Risk Perceptions + Costs

Ara’s blog for September 10 (week 3):

The question posed: Are administrative costs and excessive profits raising health care costs?

That is an indisputable notion which bares few exceptions. In fact, the article illustrates a federal restriction on economic freedoms. Yes, it’s back to public health law 101. In the post-New Deal era, the Courts began to place more emphasis on social and economic equity. And consequently, it led to a permissive judicial approach to public health regulations, irrespective of its effects on commercial and business affairs. But, getting back to the question posted. I’d like to take the perspective of the root causes of the administrative costs; or at least a rational assumptive perspective to display an underlying contributor for such high health care costs.

Why have high administrative costs? Perhaps for quality and data assurance and management.
If so, then, why should there be a high emphasis on such a measure? Perhaps to ensure less medical liability and thereby curbing the number of lawsuits brought forth against health professionals.

If so, then, why is there such a high rate of legal action against the medical community? Perhaps due to the high demand of the health care consumer.

Lastly, if so, then, why does the health consumer demand so much? Risk perception.

Solution: enhanced public health education and investment in preventative care and public health system infrastructure.

Now we’re dealing with risk assessments and how perceptions of risk play a crucial role in the justifications of health product consumption and service utilization. While public health professionals see risks on the grounds of their probability of occurrence and severity; the public will perceive risks as to whether or not it will challenge any social, cultural, or personal value as well as whether or not the risks are imposed voluntarily, or naturally. The public doesn’t have different values, rather, different understandings of the underlying risk-related facts.

What are some of the causes of these consumer perceptions?

a) Rule of thumb: people will act heuristically, on the spot, without considering the risks
b) Prominence: people will pay attention to what is most commonly spoken

c) There is distrust of the public in the health institutions/experts

d) Fixed decision: once people make up their mind, it’s hard to change

e) Math: people think dramatically rather than quantitatively

Having taken a look at the possible consumer contributions toward high health care costs, let’s consider the contributions made by health care providers. As we all know, health consumers are always “on the tip of their toes” to seek out any legal action for varying proportions of medical mishaps. And this is enough reason for health care providers to over-utilize diagnostic tools and therapeutic measures. And despite the assumption of risk upheld by the health care consumer as well as their contributory negligence acted upon through the unhealthy risky behaviors, the health care provider is under obligation to conform to a standard of conduct to protect the public against risk of harm. It’s an ironic duality.

These are significant underlying determinants behind the motivations in consumer judgment as well as the provision of services by health care providers. There will inevitably be an overestimation of the small risks, and underestimation of the larger risks. So the objective would try to have better risk communication by either more education in risk analysis or to establish stronger trust between the public and health agencies. It goes unsaid, both tasks are difficult.