Rationing By Waiting
Economic textbooks stress the role of prices in allocating resources. Yet the reality is that we pay for almost all of the goods and services we buy with both time and money. The size of the time price, versus the money price, varies a lot from good to good, market to market and even by the hour of the day.
Most of us accept this reality as a normal part of life without experiencing any emotional stress or moral outrage. I’ve never heard anyone say that paying with time is more moral or just or fair than paying with cash. Certainly no one ever argues that paying with time rather than money is more efficient.
Except in health care. As loyal readers of my blog discovered long ago, health policy analysis attracts an unusual breed of thinker:
- They almost universally believe that if health care has to be rationed, it’s always better to ration by waiting instead of rationing by price — even when the service is something almost everyone could easily afford (e.g., a doctor’s visit).
- They believe that paying for care with time, rather than money is more efficient, even though the most rudimentary economic analysis shows that belief is wrong.
- And they believe that people who pay for care with time are “insured” while people who pay with money are “uninsured” — even if the same people end up getting the same care under either system.
[Note to self: Does health policy analysis attract people with peculiar personality disorders? Or do they just get crazy after they become immersed in the field?]
“I ain’t saying you treated me unkind….
You just kinda wasted my precious time.”
That brings me to Massachusetts, where these ideas have been largely codified. According to the latest survey by the Massachusetts Medical Society:
- New patients must wait more than a month before they are able to see a family doctor; and the wait to see an internist averages 48 days.
- More than half of all family doctors and more than half of all internists are not accepting new patients at all.
In Massachusetts, this is called “universal coverage.”
Of special interest is what has happened to the people who are newly insured as a result of health reform in the state. As the graph below shows:
- Whereas 87% of family doctors accept Medicare patients, only 56% accept patients enrolled in Commonwealth Care (subsidized insurance sold in the “exchange”).
- Only 44% accept patients in Commonwealth Choice (unsubsidized insurance sold in the “exchange”).
- Although 85% of internists accept Medicare patients, the fraction who accept Commonwealth Care and Commonwealth Choice is 43% and 35% respectively.
In Massachusetts this is called “access to care.”
Before leaving this subject, allow me to make an observation previously made here: If you force people to ration care by waiting, you effectively double the social cost of that care. Patients will wait until the value of their time equals the value they place on the care they receive, at the margin (that’s once); and taxpayers or employers and employees must pay with money (that’s twice) for the real resources — doctors, nurses, facilities, etc. — needed to provide that care.
In Massachusetts, this is called “cost effective” care.
John, you are right. The vast maority of people in this field believe you should pay for health care with your time and your taxes. But never out of pocket.
Good song pairing. Too bad Bob Dylan won’t allow any live videos on Youtube.
Health policy anaylsts need to take Econ 101.
I agree with Paul H. If we could get health policy analysts (especially on the Hill) to understand some basic economics, they’d know that it takes more than just good intentions to enact good policy.
All people have the same amount of time. Not all people have the same amount of money. Health care people see time as ‘fair’ because it the amount of time available is equal among all. If you could change the nature of time so that it expanded for those people who provide more value to other human beings then it you could have the same dynamic as money.
John
I was with you until you pulled in Massachusetts. I agree that most folks want to ration by wait time instead of by price.
But you are implying a causation here in MA with wait times that I am not sure is there. We have suffered from wait time issues for years before our “universal coverage.” There are regulatory arguments for causing that, but I am not sure we can imply the law is the cause.
Plus the MMS survey results were mixed. The average wait time for an appointment for internal medicine is five days shorter than last year, the wait time for family medicine is 7 days longer, and for pediatricians, the wait time is unchanged.
Finally, while the MMS survey does take an important snapshot of the number of doctors not accepting new patients, one has to be careful when interpreting doctors’ responses to insurance acceptance questions.
For example, most doctors I talk with in MA don’t know what CommChoice is (there are few people buying in this program in the exchange)– on top of the fact that when a patient walks in, the doctor would never know they had it– it looks like any other private insurance plan. So most likely they answered that they don’t accept CommChoice out of understandable ignorance. Similar lines of reason can be used for CommCare.
Not all people can afford the same house. Not all people can afford the same care. Not all people can afford to live in the same neighborhoods.
In most of asia, they have the international hospitals which are like 7 star resorts, and they have the local hospitals, which sometimes don’t even have running water. The latter are often government subsidized.
I would say it is the “equality above all” principle at work. If everyone has to wait an hour, some people’s time is worth $10/hour and other people’s time is worth $100/hour. Thus “the rich” are charged far more than could ever happen with mere prices.
I know of people who take it even further, saying, “If everyone can’t have Treatment X, than no one should have Treatment X.” Equality of misery.
Of course all of these approaches result in a black market, where some people (those desperate for treatment or those who can pay extra) will go outside of the system, even overseas, to get what they need. The “equality above all” principle then needs to add more police to shut down the black market. Then comes border security — not to keep people out of the country, but to keep them in.
The subsidized Commonwealth Care plans have physician fees similar to Medicaid. It’s no wonder that their enrollees have a hard time seeing a doctor.
