To discuss "high value" medical care do we need to begin with what is value

Apparently in the history of economics for a while the early thinkers in the field were a bit perplexed by what was known as the diamond-water paradox.Why was is that diamonds were worth so much more that water even though water was necessary for life.

The story goes that in the late 1800s three economists working independently devised what became known as the  subjective marginal theory of value. Their notion was that value was not inherent in an object but value was in the eye and mind of the valuer.There is no such thing as value without a valuer.Further the valuers made their evaluation at the margin. (Economist like to talk about margins a lot) A man living by a lovely stream of potable water would pay little or nothing for a glass while a person lost in the desert without supplies would pay almost anything for a drink.The early economists were considering things from the view point of mankind in general for whom water  was essential for life but the value of a given increment of water was evaluated by individual people each with their own set of values and needs and  circumstances which could change over time.It was the value at the margin, the marginal value, and it was subjective.

The American College of Physicians (ACP) has announced a program called" High value,cost conscious care" ( HVCC). See here for some details.

Value is not inherent in things but is subjective but there may be objective proxy-measures of value such a market value. However, these measures in turn depend on the subjectivity of the individuals who make the choices. I have no reason to believe that the leaders of ACP have anything but good intentions in this initiative but I wonder if their notion of value is stuck somewhere  in the early 19th century.

Here is a quote from ACP that seems to say we can have our cake and eat it too.

"[ the initiative is] to help physicians and patients understand the benefits, harms, and costs of an intervention and whether it provides good value, and to slow the unsustainable rate of health care costs while preserving high-value, high-quality care."

My question is in regard to how will "good" or "high "value be determined. It seems like the history of the notion of value in the world of economics has lead to the widely accepted concept that value is subjective.Does this now say that after all value can really be objectively determined? So the advocates and practitioners of cost effectiveness would seem to  say. I should add in fairness that the authors of the quoted Annals article do state that in the final  analysis a subjective judgement in required.At the end of the analytic process  someone or some group makes a subjective judgment.Is the benefit greater than the risks or does treatment x cost "too much".Too much in the judgment of whom. Will the value be decided by the patient to whom the risk and benefits accrue or will the value be decided by a group of medical experts after making a cost effectiveness "determination".

In the March 7,2013 issue of the NEJM there is a thoughtful commentary by Dr. Lisa Rosenbaum entitled "The Whole Ball Game-Overcoming the Blind Spots in Health Care Reform" which addresses certain aspects of the notion of value in health care. She says:

"Value in health care, however,depends on who is looking , where they look and what they expect to see....". Are we fooling ourselves if we believe that efforts to reign in health care cost can be done by only eliminating things of low value?" 

 That quote seems to express the notion of subjective value- that individuals subjectively evaluate a given event ( test or treatment ) from her own point of view which may or may not coincide with a determination of value by practitioners of cost effectiveness and cost benefit analysis who after they carry out the various elements of their statistical package make their own  subjective evaluation cloaked though it may be in the robes of a  purported objective analysis. Is the real bottom line here the accounting bottom line of the third party payers?

5/30/14. several minor corrections made in spelling and punctuation.

High value health care-who gets to decide?

In the 1 Feb 2011 issue of the Annals of Internal Medicine,an ACP committee offers up a entry entitled
High-Value, Cost Conscious Health Care: Concepts for clinicians to Evaluation, and Costs of Medical Intervention" with Douglass K. Owens, the lead author.

They begin with their definition of value  which is " an assessment of the benefit of a intervention relative to expenditures." So balancing benefit and cost is considered value.

As a possible counterpoint I quote the following from the blog, "Politics & Prosperity" :

The theory of subjective value, which is a cornerstone of microeconomics, says that

value is not inherent in things. There may be objective proxy-measures of value—like market value—but these depend primarily on the subjectivity of the individuals who make the choices. The prices of things, in other words, result from people’s subjective valuations of things.

The often quoted,Harvard Business School professor, M.E. Porter defines as: Value =outcome/cost. See here for my earlier comments on Porter,value and its determination.

The Annals authors then make what they believe to be critical distinction -the distinction between cost and value. So that a high cost item may or may not provide high value and low cost may have little benefit , therefore low value.The price ( or cost?) of things in micro-economic theory results from the subjective valuation of things by people.

The authors then redefine rationing (or in the authors words " more appropriately define) to mean "restricting the use of effective, high-value care". So that if an intervention that is "determined" to be low value is restricted this would not be considered rationing. One can see what power this puts in the hands of those who determine what is high and low value.We will not have rationing-in the ACP definition- if we only eliminate those interventions that some one ( government? an ACP committee, United health Group ?) has determined to be low value. You think the power to define the words we use and the power to control the narrative is not important.

