For specifically the doctor version of the principle-agent problem, Robin Hanson published an incentive-compatible solution over 25 years ago: http://mason.gmu.edu/~rhanson/buyhealth.html

> To cure health care, give your care-givers a clear incentive to keep you well. Make sure that when you lose, they lose, and just as much. Buy lots of life and disability insurance from your care-givers, and have a third party, unable to act against your life or health, pay you to be the beneficiary.

So, basically bundling insurance with the healthcare provider, like kaiser?

The quantitative difference is big enough to be qualitative. You have to buy a lot of life insurance, more than people normally get, to make it work. The disinterested third party beneficiary makes this affordable:

> There are, however, two big problems with this approach. The first is that even though my life may be worth $10 million to me, most of the (huge) insurance premium to pay for this insurance would be wasted from my point of view -- there probably is not one person to whom I would want to give this much money when I die. The other problem is moral hazard -- heavy insurance may reduce my incentive to keep myself healthy, and may even create incentives for my relatives to try and hurt me. It might be a problem if I could only give my doctor a 50 percent interest in my life by taking away 50 percent of my own interest, or by giving a minus 50 percent interest to my relatives.

This was also my first idea when I read the problem. As the payments stop as soon as you die, this is a strong incentive. The only thing I could think of arguing is, that the doc could keep demanding more and more. But that would imply a situation with only one or very few skilled individuals, right?

This assumes that actions that make a patient happy also make them healthy. There’s a risk that pursuing patient happiness can come at the expense of patient health. The doctor may be more inclined to keep a patient from switching doctors to keep getting paid.

Such as doctors that prescribe sleeping meds to rich clients that... end up dead.

That's what I do. It's called "direct primary care". In the last 10 years, I've used two DPC doctors. I loved my first doctor because we had the same philosophies towards health. Last year she started drifting too "mainstream" and I didn't like her style, so I switched and took my money elsewhere. I found a new guy who is really aligned with me and it's been great. It's almost as if having choice and market can work :)

I get the super high-deductible catastrophic with HSA plan from my work, and then I pay $135/mo for my whole family for the DPC doctor (I could pay that $135 with my HSA and have it be on pretax money, but I'd rather invest my HSA pretax right now). The total there is less than any other insurance available to me. If I ever need anything, I just call or email my doc, most of the time we just do a (secure) video chat and I'm done and I don't need to make a trip in. If it is more severe, I can easily get a same-day appointment. He knows me, knows my history, and has an incentive to keep me healthy. The healthier I am, the more I pay him and don't see him.

I love the model!

I pay $25 to $30 per hour to housekeepers. I question the sanity of a doctor charging $135 per month for multiple people.

He’s solidly middle class. Not pulling in tons of money. But he doesn’t have crazy stress either. He doesn’t do insurance or Medicare, so his overhead and admin cost are really low.

Typical panel size is ~1200 patients. So to get $300k/year that’s $20.8/person/month.

That’s a good point. I’ll have to ask some friends about overhead. Seems like a weirdly small number though compared to insurance premiums + deductibles, and what doctors usually get per visit when we go for run of the mill fevers for the kids (~$150+ each time).

I agree with the idea of paying the doctor a flat fee every month, but in my variant, the doctor has to repay you the entire sum you've paid to date, with 10% interest, if you succumb to any preventable illnesses; in other words, the doctor now has some real skin in the game. S/he becomes motivated not only to keep you well, but to keep the fees reasonable.

That’s horribly ignorant considering that many diseases have a large genetic component and people are rarely 100% compliant with the things they need to do to prevent a disease. Even when a doctor lets them know how to prevent the disease. How would this work for a disease, for example, like Alzheimer’s where the onset is much earlier in life (40s) but doesn’t manifest until much later in life and has no diagnostic test at age 40? What about hypertension where the majority of it is idiopathic? Would the doctor be blamed for all this despite practicing evidenced based medicine? I’d argue that a lot of diseases are this way and placing the blame on a doctor is a way to shift personal responsibility.

Seconding your view points. If a patient dies from a hypertension related cause (say stroke), and the patient has not followed the strict low salt diet the doctor recommended, does the doctor pay for that? At what point does the doctor stop seeing patients who do not follow their recommendations to the exact letter?

I know you're framing it as patient choice, but it would incentivize doctors to actually want to research new solutions instead of give stale advice that doesn't seem to work.

Do you really think that doctors don't keep up on education? All doctors are required to do continuing education every year to keep up to date on the latest advances. Most I know go to national conferences to learn more about their speciality. Then you have the portion of doctors that conduct research and actively advance medicine. Most doctors I know (anecdotal, I know) are constantly striving to do more, to learn more because they care. Doctors know how much responsibility they have to help people and even save lives.

> Do you really think that doctors don't keep up on education?

No, I know they don't.

The advice works if patients listen (which is patient choice). Reducing salt intake and losing weight are simple ways to lower blood pressure and they are also effective.

This is such an oversimplified view of how medicine works. I'm not even sure how to begin a counterargument. In medicine, bad outcomes can occur without being sure of the cause. For example, let's say a patient who currently smokes gets lung cancer. Did the patient get lung cancer from smoking, or is this a sporadic non-smoking related cancer? There's no way to definitively find the answer to that question. But for the sake of discussion, let's say it is due to smoking. Do you fault the patient for smoking and not quitting? Or do you fault the doctor for being unable to convince the patient to quit smoking?

Even for HN this is a pretty shockingly out of touch "I don't know anything about $X but I can figure it out 'from first principles!!1'" type of comment.

The doctor will purchase "refund insurance" and pass that cost along in the monthly retainer.

Fair point, but if the client does develop a preventable condition, it would be easy to show this is due to dereliction/negligence on the part of the physician, so the insurance would not pay out. If the client came down with a condition and the physician was not negligent, the condition would likely be non-preventable, wherein the refund clause wouldn't apply, anyway. Thus, regardless of outcome, insurance can never pay out, and the physician retains all the liability, i.e. no use for insurance.

How is it "easy" to show negligence?

Yeah that just passes the buck to someone else (the insurer), who is incentivized to investigate malfeasance.

Some insurance policies must not exist. Malpractice policies must not exist.

I am sure if I asked my mates they would all disagree with me on this. Bad luck for the patients.

Without malpractice insurance, would doctors be incentivized to not take on risky patients? Risky could be defined as litigious (I know this patient has sued another doctor before) or medically difficult to treat (this patient needs this surgery but they are at high risk of poor outcome due to their current state of health).

Having sued a doctor once, you might never be able to get medical treatment again.

Which would also disincentivize ridiculous lawsuits that you'd almost certainly lose.

It would also disincentivize legitimate lawsuits.

Upon reading the responses my earlier comments generated, I suppose I should have disclaimed that I'm seeing this problem as the OP had portrayed it, which is as a thought problem in logic and economics, rather than an actual approach to preventative medicine. As a thought problem, it can be broken into basic, of-necessity simplified elements, e.g. preventable vs. non-preventable illnesses, fee optimization, etc.

The idea of actual healthcare being dependent solely on optimization of greed is, of course, ludicrous.

I had the same thought, but I can think of two problems with it.

1. The doctor's stake is pretty limited.

The old royal court doctor model is the perfect model for this. It's based on the doctor having very few (one?) patient. If the patient dies, not only do you risk your substantial income and high status, but you might even lose your life if the royal family gets suspicious enough.

It's a good solution if you're very rich. Much richer than the average doctor.

2. When you have more than one patient, at some point you probably earn more by treating less.

The less work you spend on each patient, the more patients you can take on. The more patients you can take on, the more you earn. If you simply stop treating patients - "you're perfectly healthy, don't worry" - you can basically take on an unlimited amount of patients and collect their fees until they perish. (This sounds like a caricature of the US insurance system, from my western EU perspective.)

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What about this convoluted system:

- The doctors get paid a recurring fee that starts small and increases the longer you keep a patient around. This counters the problem that patients can just be replaced by a younger and healthier patient.

- The doctors get assigned patients randomly. This addresses the problem that doctors would choose young and healthy patients.

- The doctors can only have a certain number of patients at once. This makes each patient more valuable, and the doctor will be incentivized to actually treat patients, instead of having as many as possible.

