Questioning Simplistic Answers In Health Care Policy

We often hear simplistic explanations as to why health care is so expensive. Conservatives dwell on malpractice which, while reform would be desirable, is only responsible for a small portion of health care costs. Others argue that the problem is with unnecessary procedures. While I don’t doubt that there are some unnecessary procedures performed, I doubt this is the real answer. I see far more examples of under-utilization as many people either do not have access to care or their physician fails to provide all recommended care for chronic diseases.

Mike the Mad Biologist shares this view, questioning the study upon the belief that the problem is unnecessary procedures in some areas:

First, unnecessary procedures do not appear to be driving cost differences. What is driving cost differences? Price gouging. That is, certain hospital systems and medical practices have de facto monopolies, either through consumer loyality or market share. For instance, in 2000, Tufts Health Insurance (this is not associated with the university), in response to Partners HealthCare’ (which includes the Harvard hospitals) demands for much higher reimbursement rates, announced they would no longer include these hospitals. After a day, Tufts backed down. This wasn’t about unnecessary care: Partners simply wanted to charge more for the same care. This type of thing is still happening: now Tufts Hospitals is butting heads with Blue Cross.

The second problem, as I’ve discussed before, is that the claims of unnecessary procedures, to a considerable extent, are overhyped, at least in terms of costs*. That assumption is based on an analysis that conflated high-income low-need patients with low-income high-need patients. In other words, the supposed evidence that regional disparities in costs reflect unnecessary procedures didn’t take into account the role of poverty.

Sure, we should not provide unnecessary care. But much of the problem seems to revolve around anti-trust and poverty. We need to fix those things.

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