Remodeling health care

Abstract

Standard models of patient demand for health care and health care suppliers' response to that demand imply that some manner of manipulation of the prices faced by patients must be chief among the mechanisms of systemic cost control. However convenient econometrically, these standard models cannot reflect the complexity of patient demand behavior, and they say little about the predominant causes of health-care cost escalation. This paper describes a richer Jevonian political-economic model that sensibly portrays patient demand and physician and corporate supply behaviors and suggests a range of cost-controlling and care-enhancing compensatory steps, some professional, some societal. This new model implies that reformers in the United States could take respectful advantage of the fundamentally self-regulating nature of patient demand for health care by shifting their attention away from its further discouragement and toward the modulation of other factors.