Can Dementia Diminish Consent?

Never at a loss for finding innovative ways to avoid liability, nursing homes are now pushing arbitration clauses onto residents. The trend raises some interesting contract law issues. For example,

[One family] hadn't realized they had signed an arbitration agreement at all . . . . But their six-page admissions contract with the Attala County Nursing Center included a paragraph requiring arbitration. It also said that if the family challenged the agreement in court they would have to pay the home's legal fees. That type of provision was declared "one-sided" and "oppressive" by the Mississippi Supreme Court last year in a separate lawsuit. But it helped pressure [the] family to accept the arbitration . . . .

A sidebar claims to offer some strategies for dealing with arbitration clauses:

Lawyers say patients should question admissions personnel closely. If an arbitration agreement is mandatory, they say, patients should write on the contract that they're being given no choice. "Write on the page, 'I'm signing this, because I was told I have to' " for admission, says Cleveland plaintiffs lawyer Blake Dickson, to try to make it easier to challenge an agreement in court.

Even the staunchest advocates of arbitration find these agreements troubling; the "biggest arbitration provider, the American Arbitration Association, frowns on agreements requiring arbitration in disputes over nursing-home care and generally refuses such cases." What's particularly ironic here is that much of the same political coalition that moved heaven and earth to respond to the Schiavo situation is behind the limits on lawsuits (and regulatory cutbacks) that make increasing risks of neglect and dehydration of the elderly a far more attractive business strategy.

Posted by Frank Pasquale at 08:12 AM | Comments (0) | TrackBack

Marketized Health Care: Some Horrible Choices at the Margin

When I was in grad school in England, one of the dorms had a radiator that required the user to insert pound coins into a slot for heat. I found this bizarre at the time. . . but perhaps it will be a model for hospitals soon. As an article entitled "Cash Before Chemo" suggests, IV drips may as well include credit card readers in some hospitals:

[For the effectively uninsured Mrs. Kelly,] [c]hemotherapy would continue for more than a year, as would requests for upfront payments. At times, she arrived at the hospital and learned her appointment was "blocked." That meant she needed to go to the business office first and make a payment. One day, Mrs. Kelly says, nurses wouldn't change the chemotherapy bag in her pump until her husband made a new payment. She says she sat for an hour hooked up to a pump that beeped that it was out of medicine, until he returned with proof of payment.

To the Journal's credit, reporter Barbara Martinez reveals the complexity of the story. . . including the fact that Mrs. Kelly's household appears to have rental income of about "$11,000 a month before taxes and maintenance costs [and] interest income of about $35,000 a year from two retirement accounts." So why didn't they have insurance? Turns out Mrs. Kelly did, but was part of an ever-growing group of underinsured Americans:

[Kelly] signed up for AARP's Medical Advantage plan, underwritten by UnitedHealth Group Inc., three years ago after she quit her job as a school-bus driver to help care for her mother. . . . She says that at the time, she hardly ever went to the doctor. "I just thought I needed some kind of insurance policy because you never know what's going to happen," says Mrs. Kelly. She paid premiums of $185 a month.

A spokeswoman for UnitedHealth, one of the country's largest marketers of limited-benefit plans, says the plan is "meant to be a bridge or a gap filler." She says UnitedHealth has reimbursed Mrs. Kelly $38,478.36 for her medical costs. Because the hospital wouldn't accept her insurance, Mrs. Kelly paid bills herself, and submitted them to her insurer to get reimbursed.

Which brings us to the question: do we really want to let people like Mrs. Kelly sign up for "cut-rate" insurance that poses the risk of bankrupting them should anything serious go wrong? It's now a mantra on the right that "we" (i.e., those unable to afford a real insurance plan) should have the freedom (i.e., nothing left to lose) to buy "last year's medicine at last year's prices" and that "we" (again, very often the poor among us) are overinsured. Try telling that to Mrs. Kelly, who "rationally chose" to be underinsured.

Posted by Frank Pasquale at 06:17 PM | Comments (0) | TrackBack

Encouraging Vanity and Misogyny

Just in time for Mother's Day, the book My Beautiful Mommy offers to explain for kids how "mom is getting a flatter tummy and a 'prettier' nose" via a trip to the plastic surgeon. Meanwhile, the new reality TV show Bulging Brides encourages participants to lose weight with the slogan "The perfect day is just pounds away." Ann Friedman of Feministing calls the show "size-shaming meets the bridal-industrial complex."

The mass media has dropped the ball in its coverage of both shows, generally focusing on the best "techniques" of accommodating women and their children to plastic surgery, or the spectacle and tastelessness of the bridal show. Some outlets have given feminist critics of plastic surgery a bit of time to put their case to the public, but by and large are drawn in by the slickness of each effort.

Media coverage of the children's book and the show reveal once again the bankruptcy of old concepts of "objectivity" in journalism. At this point, there are at least three "narratives" of plastic surgery that are coherent (on their own terms): 1) a libertarian narrative that values increasingly instant and cheaper gratification of desires (and safety only secondarily), 2) a moral narrative that questions the vanity at the heart of the plastic surgery boom, and 3) a feminist narrative that critically examines the types of economic and cultural pressures that make women particularly susceptible to the appeals of cosmetic surgeons. It's very hard to work all three narratives into a given story. Instead, we're treated to inarticulate exclamations of "how cute and fun" or "how repugnant"--one more symptom of MacIntyre's famed characterization of modern thought as a "moral Babel." This superficial "balance," unmoored from any larger understanding of what makes for a good (or at least unoppressed) human life, ends up promoting the very phenomena it claims merely to be covering.

Posted by Frank Pasquale at 02:07 PM | Comments (2) | TrackBack

The Candidates on Disability

Having criticized the mainstream media for failing to discuss substantive policy issues in the presidential election, I should commend coverage that actually explores what the candidates will do. Michael Berube's analysis of the disability policies of Obama/Clinton/McCain appears here (and here). Of particular interest to lawyers may be this part from the section on Obama:

[Barack Obama’s plan] pledges support for Tom Harkin’s ADA Restoration Act, which would “overturn the Supreme Court decisions [such as University of Alabama v. Garrett or Sutton v. United Air] that limit the ADA’s coverage and effectiveness.”

And for those in education, this comment by Berube is interesting:

In recent years I’ve had many fine students at Penn State – twenty-year-olds with dyslexia, or Asperger’s Syndrome, or arthritis, or mild cerebral palsy – request “reasonable accommodation” from me on final exams. And I’ve been amazed and appalled at how many of my colleagues (here or elsewhere) seem to believe that they’re under no obligation to provide reasonable accommodation for everyone. (Guess what? If you teach in the United States, you have that obligation! It’s a real federal law!)

The whole post is highly recommended.

