Sunday, June 28, 2009


Eskimos supposedly have multiple words for snow, reflecting the need to be able to distinguish subtle but mportant differences in something so central to one's life. In a similar manner, people in the oil industry have different terms for various grades and products of petroleum, even if it is all just goop to the rest of us. Grandma may have a "lump," but the professional who makes a living evaluating such things must converse with colleagues using a vocabulary that parses lumps, masses, tumors, adenomas, carcinomas, hematomas, adenofibromas, etc. The simple principle seems to be that the more important a concept is to a group of people, the more that language must be able to convey the subleties and practical differences in that concept as it discussed in different contexts.

It is somewhat puzzling therefore, for a society that declared at its founding that we are possessed of certain unalienable rights, to be so limited in our discourse regarding the concept of rights. We seem to have gotten the principle exactly backward. Instead of being able to distinguish the variations and subtleties of individual rights so as to understand how they fit in our system of ordered liberty, we make the term less exact and less meaningful by attaching it to things that have little in common with those endowents recognized bythe founders, and as a result degrade the entire concept.

It is possible to argue strenuously that healhcare is a right, and to assert just as convincingly that it is not, by substituting the word for less politically advantageous, but more exact terms. The reform disciples who advocate for more government involvement in healthcare by invoking the term "rights" do not mean what they say, despite their inexact use of the term. They are not even referring to entitlements, rather they seek to create a social obligation based on political advantage and academic theory. Observing this obligation will ensure that healthcare will lose many of the attributes of a right.

It should instruct us that Thomas Jefferson limited the enumeration of unalienable rights in the Declaration to three, the last being the pursuit of happiness. This insight recognizes that the meaning of each person's life is an individual and unique attribute. Every person's life involves finding that subjective equilibrium between realtionships, risk, health, honor, work, family, curiosity, ambition, temptation, adventure, fear, etc. that makes life meaningful for that individual. So long as the individual's priorities do not harm his fellow citizens or impair those few purposes for which people form societies, a person should be allowed prioritize his interests in the way most meaningful for him. The malignant progressive on the other hand insists on prioritizing these interests for us. It is the conceit of the political busybody that insists that bodily risks must be minimized even if it means sacrificing those meaningful experiences that give rise to the risks. The blinkered planner presumes to decide what should be meaningful at the end of life, prioritizing hive-like efficiency above the interests of the individual patient. It is just as easy to see how this government meddling is a deprivation of rights as it is "protection" of something that the ideologue confuses with rights. If you want to smoke and drink and have promiscuous sex, because that is what turns your crank, that is your right. If you want your neighbors to pay the health-related costs of the consequences of your activities, you are not invoking rights, you are seeking an accommodation that relies on the interests and altruism of others. If you want to pay for your hip replacement because it is important to the way you want to live your life, that is responsibility, and you should have the right to do so. But if the government tells you that you cannot receive this treatment or that, or that you must be treated in a manner satisfactory to some distant functionary as a matter of "efficiency" or "fairness," healthcare is no longer a right, it is simply a vital resource that has been degraded by tyranny.

Monday, June 22, 2009


Some orphan issues in the health care debate:

1. Expertise. Ask any number of established physicians if they order more or fewer tests now than they did right after residency. Nearly all will answer "fewer." Ask the same regarding specialist consultations, and referrals to the emergency department and you likely will get the same answer. The underlying principle is that expertise is essential to cost-effective medicine, and cannot be replaced by giving glorified cook books to mid-level practitioners, imposing practice guidelines, or trying to shoehorn an experienced physician's decision-making into some mold fashioned by remote academics.

2. Providing more money for physicians to be primary care providers is not the same as paying them to take care of primary care problems. Just improving reimbursement for office visits and level of service provides no incentive to keep the primary care provider from referring the management of a COPD patient to a pulmonologist, fob off adjusting a heartfailure patient's diuretics on a cardiologist, or sending a diabetic with proteinuria off to the nephrologist.

3. "You will get to choose your doctor" masks a simple truth in the setting of universal care. You will only be able to choose those doctors that are willing to have you. Physicians, like any rational participant in an economic environment will do whatever is allowable to maximize their income as a function of effort. Some patients frankly are a pain in the neck and consume resources out of proportion to the acuity of their medical complaints. These patients will be competing for the physician's schedule with patients who have problems that are relatively straightforward, can be addressed in a limited amount of time, and provide satisfactory reimbursement. Expect your doctor to keep his schedule open for the dog bite or uncomplicated cellulitis, in preference to the person trying to make the eighth or ninth appointment for back pain in which "nothing works," or the fibromyalgia patient who is intolerant of all prescribed therapies.

