What’s the market solution?

I find describing my political leanings difficult sometimes.  An easy answer would probably be “liberal,” since I favor a pretty robust social safety net, and am definitely to the left on most social issues.  That said, I am aware of liberalism’s more corrosive effects, and have a healthy degree of respect for the traditions and institutions that have stabilized society across the centuries.  There are little pools of conservatism burbling away inside me.

And of course I have my libertarian leanings, too.  I am wary of undue government power, and would rather it not intervene in a problem if some other entity can do so, or if the problem is not sufficiently pressing as to warrant intervention at all.  In balancing liberty against equality and order, I am generally in favor of liberty as the prevailing value (while nonetheless recognizing that a certain degree of equality and order are necessary for a flourishing society).  Maybe I’ve just been hanging around the League too long, but if I were to place myself on some kind of political grid, I’d be somewhere in the area where liberalism and libertarianism admix.

So when I read this story the other day, I found myself wondering if there is any solution beyond government regulation to keep the problems described from recurring.

HCA, the largest for-profit hospital chain in the United States with 163 facilities, had uncovered evidence as far back as 2002 and as recently as late 2010 showing that some cardiologists at several of its hospitals in Florida were unable to justify many of the procedures they were performing. Those hospitals included the Cedars Medical Center in Miami, which the company no longer owns, and the Regional Medical Center Bayonet Point. In some cases, the doctors made misleading statements in medical records that made it appear the procedures were necessary, according to internal reports.

Questions about the necessity of medical procedures — especially in the realm of cardiology — are not uncommon. None of the internal documents reviewed calculate just how many such procedures there were or how many patients might have died or been injured as a result. But the documents suggest that the problems at HCA went beyond a rogue doctor or two.

This issue was raised in the comments following my most recent post, and illustrated with unfortunate precision in this case.  What to do about physicians whose financial interests compel them to order tests and interventions for their patients that their patients could well do without?  I don’t know (and suspect it would be nigh unto impossible to really pin down) how much these ethically suspect doctor’s orders contribute to the burgeoning healthcare costs in this country, but even if it is a relatively small proportion that doesn’t make it any more right.  Not only is it taking egregious liberties with the physician-patient relationship and exploiting the trust invested in medical providers, it (as the article makes clear) exposes some patients to potential or actual physical harm.

Now, I happen to feel strongly enough about this issue that I, as a physician, would accept a limit on my liberty in the form of a ban on certain kinds of ownership arrangements and incentives for medical providers.  (In my case this limit is likely to remain abstract, as I have no intention in entering into the kind of arrangement that would fall under such a ban.)  Where that ban would fall is a hard question to answer, and there has to be some accommodation for certain kinds of medical providers having their own facilities to perform certain procedures without undue inconvenience to their patients and themselves.  But I happen to think some kind of limit on the financial rewards a provider can enjoy for ordering tests and interventions is appropriate, and removes or mitigates the incentive to order them for reasons other than the patient’s legitimate medical needs.

Here is where you paste the “liberal” label on me and shake your head in dismay.

But is there a non-governmental solution to this?  Is the problem even sufficiently grave as to warrant some kind of preventive measure at all?  (I plainly think so, but perhaps you disagree.)  If there happen to be any stray libertarians lurking about who would like to suggest how the market might better handle this problem, I would be sincerely interested in hearing an alternate view.

For my part, I don’t see how a market solution exists.  Ideally, patients are fully informed about the risks and benefits of any recommended procedure.  But the knowledge differential between a physician and a patient is such that at a certain point almost all patients who are not medical providers themselves have to trust that their doctor is giving them the best advice with their welfare the foremost consideration.  Being able to entrust someone with more training than you with diagnosing and treating your illnesses is why we bother with doctors in the first place.  I don’t see how there is a mechanism within the free market alone that would correct the potential for exploitation by the unscrupulous few.

