Is the Healthcare Market like any Other and Reformed in the Same Way

What is nub of a major issue in health care reform?  I think  a lot revolves around the health care market.  Critics of Obama care seem to rely a lot on the idea that health care just needs to be deregulated like any other market and the power of choice harnessed.

Reforms that start from this notion are mostly based on making patients into consumers, that choose what treatments based on understanding of the benefits and costs.  Much of Obamacare is dismissed as centralizing choices to the detriments of patients.  Finally, its seems to this all assumes that patients differ in what they want, much like some customers want blue cars and other want read.  Give consumers sovereignty and wait for the great results.

What might be wrong with this point of view?  I think several things.  What follows are hypothesis, not empirically proved propositions or theoretically derived.

1. Healthcare consumer lack information – Our ability to act rationally as economic agents grows to some degree from experience.  We learn how to buy cars, appliances and so, because we buy these things more than once. 

Healthcare is different:  we don’t generally buy cancer treatment many times in our life.  We don’t have strong base of experience to fall back on.

The consumer choice is inherently quite complex.  The effectiveness of different treatment regiments is not easily discerned.  Among health professionals the ranking of the effectiveness of treatments is far from uniform.

2. Healthcare is a means to an end not an objective of desire in itself – We don’t make healthcare choices to enjoy the effect of the treatments.  We do so to be healthy.  When choose between a red and blue car, we do to a higher degree anyway want the car for itself.

3. Patients in fact all want the same thing mostly – Advocates of customer choice in many markets can argue for allowing customers be able to satisfy different tastes and desires.  People like different kinds of entertainment; housing; transportation; and cloting to name a few.  Competition and consumer choice allows those differences to be rcognized.

Healthcare however as noted above is a means to an end.  People, I conjecture, want much the same things as patients:  good health; lack of illness; lack of pain; and to feel good.

This all so much conjecture, I admit again.  What would suggest any basis for it? 

For one I think we might see wide variation among poorly informed customers (patients) making different choices desiring the same end.  If these choices are also influenced by regional practice, then we might see a lot variation in health costs that don’t necessarily correlate well with health results, and we do.

From a new paper in the Journal of Health Politics, Policy and Law (JHPPL) by Sandra Tanenbaum:

The finding of variation, unlike much in health policy, confers a measure of hope. The project to reduce variation is buoyed by a sense of the possible. If different physicians, regions, even nations do things differently — and without apparent adverse effects — there are extant, reasonable alternatives to the status quo; these can be studied and replicated or adapted. In a health polity that is accustomed to alternatives that are never proposed, or proposed and not passed, or passed and not implemented, or implemented to no avail, the identification of an alternative that is already working somewhere is a heady experience. The Commonwealth Fund’s (n.d.) cross-national research has a similar effect. It is not only the finding that Americans have worse outcomes than nations that spend less, but the very fact that nations with better outcomes can spend less, that communicates that we can do better and shame on us if we do not. Atul Gawande’s (2009) treatment of cost variation in two Texas cities provides a twist on this argument when he finds that physicians in the higher-spending city participate in a culture of greed; here spending less is not only as effective but is morally superior. Still, even without the moral overlay, Gawande shows us that the lower-spending city exists and that its residents are equally healthy. This is the allure of the variations discourse. Lower costs and higher quality are not only possible. They are already here.

Though I would take issue with some of its content, the paper is an interesting read from beginning to end.



“Reducing Variation in Health Care: The Rhetorical Politics of a Policy Idea”

This suggest that the have patients make choice models may not fit reality.  In fact, using boards of experts “death panels” may not be so bad to make some health choices.  This recognize that information to make health decisions may be public goods, and should be provided publicly.  When the tastes of health care customers differ little, it may make sense to have these decisions made by centralized expertise.

Interestingly, I’m not sure this argument would say all health service should be provided this way.  Tastes on bith control may differ and justify the customer choice model for that service.


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