Health care

I broke one of my own rules yesterday.  I spent way too much time arguing with a libertarian friend about health care.  Anyway, as always happens in these things, I got a lot of Cato Institute quoted at me.  Including this gem.

“For health care providers, insulation is a bonanza. Because consumers are not spending their own money, they accept doctors’ recommendations for services without questioning them and without concern for cost. Faced with an insured patient, a health care provider is like a restaurant catering to convention-goers with unlimited expense accounts. The customer will gladly take the most high-end recommendation and not worry about the price.

“Consumers are happy as well. Insulation relieves the patient of the stress of making decisions about treatment. The patient also does not have to worry about shopping around for the best price.

“The problem with insulation is that it is not a sustainable form of health care finance. Individuals, employers, and government are all under stress.”

“Insulation” means health insurance.  Specifically it refers to the health insurance most Americans have: employer-provided health insurance, once offered as an employee benefit, now mandated by Obamacare.  That’s the insurance I have.  An HMO covers me and my family.  We have a small co-pay when we go to a doctor, and a larger co-pay if he’s a specialist.

Libertarians, like my friend, believe that free markets always, always, as a matter of ideology, always offer the best services at the lowest price.  That competition reduces costs.  That the problem with the American health care ‘system’ is that it doesn’t allow for competition; that it insufficiently provides for free market solutions.

First of all, competition is part of my health care.  My HMO only allows us to see some doctors, and not others, based on cost considerations.  The HMO negotiates with doctors, and the only doctors who they’ll cover are ones that agree to the prices the HMO offers.  From my perspective, those negotiations are invisible. The results are not.  I have to travel to Salt Lake to see two of the specialists I need to meet with regularly.  I can handle it, but it does make me a bit grumpy.  But I do get excellent health care at an affordable cost–I only pay a small percentage of my health care costs.  And I’m certainly not incentivized to compare prices.  My HMO has already done that.

But that’s not the main thing wrong with this Cato article.  It’s this sentence: “Because consumers are not spending their own money, they accept doctors’ recommendations for services without questioning them and without concern for cost.”

I cannot begin to describe the ways in which this is complete and utter nonsense.  I lack the vocabulary for it.  It’s balderdash, bananas, claptrap, drivel.  It’s gibberish, hogwash, fatuity, hooey.  It’s poppycock, rubbish, tripe.  It’s jive, it’s BS, it’s flapdoodle, folly.  It’s silly.  It’s stupid.  It’s idiotic. It’s wrong.

Consumers of health care do not ‘accept doctor’s recommendations without questioning them’ because we’re not spending our own money.  We accept our doctor’s recommendations because doctors know more about it than we do.  In a previous post, I talked about the asymmetry of information that defines doctor/patient relations.  This is what I’m talking about.  We trust doctors because doctors know more about medicine than we do.  They know more about it because they give up years of their lives to get intensive, in-depth training.  It’s certainly true that we sometimes get second opinions, but that’s not for reasons of cost.  It’s because we want to be absolutely sure we’re getting the best medical advice.

Absolutely nobody is going to price-shop when our health or the health of our loved ones is at stake.  Think about it: “well, Doctors Jones and Brown think I have cancer.  But I’m going to trust Dr. Green, because he charges less, and he thinks it’s only a tummy-ache.”

And when you go to the doctor, or take a child to the doctor, you don’t know if the problem is a serious one or not.  Let’s say your child has a headache, and a spiked fever.  You give her some Tylenol, a cool compress on her forehead.  You pray for her, maybe give her a blessing.  The fever persists.  Okay, kids get fevers; it might be no big deal.  But you also know it could be something serious; meningitis, say.

Now, if you don’t have health insurance, you have two choices, both of them completely irresponsible.  You could ignore the fever, and hope she’s going to be fine.  But you might be ignoring a very serious, and treatable problem.  Or you take her in, racking up a doctor’s bill you probably can’t afford.  The doc says ‘we need to do a lab test.’  More expense.  Do you say ‘no, sorry, no lab tests?  We can’t afford them.’  Are you out of your mind? Or, even crazier, would you say “I don’t want to use your in-house lab. I want to use a different, cheaper lab an hour away.”  Nobody’s going to do that.

If the choice is a heavy financial burden or the life of my child, that’s a very very easy call–I’ll figure out the finances.  But isn’t it better if you don’t have to make that choice?  Isn’t it better if you can afford to go to see a doctor?

Right now, about fifteen percent of the American people have no health insurance.  Obamacare will basically provide insurance for those people.  I’m not a huge Obamacare fan (I’d prefer to just expand Medicare for everyone), but okay, it’s what we have, and it’s better than the status quo.  Because it’s unconscionable to say that poor people should be forced to make that ‘bankruptcy v. my kid’s life’ decisions every time kids get sick, but that rich people needn’t bother.

When I think of my children, I remember vividly how difficult the choices were that we sometimes had to make.  With our youngest son, I remember, he was about ten, and he got sick.  He didn’t really have a tummy-ache, and he didn’t have a fever, but he was clearly sick–listless and miserable.  We took him to the medical practice our doctors share, and the only guy who could see him was an older doctor with a very thick Hispanic accent.  This doctor examined our child, and said ‘I think it’s appendicitis.’  Our boy wasn’t really symptomatic for appendicitis, and I was skeptical.  But he called a surgeon, who agreed to see us immediately.  And the surgeon was pretty skeptical too, but took a blood test, and then came out and said, ‘okay, it’s appendicitis, we’re operating immediately.’  Now, we could have chosen not to take our kid in to the doctor–he was just feeling crummy, as far as we could tell.  No fever.  Or, when this older doctor said ‘appendicitis,’ we could have asked for a second opinion.  And a third, and we could have wasted a couple of hours price-shopping.  And if we had done that, there’s a very good chance our son’s appendix might have ruptured.

That’s the reality of health care.  You trust doctors, because they’re generally worth trusting.  Does medical malpractice sometimes occur?  Sure; doctors aren’t perfect.  But in our experience, our doctors have universally given us excellent care.  And we believe that we have very good reason to trust them.

The American health care system is seriously flawed, and Obamacare is untested as a solution to its problems.  I suspect that Obamacare will work very well indeed, and that four years from now, it won’t be a political issue.  But to say ‘let markets provide’ and suggest we get rid of health insurance entirely?  I’m sorry, but that’s nuts.

Free markets do some things very well indeed.  But a ‘free market solution’ to health care falls apart, destroyed by asymmetry of information.  Basically, it’ll become a system that will triage patients based on ability to pay, not health considerations.  And that’s fundamentally, well, unAmerican.



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