What's Your Life Worth?: Health Care Rationing... Who Lives? Who Dies? And Who Decides?

Paperback | March 12, 2003

byDavid Dranove

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Healthcare rationing is coming -- with a vengeance. What's Your Life Worth? previews tomorrow's healthcare system, showing what it'll feel like to be at the mercy of a system that might choose not to cure you. Right now, experts are calculating which diseases are worth curing, which treatments are worth paying for, and which aren't. This book tells you who they are, what they're up to, what they think you're worth -- and what to do about it.

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Healthcare rationing is coming -- with a vengeance. What's Your Life Worth? previews tomorrow's healthcare system, showing what it'll feel like to be at the mercy of a system that might choose not to cure you. Right now, experts are calculating which diseases are worth curing, which treatments are worth paying for, and which aren't. Th...

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Healthcare rationing is coming -- with a vengeance. What's Your Life Worth? previews tomorrow's healthcare system, showing what it'll feel like to be at the mercy of a system that might choose not to cure you. Right now, experts are calculating which diseases are worth curing, which treatments are worth paying for, and which aren't. Th...

David Dranove is one of the world's most respectedhealth care economists. He is the Walter McNerneyDistinguished Professor of Health Industry Managementat Northwestern University's Kellogg Graduate School ofManagement, as well as Director of the Center for HealthIndustry Market Economics there. His research and teaching focus on proble...

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Format:PaperbackDimensions:256 pages, 9 × 6.1 × 0.7 inPublished:March 12, 2003Publisher:Pearson EducationLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0130671657

ISBN - 13:9780130671653

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From the Author

IntroductionYou may not know it, but the people who pay for yourhealth care have decided that enough is enough. They haveplaced a limit on how much they are willing to spend to saveyour life. In the United States, the keepers of the Medicare andMedicaid programs have capped spending growth, forcing providersto cut back on care. At the same time, U.S. employersare getting fed up with rising health insurance costs, and theyare giving managed care organizations the goahead to cutback on prescription drug benefits and other services. Suchrestrictions are old news in the rest of the world, where governmentpayers have been limiting access to costly medicaltechnologies for over three decades.This is rationing, plain and simple. Rationing is a dirtyword in health care, but it is not necessarily a bad thing, providedthe cost savings are large enough to justify any resultingharm. For the most part, rationing has been ad hoc, withoutcareful weighing of the benefits and costs. But in the last fewyears, a few payers have taken baby steps toward rationalizingrationing—making sure that they get biggest bang out of theirhealth care bucks.This book is about the many ways in which health care isrationed, and the transition toward rational rationing. AsChapter 1 details, rational rationing has already been institutionalizedby the British and Australian national health systems.The outcomes have been mixed. Government decisionmakers seem obligated to balance scientific principles withpolitical considerations. The outcomes are not always pretty,and government health officials remain crippled by budgetceilings that force them to place an unrealistically low valueon life.Chapters 2 through 4 provide the theoretical justificationfor rationing health care and demonstrate the disconnectbetween theory and practice in Europe and the United States.At least for now, any careful weighing of lives and dollarsseems to be mere happenstance. Chapters 5 and 6 describerational rationing. Chapter 6 also explains how to numericallyscore different diseases to determine which are most worthcuring. These methods appear to be relatively simple to implement.In fact, they were central to a rationing plan implementeda decade ago in the state of Oregon, as described inChapter 7. But, as I show, appearances are deceiving. Proponentsof rational rationing have yet to overcome numerousobjections based on methodological, economic, ethical, andpolitical grounds.Even if supporters of rational rationing can overcome themyriad objections to it, their schemes will not fully succeedunless they can grapple with the most challenging obstacle ofall. At some point, payers must decide where to draw the lineand declare that one particular health care service is "worthit" whereas another, slightly less costeffective service is not.To do this, payers will have to explicitly determine how muchlife is worth. Chapter 8 tackles this question headon and evenshows you how to compute the value of your own life.One question remains: Who should implement rationalrationing? Chapter 9 describes the global imperative to containcosts in the public and private sector. I argue that rationalrationing is better left to the market, where individuals candecide for themselves how much their lives are worth. I concludethat if payers fully embrace rational rationing, they mayno longer fear spending money to save lives.

