Perverse Incentives Destroying Health Care
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As aggregate spending on health care in the United States approaches $2.5 trillion (yes, that's trillion with a "T"), there is growing concern that people might be getting less than what they are paying for.
Per capita spending on health care in the United States far exceeds that of any other industrialized nation in the world. Yet, Americans are still less healthy than people living in other countries, in terms of life expectancy, infant mortality rate and survival rates for chronic disease.
If the United States has the best health care in the world, as is often the refrain when discussions of reform arise, then these indisputable indicators of American health would look very different.
The unfortunate reality is that the American health care system is infested with perverse incentives, resulting in a lower quality of care for a much higher cost.
Students graduating from medical school today face daunting loan sums, often exceeding $150,000. Graduates interested in research or family practice need only look at the numbers to realize that opting instead to become a specialist almost certainly means an income two or three times higher. On the face of it, this looks like simple supply and demand, but consider what a system with diminishing emphasis on primary care, wellness and prevention means for the health of a population.
The perverse incentives keep coming once a doctor begins practicing medicine. The trend to improve efficiency via electronic medical records is picking up steam at the state and federal level. But, while insurance companies often reap the greatest benefits of the move to electronic records, the cost of care keeps rising. So, a worthy idea (electronic medical records) gets put on hold because there is little benefit for both doctor and patient.
Finally, consider the use of cutting-edge technology to detect early signs of heart disease. On the face of it, capitalizing on American ingenuity to prevent medical problems from escalating appears to be a solution to our problems. However, research indicates that the use of new medical technology is more often driven by monetary incentives than improved medical outcomes.
Perverse incentives are slowly eroding our health care in the United States. We must recognize this dynamic and begin the hard work of restoring the patient as the focal point of our system.
Per capita spending on health care in the United States far exceeds that of any other industrialized nation in the world. Yet, Americans are still less healthy than people living in other countries, in terms of life expectancy, infant mortality rate and survival rates for chronic disease.
If the United States has the best health care in the world, as is often the refrain when discussions of reform arise, then these indisputable indicators of American health would look very different.
The unfortunate reality is that the American health care system is infested with perverse incentives, resulting in a lower quality of care for a much higher cost.
Students graduating from medical school today face daunting loan sums, often exceeding $150,000. Graduates interested in research or family practice need only look at the numbers to realize that opting instead to become a specialist almost certainly means an income two or three times higher. On the face of it, this looks like simple supply and demand, but consider what a system with diminishing emphasis on primary care, wellness and prevention means for the health of a population.
The perverse incentives keep coming once a doctor begins practicing medicine. The trend to improve efficiency via electronic medical records is picking up steam at the state and federal level. But, while insurance companies often reap the greatest benefits of the move to electronic records, the cost of care keeps rising. So, a worthy idea (electronic medical records) gets put on hold because there is little benefit for both doctor and patient.
Finally, consider the use of cutting-edge technology to detect early signs of heart disease. On the face of it, capitalizing on American ingenuity to prevent medical problems from escalating appears to be a solution to our problems. However, research indicates that the use of new medical technology is more often driven by monetary incentives than improved medical outcomes.
Perverse incentives are slowly eroding our health care in the United States. We must recognize this dynamic and begin the hard work of restoring the patient as the focal point of our system.
