Be that as it may, I think Hanson's observation that "humans long ago evolved a tendency to use medicine to 'show that we care,' rather than just to get healthy" partially explains why things like the UK's National Health Service generate so much bang for the buck. In effect, a highly centralized state run health care system is able to put a cap on how much demonstrative caring can be done through the health care system. Nobody's going to say to his or her spouse, "well, sure we could afford the procedure, but it doesn't really stand up to cost-benefit analysis compared to spending the money on organic produce for the kids" but if bureaucrats stand in your way well, then, that's hardly your fault.
That doesn't actually strike me as a very good model of how American government services work. It is, to be sure, how they used to work; American public goods in the 1950's look a lot like British ones, except nicer, because we were richer. People largely accepted what they got at the pleasure of the government.
But after the legal revolution of the 1970's, American public services look, well, like American ones: unable to deny anything to anyone. What would actually happen in the case Matt describes is that the patient would form an activist group, sue, get the treatment, and use the government settlement to buy the kids organic fruit and a trip to Disneyland.
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