It's the accounts, stupid

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Health Secretary, Andrew Lansley, brings considerable experience of NHS issues to his new job, having been the Shadow Minister for many years.

Encouragingly, he is reported as believing that Monitor, the regulatory body, should play a crucial role in bringing about modernisation and competition in the NHS.

Indeed, he should use Monitor to push forward the NHS deregulation agenda, not just to the 129 Foundation Hospitals that it currently oversees, but also to the remainder.

Monitor should also seek to narrow the gap between the private sector and the Foundation Hospitals. Central to its activities should be the compilation – and updating - of accurate costs for each common type of surgical procedure, based on standard accounting principles.

Furthermore, parts of the NHS are ripe for disengagement from the existing system, especially imaging and pathology services.

Requiring each hospital to provide separate accounts for these two services should be the first step towards creating a competitive market in imaging and pathology; it should also facilitate the raising of much-needed – and contract-backed - investment funds.

The principles to be used - based on a gradual move to full competition in imaging and pathology - should be similar to those employed in introducing electricity competition in the 1990s.

In time, a few major imaging and pathology businesses should emerge from NHS hospitals. They could also operate in overseas markets and become flag-carriers for the technical excellence of the UK medical sector.

But crucial to the many necessary improvements in the NHS is the availability of accurate numerical data, a role that Monitor is best placed to ensure.

Drawing up ring-fenced regulated accounts on common principles will be crucial in this process. To bowdlerise James Carville, the ‘Ragin Cajun’ of US politics, - It’s the Accounts, Stupid’.

Are these proposals too radical or just standard business practice?

And another thing...

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...that doesn't need a government solution.

This piece is interesting for it shows just why so many problems not only should not be solved by government intervention but also why the need not be so solved. Yes, I know that comes as something of a shock to certain types, which there are problems which government really shouldn't be getting involved in.

The basic problem is that those who have had cancer find it very difficult to get travel insurance. Well, that's not quite the problem: it's that many who have had cancer now recover and even those who are terminally ill might be so for some years rather than the quick shuffle into the shroud that was their fate decades ago. The insurance industry hasn't quite cottoned on to this and thus either refuses cover or charges a fortune for it.

The solution is of course market competition. Led, in this case, by an insurance industry type who had had cancer and found that not only had she survived she couldn't get such holiday health insurance. You see the importance of local knowledge in this case then, yes? So she cranks the new numbers on cancer survival and is able to offer policies at £180 rather than the £1,000 charged by the large firms. Business is apparenly going gangbusters and there we have it: local and specific knowledge leading to a competitive and better service being offered to consumers. Driven, of course, by that lust for profit.

The problem is already solved. In fact, many such other problems will also be solved. Now that entrepreneurs have seen that cancer survival rates have changed, and that profit can be made by redesigning services and offerings, the fleet footed should be able to build fortunes. Indeed some will from this new knowledge and good luck to them.

All without the intervention of government which hasn't even noticed this problem as yet, let along thought up a solution.

An ounce of prevention...

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An ounce of prevention is worth a pound of cure. For the NHS, this could mean billions of pounds of annual savings and so the commissars who run the place spend a large amount of money advertising, hectoring, nagging and even ordering people to get healthy. Of course, what they dare not try is good old fashioned bribery by appealing to people’s financial self-interest.

If the NHS wants to get serious about improving public health before urgent treatment is required, they could take a look at private health insurers. For example, PruHealth operates a points scheme where customers move from bronze to silver to gold status by undertaking certain activities. The higher the status, the lower the annual insurance premium.

Take a married couple in their 50s. Depending on the level of cover chosen, the annual premium for bronze status is around £3,000 but silver status drops that premium to just under £2,000. It takes 1,500 points to move from bronze to silver and there’s a variety of ways to do this.

An annual full medical screen for both partners scores 1,200 points. A rigorous, monitored, exercise regime gets 1,500 points. Eating well can earn up to 1,000 points. There’s traditional online questionnaires on lifestyle and stress assessment which is easy to complete and scores 400 points.

