OP-ED

Why Everything We Are Doing in Health Policy May Be Completely Wrong …

A relatively obscure paper (gated) published in an academic journal the other day was completely ignored by the mainstream media. Yet if the study findings hold and if they apply to a broad array of health services, it appears that the orthodox approach to getting health services to poor people is as wrong as it can be.

At first glance, the study appears to focus on a rather narrow set of issues. Although most states try to limit Medicaid expenses by restricting patients to a one-month supply of drugs, North Carolina for a period of time allowed patients to have a three-month supply. Then the state reduced the allowable one-stop supply from 100 days of medication to 34 days and at the same raised the copayment on some drugs from $1 to $3. Think of the first change as raising the time price of care (the number of required pharmacy visits tripled) and the second as raising the money price of care (which also tripled).

The result: A tripling of the time price of care led to a much greater reduction in needed drugs obtained by chronically ill patients than a tripling of the money price, all other things remaining equal.

This study pertained to certain drugs and certain medical conditions. But suppose the findings are more general. Suppose that for most poor people and most health care, time is a bigger deterrent than money. What then?

If that idea doesn’t immediately knock your socks off, you probably haven’t been paying attention to the dominant thinking in health policy for the past 60 years.

What I call health policy orthodoxy is committed to two propositions: (1) The really important health issue for poor people is access to care and (2) to insure access, waiting for care is always better that paying for care. In other words, if you have to ration scarce medical resources somehow, rationing by waiting is always better than rationing by price.

[Let me say parenthetically, that the orthodox view is at least plausible. After all, poor people have the same amount of time you and I have, but (unless you are a student) a lot less money. Also, because their wages are lower than other people’s, the opportunity cost of their time is lower. So if we all have to pay for care with time and not with money, the advantage should go to the poor. This view would be plausible, that is, so long as you ignore tons of data showing that whenever the poor and the non-poor compete for resources in almost any non-price rationing system, the poor always lose out.]

The orthodox view underlies Medicaid’s policy of allowing patients to wait for hours for care in hospital emergency rooms and in community health centers, while denying them the opportunity to obtain care at a Minute Clinic with very little wait at all. The easiest, cheapest way to expand access to care for millions of low-income families is to allow them to do something they cannot now do: add money out-of-pocket to Medicaid’s fees and pay market prices for care at walk-in clinics, doc-in-the-boxes, surgical centers and other commercial outlets. Yet in conventional health policy circles, this idea is considered heresy.

The orthodox view lies behind the obsession with making everyone pay higher premiums so that contraceptive services and a whole long list of screenings and preventive care can be made available with no copayment or deductible. Yet this practice will surely encourage overuse and waste and in the process likely raise the time prices of these same services.

The orthodox view lies at the core of the hostility toward Health Savings Accounts, Health Reimbursement Arrangements (HRAs) and any other kind of account that allows money to be exchanged for medical services. Yet it is precisely these kinds of accounts that empower low-income families in the medical marketplace, just as food stamps empower them in any grocery store they choose to patronize.

The orthodox view is the reason so many Obama Care backers think the new health reform law will expand access to care for millions of people, even though there will be no increase in the supply of doctors. Because they completely ignore the almost certain increase in the time price of care, these enthusiasts have completely missed the possibility that the act may actually decrease access to care for most low-income families.

The orthodox view is the reason why there is so little academic interest in measuring the time price of care and why so much animosity is directed at those who do measure such things. It explains why Jon Gruber can write an NBER paper on Massachusetts health reform and never once mention that the wait to see a new doctor in Boston is more than two months.

Yet the orthodox view may be totally wrong. Clearly, time prices matter to low-income patients. As the new study concludes:

The observed decreases from the days’ supply policy were larger than those from the copayment policy, indicating that the increase in the time costs from more frequent trips to the pharmacy were more of a barrier to medication adherence than the increased copayment…. The decrease in adherence occurred at a mean level of usage generally thought to show clinical effects. The probability of being 80 percent adherent decreased between 1 and 13 percentage points, implying that the policy changes resulted in a substantial decrease in medication adherence for the chronic medication users.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

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Kilroy71Legacy FlyerpcpPeterNate Ogden Recent comment authors
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Kilroy71
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Kilroy71

If the title of the article were “What if” instead of “Why,” I’d buy it. Health reform is going in many directions at once and it’s too early to tell what’s a win and what’s a fail. And if you guys who think the poor in America aren’t poor at all, you try a month in Section 8 housing and living on food stamps and tell me how rich you feel.