One exception: when delay in getting medical care allows time for a problem that will get better on its own to get better on its own, money is saved and the patient may be spared seeking more medical care for the side effects of prior “treatment.”
@Josh
I talked with a representative of the Massachusetts Medical Society and they confirmed what you said about Commonwealth Choice. Doctors don’t want to deal with it because so few people (only around 30,000) are in the program.
Your opening thesis makes no sense.
The wait times are for non urgent primary care. For those that cannot afford to pay, having to wait for non urgent primary care is better than getting none at all.
According to the article, the problem according to the medical society, is a shortage of primary care physicians.
“Medical Society officials say the percentage of practices closed to new patients reflects the persistent shortages of primary care physicians in the Commonwealth. For five consecutive years, the Medical Society has recorded critical and severe shortages of both internists and family physicians.”
This has been understood for years, and it is related to the debt incurred by medical students, and the high level of compensation for specialists, which discourages students from going into primary care. It is a nationwide problem, and is not the fault of the Mass. universal health insurance system. Reducing the debt burden of medical students, is the solution to the shortage of primary physicians. In Canada the average cost of physician education is 1/2 of what it is in the US, and physicians accept lower compensation than in the US. Mortality in Canada is better than in the US. In France, which is tops in medical care in the world, medical school is free, but highly competitive.
Looking at improvements in mortality in the US by state and county, Massachusetts ranks the highest in the country. The states that rank the lowest are in the South, which has the highest rate of the uninsured.
Shortage of primary care physicians is not a new phenonmenon, and was not created by the universal insurance system in Mass. Abolition of the universal insurance in Massachusetts would not fix the shortage.
…and yes, John, those of us who dabble in health policy analysis are more than a little weird.
So, what is ‘health policy’ anyway? Sick people just want help. Bring back true hospital and attending physician insurance for major medical and forget ‘policy’.
In my mind policy wonks benefit from screwing up the ‘system’ and then get paid to tweak it here and tweak it there to ‘improve’ it.
Freedom to choose who provides care and how that care is paid for should be any healthcare policy wonk’s mantra. Get Government out of the way.
Then when the invisible hand takes over and prices go down and service goes up, they can go on to another ‘problem’ in our society that needs their kind of ‘solution’.
I have a better idea for them – Why don’t they just get a private sector job and provide some value to America? Leave us alone, please
Very well done, John. Keep up the good work. I’ll post this on the Dallas Blog.
-Tom Pauken
How do we get Congress to say the ‘R’ word and get on with it. They all seem to fear Rationing when they know good and well we can’t have a national health policy without it. We are reaching the end of the ‘unlimited’ resources to pay for every conceivable healthcare need for everyone.
Opportunity cost is more than just waiting. It also includes lost productivity. Imagine an essential professional team sports player that is injured and with immediate surgery could be back later in the season versus one who has to wait for the surgery so that he cannot return until next season. To both the team, the sports league and the individual there is lost productivity.
Employers of workers who have a non-life threatening ailment that diminishes their productive capacity increase the costs to employers and increase the time it takes for the individual to complete the task, etc.
I find it interesting that MA requires everyone to have health insurance but does not require much if anything in return from the dominant healthcare systems such as reduced cost of care. The hospitals blame the high cost of treating the uninsured as the primary reason that they charge exhorbitant prices. After a quick look at AHD.com, the large hospitals in Boston show a 30% average increase in net income from the previous year with the top three hospital (# of beds) making over $350mm combined. On top of that the average bill is marked up 400% before anyone is offered a “discount”. Sounds like a great deal to me if you run a hospital. Keep charging what you want and now every patient that comes through the door is insured.
Answer for “NOTE TO SELF”. I think they become “crazy” after they become immersed into the field, because they find the logical conclusions reached after mastering the basic dynamics of healthcare are ignored in favor of political considerations.
Speaking of which, Eric says
“Looking at improvements in mortality in the US by state and county, Massachusetts ranks the highest in the country. The states that rank the lowest are in the South, which has the highest rate of the uninsured.”
Let’s see – “Cats are mammals,and dogs are mammals – therefore dogs are cats”
Gee, that means if every state adopted the Mass Plan we would all live longer. Why didn’t I think of that?
The argument of mortality rates is totally falacious.
Until the WHO makes all report equally they are meaningless.
Eliminate homicides and MVA’s, make all report infant mortality the same, not “viable births” as many countries report. If you equalize the mortality stats you would be shocked that the US soars to near the top.
Milton Recht says:
June 22, 2011 at 2:39 pm
“Opportunity cost is more than just waiting. It also includes lost productivity. Imagine an essential professional team sports player that is injured and with immediate surgery could be back later in the season versus one who has to wait for the surgery so that he cannot return until next season. To both the team, the sports league and the individual there is lost productivity.
Employers of workers who have a non-life threatening ailment that diminishes their productive capacity increase the costs to employers and increase the time it takes for the individual to complete the task, etc.”
The wait times are biggest for people who are looking for non urgent care from a primary physician. This is different from waiting for surgery to fix an injury.
Physicians normally do some kind of triage to determine the severity of a problem before assigning a waiting time.