Oh wait...

Now, the problem is that a young, ambitious, greedy doctor would be incentivized to cull their set of patients and select for the most viable ones in the long run. This actually incentivizes them to kill off patients with minor defects?

Actually, we are increasingly doing that already in the US. Value-based healthcare, aka Medicare Advantage uses something called risk adjustment. Payments are based on patient demographics and select disease categories (HCC codes) with bundled payments. The intent is to slowly get rid of fee-for-service healthcare.

That incentivizes doctors to avoid taking on sick patients, as the work/reward ratio is much higher.

I do this!

I’ve found that my employer-provided health insurance is less than worthless for routine health care. I actually pay less by going to providers who don’t accept insurance — even though I maintain bare-minimum coverage and an HSA. I don’t think I used my health insurance at all this year — at least not enough to come close to meeting the deductible.

My primary care doctor uses this model — I pay $300/yr for basically unlimited access. I have a therapist who I pay $75 a session. I use GoodRX for prescriptions and get better prices than the post-deductible price on my insurance plan.

Basically, I pay less out of pocket by not using my insurance. I also get to choose my doctors, and they treat me as an actual patient rather than a number. Health insurance in the US is a scam.

Yeah, I don't get it. If you have infinite resources, and you absolutely know the doctor is competent (a question omitted here that would make this more interesting) just tie the doctor's fate to yours.

I don't know if overpaying will work, because the marginal value of money goes down the more you have. Once your doctor is rich enough, he won't be overly concerned if you die and the checks stop coming in.

The real answer is the action-movie/not-that-uncommon-in-reality answer: Credibly promise to shoot the doctor if you die, or to shoot the doctor's family members.

If we're trying to handle the case of greedy doctors, why would a doctor accept a very sick patient who is going to require a higher-than average amount of care and probably not live (i.e. pay) as long? If they can't pick their patients, how do you protect the unlucky ones who end up with too many very sick patients?

Right? I can't get over the "meta" point here of what we're here doing: This is not a conceptually difficult problem to fix and a whole lot of countries besides the one I live in have solved it quite easily, but here we are having to contend with it. It's just quite frustrating.

>The obvious, obvious thing is to simply pay the doctor a fix priced each month wether they diagnose you with something or not.

Easy fix... "Just be wealthy!" lol... :|

I've paid for the absolute best insurance I could find this year and gone to doctors my entire life that simply don't care. I've had everything from colonoscopies to MRIs done and I haven't spent more than one day in my entire life in a hospital overnight in over 40 years.

Many would say I'm pretty healthy, but who knows?

It usually seems like doctors peddle as much fear as web MD now in order to drive me through the service bay of fees every time I have an ache or troublesome pain.

If it's any consolation though, my dentist, my auto maintenance shop, my lawyer, and even my local supermarket want a constant revenue stream out of me because they have a pipeline of service that they know they can get a customer hooked on if they coordinate their efforts and make their pricing variable based on being properly opportunistic.

A lot of the tactics the health care industry regularly uses to sell services (and drugs of course too) are from the nefarious book of street drug dealers... In a bad economy, the scams and opportunism are ripe. Getting a second opinion is often VERY EXPENSIVE as well.

Be careful my friends, sometimes it's better to face your fears of "WebMD prescribed" death head-on rather than to bankrupt yourself, because if you don't die, living broke or in extreme debt can be a "silent killer" and harmful mentally and physically to you too. Maybe marry a doctor... That might cut extreme health care costs... By about 5% if you're lucky... :P

> Easy fix... "Just be wealthy!" lol... :|

Or have all doctors employed by the state on good fixed pay

I think the premise of the article is that this is _more_ of a problem when you're wealthy and you want to be "as healthy as possible". If you're poor you're only going to pay the bare minimum to stay alive so capitalism takes over.

Pay a fixed rate.... Like a health insurance plan? That doesn't work well in the US

Edit: The smarter person will charge you while you are healthy and not treat you when you need it, or underdeliver for the expectations.

Or even better pay nothing and get a government run system that is smart enough to figure out what is important and what is wasteful.

