It Depends On Who Is Paying

From a Washington Post story about Dick Cheney’s heart transplant (via Instapundit):

A study published last November found that treatment similar to what Cheney received costs $167,208 for every year of life saved. Treatments that “buy” a year of life for $50,000 or less are considered cost-effective, and those costing $50,000 to $100,000 are generally considered acceptable. (A European study in 2011 found the device much less of a bargain, at a cost of $414,275 for year of life saved).
Who gets a donor heart when one comes available depends on many variables, including body size and blood type. The most important one, however, is a person’s clinical condition and immediate availability for surgery.
There are strict guidelines for placing someone in the most urgent category and the decision is made by a team of many specialists. Moving someone to the top of the list who shouldn’t be there would be hard to do and would open a hospital to major sanctions. Both Bull and John said they are confident Cheney got no special breaks.

From the quoted passage: Treatments that “buy” a year of life for $50,000 or less are considered cost-effective, and those costing $50,000 to $100,000 are generally considered acceptable. [My italics.]

The unstated assumptions here are that 1) third parties will pay for transplants and therefore get to decide which patients will be considered to receive transplants, and 2) third parties will allocate the limited supply of transplantable organs.

Points left undiscussed are the likelihood (assuming that the supply of human organs is like the supply of everything else) that allowing payment for donor organs would increase the supply, and the possibility that price allocation of transplantable organs would make it easier for people who aren’t Dick Cheney or Steve Jobs to get transplants.

I myself am reluctant to be an organ donor because on the margin I don’t want to give agents of the current hospital-administered organ-distribution system that benefits from my organs any additional incentive to decide that I am dead. But if being an organ donor meant that agents of transplant prospects or their insurance companies could negotiate with my agent to pay money that would go to my family, I might reconsider.

It is true that a price-based organ allocation system would allow rich people to pay more for organs than poor people could afford but rich people have tremendous advantages under the current system. Does anyone think Steve Jobs wasn’t able to game the current system if he needed to? In a price-based system a poor person can buy insurance or solicit donations or find a patron, and there would probably be institutions to subsidize transplants for poor people in the same way that private charities operate hospitals and subsidize other types of medical care. The current non-price organ allocation system is based on committee decisions and nominal considerations of fairness. Inevitably, on the margin it will be arbitrary and probably (if it is like most systems for making non-price allocations of scarce goods by committee) subject to political and other influences.

The current organ-allocation system is a bit like college athletics. The owners of something valuable (athletic talent or organs) are not allowed to sell it but may only donate it to institutions that then use it for their own purposes. Obviously this situation is acceptable to current organ donors, many of whom get substantial psychic benefit from putting themselves on donor lists. Their willingness to donate their organs to help other people live is highly admirable. But how many more people would offer themselves as organ donors if by doing so they could give their families the possibility of a substantial payout in the event of their untimely death? And how many more people would be able to get transplants who now die while waiting?

One good thing is the technological innovation that results from the chronic shortage of transplantable organs. Cheney and other people are able to keep going with the help of mechanical pumps until donor hearts are available. And it looks as though eventually mechanical hearts will replace transplants for people with heart problems. But the new technology isn’t cheap, so the issue of third-party payment is important. I would certainly be willing to pay $150k/year (or whatever Cheney’s pump cost) to keep myself alive if I could afford it. Maybe an insurance company would pay that if I could purchase the right policy in a relatively deregulated insurance market that catered to such risks. Would the government pay it under Obamacare? Maybe for some people; probably not for people above some arbitrary age as determined by a committee. But remember, the idea that there will be “death panels” is a right-wing canard.

6 thoughts on “It Depends On Who Is Paying”

  1. I live in Canada. Canada has had national universal medicare since 1968 (it is nomially under the control of each province but funding from the federal government via The Canada Health Act gives the federal government disproportional influence on what must be insured and other administrative aspects of each province’s rules).I have had numerous serious medical procedures (double trans tibia amputations). I have been through the slow deaths of my parents and mother-in-law.

    Death Panels do exist. If one is not politically connected and is over 75 years of age, the minimum of resources will be allocated to you and your medical conditions. My medical requirements were met quickly to get me back to work and paying taxes into a system which consumes close to 50% of provincial government spending and about 20% of federal government spending. My parents and mother in law? Not so much. Extending their lives would not increase the tax base but would increase other government spending (old age pensions and what not).

