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Metrics for Future Health: A Way Out of the Inputs-Outcomes Conundrum


James P. Pinkerton
Medical Progress Today
February 24, 2011

The consent of the governed depends on popular confidence in the competence of government.

In terms of public finance, for instance, if people see a too-wide disconnect between inputs (defined as tax money spent), and outcomes (what they actually get for their money), they will lose faith in their leaders and work toward political change.

Over the past two years the gap between fiscal inputs and outcomes—the massive federal budget deficit as well as state and municipal budget gaps—has led to the emergence of the Tea Party movement demanding greater frugality from every level of American government. Angry voters are demanding fundamental reforms to address the deficit and focus government spending on high-value, high-return services. The specter of government defaults in Greece, Ireland, and Spain has added even greater impetus to reform, producing the first glimmerings of a bipartisan consensus.

Today, in the realm of healthcare, many are also saying that the ruling elites have failed—the gap between massive inputs and meager outcomes has become a chasm—and so major political change, in the form of Obamacare, is on its way. But is it the kind of change we need?

Intuitively, all of us can sense that the healthcare status quo is failing, and yet the dimensions of that breakdown might not be fully clear. So perhaps some new metrics would bring the point home to all of us—and clarify what kinds of rethinking and reforms we really need.

At present, a deeply embedded incentive-structure dominates American politics—the reality that the perceived effort of government spending is more valuable, politically, than the actual results of that spending. Billy Tauzin, former chairman of the House Energy and Commerce Committee, as well as former president of the Pharmaceutical Research and Manufacturers of America, sums the point up well: "Washington is prejudiced in favor of activities and against results," he notes; "a results orientation goes against the tide."[i]

To put it another way, a politician who spends money buys himself a headline, as well as immediate goodwill from those who favor his spending—and yet the larger positive results of that spending, if any, might be far over the electoral horizon, deep in the future, obscured in the overall haze of complex events. So the vote-optimizing strategy is to take the vote-in-the-hand now, and let others worry about the actual outcomes (or unintended consequences) long after you've retired from the political scene.

In the healthcare sector, for example, it might be hard for a politician to demonstrate that he will be improving public health or medical outcomes a decade or two from now—but it's easy to show that he has delivered the bacon for constituents in the short run. Indeed, within the Democratic Party, ideological constituencies have strongly supported national health insurance for decades; yet they seem to care more about the idea of universal healthcare than about the actual medical quality of that care. And from a practical political point of view, why shouldn't a vote-maximizing Democratic official seek to give loyal supporters what they want?

Other blocs, too, care more out today's inputs than tomorrow's outcomes. The US healthcare sector, for instance, consists of some 14.3 million workers[ii]—all of whom know exactly who is paying their salary. And it so happens that the Service Employees International Union, which represents hundreds of thousands of healthcare workers, has emerged as one of the most enthusiastic supporters of the Patient Protection and Affordable Care Act, aka Obamacare. [iii]

Some say that Obamacare will shrink the healthcare sector, but the SEIU obviously isn't worried about that prospect; many more jobs, union chiefs reckon, will be found as tens of millions of the uninsured are enrolled. So will any cost savings come to healthcare, as the President has promised? Perhaps—but likely not from reductions in employment of health service workers, such as those unionized by the SEIU. At a time when jobs are scarce, it’s easier to cut back on future-valued technology (new drugs, medical devices, high tech diagnostics) than it is to cut back on present-valued labor (the labor that can walk a picket line and donates 90% of its political contributions to Democrats).

In the meantime, per Tauzin, we can note plenty of financial "activities" in the healthcare sector. Over the last three decades, the national health expenditure of the United States has more than doubled as a share of GDP, from 8.6 percent of GDP in 1979 to 17.6 percent in 2009. Today we are spending north of $2.5 trillion a year; about 44 percent of that total comes from the government.[iv] And yet given given the size and scope of the Obamacare legislation—2,400 pages of legislation, plus as many as 144,000 pages of future regulation[v]—it could be argued, of course, that Uncle Sam now controls virtually the whole of the healthcare system.[vi]

So are we taxpaying Americans getting our money's worth? Cancer survival rates have improved substantially in recent decades, from a 50 percent survival rate in the mid 1970s to a 68 percent survival rate today.[vii] And yet overall, in the same three decades that spending as a share of wealth more than doubled, from 1979 to 2009, life expectancy in the US has risen only slightly, from 73.9 years to 78.1 years,[viii] an increase of just 5.6 percent. To be sure, many factors play into longevity, but it seems obvious that the medical sector has seen nothing like the permanent innovation revolution that we have seen, say, in personal electronics. Indeed, we might wonder why the cyber-revolution continues, while the biotech revolution never seems really to arrive. Might there be blockages unique to medicine, such as regulation and litigation?

