The placebo effect, high prices, and someone else’s money. Spending the most and getting the best aren’t the same thing. Entry 13 – 2008

Whenever I hear people (especially those who do not work in healthcare industry) exclaim that "America has the best healthcare in the world," I wonder how they formed this opinion. Certainly we have many wonderful medical capabilities, but we also have tremendous challenges.

The challenge most people are aware of is cost. But that problem either gets blamed on government—for not providing better access to insurance, or corporations—for being greedy. So, the next comment is often something like: “Medicine is so great, what a shame the costs are so out of control.”

In casual conversation, I rarely question a person's generalization, but it is hard not to wonder if most Americans understand their own role in making healthcare expensive.

A few specific aspects of our individual roles come to mind:
1) Our largely unquestioning faith in what medicine can do (while discounting the risks);

2) Our belief that expensive and more invasive treatments are likely better than less expensive simpler ones; and

3) Our lack of appreciation of the effect third party payment (on our behalf by employers and government) has had on our ability to recognize and appreciate value. (Someone else is paying, so why worry?)

Let’s look at how these three have combined to make healthcare more costly, without necessarily making it better.

Our faith in medical care
It's well known that we are wired to believe in "treatments" provided by experts—just look at the power of placebos (sugar pills with no active medical ingredients). Simply being told we are getting a treatment can make us feel better. Patients frequently experience relief from placebos; the FDA reports that researchers can expect one-third or more of placebo-receiving patients to report improvement in virtually any symptom (1).

Many factors are recognized in the “placebo effect,” among them: the power of the mind to produce an anticipated result, natural healing and recovery, and the potent effect of someone caring. It is a real phenomenon, in the sense of a person’s experience. Placebos are as effective as many things we consider as true treatments.

For instance, over-the-counter children’s cough medicine does no better at reducing symptoms than simple, sugar syrup (2). More surprisingly, patients who believe they have had arthroscopic knee surgery (but only had incisions to fake surgery ) for arthritis report as much improvement of pain as those who had the procedure. (3) There is even some evidence that an authority simply telling you something about your current behaviors (but not altering the behaviors themselves) has physical effects. This is what happened when hotel maids who were randomly assigned to either learn how many calories they burned in their daily work or not learn about it. Those who were told they had already been exercising lost weight and improved blood pressure, while those doing the same amount of work but still believing they “didn’t exercise” had no improvement in weight or blood pressure(4).

Doctors are well aware of the power of placebos—and use them in general practice more than one might expect. In a study earlier this year almost half of Internists reported that they had treated patients with placebos without their knowledge (5). Their patients weren’t told it was a sugar pill (otherwise it wouldn’t work), but instead got comments like: “try this, sometimes it helps people.” In the same survey, only 12% of doctors felt it was unethical to mislead patients in this way. Just imagine if we believed as strongly in some non-medical solutions as we do in medicine.

Add the power of high price (which we think means better quality)
As an example of how much we believe price reflects quality in medical services, consider this recent finding. Researchers gave study subjects electric shocks to elicit pain and asked them to assess the effectiveness of medications in reducing the pain (6). Two groups of subjects received placebos. The only difference was that one group read material saying the medication normally costs $0.10 per dose, and the other signed read materials saying they were begin given a medication that costs $2.50 per dose. Eighty-five percent of the subjects who believed they were getting the high priced drug said their pain lessened. By contrast, 61% of those getting the lower priced drug reported less pain—quite a bit lower. Apparently subjects concluded that if it costs more, it must be better.

Despite our perceptions, higher prices in medical treatment often do not reflect higher quality.

When new medications come on the market, they often come with significant advertising and fanfare; enough to convince doctors and patients alike that the “new” (and more expensive) medication is better. Older, generic medications are cheaper, not marketed aggressively, and may get lumped into a category of “outdated,” less valuable treatment. Consumer Reports (CR) has released new information about medications that suggests that the latest medications may not necessarily be better (7). Consumer Reports rates medications based on effectiveness, price, and safety. In their overview of all diabetes medications, they conclude:

• Newer drugs are no better. Indeed, several of the newer drugs are less effective than the older ones. The newer drugs are more expensive. The newer diabetes medicines cost many times more than the older ones.