Posted by Frank Pasquale at 08:35 AM | Comments (0) | TrackBack

Food Shortages and Aid Wastages

Rising food prices are becoming a global problem. This article from the Economist summarizes the wide-ranging impact of the crisis. Josette Sheeran, head of the UN's World Food Program, says that the rising price of food is not just causing hunger for the poorest, but has effects throughout the income scale:

For the middle classes it means cutting out medical care. For those on $2 a day, it means cutting out meat and taking the children out of school. For those on $1 a day, it means cutting out meat and vegetables and eating only cereals. And for those on 50 cents a day, it means total disaster.

And what might disaster look like? A few hundred miles from the US, dirt has become a new satiation option:

In Haiti, where three-quarters of the population earns less than $2 a day and one in five children is chronically malnourished, the one business booming amid all the gloom is the selling of patties made of mud, oil and sugar, typically consumed only by the most destitute. “It’s salty and it has butter and you don’t know you’re eating dirt,” said Olwich Louis Jeune, 24, who has taken to eating them more often in recent months. “It makes your stomach quiet down.”

The Economist has some good ideas for responding to the crisis, though I wish they'd take more seriously inequality as the main underlying cause of the crises here. Oxfam has put out an "Action Alert" to reform the U.S. farm bill:

[C]urrent price increases are causing widespread hunger for millions of poor people. Yet US food aid policies require all food to be shipped halfway around the world, draining critical aid money on needless costs. Congress could change this policy in the coming weeks, and we need your action immediately.

Congress is still debating the Farm Bill, the legislative package that governs our food and farm policy, including international food aid programs. A simple change to the law—to allow some cash for local purchases of food—would immediately increase the efficiency of food aid programs and feed more hungry people.

They offer a letter to that effect here. Even if we are "running out of planet to exploit," some small changes now could make an enormous difference in the lives of the poor.

Photo Credit: El Ramon.

Posted by Frank Pasquale at 11:56 AM | Comments (0) | TrackBack

Health Care Lottery, Shirley Jackson Style

The old idea of insurance was to spread costs by having the relatively healthy subsidize the sick. But many insurers and pharmacy benefit managers are challenging that ideal:

Instead of paying a modest $10 to $30 co-payment, as is usually the case for cheaper drugs, patients who need especially costly medicines are being forced to pay 20 percent to 33 percent of the bill (up to an annual maximum) for drugs that can cost tens of thousands of dollars, or even hundreds of thousands of dollars, a year. . . .

The insurers say that forcing patients to pay more for unusually high-priced drugs allows them to keep down the premiums charged to everyone else. That turns the ordinary notion of insurance on its head. Instead of spreading the risks and costs across a wide pool of people to protect a smaller number of very sick patients from financial ruin, insurers are gouging the sickest patients to keep premiums down for healthier people.

It's not just insurers; drug benefit managers (who were supposed to be a great market innovation for holding down drug prices) are sticking it to those with rare illnesses.

These trends shed new light on consumer-directed health care plans that promise to deliver cheaper insurance "designed for your needs." Most people are healthy, and don't need much care. But ill-conceived "breaks" for the many may subject chronically ill to a ruinous financial version of the lottery Shirley Jackson so memorably evoked.

Posted by Frank Pasquale at 05:37 PM | Comments (3) | TrackBack

Stopping the Spin Cycle: Recognizing Bent Science and Stealth Marketing

American University's conference last Friday "Does Red Lion Still Roar?" (about the past and future of media regulation) featured a number of great speakers, including Tara Malloy of the Campaign Legal Center, Andrew Jay Schwartzman of the Media Access Project, and Gigi Sohn of Public Knowledge. My talk focused on the type of social science considered by regulators, as did those of Catherine Sandoval and Philip Napoli. I think their perspectives could help us sort through a number of recent controversies in the media.

Sandoval highlighted some deeply troubling practices at the FCC, including decisions based on deficient data. Napoli noted that given government retrenchment in basic recordkeeping, and copyright challenges for private archives, it's sometimes easier to study media of the 1920s than to get a good sense of what is going on today. Napoli noted that Europe has established "cultural observatories" which make such efforts easier. Both speakers suggested that it is essential for there to be some separation between data-gathering and policy-making arms of administrative agencies.

Their work reminded me of the pervasiveness of the phenomenon Ellen Goodman has deemed "Stealth Marketing"--and its power when combined with "bent science." Just today the NYT reminds us of the degree to which we may be mis-evaluating biased data as "objective:"

Consider this reporting from David Barstow on the Pentagon's management of opinion regarding the Iraq War:

[In response to Guantanamo], administration’s communications experts responded swiftly. Early one Friday morning, they put a group of retired military officers on one of the jets normally used by Vice President Dick Cheney and flew them to Cuba for a carefully orchestrated tour of Guantánamo.

To the public, these men are members of a familiar fraternity, presented tens of thousands of times on television and radio as “military analysts” whose long service has equipped them to give authoritative and unfettered judgments about the most pressing issues of the post-Sept. 11 world.

Hidden behind that appearance of objectivity, though, is a Pentagon information apparatus that has used those analysts in a campaign to generate favorable news coverage of the administration’s wartime performance, an examination by The New York Times has found.

Perhaps something like the principles of disclosure and objectivity proposed in this JAMA editorial (for medical publications) should be adopted more generally by government and the journalists who cover it. We deserve to know exactly who is behind the views and studies that inform public debate and policy.

Posted by Frank Pasquale at 04:10 PM | Comments (1) | TrackBack

Shareholder Wealth Maximization in Action

From the WSJ comes an article about how the slow flu season hurt the profits of some companies. The article quotes several executives complaining that Americans (initial) resistance to illness hurt their balance sheets.

Thus, Walgreen CEO Jeffrey Rein, speaking to shareholders, said “If attendees of the meeting needed to cough, he joked, they should leave the room and ‘go to a movie theater or on a bus’ to spread their germs. ‘We’re really hoping for a very strong flu season’.” While P&G CEO A.G. Lafley said on a quarterly analyst call: “Unfortunately, people have not been getting sick at a rate that we would all like yet.” Finally, LifePoint Hospitals CFO David Dill mused that "You have a strong flu season, and the ancillary business is very profitable . . . On the pediatric side, young kids coming into the hospital, that’s a nice margin for us, as well.”

I've got to think that these officers wish they could take some of this back, at least as phrased. And as reader S.B. pointed out, Rein's comments in particular raise red flags. I think it fair to assume that most OTC remedies for the winter flu are sold to concerned parents, despite the recent recall and health warnings. If Walgreen's intends to profit off of the flu season, and in particular in the sale to parents of potentially harmful meds, plaintiffs lawyers should smell blood in the water when bad outcomes occur.

Further, I think the article highlights how invested sectors of the economy are in a status quo of reactive, medicated, health care delivery. I don't mean to be dramatic, but it is worth pointing out that there is quite a bit of money (not to mention employment) riding on the continuing dysfunction of the health care system.

