Health Policy$ense

The Value of Measuring Value

Cost Matters, and Legislated Prohibitions on Considering Cost are Self-Defeating.

(An edited version of this post appeared in

US health care spending has never grown as slowly as it did last year.

Dwight D. Eisenhower was in the Oval Office when the US government began recording health care spending in 1960.  Since that time, growth in health care spending has never been lower than the 3.6% annual rate reported by researchers from the Centers for Medicare and Medicaid Services a few weeks ago in the journal Health Affairs.

High-deductible health plans (HDHPs) are believed to be one reason for the slowdown in spending.  The 2014 minimum deductible for an individual in an HDHP is $1250. Since 2008, enrollment in high deductible health plans has nearly tripled, from 6 million to 17.4 million, and the average deductible for individuals with any type of employer-sponsored insurance has grown from $735 to $1217.  These plans are designed in part to give patients “skin in the game” and to discourage use of unnecessary services. Research from RAND Health shows that families with high-deductible health plans spend 14% less on health care than families in traditional plans. But spending less overall has also meant lower use of valuable services. We want to discourage use of low-value services (like MRI tests for most types of back pain), but if our approach to doing that also reduces high-value treatments like childhood vaccinations, then we have thrown the baby out with the bathwater.

How we can empower patients to value high-value care?

Value Transparency for Patients
“I haven’t met my deductible.  How much will this cost?” 

Donna was a 44-year-old woman with hypertension, diabetes and, now, chest pain.  Arriving in my emergency department a few hours earlier, she had described a few days of intermittent pressure in her left chest.  Her initial evaluation revealed no indication for an emergency procedure, but I recommend observation overnight for continued evaluation.  Despite the good news, Donna looked at me with apprehension.  Money was tight, and her expenses would be paid out of pocket since her family had a high-deductible plan.  If she truly needed care, she would find a way to pay for it, but these expenses would make it difficult to pay rent, purchase medications, or care for her children.  Did she really need further testing? 

Her question seemed simple.  What would she be charged for a night of observation and, possibly, a stress test?  But that information isn’t simple to get.  Moreover, her real question – whether the recommended care was worth the price – is far more complicated. Without information on costs, risks, benefits, and alternatives, how could anyone be expected to make a reasonable decision? 

Having “skin in the game” is meant to make patients more sensitive to cost.  Now Donna and 17 million other Americans with high-deductible plans have skin in the game – and a set of information needs we’ve never faced before.

Financial incentives alone do not help patients choose care wisely; patients must also have easy-to-understand information on prices.  Price data historically were difficult to obtain, but more than 30 states are pursuing legislation to enhance price transparency in health care. Even with price information available, individual patients’ financial obligations remain a complex mix of allowable charges, deductibles that may or may not have been met, and different out-of-pocket maxima.  Determining the value of that care compared to alternatives is harder still, but everyone agrees we should try.  No one thinks we should keep patients in the dark about what their care will cost or what value that care will provide.

Value Transparency in Policy
Health policymakers face the same questions as Donna, just on a population-based scale.  They too want to know the cost of health care programs and the value of those programs compared to alternatives.  One approach used by policy experts is to measure benefits in terms of quality-adjusted life years (QALYs), units that are meant to reflect both years of life and how good they are.  Comparing treatments by cost per QALY is a way to measure whether you, or someone else who is paying, is getting a worthwhile buy.  The Affordable Care Act established the Patient-Centered Research Outcomes Institute (PCORI) to help patients make informed health care decisions, but it also prohibited PCORI from using QALYs to measure cost-effectiveness or guide care recommendations.

The intense push to help individual patients understand health care value is in stark contrast with similarly intense efforts to prevent policymakers from doing the same thing. We want patients to choose wisely and to do so they must have information, but it is as if we don’t trust ourselves enough to give patients that information or even to gain it ourselves.

Seeing Clearly
We need to overcome the wishful blindness that allows us to think that our national interests in health care value are not somehow built up from the interests of individual patients.  Cost matters, and legislated prohibitions on considering cost are self-defeating.  If we want our nation to spend health care dollars wisely and if we want individual Americans to avoid wasteful procedures, we must make cost, quality, and value transparent—not just to patients, but also to the people who can guide them. Unlike Donna, who faces stress and illness and emotion and a simple lack of facts, health policy researchers have methods for measuring and comparing the value of different treatment options. These tools are imperfect, but they can be disciplined and rigorous in a way that avoids the uncertainty, stress, and information deficits faced by individual patients.

Questions on how to prioritize our health care spending arise at the national level, at the level of physicians and health systems, and at the level of individual patients. Only by reducing use of low-value services will our patients – and our nation – have the resources to devote to other priorities, whether those are in health care or elsewhere.  It will be hard to improve value if we won’t let ourselves measure it.