The next big health care idea

This week, the New York Times magazine ran an extended interview with President Obama on his economic program, while The New Yorker’s Ryan Lizza profiled Obama’s budget director, Peter Orzsag.  Both pieces devoted considerable attention to health care reform, and made clear that despite the urgency of dealing with automobile bailouts, financial regulation, housing, and the overall economy, health care remains the Administration’s top legislative priority. But what was striking was that neither piece devoted much attention to the issue of the uninsured and the challenge of expanding coverage to the 45-50 million Americans who currently lack insurance. Instead, the health care issue uppermost in the minds of Obama and Orszag, and the policy proposal on which their initiative seems to hinge, is something most Americans have likely never heard of – comparative effectiveness research.

The term refers to the emerging effort to identify which medical treatments and procedures can be shown to have the most cost-effective outcomes in making people healthier, and to find ways to promote medical decision-making in line with these findings. For the Administration, comparative effectiveness research is the key to health care reform because it provides the possibility of expanding access to care while reining in health care spending, which is essential for the nation’s long-term fiscal stability.

The idea, which Orszag has studied extensively, is based on research showing a general lack of correlation between health care spending and medical outcomes in the current medical system:

As a fellow at the Brookings Institution, [Orszag] became obsessed with the findings of a research team at Dartmouth showing that some regions of the country spend far more money on health care than others but that patients in those high-spending areas don’t have better outcomes than those in regions that spend less money. If spending more on health care has no correlation with making people healthier, then there must be enormous savings that a smart government, by determining precisely which medical procedures are worth financing and which are not, could wring out of the system.

The AARP reports that, according to the Institute of Medicine, of the nation’s more than $2 trillion in annual health expenditures, less than 1 percent is invested in addressing the comparative effectiveness of medical treatments, prescription drugs, and so-called “healthy behaviors.” The stimulus bill passed by Congress in February  begins to address this by allocating $1.1 million for comparative effectiveness research. The Comparative Effectiveness Research Act, which was introduced in Congress in 2008, would create the independent and nonprofit Health Care Comparative Effectiveness Research Institute to conduct comparative effectiveness research and to publicly disseminate the results.

In principle, supporting research that would improve knowledge about the effectiveness of medical treatments would seem to be an idea that all parts of the health care system – providers, patients, and payors – would support. So why is it controversial? Well, if comparative effectiveness research is going to generate cost savings, there will have to be some mechanism to translate the research into better decisions by medical providers. Lizza writes:

At the core of both the stimulus bill and the Obama budget is Orszag’s belief that a government empowered with research on the most effective medical treatments can, using the proper incentives, persuade doctors to become more efficient health-care providers, thus saving billions of dollars.

How does the government create an incentive structure that will persuade medical professionals to become more cost-efficient health-care providers? Opponents of Obama’s health care plans are already painting comparative effectiveness research as leading to the creation of a large bureaucracy that will intrude into the doctor-patient relationship. The group Conservatives for Patients Rights has released an ad titled “Not So Innocent” which warns:

Deep inside the stimulus bill, Congress buried an innocent sounding board: the Federal Coordinating Council For Comparative Effectiveness Research.  It’s not so innocent – it’s the first step in government control over your health care choices.  This federal council is modeled after the national board that controls Britain’s health system…Not only could a government board deny your choice in doctors, but it can control life and death for some patients.

Orszag contends that a health care system based on comparative effectiveness research can be established “by a simple adjustment of the payment structure for government-purchased health care: “You get paid more if the treatment has been shown to be effective and a little less if not.”” However, Obama, in his interview with the Times, presents the idea in a way that is less likely to ease concerns about the intrusiveness of effectiveness-based medicine:

And so if it turns out that doctors in Florida are spending 25 percent more on treating their patients as doctors in Minnesota, and the doctors in Minnesota are getting outcomes that are just as good — then us going down to Florida and pointing out that this is how folks in Minnesota are doing it and they seem to be getting pretty good outcomes, and are there particular reasons why you’re doing what you’re doing? — I think that conversation will ultimately yield some significant savings and some significant benefits.

The President’s reasoning makes sense, yet lots of people will want to know who exactly is the “us” going down to Florida to try to talk sense into the misguided doctors.

Supporters of the Administration are already out explaining the project in ways that emphasize patient empowerment, and consumer groups like the AARP are supportive at least of conducting the research. However, preventing powerful interests such as the American Medical Association and the pharmaceutical lobby from mobilizing in opposition will be quite a task. If the success of health care reform – including tackling the problem of the uninsured –  is really going to hinge on the success of comparative effectiveness research, this may be the new Administration’s biggest gamble of all.


Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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