    Other distortions exist. A physician cannot open a private surgery for people who wish to “jump the queue” unless the surgery is for abortions. Then you may open the private surgery and bill the provinial government’s medical system for each abortion AND get police enforced anti-abortion protest “bubble zones” around your pivate clinic. in the mid 1980’s several provinces saw the rising cost of medical care and decided to “solve” it by limiting enrollment in provincially funded (i.e. ALL) universities. The concept being physician billings were the largest cost and if you restrict the number of physicians the spending will be restricted as well. Any one see a problem with this plan? Anyone? Bueller? The predicable result happened.

    USA avoid nationalized medical care at ALL costs, even if it means exercising your marvelous 2nd Amendmen rights to prevent it.

  2. The “cost effectiveness” studies are utter crap. The number of assumptions is ridiculous. Oregon, under Governor Kitzhaber, a former ER doc, tried to use this to set priorities for treatment about 20 years ago. The number one priority turned out to be the common cold. Back to the drawing board.

    Routine sigmoidoscopy was subjected to this nonsense 20 years ago. One of the assumptions was that a positive exam would result in expensive surgery. The conclusion has been that $300,000 per life saved is cheap. Most decision theory uses Quality Adjusted Life Years (or QALYs) and some serious people have tried to use it but the methodology is very complex. Would you rather live one more year in pain from cancer ? My son’s mother-in-law just died from a rare cancer. Nobody asked her but the family had some serious discussions as her quality of life deteriorated.

    I once had a family vote 5 to 4 to put a subclavian catheter in the father to keep him alive until morning. I tried to discourage them.

    Canada is starting to see private clinics again since the supreme court determined that “a health plan” is not medical care. They are technically illegal but thriving. It will probably put a crimp in the Spokane and Minneapolis medical centers.

    Death Panels are coming unless we can keep Santorum from losing the election for Romney.

    Organ donation is so complex that only the government could have designed it. I remember when renal dialysis was not offered to anyone over 55. Seattle, which had to only dialysis units for chronic dialysis in the country had a real death panel. It’s in my book.

  3. In 1978 my late first wife suffered kidney failure and was put on dialysis,which was covered by Medicaid in NY. A few years earlier and the the “God”panels would have likely left her out. The linked article describes the situation accurately pre -Medicaid. One thing about dialysis then (I don’t know if has changed) is that you generally felt unwell almost all the time.

    At that time, apparently, the NHS limited dialysis to those it was “medically appropriate for”. This meant under age 56. Do they still do that?
    If the gov’t is paying,you can be pretty sure in the end they will determine what is appropriate. Do we really want to go there?

  4. ESRD (End Stage Renal Disease) is now covered by Medicare and there are about 7 million covered. Diabetics are a big share of the patients. The poor quality of life was from anemia and the discovery and synthesis of erythropoietin has changed all that. The patients can live normal lives. Younger patients are usually candidates for transplant. It is not terribly unusual for a type I diabetic with ESRD to receive a combined pancreas/kidney transplant. Hopefully, an artificial pancreas is not too far away. Pancreas transplants are not considered “worth it” because of the immunosuppressive drugs for life and the risks. Once a kidney transplant becomes part of the equation, the pancreas transplant is usually included. The patient will be on the drugs anyway.

    There is a very interesting book by Tom Starzl, who developed liver transplant, about his early series of kidney transplant patients. He has a theory that if you do not kill off all the immune system at first, the patients can develop “tolerance” to the transplanted kidney. A number of his early patients have not taken drugs for many years and are free of rejection. It is a controversial topic.

  5. One small thing. Norm … what did all that cost you? In dollars if you will.

    He is talking about standard health care. The same health care that gave my evil step father a new knee at 93 years old. He is evil because he is ex Goldman Sachs and is now sponging off his wife’s country. He is also in amazing shape and they told him they don’t normally do knees for people like him but his great condition and the fact he blew it up playing tennis was enough. He at 97 has finally quit tennis and he is kinda sad about that. Says it takes so long to get across the court that he won’t do it anymore.

    I am implementing my health care now, I now have all the necessary documents. I had paperwork problems, born in England to a Canadian fighting in the British army, and being healthy never bothered. Also my gold medical card, for over 65, is identification for many discounts.

  6. re Pengun

    In direct costs, a non tax dedcutable premium of $108/month. In additional taxes (consunption and income) about another $8,000 per annum. In the early 1980’s I was considering emigration to the USA. Being a prudent accountant I explored the effect of tax rates and other costs. At that stage in my life, additional medical care premiums (I assumed a prospective employer would not provide coverage) less income and consumption tax savings I would have saved $3,000 to $5,000 per annum by emigrating to the USA. Since that time, a national sales tax (initially 7% in 1991 and 5% since 2008) on almost every good and service has been levied, income tax deductions have been replaced with non refundable tax credits (worth less in tax saved the higher one’s income.

    There is no such thing as a free lunch.

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