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Saturday, October 24, 2009

Health Care (2)

The skies are darkened by streams of criss-crossing lobbyists (and campaign contributions from interested parties) as various bills, purporting to reform the American health care system, work their way through the United States Congress.

Unfortunately, while there is some hope of reducing - although not eliminating - the disgracefully large number of uninsured, there is little or nothing being done to reduce the costs of the current system. There is little dispute that these costs are both out of control and projected to consume most of our economy before too many years have passed.

Addressing the issue now is likely to result in much less pain in the long term. Our politicians, however, have shown conclusively that they do not have have the stomach to make hard decisions. Jean Claude Juncker, former Prime Minister of Luxembourg, summarized the situation perfectly:

"We all know what to do. We just don’t know how to be re-elected once we’ve done it."

There are, I believe, three different major problems: none of which are being addressed by any of the proposed bills:

First, patients, encouraged by direct to consumer advertising and their own "research" on the Internet, demand treatments that are often inappropriate, ineffective or both. Overworked doctors, like mothers dealing with whiny and demanding small children and teenagers, get tired of saying "no" - specially as they are not paid for the time it takes to explain their diagnoses and treatment plans. So they schedule the procedure or provide the demanded prescription.

This is a cultural issue and will take time for attitudes to change. It will be hard but the cultural shift with respect to smoking - cool in the 1960s to, generally, an exhibition of stupidity now - provides hope.

Second, most doctors and hospitals, no matter how ethical and honorable, are paid on a fee for service basis. That is, they get paid for "doing things to people".

That is how they keep their offices open, their nurses and assistants paid, and have enough money for a decent living (after paying back the loans taken out to attend medical school) for themselves. In conjunction with the patient demand issue described above, the doctor's incentives are aligned in favor of doing more rather than less.

There is a simple question that all patients should pose to their doctors: "what are the likely consequences if I say no?"

Third, the tort bar is still running amok and the Law of Unintended Consequences is in full flower. Naturally, doctors respond to the threat of being sued by practicing [expensive] defensive medicine since the chance of a lawsuit, from a disgruntled patient bent on vengeance, is much reduced. That is all the more so when a poor outcome follows action rather than no action - even when no action is likely to be the better way.

That last statement almost certainly deserves to be explained further. It's not the multi-multi-million dollar jury awards that are the problem, or even the main driver of costs, so caps on non-economic damages will provide only limited value. The real issue is that when a doctor is sued for malpractice, the insurance company takes over the defense.

All too often the insurance company comes to the decision that it will cost $150,000 to defend the doctor but the case can be settled for $50,000 even though a defense is likely to prevail. So the insurance company settles, the doctor's reputation is modestly besmirched, the attorney takes his one third (or more) of the proceeds without having had to do much work, and the not-really-harmed patient gets a modest, but still undeserved, payment.

That gives lawyers the incentive to file as many suits as possible in a never ending search for easy settlements. Short term savings for the insurance company (quarterly earnings anyone?) result in greatly increased long term costs.

Lawyers will not be discouraged until they start finding out that the sympathy card - as opposed to a finding of true fault - does not work. In the event that the insurance companies were to develop some courage and backbone, a few major victories in court would reduce the number of attormeys willing to file suit where the merits are few - if not entirely lacking - but payments are still highly likly to be made.

The Angles and the Saxons suffered the depredations of Viking raiders between the ninth and eleventh centuries. They paid Danegeld - i.e. blackmail - to try to persuade the Vikings to refrain from looting and pillaging. It didn't work and the Viking problem was only solved when the English kingdoms became willing to fight back. That sounds like a dark ages version of the current medical tort racket.

Plus ca change, plus c'est la meme chose!

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