MA Health Policy Forum

The Massachusetts Health Policy Forum has written a pretty comprehensive brief on the various health IT activities going on in Massachusetts. It was written to support an upcoming conference. To download the brief, go to the link at the bottom of the page.

How much would you pay for another year of life?

Lee Gomes has an article in Wednesday's Wall Street Journal about medical technology ("A Technology Writer Confronts Wizardry In Today's Hospitals" -- subscription required). After being admitted to a hospital for 10 days with pneumonia, Gomes marvels at the latest imaging and lab technology, but notes that the bill for his 10-day stay was $125,000 (not including physicians' fees). And then, he concludes:

...I doubt that I would have declined any of the high-tech wonders I was offered. Who would? And that attitude is a main cause of our soaring health care costs. The decisions that are in our best interest as individual patients, in the aggregate, help push things into crisis. We can't afford the remarkable system we've been smart enough to build.

Study after study has concluded that development and rapid introduction of advanced technologies are the main driver of health care cost growth in the US. Consumers don't face the price of such technology introductions because of insurance, but given the stakes involved, who among us wouldn't want our insurance company to pay any amount more to reduce our risk of dying by even 1 percentage point? The question is, as Gomes implies, how do we reconcile our individual desires to spend anything to increase the odds of saving our own lives, with the real affordability issues that it raises?

Economists have approached this question by sneaking up on people. Rather than asking directly, "how much should Harvard Pilgrim pay to save your life?", they look at how people evaluate risk every day, and then calculate what this implies about how much they "value" their lives. Or put another way, how much they would be willing to pay for this if they could make the assessment in a rational state of mind clear of the medical crisis that they're facing at the time, and they had to pay on their own?

For example, airbags are known to save lives, and there was a time when you would pay extra to have airbags installed in your car. Question is, how much were people willing to pay for airbags that would reduce their risk of serious injury by some known percent? Once you know that, you can make a guess as to how much value they're placing on their own lives.

Sounds dodgy, I know, but it turns out that researchers who've done this across a number of categories have found surprising consistency in peoples' valuations. David Cutler, an economist at Harvard, has done a lot of work in this area. He surveyed a number of studies and found that most value an additional year of life between $75,000 and $150,000.

So, back to the Gomes article. Is $125,000 too much to pay? Looking at his picture in the paper, I'm guessing that he's in his 40's, with many happy years ahead of him. Given the nature of his pneumonia (he was in the hospital for 10 days!), this technology probably reduced his risk of dying or having serious complications by a substantial amount compared to what he would have faced, say, 50 years ago.

Do the math and the conclusion seems obvious: Gomes got a bargain......

Correlation vs causation

Today's Boston Globe commits one of the classic blunders of inferential statistics -- confusing correlation and causation. The Globe had the following headline:

Beverage reseach tied to corporate dollars

Conflict of interest seen when industry finances studies

The article describes a study from Childrens' Hospital that finds that nutrition research sponsored by the beverage industry is more likely to yield results that favor the industry than are studies that are not funded by the industry (64% versus 46%). The article concludes that industry money biases nutrition research.

Well, it may very well be true that industry money biases nutrition research, and I have no trouble believing that. Unfortunately, this data doesn't prove it, and indeed, could just as easily prove the opposite. Instead of industry money biasing research, it's plausible that causation really works the other way around -- nutrition research may bias the allocation of industry money.

How would this work? Instead of paying off researchers, it may be that dollars get allocated in a more benign way: corporate sponsors scan the research horizon and place their dollars behind scientists and research approaches that are already favorable to industry positions, and thus, are more likely to continue to generate findings that support industry positions.

Industry may not be paying off researchers so much as placing bets on which research is going to go their way. And the problem is, the data would look the same either way -- funding would be correlated with results under either scenario.

This same problem of trying to separate causation from correlation also exists in analyses of corporate contributions to Members of Congress. While the presumption is that oil industry money influences Congressional voting on environmental laws, for example, it may also be the case that oil industry money really just rewards Members who would vote against environmental interests anyway.

I think that researchers would be wise to somehow separate themselves from this money, because it hurts their credibility even if it doesn't affect their research, it's becoming increasingly transparent to the public, and the NIH extramural research model relies on their integrity.

I would also like to see Members of Congress do the same. Unfortunately, credibility may not matter quite so much for them.......