The American Interest
Analysis by Walter Russell Mead & Staff
Our Ptolemaic Health Care Wonks

The wonks in Washington have no shortage of miracle fixes for America’s health care system. One is performance rewards, where doctors are rewarded for the quality and efficiency of their treatments. As usual, the theory is sound: paying doctors based on outcomes rather than treatments should reduce the use of expensive or unnecessary medical procedures. But over at the NYT Bill Keller takes a hard look at this popular proposal and finds its implementation wanting:

Pay for performance, or P4P in the jargon, is embraced by right and left. It has long been the favorite egghead prescription for our absurdly overpriced, underperforming health care system. The logic seems unassailable: Reward quality, and you will get quality. Stop rewarding waste, and you will get less waste. QED! P4P!

If only it worked.

For if you spend a little time with the P4P skeptics—a data-bearing minority among physicians and health economists — you will come away full of doubts.

Keller points out that P4P pilot programs have so far failed to produce the expected results despite all the hopes invested in them.

This is a classic example of the kind of smart technocratic fix that clever DC wonks think will make big improvements in the health care system. Unfortunately, in practice these kinds of policies generally go wrong, often disastrously so. As with the medical records fiasco, we invest tons of money and energy into superficial quick tweaks, only to find they don’t work out.

Wonks are logical, clear thinking people (though they tend not to think very clearly about their own limitations). Health care is a messy, chaotic system where conflicting objectives and pressures mean that interventions often go awry. They fail not only because the system, full of weird feedback loops, is more complicated than the wonks can comprehend, but also because various economic actors with specific and competing interests deliberately distort the way the system works—again in ways that the wonks can’t keep track of or compensate for.

What most diligent deep-blue NYT readers hope will happen is that some even smarter wonks will tweak the original tweak, like Ptolemaic astronomers introducing cycles and epicycles to somehow reconcile the observed planetary motions with the idea that the Earth is at the center of the solar system. Indeed, this is exactly what Keller attempts to do. Seeing that P4P has so far failed, he runs through several attempts by DC think tanks and med school professors to fix the program. It won’t work; the system will become even more irrational and unpredictable than it already is, as more and more complex, untested ideas are thrown into the chaos.

Sadly, Obamacare combines smart wonk technocratic fixes with political bargains and rent agreements: the result looks to be a big and counterproductive mess. This is neurosurgery with a chain saw, and we probably won’t like the result. What the wonks really need to do is think about how we could move to a system in which market forces allow price signals to drive the evolution of the system, while subsidies and other systems of support give the poor access.

Published on January 29, 2013 9:00 am