Priceless: Preface (2)
by Austin Frakt
September 14, 2012
Source: The Incidental Economist
I’m blogging my way through Priceless: Curing the Healthcare Crisis, by John Goodman. All posts in the series will be found under the Priceless tag. This post pertains to the book’s preface. Since it’s just the preface, I won’t read too deeply into where John is going. (I could guess, of course.) Let me just flag a few things.
When we expand a government insurance plan for low-income patients, we are spending billions of dollars in a way that doesn’t increase their access to care.
This is not what has been found in the Oregon Health Study, and it is very hard to argue with the methods of that study.
Under John’s proposal,
When you enter a new health plan, you and your previous insurer would pay a premium that fully reflects the expected costs you bring to that plan.
I’ll keep thinking about this idea as John discuss it further in his book, but my reflex is to like it. I can see how it could solve some big problems. I can also see how it is not that different from risk adjustment funded by a consortium of insurers. On average, across all insurers, it is cost-neutral. If it works perfectly, there won’t be any winners and losers. Perfectly is important. (More later.)
It’s obvious the general direction of John’s ideas are toward more consumer driven (consumer paid) health care. I’ll be interested to see where comparative effectiveness research and shared decision making fit into his scheme. As a consumer who pays relatively little out of pocket at the point of care, I already want more of both. I don’t see how paying even more out of pocket would decrease my interest.
I also want to flag the skewed distribution of health spending, as well as the persistence of it. Over the span of time relevant to the deductible (usually a year), if a small minority of patients account for the vast majority of spending, much of it above the deductible, then the deductible isn’t that relevant. It is certainly not relevant for spending above it. It is potentially not relevant for spending below it, to the extent patients know their spending will eventually exceed it. Persistence is a proxy for how well they might be able to predict this fact, but it is not a perfect proxy. Watch for these issues. Don’t be distracted by the degree of persistence. It’s not the whole issue.
My next post on the book is scheduled for Sunday, and it will cover Chapter 1. For the next couple of weeks, I’ll post on three chapters per week.