The Economics of Renal Failure

By | October 29, 2011

Effective renal dialysis created its own demand, transforming a disease with a life expectancy of weeks into one with a time course of decades.

In 1972, in an act of compassion, Congress and the President extended Medicare coverage to include almost all Americans suffering from ESRD, End Stage Renal Disease. Their logic was compelling. It was disease which affected a relatively small number of Americans, who wasted away of over a period of days to weeks, due to a lack of effective therapy. It seemed as though compassion would come cheaply.

The problem was that they had failed to take into account the potential effects of federal funding on the demographics and treatment of the condition. Almost as soon as the legislation became effective on July 1, 1973 treatment paradigms began to change. Previously unaffordable hemodialysis treatments now became commonplace. This led to increased research and development and eventually to better and safer dialysis equipment. This in turn led to increased survival of these patients.

At the same time organ transplantation research began to make progress and kidney transplants which previously been rare procedures performed in research institutions, now became fairly common. Regional transplantation centers and organ procurement agencies developed in all of the major metropolitan centers. In 2008 over 16,000 kidney transplants were performed in the United States alone.

Over the years some of the complications of renal failure have also become treatable, the best example of which is anemia. Recombinant DNA research has made synthetic erythropoietin available, improving the health and sense of wellbeing of renal failure patients while they wait for transplantation, but at the cost of hundreds of dollars per month.

The lessons of the Medicare treatment of renal failure are instructive and compelling. If you provide payment for the treatment of a disease over time more people will treat it. The greater the number of patients treated the greater the cost. With increased treatment of any condition, treatment regimens will improve, sometimes slowly and sometimes rapidly, but they will improve. These improved treatment regimens are sometimes cheaper, but often more expensive than older forms of therapy. With improved treatment comes improved survival, so the patients require care for longer periods of time, again increasing cost. We will take up the implications of these increased costs both for renal failure patients and chronic pain patients in the next blog.

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