Tuesday, October 30, 2007

Is cleaning out ear wax an example of overconsumption of Medical Services?

When we were in Kuala Lumpur this past summer, K1 fell sick. We had thought it was a virus and after 3 days we decided to bring her to a local doctor who confirmed that it was indeed a virus. We mentioned that back in the states, the doctors usually order a complete blood count (CBC) at her annual checkup. The doctor was surprised and seemed to indicate that this was not normal practice in Malaysia. Is CBC at every annual checkup an example of overconsumption of medical services that drives up the cost of health care in the US? I haven't made up my mind. It's not that expensive and it's mostly covered by insurance. Our bill shows $49 before insurance.

Another related story is the following: My cousin who lives in Singapore has a 5 year old (I think) but for almost 2 years was incredibly worried because he was not talking. They went to see a specialist to try to figure out what was wrong. Eventually, hard as it was for me to believe, they found out that he could not hear and hence could not repeat anything back because his ears were full of wax. I was amazed to hear this because here in the US, during the annual checkups the pediatrician always looks in the kids ears to make sure they're clear. (K1 has a problem with impacted cerumen (which I'm guessing is ear wax) and always needs it cleaned out.) Having a doctor look into her ears doesn't cost us anything -- well, at least it's not itemized in the bill but is probably included as part of the checkup. Is checking ears an example of overconsumption of medical care? Here I would disagree.

It's dangerous to generalize about the quality of health care based on these incidents but it makes me wonder. I'm also not too partial to some of arguments of overconsumption because of generous insurance plans, for instance, noted here by Prof. Mankiw.. If there were overconsumption is it driven by the patient, the doctor or both? And if there were overconsumption but is still beneficial overall, why would insurance companies who are profit maximizing entities continue to insure that part of the medical care? I would expect that in equilibrium, if the overall costs of coverage are higher than the benefits then insurance companies would refuse coverage (as they already do for certain pre-existing conditions).

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