The World Turned Upside Down

Actually, the world is still right side up. It's the junk economics that permeates our political culture that is upside down.

The obvious question raised by yesterday's post is why those people in the lower spending regions aren't getting such great benefits from Medicare as the people in the higher spending regions. Obvious, but completely wrong. It turns out the people in the lower spending regions get better health care than the people in the high spending regions. According to Fisher, Goodman, Skinner and Bronner, with the Dartmouth Atlas of Health Care, in higher spending regions:

Technical quality

-- Adherence to evidence-based care guidelines worse.

Health outcomes

-- Mortality higher following acute myocardial infarction, hip fracture, and colorectal cancer diagnosis.

Physician perceptions of quality

-- More likely to report poor communication among physicians and inadequate continuity with patients.
-- Greater difficulty obtaining inpatient admissions or high-quality specialist referrals.

Patient experience

-- Worse access to care and greater waiting times. (“paradox of plenty”
-- No difference in patient-reported satisfaction with ambulatory care.
-- Worse inpatient experiences.

* High- and low-spending regions were defined as the U.S. hospital referral regions in the highest and lowest quintiles of per capita Medicare spending as in Fisher (2003).

Why do you have to wait longer where supply is more plentiful? Because utilization is even higher. Isn’t this the exact opposite of what your Economics 101 professor told you?

Why yes it is. Reality is not cooperating with that theory of the Free Market. And one of the key reasons is that it is suppliers, not consumers, who control demand in health care. Now, of course most physicians perceive themselves as acting in the best interest of their patients. However, they get paid for doing stuff. What is more, specialists get paid a whole lot more for irradiating you and slicing and dicing you than primary care docs do for listening to you and giving healthy advice. Therefore, we have more specialists than other countries and fewer primary care doctors, and we spend more on the zapping and cutting as a result. Doctors aren’t necessarily conscious of this but it’s just human nature. Surgeons think you need surgery, radiologists think what you really need is radiation, oncologists think you need chemotherapy. It’s unlikely that they’ll think you shouldn’t do anything, but often that’s the best course.

Now, conservatives and some physicians talk a lot about how fear of malpractice suits drives overutilization. I won't get into that in any depth right now because it would be a bit of a digression, but the problem has been greatly exaggerated. Total malpractice payouts per capita in 2001 were $16 in the U.S., $12 in the UK, and $10 in Australia. Not a huge difference, and maybe we just have more malpractice? Adding the cost of defending malpractice suits and insurance underwriting expenses, malpractice payments are less than 5% of health care spending in the U.S.

The conventional wisdom is that malpractice premiums have steadily risen and now constitute a crisis for medical practice. American Medical Association (AMA) surveys of self-employed physicians from 1970 to 2000 indicate that premiums were lower in 2000 than in 1986. There is a commonly accepted range of estimates, that from 44,000 to 98,000 Americans die every year from avoidable errors made in hospitals. The number who are injured, including many serious injuries, is obviously much higher. The vast majority of these incidents do not result in any malpractice claims at all. We have a problem in that the only method we have available for compensating people who are injured by medical errors is malpractice litigation. That's bad for both patients and doctors, and it should be fixed, but it is absolutely not an important reason for our high and out of control health care spending.

But I digress. The last quite substantial influence on utilization is the local peer culture, basically. It’s just the way we do things here in Walla Walla Wash or Kalamazoo. In order to appreciate how this can be, you need to know that most of what physicians do is actually not based on clear evidence; it’s based on conventional wisdom, personal habits and proclivities, accepted practice. People are surprised to learn that we’ve actually needed a movement toward evidence based medicine in recent years, because it has not been the standard all along.

Next time: Efficiency, and the causes of health.