Sunday, October 7, 2012

Guest editorial by Jeremy Shane: If Cost Was The Only Measure of Value

Editor's note: Jeremy Shane is a veteran of the Bush 41 administration, where he worked at the Justice Department; since then, he has worked in the energy, healthcare, and education sectors.


“Cost” is a wonderful economic concept that supports making specific purchasing decisions.  Should I buy “x” instead of “y”?  What’s the most efficient use of scarce resources?   Cost-comparisons work well in making well-defined choices about non-sensitive economic subjects.  

However, cost is a difficult, even dubious, concept to base systemic judgments when matters of life and death are involved.  That is, the “x” and the “y” of the mathematical equation now have names and faces, and souls.  We can say with certainty that questions that involve life and death, flesh and blood, involve many more variables than just dollars and cents.   

Yet for some reason, the reporters and commentators covering health issues seem to have reduced the politics of healthcare to the single variable of cost.  That is, the quality of the healthcare system seems to be regarded as a constant, and so the variable to be debated, left against right, is cost.   Debates over cost – whether about the desirability of greater bureaucratic management or greater use of market forces— do captivate health care experts and the reporters who cover them.     

Yet at the same time, among ordinary Americans, the calculations are different.  For the public as a whole, the perceived value of health care -- and good health -- is greater than the experts are willing to acknowledge.   To ordinary folk, health is, well, a matter of life and death, and thus it should be substantially beyond the reach of bean-counters.   So ordinary Americans rise up against cost-cutting efforts, public and private.   

Meanwhile, the occasional public eruption aside, most experts still regard the health care system as a cost center.  That is, as a monolith of money that needs to be pared down a little--or a lot.   And so policy wonks focus on the problem of the “healthcare system” as one of cost, and proceed from there.  Other measures of results are rarely part of the DC discussion.  

How do we know this?  We might consider, as a prime illustrative example, an October 4 Reuters article, headlined “Obama, Romney debate sheds little light on healthcare issues” critiquing the presidential candidates’ failure in the first debate to discuss health reform plans, specifically, how to save money.  Here are some key lines from the piece:  

Healthcare is a top issue in the Nov. 6 election. The U.S. healthcare system is the world's most expensive, with spiraling cost growth …

Let’s parse those words for a moment.  A very broad, very complicated concept–health care–is a “top” issue.  Yes, but “healthcare” means a lot of different things to people, depending on their situation.  For many, health care may be mostly about the financial strain of increasing insurance costs.  Yet for many others, the question of health care is foremost about getting well, if they are sick.  Or dealing with pain and fear, if they are getting sicker.   

For most Americans, health care is more existential than financial.  There is health of aging parents; there is the health of newborns. There is treatment for lifelong disability; there is routine health care like an annual checkup.  There is medical necessity in the face of life-threatening illness, a necessity that has a way of taking on greater import than cost considerations.  After all, people don’t incur a $100,000 medical bill just because they can.  They incur that cost in the hope that the expense will result in better health for themselves or a loved one. So there are a lot of different kinds of “health care” each implicating a different measure of concern over results, and many in which cost considerations hardly enter at all. 

Not so for the Reuters reporter, and to many others writing about health care.  For them, the measurement of the U.S. health system is cost, and cost alone.  The issue of health outcomes is not mentioned in the article; indeed, one looks in vain for the word “cures,” or even “medicine.”  It’s simply taken as a given that the health care system costs too much, with the only remaining question being how to make it cost less.   The question of health care quality (whether people are cured or not) is subordinated to questions quantity (how much it costs).  Subordinating health issues to cost issues might be fine with wonks, but it doesn’t sit well with ordinary people.   

To illustrate this point, let’s consider how it would look if we applied the same approach to other issues of life and death, substituting other concerns for “health care.”  For example, we could rewrite that same Reuters story, substituting “counter-terrorism” for health care, and it would look like this: 

America’s terrorist tracking and killing system is a top issue in the Nov. 6th election.  The U.S. terrorist tracking and killing system is the world’s most expensive, with spiraling cost growth …

its face, this would be an unacceptable argument to most people.   Yes, America spends more on tracking and eliminating terrorists than any other nation, from spy satellites to software to special forces.  And yet since there are relatively few terrorists in the world, from a strictly dollars-and-cents point of view, it would be easy to make the argument that we are spending too much.  One could ask:  what kind of a return on investment are we getting?  The cost per terrorist tracked, never mind eliminated, must be millions of dollars, maybe more.  

