How sick am I, exactly?
First and most importantly, is anyone but me having trouble with Cato Unbound’s trackback system? My last post should have connected via trackback to the Lead Essay, but I got nothing. It’s happened before, and I’ve rectified it in the past by reposting–the trackback feature has in the past worked fine the second time, but it didn’t this time.
So anyway if you’re really into this kind of topic and you’ve got way too much time on your hands, feel free to go back and peruse my last entry.
I don’t know what type of contribution this entry is going to make to Matthew Holt’s Reaction Essay, but one part in particular jumped out at me–whether it is possible for consumers, if paying for health care services at an individual level, to make informed decisions. If you follow Kling’s model and go with insurance rather than insulation, the consumer still has threshold decisions to make regarding care. We can’t all be like Uncle Mort and not go to the doctor ever until you die of old age at 102.
The field of medical care is science, but it’s a science I believe is quite beyond the grasp of even intelligent people outside of the field. The typical libertarian response to something like that would be to call me patronizing, or to say that I have a dim view of humanity if I poo-poo the average Joe’s ability to grasp some concept or set of concepts. But really, once you get outside of such things as the common cold or a broken bone, how many ailments can you say with any confidence you could self-diagnose?
In other words, in Kling’s system one of the first calls you have to make is whether to go to the doctor. You would have a high-deductible plan which means you’re going to be paying to have something checked out, and the deductible would be high enough that you would be paying out of pocket for common minor ailments or injuries for which you seek medical care. There is a built-in disincentive to seek medical care unless you think you’re really sick and/or injured. Because when you get cancer, or you are in a serious car accident, that’s what Kling’s insurance is designed to capture.
Some of that is more of an obvious call than not. None of us are the Black Night, apparently impervious to amputation. But what about the plethora of other serious conditions that may have simple, even innocuous beginnings–when catching something early means the difference between either life or death, or even between an early treatment regimen with moderate cost vs. a critical late-stage medical intervention costing substantially more?
And perhaps in isolation most individual cases are easy to figure out. Well, stupid, if you were having X symptom you should have gone to see the doctor. Now you’re dying. But a perusal of web sites relating to, say, early cancer symptoms shows lists of potential symptoms that you might not go to the doctor for under a high deductible policy. By the time you go see a doctor they could very well say–well, crap, if you had been here 6 months ago maybe we could have done something . . .
And it’s not just cancer. You could have symptoms related to serious and worsening heart disease that start out relatively innocuous. If you have kids you might be tempted just to stay home when sickness gets passed around (as it often does, particularly around the holidays), only to find out later you were exposing them to something more serious than the flu or a cold.
Point is, from a cost perspective and from a medical perspective catching a serious condition early is almost always significantly preferable to diagnosing something when the symptoms become blatantly obvious. But this ties into my first point–most of this stuff we’re never going to realize. We are not trained professionals and no matter how much time I spend at WebMD I’m hardly ever going to be able to tell whether a symptom I am having really needs to be checked out or not.
That is one of the nice things about insulation–if I can go in often, a doctor is more likely to catch a big one when it comes. When I go in for small things, a good doctor may ask questions that help build a solid medical history that can be very valuable in a pinch.
I haven’t translated this into a specific policy philosophy regarding health insurance–I’m a libertarian at heart, but the ability to obtain, assess and apply good information is the core to good market function and at the end of the day I just don’t know that I’m convinced that is possible in the medical “market”. I know that there is a market itself for good, consumer-level medical information, but even then assessing and applying that information to put together an informed risk assessment? Tall order for any of us given the stakes.
Of course, then I go back to questioning–what alternatives to market-based health care are sustainable? And if you read my last post you’ll see markets are still my preference, but damn, even in talking about medical markets–much less medicine, there is a whole hell of a lot of information to wade through to try to come to a semi-competent philosophy (see, e.g,. Cato Unbound’s recent topic on the pros and cons of democracy itself).
Tough one. Are there markets where the challenges to informed decision-marking are so significant that the market itself is too ineffecient to operate properly? Is this one of them? Is it too much for a libertarian to admit, even if true?
on January 11, 2007 on 2:03 am
Consumers don’t really know much about anything - yet all of the stuff that we buy manages to work pretty well. From computers to cars to appliances - all this stuff is pretty complex yet free markets seem to make far superior products than the centrally planned economies which couldn’t manage to provide bread most of the time.
