• Priceless: Preface (1) – ctd.

    Austin gave you his thoughts on the preface, though more from him on that section are coming on Friday. I’d like to add some of my own. I’ve been travelling for the past few days, but I wanted to get things down here.

    First of all, I will be honest and admit that as I read the first few pages, I felt myself getting defensive. John begins with the ususal complaints which I’ve discussed here before. He argues that by removing skin in the game, health care is over-used (I disagree). He also argues that making health insurance more affordable makes it more expensive, I don’t think that has to be the case, as many, many other countries make health insurance quite affordable without racking up our prices.

    But then he went and surprised me.

    John supports value based insurance. We’ve discussed that many times on this blog. I imagine we’d implement it differently, but I also have been a supporter of this idea.

    John also notes that by identifying outliers (like Jeffrey Brenner did), we can reduce costs. I agree. So does Atul Gawande, who wrote about the same thing.

    John ends though, by citing the fact that some physicians have had success with EMRs or figuring out more efficient practices without outside help, therefore all should. I’d counter that it’s totally likely that out of the 800,000 practicing physicians, some have been able to succeed. Anecdotes are not, however, evidence of widespread trends.

    So far, I’m encouraged. While I never expected to agree with everything that’s in the book, I was not as put off as I feared I might be. I look forward to chapter 1.


    • John… argues that by removing skin in the game, health care is over-used(I disagree).

      Health care that is beneficial in theory may still be a bad investment from the perspective of a consumer’s preferences and priorities. Money is a finite resource that can also be used to pay for housing, clothing, food, leisure, and other aspects of life’s necessities. There has to be a balance between (on the one hand) spending all our resources improving our health; and (on the other hand) spending all our resources on non-health consumption.

      Public health advocates often argue that many low-income people have unmet health needs. From the perspective of people whose income is at or above the medium, this is understandable. But from the perspective of the person who has to make hard choices to use hard-earned dollars on expensive medical care or pay rent, the choice to forgo care is rational.

    • Like education, the health care system is a sea of mediocrity punctuated by islands of excellence. Because we have completely suppresed normal market forces, the islands are not correlated with anything. That is why the Brookings’ look at best hospital regions and best doctor practices was unable to find that they had much in common.

      It should be easy to agree on things we like. But if we want a lot more of them, we will have to free the market and let them flourish.

      • Like education? We are rated as having the best universities in the world. If you go to any top university, you will find it loaded with students from around the world. Kids today need calculus just to enter a decent school. In the past calculus was not even offered at most high schools.

        I think the better way to look at it is that we do a pretty good job of educating middle class and up kids. They can, and do, compete with anyone else in the world. We do a bad job of educating poor kids. We see much the same with our health care system. If you are middle class and up, you have access to (for the most part) excellent health care. If you are poor, you do not.


      • It seems to me that using concepts like “normal market forces” is patently absurd. I may wish to purchase a Mercedes but only have enough money to purchase a Toyota, so I’ll need to decide whether to purchase a Toyota or nothing. I may have enough money to buy lunch or see a movie but not both, and I’ll need to decide which is more important.

        But if I’m suffering a life threatening condition, the choice might well be do I spend everything I have and then some more in the hopes that I might live, or do I decide it’s more important to save some money for after I die?

        Seems to me that the entire rest of the world has figured out that health care is NOT a normal economic transaction.

        (There are lots of additional factor as well, such if I’m in desperate need of immediate health care I can’t really “shop around”, and I don’t know if that bump on my scalp is an insect bite or skin cancer, and so on. But for now I’ll stick with what I think is the most important factor — your health/life are valued in a much different way than essentially everything else you can purchase with money.)

    • As far as having “skin in the game,” this is an important concept.
      For me, this means I am involved in my health care treatment, but it is not all about me.
      In other words, a rational, healthy viewpoint would be to consider how my life may be after treatment is provided. We need to think more in terms of quality of life than quantity of life.
      And, we also need to think in terms of getting more quality bang for the buck, than simply postponing the inevitable.
      This type of attitude is very empowering, for one realizes he is part of a grand process rather than an isolated fish trying to survive in a precarious stream of life.
      In addition, “skin in the game” means taking care of oneself – proper diet, management of stress, and regular exercise.
      Medical treatment which makes up for this lack means that his skin was too thick, that the person took chances which he expects others to assume the financial risk for.
      And, “skin in the game” means trying to accumulate either through savings, paid-up insurance, or both, front-end coverage which can lower premiums on a pay-as-you-go basis significantly.
      Don Levit

    • First impressions:

      The tone is just insufferable. Can we get him to take out all of gratuitous hyperbole and sarcasm. Two examples more or less at random from page 21: 1) “Brenner’s attempts … have all drowned in a bureaucratic morass”. I don’t think you drown in morasses; I think you drown in pools, but even more I think Medicaid has a tough row to howe with payment and moral hazard, and, anyhow, please, a little respect. 2) “… even as Medicare is spending millions on pilot programs … “to find out what works” — Goodman’s quotes, because, I guess, what works is patently obvious to the likes of John Goodman.

      Oversimplification: Just give Dr. Brenner 25% of the savings he generates. OK. Calculate? 25% of the money not spent? How about baselines, up sides, down sides, quality thresholds, sustainability of the incentive in future payment cycles — irrelevant? Or maybe just rhetorically burdensome?

      Misrepresentation: “The conventional view is that we have too much freedom, not too little. Doctors are said to have too much freedom to provide treatments that are not best practice…” Ah, that’s what John Wennberg said? The culture of medical practice, too nuanced for Mr. Goodman?

      Is that defensive of me?

