The Excessive Demand for Medical Care
You can't take care of everyone. The demand for medical care is infinite.
-- Enoch Powell, U.K. Minister of Health Affairs
Having discussed the amazing ability of physicians to generate additional demand, to the point that even greatly overstaffed specialties have very high average earnings, we now turn to consumer demand for medical care. We seek to understand, first, how consumers can be persuaded to increase their demands at the will of the supplier and, second, how excessive demand is independent of the influence of the health care industry.
It is difficult to distinguish between the excessive demands of consumers for medical services and the ability of an oversupply of M.D.s to generate additional demand for their services. 1 But there are limits to supply-induced demand, and we foresee M.D.s joining lawyers as disaster-mongers. On the one hand, without autonomous excess demand, some of the oversupply cannot occur. On the other hand, without an excess supply, excessive demands cannot be met. They are interdependent. There is some implicit collusion. The decision to see a physician in the first place is entirely up to the consumer. But what happens next is at the suggestion of the M.D. and the discretion of the customer. Better-informed individuals use more medical care. But the effect of their information on number of follow-up visits is negligible. 2
Suppliers and consumers share many of the same attitudes. Neither is constrained by price, only by insurance coverage. Even medical costs, that is,