Read from the Book

Introduction You may not know it, but the people who pay for yourhealth care have decided that enough is enough. They haveplaced a limit on how much they are willing to spend to saveyour life. In the United States, the keepers of the Medicare andMedicaid programs have capped spending growth, forcing providersto cut back on care. At the same time, U.S. employersare getting fed up with rising health insurance costs, and theyare giving managed care organizations the go-ahead to cutback on prescription drug benefits and other services. Suchrestrictions are old news in the rest of the world, where governmentpayers have been limiting access to costly medicaltechnologies for over three decades. This is rationing, plain and simple. Rationing is a dirtyword in health care, but it is not necessarily a bad thing, providedthe cost savings are large enough to justify any resultingharm. For the most part, rationing has been ad hoc, withoutcareful weighing of the benefits and costs. But in the last fewyears, a few payers have taken baby steps toward rationalizingrationing—making sure that they get biggest bang out of theirhealth care bucks. This book is about the many ways in which health care isrationed, and the transition toward rational rationing. AsChapter 1 details, rational rationing has already been institutionalizedby the British and Australian national health systems.The outcomes have been mixed. Government decisionmakers seem obligated to balance scientific principles withpolitical considerations. The outcomes are not always pretty,and government health officials remain crippled by budgetceilings that force them to place an unrealistically low valueon life. Chapters 2 through 4 provide the theoretical justificationfor rationing health care and demonstrate the disconnectbetween theory and practice in Europe and the United States.At least for now, any careful weighing of lives and dollarsseems to be mere happenstance. Chapters 5 and 6 describerational rationing. Chapter 6 also explains how to numericallyscore different diseases to determine which are most worthcuring. These methods appear to be relatively simple to implement.In fact, they were central to a rationing plan implementeda decade ago in the state of Oregon, as described inChapter 7. But, as I show, appearances are deceiving. Proponentsof rational rationing have yet to overcome numerousobjections based on methodological, economic, ethical, andpolitical grounds. Even if supporters of rational rationing can overcome themyriad objections to it, their schemes will not fully succeedunless they can grapple with the most challenging obstacle ofall. At some point, payers must decide where to draw the lineand declare that one particular health care service is "worthit" whereas another, slightly less cost-effective service is not.To do this, payers will have to explicitly determine how muchlife is worth. Chapter 8 tackles this question head-on and evenshows you how to compute the value of your own life. One question remains: Who should implement rationalrationing? Chapter 9 describes the global imperative to containcosts in the public and private sector. I argue that rationalrationing is better left to the market, where individuals candecide for themselves how much their lives are worth. I concludethat if payers fully embrace rational rationing, they mayno longer fear spending money to save lives.

Table of Contents

(NOTE: Each chapter ends with Endnotes.)

Introduction.


1. Is It NICE to Ration?

Putting a Price on Your Life. The Pressure to Ration. Cutting to the Chase. Rationing Drugs Down Under. The National Institute for Clinical Excellence (NICE). The Beta-Interferon Controversy. Medicine versus Economics.



2. Defending Rationing in Principle.

Rationing and Toy Shopping. Are We Wasting Money on Health Care? Moral Hazard. The RAND Study. Demand Inducement. Bad Buys in Health Care. The Wennberg Variations. Defending Rationing.



3. Rationing Around the World.

Rationing in Germany. Controlling Drug Costs in Germany. If It Looks Like Rationing. Rationing in Canada. The Consequences of Waiting Lists. The Future of Rationing in Canada. Rationing in England. Rationing Elsewhere in the World.



4. Rationing in the U.S. Health Care Marketplace.

Rationing Through the Market Mechanism: The Uninsured in the United States. Attempts to Provide Universal Coverage. Rationing Among Insured Americans. Government-Sponsored Rationing in the United States. A Brief History of Managed Care. MCO Strategies for Containing Costs. Whither Rationing in America? Enough Is Enough.



5. Doing Cost-Effectiveness and Cost-Benefit Research.

Some Background on CEA. Is It Valid to Use CEA for Health Care? Doing CEA/CBA. Measuring Costs. Discounting. Is CEA/CBA Research Valid? CBA/CEA in Practice.



6. Measuring the Quality of Life.

Using Rating Scales to Measure Health States. Working with QALYs. Putting QALYs into Practice. All QALYs Are Equal. Measuring QALYs. How Do Your QALY Scores Measure Up? The Quality of Well-Being (QWB) Scale. Concerns about QALYs. Discrimination and QALYs. Limitations of QALY Surveys. Summing Up CEA/CBA Methods. What about the PSA Test?



7. The Oregon Plan.

Rationing in Oregon. The Story of Coby Howard. Toward a Rational Rationing Plan. The Creation of the Oregon Health Plan. The Oregon Plan and HMOs. Creating the List. The New List. More Protests. The Performance of the Rationing Plan. Oregon Ten Years Later. Where Do We Draw the Line?



8. What Is Your Life Worth?

Willingness to Pay, Human Capital, and Intrinsic Value. Pricing Life in the Real World. The Cost-of-Illness (COI) Approach. Using Surveys to Put a Price. on Good Health. Some WTP Measures. Willingness to Pay for Life. How Useful Are WTP Measures? Statistical versus Identified Lives. The Economic Approach to Valuing Statistical Lives. Other Evidence on the Value of Life. What Is Your Life Worth? Value of a QALY. Responding to Mr. Mortimer. The Bottom Line.



9. Rising Costs and Rational Rationing.

The Health Care Budget “Crisis”. The Drain on the U.S. Economy. Targeting Technology. The Fallacy of Cost Containment. The Steady Drumbeat of Rational Rationing. Can Patients Be Rational? Who Should Ration? Rational Rationing in the Public Sector. Rational Rationing and Managed Care. The Real Obstacles. Rational Rationing in the 21st Century.



Index.