Even so, for the vast majority of Americans, the real issue in counter-terrorism is not the cost, it’s the result.  That is, are we making America safer?   Ordinary people ask, “Has there been a terrorist attack?”  Without going through any of the green-eyeshade calculations, Americans intuit that our “terrorist tracking and killing system” is worth it compared to the loss of life and wealth and security that a major terrorist strike could wreak.  

There is waste in our terrorist tracking programs, and perhaps we are spending too much, but the key metric to most Americans is safety, not cost.   Convince folks that they are safe from terror, and then they will listen to arguments about economizing.  

When life and death matters, life and death matter more.

Okay, one might argue, anti-terrorism is a red herring.  No one wants another 9/11.  Fair enough.  So let’s try another example, taking the excerpt of that Reuters story, this time substituting the word “food” for health care: 

America’s food system is a top issue in the Nov. 6th election.  The U.S. food system is the world’s most expensive, with spiraling cost growth …

We all have to eat, right?   Food, too, is a matter of life and death, though admittedly food is less spectral than terrorism.  On a per capita basis, the U.S. spends more on food and water than any other country.  Yet, once again, cost is hardly the top factor in evaluating the efficacy of agribusiness and food distribution.  The key questions are around availability of food, access to more nutritional options, ensuring that poor families do not go hungry.  

To the extent cost enters the equation, it is as a reflection of the larger economic situation, that the cost of food--a necessity--is more fixed than variations in family income, so in hard economic times, families have to cut back in other areas to afford food, or cut back on the food they can eat.  Cost matters on an individual or family basis, but systemic cost is an irrelevant abstraction.  

Indeed, arguably the most ominous food variable for Americans today is not the cost of food at all, but rather, the caloric load of what they eat.  For tens of millions of overweight and obese Americans, the issue is, paradoxically, abundance.  In a way, it could be said that high-cal food is too cheap.   But of course, the issue can’t be put in such numeric terms.  For just about everyone, food is a passion, and so controversies over diet and nutrition and lifestyle implicate larger questions of personal taste and desire.  Bean counters take a back seat.   

And so to speak of a food system in terms of its costs is nonsensical.  Our food system includes some trends that lower cost making food cheaper, safer, tastier, and more accessible, and bad (making sugary foods more addictive and encouraging overeating).  To speak of “cost” in evaluating our food supply is intellectually sloppy and beside the point. 

And so, we came back to that blobby bogeyman, the “healthcare system.”  Even if we could say there is such a monolith, it would be silly to evaluate it by cost alone.  For a 45-year old mom just leaving her radiologists office with devastating news, the legitimate cost of health care is infinity.  For a healthy twenty-five year old going for a flu shot, there’s a much lower, commoditized price, for the services to be provided.  Both are life-saving technologies, but both have widely different costs, at least for now.  

Life and death issues defy cost, especially in complex systems.  We would do ourselves, and future generations, a great service in declaring a moratorium for awhile on thinking about a complex life and death issue like health care in the context of “cost.”   Instead, we should think of outcomes, including the outcomes that derive from better medicine--a possibility, as we saw, that was left out of the Reuters article.  A cure for killer diseases would improve Americans’ quality of life and redirect resources from one kind of consumption (nursing care in the case of Alzheimer’s for example) to others. 

Overall economic growth will do far more to define how much individuals spend on one kind of good or service than another, helping us afford more of what we want and need including effective counter-terrorism, healthy food, and, yes, better medicine leading to new cures.  A central argument of Serious Medicine is that a cure is cheaper than care. 

In health, the most fundamental metric of success will be quantifiable but still infinitely variable: How well do we extend and enrich life and minimize random or avoidable death?  And, therefore, are our metrics of cost and benefit really measuring the right things?  

If we get these questions right, the issue of cost will take care of itself.


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