Posted by Dave Hoffman at 01:06 AM | Comments (4) | TrackBack

The Human Side of Health Care

I've admired Bill Stuntz's frank discussions of his struggles with illness for some time. In the new blog Less than the Least, Stuntz describes a Massachusetts-area hospital (the Yawkey Center) that he finds exceptional:

Sitting in that waiting room, I twice saw a volunteer wheel a cart past my seat, asking whether I wanted something to drink or a snack—no charge. I didn’t, but the offer made me smile more. I felt like a human being, not a number or an item on someone’s checklist. The same was true when I met with my oncologist—actually, it has been true in every conversation I’ve had with anyone at the Center so far. . . . That kind of behavior lends dignity to the patients who experience it. And for people whose bodies are assaulted by this disease, dignity is in short supply.

Most hospitals are the last places to seek dignity. The physical spaces are, for the most part, ugly and cold . . . Some of the doctors and nurses go out of their way to show patients warmth and consideration—and may God bless each and every one of them; the smallest interactions with them are like a drink of cool water in the desert. But for the most part, hospital conversations are tickets being punched, not human beings communicating with one another. . . . However excusable . . . bottom line[-driven treatment] may be, it’s deeply wrong. Sick human beings need to know that we’re still human beings.

Having taken my mother to the predecessor of that center many times, I can second Stuntz's observations. I think they can be taken in a few directions by policymakers. I'll explore a couple beneath the fold.

First, Virginia Postrel brings up evidence that more aesthetically pleasing hospital settings can speed better health outcomes:

“[E]vidence-based design,” which draws its principles from controlled studies, is the great hope of professionals who want to upgrade the look and feel of medical centers. Much of this research follows a seminal 1984 Science article by Roger S. Ulrich, now at the Center for Health Systems and Design at Texas A&M. He looked at patients recovering from gallbladder surgery in a hospital that had some rooms overlooking a grove of trees and identical rooms facing a brick wall. The patients were matched to control for characteristics, such as age or obesity, that might influence their recovery. The results were striking. Patients with a view of the trees had shorter hospital stays (7.96 days versus 8.70 days) and required significantly less high-powered, expensive pain medication.

When I started thinking about health-care design, I assumed that insurance price controls and third-party payments were the source of the problem. But hotels upgrade their rooms to please business travelers whose expense accounts impose budget limits. When airfares were set by law, airlines competed by offering better food and prettier stewardesses. Patients generally do decide where to take their business, even if rates are fixed and someone else is paying. They may not know what their health care costs, but they certainly know what the hospital looks like. In academic surveys, patients in better-decorated, hotel-like rooms rate not just the environment but their medical care more highly than do patients in rooms with standard hospital beds and no artwork. That customer-satisfaction result would tell any smart hotelier to redecorate. But hospitals feel less competitive pressure and are more resistant to change.

Personally, I find Postrel's faith that "competition" will solve the problem a little puzzling. Not many seriously ill people are shopping for health care on the aesthetic dimension. As she admits, they are looking for the best doctors and technical treatments they can find. But I do think that if hospitals were under less pressure from ever-declining government reimbursements, they might have the resources to implement "evidence-based design." Postrel might find a good model for her program in the government's requirement that food labels clearly display nutritional content. The market didn't bring us that information and design improvement--government did.

Postrel's and Stuntz's work lead me to reconsider the degree to which the health care system generally should subsidize design and aesthetics. In prior work, I criticized boutique physicians for "bundling medical care with unrelated amenity services." I was agnostic about the value of amenities at the time I wrote that. But now I'm more concerned about getting them supplied to the chronically ill. . . and just hope that we as a society can recognize that everyone battling serious illness deserves to be treated well at a time of great need.

As Daniel Goldberg has perceptively observed for a long time now, health outcomes have a lot more to do with social care and stress-reduction than conventional wisdom recognizes. He highly recommends a documentary on the social determinants of health. As the documentary web page notes,

Economic and racial inequality are not abstract concepts but hospitalize and kill even more people than cigarettes. The wages and benefits we're paid, the neighborhoods we live in, the schools we attend, our access to resources and even our tax policies are health issues every bit as critical as diet, smoking and exercise.

The unequal distribution of these social conditions - and their health consequences - are not natural or inevitable. They are the result of choices that we as a community, as states, and as a nation have made, and can make differently. Other nations already have, and they live longer, healthier lives as a result.

Participants in the documentary talk about "chronic stress and the neuroendocrine pathway," scientifically linking stressful situations to poor health outcomes. If hospitals should "first do no harm," improving patient experiences is a smart way to start.

Posted by Frank Pasquale at 10:25 AM | Comments (2) | TrackBack

Reverse Robin Hood: The $30 Billion Question

Remember the controversies over the State Children's Health Insurance Program (SCHIP) last fall? The Bush Administration was very concerned that spending an additional $30 billion over the next five years to cover more children would put the country on the road to "socialized medicine." Even if economic reports indicated that only one in five families in the coverage expansion would drop private insurance to purchase government sponsored insurance, that was seen as far too high a cost to pay to allow even a bit more publicly-financed insurance to "pollute" children's health care.

Yet the administration has recently endorsed the Fed's $30 billion guarantee for JP Morgan as it purchases Bear Sterns. I'll let the accountants figure out exactly how much of that money will end up being provided by taxpayers, but I think it's safe to assume that more guarantees like this are coming, and that the market itself priced it in in response to the toxic subprime securities Bear still counts as "assets."

So what are the practical consequences when a country allows millions of kids to go uninsured, but structures financial regulation so that leaders of banking firms face nearly no downside, and high upside, on extraordinarily risky investment strategies? It appears that we only worry about moral hazard in the health care arena (where it has been largely discredited), and not in the financial world (where it has been amply confirmed). Internationally, the US is looking less like a leader in financial innovation and more like a haven for crony capitalism. The New York Times describes the situation as "socialized compensation" for the connected:

Bankers operate under a system that provides stellar rewards when the investment strategies do well yet puts a floor on their losses when they go bad. They might have to forgo a bonus if investments turn sour. They might even be fired. Their equity might become worthless — or not, if the Fed feels it must step in. But as a rule, they won’t have to return the money they made in the good days when they were making all the crazy bets that eventually took their banks down.

The costs of such a lopsided system of incentives are by now clear. Better regulation of mortgage markets would help avoid repeating current excesses. But more fundamental correctives are needed to curb financiers’ appetite for walking a tightrope. Some economists have suggested making their remuneration contingent on the performance of their investments over several years — releasing their compensation gradually.

In a recent hearing questioning the extraordinary gains at top financial firms (for pioneering strategies that now may lead to massive government bailouts), Henry Waxman suggested that current policies may lead to a crisis of faith in the market system:

“There seem to be two economic realities operating in our country today. Most Americans live in a world where economic security is precarious and there are real economic consequences for failure. But our nation’s top executives seem to live by a different set of rules.”

