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Healthcare reform puts a price on quality of life


As the Clinton White House discovered to its grief more than a decade ago, and the Obama White House is learning, no minefield of American politics is as uncharted and explosive as healthcare reform.

And no piece of healthcare reform is as explosive as the issue of cost control.

Consider the conniption being thrown by Republican senators and other conservatives over a $1.1-billion provision in the stimulus package to fund "comparative effectiveness research."

The health insurance industry and other constituencies have been angling for such research for years, hoping for a rational basis for judging whether one treatment is more cost-effective than another. Such conclusions would presumably drive decisions about what insurance should cover.

The outcry against comparative effectiveness has been led by, among others, Rush Limbaugh, who cited it as a precursor of what he called "the gigantic national socialization of medicine bill . . . to come down the pike." (Catch an allusion there to the Nazi, i.e., the "national socialist," party? That's why no one ever accuses Limbaugh of good taste.)

A clutch of GOP senators last week introduced a bill to "prevent" comparative effectiveness findings "from being used to ration healthcare."

One of them, Senate Minority Leader Mitch McConnell (R-Ky.), claimed on TV that President Obama's support of the research was tantamount to his seeking "a national rationing board."

Leaving aside the fact that commercial insurance companies already ration healthcare by placing intolerable obstacles in the way of patients seeking treatments, it's worthwhile to examine just how "rationing" by cost-effectiveness works in practice. Or more precisely, how it doesn't work.

The most extensive laboratory in the field has been run by the National Institute for Health and Clinical Effectiveness, or NICE, an arm of Britain's National Health Service, the government healthcare program.

NICE's judgments about cost-effectiveness are based on a measure known as the quality-adjusted life year, or QALY. Get used to the acronym -- you're sure to hear it a lot more as the health-reform debate rages on.

In simple terms, QALY adjusts the length of time that a treatment might extend a patient's life by a factor assessing the patient's quality of life in that time ranging from 0 (death) to 1 (complete health). If a certain cancer drug would extend life by two years, say, but with such onerous side effects that those years were judged to be only half as worth living as those of a healthy person, the QALY is 1.

That's not very objectionable, as far as it goes. But the clinical effectiveness institute judges new drugs and treatments by their cost per QALY; the institute almost always approves those that cost less than 20,000 pounds per QALY (about $33,000), and except in rare cases rejects those costing more than 30,000 pounds (about $50,000).

The pitfalls of such an approach should be obvious.

One is society's aversion to placing a hard monetary value on human life. The Brits have had to constantly grapple with this distaste. On several occasions, the institute has had to reverse, modify or reconsider rejections under political or professional pressure. Last year it convened a citizens' council to ponder rules for relaxing its 30,000-pound standard -- with a majority of the council favoring loosening the rules when the treatment is "lifesaving," the patients are children, the illness is severe or rare, or no alternative therapies exist.

Another issue is the lack of any empirical basis for the 30,000-pound standard. No one seems to know how it was determined. That's important, because U.S. health economists tend to use a similar $50,000 cut-off for cost-effectiveness.

Why $50,000? Scott Grosse, a health economist at the Centers for Disease Control and Prevention, speculated in a 2008 study that it might be based on the "convenience of a round number" rather than on "theoretical or empirical justification," which he says doesn't exist. (A theory that it was based on cost estimates for kidney dialysis in the 1980s doesn't hold up, he found.)

In any event, Grosse told me, because the figure has been used since the 1990s, it's in serious need of updating. Given the rate of medical inflation in the interim, the sum would be the equivalent of roughly $100,000 today, and Grosse believes that still underestimates Americans' willingness to pay for life-extending healthcare.

"Lots of cardiac procedures wouldn't be covered under a $100,000 standard," he says.

Certainly the most fraught element of QALY is the quality-of-life multiplier, which is a quintessentially subjective assessment masquerading as an objective measurement. One key question is whose values are being measured -- the patient's, the medical community's or the general public's?

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