Poor Have Higher Time Values than We Thought
By David Henderson
What I call health policy orthodoxy is committed to two propositions: (1) The really important health issue for poor people is access to care and (2) to insure [sic] access, waiting for care is always better that paying for care. In other words, if you have to ration scarce medical resources somehow, rationing by waiting is always better than rationing by price.
This is from John Goodman, “Everything We Are Doing in Health Policy May Be Completely Wrong,” July 5, 2011.
This came out just before I went on vacation and so I’m playing catch up. I thought a lot of other bloggers would beat me to it and there would be links to this piece all over the place. I don’t think there were.
We don’t know, on the basis of one study alone, that everything we are doing in health policy may be completely wrong, unless you emphasize the “may.” Still, the results are quite striking. Raising the time price of getting drugs to a Medicaid population resulted in more of a cutback than raising the out-of-pocket price of the drugs.
The orthodox view underlies Medicaid’s policy of allowing patients to wait for hours for care in hospital emergency rooms and in community health centers, while denying them the opportunity to obtain care at a Minute Clinic with very little wait at all. The easiest, cheapest way to expand access to care for millions of low-income families is to allow them to do something they cannot now do: add money out-of-pocket to Medicaid’s fees and pay market prices for care at walk-in clinics, doc-in-the-boxes, surgical centers and other commercial outlets. Yet in conventional health policy circles, this idea is considered heresy.
Goodman also adds:
The orthodox view is the reason why there is so little academic interest in measuring the time price of care and why so much animosity is directed at those who do measure such things. It explains why Jon Gruber can write an NBER paper on Massachusetts health reform and never once mention that the wait to see a new doctor in Boston is more than two months.
In the comments on Goodman’s post, health economist John R. Graham points to one counterintuitive result that Goodman admits he can’t explain:
The time price had a much larger effect in reducing Rx consumption than the monetary price, but the increase in monetary price caused overall Medicaid spending to go up, whereas the increase in time price did not.
I tried to read the study but, unfortunately, it’s gated. When I get it, I’ll see if there’s anything more interesting and, if so, report back.
Update: In response to Tom West’s comment below, here’s what I wrote in The Joy of Freedom: An Economist’s Odyssey:
[B]ecause of socialized medicine, many young Canadian women get to experience the pleasures of natural childbirth. An Ontario doctor who administers an epidural is paid only about $100 for it, versus about $1,000 in the United States. At that price, it is often not worthwhile for an anesthesiologist to stick around at, say, 3:00 a.m., when a delivering mother would like him there. No matter how much a woman may want an epidural, she is not legally allowed to pay for it.