MEDICAL DECISIONS & THIRD-PARTY PAYMENT

Last week, at an event hosted by the Center for American Progress Action Fund, one of John McCain’s health care advisors (Al Hubbard) pointed out the following:

When a third-party pays for a service or product—we consume it as if it was free…It’s interesting, if you would think about, the employers rather than providing health care insurance they provided food insurance. So every time you go to the grocery store you just take out your food insurance card, you give it to the cashier, she scans it, and you’re outta there. Pretty soon, you would start buying caviar, expensive steak, and you start buying more than you need …

For anyone acquainted with basic economics, Hubbard’s assertion is unremarkable. It is blindingly obvious that if consumers are insulated from the cost of something, they will consume more of it than they need.

But there are soi-disant health care wonks out there who remain stunningly ignorant of economics. Thus, we get this post, in which Ezra Klein fancies himself outing a ”revealing slip”: 

Caviar and oysters … are luxury goods, sensual pleasures that we love to experience when finances permit, but understand we can do without when incomes tighten … By contrast, colonoscopies and MRIs aren’t a good time … Diagnostic tests and medical treatments are not luxury goods.

One would think that even a guy with Klein’s limitations could see that the man wasn’t saying MRIs are “sensual pleasures.” Even dumber is Klein’s assertion about medical decision making:

Hubbard characterizes the purchase of medical tests as “our decisions,” but that’s inaccurate. They are our doctor’s decisions. We don’t want to make those purchases; we’re informed that we need to make them. Then we try and figure out how to pay for them.

It is clear that Klein cannot imagine patients as autonomous entities capable of critical thinking. In this he has a lot of company among “progressives.” They are wrong. These are indeed “our decisions.”

Take Klein’s colonoscopies, for example. They are routinely recommended by PCPs for all patients older than 50. It’s a precaution. There is no reason that you can’t say “Nah, I’ll do it on the next check up.”

Refusing to do the routine colonoscopy does involve a tiny risk, but so does driving an automobile.  And, as adults, we have the right to take that chance, particularly if we must write a check for the procedure.

Under our current (hopelessly perverse) third-party payment system, it never occurs to most people to say “no.” Why? Because, as Hubbard correctly points out, the colonoscopy seems “free.”

Most medical decisions are not urgent. Hubbard’s only point is that, in a system that required us to write a check for medical services, we would be more circumspect about how much we consume.

Is that really so hard to absorb?

Comments 5

  1. Matt Horn wrote:

    The economic name for this is “moral hazard.”

    Posted 28 Jul 2008 at 12:46 pm
  2. DrGrumpy wrote:

    Excellent post!

    Informed consent should explain procedures, why they’re “necessary,” the risks of treatment or no treatment, alternatives and COST. Informed consent is what makes health care choices the patient’s and not the doctor’s.

    Posted 28 Jul 2008 at 12:53 pm
  3. groetzinger wrote:

    So the people that we the tax payers provide health insurance for are abusing the privilege and we should take it from them.I agree!
    Make them pay for their own and they will appreciate it more.

    Posted 28 Jul 2008 at 3:52 pm
  4. Lynn wrote:

    Although I usually agree with you, I don’t think this post is quite fair. I actually have really good insurance, am rarely sick, and pretty much never go to the Dr. Even my “annual” checkup is something I do only every 18 months or so.

    Recently, I had a miscarriage and the Dr keeps ordering tests (blood tests, ultrasound, etc) It seems a bit much to me, however since I have never been in this situation before I think that following the Dr’s recommendations are probably the best idea. Should I really be doing some reading on the internet and deciding for myself that I don’t need my hormone levels checked again in a week? I don’t think that second guessing my Dr is a good idea, I didn’t go to medical school.

    My husband last year got a small scrape on his arm which somehow caused a serious and deep infection in the elbow and also in the skin. This happened so quickly on a weekend that it required a trip to the emergency room, plus weeks of follow up Dr visits, trying different prescriptions to kick the infection, and ultimately surgery to finally get rid of it. This cost us quite a bit of money in copays & lab charges & stuff, and it would have been thousands and thousands of dollars without insurance. All of this treatment was absolutely necessary, he was in a LOT of pain and the infection was not getting better, it was frightening! We didn’t want surgery and if there was any other option we would have taken it. Which of this medical care should we have forgone? Was this a “luxury” we were demanding?

    It was completely a freak occurrence, before these 2 instances neither of us had an occasion to visit a Dr in 10+ years! We are very grateful to have good insurance, and feel like we don’t abuse the medical system at all with excess tests. But when something did happen, navigating the whole insurance process is INSANE, even for 2 college-educated people generally considered to be not dumb.

    I don’t know what the answer is, but to just say that we’ll consume more health care if it’s free is not true, in our case anyway. We consume what we need, and for years we didn’t need anything.

    It’s actually horribly frustrating to pay so much money for our health insurance, and to see our employers pay so much as well (which limits raises & such) when it feels like we don’t get good value. For years & years we cost them pretty much NOTHING and they collect thousands & thousands from us & our employers, and the twice we have needed to actually use our insurance in the last year we fight about every charge, every copay, and when the surgery center (in network) gives us a splint, apparently that’s provided by an out of network company so the insurance company doesn’t cover that? ARE YOU KIDDING ME? So, exactly how are we to know beforehand any of that? It’s awful. It’s broken. And although I don’t want the government to start providing it all, the current system is a mess, and it’s way too convenient for you to say it’s all just because of “free” healthcare being abused by “luxury” unnecessary tests. Who has time to go to a bunch of extra Dr appnts and extra unecessary tests? Not me, that’s for sure.

    Posted 29 Jul 2008 at 4:33 pm
  5. jk wrote:

    “Refusing to do the routine colonoscopy does involve a tiny risk, but so does driving an automobile. And, as adults, we have the right to take that chance, particularly if we must write a check for the procedure.

    Under our current (hopelessly perverse) third-party payment system, it never occurs to most people to say “no.? Why? Because, as Hubbard correctly points out, the colonoscopy seems “free.?

    No reason to say no? Umm, how about the two days of h*ll in the bathroom that is the prep for the colonoscopy? That might be one reason. :>)

    Or the small risk from the proceedure? Or the copays/coinsurance? Or the lost work days?

    Posted 10 Aug 2008 at 8:45 pm

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