Not so NICE?

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The National Institute for Health and Clinical Excellence (NICE) is often criticized for the decisions it makes in the approval of drugs and their advice regarding clinical practices. Over the years they have managed to cultivate the negative image of putting the cost of drugs before patient welfare. This stigma has recently been partially disproved, with it emerging that three-quarters of cancer treatments, and 83% of all drugs and new treatments have been approved over the past decade.

This news shows that, despite their perceived image of withholding access to innovative treatment, it is in fact not this organisation that is guilty. Instead those patients, charities and politicians should instead look to the NHS and the primary care trusts that control around 80% of the NHS budget. These trusts are highly bureaucratic and complicated, reducing efficiency and losing sight of the needs of the patient. The problem of access to treatment is just one area of discontent, but surely it raises the question over the organisational structure and even the “public” status of the NHS. Even if there is a need for universal healthcare, why does it need to be provided by the government? What we do need is greater consumer choice in the system – not just over treatment but also over location, doctors, admission times, generally encouraging a higher level of clinical care.

In the current era of cuts, the NHS has been ring-fenced for political reasons. This is a mistake, but there is still room for greater efficiency within the organisation. Ultimately, efficiency cannot be achieved in the current public system with the escalating cost of treatment and increasing numbers of patients, particularly the elderly. With NHS funds and medical contact time at a premium, surely it is time for a shake-up by privatizing parts of the NHS. Give the public back their choice and let the market fix the NHS.

Harry Potter and the state pension age

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Researchers at the University of Milan have discovered an "elixir of life", made up of amino acids and antioxidants that can boost the age of mice by 12%. The research team believes this "philosopher's stone" could be used by humans. In a number of years we could expect to see something similar appear on the market: not only does it boost lifespan, but it increases stamina and muscle co-ordination, so we may see many sprightly pensioners in coming years.

This may help reduce government spending on social care, particularly for the elderly, which was expected to double by 2035, but with life expectancy already on the rise and fast outstripping birth rates, such a move could force governments to raise the state pension ages much sooner than expected.

The original 1908 old age pension was to paid at 70, at a time when life expectancy was around 50. Nowadays, life expectancy at birth is just under 80, and the state pension age will be 65 for both men and women by 2020. The new 'triple lock' on pensions means that they are unlikely to become less generous, so a further, faster increase in the pension age will be necessary. This age crunch was already inevitable - there will be a point at which supporting pensioners will be a huge burden on a much smaller number of younger, working taxpayers.

The Chancellor George Osborne has already hinted at plans to raise the age to 68 by 2046, but if we are to see a jump in life expectancy to something approaching 90 thanks to this "elixir", then a faster increase is inevitable. The unpleasant alternative would be to wait until it is too late, when the young people of today and of the future will have to shoulder our burgeoning state pensions, and then risk the uproar of those having to endure a sharp increase in the state pension age or a cut in its generosity. Much like dealing with the deficit, pension reform needs to be done as soon as possible so that a larger crisis can be averted.

Switzerland or Singapore?

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I don’t often disagree with Eamonn but I must confess to having slight reservations about his recent post on the Swiss healthcare system.

It’s not that Switzerland has a bad healthcare system. In fact, on international comparisons the Swiss systems rates very highly. Moreover, from a market perspective there is lots to like in the Swiss system. Premiums reflect the genuine price of insurance and are typically paid by individuals, avoiding the distortions that employer or government provision causes. Reduced premiums are available if you accept a higher excess, which helps control costs. The system is mostly privately operated and patients have a great deal of choice, which encourages competition and drives up standards.

However, there is a problem with Swiss healthcare: it is very expensive. Indeed, only the US and Norway spend more per head on healthcare. Of course, to a certain extent that reflects the preferences of the Swiss people – and there is no correct percentage of GDP that a country should spend on healthcare.

But for all that, I don’t think the Swiss model is a good one for the UK, largely because it has the same fundamental flaw as practically every health ‘system’ in the world. Put simply, the role of insurance goes far beyond what makes economic sense.

