Health Care Isn’t ‘Different’

Published October 2, 2014

Frequently we hear that health care is somehow ‘different’ from other goods and services, and therefore normal economic forces either don’t apply or should be suppressed whenever they would normally apply. Probably moreso than any other idea, this is the one that has devastated the U.S. health care system (which is saying something, because there’s no shortage of bad ideas in health care).

Yesterday over at The Upshot, a blog on the New York Times site, was an article demonstrating once again that normal economic forces work just fine in health care:

Given Choice, Parents Pick Cheaper Medical Procedure for Children

It is common wisdom that patients don’t like to think about cost when it comes to health care. But what if the problem is that they’re so rarely even given that information? A recent study in the Annals of Surgery found that parents who were asked to decide which form of surgery their children should undergo and told about the price difference tended to select the cheaper option.

An appendix can be removed in two ways: via open surgery or using a laparoscope, in which the inflamed organ is removed with the aid of a fiber optic scope, with only tiny incisions. The average total cost of the traditional open surgery is about $2,000 less, said Dr. Eric Scaife, of the University of Utah Health Sciences, who helped conduct the study.

Though American surgeons almost always favor the minimally invasive procedure, the results of the two types of procedures are similar in children, studies show. “Cost is really the only difference — there’s no difference in outcome,” Dr. Scaife noted in a telephone interview.

When told that and given the price quotes, nearly two-thirds of the parents selected the cheaper open procedure. Parents given price information were 1.8 times as likely to choose the cheaper option than others. In fact, 31 percent of parents given the information said it had been a primary influence in their decision. And 90 percent said they liked having a choice.

This is why I generally don’t listen to people who start off their discussions of health care with some variant of “health care is different from other goods and services, so we can’t rely on markets…”