To contexualize Waxman's point, here is Paul Krugman with the back story:

[By the 1990s], Wall Street chafed at regulations that limited risk, but also limited potential profits. And little by little it wriggled free — partly by persuading politicians to relax the rules, but mainly by creating a “shadow banking system” that relied on complex financial arrangements to bypass regulations designed to ensure that banking was safe.

For example, in the old system, savers had federally insured deposits in tightly regulated savings banks, and banks used that money to make home loans. Over time, however, this was partly replaced by a system in which savers put their money in funds that bought asset-backed commercial paper from special investment vehicles that bought collateralized debt obligations created from securitized mortgages — with nary a regulator in sight.

As the years went by, the shadow banking system took over more and more of the banking business, because the unregulated players in this system seemed to offer better deals than conventional banks. Meanwhile, those who worried about the fact that this brave new world of finance lacked a safety net were dismissed as hopelessly old-fashioned.

Fortunately, it is now market fundamentalism that can be "dismissed as hopelessly old-fashioned."

Finally, I want to provide readers with an extended quote from David Cay Johnston's book Free Lunch, which chronicles the way in which government policies systematically redistribute income regressively. After surveying a panoply of such policies, he sketches their effect on the distribution of income in today's economy:

To appreciate fully how much the fruits of economic growth are, under current government policies, being concentrated in the hands of the few, it is useful to . . . examine the ratio of income growth between different groups over several long periods of time, starting with a comparison between the lower 90 percent, our "vast majority," and the top 1 percent.

Let's consider three eras. The first would be from 1950 to 1975, a quarter century when a rising tide did lift all boats and the nation was transformed into a land of broad prosperity. Setting the second era from 1960 to 1985 allows us to incorporate an early part of the era in which government began changing its policies in ways favored by many of the rich. Finally, it would be good to compare 1980 with 2005, but that will not work mathematically because the ratio would include negative numbers, since the income of the vast majority declined slightly. So instead we will use 1981, a recession year, to compare to 2005. The vast majority's average annual income was $114 higher at the end of those 24 years.

The measure is a ratio. For each additional dollar going to each person in the vast majority, how many went to each of those in the top 1 percent? For 1950 to 1975, the ratio is four dollars more at the top for each dollar going to the vast majority. For 1960 through 1985, the ratio is $17. And for 1981 through 2005, it is almost $5,000.

Dramatic as those numbers are, they understate the concentration of income. Let's now compare income growth for the vast majority with the top 1/100 of 1 percent, those 30,000 Americans at the very top of the income ladder. For 1950 to 1975, the ratio was $36 to one. For 1960 through 1985, it was $459. And for 1981 through 2005, it was $141,000 to the dollar.

It's probably safe to say that all of the executives at Waxman's hearing were in the top 1% at some point (and may well be kept there by capital gains on their current wealth). It's likely that they were in the top one hundredth of one percent during the boom.

When will the ratio of gains between those at the top and the "vast majority" become so great that academic defenders of inequality (like Greg Mankiw) will become concerned? Is a 10,000 to 1 ratio too much? 100,000 to 1? And at what point will conventional economic theory recognize the extraordinary importance of relative position to economic welfare? It's currently clear that inequality of income affects such important goods as education, housing, and access to the political sphere. If the fall of the dollar continues and commodity prices continue rising, more brutal consequences of inequality are sure to come to the fore.

PS: Here is one more reminder, from Thomas Pogge, on why, in an era of increasing inequality, it is very misleading to focus on growth alone in economic policy generally:

Consider what difference such a pro-poor assessment of economic growth would make to an economic planner—in a high-inequality country, say, such as Bolivia. If such a planner focuses on (per capita) GNI, she will ignore the poorest decile who, though they make up 10 percent of the national population, constitute just 0.3 percent of the national economy. One percent more income growth for the poorest decile adds 0.003 percent to national growth—one percent more income growth for the richest decile adds 0.472 percent. But if such a planner assesses her performance in terms of the economic position of the poor, she will realize that substantial improvements in the position of the poor are possible at tiny opportunity cost to the rich.

Perhaps by focusing too much on GNP as a measure of economic well-being, the US has inadvertently prioritized income growth for the richest decile.

Posted by Frank Pasquale at 07:24 AM | Comments (2) | TrackBack

Understanding the Flight to Cosmetic Surgery

An article by Natasha Singer has documented the increasing attractiveness of cosmetic medical practices in the US:

Seniors accepted in 2007 as residents in dermatology and two other appearance-related fields — plastic surgery and otolaryngology (ear, nose and throat doctors, some of whom perform facial cosmetic surgery) — had the highest median medical-board scores and the highest percentage of members in the medical honor society among 18 specialties[.]

The vogue for such specialties is part of a migration of a top tier of American medical students from branches of health care that manage major diseases toward specialties that improve the life of patients . . . . “It is an unfortunate circumstance that you can spend an hour with a patient treating them for diabetes and hypertension and make $100, or you can do Botox and make $2,000 in the same time,” said Dr. Eric C. Parlette, 35, a dermatologist in Chestnut Hill, Mass., who chose his field because he wanted to perform procedures, like skin-cancer surgery and cosmetic treatments, while keeping regular hours and earning a rewarding salary.

I think the article's explanations for the "best and brightest"'s migration to the more superficial specialties are good, as far as they go. But larger economic forces also play a role.

As Robert Kuttner has explained, the key starting point in any analysis of contemporary American health care is the trend to allocate in response "to profit opportunities rather than medical need." Thomas Pogge's important recent article "Growth and Inequality" helps illuminate how that trend, while perhaps defensible in some limited situations, has been thoroughly corrupted by rising levels of inequality:

When growth is accompanied by rising inequality, this matters for the poor in two ways: It reduces or even negates gains in their absolute share that would otherwise result from economic growth. And it also diminishes their relative share. Many things money can buy are positional or competitive: political influence, for instance, and access to education and even health care depend not merely on how much money one has to spend but also on how much others are willing and able to spend on those same goods.

I have explored this dynamic in more detail with respect to primary care here, dentistry here, and with respect to political power here. If current trends continue, perhaps we will see the rise of teams of courtier doctors and specialists, paid a handsome retainer to be at the beck and call of, say, one tycoon's family, or a small gated community.

Posted by Frank Pasquale at 08:27 PM | Comments (4) | TrackBack

Debate on Universal Health Insurance: What Place for Anecdotes?

Tomorrow I'll be debating the Chairman of the Cato Institute, Dr. William A. Niskanen, on the topic of universal health insurance. (Thanks to the Seton Hall Federalists and ACS for putting this together.) We'll be discussing the following issues:

I. Is there a health care crisis in US and what are the primary factors contributing to it?

II. Is the universal provision of heath insurance by the government a legally and economically feasible solution?

III. Are there alternative solutions addressing the health care crisis that are superior to the universal provision of health insurance by the government?

