Two Interesting Health Care Papers
By Arnold Kling
We estimate that employees would be willing to forego 10 to 40 percent or more of their employer subsidies for the right to apply those subsidies to the plan of their choosing, with the exact magnitude depending on the demand specification as well as the definition of the expanded choice set.
The point of the research is that limiting choice in health insurance is not a good thing. Employer-provided health insurance limits choice. I should point out that what the Left thinks of as “health insurance reform” is designed to limit choice even more.
Between 1810 and 1939, real per capita spending on patent medicines grew by a factor of 114; real per capita GDP by a factor of 5…While consumers in other markets stopped searching for a viable product after a few failed attempts, consumers of patent medicines kept trying different products, irrespective of the number of failed medicines they observed. The market expanded as the stock of people buying potential cures accumulated over time. Because no one was ever cured and consumers possessed a highly inelastic demand with respect to product failures, demand was unrelenting. In short, patent medicines flourished not despite their dubious medicinal qualities, but because of them.
Robin Hanson would probably say that this is still true of medicine today.