{"id":543497,"date":"2010-04-26T13:50:01","date_gmt":"2010-04-26T17:50:01","guid":{"rendered":"http:\/\/www.theatlantic.com\/business\/archive\/2010\/04\/the-mystery-of-future-health-care-costs\/39506\/"},"modified":"2010-04-26T13:50:01","modified_gmt":"2010-04-26T17:50:01","slug":"the-mystery-of-future-health-care-costs","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/543497","title":{"rendered":"The Mystery of Future Health Care Costs"},"content":{"rendered":"

Ezra Klein<\/a> had a post last week about the accuracy of projections about health care, in which he called reports like the recent one from HHS a sort of Rorschach test–conservatives and liberals each see in them what they want to.  I think this is true, to a point.  The history of health care spending projections is considerably more checkered than either liberals or conservatives acknowledge.  Over time, it is true that far more health care programs have busted their budgets than have come in considerably under budget; on the other hand, some cost cutting programs have ended up netting more than expected.  But virtually all of the reports written on this question consists of simply cherry picking your examples very carefully in order to generate the answer you want.  This would be a perfect job for the CBO, except that members of congress request those reports, and I doubt either party is willing to risk getting the wrong answer.<\/p>\n

But there is one example of “cost underruns” that I keep hearing, which I think should be used cautiously if at all.  That’s Medicare Part D, which came in substantially beneath projections.  <\/p>\n

As it happens, I just turned in the first draft of a piece on the status of prescription drug pipelines.  You’ll have to wait to read my opinions on that question, but investigating the question has given me a better appreciation of just how unique an environment surrounded the enactment of Medicare Part D.  There was a broad shift in the market for pharmaceuticals on several fronts:  fewer blockbuster drugs were being approved, and more blockbuster drugs were going off patent.  Meanwhile, pharmaceutical benefit managers were really cracking down on what drugs went into their formularies.  <\/p>\n

A drug like Eli Lilly’s Effient platelet inhibitor would have been a
\nblockbuster ten years ago–it causes slightly more bleeding, but it’s
\nalso more effective than Plavix, its main rival.  But Plavix goes
\noff-patent in 2011, and is less expensive even now, so Medco, a major
\npharma benefit manager, is funding its own research<\/a> to find ways to identify the small subset of patients who will do better on Effient.  In other words, private firms have started to do the sort of comparative effectiveness research that the architects of health care reform promised. <\/p>\n

There are several good reasons to think that this won’t generalize well:<\/p>\n