This is the Cato Daily Podcast for Wednesday, February 25th, 2009.

I'm Caleb Brown.

To eliminate wasteful spending in health care, we have to compare outcomes of some treatments to others.

So why isn't there enough comparative effectiveness research done?

There's a billion dollars worth of that research in the so-called stimulus legislation,

but Michael Cannon, director of health

policy studies at the Cato Institute, says rather than funding that kind of

research the feds should be removing impediments to keep the private sector

from doing more of it.

Well, it's often said that the U.S. health care sector is extremely wasteful.

That's one of the reasons why we spend more money than other countries, but we don't have appreciably better health outcomes.

And it's been estimated that as much as one-third of what we spend on health care is just

pure waste.

It doesn't make patients any healthier or any happier. Now when you're talking about a third of... is just size of the stimulus package we just passed, or about 5% of gross domestic product.

So if we could take some of that money that's being wasted on low-value medical care and

allocated toward more productive uses, well that would be a huge gain for society.

The problem is how do you know which medical services are wasteful and which are not?

It's very hard for patients and even doctors to know beforehand or even after the treatment

has been rendered just how much value was provided there.

So the idea behind comparative effectiveness research is that the government or

somebody will set up these trials that will test one treatment against

another, find out which works best. You can also do cost effectiveness research which will tell you if the additional cost of one of these treatments is worth the additional benefit.

...