Legacy Flyer
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Legacy Flyer

Nate,

You may be right. I don’t have a problem with your approach – although others may.

My point is that many people who support the use of nurse practitioners, etc. would be shocked by the analogous changes in other professions.

I also have no problem with NPs taking care of many routine problems – the kinds of problems my mother handled very well for many years.

Nate Ogden
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Nate Ogden

she was a NP?

Legacy Flyer
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Legacy Flyer

I think that the name calling (on both sides) has detracted from the importance of the post by John Goodman. In essence, the post questions the wisdom of rationing by time rather than by money. This is an important point, since rationing by time is the traditional way of controlling demand for medical care by poor people. It is also clearly true that increased use of nurse practitioners and physicians assistants can substitute for primary care physicians. The question is; “Why do we want to go in this direction?”. Do we wish to abolish teacher certification (or water it down)… Read more »

Nate Ogden
Guest
Nate Ogden

it should we yes as they all need reform. Abolish teacher certification but it needs fixed without question. Paralegals should be able to pratice in areas attorneys aren’t affordable. I had an auto accident but made the mistake of not running up the medical treatment so no attorney wants to touch it. I can’t even find one to hire at an hourly rate to help me file suit for the car damage and medical bills so now I have to go pro se. There are entire areas of law attornies won’t touch because its not worth their time, paralegals would… Read more »

pcp
Guest

“Why is it that so many trolls are semi-literate?”

Most inappropriate comment I’ve EVER seen here.

Peter
Guest
Peter

Maggie,

You misspell words all the time on your blog. Take a look in the mirror.

Maggie Mahar
Guest

Detemined:

You write: “where is your logic in starting this thread with two completely inconguent statements that nurse practitioners will be providing more of the primary care in this country, and yet you say in the next paragraph there is no shortage of doctors nor expected to be a shortage.
Then why do we need more nurse practitioners, Ms Mahar?”

I’ am sorry you find the logic so hard.

As nurse practioners provide more care, the need for more primary care docs
declines.

.

DeterminedMD
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DeterminedMD

Wow, so plain in the end, yet you think saying it without emphasis makes it less offensive and overt: “As nurse practioners provide more care, the need for more primary care docs declines.” So, one could interpret that simple sentence that you expect Nurse Practitioners to replace primary care physicians (not that there is a shortage of said doctors in the first place), so if the need for access to care declines and there are still doctors to provide care that NPs have allegedly filled this void, what happens to said doctors? They are disposable? Your distain for my profession… Read more »

Maggie Mahar
Guest

I’m disappointed to see THCB continuing to spread misinformation. Different opinions are one thing, but lies only add to widespread confusion about heatlhcare. This is not what the Wall Street Journal was reocgnizing some years ago when it gave THCB high praise. . . THCB has changed since then. Consider Nate’s response to my comment: I wrote: “This post ignores the fact that under heatlh care reform many more nurse practioners will be providing care to the formerly uninsured (and many others) in Community Heath Centers.” Nate replied “What a tortured definition of the word fact. There is no fact… Read more »

DeterminedMD
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DeterminedMD

“Lies in the blogosphere hurt us all.” As far as I am concerned, one of the most definitive projective statements you have made at this blog. I mean, where is your logic in starting this thread with two completely inconguent statements that nurse practitioners will be providing more of the primary care in this country, and yet you say in the next paragraph there is no shortage of doctors nor expected to be a shortage. Then why do we need more nurse practitioners, Ms Mahar? Is it you are pissed you do not control this site as much as you… Read more »

Nate Ogden
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Nate Ogden

You are desperate to shred any last bit of creditability you might have aren’t you? “This post ignores the fact that under heatlh care reform many more nurse practioners will be providing care to the formerly uninsured (and many others) in Community Heath Centers.” Maggie, until a nurse practitioner actually provides care to a formerly uninsured it is not a fact. A simple logic test proves this; the world ends today, did nurse practitioners provide more care? No not yet, maybe they would have, but it didn’t happen so it’s not a fact. If Obama shocked the world and repealed… Read more »

Maggie Mahar
Guest

Nate writes: ” does the grocery fairy fill the cubbard

I think you mean cupboard.

