Thursday, June 21, 2007

Wise Words about Health Care

from Peter Orzag, Congressional Budget Office Director:

"Furthermore, hard evidence is often unavailable about which treatments work best for which patients or whether the added benefits of more-effective but more-expensive services are sufficient to warrant their added costs. In many cases, the extent of the variation in treatments is greatest for those types of care for which evidence about relative effectiveness is lacking. Together, those findings suggest that better information about the costs and benefits of different treatment options, combined with new incentive structures reflecting the information, could eventually yield lower health care spending without having adverse effects on health—and that the potential reduction in spending below projected levels could be substantial. Moving the nation toward that possibility—which will inevitably be an iterative process in which policy steps are tried, evaluated, and reconsidered—is essential to putting the country on a sounder long-term fiscal path. But even if it did not bring about significant reductions in spending, more information about comparative effectiveness could yield better health outcomes from the resources devoted to health care."

hat tip: Arnold Kling

Note: I would highly recommend reading Arnold Kling's book on healthcare "Crisis of Abundance". It's a short read and I think does a great job on diagnosing some of the drivers behind spending. That said, I think his policy recommendations, while gesturing in the right direction (more cost sharing, taking employers out of health care provision), are politically untenable. He also writes for and runs a very interesting blog with Bryan Caplan (also a GMU Econ professor and author of the "Myth of the Rational Voter"): Econlog.

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