"What Price is Life?"

Ronald Bailey | December 3, 2008

Ten years ago, the British government created the National Institute for Clinical Excellence (NICE) to evaluate the cost/benefit ratio of new medical treatments, especially the costs versus the benefits of pharmaceuticals. Thus government bureaucrats decide whether or not patients should have access to new drugs. This is explicit government rationing. And why not? After all, why should taxpayers be on the hook for costly treatments that may boost a patient's life expectancy by only a few months?

As the New York Times explains:

When Bruce Hardy's kidney cancer spread to his lung, his doctor recommended an expensive new pill from Pfizer. But Mr. Hardy is British, and the British health authorities refused to buy the medicine. His wife has been distraught.

"Everybody should be allowed to have as much life as they can," Joy Hardy said in the couple's modest home outside London.

If the Hardys lived in the United States or just about any European country other than Britain, Mr. Hardy would most likely get the drug, although he might have to pay part of the cost. A clinical trial showed that the pill, called Sutent, delays cancer progression for six months at an estimated treatment cost of $54,000.

But at that price, Mr. Hardy's life is not worth prolonging, according to a British government agency, the National Institute for Health and Clinical Excellence. The institute, known as NICE, has decided that Britain, except in rare cases, can afford only £15,000, or about $22,750, to save six months of a citizen's life...

...the decisions that get the most attention are those involving new drugs. Any drug that provides an extra six months of good-quality life for £10,000 - about $15,150 - or less is automatically approved, while those that give six months for $22,750 or less might get approved. More expensive medicines have been approved only rarely. The spending limits represent the health institute's best guess for how much the nation can afford....

"It's hard to know that there is something out there that could help but they're saying you can't have it because of cost," said Ms. Hardy, who now speaks for her husband of 45 years. "What price is life?"

Some will object that the U.S. already engages in rationing. After all, private health insurance companies limit access to certain drugs or limit the amount they will pay for treatments. In fact, as health care costs escalate, our dysfunctional employment-based health insurance system encourages employers to find the cheapest one-size-fit-all policies for their employees.

However, with the creation of the Medicare prescription drug program, such bureaucratic rationing is probably inevitable in the U.S.

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Elemenope|12.3.08 @ 12:43PM|#

A better system would allow people to purchase health insurance policies that reflect their own evaluation of how much an extra bit of life should cost.

And so a poor person's life is prorated? After all, a poor person's evaluation of how much their life is worth would most likely not be reflected in the policy they would be able to buy.

|12.3.08 @ 12:49PM|#

Two words: Drug Re-Importation.
Allowing Americans to buy drugs from CA, Europe, etc. would put an end to foreign markets getting a free ride on our health care system and put an end to this socialized medicine fantasy.

|12.3.08 @ 12:53PM|#

"It's hard to know that there is something out there that could help but they're saying you can't have it because of cost," said Ms. Hardy, who now speaks for her husband of 45 years. "What price is life?"

A better question: Why should we save one life for fifty grand, when we might save five lives for ten grand each? How many inoculations does fifty grand buy?

These questions only seem rational to people who believe in the notion of finite resources, I guess.

Naga Sadow|12.3.08 @ 12:55PM|#

Hmmmmm . . . tough health care system. As for the employer based system here. Aren't prices a reflection of scarcity? Wouldn't rationing be the only available option other than increasing premiums? Also we have always had rationing. It's called triage, I believe.

Mike Laursen|12.3.08 @ 12:56PM|#

And so a poor person's life is prorated? After all, a poor person's evaluation of how much their life is worth would most likely not be reflected in the policy they would be able to buy.

And so the possible solutions are to help the poor person through philanthropy and/or government programs. Bailey's post addresses the latter, pointing out that there is likely to be rationing; in which case, the poor person won't get the level of health care that he or she would like to get.

It sucks to be poor, by definition. You can't buy yourself lots of things that you need or want, and you are likely to be dependent on the generosity of others.

Naga Sadow|12.3.08 @ 12:56PM|#

P Brooks,

I believe the outrage is that people are actually making those kinds of decisions for other people.

|12.3.08 @ 12:57PM|#

Government rationing is uniquely awful, because the government doesn't make a profit. Or something.

Much better to ration by wealth. What?

Hugh Akston|12.3.08 @ 12:58PM|#

And so a poor person's life is prorated? After all, a poor person's evaluation of how much their life is worth would most likely not be reflected in the policy they would be able to buy.