Why is it that so many trolls are semi-literate?

Nate Ogden
Guest
Nate Ogden

name calling, that is a sure fire way to win an argument and show how much smarter you are, THCB taught me that, when they started their campaign for civil and respectful debate. I guess they didn’t invite Maggie to turn over a new leaf. “Why is it that so many trolls are semi-literate?” Maggie writes: fact that under heatlh care reform many more nurse practioners I think you meant; fact that under health care reform many more nurse practitioners Health and practitioners are the correct spelling, you misspelled practitioners numerous times, obviously not a typo. Also Boston is spelled… Read more »

Reality
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Reality

I suggest that M Mahar, and all those who fanatically oppose physician autonomy and identity, to shadow a real doc in a busy hospital or practice for one week. I bet it would be an eye opening experience. It may even trigger a re-evaluation of their motives. The sole reason why HSAs and similar constructs are being resisted is because they change the flow of healthcare dollars, granting more control to patients (consumers) and physicians (providers). That’s it. There is tremendous activity right now to turn healthcare delivery into an activity with a defined set of deliverables to ensure that… Read more »

DeterminedMD
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DeterminedMD

Hit it right on the head, autonomy and independent thinking is contraindicated to what government these days wants from those it controls, not a typo, as they in DC are not interested in representation, just resentment they have to put on the dog and pony show of elections every 2 years. And those who write for either side of this monolithic party of Republocrats are the modern day Goerbels of this onslaught of public interest being smothered by a septic tanked soaked pillow. Yeah, harsh and irritating analogy, bringing up Nazi references, but, isn’t this kind of propaganda the benchmark… Read more »

Nate Ogden
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Nate Ogden

more then McKinsey the government wants every healthcare dollar to pass through it. Even has cost skyrocket out of pocket spending is projected to drop to single digits between now and 2020. Individuals engaging in activity outside of government control means loss opportunity for government to tax and profit from it.

waste_of_time
Guest
waste_of_time

this article is a waste of time…

a high school student could write better….

Maggie Mahar
Guest

Melissa–

I understand why going to a pharmacy once a month should not see like such a big deal for someone living in an urban area.

But imagine that you are a single mother, poor, with two children. Your time is very limited.

Of perhaps you are parents in a two-parent family where you both work two jobs (probably one,is part-time), minimum wage. Poor people who are lucky enough to be employed have less time than the rest of us.

Nate Ogden
Guest
Nate Ogden

“But imagine that you are a single mother, poor, with two children. Your time is very limited.” Is it? Signle moms don’t feed their kids or does the grocery fairy fill the cubbard? Have none of your liberals been outside the city or meet a poor person? I know many poor people and very few of them are short on time, most of them have to much time and that is why they drink and smoke so much. picking up an Rx when they get their ciggs or groceries is not going to cost them an extra minute or dollar… Read more »

Amy Berman
Guest

John, you shared an intriguing piece of research from Health Services Research (HSR). You supposed that “for most poor people and most health care, time is a bigger deterrent than money”. But it may not have been time alone. Some responses to the blog have mentioned the cost of gas or other transportation. But for some of the most vulnerable there may be real issues with their physical ability to travel. How do we balance such creative alternatives with meeting the needs of those most at risk, not just the relatively well population? The high costs come with acute care,… Read more »

Melissa S
Guest

I understand those who are exceedingly rural might have some issues with traveling to the pharmacy every month. But those not living on the edge of the remote and are only paying only a dollar or 3 for prescriptions should have no complaints.

Peter
Guest
Peter

Of course first word above is “move”. D’OH

Peter
Guest
Peter

More all the poor to the wilds of North Dakota and their health care access to Florida, but reduce their co-pay – that will keep costs down.