Thanks for your comment, Tina. I don't have anything against fee-for-service, but I also think that, in a free market, it would begin to fall out of favor and be replaced by DPC or group-practice subscriptions that include specialists, because patients would push for that alignment with their interests. I could imagine a subscription pain clinic where PM&R, physical therapy, pain management, and surgeons care for patients together. For a subscription fee, the physician group would prefer conservative treatment, where appropriate, to save money, but the groups would still need to achieve good patient outcomes to maintain and grow their practices. I'm sure there are other models that would work as well, but we need to free up the market and eliminate the regulations that constrain competition and innovation.
So, I definitely enjoyed this piece--and very much in line with where I live in this space. I do believe physicians have a higher calling. I also believe that science has quite emphatically proved that we are influenced, however subtly, by our own financial benefit in making recommendations to patients. This is why in the Dartmouth Atlas Project they demonstrated the "Supply-Sensitive Care" phenomenon. Essentially, where there are a higher number of surgeons per capita there are a higher number of elective surgeries per capita. Surgeons gotta Surge, after all.
Therefore, I would argue that the important argument here is one of aligning incentives. If we can appropriately align physician incentives with patient incentives, in that space we can feel assured that we are functioning in the best interests of the patient. Direct Primary Care does this by ensuring that the healthier and better managed a doctor keeps their patient population, the less work the doctor has to do. So, lots of work up front on chronic illness, but way less work on the back end. It's a bit harder for surgeons and other specialists, but we really do need to find a way to equitably reward proceduralists for recommending against procedures as much as we reward them for doing procedures.
Until we have reconnected the art of medicine to the right to be compensated for our time and training, we will continue to see our profession and work devalued. We just need to do that in a way that preserves our integrity.
Doctors practice medicine to make a living. We learn a skill that other people desire and pay us for our efforts accordingly. Yes, there is a longstanding code of ethics that demands treatment first and payment later when there is urgent need, humane discretion in payment demands for those in need especially where other options are limited and obviously primum non nocere including medical fraud. But, except for some unique humanitarians, we are not some sort of saints, devoting our lives to others beyond what common moral behavior would be expected of any other individual in our society.
Somehow over the past 70 years or so we've adopted the idea that when it comes to seeking medical goods and services, unlike all our other basic needs like food and shelter, we should not have to bother our heads with things like prices and value. We address this concept with the sleight of hand of arranging payment through third parties, although obviously it's actually only indirect payment. This arrangement has slowly but surely resulted in major problems of cost inflation, national debt and declining quality of service delivery. Doctors didn't originate this system although it's been around long enough now that both doctors and patients accept it as the status quo. Mostly it is the result of federal government involvement both directly through government programs and indirectly through tax incentives and mandates for fully comprehensive "insurance", which is not insurance at all in the usual sense but prepayment, subject to all the problems of, for example, a fixed price buffet dinner in which we fill our plates to overflowing, although at least in that case we know the price beforehand and can judge the value.
Fee for service is not the problem. It's the way we pay for almost everything else because it's the most efficient system by far. Yes, there are needy individuals and those with misfortune who society, charitable organizations and government where needed, should help as generously as possible. Yes, insurance as a mechanism to pool premiums to pay for high-cost unexpected events that we hope to not experience makes sense. Yes, we should save and invest some of our income in our healthy years for the inevitable infirmities of old age, just as we do for retirement. For the rest, if the "free market" means getting the government, and especially the federal government, out of the medical arena to the greatest extent possible I'm all for it.
But let's be clear about libertarian style free market. It exists nowhere in our capitalist society, nor should it. For our free economic system of consumer choice, value seeking, and price incentives to function we need generally agreed upon moral behavior and a generally agreed upon authority, the appropriate role of government, to enforce it. That includes medical goods and services as well as all our other commercial endeavors, with due consideration for the necessity of the products and services involved. I don't think it's all that hard!
I think I agree with most of what you say here. If what you mean by “libertarian style” free-market is anarchy, I definitely agree. We need a government to enforce contracts.
I also think there’s some role for government in public health. And along those lines some role for government to be involved in aiding the poor. But why not do that in a similar fashion to how we give food stamps? Give money for healthcare that can be saved for and used for healthcare alone. Provide tax subsidies for money spent by individuals on catastrophic insurance. And deregulate across the board to allow for competition and innovation.
But I do think doctors have been complicit in establishing our status quo - at minimum we’ve allowed it and at time pushed it - because of an aversion to profit (conflating it with greed). (I recommend historian Christie Chapin-Ford’s book Ensuring America’s Health for that fascinating history.)
Here's my experience on the complicity of doctors: (Thanks for the book reference.)
I did my med school and internship before Medicare. It came in when I started my residency. What happened was a wholesale exit of indigent seniors from the hospital public and charity wards to the private services with private doctors. No doubt the need was there. But Lyndon Johnson's idea that there shouldn't be two-tiered medical care for seniors and therefore Medicare should apply to all was power politics and profoundly ignorant, both from the medical and the economic standpoint.
What happened from the doctor standpoint was that the doctors in the field bought into Medicare which at first paid "usual and customary" fees, substantially increasing incomes. But it was a fool's bargain that over the years has led inevitably to the disaster we have today.
