Goodman vs. Kendall

If you are not a policy wonk, you may not care about this issue very much.  If you are a wonk, read on.

I find that people who became steeped in the managed care way of thinking over the past two decades are often incapable of seeing the world in any other way.  How else can one explain Dave Kendall’s Progressive Policy Institute response to my recent Wall Street Journal editorial?

I wrote: 1) Third-party payment of all sorts has suppressed the ability of doctors to respond to changes in economics and medical science and provide high-quality, low-cost care.  2) As a result, excellence is distributed randomly (just like in the market for education); it is not emulated because there is no financial reward for doing so.  3) The exceptions to these generalizations are in those sectors where third-party payment is rare or non-existent: cosmetic surgery, LAZIK surgery, walk-in clinics, medical tourism, etc.

David Kendall interprets this to mean that: 1) Goodman admits demand side changes can’t solve our problems, so 2) we must focus on the supply side instead and that means 3) buyers of care must tell doctors how to practice medicine. 


To borrow a phrase, I report, you decide.

Read Goodman’s Wall Street Journal op ed.

Read Kendall’s Progressive Policy Institute response.

Comments (3)

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  1. Gerald Musgrave says:

    I looked at the PPI rejoinder to you. There is a big difference between how economists think about things compared to business managers or physicians. It is difficult to straddle both views. Automobile engineers actually think they design cars, not markets–architects think they design office buildings and homes not markets. You get the idea.

    You are, of course, correct. However, in the email you sent it might be a little confusing to business economists. We have always argued that the buyers of health care do in fact tell physicians how to practice. That is at the core of what we want to change.

    We can’t change the fact that buyers will always tell sellers how to produce.

    We want to change who the buyers are. We want the “buyers” to be the patients. Our view is that the folks who currently “buy” health care are agents for business or the government, not the patient–or maybe indirectly the patient. They tell physicians how to practice. If the patients were the buyers, then physicians would do a better job of meeting patients needs.

    I realize in your brief emails you can’t write a dissertation. May be you could just say that Kendall wants to maintain the status quo where ever large bureaucracies tell physicians and patients what to do rather than patients.

  2. Allan says:

    Sometimes policy wonks become so absorbed in artificial creations that they lose track of their core beliefs. I refer you to some of your recent thoughts regarding Medicare Advantage (Third-party payment ) that I took issue with earlier. Understand, you are one of the few bright lights in health care that I hope will not dim based upon a faulty image of how a doctor really functions and what constitutes third-party payment. We need free competition on the patient to doctor level, not competition imposed by third parties that are not valid agents of the patient or the doctor.

  3. Stan Alekna says:

    I am a fairly recent subscriber to your newsletter and I agree with a great many of your ideas and propositions on health care. However, I can’t support your suggestion or hope that the government will jump start the entrepreneurial process in health care as I can think of no case when this has happened, certainly not in an area as vast, complex, and problematic as health care. Please come up with a better solution to put market forces at work in health care.

    As a retired CEO of 2 managed care companies, an IPA model HMO and a Managed Dental Plan, I take some exception to your condemnation of managed care executives. To the contrary, I feel strongly that those who have never managed the complexities and conflicts among providers, employers, regulators, legislators, insurers and individuals with a goal of delivering the best available, necessary care in the most appropriate setting, and trying not to go broke, cannot grasp all of the problems and dichotomies of our health care system.

    We enjoy the finest health care in the entire world. My growing concern is that there is an increasing number of uninformed state and federal legislators who are willing to risk destroying the quality of our health care by legislating some form of socialized medicine. Some large businesses executives are joining this movement, simply as a means of disposing of a huge H.R. problem and cutting their expenses without regard for the irreversible damage that could occur to our delivery system. They, of course, would pay for top-of-the-line health care with their exorbitant incomes leaving the working people to the rationing that is inescapable with socialized medicine.