Why Did the "Dean of Health Care Economics" Urge Reforms that "Appeal to Some Special Interests?"

We have often discussed, some would say belabored, the importance of the "anechoic effect" in health care.  Particular issues which would make those who benefit the most from our current dysfunctional health care system uncomfortable are often considered not to appropriate for polite conversation. 

A prominent recent article in JAMA provided a great example of  how there are certain topics that health care, services, and policy experts avoid discussing.

Summary of the Article

The article was by Victor R Fuchs, who has been called the" dean of health care economics."  His topic was why US health care is so expensive compared to those in other countries, but provides little additional value for the extra expense.  [Fuchs VR. How and why US health care differs from that in other OECD countries.  JAMA 2013; 309: 33-34.  Link here.]

His explained the differences as follows:
-  "US individuals appear more distrustful of government...."  Thus presumably they shun government operation of health systems, which can lead to lowering administrative costs, and more effective negotiating "with drug companies and physicians and to control investment in hospitals and equipment."
-  "reluctance to achieve more equal outcomes for the population through redistributive public policy."  He attributed this to attitudes stressing personal responsibility for success, and the heterogeneity of the population leading to decreased sympathy to those who are unfortunate but "whose identity may differ greatly from one's own."
- "the opposition [to health care reform] of 'special interests,' such as pharmaceutical and device manufacturers, physicians (especially those in high-income specialties), and hospitals."  He noted that other countries have special interests, but attributed the power of US special interests to the country's system of government, especially "checks and balances," which provide "'choke points' for special interests to block or reshape legislation."

He ended with three policy prescriptions for more and better health care reform:


-  "government's role should be limited to what is necessary, not just desirable."
-  "provision of basic coverage for all should not require equality for obtaining additional coverage."
-  "reform should have features that would appeal to some special interests, or to some elements within each special interest group (for example, some physicians or some health plans."


I believe this essay, because it is in a prominent journal and by the supposed dean of US health care economists, provides a good example of some of the things that ail the discussion of health care policy. First, the author made rather cavalier use of evidence to support his points.  Second, he avoided even mentioning any of the unpleasant issues we discuss on Health Care Renewal.  Third, he not only failed to challenge any of those who benefit the most from the current system, but also suggested further appeasement at least of some of them.

Cavalier Use of Evidence

Prof Fuchs' justification for the role of distrust of government was based on a rather casual review of American history, and a single survey.  In fact, the proportion of people who appear to trust the government appears to depend on who asks the question and how it is asked.

For example, Gallup polling from 1998 to 2012 showed from 65% to 80% of people expressed “a great deal/ fair amount of trust in state and local government.”  Gallup polling from 1997 to 2012 showed from 51% to 83% of people had “a great deal” or “fair amount” of “trust in federal government to handle international problems.”  On the other hand, the Pew Research Center for the People and the Press showed public trust in government peaking at nearly 80% during the administration of President Johnson, then precipitously declining, rarely exceeding 50% over the ensuing years, and now around 20%. Furthermore, although Prof Fuchs argued that distrust of government is uniquely American, he provided no data comparing such poll results from the US with those from elsewhere.

Nor did he compare results of polls about trust of the government with those about trust of other organizations involved in health care.  However, while people in the US may be distrustful of government, polling shows even bigger distrust of health care special interests (like pharmaceutical companies and health insurance).    While Edelman marketing showed relatively constant trust in the pharmaceutical industry at around 50% from 2009-2012), a Harris Interactive 2010 poll showed that only about 10% of people thought the pharmaceutical industry was honest and trustworthy from 2003 to 2010, while health insurance companies and managed care companies were trusted by even fewer.

Avoiding Unpleasant Issues

While Prof Fuchs acknowledged the role of "special interests," he avoided mentioning how these special interests might negatively affect health care, and thus how their role could be altered or countered.

Some issues we discuss on Health Care Renewal, but which he ignored were:

Concentration of Power

We have frequently discussed how health care organizations have grown ever larger, increasing their market power, and hence their ability to command revenue.  Although we often hear arguments that larger organizations are more efficient, this historic excuse of monopolists has little evidence in support.  In fact, large organizations seem mainly efficient in extracting money for the benefit of their insiders.  For a recent discussion of the push toward monopolies that has some health care angles, see this post on Naked Capitalism.   


