Cost-Effectiveness in Health Care Is Racist

Recent protests against police brutality have forced the country to face the role our institutions play in perpetuating racism. As with law enforcement, we must hold our health care system accountable for discrimination and the effect it has on health outcomes.

There is growing recognition by the World Health Organization and U.S. Centers for Disease Control and Prevention that social determinants play a significant role in health and well-being. This includes the family we are born into, our sex, our race and ethnicity, and our level of education and financial resources. Not surprisingly, systemic racism and violence are major barriers to health care equity.

One overlooked aspect of systemic racism in health care lies within health economics. Many countries make drug reimbursement and coverage decisions based on “cost-effectiveness assessments,” which are complicated analyses of the costs and potential health benefits of medical interventions. The “effectiveness” of a treatment is often determined by a metric known as the quality-adjusted life-year which assigns a financial value to patients in relation to an intended treatment.

Older people and people with disabilities or debilitating chronic conditions are discriminated against compared to younger, healthier people when it comes to QALY analyses. For two patients receiving equal care, it means covering treatment for the younger and healthier one is a more cost-effective move for an insurance company than treating the older and sicker one.

Overall, QALYs distort our ethical instincts by placing a lower value on people’s lives due to having less “life years” or “perfect health” ahead of them. This is a particular issue for Black people, since QALYs dictate that worth is proportionate to life expectancy. Black Americans maintain a shorter life expectancy than whites, which forces the cost-effectiveness threshold for treatment to rise. QALYs also seek to generalize the population, which sounds like it would have an equalizing effect, but populations that experience social disadvantage are routinely considered more expensive to treat.

This played out in a recent cost-analysis report developed by the Institute for Clinical and Economic Review on new treatments for sickle cell disease. SCD is an inherited red blood cell disorder that affects 100,000 people in the United States, mostly Black people. It can lead to problems that include persistent pain, bone damage, strokes and organ failure. Some newer SCD treatments help with debilitating symptoms and significantly improve quality of life.

But ICER’s March SCD report openly acknowledges that QALYs “cannot capture the full psychosocial impact of systemic issues such as racism that may impact underserved populations.”

Still, the group takes a “don’t shoot the messenger” posture by punting on the access implications. The report suggests “decision-makers in the US may wish to consider giving special weighting to other benefits and to contextual considerations that would lead to coverage and funding decisions at higher prices.”

Based on the current status quo methodology, new SCD drugs demand rebates in the 80-90 percent ranges to be cost-effective. According to ICER’s report, most payers do not cover these options easily or at all.

Just last week, House Democrats voted to pass legislation intended to shore up the Affordable Care Act — including the QALY-based international reference pricing solution included as part of the drug pricing package they passed last December. This time, the discriminatory policy was used as a “pay for” to cover the new ACA legislation, ironically to help those who are disadvantaged. It was a classic example of robbing Peter to pay Paul.

Like the case made with police brutality, health economics isn’t broken — it was built that way to ration health care among groups that have the least power in society. We need to develop non-QALY alternatives that put the economic focus strictly on the effectiveness of treatments and services, and whether they are truly delivering health outcomes that patients want.

In the meantime, Congress should pass a universal ban on using QALYs for coverage and reimbursement decision-making. That would be a courageous way to show that Black Lives Matter and no life is worth less.

Susan Peschin, MHS, is the president and CEO of the Alliance for Aging Research.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.

This op-ed has been updated to reflect the latest legislative moves in the House.

Morning Consult