Is Free Preventive Care The Answer?

In response to my earlier post of a couple of thoughts on healthcare, a reader called “bunkerbuster” throws a few interesting questions my way:

What’s your view on demand for health care?

The market model would have it increase to infinity if it becomes zero cost to the consumer.

Generally, that is the rule, but I think “bunkerbuster” is right to be skeptical for three reasons. First of all, the market model is a model, and nobody seriously expects models to work at the extremes. Having an infinity turn up in the middle of your model is usually a sign that you’ve gone too far.

Second, healthcare has non-financial costs—such as the time it takes from a busy day and the fact that it’s often very uncomfortable—that prevent the true cost to the consumer from ever dropping away to zero.

Third, like everything else, healthcare has diminishing returns. The most important bits of medical care are extremely important to your health, but additional care is less and less valuable. These returns likely diminish all the way to zero—or at least below the costs mentioned in the previous item. Once you’ve fixed everything that’s wrong with you, why would you buy more healthcare, even if it’s free?

(Of course, health problems can be defined down. Back when most children never made it to adulthood, nobody worried about allergies. Nowadays, people take pills to get rid of toenail fungus, and some plastic surgeons have lobbied to have small breasts classified as a disorder.)

But in reality, the non-union pipefitter who can now afford to have regular check ups may well have significantly lower long-term demand for medical services.

So here’s a point to ponder: If preventive care reduces long-term costs, shouldn’t we expect uninsured people to consume a lot of preventive care, since they are more directly exposed to the costs? That’s apparently not what happens, however, because our healthcare system already includes a distortion in healthcare pricing, as illustrated by the last part of the comment:

And there’s always the classic emergency room scenario in which demand for those ER resources balloons because the poor have nowhere else to go and because minor problems go untreated until they are emergencies…

This happens because hospital emergency rooms aren’t allowed to turn people away, even if they can’t pay. For poor people, this artificially lowers the price of emergency care with respect to non-emergency care, which distorts the healthcare decision-making process. From the indigent patient’s point of view, emergency care is cheaper than non-emergency care. And when something has a low price, people buy more of it.

Since non-emergency situations can progress into emergencies if untreated, this creates some perverse financial incentives for poor people to avoid preventive medical care. But what are the alternatives? Refusing emergency care to people who can’t pay? Paying for every doctor’s visit, no matter how unnecessary? There are no easy answers.

(And, just to mix things up a bit, some statistical evidence suggests that the benefits of preventive care aren’t as clear-cut as we might suppose.)