• The cost control collective action problem

    Many times I’ve written that everyone believes we spend too much on health care in the U.S. but nobody treated by it thinks the care they receive is wasteful. I’m reasonably confident this assertion is true, but I’d feel better with some evidence to support it. Alternatively, I’d appreciate evidence that refutes it.

    Finally, in the course of a Twitter discussion, someone (who?) offered evidence from a February 2013 Health Affairs paper by Roseanne Sommers and colleagues. Check it:

    Some participants felt that since they had done nothing to cause the problem of unsustainable costs, they had little responsibility for helping solve it. One participant expressed this view as follows: “It’s asking us to bear the responsibility for the costs when we didn’t have a part in creating these costs in the first place. So [why am I as a patient] responsible for now reducing the costs, which I had no part in creating?”

    It’s not me! It’s everyone else!

    Some participants justified their choice by citing others’ noncooperation.

    For example, one said: “Just because one person recycles, not everyone’s going to recycle. And how can I trust the rest of society to be as good as I’m being at that moment?” Another said, “Ideally, in a perfect world, it’d be nice to have a sit-down and see who has what conditions and who really needs—yeah, exactly. You can’t do that, so I agree with what they’re saying. It’s really sad, but it’s true. The country should work together, but ultimately everyone is just out to get their own.” […]

    [S]ome participants’ comments reflected the belief that their personal interests should trump their communal responsibilities. These participants were unapologetically self-interested, as shown in this statement: “I don’t care about everybody else. I care about myself. So why are you trying to push something cheaper on me?”

    In a comparable statement, another participant said, “I still have a lot of years to go, and I’m going to take the best medicine, the best treatment. And if it raises the costs, I’ll feel sorry. I don’t want the company to go out of business. I don’t want other people to suffer. But I’m sorry, I want to live. I’m not going to think about them.”

    The care I get is valuable! Don’t give me something cheaper!

    It’s only been in the last few years that I began to see that I am a vessel of wasteful care. I’ve purposefully canceled follow-up visits that seemed, well, wasteful. I don’t always fill prescriptions or take all the pills when I’m not convinced I need them. I’ve stopped seeing a doctor who talked me into a procedure I didn’t need. (I’m still embarrassed I didn’t stand up to him in the office. It’s very hard, even for me!)

    Yet, I am sure that I don’t correctly judge the value of all the care I receive. I am sure I am  as much a part of the problem as the next patient. Yet, apart from the few exceptions I hinted at above, the care I get seems worthwhile to me. Doesn’t your care seem that way too? So, where’s the waste?

    Oh yeah, it must be those other people.


    • The first premise is wrong, Look at spinal surgery for back pain. A substantial fraction of patients have bad outcomes and at best consider their surgery to have been a waste. But healthcare providers benefit from the Stockholm Syndrome just as all other vendors do; having bought a Chevy/Ford/Honda/… most people psychologically reinforce their purchase decision with time and become ardent Chevy/Ford/Honda/… backers.

      Second, distinguish between excess care and cost of care. The real inflation in healthcare is not overuse, it is overcharging for utilization that has not changed all that much over the past decade. When (as happens all to rarely in healthcare) people get the data, they tend to blame themselves for being suckers rather than the system. E.g. people learning that the statins they have been paying $100/month for are available at Target for $4. It is not waste for an appropriate patient to be on a statin, but it absolutely is waste to be overpaying 25x for it.

