[ExI] USA Health Costs

[Dan]

--- On Mon, 6/1/09, Stathis Papaioannou <stathisp at gmail.com> wrote:
> 2009/6/2 Fred C. Moulton <moulton at moulton.com>:
>> On Mon, 2009-06-01 at 23:18 +1000, Stathis Papaioannou
> wrote:
>>> 2009/6/1 BillK <pharos at gmail.com>:
>>>> Good analysis here in the New Yorker
> magazine:
>>>> <http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=all>
>>>
>>> The article is about overservicing. Medical
>>> overservicing is not only
>>> expensive, it can also be dangerous. Free market
>>> medicine encourages
>>> overservicing.
>>
>> Whether "Free market medicine" encourages
>> overservicing is a conjecture.
>> Perhaps correct; perhaps incorrect.

Well, to know what overservicing is, we would have to have an objective standard of what is the correct level of service.  Without this, all of this is conjecture.

That said, though, it appears to me that the higher use of medical services in the article has more to do with the government subsidizing medical care -- and not with the market itself.  As I've said before, subsidizing anything leads to more demanding it _because_, all else being equal, their costs for it are lower (since their costs are not partly or wholely provided by someone else -- here: the taxpayers).

>> But since there
>> is not a free
>> market in medicine in the USA it is difficult to apply
>> that conjecture
>> to the McAllen situation.  Since medicine is
>> regulated in the USA you
>> could more easily make the claim that the current type
>> of regulated
>> medicine might encourage overservicing in certain
>> areas.  I said
>> "current type of regulated medicine" since a different
>> type of
>> regulation could score differently in the measurements
>> and I said
>> "might" just to include the possibility that there are
>> other factors not yet noticed.
> 
> Even some types of Government-controlled medicine
> encourage
> overservicing, where the doctor is payed per patient seen
> or per
> procedure rather than being on a salary.

Again, we would need an objective way to measure the correct level of service.

> This is just part of
> capitalism: it's understood by everyone that when they walk
> into a
> shop, the shopkeeper will try to sell them something,
> whether they
> need it or not. There may be other advantages to having
> private
> practitioners, but the temptation to overservice has to be
> taken into consideration.

I agree, but the problem is easily resolved in market excahnges by the buyer having an incentive not to be overserviced -- specifically, the buyer will have more money (or other resources) to devote to her or his other wants.  When the buyer is no longer price sensitive -- as in when the cost is subsidized -- then expect the seller to pile on more.

Regards,

Dan