I won't belabor the issue, but a similar situation developed with the push through federal tax policy and mandates to have employers provide a socialist type system through the provision of "insurance" that covered first dollar charges. Supposedly this is a "benefit" but of course it is in reality a part of one's salary. The arrangement has numerous similar deleterious medical and economic effects which primarily differ through the fact that the insurance companies, unlike the federal government, must provide their services without going into debt.
Doctors prospered under both arrangements. As a resident during that heyday, I saw to patients who were admitted for days at a time with various complaints for a "workup". They weren't sick and could even leave the hospital for a few hours on a "pass". We all know how that worked out.
Today's doctors face a dilemma. There are some who understand the problem and are doing what they can to find some alternative, such as dropping out into some sort of direct payment practice or charging for concierge services. But it seems like most, having experienced nothing else and being busy with their day to day lives, are so caught up in the present system that they take it as a sine qua non. They experience the problems and complain a lot but if you look at the social networking sites they mostly look at early retirement or even the false chimera of unionization. Their medical organizations and the academics seem to be more part of the problem than the solution. What they need is continued discussion and education such as your post has offered. Hopefully that is a growing thing.
I think there are all sorts of ways to work out medical help for the needy and those with unusual medical misfortune, including self-induced. The idea of self-controlled subsidies earmarked for medical care has economic benefits. The Healthy Indiana Plan started by Gov Mitch Daniels and later adopted by Gov Mike Pence is something like this and has good features in this regard. The Singapore system has many of these features which are worth looking at. I'm not even against government run clinics. I worked in one for a few years after my residency operated by Contra Costa County in California. I don't think there's any way to get the dysfunctional influence of the government completely out of any of this. I think maybe we should take more interest in encouraging charity as well. In the days before Medicare and Medicaid it was a much bigger player.
Thank you for this. I’m increasingly of the belief that alignment of profit and prevention, particularly in the US, as many publicly-funded prevention tactics are being dismantled, is necessary for enduring change. For attention, behavior change, and even widespread belief. We were trained that profit wasn’t something to seek although most clinicians are nested into systems that are forced to focus on it constantly…and those practicing are simply working towards the profit without a focus on it. I’ve just started a company working to do 2 things: a) get people outside (profound benefit through life) and decrease risks for skin cancer (the most common cancer in the US). As a pediatrician and bioethicist I genuinely believe we have to be a part of making new systems/solutions that solve prevention opportunities that are missed. Rendering advice isn’t enough. Would be delighted to talk w anyone more about my belief to encourage and teach trainees some of these tactics, especially as public health remains under siege.
Thank you for a very thought provoking article. I am not a libertarian.. I believe that access to affordable health care is a basic human right and right of citizenship and there are many other countries that do a better job of it than the US. As such affordable access to high value health services is a basic requirement. On the other hand, the dislocation of both providers and patients from the costs of the health services has created a moral hazard on both ends and there are times which both the patient and the provider and conspire. The moral hazard has gotten worse with the demise of private practice. A rational system would require both providers and patients to have skin in the game regarding services asked for or rendered. The problem is that adequate skin in the game for patients is related not only to the cost of the service but also the status of their finances. Likewise, the more discretionary (or less vital) a service is, the more skin should be in the game. Thus it is immoral for insulin to be unaffordable for Type I diabetics but there are many other services where higher out of pocket payments would achieve some of the goals which the authors addressed.
For a 'free market' to work the customers would need to be empowered to be able to choose between products at known prices. Given its the customers' health, this ideal is quickly lost and so with it any notion that the free market can work in healthcare the way we idealize it for things like sneakers. That's before you get into the reality that all markets gravitated towards monopoly which leads to price gouging. Do that for widgets...your a jerk...do it with drugs like insulin you're a monster. Harnessing profit motive has its limits.
Adding this response from Charles Silver who could not post at this time.
I love this column and the vast majority of the comments. Not being a physician, I could not understand or discuss providers' resistance to market-based arrangements from what might be called the internal perspective of health care professionals. But if resistance is to be overcome, that perspective must be understood, and the case for reform must be framed in terms that providers will respond to positively. Even with providers' support, it will be difficult to transition from existing arrangements, which neither patients nor providers like, to better ones. But over their opposition, it will likely be impossible.
Charlie (if I may), I think you’re asking a really important question about “the internal perspective of health care professionals” and why we tend to be hostile not merely to libertarian but to “small l” liberal perspectives in general. Groping my way here, I think there some elements of an answer to that question: 1) We are an expert community and therefore used to thinking in terms of epistocracy and of an expert-specific morality rather than of economic complexity, tradeoffs, and legitimate pluralism. 2) Our moral frame is one of parentalist benevolence especially to the vulnerable, which we feel we can translate into policy imperatives without the intervention of pluralist politics. 3) In the past 30 years we have become less impressed with previous professional ideals of objective inquiry and rigorous application of science to patient care in favor of an extra-caregiving professional identity as social improvers and activists. Of course this is all a sea change from a mid20th century past when physicians were small proprietors as well as caregivers and generally had a very different sense of who they were. Best!
Thanks Tom. Maybe I should focus on explaining how, by using market-based approaches, doctors can engage in "parentalist benevolence" more effectively. I think they can. Years ago, I wrote an article on ethical prohibitions that prevented doctors from, e.g., tying fees to outcomes, offering warranties, and engaging in other conduct that is pro-consumer. But being pro-consumer is a good way of putting patients at ease and demonstrating real concern for their welfare.
Thank you, Mr. Silver, for your comment. I hope we have gone some way to answering your original question for why there isn't more support for free markets in healthcare.
