Skip to main content

Why health care competition won't work

By Amitai Etzioni, Special to CNN
updated 4:40 PM EST, Wed January 4, 2012
STORY HIGHLIGHTS
  • Candidates, legislators see competition as key to controlling health costs
  • Amitai Etzioni says health care doesn't lend itself to smart competitive choices
  • He says patients are poorly prepared to make decisions in a competitive environment
  • Etzioni: It takes expertise to properly evaluate health care choices

Editor's note: Amitai Etzioni is a sociologist and professor of international relations at George Washington University and the author of several books, including "The Limits of Privacy." He was a senior adviser to the Carter administration and has taught at Columbia and Harvard universities and the University of California, Berkeley.

(CNN) -- A proposal by Rep. Paul Ryan and Sen. Ron Wyden to allow those who retire in the future to choose between Medicare and private health care insurance for seniors is the latest addition to the drive to increase competition in health care.

Mitt Romney recently released a health care proposal that would introduce vouchers, which would allow consumers to choose where to take their business, although he did not include Medicare as an option. Newt Gingrich's plan suggests a variety of ways to increase "price competition in the industry."

And President Obama's health care overhaul also includes competition, to take place in new statewide exchanges, in which individuals and businesses will be able to find and compare insurance plans in a centralized marketplace.

Amitai Etzioni
Amitai Etzioni

But research shows that competition in health care cannot be made to work effectively. As patients, we are just not equipped to absorb and process the information needed to make healthy choices on our own.

To highlight the issue at hand, it is best to start with the circumstances in which competition does work. It requires that the consumers purchase items that are relatively small in cost and consequences (a can of beans, a tube of toothpaste, a pizza), that they repeat the purchase often, and that the consumers are able to readily receive and absorb relevant information.

When these conditions are met, consumers can find out which products meet their needs by trying one, then trying some others, then casting away (or not purchasing again) those that fail -- without undue costs or harm. And consumers must be able to obtain the information about what the products contain, which they cannot figure out by simply tasting them or trying them on (hence the standardized nutrition labels that describe what foods contain, such as the number of calories and amount of sodium).

Gingrich health care flip-flop?
Gingrich & Romney health care volleying

None of these conditions is met by most health care "products." Most people do not buy more than one coronary bypass, hiatal hernia repair, kidney transplant, or other such intervention. The consequences of "buying" the wrong intervention are huge and often irreversible. The emotions evoked are profound and the relevant knowledge needed to make comparisons is either unavailable or cannot be readily digested by people who are sick to begin with.

A recent University of Michigan survey found that less than 50% of patients were able to answer basic questions about their condition, let alone its treatment. A 2004 Institute of Medicine report summarizes the finding of over 300 studies demonstrating that most people do not understand health information that is intended for them. An analysis conducted by the Department of Health and Human Services found that only 12% of Americans have proficient health literacy (they could, for example, calculate the cost of an employee's annual health insurance costs using a table). Just over half of Americans -- 53% -- have intermediate health literacy; these Americans can read prescription instructions and determine what time to take medication. More than one third of American adults (77 million people) have basic or below basic health literacy and would have difficulty understanding prescription instructions or following a child immunization schedule.

A study of almost 3,000 people found that most assumed drugs on the market were safer than they are, mistakenly believing that the FDA only approves drugs that are extremely effective or without serious side effects. The study also found that even when explicitly told to ask for a drug with a longer safety record, half of the participants chose the newest drug anyway.

Some argue that publishing patient outcome statistics for all hospitals would lead to better-informed consumers. But studies consistently show that hospital ratings are often misleading. Hospital "report cards" on mortality rates include all inpatient deaths, even though only one of every 20 hospital deaths is preventable to start with. Mortality rates often ignore things like the age of patients, the complexity of their health problems, and how many of those who die had "do not resuscitate" orders. And ironically, the best hospitals with the most talented doctors are likely to have the most deaths simply because they receive the most challenging cases.

One may argue that the proposed competition is mainly among insurers and not particular hospitals or physicians. However, insurance plans differ in the medications, procedures (especially MRIs), and specialists they cover. Hence judgment by those who purchase them demands a capacity to evaluate the relative safety and effectiveness of various medical interventions.

In short, calling for more competition in health care may gain a presidential candidate some votes, but it cannot be relied upon to make for a higher quality and lower cost health care system. Patients will have to rely on physicians they trust for guidance -- and second opinions from other physicians -- and on guidance provided by not-for-profit hospitals, especially those like Mayo where the doctors are salaried and hence their income is not affected by how many procedures they carry out or how many patients they rush to see.

Congress has a role to play by ensuring that the incentives created by Medicare and Medicaid foster good care, and that fraud and abuse are curbed by increasing the number and authority of federal accountants and by ensuring there are stiff penalties for those caught cheating. None of these sources can provide an ideal system but all -- especially in combination -- will do better than competition, which presumes that patients act like regular consumers.

Follow @CNNOpinion on Twitter

The opinions expressed in this commentary are solely those of Amitai Etzioni.

ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT