Let Brits Do US Med Eval

Here is my entire 300 word NYT oped:

Medicare should stop paying for treatments that the British Medical Journal says probably don’t work.

Today, United States agencies that try to not pay for ineffective treatments face the wrath of Congress, egged on by the surgeons and drug companies whose revenue is threatened. So far, U.S. agencies have pretty much always backed down, and just paid for everything.

The United Kingdom, where, on average, people live longer than in the U.S., spends only about 9 percent of gross domestic product on medicine, compared with our 18 percent. The British control costs in part by having the will to empower a hard-nosed agency, the National Institute for Health and Clinical Experience (N.I.C.E.), to study treatments and declare some ineffective. Some hope the United States will create a similar agency, but I fear it would be hopelessly politicized and declawed.

My solution: admit we are cost-control wimps, and outsource our treatment evaluation to the U.K. Pass a simple law saying Medicare (and Medicaid) won’t cover treatments considered but not positively appraised by the Britain’s national health institute.

Even better, use clinical evidence evaluations of the British Medical Journal. They’ve classified more than 3,000 treatments as either unknown effectiveness (51 percent), beneficial (11 percent), likely to be beneficial (23 percent), trade-off between benefits and harms (7 percent), unlikely to be beneficial (5 percent) and likely to be ineffective or harmful (3 percent). Let’s at least stop paying for these last two categories of treatments! And to put pressure on doctors to collect evidence, let’s stop paying for “unknown effectiveness” treatments after 10 years of use.

Yes, eventually, this evaluation source would become corrupted, as were the asset risk rating agencies that contributed to the recent financial meltdown. But we’d at least have a few more years to come up with a better solution.

Interestingly, two of the nine other opeds on “What Medicare Services to Cut, Now” wanted more hospice care.

Added 4June: Will Wilkinson:

This reminds me of another proposal, similar in spirit, to de-nationalise the drug-approval process … [by] Daniel Klein …:

One idea is to recognize the drug approvals of, say, 15 other governments. That is, we reform the U.S. system so that if the drug-approval agency of even one of those 15 countries approves a drug for that country, then the drug is automatically approved in the United States.

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  • Sandeep

    US seems to be doing about the same, probably slightly better, than Britain as far as life expectancy at 65 is concerned (this seems to contradict the graph cited by Yglesias; in any case the difference isn’t too much). Also, how much of the 18% goes into research and other factors?

    • Douglas Knight

      Those are great charts. Yes, the US and UK expectancy at 65 are basically the same, though they US was ahead 20 years ago. The most striking 20 year trend is that Japanese women are pulling (further) ahead of European women, while European men are catching up to Japanese men. What’s up with that?

      • I’m going to assume Japanese male life expectancy has been static; the chart doesn’t say what the trends are for each gender-nationality.

        There are a number of possibilities that come to mind. Smoking is still a very male behavior, which damages longevity. Women have made considerable economic gains over the past 2 decades, while the position of males has deteriorated badly (much like in the US, blue collar jobs are vanishing, white collar jobs are ever rarer, and salarymen are disappearing) and they have become ever more temporary part time or simply NEETs. Lack of income and the social status of being gainfully employed damage health & longevity (I think, not sure if I have citations for that).

      • Douglas Knight

        I got the trends from Sandeep’s second link, to Yglesias.

        I don’t see your suggestions distinguishing Japan from Europe. I suppose that if smoking is male in Japan, but not Europe, that would explain larger sex gap in Japan, but it wouldn’t explain the trend.

      • Sandeep

        I don’t have a good explanation for the curious phenomenon of the life expectancy gender gap widening in Japan and closing in Europe, could it be that Japan has fewer full-time-working women? I would think that something like a low stress part time job is most conducive to longevity, but have no statistics to back that up.

    • JAMayes

      As a further point, naked life expectancy doesn’t account for differences in lifestyle and disease incidence in U.S. v. U.K. Our heightened expenditures could allow us to live as long as the Brits even though we have more obesity, diabetes, etc. I saw a study in the Lancet showing that cancer survival rates were way higher in the U.S. than in the U.K.

      • That higher “cancer survival rate” comes from earlier diagnosis and earlier treatment and is an artifact.

        The “start date” for cancer survival is from date of treatment. If two people are the same age and with the exact same cancer, but you treat one of them a year earlier, even if they die on the exact same day, because one of them was treated a year earlier, they have a year longer “cancer survival” time.

  • nazgulnarsil

    asking a bureaucrat to defer to someone else rather than form a interdepartmental panel with a fact finding trip to the caribbean thrown in (hat tip to Yes, Minister) is bound to go down in flames.

    • Not sure. I’m about to make an evidence-free claim that I can’t be bothered looking up, so please correct or confirm it: quite a lot of jurisdictions outside the US look to the America’s FDA when they decide on drug approval.

      Obviously those countries have their own drug-approving bureaucracy, but much of what they do is read FDA-related paperwork. This proves that governments can in principle pay attention other people’s results. I’m not sure this means the *American* government can do the same though.

      • American politicians (and the voters who elect them) are too xenophobic to agree to anything like this. How many laws have been passed prohibiting Sharia or any non-US law from being considered?

        Saving money isn’t what the politicians are after, it is getting ever more political power. How much it costs is irrelevant.

    • Michael Wengler

      The government agencies in charge of bank health all deferred to private companies Moodys, Standard&Poors, (and one other whose name I forget) for bond ratings. Capital reserve requirements were satisfied by the ownership of AAA rated securities. Unfortunately, these ratings agencies ALL rated mortgage backed securities (MBS) AAA. Market forces in actions, the best ratings investment banker money could buy!

      The point being government agencies do outsource ratings on bonds.

  • Michael Wengler

    So instead of Medicare having US Government death panels, we outsource to the UK Government death panels?

  • Jeffrey Soreff

    What does the British Medical Journal say about cryonics?

    • They probably haven’t said anything. If they did, they would be against it.

      1. Nobody is perfect. An error (from our perspective) on cryonics doesn’t refute the idea that the BMJ is doing a better job than the existing American solutions.
      2. They probably would not be wrong, either. The responsible cryonics advocates don’t claim it has a tremendous chance of working, just that it has a real (but small) chance of working. I think Hanson has said he expects a revival with confidence 1% or something once you account for all the links in the chain that can go wrong. (But perhaps I am thinking of someone else’s Fermi equation ruminations.)

  • J

    “The United Kingdom, where, on average, people live longer than in the U.S.”

    Are you sure that’s true? I’m always suspicious of claims like this, mainly because one of the biggest drivers is infant mortality, a self reported statistic distorted by wildly differing definitions of live birth from one country to another. Based on the stats above on life expectancy at 65, it appears to be incorrect.

  • Sigivald

    That “18%” link doesn’t seem to link to something that actually contains that factoid – or more importantly, a summary of what the spending was.

    Remember, there’s a lot of voluntary, personally-financed cosmetic medical expenditure in the US that doesn’t seem to happen in the UK.

    (Does this number include dental expenditures? Say… braces and whitening and the like?

    I can’t find numbers in a quick search, but certainly the mass of decades of talk about it from Britons suggests that in that area, Americans spend more because they desire straight teeth more.

    And that adds up. A lot.)

    Now, all the voluntary/cosmetic spending in the country won’t make up the 9% GDP differential – but it’s not zero either.

    I’d like to know what it is, for one.

    And I also don’t like the idea that aggregate spending via NHS is comparable to aggregate spending from Federal medical care, private insurance, and Paying Cash For Care You Want are really comparable, and that “we” are the ones paying for the latter [or perhaps even the latter two].

    “Americans” as a group don’t pay for breast enlargements and braces – individuals do.

    • The US Government, by itself, pays more (on a per-capita basis) than most other countries spend, in total, on health care.

  • I’m surprised to learn that Britain, which has a lot more social services than the U.S. does, spends less on health care as a percentage of its GDP. I wonder how much administration plays a role in U.S. health care costs.

    • There are two big factors that the UK doesn’t have to pay for, the administrative costs that US health insurance companies use do deny health insurance to “high risk” individuals (something like 30% of health insurance premiums) and insurance company profits.

      There is absolutely no reason for the US government to buy insurance from anyone. Insurance is only needed by an entity if the entity is not large enough financially to even out the relatively infrequent large expenses. The US government is the largest financial entity that there has ever been in the history of the world. The only reason the US government would buy insurance is to give profit to the insurance companies selling it.

      • J

        You raise an interesting point. Do figures for health care expenditures in the UK include administrative costs? The idea that at least 30% of health care spending wouldn’t go to administrative costs if the government ran the industry is…optimistic, to put it mildly.

        From the NHS website :

        “The NHS employs more than 1.7m people. Of those, just under half are clinically qualified, including 120,000 hospital doctors, 40,000 general practitioners (GPs), 400,000 nurses and 25,000 ambulance staff”


        “Some 60% of the NHS budget is used to pay staff”

        It would appear your first sentence is incorrect.

      • J, the staff that the NHS pays for are health care providers. Their salaries are part of the cost of health care. The staff that health insurance companies have do not provide health care. Their salaries are insurance company administrative costs not health care costs.

        Administrative costs for Medicare are less than 2% of total expenditures (according to CBO).


        Health insurance companies have larger non-health related administration costs plus they make a profit too.

    • The biggest component of health care costs is health care.

      • Right, but tacking on an extra 40% administrative overhead and profit to a middleman doesn’t make health care any cheaper, it makes it more expensive even if the biggest component is still health care.

  • gbgbh

    There is absolutely no reason for the US government to buy insurance from anyone. Insurance is only needed by an entity if the entity is not large enough financially to even out the relatively infrequent large expenses. The US government is the largest financial entity that there has ever been in the history of the world. The only reason the US government would buy insurance is to give profit to the insurance companies selling it.