Healthcare Is Not Exempt from the Law of Diminishing Returns

As I explain in my recent book, Priceless: Curing the Healthcare Crisis, the single greatest mistake in all of health policy is the belief that people should always get healthcare as long as it provides some positive benefit.

Ask yourself this question: Does that principle hold for any other good or service? When you enter a supermarket, do you buy every item that could possibly quench you thirst or quell your hunger? Or do you leave some desirable items on the supermarket shelf? When you walk in a clothing store, do you buy every piece of apparel that could possibly meet your wardrobe needs? When you buy a house, do you buy one large enough to meet every possible need you may have for comfortable shelter? Or do you purchase a house that is more affordable?

Well, if you are unwilling to apply the principle to food, clothing, or shelter, why would you insist on it in healthcare? I believe we could spend our entire national income on healthcare, not by frittering money away, but by spending it on goods and services that even in small ways could improve the odds of better health. Here are some examples of how we could do that:

Notes:

• The Cooper Clinic in Dallas offers an extensive checkup (with a full body scan) for about $4,000. Its clients include high-profile individuals. Yet if everyone in America took advantage of this opportunity, we would increase our nation’s annual healthcare bill by nearly one-half.[1]

• Americans purchase nonprescription drugs about 12 billion times a year, according to a calculation by Simon Rottenberg some time ago, and almost all of these are acts of self-medication. Yet if everyone sought professional advice before making such purchases (as they probably would if there were no time or money cost), we would need twenty-five times the number of primary care physicians we currently have.[2]

• Some 1,100 tests can be done on our genes to determine if we have a predisposition toward one disease or another.[3] In 2010, the charge for a full gene mapping was around $50,000.[4] Yet if every American incurred that expense the total would exceed the country’s entire GDP. The price is currently falling, but at almost any price, the potential for spending is enormous.[5]

Notice that in hypothetically spending all of this money, we have not yet cured a single disease or treated an actual illness. We are simply collecting information. If in the process of searching, we actually found something that warranted treatment, we could spend even more.

Notes:

1. Mike Offit, “The Big Physical: Where to Go, What to Get,” Departures.com, Jan/Feb 2008, http://www.departures.com/articles/the-big-physical-where-to-go-what-to-get.

2. Simon Rottenberg, “Unintended Consequences: The Probable Effects of Mandated Medical Insurance,” Regulation, Cato Institute, undated, http://www.cato.org/pubs/regulation/regv13n1/reg13n1-rottenberg.html.

3. For example, see “ASHG Statement on Direct-to-Consumer Genetic Testing in the United States,” The American­ Journal ­of Human ­Genetics ­81 (2007): 635–637.

4. Krista Conger, “Study first to analyze individual’s genome for risk of dozens of diseases, potential responses to treatment,” Inside­ Stanford­ Medicine,­ Stanford School of Medicine, April 29, 2010, http://med.stanford.edu/ism/2010/april/genome.html.

5. Ron Winslow and Shirley S. Wang, “Soon, $1,000 will Map Your Genes,” Wall Street­ Journal, January 10, 2012.

[Cross-posted at Psychology Today]