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Comment by lumberjack | Hacker News Reader

Where is the source to support that claim of moral hazard?

The US has much less doctor consultations per person per year than other OECD countries which is an indication of the contrary:

Page 101: http://www.oecd-ilibrary.org/docserver/download/8115071e.pdf

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I'm fairly skeptical of claims of moral hazard on the part of the patient. Even if healthcare is free in monetary terms, it still has a big cost in time and annoyance. Going to the doctor is annoying. Seeing a specialist is annoying. Getting surgery is the worst thing ever.

Where moral hazard likely plays a bigger role is on the part of the doctor. It is always better to prescribe another test or a pill, or some precautionary treatment. It both makes you money and covers your ass from lawsuits, and you don't feel guilty about making your patient pay for it because insurance will cover it. This is a pretty good case study of how the process can get very dysfunctional: http://www.newyorker.com/magazine/2009/06/01/the-cost-conund...

If the patient had to pay the full cost of the tests, they might take a bigger interest in how necessary they are and whether the prices make sense. So they are participating in whatever moral hazard is there.

The patients qualified to do that are called doctors.

Unqualified patients can ask their doctor to explain what the test is for. Like, what risks does it rule out, is there much danger in waiting a week instead, etc. There's a whole line of questions that absolutely don't require an MD.

Just asking a few questions is already a big difference from doing whatever the doctor says.

And if the doctor is unethical or is trying to CYA in the case of a malpractice lawsuit, and therefore doesn't properly indicate risks, effectiveness, etc?

Yeah, more patients asking more questions is not a silver bullet, it's just something I expect would put downward pressure on prices.

TBH, I don't believe that to be true.

Let's say you're a healthy 20-something that's been experiencing weakness in your hands. The doctor comes back and says "This could be either arthritis (5% chance), cancer (0.1% chance), or nothing at all (94.9% chance). Test X will rule out cancer and test Y will rule out arthritis, but they both have a false negative rate of 15% and a false positive rate of 15%, and each test will cost $1,000 to perform".

Now what do you do?

I would make the claim that performing either test would be irrational given the probabilities. But people aren't going to screw around with their health.

Your position also presumes that doctors know what the heck they're doing and can provide information to the patient that allows them to make an informed decision. This is meant as no disrespect to the profession at all, but the reality is medicine is a lot of guesswork. It's very normal for a doctor to prescribe a battery of tests, or trial medications, because all they can do is assemble hypotheses and then test them against the individual. I guarantee you, anyone with a chronic condition has heard something along the lines of: "Well, I don't know what that is, but let's try this drug and see if it helps".

This is fundamentally why I don't believe healthcare can work as a free market. A free market presumes rational actors and perfect information, and healthcare is the antithesis of those things.

There's plenty of tests that are less contrived. X-rays are done as a matter of course after treating a sprain. What would really be the costs of deferring them and only doing them when pain persists days later? Lots of people would not choose to defer them vs minimal risk, but lots of people probably would.

I'm not a huge believer that health care should be a market but at the moment we at least are supposed to have some sort of market, so I'd like to see market mechanisms applied where it is sensible.

Well, there's this (from http://www.foothealthfacts.org/Content.aspx?id=2827):

"Patients with unrecognized ankle fractures have a high risk of developing infection, arthritis and foot deformities that may make it impossible to walk normally again."

So what's your appetite for that risk?

There's a testable hypothesis right there.

Hell, even transparent pricing would reduce moral hazard significantly. Most patients have no idea what a procedure costs until they get billed.

Even worse, many doctors don't even know what a procedure costs to a patient due to the maze of bureaucracy both necessary and unnecessary in many healthcare facilities.

The doctors don't know either! Have you ever tried to talk to your doctor about how much something costs? You'll just be told to talk to the front desk.

And all you'll get from the front desk is the hyper-inflated "list price" (for the uninsured). If you have insurance, your (insurance negotiated) price is treated as Top Secret confidential information until you're actually billed. Neither the hospital nor the insurance company will disclose it to you in advance.

I have a HSA, and I've had to get stitches twice (two on a cut finger both times): one time it cost $400, the second time $1200 (same city, but different hospital and insurance). Outraged at the second price, I tried to figure out which hospital would be cheapest with my current insurance, and utterly failed.

This requires a specific known price for everything. Instead the industry is focused on making prices as opaque as possible.

Worse prices are non binding, often stated prices have little relationship to billed prices.

This was my biggest issue with Obamacare. It did nothing to increase price transparency.

More broadly, I think the discussion needs to move away form health "insurance" because what we're really talking about is health care financing.

The insurance industry has a perverse incentive to increase systemic prices. If they make say 10% profit due to competion, then ~10% of healthcare spending paid for by insurance = their profit. Thus, their profit increases as prices rise. Sure, they want to tamp down on specific bills, but things like restricting the supply of doctors helps pad their bottom line.

Consider, A 1% chance of a problem is reason to buy insurance. However, if the bill is always ~2,000$ then some people will pay for it, but it's skippable (2$/mo). If it's 20,000k then more people would pay for it and pay more money (20$/mo). If it's 200,000k then it's less affordable (~200$/month) but even if you only get 1/2 the population that's still more profitable. It's only when prices get to 1% of 2,000,000$ that it's simply unaffordable and most people would skip the ~(2,000$/mo) bill.

PS: This is borne out by single payer systems which tend to have vastly lower costs for the same procedure. Assuming similar economic conditions. http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS

I blame the health care tax exclusion. If benefits weren't cheaper than wages and people weren't used to getting a health plan from their job, they would be more interested in demanding prices from providers.

Of course, the ACA doubled down on the problem with the employer mandate.

Compare, if you will, the US system to the French system.

In the US, if I'm going to an in-network provider (any provider), I have a defined co-pay. I could go to the Mayo clinic, a family physician, or even urgent care.

In France, I pay full price for the visit at the time of the visit. My insurance provider then reimburses me at 80% of the "reasonable and customary" cost of the visit.

(This is changing, with French insurance companies creating networks and selling additional coverage that works more like the US system)

Interesting! I didn't know that. I wonder if the US system worked like that (pay up front, get reimbursed later) it would have any impact on costs?

I'm thinking it might for two reasons: (1) it pushes patients and providers to lay out costs before starting treatment [in non-emergency cases] and (2) it allows patients and providers weigh the economic costs relative to the potential benefit.

Trying asking what something costs in the US before getting treated and most of the time you'll get a blank look from your doctor's office. Or, they tell you "about $1000" and you get a bill later showing the cost was $7000. It's impossible to weigh the economic costs because you never know them until after the fact.

Paying upfront is different from having transparent pricing though--even if you pay first and insurance reimburses you later, you still might not know the price until you get the bill.

In the end the two systems differ only in liquidity requirements, and perhaps counterparty risk (if insurance stiffs you). Otherwise the costs are the same, and since liquidity requirements affect primarily low-income people and those with little to no savings, it would disproportionately affect them.

The French system grants special cards to low-income people that allows them to charge their outpatient visits directly to insurance.

That's how some out of network providers handle billing. Essentially it offloads the entire claims submission process to the patient.

Fight it. In the US, networks aren't used to manage costs, they are used to deny coverage.

(As far as I can tell, insurance companies make an actuarial decision about accepting charges from a given area, they aren't negotiating shit with providers)

The Oregon Medicaid Study seems to suggest moral hazard in the sense of increased utilization because the patient isn't paying directly.[1]

Overall an increase in healthcare utilization, but no change in hard outcomes.

[1]https://en.wikipedia.org/wiki/Oregon_Medicaid_health_experim...

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