Commercialization of Health Care 

The US seems to be unique in that it allows a larger role for private, for-profit corporations in health insurance and the actual provision of health care.  In the US, many health insurance companies, some hospitals and hospital systems, and many other types of health care providers, like hospices and dialysis centers, are now for-profit.  Furthermore, the physicians who provide direct patient care are more frequently employed by corporations (rather than being in solo or small group practice), and these corporations are increasingly for-profit  (look here).

This increase in the provision of health insurance and direct health care by for-profit corporations is a historical change.  Through the 1970s, the American Medical Association declared "the practice of medicine should not be commercialized, nor treated as a commodity in trade." (Look here)   In most states, the corporate practice of medicine used to be banned.


Commercialization in an Age of Financialization -

This commercialization took place in an era in which economists were advocating that corporate leaders ignore all goals other than increasing "shareholder value" (look here).  This de facto meant increasing short-term stock price and/or revenue.  Clearly focusing only on short-term revenue increased the risk of management that ignored or was even hostile to the health care mission.  The focus on short-term revenue lead to strong incentives for employees to "make their numbers," that is, to achieve financial goals, no matter what it took (see examples here).  This likely lead to many examples of unethical behavior.  Furthermore, physicians were not immune to such requirements (look here).

 Abandonment of Government Regulation

As was noted in the comments on the post on Naked Capitalism,enforcement of anti-trust law that could prevent concentration of power has generally been abandoned by recent US administrations.  Furthermore, as we have discussed here, enforcement of laws against fraud, kickbacks, etc have lead to numerous legal settlements, but almost never any penalties against individuals who authorized, directed or implemented such actions within large health care organizations.  Thus, the leaders of health care organizations, particularly large health care corporations, have experienced impunity.  In some cases, there has been outright regulatory capture.  Conflicted regulators have proliferated, often through the mechanism of the "revolving door."

Executive Compensation 

Thus protected by such impunity, executives of large health care organizations often have become rich, and seem to be able to do so without any accountability for their organizations' actions.  As noted above, their incentives push them to put short-term financial goals ahead of the health care mission.  Furthermore, another currently fashionable business school doctrine is that health care managers may and perhaps should be generic, and thus need not know anything about health care, have experience caring for patients, or have sympathy for health care values.  All this has lead to health care management that ignores or even is hostile to the health care mission. 

Deception Undermining Clinical Research and Education 

Furthermore, this impunity and lack of accountability has been correlated with a rising tide of unethical behavior.  In particular, corporations that make drugs and devices have taken over clinical research meant to evaluate their own products.  They have often manipulated research to favor their products, and suppressed research that even when manipulated does not favor these products.  Thus they have corrupted the clinical research base on which physicians and patients rely to make the best possible health care decisions.  Marketers have launched stealth campaigns that have also included corruption of medical education.  In particular, they have paid influential health care professionals, called key opinion leaders, to support marketing under the guise of medical education.  Thus distorting health care and medical research and education decision making has distorted decision making, likely leading to increased costs and decreased quality.  

Other examples of poor, that is ill-informed, unaccountable, self-interested, conflicted and corrupt leadership are strewn around Health Care Renewal.  He have also shown how the governance of health care organizations often lacks accountability, integrity, transparency, and honesty.  All these problems can lead to increased costs, and decreased quality and access.  Yet almost never do any of these issues make it into polite discussion within health care research and policy circles.

Appeasement of Special Interests

Over eight years of  effort by a few dedicated academic researchers, health care professionals, investigative reporters, whistle-blowers, and watch dog organizations,  chronicled to some extent on this blog and by other bloggers and commentators, has shown bad leadership and governance of, and resulting unethical behavior by health care "special interests."  Yet, the example essay by Prof Fuchs failed to deal with any of these issues.  Instead of discussing how they might be approached, he suggested continuing appeasement of special interests, which would likely make our problems even worse.  Why he ignored all the privileges the leaders of special interest have, and felt the need to treat them even more nicely, remains unclear. 

Thus it appears that the anechoic effect is leading to failure to grapple with the real reasons for health care dysfunction, thus ensuring that health care costs will continue to rise while access and quality fall.

Real health care reform will first require honest, unflinching consideration of what has gone wrong.  As long as the conversation seeks to avoid offending those who benefit the most from the current system dysfunction, that dysfunction will only get worse. 

US President Theodore Roosevelt had the courage to challenge the "malefactors of great wealth" who engineered the first gilded age, at the expense of the public at large.  During this second gilded age, will we have the courage to take on the new malefactors of great wealth, including those who benefit from health care's dysfunction?