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Health care

There's an interesting article in this week's New Yorker. The author, a doctor, visits a county in Texas that has (according to Medicare) the most-expensive-per-capita health care in the nation with the most-expensive-per-capita health care in the world, in hopes of finding what makes that county (and perhaps the US) so special. He concludes that it's not the general health of the population, nor the quality of care and facilities, [ETA: nor malpractice awards] but massive overutilization of tests, medications, and procedures. And why does this particular county have so much overutilization? Because of a culture of individual profit among the local doctors and hospitals. Kickbacks are routinely requested, and apparently given, for doctors referring patients to particular hospitals or specialists. The author contrasts the situation with other cities and counties that have unusually low health care costs and high quality, where groups of doctors pool their income so no one of them has a strong incentive to perform extra procedures or skimp on patient time.

A purely free-market health care system would probably be much cheaper and more efficient than our current system, with the usual free-market problems of distribution and fairness: hospitals and doctors would be only in rich neighborhoods, and millions of people would die of preventable or treatable problems.

A thoroughly socialized system would also be cheaper and more efficient, as witness almost every other developed nation. It would have some of the usual socialist problems of overutilization and freeloading.

Our current system is the worst of both worlds: private profit from public payment. Insurance (whether government or corporate) acts like a "common resource," and is predictably consumed at far above its efficient level. To avoid this, either the costs have to be more individualized or the benefits less so. Doctors in the low-cost, high-quality cities and counties mentioned in the article have taken the latter course.



"Socialist" health systems don't actually suffer from free loading and over utilization. Perhaps this is a cultural thing, or perhaps people know that health care will be there when they need it so aren't so paranoid.

Three examples:
1. Canada has a publicly funded system of private providers. The closest in the US is Medicare/Medicaid. You get to chose your doctor, he gets to decide the treatment and the government pays. Cost control is a separate issue. It works in Canada, but is broken in the US.

2. The UK has a system where doctors are actually employed by the National Health Service. The closest US equivalent is the VA. The system provides decent health care, keeps costs down, but is continually starved for funds as a consequence of the legacy of Thatcherism. As a consequence there are deficiencies which could be remedied by more equitable distribution of funds and less scrimping.

3. The Japanese see their doctors quite frequently (especially the aged), but this take about 10 minutes and seems mostly to be a social thing in that the elderly need the human contact and the doctors move them through quickly. Other aspects of the system are unusual, with private clinics now taking on a bigger (for-profit) role. It is not clear where this is heading, the Japanese seem unwilling to look at the issues too closely.

If you are interested in the topic, you might like reading this blog:

Re: Comparisons

Canada has a publicly funded system of private providers. The closest in the US is Medicare/Medicaid. You get to chose your doctor, he gets to decide the treatment and the government pays. Cost control is a separate issue. It works in Canada, but is broken in the US.

Interesting. I lived in Canada for a year, and took advantage of their health care system shortly before leaving: I cut my finger open with a tape gun while packing boxes, and my first aid supplies were already packed away, so I went to my landlord next door, who took a look and said "You don't need a band-aid, you need to see a doctor." An hour later I walked out of the hospital with three stitches in my finger, and nobody had mentioned money. It worked very well in that situation.

The puzzle is how they prevent the kind of over-utilization described in the article, if the doctors choosing the treatments are also getting paid for them. And as I recall, when I lived in Canada there was a national scandal about how expensive and inefficient Canada's health care system was, compared with every other developed nation (except of course the U.S., which remains in a league of its own).

Gaming theory on health care?

Wow, that is quite the pithy nugget to ponder. And I really like the assessment at "the end" (can you term the last 3 paragraphs of a 4 paragraph "the end"?), it gave hope that the problem could be analyzed without implying it was easy or clear. Do you have a link to the article? Or did you read the dead tree edition? I might even haul my sorry butt to the library for that one :-)

Re: Gaming theory on health care?

Well, the "last 3 paragraphs" are my own, inspired by the article, rather than actually being in the article. But there's a lot of interesting stuff in the article that I didn't fit into my summary; I recommend it.

I read the dead-tree edition, but it's on the Web here.