Packaging of Health Care Is Not the Problem

Published February 1, 2007

“We don’t bundle and price health services the way we would if the medical marketplace even remotely resembled an efficient, competitive market.”

So writes Dr. John Goodman, president of the National Center for Policy Analysis in Dallas and a superb health policy analyst, in pointing out what he sees as a positive element in the book Redefining Health Care, by Michael Porter and Elizabeth Teisberg, in a review published on the American Conservative Union Foundation’s Web site on November 29.

Goodman goes on to suggest that a fault of current health care payment strategies is that they prevent a changing and flexible menu of provider packages.

‘Free Lunch’ Environment

I would disagree with that point. The problem with the American health care system is not inadequate “packages.” It is irresponsible consumers operating in a “free-lunch” environment.

The current medical system may not have a changing menu of the sort Goodman suggests, but it is like a buffet–and the table is set by the insurance companies. People fill up their plates, many times with comfort food, and just keep getting stuff.

We do not lack good packaging–in fact, the packaging encourages the nervous well to over-utilize the system, chewing up health care services like Cheetos. In most health payment systems there are no negative consequences for excess utilization–except in HSAs and self-pay, which are Goodman’s favored projects.

The cost of the American health care system is directly proportionate to the packaging and consuming that goes on, as professional consumers engage in sophisticated consumption of services.

Encourages Overuse

There is no lack of sophisticated health care consumption in America. In fact, the cost of American medical care is greatest in the most sophisticated consumer groups: government employees and health care industry employees.

I have dealt with very unsophisticated individuals who still are very sophisticated in their desires for high-tech medical testing: If the CAT scan is negative, they ask for an MRI. Anxiety and water-cooler chatter, combined with Internet access, sometimes make for a demanding customer base.

Providing preventive ambulatory care doesn’t hold down costs–it just delays them. People are mortal, and most do not die quietly in their sleep at the designated hour. Prevention doesn’t stave off the ravages of life and the approach of death, with its accompanying deterioration.

Preventive care is not even efficient–it often only creates a whole new layer of bureaucracy and red tape. Even healthy people consume much health care system funding after the wages of time and mortality set in. Preventive care and efficient packaging can’t prevent that.

Consequences Reduce Costs

If one intends to reduce nonsensical health care spending, there must be some negative consequences for overuse. To reduce the overall costs of care for the seriously ill, efficiency involves setting reasonable guidelines that are not duplicative and addressing the administration of futile care given for bad reasons.

If health care appears to be free in an insurance system, people will use it. Packaging, flexibility, and disease-oriented strategies just rearrange the deck chairs.

Dr. John Dunn ([email protected]) is a member of the American Council on Science and Health’s Scientific and Policy Advisory Board and an emergency physician in Fort Hood, Texas.

For more information …

“Real Health Problem,” by John Goodman, American Conservative Union Foundation, November 29, 2006,