As you will see in some of the comments to this article, part of the answer still remains concerns that free markets in healthcare wouldn't work or would fail to serve the poor.
Those concerns have been addressed by others before, and we will have to continue addressing them in our advocacy for free markets in healthcare.
But what we have tried to do in this article is to reveal an all too often neglected yet crucial part of why healthcare providers, and doctors in particular, have 'resisted' free markets in healthcare, that their view of a moral doctor conflicts with the ethos of a free market.
Economic arguments about the failures of government policies and the efficiencies of free markets alone are insufficient to overcome that conflict. It also leaves doctors and other providers without an answer on how to resolve that moral conflict in their own lives.
Only a moral rethinking of how freedom and the profit motive actually empowers, rather than corrupts, the relationship between providers and patients can resolve that conflict. Much of that work still remains ahead of us. I hope to share more of it with you in the future.
I agree. Doctors don't receive training in microeconomics, so they neither know nor intuit that markets are good at ameliorating conflicts between sellers and purchasers. A consumer may worry that a seller is trying to pass off inferior goods as superior ones. In a competitive market, the seller will feel pressure to address this fear--which is entirely reasonable--because potential purchasers will either refrain from buying or seek out other sellers who, e.g., provide warranties, money-back guarantees, or other assurances of quality. Medical providers can do the same thing. I recently wrote about LASIK providers who offer warranties regarding the quality of patients' post-procedure vision, and who will tell patients upfront whether they qualify for the warranty or not, thereby giving patients important information about the desirability of the procedure. It's good that doctors don't want patients to think of them as con artists, but they can enhance patients' confidence in their recommendations by using market mechanisms, rather than rejecting them.
Mr. Silver, thank you for the encouraging comment and for your original article, which inspired me to write this.
I think we have a lot of work to do to demonstrate that a more free-market system is not inherently in conflict with a system that is compassionate and prioritizes patient care.
As always, the devil will be in the details, and any change to the system will require a carefully planned transition to avoid breaking contracts with patients and doctors who rely on the status quo. (For example, as much as I think Medicaid underpays doctors and disadvantages patients, it's terrible to take it away from people who have depended on it and haven't had the opportunity or ability to plan for that loss.)
The transition will be hard. But I think there is so much waste in the system that the finances can be managed in ways that won't set anyone adrift. Even though I am a libertarian, I believe in helping the poor. The vexing problem is that some people will inevitably fall between the cracks, if only because they are incapable of managing their own affairs. If perfection is the standard, we're cooked. But existing arrangements are highly imperfect. The question must always be framed comparatively, not absolutely.
Yes. Or even for life. That would solve the preexisting condition issue, also insurance would have incentive to subsidize or cover interventions that could improve health such as gym memberships, postpartum physical therapy, discounts for not smoking, etc.
Note: I'm a computer scientist, not a healthcare professional. As I've said before, I think it's important to remember that "He who pays the piper calls the tune". The third party payer, whether a private company or a government agency, is stuck in the position of having to justify payments, and because it doesn't have unlimited resources this inevitably means lots of bureaucracy, red tape, and disappointment for payers, providers, and patients.
With some exceptions such as children and the indigent, it is actually the patient/consumer who is paying the costs for medical care, whether through insurance premiums, deductibles or taxes. However, because health ins companies or government has inserted themselves between the patient and providers, in the role of the 'payor' , the patient loses any leverage they would have had to negotiate or 'comparison shop'.
I talk about values a lot with my patients. Trying to pay for “ideal” treatment might harm their quality of life. So I talk about what feels like good value for the quality of life they desire. We talk about it together. I have to run a sustainable business to keep providing care and patients do have to pay for their care.
The problem isn't profit per se - it is the fact that profit centers are now largely insurers, venture capitalists , third party pharmacy benefit managers and others who have no allegiance to patients or to medical ethics and the pledge to put patient interests first. Insurers make sure that cash pay isn't competitive when they require contracted physicians and hospitals to set the " rack rate" 3-4 x higher than what insurance reimburses - you almost have to buy insurance or face ridiculous charges. 25k insurance paid surgery is billed at 100K cash price . Not to mention that employer provided insurance is tax free , and cash to spend is taxable. The system is rigged to require you to have insurance , which drives cost up because now you feel entitled to use it for every little thing . Our ER s are drowning in non emergent visits because patients don't think it is a big deal to go the the ED , and because primary care says " my first available is 2 weeks ".
A " free market " system whereby patients can shop for the best price sounds good , but only works if you are a) well educated and medically literate b) have money to spend and the capacity to save for the future . Quite a large segment of our population has neither qualification , and when you are sick and in pain and frightened your first thought isn't to shop for the best price . Not to mention that " quality " in the patient mind is most often linked to bedside manner and willingness to do what the patient wants, as opposed to needs. We all know that the best surgeon isn't necessarily the nicest one. But the public chooses differently. Asking the middle class employed American to use funds wisely is one thing, but what about the addicted, the mentally ill, the unhoused , the poor , those living paycheck to paycheck . There needs to be a solution that includes care for these individuals too -
I agree that the average insured person is divorced from the actual cost of their care and as a result wants" everything " - no matter how inappropriate and pricey - but we ourselves have largely fostered this with a message that more is better - more drugs, more surgery, more imaging. Doing " something" is rewarded - cognitive skills are not . I can't tell you how many times in private practice a patient felt they didn't get their money's worth because they didn't get a prescription despite all my best efforts to spend time, educate and counsel.
Personally , I like direct pay primary care ( not " concierge" medicine - 2 different things) . I pay my PCP a set monthly fee and he is accessible when I need him - which is rarely for me and a lot for my elderly mother ( who also subscribes despite being on Medicare because otherwise she would see a NP two weeks out or get sent to the ED ) . At 88 she has been to the ED 2x in the past 2 years because he keeps close tabs on her and resists the urge to do things to a frail elderly woman. If we could have Direct Pay primary care for everyone and insurance only for specialty care , surgery and catastrophic medical diagnoses ( kind of like car insurance ) the system would likely self regulate better. But we would need 3-4 x more primary care doctors to do this. And doctors willing to run their own businesses without huge subsidies from large hospital groups that then hold them captive after they sign for the money . I know so many young FM docs who sign with these groups because they a) have huge student loans and b) are exhausted , have no business training , and no means to acquire a business loan to start a practice .
Great article. What's interesting about physician-written articles about the healthcare marketplace is that the author rarely views themselves as not just the clinician but also the patient. We are always both.
The short answer is fear of freedom and a (mistaken) faith in "regulation" by supposedly objective third parties. The source of the problem is always government intervention that always evolves into a bureaucratic nightmare. Collectivistic thinking works against the realization of these simple elements.
I am going to touch the 3rd rail here. What about all the "free care" we give to illegal immigrants, people on "vacation" and those that walk into a urgi-care for a cold? I knew a MD in East Boston. On handfuls of occasions, 6 men from a foreign country (I won't name it) arrive in the walk in center all complaining of blood in their urine. They are worked up and all of them have bladder cancer. They are provided cancer care free of charge because they are not from here and at the end of it, they all leave home together. I may have the details a bit medically off, but I hope you get my point. And this doc was originally from China and he saw the corruption in the groups of people coming the the US to get "vacation cancer care" and then go home. I have foreign friends who bring their elderly parents here for medical care and then they go home and it is all free. And that doesn't begin to cover the millions upon millions of illegal people who have come here and get free care. We wonder why our healthcare is tapped out and unaffordable? I pay 10-15K a year (through my insurance and out of pocket for non-covered care. Then I pay 6K for my health insurance. And I am healthy! So we have a serious problem when I am paying for someone else's care and I can't get any care covered myself. Sometimes I think it would be better to not be from this country, apply for free care or maybe not have a job! Then I could qualify for free care. I own a health care business and take every insurance. And the only way to survive is to hope the mix pf payments works out so that the free care patients are outweighed by the better paying products. And I live in an area where we have lots of free care at one end and Medicare at the other end. It is not sustainable. This is the first year I have gone into a new year feeling like this business can't carry on. The other thing not talked too much about, admin burden. I have insurances that require an authorization. Now the allowable is $60/visit and the copay is $60/visit. Basically the patient will be paying me every time they come. So why make me take time to fill out forms, fax them, follow up, to approve a service the INSURANCE IS NEVER GOING TO PAY FOR! And we do this because we want the care to go tot he patient's deductible. This requires authorization. Totally ludicrous.
Without meaning any disrespect whatsoever, I'm surprised to see that one of the authors is an Emergency physician.
The authors say the free-market is "a situation in which buyers seek the best quality at the lowest prices, and sellers compete for buyers by improving quality, lowering prices, or both.". But Emergency medicine highlights exactly why these principles can be useless. In the middle of a cardiac arrest no-one is in a position to do either.
But that's just the most extreme case. I think that even in more routine cases the information asymmetry between consumer and provider means free-market mechanisms will fail. On top of that, outside of major urban centers natural monopolies would quite likely form, causing market failure in another way.
On the one hand, I agree that the idea of a mid-cardiac-arrest bill is tragically laughable. But this is the sort of thing that real, catastrophic insurance would be for, if it were available. To some extent, people would have an obligation to buy that insurance or expect to slowly pay off the hospital debt in exchange for their life. What is too much to pay for your life?
On the other hand, this comment presupposes our (U.S.) current, non-free-market system, where the cost after a severe, unexpected medical event *is* unbelievably high - maybe too high - even with health insurance.
We can think creatively and entrepreneurially about other models that could exist in a free-market system to appropriately disincentivize the overuse of emergency care and also drive down its costs. Off the top of my head: expansion of HSAs, legalizing true catastrophic plans, and allowing physician-owned group practices that include urgent, emergency, and specialty care at annual subscription rates.
I have a lot to say about this but too little time to say it. I'll just say that in my experience coming from a working class family in a small town and having spent my career in a tertiary medical center, a free-market system seems a lot more appealing from the latter than the former.
Debrah Owen's comments captures some of the reasons why, and I'll add that to that the paucity of choice in providers outside of urban centers, and the consolidation of practices which I would expect to continue further. I expect a free market would emphasize these forces.
I think the info assymmetry problem is less than it appears. Patients shop for doctors when they're well rather than when they're sick (yes, not all the time but they can). And reputation is often reliable--most consumers dont know much about cars but its hard to buy a lemon these days--because there's a working market with competition including on price. If physician group practices competed on both price and quality to patients paying in cash for routine expenses and relying on insurance for major illnesses, etc we'd be in a very different place than we are.