But that’s why I hang around here, to learn new things.  To me the need for some kind of regulation is self-evident.  Those of you who balk at such things, what alternative would you propose?  Or is an alternative even necessary?

Russell Saunders

Russell Saunders is the ridiculously flimsy pseudonym of a pediatrician in New England. He has a husband, three sons, daughter, cat and dog, though not in that order. He enjoys reading, running and cooking. He can be contacted at blindeddoc using his Gmail account. Twitter types can follow him @russellsaunder1.


  1. This is a genuinely tough situation. Overconsumption (or for that matter over prescription) is a genuine problem. I am under no illusions that fee for service is not a contributing factor. One problem that I have mentioned that contributes to this is that the marginal cost for any additional treamtent is $0 under american style health insurance. Once you pay your premium, you’re basically wasting your money if you don’t go for the most cutting edge and expensive treatment your insurance will cover. But heart disease is the kind of thing that is still covered in a high deductible plan, so changing the payment model may not necessarily change things there. One alternative is to have insurance cover only a certain amount of spending. i.e. for a lower premium the company will only cover say $10000 of treatment a year or something. This would cause people to think twice about going for a treatment. Some of this is cultural. American patients may feel entitled to the very best of treatment and want to feel that their doctors are doing everything humanly possible to make them better.* The lack of transparency in princing as well as high barriers to entry** also pose problems

    My understanding is that the situation is stuck in a particularly bad equilibrium. Lack of transparency and barriers to entry already prevent new entrants from competing on costs and efficiency. Add to this, the fact that the extremely high costs and high expectations make patients quite scared to be anything but fully covered. So, those who can, purchace full coverage and then subsequently over consume thus driving up premiums. Oh, and the barriers to entry are not only difficult to get rid of, it is not necessarily clear that it is entirely desireable to do so. Even if a private certification system does the job insted of the more coercive AMA, it will have little effect on the number of available competent practitioners. The AMA already has a low false positive and false negative rate when it comes to identifying minimally competent practitioners.***

    That is just on the demand side. On the supply side, aside fromt he barriers to entry, fee for service can provide fairly perverse incentives in an environment where doctors occupy a position of expertise where deference is owed. Fee for service works fairly well in GP clinics where people more or less choose to go there or not. Hospitalisation is a different matter. Hospital visits are more governed by necessity (at least a felt necessity) than GP clinics. I’m really hesitant, however, to mandate that all doctors work in salaried positions. In Singapore, what is done is that students can take a loan from the government to pay for their very expensive medical school, but in return, must either work off their debt in a salaried position in a public sector hospital (takes about 5 years to work off the loan), or pay it back in cash. Many of the doctors who work in salaried positions stay on in the public sector because 1) they already have a career in the hospital there andalso 2) There is an ethos of service. i.e. even if many doctors eventually get tired and move to the private sector, many still stay on. And the ones who stay on are not necssarily less skilled or anything.

    This latter system is better than a blanket bann of fee for service in hospitals in that it is less heavy handed and exists on a kind of contractual and thus voluntary basis. Yet it is able to generate a significant number of doctors who work longer hours for a lower salary than in the private sector. The question is, how do we implement this latter system in the US where the are few if any public sector hospitals?

    *Admittedly, this is speculation and your opinion on this is useful. But, at least part of a lot of American furore over the notion of rationing could be explained by such an attitude.

    **Medical licensing provides a barrier to entry, but I differ from fellow libertarians that we should abolish medical licensing. It seems that there is a clear cut case of medical fraud when people sell you something claiming that it is medical treatment when it is no such thing. If I sell you something claiming that it is medical treatment when it is in fact, not, I am defrauding you. The AMA whatever its imperfections has a role to play in preventing fraud of this sort. Any attempts to do so are going to create barriers to entry. Also, the biggest barrier to entry is medical school and residency. And the former according to my parents, sister and sister-in-law is basically necessary in order to practice medicine safely and effectively. I have heard horror stories about mid-wives. The latest being my cousin in australia who was examined, told she was not in labour, and when she went to the toilet, promptly gave birth there.

