Cell Phones vs. Health Care
As far as I can tell, access to cell phones is far more equal than access to basic primary care — not only in this country, but all over the world. The distribution of cell phones also appears to be far more egalitarian. Even panhandlers on street corners have cell phones. Cell phones have something in common with our bodies. Things can go wrong. When they do, we want someone to help fix them. In my neighborhood, I can walk into almost any phone store (Verizon, Sprint, AT&T, etc.) with no appointment, and most of the time I get service immediately. The phone store has competitors. Independent phone repair companies are popping up every day. There are even tools on the Internet that help you start your phone repair business. In most places, repair companies are within ten miles of their customers; repairs are done in fifteen minutes or less; and they are usually inexpensive ($40 to $60, say). Shopping malls have phone repair kiosks. Some companies will come to your house to repair your phone.
Contrast that with the market for medical care, where almost nothing is available at the drop of a hat. Nearly one in four patients has to wait six or more days for a physician appointment. A 2009 survey of family physicians in 15 metropolitan areas found the average wait for a new patient was more than 20 days. However, this varied from a low of 2.47 days to 99.6 days. Sixty percent of patients find it difficult to get care after hours or on weekends. Four- and five-hour average waiting times at hospital emergency rooms are not uncommon.
In fact, the few places in health care where waiting is not a problem are for services that are peripheral to the orthodox health care system. Teladoc promises a physician will return your call within three hours or the telephone consultation is free. Most calls are returned in less than one hour — during which time, you are free to do other things. MinuteClinics in some CVS pharmacies give you an estimated waiting time so you can shop while you wait for your care. Both of these services developed outside the third-party payer system, however.
Consider customer education. Elderly buyers in particular often have difficulty mastering the electronic devices they buy. The market has a solution. Verizon offers its customers free two-hour classes in how to use their iPhones. Yet, I don’t know anywhere in Dallas that will give Medicare patients free counseling (or even paid counseling!) on how to manage their diabetes. That’s unfortunate. This one disease is costing the country $218 billion a year.
Why is the marketplace so much kinder to my iPhone than it is to my body? I would argue that it’s because one type of service is bought and sold in a real market, while we have gone to great lengths to ensure that the service is completely free at the time of consumption in the other.
Call me (call me) on the line
Call me, call me any, anytime
Would you like our primary care system to work as well as the market for cell phone repair? I believe that is possible. But if I am right, everything we have been doing in health policy for the past 60 years has been completely wrong. Health policy has been designed to (a) make health care free to the patient at the time of service, (b) have third parties pay all costs and (c) tightly regulate entry into the market.
What is needed is the opposite approach. Everyone should be paying market prices for primary care, even the poor. We should abandon the idea of “free” health care completely. Third-party payers should get out of primary care entirely. (Much the same should happen for chronic care, but I’ll address that issue on another occasion.) Everyone should buy primary care using a Health Savings Account, including people on Medicare and Medicaid. And we should eliminate artificial barriers to entry in order to encourage competition and entrepreneurship.
While you ponder those thoughts, here is some additional information about the market for cell phones, courtesy of NCPA Senior Fellow Devon Herrick and Chris McGregor, the NCPA’s Director of Information Technology.
Universal Access. In the United States, there are an estimated 328 million cell phones in use — more than one for every man, woman and child in the country. An industry survey finds that 91 percent of the U.S. population uses a cell phone, including 87 percent of adults.
Americans used more than 2.2 trillion minutes in 2010 — up from 1.5 trillion just five years earlier. This is also an international phenomenon. It’s estimated that nearly 80 percent (5.6 billion) of the world’s 7 billion people have access to a cell phone.
Cost. Virtually all U.S. cell phone carriers will provide free phones to customers who sign up for a 1-year or 2-year contract. Basically, you can have the latest technology for free every couple years. Cell phones are also cheap to use: in real terms the cost of using a cell phone has been falling for years. The average monthly cell phone bill is around $47 per month — about what it was a decade ago — despite far better technology, higher usage, web access and the availability of smart phones.
(Just to keep perspective, there are concierge doctors who provide all primary care — including same day service, email, telephone, etc. — for about three times the cost of the average monthly cell phone bill.)
