Once Patients Pay, Health Costs Will Fall – Investors.com

… our system encourages overuse. And, as any ninth-grade economics student will confirm, an increase in demand forces prices higher.



via Once Patients Pay, Health Costs Will Fall – Investors.com.

That says it all, really!

What remains is to teach people that health care (or anything, for that matter) can be over used.

In economics, we consider a transaction as efficient if the benefit gained from it is greater than the opportunity cost of those involved. If you go to the doctor and pay $70, you are demonstrating that you value that visit, the doctor is demonstrating that she values the money (rather, what it buys) more than her next best opportunity. This is a mutually beneficial trade. If you pay $10, and someone else pays the remaining $60, the doctor is still gaining, and you are still gaining, but it becomes more difficult to say if it’s efficient. You value the visit more than $10, but are you really getting $70 worth?

We’ve all heard stories of Medicare patients going to the doctor just because they feel lonely. This is a sad state of affairs, and very costly. We could make everyone at least a little better off if we just gave Medicare beneficiaries a cash payment to use as they see fit; if the only change they make is that they use some of that money to hire a companion rather than using doctors as companions, total health care costs would go down, as those doctors would have more free time to treat other patients.

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