Cost and quality Notes for November 23

Main points

We know that there is significant variation in the cost and quality of health care in the US.

On the one hand, it’s bad news. It means that our private insurance companies and public agencies have funded overspending. On the other hand, this is good news. It means that it’s possible to get low cost health care in the US. At least, provided that we can figure out how to encourage the good practices and discourage the bad ones.

And we do that how?

Jon was absolutely right to point out that private insurance companies haven’t done much to solve this problem. (I’ve been siding with them on the grounds that they’re at least motivated to limit costs.) He’s right and that considerably diminishes my enthusiasm for them, such as it was. I should note that public agencies, other than the VA, haven’t done much about it either.

Maybe that’s the answer: have the government run the hospitals. Short of that, we’ll have to make do with a reformed version of our current system.

Buntin and Cutler think it’s possible for public policy to encourage the good practices. Marmor, Oberlander, and White aren’t impressed by the evidence for this conclusion. They think that we need a global cap on health care spending, like other countries have. Gawande is worried that the main causes are sociological and so resistant to most financial levers. (Although he does think that public policy could favor the groups that pay doctors a salary, thus changing the sociology of the field in local areas.)

Without plowing through the studies myself, I don’t know who is right. I am cautiously optimistic that it’s Buntin and Cutler. After all, we can identify medical groups that are doing what we want and those that do not do what we want. Shouldn’t it be possible to find the financial mechanisms to encourage more of the former and less of the latter? We’ll see!

This page was written by Michael Green for PPE Senior Seminar, PPE 190, Fall 2009. It was posted November 23, 2009.
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