It's a real honor to be debating Dr. Niskanen, since I read parts of his 1971 classic Bureaucracy and Representative Government back in grad school.

In preparing for a debate like this, I always wonder what should be the balance between empirical evidence and anecdotes. While the former is the "gold standard" in written publications, the latter often represent the best opportunity to bring home the urgency of a given policy position. Catonian David Hyman has claimed that mere "narratives provide an inadequate basis for [the] framing and resolution of matters of social policy." But as advocates at Health Care for All and Health Law Advocates pointed out at a recent luncheon at Harvard's Petrie-Flom center, even the finest "economic policy and theory" needs to be questioned if its prescriptions leave "millions with inadequate health coverage."

In any event, I plan to lead with anecdotes like the recent Oregon health insurance lottery and the Sixty Minutes story on Americans waiting hours for doctor-volunteers originally dispatched to the third world. But I most look forward to developing the moral and economic case for universal insurance--the neglect of which leaves the US increasingly out of step with norms of solidarity and mutual concern overwhelmingly prevalent in the developed world.

Posted by Frank Pasquale at 09:34 PM | Comments (1) | TrackBack

The Culture of Cosmetic Surgery Reaches Iran

Mehrdad Oskouei's documentary "Nose Iranian Style" offers a fascinating (if depressing) look at the rhinoplasty capital of the world: Iran. Here's the summary:

A large and growing percentage of . . . people in Iran [about 60-70,000 per year] . . . have their noses made smaller through rhinoplasty, even young Moslem women who hide most of their faces with traditional scarves. Filmmaker Mehrdad Oskouei explores this phenomenon [by interviewing] a number of teens who have either had the operation or are considering it, the parents to give their blessings to this practice (and their money to the plastic surgeon), and trends in Middle Eastern culture which may be contributing to this wave of new noses.

The film starts with a group of girls cheering upon hearing that Iran is "nose job" capital of the world, and a series of uncomfortable (if illuminating) encounters and montages follow. News reports have tracked the trend for a while, but the film does an extraordinary job juxtaposing the pre- and post-modern aspects of contemporary Iranian life that contribute to the pressure to abrade, upturn, and minimize noses. Though some religious authorities oppose the trend, they appear feckless throughout the film. (One plastic surgeon states that "Plastic surgery is better appearance for people, and I think God [would] like this.") A few more thoughts on the comparative role of law and norms in addressing the rise of the rhinoplasties below.

The documentary script contains several provocative quotes from interviewees. Here's a plastic surgeon attempting to explain the fad:

The youth are after identity, they are seeking acceptance. Different societies and their needs are rapidly changing. The young people are more sensitive and desire more excitement; they are after new issues. Our youth are no exception. The demands for change are in the face, especially the nose. You see the change of nose in a front and a silhouette angle.

What I found bizarre about this assertion is that virtually everyone in the film who deeply desires a nose job looks fine. . . as this dialogue suggests:

Filmmaker: Doctor, her nose is so beautiful, does she really need a nose job?

Dr.: It’s extraordinarily beautiful but she will become more beautiful.

Admittedly, a plastic surgeon does bring up a few pictures that are out of the ordinary, but these are skillfully balanced by the filmmaker with mishandled jobs that were genuinely disfiguring--and irreversible.

While the plastic surgeons rhapsodize about finding one's own identity, the youths themselves offer a very different perspective. Attracting a marriage partner appears to be the key rationale, but some despairing social commentary emerges as well:

Girl: A girl that is more beautiful will have a better chance to be picked.

Girl: They girls must have a nose job, become beautiful and then get married.

Girl: There is a lack of husband[s in the country]…

Filmmaker: Which grade are you in? [10th Grade]

Girl: It’s a variety for us. We can’t wear an orange manteau in the street. So we are forced to have a nose job.

Girl: Unfortunately we are feeling vain and futile. And nothing is as it should be. We are always looking for a healthy and profound relationship and friendship, but we’re unsuccessful. The nose job is epidemic and everyone has caught it more or less.

As I've blogged before, the personal is inevitably political here, because of the positional pressure that prevalent cosmetic surgery can perpetuate. When one person in a group gets rhinoplasty, they may stand out positively. But when virtually everyone gets it, no one in that group ends up "ahead" of one another--but the few who are left out can be all the more stigmatized for being more unusual now.

Posted by Frank Pasquale at 06:04 PM | Comments (0) | TrackBack

There Really Is No Such Thing as a Free Lunch

The school system feeds hundreds of thousands of kids who would otherwise go hungry. These students receive free lunch at school cafeterias. As Frank has noted provision of basic services is vital to our country. Making sure that children receive solid educations (and yes can read and think not just take a bloody test) just might lead to little things like jobs, reduced likelihood of going to jail, not to mention possibly participating in the political process. But I digress.

Frank Pasquale, Greg Lastowka, I and others having been looking at reputation online. The New York Times brings home a simpler, pernicious aspect of reputation: just plain old coolness. Apparently many students who receive free lunches choose not to take them or try and hide the fact that they get them because it is just not cool. This fact reminds me of a line in a film called the Moderns when an American artist in 1930s Paris says "It's ok to be broke in Paris in America it is down right immoral."

One thing that must stop in the United States is the stigma of poverty. I just finished Bill Strickland's book, Make the Impossible Possible: One Man's Crusade to Inspire Others to Dream Bigger and Achieve the Extraordinary. Strickland's point that treating people like human beings, giving them clean, nice places that show them that the world can be a good place, AND then demanding of them the same high quality of dedication and work that is asked of people who are better off, yields tremendous results. We are talking impressive high school graduation rates, college matriculation rates, and job placement records (adults tend to become sous-chefs, lab technicians, graphic artists) that most cities would love to have.

The Times article notes that some schools are thinking of moving to a debit card or code system so that it is harder for kids to determine who is getting the free or subsidized lunch and who is not. So maybe things will change on that small front. I hope so.

Hat Tip: John Scalzi

Image WikiCommons

License: Public Domain

Posted by Deven Desai at 06:11 PM | Comments (3) | TrackBack

Korobkin on the Clinton/Obama Mandate Contretemps

Television has an extraordinary abilty to drain the substance from policy--so much so that even after their 20th debate, the difference between the Democratic candidates on health care has been shrouded in slippery charges and countercharges. Fortunately, Russell Korobkin has an excellent commentary on the Clinton/Obama mandate controversy. Korobkin has a deep understanding of both managed care and the political dynamics at stake here; his diagnosis follows:

Whether the government should require everyone to purchase health insurance is a difficult issue about which reasonable people may differ. (Full disclosure: I am an unpaid member of a health care policy advisory committee for the Obama campaign, but I personally favor individual mandates as part of comprehensive health care system reform). But the sound argument to be made in favor of mandates is very different from the one reiterated daily by Clinton. . . . Clinton could reasonably argue that, as president, she would need to accept an individual mandate in order to win Congressional backing for market reforms and subsidies that would truly help the uninsured. Instead, she chooses to claim that mandates are themselves the goal. . .

