As a guy who has been in practice for many years, I have no doubt that doctors' decisions are the reason American medical attention is as expensive as it is.
However, what Kling in his excellent and important piece at TCS omits is the extent to which such decisions are driven by patients and their families. Most patients, offered the option that "this might help," opt for it. And the docs go along with it, even if the statistical gains are marginal to none. In other words, they replace their measured judgement with the "consumer's" choices. "Doc, do everything you can." I see it every day, and have done this countless times myself.
And why not, if someone else is paying the bill? Do we love outselves too much? Or do we want to believe in magic? (Also, bear in mind that the physician ordering your test or procedure makes no money from that.)
As a consequence of "consumerization" and litigation, the band of "elective" procedures and tests shrinks ("elective" used to imply that Major Medical insurance would not pay for it), while the band of the routine expands, including the marginal, the useless, the "heroic," the hopeless, the experimental, and the optional. Many extremely expensive cancer treatments would be on that latter list, plus allergy "treatments," plus even routine annual physicals which I believe are a waste of time and money - my list would be quite long, and I could easily annoy every medical specialty.
In the good old days of medical authority, before people came up to you and said "I read on the internet that there's a doctor in Arizona who says...", physicians were capable of carrying the burden of making good decisions for their patients. And when folks were ready to go, we let them go: we would never treat pneumonia in the ICU in Alzheimer's patients. That is not rationing - that is sane decision-making. And we all pay the bill.
Thus American medical care is more expensive, but minimally more effective, than other places: we spend our extra money on the margins, and on terminal patients, where outcome is not meaningfully affected. A classic example comes to mind: Mickey Mantle, with metastatic lung cancer and dying, gets a liver transplant for his cirrhosis. I doubt a physician recommended that, but they probably did say it was an option, and he said "sure." It probably gained him a couple of weeks of torture and misery, in the hospital.
Kling considers all of the possible causes for medical costs, and concludes:
That leaves (D), with its radical suggestion that America's culture of medical practice is at fault. I arrived at this conclusion as an economist, looking at the data that contradicts the alternative hypotheses and also at a variety of studies, cited in my book, that show little relationship between health care outcomes and the supply of medical services.
Since writing my book, I have come across the work of Nortin Hadler, an MD who, coming from a very different direction, arrived at the same conclusion that I did about America's medical culture. In 2004, Hadler published The Last Well Person: How to Stay Well Despite the Health-care System
Hadler takes on many popular forms of health care in America, from alternative medicine to colonoscopy screening to anti-cholesterol drugs to heart bypass surgery. In his iconoclastic view, all of these therapies have benefits that are too small in terms of either statistical significance or common sense to warrant widespread use (he qualifies this by saying that certain narrow target populations do in fact benefit from these approaches).
Hadler steps on some very sensitive political toes. Americans want to hear that our doctors "save" men with prostate cancer. Hadler sees it is a common, slow-acting ailment that can be left untreated (there is a less-common variant that is more dangerous). We want to believe that talk-show hosts who scold people to get mammograms, watch their cholesterol, and submit to the indignities of colonoscopies are doing the public a service. Hadler argues that we should take a more stoic attitude toward the risks that we face.
Please read the whole thing.
