Friday, September 04, 2009

Of venal dentists and patients' incentives

Don't get my father, 81, started on the incompetence and venality of (some) dentists. Troubled with bad teeth -- most of which he's managed to keep -- all his life, he's had several bouts of long, painful, expensive bridge work, periodontry, implants, etc. He's learned always to get two or three opinions. He loves to tell of the guy who told him he needed $4,000 worth of bridge work -- which another dentist told him was totally unnecessary, proving it with effective, much more limited treatment.

It occurs to me that dentists are likely no more venal than doctors (or members of any other profession). The difference is that since most of us don't have dental insurance, we know how much dental treatments will cost, if we care to ask. While I disagree with health care free marketeer David Goldhill's solutions to our health care crisis (ultra-high deductible insurance for all; HSAs for all; substantial services paid out of pocket), he has a point that we're apt to spend like drunken soldiers on health care when doctors tell us to, because we don't know the cost and don't bear much of it -- if we have decent coverage.

It stands to reason that many specialists, e.g., surgeons, whether out of unabashed "entrepreneurialism" or a natural tendency to believe that most people suffering from the ailments they treat will benefit from the very expensive treatments they offer, are as apt to recommend unnecessary expensive treatment as the dentist villain of my father's tale. When the procedure is high risk, many patients are likely to seek at least a second opinion. When it's not -- when the procedures are diagnostic, or hold out what seems a reasonable chance of quick relief from pain, or seem likely to eliminate what may be a very low-odds but deadly risk -- most people will go for it.

It is quite difficult to figure out the appropriate mechanisms and agency and incentives for cost-benefit analysis. Much of our problem is cultural. In a paper (fee required) on the causes of Americans' "overutilization" of medical services, Ezekiel Emanuel and Victor Fuchs identified 7 factors -- "4 related to physicians and 3 related to patients." Doctors' factors, according to Emanuel and Fuchs, are 1) training that places a premium on "enumerating all possible diagnoses and tests that would confirm or exclude them"; 2) fee-for-service, which creates incentives for overtreatment; 3) pharmaceutical marketing to doctors; and 4) medical malpractice laws. On the patient side, there is 1) the American cultural tendency "to embrace technologic fixes for problems"; 2) direct-to-consumer pharmaceutical marketing ; and 3) third-party payment for services, as outlined in this post.

Changing doctors' incentives has been the focal point of most discussion of health care cost containment. But changing the maximalist culture that patients have imbibed -- which starts by at least making costs transparent -- must also be part of the mix. No politician is going to tell the American people that. "It's your fault too" has never been a winning political message -- except to a minority, when a majority is calculated to overhear.

UPDATE: Ezra Klein, referring to the employer tax break for health care that produced our current system and so hides their cost of health care from most of us, points a way to change patient incentives:
I would like to see the tax preferences eliminated, and I would like to see every worker get the money their employer pays for their health care put back into their wages. Then I would like them to purchase health insurance on their own, so they see the full cost of it, and can decide whether they're willing to support more radical efforts to bring those costs down, or whether they're willing to accept more care management in order to save some money. This is, basically, how the Wyden-Bennett bill works, and it's why it's such a gamechanger. It's also why it has so little legislative support: It tries to solve the full problem when people only feel a small fraction of the problem.
In agreement with Klein and contra Goldhill, I would add that it makes more sense to induce people to give up a degree of autonomy over treatment courses in advance than to force each of us to factor in cost when we're up against major treatment decisions, such as whether to undergo bypass surgery.

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