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Wednesday, March 31, 2010

Health care gluttony and grazing at the all your can eat health care buffet

Everywhere I look I see parallels between individually bad human behaviors and collective problems. Human beings have a tendency to overgraze when there is food and it is free or its cost is not really linked to the volume consumed. We know we should not consume so much but the immediate impact of overconsumption is generally inconsequential and can be dealt with by popping a few Tums or the purple pill. The long term consequences may be dire but they are ..... long term meaning not now. Without some immediate consequence, let say an electric shock or painful vomiting, we can be assured that the legions of the over consuming consumers will be well represented if provisions are plenty and cheap. We simply can't help ourselves.

Similarly, we can expect that any product if provided at steeply discounted prices as compared with its real costs, will be treated like the all you can eat buffets. Thus we have the health care economy. The health care restaurateurs have also been provided with rich incentives to induce their clients to graze, not just on cheap pasta and other fillers, but more so on caviar, foie gras, lobster tail, and truffles. Not unexpectedly the diners consume beyond their needs, the providers see no reason to withhold anything, and those who pick up the tab are going broke.

There appears to an increasing appreciation of the looming financial calamity which will not be responsive to financial gimmicks and robbing from Peter to pay Paul. The NEJM has actually published two recent commentaries which have all but declared that something fundamental has to change. The continued rate of growth in the costs of health care above and beyond the growth of the underlying economy will consume us, no matter how much waste is ferreted out and no matter how high the tax rates climb.  This is well articulated in the article:

The Specter of Financial Armageddon — Health Care and Federal Debt in the United States

Michael E. Chernew, Ph.D., Katherine Baicker, Ph.D., and John Hsu, M.D., M.B.A., M.S.C.E.

 However, when the authors have a chance to look at the really difficult choices we face, they include a list adapted from a WSJ piece by David Cutler:

Proposed Strategies for Reducing Health Care Spending.*
Establish insurance exchanges.
Reduce excessive Medicare payments.
Shift from a volume-based to a value-based payment system in Medicare.
Tax generous insurance plans.
Empower an independent Medicare advisory board.
Address and reduce fraud and abuse within the Medicare program.
Enact malpractice reform.
Invest in information technology and comparative-effectiveness research.
Invest in prevention.
*Cutler D. Health reform passes the cost test. Wall Street Journal. March 9, 2010

There is something missing here. Where are the incentives for patients to not gorge at the all you can consume health care buffet? No matter how complex and comprehensive the regulation, enforcement has to happen in a world filled with clever and motivated providers highly incentivized not to leave money on the table and buttressed by the prize of providing the best care for their patients using someone else's money. 

Administrative pricing + third party payer involvement + further insulation of recipients from the costs of the services they demand + command and control management systems = Solution to financial Amagedon?? I don't think so. As long as the underlying structure which drives health care inflation is preserved, the Federal government will be impotent in reigning in the costs and the gluttony will continue.

1 comment:

  1. Chauncey McHargue M.D.April 2, 2010 at 7:50 AM

    A common experience in my practice is the Medicare patient who comes in with a benign skin lesion, her family physician has correctly assessed as such but "She just thought she'd have me check it out." Medicare, meaning the payroll tax paying population, just paid for that visit, essentially paying for the same evaluation twice, as well as paying for the government employees and carrier contractors who administer the system. I netted on this level two visit about $10 and her presence there displaced someone else potentially with a more serious problem. It is doubtful if that person had to pay even the Medicare fee of $66, much less the fee-for-service fee of $145 she would have sought a second opinion or she would have asked her PCP for reassurance that he was confident of his diagnosis. And if I did have to accept Medicare's marginally profitable reimbursement, I would not have to cost shift to private patients and my fee for any initial office visit to allay this woman's anxiety would be less than $145. QED. As to the WSJ editorial citing "excessive Medicare reimbursement" as a problem—that is an oxymoron. CAM