There are several more very important ways in which health care does not conform to the assumptions necessary for the idealized "free market." (This is actually true of just about every kind of good or service but more glaringly so for health care.) One important way is imperfect information. I know what kind of cheese I like or what kind of clothes I want to wear. But we don't actually know what health care services we need. The first thing we pay the doctor for is to figure that out. Physicians tell us what's wrong with us and what to do about it. Sure, there's a big movement going on for shared decision making, but before I can share in the decision I need the physician to tell me my diagnosis, the prognosis -- what the likely consequences are -- and my treatment options.
The result is that consumers don't create demand for health care, except maybe for cosmetic surgery. Providers do. And if they are paid to do certain procedures they are likely to decide you need them. This is called provider induced demand. And no, they aren't being unethical greedy bastards -- well maybe some are -- but it's just human nature to be unconsciously biased toward deciding that something needs to happen that will make you money. This can happen to some extent with auto mechanics and roofers and other professions of course, but a) the stakes aren't as high and b) more of us have some capacity to judge whether the advice is really sound. In health care, it's pretty much 100%, very few people know enough to second guess their doctors.
This is part of what makes health care in the U.S. so expensive. In other countries the way it's paid for is different and incentives outcomes rather than doing more stuff. Experiments with that are underway here, but it's difficult to make it work when there are multiple payers and multiple payment systems going on at once. This is a very complicated subject, unfortunately, and I can't really do it justice with blog posts, but I'll try to unpack it a little bit next time.
4 comments:
I have a related story.
About six years ago, I had an outpatient procedure. It was a fairly simple procedure, but not completely without risk. A biopsy was taken before the procedure. A few days later, I received a call from the doctor's office; I was expecting them to check in to see how I was doing, but instead was told that they were going to put me on the schedule for a major surgery, because some cells were identified in the biopsy that were concerning. The nurse making the call then identified a condition that was not serious (she actually misspoke; I looked up the condition(s) after the call was over) and asked if I had vacation time to take for recovery. !!?!?!
Anyway, I asked what the chances were that this would result in serious illness (I think she mentioned cancer) and she hesitated, put me on hold, and came back with 1% chance.
I made a follow-up appointment with the surgeon, told him I would not be scheduling the major surgery. At the end of the appointment, he mentioned that his wife, pregnant with their third child, was still working on the new landscaping for their large home...I just stared at him.
Shortly after that, he closed his practice, and went back to the state where he came from.
I am sure that many people, trusting that doctors (and their accomplices) know what they are doing, would not hesitate to schedule the surgery. I asked questions.
Thank you for this, Eddie.
I had a similar experience with a skin lesion that was very sore like a large pimple that would not heal. Went to the dermatologist and she took a biopsy, called me and told me to come in and it would be excised. I asked the exact name of the condition and, like you, it had a very tiny chance of turning into something ugly. In the vast majority of the cases, it resolved itself. I, too, declined the procedure.
But I probably will disagree with you on the doctor's motive. Instead of greed, it's more likely "defensive medicine" which is caused by our legal system. As a side bar, I had a gynecologist for a client that was paying $400k year for professional liability insurance in another state. She said she specifically moved to Texas because of the tort reform that limited outrageous punitive damages in medical cases (compensatory were left unlimited) and her insurance cost was about half.
Our legal system allows anyone to sue anyone else with impunity. In the other countries that Cervantes mentions, many have a "loser pays winner's court costs" system which cuts down on frivolous lawsuits solely for monetary gain. Tort reform is not the total answer, but as a factor in healthcare costs, cannot be dismissed.
That's really not accurate. As long as the physician tells you the risks and benefits, you can make your own decision. The doctor can't be sued because you refuse a procedure. The legal system does not allow frivolous lawsuits to go forward, they are tossed without a trial, and lawyers aren't going to take cases on contingency that they know they can't win. There are definitely problems with our malpractice system, which I will discuss, but it contributes only a small amount, maybe 2%, to medical costs. (I don't remember the exact number, but it's not enough to make a serious dent in the cost issue.)
Okay, I now have the straight dope on this. According to a credible analysis, the total cost of the medical liability system comes to 2.4% of health care spending in the U.S., including the practice of "defensive medicine." As I say, the solution to high medical spending is not to be found there, although it could indeed be improved. Caps on non-economic damage do seem to be associated with slightly lower hospital spending on cardiac care, but whether that's a good or a bad thing is not obvious.
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