If a treatment is both better and cheaper than an alternative there is no problem in deciding between the two. More complexity emerges when an alternative provides more benefits but also costs more. What to do here gets to the core issue. How much is health worth.?In the authors terms- what is the choice of the " cost effectiveness threshold".

Owens et al in regard to determining how much health care is worth say that we need cost  effective analysis  which they say requires "specialized expertise and training" attributes that just happen to be apparently possessed by the authors themselves. Note we are moving from comparative effectiveness analysis to cost effectiveness analysis which is an entirely different matter. The authors tell us that such analysis is expensive and is "typically performed by investigators". In this way the value of competing interventions to patients and to society can be determined. Determining the "value to society"-no hubris there.

 But here is the money quote in which he authors admit the obvious.

"The choice of a cost effectiveness threshold is itself a value judgment and depends on several factors, including who the decision maker is."


 After all of the gathering of various costs and developing estimates of the quality adjusted life years (QALY) and the aggregation of costs and aggregation of estimated benefits and using various analytic tools , a value judgment has to be made. Ultimately  it is a human value judgment- not simply the objective analysis or simply solving a set of equations. The big question question is who will decide; whose judgment will settle the issue..Seemingly, the authors have assumed or gratuitous announced  they ( or similar  experts with special training and expertise) should be the ones whose subjective evaluation is determinative.

I am not speaking against comparative effectiveness research (CER). It is important that we be able to say, for example, if carotid stenting gives better results that carotid endarterectomy and in what groups of patients.Presuming to be able to determine which is the better value if the higher price intervention gives superior results than the less costly alternative is another matter altogether and   in my opinion falls into what I call type 2 hubris.See here for the woefully under utilized  Gaulte classification of hubris in which type 2 is the type that some self defined exceptional persons never outgrow their sense of hypertrophied self worth and instead enlarges to know what is best for everyone .

The authors of the article clearly admit the exercise ultimately is a value judgment. The authors modestly admit that folks with their skillful use of utilitarian statistics of the aggregate  are best able to make those judgments.

Econ 101 courses often talk about economics as involving the allocation of  scarce resources to competing ends and scarcity leading to trade offs.  People in their everyday lives make trade offs that involve some type of formal or more likely informal balancing of costs and benefits. Mark Pennington in his book "Robust Political Economy" said :

"Utilitarianism,however,extends the principle of making trade-offs within a person's life to the trade-offs between lives, and thus fails to respect the discreteness of individual lives."

John Rawls criticized utilitarianism as being inattentive to the separateness of persons and being guilty of treating people as means for the achievement of various social ends. The utilitarianism of  cost effectiveness based decisions regarding health care is in opposition to both the egalitarianism of Rawls and the libertarian views of Nozick but dovetails nicely with the notion of physician as steward of society's medical resources and the medical progressives' overarching principle that medicine is too important and complicated to be left to the individual patient with his  individual separate life and his physician.


(Note: I have written before on the Owens article discussing in  why that approach will deliver much less than they claim and have also commented on the bogus nature of the concept of Quality adjusted life year (QALY) which was actually recognized by the father of utilitarianism and other questionable assumptions involved in cost benefit analysis.)

Another chapter in the story of Obamacare and crony capitalism

Since many states have not and may not ever establish insurance exchanges,a key component of ACA,the federal government is moving ahead to put in place a federal insurance exchange.

The key to that is the "hub" which will be a gigantic computer system which will house information on everyone in  the country. Data will be imputed from  CMS  (Center for Medicare and Medicaid Services),the IRS,Homeland Security and the Justice Department as well as various state agencies.
A Maryland company QSSI ( Quality Software Services Inc ) has been awarded the contract. QSSI is now owned by a division of United Health Group known as Optum.See here.

Now consider  the revolving door part. Steve Larsen now works for Optum.Mr. Larsen with a resume of variously working for state insurance agencies (including being Maryland's Insurance Commisioner) and health insurance companies and then HHS most recently lead a group at HHS charged with setting up rules for insurance coverage for the exchanges.His new job is- according to the Optum web site-executive vice president in charge of  "government solutions". See here for more details about the contract with QSSI and concern about possible cahoots by expressed by folks in both the Senate and House.

Soon after Obamacare was rammed through passed by Congress folks at ACP and AMA offered praise in part because of their claim that social justice was forwarded.More realistically its passage and efforts aimed at subsequent implementation seems a embarrassing monument to crony capitalism and rent seeking.