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Problem LXVII in the Marketization of Health Care

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David Leonhardt:

At only 27 of the 40 garages did mechanics tell Mr. Schneider that he had a disconnected battery cable, the very problem to which he had pointed them by saying his car didn’t always start. Only 11 mentioned the low coolant, a problem that can ruin a car’s engine. Ten of the garages, meanwhile, recommended costly repairs that were plainly unnecessary, like replacing the starter motor or the battery. (Tellingly, his results were in line with what the Automobile Protection Association found when it performed its experiments in Canada.)

In all, only about 20 percent of the garages deserved a passing grade. “And that’s with a pretty low bar,” Mr. Schneider told me. “I’m even allowing them to have missed a blown taillight that should have been caught.”

[…]

Yet by studying a fairly narrow question, Mr. Schneider discovered a larger truth: the expert service problem really does appear to be a serious one. It isn’t that reputation is irrelevant. “Very few businesses will stay in business ripping off their customers,” Tony Molla, a spokesman for the National Institute for Automotive Service Excellence, argued after I sent him the study.

But when a situation is too complex for an amateur to grasp — and when it involves shades of gray — you probably shouldn’t expect to get a purely objective diagnosis from someone who has a financial incentive to give you something else.

That, in fact, may be the biggest flaw with today’s health care system. (Yes, even bigger than lack of health insurance.) If anything, Professor Hubbard argues that the expert service problem is more serious in medicine than in auto repair, because most people are less willing to question a doctor than to question a mechanic. Any effort to reform American medicine has to grapple with these conflicts of interest.

Via Drezner.

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