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A Question of Rationing


Michael Hiltzik has a smart column explaining the way rationing works in the British health-care system:

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 big problem with Britain is that there's nothing outside the National Health Service. If you want to pay for care out of your own pocket, you have to give up your state-based coverage.

There's no reason we have to copy that example. But imagine a system in which the government offered basic coverage to all Americans, regardless of age or income, for all treatments that are less than $33,000 per QALY. Above that, the government could offer subsidies for low-income Americans to purchase supplementary coverage, and higher-income folks would have to figure it out on their own.

That's not rationing, incidentally. It's simply setting limits on what comes out of the public purse. And it would have a few advantages over both the current system and most potential alternatives. First, it would create a larger market for lower-cost care. Companies would have more of an incentive to develop affordable treatments because what they'd lose on each individual sale they might make up on volume. Second, it would ensure that all Americans have access to the basic, cheap interventions that are the most important for long-term health. Third, it would preserve a place in the system for innovation but wouldn't bankrupt the government by making an implicit promise to pay for every single treatment that emerged. Indeed, this is basically what the French do, and many people think their health-care system is the best in the world.

Photo credit: AP Photo/Susan Walsh

By Ezra Klein  |  June 22, 2009; 5:08 PM ET
Categories:  Health of Nations  
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I'm assuming that the system allows for cancer treatments but, how? Also, MS drugs.... These are expensive drugs but, and effective. But, how do they rank on the QALY scale?

Posted by: katiebird36 | June 22, 2009 5:36 PM | Report abuse

"If you want to pay for care out of your own pocket, you have to give up your state-based coverage."

Well, not really. If you want to jump the queue for elective surgery, you can pay for it and you'll often end up seeing the same consultant for follow-up on his/her NHS days.

You're thinking about the cases related to certain cancer drugs, but the guidelines for that have changed in recent months: Professor Mike Richards' report ('Improving Access to Medicines for NHS Patients') issued at the end of last year set out a range of options to deal with the purchase of drug therapy, and offered recommendations on how to provide both flexibility and savings through work with pharmaceuticals manufacturers.

Part of the Richards review included a 13-country study on how expensive drugs are covered in other statutory systems (i.e. not the US) -- search for DH_089990, it's thorough and well worth reading.

The clinical guidelines issued in March after a consultation period now 'ringfence' any separately-purchased private care, and preserve NHS care for the areas not covered by private treatment. At the same time, NICE approved Sutent (the drug at the heart of the debate last year) as a first-line treatment for kidney cancer.

Posted by: pseudonymousinnc | June 22, 2009 6:40 PM | Report abuse

Many users of the NHS have private health insurance, often through their employers. For certain types of critical care it is widely acknowledged that the NHS does a better job than private. The people that have private insurance use it typically for so-called non-critical care, or for extras like private hospital rooms.

You certainly don't give up your NHS rights by having private insurance.

That would be, not incidentally, a disastrous policy politically since it would rob the NHS of support from a core group of wealthier voters.

Posted by: lknobel | June 22, 2009 6:59 PM | Report abuse

Wouldn't you say that an insurance plan (govt or not) should pay when one reaches a certain amount of health care dollars, not before?
If it's really 'insurance,' well, then you should KNOW that health care is part of the costs of, um, being alive, and one should budget for it. Insurance is supposedly for 'unexpected events.' And one should go to the dr. every year, typically people go to the eye dr, dentist, etc, yearly. So should our government cover that care? Stuff you KNOW you're going to have to pay anyway?

France does have a good system, why does no one discuss that one?

One issue with the health care system in GB (and, I suppose, anywhere where a bureaucrat is running the system) are such things as, diseases that cause blindness (or something else debilitating). Becoming blind technically does nothing to life expectancy, so from what I've heard, the system would say: well, you're not going to DIE if you go blind, so you have to wait for that procedure (if we'll pay for it at all). Not wanting that...

Posted by: atlmom1234 | June 22, 2009 7:32 PM | Report abuse

"from what I've heard, the system would say: well, you're not going to DIE if you go blind"

Could you give a refernce for that?

I think you are referring to one type of treatment for one kind of eye illness that used to be deemed too expensive. Practically all eye treatment has always been covered and now even the formerly denied treatment is covered. Don't believe Rush.

"In August 2008, following more than two-and-half-years of campaigning led by RNIB, the National Institute for Health and Clinical Excellence (NICE) issued new guidance on drugs for treating wet Age-related Macular Degeneration (AMD). This paves the way for patients in England and Wales to receive sight-saving anti-VEGF drugs free on the NHS. Previously NICE had deemed the drugs too expensive for NHS availability."

From the Royal National Inst. for the Blind

Posted by: lensch | June 23, 2009 12:19 AM | Report abuse

For the really expensive drugs, the question is not so much how to make it up on volume, it's how to re-coup the costs of discovery and development, particularly late-stage clinical trials. The most expensive treatments are often cancer treatments, and you just don't have as large a patient population for a particular type of cancer as you do for, say, high blood pressure. Sure, "orphan drug" designations help out in some instances, but just above that size is a range for which making it up on volume may not be an option within the life of the patent.

Posted by: merrilld | June 23, 2009 6:00 AM | Report abuse

Just a point of information: As someone referenced, it's National Institute for Health and Clinical Excellence (NICE), not effectiveness as Hiltzik notes.

Posted by: GrandArch | June 23, 2009 9:27 AM | Report abuse

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