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Crisis of Abundance, 8/1
We consume medical services with high costs and low benefits
Interview with Ian Harris about his book Hippocrasy: How doctors are betraying their oath, co-authored with Rachelle Buchbinder. Argues that much of medicine does not improve health, with too many drugs prescribed, too much surgery performed, and too many unhelpful tests, scans, and overdiagnosis.
There is a substantial literature along these lines. It includes my book Crisis of Abundance. But I think that the fault lies in our attitude toward medical care.
As individuals, we would like unlimited access to medical services without having to pay for them. We think of that as “good health insurance.”
In other countries, access to medical services is limited by explicit rationing schemes. Also, in other countries, people pay a lot out of pocket for procedures that here are covered by insurance. In the U.S., we pay a smaller share out of pocket than just about any other industrialized nation, including Canada.
Sometimes, our health insurance will not pay for services, but we go ballistic when that happens. Under most circumstances, any procedure that has expected benefits gets paid for, even if the costs far exceed the expected benefits. Next time you go for an MRI, try to calculate the probability that the result will affect the treatment plan and multiply by the likely benefit of the treatment plan. My guess is that the answer will be much less than the cost of the the MRI.
Because we pay for health care collectively, as individuals we far over-consume medical services. But this is not the conventional wisdom.
The conventional wisdom is that our health care is too expensive, as if somebody in the supply side (insurance companies, doctors, pharmaceutical companies) is ripping us off. According to this view, if government negotiated lower prices, we could obtain even more medical services. When I looked at the data when I was doing the research in my book, I did not find much support for this conventional narrative.
The reason that we spend so much on health care is that we obtain a lot of procedures that have high costs and low benefits. That is the “crisis of abundance” to which my book refers, and that is apparently the topic of the podcast with Ian Harris.
What we call health insurance is not really insurance. John Cochrane also makes this point. With real insurance, we would pay for most of our own medical procedures, other than for major expensive illnesses. For less-expensive maladies, we would pay mostly out of pocket. We would probably choose fewer procedures that have high costs and low benefits.
I think that our attitude toward medical care is based on crude moral dyad framing. We think of the person with a medical need as a helpless baby, with all feelings and no agency. So we insist that this person cannot possibly pay out of pocket for medical services. And we think of the providers of health insurance and medical care as robot agents, with no feelings and total agency. So we blame them for high costs and low benefits.
I wish we could see patients as having agency. They should have more responsibility to align costs and benefits.