The more I think of the issue of classic economic "demand" in health care the more I see that economists just do not get it. Demand in health care is for the most part driven by disease, not by some utility maximization. If there were no sick people only hypochondriacs would be in the market, yes a somewhat large market, but there would be no demand. Health care is not like an auto, you really don't need a car, just look at the people in New York City. Auto companies advertise to get people to buy cars.
This advertising thing is the whole essence of Galbraith and his Affluent Society, namely the big evil companies advertise and we dumb consumer respond like Pavlovian dogs. Galbraith is mostly wrong, except for teenage girls who seem to follow the trends like lemmings.
Now back to health care demand. If one agrees that it is relatively insensitive to advertising, for example one would have to admit that we do not get in line for a colonoscopy or a aortic valve replacement, or even a lung transplant, health care is demand drive by other non-Galbraithian factors.
Thus trying to get marginal propensities to consume health care is not only fruitless but just plain dumb. We know what drives health care demand, it is disease. The more disease the more demand. Then what drive costs, well two things; the procedures to treat the disease and the cost per procedure. Thus fifty years ago there was the same relative amount of breast cancer but its costs were low. We did not do a mammography, we did not do biopsies, we just did a plain and simple radical mastectomy after a palpable tumor was detected. Survival was low and we used no chemotherapy or radiation therapy and we did no testing for BRACA and the like. We just hacked away and sent the patient home. Cheap and efficient. Inhumane in today's terms. The acute leukemias of childhood were death warrants as was Hodgkin's Disease.
Thus trying to look at the demand in the classic economics sense is in itself nonsense. There are many demand models which one can develop for business which are bottom up models. For example we know how many broadband users there are, we know the data rate demanded by each, then we can postulate a total demand, we can "guess" at some market share and that would represent our revenue base potential. This is done a millions times a day on spreadsheets worldwide. But never by an economist. They get their demand curves from some providential utility function, descending from the almighty. Again balderdash!
Thus the more one considers using classic economics to analyze health care the more one sees its faults and failures. One should use standard business development models working for the facts, from the bottom up, from reality and from things we can do something about!
This advertising thing is the whole essence of Galbraith and his Affluent Society, namely the big evil companies advertise and we dumb consumer respond like Pavlovian dogs. Galbraith is mostly wrong, except for teenage girls who seem to follow the trends like lemmings.
Now back to health care demand. If one agrees that it is relatively insensitive to advertising, for example one would have to admit that we do not get in line for a colonoscopy or a aortic valve replacement, or even a lung transplant, health care is demand drive by other non-Galbraithian factors.
Thus trying to get marginal propensities to consume health care is not only fruitless but just plain dumb. We know what drives health care demand, it is disease. The more disease the more demand. Then what drive costs, well two things; the procedures to treat the disease and the cost per procedure. Thus fifty years ago there was the same relative amount of breast cancer but its costs were low. We did not do a mammography, we did not do biopsies, we just did a plain and simple radical mastectomy after a palpable tumor was detected. Survival was low and we used no chemotherapy or radiation therapy and we did no testing for BRACA and the like. We just hacked away and sent the patient home. Cheap and efficient. Inhumane in today's terms. The acute leukemias of childhood were death warrants as was Hodgkin's Disease.
Thus trying to look at the demand in the classic economics sense is in itself nonsense. There are many demand models which one can develop for business which are bottom up models. For example we know how many broadband users there are, we know the data rate demanded by each, then we can postulate a total demand, we can "guess" at some market share and that would represent our revenue base potential. This is done a millions times a day on spreadsheets worldwide. But never by an economist. They get their demand curves from some providential utility function, descending from the almighty. Again balderdash!
Thus the more one considers using classic economics to analyze health care the more one sees its faults and failures. One should use standard business development models working for the facts, from the bottom up, from reality and from things we can do something about!
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