The Presumption Against Expensive Health Care Consumption
19 Pages Posted: 10 Apr 2014 Last revised: 10 Sep 2014
Date Written: May 30, 2014
This essay, as part of a symposium in honor of Professor Einer Elhauge, starts with his recognition that, for both epistemic and normative reasons, it remains profoundly difficult to regulate particular uses of medical technologies on the basis of their cost-benefit ratios. Nonetheless, this essay argues in favor of a general regulatory presumption against consumption for the most expensive medical technology usages, which drive most of aggregate healthcare spending. This essay synthesizes twelve facts about the ways in which medical technologies are produced, regulated, studied, and consumed to suggest that it is quite unlikely that the most expensive usages of medical technologies will have benefits exceeding their costs. These considerations include the contingent relationship between research investments and health outcomes, the FDA’s lack of authority to consider cost-effectiveness, and the prevalence of off-label uses that have no proof of efficacy. Where efficacy is shown, there are problems in scientific research including publication biases, lack of effective randomization and blinding, commercial biases in design and conduct, the use of surrogates for improved health, small demonstrated benefits not enjoyed by most consumers, and the lack of power and time to detect adverse outcomes. There are also market failures because consumers are unable to estimate benefits and have little or no exposure to cost, while their advisors, physicians, have misaligned incentives. Ultimately, aggregate data across time, geography, and experimental conditions shows that much medical spending is along the “flat of the curve,” not delivering commensurate healthcare value. Thus even without particularized rationing decisions, crude regulatory tools that reduce consumption, while preserving choice, are likely to promote rather than hinder welfare.
Keywords: Elhauge, medical technologies, regulation, healthcare spending, medical spending, expensive medical technology
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