Does everyone want to pay for high-quality medical care?

Focus on health care quality rather than cost? Not a bad idea, if you’re prosperous. But if you’re poor, money matters more.

David Cutler asks a perfectly reasonable question: What’s wrong with paying a big chunk of your income for high-quality medical care? The idea of paying health-care providers for actually delivering high-quality care, and making that rather than cost control the central management idea of the nation’s health care system, is intuitively appealing. It makes sense that as we get richer, we’re willing to spend an increasing fraction of that higher income on health, because the urgency of the competing wants diminishes with rising incomes.

But if that’s right, it suggests that not everyone wants to make the same decisions about allocating resources between health care and other needs. The poorer you are, the greater the value to you of each dollar spent on something other than health care. That suggests that poor people, if they got to make decisions for themselves, might choose to buy less luxurious health-care packages than richer people.

The cost of my health insurance is pretty high, but the dollars I spend on it (or that my employer spends on it on my behalf) don’t leave me lacking anything I really need. By contast, if we cashed out half of the cost of Medicaid and gave it to poor families in cash, that cash might make a big difference in the way they were able to afford to live; in some cases, the health benefits of, say, moving to a better apartment might outweigh the health costs of having worse access to medical care.

I’m not suggesting that we actually provide such choices; letting people choose their health plans runs into profound adverse-selection problems, even if we weren’t worried about imperfect rationality or the ethics of withholding care from those whose insurance doesn’t cover it. What I am suggesting is that the health care system may be a very inefficient place in which to concentrate our redistributive efforts. (Against that is the fact that richer people may be much more willing to vote to give poorer people health care than they are to vote to give them the other stuff they might prefer to have.)

Insofar as these decisions are made publicly, there’s a danger that what seems sensible for the upper middle class will be assumed to be sensible for everyone. That might not be true.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: