Health care queuing: this will get worse

by on June 16, 2011 at 12:53 am in Economics, Medicine | Permalink

The study used a “secret shopper” technique in which researchers posed as the parent of a sick or injured child and called 273 specialty practices in Cook County, Ill., to schedule appointments. The callers, working from January to May 2010, described problems that were urgent but not emergencies, like diabetes, seizures, uncontrolled asthma, a broken bone or severe depression. If they were asked, they said that primary care doctors or emergency departments had referred them.

Sixty-six percent of those who mentioned Medicaid-CHIP (Children’s Health Insurance Program) were denied appointments, compared with 11 percent who said they had private insurance, according to an article being published Thursday in The New England Journal of Medicine.

In 89 clinics that accepted both kinds of patients, the waiting time for callers who said they had Medicaid was an average of 22 days longer.

Here is more.  Once again, health care policy needs to be about the supply side.

Addendum: Ezra Klein reports that the budget deal may involve significant Medicaid cuts.

Rahul June 16, 2011 at 1:17 am

Import more doctors.

Any good arguments for not doing this?

nazgulnarsil June 16, 2011 at 2:00 am

they aren’t certified by the holy AMA.

Rahul June 16, 2011 at 3:16 am

Unfortunately you are right. The AMA has been a longstanding opponent to getting more doctors (US-trained or immigrants) claiming that we have too many already (although recently they did change that stance)

The statistic that did surprise me was that in terms of doctors-per-capita the US is just barely in the top 50 nations in the world. How are even countries like Azerbeijan and Uzbekistan better than the US; is this a data anomaly?

nazgulnarsil June 16, 2011 at 3:49 am

the AMA has had a policy of lowering supply of doctors since the turn of the century. After gaining monopoly certification power the AMA closed the majority of operating medical schools in the US and has been instrumental in rationing out degrees ever since.

Richard June 16, 2011 at 3:51 am

One reasonable argument might be that you’re depriving doctors of other nations, many of whom were trained and subsidized by local governments to provide for local populations. As opposed to increasing supply overall, you’re just redistributing existing supply.

Another issue is that you’re exposing a domestic industry to competition from subsidized competition from elsewhere, much like how US manufacturing has a difficult time competing with “national focus” projects of Singapore or Germany. Case in point: a German physician trains straight out of high school for 6 years and accumulates much lower debt due to subsidized tuition (I am told that a small stipend can even be awarded to cover living expenses). He can expect to earn less in income as a result. An American physician commands a high income because of high training expenses. Thus, the logical course of action for an aspiring physician is to train in Germany and work in the US. You may see fewer people enter medicine in the US as a result, which doesn’t help to increase supply.

A bit dated, but food for thought: http://www.spiegel.de/international/0,1518,399537,00.html

Emil June 16, 2011 at 4:21 am

Richard, how would it hurt the US to let others pick up the bill?

Slocum June 16, 2011 at 7:35 am

No — if we enabled the flow of MDs from other countries to the U.S. (countries with lower cost, more efficient training methods as in Germany), then those countries would have an incentive to expand their efficient training facilities. If we can’t ‘manufacture’ enough physicians here or cannot do it cost effectively, let’s import them (as we already do with computer programmers and engineers). And, note, if lower-cost, foreign trained MDs were accepted in the U.S., there’s nothing that would prevent those schools from offering English-language instruction to American students (who intended to return to the states after completing their degrees).

ad*m June 16, 2011 at 11:33 am

I did something like that. American trained MDs are substantially better than anywhere else in the world – and I have lived and worked on three continents. Be very careful with what you break.

Richard June 16, 2011 at 1:27 pm

Emil – It doesn’t hurt the US. It just hurts all the other countries. Some of us consider whether the world is better as an aggregate rather than advocate beggar thy neighbour policies.

Slocum – I disagree. Physicians being trained take many years to filter through the pipeline. Infrastructure required to train them (medical schools and residency programs) cannot be easily expanded without significant cost. Also, it’s not that Germany is more efficient at training physicians; it’s that the government subsidizes their training. If they don’t think the country is getting appropriate benefit from the subsidies, they will probably consider eliminating them (a la US) or putting in labour flow restrictions on physician export.

ad*m – So far, I have not discussed quality issues since that touches a nerve and is difficult to measure (outcomes are not as granular as many think due to different reporting mechanisms, insurance systems, and poverty/inequality across countries being measured). It is my belief though that standards of training and licensing across the G8 are higher than in developing countries. Removing those barriers will undoubted increase supply at a cost of lower quality (the exact change is difficult to substantiate), assuming that all the G8 nations will import physicians from developing countries.

J Thomas June 16, 2011 at 6:43 am

If we had more doctors, would the total cost of medical care go up or down?

Wouldn’t it go up? We have an insatiable demand for medical care, so the more doctors we have the more patients they will see and the more procedures they will run. Or is there some other limiting factor?

RZ0 June 16, 2011 at 7:26 am

If you assume insatiable demand, you’ve assumed away any possible solution.

Dan Weber June 16, 2011 at 11:00 am

Except that demand in America does seem insatiable. People want more and more health care, even if it doesn’t improve their health.

Rahul June 16, 2011 at 11:07 am

Not in this specific context at least:

“diabetes, seizures, uncontrolled asthma, a broken bone or severe depression.”

None seems an elective or a questionable malady. Improvements in health are obvious. Most of the healthcare logjam is for run-of-the-mill stuff; I don’t see million dollar treatments that offer a month end-of-life extension being the typical issue as is so often made to be.

J Thomas June 16, 2011 at 6:13 pm

Rahul, there are always more expensive ways to treat broken bones, diabetes, etc. People who are stuck with the older cheaper treatments are being deprived.

Or maybe the newer expensive methods don’t actually work that well. I listened to statisticians who said that for various heart treatments, it took them 5 years to show that the treatments did not improve length or quality of life on average, and during those 5 years the MDs discovered newer methods which they claimed were big improvements. So it took 5 years to show that these treatments were not improvements either, while the MDs discovered newer methods….

J Thomas June 16, 2011 at 6:09 pm

RZO, in the face of insatiable demand you must have some way to ration the limited supply. This is a political problem and not an economic one.

The obvious approach is to let each individual pay for his own health care, and pay whatever he can afford. Simple and clear. But that is not politically acceptable, and advocating that will lead people to start thinking unfavorably of rich people, of capitalism, etc. Like the old folk song. “If health was a thing that money could buyyyyyy — the rich would live, and the poor would dieeeee”

A second approach was to have private insurance companies that paid big medical costs for catastrophic cases and charged everybody else more than they got back. That was probably OK for what it did, kind of. But it didn’t begin to solve the problem.

A third approach was to have private insurance companies that used collective bargaining to cut health costs, and also rationed health care to their customers. That sort of worked, but costs went up to the point that individuals could not afford it. On average individuals felt they needed more healthcare than they could afford.

A fourth approach was to have businesses pay the health care costs that their employees couldn’t afford. The businesses could afford it, both because they could do a degree of collective bargaining with insurance companies, and because they could pass their costs on to customers and write them off on their taxes. That worked for big-business employees and their dependents until it got too expensive for them too.

So the fifth approach was to have the government insure the expensive people, and let private insurers insure the profitable ones. This was good for private enterprise, but the government had to either collect the taxes or increase the deficit.

The sixth approach was to have the government insure the expensive people through private insurers, and the government could do a whole lot of collective bargaining. But enough expensive medical care is needed to bankrupt the government.

So, it’s unpleasant when a private insurance company refuses to pay for expensive treatment, and the patient dies before they come through. If that happens to you, it’s your own fault for choosing the wrong insurance company. If you had only chosen better insurance, they would have paid your bills and you wouldn’t have died. But if the government is paying your bills? You can’t pick a better government to insure you. Unless you’re young and healthy and employable other governments don’t want you. If a government death panel refuses to pay for your treatment there’s nothing you can do. So people prefer private insurance companies to do that.

It would make sense for the government to do it all, but what about rich people? They don’t want to get the same care poor people do. They want to pay extra for superb care, or at least for care they prefer to think is superb. “If health ain’t a thing that money can buy, the rich and the poor, they both will die….”

How do we make sure that everybody gets good health care, and that the rich get superb care, and keep the costs in bounds? It’s a political problem. If it wasn’t for the politics we’d be asking different questions.

Rahul June 16, 2011 at 7:00 pm

So, it’s unpleasant when a private insurance company refuses to pay for expensive treatment, and the patient dies before they come through. If that happens to you, it’s your own fault for choosing the wrong insurance company. If you had only chosen better insurance, they would have paid your bills and you wouldn’t have died.

Might you be committing the “just world fallacy”? Are you really so sure that everyone dying for lack of treatment was due to his own fault?

J Thomas June 16, 2011 at 8:54 pm

Rahul, yes, that’s definitely a “just world” fallacy. And it works.

