Perverse incentives: Where’s the outrage?

perverse incentives in health careThat’s a good question!

H. Gilbert Welch, MD, the author of Overdiagnosed: Making People Sick in the Pursuit of Health, wrote a recent op-ed in the New York Times in which he wonders at what point will the high costs—and profits—of medical care in America be considered “a crime”?

Medical care is intended to help people, not enrich providers. But the way prices are rising, it’s beginning to look less like help than like highway robbery. And the providers — hospitals, doctors, universities, pharmaceutical companies and device manufacturers — are the ones benefiting.

The crime of perverse incentives

Although admitting criminal might be too strong a word, Dr. Welch calls out several recent stories in the media related to ethically-questionable high health care costs:

As Dr. Welch points out in his book, the American health care system is built on “perverse incentives”—profit is made on illness, not health.

After several decades of increasingly confusing and complicated health payment systems, the free market for health care has apparently decided that the end (massive profits) is justified by the means (overtreatment, overcharging).

We could make the system better. We could ensure that everyone has access to the same set of prices, like the Medicare fee schedule. We could end the “fee for service” positive feedback loop — in which doctors and hospitals earn more for every procedure they do, which leads to overtreating patients — and instead have a flat fee. But the incentives will never be perfect. Ultimately, society needs individuals to be guided by ethical standards. And in medical care, those standards are getting pretty darn low.

Too many of us have passively accepted the situation as being beyond our control. Medical care in America could use a dose of moral outrage.

Now that’s a prescription I’d be happy to fill!


Frugal Nurse


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