The Illusion of Costless Benefits: Mammograms, Pap Tests, and the Inspection of Goat Entrails

Last week the results of two major research studies challenged the utility of two cancer screening tests: mammograms and Pap tests. As a libertarian philosopher, I thought I’d add a few caveats.

Scientific predictions of impending downward spirals are subject to two kinds of costly errors that waste time, effort, and resources: false positives and false negatives. Mammograms and Pap tests are subject to a high incidence of both, which raises two questions. 1.) Under what conditions does it make sense for an individual to undergo these imperfect screening tests? 2.) Under what conditions does it make sense for government to encourage or discourage the use of these imperfect screening tests? The cost/benefit ratios for these tests are enormously complex and include both biological and economic determinents. Recent scientific evidence indicates that for individuals, the utility ratios for both mammograms and Pap tests vary based on one's medical history, family history, and age. If you have had cancer before, or if you have a strong family history of cancer, evidence suggests that you probably ought to be tested.

Once it is determined that you ought get routine mammograms and/or Pap tests, then scientists must then determine at what age routine testing ought to begin and end, and how often you ought to be tested? Surprise! The corporations that manufacture these tests and the specialists that interpret the results prefer that more women get tested more often. Third-part payers prefer fewer women being tested less often. As scientists gather empirical evidence over time, the cost/benefit ratios for various groups change and the status quo becomes subject to revision, and some women who were previously recommended for routine may no longer be routinely tested, and/or some who were not recommended for routine tested may be routinely tested.

Although about 3-4 million Pap tests are performed annually, only about 13, 000 cases of cervical cancer are diagnosed, and 4,000 women die from it every year. In the case of mammograms, 1,900 women must be screened for a decade in order to save a single life. In light of this body of statistical evidence, under what circumstances might government encourage women to undergo these tests, or mandate insurance companies to pay for these tests? Here lies the political problem.

For better or worse, we have all been culturally programmed to ignore the economic dimension of health care: an ideology that is reflected in the often cited moral pronouncement: “Regardless of how much it costs, if we can save one life… it’s worth it.” This high-minded ideology has had, not only a devastating effect cost of health care, it has also undermined scientific medicine. Based on the “save one life principle,” if we screen 100 million persons and save one life, it’s worth it! Or, if we spend $50,000 keeping 95 year old Uncle Joe alive in an intensive care unit for three more months, it’s worth it. And, of course the “save one life principle” becomes even more pernicious when someone else pays for the tests and/or hospital bills.

We Americans are more likely to want and/or undergo any screening test if a third party (private health insurance, Medicare, Medicaid etc.) pays for it. Economists call it “moral hazard.” So how do third-party payers decide which tests to pay for? Well, state and federal governments usually decide for them by force third-party payers to pay for certain tests. How do legislators decide which tests to mandate? We would all like to believe that scientific evidence plays a prominent role, but that’s not how our political system works. What usually happens is that the manufacturers of the tests and the would-be beneficiaries of low-probability, costless benefits get together and form coalitions that vigorously lobby state legislators. How hard is it for male legislators to refuse to cover Pap tests and/or mammograms when confronted by an army of female lobbyists?

Libertarians are critical of any system where government presides over the distribution of "costless benefits." If the goat industry and a group of patients that believe in the prognostic value of the inspection of goat entrails could form an effective lobby, third-party payers could be forced to pay for those tests. The fundamental problem in the United States is that health care policy is often forged on the basis lobbying acumen, often at the expense of science. As the goat industry plans its lobbying campaign to force third-party payers to cover the inspection of goat entrails as an alternative to mammograms and pap tests, we can begin to understand why the quality and cost of health care in the United States will remail suboptimal.

The Cost of Health Care

Critics of our health care system point to the ever-rising cost of providing health care in the United States, in comparison to other industrialized nations. In 2007, the Kaiser Family Foundation reported that the cost of providing health care in the United States has grown from 7.2% of the nation’s economy in 1970 (or $356 per person per year), to about 16% in 2005 (or $6,500 per person). This is nearly twice the cost of providing care in Canada ($3,161), France ($3,191.), Australia ($3,128.), Japan ($2,358), and the United Kingdom ($2,560.). (Kaiser 4). But there are hidden complexities here as well. How much health care spending is too much for an individual patient, family, city, state, or a nation? Is it economically and/or politically undesirable to have so many Americans employed in the health care sector of the economy? What exactly is the quality of the health care that we purchase at this cost? So what does it really mean when we say that our health care system costs too much? Let’s take a look at that!

In the real world, the access and quality of a health care system cannot be separated from its cost, at least not for very long. How do we decide whether the “price is right?” In the Real World, that depends on how much we, as individuals, value health care products and services at the quality and price that they are being offered. For any other product or service other than health care (and perhaps education), when a product or service is priced too high, buyers simply refuse the offer and gravitate toward other sellers. Although I am a pro football fan, I have never attended a Bengals game. Frankly, the product being offered is not worth the ticket price. So I spend that money on other leisure activities that are “worth it,” mostly concerts. Even if the Bengals were great, I still wouldn’t attend a game at the prices offered today. I prefer to watch them for free on T.V. I might attend those games if they were free, or $10. But probably not. I hate the other "opportunity costs" such as traffic and parking problems. The Bengals will stay in business as long as at least a few fans continue to show up at Paul Brown Stadium on Sundays, and as long as the T.V. networks are willing to carry the games. In short, the Bengals must compete for our money. As individual buyers, we make purchasing decisions based on our beliefs about both quality and price. If I say that a new automobile is too expensive for me, what I’m really saying is that, the quality of the new vehicle does not justify the price that I’d have to pay for it. Hence, I’d prefer to keep my old car, or buy a less expensive used vehicle and spend those savings on the fulfillment of other wants and needs; perhaps a family vacation.

So what is the “value” of health care and or “health?” Our assessment of the value of health care has been shaped by a four-party party payment system that fosters both quality-insensitivity and price-insensitivity. In today’s economic environment, many young, healthy, middle class Americans, that do not get less expensive health insurance through a fourth party (employer) value other goods more than they do health insurance. Therefore, they spend their paychecks on new vehicles, spacious homes, higher education, high-quality food, alcohol, tobacco, or extended summer vacations. Therefore, when we say that our health care system is too expensive, what we are really saying is that many Americans value health insurance (of unknown comprehensiveness) less than other things. If I choose to spend my money on a vacation at Disney World, I at least have a good idea the quality and price of my purchase.

So the fact of the matter is that all Americans have “access” to health care, they just are not willing to buy it at the quality and price that it is being offered. And of course, many young, healthy Americans will never buy health insurance, no matter how much it costs because they would rather spend their money on those other things. This underlying reality has inspired a movement to offer “free universal health care,” through a government program like Medicare or Medicaid. However, the fact of the matter is that these programs are neither free nor high quality. Indeed, libertarians argue that the best way to insure universal access to low quality health care (or education) at an unreasonable cost is to force all Americans to pay for it through taxation. Here's another blog entry on health care reform: http://freedomsphilosopher.blogspot.com/2008/10/health-care-reform.html