I have heretofore refrained from commenting on the controversy because of the diversity of circumstances of the uninsured. Mandates can be a good idea for the more well-off uninsured, but raise many difficulties for those lower on the income scale.

For example, I can't see why taxpayers generally should allow, say, a single person making over $75,000 annually to a) avoid paying any insurance premiums, b) demand high tech care in case of an accident, and c) go bankrupt to avoid paying the bills incurred. On the other hand, such "free riders" are often only responding rationally to a competitive market economy that puts the "lowest cost provider" of labor at an advantage over those who pay their fair share (and demand their employer do the same). A mandate levels the playing field for this group.

But as an NYT story reports, only about 16% of uninsured households make over $75,000 per year. Given that the "the average annual premium [is about] $4,479 for an individual and $12,106 for a family," affordability becomes a much bigger issue when we go down the income scale. For the 40% or so of uninsured families with less than $25,000 in annual income, an average policy could easily bankrupt them. They can purchase very cheap insurance, but in some cases that is tantamount to no insurance at all.

Massachusetts has addressed that problem by setting a standard of "minimum creditable coverage," and subsidizing those below certain income thresholds to help them purchase it. Yet there are important objections to this method of providing care. Consider the incentives it creates for the subsidized--they tend to lose government subsidies to the extent they make more money. As Fuchs & Emmanuel state, this is but the tip of an iceberg of difficulties with the "subsidize the poor & let them buy their own insurance" approach:

The proposal that would make the least change in the existing system is mandating that every American have health insurance that meets some minimum standard and having the government provide income-related subsidies or tax credits to the poor and near-poor to enable them to purchase insurance in the individual market or through exchanges formed for that purpose. . . . One version of the individual-mandate approach envisages the elimination of employer-based and means-tested insurance and the phasing out of Medicare. All Americans would be required to purchase one of three levels of coverage with income-related subsidies.

The fact that mandates with subsidies would build on existing systems of finance, organization, and delivery is perceived as an advantage by some and as a disadvantage by others. The advantage lies in simplicity of plan design and the likelihood that no large groups would believe that they had been hurt by thereform. The disadvantage is that this would preserve the existing methods of finance with all of their flaws and do little to increase the efficiency and effectiveness of the organization and delivery of care. Without increased efficiency, overall health spending would be likely to shoot up. . . .Mandates with subsidies seem relatively simple, but implementation could prove to be complex and expensive. Enforcement of a mandate on 300 million Americans would not be trivial, as evidenced by widespread noncompliance with liability insurance mandates by millions of automobile owners. What will happen when a patient who does not have health insurance shows up at a hospital with a heart attack or after a bad accident?

Administration of income-related subsidies is also likely to prove problematic. . . . With premiums now close to $10,000 per year for decent family coverage, the subsidies for low-income families would have to be substantial. Potential loss of subsidy would discourage efforts to increase income and encourage misreporting. . .

As I have noted earlier, advocates of market-based health care reform face many paradoxes here. They may think that the ideal way to rein in health care spending is to give individuals money (rather than subsidize care directly). But to the extent those subsidies are tied to low levels of income, they create the same old incentives to work less (or not at all) that the right has long blasted traditional social welfare programs for creating.

Perhaps we can learn something from Taiwan, an indisputable economic success story that decided in the mid-1990s to try to cover all individuals (and has largely succeeded):

[T]he experience of the insured in Taiwan is certainly better than that of Americans dependent on the caprices of commercial health insurers. In 2005, polls showed a 72.5 percent satisfaction rate—and much of the dissatisfaction is with the cost, laughably small though it is by U.S. standards. When co-payments and premiums were increased in 2002, the satisfaction rate plummeted to 59.7 percent. To put this in perspective, the premiums at the maximum are less than $20 (U.S.) per month (the annual per capita GDP is $16,500 U.S.).

Premium collection is similar to that of Social Security contributions in the United States. Employers and the self-employed are legally bound to pay. However, unlike the US Social Security Fund, the NHI is a genuine pay-as-you go system. The aim is for the premium income to pay costs. There is a continual tussle over who bears the cost of the national service—currently 27 percent is paid by the government, 35 percent by employers, and 38 percent by employees.

The various constituencies seem to have cooperated to avert long-term financial problems, adjusting premiums, co-payments, and provider fees in a way that has left them all reasonably content, while providing protection for weaker and poorer groups and those suffering chronic illnesses. Even the generous safety net seems to have another net below, with exemptions for those who cannot pay, loan option to pay premiums, and referral to charitable organizations for payment when even that fails.

In any event, perhaps the most heartening thing I've heard in this whole debate recently was a perspective from David Cutler, another Obama advisor. Like Korobkin, he understands the complexity of the US political system and realizes that we can't have everything on the table at once. The key here is to slowly change minds about provision of care for the most disadvantaged groups--and then use successes in those areas to build the political capital necessary to put models like the French, German, and perhaps Taiwanese on the table.

PS: For more on the political risk of advocating mandates now, see:

Posted by Frank Pasquale at 10:17 AM | Comments (4) | TrackBack

A Hold on Democracy

Though DNA tests could help a lot of people, many are afraid of getting them--and for good reason:

Employers say discrimination is already prohibited in the workplace by the Americans with Disabilities Act and existing laws governing privacy of medical records. But employee rights advocates say nothing in those laws explicitly prevents employers hard-pressed to pay for mounting health care costs from trying to screen out employees they know are more likely to get sick.

Courts have yet to rule on the subject. When the Equal Employment Opportunities Commission sued the Burlington Northern Santa Fe Railway for secretly testing the blood of employees who had filed compensation claims for carpal-tunnel syndrome in an effort to discover a genetic cause for the symptoms, the case was settled out of court in 2002.

Fears about these possibilities have long led Congress to consider a general national ban on genetic discrimination. There is broad bipartisan support for the idea. . . but one man appears to be blocking it.

As the NYT reports,

The Genetic Information Nondiscrimination Act, which passed the House of Representatives by a wide margin last year, would prohibit insurers from using genetic information to deny benefits or raise premiums for both group and individual policies. (It is already illegal to exclude individuals from a group plan because of their genetic profile.) The bill would also bar employers from collecting genetic information or using it to make decisions about hiring, firing or compensation. But it has yet to reach the Senate floor.