4. The claim that health care consumes 17% of gross domestic product is a glaringly one-sided assertion. It only makes sense if you view the economy as something of a gigantic Easter-egg hunt, with a pre-determined GDP distributed around the yard, harvested by the people and then spent on items reflecting varying degrees of necessity and discretion. What percentage of GDP does manufacturing or legal services "consume?" An equally valid formulation would be that health care produces 17% of GDP. So then we have to ask, how much is too much? If less is spent on health care, will something else produce a compensatory amount of wealth? True, health care expenditures go up, but the expenditures go somewhere. How much will we spend on education, or transportation infrastructure or scientific research before we start complaining that it "consumes" too much of our economy?

Sunday, June 21, 2009


Part of the healthcare reform debate concerns the notion of value, getting something worthwhile for the amount of resources expended. It seems obvious that a desirable healthcare system would provide more value per amount of money expended. Some people even think that poor value is the key to the issue. In an article in the May 25, 2009 issue of National Review, Regina Herzlinger wrote: "In my view, the core problem is that U.S. health care is a bad value for the money spent." In the very next sentence she identifies the difficulty in relying on value as a basis for change: "Unfortunately, I cannot prove my view of the problem because, unlike virtually every other sector of our economy, health care has no real measure of productivity." This defines the difficulty in a nutshell. We really have no way of knowing just how good or bad things are, and no good way of knowing if we are making them better or worse.

Ms. Herzlinger is not alone in lamenting a straightforward measure of value. The lack of such has led the health care system to embrace poor subsitutes, such as adherence to treatment guidelines, comparison to arbitrary benchmarks and consensus guesses as to what constitutes quality. The real issue however is that Ms. Herlinger has slightly mis-stated the problem. It is not that there is no "real measure of productivity," it is that there is no generalizable measure of value from which to derive measures of quality. This conundrum is an inherent byproduct of the notion of quality.

People who attempt to derive consitent measures of quality are trying to square the value circle. There is no objective measure of value for the simple reason that value is not objective, it is inescapably subjective. A particular health care outcome, such as a cosmetic result or shortened recovery time may seem trivial to one patient but highly important to another. Some patients may not tolerate one form of therapy, or care about a particular side effect, while other's experience is the opposite. Some patients may be resigned to age related functional decline while their neighbor intends to go out kicking and screaming.

It is both a great strength and obvious point of criticism that our health care system accommodates the subjective appraisals of value and quality between individuals. The bureaucrat and social engineer is appalled by this situation of inaccessible metrics and seeks to remedy it by prescribing what constitutes value and quality. This makes the job of administration easier but, like many bureaucratic interventions, it defeats the purpose of reform by destroying one of the most desirable ends of healthcare in favor of one of the more insignificant means.

Sunday, June 14, 2009


A large impediment to the advocacy of free market principles in healthcare is the intuitive notion that such principles are incompatible with the idea that healthcare is a right. Healthcare is not a right, at least in the commonly used sense that it is a constitutional obligation of the government. No less an authority than the U.S. Supreme Court has already recognized this:

The Constitution imposes no obligation on the States to pay the pregnancy-related medical expenses of indigent women, or indeed to pay any of the medical expenses of indigents.
Maher v. Roe, 432 U.S. 464 (1977)

The postition that healthcare is a right is asserted dogmatically, but the assertion cannot withstand scrutiny. Until this misperception is dispelled, advocates of government financed healthcare will have a formidable, if disingenuous talking point, one that will be used to defend potentially disastrous alterations to our healthcare system.

But if healthcare is not a right, what is it? If I may wax Obamaesque for a moment: There are those that assert that healthcare is a right, and not a privilege. But I reject the false choice between those two extremes." In fact healthcare is neither a right (in the sense that someone is obligated to provide it for everyone), nor a privilege. It is instead a limited resource that must be provided and used judiciously. This is the key to understanding the healthcare "crisis." View healthcare as a limited service, and you can clearly see the differences in philosophies underlying the various healthcare proposals.

