A Bitter Pill For Us All

I have enjoyed watching the press and public reaction to Steven Brill's tour de force on healh care pricing transparency in the February 20th issue of TIME Magazine.  Reminded of the old NEW YORKER article consisting of 10,000 words on zinc, I am astonished and pleased that so many have read at least part of  "Bitter Pill."

Today I want to consider an observation Steven Brill makes early on about the role of innovation in health care pricing." [W]hat [he asks] is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?"  This question alone merits 10,000 words.

I want to suggest a few answers.  

First, we need to acknowledge how new medical and health technological advances are introduced to the U.S. market is left — to an astonishing degree– in the hands of the producers.  The government exercises very little of its buyer power to screen for efficacy and value in programs like Medicare.  Its position, as a result, is what I would describe as a defensive crouch when challenged by Medicare beneficiaries about limitations on coverage as opposed to an affirmative stance on value-based medicine.

Second, the thought that we could all implement some rules on value-based medicine if only the big bad producers would get out of our way is too simple.  We are so insulated from cost to the consumer and genuine knowledge about cost-effectiveness,  that even attempting to reach consensus on value-based medicine would be an important and necessary first step.  Then, introducing price transparency and price sensitivity into the clinical encounter could only come next. It is deemed revolutionary, after all, that Johns Hopkins School of Medicine has introduced some education into the financial costs of various diseases, treatments, and protocols into its medical school curriculum.

Finally, the prime directive in the medical health care ecosystem is not the drive to efficiency. Inefficiency has ruled the day, and continues to benefit many. If the incentives are not re-aligned to reward health care innovation that is efficient, the status quo ante of a system that rewards capture of monopoly rents is likely to continue.

I admire what Steven Brill has tried to do. But, in many ways, I admire his diagnosis more than his prognosis.