Monday, March 4, 2013

Relman on health care

Arnold Relman is a (medical) doctor and the former editor of the NEJM. One of my colleagues recommended his book, A Second Opinion. I like to read widely on complex topics. Although Relman is not an economist or policy analyst (by training), he's worth a read, given his time in the medical field and his prominence in the popular debate on the topic of Health Care (HC) and Health Insurance (HI). (See: his  recent NYT Review of Books piece; I'll add comments on this below.)

I certainly don't mind someone NOT being an economist-- as long as they don't say silly stuff about economics and economists. To note: Relman says "Economists in particular argue that most of the HC system's problems can be solved simply by allowing the market to work, with only minimal help from government. My experience has convinced me otherwise." (p. xvii) On what planet did he get this experience? Or this: "There can be little doubt that today's HC system has become thoroughly saturated with market ideology." (31) Hmm, would he say the same about statist ideology, given the extent of government spending, subsidy, and regulation in the same system? I doubt it. (He doesn't do it here!) He's similarly tin-eared about "markets" and standard economic analysis. For example, he doesn't want to put a "value on life" (46). But he probably does that in his personal life by only purchasing a limited life insurance policy. Or this conclusion: "If the market is not going to save our HC system, must we conclude..." (111) Well that certainly answers the subsequent question!

Thankfully, Relman acknowledges, at one point, that health outcomes are far more than a function of HC and HC spending (47). Well, at another point, he makes the opposite claim (53). Usually, proponents of even more govt intervention in HC talk as if spending and HC are all that matters to health outcomes, as they cavalierly trot out the stats comparing our outcomes to those in other countries. So, it was refreshing to see him break out of that canard, if only for a moment.

Unfortunately, Relman repeats the common conflation of all health care matters into the few instances where people have little or no choice (47). In this "analysis", everything is akin to a heart attack-- some sort of emergency where one doesn't have time to "choose" the services one receives. Instead, the vast bulk of health care services are delivered with far more patient discretion-- from allergy shots to cancer treatments.

Throughout the book, Relman acknowledges that the prevalence of third-party payment is a key part of the problem. But he doesn't seem to understand or explain how that's happened. (I and many others have written about the cause of this-- government subsidies for HI through the workplace. In fact, we cover this in both E101 and E150.)

Relman cites Kenneth Arrow's seminal piece on information problems/limits in HC and HI. But oddly, his lit review ends 50 years ago (22-23, 96). John Goodman crushes this (surprisingly common) approach-- both because it's a really lame literature review and, well, even if it holds, it's wrong in its application.

He has an aversion to profits in HC/HI. I can't really speak to the subjective part of his preferences there-- any more than I can debate why you should like pepperoni more than sausage on pizza. But it's noteworthy, since it colors his analysis and takes him a long way toward his conclusions. One can also point to the inconsistencies in this view: Are HC and HI different for him, compared to other markets-- and if so, why so? Why does he expect government agents to be less "greedy" and self-seeking? Why does he imagine that government policy, in practice and in combination with powerful interest groups, will yield better outcomes?

For example, he recognizes incentives to profit-max in a market setting (49, 50, 113), but doesn't seem to recognize the unfortunate incentives that accompany government operations and political economy. (He upholds various govt agencies as impressive [126]-- which to the knowledgeable observer, undercuts his case!) He sees overhead in private efforts (50-51, 113); he doesn't see bureaucratic costs in public efforts. (One can be discouraged by the former, but don't ignore the latter!) He does note that service providers are incentivized to provide more services (86-87), but doesn't seem to see the usefulness of tort reform and having people pay for services more often (motivating them to care a lot more about the services requested by providers; 99).

He spends a chapter on "consumer-driven HC" but is mostly unimpressed (94). Unfortunately, he doesn't understand the impact of HSA's by income class (100-101); he doesn't understand that HI often covers preventative care (101), even in our distorted HC/HI markets; and he greatly exaggerates the size/impact of HSA's at present (110).

A lot of this relates to the old, defunct line of reasoning made famous by Kenneth Galbraith-- that monopolies would likely be more efficient because they wouldn't have to waste money on advertising and the like (134). All things equal, that's a brilliant point. Unfortunately for Galbraith and Relman, not nearly all other things are equal.

In his article, Relman makes a series of correct and surprising claims that will disappoint most fans of ObamaCare. (In this, he elaborates on ch. 3 in his book-- and interestingly, echoes Goodman's pessimism about the efficacy of the current reforms. Likewise, fans of Canada will be disappointed by his panning of their system [155], which again parallels Goodman.)

"Both parties claim to have the answer but, as I will make clear, no initiatives proposed by either party have much chance of significantly slowing the rise in federal health costs without reducing access to needed services. Major reform will be required, but that is not even under consideration."

Expanding on this: "The Act expands insurance coverage but, as already explained in these pages, it is not likely to slow the rise of costs significantly [nor is it likely to expand HC]...First, the Act does not replace—but expands—the investor-owned private health insurance industry...Second, the Act does not change the method of payment for most medical care...Third, it does nothing to change the current fragmentation of medical care." This third factor is probably not nearly as big of a deal. But who knows what a much-less-encumbered market would give us?

Despite this solid level of analysis, the "subsequent" proposals are based on non-sequiturs for analysis and/or speculation about likely results. Interestingly, he does embrace state-based reform (a good sign), but then sees that as a bridge to assumed-to-be-competent national policy (oops!). 

I appreciate my colleague's recommendation and enjoyed reading another work in the field. I can only hope that he'll read at least one book from the pro-market side-- e.g., Goodman's Priceless. As for Relman, I'm left hoping that he was a far better doctor and editor than public policy analyst. Likewise, I can only hope that he would apply the famous dictum "first, do no harm" to his overly-avid embrace of government as a prescription. Unfortunately, the patient is already over-medicated and little has been done to recognize the damage done by the "solutions". Just give the patient more meds; I'm sure that'll fix things. 


At March 4, 2013 at 9:48 PM , Blogger Chris said...

I submit the following as a method of reducing health costs that is based in technology:

I particularly like the good doctor's view that we (the patient) should have more control of our health care information. Unbelieveable, frankly, that the health care system is so closed off and grossly ineffiecient.

Time for the health care professionals to start giving the patients some credit... (pun intended)

At March 6, 2013 at 2:33 PM , Blogger Eric Schansberg said...

very cool...thank!


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