Why the holdup? Ask Oklahoma Senator Tom Coburn:

In a Congress that has had trouble passing even the simplest legislation, Sen. Coburn, who proudly wears the nickname "Dr. No,'' is a one-man gridlock machine. This year, the senator, who indeed is a medical doctor, single-handedly blocked or slowed more than 90 bills, driving lawmakers on both sides of the aisle to distraction. He blocked a ban on genetic discrimination by health insurers. He thwarted a bill to set up a program to track patients with Lou Gehrig's disease. Also nixed: an effort to promote safe Internet use by children. . .

What's really astonishing is that Coburn's extraordinary power to "hold" bills does not appear to be shared by some colleagues in the majority, like Chris Dodd. Majority Leader Harry "Reid . . . completely disregard[ed] the "hold" placed by Chris Dodd on any [telecom] amnesty bill -- simply refusing to honor it, even as he respectfully honors literally scores of "holds" from GOP Senators such as Tom Coburn."

I'll have more to say on double standards in the Senate in a bit. But for now, it's pretty disheartening to contemplate that one of the few doctors to make it into the Senate appears to be derailing a bill that would alleviate thousands of individuals' anxiety about crucial diagnostic tests.

PS: By the way, some might claim that genetic discrimination has not yet become widespread, and therefore is not a legitimate policy concern:

Insurers say they do not ask prospective customers about genetic test results, or require testing. “It’s an anecdotal fear,” said Mohit M. Ghose, a spokesman for America’s Health Insurance Plans, whose members provide benefits for 200 million Americans. “Our industry is not interested in any way, shape or form in discriminating based on a genetic marker.”

My colleague Gaia Bernstein has indeed concluded that "genetic discrimination is rare and apparently on the decline." But that empirical "is" does not lead to the conclusion that legislation "ought" to be unnecessary--a point Bernstein makes clear in her work. The public assurances of employers and insurers aren't enforceable in court. And in a "recent study by the Georgetown University Health Policy Institute. . . ., [in] 7 of 92 underwriting decisions, insurance providers evaluating hypothetical applicants said they would deny coverage, charge more for premiums or exclude certain conditions from coverage based on genetic test results."

Posted by Frank Pasquale at 07:29 AM | Comments (3) | TrackBack

Discriminating Our Way to Universal Health Care

When libertarian bloggers hear about rationing by the British National Health Service, they get quite distressed. But I rarely hear the same level of outrage over stories like this:

One of California's largest for-profit insurers stopped a controversial practice of canceling sick policyholders Friday after a judge ordered Health Net Inc. to pay more than $9 million to a breast cancer patient it dropped in the middle of chemotherapy. . . . "Health Net was primarily concerned with and considered its own financial interests and gave little, if any, consideration and concern for the interests of the insured," [a private arbitration judge] wrote in a 21-page ruling. . . . When Health Net dropped her in January 2004, [the patient] was . . . forced to stop chemotherapy for several months until she found a charity to pay for it.

A few years ago, a doctor/novelist (Robin Cook) suggested that private insurers may eventually provoke adoption of a universal health care system if they use new technologies of genetic discrimination to avoid sick patients.

The argument is worth quoting in full, because it points out some deep difficulties in a "market" for private insurance that provides "tailored" policies in response to individual needs:

[A] negative consequence of [a] new ability to predict illness is the potential for discrimination in one form or another if confidential health information is released. Unfortunately the chances of such a breach of privacy occurring, despite lip service by politicians to prevent it legislatively, are probably inevitable. Not only is microarray technology easily accessible, but for-profit private insurance companies have strong incentives to use it to protect their bottom lines by denying service, claims or even coverage.

It is precisely this danger, however, that may lead to a great breakthrough: the inevitable movement to universal health care. In this dawning era of genomic medicine, the result may be that the concept of private health insurance, which is based on actuarially pooling risk within specified, fragmented groups, will become obsolete since risk cannot be pooled if it can be determined for individual policyholders. Genetically determined predilection for disease will become the modern equivalent of the "pre-existing condition" that private insurers have stringently avoided.

As a doctor I have always been against health insurance except for catastrophic care and for the very poor. It has been my experience that the doctor-patient relationship is the most personal and rewarding for both the patient and the doctor when a clear, direct fiduciary relationship exists. In such a circumstance, both individuals value the encounter more, which invariably leads to more time, more attention to potentially important details, and a higher level of patient compliance and satisfaction - all of which invariably result in a better outcome.

But with the end of pooling risk within defined groups, there is only one solution to the problem of paying for health care in the United States: to pool risk for the entire nation. (Under the rubric of health care I mean a comprehensive package that includes preventive care, acute care and catastrophic care.) Although I never thought I'd advocate a government-sponsored, obviously non-profit, tax-supported, universal access, single-payer plan, I've changed my mind: the sooner we move to such a system, the better off we will be. Only with universal health care will we be able to pool risk for the entire country and share what nature has dealt us; only then will there be no motivation for anyone or any organization to ferret out an individual's confidential, genetic makeup.

Cook's argument is a powerful counternarrative to a dominant theme of "medicine & technology" discourse. Usually, technological advance is Exhibit A for the logic of a tiered medical system--if only the comparatively wealthy can afford something new, it's fine to allow them to get better technology than others because it incentivizes the development of technology that all can afford. But if technology makes existing markets for private insurance obsolete by rendering risk more transparent, it may well catalyze more egalitarian methods of pooling risk.

Posted by Frank Pasquale at 10:03 PM | Comments (5) | TrackBack

The Public/Private Balance in Health

In a piece entitled "Paying Patients Test British Health Care System," Sarah Lyall discusses the tensions between public provision and private markets in the UK. Lyall focused on the case of a breast cancer patient who wanted to use a new chemotherapy drug (Avastin). The National Health Service (NHS) provided most of her care, but would not pay the $120,000 needed for Avastin. The patient was about to sell her house to purchase the medicine, but then the NHS said that her choice to "go private" for the cancer drug would render her ineligible for NHS coverage of the other care she needed: Explaining such a policy, the health secretary, Alan Johnson, said

Patients “cannot, in one episode of treatment, be treated on the N.H.S. and then allowed, as part of the same episode and the same treatment, to pay money for more drugs." Officials said that allowing Mrs. Hirst and others like her to pay for extra drugs to supplement government care would violate the philosophy of the health service by giving richer patients an unfair advantage over poorer ones.

Note that the NHS is not actually denying her care--it is refusing to pay. Though I wouldn't endorse the Avastin decision, there are some good reasons for the NHS to manage the interaction of public and private plans--reasons that even the US has recognized in its limits on "balance billing" in the Medicare context.

According to a British doctor,

“People swap from public to private sector all the time, and they’re topping up for virtually everything,” Dr. Paul Charlson said in an interview. For instance, he said, a patient put on a five-month waiting list to see an orthopedic surgeon may pay $250 for a private consultation, and then switch back to the health service for the actual operation from the same doctor. “Or they’ll buy an M.R.I. scan because the wait is so long, and then take the results back to the N.H.S.,” Dr. Charlson said.

