We may see more consolidation, too. It’s possible that the big fish will swallow up some carriers that have a harder time competing. If we have a few mega carriers as market leaders, just imagine what might happen to prices. It’s going to be easy for them to set prices as high as the market will bear. You don’t have to deal with any of this in England, right?
How decisions get made in Britain
CS: In the UK, people know they are getting healthcare, and they are paying for it through taxes. They know those things have to be weighed somehow. They want to know their taxes are well spent. The National Institute for Clinical Excellence, or NICE, which studies medical evidence and makes recommendations to doctors, is quite well accepted now as the best way to do this.
I find it interesting that there is nothing similar in the US. Not necessarily a statutory body like NICE but any kind of independent body that says, ‘This is best practice; this is cost-effective and this isn’t.’
TL: NICE is relatively new isn’t it?
CS: It’s been going since 2000. The essential point in our system is to balance the two sides of citizen engagement with the NHS—the patient side and the taxpayer side. That’s why NICE has been accepted. It’s sort of an equation: How much treatment are you going to give versus the interest of the taxpayer, and not paying through the nose for stuff that doesn’t work. NICE has gone though more or less every NHS treatment, usually two or three times, and is able to say, ‘This is the gold standard of care you should get.’
TL: Then they decide how much it costs to keep someone healthy?
CS: In the early days they sort of solved this. They had these concepts of “quality-adjusted life year.” In other words, What is your life worth per year if you’re healthy; how much less if you’re in a certain amount of pain; and even less if you’re in chronic pain all the time. The method for figuring that out is well established, and experts understand it and think it’s a robust model.
I don’t think the public has any idea how they calculate it. But they do understand the figure they’ve picked out—30,000 pounds [nearly $50,000 at current exchange rates] is what the government will pay for one year of good quality life. And I think people widely accept that. It’s an arbitrary number, but it’s a large number to an average person, and people don’t see it as stingy as far as I can tell. If a treatment comes in under that, then NICE will recommend it, and if it doesn’t, they won’t.
TL: I’ve heard that’s sometimes controversial.
CS: This obviously leads to intense discussions with drug manufacturers whenever there’s a new drug, and the drug companies desperately try to make sure it comes in under the threshold. If treatment is calculated to cost more, they claim ‘you haven’t you looked at this fact or that fact.’ That’s always a protracted process. But I think fundamentally people feel that it works, to determine the best and most cost-effective treatment.
TL: I remember some very negative and sensational press coverage when NICE began.
CS: When NICE was set up, there was a standard genre of story—you found a lovely family, made a nice picture; they want this life-saving drug and the bureaucrats have said, ‘No.’ You could always find tough margin calls, but those stories have dried up a bit now. Not many newspapers do them anymore because the public has accepted that sometimes there are hard cases, but that generally this process does work.