I don’t understand why Mr. Holt seems to think that this time its going to be different (an attitude that he attacks Kling for).
on January 11, 2007 on 2:23 am
I’m going to play Devil’s advocate for a minute . . . you buy the wrong oven, you buy the wrong car, you buy the wrong computer and unless there is a major, major safety issue (which, if known, you can likely research because it is specific to a brand) the consequence for picking the wrong car, the wrong appliance, the wrong computer is likely to be small. Right? You’re out too much money, or you didn’t get a feature you wanted, or the gas mileage isn’t as good as the commercial estimates, or whatever. The consequence of misdiagnosing yourself regarding a “small” symptom? Maybe nothing, maybe painful treatments then an agonizing death.
Beyond that I do (not being Devil’s advocate) quite serious contest your comparison on a complexity level of shopping for a car, shopping for a computer, shopping for an appliance vs. taking much more direct control over your health care. That isn’t in and of itself to mean that free market’s aren’t the most efficient, just that I go back to my last paragraph–why are libertarians (myself included) so afraid to acknowledge the major, major complications related to certain types of markets? If we’re serious about saying that markets are efficient when consumers make informed decisions then we have to face straight-up situations where that is difficult or impossible rather than just deny such complexity and challenge exists.
If you said yah, this is a really, really difficult market for consumers–much more than the average market–but in spite of that the market is still the most efficient solution because (a) it meets the challenges by doing X, (b) the alternatives aren’t sustainable solutions, (c) the market is complex but you’re short-selling the consumer, who will likely spend a proportionately greater amount of time seeking accurate information about his/or own health than they would making decisions with simpler markets, (d) etc . . . then at least I’d have something other than denial to chew on.
My primary beef with Holt is that his denial lies directly with sustainability. He’s essentially saying hey, it hasn’t broke yet so why worry? Maybe it will never break! That kind of head-in-the-sand analysis doesn’t fly far with me, but it also doesn’t excuse libertarians from facing the legitimate issues Holt raises.
btw thanx for the comment.
on January 11, 2007 on 2:24 am
. . . and sorry for the poorly edited response by me.
on January 14, 2007 on 9:12 am
I think the market would work for medicine. But, it would certainly require a different approach than the one you are supposing that people will use if they are paying their own bills. No, we can’t all become knowledgeable enough to diagnose ourselves, but we can do the simple math and realize that our health is worth quite a bit more to us than the few hundred dollars a year that we would have to spend for an annual physical. If you aren’t exhibiting any symptoms, but you have been getting an annual physical, and you end up with some whacky disease then there was really nothing that insulation would have done for you anyway.
I am a husband and father of 2 and due to some good luck am currently not employed by choice, so I do not have access to an employee health plan (love that euphemism) but I do have insurance. My family is covered by a catastrophic health policy (that is such a dramatic term) so pretty much all our medical care is paid for out of pocket as none of us has come up with any nasty diseases or accidental injuries (except my knee surgery 2 years ago which was to some extent elective and was to some extent paid for out of pocket). To me, the only logical way to use a catastrophic health policy is to go to the doctor from time to time to see if you need to put it to work. Otherwise you are purchasing something that you intend to use at its absolute lowest utility.
Certainly there are people that function in that way. Anyone driving a Cadillac Escalade or its like is purchasing something wildly maladaptive to any actual transportation function imaginable. But most people, just as they drive much more functional automobiles, would realize that the proper use of medical insurance would also entail keeping track of your health well enough to know when the insurance is needed. In addition, it wouldn’t take Doctors and Hospitals long to change their marketing and pricing in ways that would drive traffic through their doors, hoping that at least a bit of the traffic required expensive procedures that could be billed to insurance companies. My guess is that without insulation there would be a huge reduction in the cost (and paperwork, but that’s another issue entirely) of a basic physical and a huge increase in marketing them. I think the average person would respond in their best interest and shell out a few bucks to safeguard their most significant asset, their life.
To make real health insurance work doesn’t require that people become experts in medicine, it only requires that they realize that they need to purchase medical services. Certainly lots of people seem to be able to purchase legal and accounting services. People have also found that buying information in the form of internet access and cable services is worth quite a bit to them. Last year my family, thank God, had another uneventful year medically, but we still all got physicals. And we spend quite a bit less for the medical services that we consumed than we did for cable and internet access. The idea that people can’t manage their own health is just another elitist fabrication and you, good libertarian that you are, should be able to see it for what it is.
on January 14, 2007 on 3:08 pm
So basically what you’re saying is that a market-based model of health care insurance worked for you, so why not everyone? And by the way, during your true insurance period you and your family have enjoyed, thank God, good health, so there has been no need to truly need to rely on market-based medical information and no instance where a seemingly routine medical symptom was a mask for a much deeper problem. A rock-solid anecdote if you ask me.
