• Rational implications

    There’s plenty of evidence that, in general, physicians respond more rationally to financial incentives than do patients. If patients were more rational, under-use of low or no out-of-pocket products and services (even those with few to no side effects) would be less common. We’d see less of this or this. If physicians were less rational in response to financial incentives, we wouldn’t see things like this or this or this. George Loewenstein, Kevin Volpp, and David Asch spin out the implications. Among them are the following.

    Attempts to address issues of overuse of low-value services should focus mainly on physicians rather than patients. Insurance payments for services of low value should be reduced. Given the fiscal consequences of poorly controlled health care spending, it makes no sense to pay just as much for services or procedures that are unnecessary as those that are life saving. […] One straightforward implication of the greater rationality shown by individuals facing repeated decisions is that the role of patient cost sharing should be different in the setting of chronic illnesses than in the setting of acute illnesses. Patients with acute conditions are likely to confront unfamiliar and emotional decisions and are therefore not appropriate targets of cost-sharing incentive programs that require a dispassionate evaluation of costs and benefits. In contrast, higher cost sharing for low-value services can make more sense for patients with chronic conditions who are more likely to face similar decisions repeatedly.

    If you have access to their (short) paper, it’s worth reading.


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    • Medical care does have an advantage over some services in that your GP is on your side and absent insurance will seek the best care for the dollar. (Like I have often noted in these comments when I have told doctors that I am paying out of pocket they change the care plan. I have talked to friends who find the same.) If you take your car to the mechanic he is the one who will do repair and so is not motivated to seek someone who will do it cheaper. Your GP could seek the cheapest surgeon for you if we had less insurance.

      • You may have a GP who is understanding of your financial constraints but most doctors are not. They have every incentive to provide maximum dx and tx regardless of necessity or effectiveness since this increases their income. If you have insurance, they can rationalize that “someone else is paying for it” and charge whatever they can get away with… (moral hazard).
        Patients are rational and do not wish to subject themselves to more pain and inconvenience than necessary. The medical industry is driving health care overuse, not patients.

        • I know TIE is not overly fond of the Dartmouth Atlas work and findings, but they have repeatedly found correlation between available supply of care (e.g., high # of heart surgeons) and high utilization of care (# of heart surgeries performed, regardless of evidentiary support for the tx). As I have commented before, it was a local MD who declared, in public, a few years ago, “The most expensive device in American medicine is the pen in a doctor’s hand.”

          Do some patients request/demand tx that may be unwarranted and not evidence-based? Yep. Do many MDs continue to order tests and tx that are unwarranted and evidence-based? Yep. And they are behind the wheel.

          • “I know TIE is not overly fond of the Dartmouth Atlas work and findings”

            Huh? I fail to see how you could draw that conclusion. Any posts here that pertain to Dartmouth Atlas work focus on its interpretation only.

          • Are you kidding? Wennberg’s work is essential reading. We’ve highlighted his book MANY times.

    • Interesting quote:

      “At the same time, however, physician incentives must be implemented carefully. Broadly based incentive schemes, such as capitated payment or fee for service, are blunt. Both can perversely create unwanted results—too much care in the case of fee-for-service medicine, and too little in the case of capitation—with little regard to value.”

      I can’t help but wonder if some of the irrationality displayed by people who get too little high value, low cost care takes into account the non-price cost-factors that discourage use – such as the cost time away from work, transportation to and from the point of care, etc.