A consumer demand or subjective value approach to government-provided or -subsidized medical services. The usual cost/benefit or human capital approach is irrelevant to human preferences and actions of decisionmakers. For the nonpoor, government action should generally be restricted to what consumers cannot obtain elsewhere: regulatory actions, control of infectious diseases and pollution, and aid to biomedical research. Government activities are worth what people would be willing to pay for them. Services to those who could not pay are justified by the willingness of the nonpoor to pay for them. Giving the poor what they want instead of what some index says they need would better serve the total perceived well-being, since present programs arouse hostility. Direct money transfers to the poor cost far less to deliver than medical services and would probably contribute more to improving health through better living conditions. 38 pp. Ref.