Friday, July 27, 2012

Who gets what?


I've been thinking about the larger “medical futility” project to which we will soon be returning, and came across Kenneth Feinberg's book on "Who Gets What - Fair Compensation after Tragedy and Financial Upheaval".   Feinberg administered the Agent Orange settlement for Vietnam vets, 9/11 distribution, Gulf oil spill compensation, as well as TARP payments to bailout executives, along with VaTech victims.  So he has a lot of experience with allocating money, all the time under pressure from many sides.  the only thing he could be sure of is that no solution would make everyone happy.   Sometimes tort law and legislated rules tied his hands, and sometimes public expectations / pressure/ politics / public outrage were as important factors as the other factors.

I quickly read through looking for how Feinberg’s insights into who gets what, can help us with the cost aspect of medical futility: who should get what care?



The one aspect of all his deliberations that stood out to me is this:  all his dealings were public, and everyone knew what everybody else was getting.   "People will always count other people's money"
The major difference in health care cost, seems to be the complete opacity of costs -- the general public has simply no idea where the money comes from, and to what destinations it goes.   With health plan co-pays in the $20 range, and emergency room visits at $50, the REAL cost of care -- an xray, medicine, treatments, never mind hospital stays, is completely invisible to most of us.  Those in the businesses dealing with medical billing codes are much more aware, at a transaction level, but they don’t see where the river of money really flows among institutions (government, insurance, hospitals and health plans, taxpayers, caregivers, pharmaceutical, and on and on).

At the lowest transaction level, perhaps many of us would be outraged that the xray that costs $100 in a local clinic runs $2000 in some institution -- who's to know?   Maybe it is $10,000.  Nobody posts prices.  I liken this to going to the gas station without a price sign outside, telling the attendant "fill it up with super!", and perhaps charging $50/gallon gas to my "travel credit card" (I’m not paying, “insurance” is).    If I had any idea the price was $50/gal, I'd drive right past the place.  My point is, most of us don’t know even if it is billed out at $500/gal.   

It seems clear that one important factor in addressing cost, is a high level of transparency that is reflective of Feinberg's balance between stinginess and generousity:  who gets what ?   Do we feel that physicians or surgeons deserve what they are paid (do you know your doctor’s income? how about your health plan administrator)?  it's already clear that good, conscientious nursing assistants are underpaid for what they do.   How can we make up our minds whether it's ethical or supportable (or even forgiveable),  if we don't even know who is getting what ?   THAT's the first thing that's broken about the cost of healthcare: it's completely opaque black box.

If we are to make an ethical determination relating to the cost of health care, (is it just? is it ethical?), one of the essential changes is the transparency of costs: how much does it cost, and where does it go? The cost factor in medical futility, is a piece of this larger societal issue and cannot be separated.
Some other aspects of the “cost” topic might include these other related threads:

Another member of the committee points to the inelasticity of price vs demand/supply in healthcare: right now there is a glut of lobsters in the market: $3.99/lb because the supply is huge.  When the supply dries up next year, prices will be back to $9, $12, $14/lb.  Prices in healthcare related transactions don’t move like that, so those costs don't respond to normal market changes.  

There is also the matter of immediacy:  If you need that appendectomy, you're not likely to quibble on price or shop around.   



Another non-market feature of many healthcare costs seems to be a large gap between the price of a drug or service, and the incremental cost of delivering it (what does it really cost to manufacture one more pill?  trivial!  yet the price doesn't drop no matter what else happens...).   
Finally,  how do we (our society) want to deal with "free riders" ?  Hospitals in border towns that are inundated with patients from neighboring states who are not turned away, but also don't have insurance to pay for their treatments.  Supporting free riders in many parts of the industry, is completely unsustainable.   I'm not suggesting denying services to people who obviously need it, but free riding is a key factor in dealing with the cost of healthcare in general, and more narrowly in medical futility context in particular.   Who is getting what health care for free? Don't fool yourself: "the rest of us" end up paying.

The above are personal observations.

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