Professor Mark J. Perry's Blog for Economics and Finance
(1) Incentivize patients to be smart consumers
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
19 Comments:
http://www.cato-at-liberty.org/2010/02/15/fisking-pawlenty/
Good catch Colin...
Thanks...
How about increasing the healthcare resources??? Prices are established by supply and demand, right? If there are more resources (hospitals, clinics, doctors, nurses, EMTs, etc.) then the price would go down. There are barriers to entry that are in place to falsely keep prices up.
Point 1 is pretty weak in the original article because it assumes that we can all compare insurance plans, hospitals and hospital procedures as well as we can compare car features. While transparency is absolutely required, making each of us responsible to know that we are getting the most effective health care is overstepping the skills that many people will have. Expecting them to do so in an urgent situation is ridiculous.
If patients are to make good decisions they would need an independent rating service to assess the providers. They should not be left to themselves.
Re increasing resources, the New York Times reported that more than 10 new medical schools are being established in the US, leading when fully open to more than 1000 new grads a year. Note that this will reduce the number of foreign residents in hospitals because the article says that med schools currently don't produce enough grads to fill all the US residency positions.
In general of course the Medical Guild objects to increased supply. Or for example allowing pharmacists to directly prescribe some drugs for say flu and cold, as in Europe.
The interstate sale of insurance requires some caveats or it will result in snake oil problems.
1. Say you are a New York citizen and purchase a Texas healthcare policy. The Texas insurance commissioner handles disputes between Texas insured and the carrier, not New York insureds and the Texas carrier. You, as a NY citizen, by the way, do not get to vote for the Texas insurance commissioner.
2. States set minimum benefits under health policies. This has good and bad points. Minimum benefits assure consumers that, in fact, they are buying health insurance, and not a policy of exclusions. (There is a long history on this issue.) But, there is a counterproblem: every medical specialty tries to have its practice area included under minimum benefits, leading to high mandates. So, you get the problem of snake oil if you don't regulate, and bloat if you do.
3. If there are interstate policies, what will happen is the same thing that happens in credit card regulation: low population states will compete by lowering standards of regulation and consumer protection to get more premiums in their state, and get a premium tax. Expect ND or NC, or some other jurisdiction offering really bad policies to be sold to the uninformed.
4. People who have looked at this issue in life and health have favored a national charter or national regulation or minimum national standards with states obligated to represent their citizens under policies issued in other states. But, the proposals made by some have noticeably left this stuff out, making interstate sales a bad option unless corrected.
By the way, pay for performance is great. But, it is funny that when Obama offers it, the criticism rolls, but when Pawlenty proposes it, there is a handclap.
Either way, it is a good idea.
Anything that makes Obama shudder at the thought of LESS government intrusion into health care ought to be worth implementing.
W.H.B,
Um...most folks don't know enough about cars to judge them either. So they read Car&Driver or Motor Trend or Consumer Reports, and they ask their gearhead cousin and that cute ecofreak girl at the office for advice, and they probably couldn't stop their hypocondriac, high-school buddy from telling them about safety ratings.
And, somehow, they work it out pretty well. Not perfectly, not even always great, but good enough.
Why would you expect less in something as viscerally engaging a medicine?
These five suggestions make sense to me. They're definitely better than Obamacare.
My suggestions:
1) Allow purchase of health insurance across state lines
2) Eliminate the unfair tax deduction for employer-provided health insurance
3) Allow balance billing for Medicare/Medicaid
4) Allow medical underwriting to incentivize healthy living
5) Increase tax benefits of health savings accounts
fun-
pay for performance is a bad idea so long as it's government determining what good and bad performance is.
a federal performance monitoring agency is just another detached bureaucracy dispensing taxpayer largess.
the fact that we even need to talk about adding pay for performance means we have not addressed the real issue of consumers not facing prices.
ever other market gets pay for performance built in for free. you don't need a government agency to determine what your auto mechanic gets paid. you work it out yourself and you have incentive to do so. you'll stop going to a guy who does unneeded work, charges too much, takes too long, or doesn't get it right the first time.
bingo. pay for performance.
anybody actually including it in their plan like we somehow need to government to do it or it won't happen is telling you that their plan sucks.
Rather than eliminating the "unfair" tax deduction for employer paid health insurance, it should be extended to the self-employed and to individuals who purchase their own health insurance.
I would add another way to reform and that is on-line health records. Filling out paperwork for the patient and the provider is a big time and money expense. Also the amount of tests and procedures would be lessened because records show they are already completed with results.
A complicated area is emergency service and in follow-up recoveery care. I would want the best for myself and not have to shop around at the time (duh). A best practices protocol would be best if it offered the best chance for survival. The high cost of random procedures and supplies is troubling and might be taken down under best practice protocols.
I hope that people are kidding about "pay for performance." To me, that means paying for the results you want. We do that at my company, but our product is something you can see (I used to say touch, but now it's electronic). You get the thing or you don't. In medicine, you will not necessarily get the outcome you want. Medicine is art, not science. We use science to improve the practice of the art, but no one can guarantee results. "Pay for performance" is NOT the way to go. It will result in MORE lawsuits and fewer practitioners which will lead to higher costs.
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Thank you Morganovich. I think you have hit every nail on the head regaeding pay for performance. Whoever pays gets to define performance.
Welliscent Health Blog, why do you feel that most of us are too stupid to make healthcare choices on our own? How elitest!
"If patients are to make good decisions they would need an independent rating service to assess the providers. They should not be left to themselves."
The arrogance of this statement is mind boggling. Is this "independent rating agency" you recommend one more government bureaucracy staffed by people who don't know me, but somehow know what is best for me? No thank you. I have more of these than I need now.
I would start off by doing a good long critique of Massachusetts.
And, Switzerland.
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