It's criminal that poor people are priced out of the plans that allow rich people to live forever with perfect health.

Jozef|12.3.08 @ 12:59PM|#

Didn't Ford come up with monetizing human life some 40 years ago with the Ford Pinto memo? Adjusted for inflation, they estimated the average human life to be worth about $1.2 million. Maybe they should demand royalties from that Orwellian-named NICE for copying their business processes.

|12.3.08 @ 1:02PM|#

Government rationing is uniquely awful, because the government doesn't make a profit. Or something.

Yes, joe, very good summary of my argument.

Paul|12.3.08 @ 1:07PM|#

Much better to ration by wealth. What?

Yes.

When you ration by government fiat, there's no going around the problem, especially when your government makes it illegal to seek healthcare elsewhere. In a system where wealth dictates how much of product x you buy (the horror), but leaves the system free, philanthropy can and will subsidize your care.

For instance, my daughter had a tiny 1.5" incision to remove a nevus sebaceous from her head. The price of the outpatient 'surgery': $50,000.

That $50,000 is subsidizing the poor family next to us in the waiting room whose daughter was born without an arm and a leg and god knows what other genetic maladies she has which undoubtedly cost millions.

But I suppose it would be "better" if the government just sent her home because it's not "worth it".

Abdul|12.3.08 @ 1:09PM|#

Joe,

All things in life are already rationed by wealth. That's why Jay-Z owns three gold plated lamborghinis and you don't own any. It's also, to quote Danny Devito, why we call it money.

|12.3.08 @ 1:10PM|#

And so a poor person's life is prorated? After all, a poor person's evaluation of how much their life is worth would most likely not be reflected in the policy they would be able to buy.

At my age, I'm probably at a greater risk of a heart attack shoveling snow out of my own driveway, instead of paying to have someone else it shovel it for me like people who have more money than I do. Should I be entitled to having my snow shoveled at taxpayer expense because there's a chance it would prolong my life?

Naga-

If the person making the decision is the one paying the tab, I can't get too terribly outraged.

People die all the time; they fall off roofs, get hit by cars, catch diseases, all kinds of things.

Nobody gets out of here alive.

Warty|12.3.08 @ 1:11PM|#

What price is life? I say 'bout tree-fiddy.

|12.3.08 @ 1:14PM|#

Should I be entitled to having my snow shoveled at taxpayer expense because there's a chance it would prolong my life?

Frame it as part of the "green jobs" initiative, and you might have a shot.

Naga Sadow|12.3.08 @ 1:16PM|#

P Brooks,

I'm young but I've lived long enough to know that when government is involved, beggars can be choosers. Also it's not a person dispencing his/her cash to pay the tab. Personally, I'm hoping medical technology will catch up to me and grant me immortality.

Warty,

LMAO!

Paul|12.3.08 @ 1:19PM|#

I say 'bout tree-fiddy.

Inflation. I was a'gonna say 'bout two-fiddy.

punk7|12.3.08 @ 1:21PM|#

http://www.hrc.utexas.edu/multimedia/video/2008/wallace/huxley_aldous.html ...
watch it, love it, comment upon it.

Abdul|12.3.08 @ 1:21PM|#

Giving more thought to the situation, even Britain's NHS is rationed by wealth. A rich Englishman like Paul McCartney could pay out of pocket for these drugs, whereas a poor schlub like Ringo Starr would be stuck with whatever NHS gives him. It's the same in Canada where wealthy folks jump queues by going to the US or to private docs while poor Canucks languish in pain.

GILMORE|12.3.08 @ 1:23PM|#

joe | December 3, 2008, 12:57pm | #

Government rationing is uniquely awful, because the government doesn't make a profit. Or something.

And people dont work for years to get through med school to become doctors because *it pays well*

classwarrior|12.3.08 @ 1:23PM|#

Would a better system also allow insurers to cherry-pick and only offer coverage to the young and healthy? Seems like that would be another form of rationing.

Paul|12.3.08 @ 1:25PM|#

A rich Englishman like Paul McCartney could pay out of pocket for these drugs, whereas a poor schlub like Ringo Starr would be stuck with whatever NHS gives him.

Of course it is. It becomes the worst of both worlds. A world where the government enshrines limited care and rationing for the poor, but yet the wealthy still manage to get better healthcare.

You think that Tony Blair would be sent home because whatever malady he had wouldn't be considered "worth it"?

Paul|12.3.08 @ 1:28PM|#

Would a better system also allow insurers to cherry-pick and only offer coverage to the young and healthy? Seems like that would be another form of rationing.

