Craig Garthwaite makes a very good point on the problems of paying for prophylatic treatment in the current US health finance system:
Some people have misinterpreted my comments on the FDA Alzheimer's guidance, likely because I wasn't fully clear. This is a broader point about treating this condition in a multi-insurer world. Put simply, a pre-symptomatic treatment for Alzheimer's will break the system (1/4)
— Craig Garthwaite (@C_Garthwaite) February 15, 2018
Most of the savings from treating Alzheimer's will be captured by Medicare. But the payment for the treatment will come from privately insured premiums. It's not clear that our system of multiple insurers pre-65 and a social insurer post-65 provides proper incentives here (2/4)
— Craig Garthwaite (@C_Garthwaite) February 15, 2018
He is commenting on a specific case. But the general point is that the incentives for costly upstream care to deliver large downstream savings are seldom aligned in the United States. The insurer paying for the expensive care seldom receives the benefit of future cost savings. Unless there is a strong mandate that requires all insurers to pay for this type of high cost and long pay-off care and perfect risk adjustment to eliminate the incentive for insurers to dodge, private insurance models will provide less of this type of care than optimal. This is true if a person is likely to churn to another private insurer or if in this case a person is highly likely to churn to Medicare.
We either accept this is the case or we perfect our mandates with precise risk adjustment or we carve out increasing classes of care so that they are paid for by entities with very long shadows of the future.
WereBear
Good luck with that in a capitalism mindset that only cares about Next Quarter.
Nicole
Like some entity that’s been around since the late 18th Century?
Steeplejack
Not a knock on Mayhew, whose posts are invaluable, but every one of them now reminds me what a Rube Goldberg contraption our healthcare/insurance system is.
WereBear
@Steeplejack: On purpose, because it’s about getting rich people the best healthcare at a profit on the backs of poorer people.
And convincing everyone this is “just the way things are” instead of letting anyone see behind the curtain.
AnonPhenom
The current for profit healthcare insurance industry has to be shrunk to the size where it can be drowned in a bedpan.
Barbara
This would be theoretically true for any kind of intensive preventive medical intervention, e.g., smoking cessation. We don’t actually have a prophylactic for Alzheimer’s, or maybe there is one in the pipeline that I don’t know about, but I feel like it misses an even larger point, which is that throwing more and more dollars at medical interventions makes it harder to adopt or pay for things that really do have a significant (if largely indirect or hard to measure) positive impact on personal health, like green spaces and safe pedestrian focused communities. Also, no pharmacy based prophylactic or treatment HAS to break the system. These things threaten to break the system because the system has no way to extract reasonable value from new pharmaceuticals, because the entire pharmaceutical industry is wrapped around patent exclusivity.
Raoul
@Steeplejack: As Ezra Klein and many others were saying during the creation of ACA, the whole damn thing is a kludge. Foisted on us by a combo of recalcitrant Repubs and a small faction of centrist Dems who were frightened of the Tea Party. Frustrating!
Kludge (/klʌdʒ, kluːdʒ/) — a workaround or quick-and-dirty solution that is clumsy, inelegant, inefficient, difficult to extend and hard to maintain.
To make something like prophylactic Alzheimer’s medication work, we might want … single payer. Or Medicare for all. Or some such bit of poison to the Republicans. But that party may be lighting itself on fire, so we should want to be ready for some bold policy ideas for when they go the way of the Whigs.
Villago Delenda Est
@WereBear: Prezactly. Long term economies are not even on the radar of your average MBA, incapable of looking at anything other than a balance sheet in front of them, incapable of projecting out trends.
Barbara
@Villago Delenda Est: Trust me, it’s not on the radar of your average congressional rep either. The attitude of most insurers on this sort of thing is pretty straightforward: if you want it, require it and be willing to pay for it. A big problem is that there is so much hype about so many medical interventions, and so much research is paid for and generated by parties who are interested in seeing a product succeed. Payers are highly skeptical of benefits along these lines, either short-term or long-term. I certainly agree that avoiding Alzheimer’s would be very good for people’s quality of life as they age, but I am highly skeptical that it would return a long-term financial benefit to the Medicare program. That’s not a reason all by itself not to do it, but it will “break the system” only because the system is simply too expensive, and most expenses are driven by actual care — needed or not.
WereBear
That I don’t understand. The projected mountain of Alzheimer’s cases is projected to break some banks in terms of cost.
Barbara
@WereBear: it’s going to break the Medicaid bank and it breaks the banks of individual caregivers and long term insurance. Medicare doesn’t pay for long term or custodial care. Even moderately healthy elderly people who do not have dementia are receiving a mountain of health care. The tragedy of Alzheimer’s disease is that there is no treatment. For the most part, people are being maintained as they deteriorate. They might require some kinds of other health care services as well, but these don’t improve their mental function. Don’t get me wrong, finding something that mitigates or prevents Alzheimer’s would be a great thing and I am totally in favor of finding a way to validate that it works and make it as widely available as possible. But long experience of listening to one hyped innovation after another has made me highly skeptical.
WereBear
@Barbara: Thanks, I get it now.
RSA
I don’t think that most people appreciate the difficulties of resource allocation in healthcare, on either (or one of the several) sides of the debate. Because we have to consider death, quality of life, and other issues that take ethics into account, it can be hard even to bring up the subject. In a New York Times Magazine essay from the other day:
I’m happy for the 68-year-old woman, whose life will be improved significantly. I don’t know how or when it’s appropriate to bring economics into the picture. Should it be done case by case, decided by individual doctors and patients? Maybe there are general guidelines I’m not aware of.
jl
Does this Mayhew insurance oligarch guy think that a national uniform minimum benefit contract could solve the problem?
Old Scold
@Steeplejack: Not a problem in Canada.