I am not saying that medical markets are not the most efficient solution, but waving our hands and chanting “elitist fabrication” the way a second-rate magician says “hocus pocus” any time someone challenges our notion that fully free markets are the cure-all for everything is one of the reasons we’re not taken quite seriously by a lot of people. If we’re that dismissive of any challenge to market efficiency, why aren’t we all militant Randians, off to start a boutique country with no government whatsoever? I believe I am a good libertarian, in particular with respect to wanting to find ways to communicate our ideas persuasively rather than with an elitist snort and hand-wave of our own.
That’s one of the reasons I enjoy Cato Unbound, and thereby one of the reasons most of my posts here are in response to their essays. However, so far this month (and unlike many prior months) I haven’t seen the kind of opposing vewipoint I would expect to create a true debate,
on January 14, 2007 on 7:03 pm
OK, fine. You didn’t get the point from my admittedly weak anecdote, so I’ll simply state it and leave the humanistic icing off. The idea that people can’t make medical decisions is a straw man. There is no feature of the insulation model that obviates the need to make medical decisions without perfect knowledge. Neither does it create any knowledge that would not be knowable under the insurance model.
The fact that the insulation model makes your initial medical contact free does only one thing and that is remove one disincentive, among many, to seek health care. After that the systems would be able to create the exact same information with the exception that the insurance system, since it is unfettered by the same degree of oversight, would in my opinion create better and more reliable information more quickly, thereby producing the best result in a medical crisis since time is of the essence. Additionally it creates a less expensive result since there is less administration.
Explain to me why the insulation model produces better information.
on January 14, 2007 on 8:17 pm
Fair enough argument. I suppose the counter would be that the insulation does not produce better information for the consumer, but places the decision-making in the hands of the most knowledgeable party–the individual doctor and/or specialist.
The proper attack I don’t think is against information, because I don’t think there is any doubt that doctors have the edge when it comes to the capacity for evaluating symptoms and recommending proper testing, treatment and prevention. You can say that individuals have a greater incentive to become knowledgeable about their own health, but at the end of the day the education gap is generally so large that at least I don’t personally find it persuasive that individual consumers will make better decisions regarding their health care than would a physician even given roughly equivalent information.
I think the best attack is sustainability–in the short term insulation seems like an “everyone wins” situation, when in reality it is not. In the long run the insulation model necessarily becomes governent-run health care, and few people can make the argument that government-run health care is better for everyone. Markets are better because they are sustainable, and over time advances in technology and production improves service for everyone, and the alternative is a sure slippery slope to government health care.
For all of that it still begs the question like so many things that if the marketplace of information is such a great thing why we continue to move leftward when it comes to health care policy.
on January 14, 2007 on 10:13 pm
Does the insulation model place the decision making in the hands of Doctors? I suppose it does partially, but the actual decision making is in the hands of the administrator and the degree to which the Doctor has input is dependent on the situation. Certainly the Doctor is not allowed to do whatever he thinks is in the best interest of the patient alone. And administrators will always have a vested interest in controlling their own costs. Beside, you still didn’t explain why I am not the beneficiary of the Doctor’s knowledge in my current situation. I think that I get not only the Doctor’s best effort but get a freer hand to follow his advice.
This is the most curious thing about health care. Elites have people convinced that they can not make informed decisions about medicine and the alternative that they offer is to allow essentially a disinterested third party to make them instead. So we are faced with pretty much the worst of both worlds. The situation can be improved by either getting the third party out of the way and giving Doctors total control over treatment or making the patient responsible for the choice. Since the former is unsustainable because the medical community will do what anyone would do in that situation and tend toward greater usage and more costly care, the former is really the only way forward.
The patient may be an imperfect arbiter in this scenario but he is at least the one that has the most obvious motivation regarding the outcome.
on January 27, 2007 on 7:54 pm
Baldguy is a very wise man with very powerful arguments. Anyone who thinks that people will not spend $50 to $100 for an annual checkup needs to answer the question of why people value their health less than their cell phone, cable or other creature comforts.
Perhaps a bigger reason why people do not go to the doctor annually is the fear of what they will find out and perhaps a lack of faith in medicine. No “insulation” system will solve that.
BTW: I do not like Kling’s “insulation” term. It is really insurance versus pre-payment plus insurance. As should be obvious, no pre-payment system can be cost-efficient since one is paying a third-party to manage the payments (either the government or insurer in the case of healthcare). Pre-payments only make sense if one does not want to be bothered with managing the billing process oneself for some reason. Those cases would mostly apply to the rich and those who value time over money.