Hello healthcare! That Verdon Guy [you know what to do] put up that nice little post as a dissection of an Atrios post on healthcare. Go read it. What that post brings to mind, as did this one (whose original intention is a criticism of Austrianism, but it got me thinking) from earlier in the week, is the question of whether or not healthcare is a public good.

Meaning, really, does healthcare have the following two properties:

1) non-excludability [people cannot be stopped from consuming the good]
2) non-rival consumption [one person consuming the good doesn’t reduce the amount of the good available for others to consume]

In the United States, and the world more broadly, it is pretty much cannon that people cannot be stopped from consuming healthcare. In the US, hospitals are bound to treat any patient who comes through the door, regardless of ability to pay. Now, we can debate the relative merits of that policy at a later date, but for now we’re going to have to take it as given. So, clearly, healthcare meets the first criterion.

Non-rival consumption is a bit trickier in my view. If we assume there are both a finite number of doctors and a finite number of hours those doctors can work in a given period (say a week) then it seems fairly obvious that there is rivalry in consumption of healthcare. That is, if I’m taking nine hours to have my knee reconstructed, that’s nine fewer hours available for you to have a hip replacement [yes, I am assuming homogeneity of doctors and hours, don’t get on me about that, I know]. There are also finitely many medical devices and such. Just by failing that criterion, I’d say that healthcare certainly isn’t a wholly public good.

There are, of course, arguments regarding positive externalities etc. which might be used to make a socialization case, but if healthcare is not a public good, the argument for complete socialization fails because socialization would enter us into monopsony from oligopoly and even neo-classical economics predicts that oligopoly outcomes are better than monopsonistic outcomes. The question becomes, then, how is a government monopoly better than a private industry monopoly in the market for a non-public good?

This entry was posted on Tuesday, June 1st, 2004 at 15:32 by Timothy and is filed under Things Only Tim Cares About. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.