With an employer-linked, one-size-fits-all, government regulated insurance system like we have now? Yep, it's rationing for sure.

Urkobold™|12.3.08 @ 1:32PM|#

WRONG! RINGO IS RICH IN THE ONE THING THAT MATTERS: HE HAS MORE BARBARA BACHS THAN PAUL.

|12.3.08 @ 1:33PM|#

Everything is already rationed by wealth. Bringing the government into it just changes it to rationing by wealth and connections. Wow, what a win.

|12.3.08 @ 1:34PM|#

"What price is life?"

At $22,750 for 6 months and an average life expectancy of 73 years, about $3.3 million. This amount, incidentally, is about half the value of an American life. The EPA values an American life at $6.9 million. Using this value, the $47K for 6 months that it would come out to is about $8K short of the cost of treatment.

I believe the outrage is that people are actually making those kinds of decisions for other people.

Big deal. These sorts of decisions are made all of the time. The "safe" level of various in drinking water is determined by the exact same calculation. The value of a human life is x, the number of expected lives saved is y and the cost to decrease the allowable level of some toxin in z. If x*y >= z toxin levels are reduced to that new level, if x*y < z it isn't. Stop being squeamish pansies. You have to draw the line somewhere. Ideally, the government would cover up to the value they think is fair and force the patient to cover the rest if they think it's worth it.

Look at it this way, at least you can brag to your British friends that your life is more than twice as valuable as theirs is.

A better system would allow people to purchase health insurance policies that reflect their own evaluation of how much an extra bit of life should cost. Some may choose gold-plated policies that pay for nearly any new treatment. Others may decide that it is more important to save money to give to their heirs than to try to purchase a few extra months of life that an expensive policy might provide.

Every company I've worked for has offered me at least 3 and up to 7 health plans to choose from at different price points. You need to bitch to the Reason Foundation for not giving you enough choices.

A better system would allow people to purchase health insurance policies that reflect their own evaluation of how much an extra bit of life should cost.

To play the devil's advocate here...

Suppose we think of a socialized medicine system as providing a "floor" to ensure that everyone receives at least the basic level of care.

If you want anything more than that, than you purchase extra insurance (whether it's through a private insurer, or a "supplemental" social insurance policy paid for by an increase in your taxes is not of fundamental concern).

This, after all, seems to be the way most people around here view Medicare (and, for what it's worth, Social Security): it provides a basic floor, ensuring that you get at least something. But if you want to live decently, you have to go out and get it yourself.

|12.3.08 @ 1:35PM|#

"Government rationing is uniquely awful, because the government doesn't make a profit. Or something."

It is awful because it is a monopoly. If my insurance company won't pay for my medicine, I can go to a charity and get them to pay for it. There are thousands of them for cancer patients. I can go to my friends. I can just go into massive debt as a perferable alternative to death. If the government rations the product, I am fucked and die. Death of course is really what it is all about. There are few things more intoxicating than having power over life and death. That is why liberals love socialized medicine so much. It appeals to their love of power and control.

|12.3.08 @ 1:37PM|#

It is awful because it is a monopoly. If my insurance company won't pay for my medicine, I can go to a charity and get them to pay for it. There are thousands of them for cancer patients. I can go to my friends. I can just go into massive debt as a perferable alternative to death. If the government rations the product, I am fucked and die.

Nothing is stopping the guy from doing any of those things. You're adding made up details.

Abdul|12.3.08 @ 1:39PM|#

If you want anything more than that, than you purchase extra insurance (whether it's through a private insurer, or a "supplemental" social insurance policy paid for by an increase in your taxes is not of fundamental concern).

In countries like Ireland, the UK, and Canada, these supplemental policies are gaining more traction. Health care costs have gone up world-wide, but government institutions don't react to these shifts very quickly. Increasingly, people in countries with socialized medicine are seeing the "floor" as inadequate.

|12.3.08 @ 1:41PM|#

"Nothing is stopping the guy from doing any of those things. You're adding made up details."

If he can then why isn't he? You certainly don't hear these stories in the evil US.

Naga Sadow|12.3.08 @ 1:42PM|#

Mo,

Did you once work for Ford? Seriously, as Epi pointed out it's already rationed. Just by connections and wealth rather than wealth.

Mike Laursen|12.3.08 @ 1:42PM|#

If you want anything more than that, than you purchase extra insurance (whether it's through a private insurer, or a "supplemental" social insurance policy paid for by an increase in your taxes is not of fundamental concern).

