Market competition is not going to fix US health care

Imagine you are getting your car serviced. You bring it to the shop, you get an estimate. When the work is done the shop presents you with a bill. It may be a little more or less than the estimate was, but either way that's what you'll be paying. Now imagine that instead of paying the bill as it's presented, you tell the shop: No, I don't think your work is worth this much. In fact I think it's only worth half this much, and that's what I'll pay. You pay half the bill and walk out, leaving the mechanic with his mouth open.

Sound out of line? This is exactly what happens every day to health care providers across the country. I recently made two visits to a specialty practice group at a large public academic hospital. Here are the services I received:

2 ultrasounds: ~40 minutes of time with each of 2 ultrasound techs and ~20 minutes of time with an attending radiologist (+resident but she was just observing)
~20 minutes of counseling with a pediatric surgeon
~20 minutes of counseling with a high-risk OB

Don't forget all the overhead costs and behind-the-scenes work like maintaining the ultrasound, scheduling the appointments, dictating and transcribing the reports, discussing the case, etc.

The cost for all of this work was $994. I have to say this doesn't sound unreasonable to me, though perhaps others' views may differ.

The insurance company, however, decided the work was worth only $477.12. That left the hospital $516.88 in the hole. But since they have an agreement with my insurance company, I'm not being held responsible for the difference. The hospital is presumably going to eat the cost. (I'm planning to call the practice group and offer to pay the difference, because I got excellent service, I was treated incredibly well, and I feel terrible that my insurance company is screwing over the hospital like that. But that's a side issue.)

In any other line of business you'd be stuck paying the sticker price, regardless of what you thought was fair. Only in health care does a third party get to decide what a provider's services are worth. The doctor or hospital can say ahead of time, we will work with Insurance Company A or we won't; but once they agree to work with that insurance company they are bound to accept whatever the insurance company decides is fair reimbursement.

Surprised at the cost of your health care? Remember that if you or your health insurance company pays in full, you're subsidizing all the people who don't have health insurance, or whose insurance (like mine, or like MediCare) doesn't pay the full cost of the services provided.

This is just one of the many ways that the insurance system divorces the health care system from the competitive forces of the free market.

Here's another one to wrap your brain around: Basic market principles imply a cost for a product or service. The better your product or service, the more you can charge for it and (in a perfect world) the more money you make. Right? Not down the rabbit hole of health insurance. Insurance companies make money by *refusing* the service they ostensibly provide - payment for health care. The more claims they deny, the bigger their profit margin. This completely subverts the competition principles of the free market. It also results in insurance companies spending a lot of money to pay people who figure out how to deny claims. Hence (among other, more complex reasons) why private insurers in the US have three times the overhead of MediCare, which doesn't waste effort figuring out how to deny people's claims.

Check out also this comparison of overhead costs in the privatized US system versus the centralized Canadian system (Woolhandler et al., NEJM 349:768-775):

And hence why placing blind trust in the power of the free market is, at least in this instance, a terrible idea.


In fact, not only is the health insurance system divorced from the principles that make free markets successful, it's divorced from its own founding principle of spreading the risk.

The whole point of insurance is that you have a large number of people at risk for an adverse event. These people all pay into a pool that will cover the small number who actually experience the adverse event. Somehow insurers decided it was OK to start divvying people up into risk pools, so that people who are less at-risk pay less, and people who are more at-risk pay more (or are blocked from getting insurance entirely). Sounds reasonable at first, but it's a slippery slope. As we find out more about ways to predict risk, we can charge sick (or risky) people more and more and healthy (or low-risk) people less and less. Soon you have a system where all the sick people are blocked from participating, or are paying the costs of their own health care with no participation from the healthy community. That's not spreading the risk. You might as well just pull out your checkbook and pay your doctor his fee. Except then you wouldn't be generating profits for the insurance companies.

The only way health insurance is going to work is if we go back to the basics:
If you want to use a risk-spreading model, everybody needs to participate. Young, old, sick, well. No excluding people and no basing premiums on expensively-generated risk profiles. Practically, the only way I can see to do this is a single-payer system. Whether the government wants to do the job itself or contract out to a private company is its own business; but however it's done, everybody (or almost everybody) has got to be enrolled to make it work.

This is why the Obama-Biden health care plan is not going to work.

Obama wants to let people opt out of the national program if they like their own insurance - or if they are simply healthy and don't want to participate. In fact, with a guaranteed-issue plan available there is no reason to buy insurance until *after* you get sick. This would result in healthy people refusing to buy insurance, and the system cannot remain solvent without that crucial population of people who pay in more than they take out.

