Great Moments in Health Economics
By David Henderson
From President Obama’s Council of Economic Advisers, “The Economic Case for Health Reform,” June 2009:
In medicine, however, technological progress in recent decades has been almost exclusively cost-increasing, without generating a commensurate increase in value. Undoubtedly, provider incentives, which largely reward finding an expensive way of treating a previously untreated condition rather than finding a less costly alternative to an existing treatment, contribute to this trend. (p.20)
In other words, an example of technological progress that increases costs without generating a commensurate increase in value is a new expensive way to treat a condition, sometimes a disease, for which no treatment had existed. Like AIDS? Polio? Parkinson’s? Alzheimer’s? For virtually every disease, there was some point in time at which it was not treatable. And some of them are treatable. This is generally a good thing.
Surely, given the incentives in the insurance system, the CEA may be right to point to new ways to treat previously untreated diseases that, even though beneficial, are not worth it. But to cavalierly make the statement that curing previously untreated disease is not worth it is breathtaking.