One of the things that strikes me most about the health care policy debate is just how little of it is focused on thinking about the actual policy implications of health care reform, and how much of it is rooted in misconceptions that people pass off as fact. A case in point, which I think is kind of relevant to the debate is a discussion I had with a co-worker last week. He brought up alternatives to the ACA, and I mentioned in passing that it drove me nuts that people talked about the solution to reform being "more markets". Which led him to respond that "virtually all" economists disagree. Of course, I called him out on this. The reality, of course, is that economists rather strongly lean the other direction, and have for years. Needless to say, when I brought up this being an issue in which the most prominent paper is almost 50 years old (the Kenneth Arrow piece), he dismissed it as "one paper by one economist" (never mind that it's still widely regarded as the pre-eminent paper in the field, and Arrow is a little more than "just some economist", but that's beside the point.
Although he wasn't much interested in hearing about 50 years of health care economics papers (and, let's be real, very few people are. Most people aren't big enough nerds and have better things to do than read academic papers for fun...), my colleague told me we'd "never agree" before we could start having a discussion. Fair enough. But he highlighted another flaw in the thinking of those who advocate for "market-oriented" approaches. When we got to talking about comparative-effectiveness research, he argued that, if this was an effective strategy, insurers would do it to cut payouts. But that's where his logic broke down. Just because doctors in a pay-for-procedure model have incentives in place to do more procedures, and do more expensive procedures rather than cheaper ones doesn't mean that they're always wrong to choose the more costly approach. While it might be that something like an X-Ray can catch 90% of what a CAT Scan can at a fraction of the cost, it doesn't follow that CAT Scans are redundant (this is entirely hypothetical; I hardly know the difference between the two, but this is assumed for argument's sake). Rather, there are good reasons why particular procedures are done at particular times, and why doctors can prefer one over the other. These vary not just based on the condition, but also based on the particular patient and their medical history. The reason doctors spend years in school and get paid big money is because they're highly skilled professionals, and their decisions can't be boiled down to a flowchart based on a few yes or no questions.
A big health insurer certainly has the breadth of patients to do comparative-effectiveness research. What it lacks is the capacity to monitor doctors that it oversees. It can't (and we don't want it to) tell doctors that they're doing superfluous procedures on patients simply because their view from 20,000 feet is insufficient to tell a particular patient what the best course of action is. As a result, insurers have controlled costs in other, even blunter ways. Along with rising premiums, driven by a lockstep rise in the cost of care, they use tools such as annual and lifetime caps to limit how much medical care they will cover. The problem with this, of course, is that there are plenty of patients who require more care than their annual or lifetime cap will permit. But doing away with these caps without broader just puts the health insurance industry out of business or puts health insurance out of reach for an even bigger chunk of Americans. If doctors are compensated for more expensive procedures, and insurers have to cover those procedures, there's really no incentive to cut costs. And then the problem just gets worse.
It should be clear that, as much as some people might rail against the government making health care decisions for people, allowing insurers to make health care decisions for people is even worse. This isn't to say that the insurance industry is "evil", per se-- just that, like any corporation, it's a profit-maximizing entity that makes more money when it pays for less. This creates a bit of a conflict if we accept that the social goal is to get people quality medical coverage. While cost control is really hard (as the prominent MIT health care economist Jonathan Gruber, who designed both RomneyCare and ObamaCare noted, it's not a problem that we'll ever solve, just one that we can hope to manage), we have some preliminary evidence that particular ways of paying for health care can cut costs without diminishing (and, in fact, while often enhancing) quality. The encouraging evidence is in comparing doctors who participate in the traditional pay-per-procedure model with those in integrated systems like the Mayo Clinic and Kaiser Permanente. The big difference in the latter model is that doctors, rather than being paid for procedures, are salaried. This means that, regardless of how much care they order, they are paid the same amount (likely with some incentives for good outcomes, but those are very different from incentives to do more procedures). Theoretically, such an approach would allow the provider itself to pressure the physicians to do fewer procedures, but in practice this doesn't seem to be the case. Doctors have an easier time ordering procedures and then finding out that insurance won't pay for some of them after the fact than being told by their employer that they shouldn't do procedure X, Y, or Z because it's too expensive. The former puts paying for care in someone else's (the patient's) court. The latter is an assault on their professional dignity.
I think, as a start, moving toward salaried physicians is a step in the right direction. By making the doctor strictly a doctor and not a businessperson providing medical services, this model strips away the incentive to overmedicate people and enables doctors to focus on treating patients.
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