That is, we can't stand to be thought of as the sort of uncaring heel who wouldn't try everything possible. But we are not very concerned about private signals about the quality of medical care, since our unconscious goal is mainly the appearance of effort. We do respond much more, however, to publicly visible quality signals that our intended audience would likely see as well. The marginal health-value of medicine may therefore be low, both because we spend more than is useful and because we have little incentive to privately monitor quality. [...]
Once nations became thought of as tribes, citizens and politicians supported national health insurance in order to show that they care about sick citizens of their nation, and to show other citizens that the nation is loyal to them. Thus the primary function of national health insurance may be to show social solidarity, rather than to respond to any failure in the market for health care. And since the world is not (yet) thought of as a tribe, there is little support for international health insurance.
January 08, 2009
Robin Hanson on health care: