Common Error No. 67

1079

common-error-no-67

67. "Some things, such as health, should not be provided for gain."

Why not? If gain will motivate people to supply necessary goods and services, then it can be a useful way of ensuring supply. All goods and services cost something, and the prospect of gain is a good way of encouraging people to produce them. Price, as an indicator, tells them where to direct their activities. Where prices are high, people produce because profits can be made; and in producing, they alleviate the shortage which caused those high prices.

A genuine market in such things as health would put resources where they were needed. Enough people would go into health care to meet the demand for it. It would settle at a level that people were freely prepared to pay for. For decades Britain has spent less per head through its NHS than have its partners with larger private health sectors. People spend more themselves than they will do through taxation.

This is not because the British NHS gives better value. On the contrary, it achieves poorer results overall. Britain has less scanners per 1,000 of population, less renal dialysis units, less kidney transplants, and less of almost every objective measure. It also has higher early death rates on many major illnesses.

Food might be thought even more important, but imagine what the food situation might be if most people were dependent on government supplied food, financed out of taxation, run by the bureaucracy, and available only from approved supply outlets. Even though food is important, the private market is much more capable of guaranteeing us the appropriate supply than would a state-planned system.

If we want a society in which even poor people have adequate healthcare, there is a better way than mass state provision. It is to ensure that quality healthcare is widely available, and that resources are provided to give poorer people access to it.

Saving the health of the nation

1095

saving-the-health-of-the-nation

This week I attended the launch of Saving the Health of the Nation, an excellent short film from the Stockholm Network which looks at the failings of the National Health Service and introduces the idea of Health Savings Accounts as the most promising route for reform. The film features contributions from Stephen Pollard, president of the CNE, James Bartholomew, author of The Welfare State We're In and an ASI welfare fellow, as well as Dr Eamonn Butler, our own director.  

You can see the film online by going to the Stockholm Network video player, then selecting documentaries and clicking on 'Saving the Health of the Nation'.  

Making things more expensive by trying to make them cheaper

993

making-things-more-expensive-by-trying-to-make-them-cheaper

All Hail Central Planning! We seem to have another quite wonderful disaster from the bowels of the NHS.

Despite restructuring and a hiring freeze, documents presented to the board of NHS Direct show that so far this year the "total cost per call answered" has been £16.54.

OK, NHS Direct is the idea that we'll save money by having nurses at the end of a phone line rather than people going to their GPs for a meatspace consultation. Does it really save money though?

The British Medical Association estimates that it costs the NHS between £20 and £25 every time a patient sees a GP...

Well, yes, it appears. Except, except, it's a lot easier for a patient to make a phone call rather than schlepp down to the surgery, so we might be getting more not very much less expensive phone calls than we did GP consultations. No figures on whether that is true or not unfortunately.

More than a third of patients treated by the organisation's nurse advisers are referred to their GP or hospital accident and emergency unit.

Ah, the savings by using the nurses are about one third. But one third of the calls incur the costs of the nurses plus the costs of the GP (or A&E, even more expensive). So we've managed, by the glories of central planning, to make the system more expensive while trying to make it cheaper.

All Hail Central Planning! 

Did no one think this through? GPs are independent businessmen, if a nurse on the phone was indeed a great saving, wouldn't at least some practices have done this themselves? And if they were, then why the central system? And if they weren't, then why did anyone think it would be a great saving?

Topping Up the NHS

960

topping-up-the-nhs

This story about Debbie Hirst and her cancer treatment has even hit the NY Times. To recap, the NHS does not pay (upon the grounds of cost effectiveness) for the use of Avastin, a breast cancer treatment. Ms. Hirst decided to pay for it herself and then was told that if she did so she would also have to pay for all of the other treatment from the NHS, something that of course she had already paid for once through the taxation system. Alan Johnson said:

Patients “cannot, in one episode of treatment, be treated on the N.H.S. and then allowed, as part of the same episode and the same treatment, to pay money for more drugs,” the health secretary, Alan Johnson, told Parliament.

“That way lies the end of the founding principles of the N.H.S.,” Mr. Johnson said.

Quite so, the founding principle seeming to be that it's is better that some die so that we can all be more equal. Greg Mankiw asks an interesting question:

Should a parent who hires an after-school tutor for his child be barred from sending the child to the public [i.e. State] schools?

Or the parent who teaches a child to read at home? Or the patient who pays for gym membership, or better food, or vitamin supplements, perhaps those who buy their own paracetamol should be denied the care they have already paid for? As the Professor points out:

Some people like to think of health care and education of basic human rights. Maybe they are. But they are also normal goods. That is, the income elasticity of demand is positive. It is hard to escape the conclusion that the right cost-benefit calculation for providing the good depends on the income of the consumer. Achieving both efficiency and equality in the provision of these goods is impossible.

As both are impossible we must make a choice. Should people be allowed to spend their own money as they wish, over and above the care that the NHS provides? Or must we have the equality of the grave? You won't be surprised to find out that I am for the former: it's your money, do as you wish with it.

Democrats mute about equity in healthcare

895

democrats-mute-about-equity-in-healthcare

Two ambitious state projects for universal healthcare, Massachusetts and California, are about to fall apart because of huge funding problems. Barak Obama has taken notice. He keeps repeating that Hilary Clinton’s state mandate – wrongly labelled as ‘individual’ mandate - to purchase private insurance can’t work. Too many people, he says, simply can’t afford it. He has a point, since overregulated private insurance in many states comes with prohibitive premiums.

More important here is the case of existing inequality and unfairness – which both Democratic presidential candidates are silent about. We are talking about the present tax exemption for employers who provide healthcare to their employees. This is a dismal paternalistic ruling, going back to the cold war. It benefits mostly immobile and heavily unionised worker communities. The Wall Street Journal, which is free for everyone to read online since Richard Murdoch took over, raises the question of equity in healthcare. The subsidy is not just iniquitous because individuals can't get it, but also because it favours employees with higher incomes:

Estimates show that the subsidy is worth more than $3,000 for upper-income families (with higher marginal tax rates), and less than $1,000 for those on the lower rungs.

As the WSJ says: "If such inequality and unfairness existed anywhere other than health care, the Democrats would be raising hell." This lost revenue costs the US government more than $208 billion a year. It is claimed HilaryCare II, by comparison, would cost roughly $100 billion – although that is, of course, a gross underestimate according to some health economists. But the real point is this: the Democrats could hit two birds with one stone if they were just more honest. They could implement more equity and fairness in the tax system and create plenty of cash for reform to boot. Yet we are left with populist and deceptive posturing.

Reforming general practice

855

reforming-general-practice

Alan Johnson, the Health Secretary, has written to every GP surgery in England urging them to open in the evenings and at weekends. He wants surgeries to be open for an extra three hours a week. The British Medical Association (BMA) is only prepared to offer two extra hours. They say opening for longer would compromise patient care, unless they were given extra resources. The government's proposal would, apparently, only cover a single GP working late at the surgery, without a nurse.

The whole argument is ludicrous. Why do GPs have central contracts with the government at all? Why on earth is the secretary of state sending letters to GP surgeries? This sovietized system is so backward, so obviously inadequate, that it’s a wonder it has lasted so long. In such a system the fight is always between producers and governments, with patients hardly entering the equation.

This could all change very simply. Make GP surgeries independent and self-governing. Then have them agree NHS treatment tariffs with their primary care trusts (the local bodies that commission healthcare services). Let them advertise for patients, or group together into chains of GP surgeries to reduce administrative costs. The revenue these surgeries, or chains of surgeries, brought in would depend on how many patients they treated, and on whether those patients were satisfied with the service and became repeat customers.

In such a system you would quickly find that where there was a demand for such services, GP surgeries would stay open later in the evening or at weekends. All their incentives would be aligned towards providing the best possible service. Of course, the left will scream "privatization" and say this amounts to the abolition of the NHS. Yet services would still be free at the point of use and paid for out of taxation.

It's high time British healthcare put patients ahead of political ideology.

New global health blog

847

new-global-health-blog

Although it is now widely accepted that markets and their underlying institutions are the best way to organise economic relations between people, certain fields of human activity have remained stubbornly resistant to such thinking.

The provision of healthcare, for example, is hindered throughout the world by the belief that governments should take the driving seat. As a result, the patients in developing countries have to endure decrepit state-run healthcare systems, while the UN and its agencies promote all kinds of failing centrally-planned initiatives to combat diseases such as HIV/AIDS and malaria. All this is lavishly funded by taxpayers in richer countries, whose money often doesn’t make it past the personal bank accounts of corrupt officials in ministries of health.

In order to help shift the global health consensus towards something more practical, the Campaign for Fighting Diseases have started a blog – www.fighitngdiseases.org/blog. It promises to be well worth reading.