    ***I am open to the possibility that a private certification system can do better by identifying all these miscreant cardiologists. But if miscreancy is so widespread, it may very well masquerade itself as standard practice. But if drives up the business of the few cardiologists who are good, I can see how a private certification system would be better than the AMA.But, in order to work there would have to be a certain critical mass of the good ones in every state.

    • I’m only midway through your comment (and thank you for going to the trouble to write such a thorough and thoughtful response), but I wanted to mention that the AMA does not have the certifying, licensing or regulatory powers that you seem to think it does. Certification comes through the American Board of Medical Specialties and the various member boards (eg. the American Board of Pediatrics). Licensing and regulation are done at the state level by the various licensing authorities. The AMA is, for all intents and purposes, an advocacy group that has no power over individual physicians.

    • My first reaction to reading your comment is to put a stone on the “liberal” side of my “liberal-libertarian” balance. I am absolutely in favor of licensing for medical professionals. The costs to credulous patients who are left to their own devices when choosing care absent licensure are borne in their bodies, and who knows how many people need to be harmed before an incompetent or unscrupulous provider is caught out? A stringent set of requirements to meet before you are allowed to dispense potentially harmful or fatal remedies to patients seems an unambiguous good to me.

      As with my comment to Jaybird below, the problem I see in what you’re suggesting is that it conflates competence and probity. Certification and licensure are means of assuring the former. Do I think there is room for more competition in the certification process? Sure. Get me in a room with a few cold beverages, and I will happily grouse at length about the tedious and onerous process of ongoing certification with the ABP. (I’m with Rand Paul on at least one issue.) But the unethical physicians in this story were perfectly competent, so far as I can tell. Modifying entry into the field doesn’t help once people choose the manipulate the system once they’ve arrived.

    • As if 10,000 would cover more than two sprained ankles! (and, that’s just diagnostics, not physical therapy).

      People by and large DON’T ask for the best and biggest treatment for whatever ails them. They ask for something that will work, and preferably fast.

      I didn’t ask for an MRI for my sprained ankle… didn’t ask for physical therapy either (was kinda surprised that a doctor would prescribe that, actually, other than for the aged).

      And, believe it or NOT, the most costly solutions to problems happen when you let them go for a while… I don’t think it’s mostly a “doctors don’t know how expensive things are” but a “oh god I can’t afford it” until you “REALLY” need it.

      In short, I don’t think it’s the insured people who are driving up care by asking for too much of it. I think it’s the uninsured, who are delaying care — skipping meds, etc, because they’re in relatively dire straights.

      • As if 10,000 would cover more than two sprained ankles! (and, that’s just diagnostics, not physical therapy

        You see I could get my sprained ankle treated for $300 tops in Singapore. (if I estimate correctly). The X ray would be about $100 odd and the hospital visit + treatment (dressing + pain medication) could cost another $150. And that is at full price. Subsidised patients pay less.

        So, even if I doubled the price to reflect the cost in the private sector (which tends to be more expensive) and then and then twice again for the second ankle, I get far less than 10000. Something else has to explain the massive gap in costs. One way to explain is that more high end x-ray machines are used. Maybe more diagnostic tests are run? Clearly something is off!

          • What? All I did was read my bill. I’d cite that, but HIPAA regs mean you wouldn’t be able to see it…

        • Something is off, that’s for sure. I’ve been spending the last couple weeks calculating damages from auto accidents, and it’s pretty typical to spend several thousand on a month or two of rehab, several thousand on cortical injections, or, and this is my personal favorite, $1800 on a single MRI.

          • I know what the doc wanted to bill me.
            A few notes:
            Cortical injections are done by nurses, not doctors I believe. That decreases the cost dramatically

          • … continuing…
            yeah, MRIs are insanely expensive. Even with insurance I think they cost $75 as a copay.

