Eventually, Medicare should completely transform the way it pays physicians and hospitals.  Instead of paying doctors and hospitals separately and reimbursing them for how much care they deliver, it will want to begin paying them as a group on a per-capita basis, depending upon the number of patients they care for.  (Because outcomes of their patients will be monitored and eventually made public, these integrated systems will not want to attract more patients than they can handle simply to boost their incomes.)

That is from Shannon Brownlee’s new Overtreated: Why Too Much Medicine is Making Us Sicker and Poorer, which should be read by anyone interested in health care economics.  I have a few points:

1. The early chapters are too anecdotal for my tastes, but later the book becomes more analytical.

2. The author writes as if doctors can be steamrollered into submission and forced to adopt better compensation schemes; in this sense the public choice analysis is naive.  Yes maybe that is what "should happen" but I predict that greater government involvement will be geared toward protecting the rents of American doctors, not making them passive servants of the public interest.

3. The (favorable) discussion of VHA is more insightful and more subtle than the usual treatments.  For instance we learn that the much-heralded computerization of VA records was created in direct violation of government law.

4. The chapter on the rise and fall of managed care was excellent.  Yet the core problems with managed care also would plague the author’s proposal for compensating doctors and hospitals, quoted above.

5. The policy prescriptions focus on changing the bundle of health care, rather than just cutting back on health care, so the title is not strictly accurate.  The author is not a radical Hansonian but rather favors more "integrated care" and more primary physicians.

Robin Hanson, now there’s a guy who favors gross cutbacks in health care, he argues they won’t cost us actual health.  See the recent forum over at CatoUnbound.

Addendum: See also this NYT magazine article, "Do We Really Know What Makes Us Healthy?"


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