Healthcare and the Poor: Why Money Works Better than Waiting

What I call health policy orthodoxy is committed to two propositions: (1) The really important health issue for poor people is access to care, and (2) to ensure access, waiting for care is always better than paying for care. In other words, if you have to ration scarce medical resources somehow, rationing by waiting is always better than rationing by price.

(Let me say parenthetically that the orthodox view is at least plausible. After all, poor people have the same amount of time you and I have, but a lot less money. Also, because their wages are lower than other people’s, the opportunity cost of their time is lower. So if we all have to pay for care with time and not with money, the advantage should go to the poor. This view would be plausible, that is, so long as you ignore tons of data showing that whenever the poor and the non-poor compete for resources in almost any non-price rationing system, the poor always lose out.)

The orthodox view underlies Medicaid’s policy of allowing patients to wait for hours for care in hospital emergency rooms and in community health centers, while denying them the opportunity to obtain less costly care at a walk-in clinic with very little wait at all. The easiest, cheapest way to expand access to care for millions of low-income families is to allow them to do something they cannot now do: add money out of pocket to Medicaid’s fees and pay market prices for care at walk-in clinics, doc-in-the-boxes, surgical centers, and other commercial outlets. Yet, in conventional health policy circles, this idea is considered heresy.

The orthodox view lies behind the obsession with making everyone pay higher premiums so that contraceptive services and a whole long list of screenings and preventive care can be made available with no co-payment or deductible. Yet, this practice will surely encourage overuse and waste and, in the process, likely raise the time prices of these same services.

The orthodox view lies at the core of the hostility toward Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), and any other kind of account that allows money to be exchanged for medical services. Yet, it is precisely these kinds of accounts that empower low-income families in the medical marketplace, just as food stamps empower them in any grocery store they choose to patronize.

The orthodox view is the reason so many backers of Obamacare think it will expand access to care for millions of people, even though there will be no increase in the supply of doctors. Because they completely ignore the almost certain increase in the time price of care, these enthusiasts have completely missed the possibility that the act may actually decrease access to care for the most vulnerable populations.[1]

The orthodox view is the reason there is so little academic interest in measuring the time price of care and why so much animosity is directed at those who do measure such things. It explains why MIT professor Jonathan Gruber can write a paper on Massachusetts health reform and never once mention that the wait to see a new doctor in Boston is more than two months.[2]

This neglect would matter little if not for one thing: the evidence, as I explain in my book Priceless: Curing the Healthcare Crisis, suggests that the orthodox view is totally wrong.

Notes:

1. John C. Goodman, “Emergency Room Visits Likely to Increase under ObamaCare,” National Center for Policy Analysis, Brief Analysis No. 709, June 18, 2010, http://www.ncpa.org/pdfs/ba709.pdf.

2. Jonathan Gruber, “The Impacts of the Affordable Care Act: How Reasonable Are the Projections?” National Bureau of Economic Research, NBER Working Paper 17168, June 2011, http://www.nber.org/papers/w17168.pdf.

[Cross-posted at Psychology Today]