The following is a reader take by an anonymous medical student.
One of the ideas that comes up in the search for explanations of high healthcare costs is the so-called “Moral Hazard”—the idea that insured patients are more likely to agree to unnecessary procedures because they don’t pay for them directly. Not everyone thinks it is real—does a patient have the medical knowledge to make an informed decision? Recently, I’ve become convinced that the Moral Hazard does exist. I’ve seen it with my own eyes.
This week in the genetics clinic we saw an adult patient with a classic case of Pendred syndrome: bilateral hearing loss that worsens with head injury, hypothyroidism, and a sister with the same presentation (implying genetic cause). He’d been diagnosed with hearing loss early in life, but the hypothyroidism developed recently, so he’d never been officially diagnosed with Pendred syndrome. His primary physician saw the signs and referred to genetics to confirm his suspicion.
From what I’ve seen in the past few weeks, the genetics department has an important role. A geneticist can be the person who puts the pieces of a medical puzzle together and finds the underlying cause for a myriad of symptoms, for example. Genetic testing for disorders can be useful and cost-effective. But it isn’t always.
The patient with Pendred syndrome was offered genetic testing to confirm his diagnosis. His insurance, the genetic counselor assured him, would cover the cost. He agreed to have the testing done: since it was covered, it couldn’t hurt.
But would it help? The geneticist made it clear that she was convinced that he had Pendred and even a negative test would not convince her otherwise. After all, the test misses about 10% of cases. Furthermore, the test result wouldn’t impact his care: his hearing loss and hypothyroidism would be managed the same no matter the result. It didn’t seem likely to affect pregnancy planning either. His parents were well past their child-rearing years. The patient was married and trying to conceive, but didn’t seem concerned with the slightly elevated risk his offspring had of hearing loss
The genetic counselor dutifully explained all this to the patient and offered: “All it will really provide is an explanation.” Don’t get me wrong, explanation and confirmation can be valuable. For some cases like this, a genetic test would be appropriate and helpful. But not without consideration of the costs.
Prices of genetic tests are not readily available, so I can’t say how much the insurance company had to fork over for this test. My experience is that even the cheapest tests are a few hundred dollars. Was this “explanation” worth a few hundred dollars to the patient? Maybe, but because the test was covered, no one even hesitated. My guess is that if the patient had had to pay out of pocket for the test, he would have been more likely to stop to consider the benefits of the test. He may have decided to go ahead with the test anyway, but it’s worth noticing that this cost-benefit analysis is often missing from patients’ healthcare decisions.
In reality, this moral hazard probably doesn’t account for much of our overall healthcare expenditures. There aren’t many situations as straightforward as the one I describe, where the patient can understand the facts and make an informed decision. But it can’t be denied: the moral hazard does exist. There’s no easy way to eliminate it, but it’s important for physicians and patients to be aware of the impact their actions have on total health costs. Insurance coverage is not free care—you are paying for it one way or another. Until we recognize that, it seems unlikely that physicians or patients will take the steps to reduce unnecessary expenditures.
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- Inconclusive genetic testing
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The physician needs to be given the freedom to deal with these issues on a case by case basis. Some patients are able and willing to have an active role in their care and should be presented with best course of treatment in the physicians opinion. The trick is determining which patients without being accused of economic, social discrimination.
A lot of times the best course isn’t given, but rather the course that the insurance company will pay for.
My insurance paid for 2 tests run for the “Dr.’s legal protection-his exact words” even though he would proceed with the same course of treatment regardless of the results.
Tests do NOT replace listening to the patients symptoms. If they can’t rule out or confirm a diagnosis than they should not be ordered.
What if we had patients pay a higher proportion of the cost for lower yield procedures and tests? Examples: CPR and intubation on a 90 year old with COPD, dialysis on an 80 year old diabetic with known CAD and wheelchair bound by bilateral BKA’s, head CT on drunk patient with a bump on the head and a non-focal exam. The point you have made is that we are more likely to do unnecessary testing, and patients usually want costly reassurance when they do not have to pay for it directly. Right now, it is not market driven, evidence driven or consumer driven, it is a consumer who is acting like a teenager with a credit card.
So are the costs of tests like that part of the “defensive medicine” physicians are always discussing? What reform would change that?
I do think the moral hazard exists, but I question how much it really adds to health care costs compared to, say, administrative overhead and end of life care.
I agree with the medical student. It makes no sense to test for a disease for which there’s no difference in treatment. The only thing this patient’s going to get is a denial letter for any other insurance policy later in life.
Interestingly, in many instances having the patient come back for recheck soon or a follow up phone call avoids many uneccessary scans and tests when the physical findings are not impressive. Wonder if our physicians and patients will ever be ready to approach care in a logical way. Patients don’t pay for tests directly, doctors don’t get reimbursed unless they provide more care, so I guess this will never a good solution. No one has skin in the process to act prudently. We will continue to see kidney failures from all those multiple CTs which strain the system in long run.
