Hospitals v. Health

Today's Washington Times contained an ad that covered most of page A7. Sponsored by the American Hospital Association, AAMC, Federation of American Hospitals and others, the ad read,

"When Natural Disasters Hit, America's Hospitals Are There.
When Fears Rise About a Flu Pandemic, America's Hospitals Are There.
When the World is an Ever More Dangerous Place, America's Hospitals Are There.
So why do some in Washington want to cut hospital funding?

Pressure to cut the budget has caused some legislators to think about cuts that would hurt hospitals. But why in a dangerous and uncertain world would anyone cut the front lines of America's health care?

America's Hospitals. First in hope. First in care. Always there."

Certainly emergency care is nice to have. But it doesn't have to involve government or tax dollars. In fact, cutting hospital funding might actually save lives.

The old adage, "prevention is the best medicine" rings true. Why is prevention the best medicine? Compared to treating a serious illness, prevention is usually less expensive and less risky. With finite resources, we want to maximize health, not necessarily hospitals. Prevention, being the cheaper means of maximizing health, should be preferred over hospitals and other, more expensive methods of increasing health.

Let's allocate $1000 to be divided between two categories: wages and hospital funding. In the first scenario, the government takes $100 of your wages to pay for hospitals. Your net income is then $900. Suppose that you require $500 to pay for food and shelter. Given the $900 wage, you have $400 remaining which you can spend on prevention. Prevention may come in the form of taking off work when you start to feel ill, of purchasing a safer vehicle or eating better food. Hospitals might not have as many amenities, but your health overall may be better than if more of your money was allocated to hospitals.

Now suppose the government believes it is its job to ensure that Americans all have adequate access to hospital services by taking more of your paycheck and giving it to hospitals. Now, the government takes $400 of your wage to pay for hospitals. Your net income is then $600. Assuming that your cost of food and shelter is fixed at $500, you have only $100 to allocate towards preventing illness or injury. Prevention, in this scenario, will cost you a higher percentage of your disposable income. Maybe you'll stick to the older vehicle without all the new safety features. Maybe you'll go to work even though you feel ill. You won't make the same investments in your health that you would have previously. Instead, you'll take chances with your health and the health of your coworkers.

Before we assert that cutting hospital funding is bad, perhaps we might examine the unintended consequences of taking other people's money that might have been allocated towards health measures and putting it to a less productive use, e.g. sacrificing preventative measures for expensive hospital visits. Increase hospital funding and you will continually need more hospitals.