You might have noticed I have a particular interest in
health care and health care insurance as it relates to personal finance. That is not surprising when you consider I
have a background in both areas. That
experience shapes my perspective on the economics of health care and tilts me
toward a certain way of thinking about the subject.
Last week’s post addressed consumer choice as a driver of
health care price inflation; but I also wrote that I believe a second factor
influences that inflation just as much or more.
That factor is government regulation.
A key tool used in some nations for keeping the cost of care
lower is to employ workers with just the minimum skills needed for the job to
which they are assigned. In other words,
don’t have a physician, or even a nurse, take medical histories from
patients. Have a clerk who took a course
in medical terminology do that. But that
is not the American way. When working at
(not for) a large hospital system, I never ceased to be amazed that nearly an
entire building on the campus held nothing but offices manned by doctors and
nurses doing paperwork instead of patient care.
Much of the paperwork was mandated by government rules for programs like
Medicare and Medicaid. Insurance
companies add their own requirements to the workload. Highly paid medical professionals labored all
day long, week after week, never seeing or treating a patient.
It will be argued that the regulations protect
patients. That is always the excuse for
imposing more rules on an industry: we’re protecting consumers. But if our health outcomes are no better than
in less-regulated countries, have the regulations done their job? If 100,000 Americans die every year from
medical errors, have we succeeded in protecting patients?
But that is only half the story. Over-regulation scares away medical
professionals because they feel they have to spend too much time doing
paperwork rather than seeing patients.
There are fewer and fewer solo practitioners and small, independent
medical practices. These offices
typically just don’t have the resources to keep up with all the rules and
requirements. The physicians end up
joining a large network that does employ the necessary people to do the
paperwork; but then they are reduced to patient care factories, closely watched
to ensure they see a minimum number of patients and keep their average time
spent per patient to a prescribed limit.
The care rendered in these large networks tends to be higher-priced,
naturally; but research has also shown they tend to use more health care
resources: ordering more tests, referring more frequently to specialists,
etc. In other words, regulation drove up
costs and limited consumer choice and competition.
In many cases where the physician doesn’t want to join a network,
he simply opts out of accepting Medicare patients because he finds the
regulatory burdens too overwhelming. If
the pattern continues, disabled and elderly patients on Medicare will have
seriously restricted networks of potential providers to choose from.
This being a personal finance blog, I’ll extend this
argument to the Consumer Financial Protection Board, an agency born out of the
last recession. It, too, purports to
protect consumers. But as it is often
said about banking regulations, they are very good at addressing the previous
recession. They do not and cannot
anticipate the next crisis that will launch us into a recession. Meanwhile, they restrict consumer choice and
make banking ever more expensive.
So don’t assume that every law, regulation, and federal or
state agency that claims to be serving and protecting the public actually
accomplishes that goal. The unintended
bad consequences of these tools often outweigh the good they might do. Be an intelligent and discerning consumer of
the noise out of Washington
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