Over-reliance on third-party payment (and it doesn’t matter whether we’re talking about governments or private insurers here) drives up costs because doctors and the patients both have an incentive to maximize the amount of treatment given, regardless of cost. The patient has already paid his premium and wants to get his money’s worth. The doctor knows this and wants to bill as much as possible. And then there are the hefty administrative costs. In truth, it only makes sense to insure against big-ticket risks, things you can’t plan or save for. It makes no sense at all for garden-variety health problems.

We might have got away with the cost inflation that insurance encourages in the past, it’s quickly going to get much more difficult, given changing demographics and advancing medical science. The biggest challenge for healthcare reformers now is controlling costs – and the most effective way to do that is to rely far less on insurance and far more on direct payment. That would have the added benefit of giving people an incentive to take better care of themselves, something else that is going to be crucial as the relative burden of ‘lifestyle diseases’ rises.

Bearing this in mind, we’d be unwise to devote too much time and energy trying to bring the Swiss healthcare system to the UK. We would probably be better off looking at innovations in ‘consumer-directed healthcare’ in the US and at the compulsory savings scheme that operates in Singapore, and seeing how their lessons could be translated into British context. But that’s probably a subject for another blog.

Competition in health care does work

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We all know that the centralisers, statists and bureaucrats are going nuts over this idea that there should be competition within the NHS. Health care is different they say, markets won't work and anyway, the NHS is the wonder of the world it is. Presumably why no one has ever copied it.

That health care is different is true: so's the market in water different from that for houses. This might mean that we want to take care in the way in which we construct a market, how it is regulated, but it doesn't mean that we don't actually want to have markets at all. As we find from the limited allowance of markets that were introduced into the NHS a few years back:

The last Labour administration introduced competition between healthcare providers as part of its drive to increase productivity in healthcare. In 2006 the government mandated that all patients must be offered the choice of five – and by 2008 any – hospital in the National Health Service for their treatment.

OK, the result?

We find that hospitals located in areas where patients have more choice are of a higher clinical quality – as measured by lower death rates following admissions – and their patients stay in hospital for shorter periods compared with hospitals located in less competitive areas. What’s more, the hospitals in competitive markets have achieved this without increasing total operating costs or shedding staff. These findings suggest that the policy of choice and competition in healthcare can have benefits – quality in English hospitals in areas in which more competition is possible has risen without a commensurate increase in costs.

Markets bring fewer deaths, shorter hospital stays at no extra cost. We spend the same and get better results: productivity rises is another way of saying the same thing.

So it appears that health care is not as different as all that: competition does its thing of driving up productivity even there. Whocoulddanode?

The National Institute for Car Exboblification

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Imagine a world where the government provided us with our cars. It would purchase a set number of them from private producers and some rationing board, lets call it the National Institute for Car Exboblification, or NICE, for short, would be established to allocate them. NICE wouldn’t necessarily allocate them to those who want them the most, but by some arbitrary principle.

Imagine, now, that a brilliant new hatchback is produced; superior in every way to the currently provided hatchback. However, NICE decides not to supply this hatchback. ‘It’s too expensive’, the rationing body decries! ‘It may well be superior in every way, but you’ll just have to make do with the old model.’

Clearly, this method of allocating cars is a nonsense. Why, then, do we apply it to the allocation of far more fundamental goods?

As readers of this blog are no doubt aware, a real life NICE determines which drugs are and are not made available on the NHS. A remote, unaccountable board of technocrats takes decisions that massively alter the lives of the individuals and families that they affect; such as that made yesterday to not provide Avastin: a new bowel cancer drug that could effectively treat 6,500 people a year.

In the allocation of drugs, as in the allocation of cars, the market does a better job than a rationing body. Removing rationing enables people to make better-informed choices. The medicines that one receives wouldn’t be determined ad hoc by NICE, but by an informed choice made in advance after a full consultation of health insurance options and their prices. One could object here that the poorest might struggle to purchase a decent plan. Yet is this really worse than the current system, where NICE denies them access to treatments in the first place? Also, there is no reason why, in a freer system, the government couldn’t step in to help the poorest purchase plans that meet a pre-defined standard.

It’s time to abolish NICE and wean our healthcare system off the wartime rationing mentality that has dogged it since its inception.

Swiss healthcare

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Lots of people liked my Times article on Switzerland's canton system as the model for localism in the UK, and many have been asking me if other parts of the Swiss system would be good for other countries to follow too. I can think of one right away: Switzerland's healthcare system.