Wise use of resources requires stewards, and the debate at the moment reduces to who is the most appropriate steward for utilizing the impressive healthcare resources of the United States. There are four obvious candidates:

1.) The patient. This is the model that pure free marketers advocate, and in theory, the main stakeholder.
PROS: This is the human life that is actually affected by healthcare decisions. The patient has the most incentive to retain the quality of the healthcare system, and since he ultimately ends up paying for a portion of it in one way or another, he should be able to exert consumer pressure to keep prices down and service up.
CONS: Most patients do not have the sophistication, nor the objectivity to evaluate healthcare decisions. They are dependent on providers who guide them through the decisions between angioplasty and by-pass surgery, revascularization vs. amputation, expensive diagnostic studies vs. watchful waiting. Likewise they may be confused by the intricacies of determining actuarial risk among various pools, and not fully understand the subtleties of different insurance plans.

2.) Insurance companies. These are ideally thought of as the agents of the patients, serving to diffuse risk among appropriately described pools. The employer-provided model significantly limits the utility of insurance companies, by constraining the choice of individual patients, and injecting job-related uncertainties into the private insurance market.
PROS: Insurers can be objective. In a competetive market, they have an incentive to select out the most efficient aned efficacious therapies. Through their premium structure they can promote preventive and public health practices that lead to more efficient uses of limited healthcare resources. They can use their actuarial skills to adjust risks for arbitrarily sophisticated treatments.
CONS: The more regulated insurers become, the more their interests conflict with their policy holders. Publicly traded companies also must balance the interests of insureds and shareholders.

3.) Physicians. They are the most knowledgeable regarding the use of resources and the expected benefits to the patients. In theory, they are patient advocates.
PROS: Physicians have the best knowledge regarding the use of resources in a particular case. They are responsible for expending resources in a manner that benefits the patient's health. They interact with the patient and are exposed to the patient's concerns and anxieties. A large part of medical expenditures is the direct result of uncertainty reagarding the patient's care. The physician alone is charged with accommodating this uncertainty.
CONS: The present system imposes a multiplicity of conflicts of interests. The physicians financial interests sometimes enters into medical decision-making; the spectre of medical liability results in the waste of resources under the guise of "defensive medicine." Regulatory requirements, hospital medical staff rules, insurance panels, unreasonable family members of patients, and dwindling reimbursements all compete for the physician's decision-making attention.

4.) The government. The government brings two things to the financing of healthcare: coersion and other people's money.
PROS: They government can limit costs by diktat. It can force physicians, with criminal penalties if necessary, to conform to the ideologies and pet theories of the bureaucrats in charge of the system. It can confiscate property and money to pay for services.
CONS: Efficiency suffers whenever any system must simultaneously accommodate multiple competing interests. The government is far and away the institution most subject to this effect, and consequently will be the least efficient steward of healthcare services. This is a main reason why the government will have to ration, why waiting times will soar, why care will suffer, and why choices will diminish. The government will only be able to accommodate "good enough" care. Furthermore, the government may coerce people, but it cannot coerce the outcomes of the immutable forces that affect the production of goods and services. A fair market contains an intrinsic optimizing feature: competition. A prescriptive government defauting to command economy methods will eventually respond only to political concerns rather than individual patient care concerns. And obviously, the smartest people will not be running healthcare with the government in charge.

Taken together, the reforms most useful to the American healthcare system will: exclude the government from running anything; limit the conflicts of interests imposed on physicians, especially the tort liability system and mindless "guidelines" drafted by remote functionaries; allow the insurance industry to compete on the basis of efficiency and the values and preferences of their insureds, rather than the ideologies and parochial vanities of policy-makers; and allow patients to find those insurers that will help them get the services that they need and value in the most efficient ways possible.

Monday, June 01, 2009


8. There is no way to change the way that heathcare is financed without changing the way that medicine is practiced.

9. In order to slow the rate of increase of healthcare expenditures, it is necessary to increase efficiency. Efficiency is promoted by focus and degraded by attempts to accommodate multiple competing interests. For example, efficicency and cost effectiveness is impeded by HIPPA compliance. This is not to say that there may not be some independent argument validating HIPPA regulations, but it must be recognized that these regulations breed inefficiency and its associated costs. The more interests that are accommodated in the healthcare system, e.g. cost-effectiveness, access, liability for adverse outcomes, shorter waiting times, availability of imaging studies, the more that efficiency will decline.