Thanks for your comment, Tina. I don't have anything against fee-for-service, but I also think that, in a free market, it would begin to fall out of favor and be replaced by DPC or group-practice subscriptions that include specialists, because patients would push for that alignment with their interests. I could imagine a subscription pain clinic where PM&R, physical therapy, pain management, and surgeons care for patients together. For a subscription fee, the physician group would prefer conservative treatment, where appropriate, to save money, but the groups would still need to achieve good patient outcomes to maintain and grow their practices. I'm sure there are other models that would work as well, but we need to free up the market and eliminate the regulations that constrain competition and innovation.
So, I definitely enjoyed this piece--and very much in line with where I live in this space. I do believe physicians have a higher calling. I also believe that science has quite emphatically proved that we are influenced, however subtly, by our own financial benefit in making recommendations to patients. This is why in the Dartmouth Atlas Project they demonstrated the "Supply-Sensitive Care" phenomenon. Essentially, where there are a higher number of surgeons per capita there are a higher number of elective surgeries per capita. Surgeons gotta Surge, after all.
Therefore, I would argue that the important argument here is one of aligning incentives. If we can appropriately align physician incentives with patient incentives, in that space we can feel assured that we are functioning in the best interests of the patient. Direct Primary Care does this by ensuring that the healthier and better managed a doctor keeps their patient population, the less work the doctor has to do. So, lots of work up front on chronic illness, but way less work on the back end. It's a bit harder for surgeons and other specialists, but we really do need to find a way to equitably reward proceduralists for recommending against procedures as much as we reward them for doing procedures.
Until we have reconnected the art of medicine to the right to be compensated for our time and training, we will continue to see our profession and work devalued. We just need to do that in a way that preserves our integrity.
Doctors practice medicine to make a living. We learn a skill that other people desire and pay us for our efforts accordingly. Yes, there is a longstanding code of ethics that demands treatment first and payment later when there is urgent need, humane discretion in payment demands for those in need especially where other options are limited and obviously primum non nocere including medical fraud. But, except for some unique humanitarians, we are not some sort of saints, devoting our lives to others beyond what common moral behavior would be expected of any other individual in our society.
Somehow over the past 70 years or so we've adopted the idea that when it comes to seeking medical goods and services, unlike all our other basic needs like food and shelter, we should not have to bother our heads with things like prices and value. We address this concept with the sleight of hand of arranging payment through third parties, although obviously it's actually only indirect payment. This arrangement has slowly but surely resulted in major problems of cost inflation, national debt and declining quality of service delivery. Doctors didn't originate this system although it's been around long enough now that both doctors and patients accept it as the status quo. Mostly it is the result of federal government involvement both directly through government programs and indirectly through tax incentives and mandates for fully comprehensive "insurance", which is not insurance at all in the usual sense but prepayment, subject to all the problems of, for example, a fixed price buffet dinner in which we fill our plates to overflowing, although at least in that case we know the price beforehand and can judge the value.
Fee for service is not the problem. It's the way we pay for almost everything else because it's the most efficient system by far. Yes, there are needy individuals and those with misfortune who society, charitable organizations and government where needed, should help as generously as possible. Yes, insurance as a mechanism to pool premiums to pay for high-cost unexpected events that we hope to not experience makes sense. Yes, we should save and invest some of our income in our healthy years for the inevitable infirmities of old age, just as we do for retirement. For the rest, if the "free market" means getting the government, and especially the federal government, out of the medical arena to the greatest extent possible I'm all for it.
But let's be clear about libertarian style free market. It exists nowhere in our capitalist society, nor should it. For our free economic system of consumer choice, value seeking, and price incentives to function we need generally agreed upon moral behavior and a generally agreed upon authority, the appropriate role of government, to enforce it. That includes medical goods and services as well as all our other commercial endeavors, with due consideration for the necessity of the products and services involved. I don't think it's all that hard!
I think I agree with most of what you say here. If what you mean by “libertarian style” free-market is anarchy, I definitely agree. We need a government to enforce contracts.
I also think there’s some role for government in public health. And along those lines some role for government to be involved in aiding the poor. But why not do that in a similar fashion to how we give food stamps? Give money for healthcare that can be saved for and used for healthcare alone. Provide tax subsidies for money spent by individuals on catastrophic insurance. And deregulate across the board to allow for competition and innovation.
But I do think doctors have been complicit in establishing our status quo - at minimum we’ve allowed it and at time pushed it - because of an aversion to profit (conflating it with greed). (I recommend historian Christie Chapin-Ford’s book Ensuring America’s Health for that fascinating history.)
Here's my experience on the complicity of doctors: (Thanks for the book reference.)
I did my med school and internship before Medicare. It came in when I started my residency. What happened was a wholesale exit of indigent seniors from the hospital public and charity wards to the private services with private doctors. No doubt the need was there. But Lyndon Johnson's idea that there shouldn't be two-tiered medical care for seniors and therefore Medicare should apply to all was power politics and profoundly ignorant, both from the medical and the economic standpoint.
What happened from the doctor standpoint was that the doctors in the field bought into Medicare which at first paid "usual and customary" fees, substantially increasing incomes. But it was a fool's bargain that over the years has led inevitably to the disaster we have today.
I won't belabor the issue, but a similar situation developed with the push through federal tax policy and mandates to have employers provide a socialist type system through the provision of "insurance" that covered first dollar charges. Supposedly this is a "benefit" but of course it is in reality a part of one's salary. The arrangement has numerous similar deleterious medical and economic effects which primarily differ through the fact that the insurance companies, unlike the federal government, must provide their services without going into debt.
