Paying For Experimental Treatments Would Break Health Care Bank

LA Times’ business columnist, David Lazarus (who I knew slightly when he worked at the SF Chronicle), writes about a man who just died of cancer after a private insurance company refused to pay for an experimental treatment that could have extended his life. (Note, the company paid for the treatment three times even though not required under the terms of the policy).  He decries the decision as a case of putting profits over people.

But non coverage is a much more acute danger under single payer plans. For example, Oregon Medicaid refused to pay for life extending chemotherapy for Barbara Wagner based on its rationing regulations, but offered her assisted suicide as a consolation.  In the end, she received the chemo free from the drug company.  And then there is the Florida case—directly relevant to the issue about which Lazarus writes—in which a court allowed Medicaid regulators to limit treatment for a cerebral palsy patient because regulators may decide what are “necessary” treatments based on “utilization control procedures.” Anecdotes cut both ways.

But back to the point: Lazarus claims that doctors should decide what treatments are provided and paid for. From “Putting a Price on Prolonging a Doomed Life:”

Clearly there are limits to how much can and should be done to prolong the lives of the terminally ill. But this is a matter for medical experts, not insurance bean counters, to address. A doctor is in the best position to determine what’s most appropriate for his or her patient. Health insurers have no business denying coverage just to save a buck. It’s not their call to make.

Under Obamacare, those “limits” will be promulgated and enforced by regulators, not doctors.  And many liberal advocates, such as the NYT editorial page, want explicit rationing. Along the same lines,  rationing—and assisted suicide—are also being pushed in Vermont to help pay for its new single payer plan.  The Wisconsin Medical Association also pushes rationing for Medicaid.  But why allow inconvenient facts to interfere with a good anti-private insurance company rant? Back to L:

Nor should they put patients and their families through the grueling process of challenging insurance decisions and battling a corporate bureaucracy. That’s just cruel. But it’s what we’ll keep getting as long as health insurance is run as a for-profit industry. Under such circumstances, a Bob Iritano isn’t a living, breathing person. He’s a financial liability. And for-profit companies have a fiduciary duty to eliminate financial liabilities.

That’s an unfair hit based on emotionalism because the experimental treatments wouldn’t—and shouldn’t—be paid for by a single payer plan either—with less chance for a compassionate exception being made.  And challenging bad decisions in publicly funded cases are far harder because the patient loses the power of the tort lawyer to compel that money for covered services be ponied up, which can be the bane of overly enthusiastic corporate cheapskates.

But digging deeper, Lazarus’s prescription lacks all common sense.  If doctors were to get paid for whatever procedure they decided to try in the face of desperate patient demands, there wouldn’t be enough money anywhere to pay for the costs of health care.

That is why we have developed regulatory procedures (which definitely need to be streamlined) to determine whether a proposed treatment is efficacious. As I have written, such approvals should not be based on cost effectiveness considerations, but whether they work as proposed.  In the real world, these procedures are the only means we now have to separate wheat from chaff in determining what should be covered by public or private payers.

Once the treatment has been approved, all things being equal, coverage should then apply.  (Yes, there are nuances here, but lets just talk generally.)  Until then, whether the payer is “single” such as Medicare, Medicaid, or for profit/nonprofit private sector, there can be no requirement for payment of experimental treatments.  Otherwise, the pit becomes bottomless and the entire system collapses.