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September 21, 2004

Selling Your Spot in Line-- Canadian Knee Operations

Alex Tabarrok at MR has a post I'll use in my class tomorrow, since we are discussing property rights and the problem of defining "property":

The Canadian health care system is falling apart. Bill Binfet needs both knees replaced. He waited 4 months to get an appointment with a specialist who then put him 290th on a waiting list. It's been a year and still no surgery despite the fact that his arthritis is now so bad he has bone grinding on bone.

In desperation, Binfet has placed an ad in the local paper offering to buy someone else's place on the waiting list . The provincial health care minister tut-tuts and says "it would be unethical for a doctor to trade places on a surgical wait list for an exchange of money."...

...Of course, this is a clear improvement. The only problem I can see with allowing sale of queue spots is that people would have an inducement to get in line so as to sell their place. In this example, though, the primary care doctor acts as gatekeeper, and unless he gets kickbacks, he wouldn't let patients get in line if they didn't really need an operation.

We were just discussing a similar problem after class in G202. Apparently, Singapore would like to make rich people pay for medical care, but not poor people. It also, however, wants to avoid embarassing poor people by making them admit they are poor (don't ask if this reasonable; take it as a given of the policy making problem). This is a price discrimination problem, and the problem is to make people self-select between the high price and the low price. One solution is to use queues. People can wait in line and get the low price, or get immediate service at a high price. Another would be aesthetics-- people could go to shabby-looking, smelly (though healthful) clinics for free care, or beautiful clinics and pay a higher price.

Posted by erasmuse at September 21, 2004 10:03 AM

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