Something Not Unlike Research

A Clue to What Weinstein and Stason Were Thinking

post by Paul Kelleher

This is a follow-up to my recent post analyzing one argument for uniform time-discounting in cost-effectiveness analysis.

As I explained, Weinstein & Stason's (W&S) argument relies on a comparison of five hypothetical health interventions. 

(Key: $10’ = $10,000, $70’ = $70,000; “LY” means “life-year saved/generated”)

Their most controversial premise is that programs A1 and A2 are "equivalent." This is controversial because W&S also assume that programs A and A1 are equivalent. However, A and A1 can be equivalent only if $10,000 today is worth $70,000 in 40 years. But then if $10,000 today is equivalent to $70,000 in 40 years, we should conclude that program A1 is superior to A2, since A1 gets us one life-year for $60,000 less than A2 (we can just put $10,000 in the bank now and wait until the account grows to contain $70,000 in 40 years). This is why it looks absurd to say, as W&S do, that A1 and A2 are equivalent.

Now, I was trying to be charitable in my first post. So instead of claiming that W&S were simply wrong to claim that A1 and A2 are equivalent, I introduced a notion of equivalence on which A1 is indeed equivalent to A2. I called that static-equivalence, and it was meant to convey that both A1 and A2 involve buying 1 LY for $70,000 at the time the LY can actually be purchased. For A1, that is in 40 years. For A2, it is now. I then went on to note that programs A and A1 are not equivalent in that same sense. Rather, A and A1 are dynamically-equivalent, since their equivalence relies on the fact that productive forces can transform $10,000 into $70,000 over time. Finally, since W&S wanted to create a "chain of equivalences" running from program A through to program A3, I claimed that this chain cannot even get started, since there are two completely different notions of equivalence at work here.

I still stand behind this analysis, and I still think W&S's argument is plainly invalid. But I was always unsatisfied that I couldn't explain why W&S (or anyone!) would assert that A1 and A2 are equivalent. I now I think I may have the answer. (The explanation I'm about to give is also suggested by Erik Nord in the paper of his linked to in my first post, but I didn't quite see this until my second or third reading of it).

To understand where W&S may be coming from, it helps to return to the Washington Panel Report chapter on discounting. The "W" of W&S (Weinstein) was a co-author of that chapter. After restating W&S's argument, the Panel writes (my emphasis): "Closely related to [W&S's] consistency argument is the paradox of Keeler and Cretin...The following simple example...summarizes the essence of the argument:"

Assume that an investment of $100 today would result in saving 10 lives (or 1 life per $10 of investment). If the $100 were invested at a 10% rate of return, in 1 year it would be worth $110; and with this $110, it would be possible to save 11 lives. If the original $100 were invested for 2 years at 10%, it would be worth $121, and 12 lives could be saved. If the social decision maker is attempting to maximize the health output obtainable from the original $100, and if the value of future lives saved is not discounted [at the same 10% rate], then the cost-effectiveness of the investment would be...postponed "until next year" on a perpetual basis.

The Panel's example highlights two potential problems. The first is that decision makers may be tempted to hold onto allocated health funds indefinitely, since it always seems a good idea to save the money for one more year. The second problem arises even if we avoid the first by establishing an end-date by which the health funds must be spent. Even with an end-date, decision makers will still prioritize those who need help at end of the imposed time-window, since more lives can be saved by waiting as long as possible (assuming, as is being done here, that the nominal cost of saving a life does not increase over time). Thus the Washington Panel concludes:

Hence, setting [the discount rate for costs equal to the discount rate for health] creates what economists term horizontal equity among potential beneficiaries.

In other words, uniform discounting removes the basis for systematically prioritizing future beneficiaries over present ones. If the amount of good one can do declines at the same rate as the real costs of saving those lives, then there is no incentive to wait to save lives. 

I think this may provide the best clue to what W&S must've been thinking. Given that the Washington Panel Report was co-written by Weinstein, and given that the Report says that W&S's logic is "closely related" to the logic used to avoid the "postponement problem," some sense can now be made of W&S's claim that A1 and A2 are equivalent: W&S may have wanted to rule out the perceived intertemporal inequity that exists when there is systematic reason to postpone health expenditures. To say that A1 is superior to A2 is to invite "horizontal inequity."

I was aware of the so-called "postponement problem" when I wrote my previous post. But I was not aware that W&S's argument might be influenced by it. If this new explanation of their argument is correct, I can give the response to W&S that I'm inclined to give to the postponement problem itself: Since cost-effectiveness analysis is intended to be a framework for evaluating efficiency only, economists should not build equity-related considerations into their calculations of efficiency. If one is interested solely in quantifying efficiency (as cost-effectiveness analysis is intended to be), why not just admit that more good can be done by waiting until one's health budget is as large as possible? If we think it's wrong to wait that long, this reveals that we have concerns other than efficiency. Big surprise.

