Is there a hole in the heart of U.S. healthcare cost control?

It's a given that the sine qua non of providing universal access to quality healthcare is effective cost control. That's especially true in the United States, where healthcare costs 50% more per capita than in the next most expensive country, Switzerland, and more than twice the OECD average, notwithstanding the fact that the U.S. is the only wealthy country that does not insure all its citizens.

This high-cost starting point is the Affordable Care Act's pre-existing condition, the reality underlying bitter complaints about high premiums for the unsubsidized and narrow networks in exchange plans.  As Yogi Berra might say: if you want to make healthcare affordable to all, healthcare has to be affordable. To be successful, the ACA has to bend the cost curve -- or at least, maintain the windfall spending growth slowdown that seems to have taken hold over the last ten years -- at the same time it's expanding access.

The ACA's main efforts to control costs fall broadly into two categories. First, in Medicare payments, a series of pilot programs seek to move healthcare providers away from fee-for-service, via per-patient and per-episode payments and incentives to reduce costs and meet quality benchmarks. Second, in the exchanges, competition and price pressure induce insurers to reduce costs by a) putting a good deal of the cost burden on patients, via high deductibles and co-insurance payments, and b) offering narrow networks -- that is, limiting covered doctors and hospitals to those who meet the insurer's price (and, theoretically, quality) demands. In the broad category of putting price pressure on payers of all kinds also belongs the ACA's excise tax on the most expensive employer-sponsored plans, which is driving employers too toward both narrow networks and more cost-shifting to employees.

Cost control without cost controls?

Atul Gawande has expressed the hope that by seeding myriad experiments, the ACA will grow a few cost-saving sequoias  -- as an analogous outpouring of experiments and demonstration projects spurred by the U.S. Department of Agriculture revolutionized food production and drove down food prices in the early 20th Century.

I hope Gawande is right. He may be. But it might also be argued that all this experimentation is "designing around" the one cost control element that works in every other wealthy and is lacking in the U.S.: uniform pricing per procedure, imposed or at least overseen by government. (It's "overseen" in Switzerland, where hospital rates in each canton are negotiated by hospitals and insurers acting collectively, subject to approval by the cantonal government. Physicians are paid on a national fee-for-service scale.) Without that core shift in leverage away from healthcare providers, reforms are balkanized and incentives may fly in various directions.

Guess what happens when you tie teachers' (and administrators') pay directly to student test scores?

This:

Ms. Parks admitted to Mr. Hyde that she was one of seven teachers — nicknamed “the chosen” — who sat in a locked windowless room every afternoon during the week of state testing, raising students’ scores by erasing wrong answers and making them right. She then agreed to wear a hidden electronic wire to school, and for weeks she secretly recorded the conversations of her fellow teachers for Mr. Hyde. 

In the two and a half years since, the state’s investigation reached from Ms. Parks’s third-grade classroom all the way to the district superintendent at the time, Beverly L. Hall, who was one of 35 Atlanta educators indicted Friday by a Fulton County grand jury. 

Move over, Michelle Rhee (test cheating was also apparently rife in the D.C. schools under her tenure).  So often it's the icons of toughness, the lionized apparent miracle workers who create a culture of fear and greed that breeds corruption:

The Wire's David Simon: "Statistics will always lie" when someone's job is at stake

Via The Dish, an interview with Bill Moyers in which Wire creator David Simon highlights the perverse effect of performance incentives:

One of the themes of The Wire really was that statistics will always lie. Statistics can be made to say anything. You show me anything that depicts institutional progress in America: school test scores, crime stats, arrest reports, anything that a politician can run on, anything that somebody can get a promotion on, and as soon as you invent that statistical category, fifty people in that institution will be at work trying to figure out a way to make it look as if progress is actually occurring when actually no progress is. I mean, our entire economic structure fell behind the idea that these mortgage-backed securities were actually valuable, and they had absolutely no value. They were toxic. And yet they were being traded and being hurled about, because somebody could make some short-term profit. In the same way that a police commissioner or a deputy commissioner can get promoted, and a major can become a colonel, and an assistant school superintendent can become a school superintendent, if they make it look like the kids are learning and that they’re solving crime. That was a front-row seat for me as a reporter, getting to figure out how once they got done with them the crime stats actually didn’t represent anything.

I can't help but note that when the Michelle Rhee testing scandal broke in late March, I used an episode of The Wire to illustrate Campbell's Law -- the principle that incentives corrupt:

Pay for performance, Baltimore police style

Dana Goldstein cites a a social science maxim to explain powerful evidence that former D.C.schools Chancellor  Michelle Rhee's heavy incentives for improved test score results led to widespread cheating:

In the social sciences, there is an oft-repeated maxim called Campbell’s Law, named after Donald Campbell, a psychologist who studied human creativity. Campbell’s Law states that incentives corrupt. In other words, the more punishments and rewards—such as merit pay—are associated with the results of any given test, the more likely it is that the test’s results will be rendered meaningless, either through outright cheating or through teaching to the test in a way that narrows the curriculum and renders real learning obsolete.

There's a dramatic illustration of this principle at work (with negative incentives) in The Wire, the HBO series about Baltimore detectives' endless and mainly fruitless struggles against the drug trade (Season 3, episode 1, Time after Time).  A city councilman who's trying to get the police commissioner to dance to his tune flays him and the mayor at a public meeting for high crime stats. Under pressure from the mayor, the commissioner promises to reduce felonies by 5% and keep the year's murder count under 275. The commissioner and deputy commissioner in turn lay the wood to their subordinates. Here's Rawls, the dickish deputy (my rough transcript):

You will reduce the felonies by 5% or more or...let no man come back alive.  In addition, we will hold this year's murders to 275 or less...[there's] no excuse I will accept. I don't care how you do it. Just fuckin' do it.