How Our Healthcare System Has Us Trapped

The premise of my latest book, Priceless: Curing the Healthcare Crisis, is that most of our problems arise because we are trapped. We are caught up in a dysfunctional system in which perverse economic incentives cause all of us to do things that raise the cost of care, lower its quality, and make access to care more difficult. Perverse incentives are faced by everyone: patients, doctors, nurses, hospital administrators, employees, employers, and so on. As we interact with the system, most of us spot ways to solve problems. We see things we could individually do to avoid waste and make care less expensive, for example. But the system generally penalizes us for doing the right things and rewards us for doing the wrong things. Anything we do as individuals to eliminate waste generally benefits someone other than ourselves.

So what’s the answer? Let people out of the trap. Liberate them from the dysfunctionality that is causing us so much trouble.

This message is precisely the opposite of what you are likely to hear from other health policy experts—on the right and the left. The conventional view is that we have too much freedom, not too little. Doctors are said to have too much freedom to provide treatments that are not “best practice” or that are not “evidenced-based.” Patients are said to have too much freedom to patronize doctors and facilities with inferior performance records.

Hence, the conventional solution: put even more restrictions on what doctors can do and where patients can go for their care. Ultimately, the conventional answer to the country’s health policy problems is to have government tell doctors how to practice medicine and to tell patients what care they can have and where they can get it.

The biggest problem with this approach is that it would leave us even more trapped than we currently are. Incentives would be even more perverse. We would have a plan designed by folks in Washington. But 300 million potential patients, 800,000 doctors, almost 2.5 million registered nurses, and thousands of others working in the system would find it in their self-interest to undermine the plan. My answer is just the opposite. I want all those patients and all those doctors to discover it is in their self-interest to solve problems, not create them.

Under the conventional approach, every doctor, every nurse, every hospital administrator will get up every morning and ask, “How can I squeeze more money out of the payment formulas today?”

My answer is just the opposite. Under the approach detailed in my book, all these people will be encouraged to start each day by asking, “How can I make my service better, less costly, and more accessible to patients today?”

[Cross-posted at Psychology Today]