        • Triple x-rays — doc thought for sure it was broken (and feet are hard to diagnose in terms of finding broken bones) — the amount of swollenness . So let’s count that as $400 in Singapore (discounting the “visit” cost, because all i did was see my PCP — no meds, no dressing).

          As I went to one of the top ten hospitals in the country for the xrays (it was downstairs from my doc’s practice), i can indeed understand a high end xray machine being used. So, maybe, if we’re being charitable, double the costs. $700 in Singapore, $1400 in the United States.

          Note: I do not at this time recall the discount for “being uninsured” (it was NOT half, nor close to half, but there was one).

          Now, assuming a second sprained ankle, we get to about $3000. These are, I repeat, minor injuries. Nothing like an actual debilitation.

          Shall we take a different example, then? Phexophenadine — something needed for life-threatening allergic loads. That (used to, until they made it over the counter) cost $3600 a year.

          I guess what I’m trying to point out is: $10,000 is a lot of money in Singapore, but it’s really not a lot around here.

          • Could you get to $10,000 for two sprained ankles? I guess maybe, under some particularly weird circumstances. But that number is markedly atypical, even at the nation’s “best” hospitals.

          • I guess what I’m trying to point out is: $10,000 is a lot of money in Singapore, but it’s really not a lot around here

            Onlly when it is convenient for your rhetorical purposes. I distinctly remember a previous conversation where you said that not having $1000 in your account wasn’t a sign of poverty or overspending, but where I said that $1000 was easily had by most from the lower middle class and above in Singapore. Also, singapore has a higher gnp per capita (adjusted for PPP) than the US. So, I imagine that $10K is going to be slightly more valuable in the US than in Singapore. The thing is, there is something really screwed up about the ihealthcare market in the USand a whole bad list of incentives. You cannot solve your healthcare problem unless you recognise exactly what the problem is.

          • Murali,
            I consider the “not having $1,000” in your account to be a symptom of a very sick financial structure. I find it alarming, and I wish I knew how to change it. Bernanke’s right when he asks for people to learn about fiscal matters in school.

            But, hell, let’s roll with it. We can do studies (and have!) on teh difference between paying in cash and paying on credit. Basically, people’s brain processing is very different about buying things on credit than with cash.

            Am I saying that Singapore’s health system is unapplicable here? absolutely not. But can we at least be aware of the factors that WILL dilute people’s incentives?

            (and I meant $10000 being a lot of money in terms of what health care it would cover, not a lot of money in general. your point is indeed well taken on Singapore’s private fiscal health versus America’s. Apologies for the misunderstanding).

            There are many things really screwed up about the healthcare market, and multiple ways to fix them. Dunno what’s best.

    • One problem that I have mentioned that contributes to this is that the marginal cost for any additional treamtent is $0 under american style health insurance.

      Really, it isn’t. I could show you credit card statements to prove that.

      • Unless your credit card statement shows bills for things not covered in the insurance, I don’t see how your credit card bill can show that the marginal cost is non-zero

        • $75 for an MRI
          $30 for an Xray
          $75 for an ER visit
          $20 for a doctor visit
          $40 for a specialist visit

        • Not covered *fully*, which makes the marginal rate non-zero. And that’s the norm, not the exception.

          • oh okay. so there is a small co-pay for various treatments which give even covered treatments a non-zero cost?

          • Sometimes zero, sometimes a copay, sometimes a percentage. It can sometimes require two or three calls to find out what the copay is, or what the percentage is. One of the biproducts of the opacity and complexity of our system is that rather than the percentage or copay encouraging us to be thrifty, we kind of throw our hands in the air and wait to get the bill.

          • One point, though: the co-pays tend to be small (no more than $50 at the outside), but the total cost percentage of the whole that isn’t covered can easily go well into five figures. Don’t think that American-style insurance means only minor exceptions to everything being free.

