He's Not an Economist
By Arnold Kling
one of the latest gimmicks the health care policy wonks have dreamed up, more commonly known as pay for performance. It’s based on the (highly disputable) notion that bad doctors are running up the cost of care by ordering unnecessary tests, recommending unneeded procedures and surgery, practicing costly medicine which lies outside the mainstream–renegades all, ransacking the health care treasury. The good guys in the white hats, on the other hand, walk carefully between the lines, following established standards of care, don’t cost the system nearly as much–and should be rewarded with better reimbursements.
Ten solid seconds of thought by anyone with an IQ over 50 should see problems with this idea. A superbly-trained physician saving the life of a desperately ill patient, on a ventilator in an ICU, will be spending a whole pile of money–whereas ol’ Doctor Feelgood, passing out antibiotics for your sniffles and pain pills like candy may not be spending many health care dollars at all. High quality — while not invariably more expensive–is often so. And what about those guidelines? Well, one problem is, by and large, they don’t exist — except in a few relatively straightforward areas of medicine. The reason, in no small part, is that quality medical care is a complex and constantly moving target: what was excellent care ten years ago may be marginal or even poor care today. Once you ossify guidelines into regulations governing payment, you run a great risk of freezing health care advancement. You will be paid for care meeting the guidelines–but not for better care, based on advances in medical knowledge and technology, which will tend to fall outside the guidelines.
Maybe David Cutler will start a blog, so that he can reply. But I’m with Dr. Bob on this one.
Next, we have Dr. Bob’s solutions, in part 8.
Pay physicians by time: In virtually every profession and avocation, including law, accounting, consulting, and most trades, the primary measure of one’s efforts is the time spent performing the task at which you are trained and skilled. The hourly rate will, of course, vary widely based on your profession, training, and expertise; but, by and large, the time you spend on a task is well-correlated with its economic value.
…I would mandate that universal catastrophic coverage be required for all, with very large deductibles, perhaps $25,000.
…To cover this large deductible, secondary policies would be available, paid either by individuals or their employers. However these plans would not make payments to physicians; they would reimburse patients for their health care costs. The patients themselves would be the contact point for payment; they would be the ones who actually pay the physician’s bill.
…Provide tax credits for physicians to see the poor.
If you think you have a “gotcha” for how these suggestions could go wrong, then go read his whole post. He anticipates many concerns. I’ve said in the past that I really respect experts who discuss the possible weaknesses in their own views, not just the views of those with whom they disagree. Dr. Bob earns respect by this criterion.
His overall goal is to try to cut down on unnecessary overhead in medicine. He is trying to eliminate the paper chase between insurance companies and doctors.
I wonder what his solution would be for Medicare…
Thanks to commenter Spencer for the pointer.
Meanwhile, another commenter, Floccina points to Murray, et al, who studied longevity among different sub-populations in the United States.
About a year ago, the Harvard Gazette talked to two of the authors.
“Put in a global context, the disparities in mortality among the eight Americas are enormous,” says Majid Ezzati, an associate professor of international health at the School of Public Health. “Our analysis indicates that 10 million Americans with the best health have achieved one of the highest levels of life expectancy on record, three years better than Japan for women, and four years better than Iceland for men. At the same time, tens of millions of Americans are experiencing levels of health that are more typical of people in developing countries.”
…Increasing access to coverage is bound to narrow the gap in life span, but will not come close to eliminating it, the researchers speculate. “The variation in health plan coverage across the eight Americas is small relative to the very large difference in health outcome,” notes Murray, who is lead author of the report. “It is likely that expanding insurance coverage alone would still leave huge disparities in young and middle-aged adults.”
As Floccina notes, the point that variation in health plan coverage does not explain variation in health outcomes is quite Hansonian.