Unbiased Analysis of Today's Healthcare Issues

Markets and Medicare

Written By: Jason Shafrin - Feb• 25•08

The Wall Street Journal has an interesting article (“Markets and Medicare“) by John Goodman, President of the National Center for Policy Analysis. The article has some innovative suggestions regarding how to improve the health care system.

Medicare should allow alternative payment mechanisms, such as compensating doctors for e-mail and telephone communication with the patient (I completely agree with this). Geisinger Health System “…offers a 90-day warranty on heart surgery, similar to the type of warranties found in consumer product markets. If the patient returns with complications in that period, Geisinger promises to attend to it without sending the patient or the insurer another bill.” While this may seem like a good idea, if someone falls sick within 90 days, it may not always be possible to attribute the complication direction to the heart surgery. It may be due other co-morbidities and how seriously the health system takes this guarantee is unknown.

Virginia Mason Medical Center in Seattle will not give patients MRIs for back pain without first seeing a physical therapist. This is entirely sensible and will greatly cut costs without affecting the quality of patient care.

It is interesting that Goodman advocates the “resticted MRI use” since the NCPA says that “The NCPA’s goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector.” Reducing the number of MRIs run is certainly the optimal solution from a systems point of view, but reducing MRI use smells like rationing. Physicians have no incentive to decrease the number of MRIs taken–unless the insurers refuse to pay for them–since the patients demand them and many physicians are owners of the MRI care centers to which they refer patients.

What we all must realize is that all good are rationed. They are either rationed through a price mechanism, through queues or through by insurance company or government mandates.

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  1. Akshay Kapur says:

    Great point about rationing. There’s also the issue of control over such rationing. Do we want our doctor (outside of conflicting interests) to make the decision? Maybe the government? Definitely not the insurance company it seems.

    There has to be some unbiased, objective, quantitative way of doing this. For example, you meet such and such criteria (determined by CRTs and scholarly sources) and therefore you can/cannot get an MRI.

    Its tough to grasp all the possibilities with the uncertainty that underlies all health care problems.

  2. Why does there have to be some unbiased, objective quantitative way of assessing the best way to ration?

    This seems to me at least in part to be an irreducibly normative question, which means that the permissiblity of any particular form of rationing is not defined by “objective” “quantitative” ways of assessing (and in any case, such methods are hardly immune to bias). I tend to think a qualitative, subjective means of evaluating the ethics of rationing might also provide some valuable insight on where we’d like to go with this is a society.