This morning’s New York Times’ piece on diabetes care annoyed me, and highlights the vast differences in costs for caring for the same kind of illness:
In the article, a type I diabetic incurs over $26,000 for her routine diabetes care annually. She uses much of the latest technology, and it costs a fortune.
I use syringes (bought wholesale online), generic insulin (WalMart’s Relion brand), generic test strips (also Relion), and see my endocrinologist once a year:
I pay around $750 a year to manage my type I diabetes. [1]
I don’t say this to brag, and every patient is different – some may genuinely require insulin pumps and the like. But my doctors pushed the insulin pump idea on me from day one, without considering other options. I could afford a pump, out-of-pocket if need be. So why did I refuse one and opt to try the “old-fashioned” way? Here are a few simple reasons:
- I desired the simplest and least intrusive treatment that would work. No machines strapped to me 24/7, no intrusive wires.
- New treatments are not time-tested, and are later found to have serious flaws. Note Avandia, a popular diabetes drug until it was pulled from the market for elevating heart risks.
- Why not try a simple solution, and only escalate to a complex (and expensive) solution if it fails?
My treatment plan is working, as my A1C is low (generally under 6). While my approach wouldn’t work for every patient, shouldn’t doctors start simple and work up from there? Of course not – there’s no financial incentive to do so. But converting, say, 1 million diabetics (there are tens of millions in the US) from 25k/year to 1k/year treatment would save $24 Billion per year. At some point insurance companies, payors, and the government are going to have to wake up, and make cost-effectiveness a metric in health care decision-making.
[1] Since I use mostly generics, all of my expenses are out of pocket save my annual doctor’s appointment. Including the doctor’s appointment, associated tests, and both out-of-pockent and insurance reimbursements, the total cost of care is still less than $1000/year.
[2] I virtually never link to commercial interests in my posts, and I have never received compensation for doing so. I linked to Relion and American Wholesale Diabetes in this post simply to inform those who might benefit from the information.
True Cost - Analyzing our economy, government policy, and society through the lens of cost-benefit 
So, as you note, every diabetic is different. Some are more brittle than others. Insulin pumps benefit a lot of people.
Physicians are trained to look for the optimal management strategy and implement it, and to look at costs secondarily, if at all. Suppliers know this, and so they will frequently offer a small improvement, perhaps an improvement only some patients need, at a great cost.
The payment system, running through insurance companies and hospitals with multiple layers of negotiation, means that physicians often have very little idea what things cost. But the heart of the problem is that we really don’t care. And we can’t. These decisions need to be made at a system level, not an individual level.
Why at a system level? Well, for one thing, there is no recognized defense to a malpractice claim that goes “Yes, that MRI/expensive drug/surgery might have lead to a better outcome, but this patient is poor so I went with something cheaper.”
Physicians (and, more importantly, society as a whole) are not comfortable giving multi-tiered care. If you are wealthy you will have a nicer car, if you are struggling you may have a shoddy car, and if you are flat-out poor you may have to take the bus. Society accepts this, because in the end everyone gets where they need to be and no one suffers to an exceptional degree as a result.
Now try and generalize that principle to the care of a child with cancer: wealthy parents get the very best care, struggling parents get less effective care with more toxic side effects, poor people get a large dose of morphine and a pauper’s grave.
You as an economist may see nothing wrong with that, but most people (and most physicians) do. As a result, physicians can’t really recommend anything but the most effective care to everyone, and let patients drive the cost discussions.
With a national system it’s easier. The UK’s NHS has NICE: less than $25k for every disability adjusted year of life, they’ll pay more it, more, they generally won’t. Society makes a determination of what it can afford, and doesn’t ask physicians to size up their patients and try and determine whose life isn’t valuable enough for the allopathic “A game.”