Now that the furor over the Supreme Court's health care decision has died down, the inevitable attacks on the law have started with an eye toward the November election. Watching CNN, the TV ads from groups like Americans for Prosperity (the group chaired by one of the Koch Brothers to push right-wing positions) have focused on repealing the Affordable Care Act and replacing it with "patient-centered health care reform." The point of the contrast seems to be that the ACA is "government-centered health care reform." But push a little toward specifics, and what you learn is that, if you take these claims at their word (which there's substantial reason to doubt, but we can put that aside and give them the benefit of the doubt for now), this means focusing on patient choice. The idea is that we need to let people choose not only their doctors and hospitals (which they pretty much do now anyway), but also let them choose their insurance policies and which procedures they get done. And this is where the coherence of there plan falls apart altogether.
The key assumption here is that health care is an efficient market-- in other words, that people choosing their care will lead to the best care for the lowest prices. This assumption holds up great in many markets. When I go to the grocery store to buy bread, Brooks Brothers to buy a suit, Best Buy to get a new TV, or Sleepy's to buy a bed, I know what I'm looking for, and how much I'm willing to pay for it. I have very good information about the product-- I can inspect it, read consumer reports on it, try it out, and determine how much I am willing to pay for it. The health care market is a prime example of a market in which none of these characteristics are present. This observation isn't new-- as I've pointed out plenty of times before, Kenneth Arrow cited health care as a major failed market nearly 50 years ago. But it's useful to go back over why this is the case.
To start with, the vast majority of health care is not paid for at the point of delivery; it's paid for through insurance. What this means is that I don't know the true cost of a procedure that I have done because the health insurer is picking up the overwhelming majority of the bill. And insurance is absolutely necessary to pay for health care because health care costs are irregular and expensive when they are needed. What this means is that patients have no incentive to control costs, since they aren't footing the bill for procedures that they get. And, because doctors in the US are overwhelmingly compensated for doing procedures rather than getting results, the incentive on their end is to do more procedures that are more expensive rather than an efficient number of procedures that are necessary. Plenty of people on the right claim that the reason we consume so much medicine is because of greedy trial lawyers who gouge doctors. This is nonsense. Texas tried draconian tort reform. The number of lawsuits fell drastically. Health care costs didn't budge. Whether or not reforming the tort system is a good idea (I don't know enough to have strong feelings about it either way), it's certainly a proven failure as a cost-control strategy. The only plausible source of cost control in that scenario comes from... the health insurer. And, whatever you think of the health insurance industry (I'm not as hostile toward it as a lot of people are), putting an insurance company staffed by actuaries rather than doctors at the forefront of medical decision-making is a horrible idea, for self-evident reasons.
But even if we scrap the insurance system altogether and create something like health savings accounts where patients decide what procedures to get, "patient choice" is still a miserable idea. The reason is that the information asymmetry between buyer and seller is bigger in health care than in just about any other market. Imagine for a moment that you go to the doctor, and the doctor tells you that you have Condition X. The options for treating Condition X are A, B, and C, and the costs of those are D, E, and F. Do you have any way to verify anything that the doctor told you? If something doesn't work, do you have any clue if it didn't work because you got the wrong treatment, or because your body responded unpredictably? Heck, if a doctor cuts you open to remove a tumor, do you have any clue whether the doctor actually did anything besides sedate you, cut you open, and sew you back up? This should illuminate some things. First, medicine is a highly skilled profession. It takes a decade of schooling and preparation before you're ready to practice yourself. Being a hypochondriac who can read WebMD doesn't qualify someone to determine the proper course of treatment for themselves any more than watching Top Gun qualifies me to fly an F-16. The reality is that we walk into the doctor's office and entrust the doctor to make all crucial decisions for us, regardless of cost. And that's the way it should be; the doctor is in a position of confidence, and only the doctor can possibly know what's wrong with us and how we can make it better. Which is why the key to controlling costs is fixing skewed incentives for doctors (like paying them for procedures rather than outcomes). All "patient choice" serves to do is put people in a position to make decisions about themselves in an area in which they have absolutely no expertise. No lawyer would ever go to their client and ask which legal argument they'd rather pursue in the case; the client would tell them, "whichever one will win the case." In medicine, this is even more apparent; if I have a health problem, I'm woefully unqualified to tell my doctor what procedure I want done; the answer is always, "the one that will make me better." And if something goes wrong in the aftermath of a procedure, unless the doctor accidentally lopped off my arm fixing my wrist or cut off my head while doing heart surgery, there's no way for me to know that adverse effects later actually resulted from failure on the doctor's end, or failure of my body to respond to treatment. This is distinct from something like the market for beds, where the mattress collapsing a year after buying it is a pretty good sign that I bought a crappy bed, and the company was to blame.
Finally, medicine doesn't have the kind of choice consumer markets do. If I have a heart attack tomorrow, I won't tell the EMT that I don't want to be taken to St. Luke's because it stinks; I'll go to St. Luke's because it's around the corner. And, even for longer-term care, I have no clue how skilled a particular doctor is. I suppose there's a bit of value to looking at doctors' evaluations. The operative term is "a bit". 95% of those reviews focus on how long it took the receptionist to call them back, how attentive the doctor looked, and whether the doctor remembered their niece's name. The other 5% focus on how long the doctor spent in the room with them. This is about as useful as it sounds. If the consumer report for a TV tells me that it has poor image quality and a history of breaking after a year and a half, that's pretty good information. If broccoli at the grocery store is brown, it will probably taste like crap. A doctor's performance can only really be evaluated by... other doctors. Which means that we don't have any real meaningful choice over who's providing our care.
What all this points to is that this idea of "patient choice" as a centerpiece for effective, efficient care is completely nonsensical as a practical matter. The reality is that markets work great for most things. But that's because a functioning market requires particular conditions. Health care is a prime example of a market that is geared for failure. It isn't transparent, it has massive information asymmetries, and payment is separate from delivery. All of this makes the case for... either elimination of the market altogether (through the creation of a single payer, similar to what the UK and Canada have), or regulations that incentivize high-quality care at the lowest possible price, essentially creating the conditions in which the market WILL function well. Because I think markets are powerful tools under the proper conditions, I personally prefer the second option, with some tweaks. That second option is... the Affordable Care Act.
No comments:
Post a Comment