Public Health Care Consumption: Tragedy of the Commons or a Common Good?

Eric Schiff, University of California, Berkeley

The United States is far and away the world leader in per capita health care expenditures, yet the country’s notoriously poor health outcomes flies in the face of what should be expected given such high expenditures. This paper seeks to answer whether the availability of public health insurance affects individuals’ consumption patterns, especially when citizens become eligible for Medicare at age 65. Data from the Medical Expenditure Panel Survey (MEPS) conducted by the United States Department of Health & Human Services, yield the surprising result that health care consumption for individuals relying solely on public health care funds consume considerably more health care services than privately insured individuals from the ages of 20 to 65, but after age 65, consumption levels for publicly and privately insured individuals are surprisingly similar, suggesting that insurance type only affects consumption patterns before the age of retirement, when individuals are presumably the most healthy.