It's many years since I looked at this in detail, but Switzerland's healthcare system is fundamentally a compulsory insurance system – like the compulsory insurance system we have in the UK for our car insurance. You have to insure yourself or your family for a basic package of healthcare services. The premiums are the genuine price for that insurance, and are not related to income. You can shave off some of the cost of those premiums by taking a higher excess – meaning that if you do need treatment, you will pay more out of your own pocket. A typical policy might cost a family £2,000-£3,000 a year, but if you can't afford that, the state steps in by paying the premium for you. There is also a state-funded disability benefits programme.

The insurers are competitive, but they are not allowed to make profits on these basic healthcare package policies. However, most people also buy voluntary top-up policies, on which the insurers can make a profit. These provide services that are not covered in the basic package – things like dentistry, the use of a private room in hospital, eyeglasses, newer medicines, or alternative medicines. There is a mixture of publicly run and privately run hospitals to choose from, but you can also join an HMO-style managed care system, which actually provides your care, rather than having insurance that enables you to shop around between different providers.

Many commentators think that the Swiss system is the world's best. The care is as good as any in America but because there is much more competition and much less regulation, the cost is significantly less – though, like everywhere, premiums have increased considerably over the past decade or two. But the bottom line is that the system is very popular with the Swiss population, who consider it both good and fair, and seem to have no desire to change it very much.

A health system that the public are happy with? Now that would indeed be a good model for us all.

Would you like statins with that?

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For the 2.5 million people who eat a fast food meal every day, there may be an answer to helping prevent high cholesterol. UK researchers are suggesting fast food outlets hand out the cholesterol-lowering drugs, which would cost about 5p.

Yet again, it seems ill-founded medical advice is being used to regulate and control people’s lives. Whilst the researchers at Imperial College London have apparently taken "data from trials of almost 43,000 people to calculate whether the statins could override the effects of eating a junk food diet", finding that a daily statin can ‘neutralise the risk of cardiovascular disease linked to a daily intake of a 7-oz cheeseburger and a small milkshake’, one wonders why the debate has to arise in the first place.

Although statins do have occasional side effects, they have transformed the lives of many people with high blood cholesterol. Those with high dietary cholesterol are going to see very little effect from a drug developed to control cholesterol produced by the liver. A very large and prolonged intake of junk good will feed through into the blood to some extent, but statins won’t affect that part of cholesterol.

The idea from Imperial is that the effect of the statins will off-set the effect of junk food; it will not directly neutralize it. However, there are drugs, such as ezetimibe, that actually inhibit the absorption of dietary cholesterol, and these might be more appropriate. Ezetimibe appears to be under-prescribed, probably because it encourages people to eat junk food.

If statins are appropriate for individuals, then they are appropriate irrespective of whether they eat junk food. It is a matter for them and their medical advisers – not the nanny state.

Milk-snatching

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David Cameron’s aides have firmly stated that children under the age of five will not be losing their daily right to 189ml of free milk. The Prime Minister was, apparently unaware of and ‘did not like’ the idea of scrapping the scheme, which has been running since 1940s post-war Britain – although Margaret Thatcher famously scrapped it for 7-11 year-olds 39 years ago. Nevertheless, it is episodes like this which serve to highlight the endemic misconception of a ‘right’: the issue is not whether milk is beneficial to children, but whether it should be the state providing it.

The straw man argument over the health benefits of milk versus cost has provided the main source of contention: milk is a ‘nutrient dense food’, with very few calories; child obesity is on the rise. Indeed, the leaked letter of Health Minister Anne Milton to the Scottish Public Health Minister outlines meagre health benefits, complemented by a point on efficiency. She comments that the price the government pays for the milk will rise from £50 million to £59 million by 2011/12, an economic reason to scrap the scheme.

But what about simply not imposing milk on children? The potential cost is unimportant; it would be cheaper not to give it out at all. As for the ethical argument, not only has the society changed since the scheme was started, but the milk is simply being given – there is no question of choice. Of course, there is room for refusal when the milk is actually there, but that assumes each child for whom a provision has been made may want of need the milk at all.

Statistics such as, ‘2-3% of children are allergic to milk’, and comments like, ‘some, as they get older, may have difficulty digesting lactose’ simply miss the point. Some children may not like milk; others may love it, but is this something for the Government to find out? Yes, many children come from homes that may need information regarding health and nutrition, but a more-than-metaphorical nanny state cannot and should not be the dictators of that.

Professor Maynard on healthcare

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To the joy of many NHS trusts, Labour's cap on revenues from paying patients is to be lifted. The potentially huge revenues for hospitals will enable them to reinvest profits in free NHS services as well as boosting the provision of private healthcare in the UK. Hospitals such as Moorfields, with ventures in Dubai, and the Royal Marsden, with a much higher cap due to historical anomaly, will be well placed to expand their revenues. Manchester Christie hospital is even eagerly looking forward to the trebling of its income over the next decade, and the construction of a new £14m cancer centre as a result of the policy change.

You'll be surprised to learn that I gathered this great news from The Guardian. Naturally, the paper also gave voice to some ridiculous objections:

What's to stop US healthcare companies coming over here to poach patients. Or GPs sending patients to India for cheap operations? Or English hospitals raiding Scotland for sick people?" said Alan Maynard, professor of health economics at the University of York.

The answer to these questions is, of course, "nothing, and why not?". If Scotland has sick people, then why should they be denied better treatment, irrespective of its source? Scottish patients are not some kind of 'turf' to be jealously guarded much like a suburban gang defends its patch - that kind of mentality entrenched in regulation or law simply leads to Scots receiving poor healthcare for the peace of mind of inadequate NHS trusts.

Patients are not there to be poached, they are there to be provided for, making their own decisions as to where they want to go. If US companies can entice patients, then the NHS must be underperforming and may well up its act to prevent patients from being lost. Likewise, if Indian operations are cheaper, and patients choose to go along with them, what's the problem? Essentially, Professor Maynard dislikes the idea of supply attempting to meet demand - his comments display an alarming belief in health protectionism, favouring public health providers to the direct detriment of patients. Health economics? Please.

Is it because they iz doctors?

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The quangocrats are quite rightly squealing about how the quangocracy is going to be squeezed out of allocating and planning for health care in the NHS. Rightly, for of course, without the great and the good to determine what we plebs should be offered for our bruised tootsies and obesity strained bodies, how on earth would we end up with what is good for us?

This idea that doctors, mere general practitioners, might determine what treatment we get at what price is certainly no panacea for the absence of said quangos and bureaucrats. After all, they've only spent years prodding bodies and treating sick people while smart people in offices know how to do planning. Planning, of course, being much more important as the expense accounts provided to those who do it show.

When Peter Aylott, 67, needed a scan for a heart condition he expected it would mean a trip to his local hospital in Kent, not in an exclusive private clinic in London. But Peter and half a dozen other patients were picked up from their homes in Bexley and taken to the home of private medicine, Harley Street. …

[In addition to being safer than the NHS procedure,] the scan is also cheaper, says Dr Kostas Manis, a GP in Bexley. "The angiogram is £1,300 in the NHS, and the private clinic scanner is £900 and we're negotiating to bring the figure down to £600."

Dr Manis has helped to develop the new scheme, which has saved the NHS in Bexley £300,000 in the past eight months. Faced with a £20m deficit in 2007, the primary care trust decided to hand over the bulk of commissioning power to GPs. They now control 70% of the £150m budget for Bexley.

Hmm, what's that? GPs are already handling budgets and doing the planning? They're managing to find better and cheaper treatments than the bureaucrats? You mean that having people who actually know what they're doing making decisions works better than leaving said decisions to people who don't?

My, my, well there is a turn up for the books. As Phil Walker goes on to intimate, these concerns about the death of the NHS as a result of GP budget holding are entirely nonsensical.

If the NHS really is the best health care system in the world, the envy of every other nation, then everyone looking for the best service will be using the NHS: there will be no business escaping this best in the world system. If money does get spent on private providers then that can only mean that the private providers are offering a better deal than the NHS: which means that the NHS isn't the best system in the world and therefore we don't want it, do we?

Another way of looking at it: why is it that those who insist most stridently that the NHS is the best of all possible health care systems are the ones who insist most stridently that the NHS should never face any competition? Competition being, of course, something that should not trouble the best in any field for the best always win competitions, don't they?