BrianGarst.com

There’s waste in health care!

Too much cancer screening, too many heart tests, too many cesarean sections. A spate of recent reports suggest that too many Americans—maybe even President Barack Obama—are being overtreated.

Is it doctors practicing defensive medicine? Or are patients so accustomed to a culture of medical technology that they insist on extensive tests and treatments?

A combination of both is at work, but now new evidence and guidelines are recommending a step back and more thorough doctor-patient conversations about risks and benefits.

Defensive medicine, which is a response to so many frivolous lawsuits, is no doubt part of it.  But the problems are deeper and systemic.

The third-party payer system is the biggest contributor.  When patients are insulated from the costs of treatments, they have less incentive to ensure their necessity. Overconsumption is guaranteed under such a setup.

Some will use this and put forth the wrong solution.  “We need greater government involvement,” they’ll say, “to set guidelines and provide information on what treatments are really needed.”  This approach is destined to fail.  Government processes are necessarily political, and any attempt by government to create such guidelines will only encourage the stakeholders – manufacturers of medical equipment, drug companies and doctors – to spend more time lobbying government to ensure the guidelines benefit them.  Who will lobby for patients?

The better solution is to bring the patient back into the equation.  Phase out the third-party payer system by reforming Medicare, eliminating tax distortions that give employer provided insurance an advantage of individual coverage, and remove the onerous regulations that prevent more innovative care models from emerging.

We also have to realize that there will always be a certain percentage of treatments that are not strictly necessary.  It is the nature of the industry that it’s not always clear what works and what does not.  The important thing is to have a system where each agent – patient, doctor and insurance – has appropriate incentive to examine the suitability of both the quality and quantity of care provided.