Tuesday, March 16, 2010

I see 3 possible ways to cut medical spending:

A friend wrote: 

I have a very simple change in proceedure that could appreciably reduce health care costs: Mandate that the cost of each proceedure must be stated before the patient decides to choose whether to have it done;

I have three excellent examples - a year ago I was planting and scuffed my Achilles tendon. The doctor said why don't we get a MRI just to be sure - I said OK and it was done. Nowhere was it stated that the MRI would cost $1700 and waiting a few days would give the same answer. About the same time I had a skin specialist look over some scruffy looking places. He sprayed them with liquid nitrogen and they went away - but I had a little bump and he said why don't we get it biopsied? I said OK and later got the bill for about $700. If I had known the cost, I would have said why don't we wait a little while and see if it goes away? A few years earlier I had a mild distress in my chest and went to the emergency room. Whiz - Bang and I am in the "Heart Catheter Lab" with a thin probe doing its work in one of my cardiac arteries. A few hours later I find that I have incurred a bill for $35,000. Much later I learn that a medical approach has as high a success rate as angioplasty with a stent.

In all of these cases, if I had been told: "This is what the cost will be - do you want to do it?" I might have been inclined to save the money.

This is non-partisan - What do you think?

I see 3 possible ways to cut medical spending:

1. Put more of the costs of medical care on the patients. 

My friend's comments above beg the question of why costs of procedures are not stated or even asked for! 

I think the answer is because few people pay directly for medical care.  Putting more of the costs of medical care on the patients means most people should have deductibles and copays in the tens of thousands of dollars per year.

This would be facilitated by a separation of health insurance from employment.  I do not think employers would have taken on provision of health insurance for their employees if it was 17% of the economy when they started.  Spending 17% of the USA economy needs the attention of everyone each with his specific and individual knowledge of his own circumstances, delegating it to employers when it was 4% of the economy made more sense.

2. Monoposony

Single payer where the government like in Canada and Japan pays for all medical care and so can set the price pretty low.  This though, creates shortages but the shortages are somewhat mitigated because governments through excessive regulations and licensing have created a shortage of provision and so some of the shortage would be absorbed. 
Further even if quality and access is reduced it seems that medical care beyond vaccinations, antibiotics, trauma care and a few other cheap things yields very little improvement in health, so lowering quality and access is not so bad.

Still the government of Canada socialized medicine when it was only about 2% of GDP.  It is now 8% of GDP in Canada and this seems to be loosening monoposony's grip.  Again they need more people actively working to lower the spending.  Also the shortages can still be a drag even though somewhat mitigated. 

2. Making some procedures illegal

Researcher after researcher has shown that back and neck surgery do not work. Heart bypass other than for the upper left ventricle has be shown to be less effective than non surgical treatment. One could go on and on. These non effective procedures could be banned. The problem here that people would not like this and it could effect future innovation.

I choose option 1 and the good news is that the bad news in healthcare, that employers are dropping coverage and increasing deductibles, is moving in that direction.
The current bill is a complete joke. 

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