For depression medications, Consumer Reports recommends three best options, all of which are generic, and concludes:

• These medicines are substantially less expensive than most other antidepressants, and are as effective as any of them.
  

One last example, in reviewing evidence about the latest highly-advertised medications that treat insomnia, Consumer Reports concludes:

• While effective, these medicines are not necessarily better than older, less expensive drugs for many people who need a sleep aid for a night or two.

These are just a few examples where more healthcare, or more costly healthcare is not necessarily better healthcare.

Now, combine confidence in medical science, a belief that price indicates quality, and one other factor…someone else paying the bill. When someone else pays the bill, we have an incentive to consume more than if we pay ourselves. We are more likely to order steak and lobster at a business dinner than when we pay the check ourselves. When we know insurance will be paying for healthcare, we ask for the “best” care, which, despite the lesson above, more often leads us to choose the more expensive option. When pharmacies substitute generic medications for “brand name” options, members may presume they are getting a lesser product. Or when your health insurance company suggests a less invasive procedure (regardless of efficacy), you might think it’s just because they are trying to save money. We don’t trust decisions made by insurance companies because we know they have an interest in paying less, and we believe we deserve whatever costs more.

In any consumer market where we spend our own money, we are pleased to find an equally effective product for a significantly lower price. In healthcare, we simply get suspicious.

Hopefully, more trusted sources like Consumer Reports will help patients understand that price and quality in healthcare do not necessarily go hand-in-hand. But this will require a financial stake, like health savings accounts, that makes price a consideration for patients. In the meantime, we may be spending someone else’s money to buy the “best care,” which—now we know—includes sugar pills that we believe are helpful. Either way, make sure you ask for the high-priced ones; they seem to work better.

Why this matters
Until we have a more balanced understanding of the limitations of medicine, a better appreciation of price and value, and pay for care ourselves, we will continue to demand and pay for many things for which there are options of equal value at a lower price. Just because we spend the most of any country, doesn’t mean we couldn’t spend less, or that we get the best in all cases.

________________________________________________________________
References

1. Nordenberg, T. The healing power of placebos. U.S. Food and Drug Administration; 2000 Jan-2000 Feb 28; 34, (1).(accesed June 20, 2008).

2. Paul, I. M.; Yoder, K. E.; Crowell, K. R.; Shaffer, M. L.; McMillan, H. S.; Carlson, L. C.; Dilworth, D. A., and Berlin, C. M. Jr. Effect of dextromethorphan, diphenhydramine, and placebo on nocturnal cough and sleep quality for coughing children and their parents. Pediatrics. 2004 Jul; 114(1):e85-90. (accessed June 20, 2008).

3. Moseley, J. B.; O'Malley, K.; Petersen, N. J.; Menke, T. J.; Brody, B. A.; Kuykendall, D. H.; Hollingsworth, J. C.; Ashton, C. M., and Wray, N. P. A controlled trial of arthroscopic surgery for osteoarthritis of the knee. N Engl J Med. 2002 Jul 11; 347(2):81-8. (accessed June 20, 2008).

4. Spiegel, A. Hotel Maids Challenge the Placebo Effect. National Public Radio; 2008 Jan 3. (accessed June 20, 2008).

5. Expensive sugar pills work better than cheap ones. Thomson Reuters; 2008 Mar 4. (accessed June 20, 2008).

6. Steenhuysen, J. Doctors say placebo use common. Thomson Reuters; 2008 Jan 3. (accessed June 20, 2008).

7. Consumer Reports. Consumer Reports Best Buy Drugs. Consumer Reports.Notes: (accessed June 20, 2008).