Ab­sent pol­i­tics, Repub­li­cans can im­prove health care

Honolulu Star-Advertiser - - VIEWS & VOICES - BROOKS ——— David Brooks writes for The New York Times.

Be­lieve it or not, we’re not re­ally go­ing to have to spend the next four years wad­ing through wonky drudgery of Rus­sian spy dossiers and ho­tel sex cam­eras. At some point we’re go­ing to have a thrilling de­bate over the most scin­til­lat­ing ques­tion in health care pol­icy.

The Repub­li­cans are go­ing to try to re­place Oba­macare. They’re prob­a­bly go­ing to agree to cover ev­ery­body Pres­i­dent Barack Obama cov­ered, thus essentially grant­ing the Demo­cratic point that health care is a right. But they are go­ing to try to do it us­ing more mar­ket-friendly mech­a­nisms.

As you know, the Amer­i­can health care sys­tem is not like a nor­mal mar­ket. When you make most health care de­ci­sions you don’t get much in­for­ma­tion on com­par­a­tive cost and qual­ity; the per­sonal bill you get is only vaguely re­lated to the ser­vices; the ex­pense is of­ten

>> By Scott Stantis de­ter­mined by how many pro­ce­dures are done, not whether the prob­lem is fixed.

You wouldn’t buy a phone this way.

The Repub­li­cans are go­ing to try to in­tro­duce more nor­mal mar­ket in­cen­tives into the process. They are prob­a­bly go­ing to rely on re­fund­able tax cred­its and health sav­ings ac­counts so ev­ery­body can af­ford to shop for their own in­sur­ance and care.

This would still be noth­ing like a free-mar­ket sys­tem — it would still be a highly reg­u­lated, largely pub­lic ben­e­fit — but it would rely more on con­sumer in­cen­tives.

The cru­cial ques­tion is: Do mar­ket in­cen­tives work in health care?

This is re­ally two ques­tions. The eco­nomic one: Would mar­ket mech­a­nisms im­prove qual­ity and re­duce costs? The psy­cho­log­i­cal one: Do peo­ple want the ex­tra cog­ni­tive bur­den of shop­ping for health care, or would DAVID they rather off­load those de­ci­sions to some­one else?

Most pro­gres­sives say mar­kets don’t work. They point back to a fa­mous es­say the econ­o­mist Ken­neth Ar­row wrote in 1963, which is the same year the Beach Boys had a huge hit with “Surfer Girl.”

Ar­row ar­gued that there are sev­eral fea­tures that make health care un­like nor­mal mar­kets. Peo­ple’s needs for health care are un­pre­dictable, un­like food and cloth­ing. The doc­tor-pa­tient re­la­tion­ship is unique and de­mands a high level of trust, em­pa­thy and care. Providers know much more about medicine than pa­tients do, so the in­for­ma­tion is hope­lessly asym­met­ric. Pa­tients on a gur­ney can’t re­ally make nor­mal choices, and pay­ment comes af­ter care, not be­fore.

These are all solid points, es­pe­cially the doc­tor-pa­tient one. But health care has be­come less ex­cep­tional over time. The in­ter­net and other mech­a­nisms help cus­tomers ac­quire a lot more in­for­ma­tion. So­phis­ti­cated mod­el­ing helps with un­pre­dictabil­ity in a bunch of fields.

We put our lives in the hands of for-profit com­pa­nies all the time. I spent part of my week learn­ing from an avi­a­tion me­chanic how hard man­u­fac­tur­ers work to pre­vent pieces of metal from shred­ding through the cabin if an en­gine ex­plodes. Air­planes are ridicu­lously safe.

Pro­po­nents of mar­ket-based health care rely less on the­ory and more on data. The most fair-minded re­view of the ev­i­dence I’ve read comes from a McKin­sey re­port writ­ten by Pene­lope Dash and David Mered­ith. They noted that some­times mar­ket forces lead to worse out­comes, but “we have been most struck by health sys­tems in which provider com­pe­ti­tion, man­aged ef­fec­tively, has im­proved out­comes and pa­tient choice sig­nif­i­cantly, while at the same time re­duc­ing sys­tem costs.”

There’s much re­search to sug­gest that peo­ple are able to be­have like in­tel­li­gent health care con­sumers.

Work by Amitabh Chan­dra of Har­vard and oth­ers found higher-per­form­ing hos­pi­tals do gain greater mar­ket share over time. Peo­ple know qual­ity and flock to it.

Fur­ther­more, health care providers work hard to keep up with the com­peti­tors. When one provider be­comes more pro­duc­tive, the neigh­bor­ing ones tend to as well.

There are plenty of ex­am­ples where mar­ket com­pe­ti­tion has im­proved health care de­liv­ery. The Medi­care Part D pro­gram, passed un­der Pres­i­dent Ge­orge W. Bush, cre­ated com­pe­ti­tion around drug ben­e­fits. The pro­gram has pro­vided cov­er­age for mil­lions while com­ing in at 57 per­cent un­der the cost of what the Con­gres­sional Bud­get Of­fice ini­tially pro­jected. A study of In­di­ana’s health sav­ings ac­counts found the state’s ex­penses were re­duced 11 per­cent.

Laser eye surgery pro­duces more pa­tient sat­is­fac­tion than any other surgery. But it’s gen­er­ally not cov­ered by in­sur­ance, so it’s a free mar­ket. Twenty years ago it cost about $2,200 per eye. Now I see ads start­ing at $250 an eye.

There’s a big chunk of ev­i­dence that mar­ket in­cen­tives would work in health care, es­pe­cially in non-acute care. The harder prob­lem for Repub­li­cans may be po­lit­i­cal. This is a har­ried so­ci­ety. Peo­ple may not want the added bur­dens of mak­ing health care de­ci­sions on top of all the oth­ers. This is a dis­trust­ful so­ci­ety. Peo­ple may not trust them­selves or oth­ers to make de­ci­sions. This is an in­se­cure so­ci­ety. Peo­ple may not want what they per­ceive as an­other risk fac­tor in their lives.

The pol­icy case for the Repub­li­can plans is solid. Will they per­suade in this psy­cho­log­i­cal en­vi­ron­ment? I doubt it. On the award­ing of $13 mil­lion in new state con­tracts to pro­vide more shel­ter and homes for the home­less

Prickly City Gov. David Ige

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