At the very least, the Washington Panel Report can be commended for being open about letting equity-based considerations shape its ostensibly efficiency-based economic framework. 

A Critique of Weinstein & Stason’s Consistency Argument for Time-Discounting (wonky)

post by Paul Kelleher

UPDATE: I have a follow-up post here that offers a hypothesis as to why W&S accept what most others believe is a patently false premise (i.e. that programs A1 and A2 are equivalent). 

In 1996, an expert panel appointed by the U.S. Public Health Service released a report on improving the methods of cost-effectiveness analysis in health policy. That report, known in the biz as the Washington Panel Report, included a chapter on discounting the health benefits produced by medical interventions. Discounting is a super tricky issue that raises questions of ethics and economics, which is why I like it. It is also a super important issue, as I hope will be made plain by this post.

The Washington Panel recommended (1) that both the future costs of health promoting policies and their future benefits should be discounted, and (2) that costs and benefits should be discounted at the same rate. What does this mean? Put simply, to discount is to treat as less valuable. So consider costs first. The main reason for treating a dollar in the future as less valuable than a dollar today is that today’s dollar can be invested productively to yield more than one dollar in the future (even after adjusting for inflation). This means a cost of 100 (inflation-adjusted) dollars borne in 20 years can be covered by an investment of less than $100 today. Hence, future costs should be discounted relative to present costs.

So that’s discounting costs. What does it mean to discount health benefits that lie in the future?

Understanding DALYs

post by Paul Kelleher

Cost-effectiveness analysis (CEA) compares, you guessed it, costs with benefits. Costs are typically conveyed in monetary terms. Benefits are usually conveyed in terms of either QALYs or DALYs. QALYs are quality-adjusted life years. DALYs are disability-adjusted life years. QALYs have been around since the 1970s (as I understand it), whereas DALYs are a more recent innovation. In 1994, Christopher J. L. Murray, then of Harvard University, introduced DALYs in his paper "Quantifying the Burden of Disease." Murray then went on to the World Health Organization (WHO), where DALYs were used in the controversial attempt by WHO to rank the equity and effectiveness of the world's national health systems. Both QALYs and DALYs are used widely today as the units of benefit-measurement in cost-effectiveness analyses.

This week I've spent a lot of time reading and thinking about CEA, and I've encountered quite a bit of confusion in the literature on how DALYs should be understood. For example, I was looking at a paper entitled "The Economics of HIV/AIDS in Low-Income Countries: The Case for Prevention" which reports CEA results in terms of the cost per "loss of DALY averted." This implies that, whatever DALYs are, you should want more of them rather than fewer (i.e. you want to avert their loss). This understanding of DALYs is made explicit in "Using Cost-Effectiveness Analysis for Setting Health Priorities," a report by the Disease Control Priorities Project (which appears affiliated with the World Bank and WHO): 

In cost-effectiveness analysis, the DALY represents the number of years of disability-free life that would be gained from a particular health intervention—yielding a cost per DALY where cost data are available or can be inferred. Gaining a DALY through a health intervention reduces the burden of disease; it is the same as averting the loss of a DALY. 

Compare this understanding of DALYs with that stated in Disease Control Priorities in Developing Countries by Dean T. Jamison, who worked on WHO's Global Burden of Disease Project and continues this work at the at the University of Washington's Institute for Health Metrics and Evaluation (which Chris Murray now directs):

Disability-adjusted life years (DALYs) are a variant of QALYs in that they measure the losses from disability or premature death; a CEA will determine which interventions maximize QALYs or minimize DALYs.

So which understanding of DALYs is correct? Do we want to maximize DALYs (i.e. avert their loss) or do we want to minimize them (i.e. praise their loss)? The answer is that Jamison is right: DALYs are to be minimized (and their loss praised). But how could those others, who work with DALYs all the time, get it so wrong? Let me try to explain.

Both QALYs and DALYs are designed to integrate considerations of longevity and quality-of-life. For example, I generate 1 QALY for every year I live in full health. The number of QALYs one generates is calculated by multiplying the length of time (measured in years) by a "utility weight" which places one's health status on a scale of 0 to 1 where 0 is as bad as death and 1 is full health. So if I live 2 years in a health state that has a utility weighting of 0.8 (perhaps I have mild lower back pain), then I am said to generate 1.6 QALYs (2 x 0.8) over that time span. Given this understanding, one obviously wants more QALYs rather than fewer, since more QALYs correlates with more years lived in good health.

