Are Doctors More Like Moms Or Mechanics?

The health care system wastes a lot of money. Economists say one reason is that it is not set up like a traditional market: It's full of peculiarities.

For instance, what role, in economic terms, does the doctor play?

The Problem Of Doctors

Economically speaking, doctors are like moms. They have our best interests at heart, take care of us, deliver our babies and check our ears when we're little. Mom listens, cares and prescribes. Mothers, however, do not get paid. Doctors do.

In fact, most doctors get paid for every single sale, every surgery and every procedure. So, another proposal: The doctor is a salesman just like the guy who sells you sunglasses on the street.

This is what makes doctors such strange economic actors. In fact, the Nobel Prize-winning economist Kenneth Arrow wrote about how crazy this was in a famous 1963 paper. Doctors have a financial incentive to act as salesmen. But the Hippocratic Oath reminds them to act more like your mom.

The Auto Mechanic Analogy

When asked what profession, economically speaking, the doctor resembles most, many economists say auto mechanic — because of a big issue you don't get with the mom or the street salesman: the information problem.

To illustrate, try this example. "Car doctor" Ari Cohen, who runs ABC Erikson, says that recently a customer came in with a Buick. The customer says that every time he steps on the brakes, the entire steering wheel shakes. Cohen says, no problem, it's a $320 fix.

But then, Cohen says, the mechanics examine the car more closely and discover problems with the wheel bearings and axles. It could cost another $1,000.

Everyone has been in this situation. You take the car in, and though Cohen is a good guy, you don't really know. Customers have an information problem.

Strange Situations

In health care, patients can't always judge whether they need surgery. They don't know what procedures are necessary and which aren't. Doctors don't always know what drugs or treatments work best.

This is why when proposals are made on how to fix health care, there is also talk about changing how doctors get paid, or calls for more research so there aren't these information problems. The doctor is in a strange spot. Unfortunately, they are not the only strange thing: Customers are strange, too.

The customer with the Buick may decide his car is not worth fixing. But if you take your grandma into the doctor, you will pay whatever it takes because you love her — and because you are insured.

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