links for 2007-06-26
The Social Impact of Microsoft Once Again

Ezra Klein: Every Man A Doctor, Purchaser, and HMO

Oh, this is funny--in a sick sort of way:

Ezra Klein: Every Man A Doctor, Purchaser, and HMO: It's pretty funny to watch Michael Cannon explain how, if you didn't hurt yourself too badly, and you happen to be a professional health care expert deeply steeped in theories of consumer cost control, you can use an HSA to bring down costs on your torn ACL. So we get lines like "I heard a tear, not a crack — which suggested soft tissue damage, but no broken bones. The only reason I used that information to rule out an X–ray was because I had a financial incentive to avoid unnecessary spending." That's all for the good, when it's all for the good. On the other hand, that's just a hop, skip, and a jump away from "She had shortness of breath, but no radiating arm pain, so she decided to wait through the weekend because she couldn't afford the ambulance ride. She died."

That's not my collectivist impulses spinning some implausibly hellish scenario, by the way. A recent study looked into what happens if you increase cost sharing on pharmaceuticals in Medicare. In other words, what happens when the patients have what Cannon calls a "financial incentive to avoid unnecessary spending." The answer? "[S]ubjects whose benefits were capped had higher rates of nonelective hospitalizations, visits to the emergency department, and death. In addition, subjects whose benefits were capped had lower pharmacy costs but higher hospital and emergency department costs, with no significant difference in total medical costs between the two groups."

They did try and bargain down care, and even skip some pharmaceuticals. But their choices led to neither better outcomes nor lower spending. Instead, they died more often, and we paid for their ambulance rides more frequently. Everyone's a loser!

What is the true social marginal cost of an x-ray, given that Michael Cannon is already using the doctor's time for a diagnosis? $50? Is there a chance an x-ray might pick up something bad that an MRI wouldn't? Does Michael Cannon really want to gamble on his ability to distinguish a "tear" from a "crack" in the middle of a soccer game? Apparently he does.