Curing the Healthcare Crisis

Empowering patients and caregivers

Doctors Should Help Patients Weigh Tradeoffs

Unfortunately, the third-party payment system discourages this.

One theme of my book, Priceless: Curing the Healthcare Crisis, is that the third-party payment system has caused major harm by distorting the price system and thereby undercutting our ability to evaluate alternative courses of action. This problem is fundamental, but there are others as well. Another problem is the taboo against doctors helping patients think about tradeoffs that involve monetary costs.

What would happen if doctors routinely provided such a service? For the sake of argument, let's consider Pap smears. The cost data I am about to use here are old, since they are taken from a 1995 study published in the journal Risk Analysis, but they are still useful for illustrating the principle I wish to convey.

Getting a Pap smear every four years (versus never getting one), according to the study, costs $12,000 per year of life saved, when averaged over the whole population. What the responsible doctor should tell her patient is, “In the risk avoidance business, this is a really good buy. Based on choices people like you make in other walks of life, this is a good decision. This type of risk reduction is well worth what it costs.”

Getting a Pap smear every 3 years (versus every four) costs $220,000 per year of life saved, and getting one every 2 years (versus every three) costs $310,000 per year of life saved, according to the study. Should most patients have the test done this frequently? Here the doctor should say, “Now we are moving toward the upper boundary of what most other people are willing to spend to avoid various kinds of risks, when the probabilities are small and the amount of money is also small. So at this point, serious thought needs to be given to whether the test is really worth what it cost.”

How about getting the test done every year (versus every two years)? The cost, according to the study, is $1,500,000 per year of life saved. Here the responsible doctor will say, “This is definitely a bad buy (unless there is some specific indication or unless not getting the test is going to keep the patient awake at night). The cost of an annual Pap smear in relation to the amount of risk reduction achieved is way outside the range of choices most people make with respect to other risks.”

Notice what is going on here. The responsible doctor, functioning as an agent of a patient who is not familiar with the medical literature and who is not skilled at evaluating risks or trading off risk reduction for other uses of money, advises her patient in these matters. She helps her patient manage both her health and her money—because both are important.

When Dr. Aaron Carroll, pediatrics professor at Indiana School of Medicine, says, “I’d do it even if it cost a fortune and might notwork,” I am sure he is being sincere. But I am equally sure that is not how he normally makes decisions. It is in fact easy to spend a fortune to avoid small-probability events. The Environmental Protection Agency makes the private sector do it every day. But if an ordinary family tried that, they would end up spending their entire income avoiding trivial risks. And that is not what normal people do.

Here is another example of a money-is-no-object-no-matter-how-improbable-the-prospects-if-life-and-death-are-at-stake choice. This is former White House health adviser, Ezekiel Emanuel, writing in the­ New ­York­ Times:

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Proton beam therapy is a kind of radiation used to treat cancers. The particles are made of atomic nuclei rather than the usual X-rays, and theoretically can be focused more precisely on cancerous tissue, minimizing the danger to healthy tissue surrounding it. But the machines are tremendously expensive, requiring a particle accelerator encased in a football-field-size building with concrete walls. As a result, Medicare will pay around $50,000 for proton beam therapy for a patient with prostate cancer, roughly twice as much as it would if the patient received another type of radiation.[1]

Emanuel claims there is no evidence the treatment works for prostate cancer—so the therapy is a waste of $25,000. Is he right? I don’t know. If you’re paying the extra $25,000 out of your own pocket, listen to what the doctors at Mayo have to say (in favor of its use) and then listen to what Emanuel has to say and make up your own mind.

Bottom line: helping patients manage their health dollars as well as their healthcare should be what doctoring is all about.


Ezekiel J. Emanuel, “It Costs More, but Is It Worth More?” New­ York ­Times ­Opinionator (blog), January 2, 2012,

John C. Goodman, Ph.D. is Research Fellow at The Independent Institute; President in National Center for Policy Analysis, & author of Priceless: Curing the Healthcare Crisis.


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