Righting Perverse Incentives: A couple of months ago, an editorial appeared in Family Practice Management that looked at ten hard questions about the U.S. healthcare system. Questions 3-5 were especially to the point:

3. Will Medicare, Medicaid and insurance companies, recognizing the cost savings of family medicine, reimburse cognitive services on a par with procedures?

When hell freezes over.

4. Since every new screening test, drug, procedure or technique trumpets its global cost-savings, why is the cost of medical care once again spiraling out of control as managed care wanes?

Those are wink-and-a-sneer confabulations, and we all know it. Coreg vs. atenolol? TPA vs. streptokinase? Plavix vs. aspirin? Most modern drugs offer a 5 percent increase in efficacy at a 1,000 percent increase in cost, and we must remember that 86-year-old nursing home residents now receive triple-bypass surgery and hip replacements on demand.

5. Does controlling medical inflation involve somebody making a cost-benefit decision and saying 'no' to a test, drug, procedure or technique? If so, who?

Yes. Government, insurance companies, physicians or patients. Any volunteers?

The editorialist goes on to argue that patients are the best people to make those cost-benefit decisions. As long time readers of this blog know, I agree with him. The editorial generated an above average number of letters to the editor, some of which take issue with his endorsement of a more consumer-driven system:

We are not currently rationing care; we are rationing patients. Too many people have no reasonable access to medical care. This costs much more than it would cost to provide that care. Until we provide basic health care for all, we will continue to rank low in health care among industrialized countries, despite spending three times more per capita.

and..

Although I agree with many of Dr. Iliff's observations, I was disturbed by his reference to moral hazard as justification for change in payment mechanisms. As a family physician who has spent most of my career caring for patients in underfunded settings, I find this generalization concerning. Although there is a great deal in the actuarial and financial literature about the shortcomings of this theory when applied to health care, one of the best insights for physicians who recognize that part of our problem is that we are not created equal appeared in a recent issue of the New Yorker (see the Malcolm Gladwell New Yorker article.) [link language solely my own -ed.]

To which Dr. Iliff gives this excellent reply:

Every American should be covered by a high-deductible insurance policy with specified mandates, open for bidding among private companies. Whether by employer or government contributions, every family or individual would be given a yearly stipend to manage as a health savings account.

It has taken half a century to train Americans to misuse health care resources through the perverse incentives of our present non-system. Health savings accounts would start the re-training process, as Drs. Morrell and Harover testify from personal experience. Furthermore, I have found poor people to be every bit as shrewd at managing their money as anyone else; but first, they have to have the money.

Preach the word, brother!