Two case studies on why it's hard to constrain health care costs

Two articles in the New York Times on Saturday demonstrate the difficulty we have constraining health care costs.  We have trouble agreeing to cuts in home health care when independent analysis shows overly generous margins (on average), and we have trouble rejecting payment for a cancer drug that costs $36,000 a month, and has not been shown to have clinical benefit.

A front page articl follows a home health nurse making rounds in rural Caribou, Maine. (Not coincidentally, Maine has two Republican senators most likely to buck their party and vote for health care reform. One of them, Susan Collins, was born in Caribou.)   Cuts in home health care payments could force large layoffs in this community – which would deprive isolated rural seniors from a low-tech lifeline, and could lead to more hospitalizations. 

MedPAC recommended sharp cuts in home health care, as its analysis showed that on the average the margin in home care was too high.  (Of course, averages obscure many situations – and rural home care nurses who are only able to see five patients a day due to travel distances are very different than urban home care nurses who can walk from client to client!)   This information from the Dartmouth Atlas shows that overall Maine has far less home health expenses than expected, even though more highly populated southern Maine uses more resources than average. 

National Average:   434.5 services/1000
Maine Average:   350.3 services/1000
Maine uses $14,600,000 less resources on home health services than the national average

The front page of the business section  of the paper highlighted Folotyn, a drug newly approved for peripheral T cell lymphoma.  This disease is aggressive, strikes under 6000 in the US each year, and there is no other effective therapy.  Folotyn has been shown to shrink tumors in 27% of patients treated; it was not shown to prolong life. Here’s a direct quote from the article.

...Dr. Lee N. Newcomer, senior vice president for oncology at the big insurer UnitedHealthcare, called the price of Folotyn “unconscionable.” He said that Folotyn alone would cost as much as UnitedHealthcare now typically spends in total to treat a lymphoma patient from diagnosis until death. That median expenditure now, he said, is $87,000 for a little over a year of treatments.

But Dr. Newcomer said insurers would be obligated to pay for Folotyn because there were no alternatives.

So there you have it.  Home care probably is paid too much on average – but there are areas where resources spent are inadequate.  We focus on these areas in our public discussion.   Oncology care costs too much, but with no alternative for this new medication, we will keep writing checks.