          • I’ll second Will’s point, and add that the opacity extends to even figuring out what procedures are covered and which providers are in-network. For example, I’ve recently moved (so my insurance company isn’t based in the state in which I live), and had an eye problem last year. I wanted to know what opthalmologists were in-network before I went to get the problem looked at, and discovered that not only could my insurance company not give me a list of in-network specialists in my area, but whether or not the procedure was covered or not depended upon how my eye problem was diagnosed. So I had to make calls to individual providers all over town asking them if they were in network, and even then I wound up going to my appointment without any way of knowing whether or not the care I was getting would be covered at all, much less what percentage I would be stuck paying if it was. It’s a system in which consumers get stuck with out of pocket costs all the time, but the relationship between those costs and the care provided is so complex that it’s impossible to predict with any precision what you will or will not pay.

    • A big part of my skepticism about this approach stems from the fact that I doubt that the demand curves for medical services behave the way demand curves are supposed to behave. While there are types of services where consumers will make decisions based upon price, “almost as good, but lots cheaper” is not a winning sales pitch for, say, a brain surgeon or an oncologist. If anything, high rates might serve to signal to patients that provider x is “the best” rather than scaring them away. When you combine this with how thoroughly non-transparent medical pricing is, so that comparison shopping and cost-benefit analysis are very difficult, I don’t have a lot of faith in the value of cost signals functioning well at the retail level.

      And as for policy caps, that just defeats the purp0se of insurance. If a cap is high enough to protect people from the cost of an acute illness or injury, then it’s far too high to limit spending on routine care.

      • If anything, high rates might serve to signal to patients that provider x is “the best” rather than scaring them away.

        It gets even worse than that. I read about a study once where they gave one group of patients a pain reliever (or something), telling them that it was a generic that cost $0.10/pill. Then they gave another group the exact same pills telling them it was an experimental drug costing $10.00/pill (or something like that, I forget the exact numbers). The results were that the patients receiving the “more expensive” medicine actually had better clinical results.

        It may all be the placebo affect (which no one really totally understands) but more expensive medicine may be objectively better because it’s more expensive and for no other reason.

        • Rod,
          actually– they did studies about worker safety that proved that “when someone is watching you” people got hurt less, even if the environment was actively degraded.

          Placebo effect ain’t just for medicine.

          Luckily, we’re starting to study the placebo effect. it’s vastly underestimated in its usefulness.

  2. Not that I want to derail this discussion into something about ideology, but my relative expertise on the topics you’ve raised here is far more on the ideology side than the medicine side, so I’ll just repeat what I said to Jason the other day: liberalism is a big space. Seems to me that if you support a robust safety net, come from the left on social issues, and are “wary of undue government power”, that makes you a liberal. I guess other folks disagree, but someone has to build a non-statist left.

  3. When I think about regulation, I just wonder what kind of regulation would work…

    Looking at the example of malfeasance on the part of the doctors in the story, it appears to go beyond marginal cases that might possibly justify the additional tests/treatment… but the story says “the doctors made misleading statements in medical records that made it appear the procedures were necessary”.

    I assume that we’re talking about stuff that Perfectly Ethical Doctors who know about these things could look at the records and say “yeah, you don’t send off for a test for the Dropsy when someone comes in complaining about arrhythmia. There is no reason to test for that.” (rather than “I’d only test for the Dropsy if I were at a complete loss… and it looks like the doctors had plenty of other avenues to explore first”)

    If it’s the former, you could have some sort of software that sends a red flag to *SOMEBODY* (the hospital Ombudsman or something) saying that we’re testing for stuff that makes no sense… and then they could call Law Enforcement.

    Otherwise… how do we get this info to the cops? How can we get the police in the building and say “we have reason to believe that you’re making misleading statements”?

    • I think you’re jumping to the police a wee bit quickly, though I suspect you’re mainly doing so for rhetorical effect.