To be sure, PruHealth ties these activities to specific companies such as counting Nectar points spent at Sainsbury’s on fruit & veg. People could cheat with the answers on the questionnaires but the mere act of annually reviewing key elements of a healthy lifestyle does force an honest personal assessment. All in all, though, saving £1,000 a year is an effective driver for monitoring and improving one’s health.

The NHS should set up something similar. It could be as blatantly commercial as PruHealth’s with corporate sponsored partnerships or perhaps something more unique – a meaningful tax refund for given levels of points scored.

Unfortunately, such creativity seems beyond the imagination of the current top-heavy, command-and-control NHS. Actually paying people to stay healthy? A working computer system to keep track of points? Partnerships with for-profit companies? The excuses would go on and on.
 

Selling human eggs - why the fuss?

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 Last week a Virginia fertility clinic raffled a free cycle of IVF to British women, using eggs sold for $thousands in America. This caused quite a stir, particularly amongst regulators of artificial human fertilisation. The lottery itself was a marketing stunt, but the reason behind it is clear – in Britain, there is a shortage of egg donors and a law that prohibits giving eggs for any more than a minor sum for expenses, so demand is high. In America, there is a healthy market in these eggs, so the supply can potentially meet any demand from Britain. The clinic was putting the two together to drum up new business.

Personally, I can’t see what all the fuss was about.

Josephine Quintavalle from ‘Comment on Reproductive Ethics’ argued that “women selling their eggs are taking a huge risk with their health and future fertility simply because they need the money."

An argument to control the commercial sale of eggs for the sake of the donor’s health can only work if two claims are substantiated: Firstly, that the donation of eggs is a health risk to the donor woman, and secondly, that it is right to legislate to prevent women undertaking such a risk to their own bodies. Naturally, as someone who advocates self-ownership, I firmly reject the second assertion, but the EU unsurprisingly disagrees with me.

If we however accept that I am wrong, and the government is right, why is the logical response not to protect donors’ health by banning donations altogether, rather than allowing it, subject to an arbitrary price control? Clearly the regulators don’t think there is that much of a health risk.

When not opposing this on health grounds, they instead argue that “it trivializes altruistic donation, whether of eggs, sperm or embryos", as the British Human Fertilization and Embryology Authority said. However, if the regulators are so confident of the European ‘culture of altruism’ (Ayn Rand fans in the readership should know they have my sympathy), why is there consistently a shortage of eggs available for donation? This culture of altruism is obviously not pervasive enough to ensure results.

Whilst I am usually fond of highlighting the ‘unintended consequences’ of government action, the results of this policy have been anything but surprising or unforeseeable. Price controls cause shortages, and force people to contract elsewhere, outside the regulators’ jurisdiction. Simple and predictable.

If I were more cynical, I might suggest that the regulators’ indignation and the desire they demonstrate to control the choices of adult women is not about protecting anyone but the regulators themselves. They enjoy a privileged position in matters of life creation, and don’t want to see that threatened by forces they can’t control.

Maybe they’re worried that we might come to a point where people can sell organs, not just sex cells. Frankly, I say ‘Why not?’ At least it would be voluntary… unlike in China.

Healthcare: No need for a vote

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US Congressional Democrat leaders are looking desperate to save Obama's healthcare plan. House Speaker Nancy Pelosi even seems to have worked out a way to pass the measure without bothering with the inconvenience of a vote (and the threat of a Republican filibuster in the Senate. Under this cunning plan, the House simply 'deems' the Senate version of Obamacare to have been passed by the House. Representatives would simply be voting for a procedural motion – so they can't be pinned down as voting one way or the other on the Obamacare measure itself. Much easier all round. Indeed, the Congressional Record would not even have to show who voted which way. All very convenient, especially to those who want to support Obamacare without admitting it to their electors. Citizens can hardly get annoyed at how you voted, if you didn't actually get to vote.

Of course, the Republicans are not shy of using procedural tricks themselves, and used precisely this tactic in order to raise America's debt limit. The Democrats then took them to court for subverting the legislative process. (But no doubt they think it's different this time.) Alas, the court action was unsuccessful, so now the Republicans can hardly take the moral high ground.

The result is that, without anyone in the House of Representatives voting for it, Obamacare will be signed into law with great flourish and fanfare, and about a sixth of the US national income will be diverted into socialised medicine – exactly the sort of bureaucratic monopoly that we in the UK are trying to unravel.

Is this sleight-of-hand all a betrayal of the constitution by a self-obsessed political class that is estranged from life beyond the Beltway? Interesting question: let's take a vote on it.

Eamonn's DIY manual for fixing Britain – The Alternative Manifesto – is now out. Get it here.

Blowing smoke, third-hand

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I tend to stay away from the 'health 'sections of newspapers, mainly because I am rather bored of being told that I am a chronically unfit binge-drinker with a lifestyle leading unavoidably to obesity and depression. However, I'm surprised that I managed to miss hearing about the newest public health terror: third hand smoke.

According to new research done by Berkeley scientists, there is just no escaping the toxins of cigarette smoke (which the New York Times hastens to point out includes the spy-killing, radioactive, polonium 210.) Apparently, smoke residue on clothes, furniture and wallpaper can react with the common indoor pollutant nitrous gas to cause the wonderfully sinister sounding 'tobacco-specific nitrosamines', or TSNAs. And it seems that nowhere is safe. A Berkeley spokesperson points out that "nicotine residues will stick to a smoker's skin and clothing. Those residues follow a smoker back inside and get spread everywhere." Indeed, the smoker's selfish behavior will particularly harm young children, who will innocently touch, suck and even breathe in close proximity to the infected materials.

The finding of this research has lead to the Berkeley scientists issuing a dramatic conclusion: buildings, rooms and public places should be 100% smoke free, and nicotine-laden furniture, carpets and curtains replaced to prevent any further toxic leakage. In any circumstance this is a rather hysterical course of action to take, but what makes it so ridiculous is that the BBC reports the very same scientists are "doing more research to better understand what threat, if any, TSNAs pose." Yes, that's right: it's not just that the danger hadn't been proven – in fact, it hadn't even been studied. As FOREST's Simon Clark put it, this is "propaganda dressed up as science."

Of course, the fact that there is no evidence to prove that TSNAs are actually a health hazard hasn't stopped UK ideologues and campaigners giving their twopenny's worth. Action on Smoking and Health insist "this study adds a new dimension to the dangers associated with smoking and provides further evidence of the need to protect...from exposure to tobacco smoke", while Cancer Research add the importance of making homes and cars smoke-free.

Despite contributing nearly £10bn a year to the public purse, smokers are increasingly treated as lepers by the government and by scientists with a holier-than-thou attitude. Any attempts to further ostracize smokers would be authoritarian and unnecessary at the best of times, but for scientists and lobbyists to push an agenda with no scientific backing is simply crazy.

P.S. Over at thefreesociety.org, Chris Snowdon looks at 'third-hand smoke' in a little more detail.

Why is American healthcare so expensive?

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Yesterday I wrote on some of the misrepresentations used to attack the American healthcare system. However, as Mark Littlewood pointed out in Tuesday’s debate, the American system is not one we should want to copy in its entirety. Although America has the highest quality treatment of any country in the world, and leads the world in medical innovation, the cost is simply too high.

The intelligent response therefore, is to ask why the cost is so high.

The answer to that is actually straightforward, but those on the economic left simply don’t want to admit it. It is, in fact, the same problem we have with healthcare in our country: People don’t pay for their own care.

Yes, you read that right; the problem at the heart of the increasing costs of healthcare is the same on both sides of the Atlantic, despite us having superficially very different systems. In Britain, it is obvious to people using the NHS that the government picks up the tab. In America the cost is borne either by the government, by the patient’s insurance company, or by their employer. In both systems, it is ultimately the patient who pays; through taxes, insurance premiums or lost job opportunities because of the costs imposed on employers. However, the cost is never made apparent to people in the same way it is when shopping for other goods.

In a functioning market, like we have for televisions or cars, people pay for what they take – they aren’t insulated from the costs. As Cannon and Tanner noted for the Cato Institute, if the current healthcare logic were applied to food, people would only ever eat fillet mignon (except vegetarians, obviously).

The solution is to channel government help through patients, not providers; putting the patients themselves in charge of their healthcare funds, so that people will see for themselves just how expensive healthcare really is. The patients themselves can then decide if they want to eat fillet mignon, sirloin steak or hamburgers, and will push for those innovations that drive healthcare costs down, just as they do when buying anything else. This will solve what is essentially the same problem on both sides of the Atlantic.

American healthcare: It is not a free market

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Healthcare featured prominently in the debate at ISOS event yesterday. Mark Littlewood of the IEA and Rushab Ranavat of Debate Mate had to defend the claim that the free market can provide efficient medical care, in order to propose the motion ‘that humans would flourish if the state withered away’. As was to be expected, the opposition, consisting of Tim Horton of the Fabian Society and Peter Barton of Debate Mate, praised the NHS and attacked the American system as the result of free market madness.

This misrepresentation of the American system is an error made all too frequently, even by those who otherwise defend free markets. The American healthcare system does not represent a free market any more than the British one does, or the Cuban one for that matter.

Firstly, out of every dollar spent on healthcare in the USA, 50 cents is spent by the government – The US government spends more on Medicare, Medicaid and SCHIP than is spent on defence by The Pentagon. Secondly, despite the government using the ‘commerce clause’ of the U.S Constitution to legitimise just about every reprehensible thing it does, it still hasn’t managed to use it for its proper purpose of breaking down barriers to trade - like those that forbid the selling of health insurance across state lines. Thirdly, enterprising people who have tried to set up small, cheap clinics aimed particularly at the uninsured have found themselves the targets of massive bureaucratic red tape, and been forced to close.

The claim that this ‘free market’ in the USA does not cover the poorest members of society was also debunked with a concise and neat speech from the floor during the debate yesterday. The point was made that of the 40 million uninsured; the vast majority can either afford insurance, or are eligible for government-provided cover. This point has also been made very eloquently on the Free Market Cure website, which is definitely worth a look.

One thing is for sure. Whilst critics of the free market continue to misrepresent American healthcare, the debate will not progress. Tomorrow I will show what the debate should focus on – the real problems and the real solutions.

Dr Helen Evans on NHS reforms

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Finally... some sense on the NHS.

Spending for old age

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The recent furore over the funding and reform of social care for the elderly seems to have abated for now, but the problems persist. Currently, the government only provides free care for those with assets under £23,000, who are also judged to be worthy of care by their local authority. This is grossly unfair - not only does the access to state-funded care vary significantly by area as local authorities will fund anything from those with moderate to critical needs, but those just above the threshold are forced to fund their care entirely, often necessitating the sale of their home, and penalising those who saved for old age.

With such perverse incentives, the already burdensome demand for state-funded social care can only grow as more people opt to spend their wealth and qualify for free care. Replacing an all-or-nothing threshold with a more tapered form of funding may go some way to help.

However, many still believe that social care services would be free based on need alone rather than wealth. Those ignorant of the system may underestimate the extent to which they must save up for old age (or in the case of the perverse incentive, spend for old age!) and consequently suffer. Public information may be justified in this case by making it clear that saving up for private forms of insurance may be necessary. This could further reduce the cost of state-funded care.

Another grave problem is with the quality of care. It varies widely by council, and choice is minimal. Personal budgets, allowing users of state-funded care to choose their providers have been trialled in some areas, but not extended. This is a shame, as they also counter a further problem with the current system: the ambiguity of funding streams.

Local authorities could also counter problems with quality by breaking open the monopoly on state-funded care homes or services. The contracts issued allow providers to exercise a monopoly on state-funded care for the duration of that contract. There could be perpetual competition between social care providers if they were instead paid per person eligible for free social care.