Scat, CAT scan: Obama on U.S. health waste

In a long interview with Obama on healthcare, Time's Karen Tumulty pressed the President on an example of a tough cost/benefit decision on treatment he had raised in an April interview with David Leonhardt -- a hip replacement Obama's grandmother received at the very end of life, when she was terminally ill with cancer. Should Kaiser Permanente have paid for the operation? They did - and Tumulty asked whether that was a good use of healthcare dollars. Obama's answer was evasive - and properly so, I think:

I guess my point is, is that you don't even get to those really tough decisions, you don't even have to get to those really tough decisions before you've already saved a huge amount of money and made people healthier and made sure that Medicare was solvent and bent the cost curve. I mean, there's 20, 25% of the cost — of the system that is wasteful right now, even before you get to tough decisions about end-of-life care...

Let's just take one example, and that is testing. It turns out that we pay 10 times what Japan pays, for example, for CAT scans and MRIs. Well, why is that? And it turns out, by the way, that we are having those tests five, six, eight times as often as folks in other countries who have just as good outcomes.

Now, some of that may have to do with reimbursement models. There may be differences that have to do with the approach that hospitals here take in recovering costs for expensive equipment. There are a whole range of reasons why that might be true, but the point is, is that it's not like people out there are — would automatically be prevented from getting CAT scans if we just tried to think when is a CAT scan or an MRI working and appropriate in improving care and when it's not.

And what we've said is that if doctors and patients had that information, and you start changing some of these delivery systems, you will see significant changes in the cost of health care and you will see improved outcomes and improved convenience, because if people are going through a battery of tests when one test would be sufficient, every time they're going to the doctor, that's gas, babysitting, sitting around for two hours, a day off work. We're not even factoring in those costs.

Obama is right that the U.S. should be able to save huge amounts by eliminating patently unnecessary care, regardless of how public and private insurers resolve the really tough cost/benefit decisions. What he did not make clear in this interview, however -- and I wish Tumulty had pushed him on this as she did on his grandmother's operation -- was how currently proposed legislation would signifcantly change those skewed incentives he keeps citing. He gave a kind of answer to Fred Hiatt on this question -- "MedPAC on steroids." But we need to hear way more about this.