Unbiased Analysis of Today's Healthcare Issues

The Cost of Inconvenience and Discomfort

Written By: Jason Shafrin - Nov• 16•06

In his book Crisis of Abundance: Rethinking how we pay for health care, Arnold Kling gives an example of how economists view non-monetary costs in medical care setting.

“Most people do not like to go to a doctor, undergo medical procedures, or stay in a hospital.  However, economists do not see this as offsetting the tendency for people to overconsume medical services that are paid for by third parties, such as insurers, employers, or government.

To an economist, if medical services are time-consuming, inconvenient, and uncomfortable to patients, then those are real costs, and they should be factored into the decision of whether the service is worthwhile.  Those costs, which might collectively be termed nonmonetary costs, should not be ignored.  They belong in the equation that determines whether or not a service ought to be performed.

Suppose that the fee for a procedure is $500, and nonmonetary costs amount to the equivalent of another $1000.  If the health benefits from the service are only $750, then the servie is a bad deal for the patient.  The fact that the health benefits exceed the fee is interesting, but it does not justify having the patient suffer through the service.”

Later in this section of his book, Kling wisely states that the costs of missing work in order to receive medical services should also be included in the cost of care.  For instance, would you rather have a procedure which cost $1000 but caused you to miss 3 days of work or a procedure which costs $1050, but did not require an overnight stay or any absence from work.  While the former has a cheaper monetary cost, it is likely that most people would consider the latter surgery a better deal.

You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

No Comments

  1. Tom Leith says:

    > While the former has a cheaper monetary cost, it is likely
    > that most people would consider the latter surgery a better deal.

    What if there is no cost (to the patient) for missing work? What then? Still a better deal? For whom?

    It depends on their expectations about recovery, and on whether or not they lose either salary or “vacation days” during the recovery. I have read (sorry, I don’t remember where) about self-insured companies offering to pay more for employees to have minimally-invasive surgeries because they could be back to work in several days versus six weeks.

    The employees wanted the more invasive, lower fee surgery because they’d have six (paid) weeks off work during their recovery instead of (say) five days. They expected to be feeling “pretty good” in a week or two, evidently discounted the increased risks (infection, etc), and didn’t care so much about scarring and the rest. They’d have a quiet, four week “vacation” at home, presumably with an attentive family.

    So one can say there are “non-health benefits” to consider also with respect to an episode of medical intervention.