    • Dr. Carroll pointed out yesterday that much of the increase in health care spending is attributable to chronic illnesses. Who doesn’t have a family member or close friend with a chronic illness. It’s like the question Ralph Nader would ask his audience when he was promoting his book on unsafe automobiles back in the 1960s – who doesn’t have a family member or close friend killed or seriously injured in an auto accident. What’s wasteful health care for someone with a chronic illness? For someone with leukemia, even the common cold can be deadly. The routine of many seniors (I consider old age a chronic illness since there’s no cure for it) consists of regular doctor visits, taking daily medications, and having occasional surgery. The routine of someone with (for example) leukemia consists of regular doctor visits, taking daily medications, therapy (chemo and others), and having occasional surgery (a ruptured spleen is common, a bone marrow transplant in acute cases). My point is that what’s considered necessary and unnecessary health care varies widely depending on unique circumstances. I’ve been fortunate with my health, so any doctor visit or other health care seems unnecessary to me. For my brother, who has leukemia, regular doctor visits, daily medications, and occasional surgery are routine because they are, to him, his lifeline. Autos are indeed unsafe to those who have died or suffered a serious injury in an accident. Health care is always necessary for those with chronic illnesses who fear serious illness or death without it.

    • At the risk of losing my commenting privileges – I offer this. It may be tangential – but (IMHO) it is relevant.

      It first appeared on the Q&A site Quora. The question was:

      Q: Why do many Americans think that healthcare is not a right for its own taxpaying citizens?

      The #1 answer was by Anonymous – who clearly hailed from Europe – possibly the U.K.

      A: The fundamental mythos of American culture is that no matter how poor or humble your birth, you can through grit, spunk and hard work become wealthy and prosperous.

      On the face of it, and from the perspective of a class divided Europe, that seems incredibly noble and empowering. The idea that there is that much social mobility, that anyone can forge their own destiny is a powerful part of the American psyche. When it happens, it is an incredible thing. Something Americans can feel proud of.

      However, there is a dark side to this mythos. Which is this… if anyone can win through hard work and effort, anyone who doesn’t win, therefore deserves to be poor.

      At the core of all the anti-health care reforms is the single concept “why should I pay for the healthcare of those losers.

      Again – tangential at best – but thought it relevant.

    • It seems clear that a substantial contributor to waste comes when people make decisions based on flawed information that they received from someone they trust. Could be a doctor — “Your best hope for treating back pain is cortisone injections into the spine.” Could be an organization like the Susan Komen Foundation — “Everyone needs a mammogram at least once a year.” Could be your neighbor, the homeopath. A dear friend of mine believes she can adjust the pH of her blood by changing her diet, because she was told that by a practitioner.

      If you have faith in your advisers, when they tell you things like these, how could you ever think they are wasteful?

    • I’m worried that “wasteful” has two immediate applications… one is in having care that is not medically necessary, as in the procedure you were talked into but did not need. The other is on high expenses for care that is agreed to be necessary. The real problem, however, is that with the opaqueness in the pricing system, and the knowledge required to provide medical care, individuals generally won’t know if a level of care is too expensive or actually necessary. We trust doctors but then live with buyer’s remorse.

      I recently had an allergy test for a mild asthma problem that flares up during the fall season. I’ve had the tests before as a child — they’re common and widely accepted, and so I made the mistake of not asking the price and had sticker shock when the bill arrived, even after a decent insurance discount. My problem is mild enough that I should have shopped the procedure around, asked for prices, but instead I took a referral from my (trusted) PCP to an in-building allergy center. It turned out the doctor diagnosed that I was allergic to nothing.

      Was the test medically wasteful? Well, in hindsight it was, but at the time we didn’t know that, and of course it ruled something out as an underlying cause, so I’m further medically than I was before. Was it wasteful from a price perspective? For me it was… I’ve researched prices at other places and I still have no idea why I was charged so much; it was definitely out of line. I may yet have the charges reduced, but that’s not the norm.

      Assuming this was wasteful, then, do I have any responsibility for it, particularly since I actually needed the procedure? Well, if you accept the market-economy idea then there’s at least an argument for that… had I shopped the price, I would have gone with another provider, and they’d have lost a sale; if enough people did that they’d be forced to lower their prices (or other people would be forced to increase theirs to deal with an excess of patients).

      Wastefulness is definitely not a simple concept, though; there’s a lot to it.