QALYs are therefore used to measure healthy years lived. DALYs, by contrast, are used to measure healthy years lost. That is, DALYs measure the gap between the number of healthy years one in fact lives and some normative ideal of how many healthy years equates to full health over a lifetime. The normative ideal of longevity is set using the world's longest actual life-span, which is set by the Japanese. The normative ideal of health-related quality-of-life is a trickier subject that I want to pass over here. The important thing is that it is stipulated by DALY-users that full health for each person is a certain number of healthy years of life. So when we suffer ill health and disability, that is regarded as stripping us of those healthy years. DALYs are used to measure the healthy years lost due to ill health.  

The confusion about DALYs enters when people treat DALYs as the healthy years that are lost to ill health. These folks then assume that successful health interventions work by clawing back those lost healthy years (or by "averting their loss" in the first place). Strictly speaking, however, DALYs don't get clawed back when health improves---they disappear or are obliterated. Thus, when one is in poor health, DALYs come into existence and displace one's stock of healthy life years (as set by the normative standard); but when one's health improves, one's newly regained healthy years of life displace or obliterate the DALYs that poor health created. Hence Jamison's dictate: minimize DALYs. One minimizes DALYs either by preventing the poor health that creates them in the first place, or by eliminating and substituting them with regained healthy years of life.

I hope that helps.

 

Inequality? Oh we'd love to help, but...

post by Bill Gardner

Arnold Kling and Nick Schulz argue that the growth in US inequality derives from two factors:

• Technology that allows a few very able persons to achieve extraordinary things (think Sergey Brin), and
• Defective families and assortative mating based on ability that result in large groups of people at the bottom who lack the talent to produce much of value.

These are important causes of inequality. Kling and Schulz would do something about these things if they could, they really would, but 

there may be less that government can do than one might hope. Research from Heckman suggests that education is a relatively feeble remedy for the effects of family background (although Heckman believes that early intervention, in preschool or even before, shows promise). In order to make a dramatic impact on inequality, government would have to do something about the fundamental causes: technology and marriage patterns. However, putting a brake on technological progress seems hardly feasible or desirable. And forcing people to select mates at random rather than on the basis of similar backgrounds and tastes seems similarly unlikely. As much as inequality may be a problem, no real solution is in sight.

OMG, if the only alternatives are freezing technological progress or making people marry random partners (on second thought, this is the best explanation for my first marriage, and the kids turned out great anyway), then I guess there really is nothing to be done.

Or maybe we could try the following:

• We could give every mother good prenatal care, and institute programs to reduce premature delivery. 
• We could provide every child with universal, high-quality preschool education. Please, read Heckman for yourself. He isn't saying that early interventions "show promise." He's saying that "Early interventions promote schooling, reduce crime, foster workplace productivity, and reduce teenage pregnancy." 
• We could reform our criminal justice system. The US has 751 persons in prison per 100,000 population. Canada has 117. England's rate is 151; Germany's is 88; and Japan's is 63. Mexico has 204. The global median is 125. Are Americans really six times as violent and criminal as the rest of the world? The burden of US incarceration falls on the poor and above all on people of color. It destroys families. But it could be fixed.

America could do these things and it would still have considerable inequality. But these are solutions that would help and, contrary to Kling and Schulz, they are in plain sight.

'Health Shock': How childhood chronic illness affects children's schooling and adult employment

Pediatrics is sometimes treated as the least important branch of medicine. This kind of makes sense, because children are mostly healthy. Focusing just on health outcomes, however, is terribly short-sighted. As Jason Fletcher and Michael Richards show, chronic diseases that begin in childhood have powerful effects not only on children's adult health, but also on their non-medical development and achievements. 

Fletcher and Richards looked at the association between the 'health shock' of  getting diabetes in childhood and achievements in schooling and work for more than 15,000 children. They found

effects in several measures of educational attainment, including a high school dropout rate that was six percentage points higher than among young adults without the disease. We also found lower employment and wages: A person with diabetes can conservatively expect to lose more than $160,000 over his or her working life, compared to a peer without the disease. 

This is an observational study, so whether diabetes causes these effects is a matter of inference and interpretation. Fletcher and Richards used a data set that included detailed information on the children's family backgrounds, the health of parents, and other diseases that children had; and their estimates include statistical controls for such factors. We cannot necessarily infer that an intervention that prevented diabetes in a child would increase the years of schooling they would achieve, or how much they would earn as adults. But based on these data, it would be worth a shot.

