Dr. David Beckworth, an economics teacher and former college classmate of mine, sent an e-mail during a group discussion of health care reform. It touches on several issues which I don’t think are being sufficiently discussed in the present debate. Here’s an excerpt:
- Over utilization of health care by consumers. 85 cents of every health care dollar is paid by a third party. Very little incentive for consumers to be guarded in their consumption of health.
- Doctors often over-treat their patients. There have been a number of studies done that show after accounting for income differences, insurance coverage, lawsuits, race, gender, etc. there is still wide variation in amount and type of treatments physicians prescribe to their patients. Much of the variation is attributed to a culture of how medicine is practiced that is idiosyncratic to a particular region–there are no sound reasons for the differences other than Doctor’s preferences who live there. Some studies show up to 30% of health care’s expenditures fall into this category. Not only is this wasteful but it increases the odds of complications which, in turn, leads to more health care expenditure. See this article in Times magazine, the New Yorker, and the book Overtreated (I read this book and loved it).
- As this group learned from the book Crisis of Abundance: Rethinking How We Pay for Health Care which comes from the libertarian think tank CATO, most doctors are not very good at doing the statistics of cost-benefit analysis. Thus, they are prone to do more test & procedures than are warranted. Like Obama, this libertarian book suggested some committee of health care experts help select for Medicare what procedures are covered based on a benefit-cost analysis. (Note that Obama’s versions of this proposal is being promoted by critics as someone else deciding if you live or not. There are two problems with this view: (1) This is already being done implicitly. For every Medicare dollar being payed, say, to someone in the last six months of their lives this is one less dollar going to find a cure for, say, cancer and thus is somewhere along the line killing someone with cancer. So why are the current accepted procedures that are killing some folks appropriate versus some other list that would save someone else? (2) Medicare’s cost curve is soaring and something has to be done. To argue such a committee should not be doing cost-benefit analysis for Medicare is effectively to say we want to bankrupt our nation!)
- Lawsuits also are exacerbating health care expenditures. Note that studies show that it is not the only factor, but it does matter. [. . .]
- Insufficient number of doctors going into primary care positions. Specialties are sexier and pay more so this is a reasonable response by medical students, but there is much we could save on health care expenditures from having more preventative medicine and physicians to support it. (I understand Medicare is creating incentives to change this trend). Here is a great radio documentary about the shortage of primary care physicians cleverly titled “You Can’t See Your Doctor Now.”
- The health insurance industry is plagued with problems. One, each state has its own state insurance agency–ridiculous. That makes it costly to have firms competing nationally. Two, there is evidence that health insurance companies abuse the system by dumping people for any reason they can find, even silly technicalities like making a mistake when filling out the form for health insurance. See this Slate article on the issue.
- Related to (6) above, think about the implication of genome mapping and the learning of all the genes that causes certain conditions. What will happen to private insurance when it becomes known at birth that an individual has a greater than 50% chance of say some heart disease? I see problems only growing here.
- There are huge administrative cost in health care right now. One is that there is little standardization in record keeping. Thus it is costlier for patients to move among providers. A related second point is that there is inadequate electronic record keeping. Everything I read says the health care industry is way behind other industries on this front.
- There is no true free market in U.S. health care. The industry is highly regulated already and plagued by having different state insurance regulators. Also,whenever Medicare decides a procedure is covered it often is followed by private insurance companies.
For these and other reasons, health care costs are soaring at an unsustainable pace. Interestingly, if we do not make changes ourselves glottalization will force us too. We already see areas like radiology being outsourced via the Internet to radiologists in India and certain insurance companies paying their clients to go overseas to get health care procedures at a fraction of the costs in the United States. (The Economist had a great article on this here.) These external pressures will force us to reform some way. So I am optimistic in the long run. I am just concerned that in the short run we might make some poor policy choices.
Where is a full-fledged discussion of these problems? Mostly in the wonk-rooms, unfortunately. On the Democratic side, supporters of health care reform are too busy reacting to death panel scares and other loony claims. Meanwhile the Republican leadership is disingenuously pretending that the present system is just fine.
It’s not fine, and I wish we had a more rational discussion on the problems.