Doctors prospered under both arrangements. As a resident during that heyday, I saw to patients who were admitted for days at a time with various complaints for a "workup". They weren't sick and could even leave the hospital for a few hours on a "pass". We all know how that worked out.
Today's doctors face a dilemma. There are some who understand the problem and are doing what they can to find some alternative, such as dropping out into some sort of direct payment practice or charging for concierge services. But it seems like most, having experienced nothing else and being busy with their day to day lives, are so caught up in the present system that they take it as a sine qua non. They experience the problems and complain a lot but if you look at the social networking sites they mostly look at early retirement or even the false chimera of unionization. Their medical organizations and the academics seem to be more part of the problem than the solution. What they need is continued discussion and education such as your post has offered. Hopefully that is a growing thing.
I think there are all sorts of ways to work out medical help for the needy and those with unusual medical misfortune, including self-induced. The idea of self-controlled subsidies earmarked for medical care has economic benefits. The Healthy Indiana Plan started by Gov Mitch Daniels and later adopted by Gov Mike Pence is something like this and has good features in this regard. The Singapore system has many of these features which are worth looking at. I'm not even against government run clinics. I worked in one for a few years after my residency operated by Contra Costa County in California. I don't think there's any way to get the dysfunctional influence of the government completely out of any of this. I think maybe we should take more interest in encouraging charity as well. In the days before Medicare and Medicaid it was a much bigger player.
There have been plenty of doctors who were/are snake oil salesmen not putting patient welfare above profits.
Thank you for this. I’m increasingly of the belief that alignment of profit and prevention, particularly in the US, as many publicly-funded prevention tactics are being dismantled, is necessary for enduring change. For attention, behavior change, and even widespread belief. We were trained that profit wasn’t something to seek although most clinicians are nested into systems that are forced to focus on it constantly…and those practicing are simply working towards the profit without a focus on it. I’ve just started a company working to do 2 things: a) get people outside (profound benefit through life) and decrease risks for skin cancer (the most common cancer in the US). As a pediatrician and bioethicist I genuinely believe we have to be a part of making new systems/solutions that solve prevention opportunities that are missed. Rendering advice isn’t enough. Would be delighted to talk w anyone more about my belief to encourage and teach trainees some of these tactics, especially as public health remains under siege.
Thank you for a very thought provoking article. I am not a libertarian.. I believe that access to affordable health care is a basic human right and right of citizenship and there are many other countries that do a better job of it than the US. As such affordable access to high value health services is a basic requirement. On the other hand, the dislocation of both providers and patients from the costs of the health services has created a moral hazard on both ends and there are times which both the patient and the provider and conspire. The moral hazard has gotten worse with the demise of private practice. A rational system would require both providers and patients to have skin in the game regarding services asked for or rendered. The problem is that adequate skin in the game for patients is related not only to the cost of the service but also the status of their finances. Likewise, the more discretionary (or less vital) a service is, the more skin should be in the game. Thus it is immoral for insulin to be unaffordable for Type I diabetics but there are many other services where higher out of pocket payments would achieve some of the goals which the authors addressed.
For a 'free market' to work the customers would need to be empowered to be able to choose between products at known prices. Given its the customers' health, this ideal is quickly lost and so with it any notion that the free market can work in healthcare the way we idealize it for things like sneakers. That's before you get into the reality that all markets gravitated towards monopoly which leads to price gouging. Do that for widgets...your a jerk...do it with drugs like insulin you're a monster. Harnessing profit motive has its limits.
Adding this response from Charles Silver who could not post at this time.
I love this column and the vast majority of the comments. Not being a physician, I could not understand or discuss providers' resistance to market-based arrangements from what might be called the internal perspective of health care professionals. But if resistance is to be overcome, that perspective must be understood, and the case for reform must be framed in terms that providers will respond to positively. Even with providers' support, it will be difficult to transition from existing arrangements, which neither patients nor providers like, to better ones. But over their opposition, it will likely be impossible.
Best wishes,
Charlie
Charlie (if I may), I think you’re asking a really important question about “the internal perspective of health care professionals” and why we tend to be hostile not merely to libertarian but to “small l” liberal perspectives in general. Groping my way here, I think there some elements of an answer to that question: 1) We are an expert community and therefore used to thinking in terms of epistocracy and of an expert-specific morality rather than of economic complexity, tradeoffs, and legitimate pluralism. 2) Our moral frame is one of parentalist benevolence especially to the vulnerable, which we feel we can translate into policy imperatives without the intervention of pluralist politics. 3) In the past 30 years we have become less impressed with previous professional ideals of objective inquiry and rigorous application of science to patient care in favor of an extra-caregiving professional identity as social improvers and activists. Of course this is all a sea change from a mid20th century past when physicians were small proprietors as well as caregivers and generally had a very different sense of who they were. Best!
Thanks Tom. Maybe I should focus on explaining how, by using market-based approaches, doctors can engage in "parentalist benevolence" more effectively. I think they can. Years ago, I wrote an article on ethical prohibitions that prevented doctors from, e.g., tying fees to outcomes, offering warranties, and engaging in other conduct that is pro-consumer. But being pro-consumer is a good way of putting patients at ease and demonstrating real concern for their welfare.
Thank you, Mr. Silver, for your comment. I hope we have gone some way to answering your original question for why there isn't more support for free markets in healthcare.
