South-Western College Publishing - Economics  
An Ounce of Prevention May be Worth a Pound of Cure, But Bypasses and Stents are What Bring in the Money
Topic Economic Analysis
Key Words health insurance, prevention, benefits, costs
Full Article

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Reference ID: A158193634

News Story It is well-known that preventive medicine done today makes people better off in the long-run. Exercise, diet, and quitting smoking and drinking are all ways to reduce health problems later in life. So what's the problem? Doctors can't earn a living on preventive medicine alone. They have to run tests do surgery just to make ends meet.

Dr. Arthur Agatston, the creator of the South Beach Diet, has a cardiology practice that specializes in preventive care. Nurses offer specific goals to meet, and help patients deal with side effects they encounter from the cholesterol-reducing drugs they take. But Dr. Agatston has suggested that doctors who put in this much time with their patients get little financial reward for their efforts.

President Bush' State of the Union address this past month pushed for ways to reduce the number of uninsured people in the country. But the problem is equally murky for those with insurance. The current health care system provides incentives for doctors to engage in expensive tests and other procedures, when preventive care might work instead. And those preventive methods are documented to work, but there's no evidence that invasive tests and resulting procedures prolong life. This adds up to increased health care costs for those with insurance, and makes insurance more difficult to purchase by those without it.

Doctors get paid more for procedures rather than for results. Some insurers, however, are beginning to experiment with "pay for performance" requirements for doctors, as well as trying to discover how to make sure that people engage in the preventive care that will promote good health.

The movement toward universal health care may help make this a reality; if everyone receives some sort of health insurance, then the focus will have to move away from procedures, and toward making sure that everyone leads healthier lifestyles.

Discussion Questions:
1. Why do you think it would be in an insurer's best interest to focus on results, rather than specific procedures run?
2. What do you think a greater focus on results would do to the level of competition in the health industry?
3. What are some of the social benefits associated with a focus on results rather than on procedures done?
Multiple Choice/True False Questions:
1. According to the article, doctors are running expensive tests on their patients because

  1. It's cheaper than preventive medicine;
  2. Incentives by health insurance plans push them in that direction;
  3. It's easier than preventive medicine;
  4. A and C
2. True/False. Focusing on universal health care will give insurers greater incentive to engage in preventive care.

3. If insurers focused on results rather than procedures, as cited in the article, then
  1. Health care costs would fall;
  2. People would be sick more often;
  3. Society would benefit;
  4. A and C
Source Leonhardt, David. "What's a Pound of Prevention Really Worth?" The New York Times. January 24, 2007.
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