A Carnival of Perverse Incentives – in the USA and the UK?

A Perverse Incentive is a “driver within a system which works against the overall intention of the system”. (Or as Wikipedia says with an unintended and undesirable result..)

John Goodman of the Wall Street Journal (WSJ) opines: “The ObamaCare Carnival of Perverse Incentives (PIs) “

Cities with unfunded health-care commitments are getting ready to dump their retirees on the state exchanges.

Taking aside the fact that the Wall Street journal is the most right-wing and republican orientated national newspaper, I wonder why Mr Goodman feels the PI are worse with Obamacare than with the alternative that preceded it? He make no analysis of the PIs appertaining to a private and insurance based system where 40% of the population has inadequate or no cover.

The (Regional Health Services) RHSs in the UK have and are developing more and more PIs. Private Finance Initiatives, Private Contractors, Self Employed (GPs) and Trust Executives waiting for Performance related Bonuses are all subject to PIs. The important thing is to make these overt rather than covert, both to the media and to the patient. If patients cannot understand that the PIs to overtreat in private system are mush worse than the PIs to undertreat in a National (basically free) system, then they start at a disadvantage…. It seems Mr Goodman falls into this group.

Dentistry is a good example. Many of the citizens in the UK now have non RHS funded (private) care. Unfortunately this means there is an automatic self-selection where those who cannot afford it get the least care, exactly what the government does not intend… The result, over time, will be an increase in dental related diseases such as Subacute Bacterial Endocarditis. A

Another example could be related to Clostridium Difficile outbreaks in Government Hospitals (virtually unknown in private hospitals) because of the rapid throughput combined with high risk elderly people and the overuse of antibiotics… If managers were rewarded by bonuses for reducing te number of cases then the throughput of the hospital would decline!


This entry was posted in A Personal View, Perverse Incentives, Stories in the Media on by .

About Roger Burns - retired GP

I am a retired GP and medical educator. I have supported patient participation throughout my career, and my practice, St Thomas; Surgery, has had a longstanding and active Patient Participation Group (PPG). I support the idea of Community Health Councils, although I feel they should be funded at arms length from government. I have taught GP trainees for 30 years, and been a Programme Director for GP training in Pembrokeshire 20 years. I served on the Pembrokeshire LHG and LHB for a total of 10 years. I completed an MBA in 1996, and I along with most others, never had an exit interview from any job in the NHS! I completed an MBA in 1996, and was a runner up for the Adam Smith prize for economy and efficiency in government in that year. This was owing to a suggestion (St Thomas' Mutual) that practices had incentives for saving by being allowed to buy rationed out services in the following year.

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