In fact, we can see disturbing evidence that the technological side of medicine is in retreat—an absolute fall in the number of medical innovations approved by the Food and Drug Administration. According to FDA's own figures, over the last decade, the number of medical devices approved each year has fallen by more than half, 55 percent.[ix] And the number of new drugs approved by the FDA over the last 15 years has fallen by 63 percent.[x] Is this fall-off due to lack of interest by device- and drug-makers? That's unlikely, given the powerful financial incentives for companies to bring new products to market. It is much more likely the result of an overly bureaucratic and restrictive FDA.

Another inhibiting factor, of course, could be the rising tide of litigation. A UBS analyst estimates that litigation over Avandia—regarding alleged side-effects from that diabetes drug—could cost maker GlaxoSmithKline some $6 billion.[xi] So how many more diabetes drugs will GSK want to make in the future? Those looking for a medical-science solution to the multi-hundred-billion dollar annual cost of diabetes will have to look elsewhere.[xii]

Indeed, ten-digit lawsuits have a way of thwarting progress. The National Institutes of Health spends more than $30 billion a year on research, but research is of little value until it is developed into an actual product or medication. And we have seen that trial lawyers can take money out of the drug pipeline, just as Uncle Sam can put it in. So even though NIH funding rose 221 percent in real terms from 1979-2009,[xiii] it's possible that little will come from all that expenditure, because fewer drug makers will want to risk the liability that comes from trying to turn research into development and then into production.

But wherever the actual blame lies—manufacturers, regulators, or lawyers—we all suffer the consequences of poorer health and shorter lives.

So what does the future hold for medical advancement? According to one estimate, the number of medical venture capitalists is falling by three-fourths,[xiv] a sobering indication that the market doesn't see much upside in medical innovation.

We are seeing this drying up of the new-product pipeline in the case of Alzheimer's Disease. What do we currently have in the medical armamentarium to combat Alzheimer's? What effective treatments have we developed for a malady that costs the US some $172 billion a year?[xv] We have exactly zero.[xvi]

Meanwhile, the news continues to be good for healthcare workers—at least when they are young. The ranks of those 14.3 million workers seem destined to swell even further as the Alzheimer's epidemic spreads throughout an aging America. Those workers will likely be caring for the victims of dementia, as opposed to actually curing dementia—but a job's a job. So a cynic might conclude that our current healthcare system is designed by the nursing-home industry, staff and owners alike. That is, greater sickness + no cure = long term dependency. And speaking of dependency, is it too cynical to suggest that maybe some vote-minded politicians have come to see the upside of larger numbers of helpless elderly? Those suffering from dementia might lose their minds, but they can't protest budgets that protect favored constituencies (like the SEIU) at the expense of new treatments for AD.

So is there an answer? Is there a way to escape from the hegemony of inputs over outcomes? Of "activities" over "results"? One obvious answer is better information. If people fully understood that they are spending more and getting less—that they are being ripped off—they would demand change in the system. There'd be a Tea Party for health care, a revolution in favor of biotech overnight.

So what we need is a "Health Spending Index," so that people can better see what is being done with their trillions—who benefits and what is happening to their health. Americans have learned to monitor the stock market, or interest rates, or tax rates, or their own blood pressure; they should now start concerning themselves with the health of the healthcare system. Today, the principal metric that people see in regard to healthcare is the number of uninsured Americans. That is, the political left, aided by the media, has propagated the idea that the number of uninsured is the most urgent measure of our healthcare system—and that the great societal goal, of course, should be to drive that uninsured number down to zero. And even though the number of uninsured has, in fact, actually grown since the enactment of Obamacare, the media have mostly ignored that fact.[xvii] Indeed, we can expect that President Obama will campaign in 2012 as if the health insurance issue has been mostly solved, thanks to his bill.

