Heterogeneity and Health Care

11 August 2009 at 7:53 am 10 comments

| Peter Klein |

Further to Russ’s post: One of the most frustrating aspects of the discussion surrounding health-care reform is the tendency of politicians, activists, and even a few economists to talk about “health care” as if it’s a homogeneous blob, or an intangible thing like “love” or “happiness.” Of course, what we produce and consume, what we exchange on markets, is not “health care” but specific, discrete health-care goods and services (procedures, medications, insurance policies, etc.). If you never go to the doctor and consume only one aspirin per year, do you have “health care”? If not, what specific bundle of goods and services constitutes a unit of “health care”?

Once we realize we are really talking about discrete, marginal units of particular goods and services the very notion of “universal access to health care” becomes problematic. What exactly is it that people have a universal right to? It’s analogous to debates about the environment.  One can have a sort of philosophical or meta-economic commitment to “the environment,” and its protection (hoo-boy), but this means very little in terms of specific trade-offs at the margin. Is it better to have one more house or airport runway or corn field, or one more patch of meadow or forest? Being an “environmentalist” doesn’t answer that question. You know the old story: everybody values “safety,” but that doesn’t mean you never leave your house or, when you do, drive to work in a Sherman tank. You willingly sacrifice some amount of safety in exchange for units of other scarce and valuable goods (like access to the world outside your house, time spent traveling, money). Each of us evaluates this trade-off differently. Likewise, the marginal valuations of specific health-care goods and services, relative to other consumption and investment goods, cash balances, etc. varies from individual to individual. There’s no such thing as “health care.” As always, heterogeneity matters.

Entry filed under: - Klein -, Institutions, Myths and Realities, Public Policy / Political Economy.

Will Mitchell’s Comments on Receiving the BPS Irwin Award Coasean Bargaining Around Wrigley Field

10 Comments Add your own

  • 1. Klein: “what is health care” ? « PublicOrgTheory  |  11 August 2009 at 11:01 am

    […] Klein unpacks the least-discussed given of the health care debate: Once we realize we are really talking about discrete, marginal units of particular goods and […]

  • 2. russcoff  |  11 August 2009 at 2:32 pm

    So glad to finally see your brilliant response ;-) Let me just echo raging agreement. We must unpack what we mean by healthcare in order to even begin to separate what types of health coverage would be considered a “right” from levels of coverage that are thought to be a “luxury.”

    It is being sold to the public as though everyone will have access to every procedure, drug, or specialist that they want at the taxpayers’ expense. Of course, that is impossible…

  • 3. Brad  |  12 August 2009 at 12:58 am

    Many times the discussion is about “community health care,” whatever that is, and not about health care for the individual at all.

  • 4. Economics and Health Care « Market Process Blog  |  14 August 2009 at 9:28 am

    […] be a shortage of health care providers. I thought Peter Klein had a good commentary this week about “Heterogeneity and Health Care.” These are areas and aspects of the issue that need to be discussed as this debate goes […]

  • 5. John David  |  14 August 2009 at 9:23 pm

    This is a terrific analysis, I hadn’t thought about it in this angle. I brought it up to a few socialists today, and their self-esteem fell thru the basement.

  • 6. Huh?  |  28 November 2010 at 9:35 am

    Looks like section 1302 renders this musing moot; you really shouldn’t be referring back to this post in current discussions of healthcare — it is no longer relevant.

  • 7. Peter Klein  |  28 November 2010 at 10:17 am

    You’re joking, right? “Emergency services.” (Which ones?) “Hospitalization.” (How long? What procedures? By whom?) “Prescription drugs.” (Any and all?) “Preventive and wellness services and chronic disease management.” (LMAO.) And you think these things should be defined and mandated at the Federal level? Hahahahahaha.

    Actually, thanks for encouraging me to study the text of the bill more closely. It’s much worse than I thought.

  • 8. Huh?  |  28 November 2010 at 10:52 am

    These terms and categories are quite familiar to anyone who has had to deal with medical insurance for actual medical needs, something you should consider yourself lucky you obviously have not, at least to the extent of actually having to read your benefits information.

    While they obviously don’t go into extreme specifics, which is rightfully relegated to the department to administer*, the categories delineated do in fact render your point at the very least mortally diminished. You claim healthcare was considered as a nebulous nonspecific concept; this is clearly not the case and one can reference the level of care the CBO estimates are based on.

    I don’t get it though, you complain the law isn’t specific enough yet decry definition and mandating via the law … this smacks of intellectual dishonesty. You seem to be making an argument you have no intention of honestly considering.

    * To measure up to typical current plans, a pretty explicit point used in the reform debate.

  • 9. Peter Klein  |  28 November 2010 at 11:21 am

    No intellectual dishonesty here, just a conviction that a national health care system is too complex to be designed and implemented by a small coterie of bureaucrats and lobbyists.

  • 10. Huh?  |  28 November 2010 at 11:56 am

    There are myriad national healthcare systems already designed and implemented, both in the US and abroad, working to various degrees of success but almost all beating the US private system. But of course you know this.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Authors

Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts

Guests

Former Guests | posts

Networking

Recent Posts

Categories

Feeds

Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).