    • Third party pay is what drives the attitude. If a third party agrees to pay for all the care which the doctor prescribes, why would the patient have any reason to complain or argue? Conversely, if patients had to negotiate fees with doctors beforehand and pay the doctors cash on delivery and wait to be reimbursed from the carrier; then the patient would have a different view of things.

      • “Third party pay is what drives the attitude. If a third party agrees to pay for all the care which the doctor prescribes, why would the patient have any reason to complain or argue? Conversely, if patients had to negotiate fees with doctors beforehand and pay the doctors cash on delivery and wait to be reimbursed from the carrier; then the patient would have a different view of things.”

        This is wrong on two counts. First of all, third party pay is cheaper. If you arrive sick at a hospital without insurance, you are charged list price. If you have insurance, your insurance company fights for discounts, and has a lot more clout than you do.

        Second, if you are in a car accident, you are in no condition to discuss cost. The idea that patients are in a position to discuss cost is simply wrong.

        Again, here in Japan, what medical providers are allowed to charge insured patients is strictly limited, and everyone has insurance. (There are out-of-system providers for the very rich, though. But everything that’s even vaguely medically necessary is covered.) To the best I can tell, strict regulation of charges is the only way to keep medical costs under control.

        • David L., perhaps you confuse third party payer with normal insurance. When you purchase and pay for your own policy even if someone gives you the money to do so that is NOT third party insurance.

          Third party insurance is when a third party such as an employer purchases your insurance and pays for it. That leaves you out of the loop unless the employer chooses to leave you in.

          Because I think you misunderstand what third party insurance is I won’t comment on what would otherwise be incorrect except that third party is not “cheaper”. It may look that way because someone else is paying a large portion of the premium.

    • I’ll add that it’s hard to be a cost-conscious healthcare consumer. I receive a very expensive medication for a chronic condition. I justify that cost to myself in that without the med, I’d be so disabled I wouldn’t be a productive member of society. This med is administered in a doctor’s office or hospital. If the doctor’s office/hospital provides the drug, it costs 3-5 times as much as it does from my insurance company’s preferred mail order specialty pharmacy. Regardless, my insurance pays the full cost in both scenarios.
      To get the drug from the office/hospital, I just have to: 1) call and make an appointment. They do the rest. To get the drug sent from the mail-order pharmacy to the office/hospital, I have to: 1) get my doctor to send the prescription to the mail order pharmacy; 2) call the office/hospital to make an appointment; 3) call the mail order pharmacy to schedule a delivery; and 4) confirm with the mail order pharmacy and office/hospital that my medication was in fact delivered.
      I do the latter, but it I probably spend over an hour total arranging the whole thing (more if the prescription needs to be refilled or preapproved). The former would take me 5 minutes. I know anecdotes aren’t your thing, but I’m guessing this is true for many patients – since we don’t necessarily see the costs, it’s harder to be outraged about them, while my time is a very visible cost to me. (Also, please don’t take this as an argument in favor of more cost sharing. Rather, it should be an argument to make responsible healthcare spending easier for conscious consumers.)

    • “but nobody treated by it thinks the care they receive is wasteful.”

      If the care *was perceived as necessary* then I don’t expect many people “treated by it thinks the care they receive is wasteful”. But many people recognize wasteful care and put up with it because that waste is built into the system. People don’t like to swim up stream, but many will tell you that even the treatment they received was wasteful.

      This is the problem when the recipient is getting something for free. We all become part of the problem. That has been proven over and over again.

    • I’ve had what I suspected, in hindsight, was wasteful care. But to be not wasteful requires a good understanding of the prices and the alternatives. What’s the likelihood that I’ll get better with no surgery/drug/care? What the likelihood that the surgery/drug/care will make a significant improvement? What are the alternative treatments, their costs, risks, and success rates?

      Most of the time I should have considered these questions, I’ve been under a lot of stress. I find that I don’t retain a lot of what the doctor said under stress and without any prior knowledge and I certainly don’t ask good questions and am not able to make good decisions based information offered in a short time.

