31 December 2005

More Economics

Luke posted on his blog:

I am outraged that there are so many people that cannot get basic health care . . . This should be fixed. I'm afraid though that fixing it may even the playing field, but also somehow lower the quality of the best levels of care. Here is where I'm being selfish. I'm not in that 20% and I have been able to secure incredible care and innovative treatment for my son. . . . we were able to have Nathan operated on by the single most qualified surgeon in the world for the procedure that he needed. Can the system be fixed without removing the framework that allows for such incredibly talented people and innovative care to flurish?
It is quite likely that the talented and innovative folks Luke refers to here flourish in spite of and not because of the current economic structure of medicine. This structure creates many perverse incentives. For example, many of the best physicians stay in academic medicine, which is notorious for the fact that it pays less than private practice, and requires much more personal commitment. The surgeon who operated on Nathan very likely makes less than one with a nice suburban practice who just does a lot of really simple procedures. And the docs have little to no say over how much they can charge for a given procedure -- the fee schedules are dictated by the government and insurance companies. Market forces do not apply -- if you provide a superior service in any respect, there is no ability to command higher compensation. Given that fact, the only way for docs to get ahead financially is to deliver more efficient care -- which translates into hurried encounters with the caregivers and a definite decrease in quality of care.

I don't think a medicare-for-all type system would affect this at all, either for better or for worse. I haven't thought this through fully yet, so the details are sketchy. We would need some method for providing a stratified system. I think it would be a good thing if there were specialists who could command higher fees, and I don't have a problem with practices which cater to rich people, offering more attention and more convenient and personalized services for higher fees. Furthermore, Canada's system, which has many many benefits, has a huge downside: physician compensation is capped by the government, which removes the entrepeneurial incentive and has resulted in an exodus of canadian docs to the US. I would not want to see a similar situation develop here.


  1. Thanks for this perspective. I have often wondered recently about the imbalance between a more equitable health care system and maintaining the high level of care that many are able to achieve.

  2. There is much more to the issue than just market forces not applying. The most significant issue, as you mention, is that the fee schedules are set by government (medicare/medicaid) and insurance companies. Increasingly, though, it is becoming clear that there are many difficulties with judging "quality" care, and this is why academic medicine suffers comparatively.

    2 things need to happen: 1. Politicos need to commit to providing basic healthcare for all; and 2. Docs need to push politicos into a situation where they are forced to commit to legislating basic healthcare.

    Hillarycare makes the issue political suicide for anyone proposing the legislation (how is Maine different, again?) and the uninsured are a numerous but silent group. Therefore it is up to those of us who are the highest stakeholders in the system to fix it. Unfortunately there are few docs who are good at (or would enjoy) the type of work required. I mean, that's not why we went into medicine in the first place!


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