Wednesday, November 02, 2005

So how can we get people to consume less, anyways?

Interesting article by Margaret O'Kane over at the San Francisco Chronicle on overuse of health services. I'll be excerpting but I highly recommend you read it. O'Kane writes:
The question is never "Doctor, how little can you do to treat my illness effectively?" And the answer is never, "Let's wait a while." Instead, it's a quick rush to the imaging room, to the surgical suite, or to the pharmacy downstairs. The costs are clear to us all: a $1.7 trillion annual health-care tab that is growing again, and as fast as ever. Today, millions of Americans are getting more and more care whose value is not clear, because it's not based on scientific evidence.
In terms of the "question", I highly recommend to all of you to always ask "What would happen if I don't do this? And what are the other ways of doing it?". It's vitally important.

In terms of the rest, many people will respond that our health system isn't competitive enough to cut out a lot of waste. In this instance, the private sector is surely driving a good deal of unnecessary spending.

Take pharmaceutical companies. They want as many people as possible to take their medicines. Think of all the people that were on Vioxx and Celebrex who had no problem tolerating ibuprofen? And those meds were shown to be no more effective than ibuprofen in relieving pain. I just find it deceitful because Pharma seems to take this "health costs are so expensive but we don't have anything to do with it! We just provide medicine everyone needs!" approach which doesn't ring true to me. Does Pharma provide a necessary service? Of course. We clearly need drugs. Are they responsible for all unnecessary health spending? Absolutely not. But they contribute quite a chunk.

Kane goes on:
Just as we do in so many other areas of consumerism, we need to take a more active role in health-care decision-making, questioning the value or necessity of tests, treatments or procedures.
This a really interesting point. Can people take this role? I mean, considering the amount we spend on all sorts of pretty "useless" things -- ipods, clothing (my particular weakness), video games, etc -- it often feels like there's this culture of spend now, think later. And that's without the emotional vulernability of people with illness that might require surgery, which obviously adds a whole new element to the decision making.

Wasteful spending stemmed in consumerism obviously extends way beyond health care. Think of "branding" -- it's not about quality and price at this point (maybe it was when the brands were first established). I know I'm one of those people that goes to the grocery store and doesn't like to buy the store's brand of stuff --- I feel suspicious even when I know it's theoretically the same.

That said, how can we change these consumer attitudes, which are good for other sectors of the economy (through more spending, income, happiness, etc) in all these other goods, but decidedly not good where health is concerned? This is a place where I agree with CDHC (consumer directed health care) people -- one problem is that we, as patients, do not have enough information.

Evidence-based medicine is in short supply in too many cases. Just think about the doctors who just won the Nobel for their research on ulcers. They knew it was caused by bacteria in the early 80's. The medical establishment refused to believe uclers were caused by a bacteria and it wasn't until the mid 90's that doctors finall woke up and started treating ulcers with antibiotics. It's 2005, and I guarantee if you polled the public (pre-nobel annoucement would have been preferable, but I think you'll find the same thing) on what causes ulcers, most would absolutely say stress.

And again the we have an unnecessary hysterectomy rate of 30% -- which is more tragic because it's automatic menopause and greatly reduces women's sexual function.

The first step is creating standards. We desperately need treatment standards for most every common illness (according to
symptoms, surely many people really do need that triple bypass) -- heart attacks, breast cancer, hip replacements, high cholesterol, birth (can we say completely inflated c-section rates?). I would argue for a federal agency to be responsible with this, but I'm open to other suggestions.

Knowledge is power, people.


At 11/02/2005 11:52 AM, Anonymous Trapier K. Michael said... knowledge and information are good things that would make people better off.

And...people value good things and being better off.

Then...why not trust private entrepreneurs to sell them to us? Why is our trust so much stronger in the state to be able to do stuff?

A few weeks ago I road my Ford Ranger to work. I powered up my IBM computer and used Microsoft's internet explorer to reserve a flight to Washington, D.C. via Orbitz.

I have people like Henry Ford to thank for cars, Howard Hughes for planes, Bill Gates for computers, and others for Orbitz, Google, etc.

And when I go to DC, I won't go naked. I'll have some clothes. I'll be wearing my pair of 15 dollar jeans on the plane and have packed an 85 dollar pair of slacks for my meeting. I'll also probably buy a cup of coffee and eat a sandwich while I wait at the terminal. I have Wal-Mart to thank for the jeans, Brooks Brothers for the slacks, Starbucks for the coffee and McDonald's for the sandwhich (or salad if I'm feeling healthy).

