July 7, 2009

Drug Cost (and a coming post on Stimulus)

I realized this evening that the post on incentives as the best health care cost-control method needed one more basic piece -- drug costs.

The current incentives on drug costs are terrible. What happens when a doctor has no consistent or basic incentive to compare effectiveness and costs for prescriptions? A doctor might prescribe a drug of only equal effectiveness but significantly higher cost for instance if it is heavily advertised and the patient asks about it. Another possibility is to begin with a new drug, without trying an often-effective old standby that has much lower costs. In other words, the incentives are often in the wrong directions.

This turns out to be quite easy to correct in the Pay-for-Performance (Outcome) incentive structure. And the wrinkles also.

See my update here.


Coming Soon: I'll be posting within a few days or couple of weeks a better kind of Economic Stimulus we can implement quite easily and rapidly. It will be politically popular with both parties, and quite low-cost over a 7 year period. Best of all...it's organic (...couldn't resist stretching this word into the sentence.)

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