Incentive Perversity

In February, Blue Cross of California sent letters to physicians asking them to report conditions that their patients may have hidden when they applied for health insurance in order to cancel policies.

Here's a snipit from a Salon.com blog , "Healthcare Needs You,"by Rahul K. Parikh, M.D. ( Jun. 19, 2008)

In February, Blue Cross of California (owned by Wellpoint, one of the country's largest health insurers) sent letters to physicians asking them to report conditions that their patients may have hidden when they applied for health insurance. The company's intention was to use the information to cancel policies.

Asking doctors to blow the proverbial whistle on their patients goes well beyond bad taste. If I had received one of the letters, I would have gladly sent Blue Cross my reply -- a picture of my middle finger photocopied on some nice office letterhead.

Just another day in the monstrous mess that is American healthcare. Indeed, poll after poll shows that most Americans (including the doctor writing this) agree that the time for healthcare reform is now. Many reform advocates point to the nationalized systems in Canada, the U.K. and other European nations as better alternatives to our employer-paid, fee-for-service system.

Dr. RK Parikh goes on to discuss incentives--both for the medical establishment and for patients, and he discusses incentive realignment - It's a good read and it brings me to comment (after being a medical director for over thirty years—now a full-time clinician).

Suffice it to say; when the incentives are misaligned, the results are less than astonishing. For instance, when the doctor is paid by piecework they generate more pieces. 'Oh, that ear recheck should be next week' (rather than in 3-4 weeks). 'We need to discuss those test results in person.' Pay a doc by the visit, s/he will generate more visits; capitate them and you will see fewer visits prescheduled (Ed Aside: why then do insurers not pay for the office care that might otherwise go to the ER? Why do they refuse to cover nebulizers, or the more expensive drug that worked so well?) And when the patient bears little or no cost for an encounter, guess what? — They become 'frequent flyers.' 'Generics? They can't be as good as the branded product.' You want to smoke / live a sedentary lifestyle / need a new liver after all that bingeing? No problem if someone else's the deep pocket, etc.

And, what of the deep pockets? Is it right that insurers profit the more that care is withheld? Should employers be able to discriminate based on health? Should women have a decent pregnancy leave (and what about their spouses)?

Below, some reader responses:

From: "Steven B, PhD, RPh"

Date: June 19, 2008 6:10 PM EDT

Jeff, wait a minute--you mention the alignment of incentives in the case of generic substitution? Sometimes that can be dangerous and I wonder about Pharmacy and Therapeutic committees that push too hard for it. Let me use the example of low-molecular-weight heparin and I quote W.P. Jeske and colleagues, Loyola University, Cardiovascular Institute: "The U.S. Food and Drug Administration and the European Medicine Evaluation Agency are currently developing guidelines for the acceptance of biosimilar agents including LMWHs... . [But,] "Until such guidelines are complete, generic interchange may not be feasible." Of course, the other side of the coin is the seemingly extraordinary extension of Lipitor’s patent to Pfizer.

From: "Fredrick H” (MD, PhD, JD)

Date: June 19, 2008 5:47 PM EDT

Jeff: It's true that people might prolong their lives by living differently, but I don't believe it is the place of society to enforce such personal choices.

OTOH, people don't have the right to force others to pay for their self-indulgences, so it's probably not unreasonable to adjust insurance premiums to account for excess voluntary risks.

But, what is "voluntary"? Certainly much obesity is largely genetic, as is an addictive personality, and poor self-control. Should people pay more for being impulsive, any more than they do for being stupid? Perhaps those genetically fat people COULD lose weight by a superhuman effort of will, that naturally thin people couldn't imagine. I wouldn't like medicine to become judgmental. Doctors are there to treat patients, as they are, not as society wishes they were. So, I could see premium discounts for non-smokers and non-motorcyclists, but not for those with the good fortune to be congenitally skinny or hyperactive.

An article in today's paper reported dramatic decreases in cancer rates, including major cancers like breast and colon, in obese people who had gastric bypass surgery. Yet, current insurance practice discourages such surgery, basically on moral, punitive grounds, arguing that obesity is not a medical condition, but a moral flaw.

This is precisely where doctors and insurers should not be imposing their judgments on patients.