ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
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My thought experiment would be to offer chronically ill elderly the choice of some vey large amount of money if they should to let the illness run its course.
I published a related proposal in 1994: Buy Health Not Health Care.
The knowledge asymmetry here I think makes the hole thing impractical.
For example, the Dr. might know that the median survival for the procedure is rather low, say 3 months, but, because when someone does well they do real well, the average might be 2 years, even though it is only 10% of the patients that achieve it. (Think cancer treatment.)
So the Dr. might say, the average person survives 2 years or more, and of the people that survive for 2 years or more, the recurrence rate is nearly zero. You'd think that sounded great, and be ready to pay a lot for it (50/50 chance of cure! you'd think). Then, the Dr. might go on to talk you into a 3 month payoff (meaning if you survive for 3 months, you pay). For example, he might say, "I can't possibly wait 2 years to get paid for a procedure that costs $200,000 - I just got out of med school, and my loans are due now." And the patient doesn't have the background to read and understand the medical and statistical details, and signs up.
So he thinks he's paying for the average outcome of 2 years or more survival and low recurrence rates, but in reality is going to be paying for median outcome, which is 3 months and then dead.
And of course we could write things into the contract about how the doctor has to refund if the patient is dead within two years, etc, but good luck with that. Consumers get their clocks cleaned with stuff simpler than this all the time. (And who's to say Dr. is still going to have the money then anyway.)
A successful Dr. is going to be the best business man, rather than the best practitioner.
Also, I have to say that negotiating on the spot for life saving treatments is pretty unrealistic in its own right. Most people can't negotiate successfully for a car, forget about their lives.