Home > Health care > The “market” can’t fix US health care (2)

The “market” can’t fix US health care (2)

High-deductible health insurance doesn’t work — it reduces health-care spending on preventive care as well as unnecessary care.

Thanks to James Kwak at Baseline Scenario, we have additional evidence about the wrongness of “market-driven” solutions to our health-care dilemma: Dr. Atul Gawande discussing a company that pushed more health-care costs onto its employees year after year, only to see its own spending continue to increase, too.

Why didn’t it work? While most employees responded to higher copays and kept their costs more or less steady, the 5 percent of members who generated 60 percent of the costs behaved differently. Like the people with Hi-D plans, they also reduced spending on doctor’s visits and prescription medications, with bad — and costly — results. When people with heart disease stop taking cholesterol-lowering medications, they often end up in the hospital with heart attacks and then with congestive heart failure.

Health-care sellers generally have no incentive to reduce prices or utilization — that’s their revenue. But Gawande recently wrote in The New Yorker about a doctor in Camden, NJ, who saw that one percent of the city’s residents were generating 30% of the city’s health-care spending.

Gawande is talking about “doctors and health care organizations identifying their most expensive patients or members, figuring out what’s wrong with them, and getting them the right treatments. In the few examples that Gawande discusses, it results in cost reductions on the order of 20 percent with better outcomes,” according to Kwak.

Bill Sez: The evidence all suggests that the “skin-in-the-game” approach to controlling health-care spending doesn’t work because (1) really sick people account for a large share of treatment/expense and because (2) supply drives demand, and sellers recommend a lot of screening and treatment even though science can’t find any benefit from it. If you rob banks because that’s where the money is, you control health-care spending by providing more effective care for the most expensive patients and by addressing regional variations in treatment that have no scientific basis.

Categories: Health care
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