Waste And Reward In Health Care

Is it a contradiction to think that people both underestimate the value of health care and also that the health care system is full of waste? Very well, I contradict myself. Because I agree with Kevin Drum:

I think a lot of people seriously underrate the value of modern improvements in healthcare. It’s not just vaccines, antibiotics, sterilization and anesthesia. Hip replacements really, truly improve your life quality, far more than a better car does. Ditto for antidepressants, blood pressure meds, cancer treatments, arthritis medication, and much more.

I think that’s spot on. The consumer surplus involved in successful medical treatments is gigantic. Indeed, I would say that’s probably a good start at an explanation for why there’s so much waste. But from a policy point of view this is why I often find myself moored between the impulse to “control costs” and the impulse to “expand access.” What I really want to do is promote good health and there are an awful lot of things we could do to do that at very low cost. That’s things like getting surgeons to wash their hands properly and making sure we prioritize treating chronic pain over fighting a “war on drugs.” In general, the most valuable treatments often entail very low marginal costs (though there may be substantial up-front research costs) and properly organized systems are able to deliver them both widely and cheaply.