When you have your choice of insurance company, then you might feel more free than when you have a single government intermediary for your health care.

Even if you can’t read the policies. Even if the insurance companies do not actually follow the policies. Even if economy of scale is so big that only a few insurance companies can be competitive.

When you start a new job and on Friday they give you three different health deals, each of them more than 200 pages, and they want you to come in Monday morning telling them which one you want, that’s a *choice*. Very different from the government just telling you what to do.

Or at least it feels that way to some people.

Rahul June 16, 2011 at 8:03 am

Ok, then you would be happy if suddenly we de-rostered 50% (say) of all American doctors? This will reduce total cost, no? Using your theory, what’s the optimum number of doctors?

You forget that there’s an opportunity cost to time people spend at the doctor. A hospital visit is never pleasant, even if free.

I’m on a employer-paid, private health plan with almost zero co-pay (lucky me!): How do you explain that I still cringe and delay going to the doctor unless it is a must?

Lot of Europe has free care; do you see people lining up at hospitals, like monkeys after bananas?

J Thomas June 16, 2011 at 6:26 pm

Ok, then you would be happy if suddenly we de-rostered 50% (say) of all American doctors? This will reduce total cost, no? Using your theory, what’s the optimum number of doctors?

I don’t know. I don’t even know how to find out the optimum number of US doctors.

It ought to be an empirical number that you could find out somehow. But how?

Noah Yetter June 16, 2011 at 9:46 am

Why is the total cost relevant in any way? All thinking about health care policy that flows from this initial focus is inherently flawed. Look at the costs and benefits to individuals.

J Thomas June 16, 2011 at 6:47 pm

Look at the costs and benefits to individuals.

Noah Yetter, if individuals paid their own health costs we would be facing a different set of problems. But they don’t.

So we have benefits to individuals and costs to society.

albert magnus June 16, 2011 at 8:21 am

There are many, many US students who could pass the boards who can’t get into medical school/residencies. I would expand those programs before passing out more visas.

Also, nurse practitioners should be delegated more medical tasks.

Rahul June 16, 2011 at 10:02 am

Both are good ideas. Whatever works to increase supply!

Bill June 16, 2011 at 10:57 am

Isn’t the doctor supply issue related to the number of residency positions that are made available. It is my understanding that the government funds teaching hospitals and the funding either has been the same or has been cut. So, if you want change, ie , more supply, write your congressperson, because ultimately residency positions are the constricting points, not teaching.

Rahul June 16, 2011 at 2:43 pm

Are all residencies at government run hospitals? Are there “private” medical schools in the US with their own hospitals and residencies. I could never understand the ownership of hospitals in the US…..

Hillary June 16, 2011 at 4:33 pm

Residency programs aren’t legally associated with medical schools, and medical schools don’t usually have their own hospitals. Residency is usually with a teaching hospital or hospital system. My brother’s residency will be a collaboration between multiple hospital systems: one federal (VA), one county owned that provides most of the indigent care in the region, and one owned by the university but operated as a separate business.

Hillary June 16, 2011 at 4:30 pm

That’s not all of it. Some people in my brother’s med school class were offered increased scholarships if they deferred a year. There are a limited number of spots in the required beginning anatomy course (there’s a reason they’re called body buddies in that class) and limited rotations for years three and four. For the school he went to to increase capacity, they’d need a lot more physical infrastructure and more hospitals and research labs willing to host rotations, except all the hospitals big enough to host rotations already do.

There are spots open in his internal medicine residency program (starting next week).

Paul Johnson June 16, 2011 at 2:15 am

I wouldn’t call it a “secret shopper” technique. They were flat out lying about having a sick child. Do the ends justify the means?

Doctors in Australia are allowed to extra-bill. So in time there may be an outflow of US doctors to Australia, if ever the Australian government figures this out and somehow gets it past their own AMA.

Rahul June 16, 2011 at 4:07 am

I wouldn’t worry about US doctors migrating to Australia anytime soon. The average Australian doctor gets paid about $40,000 $/year less than an American doctor (PPP adjusted).

Richard June 16, 2011 at 1:32 pm

Actually, I am considering that course of action myself. From an anecdotal and cursory view, Australia and Canada both offer close to 90% of US salaries and have far more leisurely work hours. Also, there’s no impending Medicare reimbursement cut being threatened every year. Taking into account future issues such as the debasement of the US dollar makes it worthwhile to migrate (unless you allow me to charge my patients Swiss Francs). Of these two, Canada seems more likely as a destination because they admit US-trained physicians without extensive recertification.

Bo June 16, 2011 at 8:15 am

Your first paragraph – huh? What parties were harmed by this deception?

Peter June 16, 2011 at 10:00 am

Well, the parties harmed were any patients who were denied appointments because the people doing the study had filled the available slots with dummy names. I hope they called soon after making the appointment and cancelled.

Rahul June 16, 2011 at 10:24 am

From the methods section:

All calls were kept as short as possible, and all appointments were canceled at the end of the call.

In fact, they were nicer than that:

Debriefing letters [were] sent to all clinics in the entire sampling frame at the conclusion of the study. […] The debriefing letters clearly stated that the purpose of the study was to monitor the system rather than individual providers, that individual clinics may or may not have been randomly selected to be studied, and that the identity of those selected will never be disclosed.

Just imagine if this had been an investigative journalism study! Wouldn’t have been hard to conduct and I think the reporters wouldn’t take as much pains to hide the names.

albatross June 16, 2011 at 4:43 pm

Unlike researchers publishing in a medical journal, investigative reporters don’t have to go through an IRB….

Veridical Driver June 16, 2011 at 2:50 am

Don’t worry, if doctors refuse to accept government insurance, they will do like Canada and outlaw private insurance.

Mineral Rights June 16, 2011 at 7:24 am

Hi there,
Great post, I also carry around a note book to write my ideas of blogs down. Still working on what to do. I guess the planning is the most important part of the process.

tom June 16, 2011 at 10:10 am

MR and other sites should have a policy that spam comments like this are subject to a $500 SEO fee. Then, sites could sell those rights to someone like the trolls at Righthaven (but with white hats).

superdestroyer June 16, 2011 at 7:34 am

The reimbursement for Medicaid/S-CHIP is the lowest for any third party reimbursement. Even if Physicians do take Mediciad patients, there is a limit on the number that they can accept without going broke.

If the U.S. becomes a single-payer system, the health care workers in the U.S. will be in the same position as grain farmers. And even though the supply of grain is high, the number of people working in the grain farming industry is small.

Lowering reimbursements for primary care will push more physicians into cash and carry medicine such as dermatology, ophthalmology, or boutique hospitals. The remaining physicians will probably all be immigrants who will operate medicine in much the same way that dry cleaners operate: only employ family members, cheat on taxes and regulations, and offer a low level of service.

Thus, much lower employer, lower supply, more cheating on taxes and regulation, and a n overall poorer standard of care for Americans.

Andrew' June 16, 2011 at 9:10 am

“The reimbursement for Medicaid/S-CHIP is the lowest for any third party reimbursement.”

That was my question. If I were to write the newspaper article it would go something like this.

The reimbursement for Medicaid/S-CHIP is the lowest for any third party reimbursement. Researchers prove this. [End]

Bill June 16, 2011 at 10:55 am

super, the selection of these other practices, first, is not all that lucrative, and second, relate to the desire of the doctor to have more standard hours. Finally, what does move doctors into practices today is group practice or hospital practice which allow them to have time with their family as other doctors are not always on call. Spoken by a father whose daughter is a pathologist. Doctors get paid well, and have the opportunity to move, which other parts of the population do not have as alternatives.

Rahul June 16, 2011 at 11:00 am

Medical malpractice insurance premiums also differ and play a role I think.

Kevin June 16, 2011 at 10:19 pm

Bill, there is a huge differential in income, and workload, between different medical specialties, and medical students know it (at least by the time they need to choose a residency). The ironic part is that many of the specialties that have less patient contact, less intellectual challenge, less day-to-day responsibility, and allow more leisure time are also better reimbursed.

At the beginning of med school, there tends to be tremendous interest in either challenging patient care, or intellectually stimulating specialties. But by the fourth year, it’s amazing how many people change their tune and find radiology or dermatology just fascinating. When you’re graduating from a good medical school, and you tell classmates that you’re interested in family practice, or pediatrics, or psychiatry, you get these looks like you’ve just stepped off the short bus.

And malpractice is much, much less a factor in these decisions that the press would have you believe.

Bill June 16, 2011 at 11:28 pm

And, radiology and dermatology have more regular hours as well. I don’t think we are disagreeing.

Kevin June 17, 2011 at 2:30 am

Well, not exactly. My point was that the hours for many specialties and subspecialties are often better, AND the typical yearly income is also better (often 2-4 times better). If you divide income by time devoted to the work (and time being available to work, as when you’re on call for your own patients), then the differential is even more dramatic.

