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FiftyTwo comments on Politics Discussion Thread August 2012 - Less Wrong
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The "preventative care saves money" meme is incorrect AFAIK. People massively over-consume expensive tests which check for conditions with extremely low base-rates of occurrence in the population.
example: "Think of it this way. Assume that a screening test for disease X costs $500 and finding it early averts $10,000 of costly treatment at a later stage. Are you saving money? Well, if one in ten of those who are screened tests positive, society is saving $5,000. But if only one in 100 would get that disease, society is shelling out $40,000 more than it would without the preventive care.
That’s a hypothetical case. What’s the real-life actuality in the United States today? A study in the journal Circulation found that for cardiovascular diseases and diabetes, “if all the recommended prevention activities were applied with 100 percent success,” the prevention would cost almost ten times as much as the savings, increasing the country’s total medical bill by 162 percent. Elmendorf additionally cites a definitive assessment in the New England Journal of Medicine that reviewed hundreds of studies on preventive care and found that more than 80 percent of preventive measures added to medical costs."
Working with your example: If we assume the government health service is behaving in its own self interest, why would it spend money on test that it knew not to be cost effective? Whereas if the incentives are split between a Dr ordering a test and an insurance company paying for one wouldn't they disproportionately order tests?
More generally, even if its true for particular testing procedures theres lots of low hanging fruit for intervention before things get severe. The most obvious examples would be schemes to get people to stop smoking or lose weight, that the government provides freely because they are less expensive than the projected cost of the illnesses that would arise without such intervention. Also the ability to see a general practitioner more regularly than if you paid per visit means symptoms can be picked up earlier (e.g. if someone has a mild symptom but has to pay to get it checked they are disincentivised to get it checked until it becomes severe.)
Again, AFAIK smokers and the obese are cheaper in the long run because they die faster.
Given they way other government services tend to behave this is highly dubious.
The problem is that the way these kinds of schemes tend to work in practice has a lot more to do with whatever the currently fashionable moral panic is than any rational analysis.