannot be "scored." That is, the Congressional Budget Office won't score, or calculate, gains from future science. 

But CBO will calculate costs. So if a new federally funded esophagus research & development center were to open up in the US, and it were to cost, say $100 million, CBO would score that cost--another $100 million to the deficit.   And if the esophagus center were to generate great windfalls of money for the US economy, and for the Treasury, the CBO would be happy to score that, too.  But such a positive development, were it to come, would be years away.  And in between, as the esophagus center was ramping up, the CBO would just count its ongoing costs as simply more red ink. 

It's possible to defend the way that CBO does its job--as a matter of accounting rigor, we should not count chickens before they are hatched--but it's not possible to defend making national policy on such a basis.  Why?  Because under CBO rules, the most exciting and potentially transformative projects are scored as costs.  And so when belts tighten, it's easy to cut such costs.  Perversely, CBO would measure such spending reductions as a reduction, and never even think about the foregone gains.  

So most likely, in any kind of budget deal to come, medical R&D will take a hit. And CBO will dutifully  assess the "savings," paying no heed, of course, to the missed opportunities that medical science could have produced with a little help and inspiration.    Meanwhile, the sort of strategic thinking we need, as to what opportunities and needs should be addressed, is pushed out of the way by the bean-counters.   That might be a good way to run an accounting system, but it's a lousy way to run a country.   Such static analysis, applied to things that aren't static, will be the ruin of us.  

And maybe that's why the Swedes are using high-tech science to manufacture organs, generate jobs, and produce hope.  And not us. 

Peter Orszag rebutted by a Serious Medicine Strategist in Foreign Affairs

Peter Orszag, who spent nearly two years as the director of the Office of Management and Budget in the Obama administration, has published a piece in Foreign Affairs continuing is efforts to bring European-style rationing to the US.  Such policies proved disastrous for the Democratic Party in 2010, and don't even seem to be helping to control spending--but evidently, they still play well in the gilded towers of New York City, where recipients of bank bailouts scan the horizon looking for other people to de-fund. 

In "How Health Care Can Save or Sink America: The Case for Reform and Fiscal Sustainability," Orszag asserts that healthcare costs could cause either a "severe fiscal crisis or a crippling inability to invest in other areas."   As he puts it: 

Rising health-care costs are at the core of the United States' long-term fiscal imbalance. The Congressional Budget Office (CBO) projects that between now and 2050, Medicare, Medicaid, and other federal spending on health care will rise from 5.5 percent of GDP to more than 12 percent. (Social Security costs, by comparison, are projected to increase from five percent of GDP to six percent over the same period.) It is no exaggeration to say that the United States' standing in the world depends on its success in constraining this health-care cost explosion; unless it does, the country will eventually face a severe fiscal crisis or a crippling inability to invest in other areas.

Orszag worries, in particular, that spending more on healthcare will divert money away from education. And that's certainly a concern, but the plain fact is that if people age and grow sick, their care will expensive.   Orszag's answer is to crimp down on that spending, which, of course, is politically problematic.  The crimp-down was a partial explanation for Obamacare, and the same crimp-down helped explain the Democrats' defeat in 2010.

Completely ignored in Orszag's piece is the idea that better health through medical research and new cures is a more politically and economically acceptable way to achieve Orszag’s own stated end: saving money.   It would be nice, for example, if Orszag were to at least consider the option of cures as part of US policy strategy.  Happily, that Serious Medicine point was made in the comments section of Foreign Affairs by one James W: 

Where was Mr. Orszag and his analysis when America first needed him--in 1950 when the federal government estimated that (translated into today's dollars) by now we would be spending over $1 TRILLION/year just on care for polio victims? Americans would have then been able to choose one of his three "strategies for saving", 1) reducing provider reimbursements, 2) direct rationing, and/or 3) consumer-directed health care. Lacking the benefit of his policy insights, ignorant politicians allowed Dr. Jonas Salk to blunder ahead with that vaccine thing of his. Now we will never know by how much Regina Herzlinger's "focused factories" could have bested the cost of treating polio vs. general hospitals, nor will we ever learn what percentage skilled bureaucrats like the author could have used Medicare's market power to negotiate down the price of iron lungs.

Back when Mr. Orszag was running the Congressional Budget Office (CBO), the term for his kind of thinking was "static scoring". It still is. For an alternative view, in which innovation is an option and outright cures are possible (think "Gardasil" vs. "rationing chemotherapy for cervical cancer"), see: http://seriousmedicinestrategy.org.

Well said, James!