| I just read an excellent article in The New Yorker about cost drivers in health care. It's online - I highly recommend that every American go read it. The author is a surgeon, and the article is built around a simple fact: McAllen, Texas has the next-to-highest rate of per-capita health care spending in the country - only Miami is higher. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.
Why? The article is the story of the author's quest for the answer. He went to McAllen and interviewed physicians, hospital administrators, and even random McAllen residents. One by one, he eliminates explanations for McAllen's outlier status - an unusually unhealthy population, much better than average care, malpractice - by comparison with El Paso, just up the Rio Grande, or other facts (such as the near-zero rate of malpractice lawsuits since Texas capped pain-and-suffering payouts). El Paso, with similar demographics, population, and unemployment, has half the Medicare spending that McAllen does. What's finally left is medical overutilization, driven by fragmentation of the medical system and perverse incentives. As economists have often pointed out, we pay doctors for quantity, not quality. As they point out less often, we also pay them as individuals, rather than as members of a team working together for their patients.
But this part really makes the whole article. And this article is worth the price of the annual subscription, as far as I'm concerned Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coördination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.
That last point is key - we tend to fixate on insurance companies vs. public option vs. single payer as a silver bullet. But fixing who writes the check is only part of the problem. How the check is getting spent is the other. |
