The Free Market, the Unrestrained Consumer, and Jonathan Bush’s Solution to Healthcare costs

Jonathan Bush Sq

Many observers have lamented the lack of a true market in health care, and tomes have been written about the rampant distortions in the system. Large provider networks battle large insurers in a game of chicken to set prices. Patients don’t have enough information to make good choices. Costs are hidden from patients by a cascade of employer, insurer, and provider policies. And the US government ultimately provides most of the money.

One of the most prominent advocates for a health care market is Jonathan Bush, a regular speaker at health conferences and author of the recent book Where Does It Hurt? To achieve the potent mix he envisions of innovative entrepreneurship, rich data sets, and long-term care for chronic conditions, he calls for a light regulatory hand and for smashing the current oligopoly in health care.

I see these two goals as somewhat opposed. Because essential regulations are widely accepted–you’re not going to let the ambulance EMT open up your skull and perform brain surgery–there are ample opportunities for incumbents to tie down patients and prevent change. Bush enumerates many such opportunites, and while some of those abuses implicate the regulators, others would be hard to avoid unless an honest regulator steps in. Bush himself cites a battle with another major electronic health record vendor that was doggedly pursuing a monopoly in the absence of government regulation.

Putting patients in charge of choosing and paying for their own treatment has a strong appeal. It would certainly eliminate a lot of unnecessary tests and treatments that add billions to health care costs and do more harm than good. Such a system would require a lot of open information about costs, quality, and prospects for health improvement, as Bush acknowledges. And as he says, it would also have to include incentives for health providers to take a long view of patient care, engage patients with sensitivity, and provide guidance for chronic conditions.

It’s worth noting that pay-as-you-go is not a new idea. It’s the way health care was practiced in the US in earlier centuries, and the way it’s practiced in many parts of the world now, as explained by T.R. Reid in his popular account The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care. But pay-as-you-go is presented in Reid’s book as a desperate measure resorted to by poor residents of developing nations and the uninsured of America. Reid calls for a universal health care system.

In a crucial concession to universal health care, Bush writes, “I would say that everyone should be covered for the kinds of treatments and therapies that the vast majority of Americans cannot afford. That would included serious accidents and curable catastrophic illnesses. But the rest of the smorgasbord? I’d let people choose.” (p. 66) He later cites in-vitro fertility treatments as an example of health care that he would exclude from universal insurance coverage.

The issue of transgender surgery and hormonal treatments is another area where I assume Bush would rather make people pay for themselves. It happens to be a big issue right now in my state, Massachusetts, whose administration has just informed insurers that they are in violation of the law if they do not consider transgender treatments medically necessary.

Where insurers refuse to cover such things (which is still the case in most places today), transgender people band together, hold fund-raisers, donate to each other’s surgeries or hormonal doses, and wait years until they have amassed the thousands of dollars they need for treatment. This represents a powerful impetus to become the person one needs to be, as well as a wonderful outpouring of community support, and could be seen as a vindication of human automony.

But is this rite of passage worth the sacrifice and pain experienced by transgender people? The delay and denial of treatment is statistically associated with depression, job loss, homelessness, HIV infection, drug abuse, and suicide. Where insurance covers the treatments, the patient can get on with other things in life and become a more productive member of society–and the cost to society is also less, as with other successful health interventions.

I think Bush must recognize that his category of “serious accidents and curable catastrophic illnesses” is vague. When you’re suffering, it always feels “serious” or even “catastrophic.” The whole premise of insurance is that you don’t know when you’ll need a particular treatment, and we pay a lot so that we’ll get the treatment we need.

Even more complicated is the relationship between chronic conditions and emergencies. A key component of a rational health care system in everyone’s estimation–including Bush’s–is a treatment team that follows and supports individuals through daily life and helps them handle chronic problems before they turn into hospitalizations. Bush even suggests that doctors see treatment as a “continuum,” and writes “Instead of replacing a broken component, a doctor is selling a service involving product management.” (p. 201)

Most catastrophic incidents result from individuals’ failure to take proper care of themselves: to exercise and maintain a healthy weight, to take their prescribed medications, to return for follow-up exams when they have a dangerous condition, even to notify a doctor when they’re experiencing distress. One of the biggest drains in the current US system is precisely that we throw health interventions at people who arrive at the emergency room, but don’t engage with them to prevent such crises during normal daily living.

So the challenge for Bush’s vision is how to maintain strong relationships between provider teams and patients–an initiative he supports–while creating a free market that leaves choices up to the individual. We can’t just say to folks, “Pay for what you want–but we’ll take care of you when you flounder.” The last thing Bush wants is to create more emergency rooms, so we need to find out how to bring into being some kind of ubiquitous system that promotes healthy living, even (and especially) among the most vulnerable populations who don’t have healthy habits, aren’t educated about health, and suffer mental health problems that interfere with rational decisions about their health.

Andy Oram is an editor with O’Reilly. 

9 replies »

  1. Not long ago this approach was rarely presented and sounded wacky….we had gotten so enmeshed in top-down control by government bureaucrats and insurance bureaucrats that it sounded like an alien idea.

    Fortunately over time we have regained our common sense and this approach is now commonly heard. How did we get back to sanity? Thousands of people (self employed and insured) started choosing high deductible plans with solid catastrophic event coverage….linked to health savings accounts….and voila…people liked them and the “cost curve” started to slow its climb. Folks LIKE to be in charge of their health care and while they will make mistakes (as critics claim)….but these mistakes pale in comparison to the mistakes our grand social engineer system designers will make with their health systems.

  2. “One of the biggest drains in the current US system is precisely that we throw health interventions at people who arrive at the emergency room, but don’t engage with them to prevent such crises during normal daily living.”

    Thoughtful piece. I don’t know what the answer(s) are, but these ideas are profound, and point to the whole issue of mis-aligned incentives.

    Seems like many of the ideas Andy Oram advances here are part of the answer to a broken system. We are happy to join hands with those seeking a better way, in finding solutions — transparency included.

  3. “Many observers have lamented the lack of a true market in health care”

    What is a “true” market? One where — theoretically — there is NO government?

  4. Florida MRI is one company that advertises $250 MRI’s every day of the week.

    This may be a loss leader, but even if the final price is $500 that would mean a big savings.

    I do not practice medicine so I cannot comment on the equipment costs.

  5. Ummm, average MRI cost is over 4 million dollars including special site installation requirements

    You think a small clinic is going to have the funds for a 4 milllion dollar MRI magnet?

  6. I just finished reading Bush’s book. He has several good insights.

    One is this: for extreme trauma cases, it is far cheaper to have one or two tertiary hospitals per state and a fleet of helicopters. versus having ten tertiary hospitals in a state so that no one has to drive more than 200 miles once in their lives.

    Another is this: Most of what emergency rooms do can be done in free standing minute-care clinics for about $99.

    And imaging tests! Bush points out that a well run free standing clinic can do MRI’s for about $125 each and make a profit. For a hospital to charge $5000 is almost criminal. (If the hospital accepts $1500 from an insurer on a “discount,’ that is not a great improvement.)

    Give Bush some room. I like him.

    Not everything of course. But hitting casual patients with full hospital overhead charges is deeply wrong.

  7. “Putting patients in charge of choosing and paying for their own treatment has a strong appeal.”

    Well, Grandma better make sure she has at least $80k banked to pay for the CABG and hip job. Look ’em up on HealthCareBlueBook.

    Oh, — WAIT! — see, we “insure” against such things. Which puts us right back around into the hated, heel-dragging 3rd party payors, those people whose profit comes from obstructing and/or denying care payment insofar as doing so keeps them out of court.

    Yeah, I know, routine expense (which is not really the proper purview of “insurance” in the first place) is inexorably moving away from pre-payment intermediation toward OOP, and that’s a good and necessary thing. People pay $200 a month for their high-speed cable/TV/phone packages and bitch about a $25 co-pay several times a year. Get over it.

    But, absent insurance, most people will still be one serious illness or accident away from BK. If your heart is about to fail, you will not be a “shopper” looking out for the “best deal.”

  8. A case can be made to have gubbermnt pay for almost anything.

    Plastic surgery? More jobs, given what we know about hiring trends.

    Bariatic surgery? Less depressed people.

    Tommy John surgery? More baseball players.

    Does this mean gubbermnt should pay for them?

    I don’t know. I’m pretty sure the answer is no

  9. ¥¥”One of the biggest drains in the current US system is precisely that we throw health interventions at people who arrive at the emergency room, but don’t engage with them to prevent such crises during normal daily living.

    How much did the defective EHR in the Ebola case cost society? In that case, because of the EHR,the ER did NOT throw interventions and the crisis was exacerbated.

    Were Bush’s EHRs approved by the FDA? If not, keep me away, and keep my patients away!