Subsidies for Providers. Three-quarters of households with incomes of less than $30,000 have a cell phone. One reason is that the government subsidizes cell phones for the poor. In 2011 the federal government spent $1.6 billion on subsidies for 12.5 million cell phones. The Universal Service Fee on your phone bill funds this program. The Lifeline Program provides low-income people a one-time payment of up to $30 to cover the cost of a cell phone (or landline installation) and a subsidy of $10 per month (sufficient to fund about 250 minutes on a pre-paid phone). If you qualify for Food Stamps, Medicaid or earn less than 135% of the federal poverty level you may qualify. Unlike Medicaid or CHIP, however, the cell phone program for the poor does not segregate them into a separate market with artificially low prices and inferior service. Instead, it allows low-income consumers to fully participate in the same market everyone else has access to.
Technology. In health care we are told that technology is causing increasing costs. In the cell phone industry, the opposite is true. As Matt Ridley observes:
An iPhone, for example, weights 1/100th and costs 1/10th as much as an Osborne Executive computer did in 1982, but it has 150 times the processing speed and 100,000 times the memory.
Cell phone technology sophistication is increasing every year. Of the 328 million cell phones, 257 million are “data-capable” of which about 50 million are smart phones (about 12 million of which are capable of download speeds of 3G or better).
Most cell phones can now fit in a small pocket. Some have cameras. Others have web access. Smart phones have the power of a mini-computer, with the ability to check your email, view Microsoft Office files and access your Microsoft Outlook calendar.
Oddly enough, despite the huge number of cell phones (and landlines), and despite the fact that every doctor’s office has multiple phone lines and every clinic employee (including the doctor) probably owns a cell phone, you cannot talk to your doctor on the phone. The reason is that — in most cases — your insurer is not willing pay for a phone consultation.
Very interesting contrast.
Love the song pairing.
The market does treat my cell phone better than my body.
Consumer electronics is a great example of a highly technical market, where manufacturers compete on price, quality and amenities you didn’t even know you needed until you used them. If this technology had been developed in a bureaucracy and priced accordingly, it would probably cost more than any of us could afford. But because the market for consumer electronics is highly competitive, prices are low and quality if high. The landscape is also littered with companies that pioneered cutting edge technology 30 years ago that are not bankrupt or barely hanging on. Yet, a company that was started in the founders’ parents’ garage 35 years ago provides a phone that will do far more than an power office computer would 35 years ago — all for a price that even moderate-income families can.
Very powerful post!
Wonderful analogy. Extraordinary common sense.
I assume that the difference is health care provides government with a powerful tool to control the people. Why else would they want to be so involved?
John, Dallas must be different than San Antnio. Here, At&T sales stores are on every corner it seems. There are waits to buy products and coverage. To get repairs, forget about fast or inexpensive service. As soon as the sales people hear you need help, they send you to a remote service center which takes hours to get to a desk and days to get your phone repaired, if it can be. Usually they inspect the phone, see a small ding and declare your phone is not covered by the insurance policy you bought. The same approach is coming to health care. Some techinician — probably a nurse with a doctorate in nursing — will consult his or her cell phone app (ePrognosis) and declare you have a poor prognosis and a life not worth living. You wont’ get the costly repair. I predict the AT&T model – San Antonio version – is coming to the CVS or Walmart clinic near you soon. Maybe you will fare better in Dallas. The reason that you won’t get the inexpensive fast, care you need is that evidenced based rules from the finest medical schools and most politicized professors of medicine will say you don’t deserve it. And besides, we can’t afford it.
Very clever comparison.
Can you imagine how bad the cell phone would be if Obama determined that cell phones are a “right” We’d be carrying around plug-in black AT&T rotary phones. Health Care needs to become emancipated from the government control, just as telephone service was deregulated and improved by leaps and bounds. Imagine what health care could be?
nice
Another difference:
One can read about new technological breakthroughs in medicine and in cell phones. The difference is that the cell phone breakthrough will very soon be available on your phone, but the medical breakthroughs take years until the FDA approves them. I usually assume that I will not live to see any medical breakthrough made available; I plan on updating my phone frequently.