      The trouble in this case (and this speaks a bit to Murali’s comment above, which I really should reply to in more detail) is that a physician willing to falsify the record can make the tests and interventions ordered appear perfectly appropriate. One of the things about medicine is that there are many gray, gray areas where one person’s expertise and another’s might not go in quite the same direction, but either could look at the other’s and say “sure, I can see where she was going with that.” A clumsy fraud might be easy to spot (I enjoy your reference to “the Dropsy”), but a smart provider could sprinkle the right words in and make it seem perfectly reasonable to order that stent. Indeed, the malfeasance in the linked article may never have been discovered, or discovered much later, had one particular RN not spoken up.

      • and this is why we ought to recognize that one of our prime ways of fixing doctor negligence/malfeasance is nurses. Empowering them to call “da cops” as Jay put it, is good sense. Also, paying them enough that we get good folks working where we need them (certain there are some places where malfeasance happens more often than not)

      • Seems to me that this is the place where the need for strong, well-designed institutions is key. It makes me partial to the route Murali is headed, where we change the payment structure in a way that discourages doctors from doing any more than they have to in order to make the patient get better. Of course, I can imagine some downsides to that as well…

        • Indeed, but part of changing the payment structure would need to involve a close examination of those clinical relationships that reward doctors when they order more interventions. The question I want answered is “who examines?” If not the state, then whom?

          • Insurance Companies, I guess. Which may also be the hospitals (vertical integration) and the doctors’ employers. But there’s someone out there with a cost-interest in making sure people aren’t ordering more than is necessary.

          • Russ,
            Aren’t they empowered like that already? I’m certain there was “talk” about rating doctors, scoring them on how well they are dealing with their patients.

            And I do recall “incentives” about everyone washing their hands (n.b.: not sure if this was the insurance wing’s ballgame).

          • There’s a big difference between “able to reward good quality measures or withhold payments for questionable care” and “able to discipline physicians.” An insurance company can refuse to pay for something I order or perform, which sucks a bit. But that doesn’t stop me from turning around and doing it all over again to the next patient.

          • Russ,
            okay. not talking “discipline” (as in revoking licenses). am talking “no longer going to enroll you in our network” after a certain level of “oh god what are you doing” has happened.

      • Indeed, the malfeasance in the linked article may never have been discovered, or discovered much later, had one particular RN not spoken up.

        I’m pretty sure that they put all Doctors and RNs and such through at least one ethics class in order to get certified. If this is not the case in some states, I’d see it as appropriate to say that certification cannot be given to anyone who has not taken and passed the requisite number of ethics courses. I’d also make sure that the courses discuss the need for patient advocates and point out stuff like, well, this stuff here and say “The RN who called the review board did the right thing!”

        I’d have something in the law about removing the certification of people who do stuff like the stuff in the story.

        I’d also put some sort of whistleblower protection in the law so that the RN won’t find it difficult to get new employment if her old employer suddenly doesn’t have as many certified doctors as it once did and therefore doesn’t need quite as many RNs as it once did.

        I’d also ask whether your hospital, if it were hiring RNs, is more likely to give a job to someone who blew the whistle at his or her last job or less likely to give a job to that RN.

        • I’d also ask whether your hospital, if it were hiring RNs, is more likely to give a job to someone who blew the whistle at his or her last job or less likely to give a job to that RN.

          This might have come out wrong.

          I know that in some industries (certainly not mine!), there is a tendency to prefer people who know how to play ball to people who have demonstrated their willingness to blow the whistle. If the Medical field might have similar tendencies, this will have the result of fewer people willing to talk to the authorities about bad actors.

          This in itself creates a shield of sorts for the bad actors.

          • How exactly does one create that tendency? It certainly doesn’t seem plausible for patients to force the issue.

          • Create what tendency? The tendency to prefer people who are more loyal to the people who show up every day to some weird ideal about fairness/justice?

            I suspect that this tendency is pretty innate.

          • *nods* Jay’s right, and I’m certain you’d find it a lot more with some personality types than others. Some people value ideas, others value emotions — and the people that value stability? they do not want someone rocking the boat.

