Shocking Views on Health Policy
By Arnold Kling
They come from Richard A. Cooper, a physician (not to be confused with Richard Cooper, the specialist in international economics).
Orszag has argued that if Medicare spending could be as low in Newark as it is at Mayo, the nation could save billions. But this theory doesn’t hold up in practice. Consider: One-fourth of the folks in Newark live in poverty, compared with less than 10 percent of those in Rochester. And national surveys show that poor people consume more health-care resources — 50 to 75 percent more than average. They are sicker and they stay sicker, despite the best efforts of physicians and hospitals. Mayo is a fine institution, but it isn’t more cost-effective than other hospitals in its home region, nor are its operations in Jacksonville, Fla., and Phoenix more cost-efficient than other hospitals in those cities. So why would it be more cost-effective in Newark?
the president will have to give up on the Dartmouth suggestion and grapple with some painful truths. First, medical care is inherently variable in different regions of the country — socio-demographic differences matter. Second, more is more and less yields less — the best care is the most comprehensive care, and it costs more. Finally, poverty is expensive — the greatest “waste” is the necessary use of added resources when coping with patients who are poor.
More follows. Very worthwhile–he even has a theory to explain Hansonian medicine!From the interview:
health care expenditures for people in the lowest 15% of income are 50% to 100% greater than for people of average income. There’s also a difference at the high end. The wealthiest 15% also consume more, but only about 20% more…
More spending at the high end improves outcomes, not simply for a specific condition but across the board, because the care consists of a broader spectrum of beneficial services. More yields more. But among the low-income patients, outcomes are poor despite the added spending. In fact, the added spending is because of poor outcomes – more readmissions, more care for disease that’s out of control.
Thus, his explanation for the Hansonian medicine:
Now, when you blend all of this into “regional” studies, which average rich and poor, urban density and ex-urban comfort, racial and ethnic groups, you get just what you’d expect. High costs with average outcomes in urban areas (the average of excellent and poor outcomes at different ends of the income spectrum).
Here he slams someone’s regression methodology:
Well, they never really measured how many specialists were in Mississippi or anywhere else. They did some statistical maneuver where everything was converted into residuals, and I guess that Mississippi has a lot of residuals. It just doesn’t have a lot of doctors.