I could go on. It's outstanding how much we as Americans take our amazing economy for granted, how we are so, so eager to chuck free enterprise and replace it with government command and control when the 20th Century proved that that model can't make bread in Russia.

So, here's my question: if I have Ford to thank for cars, Hughes for planes, and Gates for computers, who am I going to end up thanking for healthcare information that will make me a better, happier, healthier, healthcare consumer?

At 11/02/2005 12:51 PM, Blogger Kate said...

"I have people like Henry Ford to thank for cars, Howard Hughes for planes, Bill Gates for computers, and others for Orbitz, Google, etc"

You have people like Eisenhower to thank for highways, the defense department to thank for the internet, and so on. You mentioned communist Russia -- but that's a red herring, and a bright one at that. There are a variety of health systems in capitalist, developed nations that simply work better than ours. France. Germany. Japan. Canada. Etc. The market works best for some things, but not all. health care is one of those goods.

Rational actors run on incentives. There is no incentive to sell health care data that derides Pfizer.
And what about when Pfizer starts jamming our mailboxes with health care info? They've already jammed our magazines and tvs. If you can just get information from anyone, how do you know who to trust?

At 11/02/2005 1:48 PM, Anonymous Trapier K. Michael said...

Re: "There is no incentive to sell healthcare data that derides Pfizer."

Check out For 26 dollars a year you can access trustworthy information regarding the cost and quality of different pharmaceuticals, as well as that for general healthcare goods.

If you don't want to pay, then troll on over to WebMD Health ( and spend hours learning about any health conditions you may have.

Or, get an HDHP from BCBS and use Subimo ( to glean information and spend your HSA dollars more judiciously.

Each of these firms are serving healthcare information to everyday Americans as a profitable enterprise. And marketplace competition keeps them honest. If one starts putting out bad info, then it will lose customers to the other two.

Re: "You have people like Eisenhower to thank for highways, the defense department to thank for the internet, and so on."

Governments are capable of making certain things, but private enterprise often makes them better (except for something like National Defense).

But we'll never know if free enterprise can outperform the current system of public roads, because the state enforces its own monopoly on this production with the force of its own standing army.

At 11/02/2005 2:05 PM, Blogger Ezra said...

Just curious: how do we know if one starts putting out bad info? Who's to say?

And consumer reports is a nonprofit started by an anticorporate crusader (Colston Warne) and was even placed on HUAC's list of anti-American organizations. if they're your example of how the private market can do this, you might want to look again: they were created to check the private market.

To be fair, the whole idea that patients with no medical training and a fair amount of fear are going to dig through the medical literature sift out what is and is not credible, and choose sound treatments is absurd.

And who, by the way, is going to tag anyone for putting out untrustworthy information? Nearly half of all medical studies are eventually proved wrong, many of them are invalid and biased from the start, and in the free market atmosphere you're envisioning, the groups with the most money and loudest voice (those funded by pharmaceuticals) will be able to countersmear any potential detractors. The idea that this should be left up to the perverse incentives and self-interested actors of the market rather than, say, the NAS, is insane. The free market does many things well, but health simply isn't one of them, and nor is self-regulation.

At 11/02/2005 2:06 PM, Blogger Kate said...

first of all, Consumer reports is non-profit, so it has totally different incentives than Pfizer.

"And marketplace competition keeps them honest. " -- no, marketplace competition catches them when they're dishonest. But only the government, through the FDA, is keeping them honest by removing their products from the market.

"Governments are capable of making certain things, but private enterprise often makes them better (except for something like National Defense)."

I add health care to National Defense. Specifically health insurance.

How come all these other countries have better health outcomes with less spending than our private system if it's supposed to be making things better??

At 11/02/2005 2:52 PM, Anonymous Trapier K. Michael said...

"Not-for-profit" denotes a legal status, specifically that the organization is tax-exempt (in that's even more libertarian!!) But the operational structure of so-called "non-profits" is much closer to "for-profits" than it is to government bureaucracies and thus it's more applicable to the philosophy of the free market than command and control style economies.

FYI - HUAC also attacked Holywood and frustrated the free expression of hundreds of actors and other artists in other fields during the days of McCarthyism.

As far as Ezra's comment that ConsumerReports was created to "check the private market," and Kate's that market competition cannot keep people honest but merely catch when you're dishonest - BINGO. You both get it and deserve credit for an "A" in any introductory course in economics. Whether with warm fuzzies, or cold pricklies, companies have an incentive to keep their customer's coming back. If one company starts telling lies, then the other can run a commercial saying so. Or...other media outlets in our marketplace can create interesting, readable material by doing an expose on corruption.