          • People will probably get tired of me mentioning his name at some point, but I find the case of Eric Scheffey (google him for more information) to be an extremely disturbing look at how these things can skate for really long periods of time. The HCA story is probably more instructive of a systemic problem, but Scheffey is instructive of how hard it can be to do something about a doctor everybody knows is doing wrong.

  4. If everybody gets to be insured, let the insurance company handle it. Allow them to have two levels of “we aren’t covering this” — one of which is “we don’t think this is terribly likely to work/cost-effective” and the other is “our panel of doctors says this is medically dangerous and unnecessary” (and incidentally, we may decline to keep said doctor in our network unless he provides evidence that we haven’t considered).

    (Why the two levels? Because some patients are bound to trust their doctors, and appeal. Let them know beforehand that a “medical second opinion” has already been sought. Fewer appeals, less headache.)

    It’s fun to bear in mind that insurance companies, by virtue of economies of scale, can do this — where an individual patient would not be able to do the same… (remember, the insurance company may be okay with a certain number of “medically unnecessary judgements”… doctors should be able to get some calls wrong, especially if they’re willing to fess up about it. In which case the necessary remediation is probably Training rather than Firing — and the insurance company ought to pay for part of it).

  5. One of the reasons to have independent professional organizations (in theory) is that they are disjoined from the political process.

    Not all political process, of course, but “the” one.

    When I hear stories like this in medicine or law (admittedly, they are thankfully rare) my immediate question is, “Why do these guys still have a license to practice medicine?”

    It appears clear to this layman that they’ve violated several pretty core ethical principles. At some point, if you want to have credibility as a union, or a certification board, or a civilian oversight organization of any sort… you have to have a Pete Rose rule.

    If an organization is perniciously unable to police the community which is its core charge, well… then… of *course* the government has to get involved, either through civil tort or criminal action.

    Now, of course, it is difficult for a organization, tasked with audit of a community… whose members are entirely also members of that community… to perform this duty (which is why we have separation of powers in the government itself). But this is an organizational problem with organizational methods of correction.

    The real question is, are doctors willing to do what it takes to have a real Board that will really come down on this sort of thing?

    • Just to clarify, the certification Boards are technically private entities. How and why they came to inhabit a monopoly on an indispensable part of a physician’s credentialing is beyond me. But there is no connection to the political process.

      How people get appointed to licensing boards varies from state to state, I believe. While I’m sure there is some tenuous connection to the political process, as far as I can see the boards are essentially apolitical.

      And these physicians should, without question, lose their licenses.

      • Sorry, Doc, if there was ambiguity there, but I meant that any organization is going to be susceptible to some sort of political force. Not political in the “government” sense, but in the “people interact with people” sense. Think about the zero tolerance post I put on the sidebar recently.

        So I can see small-p political forces at play in a professional organization, but that’s different from big-p Political forces at play.

  6. Question, mostly for Russell:

    My insurance statements have the following columns for each item:

    1. Price (a ridiculous number)
    2. Negotiated PPO price (a less ridiculous number)
    3. Covered amount (generally a large faction of 2, sometimes even 100%)
    4. Patient responsibility (2 minus 3)

    The impression this gives is “Thank God I have insurance, or I’d be paying 1.” Is that correct, or is 1 a nominal price that’s always discounted?

    • A legal perspective — 1 is at least sometimes there for purposes of asserting as large a lien as possible on a personal injury or workers’ compensation claim. It must be large to accomodate the risk that the plaintiff recovers nothing from the legal action.

    • Assuming most practices are like mine, 1 is our best guess at the most we can hope to collect. It is almost always discounted, with every single carrier (and often every single plan under a single carrier) paying out wildly different amounts for 2.

      It is a totally ludicrous system.

      • I’m on an 80/20 plan. I HATE it for exactly that reason. I get the bills, I can’t even make sense of them.

        Did I just get charged 20% of the first number? Or 20% of the smaller number? I can’t tell, because it’s 20% of SOME things but not OTHERS and my bill never makes it clear.

