“More is Less,” the most recent radio episode of This American Life looks at the rising health care costs and asks who is to blame. Are doctors unnecessarily ordering procedures and prescribing medications? Are patients demanding costly services they don’t need? Are insurance companies doing little to keep the prices down? The short answer is yes, to all of them. It’s a fascinating listen and I recommend it highly.

All through the debate on reforming health care, something has not sit well with me and it is the fact that we as a society have arranged ourselves primarily as an economic entity. We make our choices based on our wallets and arrange our laws in such a way to reward and punish behavior financially. Many of the solutions discussed for health care reform have to do with how we address the market—tweak it, leave it alone, etc. But is health care really just a basket of goods and services that can and should be understood in purely economic terms? I don’t have a real answer for this, but I’ll give you some examples of why I see a purely economic view of health care as one that breaks down. These have to do with the fee-for-service aspect of health care.

My wife has a family friend who was a surgeon in the U.S., but due to increased insurance costs, decided to practice medicine in New Zealand, where the state pays for the vast majority of health care and patients are not allowed to sue their doctors. The growing cost of malpractice insurance created disincentives for him to continue practicing medicine in the U.S. In New Zealand, he and his staff were paid flat salaries for their work. He expressed a frustration over the fact that he was not doing nearly as many surgeries per day as he did in the U.S. Because the staff was paid a flat salary, there was no economic incentive for them to work faster and do more surgeries in a day. They were paid the same if they did three operations or seven in a day. This surgeon knew there were dozens of people in the queue waiting for these surgeries and it bothered him that his office could work faster, but people simply chose not to. If we do the math, they were actually paid more per unit of work and time if they did less procedures.

On the other hand, when we go to a fee-for-service model like one we have in the U.S., there are economic incentives for doctors and staffs to do more procedures, to see more patients. (Though the U.S. patients hava a longer wait-time to see doctors than in many countries with single-payer health care, which I don’t completely understand.) This model encourages efficiency and competition. It also exacerbates the issue that nearly 30% of health care spending in the U.S. is wasted. By paying more for more procedures and paying more for costlier and riskier procedures, we have created economic incentives for doctors to order unnecessary and expensive tests, operations, medications, etc. That is not to say all doctors do write unnecessary orders just to make money, but in our system the temptation is clearly there and the practice is clearly rewarded financially.

I’m not opposed to economics playing a role in health care. At the same time I am uncomfortable with changes in our health systems happening using purely economic tools. I don’t have real answers to the problem, this is just an aspect of the debate that has had me thinking for a while.

Any thoughts?

From the essay, “Seminarians,” by Martin Marty in the most recent Sightings:

We historians are not given the gift of foreseeing, but as for seeing – as in Sightings – I learned long ago to look at trends and signs that don’t fit headlines or on cable. Thus, decades ago, while many chroniclers thought that “death of God” theology was a cosmic challenge, it occurred to some of us that “high-rise apartments and the long weekend” would do more to assault the world of Sunday Schools, church attendance, and the parish as a center of communal life. Today those trends continue, and the higher-rising of apartments and the longer-yet weekend keep playing their part. Forget the current “new atheism,” so readily reported on as an assault. Notice instead patterns of leisure like Sunday marathons and soccer, patterns of work in which 24/7 job demands increase, and now, of course, “the economic crash” that colors all prospects.

Did people watch Jon Stewart eviscerate Jim Cramer on The Daily Show? I enjoyed his reporting and mocking of the spat all week, but his interview with Cramer displayed the serious intelligence behind The Daily Show. Forget what Keith Olbermann may say about himself—Stewart is our best version of Edward R. Murrow, except in a jester’s costume. Stewart’s interview with Cramer is decidedly, intentionally, and appropriately unfunny. I’m curious to see what happens to Cramer’s career after this interview. Many people think that Stewart’s serious lambasting of Crossfire led to that show’s demise.

Steven Thomma, in a March 5, 2009 article for McClatchy Newspapers, writes a needed story in the midst of all debate regarding government spending: “It only looks different: Both parties love big government.”

Republicans say they’re outraged that Obama would “borrow and spend” his way to a new behemoth government. But they borrowed and spent their way through the ‘80s and the current decade. And they love big government — when it’s at the Pentagon.

