Medicare and Heart Transplants: Will Lightning Strike Twice?

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Abstract
Prologue: The challenge of determining what a new medical ben- efit will cost any health insurance program, public or private, has a history in the United States that reflects the political nature of the process. Perhaps the most memorable episode is the gross underesti- mation Congress embraced in 1972 when it extended Medicare coverage to individuals suffering from end-stage renal disease. The issue surfaced most recently when the Health Care Financing Ad- ministration (HCFA) and the Congressional Budget Office of- fired sharply differing estimates of the cost of a new Medicare out- patient prescription drug benefit. In this article, Gregory de Lissovoy discusses the issue of cost estimation within the context of the Department of Health and Human Services' decision to extend Medicare coverage to heart transplantation surgery. De Lissovoy, a health services researcher who is well grounded in the theory and practice of economics, holds a doctorate granted by the Depart- ment of Health Policy and Management at the University of North Carolina. De Lissovoy is an assistant professor of economics and fi- nance at The Johns Hopkins University School of Hygiene and Public Health. He also is affiliated with Hopkins's new Program on Medical Practice and Technology Assessment, which was created to examine new medical technologies and procedures with respect to their benefits and costs. In writing this paper, de Lissovoy sought to achieve three objectives: to reassess projections made by the Na- tional Heart Transplantation Study (NHTS) and HCFA as to the number of heart transplant procedures that would be per- formed under Medicare, to point out what he considers a fallacy in the NHTS/ HCFA approach to forecasting utilization of the heart transplant technology-basing projections on the patient selection criteria then in effect-and to present an economic paradigm for medical technology diffusion as a market process.

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