When Health Care Becomes Personal

Below is an excerpt from a Cato Institute article regarding the quality of
healthcare in the US. The entire article is worth a read, but one part in
particular I wanted to share.

As part of my personal argument against government interference in health
care, and specifically against the nationalization of the healthcare system,
I argue that when the government pays for healthcare, the government becomes
the customer. Hospitals, insurance companies, big pharma, et al will no
longer react to the demands of the patients, rather they will react to the
demands of the government. A passage in the article discusses this
principle specifically and I've copied it below.

Government is the Customer

When consumers are in the driver's seat, best practices tend to spread. In a
market economy, if you fail your customers, you go out of business. BJC,
which is regarded as one of the best hospitals in the country, should go out
of business. It should be driven out by hospitals that function more like
its subsidiary, the Rehabilitation Institute.

Internists and specialists who do not like to touch old people should be
driven out of business. They should be driven out by hands-on doctors and by
gerontologists who take a more holistic view of patients.

The reason that medical care works the way it does is that government is the
customer. Government pays health care providers for time and materials.
Shannon Brownlee and others believe that government could come up with
better compensation schemes that would help promote quality. I doubt this.

Trying to influence medical care from a government bureaucracy sets up a
game between bureaucrats and doctors. The object of Medicare Administrators
will be to get the largest change in behavior with the least increase in
compensation to health care providers. The object of the health care
providers will be to get the biggest increase in compensation for the least
change in behavior. The health care providers are bound to win. They control
the information flows ("you want to see reports that demonstrate quality?
we'll give you reports that demonstrate quality.") More importantly, they
have the most organized lobbyists, so that any "pay-for-performance" schemes
that do not work in doctors' favor will be shut down.

Medicare is wonderful for relieving the elderly from the burden of worrying
about health care expenses. By the same token, it is wonderful for relieving
doctors of the burden of worrying about the elderly as customers. You get
paid for understanding the billing system, not for understanding your
patients.

The original article can be viewed from the "view article" link below:

Feed: Cato Daily Commentary
Posted on: Monday, January 28, 2008 11:00 PM
Author: Cato Daily Commentary
Subject: When Health Care Becomes Personal by Arnold Kling

"Despite a rapidly growing elderly population, the number of certified
geriatricians fell by a third between 1998 and 2004. Applications to
training programs in adult primary-care medicine are plummeting, while
fields like plastic surgery and radiology...

View article... <http://www.cato.org/pub_display.php?pub_id=9123>