      So, I feel strongly that expecting “more skin in the game” is the wrong way to look for price pressure.

    • I “think” I’m using my healthcare responsibly but I don’t have a lot of evidence to back it up.

    • As Robert suggests above, aren’t there statistics suggesting that a large percentage of dollars spent are for patients who have chronic illnesses, and therefore have low life expectancy? Combined with the skewed (statistically speaking) distribution of spending per person, it is entirely possible that a large percentage (perhaps 80%) of the few people (perhaps fewer than 10%) who have higher-than-average (not higher-than-median) spending over the last 3-5 years are very unhealthy and/or dead. The people you’re looking for could thus be 2% or less of the overall population.

    • There are situations where people do become aware of one of the waste problems inherent in 3rd party payment. For example I have heard people say that they have a family member who could care for the patent but the payer will not pay them anything and so they get much, much more expansive and maybe worse care at a nursing home.

    • The Amish evidently often go to Mexico for care so what could be considered wasteful spending of other people’s money is very subjective.

      BTW I once got a very minor surgery done in Honduras to save money.

    • Medical tourism (both here in the U.S. and abroad) is a popular trend – and will grow as we “punt” on the real dilemma to much of what ails – cost.

      To the person who suggested patients would react differently to costs if they had to pay the doctor directly and then work with a carrier on reimbursement – true. The model is called “Direct Primary Care” or “Concierge Care,” but here’s the thing . If a doctor is putting me at financial risk to work with the carrier independently/separately – I’m not sure that represents the kind of “team” based care I’m looking for – so I would absolutely look for a different doc. It’s also why docs subscribe to carrier networks. They can chose not to, of course, and I can chose not to see them as well.

    • Wasteful care is too general to be useful. If you want to reduce waste you have to understand it. Most people who go to the doctor 2 or 3 times a year are not causing enough waste to be worth fussing over.

      The real waste is in systemic overtreatment or ineffective treatment of serious illness. The statistics on the amount of money spent on someone for the last year of their life shows a horrible amount of waste. If you talk to someone who had a family member die of cancer or congestive heart failure or kidney failure you can see many places where money could have been saved by avoiding useless treatments and spending some time figuring out the best way to ‘wind down’ a life.

      Our system of allowing drug companies to decide treatments is hugely wasteful. The government should be issuing treatment guidelines based on evaluations of usefulness, it’s clear the drug companies just lie about too much stuff. I was horrified to find out how little information there was on how different treatments for melanoma compared to each other – it was all “we could try this or we could try that”. How the hell am I supposed to know which to pick? Which is better? Which works best? Which is cheaper? We spent months dealing with side effects from a blood thinner, only to find that there was a 3% higher sucess with that blood thinner than asperin. Why the hell would anyone go through all that for a 3% improvement? It was only when I said he’d just have to risk a stroke or heart attack, that I was not trying to use that drug any more that I heard the 3% number.
      I go through the same thing with antibiotics. I ask the doctor to prescribe what he used in 1980, with an agreement to call in the 2013 drug if I call back later in the week to say the first isn’t working. Out of 6 or 8 times over a number of years I’ve only needed the 2nd drug once. I also found out that taking an antibiotic for 14 days rather than 10 kept sinus infections from coming back, and have never had a repeat infection in the next 6 weeks. There is such a lack of common sense in medicine.

      • It is nice to talk about all the money spent in the last year of life, but that is thinking retrospectively. Most of the times the last year of life is unpredictable. Of course your comments would be on target if we could predict the last year of life.

        The FDA is in charge of pharmaceutical approval and though I might agree they are not doing as good a job as they could, how would you expect the FDA to create treatment guidelines considering the number of drugs involved. There is no certainty in life and there certainly is no certainty as to which drug works best, thus don’t feel bad that you don’t know “Which works best?” etc. Neither do the professionals when dealing at the patient level.

        “There is such a lack of common sense in medicine.”

        Among many other causes the guidelines created by managed care and government have contributed to a lack of common sense in medicine.