And Kate...many of the pharmaceuticals voluntarily removed their version of a Cox-II inhibitor from the market after it became clear that they pose a cardiovascular risk for fear of litigation (tort, though sometimes hyperactive, is a well-studied mechanism for marketplace correction) Moreover, after Pfizer (i think it was Pfizer) announced its decision, the stock market wiped out hundreds of millions of dollars in company value the VERY NEXT DAY! It takes the FDA 10 years to judge some drugs. And, after all that time when sick people missed out on potentially beneficial medicine and all that money spent by the companies, they STILL didn't catch that Cox-II's pose a small cardiovascular risk.

Also...I included National Defense because of its unique economic attribute of being a legitimate "public good" - one which, for instance, game theoretical impediments like prisoners' dilemmas ensure that it is unmarketable. It is the opinion of many that healthcare is "different" but there is no economic validity to the idea that it is unmarketable. Health INSURANCE is different. Because of Moral Hazard (see Mark V. Pauly's
Economics of Moral Hazard: A Comment," AER, 1968, pgs. 551-557) it arguably is unmarketable. That is the "magic trick" I'm working on: to solve Moral Hazard. But no other economist has been able to do that. It would be an accomplishment worthy of Nobel considerations.

At 11/02/2005 3:00 PM, Anonymous Trapier K. Michael said...

Re: "To be fair, the whole idea that patients with no medical training and a fair amount of fear are going to dig through the medical literature sift out what is and is not credible, and choose sound treatments is absurd."

To quote The Dude: "Yeah, well, that's, like, you're opinion, man."

And my mission in life is to make it easier for them, precisely because they lack the training and live in fear.

At 11/02/2005 6:54 PM, Anonymous Martin said...

Wow! A lot of stuff to comment on, alas, though I have not the time. Here is a quick data point that is a huge paradox: those countries Kate mentioned (Canada, U.K., France, Germany, etc.) ALL of them have a lower utilization of disease prevention programs than in the U.S. Best explanation so far, though there is no compelling evidence in any direction, is that Americans use more preventive services becuase there is more fear of the high costs of a really bad health care outcome while people covered with universal insurance with low levels of cost-sharing do not have such a fear since their care will be covered.

At 11/02/2005 7:20 PM, Blogger Ezra said...

"If one company starts telling lies, then the other can run a commercial saying so. Or...other media outlets in our marketplace can create interesting, readable material by doing an expose on corruption."

This makes absolutely no sense. Think about a political campaign -- ever seen resolution between negative ads? You think folks are paying attention when various regulatory agencies begin attacking each other? You think they even have the money to attack each other? Some shoestring nonprofit is going to drown out Big Pharma's commercials?


I wish it were so, I really do. I wish consumers had the ability to make all their decisions because then we wouldn't need doctors, and that'd be a lot cheaper. But considering doctors go through nearly a decade of training and still get it wrong fairly often, well, I'm not sure why you believe my hypochondriac of a mother is going to do any better. Hell, I know exactly how she'll do. Particularly considering medicine works off probabilities, and getting those wrong can be quite dangerous...

As for the structure of nonprofits being close to for profits, that's a bit of a red herring. Yes, they have presidents and staffs and hierarchies and so forth, but that's immaterial. The correct question is whether the actions and incentives of nonprofits track with for profits. And there they clearly don't. For someone so into the free market, you surely know we're dealing with rational actors responding to varying incentives -- how could they act the same? Why would they?

Answer, of course, is that they don't. Consumer reports does not act like Microsoft, and The American Prospect does not run itself like Time. But so your big idea here is to have a health care sector depending on informed consumers who are educated by nonprofits competing against infinitely better funded, perversely incentivized entities. And somehow, through the magic of direct mail, you expect the non profits to win a fight against Pharma's ad budget (ibuprofen hurt your stomach? Get Celebrex today! Look how much fun these attractive people are having rock-climbing!).

Man, and here I thought libertarians were supposed to be hardnosed realists...

At 11/03/2005 3:22 AM, Blogger StealthBadger said...

The abuse of the word "consumer" is a serious part of it. In the 50s, everyone was encouraged to identify themselves as a customer instead of a worker. In the 90s, this became "consumer," and with that word came the idea that this consumption was necessary, since it's also attached to things like food.

When I'm hearing this garbage (whether it be when someone's trying to sell me something, or someone I'm working for wants me to make things available for sale) I just remember that consumption also means tuberculosis, and that goes a long way towards emotionally neutralizing the idea in my mind.

