Health Care Thoughts

It is most entertaining to talk about health care with intelligent people. The differences in beliefs, and in philosophical orientation, are just amazing. Some of the difference in belief can be eliminated with data. The philosophical differences are harder to get rid of.

A starting point is that many many people think that our current health care system is a disaster and delivers terrible quality at very high cost.

I would suggest looking at a couple of these items:

1. The book, The Business of Health, by Ohsfeldt and Schneider. Among other things, these two economists show that if you take out the impact of high rates of murder and accidental (especially highway) deaths from the US life expectancy, the US ends up number one in life expectancy. Now how can you possibly say that our high rates of murder are due to failings of the health care system?

2. Read the paper by June and David O'Neill, "Health Status, Health Care and Inequality: Canada vs the US," NBER Working paper13429. They document the failings of comparing health care systems by metrics such as infant mortality and, similar to point number one above, life expectancy. On infant mortality, they show how much of a role low birth weight plays in infant mortality -- and how low birth weight is greatest for teenage mothers. Of course, the US has many more teenage mothers than Canada. Shall we blame teenage pregnancy on the health care system?

3. And the paper by Hall and Jones, "The Value of Life and the Rise in Health Spending," Quarterly Journal of Economics, Feb 2007. These economists argue that optimal health care spending in the US is not inconsistent with utility maximization and that as we grow richer we should expect the percentage of GDP spent on health to rise much higher. This is a great point, and they back it up with great theory. In fact a colleague of mine was recently lamenting how he could not spend as much as he would like on health care, because he cannot hire a doctor on a consulting basis as easily as he would like. This is true: the practices and institutional rules in place do restrict us from buying some health care that many of us would purchase if we could.

4. The paper by my Dartmouth colleague Jon Skinner, and Alan Garber, "Is American Health Care Uniquely Inefficient?," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 27-50, Fall. In particular, note the very neat argument how heterogeneity in demand for health care in different regions of a country might make it look like that country is inefficient in producing health care.

And here are some interesting questions to ask folks and ponder their responses:

-- should insurance pay for routine expenses like eye exams, and teeth cleanings?
-- should insurance pay for annual doctor checkups?
-- Why do we assume that people can take their cars in for oil changes, understanding that regular oil changes increase the life of the car, but we cannot trust people to go see the doctor?