What Cutting Health Care Costs Looks Like

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If you've been wondering about the rather light posting schedule, here's most of the explanation: two Saturdays ago, my mother's appendix burst.  It was a lengthy, draining saga that fouled up a rather full writing schedule.  We just brought her home from the hospital today; she'll be staying with us while she finishes a course of IV antibiotics.  Luckily, we're both writers with a great deal of flexibility about where we can work, and we have a spare bedroom, and the means to purchase a bed for her to stay on.

Of course, many others aren't so lucky--almost no one, in fact.  I thought it worth writing about because this has been my first personal experience with something I've read about quite a lot--the "Quicker and Sicker" phenomenon.

Hospital costs were a huge political issue throughout the 1970s.  Jimmy Carter unsuccessfully tried to pass price controls, but ultimately, the government settled on a system that paid a fixed reimbursement for a given class of problem, rather than just paying the hospital for however long they'd care to keep patient. (A system known as Diagnostic Related Groups, or DRGs).  The length of hospital visits dropped like a stone--from an average of 7.5 days in 1980 to 4.8 today.  Most of that change was accomplished by 1995.

I know all the reasons why this is a good idea.  Hospital days are unbelievably expensive.  And hospitals are not fun places to be.  They're noisy and the amenities aren't too great.  They're also a great place to pick up a hospital acquired infection--and hospitals are the primary vectors for really nasty drug resistant bacteria.

But it's hell on the families--the web is full of people who are at their wits end because the hospital just dumped Mom on them even though Mom can't really walk or use the toilet.   

Thankfully, my mother is basically healthy--except that she requires someone to hook up her IV antibiotics twice a day, and because she can't drive or move around much yet, she really needs someone nearby most of the time.  It's been no problem for us--my editors have been incredibly understanding, and I've spent many hours working from her hospital room on my laptop.  But how many other people have this flexibility? 

This, mind you, is for a relatively benign condition. In my extended family, I've seen elderly patients with terminal cancer sent home to die with families who hadn't any ability to cope with a patient that sick.  The poorer and less educated you are, the more likely this is to happen, because you don't have the knowledge--or the social capital--to work the system and get a few extra days.

Don't think this is just a complaint about cruel American health care, or work-family balance, either--everywhere that health systems try to control costs by cutting hospital reimbursements, hospitals respond by booting patients out the door faster.

In the US, as elsewhere, this shows up as mostly a problem with older patients, because elderly patients take longer-than-average to recover, so they are apt to be money losers unless the hospital discharges them while they're still quite under the weather.  

One way to think about it is that we made a policy choice to save money by turning family and friends into parahealth professionals.  In my case, I think that's the right choice: I'm happy to take care of my mother, and I understand the cost pressures that made this desirable.

The problem is, most people didn't participate in that choice.  There was no public debate over whether we should send elderly patients home in terminal condition to families with no training as health workers.  We just said "let's cut hospital costs!" and everyone said "Yay!" and then some folks in a back room decided that this was the way to do it. 

(Maybe not even that--it's not clear to me that the people who designed Medicare's DRG system understood that this would be the result.  I mean, I'm sure that they understood that they were cutting down on "overutilization"--I'm just not sure that they realized that "rightsizing" utilization ultimately meant family members cruising the internet for YouTube videos about emptying surgical drains.)

This is not just a problem because it's undemocratic--if they were making the choice for themselves, I expect most people would decide to go home sooner, rather than pay 50% more for health insurance, or whatever the cost would be.  No, it's a problem because people don't understand the choice.  When patients who can barely walk are sent home--indeed, I've heard stories about patients who were not yet sufficiently recovered to use the toilet--families are angry.  They think the hospital is cheating them.  They don't think of how much higher their taxes (or insurance premiums) would be if they had to cover unlimited hospital stays.

There's a fundamental conflict here: while people would probably not choose to stay in the hospital longer at the point of purchasing insurance, they (or their families) would frequently choose to stay in the hospital longer at the point of discharge.  You frequently hear people dismiss the idea of moral hazard in health insurance on the grounds that "no one goes to the hospital for fun".  That's (mostly) true.  But on the margin, there are big, costly decisions to be made about how long people stay in the hospital, and how people feel about those decisions as potential payers is completely different from how they feel about those decisions as temporary home health care aides.  By not making those decisions transparently, we have left people unprepared for the results.

There's a lot more of this coming in the future.  Health care reform's proponents tended to focus their speeches on "unnecessary back surgery" and wasteful cardiac catheterizations.  And there's some of this, I'm sure--just as there were some patients who really had no business at all being in the hospital, and were made unambiguously better off when the hospital had every incentive to let them go.  But that was not necessarily the average case.  And whatever calculations we made probably didn't take the burden we imposed on third parties into account at all.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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