Frank Timmins says:
June 22, 2011 at 3:06 pm
“Answer for “NOTE TO SELF”. I think they become “crazy” after they become immersed into the field, because they find the logical conclusions reached after mastering the basic dynamics of healthcare are ignored in favor of political considerations.
Speaking of which, Eric says
“Looking at improvements in mortality in the US by state and county, Massachusetts ranks the highest in the country. The states that rank the lowest are in the South, which has the highest rate of the uninsured.”
Let’s see – “Cats are mammals,and dogs are mammals – therefore dogs are cats”
Gee, that means if every state adopted the Mass Plan we would all live longer. Why didn’t I think of that?”
I can’t answer your question. If you really didn’t think of that, there are a number of possibilities – ignorance of facts, or confirmation bias.
Here are some facts which are worth knowing.
Researchers have empirically modeled US age adjusted mortality before age 75, to look at the dependence on the different variables. They classified 9 variables as modifiable. They are percent uninsured, high school grad, college grad, living alone, inactive, smoker, unemployed, obese and median family income.
The variable which could modify mortality the most was percent uninsured. For each 1 percent decrease, 7.8 deaths per 100,000 prior to 75 can be avoided.The second most effective variable was percent living alone, which came in at 7.2 deaths per 100,000. All of the other variables were far behind, although taken together they were significant.
http://www.publichealthreports.org/Documents/160-167.pdf
So percent without insurance is the most important single variable which can improve mortality. Lifestyle, education and income also play a important roles.
John, As any good preacher knows it is enough to repeat the simple gospel message. Nice job. While you’ve been blogging there is activity going on that will lead to market forces in health care. See http://www.castlighthealth.com/ , https://www.compasssmartshopper.com/default.aspx , and other activity that points to a table of allowances (see the term reference based pricing). The difference this time is that the ability to shop around is enhanced by web technology. Plans that succeed will offer financial incentives to consumers who get prices below the table of allowance maximum. This is the only way to cut down on moral hazard insurers are faced with (particularly on the supply side). Rather than offering tight networks of providers which leads to rationing based on waiting, this idea gives consumers maximum choice, so less waiting, and the competition among providers drives price and quality in the right direction.
Time is the coin with which we spend our lives.
To artificially induce longer wait times is to take away a bit of my life.
However, there isn’t really a significant difference between spending time or money. In a free market they would be interchangeable. You know… “time is money” but also “money buys you time.”
I like Beth’s perspective. Time is important if you can cancer that is rapidly growing or a tumor that needs to be taken out.
Aren’t we evolving to a 2-tiered system where some people chose concierge care and spend money instead of time and others use their time instead of money?
I think, just as many of you have said, that time can be as important as money. Missing work, is missing money. Dealing with a health problem and having to wait for what seems like an eternity to get an appointment is as detrimental to many as paying say an extra $100 to get in to the doctor sooner. Working in a hospital I see many people that have be put off for surgeries because of time constraints in the doctor’s schedule. This seems so unfair to me but there is not an easy fix. As many of you have mentioned, the shortage of doctors adds to this problem because a doctor only has so much time in which to see patients or to do surgery. I found an article on MedScape while researching about wait times and it discusses cancer patients having to wait for treatment. Just last week I was helping with a patient who had major abdominal surgery and was found to have stomach cancer. The patient must wait 2 weeks to get into the oncologist. She has so many questions that the surgeon cannot effectively answer such as how extensive is the cancer? Do I have it anywhere else in my body? What types of treatment are available? And the number one question that is keeping her awake at night, is How long do I have to live? It seems to be there should be NO reason for her to wait to see the MD. She would be a priority in my book. I am sure if she had large amounts of money she would definitely give it up to see the doctor and get the answers to her questions even one day sooner.
There are no simple answers or solutions to this problem unfortunately and I think under the Affordable Care Act, it is only going to get worse. Wait times are going to get longer as many more people now have insurance and feel like they can finally go to the doctor. Also, I think many doctors are going to retire from practice, refuse to take new patients or refuse to take certain types of insurance. There is always going to be some barrier in health care as everyone has to get paid for their services and few have the resources to pay the astronomical costs associated with health care.
Resource: http://www.medscape.com/viewarticle/739109
John,
Rather than offering tight networks of providers which leads to rationing based on waiting, the following ideas gives consumers maximum choice, so less waiting, and the competition among providers drives price and quality in the right direction. See http://www.castlighthealth.com/ , https://www.compasssmartshopper.com/default.aspx , and other activity that points to a table of allowances (see the term reference based pricing). The difference this time is that the ability to shop around is enhanced by web technology. Plans that succeed will offer financial incentives to consumers who get prices below the table of allowance maximum. This is the only way to cut down on moral hazard insurers are faced with (particularly on the supply side).
John,
This is why the delivery of health care MUST be about quality and not go near time vs. economy. Most physicians would agree that the best care is the least expensive in the long run. Remember my “rule of six”: do the right thing at the right place by the best providers at the right time for the right reason and at the right price. And this can only occur if the medical profession provides discipline, monitoring, and policing itself. Keep the government out of health care. They are all whores to the party to which they are affiliated.
Dr Bob Kramer