In a previous post, I suggested public sentiment that government does too much but not enough is not contradictory. It reflects a recognition that government does too little of what it should do, too much of what it shouldn’t. Today’s news that retails sales were dragged down by a drop in auto purchases, a deflation after the ‘cash for clunkers’ program ended supports that point (”Retail Sales Drop on Fall in Autos” Wall Street Journal, Jeff Bater, October 14, 2009).
There is a wealth of evidence and theory that markets work best in directing resources to their most productive use. The general consensus is that government’s role is appropriate to counteract market failure–unavailability of reliable information for markets to work, absence of decision rights to act on information even if it were reliable, or decisions that have consequences external to the decision maker.
Our financial market meltdown was triggered particularly by the first and third forms of market failure: Regulators allowed less and less transparency about transactions and credit risk and people were able to make transactions where they enjoyed the upside but dumped catastrophic costs on the rest of us.
The right response then is to fix the markets.
Pretty well accepted is that government is lousy, absolutely lousy at intervening in markets to pick winners and losers. If government does so, it is a likely as as not to pick wrong, diverting resources from better to worse purposes.
The cash for clunkers was a case study in such wrong headed policy. It pulled forward purchases that would have been made anyway, so net sales were likely flat, were an exceptionally expensive way to protect a relatively few number of jobs (albeit in politically influential districts), and probably was bad for the environment in the end, given the enormous energy required to make a new car relative to the energy required to propel an existing one
Dear Friend and Colleagues,
Congress and the opinionators are plowing ahead on health care reform that is the wrong cure for the wrong problem. Committed to competition among insurers (with a public option to add competition), they entirely miss the key point: Too many resources are wasted and too much pain is caused by the presence of inept organizations who provide crummy, expensive care because they aren’t filtered from the system.
Why aren’t they? When you decide where to get care, you lack information sufficient to pick the most effective and most efficient, so you trust your wealth and well being to a blind draw. This drives business to those who don’t deserve it and away from those who do.
The solution? Transparency about provider performance to allow informed choice by payers and patients.
Below, I’ve attached a letter I sent to the NY Times expanding on these points.
When you’ve read it, please comment and let me know what you think.
Ideally, I would like to get sufficient feedback that we can send an op ed to major papers, letters to Congress, and the like saying what _we_ want in a reform package—we being real patients, real providers, those in the thick of trying to reform the delivery of health care at the bedside and in the exam room, not just the know nothing talking heads.
Here are some ideas. Let me know what you think we should add, modify, or delete.
- Visibility about information. Without it, we’re picking providers by shooting in the dark. Let providers compete for patients who are making informed choices.
- Bona fide competition among insurers, so we get the best _portable_ plans at the best price.
- A social safety net for the underprivileged who cannot provide for themselves.
I’m sorely convinced that if we don’t act, what comes out of Washington may actually be worse than what we have. Certainly, it will be much worse than it can be or should be.
Steve
Dear Sir or Madam:
According to the NY Times opinion pages (”A Public Health Plan,” editorial NYTimes, June 20, 2009; “Health Care Showdown,” Paul Krugman, NYTimes, June 22, 2009), the primary problem with US health care is the lack of competition among insurers. Certainly, local monopolists will inflate fees and deflate service, and one would expect that genuine competition among several providers is better than none.
However, even where there is competition among insurers, quality is poor and costs are high. Why? There is insufficient competition among providers, and this lack of competition matters a lot.
Currently, there are extraordinary differences in performance, with some providing great care–consistently good outcomes, few if any complications, minimal waits and available access, all at reasonable costs, while others provide terrible care–inconsistent outcomes, many complications, and high costs.
Given those painful discrepancies, patients and payers should swarm to the good and spurn the bad. But they don’t.
Why? Because we don’t have sufficient information to know better, and, without informed choice, far too much traffic goes to those who burn a lot of resources while providing too little, and too little traffic goes to those who are most effective and most efficient. (Imagine such blindness going into a purchase by considering buying a car, and not knowing in advance whether you will get a Lexus or a Yugo for your hard earned money, or buying a plane ticket not knowing to which airport you will arrive.)
Because those who receive care and pay for care cannot determine well where to get care, the overall level of care is tragically lower than it need be and its costs are astronomically too high.
Here is a starting point to solving that problem. There are certain events that just should never happen (just like the wheels of your car or the wings of your plane should never fall off). Patients on ventilators shouldn’t get pneumonia, patients with catheters shouldn’t get urinary tract or blood stream infections, patients shouldn’t suffer surgical site infections, patients should not fall and injure themselves, and patients should never get the wrong medication, in the wrong dose.
When these things do happen, it is not because “health care is complicated” or because “every patient is different.” It is because there was a breakdown in the delivery of care. The management of care was broken.
Therefore, let us know how often it gets broken. Require all organizations to post how well they are doing against a standard of ‘zero’ on these never events. Next, build out other measures of efficacy and efficiency across the span from preventative and primary care to chronic, acute, intensive, and extended care. Then, people can make informed choices as to whom to trust with their wealth and well being and whom to fear.
Without doubt, a caring society will ensure that the least fortunate receive health care just as we try now to make sure no one goes hungry or homeless. And yes, it is undoubtedly important that there be competition among insurance providers. No one wants to get fleeced.
However, if we want bona fide reform that successfully increases quality and affordability (and hence access), we have to start rewarding great providers at the expense of the laggards so the money we put into the system gets well spent, not squandered.
Only then can we get health care for all in a way that isn’t bankrupting.
Yours,
Steve Spear
Senior Lecturer: MIT-Engineering Systems Division
Senior Fellow: Institute for Healthcare Improvement
Sandeep Jauhar writes (”Referral System Turns Patients Into Commodities,” NY Times, May 25) about a challenge facing specialists: Without referrals from primary care docs they don’t have sustainable business. The result? Odd ball, counterproductive incentives–doctor to doctor and doctor to patient that drive the wrong care to the wrong people at too much cost.
The problem? Patients and payers cannot determine where to acquire the best care at the best cost. When my daughter broke her arm, I picked an ED based parking ease. Absurb? Of course! But… I had no information to find the most efficient, effective care.
No one else does, either. Patients don’t have the information to determine the best source of wellness, prevention, diagnosis and treatment. Without transparent information allowing informed decisions, choices are determined in convoluted fashions. This is the linchpin to any health care reform. Lacking that, our whole discussion will be how much to spend, and who pays? Not how to get more better care at far less cost.
The swine flu scare and the financial pandemic were similar in the dynamics they provoked and the treatment they necessitated. This is not coincidental. Both where characterized by injections of risk into a tightly coupled ’system,’ risk unknown in location and magnitude. Until that uncertainty was resolved, normal interaction couldn’t occur. Both offer insight for evaluating the response to these crises and for guiding crisis response (e.g., health care, autos) in the future and creating regulatory/screening structures that prevent it in the future. Both crises highlight the need for increased transparency going forward, so infections are seen sooner than latter and perhaps coupled with tests of health that are ongoing and not episodic (read more below, for details). Read the rest of this entry »