1. This account is anecdotal. Show me the studies.
2. If you want another anecdotal story, I have no diagnosis and my doctor treats my condition with medication found through trial and error. My insurance company will pay for additional expensive testing. My doctor feels even if these test lead to a diagnosis, it won’t chance my treatment plan. So I have opted not to get tested. I understand the fear of not knowing for sure that is felt by the patient in the above story. Of course patient feelings are usually disregarded.
3. I usually question anytime a doctor recommends any expensive tests or procedures. Like the surgeon who wanted to remove a benign breast lump. After much research, I decided he just wanted to make money. Ten years later, I still have the lump and no other doctor has suggested removal.
moral hazard is a perspective not a fact. what about the 10% of patients who did not test positive? from a research perspective, the idea of testing everyone who shows symptoms of the disease means more subjects for a statistical understanding of a disease. perhaps those 10% actually have a related genetic disorder, testing anyone with symptoms of the disease can shed more light on the disease’s genetic origin: more understanding of the gene and the gene product. perhaps there is no moral hazard, the patient could be thinking that testing himself will help scientists understand the disease better in the long run.
So it’s immoral, now, to use privately contracted insurance to cover the costs of treatment? Do you consider the patient is responsible for paying for insurance with his own funds or his labor? That insurance is bought and paid for to cover the costs of medical tests and treatment that are useful to him.
Re: Kim’s comment. Moral hazard definitely exists, and end-of-life care is one of the best examples. Many in this situation are elderly, and therefore on Medicare. If they, or their families, had to decide to pay for – use their assets, liquidate assets, or borrow money to pay for – they would VERY MUCH LESS OFTEN choose for futile care at the end of life.
J They would very much less often choose to pay even for services, period. Medicare may be a social program, but we have all chosen to sacrifice our liberty to do with our income as we will, to pay for Medicare.
Whether a service is of medical benefit is for patient and provider to decide. If a physician orders care that is COMPLETELY FUTILE and has no medical benefit….look to the real source of immorality.
If you want to talk about moral hazard and testing, what about the tens of thousands of obstetric ultrasounds that are done annually with no evidence to support their usefulness?
It is important to know that genetic testing for an established clinical diagnosis can be helpful for genotype-phenotype correlations, meaning the type of the mutation may predict severity and in some cases it may enable participation in clinical trials. For example, if there is a missense mutation rather than a large deletion patient may be eligible for novel drug trials in certain genetic conditions.
Genetic information of disorders eventually will be very valuable in understanding the defect , protein misfoldings and treatment… I would not dismiss genetic testing that easily
It is important to know that genetic testing for an established clinical diagnosis can be helpful for genotype-phenotype correlations, meaning the type of the mutation may predict severity and in some cases it may enable participation in clinical trials. For example, if there is a missense mutation rather than a large deletion patient may be eligible for novel drug trials in certain genetic conditions.
Genetic information of disorders continue to be helping scientists understand the defect , protein misfoldings and treatment… I would not dismiss genetic testing that easily
This guest poster has hit the nail on the head (and futile care in the pocketbook.) If we could make a meaningfull correlation between treatment options and their costs, much useless testing would go away. Of course, that would also include tort reform on malpractice, a “little” item that the Obamessiah doesn’t think is important. We have a brilliant, charismatic, eloquent sociopath in charge of the nation.
I agree that there needs to be a link between clinical efficacy and reimbursement at some level. At the moment these kinds of considerations are not incentivised.
The Obama administration is supposedly a great believer in evidence based medicine. Hence the comparitive effectiveness research funding in the stimulus (that republicans ensured cannot be linked to payment decisions!)
There are many legislative options (political practicality of course is a different animal)
Eg in France public insurance money will pay 100% for the most effective (and cost effective) treatments, and less and less for more and more speculative treatments. THIS ESTABLISHES THE FLOOR – the minimum of care everyone should recieve. Private insurance and out of pocket payments (moral hazard) pick up the rest of the tab for the more clinically dubious tests/procedures (especially if you have money to spend on really gold plated insurance!). Thus no evil ceiling on expenditure to destroy innovation…
There needs to be a link between efficacy and basic insurance reimbursement in the US. To make that practical and not a red tape nightmare I believe that a single body, like a healthcare federal reserve*, should define efficacy: the “floor”, or the minimum standard that all insurance must cover. These decisions should be based upon cost effectiveness and on the best scientific research available interpreted with physician and scientific community input. They should be updated often as new evidence arises.
If people can afford better coverage then they should be free to buy it!
-terry
* (current financial armagedon notwithstanding)
Terry:
Who is going to legislate, fund, and appoint your “healthcare federal reserve”? God? If not, it will be politicians. There is absolutely nothing in my experience on this planet that would lead me to the slightest hope that it’s decisions will not be based on political considerations, or overridden for political reasons. Is there in yours?
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