NC has a post in which they criticize the Freakanomics guys’ attempt to push for further privatization of health care:
In a meeting with UK PM David Cameron, Levitt and his co-author apparently made some rather absurd remarks about health care.
They told him that the U.K.’s National Health Service — free, unlimited, lifetime heath care — was laudable but didn’t make practical sense.
“We tried to make our point with a thought experiment,” they write. “We suggested to Mr. Cameron that he consider a similar policy in a different arena. What if, for instance…everyone were allowed to go down to the car dealership whenever they wanted and pick out any new model, free of charge, and drive it home?”
Rather than seeing the humor and realizing that health care is just like any other part of the economy, Cameron abruptly ended the meeting…
This nonsense reminds me that what constitutes economic debate in the US is often laughable at best.
Health care is obviously not like most other parts of the economy. As I said last week medical services are credence goods – goods which we don’t know whether we need, and even once we’ve consumed them, still don’t know if they were good value. In economic terms, these goods suffer from the worse of possible information failures, particularly with respect to the asymmetry of information between the seller (in this case the doctor) and the consumer.
The point made by Rumplestatskin stands and he elaborates on it:
Not only that, but there are substantial positive externalities to most health care services. Vaccinations are the obvious example, but the same principle applies more broadly.
I agreed in the beginning that the comparison is idiotic but now I think that there is actually something to it, just not in the way the Freakonomists thought.
Think about how healthcare (should) work: you present with symptoms, the doctor diagnoses, and depending on the diagnosis and your personal circumstances she prescribes a treatment. In particular, prescription medication, surgical procedures etc. are typically not something you can just go out and purchase.
Now transfer this to cars: instead of going down to the car dealership and picking up any car “for free”, whenever one wanted, one would go to the car dealership, describe one’s situations and needs, and a trained professional would assign a car that fits the circumstances. Might just lead to people driving safer cars, cars with lower fuel consumption, or maybe even fewer cars, because they don’t need them.