At 11/03/2005 7:15 AM, Anonymous Trapier K. Michael said...

Re: "Some shoestring nonprofit is going to drown out Big Pharma's commercials? Please...and here I thought libertarians were supposed to be hardnosed realists..."

I truly don't understand, Ezra. Your kind berates big business and champions the little guy. But you call me a fool for hoping, if not believing, that a "shoestring nonprofit" could take on Big Pharma and bring information and its freedom to the people?

When it gets too difficult to prove these arguments philosophically wrong, you just call them foolhardy, idealistic, and unpractical. Are you just trying to silence and discredit me? And, if so, why? Or are you open to considering my points about patient freedom and choice, which are, at the least, considerable?

At 11/03/2005 9:12 AM, Blogger Ezra said...

Well I'm certainly not trying to silence you, but you're doing a fairly good job of discrediting yourself. When liberals go after Big Business, it's because it's too powerful and nonprofits, consumer orgs, and so forth simply can't compete. Galbraith understood this well -- look into his countervailing powers theory. Consolidation is simply the way of things, but you need similarly large, powerful entities exerting checks. Shoestring nonprofits make for nice actors in David v. Goliath fantasies, but they'd be the first to admit that they can't fill this role. Only the government can.

Speaking of which, your criticism of my points is that I'm tagging you for being wildly unpractical? Since we're talking about ways to reform the health care system here, I'd think the likelihood of a particular strategy working would be the preeminent concern. I'm telling you that these ideas won't work, you've been unable to articulate why they have even a shot in hell.

And I'm not sure what your points on patient freedom and choice even are, so I really can't tell you if I'll consider them. Thus far, you've primarily restricted yourself to arguing that medical information should be a winner takes all brawl between hyperfunded special interests and tiny consumer orgs. But if the question is whether I think health care should be a right, operated through a giant system of risk pooling so that rationing is done sensibly rather than by income and race, I do. In France, patients can choose most anything, no matter their earnings. In America, very few of us have that option. Choice is a red herring, as it doesn't exist now and won't under CDHC.

At 11/03/2005 9:13 AM, Blogger Kate said...

Whoa Trapper, comeon.

No one is trying to silence and discredit you!

It's a legitimate, philosophical argument to believe that it's impossible to get people to participate in the way you want. It's also philosophically legitimate to believe, given the political power of pharmaceutical companies today, to think that shoestring non-profits can't bring them down. Surely you know Public Citizen? They collect so much info on pharmaceuticals and drug companies, and they had been warning people about Vioxx and Celebrex for a while before the FDA called for action. Obviously they didn't bring down the company. And also -- Americans don't want to believe their drugs could kill them or give them heart attacks! I don't think they're exactly bursting at the seams to figure out how these medical companies are wronging them.

How do you think Democrats felt the whole last election? Essentially -- what is wrong with all these people? When are they going to wake up and look at the sorry state of this war and country? It doesn't matter how hard you try to get people to read the news, pay attention to the world -- 50% of college graduates never read a book again. Now that's scary. Ezra is totally legitimate in believing that Americans won't participate in their medical decisions they way you'd like them to.

I did not come to that conclusion, in fact, if you considered my whole post rather than taking issue with one aspect of it (the regulatory standards for treating disease) you'd see I was honestly asking, "How can we get people to care? How can we change their habits in one aspect of the economy (health care) when they are supposed to act the complete other way in the rest of it?" I mean that! I'm not saying everything is impossible.

But when you respond to people with snark and belittlement (i.e. - you both get an "A" in into economics!") Expect the same. Especially from Ezra. And don't play "woe is me, everyone is just trying to silence me" no one here buys it for a second.

At 11/05/2005 6:55 AM, Blogger Abby said...

I know that people say that we use too much healthcare, and I do think that overutilization is a problem for some. And if a back surgeon told me that I needed back surgery, I'd be very skeptical.

Still, I'd like to know why lab tests are so expensive. I think that we all ought to get a lot more of them, and they should be cheap. In this age of computers, why can't a robot analyze my blood and input the data so that it's easily accessible in an electronic medical record. I'm serious. Getting a routine TSH costs about $100. Why is it more than $3?

At 11/07/2005 7:48 PM, Blogger Matt said...

You still need a rather well-trained person to interpret the data, it's not all automatic. And the machines that do the analysis are quite expensive. Medical care is expensive, there's no real way around that. Though investing in preventative care is far cheaper than the alternative.

At 12/17/2011 3:31 AM, Anonymous Godwin said...

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