If people want to opt into private insurance in addition to the national plan, fine, but they can't be let out of the risk pool of the national plan.

The good news is, if everyone is insured, and health care providers can be assured of getting paid in full every time they perform a service, then they won't need inflated sticker prices to cover all the nonpayers and underpayers.

If people want to yell "Socialist!" when they hear these arguments that's fine, but what are they going to do about maintaining solvency in the health care system? If you want to stick to your capitalist guns then your only viable option is laissez-faire, fee-for-service, truly free-market health care. (And if that's what you want you'd better be prepared to see a lot of poor people dying of treatable diseases.)

Because what we have now is not working, and for the reasons detailed above neither are any of the other half-cocked hybrid attempts to apply competitive market principles to a system that turns them on their heads.

depression that isn't

What do you do with a healthy patient who wants to die?

Ms K was 95. Her face was only softly lined, and her ash-white hair was smooth and silky as a girl's. She was in what one might call quite good health, having survived both a heart attack and a cancer many decades ago. Save a matched pair of titanium hips, her body parts were all factory originals.

By all accounts, her life was still a full one. She was close to her children and their spouses. She had a cadre of friends and neighbors who queued at the door to her hospital unit. She was possessed of an adoring younger husband, a stripling of 89. Indeed, he treated her to an extremely long, lingering kiss with evident tongue, in full view of the medical team as well as of their son (who sighed, "This is like a bad romance movie!" as he edged out the door).

And yet, she was decided on death. Quite decided. One day she declared that she would no longer eat, and that was that. "I'm 95 years old," she said, "and it's time." No coaxing, wheedling, or caviling; no gnashing of teeth and no rending of garments could dissuade her. After a few days of this, her distraught family brought her to the ER. After it was duly determined, via the usual sequences of poking, prodding, and sticking with needles, that she suffered from no medical illness, psychiatry was called.

After much ineffective discussion, Ms K was diagnosed with depression (though she professed no sadness) and brought into the hospital. She lay there for days refusing food and medications, even basic nursing care. Far from the etheral candle flame near snuffing out, Ms K held court from her bed, directing her frantic relatives to fulfill various social obligations and execute a litany of domestic chores.

Stymied, the psychiatry team consulted the hospital ethics board. The ethics board was equally flummoxed. Its concern was to rule out the possibility that Ms K was acting in her right mind, and not out of a reaction to depression or pain. A meeting was held with the physician team, the patient, her husband, and her son and daughter-in-law.

According to the family, this desire for death wasn't like Ms K at all. Generally she was quite life-loving and had never expressed a wish to die. At the same time they admitted that she seemed quite of sound mind otherwise, that her personality was pretty well unchanged and her mind continued to be the steel trap it had always been. They did note that she had always been very pain-averse, that she was at the beginning of a long course of physical therapy to recover from a hip replacement, and that she'd been pretty well exhausted by the physical therapy for the replacement of her *other* hip a few years ago.
Of course the very fact that she'd undergone the second hip surgery - and that her surgeon felt her 95-year-old hip was appropriate for replacement - suggested that both she and the surgeon had expected her to have quite some life left to make use of it.

The best we could figure out was that she'd just decided she would rather die than go through more physical therapy. But that seemed a bit... dramatic, didn't it? Then again, from what her family said, Ms K was nothing if not dramatic.

As an aside, I'm not opposed to the choice of a dignified, peaceful, planned exit when it's the only choice over an imminent and pain-filled one. That doesn't sound like mental illness to me. But that is pretty different from this. It's pretty different when a dying patient chooses the time and the means, versus a healthy - but aged - one choosing to end her life for no clear reason. Especially when she's nested in a network of people who would be devastated by her passing, but unspeakably more so by her *intentional* passing. When you think about it from that perspective, it starts to sound a little bit selfish in a way.

What to do about Ms K? A masterful ethicist managed to convince her that in order to let her have her wish of self-starvation, we would first have to be convinced that she was not depressed. And one way for us to do that would be for Ms K to give us a trial of... eating. And taking an antidepressant. In order to prove that her course of action was entirely voluntary, she'd have to show us she could change it.

Somehow this made sense to Ms K, and she agreed to take the antidepressant - but not to eat. So there she was, dutifully tossing back a Lexapro every morning but steadfastly refusing to eat while her desperate family surrounded her bed, alternately threatening and cajoling her.

Meanwhile, we called in the pain team. Ms K had never really complained of pain to us, but given the recent hip surgery and the trepidation about physical therapy, we wondered if there was more than she was letting on. The pain team came up with an improved regimen for her, and that did seem to improve things.

So how did this all turn out? After a week or so without food but snappy as ever, Ms K realized this undertaking was going to last longer than she'd bargained for. It looked as if starvation was going to be more trouble than it was worth. One day she asked for breakfast, and that was that. I suspect the pain from the hip surgery was the real problem; but Ms K never let on. She just acted as if this was a temporary redirection and she was going to find a better method of suicide sometime soon. But she didn't seem acutely dangerous, and her family promised to keep a close eye on her; so after she'd gotten her electrolytes back in balance we discharged her from the psych unit.

You never really do know what's going on with most patients until you've been with them a while. One of my psychiatry preceptors has said that the reason the patient gives for coming in is almost *never* the real problem. At the time I thought that was exaggerated but I'm starting to come around. I guess if psychiatry were more straightforward it wouldn't be nearly as interesting.

Open Letter of Apology to the Patient I Saw Last Night

You came into the hospital hoping to deliver a baby. In fact you weren't pregnant, but you wouldn't believe that; so the ER called me. We had a pretty nice conversation. I didn't challenge your belief that you were pregnant despite a negative urine pregnancy test and an ultrasound showing a normal nongravid uterus; and in turn you loosened up just a little bit. You were still clearly mistrustful - and who wouldn't be in your situation? as you said you'd been in and out of psychiatric hospitals more often than you could remember - but you were willing to talk. You definitely didn't want to come into the hospital, you said.

I was ready to send you home, really I was. Sure you were delusional, but it was a pretty benign delusion, as delusions go. You weren't suicidal. You weren't homicidal. You had a place to stay and seemed reasonably well groomed and nourished. I wasn't worried about your ability to take a cab back to your apartment, the same way you had come. You even had a psychiatrist, you knew your medications and doses (unlike 95% of the patients who come through the ER), you were carrying the pills in your purse, and you had an appointment in less than a week. There are thousands of people out there with worse delusions than yours - more severe, more pervasive, more dangerous - who manage to survive from day to day and to find a little pleasure in life, which is about all anyone can ask for anyway.

Unfortunately for you, things weren't that easy. Since I'm still a resident, I work under the supervision of an attending physician. At night the attending physician is at home, offering advice by phone; but she bears the ultimate responsibility for the patient care decisions that we make. See where this is going? I made you sound as good as I could - as good as you were - but she wasn't having it. She said you were delusional and wouldn't be safe at home, and that unless we could find someone to come get you at 4 AM, we would have to bring you into the hospital even though you didn't want to come.

But you didn't have anyone who could come get you. Like a lot of mentally ill people, you'd burned your bridges. You weren't close with your family, and the 'friend' you named at first turned out to be someone you hadn't spoken with in ten years. And while I was calling around to area hospitals trying to find a case manager, a psychiatrist, someone - anyone - who knew you and could help you out, or at least vouch for your ability to care for yourself - you decided you'd been waiting around in the ER long enough and it was time to leave.

After that things happened quickly. Four big ER security guys pounced on you to stop you from walking out the door. I heard your screams from the doc-box where I was dialing number after unresponsive number, and my heart sank. By the time I got out there you were already in restraints. At that point I was boxed in, and I had no choice but to write out a legal hold.

It was clear you'd been through this before. Other than telling me you hoped I'd die in a traffic accident, you took it all pretty calmly - much more calmly than I would have in your position. You were evidently familiar with the laws governing this kind of thing. You pointed out that you weren't dangerous to yourself or to others and that the legal basis for me to keep you was pretty thin. There wasn't really anything I could say. I acknowledged that you had a point, apologized to you and thanked you for staying (comparatively) calm. I told you I had no choice but to admit you to the hospital. Then I wrote out some weak excuse for the legal hold, which I knew probably wouldn't stand up to the judicial review that would likely take place in a few days. I hoped someone with more power than I had would let you out before then.

We walk the line between safety and liberty every day. When is it justified to deprive someone of his personal liberty? I think the law has it about right in theory - you should be physically dangerous or unable to assure your own care and safety. Seems straightforward; but in practice the latitude is wide and depends heavily on the judgement of the individuals involved. To me, this case lay far over on one side of the line; to my attending, it was far to the other. This time, the unfortunate patient got caught in the middle.