Understanding The Medical Market
A couple years ago when I was in my prime, my little brother wanted to arm wrestle me. To make it fair, I used my nerve-damaged and atrophied arm. And he got to use both of his. I don’t remember who won, but it was a pretty close-run thing. But for the sake of this little story, let’s say he did. Would he be right in declaring that he was the stronger one?
Didn’t think so. The same principle applies when arguing the merits of ’single payer’–the PC term for socialized–healthcare versus private. In a recent post I made at homeland stupidity, a couple commenters replied that they’d rather have the Canadian system than the American system. Now, disregarding that irrationality, they make the fundamental mistake of assuming that the American system is a market system. Calling what we got right now ‘free market’ is like saying that I’m black. While elements of an open economy still exist in the American healthcare industry, it is far from a truly capitalistic environment. Much the same as despite the 15-20% of my DNA that is East African in origin (legacy of the trade relationship between ancient Eritria and South India in ancient times), it would be a fallacy for me to claim to be African.
In the Great Anarchy-Minarchy Debate, I went to great pains to emphasize the fact that the free market is a theoretical model of how things work in the real world. Models only reflect the real world when these conditions apply. When these conditions apply, the free market will produce the most efficient use of resources.
So before we write off a capitalistic solution to the healthcare ‘crisis’ (which wouldn’t exist if government hadn’t stuck their grubby, ignorant hand in the pot in the first place), we need to take an honest look at the factors contributing to market inefficiency.
What we have here in the United States is a mixed model of both government mandate and economic competition that brings the worst of both worlds to light. Start with medicaid and medicare with their growing eligibilities, add in the fact that only 30% of the uninsured ever pay their bills, limited freedom of choice in health insurance, and new government rules mandating levels of coverage, and what we have is only a step away from Soviet-style Central Planning.
Now, I’ve mentioned before that I don’t think the medical market has anywhere near the potential to be as truly free or as efficient as other markets for various reasons. Namely the fact that the market stipulates that people behave in a perfectly rational manner given the information at hand. And that they operate using perfect information. Neither of those will ever hold true of the population when it comes to medical matters, although one can get mighty close in many–if not most–other economic sectors.
The causes of inefficiency in the American healthcare market can thus be tied to both external and internal factors. External factors include the various government interventions, regulations, and prohibitions that erode freedom of choice for the consumer. Internal factors are related to the degree to which the consumers fail to act in a rational manner, and to the lack of availability of perfect information.
I’m going to run with this for the next few days, dealing mainly with the external factors. I’ve already talked about the internal factors before, just click on the medicine category and browse.
Here are a few external factors to think about in the meantime:
1. Massachusetts (and the AMA’s) proposed legislation mandating full health coverage
2. The misnomer that is full health insurance coverage (does your car’s policy cover oil changes and engine repairs?)
3. The coupling of employer and coverage provider
4. The forced expenditure of income/payroll on said coverage provider
5a. The 70% of non-payers
5b. Overuse of medical resources by others under the same policy
5c. Overuse of medical resources by medicare and medicaid holders
6. The Public Health establishment as government coercion
What’s unfortunate about some of these misnomers, mandates and manifestos is how they stilt the “market” towards providing a given quality of care at a given price and so undermines efficiency as well as subverts any chance of intelligent choices being made on the part of the patient or provider.
These single-payor types are often aghast when you bring up new care models such as In Store Clinics, setup to provide limited quality at limited cost, as if its the negro drinking fountain, when in reality its a narrow range of broadly-needed and commercially sound procedures that make good medicinal business sense. Eventually, the quality, access and cost will all improve as information and communication technology better equip RNs and whoever else will come to staff these enterprises. Of course, these models are young, but I think in that they demonstrate value, they will adapt to further advance the causes of quality, access and cost, just not towards the idealizations of the single-payors.
A basic rundown of this model is provided here:
http://www.post-gazette.com/pg/05278/583075.stm
Wild Speculation:
Semantic webs have interesting implications for healthcare, especially as HIT begins to take off. They won’t impact specialties of course, but they may help with the day-to-day routines of ambulatory care. If we let robots fly our planes, is there some fundamental thats infringed at the prospect of robot diagnosis and prescription, given that price reflects the value of such a model?
As molecular diagnostics seem to be the biggest and most commercially successful biotech of late, there may be further hope for this sort of model, beyond simply testing for sugar in urine. You could test for PSA and, unless I’m premature, lung and breast cancer.
Microarrays are also suited to such a model. The elephant in the room is medical knowledge in a human brain, able to perceive things that perhaps illude any combination of logical operators. That physicians will become “cybernetic” if you will as those brains are augmented by easy access to vast amounts of clinical data is probably a given, but what will the market say to those physicians? Is hypothetical HIT semantic web different when queried by an MD brain vs an RN - or, god forbid, the brain of some HMO bean-counter?
Comment by bloodydarkpastryman — August 28, 2006 @ 11:41 am
[...] I posted the following at Indiancowboy, where he posted some thoughts on the unique economic situations in the trade of medicine: “What’s unfortunate about some of these misnomers, mandates and manifestos is how they stilt the “market” towards providing a given quality of care at a given price and so undermines efficiency as well as subverts any chance of intelligent choices being made on the part of the patient or provider. These single-payor types are often aghast when you bring up new care models such as In Store Clinics, setup to provide limited quality at limited cost, as if its the negro drinking fountain, when in reality its a narrow range of broadly-needed and commercially sound procedures that make good medicinal business sense. Eventually, the quality, access and cost will all improve as information and communication technology better equip RNs and whoever else will come to staff these enterprises. Of course, these models are young, but I think in that they demonstrate value, they will adapt to further advance the causes of quality, access and cost, just not towards the idealizations of the single-payors. [...]
Pingback by HIT Speculation at Deus ex in silico — August 29, 2006 @ 8:46 am
Not sure what that pingback is doing other than mucking up the comments - for that I’m sorry if its something on my end. Do tell me if there is something I need to turn off - I’m not used to WP - may even navigate back to blogger. Is that 2nd comment there because of some service you have?
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Your response warrants the clarification that this technology is probably well suited for just diagnosis (or a kind of “psuedo-Walmart-diagnosis”), if even a general one. The useful implementation would be in getting the ball rolling on treatment and to do so earlier than presently done. Intrinsic to such a plan is the assumption that biomarkers can reliably indicate the presence of a malady.
In the short term, HIT can’t replace the modes of care subsequent to diagnosis, but it can probably improve them, if only by making MD, RN & PA lives a bit easier. Of course, then you’ll be seeing more patients…
Re: the rarity of “classic presentation”
I would imagine the problems of non-classic presentation (as any episode of House portrays) mean obscured causation. Besides building terminology, which would require not only mapping relationships, labels and meronyms but then you’ve got symptoms that have more than one “parent” or even share parents/children of other parents/children even, and then ontology of “disease” becomes so baffling, that it is suddenly and embarassingly evident that 10 years of brain-altering exercises more valuable than real estate in most parts of the earth is not only preferred, but quite amazing. Kudos to you then, sir.
However, perhaps “classic presentation” will become as ephemeral as “humors” one day, as better diagnostics surmount the ambiguous causality inevitable with present means of observation.
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