Costs of Care

This op-ed has been prepared for the forthcoming volume of the Harvard Kennedy School Review

Over the last four years, I’ve had the opportunity to work at the best academic medical centers in the country, alongside the most competent and caring doctors you can imagine. They go the extra mile to address the needs of their patients, diligently and compassionately attending to each physical symptom.

But even the best doctors neglect something critical. The bill.

In a time when tightening belts and pinching pennies is especially important, we often pay exorbitant amounts—enough to bankrupt 2 million American families a year—on medical care we may not even need. 

As patients, we’ll spend hundreds of dollars on a medication we are prescribed, even when an available generic version contains the exact same stuff and is 90% cheaper. We might spend thousands of dollars for an MRI, even when it is very unlikely to inform our treatment. 

The reason is painfully simple. Information on the prices patients face is rarely available to doctors when they are deciding which tests and treatments will go on the bill. As a result, a 2003 American Medical Association study showed that less than one in five doctors understands how much their patients pay for care.

In a market economy like ours, healthcare is the only arena where we routinely contract for services without knowing what the costs are or even exactly what we are buying. For good reasons, we trust doctors to make purchasing decisions for us. But when doctors are looking at menus without prices, it is easy for them to order filet mignon at every meal—even when their patients are the ones picking up the tab.

True, when we are sick certain tests and treatments may be needed no matter how much they cost. But the Congressional Budget Office has estimated that $700 Billion (an amount comparable to our total spending on the Iraq War) is spent each year in the United States on medical tests and procedures that do not improve health outcomes. 

Clearly doctors consider several factors when ordering tests, including how sick the patient is and how good the test is. However, given this evidence, and the impact it has on hard working Americans, it would be sensible to also make costs part of that calculus.

This is especially true given the potentially catastrophic impact of the rising costs of health care. Today, spending on healthcare is approximately 16% of GDP, up from 8% twenty years ago, and 4% twenty years before that.  In the near future, Medicare and Medicaid, which contribute half of this spending, will become unsustainable. Investment in other things that matter to us—roads, schools, security—will be crowded out. 

And to add insult to injury we’re not even getting much bang for our buck.  A 2008 Health Affairs report compared health care spending in the United States to other countries in the Organization for Economic Cooperation and Development (OECD). Per capita, we spend double the amount everyone else does, but we do not see a return in value. Among the OECD group, the U.S. ranks in the bottom half for most of the measured quality indicators.

Debates about this cost-quality discrepancy are inevitably abstracted to the population level—the millions who cannot afford coverage, the staggering percentages of GDP. The underlying problem is often framed as an impenetrable tension between the interests of individual patients to have everything possible done, and the collective interests of all of us to have a sustainable system.  

But there may be a simple solution.

Doctors are trained to focus entirely on the patient in front them. Unlike policymakers, they are not trained to assume responsibility for entire populations. And rightly so. If you were sick, you would want your doctors to make decisions about your care based on their assessment of you, and only you.

It’s no wonder that high level policy discussions about GDP sometimes fall flat at medical conferences. The debate, for doctors, must be framed in terms of the potential financial burdens their decisions may impose on the patient in front of them.  Price information at the point of care would do just that.

Putting prices on doctors’ menus offers an opportunity to move beyond the apparent tension between individual and collective interests.  In the end, doctors, policymakers, and patients can all agree that we don’t always need filet mignon.