John,
Good article, however the bad news for free marketers is that the FDA wants a hand in regulating cell phone health care apps: http://bit.ly/xvEpen
I agree that calling customer service with a cell phone problem can be annoying — but probably not as annoying as calling your doctor or hospital with a question about a medical bill. I know this because I was in charge of a hospital business office 20 years ago (I didn’t even understand how to read the bills we produced). For that matter, try calling your insurance company with a question about a denied claim.
Back when I ran the hospital business office, almost nobody owned a cell phone. At the time cell phones were called car phones. I owned a handheld Motorola 8000M (derisively called The Brick). Now I use an Apple iPhone on T-Mobile. I purchased it unlocked on eBay (I replaced a used Blackberry I also bought on eBay). T-Mobile support has the appropriate settings for my iPhone (even though they don’t sell iPhones). T-Mobile tolerates that fact that I’m still using an old, legacy ($10 per month) data plan on an iPhone. If I have a hardware problem, the Apple store will help me. I even also I bought an iPhone repair package on Groupon.
Following up on Paul Rubin’s post I think we can elaborate even further. The market has not only made cell phones cheap enough that almost everyone has one, but it has made the most advanced technologies of same also affordable within months of their market introduction. With phones, just as with Televisions and computers, the R & D costs are largely recovered by sales to the early buyers (read: well to do). But shortly thereafter prices drop substantially so that the majority of the public can gain the latest technology as well. Were it not for the early buyers it is doubtful that the technology would have been developed (certainly not as soon).
Why is it so hard for some to connect the dots with regard to healthcare technology? Price controls of any spin suppresses advancement – period.
Comparisons like this one help make a great case for market reforms in other industries too.
You mention that a cell phone repair business can be set up for less than $100. I believe my education was slightly more costly.
My wife’s knee has been causing her a lot of pain and finally on Friday she submitted a request on http://www.Medibid.com for a knee MRI. She got some bids ranging from $410 to 685, and the $410 one was using a Tesla 1.5, which is pretty accurate for knees. Her chiropractor faxed in the order at 3 PM, and she went there at 5:30. By 6:28 we were leaving there with the DVD inhand. We used a teleradiologist through MediBid who read the images and by 9:00 PM we had a diagnosis.
Not quite as quick as cell phone service, but not too bad either.
“(Just to keep perspective, there are concierge doctors who provide all primary care — including same day service, email, telephone, etc. — for about three times the cost of the average monthly cell phone bill.)”
My practice provides primary care, same day service since 2008, as a Concierge-lite practice, but at just over the average monthly cellphone bill.
Concierge care is wonderful, just as having the latest Iphone for $300 is wonderful. But if you want 90% of the care, without the added 10% concierge, there are many docs, myself included, that can provide this type of care well within most budgets.
To carry the cellphone analogy further, you can get the same basic service from Tracfone for $20 as you would get from a contract cellphone provider for $60 a month. The market is working to equalize the prices, but there are huge differences in prices for cellphones and the most expensive is not necessarily the best deal.
Do you all really believe ATT, Verizon, TMobile, etc., actually compete? Did I.G. Farben, Krups, or Bayer have real competition in pre and post-war Germany? Does Daimler (Benz) Chrysler really compete with Ford or Toyota, or Hyundai? Does IBM (eye-beam) really compete with Dell? Have you ever looked at logos of the transnational corporations? If the powers behind government didn’t WANT you to have a “personal” computer or a mobile device of any kind–do you really think you’d have one–and at such relatively cheap prices so that nearly everyone could afford one? Haven’t you ever asked yourselves what the true purpose is for all of this cheap technology? And have you ever thought about the kinds of technologies already in use that you know nothing about because it’s on a need-to-know basis? And do you really think that the industry and NGOs surrounding and crushing those in the medical business are simply people making dumb choices or legislating poorly, or just making bad judicial decisions? How much more obvious does it all have to get? And much more garbage will everyone have to swallow before they understand that this system is NOT WORTH SAVING since it was never your (our) system to begin with? For the education you were NEVER meant to have –www cutting through the matrix (dot) com.
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