Democrats from Obama on down insist that they don’t like big government, that they’re just forced into a temporary spending spree by the recession. But Democrats love big government as well, when it’s for social programs such as universal health care.

“The basic difference between Democrats and Republicans in recent decades is which aspect of government spending they prefer,” said Steven Schier, a political scientist at Carleton College in Northfield, Minn. “With the Republicans, it’s defense. With the Democrats, it’s education, environment, health care etc. That’s been the major difference between the two parties going back to Reagan.”

The numbers tell the tale.

In his eight years, Republican Ronald Reagan increased government spending by 69 percent, led by a 92 percent increase in defense spending as he built up the military to confront the Soviet Union. (These numbers aren’t adjusted for inflation.)

With the economy growing by the time he left office in 1989, the size of the government as a share of total economic production had shrunk slightly, from 22.2 percent to 21.2 percent.

Democrat Bill Clinton increased government spending by 32 percent from 1993 to 2001, brought down largely by the rapid slowdown in defense spending after the Cold War ended. Defense spending grew by just 4 percent during the Clinton years.

The combination of restrained growth in government and a booming economy meant that government’s size as a percentage of the economy dropped from 21.4 percent to 18.5 percent in the Clinton years.

George W. Bush boosted government spending by 68 percent in his eight-year presidency, spearheaded by a 126 percent increase for defense as he waged wars in Afghanistan and Iraq. Bush’s spending totals don’t include the $700 billion bank bailout added last fall to his final fiscal year, or the $787 billion stimulus package added early this year.

By the time he left office, Bush’s government had grown as a share of the economy from 18.5 percent to 22 percent.

While he relies on optimistic assumptions about the economy, Obama forecasts that he’ll raise spending this year and next, then ratchet it back until it again represents 22 percent of the economy at the end of his first term.

Some food for thought from Charles Schulz regarding our Christmas traditions.

From Saturday’s Denver Post:

That tens of thousands of people came to a Weld County farm on Saturday to collect free potatoes, carrots and leeks could be one of the most palpable signs of a depressed economy.

The Miller family, which owns 600 acres of farmland outside Platteville, decided to hold a free food day because they had tens of thousands of pounds of extra produce at the end of their fall festival. Any day now, a deep freeze would ruin it, so the family let people come to the farm today to collect what they could haul.

They expected between 5,000 and 10,000 — but instead found themselves inundated with cars and people with buckets and wagons and barrels ready to harvest whatever was available. They estimated the crowd at more than 40,000 people.

“Overwhelmed is putting it mildly,” said farm owner Chris Miller. “People obviously need food.”

Leviticus 23.22 says, “When you reap the harvest of your land, you shall not reap to the very edges of your field, or gather the gleanings of your harvest; you shall leave them for the poor and for the alien: I am the Lord your God.” (NRSV)

This statement from Allen Greenspan in yesterday’s hearing in the House Committee Oversight and Government Reform has been swimming through my head since I first heard it reported:

I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms.

Over on the Acton Institute web site, David Gregg captures my opinion of markets with this statement:

If the current financial upheaval teaches us anything, it should be how much market capitalism depends upon most people developing and adhering to some rather uncontroversial moral virtues.

I don’t follow Gregg in all of his conclusions of how to assign blame during the current economic mess, but I think he is right to show that we need virtue and morality in our economic system from lenders and borrowers, from producers and consumers, and from labor and management. I wish he would say more about what those virtues should be or from where they should originate. We now see how deeply flawed is and was Greenspan’s previous assumption that self-interest would be the best means of organizations protecting their investors’ equity. Self-interest cannot sustain a society for long. Duty, virtue, sacrifice, and love have no substitutes.

I still consider myself a capitalist in part because I still believe it has done more good than other economic systems. The debate needs to open, however, about what type of capitalism will we have in our nation and our world. Unfettered capitalism works in the short term, but appears to have serious crashes. It concerns me that our economic systems have not only run on self-interest, but encourage further selfishness and materialism. I began worrying about this in college when the economy soared and that meant people were buying a second or third car, or buying houses well beyond what they needed, taking themselves further into debt, often through risky loans. Our selfishness created a system and markets that reward and encourage immediate gratification, but as I said in another post on capitalism, “There is a feedback loop between our character and the systems we create. Yes, our values shape the market; we would do well to remember that the market returns the favor.”