The Din of Healthcare: Meditations and Medications

Healthcare Economics Presents a Host of Unique Challenges without Easy Solutions

This is the fourth installment in a five-part series on the fallacies and gaps in America’s healthcare debate. 

Healthcare is the most literary field of economics. No matter how abstract the issue at hand, healthcare debates touch raw nerves of desire, suffering, and empathy. Mundane budgetary issues fling out agonizing philosophical conundrums, irresolvable ethical conflicts, and intimate personal dramas. 

This literary quality led me out of the mechanistic economics of banking and into health economics, which seemed fervid, individualistic, and even eccentric. My college major was English, not economics, and healthcare returned me to my roots—economics as novel or poem.

The founding document of health economics is Kenneth Arrow’s 1963 "Uncertainty and the Welfare Economics of Health Care." Its thesis is essentially, “healthcare is different” from other economic endeavors. Arguments about how (and whether) this is true turn healthcare policy into Talmudic disputation.

In Defying Gravity, I argued that when Arrow wrote his article, a half-century of public policy had artificially imposed conditions that he saw as intrinsic differences between healthcare and other activities. As David Goldhill wrote in “Catastrophic Care: Why Everything We Think We Know About Health Care Is Wrong,” “[H]ealth care is indeed different ... but primarily because we insist on treating it as different.”

Whether healthcare’s difference is large or small, intrinsic or artificial, immutable or ephemeral, the philosophical riddles matter. One of my graduate students, after six months of studies, declared health economics “ethics with equations.”

Life-and-death tradeoffs are more obvious than in other fields (though perhaps no more real). Benefits of care are often far more discernible and immediate than costs (financial and nonfinancial). Secondary effects and unintended consequences can be maddening, opaque, and enormous. Healthcare economics and ethics are inseparable.

Increased taxation to support expanded care and coverage, for example, may require longer work hours, which reduce the available hours for sleep, leisure, family, and physical exercise—all of which may contribute more to health than healthcare itself does.

The text below presents a few conundrums from my writings and teaching.

What is the healthcare difference?

My article, “In Health Care, Is Buyer’s Remorse Killing Us?” suggested one reason for healthcare’s perceived uniqueness. My pet theory is that in healthcare, we can get buyer’s remorse over choices we’ve made, blame others for the decisions, and insist that others pay for our mistakes.

Briefly: suppose I choose to purchase a $4,000 40-year-old Ford coupe rather than a $40,000 late-model SUV with state-of-the-art safety features. If a truck rams my Ford, it’s too late to opt for the safer vehicle. However, if I opt to forgo health insurance and then find I need a heart transplant, there’s plenty of time for me to argue, “Society shouldn’t have allowed me to go uninsured, so society should pay for the transplant.”

Healthcare, I think, is unique in the extent to which it allows actionable buyer’s remorse.

Seriously, what is the difference?

I generally ask my students (mostly doctors and nurses) why we treat doctors and airline pilots differently. Both are highly trained technicians who hold our lives in their hands, guiding us through life-threatening situations. Why, then, do you want to know everything about your surgeon and nothing about your pilot? My students offer many answers, most of which don’t survive scrutiny.

In “Life, Death and Intimacy in Medicine,” I recall the best explanation I ever received—a nurse’s flippant but profound response: “Because the pilot never asks you to take your clothes off.” Perhaps healthcare’s difference lies not in its life-and-death characteristics, but in its intimacy.

What happens when fairness conflicts with efficiency—or with another idea of fairness?

The United Kingdom’s National Health Service (NHS) faces budgetary constraints that threaten the quantity and quality of care provided. Recently, an idea surfaced to reduce expenditures and (arguably) spread costs more equitably. The idea was to impose a minimum one-year waiting period on obese patients, who are especially susceptible to certain illnesses—cardiac disease and diabetes, for example—that are extremely expensive to treat.

Many of the medical practitioners in my classes nod approval: “If people want to be obese,” the logic goes, “why should others bear the costs?”

Then, I present a slide showing African-Americans with higher rates of obesity than Hispanic-Americans who, in turn, have higher rates than white Americans. I ask, “Are you OK with a solution that, on average, provides white people with immediate care and tells Hispanics and African-Americans (especially African-American women) to wait?”

The usual response is uneasy silence.

To what extent should governments limit a doctor’s ability to try experimental treatments on patients?

In 1885, a rabid dog in France bit nine-year-old Joseph Meister. Louis Pasteur injected the boy with tissue from a rabid rabbit. In a first, Joseph didn’t develop rabies.

In Fortress and Frontier in American Health Care, I mentioned my family doctor, Milton Ende, an internist in small-town Virginia. Around 1960, Ende speculated that infant blood contained cancer-inhibiting properties. He offered to test his hunch on hopelessly ill cancer patients, and a number agreed to the experiment. Some showed temporary improvement; all ultimately died. Decades later, the scientific community recognized that Ende had pioneered the first stem-cell transplant for cancer sufferers.

Jonas Salk developed his polio vaccine in the mid-1950s. Patients signed one-paragraph consent forms. Today, consent would entail a 20-page-plus document. Salk would have to clear an exhausting, unpredictable institutional review board to initiate the experiment. (Side note: as a child, my wife’s parents escorted her to Salk’s house, down the street from hers, when neighbors celebrated his discovery.)

Now, consider the bizarre case of Dr. John Romulus Brinkley, whom I describe briefly in “Safety Versus Speed—Drug and Device Approval Options.” In the early 20th century, Brinkley established a practice in Kansas. He created an early version of talk radio to persuade men across the Plains that they were suffering from impotence and erectile dysfunction and offered a medically nonsensical treatment—implanted goat testicles. In doing so, he sickened and killed an unknown number of patients. (His full story is even weirder.)

