Coyote Blog

A couple of weeks ago, I started losing hearing in one ear.  A bit later, it started to hurt.  Suspecting an infection, I called my ENT's office.  They said they couldn't see me for four weeks, and would not let me switch to see anyone else in their 10-person practice (against their practice rules, which raises the question of, from a customer point of view, why there is any benefit to a large practice at all -- the large pool of doctors provides the illusion of more customer service capability but in fact the sole logic of the practice is cost-sharing of overhead and support staff).  So eventually I just went to one of those walk-in urgent care clinics in a strip mall near me and had the GP there look at it.  I found that I did in fact have an infection and got an antibiotic scrip and some drops and was told if it did not get better in 7 days, go see a specialist.

So it has been a week and the pain is mostly gone but I still have lost most of my hearing in the ear.  So I tried to make an appointment at my ENT again -- 4 weeks.  I described my situation, and said something seemed wrong.  4 weeks.

So I talked to two friends who are both semi-retired ENT's.  They said to get my butt to a doctor ASAP because it could be nothing or it could be something really bad that needs immediate intervention.  But no ENT would see me for weeks.  So one of my friends said they would help me, but they needed audiology tests.  Turns out, those are being scheduled 3 weeks out.  I finally called in a favor with a friend of a friend and found someone to test me next Monday, just four days from now.  Four days seems a long wait for something that could be an emergency, but it beats the hell out of 4 weeks.

This is what we have done to the practice of medicine.  With a myriad of professional licensing requirements and regulatory burdens that raise the fixed cost of opening a practice, we have managed to simultaneously raise prices while limiting supply.

Kevin Drum thinks he has found the smoking health care gun - US doctors are paid more than everyone else.  That is why we have too-expensive medical care!  A few quick thoughts

• I am the last one to argue that doctors salaries are set anywhere like at a market clearing price.  Our certification system, crazy third-party payer systems, lack of price transparency, and absurd arguments over the "doc fix" and Medicare reimbursement rates all convince me that doctor salaries must be "wrong"
• The charts he shows have absolutely no correction for productivity, at least as I read the methodology.  Per the text, they don't even have correction for hours worked.  A McKinsey report several years ago found that US doctors made more, but also saw a lot more patients in a day.  GP care cost more than expected vs. other country's experience, but is due mostly to number of visits, not cost per visit.
• There is no correction for doctor expenses.  Malpractice insurance, anyone?  We have the most costly malpractice insurance in the world because we have the most broken system.  Doctors pay that out of their salary
• US GP salaries in Drum's linked report are actually falling, unlike all the other countries studied.  Seem to have fallen 6% in 10 years (page 18), whereas France, for example, has increased more than 10%.

To the last point, I have a hypothesis.  When you first overlay a government health care / price control regime, you get an initial savings.  Doctors are forced to work for less and they still, out of habit and momentum, abide by past productivity standards.  But over time, productivity, like any government-captured function falls.  And over time, doctors, like other civil service groups, become better at organizing and lobbying and begin to get increasing pay packages.  After all, if teachers and fire-fighters can scare Californians into absurd pay and benefit packages, what do you think doctors will be able to do once they learn the game?

There just seems to be a tremendous mental block people have about paying cash for health care.  Megan McArdle is surprised at how strong this bias is in some of her readers.  I'm not, as I see it in my wife and friends all the time.

Several years ago we switched to a high-deductible catastrophic health care policy.  We save a TON of money with this policy, such that year in and year out, even with fairly high out of pocket expenditures, our total health care expenses have been lowered.

Generally, I go ahead and wash all of the charges through the policy so I get credit for them against the cumulative deductible.  But since we have never hit the number, I am increasingly less attached to this approach.  Particularly since a number of doctors and other providers are offering cash discounts now for bypassing insurance and paying cash.

Here is an example -- my son has had some elbow pain pitching lately, so seeing all the kids who are having to get Tommy John surgery before they are out of high school, we decided to make sure everything was OK.  We took him to a GP who specialized in sports medicine and works with a number of MLB pitchers as a team physician to the Brewers.   For cash, he charged me $50 and spent nearly 30 minutes with my son.  Then he sent us downstairs for some x-rays of his elbow, and the radiology group there, again for cash, charged us $35 total for three x-rays.  There are people who pay more for a pedicure.

Nothing is ever going to improve in health care costs until individuals take more responsibility for the cost-benefit tradeoffs of the services they receive.

