Friday, January 17, 2020

Notes and thoughts: Thinking fast and slow about universal healthcare.

Thinking fast and slow about universal healthcare.

I have been thinking about healthcare reform in general and universal healthcare in particular, for decades now. I am well aware of the admonition of Uwe Reinhardt that, in healthcare reform, everybody’s 2nd choice is the status quo, and thus reform is hard-fought. But, because of an excellent book by Michael Lewis, The Undoing Project, about the world changing work of Daniel Kahneman and Amos Tversky, and Daniel Kahneman’s own book, Thinking Fast and Slow, I have been able see more clearly why healthcare reform is so damned difficult.
The major concepts explored in Tversky and Kahneman’s seminal work on Prospect Theory and in Kahneman’s book explain the failure of healthcare reform in America better than nearly anything I have explored before. The only caveat I will add to this is that as the late Uwe Reinhardt pointed out, Americans have also steadfastly refused to have the moral argument about whether or not we should even strive for universal healthcare, let alone how we should get there! “A common incantation during debates on health reform… is ‘that we all want the same thing; we merely disagree on how best to get there.’ That is rubbish.”
Thinking is divided into fast and slow subsets. System 1 thinking is fast and intuitive. It is also confident. Overly confident, according to Kahneman. System 2 thinking is slow and deliberate. It is more difficult, it takes more time, it is less confident.
System 1 thinking leads many to believe that any changes to the US healthcare system that would make it more like any other nations healthcare systems would be bad. This thinking occurs with minimal or no actual reference data, other than what it picks up from its favorite news sources. If the person has seen a story or two about waiting times in Canada, or a patient not getting timely care in the UK, system 1 confidently trashes any talk of change. The medical analogy, as taught to me during my medical school days is, “One half-assed observation by me is equivalent to 3 randomized controlled trials.”
Kahneman uses the following example: a bat and ball together cost $1.10.
The bat costs a dollar more than the ball.
How much does the ball cost?
People intuit what is an incorrect answer, 10 cents, and confidently do so, because they did not check. The answer is easy, but System 1 intuition confidently plows ahead with the incorrect answer.
Politicians, pharmaceutical and health insurance industries as well as the many support industries around them, promote this thinking, in a constant multimedia barrage, reinforcing false intuitions.
System 2 thinking is less confident and more deliberative. It takes longer. It requires more effort. It requires a commitment. Thus, it too often takes a backseat to our intuitive thinking.
All of our thinking is subject to the other forces outlined in prospect theory, namely, reference points, loss aversion, framing, availability, and the sunk cost fallacy.
In classical economic Utility Theory, the dollar is a dollar. $5 million should make us happy. But if I start with $1 million and my friend starts with $9 million, and we both end up with $5 million, I am much happier than he is. Reference points and starting positions matter.
Consider the healthcare analogy. I have a “Cadillac health plan.” You have no health insurance. Health care reform is proposed that will give us all excellent health care coverage, covering virtually every medically necessary expense we can have with minimal out-of-pocket expenses. If this passes, from my perspective, I have lost the best of all possible worlds even though the new coverage is essentially the same world. You are happy. I am not.
Most of us are familiar with the concept of loss aversion. Since being introduced by Kahneman and Tversky, the concept has seeped into the collective consciousness. Simply stated, we feel the pain of loss much more deeply than the happiness of gain. If I offer 2 tickets, one with a guaranteed win of $500 and one with a 50/50 chance of winning $1000 or nothing, most will choose the guaranteed win. If I offer 2 tickets, one with a guaranteed loss of $500 and one with a 50/50 chance of losing $1000 or no loss, most people will take the chance to avoid the guaranteed loss of $500.
If I offer to flip a coin with you, and heads you win $1000 and tails you pay me $1000, you will not take that bet. Our loss aversion is so high, that it requires winning about $2000 to overcome the loss aversion.
If I have Cadillac health plan, or even a standard employer-based plant, I am so concerned that changing to a universal plan will result in some kind of loss to me, I am inclined to fight vigorously to avoid that chance. Here again, proponents of the status quo will foment fear, uncertainty, and doubt. Fear, uncertainty, and doubt amplify the fear of loss and the resistance to change.
