• If you’re joining the book club, also read this

    If you intend to read John Goodman’s book along with me, you should also read the 1995 Health Affairs paper he co-authored with Mark Pauly (ungated PDF). My first post on John’s book is really about that paper. I will post it on Wednesday, September 12.


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    • Two things, out of many, I hope you address. Unless I missed it, there is no mention of health care spending demographics. I think that has to be an important part of any discussion about reform. Maybe I am wrong. Secondly, he says the following.

      ” The other approach is to provide citizens with the financial means and the information needed to make good choices, without distorting their incentives.”

      How does this happen. This seems like the magical part of market based arguments. You only get your gall bladder out once (just to use an example). You usually have a limited amount of time to decide. You cant take it back. How does a patient figure this all out? As a physician I often think we have inadequate information, and I have access to studies and have followed them for years.


      • On your second point, those issues are definitely on my mind and will make it into the series.

        On your first point, can you say a bit more about what you mean by “health care spending demographics”? I can make a good guess or two, but another sentence from you and I’ll probably have it nailed. (And, if it is what I think it is, it is also on my mind.)

        • I am thinking about how a small percentage of people account for most of our spending. Conversely, 50% of people account for just 3% of spending. (I know you know these, just fleshing out for others.) Assuming you put your catastrophic level at anywhere near what most people could afford, people will blow right past it with most surgical procedures and chemo. Lots of chronic care will go through it. If you are going to blow past your MSA and deductible, why would you care about price? If I am a greedy provider, shouldnt I be motivated to set prices above those limits to encourage ignoring price? Heck, if I know they will blow through their limits, can I become a Veblen good?


          • Bingo. That’s the notion that’s already on my mind. I will get to it — and the other one — but not necessarily in my very first post or two. I do want to hear Goodman out a bit before I toss all the concerns at him.

    • I agree with Steve. One of the most frequent arguments for liberalized models is that they will force into existence a higher and more discerning demand for critical information. Yet the evidence does not support this (i.e., doesn’t support the belief that consumers will consume more info faced with more skin-in-the-game). (On the other hand, believing that consumers want tons of info is also a major weakness of public health programs, but that’s not a financing question.) I look forward to the non-acrimony and what will certainly be a high quality discussion.