A. An overriding characteristic of mental health care is that there are often no objective standards, either for diagnosis or for treatment. As a result, this is a field where it is often very difficult to verify what we are getting for the enormous amount of money we are spending. For example:
1. Uncertain Cure: Talk Therapy
- Although a large number of mental health providers are Freudians, a recent survey of the scientific literature concluded there is no evidence that (Freudian) psychoanalysis does any good. (See "The Place of Psychoanalytic Treatments Within Psychiatry," Archives of General Psychiatry, June 2002.)
- Numerous studies have found that patients on their own improve just as well as patients in therapy; other studies have found that mental health professionals are no more effective than nonprofessionals (such as school counselors) with only minimal skills. (See: Ethan Watters and Richard Ofshe, Therapy's Delusions.)
- In some studies, patients in therapy actually do worse than patients who go without it. (See Tana Dineen, Manufacturing Victims, Ch.3)
- Based on a review of more than 500 scholarly studies, Carnegie-Mellon University professor Robyn Dawes, concludes there is overwhelming evidence that:
(1) The therapists credentials - Ph.D., M.D., or other training - are completely unrelated to the effectiveness of therapy;
(2) The type of therapy is generally unrelated to its effectiveness; and
(3) The length of therapy is unrelated to its success.
In other words, credentials don't matter, the type of therapy doesn't matter and the length of therapy doesn't matter. All that matters is the ability to be empathetic and a few other easily learned skills. (See: Robyn Dawes, House of Cards: Psychology and Psychotherapy Built on Myth.)
- According to Dawes' review of the literature, mental health professionals are also notoriously bad at predicting behavior. For example, they are no better than ordinary intelligent people and significantly worse than simple statistical models at predicting: whether a person will become violent; whether a criminal will be a recidivist; and whether a child has been sexually abused.
- Psychologist Tana Dineen says the members of her profession are becoming increasingly less scientific and more focused on maximizing their incomes. "Feelings of unhappiness, boredom, anger, sadness and guilt can now all be interpreted as signs of prior trauma" by the skillful therapist, she writes. (See Manufacturing Victims, p.20)
2. Uncertain Cure: Anti-depressant Drugs
Although drugs that treat mental illness can be very expensive, one study of nine common antidepressants found that the drugs work no better in treating depression, on the average, than a cheap placebo. (See the soon to be published study by Dr. Arif Khan, Northwest Clinical Research Center.)
3. Uncertain Cure: Treatment for Substance Abuse
A study conducted at the Stanford University of Medicine found that patients in Alcoholics Anonymous and Narcotics Anonymous - who receive services for free - were significantly less likely to relapse into alcoholism than patients in professional, high-priced programs. Even though the "professional" program was less effective, it cost $4,729 more per patient per year than AA. Other studies have reached similar conclusions. (See Keith Humphreys, Alcoholism: Clinical and Experimental Research, May 2001, .)
4. Uncertain Cure: The Handbooks of Mental Health Disorders
The American Psychiatric Association (APA) publishes the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV). Yet there is no objective biological test to identify a mental disorder - not even schizophrenia. The decision about whether a set of behavior patterns qualifies as a disorder also is subjective. When the number of disorders described in the DSM more than Tripled between 1952 and 1994, critics charged it represented a desire to expand the clientele and incomes of mental health professionals.
B. One of the reasons why there is so much waste and abuse of the system is that in comparison to physical illness, both doctors and patients have far more discretion:
1. Providers have enormous discretion precisely because of the lack of objective standards.
2. Patients have enormous discretion because (1) mental illness is usually experienced subjectively and (2) patient cooperation is almost always very important for successful therapy. Discretion on the part of patients is reflected in studies that show the demand for mental health services is four times more sensitive to price than the demand for health care generally. (See Mental Health Economics, p. 24.)
C. Because of these key differences, patients and their families are often more effective and efficient monitors of mental health care than such third-party payers as employers, insurance companies and even the government. This is true because:
- Patients and families are often more aware of the condition than third-party payers.
- Patients and families are often more aware of treatment options.
- Patients and families are often in a better position to compare the costs and benefits of those treatment options.
D. To take advantage of this capability, patients and their families need to have a financial stake in the outcome of treatment. For example, for any illness where patient cooperation is important to successful therapy, we will get better results if the patients are making a personal, financial investment in that therapy. In mental health care, health incentives are often not enough. We need financial incentives as well.
In general, a good incentive system is one in which people reap the full benefits of their good decisions and bear the full cost of their bad decisions. A lousy incentive system (having the most possible distortions) is one in which people reap none of the benefits of their good decisions and bear none of the cost of their bad ones.
If we want patients to monitor provider behavior and make sure that they get a dollar's worth of value whenever they spend a dollar, they are more likely to do it if the dollar is their own. Patients need to know that if they eliminate a dollar of waste, that dollar will be theirs to keep.
E. Having patients pay more expenses directly helps reduce two important causes of wasteful health care spending, and this is especially important in mental health:
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On the patient side of the market, the condition of having incentives to waste other people's money is called the problem of "moral hazard." It is a problem that is inherent in all third-party insurance - where individuals are able to draw resources from a common pool. For example, suppose a patient has a choice between two equally effective therapies. If someone else is paying the bill, the patient has no reason not to choose the more expensive option. An apparent reflection of the problem of moral hazard is the fact that 38 percent of all mental health patients - representing 28 percent of all treatment visits - are people who do not have any mental disorder. (See Mental Health Economics, p. 10, paragraph 2)
When individuals can affect the success of their own therapy, an additional moral hazard arises. The reason is that patient cooperation usually requires an effort on the patient's part. If the uncooperative patient is paying full fare, he bears two kinds of costs as a result of his lack of cooperation: (1) he does not get the health benefits of the therapy and (2) he ends up wasting the money he spent on the treatment. However, if someone else pays the bills, the patient's incentives to cooperate are weakened, because he only bears the first of the two costs.
- On the other side of the market, provider incentives to waste resources is called "rent seeking". Precisely because information is imperfect and monitoring is imperfect, providers find they can enhance their incomes by providing services that are of little or no value. A common observation in the mental health field is that the number of visits that it takes to "cure" a patient often miraculously equals the maximum number of visits allowed under the patient's insurance plan. Similarly, the number of days in a hospital or other institution needed to "cure" a patient often miraculously equals the maximum allowed by insurance. Providers tend to provide as long as insurance pays. But once the insurance stops paying, the services stop.
F. The upshot is: We will often get better results for less money spent if patients pay less money in premiums to insurers and pay more bills directly on their own, than if patients pay more in premiums and pay fewer bills on their own.