That seems to be the system we're headed for. And it is better than more radical, failed proposals to have a completely closed system.

|12.3.08 @ 1:42PM|#

"However, with the creation of the Medicare prescription drug program, such bureaucratic rationing is probably inevitable in the U.S."

I'd like to point out that this type of rationing is already in place in the Medicare system and has been for years.

http://en.wikipedia.org/wiki/Medical_necessity#USA_.28Medicare.29

The entry I've cited gives the practice a pretty neutral interpretation, but the choices Medicare makes for us about what's covered by Medicare affects the treatment options people are offered. ...both within and without the Medicare system, but that's another topic.

|12.3.08 @ 1:47PM|#

If he can then why isn't he? You certainly don't hear these stories in the evil US.

Because if he did, there wouldn't be a news story. There are tons of stories like this in the US. Except, instead of the evil NHS, it's evil insurance companies. Dem politicians trot out these stories every election when they talk about a need for socialized medicine.

Did you once work for Ford? Seriously, as Epi pointed out it's already rationed. Just by connections and wealth rather than wealth.

Hell no. I worked for a midcap financial firm, a (formerly) large cap financial firm and a large cap tech firm. All except the formerly large cap company are quite profitable and well run companies and the formerly large cap one got bought by a profitable and solvent large company.

|12.3.08 @ 1:49PM|#

Seriously, as Epi pointed out it's already rationed. Just by connections and wealth rather than wealth.

Epi's was posted 1 minute before mine. I was writing mine as he posted his, so I didn't see it until after I posted.

The Angry Optimist|12.3.08 @ 1:58PM|#

All things are "rationed", because there are not infinite resources.

The market is best at efficiently allocating resources.

Is that all that difficult? When an insurance company says "no" to your treatment, you're free to get another plan (at least, you should be). If your government denies you treatment, you die (but pay for it anyway!).

|12.3.08 @ 2:03PM|#

Is that all that difficult? When an insurance company says "no" to your treatment, you're free to get another plan (at least, you should be). If your government denies you treatment, you die (but pay for it anyway!).

No insurance company on Earth is going to take you with a preexisting condition*, especially one pricey enough to warrant another insurance company to deny you. If you get denied by either the government or an insurance company, you're fucked unless you go out of pocket (yours, a charity's or a friend's). Let's not sugarcoat reality.

* If they do, they will take you with the caveat that the condition and all illnesses related to it are not covered.

The Angry Optimist|12.3.08 @ 2:20PM|#

I'm not sugarcoating it. When you have a serious illness, life sucks all the way around.

I am just tired of people hunting for the "magic pill" that is going to instantly take away all the worries about health, and how there are costs, and how people die because there is not enough money.

The reality, the true reality, is that people die for lack of money. And there is nothing wrong with that; that's the way life has to be sometimes. We cannot manufacture resources out of thin air.

Like Mr. Bailey says, the true solution is not the provision of health insurance, it's the provision of health care. The best way to provide health care to the poor is to make it cheaper, and prices come down through competition.

A one-size-fits-all top-down, government policy is going to make health care worse and more expensive.

MAX HATS|12.3.08 @ 2:21PM|#

Private health insurance is available in the UK to those who are willing to pay for it. Health care is available everywhere for money. The person in the story probably doesn't have the cash, and so he wouldn't be getting the primo treatments in the US either, unless he had a job with kickass insurance.

|12.3.08 @ 2:23PM|#

TAO,

When you say, "When an insurance company says "no" to your treatment, you're free to get another plan (at least, you should be)," you're sugar coating it. The reality is, when an insurance company says "no" to your treatment, you're f-ed, whether that company is a government or a private company.

When an insurance company says "no" to your treatment, you're free to get another plan (at least, you should be).

Regulation of insurance in most states places policies sold to individuals at a prohibitive disadvantage, if they can be sold at all.

These regulations are generally based on the concept of insurance being sold to an identified group, such as the employees of a company, and make it very difficult if not illegal to construct a group out of otherwise unaffiliated individuals.

I've come to the conclusion that the Dutch system is the best we could hope for - everyone has to buy a mandatory minimal health insurance policy, with extra coverage available if you want to pay for it. Po' folk can, of course, have their premiums subsidized.

Believe it or not, Obama rather timidly proposed this very approach, then backpedaled like a power forward trying to cover Magic Johnson when Hillary heaped scorn on him for it.

