This looks at one way to control health costs, reducing the amount of unnecessary medical care:
No. 1 Book, and It Offers Solutions, by Dvid Leonhardt, NY Times: In 1967, ... Dr. [Jack] Wennberg had been chosen to run a new center based at the University of Vermont that would examine medical care in the state. With a colleague, he traveled around Vermont, visiting its 16 hospitals and collecting data on how often they did various procedures.
The results turned out to be quite odd. Vermont has one of the most homogenous populations in the country... Yet medical practice across the state varied enormously, for all kinds of care. In Middlebury, for instance, only 7 percent of children had their tonsils removed. In Morrisville, 70 percent did. ...
The children of Morrisville weren’t suffering from an epidemic of tonsillitis. Instead, they happened to live in a place where a small group of doctors — just five of them — had decided to be aggressive about removing tonsils.
But here was the stunner: Vermonters who lived in towns with more aggressive care weren’t healthier. They were just getting more health care.
Dr. Wennberg ... has done versions of his Vermont study for the entire country. Again and again, he has come up with the same broad result. And that result holds the key to health care reform — how to spend less on health care while not making the population any less healthy. ...
It’s not hard to find examples. Scientific studies have shown that many treatments, including spinal fusion, routine episiotomies and neonatal intensive care, are overdone. These procedures often help specific subsets of patients. But for a lot of people ... the treatments are a modern-day version of bloodletting.
“We spend between one fifth and one third of our health care dollars,” writes [Shannon] Brownlee, [author of Overtreatment] ... “on care that does nothing to improve our health.” Worst of all, overtreatment often causes harm, because even the safest procedures bring some risk. ...
Why is this happening, then? Above all, it’s the natural outgrowth of our fee-for-service health care system. It turns doctors into pieceworkers, as Ms. Brownlee puts it, “paid for how much they do, not how well they care for their patients.” Doctors and hospitals typically depend on the volume of work for their income, and they are the gatekeepers who decide when work needs to be done. They also worry about being sued if they do too little. So they err on the side of overtreatment. Patients play a role, too. We’re entranced by the wonders of modern medicine...
In plain English, Ms. Brownlee lays out an agenda for reform... It includes some steps that should be widely popular, like giving doctors incentives to explain the risks and benefits of procedures more clearly than they do now. Research has shown that patients frequently decide against marginal care when they know the true risks and benefits. Malpractice laws would also need to be changed so doctors were not sued by patients who later changed their minds.
Other solutions would be more difficult — because medical evidence is often murky, because hospitals and insurers would fight to keep their revenues and because most Americans think it’s the other guy who’s getting unnecessary treatment. These are the reasons that presidential candidates don’t focus on wasteful treatment.
But models for reform are out there. Hospitals that don’t use the fee-for-service model, like those run by the Veterans Health Administration, are already getting better results for less money. ...
Essentially, the argument is that profit maximization by health care providers does not coincide exactly with maximizing health outcomes. As Shannon Brownlee says here:
Is this happening because doctors ... are rubbing their hands together, thinking up ways to pad their incomes...? Of course not. They are doing the best job they know how. Nonetheless, they are delivering a lot of unnecessary care — much of which is driven by the way different hospitals are organized and how the medical cultures within them evolve.
The solution, then, is to change the incentives so that the incentives faced by health care providers are consistent with achieving the best health outcomes. Mathew Yglesias describes this solution:
Brownlee's alternative is to turn doctors into salaried employees charged with doing the job of keeping people healthy, rather than into fee-for-service professionals whose level of compensation depends on how much treatment they prescribe.
There are other aspects to the problem of over-treatment that this particular solution does not fix, there are other possible solutions, and eliminating unnecessary care is not the only way to reduce the growth of medical costs, but if this helps to free up resources that can be used to provide care to those who are currently under-served, as it appears it would, then that would certainly help.