The problem with this model is that it is so unpopular with most of the public who have gotten used to the co-pay mentality and do not react well to the “insurance company control” that they say they experience in an HMO setting.

The good news is that consumer-directed plans seem to be showing that consumers who have a financial stake in their health care will make rational decisions. Now all we need to make it happen on a wide-spread basis are more provider models like the full-service diabetes centers envisioned in the blog piece that will vigorously compete for patients.

Some specific quotes from Newhouse in the book Free For All? 1996 Harvard Press paperback edition, pages 351-352, are

“For dental and vision care, the benefits observed on the free plan could almost certainly be achieved more cheaply by a targeted benefit…the issue is whether the modest gains we found under free care justify the cost of a targeted benefit.”

“Virtually all of the improvement in blood pressure control brought about by free care occurred as a result of better identification of hypertensives…Control, once the person was diagnosed, was not measurably affected by cost sharing.”

He goes on to say that the experiment shed some light on the benefits of screening for hypertension, pointing out that the improvement from simply screening for hypertensives created an “improvement that was more than half as large as the improvement caused by free care. These results indicate that a screening examination might be an attractive alternative to free care.”

As for the “we were so surprised that utilization fell across the board and not in any one area which means that people cut health care willy nilly and therefore don’t know what they are doing” argument, I’ve always thought that this was a lame explanation. It is much more likely that health care is so individualized that people can cut in ways researchers both can’t see and don’t expect. The results from the Medicaid Cash & Counseling experiments support this kind of reasoning. So do the RAND ER usage figures (pages 154-158 of Free for All?) and a 2007 study of emergency department by Wharam et al. in the March 14, 2007 issue of JAMA. People apparently do much more effective triage when their money is on the line. Similar results seem to be showing up in the preliminary results from commercial consumer-directed account based plans. In one case, specialist use went up but costs went down. In other cases, compliance in taking medications increased.

If these results hold up, researchers may need to reconsider some of the long held research templates. It may be, for example, that specialist care for the chronically ill reduces costs and that people who pay the cost use specialists appropriately. This has profound implications for policy specialists who unceasingly chant the “we need more primary care” mantra.

Why should a person’s survival that has nothing to do with his behaviour or actions be based on his ability to pay? Is that fair?

Consuming gasoline should be based on market principles, health care should not. There are different realities for health care and the private system needs modification to account for them. One approach is subsidies, another is single payer, and there are many variations. But to blindly believe the private system is the preferred approach is narrow minded and for many Americans, dangerous. The private system works if one is wealthy, scary if not.

More and more people are going to Costa Rica for cosmetic and dental surgery. The doctors there compete with each other and are willing to negotiate prices. Prices are about 60% lower and the surgeons are excellent. Many of the dentists and surgeons studied at some of the most prestigious medical schools in the United States. The hospitals are modern and up to date. Who says that the U.S. has the best medical care in the world? Not in my books. I have a lot of air miles and I can get from Dallas to Costa Rica in about 3 hours.