Medical Services. Over on Sean's blog, he raises the question of the high cost of medical services and related issues, and he invited me to comment on a point he made about lawyers. He set me to thinking again about the Canadian/British systems, and recalled to my mind a story.

A friend of ours is from England and her parents, middle aged, still live there. Her mother developed a heart problem and needs an operation to replace a valve. Her mortality risk is significantly higher now than it will be after the operation. She must wait several months, because of the sort of rationing system that the British approach imposes. My friend's parents are a hard working, middle class couple. If they lived in the US, they would have medical insurance. I doubt a cardiologist here would run the risk of delay. There would be no reason for him to delay the procedure, of course, because the needed medical resources are immediately available here, provided the patient lives long enough to qualify for medicare or is in the private insurance system, or (sometimes) finds some charitable support.

My friend's parents wanted to come to the US to visit recently. But the scheduled heart procedure was (and continues to be) months away. If they left England and came to the US, and, while here, she had a problem, they would have to pay for treatment here out of their own pocket. The British health system would not pay for American treatment. Getting back to England for the operation, now an emergency, could be dicey. They could buy health insurance just for the trip, but the cost would be quite expensive.

They decided to come anyway, without buying a special insurance policy. Everything turned out fine. They are back in England after a nice trip, but still waiting. They assumed the risk that she would have problems here. The risk did not materialize.

But economists would attach a value to the risk she assumed. They paid something, in a way, just as their countrymen, in a way, pay for not being out-of-pocket for their medical services. They paid by assuming the risk of delay and the additional risk of moving for a few weeks completely out of the system. How do you get to the value of that payment?

If you had a large enough group of English parents like my friend's parents who made the trip, at least one mother would have a heart attack while here. She might have died or, at least, she would have had to pay a lot of money for treatment and emergency transportation back to England. The "cost" of assuming the risk that my friend's parents assumed is the value of the hypothetical life (or the expenses, if the hypothetical, stricken mother lived) divided by the number of middle-aged English couples in our group.

That same approach can be applied to the mortality risk that my friend's parents have imposed upon them by the British system as they wait around for the operation. There are people who die over there waiting for their operation, people who would have survived had the operation been as prompt as it would be here. On the other hand, people die here because they are uninsured, have no money and cannot for one reason or another (sometimes ignorance sometimes not) get into the charitable system that will sometimes answer. Both systems have costs, to be sure. I think we tend to overlook the cost of the British system because it is so subtle.

There are other problems with the British system that I will not address in this post, but I thought the story illustrates one of them.

Edited at 10:20am by Macon to link to germane post of Sean's.