    • @Aaron Carroll

      I have actually never used the term “skin in the game.” One reason: it implies endorsement of co-payments and deductibles and I think both these devices are very defective. I would like to see patients take control of entire areas of care (e.g., all primary care) and pay directly from their HSAs. In other words, patients should have the opportunity to manage a large share of their health care dollars. The other reason: once patients control the money, the biggest changes are not on the demand side of the market; they are on the supply side.

      @ Ken Hammer

      Pace makers are life saving. Don’t you want them to be produced in a competitive market. Or, would you prefer Soviet style production?

    • @ John Grima

      You’re right. I do tend to dismiss quickly ideas that appear (to me) not to warrant much thought. For example, were I the Health Czar, I would write Dr Brenner a check for $1 million, provided he agrees to keep doing what he is doing — no questions asked. For me it would be that simple. If you see something you want to encourage, do it quickly and do it in a way that gets everyone’s attention.

      I respect people who want to make Brenner jump through a lot of hoops. But not if they slow everything down to a bureaucratic snail’s pace.

      On being “insuferable,” bear with me.

    • One of the major planks of the book, as you identified. is the seemingly unsubstantiated assumption that healthcare that is free at the point of service is over-consumed.

      This is certainly not true in a national health system, such as the NHS in the UK, where I am, and I believe it is not true in countries such as France, the Nordics and others. If anything, the opposite is true in the UK – it’s a struggle to get certain groups such as middle-aged men to visit their doctor at all. The health costs per head are also well below the US.

      Sure there are growing numbers of the ‘worried well’. But the overconsumption in the US is something else – it’s for good reason that we do not allow the consumer marketing of prescription drugs, for example, while procedure based fees, fragmentation of specialists, lack of primary care, lack of evidence based technology and large out of pocket costs all drive Americans into a far more costly experience.

      American healthcare is already a victim of consumer marketing culture. It seems to me that Goodman wants to make this worse.

    • @ Steve

      Should have been more specific. I was speaking of public schools — primary and secondary. The ones Nation at Risk wrote about almost two decades ago.

      @ Marc Brown

      This is basic economics. If something has a price of zero, my incentive is to consume it until its value to me is almost zero. Since the cost is way above zero, this implies wasteful over-consumption. To prevent this from happening, all deveoped countries resort to rationing by waiting — which itself is very wasteful — and in many countries, global budgets — which leads to rationing by favoritism.

      • My mother had cataract surgery in both eyes a few weeks ago. Her out of pocket cost was zero. Yet it had significant value for her.

        But I hardly think she’ll be going back for more anytime soon. Again, health care is not broccoli.

        As well, I recently got a phone call from my doctor admonishing me to get on with the blood tests (routine) she ordered several months ago. The cost to me is free, and she has no financial interest or incentive for me to get the tests. For her it was strictly a medical issue. And for me, free as the test are, and valuable, are a minor inconvenience that I keep putting off. Valuable, and free, yet I hardly think I’ll be running out for blood tests every month.

        Furthermore, you are making claims that as best I can tell have no basis. How is “rationing by waiting” “very wasteful”? It’s not like people are standing in line, unable to do anything else, while waiting for cataract surgery, for example.

        Welcome to Canada.

        • The people in my family doctor’s clinic waiting room aren’t bronzed gods and goddesses trying to “steal” a free health care service – much like hospitals, it is usually full of sick people (and to be avoided if at all possible)! More to the point, it’s not like getting a free Mercedes or even a free haircut – I would much rather read about American health care while sipping on my morning coffee.

          I did have one family doctor 20 years ago who mentioned that his next patient had an appointment with him nearly every week, not for health concerns but for social stimulation. I recall that the PBS show on Taiwan’s evaluation of other countries’ health care systems criticized the Canadian approach because it didn’t manage “frequent flyers”. Being a consumer and not in the business, I have never seen an article about Canadians seeking unnecessary medical services (although there have been investigations of medical fraud by patients – e.g., Canadian health care cards used by foreign visitors – and medical practitioners). Tracking the free-loaders takes sytems, staffing, and money that could be better applied to actual health care.

      • But the “cost” to consuming medical care isn’t zero even if there’s no out of pocket $$ involved. There are time, inconvenience, and discomfort which are real costs.

        I find the evidence that doctors drive demand far more convincing than believing that people are running to the doctor just for fun. Some may, the “worried well” but the costs of a few office visits to reassure them surely isn’t what’s breaking our budget, rather its the high end cancer care, heart surgery, etc, which no one does just for fun.

      • John – in the UK we don’t have a sense of zero cost – we pay tax for public services. I know this may be a strange concept for you but our health service engenders a ‘priceless’ quality that you ignore – that of belonging and collective ownership.

        Our main problem is we underfund the service. Another 1% of GDP would go a long way. We do not need nuclear weapons, for example.

        And the costs of delivering world class care are anyway so much lower than yours. That’s where your main problem is – bloated fees. Even in private medicine here in central London fees are way below yours for surgical procedures and we get them performed by the same leading practitioners working in our public teaching hospitals.

    • @ K. Marq

      Why does it have to be either or? Both sides of the market face perverse incentives when a third party payer is paying the bill.

      • Hi John –

        Thanks for your response. Adding up-front cost disincentives for basic care has been shown to cause negative health impacts across the population. People sometimes or often don’t make good tradeoffs in this area. This might be tolerable if it actually addressed the cost problem but it doesn’t make sense to me to go there if it isn’t really going to address the overall cost problem in a significant way.

    • Seems to me that the billings on one heart transplant or one premature baby or one Terri Schaivo overwhelms perhaps 5,000 little individual decisions about whether to see the doctor or have a diagnostic test.

      In other words, if we want to control our national medical spending, we should go after the big ticket items first, and worry about deductibles later.

      This is not to denigrate the important debate about front-end charges by physicians. I only say that we should not pretend we will solve the total cost of health care by debating skin in the game.