What is often called “health insurance” in the United States often isn’t actually health insurance, but a kind of imperfect prepayment plan for medical services.
If “insurance” companies were ever again to become actual insurance companies, seeking profit by assessing and pricing risks of payouts, how much producer and consumer surplus might be available through invasive health monitoring? If insurance companies could more comprehensively and invasively monitor their customers’ risk factors by, for instance, requiring monthly blood tests, or requiring shared access to a 23andMe profile, how much economic surplus might be available?
Surely there’s potential producer surplus, because insurance companies would be able to keep more money if they knew certain kinds of healthy customers would require fewer expenditures. Surely there’s potential consumer surplus, because healthy customers would be rewarded with lower prices for their good health. Pricing could even be dynamic, depending on the particular monitoring technology.
Aside from gains in producer and consumer surplus, there would be an even greater benefit. Prices would serve as a kind of check on biased medical research. Medical academics politicking for research money might continue to make wild and untrue claims about different pathologies, but insurance companies would have skin in the game to evaluate medical research.
As far as I know, privacy regulations and price regulations make this idea completely impossible today.
An obvious but rarely discussed criticism of the health care sector is that hospitals are completely unaesthetic. The aesthetics of hospitals have mostly been neglected, because they don’t seem as important as the expertise of doctors, nurses, and staff, or medical technology.
A while back, Virginia Postrel wrote an article about how better aesthetics in hospitals can make for happier and healthier patients. Patients actually rate their medical care more highly when they stay in well decorated rooms, but hospitals aren’t competitive, and aren’t particularly responsive to trends in consumer demand.
There seems to be obvious demand for more comfortable environments in hospitals. People want comfort in hotel rooms, so why wouldn’t they want comfort when they’re most vulnerable? Perhaps if medical institutions were freer to experiment, they would compete on more dimensions, including aesthetics.