As you will see in some of the comments to this article, part of the answer still remains concerns that free markets in healthcare wouldn't work or would fail to serve the poor.
Those concerns have been addressed by others before, and we will have to continue addressing them in our advocacy for free markets in healthcare.
But what we have tried to do in this article is to reveal an all too often neglected yet crucial part of why healthcare providers, and doctors in particular, have 'resisted' free markets in healthcare, that their view of a moral doctor conflicts with the ethos of a free market.
Economic arguments about the failures of government policies and the efficiencies of free markets alone are insufficient to overcome that conflict. It also leaves doctors and other providers without an answer on how to resolve that moral conflict in their own lives.
Only a moral rethinking of how freedom and the profit motive actually empowers, rather than corrupts, the relationship between providers and patients can resolve that conflict. Much of that work still remains ahead of us. I hope to share more of it with you in the future.
I agree. Doctors don't receive training in microeconomics, so they neither know nor intuit that markets are good at ameliorating conflicts between sellers and purchasers. A consumer may worry that a seller is trying to pass off inferior goods as superior ones. In a competitive market, the seller will feel pressure to address this fear--which is entirely reasonable--because potential purchasers will either refrain from buying or seek out other sellers who, e.g., provide warranties, money-back guarantees, or other assurances of quality. Medical providers can do the same thing. I recently wrote about LASIK providers who offer warranties regarding the quality of patients' post-procedure vision, and who will tell patients upfront whether they qualify for the warranty or not, thereby giving patients important information about the desirability of the procedure. It's good that doctors don't want patients to think of them as con artists, but they can enhance patients' confidence in their recommendations by using market mechanisms, rather than rejecting them.
Mr. Silver, thank you for the encouraging comment and for your original article, which inspired me to write this.
I think we have a lot of work to do to demonstrate that a more free-market system is not inherently in conflict with a system that is compassionate and prioritizes patient care.
As always, the devil will be in the details, and any change to the system will require a carefully planned transition to avoid breaking contracts with patients and doctors who rely on the status quo. (For example, as much as I think Medicaid underpays doctors and disadvantages patients, it's terrible to take it away from people who have depended on it and haven't had the opportunity or ability to plan for that loss.)
The transition will be hard. But I think there is so much waste in the system that the finances can be managed in ways that won't set anyone adrift. Even though I am a libertarian, I believe in helping the poor. The vexing problem is that some people will inevitably fall between the cracks, if only because they are incapable of managing their own affairs. If perfection is the standard, we're cooked. But existing arrangements are highly imperfect. The question must always be framed comparatively, not absolutely.
I have long thought requiring insurance to be a longer contract maybe 5 years, could stimulate a lot of change.
Yes. Or even for life. That would solve the preexisting condition issue, also insurance would have incentive to subsidize or cover interventions that could improve health such as gym memberships, postpartum physical therapy, discounts for not smoking, etc.
Note: I'm a computer scientist, not a healthcare professional. As I've said before, I think it's important to remember that "He who pays the piper calls the tune". The third party payer, whether a private company or a government agency, is stuck in the position of having to justify payments, and because it doesn't have unlimited resources this inevitably means lots of bureaucracy, red tape, and disappointment for payers, providers, and patients.
With some exceptions such as children and the indigent, it is actually the patient/consumer who is paying the costs for medical care, whether through insurance premiums, deductibles or taxes. However, because health ins companies or government has inserted themselves between the patient and providers, in the role of the 'payor' , the patient loses any leverage they would have had to negotiate or 'comparison shop'.
Agreed.
I talk about values a lot with my patients. Trying to pay for “ideal” treatment might harm their quality of life. So I talk about what feels like good value for the quality of life they desire. We talk about it together. I have to run a sustainable business to keep providing care and patients do have to pay for their care.
The problem isn't profit per se - it is the fact that profit centers are now largely insurers, venture capitalists , third party pharmacy benefit managers and others who have no allegiance to patients or to medical ethics and the pledge to put patient interests first. Insurers make sure that cash pay isn't competitive when they require contracted physicians and hospitals to set the " rack rate" 3-4 x higher than what insurance reimburses - you almost have to buy insurance or face ridiculous charges. 25k insurance paid surgery is billed at 100K cash price . Not to mention that employer provided insurance is tax free , and cash to spend is taxable. The system is rigged to require you to have insurance , which drives cost up because now you feel entitled to use it for every little thing . Our ER s are drowning in non emergent visits because patients don't think it is a big deal to go the the ED , and because primary care says " my first available is 2 weeks ".
A " free market " system whereby patients can shop for the best price sounds good , but only works if you are a) well educated and medically literate b) have money to spend and the capacity to save for the future . Quite a large segment of our population has neither qualification , and when you are sick and in pain and frightened your first thought isn't to shop for the best price . Not to mention that " quality " in the patient mind is most often linked to bedside manner and willingness to do what the patient wants, as opposed to needs. We all know that the best surgeon isn't necessarily the nicest one. But the public chooses differently. Asking the middle class employed American to use funds wisely is one thing, but what about the addicted, the mentally ill, the unhoused , the poor , those living paycheck to paycheck . There needs to be a solution that includes care for these individuals too -
I agree that the average insured person is divorced from the actual cost of their care and as a result wants" everything " - no matter how inappropriate and pricey - but we ourselves have largely fostered this with a message that more is better - more drugs, more surgery, more imaging. Doing " something" is rewarded - cognitive skills are not . I can't tell you how many times in private practice a patient felt they didn't get their money's worth because they didn't get a prescription despite all my best efforts to spend time, educate and counsel.
Personally , I like direct pay primary care ( not " concierge" medicine - 2 different things) . I pay my PCP a set monthly fee and he is accessible when I need him - which is rarely for me and a lot for my elderly mother ( who also subscribes despite being on Medicare because otherwise she would see a NP two weeks out or get sent to the ED ) . At 88 she has been to the ED 2x in the past 2 years because he keeps close tabs on her and resists the urge to do things to a frail elderly woman. If we could have Direct Pay primary care for everyone and insurance only for specialty care , surgery and catastrophic medical diagnoses ( kind of like car insurance ) the system would likely self regulate better. But we would need 3-4 x more primary care doctors to do this. And doctors willing to run their own businesses without huge subsidies from large hospital groups that then hold them captive after they sign for the money . I know so many young FM docs who sign with these groups because they a) have huge student loans and b) are exhausted , have no business training , and no means to acquire a business loan to start a practice .
Great article. What's interesting about physician-written articles about the healthcare marketplace is that the author rarely views themselves as not just the clinician but also the patient. We are always both.
The short answer is fear of freedom and a (mistaken) faith in "regulation" by supposedly objective third parties. The source of the problem is always government intervention that always evolves into a bureaucratic nightmare. Collectivistic thinking works against the realization of these simple elements.
I am going to touch the 3rd rail here. What about all the "free care" we give to illegal immigrants, people on "vacation" and those that walk into a urgi-care for a cold? I knew a MD in East Boston. On handfuls of occasions, 6 men from a foreign country (I won't name it) arrive in the walk in center all complaining of blood in their urine. They are worked up and all of them have bladder cancer. They are provided cancer care free of charge because they are not from here and at the end of it, they all leave home together. I may have the details a bit medically off, but I hope you get my point. And this doc was originally from China and he saw the corruption in the groups of people coming the the US to get "vacation cancer care" and then go home. I have foreign friends who bring their elderly parents here for medical care and then they go home and it is all free. And that doesn't begin to cover the millions upon millions of illegal people who have come here and get free care. We wonder why our healthcare is tapped out and unaffordable? I pay 10-15K a year (through my insurance and out of pocket for non-covered care. Then I pay 6K for my health insurance. And I am healthy! So we have a serious problem when I am paying for someone else's care and I can't get any care covered myself. Sometimes I think it would be better to not be from this country, apply for free care or maybe not have a job! Then I could qualify for free care. I own a health care business and take every insurance. And the only way to survive is to hope the mix pf payments works out so that the free care patients are outweighed by the better paying products. And I live in an area where we have lots of free care at one end and Medicare at the other end. It is not sustainable. This is the first year I have gone into a new year feeling like this business can't carry on. The other thing not talked too much about, admin burden. I have insurances that require an authorization. Now the allowable is $60/visit and the copay is $60/visit. Basically the patient will be paying me every time they come. So why make me take time to fill out forms, fax them, follow up, to approve a service the INSURANCE IS NEVER GOING TO PAY FOR! And we do this because we want the care to go tot he patient's deductible. This requires authorization. Totally ludicrous.
Without meaning any disrespect whatsoever, I'm surprised to see that one of the authors is an Emergency physician.
The authors say the free-market is "a situation in which buyers seek the best quality at the lowest prices, and sellers compete for buyers by improving quality, lowering prices, or both.". But Emergency medicine highlights exactly why these principles can be useless. In the middle of a cardiac arrest no-one is in a position to do either.
But that's just the most extreme case. I think that even in more routine cases the information asymmetry between consumer and provider means free-market mechanisms will fail. On top of that, outside of major urban centers natural monopolies would quite likely form, causing market failure in another way.
On the one hand, I agree that the idea of a mid-cardiac-arrest bill is tragically laughable. But this is the sort of thing that real, catastrophic insurance would be for, if it were available. To some extent, people would have an obligation to buy that insurance or expect to slowly pay off the hospital debt in exchange for their life. What is too much to pay for your life?
On the other hand, this comment presupposes our (U.S.) current, non-free-market system, where the cost after a severe, unexpected medical event *is* unbelievably high - maybe too high - even with health insurance.
We can think creatively and entrepreneurially about other models that could exist in a free-market system to appropriately disincentivize the overuse of emergency care and also drive down its costs. Off the top of my head: expansion of HSAs, legalizing true catastrophic plans, and allowing physician-owned group practices that include urgent, emergency, and specialty care at annual subscription rates.
Thank you for taking the time to respond.
I have a lot to say about this but too little time to say it. I'll just say that in my experience coming from a working class family in a small town and having spent my career in a tertiary medical center, a free-market system seems a lot more appealing from the latter than the former.
Debrah Owen's comments captures some of the reasons why, and I'll add that to that the paucity of choice in providers outside of urban centers, and the consolidation of practices which I would expect to continue further. I expect a free market would emphasize these forces.
I think the info assymmetry problem is less than it appears. Patients shop for doctors when they're well rather than when they're sick (yes, not all the time but they can). And reputation is often reliable--most consumers dont know much about cars but its hard to buy a lemon these days--because there's a working market with competition including on price. If physician group practices competed on both price and quality to patients paying in cash for routine expenses and relying on insurance for major illnesses, etc we'd be in a very different place than we are.