Thinking Correctly about Health Policy

This is what I love about John Goodman:

Nearly 30 years later, after tens of millions of dollars from foundations and the active participation of top executives of Fortune 100 companies what is there to show for all this effort? I suspect it cost the health care system far more than it saved, and decreased efficiency as more time was spent on bureaucracy and less on patient care. All because the underlying premise was wrong — greedy doctors are not needlessly filling hospital beds to enrich themselves.

...

And some doctors are jerks. So are some Fortune 100 executives, hospital administrators, and health care economists. So what? I would wager that as a group physicians are more ethical and more caring than most other professions. If they over treat their patients, it is out of an abundance of caution rather than greed. When you have someone’s life in your hands, you want to do everything possible to save them. This is a good thing.

Given the record of massive, epic failure from the “health policy community,” I would much prefer to put my fate in the hands of any physician randomly found in the phone book than any of these bureaucrats.

Unlike many other health policy scholars, he: (1) takes a nuanced view of the players in the game, (2) does not take the easy way out of blaming doctors for every problem under the sun, and (3) he views the political problem as one of government versus voluntary human interactions, rather than as left versus right. 

Read the whole thing.

Slavery and the Right to Healthcare

A lot of fuss has been made over Rand Paul’s inflammatory remarks about universal health care being a type of slavery.  Here is Paul:

"With regard to the idea of whether you have a right to healthcare, you have to realize what that implies. It’s not an abstraction. I’m a physician. That means you have a right to come to my house and conscript me…It means you believe in slavery.”

Some libertarians, including Matt Zwolinski and Matt Welch, have taken Paul to task, saying the word “slavery” should be reserved only for the extreme case.  But neither of them offers a good argument.  Here is Matt Zwolinski:

“However wrongful and coercive universal health care might be, no one’s advocating beating down doctor’s doors and hauling them away, no one’s advocating that they be bought and sold or separated from their families…”

First, this is not entirely true.  In Canada in the 1970s, under Bill 41 doctors really were conscripted and forced to work under penalty of jail sentence.  Those who spoke out about the law were subject to jail for up to a year and fines of up to $50,000 per day.  Even in the United States, under EMTALA, hospitals and ER doctors are required by law to treat every patient who walks into their emergency room.  

Second, libertarians commonly use the word “freedom” (i.e., the opposite of slavery) to refer to small changes toward a completely free society.  For example, the Cato Institute has a center in which scholars advocate for education policies that don’t necessarily lead to a 100% libertarian society, and yet it’s still called the Center for Educational Freedom.  If it’s ok to use “freedom” in this sense, why is it not ok use “slavery” to refer to any policy that moves us closer to a slave society?

Perhaps part of the reason that some libertarians oppose the wide use of the “S” word is that the connection between something like universal healthcare and slavery is difficult to see. That’s because the slavery in welfare programs is more dispersed.  In the case of healthcare, it isn’t necessarily the doctors who are enslaved.  Instead, it the taxpayers, who are forced to spend a part of the product of their labors on medical care for themselves and others.  If the government determined how some small number of individuals were to spend 100% of their money, it would obviously be slavery.  The fact that it’s less than 100%, and it’s a large portion of the population makes the case harder to make, but the fundamentals are no different.

Another reason why people may oppose the use of that word, as pointed out by Bryan Caplan, is that most people think of slavery not just as involuntary servitude but as low-status involuntary servitude.  Doctors and tax payers are higher status in our society, so it is hard to think of them as slaves.  

Healthcare and Status

Arnold Kling is developing an interesting classification of industries, based on how status is obtained, retained, and enforced:

How Status is:	System A	System B
Obtained	market acceptance	credentials
Retained	competition	tenure
Enforced	choice	authority

Read the whole post. 

The question in health care is this: Is it closer to system A or B?  Specialties like Ophthalmology are closer than others to system A, and general medicine in hospitals is closer than others to system B, but overall the industry seems to have moved away from A and closer to B over the course of the last century. 

Licensing laws have privileged credentials over market acceptance.  The restriction in the supply of physicians has limited the amount of competition for customers, and ensured that almost every licensed physician can retain his status (i.e., tenure).  The trend in the last element, enforcement, is more mixed.  Medicare, Medicaid, and now the individual mandate severely limit the choice that people have to refuse to pay for medical care.  However, autonomy has become a major principle of medical ethics, and certain physician authorities have been curtailed (e.g., giving a patient a drug against his will, involuntarily hospitalizing a patient). 

This general trend toward system B may help explain why physicians have become more accepting of government regulation of healthcare.  Contrast AMA’s opposition in the 1950s and 60s to the enactment of Medicare, to its support of Obamacare.  

I don't know if the data is available to prove this, but I'm willing to bet that physicians in specialties or practices that are closer to system A are, on average, less supportive of government regulation of medicine than those in specialties that are closer to system B.  

Health Wonk Review

The latest issue of Health Wonk Review is up today! It's hosted by David Williams of The Health Business Blog. Here are the major topics:

1. Accountable Care Organizations, a major aspect of obamacare, including a commentary by Doug Perednia from the Road to Health.

2. The Paul Ryan Plan, and its effect on Medicare and Medicaid, including some comments by Avik Roy and John Goodman.

3. Medicare Politics, where I am honored to be mentioned alongside a great post by DrRich on the eroding right to spend one's own money on health care.  (See also my previous post about a similar topic: the right of self care).

4. Healthcare Technology, including a post by Jason Shafrin on predicting breast cancer stage.

5. Journalism, including a post about unconscious framing and its relevance for NPR.

6. Medical Ethics, with a commentary on physician-industry relationships that predictably calls on physicians to stop their interactions with pharmaceutical companies, without mentioning the alternative perspective.

A Misguided Attempt to Change the Medicare Fee Schedule

Medicare generally sets its fee schedule for physicians by following the advice of the RUC, a specialist-dominated panel of physicians within the AMA.  This has led to some predictable problems – most notably, primary care physicians being paid much less than specialists.  So it’s nice to see some proposals for reform.  A particularly clever one is for primary care specialists to boycott the RUC, depriving it of legitimacy.  If you like it, sign the petition here.

But the problem is that none of these proposals have any better method of determining physician fees.  They want primary care physicians to make more money, but they don’t specify how much more, or how that amount should be determined.  They just support more “transparency” or a more “diverse panel”. 

Fundamentally, there are two ways to set physician fees.  One is by convening a bunch of people – physicians, insurers, politicians, etc – and coming up with a payment method.  Another is to let each physician charge as much as he can, let patients pay as much or as little as they can or would like to, and see what happens.

Currently, Medicare does it through the first method.  All the reform proposals just want to tweak that method, hoping to come up with a political alliance that is more in their favor.  None of them want to use the second method by, say, turning Medicare into a voucher system.  But it’s not clear why the committee method is more favorable than the market method.  If primary care physicians really are underpaid relative to the value they add, the latter method would surely raise their relative fees.  But the result of the former method is unpredictable – it depends on who ends up winning the political battle.