What Matters in Health Care: Money, or Time?

John Goodman points to a narrow study with some broadly suggestive results:


At first glance, the study appears to focus on a rather narrow set of issues. Although most states try to limit Medicaid expenses by restricting patients to a one-month supply of drugs, South Carolina for a period of time allowed patients to have a three-month supply. Then the state reduced the allowable one-stop supply from 100 days of medication to 34 days and at the same raised the copayment on some drugs from $1 to $3. Think of the first change as raising the time price of care (the number of required pharmacy visits tripled) and the second as raising the money price of care (which also tripled).

The result: A tripling of the time price of care led to a much greater reduction in needed drugs obtained by chronically ill patients than a tripling of the money price, all other things remaining equal.

This study pertained to certain drugs and certain medical conditions. But suppose the findings are more general. Suppose that for most poor people and most health care, time is a bigger deterrent than money. What then?

This is actually not inconsistent with other findings.  For example, every time we get a health care expansion, people predict large falls in emergency room usage.  Supposedly, we'll save huge sums by shifting people from expensive ER visits to cheap primary care sessions.  Unfortunately, the savings have been elusive; in Massachusetts, the largest such experiment we have to date, ER visits actually rose.

Why?  ER's are much more convenient.  The working poor usually have much less flexibility in their schedules than the middle class.  They work shifts, they may need a doctor's note to miss work, and if they don't work, they often don't get paid.

Note that this implies a totally different solution to the problem of "non-emergent ER visits": urgent care or "Minute Clinics" that work odd hours.  Otherwise, you just cram even more people into the same ER space*.  It is easy to come up with "Just So" stories in health care. The reforms always sound wonderful, and the benefits always unfold in a beautifully logical way.  Unfortunately, people, and reality, are rarely as predictable as the models.

* Yes, I understand that people wanted to do HCR for lots of other reasons.  But I am extending them the charity of believing that they actually care about solving this problem, rather than simply cynically using it as a talking point to support a program that actually makes ER overcrowding worse.  
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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