Paying for Health Care

I just read an excellent article in the New Yorker by Atul Gawande, one of my favorite doctor/writers (his previous two books, Complications and Better are both fantastic). He explains that the question that is being debated right now in Washington, who should pay for health care, is the wrong one. Whether a public plan exists or not does not solve the real problem, the ballooning cost of delivering medical care. An expanded medicare-type system might save some money through administrative efficiencies, but the real problem, as Gawande outlines, is over-utilization of services by patients and doctors.

Gawande shows in his article why McAllen, Texas has one of the highest per-capita spending rates in the nation, but doesn't necessarily deliver higher quality care. It turns out that the doctors in that area have developed a culture that creates high volume, high profit practices that generate much of their income from ancillary services. When doctors own testing facilities and equipment, they tend to order more tests and recommend more surgery because it augments their income. Plus, most patients still believe more is better when it comes to health care, so they agree to whatever battery of tests their physician orders (and their insurance pays for all of it too).

I agree that reducing health care consumption by restructuring the way physicians get compensated would do more than anything else to reduce health care costs. However, Gawande didn't really outline a detailed way in which this might work. Defining what a successful outcome is for a given patient and then coming up with a way to compensate appropriately is a very difficult thing to do. The team model, where a group of doctors is held accountable for the quality of their work and given a portion of the money they save by reducing over treatment would probably save lots of money, but who wants to go see a doctor who makes more money by giving you less care? The pendulum would swing towards under treatment, which Americans would never tolerate.

It is a very complicated topic and it will be interesting to see what Obama's health care bill will look like once it is done.