Tuesday, January 19, 2010

My plan, part 2

I left you with a bit of a cliffhanger yesterday, and I'm sure you spent a sleepless night trying to figure out what comes next. Now I'll explain why putting more costs on the actual consumer will do the trick as far as health reform. Incidentally, I've been focusing on health care a lot lately, and I promise to try to find something else to cover for a little while.

One interesting aspect of health cost growth is that it's not constant throughout the country. Consider the following graph from a study on regional variation in health cost increases:

Clearly, Oregon has got it figured out. Miami is in trouble. But why these differences?

They can't be caused simply by new technology in certain areas, because that doesn't vary a ton from one major city to another. The researchers also controlled for health outcomes, so everyone in Oregon isn't walking around with pneumonia. This study's authors found that
Using clinical vignettes to present standardized patient care scenarios to physicians throughout the country, the researchers found that physicians in high- and low-spending regions were about equally likely to recommend specific clinical interventions when the supporting evidence was strong. Those in higher-spending regions, however, were much more likely than those in lower-spending regions to recommend discretionary services, such as referral to a subspecialist for typical gastroesophageal reflux or stable angina or, in another vignette, hospital admission for an 85-year-old patient with an exacerbation of end-stage congestive heart failure. And they were three times as likely to admit the latter patient directly to an intensive care unit and 30% less likely to discuss palliative care with the patient and family. Differences in the propensity to intervene in such gray areas of decision making were highly correlated with regional differences in per capita spending.
Basically, getting more stuff makes things cost more. While the study's authors advocate for more doctor advocacy to solve this problem, I think it could be much more easily dealt with by making consumers pay for more procedures. This will make them much less likely to go for a procedure that will probably not do them much good.

If people are getting less health care, this doesn't mean that we'll all be much sicker. Many studies have found, for example, that "Medicare patients in regions with higher health care spending levels do not experience better health outcomes, nor do they gain better access to care or report greater satisfaction."

So now we've got more empowered consumers, less distortion of salaries and health insurance, more transparency, slower growth (and therefore, more affordability for everyone), and less waste. Everyone wins! And the best part is that, as costs are tamed, more people are able to afford the health care they need. Plus, with insurance not covering everything under the sun, just about everybody who wants it will be able to buy catastrophic coverage, which is what insurance should cover in the first place.
Impending legislation, unfortunately, further entrenches workers' dependency on their employers for coverage, requires more comprehensive and widespread insurance, and does little that will actual control cost growth. Everyone loses...


Chick in the Czech said...

Thanks for putting so much thought into your posts! I enjoyed reading them and they are definitely food for thought.

Sarah said...

Excellent points!

And I thought that graph with the variations in spending in different cities was very interesting. It is certainly true that more medical care/procedures/intervention does not mean better health. Consider homebirth; studies show that homebirths consistently have better outcomes than hospital births, yet they are less than 1/10 of the price of a typical hospital birth.

Katie said...

David - I'm enjoying reading your thoughts on this subject! It's a very complex problem, and your posts seem to be very well thought out.

This is an interesting topic to me. when i worked at cerner the ceo explained that his ultimate goal was to put insurance companies out of business by driving down the cost of healthcare and making it more consumer driven. You might find it interesting to research some of cerner's initiatives & the ideas of the ceo neal patterson. Here's his blog: http://nealpatterson.cernerblog.com/

Mom said...

I didn't spend a sleepless night, but seriously, we just returned from chorus at 11:15, and I ran in to read this post before getting ready for bed, so we could discuss health care more tomorrow! Your ideas sound so sensible!