Thursday, July 26, 2018

How Much Medical Inflation is Driven by Fear of Lawsuits?

According to this new study, 5%. The study was done by comparing the one large group of Americans who can't sue their health care providers – active duty military personnel – with those in comparable insurance plans who can sue. They find that doctors who can be sued order more tests and so on, and that this adds up to 5% more spending.

It's nice to have that information about the direct effect of lawsuits, but I don't think that's the whole story. Most doctors practice according to norms, that is, they do what everyone else is doing. That applies to military doctors as well as private ones. Military doctors could be prescribing things that add nothing to our health because these have become the norms of practice, and those norms could have been shaped by fear of lawsuits. So the real amount of the effect could be greater. Or less, I guess, this being just one study.

I think a bigger factor in driving up costs is the pressure from patients; if you want an expensive procedure or medicine that your doctor won't prescribe you can always just find another doctor who will, and doctors don't like losing customers any more than any other businessmen.

To put it differently, I think the biggest factor making American health care more expensive is that neither doctors nor patients have much incentive to seek lower costs. Most of the costs are born by someone else, either insurance companies or the government, so the question of cost enters into these decisions only when insurance won't pay.

8 comments:

David said...

To all of which I say, hooray. I like getting a lot of care. I like it that I've had two appointments with a specialist because of the small chance that that freckle my regular opthalmologist spotted in my eye is cancer. I could probably afford the visits, but a lot of people I know couldn't, or would have to make a real sacrifice to do so. Why should they? As I've said before, if the nation is in such a fiscal crisis that we have to do without a lot of care so that the we can save money, I'd like to see a national plan that reflects that state of general crisis and spreads the pain everywhere, starting with increased taxes and extending to, say, a moratorium on the building of luxury hotels and houses above a certain square footage. After all, it's all economic activity, and if the nation as a whole has such a shrinking economy that we have to reduce our economic activity, I can think of a lot of things to cut before health care.

David said...

I suppose I should ask, what ultimately is your (that is, John's) interest in this topic? Sometimes I get the impression from your health care posts that, if someone other than the patient pays for health care, then you'd like to see the very most rigorous scrutiny applied to the expenditure. In which case I have to ask, why? Is health care not a worthy expenditure? Is it somehow bad in principle that we spend a lot on healthcare? And if it's just a question of having enough resources, then, given that we live in by far the richest society in human history, would you accept some other means of getting them than cutting health care?

John said...

My approach to all these questions is colored by my experience with natural childbirth. For most women, c-sections are much worse than natural births, they cost much more, and yet the number of them rose for thirty years straight before finally peaking a couple of years ago. In this case the more expensive approach is objectively worse for most women. And the increase was caused in part by cascading interventions, one leading to another until labor was stalled and a c-section called for.

There are many other medical procedures that we now think make things worse, including most cardiac bypass surgery, many back and knee operations, and so on.

Why are pharmaceutical companies able to make tons of money selling new medications that are chemically identical to old, off-patent medications? Or that are worse by every measure than older drugs?

Opiates.

I am all for spending hugely on medicine that helps people. But I also believe that much contemporary medicine enriches doctors, hospitals and pharmaceutical companies without doing anything for patients.

What it comes down to is that I trust nobody involved in contemporary medicine.

David said...

Yet in your original post you seem to be chiding patients for wanting expensive procedures because the procedures are expensive.

Isn't it possible that people did all those Caesarians and bypasses because they thought they were a good idea, and experience proved them wrong? In which case, where's the foul?

As for opiates, my memory is that a lot of fierce arguing was required to persuade doctors to prescribe more for pain. It turns out prescribing more for pain led to widespread addiction, but at that time that was certainly not obvious, not to me at any rate.

In other words, it seems to me like many of those involved are acting in good faith and making mistakes. I do not include drug companies among those who act in good faith.

I suppose my distrust is targeted toward those who argue too much in favor of saving money, which sounds to me like saying we should all embrace death so that Grover Norquist can get his way.

