The Dartmouth Atlas and Obamacare
The real question in the debate about the Dartmouth Atlas is: Can government do a better job of managing medicine than doctors and hospitals can?


Avik Roy

Second, the government is largely responsible for the original problem. The biggest distorter of physician behavior is what the Dartmouth group delicately describes as “the current reimbursement system” — that is, Medicare. Medicare is what gives physicians incentives to spend as much as they can on patients, and it’s not simple greed: It’s about erring on the side of marshaling all available resources for your patient. In the old days, when more people paid for their expenses out of their own pockets, without insurance, doctors were much more conscious of keeping their patients’ financial health in mind. Now that retirees pay little to nothing for Lamborghini health care, their doctors are liberated from having to think about cost.

Third, it isn’t clear that a single-payer system would eliminate variations in health-care spending. As Cato’s Michael Cannon has pointed out, the Congressional Budget Office has looked at Veterans Administration data and found that the VA health-care system contains almost as much variation as the Medicare system, despite the government’s complete control.

Fourth, Orszag is wildly exaggerating when he claims that 30 percent of health-care spending could be saved by using the Dartmouth Atlas to eliminate all unnecessary expenditures. It would be much better for health outcomes, but just as absurd, to seek to cut costs by eliminating all obesity from the country. Eliminating the entirety of wasteful health-care spending would be like eliminating, via federal mandate, every messy desk in
America. That is to say, doubtful. And it is not metaphysically possible to eliminate all waste. Quite a bit of what we call “waste” is actually uncertainty: performing heart surgery, say, on someone who may or may not require it. As in war, sports, and courtship, the best medical decision is often more obvious in hindsight than it is in the heat of the moment.

Fifth, while it is a good thing for physicians to adopt the best evidence-based guidelines for clinical practice, every human being is different. There are exceptions to every protocol, medical cases that defy conventional logic.
America in particular is a genetically diverse nation; treatments that work in some populations may not work in others. Treatments that work in some individuals don’t work in others within the same population. A one-size-fits-all approach to the practice of medicine is especially appealing to those who have never done it, but it would in reality cause innumerable headaches and heartaches.

And so, the debate about the ins and outs of the Dartmouth Atlas is not merely a statistical one. It is about something more fundamental: Can government do a better job of managing medicine than doctors and hospitals can, or should the doctor-patient relationship remain sovereign? There are plenty of inefficiencies in medical care today, but the Dartmouth Atlas demonstrates that government is the problem, not the solution.

– Avik Roy is an equity research analyst at Monness, Crespi, Hardt & Co., and blogs on health-care policy at The Apothecary.