THUS HSAs:

In an important paper published last month, "Quality and Accountability in Healthcare Delivery," four of my colleagues and friends, Jishnu Das, Alaka Holla, Aakash Mohpahl, and Karthik Muralidharan (DHMM), have undertaken a careful comparison between the public and private sectors in rural Madhya Pradesh, India. They coached a set of "standardized patients (SPs)" to present the symptoms associated with three conditions--unstable angina, asthma, and dysentery in a child (who is at home). They then sent these SPs to randomly selected public and private providers and compared the physicians' responses against a set of metrics (checklists of questions and examinations, likelihood of making a correct diagnosis, and appropriateness of the treatment) to gauge the "quality of care."

The results are, to put it mildly, striking. Even though they were mostly unqualified, the private providers exerted significantly higher effort and were no worse in providing the right diagnosis or recommending proper treatment than their public-sector counterparts. And this is in a context where the overall quality of health care in rural India is quite poor.

To isolate the effect of practice type and control for differences in qualifications, DHMM went further and looked at a sample of qualified public doctors who were also in private practice. They find that the same doctors spent more time with patients, diagnosed them better, and were more likely to offer correct treatment in their private practice than in the public clinics. Noting that "free" public health care is not free to the taxpayer, they compare the per-patient cost in the two sectors and find it to be four times higher in the public sector.

Taken together, these and other results in the paper, as well as Jishnu's previous work with Jeff Hammer, call into question statements such as "health care should be provided free by the government." Unless the doctor's pay is somehow linked to performance, there is a good chance that the quality of care in the public sector would be worse than in the private sector.

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