950 THE AMERICAN ECONOMIC REVIEW

divorced

from

self-interest. (3) It is at least claimed that

treatment

is

dictated

by

the

objective

needs of

the case

and not

limited

by

financial

considerations."7

While the ethical compulsion is surely not

as absolute

in

fact as it

is in

theory, we can hardly suppose that it has

no influence

over

resource allocation in this area. Charity treatment in

one form

or

another does

exist because

of

this tradition about human

rights to ade-

quate medical care.'8 (4) The physician is relied on as

an expert

in

certifying

to

the existence of illnesses and injuries for various

legal

and

other

purposes. It

is

socially expected that his concern for the correct

conveying

of

information will, when appropriate, outweigh his desire

to

please

his

customers."g

Departure from the profit motive is strikingly

manifested by the

overwhelming predominance

of

nonprofit

over

proprietary

hospitals.20

The

hospital per

se offers services

not too different from

those of

a

hotel,

and it is

certainly

not obvious

that the profit motive

will not lead

to a

more efficient

supply.

The

explanation may

lie

either on the

supply

side or on

that

of

demand.

The

simplest explanation

is

that

public

and

private subsidies decrease the cost to the patient in

nonprofit hospitals.

A

second

possibility

is

that

the association of

profit-making

with the

supply

of

medical services

arouses

suspicion

and

antagonism

on

the

part

of

patients

and

referring physicians,

so

they

do

prefer

nonprofit

institutions.

Either

explanation implies

a

preference

on

the

part

of

some

group, whether

donors or

patients, against

the

profit

motive in the

supply

of

hospital

services.2'

1T The

belief that the ethics of

medicine demands treatment

independent of the patient's

ability to

pay is strongly ingrained.

Such a perceptive observer as

Rene Dubos has made

the

remark that

the

high

cost

of

anticoagulants restricts their use

and may contradict

classical

medical ethics,

as

though this

were an unprecedented

phenomenon.

See

[13,

p.

4191.

"A

time

may

come when medical

ethics will have to be

considered in the harsh

light of

economics" (emphasis added).

Of course, this expectation

amounts to ignoring

the

scarcity

of medical

resources;

one

has

only

to

have

been

poor

to

realize the error.

We

may

confidently

assume

that

price

and

income do

have some

consequences for

medical

expenditures.

18A

needed

piece

of

research

is a

study

of the

exact nature of

the

variations of medical

care

received

and medical

care

paid

for as

income

rises.

(The

relevant

income

concept

also

needs

study.)

For this

purpose,

some

disaggregation

is

needed;

differences in

hospital

care which

are essentially

matters

of

comfort

should,

in

the above

view, be much

more

responsive to

income

than, e.g., drugs.

"9 This role is

enhanced in a socialist

society,

where the

state itself is

actively concerned

with illness

in relation to

work;

see

Field

[14,

Ch.

91.

'

About

3 per

cent

of beds were

in

proprietary hospitals

in

1958, against

30 per

cent

in

voluntary

nonprofit,

and the remainder in

federal, state,

and

local

hospitals;

see

[26,

Chart

4-2,

p.

601.

"

C.

R.

Rorem

has

pointed

out

to me some

further factors

in

this

analysis. (1)

Given

the

social intention of

helping

all

patients

without

regard

to immediate

ability

to

pay,

economies

of scale would dictate a

predominance

of

community-sponsored

hospitals. (2)