Apparently, the Obama administration is worried about the shortage of GP physicians.  Personally, I think anything we do within the present framework, or more onerous government interventionist approaches likely to be proposed by Obama, will fail at reversing this problem.  If plumbers were not allowed to contract directly for price and scope of service with individual homeowners they serve, and were forced instead to fill out 23 yards of paperwork just to get paid rates that were set by government bureaucrats, subject to thousands of pages of regulations any one of which could cause his payment request to get rejected, we would have a shortage of plumbers too.

However, since no one in Washington currently seems to be in the mood topromote commercial relationships in medicine that mirror how we contract for every other product and service, I guess we can nibble at the edges of the problem.  David Bernstein suggests:

I have yet to see in any of these articles one simple reform proposed: abolish the requirement of an undergraduate degree before attending medical school, and turn medical school into a five or six-year post-high school program instead. This would eliminate two or three years of debt, and, perhaps even more important, the opportunity costs of two or three years of college. Right now, an aspiring physician must go to college for four years (and take many classes that have nothing to do with his future career), then medical school for four years, and then typically do a poorly paid internship and then residency for another five years. By the time this aspiring physician goes into practice, he will be at least thirty-one years old, and have eight years of student loan debt.

I have a better solution.  Why do we have a one-size-fits-every-corner-of-the-medical-field education and licensing at all?  Why do I need to pay for someone with 8 years of college and five years of residency to put three stitches in my kids' cut?  Or to write a Viagra scrip?  In dentistry, why do oral hygienists all seem to be in dentists' offices?  Why do I need to pay the overhead of a dentist to get my teeth cleaned?

We shouldn't really be surprised, I guess, about this licensing approach -- when the government turns over the licensing board to the incumbents of the industry being licensed, they have every incentive to choke off supply and to kill any initiative that might create low-cost competition for themselves.

So the licensing system that is all or nothing -- you are either a full-fledged medical doctor that can handle anything, or someone who is allowed to handle nothing.  This is reinforced by the payment system we have, where people do not bear the marginal cost of the services they consume.  So, since every office visit costs them the same (zero or a fixed copay), they might as well ask for the most experienced and over-educated guy they can find -- it's not costing them any extra.

Well, this is true for most people.  I have a high-deductible health insurance policy, and we often consider the price of different alternatives. Here is an example.  I am a healthy person, but still go in for a physical each year.  Nothing complicated happens in these visits.  Surely there could be some kind of less-trained traige MD who could conduct such screenings, passing folks on to the full-fledged doctors if anything unusual pops up.  If you told me that I could be seen by such a person for $100 or a full MD for $300, I would certainly consider it, particularly since the triage guy's schedule probably runs smoother as he doesn't get bogged down with the unexpected -- he just passes those folks on.

I remember in about 1978 going on a bus tour into East Berlin through checkpoint Charlie.  It is hard to describe to my kids what a creepy experience this was.  The state-run tour was clearly run by the propaganda ministry, and they really pulled out all the stops to convince you that life was great in the East.  The interesting part is that all this propaganda failed miserably.  No matter what streets they took you down, you couldn't help but notice the stark contrast in prosperity between East and West.  East Berlin was full of buildings in 1978 that still had not been rebuilt from WWII bomb damage  (this actually might have been a plus, since much of West Berlin was rebuilt in that hideous 50's European public architecture).

The most amazing statement was when the tour guide bragged, "And over 70% of everyone in the city has running water."  It was just so clueless and pathetic, to be so out of touch that what Westerners considered a statistic indicating poverty was hailed as one they thought indicated wealth.

I was reminded of this story when I read the British NHS response to an article that over 70,000 Britons a year travel abroad for health care.  Their response was:

A Department of Health official said the number of patients seeking
treatment abroad was a tiny fraction of the 13 million treated on the
NHS each year.

Waiting times had fallen. Almost half of patients
were treated within 18 weeks of seeing a GP. Most people who had
hospital care did not contract infections.

I had exactly the same response as I did to the East Berlin tour guide.  Half within 18 weeks?!  That's PATHETIC.  Again, what we Americans know to be awful service is being bragged about as a sign of excellence. 

The really creepy part, though, is that America is the last place on Earth that people understand that a medical system can do much better than 18 weeks.  But we are likely to elect a President in the next election whose goal is to bring our system down to the level of the rest of the world.  Unfortunately, someday our grandkids may not know any better.