• Is the US health spending problem in our heads?

    I’ve now written enough on this on Google+ to warrant a post. Here it is.

    I think many are missing a key point and an interesting set of questions related to my post on Woodward’s and Wang’s recent paper. I concluded that post with,

    Politics and entrenched interests have a lot to do with how health care dollars are spent. But, as Woodward and Wang suggest, so does the fact that we have come to expect more for our health care dollar (or someone else’s) than just health. Bending the curve will require breaking our expectations. So far, I have not seen good evidence that we are willing to accept what that means.

    Do we receive and value lots of non-health-improving aspects of our health system: hope, information, other comfort-enhancing amenities? I think this is a very important question that many overlook. It may be the very reason “rationing” and “death panels” frighten and work politically. It may not be the fear of greater morbidity and mortality, but the fear of losing the hope of something better, access to information (fancy imaging) even if it doesn’t improve care, and the like.

    Put another way, at its heart, high and rising health care spending may be more culturally or psychologically driven than economically or politically. Sure, economics and politics matter, but one has to ask why? And why for so long and with essentially the same outcome? Maybe we have to look more at ourselves, within ourselves, than at the system.

    It’s worth asking, as Ezra Klein essentially has, why the difference with Europe? My answer, in the context of what I wrote above, is this: You take the nature of humans and health, mix it with the unique path we’ve taken to our policy trap (a la Paul Starr’s Social Transformation of American Medicine and his forthcoming Remedy and Reaction) and you’re stuck in a place Europeans are not. We’re now boxed in technically in large part due to psychology. Europe avoided the box, so the psychology is less relevant (though not irrelevant). But the answer isn’t found in today’s market/policy, it’s a 100-year path.

    That’s why pointing at Europe and saying, “Do it their way and we’ll be better off” doesn’t work. It may be correct technically, but it doesn’t work culturally, psychologically, hence, politically.

    Back to Woodward and Wang, the essence is: we’ve seen the hope and amenities that all the extra spending buy and we like them. At least that’s a perfectly reasonable, revealed preference interpretation.

    • I have this deep-seated cultural need to have unnecessary and overpriced tests which give doctors the excuse to administer expensive therapies of unproven value. It gives me great reassurance to visit the doctor and hospital and to know that they have their financial interests as their first priority. I know that they will spare no expense to try to find any indication of the potential for disease so that they can do further tests and treatments. Hopefully they can keep me alive (preferably in the hospital) long enough to extract maximum revenue from my protoplasm. I wouldn’t expect any less from my health care dollar.

    • This fits well with Robin Hanson’s idea that we spend so much on health care to show how much we care.

      Also It seems like in many countries healthcare spending is now rising as fast as in the USA, the spending reductions due to monopsony may be a one time gain.

      Also I saw your other post focusing on the amenities and I though but they do not amount to very much. I was too busy to post a comment.

    • I think this is absolutely spot-on. In Switzerland, where I live, the mandatory basic health insurance provides hospital stays only in wards. You can buy additional insurance for semi-private or private care, but the premiums are all out of your own pocket, no matter your income level.

      And many people think that this is just fine, and are happy to accept this less-comfortable option in return for the savings. Its a cultural difference. I know my relatives in the US would be horrified at being placed in a hospital ward.

      There are many other aspects of medical care here that follow a similar pattern. Doctor choice while hospitalized, choice of hospitals themselves, access to certain medications, etc. The basic policy has significant limits and restrictions, privately paid policy extensions are available, and a lot of people elect the restrictions to save money.