(Aren’t healthcare puns the best??)

This post, at The Incidental Economist, is the introduction to a ten-part series that I cannot recommend enough — each part is very short, direct, and easily digestible, so don’t let the length intimidate you.  Essentially, it is a point-by-point breakdown of the specific areas in which the American healthcare system is overspending (and, in one post, underspending) according to our GDP.  It is a useful and quantitative addition to the discussion of healthcare economics in this country.  However, like most discussions of health care economics, it does overlook one key area: human stupidity.

I’m being rather hyperbolic to call it stupidity, but as much recent research in behavioral economics has shown, the placebo effect is startlingly connected to the placebo’s price tag.  More expensive procedures do not necessarily produce better outcomes — nor do more procedures — but, as consumers, we perceive price to be highly correlated to outcome.  Healthcare pricing is about as far from transparent as it gets, so there’s a compounded effect: we think that the things we think are expensive will also be effective.  Folks are perfectly willing to wear discount clothing, buy cheap cars, even eat street food as a badge of hipness — but nobody is eager for a discount appendectomy.  Atul Gawande’s now-classic New Yorker profile of the healthcare system in McAllen, Texas — one of America’s priciest — points to a system of distorted incentives for doctors but says little about patients except that they are unwitting victims.  Too often, however, it is healthcare consumers who are complicit in spiraling costs; the idea of “rationing” healthcare is only so threatening because, in healthcare decision-making, we are fundamentally irrational creatures.

(We are not, however, insurmountably irrational, as Gawande details in a later piece on end-of-life care.  Altering systemic incentives can promote more rational decision-making, although effects are not immediately widespread.  However, it points toward reform and suggests that, if perceptions about the role of healthcare were changed throughout society, costs would be similarly impacted.)

One other point about the Incidental Economist analysis intrigues me.  The posts examine health-care spending as a proportion of GDP, and are based on the notion that other wealthy nations have settled into a more-or-less comfortable ‘set point’ of healthcare spending relative to total GDP.  America’s share of healthcare spending is vastly more than any other wealthy nation. 

There is nothing controversial or inaccurate about this.  However, it does remind me of a project I undertook in the summer of 2009, to help my mother accurately rebut some claims by a conservative family member about the relative efficacy of the American healthcare system; the charge was that, if my mother lived in and had been diagnosed with either leukemia or colon cancer (both of which she has survived) in Canada or Europe, she would have been much less likely to survive either cancer.  I sorted through piles of data from the World Health Organization and discovered that, although this claim was true on its face, there was another layer to it: cancer rates in much of Europe are so much lower than in the US that, with some very simple statistical analysis, it was easy to arrive at a straightforward conclusion.  Americans are more likely to die of cancer than people in most Western European countries (particularly the Scandinavian countries), and it is entirely because Americans are just so damn likely to get cancer in the first place.  If we do get diagnosed with cancer, we are more likely to survive that diagnosis, but can’t we all agree that it’s a good idea to avoid cancer in the first place if you can?

What’s particularly striking about this is that it is a robust finding across a number of lifestyle diseases — heart disease, diabetes, etc.  The implication is clear: European lifestyles tend, on balance, to be healthier (regardless of recent research about how few French people go to the gym, even though gym use isn’t tied to any measure of longevity).  Anyone who has spent any amount of time on both sides of the Atlantic can attest to this: their cities are more walkable (and bikable), their working hours are shorter, their environmental regulations are stricter and their food is often less processed.  These are all elements which factor into both overall health and susceptibility to lifestyle diseases. 

My point as it relates to the Incidental Economist piece is this: in considering healthcare spending on “preventive measures”, we are probably undervaluing the amounts spent by European governments on things like public transit, bike lanes, labor regulations and enforcement, and environmental regulations.  As efforts in preventive medicine, such measures have benefits well beyond mammograms or cholesterol checks: they can beautify a city, increase transportation efficiency, reduce stress, and increase people’s sense of civic pride and happiness (it is no accident that the nations of Northern Europe, which have some of the lowest incidence of lifestyle disease in the Western world, also tend to rate highly on happiness surveys).  Moreover, shifting some healthcare spending into these arenas is likely to save money (prevention tends to be a whole lot cheaper) as well as promote job growth in a diversified economy. 

What’s standing in the way of such a reordering of priorities?  That is a cognitive question I will take up tomorrow.  (Hint: human stupidity will probably come up again.)