In 2018 America, regulations designed to protect patients from Brinkleyesque charlatans would probably make Pasteur’s, Ende’s, or Salk’s experiments impossible. Where do we draw the line?

Would you prefer a world where cardiac bypass surgery costs $100,000 and an insurer pays for it, or would you prefer a world where a bypass costs $1,000, but you pay for it yourself?

This question emerges from an actual institution—the Narayana Health hospitals in India. (I describe the system in High Quality and Low Price Converge at Narayana and Health City Cayman Islands.) In the US, bypass surgery costs upwards of $100,000. At Narayana, the cost is a bit over $1,000 (and around $30,000 at their Caribbean facility); their success rates and other metrics are among the best on earth. Narayana’s hospitals employ operational procedures resembling a Toyota factory, rather than a North American or Western European hospital. Lean production methods and large patient volumes have brought costs down rapidly.

Payment mechanisms likely matter. In developed countries, such surgeries are generally paid for by public or private insurance. In the US, for example, Medicare sets reimbursement rates for Medicare recipients’ bypass surgery. If reimbursement is set at $100,000, there’s little reason for hospitals to seek ways of lowering costs. If they discover economies, as Narayana has, Medicare would ultimately lower reimbursement rates to reflect the altered cost environment. (And private insurance would follow suit.)

Narayana, in contrast, is a for-profit enterprise whose patients generally pay cash for their own procedures, rather than relying on third-party payers (like insurers). To attract more patients and earn higher profits, Narayana constantly seeks ways to deliver more and better care with fewer expenditures.

Most Americans would detest the idea of heart patients having to pay out-of-pocket for their procedures. But does our comforting safety net discourage innovators from lowering costs and improving quality?

Who owns your DNA, and what does “ownership” even mean?

The Immortal Life of Henrietta Lacks,” by Rebecca Skloot, teaches worlds about genetics and biology, 1950s racial discrimination, medical ethics, dysfunctional families, and journalism.

Lacks was an African-American mother and cancer patient in segregated Baltimore. At Johns Hopkins Hospital, a physician cut a small sample of Lacks’s cervical tumor for a culture specimen. No permission was given by the unconscious patient or her family—an action violating no ethical standards of the time.

While most tissue specimens have a finite life, Lacks’s proved “immortal.” 67 years later, her cells (now called “HeLa cells”) continue replicating and flourishing in labs around the world—and even in outer space. Billions of dollars in innovations were built atop her cells.

Decades after Lacks’s death, her family learned this story and asked how and whether property law applies to our individual chemistries and what ethical standards should govern such transactions.

To what extent should we custom-design humans, and who should decide?

My “DNA and the Shadowland of Ethics,” described a remarkable organization, Dor Yeshorim. For over a generation, this group has tested children in deeply religious (“Ultra-Orthodox”) Jewish communities for recessive genetic illnesses like Tay-Sachs and cystic fibrosis. Using pseudonymous computer records, prospective couples who share problem genes are steered away from marriage. The result has been near-total avoidance of a dozen or so terrible illnesses within these communities.

Intensely scrutinized and governed by religious authorities and ethicists, Dor Yeshorim’s goals have remained narrow and focused—preventing terrifying illnesses.

But what happens as we come to understand more and more about the human genome? And what comes from the capacity to select or even alter children’s genes? (This issue just hit the news.) And what happens when such capabilities are managed by institutions without the ethical grounding of Dor Yeshorim?

Are we okay with preventing the birth of children on the autism spectrum, knowing, as we do, that many of history’s most creative minds were somewhere on the spectrum? Are we okay with biasing births toward males, blonde hair, or heterosexuals?

Should malpractice judgments be capped?

American doctors have arguably suffered from excess and erratic malpractice litigation. One solution has been to set limits on such judgments. The tradeoff lies in limiting the compensation for patients who have been grievously harmed by improper medical practice.

Should access to lifesaving technologies be denied to one person out of fear that another person will misuse the technology?

In “Getting the Vapors Over Vaping,” I describe current controversies over vaping. The Food and Drug Administration is moving to limit publicity for e-cigarettes and the sale of fruity fragrances. Arguably, both the publicity and fragrances increase the numbers of smokers switching to vaping—thereby reducing the use of carcinogenic cigarettes. But, it’s argued, the publicity and fragrances lure teenagers to vaping.

Are lots of little harms better than one big harm?

“Nudges”—small, subtle encouragements in lieu of heavy-handed regulation—are much in vogue in public policy. In “Nudges in Health Care,” Jessica Carges and I explore the impact of large numbers of individual policy actions that impose small, even imperceptible costs, on individuals in the economy.

We focus on mandatory nutrition labeling in restaurants. Evidence suggests that positive health impacts may be small, and economic logic suggests that there may be negative impacts on consumer well-being, restaurant jobs, restaurant profitability.


The conundrums go on endlessly. When is it acceptable to harvest the transplantable organs in a doomed anencephalic baby? Which procedures should public health insurance cover? To best improve health, should an extra million dollars fund more healthcare, an environmental clean-up, or a school lunch program? Which institutional structures are best-suited for churning up cancer cures?

If the answers come easily to you, you’re not trying hard enough.

A quarter-century ago, my wife suggested that I shift into health economics because I seemed riveted by the field. A few days later, I told her I would take her advice because the questions were so fraught with emotion and because the answers would remain tumultuous for the rest of my working life. We have not been disappointed by that choice.

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