Before the ACP Ethics Manual, there was the Physician Charter

post by Paul Kelleher

In a nice round-up of reactions to the new American College of Physicians' Ethics Manual (discussed on this blog here, here, and here), bioethicist Daniel Callahan echoes what many others have said:

Just by mentioning the importance of cost-effectiveness, the policy breaks important new ground. The cost problem is getting worse all the time. We’ve got to find a way to break that logjam.

It is, however, worth pointing out that this is actually not new ground for the American College of Physicians. In 2002, the the American College of Physicians–American Society of Internal Medicine (ACP–ASIM), the European Federation of Internal Medicine, and the American Board of Internal Medicine jointly released "A Physician Charter", which was intended a sort of new Hippocratic Oath. According to health economist Victor Fuchs, the Physician Charter "has been adopted by physicians’ organizations that include a majority of U.S. physicians." 

The Physician Charter includes three Fundamental Principles and 10 Commitments. The three principles are: a Principle of Primacy of Patient Welfare, a Principle of Patient Autonomy, and a Principle of Social Justice. Among the commitments (and presumably justified by the Principle of Social Justice) is this one:

Commitment to a just distribution of finite resources. While meeting the needs of individual patients, physicians are required to provide health care that is based on the wise and cost-effective management of limited clinical resources. They should be committed to working with other physicians, hospitals, and payers to develop guidelines for cost-effective care. The physician's professional responsibility for appropriate allocation of resources requires scrupulous avoidance of superfluous tests and procedures. The provision of unnecessary services not only exposes one's patients to avoidable harm and expense but also diminishes the resources available for others.

A couple comments. First, notice that physicians are called upon to work with other stakeholders on the development of "guidelines for cost-effective care." My experience in talking with physicians (and physicians in training) is that they would rather be constrained by thoughtful, collaboratively developed treatment and diagnostic protocols than to be expected to "practice cost-effective medicine" in a discretionary manner at the bedside. Physicians would then not feel like they were "playing God," and would view themselves instead as providing "appropriate medical care" when they refuse to treat/screen/refer someone who does not fit a cost-effective protocol's indications.

Second, notice that what the charter does expect physicians themselves to do is to avoid the "provision of unnecessary services" through "scrupulous avoidance of superfluous tests and procedures." I have already suggested that this exhausts what the ACP meant when they encouraged physicians to practice "parsimonious care" in the Ethics Manual. (On "parsimonious," see Dr. Don Goldmann's comments in the round-up.) Again, the reflective view of physicians seems to be that while the doctor's job is to avoid providing harmful or unnecessary care, an understanding of what amounts to justified cost-effective care is more difficult to grasp, and should await a collaboration between different stakeholders with the power to shape cost-effective policy in a politically legitimate way.

A final theme in the round-up on ACP's Ethics Manual is that the Manual does not explain what it means to practice cost-effective medicine or how physicians are supposed to learn how to do it (this problem arises for the Physician Charter as well). Dr. Goldmann articulates what would surely be the first step envisioned by the Manual:

The true cost and effectiveness of a given treatment should be made available and utilized by clinicians as part of their decision making process. What I would love to see is increased pressure on the health care industry to be transparent about the true cost of what they’re making available to their providers and not make it so obscure that you can’t figure it out.

 But history suggests that simply knowing the costs will not be enough. Here is Steven Schroeder:

During the administration of President Jimmy Carter, hospital cost containment became a prominent health policy initiative. In response, the hospital industry argued that it could achieve those goals on its own, without government interference. This “voluntary effort” featured physician education as a strategy to produce more rational spending patterns and thereby lower costs. We tested this hypothesis at UCSF, evaluating 3 different educational strategies on the medical and surgical services over a 2-year period. The educational efforts, which included teaching about costs and benefits of various services as well as a detailed cost audit of services ordered by individual residents, were well received. But there was no significant decline in hospital charges compared with control groups. We concluded that—absent major involvement by hospital authority figures or changes in incentives— voluntary cost containment would fail. Eisenberg and Williams, who conducted similar studies at the University of Pennsylvania, likened voluntary medical cost containment to the fox guarding the chicken coop. Predictably, after Carter lost his reelection to Ronald Reagan in 1980, the voluntary effort vanished.

All this suggests that there is great virtue in having cost-effectiveness be a property of policies and protocols, not discretionary physician behavior. 

Future Medicare Cost Growth, the Baby Boom, and the Baby Bust

There is an informative and thoughtful article in today's Washington Post by Lori Montgomery on the current and future cost growth of Medicare.

The key facts are in the graph to the right. On the left is an orange bar graph with the good news: per capita Medicare spending has been falling recently. The line graph in the center is the bad news: Medicare enrollment is increasing, and it is increasing rapidly as we baby boomers retire. The net effect, on the far right, is a projected continuing increase in Medicare costs.

