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most of the world has centralized care

Lessons for American Policymakers

by Helen Evans, Ph.D.  Feb 4, 2009   Heritage Foundation

There is a pervasive European mythology: a widespread belief that American health care is rooted in the free market. In reality, much of American health care is a highly planned, regulated, and government-funded system. Through major entitlement and welfare programs such as Medicare and Medicaid, which contribute to rapidly growing American health care costs, government takes a historically higher proportion of gross domestic product than does even the British NHS.

Moreover, by virtue of the structure and financing of private-sector health insurance, there is little consumer control over health care dollars.

Nonetheless, the United States is not only a major consumer of health care services, but also the world's largest producer of medical technology. Investment in new medical technology is comparatively high, as is its rate of diffusion: "This is demonstrated by cross-national examinations of the comparative availability of selected medical technologies such as radiation therapy and open-heart surgery. Measured in units per million, the United States experiences levels of availability up to three times greater than in Canada and Germany."[32]

During the presidential campaign, Barack Obama proposed an Institute for Comparative Effectiveness that would make formal recommendations on medical technologies, devices, and drugs.  In Congress, champions of comprehensive overhaul of U.S. health care favor policies that would explicitly accelerate America's trajectory downward toward a European-style medical interventionism.

Fearing the impact of the rising costs of Medicare, Medicaid, and the highly regulated arrangements of the private insurance sector, many American legislators and other top policymakers are becoming attracted to the idea of a body that would make top-down pronouncements on the cost-effectiveness of new medical technologies. The idea of a statutorily created agency charged with system-wide cost containment and rationing of medical services and technologies is becoming surprisingly fashionable in Washington policy circles.

The implications of this trend are alarming for U.S. citizens, particularly when one considers that the technology a society uses reflects the wider and underlying incentive structures it adopts for using it: "An incentive structure that encourages providers to trade off the costs and benefits of health care gives providers little incentive to use expensive technologies and thus researchers will have little incentive to create it."[33]

In the long term, a statist, centralized control of medical technology offers little if any regulatory benefit. Through its own logic, it not only stifles innovation, but also, in doing so, ends up precluding those very inventions that could turn out to be of immeasurable benefit to individuals and to society in general.

If comparative effectiveness and health technology assessment especially are to be useful, they must be generated primarily by the private sector on a competitive and non-coercive basis. In avoiding the imposition of a uniformity of rules that comes with government intervention, physicians and other medical professionals would and should remain free to pick and choose from the best practices and professional insights into the treatment of medical conditions as they see fit (with, of course, the informed consent of their patients).

It is only by returning health care to a genuinely patient-centered and consumer-driven health care marketplace that information, innovation, and best practice will permeate the complex array of health care arrangements in both the public and the private sectors. It is only through open competition and the economic discipline of the free market that real progress and productivity can be secured.

Therefore, in framing a policy on comparative effectiveness, America's policymakers should be governed by four principles:

·         They should reject the statutory creation of a board, council, or institute that would centralize government control of patient access to drugs, devices, medical technologies, treatments, or procedures. This is especially the case if such an agency were to have the power to override the considered judgment of competing professional expertise, especially the professional judgment of a patient's attending physician.

·         Comparative effectiveness research and health technology assessments should be undertaken primarily by the private sector. While government can contribute to research efforts and promote the widespread availability of the best information, it must not exercise monopoly power over the conduct of research itself or the distribution of information.

·         Comparative effectiveness research should be patient-centered and supportive of quality and value, not focused simply on cost-containment. In this respect, it should foster scientific advances, health information technology, and the emerging science of personalized medicine.

·         Comparative effectiveness research must move beyond randomized clinical trials and embrace practical clinical trials. It should include observational data, and its methodologies should fully address issues such as the validity and applicability of findings.


As is clear from the British experience and other international examples, a comparative effectiveness strategy that relies on central planning and coercion would not only be counterproductive in the long run--because it would undermine the incentives for medical innovation--but would also lead to the imposition of cost constraints that would worsen patients' medical conditions and damage the quality of their lives.

Helen Evans, Ph.D., is a citizen of the United Kingdom. A registered general nurse, she is the Director of Nurses for Reform and a Health Fellow with the Adam Smith Institute of London, England.