The Single Greatest Obstacle to Health Care Quality

by | Apr 6, 2024

When government asserts control over your health care, it creates opportunities for low‐​quality providers to lobby for subsidies and regulations that protect them from competition from high‐​quality producers.

Once again, it’s Health Care Quality Week, when researchers and activists turn to government to fix the many serious quality problems in the U.S. health sector. Yet whenever government inserts itself into health care, low quality is the inevitable result.

Government routinely mandates and subsidizes low‐​quality health care while blocking high‐​quality care. Whether it’s terrible health insurance, poor‐​quality care, or lack of quality innovations, government is not the solution but the problem.

People don’t lose their auto or homeowner’s insurance just because they switch jobs, lose their job, lose a spouse to divorce or death, or retire. But they do lose their health insurance. If they’re sick when it happens, they end up with an uninsured and uninsurable preexisting condition.

Why does this keep happening? Cradle‐​to‐​grave private health insurance has been available for decades. Why do people keep enrolling in such low‐​quality health insurance?

Because government mandates it. About 100 years ago, obscure federal bureaucrats ruled that if employers buy health insurance for employees, it is not subject to the income tax, but if the employer gives that money to the employees, it is. Taking the money and buying health insurance that stays with you between jobs therefore reduces your after‐​tax income.

For a century, this senseless policy has effectively penalized workers unless they enroll in low‐​quality employer‐​sponsored health insurance. It practically created the problem of preexisting conditions. Yet Congress shows zero inclination to fix it. Instead, it keeps trying to plug the leaks this policy creates with endless spending programs like Medicare, Medicaid, CHIP, and ObamaCare.

At least those programs provide access to quality care, right? Wrong.

Take Medicare — please. As I explain in a new book, “Recovery: A Guide to Reforming the U.S. Health Sector,” Medicare discourages quality by paying high‐​quality providers less than low‐​quality providers. A 2016 study found that Medicare paid low‐​quality hospitals an average of $2,698 more per patient than it paid high‐​quality hospitals.

Markets reward life‐​saving quality innovations like the Intermountain pneumonia program, the Duke University and Baylor Medical Center congestive heart failure programs, and the Whatcom County care‐​coordination program. By contrast, Medicare led providers to curtail or shut down each of these innovations.

Even when Medicare tries to improve quality, it stills sends “quality bonuses” to low‐​quality hospitals and mediocre health plans.

Government researchers long ago concluded that Medicare has a “largely neutral or negative” impact on health care quality. One could tell more stories about how Medicaid, CHIP, and ObamaCare reduce health care quality than can fit into a single opinion piece.

But at least clinician licensing works, right? Improving quality is the whole point of requiring people to get a government license before entering the health professions. Surely licensing must work as its supporters intend?

Sorry, but again the answer is no.

Right off the bat, clinician licensing reduces quality by leaving low‐​income patients unable to afford medical care at all. It increases the cost of entering the health professions, which reduces the supply of doctors and other clinicians while increasing the prices they charge.

Licensing reduces quality by reducing patient access to the highest‐​quality doctors in the country, simply because those doctors practicing in another state haven’t obtained a license from the patient’s state.

It reduces access to high‐​quality care by directly and indirectly preventing entry from health plans like Kaiser Permanente. Such plans are strong on dimensions of quality like coordinating care, effectiveness research, and conveniences like electronic communications, scheduling, and medical records. They are how markets would reward the innovations Medicare effectively punished at Intermountain, Duke, Baylor, and in Whatcom County.

Licensing even prevents clinicians from giving free medical care to the poor if their license is from another state. Remote Area Medical founder Stan Brock wrote: “One of the saddest parts of trying to help these people is on the last day of a free [clinic] we always have to tell some of them we are sorry, but we cannot see any more patients…If the government would allow willing volunteer practitioners to cross state lines, fewer people will be turned away.”

For all that, licensing does little to stop clinicians from harming patients. Public Citizen found that between 1990 and 2005, “only 33.26 percent of doctors who made 10 or more malpractice payments were disciplined by their state board — meaning two‐​thirds of doctors in this group of egregious repeat offenders were not disciplined at all.”

When government asserts control over your health care, it creates opportunities for low‐​quality providers to lobby for subsidies and regulations that protect them from competition from high‐​quality producers. Remember that when people say government can improve health care quality.

This article appeared in The Hill (Online) on October 16, 2023.

Michael F. Cannon is the Cato Institute’s director of health policy studies and the author of Recovery: A Guide to Reforming the U.S. Health Sector. Follow him @mfcannon.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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