Friday, April 22, 2011

Are Patients Consumers?

The debate has been going around recently about whether patients are, in fact, consumers like they are in other markets. There’s a very good reason to think they aren’t: information asymmetry. At the current moment the doctor knows much more than the patient about the cost of care, the relevant care, the relevant problem to solve, and his own qualifications to remedy the problem. Some of these knowledge gaps can be filled but they won’t all be filled. But, on the other hand, there’s this:
Of course it is very true that life and death situations are made in the field of medicine…probably every day if not at a single hospital, at hospitals as a whole. But the actual truth of the matter is that the bulk of medical spending of the average person does not involve death at all…just nagging, often temporary, quality of life issues. In fact, outpatient care (which includes routine and sick visits to the doctor and same-day hospital visits), drugs and non-durables (which includes things like wheelchairs and other medical supplies), and administration account for ~2/3rds of all medical spending in the US.[]

In this aspect of medical care, patients are consumers, and would benefit from price competition in a less-regulated market. Having strep throat doesn’t so much require “specialized knowledge”, as it requires a signed piece of paper so that you can get specialized drugs. Most moderately bad cuts are treated with the highly technical, and extremely specialized skill…applying super-glue.[]

A lot of this is right, I think: there are roughly two kinds of health care and they need to be split up, and a sort of market-based system might deal with the problems of non-urgent care well. (In addition, loosening restrictions around what RNs are allowed to do would be very helpful for cost containment with negligible effects on quality).

On the other hand, 1/3 of health care spending is a big deal and you can make the case it’s the most important chunk—it’s the stuff people worry about, it’s the reason we have insurance in the first place. So that needs thinking about too.

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