Incentivizing Preventive Care

James Joyner’s post yesterday on Democratic presidential nomination aspirant John Edwards’s ideas about introducing incentives for patients to seek preventive care has engendered some little comment. I couldn’t get overly excited by the idea for a very simple reason: I don’t think it will happen. Whatever sense it may make (in the context that James notes), it’s not politically possible. And if it’s not politically possible, it’s not possible period.

As Exhibit A in my thesis I’d point out that, to the best of my knowledge, no OECD country has such incentives. If someone has information to the contrary, I’d appreciate it. Why is something that isn’t politically possible in, say, Germany, politically possible in the United States the citizens of which IMO would be even more resistant to such an idea than our European cousins?

I think it also should be noted that, as this article from January points out, the incentives for health care providers is quite the other way around:

See, preventive medicine simply doesn’t pay in the current American medical system.

“The time we spend with patients — we get rewarded almost zilch,” Agatston says.

Or, as Dr. Valentin Fuster, a former president of the American Heart Association, puts it: “There is no incentive at all. It’s a disaster.”

This is obviously an exciting time for health care reform. In California and Massachusetts, state officials have announced plans to provide universal health insurance. Last week, the head of the Business Roundtable, a major corporate lobbying group, and Andy Stern, a union leader, held a news conference to call for more coverage.

President George W. Bush devoted a big part of his State of the Union address Tuesday night to his own health insurance ideas. The push to reduce the number of uninsured, now approaching 50 million, is long overdue.

But a lack of insurance is only one of the two huge problems with health care. The other is the perverse system of incentives that nudges doctors and patients toward expensive tests and procedures when cheaper preventive measures — or simply doing nothing — might actually produce better results. Partly as a result, costs are rising rapidly for the 250 million-odd people who have insurance.

In cardiac care, high-tech scans and invasive procedures like bypass surgery bring in the money. Yet for many patients, there is no scientific evidence that basic procedures like stents prolong life.

So, why not incentivize the health care providers, too? For the simple reason that, unless the incentives your provide for preventive medicine are as large as the money being spent treating conditions, you’re asking the health care providers to take a pay cut. And if the incentives for preventive care are as large as the present incentives, you don’t realize any cost savings.

I’ve said it before and I’ll say it again. To reduce the costs of health care substantially in this country you’ve got to do one of three things (or some combination):

  1. Health care providers must voluntarily take a pay cut.
  2. Prices must be fixed.
  3. Or you’ve got to increase the supply of health care substantially.

Single-payer might reduce health care costs, perhaps, 10%. That would be more than absorbed by the increases in demand being proposed not to mention the secular increases in health care costs. Unless you believe that health care providers will take a pay cut voluntarily, eliminating employer-provided health insurance won’t reduce costs, either, and, even if it did, it would be to the detriment of public health We’re stuck on the horns of supply and demand.

3 comments… add one
  • One might argue that single-payer healthcare would substantially increase costs simply because of the increased demand. What will happen to doctor/nurse salaries when they suddenly have several tens-of-millions more patients to take care of and are already overloaded in many cases?

  • Tom Strong Link

    I think that might be a sly argument _for_ single-payer, Andy, since it would put so much pressure on the current system that supply would have to increase, and increase drastically. It could break the cartel.

    Or sink our economy, I suppose. Though I think taking the responsibility out of employer’s hands might counter that.

  • It’s not just that it’s not politically possible but it’s not physically possible. A proper physical takes 30 minutes. There aren’t enough primary care physicians with slack time to handle all that additional care.

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