Map of life expectancy at birth from Global Education Project.

Monday, December 06, 2010

It's Ecomomics 101 time again . . .

From the NY Times, a disgusting story about a cardiologist who was implanting stents, by the hundreds and thousands, in people for whom they were not indicated. As you may recall, these devices don't actually reduce your risk of heart attack or death. At best, they relieve the chest pains which can be a symptom of cardiovascular disease. In our last episode, we learned that many patients who receive them have the impression that they do in fact reduce the risk of heart attacks and extend lives. Did they just misunderstand their doctors?

Or did their doctors lie to them? From the Times article:

Edward Chaid, 68, a semiretired general contractor from Timonium, Md., is among those who have sued. Five years ago, Mr. Chaid decided to get his first physical examination in decades. Just to be safe, his doctor sent him for a cardiac stress test at MidAtlantic, which revealed a small “squiggle” of concern, Mr. Chaid said. He was sent to Dr. Midei to get his arteries X-rayed, and he emerged from the procedure with two stents.

“Dr. Midei said: ‘You sure are lucky. You had 90 percent blockage.’ And the nurse said, ‘Oh yeah, you were blocked in your widow-maker.’ And I said: ‘Thank God. I guess I’m really lucky you got it when you did,’ ” Mr. Chaid said in an interview.

Actually Mr. Chaid didn't even have a severe blockage, but even if he had, if he didn't have chest pain, there would be no reason to implant the stent.

I'll leave it to interested persons to read the Times article for all the gory details of this story, which also involve Abbot Labs and the hospital as unindicted co-conspirators. But for our purposes the point of this story is that once again, it proves that neoliberal economics is completely disconnected from reality.

Libertarians and their allies in the Theology Economics departments of our major universities envision buying and selling transactions as necessarily benefiting both parties. The problem of externalities, which we have often discussed, does not enter into this. We're talking about the internalities, as it were. According to standard economic theory with which college freshmen are indoctrinated, the money gained in the transaction must be worth more to the seller than the goods and services rendered; and they must in turn be worth more to the buyer than the money. Otherwise the transaction would not take place. So everybody wins. Not only that, but consumers are sovereign: they create the demand which calls for the productive potential of the economy. If people didn't want stents, not so many of them would be made, and not so many hospitals and cardiologists would share the $10,000 a pop they get for implanting them.

The problem, obviously, is that you and I don't have the slightest idea whether we would benefit by more than $10,000 from a stent. Let's even leave aside the issue of third-party payment. If somebody told me I needed it to save my life, I'd come up with the ten grand somehow on my own, if I possibly could. How was I supposed to know the guy was a greedy psychopath who was lying to me so he could pocket the fee?

This is obviously an extreme case. The medical industry could not function at all if physicians didn't have a code and a culture of ethics that we know we can rely on. We have to trust our doctors and most of the time, they are basically trustworthy. Still, if there is money to be made, they are likely to be swayed unconsciously in the direction of doing more. And the culture of their specialty will, again without conscious bias or awareness of pecuniary motives, tend to lean toward valuing what they do highly. No surprise, if you are diagnosed with prostate cancer, surgeons will think you need surgery, radiologists will think you need radiation, and oncologists will think you need chemotherapy; but maybe what you really need is nothing.

This is why it is ridiculous for conservatives to try to scare us with the specter of government bureaucrats coming between us and our doctors. We and our doctors need the best possible information about what treatments are indicated and cost effective under what circumstances, and they need some guidelines to keep everybody at least in the ballpark of doing the right thing. Without that, we don't just waste money, we get physically assaulted and maybe seriously harmed, if we happen to stumble on an amoral greedhead. Free Markets™ and liberty have nothing to do with it.


Daniel said...

Have any studies been made that estimate what % of health care costs are associated with procedures that are not necessary or indicated by medical science.

Just before reading your post I was reviewing our small company's health care premium increase for 2011. It's slightly over 20% this year due to two factors. First, an overall increase of 13.9% and second, a slight increase in age which put some employees in the next age bracket. Ouch, our costs double about every 4 years.

I wonder how much of our premiums support unnecessary expenditures and over priced drugs?

And BTW, the the increase in health care premiums at our company reduces our R&D budget and our ability to compete in a very technical market. I think health care costs contribute to job stagnation in our country.

Cervantes said...

It's difficult to answer your question because whether an intervention is indicated is not generally on one side or another of a bright line; and it isn't feasible to have a group of experts go through some random sample of medical procedures to decide if they are really kosher or not. As far as I know the best evidence we have comes from the wide geographic variation in the intensity of use of various procedures, which seems to be explained largely by the density of specialists who do those procedures, and local variations in the culture of medical practice. Atul Gawande did a much publicized article about this in the New Yorker, and I've discussed it here at times.

I know that rising health insurance costs are a huge problem for small businesses. It's a major blow to U.S. competitiveness. We absolutely need real action on this. Unfortunately the Republicans start yelling about Death Panels any time somebody tries.