Learn Liberty | Are Americans getting too much healthcare?

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During policy debates on healthcare most people assume that more healthcare leads to better outcomes. What if that assumption is false?

In a 2010 essay in the Atlantic, Myth Diagnosis, Megan McArdle cites research by Richard Kronick of the Department of Family and Preventive Medicine at the University of California at San Diego. Kronick found that even when a “disease was particularly amenable to early intervention” there was no “significantly elevated risk of death among the uninsured.”

Dr. Atul Gawande writes in his essay “The Cost Conundrum,” “Americans like to believe that, as with most things, more is better. But research suggests that where medicine is concerned, more may actually be worse.” Among other things, Dr. Gawande summarizes findings of Dartmouth’s Institute for Health Policy and Clinical Practice, which examined “regional patterns in Medicare payment data.”

Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be.

Another Dartmouth team … examined the treatment received by a million elderly Americans diagnosed with colon or rectal cancer, a hip fracture, or a heart attack. They found that patients in higher-spending regions received sixty per cent more care than elsewhere … Yet they did no better than other patients, whether this was measured in terms of survival, their ability to function, or satisfaction with the care they received. If anything, they seemed to do worse.

Consider one specific procedure: the common heart catheterization. According to Shannon Brownlee’s book Overtreated, there are more than 2 million heart catheterization procedures performed in the United States each year. Well over 50% are elective procedures; the patient has symptoms but is not in immediate danger of dying. Brownlee writes that the research suggests “the vast majority of elective cardiac procedures are no more effective at preventing heart attacks and death than medical management, which involves giving patients drugs and counseling.”

A stent is often placed during catheterizations. Dr. David L. Brown, a professor of cardiology at Washington University’s School of Medicine in St. Louis, is unequivocal about the value of a stent: “Nobody that’s not having a heart attack needs a stent.” Brown is the coauthor of a journal article that examined “every randomized clinical trial that compared stent implantation with more conservative forms of treatment.” The paper found “that stents for stable patients prevent zero heart attacks and extend the lives of patients a grand total of not at all.”

How can that be? Well, the cardiovascular system is more complicated than unblocking a clogged sink. Dietary changes, exercise programs, and medication can be more effective than stent surgery. Yet, doctors often resist taking these routes to treatment.

Examining the efficacy of other procedures too, David Epstein and Propublica observe that despite the wonders of modern medicine, “it is distressingly ordinary for patients to get treatments that research has shown are ineffective or even dangerous.”

Why does overtreatment systemically occur?

Milton Friedman was a long-time critic of the distortions caused by the tax exemption for employer-provided medical insurance. In his 2001 essay “How to Cure Health Care” Friedman explained succinctly one reason why there can be both excessive spending on medical care and dissatisfaction with the results: “Nobody spends somebody else’s money as wisely or as frugally as he spends his own.”

When we utilize healthcare, most of us are spending someone else’s money: the insurance company’s, the taxpayer’s, or our employer’s. In all, as the Cato Institute’s Daniel Mitchell points out, “Consumers are now paying only 10.5 percent of health care costs.” Under these circumstances, Friedman observes, “The patient — the recipient of the medical care — has little or no incentive to be concerned about the cost.”

Would you be more concerned about the efficacy of a treatment if you were spending your own money? Would you think twice about undergoing an expensive test? Would you be more interested in prevention in the form of dietary and lifestyle changes?

Imagine that employers provided tax exempt automobile maintenance insurance as a job benefit. Further imagine, as with many health insurance policies, the auto “insurance” benefit covered both routine expenditures like oil changes, and large unexpected expenditures like body repair after a crash. We can be certain that the automobile maintenance markets would be radically different.

With someone else paying, the incentive for car owners to take responsibility for auto maintenance is reduced. Would car owners learn basic automobile maintenance if expenses caused by ignorance were covered by insurance? If automobile insurance paid for new tires, how often would car owners rotate their tires? Suppose an engine seized up because of lack of oil and the insurance simply paid for a new engine. How often would car owners check and change oil?

With reduced consumer responsibility, automobile expenditures would explode. All well and good, if you are a provider of tires, engines, and automobiles. — but not so good for the rest of the economy.

Health insurance operates unlike other insurances. As Friedman points out, “We generally rely on insurance to protect us against events that are highly unlikely to occur but that involve large losses if they do occur — major catastrophes, not minor, regularly recurring expenses.”

“We have become so accustomed to employer-provided medical care,” writes Friedman, “that we regard it as part of the natural order.” Friedman asks pointedly:

Why single out medical care? Food is more essential to life than medical care. Why not exempt the cost of food from taxes if provided by the employer? Why not return to the much-reviled company store when workers were in effect paid in kind rather than in cash?

In 2016 the healthcare industry spent over $3 billion dollars lobbying. Given the rewards under the current system of heavy government involvement in healthcare, we can understand why the healthcare industry spends far more on lobbying than any other industry. Their interests are not the consumers’ interests.

If healthcare was financed by the consumer directly, the problem of overtreatment would diminish greatly. Healthcare expenditures and prices for healthcare would likely fall. Would the nation’s health improve too?

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Learn Liberty | Are Americans getting too much healthcare?

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