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Sicko-nomicsHealth care reformers should look to the banking collapse as a cautionary tale.

By Zachary F. Meisel and Jesse M. PinesPosted Tuesday, Jan. 27, 2009, at 6:58 AM ET

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And just as mortgage companies used adjustable-rate mortgages to convince homebuyers they could afford homes they couldn't, health care is rigged to promote overuse at the expense of the consumer. This overuse comes in two forms: the excessive testing and limitless treatments by doctors and the voracious demand for these services by patients. Many of the health care services that people want and doctors recommend really have no proven value—like the full-body CT scan that Oprah bought. The patient doesn't really bear the brunt of the cost for most health care services—the insurer does—but these practices inflate premiums for everyone. There's no downside for doctors who order unnecessary tests, and no one really watches what doctors prescribe unless they are handing out narcotics like Percocet or directly hurting people. Most doctors practice conscientiously and do what they think is in their patients' best interests, but the point is that the system encourages the delivery of as many services as possible. More liver transplants equal more money.

Neither medical care nor mortgages are fundamentally bad. But there are too few checks in the system to prevent people from getting the equivalent of a crappy burger.

How can health reformers learn from the mortgage industry? One solution is paying for health care outcomes instead of health care services. Under this system, if the doctor makes you better, he gets paid—otherwise, no dough. But reimbursing on outcomes is problematic because it is difficult to know who should have gotten better but didn't, and who would have gotten better even without treatment. Doctors who take harder cases would look like they were bad at their job and maybe get paid less, possibly creating incentives for refusing harder cases.

Another concept is the Federal Health Board (touted in a new book by the incoming secretary of health and human services, Tom Daschle). This board would be similar to the Federal Reserve and make nonpartisan recommendations on which medical tests and treatments Americans should get (i.e., which will be reimbursed). But critics of his plan worry that many treatments that actually do work don't have a lot of science backing them up. While this government scrutiny on medical care would likely tamp down costs, it could also result in the rationing of services.

Yet another proposed solution is the medical home, where primary-care providers would get special incentives to manage and coordinate chronically ill patients. When we get sick, it can be quite a challenge to navigate the system and manage the myriad specialists. The medical home might make the lives of the chronically ill easier and reduce system costs by preventing expensive hospitalizations.

But, ultimately, what needs to happen is an overhaul of the structure of the system. Just as financial reform is needed to ensure that mortgage companies don't hand out loans to those who cannot afford them, health care reform should focus on aligning what patients demand (to be and feel healthier) with health care reimbursement. An ounce of prevention is a lot cheaper than a pound of cure. Healthy diet and exercise are better than getting a heart stent and spending a week in the hospital after a heart attack. We need to reform the health system now so taxpayers don't get saddled with another trillion-dollar bailout.

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Zachary F. Meisel is a practicing emergency physician, a Robert Wood Johnson Foundation clinical scholar at the University of Pennsylvania, and a senior fellow at the Leonard Davis Institute of Health Economics. Jesse M. Pines is a practicing emergency physician, an assistant professor of emergency medicine and epidemiology at the University of Pennsylvania School of Medicine, and a senior fellow at the Leonard Davis Institute of Health Economics.

Photograph of surgeons by George Doyle/Stockbyte.

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