Beware of healthcare populism

785

beware-of-healthcare-populism

The temptation of politicians to twist public policies for short-term gains in order to win votes is well known. Policy on cholesterol (pictured) is one such example. It turns out, according to accumulating evidence, to be a rather simplistic public scare. Reducing 'bad cholesterol' has been the mantra for decades and statins, which are just doing that, have earned $27.8 billion in sales in 2006. Little wonder since 13 million Americans and 12 more millions worldwide are using them to prevent heart attacks.

Because it attracts large numbers of voters, politicians keep shifting health resources to disease prevention – and thus draining away vital resources from the chronically ill, who are always a small minority. Yet new research shows that only one in 100 people, or according to some research even one in 250, who take statins over five years have any benefit whatsoever.

One reason is that healthy people have a different metabolism than chronically ill patients. Another is that bad cholesterol levels may no longer a reliable risk indicator for heart disease. For instance, Australian Aborigines have low cholesterol but high rates of heart disease. Spaniards have as much bad cholesterol as Americans but only half as much heart disease and the Swiss have even higher cholesterol but lower rates of heart disease. And now a different enzyme, called Rho-kinase, has been found that predicts heart disease much better.

This is just one example that exposes how government healthcare policies lag hopelessly behind science and are prone to blunder public health issues. And it will probably take much longer for government health programs to change course than the market would need to correct obviously biased research.

Patient patients? It seems not...

772

patient-patients-it-seems-not

For ideological reasons, political reform of the NHS behemoth often seems impossible. Politicians across the spectrum, fearful to disturb the foundations upon which the NHS rests, hide behind platitudes, while MRSA haunts the hospital wards. However, cracks are increasingly showing in the system that no amount of political veneration can cover. The seeds of change are showing through, encouraged not from Westminster, but forced through by those that the NHS is supposed to be looking after: the people.

Earlier this week The Times' Daniel Finkelstein, reported the disgraceful case of Colette Mills and Debbie Hirst, two cancer patients who have both been refused the use of the cancer drug Avastin alongside their NHS chemotherapy, even though they are willing to pay for it out of their own pocket. Avastin has been shown to help cancer sufferers, but has not been approved by NICE because it is not considered cost-effective enough to be available on the NHS.

So why have Colette Mills and Debbie Hirst not been permitted to use Avastin alongside their NHS treatment? It has nothing to do with the drug's efficacy… In fact, the reason has nothing to with the drug… Actually, it has nothing to with health. According the the health secretary, Alan Johnson, they were refused because: "That way lies the end of the founding principles of the NHS". But when 'principles' stop the sick from getting life-improving drugs, are they really principles worth defending?

It has been obvious for some time that Johnson’s 'principles' are outdated. Following last year’s report entitled Free at the point of delivery: reality or political mirage, it is was generally accepted that a secret top-up system already exists. Politicians have duly responded by sticking their collective heads in the sand, preferring this to facing up to modern realities. Colette Mills and Debbie Hirst, like others before them, are seeking justice through the courts. They are unlikely to be the last. It's time the NHS's unworkable 'principles' were replaced with a more flexible and customer focused system of health care, one truly fit for the 21st century.

Common Error No. 10

755

common-error-no-10

10. "We have to keep universal services in health and education, so that the middle classes will demand their improvement."

This is the "theory of imprisoned misery." The supposition behind it is that the middle classes will support nothing unless they stand to gain from it. Its corollary is that as many people as possible should be imprisoned in shoddy and inadequate services in order that the pressure of their protest will improve things.

It underestimates, in the first place, the ability of the middle class to get what they want out of the system. In any universal service, it is not the articulate and self-confident who suffer deprivation; they are quite able to command the scarce resources. The inarticulate and poor lose out in competition with the middle classes. They get worse health and worse education within the state system.

Critics point to their fear of a two-tier system, with an adequate service for the middle classes and a rotten one for the poor. They fail to see that universal state services themselves create a two-tier system.

They also underestimate the readiness of the middle classes to support causes from which they derive no personal benefit. They are the backbone of most charities and the mainstay of most church organizations. The middle classes have campaigned in the past to improve the lot of the poor, and are no different now. They don't need to be imprisoned in a poor service to work for its improvement. On the contrary, if they are imprisoned within it, they might devote their energies to securing an adequate service for themselves first. If people are free to seek alternatives, new standards might be pioneered which others can benefit from.

The real reason for keeping the middle classes in a universal service might be to promote an egalitarian society by preventing them from choosing alternatives. But lack of competition militates against improvement in the services concerned.