        And then there’s labs. Some are covered at 100%, some at 80%, some at 50%, some not at all — but there’s no list anywhere. Even the people on the phone can’t help me, they can just read me a vague paragraph off the plan’s own website.

        It seems designed to make me pay as much as possible while preventing me from knowing what the heck I’m paying for. And this is run through Cigna on behalf of a very, very, VERY large corporation.

        I know that a doctor’s visit with labs costs me a 30 dollar copay, then a 100+ dollar bill in the mail three weeks later. Just the visit? 30 plus a bill for 18 or 20 or so weeks later.

        And I can’t tell if I’m paying what I truly owe or not.

      • OK, so a medical practice is the moral equivalent of an oriental rug store. 🙂

        • Except that oriental rug stores charge pricing based on interest (and shmuckitude), not on ability to pay.
          Never play cards against a rug merchant. He can’t count cards, but he can read You.

          • At least with the rug merchant I can decide to buy the rug after a price is settled on.

    • note: when I quoted $5000 above, that’s probably 1), with a negotiated price of 10% off for being uninsured.
      (After I got all the insurance worked out, I think I owed about $50 or so…)

      • I really have a hard time believing that anyone would charge $5,000 for a sprained ankle. That is over an order of magnitude higher than what seems likely.

  7. There is a non-governmental solution: Pushback from the insurance companies. Patients hate it, of course. Insurance companies could also simply refuse to work with physicians who propose treatments or tests of dubious value too often. Patients hate that, too.

    Insurers have very obvious incentives to control costs. My impression is that they’ve been somewhat constrained in terms of their ability to do so, by a combination of political pressure and pushback from consumers.

    • Yeah. the end-result being that the easiest way to cut costs is to do so on a policy-basis rather than a treatment basis. Fail to cover a treatment, congress can make you cover it. It’s been harder to put an end to rescission (in part because there are legitimate reasons for it’s existence). They can also be skimpy on individual incidents, hoping that people won’t complain and if they do, blame someone in clerical when the news trucks arrive in your parking lot.

    • Patients only hate it when there’s no science behind it. If an insurance company can say “Our panel of doctors says this guy Sucks at treating diabetes, we recommend you switch to XYZ docs”… well, I’d be less pissed at any rate.

      Brandon, my impression is that insurance companies have done some really, really shitty things to “control costs” including “not covering anything over X dollar value, regardless of medical necessity”. This is why we got new laws — insurance companies behaving really really badly.

  8. I’m not sure I even understand the concept behind “implementing” a market-based solution. Isn’t the idea behind the market that whatever happens just… happens? Isn’t it just the blind emergent properties of countless individual decisions and transactions? Isn’t government how “we” do things? Isn’t a “market solution” just not having the government do anything about the problem? So how is advocating a market solution any different in practice from just not doing anything? And why would we expect things to just magically sort themselves out for the good if that hasn’t been the experience to date?

    • So I’m reading this to mean that you don’t think a market “solution” per se exists, and that the problem warrants some kind of intervention on the part of the government.

      • I’m asserting that when someone says “market solution” they really mean “government do nothing.” If the government does something, anything at all, then it’s not really a market solution, is it?

        Perhaps that’s being overly pedantic and what they really mean is something like “tinker minimally but strategically so as to alter the market dynamics in the right direction.”

    • Hi! I work in da biz. Write programs and such.
      Someone needs to do the detective work, if you want to catch people behaving badly.
      Advocating a “market based solution” is tantamount to saying “Hey, go build a business to do XYZ — there’s a sure market for it” (and I believe in this case there is).

      In practice, you can provide incentives for insurance companies that are doing something to reduce waste (possibly giving them extensions on the amount of time before they need to spend 85% of each dollar on medical care).

      • If a market opportunity exists, then why hasn’t it been exploited? This isn’t a new problem that just popped up last week, after all.

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