Malcolm Gladwell wrote an article wrote an article for The New Yorker in August, 2005 entitled The Moral Hazard Myth. Actually, Gladwell mixed up two economic concepts. One concept is moral hazard (mentioned previously). The other concept is the law of demand.
The law of demand states that if you reduce the price of a good or service, then people consume more of it. Because Universal Health Care coverage reduces the price that people pay (at the time of care) for routine health care, the argument goes, the law of demand will increase their use of the commodity.
As applied to health care, the law of demand says that by making the consumer pay for all or more of the costs of health care, patients will use health care more efficiently because they will go to the doctor only when needed. The idea is to encourage people to use less access to health care because – according to the argument – not requiring the consumer to bear the cost of their health care will result in overconsumption.
The argument put forward assumes that you will always know when you need to see the doctor. There are many medical problems that can only be treated or cured before symptoms manifest themselves – before the consumer even knows that they need treatment. Having to pay for routine but necessary medical care for a low to middle class consumer may mean having to cut back on other essential needs – like rent, for instance. It assumes that receiving less medical care = more efficient use of resources – but, as the saying goes, “an ounce of prevention is worth a pound of cure.” Combine this with the fact that many illnesses are only treatable before symptoms arise, therefore, only utilizing access to care when a problem is known is spending a pound of money when an ounce of preventive care would have been the more efficient use of national resources.
The main reason health care is not well-suited to a free-market capitalist system can be understood by appealing to the logic of an old Ben Franklin proverb: “An ounce of prevention is worth a pound of cure.” A pound of cure will always be more profitable than an ounce of prevention. Right now American health care is based on a pound of cure.
Small, low-impact personal injury lawsuits
A lot of small-impact personal injury lawsuits could end if we instituted national health care. In my practice, I have seen people file lawsuits over very small injuries that amounted to $1000-2000 in medical costs. Now it is true that there is a cottage industry that files lawsuits because fraud can be profitable, but it amounts to a very small amount of all lawsuits. Creating a national health care system would take a lot of the profit out of the system because personal injury awards would not be tied to the amount of medical bills. The only award would be for pain and suffering.
Another problem is that there are people that will claim they got hurt in an auto accident so that they can see a new doctor and get pain medication. Creation of a national health care system would allow us to more closely track patients that are overusing pain medication and prevent their abuse.