This morning, while using the liquid soap dispenser in the shower, I noticed how frugal and careful I was with it. Just a little is all that was needed. And I made sure not to make a mess with it.
That struck me as odd because it’s the opposite of what I do at the gym. When I’m showering there, I’m not so frugal with the soap. I use a lot of it. It’s free, you know. And while some of it might spill on the floor as I rapidly pump the dispenser, it will probably get washed clear by the shower, and if not, someone else will clean it up anyway.
Cost-Consumption Connection
Who knows what is the right amount of soap? Maybe there’s a range that’s reasonable. When it’s the soap in my home, I don’t seem to need very much. When it’s provided for me, I wouldn’t needlessly pump it on the floor, but I seem to be pretty generous with what I think I ought to use. The small incentive of the cost of soap and the time needed to replace it limits soap consumption. Take away those incentives, and consumption goes up.
Impact of Incentives on Healthcare
Incentives are the forces underlying the physics of human behavior. Any plans to “save” health care in America must recognize the laws of this type of physics. To whatever extent we shield people from the cost of medical care, consumption will increase. If someone else is paying, people will use medical care they wouldn’t otherwise buy for themselves.
This is a recipe for disaster. Government can’t be solely responsible for paying for people’s healthcare. If we tried that, the demand for healthcare services would be overwhelming, and government would have to step in and regulate which health care services we are allowed to use. I’m not sure I’m ready for that.
Raising Cost Consciousness
If we want people to consume health care responsibly, they have to have some skin in the game. People make rational decisions about all sorts of consumption activities. They would be far more discriminating in their healthcare spending if they were responsible for the cost. If people were responsible for the cost of their own care, we’d probably see lower overall medical costs and far less unproductive spending on the last few months of life.
In the last year or so, we’ve seen gas prices skyrocket, and we’ve seen patients cut back on driving because of the higher cost. Higher prices are a very effective way to make people conserve, probably more than any educational program would be.
But we do have to be careful when it comes to medical care cost incentives, because we don’t want a healthcare incentive structure to be so strict that people forego basic medical care such as immunizations, preventive tests and the like.
One can go too far. The most difficult barrier to solving the healthcare insurance dilemma seems to be knowing when we’ve reached the line we shouldn’t cross.
Hmm, I hope I’m using enough soap in the morning.
Steven R. Feldman, M.D., Ph.D.
Chief Medical Editor
This morning, while using the liquid soap dispenser in the shower, I noticed how frugal and careful I was with it. Just a little is all that was needed. And I made sure not to make a mess with it.
That struck me as odd because it’s the opposite of what I do at the gym. When I’m showering there, I’m not so frugal with the soap. I use a lot of it. It’s free, you know. And while some of it might spill on the floor as I rapidly pump the dispenser, it will probably get washed clear by the shower, and if not, someone else will clean it up anyway.
Cost-Consumption Connection
Who knows what is the right amount of soap? Maybe there’s a range that’s reasonable. When it’s the soap in my home, I don’t seem to need very much. When it’s provided for me, I wouldn’t needlessly pump it on the floor, but I seem to be pretty generous with what I think I ought to use. The small incentive of the cost of soap and the time needed to replace it limits soap consumption. Take away those incentives, and consumption goes up.
Impact of Incentives on Healthcare
Incentives are the forces underlying the physics of human behavior. Any plans to “save” health care in America must recognize the laws of this type of physics. To whatever extent we shield people from the cost of medical care, consumption will increase. If someone else is paying, people will use medical care they wouldn’t otherwise buy for themselves.
This is a recipe for disaster. Government can’t be solely responsible for paying for people’s healthcare. If we tried that, the demand for healthcare services would be overwhelming, and government would have to step in and regulate which health care services we are allowed to use. I’m not sure I’m ready for that.
Raising Cost Consciousness
If we want people to consume health care responsibly, they have to have some skin in the game. People make rational decisions about all sorts of consumption activities. They would be far more discriminating in their healthcare spending if they were responsible for the cost. If people were responsible for the cost of their own care, we’d probably see lower overall medical costs and far less unproductive spending on the last few months of life.
In the last year or so, we’ve seen gas prices skyrocket, and we’ve seen patients cut back on driving because of the higher cost. Higher prices are a very effective way to make people conserve, probably more than any educational program would be.
But we do have to be careful when it comes to medical care cost incentives, because we don’t want a healthcare incentive structure to be so strict that people forego basic medical care such as immunizations, preventive tests and the like.
One can go too far. The most difficult barrier to solving the healthcare insurance dilemma seems to be knowing when we’ve reached the line we shouldn’t cross.
Hmm, I hope I’m using enough soap in the morning.
Steven R. Feldman, M.D., Ph.D.
Chief Medical Editor
This morning, while using the liquid soap dispenser in the shower, I noticed how frugal and careful I was with it. Just a little is all that was needed. And I made sure not to make a mess with it.
That struck me as odd because it’s the opposite of what I do at the gym. When I’m showering there, I’m not so frugal with the soap. I use a lot of it. It’s free, you know. And while some of it might spill on the floor as I rapidly pump the dispenser, it will probably get washed clear by the shower, and if not, someone else will clean it up anyway.
Cost-Consumption Connection
Who knows what is the right amount of soap? Maybe there’s a range that’s reasonable. When it’s the soap in my home, I don’t seem to need very much. When it’s provided for me, I wouldn’t needlessly pump it on the floor, but I seem to be pretty generous with what I think I ought to use. The small incentive of the cost of soap and the time needed to replace it limits soap consumption. Take away those incentives, and consumption goes up.
Impact of Incentives on Healthcare
Incentives are the forces underlying the physics of human behavior. Any plans to “save” health care in America must recognize the laws of this type of physics. To whatever extent we shield people from the cost of medical care, consumption will increase. If someone else is paying, people will use medical care they wouldn’t otherwise buy for themselves.
This is a recipe for disaster. Government can’t be solely responsible for paying for people’s healthcare. If we tried that, the demand for healthcare services would be overwhelming, and government would have to step in and regulate which health care services we are allowed to use. I’m not sure I’m ready for that.
Raising Cost Consciousness
If we want people to consume health care responsibly, they have to have some skin in the game. People make rational decisions about all sorts of consumption activities. They would be far more discriminating in their healthcare spending if they were responsible for the cost. If people were responsible for the cost of their own care, we’d probably see lower overall medical costs and far less unproductive spending on the last few months of life.
In the last year or so, we’ve seen gas prices skyrocket, and we’ve seen patients cut back on driving because of the higher cost. Higher prices are a very effective way to make people conserve, probably more than any educational program would be.
But we do have to be careful when it comes to medical care cost incentives, because we don’t want a healthcare incentive structure to be so strict that people forego basic medical care such as immunizations, preventive tests and the like.
One can go too far. The most difficult barrier to solving the healthcare insurance dilemma seems to be knowing when we’ve reached the line we shouldn’t cross.
Hmm, I hope I’m using enough soap in the morning.
Steven R. Feldman, M.D., Ph.D.
Chief Medical Editor