To choose a primary care career is to have much, much less control over one’s hours and one’s life, and to also make millions of dollars less net income over one’s lifetime.

Richard June 16, 2011 at 1:37 pm

You can only lower reimbursements so far before individuals consider alternatives, be it moving to another country to work or switching careers into finance or consulting.

We’re already seeing the segregation of specialties somewhat right now. Foreign trained physicians primarily go into the primary care fields of pediatrics, family medicine, and internal medicine. Residency positions and visa sponsorships are only available in those areas, which are not popular with US-trained physicians due to low pay and an uncontrollable lifestyle.

With that said, I disagree with your assertion that immigrants are unscrupulous practitioners. They are held to the same standards as US-trained physicians and judging from the behaviour of my colleagues in the field, they have been impeccable in character.

Bill June 16, 2011 at 10:06 pm

If medical schools required you to elect your specialty in order to get in, ie, we have so many positions for internal medicine, cardio, etc., what you would find would be that in order to get in, people would select internal medicine. And, many, many still do, its just that metro markets are oversaturated, and no one likes to live outside of a city, where there is a greater demand for both specialists and internal medicine. Reimbursement has little to do with location preferences.

mjw149 June 16, 2011 at 9:22 pm

You really know nothing about single-payer systems around the world, then?

Bill June 16, 2011 at 9:24 am

This will change, and you can make some investment planning on it.

Part of the problem is that uninsured que at emergency rooms for their care. With more universal coverage, there will be incentives for hospitals, or groups of doctors, to establish clinics in poor neighborhoods, because there will now be paying customers. Hospitals are evaluating opening more clinics, and pharmacies, even, are beginning to do minor shots, throat swaps, etc. in poor neighborhoods.

For an econ site, this is another example of assuming that nothing changes, or that nothing has changed, or that changes in the law have made incentives for things to change.

Personally, I’m looking for stocks that supply new clinics are the equipment purchases will increase.

Cliff June 16, 2011 at 1:13 pm

So why did this not happen in Massachusetts? I understand ER use has climbed.

Bill June 16, 2011 at 3:16 pm

So, that doesn’t mean clinics aren’t expanding in Mass. I am speaking from the perspective of a person with healthcare clients who tell me that clinics and satellites are the wave of the future.

Richard June 16, 2011 at 1:39 pm

I see health care, absent major regulation, bifurcating into a concierge care system for private payers (no insurance accepted), regular care for middle class working professionals who carry insurance, and Wal-Mart care for the lower class using lower cost PAs and NPs.

Boris June 16, 2011 at 10:08 am

If Medicaid-CHIP did not exist, many parents of sick children would either forgo care or would seek charity, resulting in a much lower chance of finding a doctor. Isn’t it a mistake to think that federal health programs must be on par in terms of quality with private insurance?

Isn’t inadequate insurance better than none?

sm June 16, 2011 at 12:38 pm

I believe the authors that access is a big issue for Medicaid. But to be fair, randomly sampling specialists probably overstates the access problems. If you’re on Medicaid, you probably have a decent idea about what providers accept Medicaid — and so would those referring you. It’s not like you would randomly sample the phone book.

What I find truly amazing is that 34 percent of the specialist providers surveyed were willing to treat Medicaid patients, even though they will only be paid a fraction of what private payers (and Medicare) offer. I wonder if Medicaid reimbursements are above or below marginal provider costs. If all payers collude and offer the Medicaid reimbursement rate for all procedures, would 100% of providers have accepted?

albatross June 16, 2011 at 4:46 pm

At some level, this study seems to be saying that the supply curve for medical services is upward-sloping.

Tim June 16, 2011 at 5:20 pm

Well if it’s anything like any other place we’ve implemented supply-side economics it can’t help. But by all means. Keep trying. Maybe this will be the time.

Of course once the barriers are down it might lead to 100% of the poor patients appointments being denied. But that is of course the system working efficiently and not a concern for economists.

Jack Davis June 16, 2011 at 5:45 pm

I’m with Boris here. It’s a lot better to have Medicaid than no insurance at all. I’ll quote Milton Friedman from Capitalism and Freedom:

The members (AMA members) argue in effect that we must have only first-rate physicians even if this means that some people get no medical service — though of course they never put it that way. Nonetheless, the view that people should get only the “optimum” medical service always lead to a restrictive policy, a policy that keeps down the number of physicians.

Comments on this entry are closed.

Previous post:

Next post: