Orszag on Public Health

CBO director Peter Orszag talking about the problems with the current health care financing system says that "we need much more information about what works and what doesn’t.” With that in hand, we need to “pay for the stuff that works” as opposed to the system where “right now we have financial incentives for more care rather than better care.” To a large extent, our current system doesn't deliver quality care because it's not designed to elicit quality care, “we should align [financial] incentives so that we are seeking better care, then that’s what we’ll get.” Long story short, you need to pay health care providers for helping people rather than for treating them irrespective of efficacy.

On public health more broadly, he says "we need to be doing a lot more to help people lead healthy lives" which means we ought to "dial down a little bit the excessive reliance on narrow financial incentives to influence behavior" and pay more attention to the extensive psychological and sociological research on why it is people do things that aren't in their long-term health interests and what we could do to push them in a healthier direction. Also this interesting fact -- "we are experiencing a dramatic increase in life expectancy inequality in the United States . . . at the bottom of the socioeconomic distribution, life expectancy is either flat or declining . . . a lot of that has to do with health behavior."

Comments

I read a book by Osho where he describes how a village in China (I think) would pay their doctor so long as everyone was in good health. If the town got sick, the doctor received no pay.

Conversely, there is a parable about a boy that gets sick and the doctor treats him and cures him, but not before the boy infects the entire town. The doctor is running around like crazy and finally gets everyone cured. He goes back to the original boy's father to demand payment and the father tells him that not only will he not pay, but that he expects the doctor to cut him in on the vast amount of money he made off the townspeople because his boy was responsible for getting everyone sick which was the cause of the doctor raking in some good money.

I'd rather live in the first village. Then there's Chris Rock's standup where he says they'll never find a cure for AIDS, or anything really, because there's no money in it.... more money in drugs to treat symptoms than in drugs that cure diseases.

Incentive is key.

Posted by Adam | July 2, 2008 12:11 PM

He's right about lifestyle. If you spend all day sitting down, and eating high sugar high fat foods, you are going to have some health problems. And those are lifestyle decisions, but they are also influenced by government policies. Cut subsidies to corn growers which makes sugar more expensive, and that will help one side. Change regulations so that walkable communities will develop will help the other side. This is both a local and federal problem.

Posted by freddiemac | July 2, 2008 12:23 PM

Currently, physicians are compensated largely based on the volume of patients they see and procedures they perform. That's why you have packed waiting rooms, long waits, double and tripled-booked time slots and slam-bam-thank-you-ma'am medicine. There is some additional compensation for longer and more complex patient encounters, but it's far more profitable to jam another two patients into the same amount of time.

I think it's a wonderful idea to redirect financial incentives towards quality of care and preventive medicine. That absolutely makes sense when you're considering the health of the individual patient. Unfortunately, I worry that the reality may result in reduced access to care unless we increase the pool of available physicians. It's simple ... if physicians are spending more time with patients, then physicians won't be able to see as many patients.

Of course, if the number of physicians increases to compensate for smaller volumes seen, then the quality of the physician labor force is diluted as less qualified individuals are accepted into medical school and residency training. Overall compensation could also decrease, making the field less attractive. There's also the fact that many of the current metrics used to assess physician quality are deeply flawed and largely defined by the health insurance industry.

Done wrong, these reforms could perversely end up decreasing quality and access to care.

Posted by Knight in Dragonland | July 3, 2008 5:50 AM