QALY QALY Oxen Free!

posted at 4:18 pm on July 29, 2009 by King Banaian
[ Economics ]   

First, thanks to Ed for the invitation to the Greenroom.  It’s an honor to be here.

Over the last few days I’ve been posting on the use of QALY, the “quality-adjusted-life-year”.  Rather than repost that entire dialog, which is quite long, let me summarize it here with links back to my blog if you want all the details.

At the end of my radio show (which follows Ed on Saturdays at AM 1280 in Minneapolis) I had challenged listeners to learn more about QALY.  It is used by health care administrators and researchers to measure the benefit of a given medical procedure.  The goal is to provide them with a common denominator in measuring benefits — how many years of life is expected to be gained in a patient if we give him this treatment?  But the QA part says not all years are equal, nor is an additional year of life in a healthy 25-year-old male equivalent to that of a 55-year-old parapalegic female.  You have to adjust for quality.

David Catron noted last week that in Britain in 1993, its “National Institute for Health and Clinical Excellence” or NICE had determined that it could not spend more than $22,000 for a procedure that added 0.5 QALYs (that probably comes to about US$32,750 today.)  As I explored that thought, what bothered me was that the decider of whose benefits and whose costs was the governments.  To get economic decision-making right, the person who takes the benefits and pays the costs is the best positioned to make the right decision given they have good information.  I wrote:

When anyone else makes the decision — let it be a neighbor, your rabbi, or a committee; it need not carry the name ‘government’ — they lack the knowledge needed to solve the problem. “If we can agree that the economic problem of society is mainly one of rapid adaptation to changes in the particular circumstances of time and place,” wrote Friedrich Hayek in The Use of Knowledge in Society, “it would seem to follow that the ultimate decisions must be left to the people who are familiar with these circumstances, who know directly of the relevant changes and of the resources immediately available to meet them.” That’s unlikely to be anybody sitting in Washington DC, when it comes to the care of my family in Minnesota.

So for example we’re told that half of medical costs come in the last year of life.  But do we know when our last year of life is?  Often not.  My uncle was told he had Lou Gehrig’s disease and six months to one year to live; he made it seven years because he figured if he walked five miles a day his muscles wouldn’t have time to atrophy.  When he stopped walking to grieve his mother’s death, the disease caught up.  “Who knows when death may overtake me,” the hymn goes.  Will the QALY cop know or care that my genetics are good (three grandparents live well into their 90s), or I’m from Minnesota where longevity is excellent and health care costs lower?  Will they find out I smoke two cigars a day?  And so what if they do?

The QALY calculus says there are two kinds of procedures: those for which the benefits exceed the cost, and those for whom the benefits fall short.  But in fact there are many procedures where the benefits are probabilistic; treatment is neither necessary nor unnecessary.  I explored the procedure of routine colonoscopies today, thinking about the decision and wait times in various countries, and the correlation to mortality rates from colon cancer.  The important point is that QALY won’t save us money.  In fact, it probably makes matters worse.

[W]hat does it mean to use a QALY calculation for a treatment that is neither necessary nor unnecessary? The political economy of that is difficult. No politician will want to be seen as funding some unnecessary procedures — that supposedly is why they want to have health care reform. But if colon cancer mortality rates start to reach British or European levels, those who pass Obamacare will not see power again for a very long time. Knowing that, they are likely instead to keep funding many of those middle-category procedures, just as they do now. Electoral outcomes are part of the cost-benefit analysis when government chooses your medical procedures.

I’ll continue this series the rest of the week, to try to answer the question that conservatives really do need to answer — if you don’t like the proposed Democrat reforms, what would you do instead?  It is best to be proactive in this regard, since if you’re not you will be said to support the current system with all its warts.  It undoubtedly has them.

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