Purchasers of Healthcare are Not Consumers

link here to article

The Ryan plan to privatize Medicare is one variation on a theme from the Bush era. It was called consumer based healthcare. The idea was that if people had to pay for healthcare they would consume less. That is true, and that is what economists call the rationing function of the price system. Krugman attacks the idea of the sick patient as a consumer as nonsense. It is nonsense for a variety of reasons, but he hits the nail on the head for one of the nonsensical assumptions. The patient is not a consumer who purchases healthcare by searching around for the lowest price. The patient depends upon the judgement of medical professionals because they have more knowledge and have earned the patient's trust. Moreover, doctors have to make decisions about what to do for patients when they are unconscious and unable to make a purchase decision.

Krugman did not touch on another issue, but it is a critical distinction between healthcare and the purchase of commodities. If a consumer complained that he was unable to purchase a luxury car because it was unaffordable, most of us would not take up a collection to assist the purchase of the luxury car. On the other hand if someone could not afford an expensive life saving operation, we would expect that some way would be found to fund the operation. That is the major reason why healthcare is an entitlement in most of the industrial countries in the world. The US is an exception, and one of the reasons is that people like Paul Ryan, who has excellent coverage through his government subsidized insurance, views healthcare as a luxury car within a market system that rations access by the price system.