The cover story of this week’s Economist examings healthcare reform in America (“This is going to hurt“). The story recounts some of the many ills of the U.S. healthcare system: too many uninsured, too expensive, and low quality outcomes. This is not news. What does The Economist propose to fix the American healthcare system?
- Pay doctors a salary. In general, I support this idea, but it only works if doctors are employees. Medicare would never pay doctors a salary; they could never track how many patients they saw or how much work they did. The only way Medicare physicians would be paid a salary was: 1) if they were direct employees of Medicare or 2) they worked for employers who decided to pay them a salary. For instance, if large, centralized healthcare systems (e.g., Kaiser Permanente, Mayo Clinic) took payments from Medicare directly, it could pay their own physicians a salary. Salaried remuneration decreases physician incentives to work hard compared to fee-for-service payment, but since overtreatment rather than undertreatment is one of the main problems in the U.S., the salary system could work. See my own research on how physician compensation affects surgery rates.
- Get NICE. The Economist believes that America could use a cost-effectiveness agency like the UK’s NICE. I agree.
- Align incentives. Will pay-for-performance improve health care? The Economist thinks so but I am skeptical that it will have a large impact. Medical care is so complicated that paying for better outcomes on one dimension will distract providers from focusing on less measurable, but perhaps more important dimensions. For instance, the Economist advocates that paying bonuses in Sweden lead to shorter wait times. However, in the UK, setting the goal that all patients should be treated within four hours of arriving at the emergency room, lead to some perverse incentives. “Thousands of people a year are having to wait outside accident and emergency departments because trusts will not let them in until they can treat them within four hours, in line with a Labour pledge.”
Overall, The Economist has some valid ideas of how to improve health care. However, broad pronouncements will not get the job done. We need a systems approach in order to decrease the amount of unnecessary medical services and increase the quality of the important medical services that are given. Like any reform, this is easier said than done.