23 Comments

It was excellent. :)

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Last weekend's episode of This American Life has a decidedly Hansonian view on health care and spending (One segment, for instance, is titled "Dartmouth Atlas Shrugged").

I'd be interested in reading your take on the episode.

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Mostly it gives my wife peace of mind. I guess my point is that for people who don't know that health care spending doesn't improve outcomes, health care spending is still perhaps worth the money because of the intangible benefits. So if you force them not to pay for health care you are taking something from them.

And in general, the assertion that health care spending doesn't improve health outcomes is certainly believable - I believe it - but even so I have a hard time applying that to my specific situation.

For example, my 5-yr old son had a stomache virus last weekend - throwing up, lack of appetite, stomache pain. We did usual home care for a few days; when he looked awful and wasn't getting better after three days we took him to the doctor and they rehydrated him with an IV. Was that overkill; probably not worth the money? I kind of suspect so. Take a nation's worth of 5-yr-olds with a stomache virus and does it make a difference one way or another to give them fluids via IV after 3 days? Probably not. But what if this case was different? I don't know. So we paid our money and took him in.

It's easy to say that we over-consume health care but when it's your own health, or your kids' health, it's even easier to err on the side of caution. And of course, there's always the fact that, just as no one ever got fired for buying IBM, no one feels guilty when something bad happens and they followed "standard practice."

Seems to me that if most people agreed that healthcare spending wasn't worth the money, then they would spend less. But as long as all that healthcare spending has some value, even if mostly intangible, then people will keep spending it.

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Why does spending that doesn't improve your kids health give you peace of mind?

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I should add that I understand the point made about the effects of health spending and actual health benefits. For the sake of argument, I would like to assume, (and have all of you assume) that "health spending" does not preclude or exclude positive investment returns on technology advances. That is, lets assume that "more" in this case is better and that "some" dollars will be well spent and increase overall welfare (somehow).

I think it's important to realize that we can't predict the exact future, which is why I find "general" thought experiments more useful (and fun).

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Is it reasonable to suggest that a greater portion of future income spending on health care is simply an indication of what society wants to spend it's money on? That is, does a greater portion of income spent on our health indicate the relative importance of "health" in our collective lives? Are we able to assume that in say 50 years all that will matter is health and - extending that thinking - living longer? Could this be used to argue that we will eventually have all or most our "basic" needs met and will divert more resources to what, perhaps, has always been ultimately important - immortality?

As you can tell, I have more questions than answers.

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You are ignoring intangible benefits from healthcare spending.

I have kids. Maybe it doesn't really improve my kids' health to take them to the doctor as often as I do, but it gives me (and, especially, my wife) peace of mind. Maybe that's worth the money?

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it largely determines if we will get richer or poorer But how much utility and consumer surplus people get from inovations like the internet and the mp3 players etc. is very hard to quantify and IMO is much greater than what is measured in GDP. I would say people will continue to live better and better.

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Feedback isn't a one time thing that happens and then stops. What I was getting at is that many processes, especially growth processes, have changing feedback as they progress. Sharper growth, or growth that approaches some sort of limit (even a temporary or psychological limit), is going to change, quite possibly substantially, so you need to take any projections with a grain of salt, especially of systems that are likely to run into such complications.

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Sure there will be a limit, but how high? There is also that limit of not being able to sustainably pay more than 100% of income for med, but let's hope we find some other limit before then.

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Projections based on previous data that took into account a feedback already implicitly take that feedback into account.

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Projections that don't take into account obvious feedback effects, such as rising prices, can be dismissed without much effort.

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Costs is also increasing, but yes there it seems to be legitemate, better care, technology, outcomes etc. not so inflationary. Also socialism!! We all know it doesn't work except for keeping those costs down for some reason :)

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Europe doesn't seem to have this problem. I wonder why? ;)

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"Yet I’d guess the number of full time equivalent researchers working on this is less than a few dozen. Why so few working on such an obviously central question?"

Because whatever they found would likely be very uncertain, and, more importantly, no one would give a damn. The various lobbyists and congressmen writing legislation are not motivated by marginal benefits to society; they're motivated by marginal benefits to their net revenue or their reelection campaign.

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