We have all become familiar the consequences of framing the argument. If, as a physician, I tell you that your chances of dying from treatment I am recommending is 10%, there is a decent chance will decline to treat. On the other, I tell you that this exact same treatment as a 90% chance of success and survival, there is a significantly greater chance that you will agree to it.
In universal healthcare debate, negatively framing the possible consequences of change are exploited ruthlessly. If I tell you that changing our health system will result in you losing the employer-based health insurance plan that you have come to depend on, you will almost certainly reject it.
If I tell you that transitioning to a universal healthcare system will result in a more comprehensive coverage plan, less of your wages going to your healthcare coverage and more going directly to you as increase wages, a vast reduction in co-pays and out-of-pocket expenses, and that you never have to worry about losing your coverage, whether or not you are too sick to stay in a job or your job for our opportunities, likely I can convince you that this is a good thing.
Alternatively, if I tell you that we will be transitioning to a system, modeled on the Canadian system or British system, and the only things you know about those systems are what you have been told in the media, relentlessly, for decades, the uncertainty and potential loss to you and your family become so overwhelming that you cannot possibly imagine accepting this option.
This dovetails with the concept of availability. If we are asked to guess how many words in the dictionary start with “R” versus have “R” in the 3rd position, we will guess a far higher number of the former than the latter. This is because we can think of lots of words that begin with “R” very rapidly – they are “available” to us – and so we overestimate the number of words beginning with it. Similarly, if the stories that come to mind rapidly about alternative healthcare systems are of long waiting times and forgoing treatments, our minds naturally fixate on these examples. As someone who spent the last 15 years or so studying international healthcare systems, my mind rapidly goes in the opposite direction, with myriad examples of better access to care, lower costs, and so on that anchor my thinking to the benefits of other systems, rather than the potential downsides.
Finally, the sunk cost fallacy is a bit harder to envision in the universal healthcare debates, as it is well camouflaged. As a nation, we have contributed trillions of dollars to the building up of massive companies, both for-profit and nonprofit like, presuming that this investment is giving us the best possible health care system. It is not. This is not to say that our institutions are failing, quite the contrary. We have the best trained healthcare professionals in the world. We have the best medical research in the world. We have many of the best hospitals in the world. But our para-medical companies are not serving us well. They have created bloated, imperious, rapacious engines of profit, paying lip service to the primacy of patients or members or participants or providers, but legitimately only excelling at growth.
When we think of the scale of the infrastructure surrounding the administration of health insurance plans, pharmaceutical manufacturers, medical device makers, and the related supporting industries, the footprint in the economy is massive. The workforce is massive. In health plans alone there are armies of nurses and doctors and support staff and administrators supporting them, whose sole task is called “utilization management,” what the rest of the world knows as the “approval/denial people.” In the trenches of the opposing armies, are their counterpart nurses and doctors and support staff and administrators working for hospitals or clinics or doctors’ offices, engaged in daily battle over whether the member/patient is “eligible” for the treatment or payment being sought.
Wendell Potter has pointed out that, “Health insurers have been successful at two things: Making money and getting the American public to believe they’re essential.” They will not go quietly into that good night. There is too much money on the line. Never mind that most of it adds no value to the health care system (i.e., it is waste), it is a robustly reliable revenue stream.
“One man’s waste is another man’s revenue.”
Well, that is all very grim. What is the solution?
My proposal is to use both system 1 and system 2 thinking to show the clear advantages of transitioning to a universal healthcare system in America. I am not talking about “gaming” the American psyche, I am talking about de-programming it from decades of misinformation propagated by the special interests that continue to literally and figuratively make a killing off of healthcare in America.
Continued in part 2. (When I get to it!)
Recommended reading:
Lewis, M. (2016). The undoing project: A friendship that changed the world. Penguin UK.
Rosenthal, E. (2018). An American Sickness: How Health Care Became Big Business and How You Can Take It Back. Missouri Medicine115(2), 128.
Reinhardt, U. E. (2019). Priced Out: The Economic and Ethical Costs of American Health Care. Princeton University Press.

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