Why thinking like an economist doesn't always work (Page 2)

^^^^^this is why healthcare is such a mess right here.  When you divorce the user from the payor you change the incentives drastically.

It's not a major factor, but it does not hurt.

I'm not sure which part of the quotes you were responding to, or why you are shifting the focus to healthcare, but I know that there are docs who don't take insurance in my area that are doing just fine, thank you.  The user is the payor, which means that they are making a choice about healthcare that directly impacts their wallet.

Actually you got my point exactly.  3rd party insurance divorces the payor from the user and incentivises the user to use more than he/she would if the decision impacted their own economic situation more.

Edited by trinnas 2010-06-09 1:01 PM

Well, all I know is that I have plenty of people who no-show for appointments, since it doesn't cost them anything to either show or not (it is a clinic with mostly insured patients and no colleccting on no-shows).  But one of my colleagues who takes no insurance (and charges for no-shows) has no problem keeping her clinic busy.  So if anything, that might indicate the opposite of your model.  Of course, it is an N=2, and in an area both professionally and geographically underserved.

Part of the problem with that economic model is that the incentive to use or not use health care is significantly predicated on the presence or absence of health and well-being, not just the "free" nature of it.  There are other barriers as well, such as time off of work, the inconvenience of the appointment(and wait time), the fears of what will be discovered ("is it cancer?"). Depending on what the "mess" is that we are talking about in healthcare, I think that people avoiding needed treatments because of the short term and immediate cost (not recognizing the longer term higher costs) is the mess.  Remove the economic barrier, and people should be incentivized to treatment in the self-interest of health. Barring the factors I mention above.

Of course, none of this has anything to do with getting kids to eat more apples and salads in school.

Actually this woold be predicted perfectly by the model.  Your time, your energy, the valuable resource that is you (and of course the other docs that work with you) are all being missallocated due to bad policy.  If I know there is no economic consequence to me for not showing up then I have no incentive to be serious about keeping an appointment with you.  Additionally since my insurance is paying, go or no go is of no economic consequence to me.  In other words because I am not paying, your services lack an intrinsic value in my mind and I feel free to squander them.  Your colleague, on the other hand will have economic consequences for me both if I go or if I don't so I will committ to seeing your colleague before I make the appointment and make an extra effort to be there for my scheduled appt time.

However, you are absolutly right it has nothing to do with kids and apples, it was actually just meant as an aside.

I absolutely agree that not having to pay more than a nominal fee is part of why I get a lot of no-shows.  But you originally stated that people would OVERUSE services if they didn't have to pay.  My point is that you can't really make a solid prediction about behavior based on costs.  Which should bring us back full circle to the issue of changing the costs of the bananas versus putting them in a good light (literally).

The no shows are an overuse of a service do you not see that.  It is the overuse of the option to not show up, that option exists with your collegues as well but it has an economic cost so it is used much less often.

If you have the option of running 3 tests 2 f which will give you a 90% probability of an answer with the 3rd tes bumping that up to 93%.  If you are paying will you have one, two, or 3 tests.  If your insurance company is paying will you have 1, 2, or 3 tests.  What do you think the answer is for the average Joe.  What is the economic incentive to only have the two test when you could have all three.  Is 3% greater surity really worth the marginal cost?  If you are paying you must make this decision depending on it's economic consequences to you.  There is no marginal cost to you if your insurance company is paying therefor no economic consequences to you.  If you are the average market participant you will take the 3rd test and the greater surity if your ins is paying.  You are much less likely to do so if the cost is coming out of your own pocket.  How much is 3% worth to you????

Gear

I have thoroughly enjoyed the discussion.

x2.. it's nice to have an intelligent discussion with an opposing viewpoint..