This type of insurance is called capitated, seeing extensive use by medicare and Kaiser Permanente.

This reminds me of something I think i heard ( or something similar ) in a movie :

“I’m not going to kill you, but you would surprised how much suffering you can live through.”

they also have an incentive to keep you alive as long as possible since they don't get paid if you die.

Having witnessed the terminal stages of several family members, additional days of being undead is not necessarily desirable for the patient.

This is basically the Kaiser model. Kaiser's doctors are salaried, rather than getting paid per procedure. Works pretty well!

(I think the actual answer to the question in the OP is, at least in part, to license more doctors. Then the cartel doesn't have as much pricing power and medical care is less of a luxury good. The rich person should really hire a lobbyist.)

I had Kaiser for a year and I actually enjoyed it. I saw a couple specialist but I never had any major work done so perhaps I am biased. It is funny to say it since I believe Kaiser originally was one of the opponents of a single payer system but using Kaiser kind of felt like what a government health care system should be. Very low friction. Oh I need blood work or whatever done, walk down the hall. Everything felt more convenient.

Same here. I enjoyed knowing there is one place where I can go and have everything done. They also sent reminders about vaccinations and checkups. I have moved away from CA so I don't have Kaiser anymore. I generally rarely go to a doctor and if I ever get sick I don't even know where to go :-(

The golden days of the doctor “cartel” (and people in the healthcare chain in general) are over.

https://www.beckersasc.com/asc-news/9-cms-pay-cut-for-physic...

The 80s/90s/00s were probably the golden years for them, but they got in the political spotlight, and combined with the decreasing proportion of young to old people, the government is going to push down cuts to whoever lacks political power to push back. Such as smaller businesses like independent doctor offices and pharmacies.

The government has already increased supply by letting Nurse Practitioners and Physician Assistants do stuff that doctors used to do, and I suspect a lot more price discrimination is on the way. Expect the average quality of care to fall (may not be a bad thing if overqualified people were treating pink eye), and paying more will result in being seen by someone more qualified.

Increasing the supply doesn't mean the average quality of care will fall.

If I pay doctors $400,000 a year to work 80 hours a week and then double the number of doctors and pay them $200,000 a year to work 40 hours per week, the quality of care would almost certainly improve but costs would be constant. And actually, do we pay doctors a premium for those overtime hours where they're actually probably less effective? If so, our costs would go down as quality of care improves.

In theory, if you want to train twice as many doctors, you have to relax admissions criteria to let in twice as many people, and the new admitees wouldn't have qualified under the previous system.

But what if the limiting factor of admission criteria isn't scoring well but things like crippling amount of debt, archaic culture of hazing and adversity to stupid hours?

Right. Are doctors ubermensch who are the cream of the crop or did they just have a high tolerance for abuse? I’m not sure being ultra-selective gets you people who are fundamentally better doctors nor are the returns gonna be very linear even if they were. I’d much rather have enough well-rested doctors than have more “select” but highly stressed, sleep deprived doctors.

you're kind of assuming that the metrics that the use to admit students are predictive of care quality. thats certainly not true, but who knows how not true?

I'm kind of surprised that med schools haven't dramatically opened up their admissions, like law schools have over the past 20 years. It's such an obvious source of funds for the school.

The med schools are accredited by (a body completely governed by) the AMA. Number of seats is part of the accreditation.

The AMA does not want more competition and lower income per doctor.

AMA claims the real bottleneck is residency funding, since you cannot practice as a doctor without residency, and for some reason, only the federal government funds residencies, and the feds have not changed funding in many, many years.

Also, increasing class sizes is not without its down sides. Pharmacy schools cashed in and blew up the number of pharmacists in the last 10 years, and now the pharmacists’ employers have so much power in the negotiations due to so much supply of labor, that they can make pharmacists accept metrics which pharmacists know are excessive and unsafe since no one can possibly do the job properly in the time they are expected to check the medications and counsel people in.

A pharmacist family member says the law is to counsel patients, but the reality is anyone who did that would be fired and replaced so, in reality, people are not getting the counseling they deserve when they pick up the medications, and pharmacists are not able to properly double check the doctors.