Our Flawed Health Care System

by Russ Roberts on November 4, 2005

in Health

A new survey finds that compared to patients in other Western nations, Americans pay more for health care, are more likely to get the wrong diagnosis or medicine and sit in waiting rooms with tackier wall paper and older magazines.  I made up the part about the waiting rooms.  But the rest is a depressingly familiar story as reported in the Washington Post (rr):

Americans pay more when they get sick than people in other
Western nations and get more confused, error-prone treatment, according
to the largest survey to compare U.S. health care with other nations.

The
survey of nearly 7,000 sick adults in the United States, Australia,
Canada, New Zealand, Britain and Germany found Americans were the most
likely to pay at least $1,000 in out-of-pocket expenses. More than half
went without needed care because of cost and more than one-third
endured mistakes and disorganized care when they did get treated.

Thes findings might be accurate  I’m sure we pay a lot.  I’m sure American doctors and hospitals make lots of mistakes.  But I’m skeptical abut a survey that asks for patients to self-report diagnostic and treatment errors and confusion.  There are lots of errors in every nation’s health care system.

I also know that not all patients discover those errors.  Is the likelihood of discovery the same across all nations?  I have no idea.  I just would take these comparative conclusions across nations with a big chunk of salt.  And it’s not like the American rate is orders of magnitude above the error rate elsewhere:

Americans also reported the greatest number of medical errors.
Thirty-four percent reported getting the wrong medication or dose,
incorrect test results, a mistake in their treatment or care, or being
notified late about abnormal test results. Only 30 percent of Canadian
patients, 27 percent of Australian patients, 25 percent of New
Zealanders, 23 percent of Germans and 22 percent of Britons reported
errors.

The real question is how to reduce these errors.  We could imagine different techniques:

1.  Requiring medical providers to attend seminars on the importance of reducing errors and urging them to be more careful.

2.  Requiring workshops and training in specific area to make sure providers are aware of the correct diagnosis and treatment.

3.  Changing working conditions to reduce fatigue and stress on medical providers that might be part of the underlying cause of some of the errors.

4.  Training and hiring more careful providers.

I suspect that none of these would be very successful.  What is likely to succeed is some process that gives providers an incentive to be more careful.  It could be a carrot or a stick. In a market-based system, the carrot and stick to reduce errors is provided by consumers choosing careful doctors and avoiding doctors who are less careful.  But that system doesn’t work very well when the average patient pays so little of the cost of the provided care.

Obviously, no one wants to go to a hospital with a staff that is overworked and less careful than another.  But because of the way current policy cuts the link between the financer of medical care (typically government or government subsidized health insurance) and the consumer of medical care, the usual market mechanisms that would provide information about quality of care and the incentives to provide quality care are missing or broken.

What happens instead is that the incentives have to be imposed artificially.  This kind of survey finding, if it leads to any change at all, will lead to some absurd situation where a government agency will award some prize of prestige or cash to hospitals that reduce misdiagnoses or inappropriate prescriptions.  But such blunt measures can never really do the job well (mainly because some hospitals will be catering to tougher clienteles to diagnose, for example) and lead to unintended consequences as hospitals or staff play to the test.

Ironically, the survey or the Post reporter sees the American system as market-driven:

The survey was aimed at evaluating care across varying types of
health care systems, including the market-driven U.S. system and those
that have more government controls and subsidies.

But how is the US system "market-driven"?  I think  "market-driven" to the survey designers or the reporter means "can pay for health care out of your own pocket if you wish," a freedom that is denied or greatly reduced in other countries.  But there is very little that is "market-driven" about health care in the US.  In all of the nations surveyed, government plays a substantial role in the health care system.

Here is the press release from the Commonwealth Fund that commissioned the survey.  It summarizes the findings in more detail.

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