Shadow said...

Austerity as ideology.

John said...

Yes, I think people demand expensive new medications, and their doctors prescribe them, even when there is something cheaper available. The demand for the newest, coolest medicine comes from patients just as much as the doctors and companies profiting from it. I think somebody should say, "no, we the people will not pay ten times as much for a drug no better than the old one." They do this in Europe and Japan and live longer than we do. The higher cost of the newer drugs is just a transfer from ordinary taxpayers and insurance customers to the investors in pharmaceutical companies, and I think that is a disgrace.

The great rise in C-sections did not take place because anybody with serious knowledge of childbirth thought they were better. It happened because they were more convenient for doctors, less scary for patients, and because people starting suing obstetricians for allowing "birth trauma" to cause cerebral palsy and other conditions. Actually there is no good evidence that birth trauma causes cerebral palsy or any of the other conditions blamed on it, but thousands of doctors have been sued over this and billions awarded in damages. I suppose you could say that we have decided as a society to take care of one class of disabled citizens through what amounts to a tax on obstetricians and their patients, but if so that's a stupid system.

Lisa used to work at a teaching hospital that took care of many high-risk mothers, and their c-section rate was lower than the one at the ordinary hospital she worked at later. This is because the doctors at the teaching hospital were employees who got the same pay regardless of whether a birth happened on their shift. At the other hospital the doctors were in private practice and were only scheduled to be in the hospital on certain days. Since the bulk of their pay came from the birth, they had a huge incentive to make sure the birth happened when they were in the hospital. Hence a c-section rate much higher than among the high-risk women in the teaching hospital. Thus a medical procedure more dangerous for the mother and more expensive for everyone became common because of the way we pay doctors.

This kind of stuff makes me crazy. I don't know nearly as much about other branches of medicine but I feel sure there are many other such monstrosities out there, which collectively add up to Americans paying half again as much for health care less effective than what people get in Europe and Japan.

I think this is also politically important; one of the reasons we don't have a national health insurance system here is that American medicine is so expensive. It our overall costs were 30 percent lower we would find Medicare for everyone much more affordable.

David said...

On the issues you cite, I don't know anything. I defer to you on them. BUT: my own major experience with the medical system is in relation to my prostate cancer. Detection came via a PSA test; biopsy showed signs of a fairly aggressive cancer; the prostate was removed. The PSA test is, of course, controversial. Studies show that, overall, PSA tests lead to more treatment for either no or a very small increase in life expectancy. In which case, by the numbers, I shouldn't have had a PSA test. I might well have never displayed symptoms, or not have displayed them until much later in life. Or I might have turned out to be in that tiny group that has an aggressive prostate CA, which probably wouldn't have been discovered until I displayed gross symptoms--that is, until the CA was much more advanced. As you can imagine, the idea that, because of the numbers, it would have been better not to have PSA tests, in which case I might well have discovered my fate when my lymph nodes started swelling or dying or whatever it is they do when prostate cancer spreads to them (it typically spreads first to the lymph nodes in the groin)--I find that one pretty enraging.

What about all those men who have radiation or prostate removal when they don't need it? Should they suffer for my sake? I can't square that circle. If I met a hundred men whose lives had been ruined by unnecessary prostate treatment, it would certainly give me pause. But then again, it's my life. I'm most reluctant to lose it, particularly for the sake of statistics or saving money.

Then there's my niece, who has an extremely rare genetic disorder. I mean RARE. There's no cure, the condition puts her in the hospital once a year or so, and she'll probably just get slowly worse. By the numbers . . . well, you get the picture. At what point are we essentially saying, everyone else will be better off if you, a particular patient, don't get treatment, so please die for us? If numbers make the decisions, where does it stop? On what basis?

David said...

To be clear, if I met a hundred men whose lives had been ruined by unnecessary prostate treatment, it would do more than give me pause. I would feel deeply ashamed before them. But would it make me less delighted with the course of my own treatment? No.