And so the death panels begin

Benjamin Zycher Contributor
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In a moment of honesty, professor and New York Times columnist Paul Krugman, arguing in favor of a single-payer (government) system of health insurance coverage, noted that “… the public sector… sooner or later [would] have to make key decisions about medical treatment.”  And: “… health care—including the decision about what treatment is provided—[would become] a public responsibility.”

And so the death panels begin.

An FDA advisory panel last month recommended to withdraw approval for Avastin, a drug for the treatment of advanced breast cancer.  Originally approved under the FDA accelerated review program, subsequent statistical studies of the benefits of the drug found them somewhat smaller than indicated by the data during the earlier review process.

But still, the benefits are not trivial: at least a one-third marginal improvement in disease progression, which translates to a range of one to almost six months of added time without progression of the disease.  And averages for a group of patients in a study obscure the larger benefits for a subset of individuals.  At the same time, Avastin is expensive, at tens of thousands of dollars per year.  Is the added medical benefit worth such large costs?

Actually, that is not quite the right question.  Instead: With whom ought that decision rest?  The FDA advisory panel is officially not supposed to consider the cost side of the issue, just as the FDA itself is not supposed to do so; safety and efficacy are the only legal criteria.  But the recommendation to withdraw Avastin’s label indication for breast cancer is inconsistent with that official constraint.  The benefits as measured by the data may be small, depending on one’s definition of that adjective, but they are not zero.  And no evidence of additional toxicity emerged.  Accordingly, it is obvious that the advisory panel is making a benefit/cost statement, regardless of whether they are supposed to do so and regardless of whether they admit it. The FDA may do the same itself.

As government outlays account for increasingly large shares of the health care market, it cannot avoid such rationing because resources are limited, always and everywhere. That is the deeper meaning of the new “comparative effectiveness review” process for drugs and medical devices, funded by $1.1 billion in the February 2009 “stimulus” legislation for the National Institutes of Health, the Department of Health and Human Services, and a new “Patient-Centered Outcomes Research Institute”.

Thus does George Orwell live on: Government does not have patients.  It has interest groups, many of which would applaud less government spending for health care coverage if that yielded more for their favored programs.  Governments thus have powerful incentives to impose price controls both explicit and hidden upon the health care system, by squeezing payments to medical providers, thus reducing access to actual health care (that is, to “coverage”), by engendering waiting lists, by denying coverage for certain services, and by underinvesting in medical technologies.  As the federal government leads, so will the insurers follow, particularly in the strange new world of ObamaCare, in which health insurers are little more than public utilities.  So much for the claim—mindless but ever-present during the health reform debate—that “universal coverage” would reduce the pressures on the emergency rooms: As physicians increasingly refuse to see patients because of low reimbursements, whether in Medicaid, Medicare, or the new system of “universal coverage,” it is obvious where those patients will go.

The more “universal” the coverage, the greater the budget pressures, and so the forces yielding the long-term degradation of health care quality inevitable under coverage systems mandated by or financed through government are more powerful.  In short: “Universal coverage” is the opposite of actual health care, and bureaucratized decisions are the inevitable outcome of ObamaCare, a massive shift toward central planning.  Government simply cannot “cover” everything, and those in need of the medical services not approved for government reimbursement, or the supply of which is reduced, are not “covered” in reality.

And so we return to the central question: Who ought to decide the benefit/cost tradeoff?  We have two options: rationing by Beltway bureaucrats in the usual top-down, heavy handed, one-size-fits-all fashion familiar to anyone with experience dealing with a federal agency, versus a doctor/patient relationship in the context of a competitive contracting process with private health insurers allowed to charge actuarially-fair premiums.  Can anyone possibly believe that the former is more consistent with the interests of patients?  Well, yes: Many members of Congress continue to argue that under ObamaCare, no way, no how will government bureaucrats interfere with individuals’ health care choices.  Or, at least, they used to argue that until they heard the richly-deserved derision at the town hall meetings last summer.  One suspects that they will hear a good deal more from the voters this November.

Benjamin Zycher is a senior fellow at the Pacific Research Institute. He may be reached at benzycher@zychereconomics.com.