Rhonda Rundle over at the Wall Street Journal today reported on an interesting study conducted to determine the cost-effectiveness of obesity surgery. I can’t imagine it’s been the only one of its kind, but this one seems promising because the findings, published in the September issue of the American Journal of Managed Care, states that the cost is offset within two to four years due to medical cost savings on co-morbities such as diabetes, high blood pressure and sleep apnea.
However, the study is coming under fire because it was sponsored by Johnson & Johnson’s Ethicon Endo-Surgery unit, a maker of surgical devices and instruments used in weight-loss surgery, throwing the authors’ integrity in to question. Well, the money has to come from somewhere. That said, it might have been a good idea for the journalist to perhaps mention some other studies that support the general premise of the findings, such as ‘Effects of Bariatric Surgery on Mortality in Swedish Obese Subjects‘ published in the NEJM, that concluded that ‘bariatric surgery for severe obesity is associated with long-term weight loss and decreased overall mortality’.
The America’s Health Insurance Plans spokeswoman responded to the results of the study with the slightly bizarre comment “I don’t know if these results would be replicated in other populations.” While the population is not clearly identified, the authors used health insurance claims data for more than 3600 patients who underwent a bariatric procedure and for a matched control group to estimate the length of time required before the procedure breaks even (return on investment period) from the insurer’s perspective. The authors find that procedure-related costs are fully recovered after 53 months. For laparoscopic procedures, the estimated return on investment is reduced to 25 months.
The WSJ story postures that this may increase pressure on health insurance companies to cover gastric bypass surgery. Most insurers specifically exclude weight-loss surgery from their coverage, regardless of proven medical efficacy. Oddly, insurers will cover treatment for diabetes, sleep apnea and so on, but evidently, the short-term cost in doing so outweighs the higher price tag associated in the short run with covering surgery that might relieve the patient of these co-morbidities.
Which leads me to my point. Health plan members routinely switch insurers every couple of years. It does not pay – from the insurers perspective – to front the high cost of surgery, when the logic goes that as the member gets sicker, they are likely to be another insurer’s expense down the line. Or not, depending on whether that person can continue to secure health insurance in the future.
So the caution here is that in quantifying break even periods for life-saving procedures, it sends a message that coverage decisions should be predicated upon achieving returns on investment in the short run, for the insurer who is ‘paying’ for it. Should we really be asking that question? How about asking where is the return on society’s investment? What is the ROI to the employer groups paying huge premiums to insurance companies if only the short term profit motive is taken in to account?
Consider this – over the last 10 years, the property / casualty and life / health insurance industries have each enjoyed annual profits exceeding $30 billion. The insurance industry takes in over $1 trillion in premiums every year. It has $3.8 trillion in assets, more than the GDPs of all but two countries in the world. The CEOs of the top 10 life / health insurance earned an average of $9.1 million.
So I have a postulation of my own – employers should start quantifying insurers on the long-term return for their investments. Short term profit gain for insurers usually comes at the expense of long term gain for everyone else.