Yet as we have seen, other numbers are valuable, too, from cancer survival rates to life-expectancy indices. In addition, we might conclude that the most valuable metrics are the leading indicators of medicine—the statistics that show how many new treatments and cures are emerging from the medical pipeline. And perhaps the most valuable metric of all would be a "Health Future Index," showing us what we have to look forward to, or not.

So how do we inject these valuable numbers into the common discourse? We could start with Congressional hearings about the gap between health care spending and health care innovation. And then we could ask an independent advisory board to publish an annual life "Life Futures Index," that would tell Americans if their investment in new technologies was paying off. This would be an index that all Americans should track assiduously, because it is indeed a matter of life and death. And people might finally be outraged enough to demand real change.

ENDNOTES

[i] Interview with Billy Tauzin, Washington DC, January 19, 2011.

[ii] http://www.bls.gov/oco/cg/cgs035.htm

[iii] http://www.seiu.org/seiuhealthcare/

[iv] http://www.cms.gov/NationalHealthExpendData/downloads/highlights.pdf

[v] Torinus, John, “GOP wins will slow ObamaCare,” TheCompanyThat SolvedHealthcare.com, November 17, 2010. http://www.thecompanythatsolvedhealthcare.com/blog/runaway-costs-premiums/gop-wins-will-slow-obamacare/

[vi] Bader, Hans, "Is Obamacare a government takeover of the healthcare system? In important ways, it is." The Washington Examiner, January 18, 2011. http://washingtonexaminer.com/blogs/opinion-zone/2011/01/obamacare-government-takeover-healthcare-system-important-ways-it

[vii] American Cancer Society, "Cancer Facts & Figures 2010." http://www.cancer.org/acs/groups/content/@epidemiologysurveilance/documents/document/acspc-026238.pdf

[viii] http://www.infoplease.com/ipa/A0005148.html and http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

[ix] FDA, "2010 Device Approvals," January 14, 2011. And data for previous years, found on previous page. http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedures/DeviceApprovalsandClearances/Recently-ApprovedDevices/ucm199026.htm

[x] "2010 FDA drug approvals," Pharma Strategy Blog, February 3, 2011. http://pharmastrategyblog.com/2011/02/2010-fda-drug-approvals.html/#p1

[xi] Fletcher, Nick, "Glaxo could face $6bn Avandia liability, says UBS," The Guardian, March 5, 2010. http://www.guardian.co.uk/business/marketforceslive/2010/mar/05/glaxosmithkline

[xii] Marcus, Mary Brophy, "Diabetes may affect as many as 1 in 3 Americans by 2050," USA Today, October 22, 2010. http://www.usatoday.com/yourlife/health/medical/diabetes/2010-10-22-1Adiabetes22_ST_N.htm

[xiii] http://officeofbudget.od.nih.gov/pdfs/FY08/FY08%20COMPLETED/appic3806%20-%20transposed%20%2070%20-%2079.pdf and http://officeofbudget.od.nih.gov/pdfs/FY11/Approp.%20History%20by%20IC%20(FINAL).pdf

[xiv] Merritt, Rick, "Regulations rise as VC's exit health care," EE Times, September 17, 2011. http://www.eetimes.com/electronics-news/4208574/Regulations-rise-as-VCs-exit-health-care

[xv] O'Connor, Sandra Day, Prusiner, Stanley, and Dychtwald, Ken, "The Age of Alzheimer's," The New York Times, October 27, 2010. http://www.nytimes.com/2010/10/28/opinion/28oconnor.html?_r=1&ref=opinion

[xvi] Kolata, Gina, "Years Later, No Magic Bullet Against Alzheimer's Disease," The New York Times, August 28, 2010. http://www.nytimes.com/2010/08/29/health/research/29prevent.html?ref=general&src=me&pagewanted=all

[xvii] Wolf, Richard, "Number of uninsured Americans rises to 50.7 million," USA Today, September 17, 2010. http://www.usatoday.com/news/nation/2010-09-17-uninsured17_ST_N.htm

James P. Pinkerton is a senior research fellow at the American Strategy Program, a contributor to the Fox News Channel and a regular panelist on the Fox "News Watch" show, the highest-rated media-critique show on television. He is also the editor of SeriousMedicineStrategy.org.

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