Steve, you really don’t get it do you?

No, you are the one who doesn't get it. It is as simple as this: health care is not a public good. Calling a public good does not make it a public good. Fashioning policy as if it were a public good wont make it a public good. I just isn't a public good.

To the extent overuse is a problem it is not a very big one. Most medical procedures are completely justified by medical need. And to the extent it is a problem the fault does not lie with the patient, as you seem to think, but with those fee for service providers who try to pad their billings with unneeded tests etc. This can be solved without punishing the patient.

I never said it was entirely the patients fault. However, I think you are ignoring a big problem here.

And if Brad Delong thinks patients are responsible for ordering/providing their own medical treatment he is just as mistaken as you are.

Brad didn't imply that either and for you to make up stuff and put words in his mouth and mine is annoying to say the least.

When a third party is picking up the tab a patient has no incentive to stop the doctor from overtreating but the patient is not the one with the incentive to cause the overtreatment in the first place.

Sounds to me like the responsibility lies with both the patient and the doctor.

If a doctor were to tell you that your childs cough might be due to a flu or due to tuberculosis and the only way to find out is with a chest x-ray what are you going to do?

I'm going to say, what about that little prick that they do on the arm? Of course, I'm a bit of prick myself and tend not to take whatever the doctor says as the word of God.

And if the cost to you is a twelve hour wait or a $$ fee what difference does it make?

I might rather pay the $$, which you just don't seem to be able to understand.

Anyhow, it is nice that you finally agree that overuse is a problem.

Dave,

I thought you were saying that demand for health care rose because government was seen as picking up the tab. Now I realize I have no idea of what you are saying.

Explain to me why the two issues are mutually exclusive? The moral hazard problem is fairly well known. Seems to me it would exacerbate the problem, i.e., if the effect you describe is true, then the probelm I'm describing simply makes it worse.

More simply, the problem is that when the government is seen as picking up the tab (i.e., individuals do not bear the full marginal cost) there is a tendency to over use a resource.

I thought you were saying that demand for health care rose because government was seen as picking up the tab. Now I realize I have no idea of what you are saying.

BTW you really should read my post on Gammon's Law. As it turns out neither increasing supply nor reducing demand per se is likely to have much effect on health care costs.

To the extent overuse is a problem it is not a very big one. Most medical procedures are completely justified by medical need. And to the extent it is a problem the fault does not lie with the patient, as you seem to think, but with those fee for service providers who try to pad their billings with unneeded tests etc. This can be solved without punishing the patient.

And if Brad Delong thinks patients are responsible for ordering/providing their own medical treatment he is just as mistaken as you are.

When a third party is picking up the tab a patient has no incentive to stop the doctor from overtreating but the patient is not the one with the incentive to cause the overtreatment in the first place. If fact, since most all medical procedures are essentially uncomfortable and a pain in the ass, the patient already has an negative incentive to overuse the system.

If a doctor were to tell you that your childs cough might be due to a flu or due to tuberculosis and the only way to find out is with a chest x-ray what are you going to do? Say no? And if the cost to you is a twelve hour wait or a $$ fee what difference does it make? You are still going to pay it either way.

Now if the doctor has a financial interest in the number of x-rays taken there may be a chance that the doctor is not acting in good faith with you. But it is not your fault that your son is being overtreated.

I agree that proponents of nationalizing health care need to address the incentive problem you describe if it can actually be demonstrated that demand factors are a real source of cost increase in health care. Do you have such a demonstration? I would genuinely like to see it.

I'm sorry but this is just an inaccurate portrayal of my post. I am not saying that the current problem is due solely to demand side issues, but that nationalizing health care without giving thought to the incentive problem will not help the problem.

You think that if medical care is free, just like the public roads, then people will overuse it. But what you fail to understand is that people do not go to a doctor just for the hell of it.

And I never claimed it. I don't use freeways for the hell of it either. I bet very few people do. This is a strawman and the basis for your argument...so your argument crumbles. You still might be right, but the evidence behind the problem of Moral Hazard is quite strong.

The incentives for use are completely different. One, the use of public roads, is somewhat discretionary; the other, medical care, is not.

For somethings you are correct for others you are not correct. For example, my son is sick with possibly the flu. I could take him to the doctor, or give him some advil, monitor his temperature and keep him home and see if he gets better. Discretionary, and the first option eats up more health care resources.

While both public goods have an element of necessity to them we are not talking about providing free use of discretionary medical services (breast enlargement) just like we provide for free discretionary road use (vacations).

Medical care is not a public good. A public good is one that is non-rivalrous and non-excludable. On both grounds medical care fails. If you get a shot, nobody else can use that medicine. If a doctor is operating on you, he can't operate on another patient. If you are in an MRI, another person cannot use it. Hence medical care is largely rivalrous and by definition is a private good.

You consistently blame the patient for the high cost of medical care when the real culprit is the provider. You even misuse Brad DeLong to make this point. Re-read what Brad wrote and you will that he is saying it the provider who overtreats the patient.

Irrelevant, and funny you are admitting there is a problem with...wait for it...over use. You just agreed that over use will be a problem. Further, Brad says nothing about who is responsible for over treatment you simply made that up.

But the solution is not to penalize the patient which is what you advocate

I have not advocated any such position and it is dishonest of you to suggest that I do.

Putting doctors on salary will remove the incentive to overtreat without losing any quality of care.

Right, which is why it worked so well for HMOs. HMOs discourage use of their services by their patients as a matter of routine. They do this to control costs. So even with the salary there is still an incentive problem.

And get it through your head that nothing is free. N.O.T.H.I.N.G. Everything has a cost. Even public roads. Christ.

You think that if medical care is free, just like the public roads, then people will overuse it. But what you fail to understand is that people do not go to a doctor just for the hell of it. The incentives for use are completely different. One, the use of public roads, is somewhat discretionary; the other, medical care, is not.

While both public goods have an element of necessity to them we are not talking about providing free use of discretionary medical services (breast enlargement) just like we provide for free discretionary road use (vacations).

You consistently blame the patient for the high cost of medical care when the real culprit is the provider. You even misuse Brad DeLong to make this point. Re-read what Brad wrote and you will that he is saying it the provider who overtreats the patient. To the extent anyone thinks a patient with totally free access to health care is demanding, and getting, extranous medical treatment without the INCENTIVE to do so laying with the provider is just plain silly. Take the incentive away from the provider and this problem will go away.

But the solution is not to penalize the patient which is what you advocate.

Putting doctors on salary will remove the incentive to overtreat without losing any quality of care.

India? Just a guess.

Matthew,

I know you don't get it. It was obvious from your first post. A big part of the health care problem is an incentive problem.

Ken,

My God...where to start.

When was the last time you ‘overused’ a free public good?

Take public roads as an example.

Public roads are over-used in my neck of the woods every day in the morning and the evening and most weekends. We call it traffic.

They were built essentially for commercial purposes yet they are often used for pleasure. This might be considered overuse by some. If you were charged a toll every mile or so perhaps your ‘overuse’ may be limited.

Yes, but instead the charge for the roads is via gasoline which does little for the congestions problem.

What about free public libraries? Can you overuse them, learn too much?

These probably are more accurately classified as club goods. Exclusion is possible and hence charges could also be put into place. As for over-use, there is a problem that when a given book is checked out nobody else can check it out. Not exactly a model of a pure public good.

By the way, you realize that calling a private good a public good does not make the private good a public good. I could just as easily call you Fido, that wouldn't make you a dog.

And then we come to health care. If free do you really think it will be overused in the same manner as freeways and libraries can be overused?

First it wont be free. Second, yes it will be overused if there is no rationing imposed.

Who is going to have chemotherapy, kidney dialysis, or open heart surgery for pleasure? Who is going to go into the clinic each Sunday for a family x-ray day, like a day spent at the beach?

You sure have a simplistic view of this problem don't you (don't bother responding to that it was rhetorical). The over usage will not occur in those areas, but in areas such as routine doctor's visits. Going to the doctor for any and all minor ailements. If this demand is meet it will suck in resources from heart surgery, dialysis, and chemotherapy. When the demand in one market increases, the price increases and more resources flow into that market. At least so long as there is no rationing.

In the case with the government providing the health care if it provides for the increased demand for minor things it will mean less resources for things like heart surgery, dialysis, and chemotherapy. To secure more and more resources it will have to pay more. Thus, the only way to limit the increase in costs would be to ration health care resources. To determine who gets what by politically established criteria.

Your fear that people will overuse free medical care is really wierd.

It isn't my fault you can't think about this problem in a logical manner.

It may be the conservative crowd you run around with that thinks this way but I can assure you that most Americans don’t.

Yeah, conservatives like Brad DeLong. Did you even follow the link on Moral Hazard? Here is what Brad DeLong writes,

Moral hazard: when insurance companies rather than patients bear the marginal costs of treatments, there is an incentive to overtreat--except where treatment has public-health external benefits, and except where the insurer has written the contract to control utilization.

Replace, 'insurance companies' with 'government'. In your partisan bias you have become blinded to things that are not partisan. You are a fool.

When was the last time you 'overused' a free public good?

Take public roads as an example. They were built essentially for commercial purposes yet they are often used for pleasure. This might be considered overuse by some. If you were charged a toll every mile or so perhaps your 'overuse' may be limited.

What about free public libraries? Can you overuse them, learn too much? Some may think the reading for pleasure crowd is overusing this free public good? What do you think? Do you ever read for pleasure? Should you be charged for this use?

And then we come to health care. If free do you really think it will be overused in the same manner as freeways and libraries can be overused?

Who is going to have chemotherapy, kidney dialysis, or open heart surgery for pleasure? Who is going to go into the clinic each Sunday for a family x-ray day, like a day spent at the beach?

Your fear that people will overuse free medical care is really wierd. It may be the conservative crowd you run around with that thinks this way but I can assure you that most Americans don't. We are not going to put our legs or arms in a plaster cast just because it is free to do so and it might be a fun way to spend an afternoon.

How about this: anyone who uses more than X amount of healthcare a year automatically gets audited by the IRS. That would keep frivolous use down, at least among those who pay taxes.