Seward|12.3.08 @ 2:35PM|#

R.C. Dean,

Sounds similar to what the Swiss do.

Anyway, the best thing we could do as far as immediate reform is to stop encouraging insurance as the sole perferred vehicle via which people pay for healthcare.

|12.3.08 @ 2:49PM|#

Every company I've worked for has offered me at least 3 and up to 7 health plans to choose from at different price points.

I get one choice and no opt-out unless my spouse has a better (employer sponsored) plan. Granted, there are literally thousands of other plans out there that I would rather purchase but, as RC Dean pointed out, they are either unable to purchase and even if they are I have no way of reclaiming my monthly plan premiums from my employer.

Seward|12.3.08 @ 3:00PM|#

Kwix,

More to the point, health plans in the U.S. are loaded down with either state and/or federal requirements regarding types of procedures, etc. covered. Generally speaking, the sort of options which one has are very general and cover just a few of the possible features that such a plan would have in a more flexible market.

No Name Guy|12.3.08 @ 3:25PM|#

This just points out the obviousness of the golden rule: He who hath the gold, makes the rules.

At my large aerospace company, I can't get the health coverage I want, a 5k annual deductable, 90% coverage until I've spent another 5k/year, then 100% coverage after that, at any doctor I choose and pocket the lower cost.

Instead, I get to 'choose' between practically first dollar paid, overpriced bullshit that covers a bunch of quack crap. I'm also stuck with bullshit life insurance I don't want, but have to pay for (which I don't need as a single guy witn no dependents.)

But hey, our union here and the dip shits in Olympia "know" what I need.

EscapedWestOfTheBigMuddy|12.3.08 @ 3:47PM|#

Rationing is going to happen. This is because the demand is larger than the supply. People like to live, to be free of pain and disability, etc...

The only argument is over what system to use for the distributions.

Supporters of socialized medicine, claim|think|feel that the government can do a more fair job that the market. In a ideal world they might even be right.

Some of the things that worry me about socialized systems are:

* "Important" people will get more than everyone else. Fairness does not apply to the connected.

* Political pressure will be brought to bear on what gets treated (not so different from the current hybrid system to be sure).

* Under populist forms of government the decision makers may (probably will) ignore the simple facts of life if it suits them.

* The government may (again, probably will) begin to feel that it "owns" the people who actually provide the care.

|12.3.08 @ 3:58PM|#

* The government may (again, probably will) begin to feel that it "owns" the people who actually provide the care.

Not to mention the people whose care it pays for.

|12.3.08 @ 5:16PM|#

A better system would allow people to purchase health insurance policies that reflect their own evaluation of how much an extra bit of life should cost. Some may choose gold-plated policies that pay for nearly any new treatment. Others may decide that it is more important to save money to give to their heirs than to try to purchase a few extra months of life that an expensive policy might provide. In other words, the "rationing" decision would made by individuals rather than by bureaucratic boards eager to protect the pocket books of taxpayers.

Except it wouldn't. I seem to recall many of the suits brought against California HMOs in the 1990s were based on people who had bought the cheapest policies and who then needed a rare and expensive procedure. The cheapskates will turn around and cry about the insurance companies and demand their "rights".

MAX HATS|12.3.08 @ 7:01PM|#

I capitalize my nonsensical handle to show everyone how important I am.

Russ 2000|12.3.08 @ 7:27PM|#

Everybody should be allowed to have as much life as they can

Since I belive in reincarnation, I beleive everyone is allowed much more life than they can probably stand.

MAX HATS|12.3.08 @ 7:42PM|#

I have a fan!

MAX HATS spoofer|12.3.08 @ 8:06PM|#

MAX HATS,
The relevant difference here is between laughing with you and laughing at you.

MAX HATS|12.3.08 @ 8:22PM|#

It is mockery! How could I have known? Oh, I am undone!

Clearly, the best and brightest are on my case. Time to set my extremely incriminating myspace and photobucket accounts to "private." But will I make it in time?????

Tune in next week. . .

|12.4.08 @ 10:38AM|#

|12.4.08 @ 10:41AM|#

You certainly don't hear these stories in the evil US.

This is the funniest thing I have ever read on Hit and Run, and I've seen some whoppers.

Uh, yeah, you certainly don't read about people being denied medical treatments by their insurance companies in the U.S.

Especially if you limit your reading to NRO, the Wall Street Journal's editorial page, and Reason magazine.

Good lord.

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