Gladwell Ignores the Moral Hazards on the Supply Side

In a much-discussed August 29, 2005 New Yorker article "The Moral Hazard Myth: The bad idea behind our failed health-care system," Malcolm Gladwell argues for universal health care and against the U.S. policy perspective that free universal comprehensive medical care is inherently wasteful. The economics term is "moral hazard:" if you’re insulated against risk, you’ll act more riskily. In healthcare, if the insurance company is paying the bill, you’ll see the doctor more often, whether or not it’s necessary. Gladwell attacks the idea that people only go to the doctor for the best of reasons, and don’t go because they can’t afford to. He also cites Medicare as a great example of a system all users love. Of course they love it: it’s free if you’re over 65. (Ask doctors if they love it.)

Economist Arthur Kling corrects Gladwell’s flawed analysis in "How Economists Really View Health Insurance," pointing out that it’s never a good idea to separate services from costs:

As an economist, I believe that the
law of demand applies in health care. I believe that if patients are
insulated from the cost of health care, then they will err on the side
of obtaining unnecessary CT scans, MRI’s, and visits to specialists.
They also will "err" on the side of obtaining useful preventive care.

But there’s a different side to the discussion that we covered in "Unleashing the Shopping Monster." If the insurance company is paying, the customer doesn’t really care what things cost. Branded vs generic drugs. Three office visits vs one phone consultation. Luxurious CT scans.  Defensive medicine. Emergency bypass surgery vs regular exercise and healthy eating. The under-trained nay-saying beancounters at the insurance companies can’t possibly keep up with the spending possibilities, and everybody suffers because costs keep rising.

To Scan or Not to Scan: A $300 Question

In the wake of some high profile lung cancer news this month, an AP story today by Marilynn Marchione, "Smokers Flock to Hospitals for Cancer X-Ray," reports on the stampede of smokers who are signing up for CT scans that could potentially spot tumors long before they show up on a conventional x-ray. The deaths of ABC newsman Peter Jennings and Dallas star Barbara Bel Geddes, and the recent lung cancer diagnosis of Dana Reeve, wife of actor Christopher Reeve, have heightened U.S. cancer awareness.

As we wrote last month, advances in digital imaging techniques are producing stunning CT images that look more like living tissue and less like black-and-white x-rays. Marilynn’s article quotes individuals who have signed up for the $300 scans — not necessarily covered by insurance — in order to get "piece of mind" rather than the diagnosis of a current condition. The resolution of CT scans is so good that minor lumps and bumps may cause false positives for cancer, potentially resulting in unnecessary biopsies and surgeries.

While some eminent physicians have recommended early CT scans, the American Cancer Society, the federal government and  "a raft of cancer specialists" caution against the test until a huge new study proves that such early detection is worthwhile —  so that it would be covered by insurance. One hospital lung specialist even stopped her at-risk 82 year old mother from getting scanned. Maybe it means a possible false positive, but it seems to me that $300 is small price top pay for your mother’s piece of mind.

Affordable French Bloodsuckers

Leechand321Last summer, the U.S. Food and Drug Administration approved a French firm’s application for the use of leeches (Hirudo medicinalis) as a medical device. By definition, "a medical device is an article intended to diagnose, cure, treat, prevent, or mitigate a disease or condition, or to affect a function
  or structure of the body, that does not achieve its primary effect through a
  chemical action and is not metabolized." Especially useful in reconstructive surgery like regrafting amputated fingers and toes, the leeches emit an anesthetic and an anti-coagulant into the wound as they suck until the patient’s blood flow takes over.

The FDA didn’t approve any old leech. The medical variety, imported from France by Leeches USA Ltd., are carefully born and bred in carefully controlled environments to eliminate the possibility of infections. They may be pedigreed, but at $10 or so per critter they are also one of the cheapest therapies in modern healthcare.

Art + Tissue Engineering: Biojewelry

Jewelry1Love and elective surgery rarely go together, but five couples are donating bone material to the Biojewellry Project at Kings College London where scientists are engineering the tissue into very personalized jewelry:

The couple’s cells will be grown at Guy’s Hospital and finished bone
tissue will be taken to a studio at the Royal College of Art to be used
in the design of a pair of rings. Following consultation with the
couple, the bone will be combined with traditional precious metals so
that each has a ring made with the tissue of their partner.

Funded with a grant of £66,664 from the UK Engineering and Physical Sciences Research Council, the project culminates next month with a live debate at London’s Science Museum and an exhibition at
Guy’s Hospital. The project web site has detailed documentation on the process and the participants.

See also "That Ring is So You" from Wired and "Rings of Bone Grown for Couples" from the BBC.

Healthwear: Wearable Medical Devices

Alex (Sandy) Pentland, a member of the Health IC Summit Advisory Board and the Toshiba Professor of Arts and Sciences, heads the MIT Media Laboratory’s Human Dynamics research group. He’s published a terrific article in the IEEE Computer Society’s flagship publication Computer titled "Healthwear: Medical Technology Becomes Wearable." Here’s the abstract from the Computer web site:

Until recently, researchers have had little success in extending
healthcare into the home environment, yet there clearly is a huge
demand for this service. Americans currently spend $27 billion on
healthcare outside the formal medical establishment, which they find
difficult, expensive, and painful to access. A dramatic shift in the
composition of the US population makes it absolutely necessary to
develop such distributed systems. To address these demands, a research
group at the MIT Media Lab has been developing healthwear, wearable
systems with sensors that can continuously monitor the user’s vital
signs, motor activity, social interactions, sleep patterns, and other
health indicators. The system’s software can use the data from these
sensors to build a personalized profile of the user’s physical
performance and nervous system activation throughout the entire
day—providing a truly personal medical record that could revolutionize

The full article is available for purchase on-line.

At-Home Pharmacogenomics: Mail Order DNA Tests

Genelexdrugreactionb"The Perfect Gift for the Genetic Age"

Doctors prescribing medicines use way too much trial and error to match drugs and doses. If the first prescription doesn’t work, they try a different drug, change the dosage or start looking for interactions with other drugs the patient is taking. Success is counted when the side effects are not too gruesome and the patient improves.

Pharmacogenomics, combining pharmaceutical knowledge with our increasing understanding of the human genome, analyzes a patient’s genotype to find prescriptions that maximize effectiveness and minimize side effects. It can also reduce adverse drug reactions, a major cause of healthcare mortality.

Ten years ago, genetic testing like this was strictly a laboratory affair. Today, you can do it at home with products like Genelex’s mail order DNA test kits that screen for drug reactions, identify disease tendencies and even check ancestry and paternity. Tests cost anywhere from $250 for an identity profile to $1,590 for a Platinum Package.

The Genelex web site is split into branches "For the Public" and "For Medical Professionals." It’s the public side that suggests DNA testing as a nice gift … maybe for Fathers Day or Valentines Day, I guess.