But my friend David States pointed out to me that we might look more closely at the projected growth in Medicare enrollment. To the right are data on the proportion of the US population that is 65 or older, with projections into the future (taken from the CDC). My graph is covering most of the same period as Montgomery's. But perhaps because she uses a different projection, or simply because I am plotting more points, it has a different shape. Notice first the rapid increase in this proportion as the Baby Boom retires. This is what will drive the expansion of Medicare costs, even if cost / retiree is stable. After 2030, however, the rate of growth of the elderly as a percentage of total population slows and then stops. As the CDC authors note:

...when the last Baby Boomers enter the ranks of the older population and the first Baby Boomer cohort enters the oldest old age categories, the proportion aged 65 and older will be relatively stable at around 20 percent.

This will happen because the baby boom was followed by falling birthrates (the "baby bust").

Let's not count on this, because long-term demographic projections are often wrong. Moreover, the percentage of very old (and very expensive) persons within the elderly may continue to increase. But suppose, for the moment, that the CDC is right.

There may be a ray of hope here. We need to find ways to hold down the growth of per capita Medicare spending, We need to do this by transforming care to make it more cost-effective. But if* we can find a way to control the growth in spending per retiree, and demographic pressure ends, we will have solved the problem of growth in Medicare cost.

*This is, as they say, a big IF.

How to Explain the Point of Cost-Effectiveness Analysis

Michael Scott: Who's ahead in points?

Pam Beesly: I think they're even. At various times you gave Jim 10 points, Dwight a gold star, and Stanley a thumbs-up. And I don't really know how to compare those units.

Michael: Well check to see if there's a conversion chart in that notebook. 

Pam: I really doubt it Michael.

Michael: Please just check.

Note: I'm off to a conference today in Portugal on justice in the distribution of health. I'm hoping to blog some of it, but I'm not yet sure about internet access, etc. My monumentally influential blogging will continue at its regular pace next week.

 

Health care and accountability in Canada and the US

post by Bill Gardner

Paul posted yesterday on problems in getting doctors to routinely prescribe beta-blockers to patients who have suffered heart attacks. He quotes David Cutler's great book,

fans of the Canadian single-payer system should know that virtually the same share of people with a heart attack fail to receive beta-blockers in Canada as in the United States.

Not a surprise to me. We have only been working at our Canadian hospital for a couple of weeks, but it is quite clear that holding doctors accountable for meeting standards of care is just as serious a problem here as it is in the United States. 

There is a single payer in Canada (although it is the province, not the federal government). The provinces, however, just pay for the care. The hospitals and the doctors are independent contractors, and they and the patients make the decisions about care. There is no one from the government in the building giving orders.

But, you ask, why can't the party paying the bill demand improvements in care as part of the contract? I hope they can. However, a principal can only influence an agent to the degree that the principal can measure the agent's performance. That is just as big a challenge here as it is in the US.

Health care costs and tragic incentives

post by Bill Gardner

Paul had a great post last week that discussed the overuse of expensive technology in health care, in situations where less intensive or cheaper care would be as effective. 

the failure to prescribe beta-blockers for heart attack patients is just unconscionable. Beta blockers are super cheap but can reduce mortality associated with heart attacks by 25%. Still, Garber and Skinner report that the use of beta blockers "varied from just 5 percent of patients in McAllen, Texas, to over 80 percent in Rochester, New York, during the mid-1990s."

I want to point out that the situation is sometimes worse -- or perhaps just more tragic -- than he described.

I have had the privilege of working for several hospitals, including some that were non-profit in spirit as well as law, that is, with a strong commitment to the health of the populations they served. At one, I got to know the Chief Financial Officer quite well, because I regularly came to him with proposals for improving the quality of pediatric mental health care. After children get through early childhood, mental health problems are the most important source of pediatric morbidity. I needed his commitment to small capital investments for clinical process innovations. Here is our dialogue, digested across several conversations and with the diplomacy edited out.

CFO: "I am already losing money on community mental health care." [A sad truth]

Me: "So what? We are trying to prevent adolescent suicides." [My cause of the month...]

CFO: "You know that MRI machine you bothered me about last week? The imaging studies that, in your non-medical opinion, are over-prescribed? What do you imagine is paying for the community mental health care?" 

The CFO was fully committed to children's well-being. However, the incentives that he faced were wrongly calibrated. The excessive profit he made on imaging was used to subsidize mental health, where he was under-compensated. Because he manages a budget, however, all his choices are interdependent. Correcting the overuse of expensive technology is, sometimes, harder than it looks.