Waste Avoidance vs. Rationing: In the Eye of the Beholder

--By Anna Shepherd, Health & Personal Finance Professional

After musing over this must-read article written by Dr. Howard Brody, a few things come to mind. I absolutely agree that the type of waste the author describes is the elephant in the room that needs to be addressed before any realistic measures can be taken to rein in healthcare spending in the United States. 

See: Brody, Howard. “From an Ethics of Rationing to an Ethics of Waste Avoidance” NEJM 2012; 366:1949-1951. May 24, 2012. Taken from the URL: www.nejm.org/doi/full/10.1056/NEJMp1203365#t=article

But I also have a few points of contention that are not directly addressed with the article.

1. It’s obvious that in this environment, trimming the health care industry from 17% of GDP to a more manageable number, say 9%, is going to be unpopular from a policy standpoint due to the sheer size of the health care industry itself (read jobs). However, this would not be disastrous as the more efficient allocation of resources in a free market would be a net benefit in the long term. However, the political will can only exist if the electorate is also willing, a political rant I will forego right now.
2. It does bring me to my next point however; I think the author asks too much of the average physician without bringing in the most important component of the equation: the patient. Patient education is the only way to really solve the waste problem, in my opinion. Unfortunately, the path to an informed and enlightened patient takes time and effort. Physicians are already inundated with large numbers of patients, ever lower reimbursement rates, malpractice threats and the cost of practicing defensive medicine, not to mention the stresses of simply running a practice. I’m not a physician, nor an expert in these matters, but it seems naïve to me to expect physicians to take on this extra task. So, there must be a better way to get the patient to make better decisions and reduce wasted resources.
3. The final issue I have with the physician-driven nature of this article is a moral one. The decision to ‘ration’ cannot come from “without”. Because the rationing we are talking about is often going to involve foregoing costly procedures, we arrive at a very gray area in which the care-taking physician must try to be an objective advisor. They are far too financially involved, as the author mentions, in the outcomes of the patient’s decisions to truly be the trusted source for advice.

Posing questions about the ethics of rationing is a great place to start the conversation. And physicians are a crucial gate-keeping mechanism to avoid waste. But I think the author may be trying to solve a problem by creating a more complex system instead of the solution I see as painfully obvious throughout the health care system. It goes to a fundamental component of economic efficiency: a system is efficient if each actor is allowed to maximize their individual utility.

Simply put: the answers need to come from the patients themselves. We need to create an environment in which patients can seek the answers and information that allow them to make efficient decisions without feeling that care has been rationed away from them. They need to own the decision.

The Health Insurance Benefit as Umbilical Cord

--By Anna Shepherd, Health & Personal Finance Professional
We are all aware now that Obamacare has had some positive benefits for the less-than-27 years of age crowd: young adults can stay on their parent's health plan up to age 26. (Read more: http://www.sacbee.com/2010/05/09/2736160/personal-finance-health-care-rules.html#ixzz13b68jp7V )

As someone who is no longer on their parent’s plan, I have mixed feelings about this part of the legislation. It would be much easier to get back on Dad’s health plan, and I would certainly have a greater sense of security as I strike out on my own. But at the same time, as I’m trying to find a dentist for cheap in my new locale, I’m learning a lot and being selective because my bank account is at the forefront of my mind.

Part of the problem with American healthcare is that the true costs are not reflected in the prices (premiums) people pay due to the tax benefits of employer plans as well as the individual idea that “I’m not paying for it, the insurance company is.” I think these types of inclusions in the health care law further exacerbate that type of thinking. It allows young people to sort of write-off an expense onto their parents and not to have to think about the true costs until they smack them in the face later on. Now, people can certainly debate the pros and cons of young people not having to worry about their health care. As the linked article states, they are freer to find work, particularly non-profit social work, because health care coverage doesn’t have to be a prerequisite for a job. However, this also allows them to not have to think critically about planning their health and finances on their own.

Furthermore, we must ask, who is paying for this? The answer is often going to be: companies already cash-strapped and trying to cut costs in their health-plans. This is certainly not the best news for them, especially in this economic climate. These adult-children are not working for the company and increasing output and thus revenue, but they are reaping a reward for the work of others.

In the end, this is another example of inefficient cost-redistribution endemic in our health care system. Unfortunately, I view it as forestalling the inevitable—these kids have to own up sometime, whether it happens at 23, 29 or 35 god-forbid, the bottom line is always there and someone’s going to have to pay for it.