Improving Efficiency, Not Just Cutting Costs



There are a number of different dimensions to the idea of reducing health care costs. One of the most important ones is, I think, simply improving the efficiency with which health services are delivered. But a pure green eyeshades approach sometimes winds up slighting the promise of these methods. Thus, this otherwise excellent piece (PDF) on reducing health care spending from The New England Journal of Medicine (via Bruce Bartlett) ends up being oddly dismissive of something that sounds great to me:

We also examined “value-based” insurance designs, in which drug copayments for patients with certain chronic diseases are reduced to give them an incentive for taking their medications regularly. Substantial evidence suggests that lower copayments lead to better adherence to drug regimes among patients with chronic diseases, but the effect on total health care spending would probably be small, since the resulting reduction in the use of hospital and other services would be relatively modest.

What I think this misses is that we’re talking about a “relatively modest” reduction in costs that’s achieved 100 percent by improving the health and quality-of-life of patients. That’s a really good idea! I don’t think it’s at all clear that high levels of national health spending would be all that problematic if it were also the case that the spending was all arranged in a very efficient, quality-of-life-improving kind of way. But it isn’t. Consequently, measures that actually succeed in both reducing costs and improving health outcomes are hugely valuable.