This Article Abstract Submit a response to this article Services E-mail this article to a friend Alert me to new issues of the journal

P E R S P E C T I V E
M E D I C A L  M A N A G E M E N T
W E B  E X C L U S I V E   

19 May 2004  
  

Perspective:
Cost-Effectiveness: Will The Public Buy It Or Balk?

The time has come for an open public debate on how to incorporate cost
to achieve an optimal allocation of resources.

By Marjorie E. Ginsburg

ABSTRACT:

The prospect of cost-effectiveness as a criterion for treatment or coverage decisions may be met with stiff resistance from the public. A characteristically American reverence for new technology and abhorrence at putting a price on life conflict with the premise of value-based decisions. Nevertheless, if particular checks and balances are incorporated, consumer acceptance is possible. Since health care leaders deny that cost plays a role in coverage decisions, it may be time for a more realistic and open public debate on how to incorporate cost to achieve an optimal allocation of resources.


In his paper Alan Garber presents the rationale for, and challenges to, using cost-effectiveness as a decision criterion.¹ However, he makes scant reference to the role the public might play as critics or advocates of this approach to helping control health care costs. Given the many controversial aspects of cost-effectiveness, policy experts would be wise to consider the public’s current perceptions and to invite public input when formulating new standards for treatment and coverage criteria.

Consumer Perspectives

For the past ten years Sacramento Healthcare Decisions (SHD) has been working with the general public to understand their views on complex health care policy issues.² In 2000 SHD conducted the Visible Fairness project to determine how consumers respond to the prospect of a value-based criterion for clinical or coverage decisions.³ Among the project activities were discussions in the Sacramento region with twenty-five groups of consumers totaling more than 250 participants. The issue of cost-effectiveness was illustrated by presenting scenarios depicting medical interventions that provide small benefit at high cost. These scenarios were the tools for initiating discussions that provided the means for identifying dominant themes and values.

Based on the results of Visible Fairness and related activities, this paper presents two differing conclusions: (1) There are major impediments to consumer acceptance of cost-effectiveness as a strategy, and (2) despite these impediments, consumers might be amenable to cost-effectiveness as a decision criterion.

Resistance to cost-effectiveness. As a new policy initiative, cost-effectiveness faces several obstacles as a strategy for controlling costs. First, it’s not the place to start. There are many other visible cost drivers that people feel should be tackled first, especially the ubiquitous WaGA (waste, greed, and abuse). While some policy experts minimize the role WaGA plays in jacking up health care costs, the public perceives that it plays a major role. Unregulated pharmaceutical costs and the perception of high profit margins for health maintenance organizations (HMOs) join the occasional scandal that keeps WaGA in the headlines. For example, there was a major brouhaha two years ago at a hospital in Redding, California, involving two physicians accused of performing hundreds, if not thousands, of unnecessary tests and surgeries. This story embodied allegations of physician greed and of a for-profit hospital that happily went along for the ride. Oversight failed, and no one seemed to notice unusual practice patterns and outlier Medicare charges. It took a suspicious patient to blow the whistle. It seems to the public that denying coverage for medical interventions that provide some benefit should be considered only when all else has failed.

Second, the public (plus health care professionals, policymakers, and everyone else) has an unfettered adoration for advances in medical technology. As Garber acknowledges, cost-effectiveness is most relevant as it pertains to new medical interventions—they are often the most costly and may represent only marginal improvements. Yet given the public’s enthusiasm for the cutting-edge technology of American medicine, they might reasonably fear that stricter coverage standards would dampen the quest for medical innovations.

Third, Americans resent using “cost” in considering appropriateness of treatment. The United States is the richest, most powerful nation in the world. It feels almost un-American to acknowledge that a treatment may be too expensive to be worth doing. To this day, regulators and providers deny that cost is taken into account in decisions about appropriate treatment. It will take a sea-change in the public’s attitude for them to now accept cost as a legitimate factor. When this is coupled with the public’s distrust of HMOs and suspicion of insurance in general, the challenge is daunting. As one participant noted during a Visible Fairness discussion, “Health plans care more about the cost than they do the effectiveness part of the equation.”

Acceptance of cost-effectiveness. Regardless of these views, for many project participants reality has set in. They see costs and copayments skyrocketing, and they know that something drastic must be done. While a minority resisted the notion of cost ever being taken into account, most thought this was a reasonable approach, with several caveats.

First, all value-based physician decisions should be individualized to the patient. Where one patient may not be sufficiently benefited by an intervention, another’s circumstances might justify it. The key to accepting cost-effectiveness rests with patients’ trust in their physicians and their feeling confident that the physician has the patient’s best interest at heart. However, even when the trust is there, patients want the rationale for a treatment denial to be that the intervention “doesn’t meet the needs of the individual patient,” rather than the cost cannot be justified by the meager benefit. Most think that a physician’s discussing the cost of health care raises doubts about his or her motivation to act as the patient’s advocate. In summary, cost-effectiveness is good in theory, is OK in practice, but is improper for discussing with the patient unless the patient’s money is at stake.

Second, health plan coverage guidelines could include cost-effectiveness if sufficient safeguards are in place. These include basing guidelines on scientific evidence; using an independent body that has no financial ties to the health plan to create those guidelines; and demonstrating that saved dollars are used elsewhere to improve patient care. But project participants also emphasized that guidelines should not be rigid rules and that a physician who can make a cogent argument for bypassing the guidelines must be given leeway to do so.

Third is the issue of individual versus aggregate benefit. The public voices two key values that are often in conflict. On the one hand, clinical decisions need to be individualized to each patient. On the other hand, there must be consistency and fairness in who has access to expensive technology. For instance, if all health plans refuse to cover left ventricular assist devices because there is a national standard saying that they are not cost-effective for the population as a whole, this is probably the fairest policy. If some people receive a dramatic, life-saving technology because they meet a cost-effectiveness standard and others do not, this is highly desirable patient-centered care but subject to inequity. These are the types of issues that need far more public input than has been elicited to date.

Concluding Comments

It is likely that cost-effectiveness will receive more attention by policy experts in the near future. After years of denying that the cost of medical treatment has relevance to clinical or coverage decisions, it would behoove health care leaders to begin discussing the role of the price tag openly and honestly with the general public. Health care leaders complain that consumers don’t have enough “skin in the game.” Perhaps it is time to expand the definition of “skin” to include realistic policy input on how scarce health care dollars are optimally spent.

The project on which this paper is based was funded by the California HealthCare Foundation. The perspective presented here is that of the author and does not necessarily reflect the view of the foundation.

NOTES

1. A.M. Garber, “Cost-Effectiveness and Evidence Evaluation as Criteria for Coverage Decisions and Benefit Design,” Health Affairs, 19 May 2004, content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.284 (19 May 2004).
2. Sacramento Healthcare Decisions is a nonpartisan organization whose purpose is to expose the public to current health care conundrums, capture its (informed) views, and help incorporate those views in health policy and practice.
3. Sacramento Healthcare Decisions, “Cost-Effectiveness as a Criterion for Medical and Coverage Decisions: Understanding and Responding to Community Perspectives,” October 2001, www.sachealthdecisions.org.vf.pdf (22 April 2004).

Marjorie Ginsburg (marge.shd{at}quiknet.com) is executive director of Sacramento Healthcare Decisions in Rancho Cordova, California.

Read related papers by: James Robinson and Jill Yegian, Victor Villagra, Alan Garber, and a conference summary by Jill Yegian.

DOI: 10.1377/hlthaff.W4.297
©2004 Project HOPE–The People-to-People Health Foundation, Inc.