Matt reprints the famous Dartmouth Atlas graph showing there's no relationship between the amount of money Medicare spends on treatments and the quality of care they get for those dollars:
"Long story short," he writes, "substantial progress on the health care costs problem will probably require the crushing of the doctor's lobby." That is, in part, true. Doctors make money from prescribing treatments. If, as in England, they made money by not prescribing treatments (i.e, through capitation pay, where they're paid X amount per patient, rather than per treatment), they would prescribe more carefully. You could even set up those salaries such that doctors made approximately what they do now (so they don't rebel), but they kept more of it as profit if they didn't spend so much on treatments. Over time, that would radically slow the growth in health spending. So too would increasing the supply of doctors and increasing the responsibilities of nurse practitioners, both of which the doctor's guilds oppose.But there's more than just guild greed at work. Methods of rationing, like capitation, are a hard sell to voters who want to believe they'll get not only every treatment they could plausibly benefit from, but quite a few they couldn't plausibly benefit from. In general, patients have a Samuel Gompers attitude towards medical treatment: They want more. Doctors don't make much money when they prescribe unnecessary antibiotics for colds. They do it because patients want antibiotics -- they feel better knowing something has been done. And doctors want them to feel better. And since neither the doctor nor the patient pays much per marginal unit of care, their incentive is to leave the encounter feeling good, not save money. So paitients ask and doctors prescribe. More expensively, doctors help families pursue heroic measures for their dying relatives even as they know they won't do much good. This isn't a guild protecting itself so much as human nature pointing in a possibly harmful, and definitely pricey, direction. Doctors take an oath to heal, they don't take an oath to cut health spending.
"Long story short," he writes, "substantial progress on the health care costs problem will probably require the crushing of the doctor's lobby." That is, in part, true. Doctors make money from prescribing treatments. If, as in England, they made money by not prescribing treatments (i.e, through capitation pay, where they're paid X amount per patient, rather than per treatment), they would prescribe more carefully. You could even set up those salaries such that doctors made approximately what they do now (so they don't rebel), but they kept more of it as profit if they didn't spend so much on treatments. Over time, that would radically slow the growth in health spending. So too would increasing the supply of doctors and increasing the responsibilities of nurse practitioners, both of which the doctor's guilds oppose.But there's more than just guild greed at work. Methods of rationing, like capitation, are a hard sell to voters who want to believe they'll get not only every treatment they could plausibly benefit from, but quite a few they couldn't plausibly benefit from. In general, patients have a Samuel Gompers attitude towards medical treatment: They want more. Doctors don't make much money when they prescribe unnecessary antibiotics for colds. They do it because patients want antibiotics -- they feel better knowing something has been done. And doctors want them to feel better. And since neither the doctor nor the patient pays much per marginal unit of care, their incentive is to leave the encounter feeling good, not save money. So paitients ask and doctors prescribe. More expensively, doctors help families pursue heroic measures for their dying relatives even as they know they won't do much good. This isn't a guild protecting itself so much as human nature pointing in a possibly harmful, and definitely pricey, direction. Doctors take an oath to heal, they don't take an oath to cut health spending. 