Is there a justification for policies like these? Consider the U.S.'s policies toward doctors who tried to bill Medicare patients for whatever the Centers for Medicare and Medicaid Services (CMS) will not pay for. The Medicare statute eventually restricted such "balance billing." The balance billing rules arose out of congressional concerns about potential barriers to access to care for poor and lower middle class Medicare beneficiaries. Without such rules, physicians could condition services to Medicare patients on the payment of additional charges that would undermine the programs' efforts to provide reasonably-priced health care to all. Under Medicare balance billing rules, participating physicians' charges are limited by the fee schedule prescribed by the program. Physicians who accept assigned claims are prohibited “from charging more than the Medicare fee schedule amount.” Physicians who “do not accept assignment are prohibited from charging more than 115% of the fee schedule amount.”

So let's return to the three British examples the article provides. My intuition is that something like a "balance billing" rule is appropriate for doctors' services, but may be counterproductive in the cases of drugs and technology.

I. Distinguishing Services and Technology

For example, some of the money paid for Avastin is going to fund pharmaceutical research. Similarly, the extra payment for an MRI scan sends a market-based signal to MRI makers that their services are in demand and they should make more such scanners. Of course, there are many caveats. If Britain somehow has only a fixed supply of Avastin for both public and private patients, the patient could be "jumping the queue." And perhaps it is the case that the private-paying patient is driving up the cost of the drug, particularly if it is very difficult to make. This may well be the case with Avastin--it's part of a class of biotechnology that is in general harder to replicate than, say, a simple pill. But even if that is the case, the current investment in the drug may well lead to better technology for its replicability.

When we turn from technology to services (a distinction some don't appear to make), the picture is different. In the case of doctors, their supply is relatively fixed. Those on the free-market right (Milton Friedman) and suspicious left (Dean Baker) would portray their licensing rules as cartel-like; those in the broad middle might accept the doctors' lobby's insistence that only a small group of people are sufficiently smart and dedicated to become doctors. Whatever one's take on the legitimacy of physician licensing, it limits the number of doctors in a way that is not responsive to price. So when someone pays $250 for a private consultation to "jump the queue," they are not likely contributing to a process that will lead more doctors to come on line eventually.

II. Complicating the Distinction

Of course, one would have to do some more empirical and sociological research to confirm that--perhaps doctors in Britain are willing to work more to do the private consultations, and won't effectively substitute out NHS patients for private patients. But I've explored many examples of this tiering dynamic in the US, and my general conclusion is that, as levels of inequality rise, doctors find they get both more leisure and more money when they concentrate their efforts toward the comparatively well-off (and away from the publicly insured).

And I should acknowledge that the technology narrative I've mentioned above is not clean-cut. For example, Kevin Outterson notes that while the developed world's research on antibiotics is a great service to the rest of globe, its frequent overuse of antibiotics during their patent terms could render them much less useful than usually supposed (due to antibiotic resistance). As Outterson observes, "Antibiotic resistance may be compared to running on a treadmill. R&D is learning how to run faster; conservation is slowing the treadmill down." Moreover, critics like Shannon Brownlee and Maggie Mahar have said that the U.S. has way too many diagnostic machines like MRI's, leading to overtreatment and overspending on medical services.

Nevertheless, I still think that in the main there is good reason to be more concerned about physician-based selective opt-out in public health systems than there is with respect to drugs and technology. Markets can create incentives for innovation and investment in the latter field. Physician licensing rules (and perhaps the "cost-disease" in services generally) make it much harder to do so in the former.

Note: My description of the balance billing rules is drawn from my 2007 article, The Three Faces of Retainer Care.

Posted by Frank Pasquale at 07:12 AM | Comments (2) | TrackBack

Understanding Medical and Financial Risks

There is a very interesting piece in the Wall Street Journal on hospitals' efforts to assure that their patients understand the consent forms they are signing. Here is a description of the VA's efforts:

The Department of Veteran's Affairs, with 153 hospitals, has over the past several years adopted a new electronic informed-consent software program that allows patients to use a digital pad to sign the consent forms, which can then be stored in their medical record. The program, known as iMedConsent, includes a library of anatomical diagrams and explanations written at a sixth-grade reading level for more than 2,000 procedures in more than 30 medical specialties.

This is a laudable effort to use computer technology to make new (and old) medical technologies accessible. The general idea probably has applications outside the medical field--particularly in a black box economy where "magic numbers" and complex deals are becoming ever more common:

[Satyajit] Das [author of "Traders, Guns and Money: Knowns and Unknowns in the Dazzling World of Derivatives"] disparages . . . bankers [for] creating "complexity for the sake of complexity," trying to wow their clients by inventing more sophisticated-seeming investments. "Financial innovation is a magical catch phrase," he explains. "It's very sophisticated and chi-chi." "Investment bankers want to make them more complex, so that they won't be copied, and so that their clients won't understand them," he says. "When they ask whether they're paying the right amount, they won't know."

But some advocates of evidence-based medicine suggest that the value of many standard medical procedures may be as uncertain as newfangled CDO-backed investments. . . .

For example, Henry Aaron highlights how little medical professionals know about the value of many of the technologies they employ:

U.S. analysts have suggested a six-level framework with which to evaluate improved technology such as diagnostic imaging. First, does the test perform as intended in a physical sense? For example, can a newer CT scanner distinguish tumor from normal tissue more effectively than an older model did? The second level of evaluation refers to diagnostic accuracy: is the test sensitive and specific? For example, does a stress test accurately show heart disease when it is present and clearly indicate its absence when it is not? Third, does the test alter the clinician’s diagnosis? When simple methods work, sophisticated techniques may add nothing but cost. Fourth, does the test affect the patient’s treatment? Accurately diagnosing a condition for which no effective treatment is available has little value. Fifth, do the test and associated changes in treatment improve patient health? Finally, what are the social consequences of the test as measured, for example, by cost effectiveness when compared to another procedure?

This six-level framework for evaluation is based on methods applied in the U.S. Agency for Healthcare Research and Quality as described by Athina Tatsioni et al., Challenges in Systematic Reviews of Diagnostic Technologies, 142 ANNALS OF INTERNAL MED. 1048, 1048 (2005).

Level-one and level-two evaluations are most common. A count of studies of magnetic resonance spectroscopy for brain tumors through 2004 revealed eighty-five level-one studies and eight level-two studies had been performed, but only two level-three studies, two level-four studies, and no level-five or level-six studies. Yet it is level-five and level-six studies that are most relevant for decisions of any group, private or public, responsible for administering limited health resources...

...as well as to patients deciding on whether to consent.

One final connection; while patients may be deliberating on the risk of illness, businesses in the health field may find their biggest risk is general good health: