Len McCluskey is not entirely correct about the NHS and TTIP

According to Len McCluskey the upcoming Transatlantic Trade and Investment Partnership is going to mean the end of the NHS. As one might expect from such a source he's slightly, umm, shading, the reality of what is going on here.

Now Cameron is set on giving these US investors new powers to sue any future UK government if it makes changes to health policy that might stop the dollars rolling in.

The deal will mean that American investors will be able to haul any UK government that tries to reverse privatisation to a tribunal – the “investor state dispute settlement” that would operate outside the law of this land. These tribunals will have the power to award billions in damages and compensation for lost profits and the loss of projected future profits, with no right of appeal. Yes, that is right – no right of appeal.

In short, the British public would face massive costs to bring NHS services back into public hands, making it nigh on impossible.

What is actually happening here is two things. The first being that the investor dispute system under the TTIP is arbitration rather than court action in the state in question. This is for the fairly obvious reason that the disputes will be between the government of the country and the investors and the government of a country controls (well, D'oh!) the legislature of that country and therefore what the law is. And as we've seen that's a very dangerous place for investors to be in. Those who lent money to Greece in Greek law bonds found themselves having a 70% haircut imposed after the Greek Government (and legislature) changed the collective action clauses (what portion of a bond issue must agree to changes in those bonds) after the bonds had been issued and paid for. Those who lent money to the same government but in English law bonds got paid out in full. Because the Greek Government didn't have the power to change English law in that manner.

We might not think that that could happen in our own dear courts in England and Wales. But this is a deal that includes the entire EU and as we've seen this has happened in the past couple of years here in the EU. So what is being offered is legal certainty to investors, that certainty being ensured by insisting that governments cannot change the rules of the game after the whistle has blown. All of which seems fair enough.

As to the second part, what this actually means, it just means that governments must adhere to whatever contracts they sign with foreign investors. If the contract says that it can be cancelled with no compensation to be paid then it can be cancelled with no compensation to be paid. If the contract says that compensation must be paid upon cancellation then compensation (whatever a government might do to change the law later) must be paid.

In this it is very similar to current law on such things as nationalisations for example. Any government is allowed, under international law, to nationalise anything that it might wish to. The UK Government could, if Red Ed were elected to power, simply decide to nationalise all private sector providers of health care and or health care services. Nothing at all to prevent them doing so: but under current law they would have to pay a fair market price for those assets. Under the new TTIP system they would also have to pay a fair market price for them.

The only people who could possibly complain about this would be those who would like to nationalise things without fair market price compensation: you know, thieves.

The whole TTIP system is simply a method by which governments can be forced to stand by the contracts they have signed with people not employed by those governments deciding whether they have or not. Which, given the power that governments do have to confiscate things from people, all seems entirely fair and just.

You can't save the NHS money by giving lardbuckets gastric bands

Apologies that we have to return to one of our treasured themes here at the ASI. But once again we are seeing the fallacy that reducing the number of fat lardbuckets will save the NHS money. It won't we're afraid, it just won't:

The National Institute for Health and Care Excellence (Nice) has just announced that it is considering lowering the BMI threshold for people with newly diagnosed type 2 diabetes for assessment and referral for bariatric (stomach-reducing) surgery. If this goes ahead, it could mean more than 800,000 additional people qualifying for possible gastric bands or similar treatments.

Perhaps some people out there right now are gearing up to the standard reaction, along the lines of: "Lazy, unmotivated lardarses getting mollycoddled by the state after they've stuffed their faces and not exercised. Why should the state pay for that?"

No mention of how losing weight (and avoiding maladies) through such surgery could save the NHS millions and therefore be classed as relatively cost-effective.

The problem with this saving the NHS money argument is that it is simply untrue. For obesity (and we do mean obesity here, not simply being overweight or a bit tubby) kills people younger than they would otherwise have been likely to die. And in a health care system where all medical expenses are picked up by the same organisation a longer life leads to greater total expenditure. This is well known and has been proven:

The actual numbers for lifetime from 20 years old medical costs were:

The lifetime costs were in Euros:

Healthy: 281,000

Obese: 250,000

Smokers: 220,000

This does not, of course, mean that the NHS should not fund gastric bands. We generally think that then purpose of said NHS is to aid us all in living longer and healthier lives so if that's the appropriate treatment to lead to that desirable outcome then that's just fine. But we can't bolster our argument in favour of the procedure by insisting that it will save money. It won't: if it works it will cost more, not less, over time.

It is this specific argument, the cost saving one, that is fallacious, not all and every argument about gastric bands or, indeed, the NHS itself.

I'm afraid that the latest ONS statistics on health inequality are simply wrong

This is a point that I've made before here and it's no doubt one that I'll have to make again. The ONS statistics on health care inequality, deprivation and lifespans are simply wrong. Yes, I'm certain that they've been accurately collected, that the usual skill and excellence has been used in their presentation. And yet they are indeed wrong for they are not a representation of what it is that they are purporting to be measuring.

Children growing up in the richest areas of Britain can expect to live a full, active life for as much as 20 years longer than their counterparts in the poorest neighbourhoods, an official analysis shows. A generation of young people living in the most deprived areas are likely to see their health effectively broken 15 years before they even reach pension age, it warns. Those from more well-off backgrounds are forecast not only to live longer overall but to enjoy good health for a much larger proportion of their lives. Although it has long been recognised that there is gap between rich and poor in terms of life expectancy, the divide is more than twice as wide when viewed through health expectations. According to the Office for National Statistics, men from the most deprived 10 per cent of the population have an average life expectancy of just 73.4 years, compared with 82.7 years on average for those in the least deprived 10 per cent – a gap of more than nine years.

The full report is available here.

There are two major and two minor problems with the approach being used here. The first major one is that no one at all is measuring the lifespans of those born into or growing up in any area. What is being measured is the age at death of people in a particular area. And, as you might have noted from your own lives there's not all that many of us who actually die in the area of our birth or childhood. Certainly not at the level of detail that these figures use: the information is collected from 30,000 or so areas, or some 2,000 people in each. I would lay pretty good odds that the vast majority of this country moves more than a couple of streets over their lifetimes. Which means that we might well be measuring something interesting: perhaps the way in which the rich, those with likely longer lifespans as we know, move into less deprived areas over their lifetime as they, well, as they become rich.

This leads onto our second major problem: the way that these figures are interpreted is that it is the inequality and deprivation which leads to the health and lifespan inequality. But we know absolutely that while this could be, probably is, true in part, we also know absolutely that it is not true in whole. For health inequality will also lead to wealth and income inequality. That poor sod permanently laid off sick at the age of 40 just isn't going to become one of the financial grandees of the country living in a pile in some undeprived area. So some part (an unknown part) of the inequality that we note will have a reverse causation to the one being assumed. Even assuming that inequality (to say nothing of deprivation) causes lifespan inequality, we also know that health inequality will cause income inequality.

One minor problem is the level at which this information is collected. When we're looking at groups of 2,000 people we really are looking in much too much detail. You'd only need a decently sized old agers home in such a district to rather sway the figures. I can point you to a couple of streets in the centre of Bath with an age profile wildly higher than that of the town or the SW in total. Because they happen to be the couple of streets where a long running (and very good indeed) charity run sheltered accomodation for old folks of the town. And this then brings us on to our second minor problem. The poverty rate (a useful synonym for the deprivation rate) is lower for the old these days than it is for the general population. Thus we would expect an area with lots of old folks to have a lower deprivation rate than one without.

These figures will, as with the earlier ones from the Marmot Report, end up being used to argue that deprivation and inequality kill therefore we must have more redistribution. You can hear the pencils being sharpened for the compsing of the tirades already. But this simply isn't what the figures are telling us because they simply are not measuring what it is assumed that they are.

No one at all is measuring the life spans of people born and or brought up in different locations. They are measuring the age at death of people in those areas, an entirely and completely different thing.

The NHS is meant to be for patients, not staff

Jeremy Hunt has annoyed people today by refusing to give NHS workers a blanket 1% pay rise on top of the incremental pay rise they were already supposed getting. That’s hardly a surprise: the NHS is a religion, and Hunt’s decision is the equivalent of giving the finger to the Pope. But he’s got a point.

According to the BBC’s Nick Triggle, “all NHS staff will be getting at least a 1% pay rise. Just over half receive incremental pay rises each year - determined by their length of service and performance. Those whose incremental increase is less will have their pay rise made up to 1%, but many will get more. Last year, the average incremental pay rise was 3.5%.”

In other words, today’s announcement means that NHS staff won’t be getting an additional 1% pay rise over their existing agreed pay increases. That’s a real terms drop, but lots of the coverage I’ve seen has suggested that this means that nurses won’t be getting any rise at all.

Remember that real private sector wages have fallen every year since 2010. Public sector workers already have greater job security than private sector workers, so it's difficult to see why they should be regarded as being automatically entitled to pay rises that most private sector workers aren’t getting.

Obviously, there’s no ex-ante reason NHS staff should get a pay rise. The point of the NHS is to provide care for patients, not to provide welfare to NHS staff. Since the NHS's budget is limited, a pay rise to staff means foregone spending elsewhere.

It’s worth noting that, at least according to the government, this pay rise would be equivalent to 6,000 nurses. Now, I don’t know how the NHS should spend its money – it may well be the case that NHS patients are better served by additional staff or more investment in medical equipment than they would be by this wage increase. Maybe a pay rise is the best way to improve patients’ outcomes, maybe not.

I’m left wondering why NHS pay should be a political issue at all. In the end, this story just underlines the need for devolution of pay bargaining to NHS trusts. National pay bargaining makes little sense given differing labour markets and patient needs across the country. In other words, a pay rise that makes sense for patients in Suffolk may not make sense for patients in Sunderland. We don’t want Whitehall to determine supplies of medical equipment or the allocation of labour hours between staff. Why should pay negotiations be any different?

I have to say that this fills me with a great deal of confidence about dietary advice

As I mentioned yesterday the WHO has come out with a couple of little recommendations about the amount of sugar we eat. Don't swill too much around your moth because of caries and do remember that sugar does indeed have caloties. Too many calories, compared to your activity levels, makes you fat. That is indeed what they said. So today we have one of those campaigning prodnoses in The Mail:

On Wednesday, for instance, no less an authority than the UN’s World Health Organisation came out with the firm recommendation that we should all be aiming to cut our sugar intake by half and that children should not be given fizzy drinks at all.

No, that isn't what they said at all.

That came just one day after Dame Sally Davies, the Government’s Chief Medical Officer, proposed that a sugar tax needed to be introduced if we wanted to cut sugar intake and reduce obesity.

She did indeed say that but there doesn't seem to be any evidence to back it up.

And it came on the same day that an eminent New York cardiovascular research scientist warned that the long-running demonisation of fats, and saturated fats in particular, could be entirely misplaced. The real killer, according to Dr James DaNicolantio, particularly when it comes to heart disease and Type 2 diabetes — those two scourges of the modern age — is sugar.

And isn't that just wondrous? Absolutely everything we have been told about diet and health for the past 50 years turns out to be, in your words, untrue. So we should immediately abandon that 50 years of advice and hop aboard your bandwagon?

It doesn't really have the ring of confidence around it this idea, does it?

Oh, and here's a little challenge. If you can find those doctors who tell us that eating as much fat as we like, including those saturated ones, if just absolutely fine for us, indeed that pig lard is better for us than sugar, then we might start taking this all a tad more seriously. Indeed, we would, if this were true, we certainly should if this were true, find Action On Sugar telling us to fill up on beef dripping.

Which, amazingly, they ain't so clearly not even they believe the tosh they're spouting. In which case why should any of us believe it?

The WHO is actually quite reasonable on sugar

You'll have seen the signs of a demonisation campaign going on. That sugar is addictive, that it has no nutritional value (as if calories are not nutrition), that we must tax it, or possibly ban certain uses, that AHHHRGH! we're all gonna die! and so on.

And then we get the actual sciency bit from the World Health Organisation which looks just fine to me:

Free sugars contribute to the overall energy density of diets. Ensuring energy balance is critical to maintaining healthy body weight and ensuring optimal nutrient intake. There is increasing concern that consumption of free sugars, particularly in the form of sugar-sweetened beverages, may result in both reduced intake of foods containing more nutritionally adequate calories and an increase in total caloric intake, leading to an unhealthy diet, weight gain and increased risk of noncommunicable diseases (NCDs). Also of great concern is the role free sugars play in the development of dental diseases, particularly dental caries.

Sugar has calories, too many calories can be bad for you and sugar can, if swilled around the mouth, rot your teeth. There's nothing here that we've not all known for decades if not centuries.

And it really is worth our noting that this is the sciency bit. The WHO is not saying that sugar is addictive. It's not stating that fructose is worse than sucrose or glucose. It's not insisting that we're all being hooked on it by the dastardly food manufacturers. All of these are inventions by the public health campaigners interfering prodnoses who would rule our lives and diets for no better reason than that they enjoy doing so.

The importance of noting ths is of course that we cannot allow said prodnoses to now start telling us that the WHO has indeed backed up all of their phantastical claims. The actual advice is don't eat too much and remember to brush your teeth. Which is the sort of nannying which most of us can manage to put up with. And to hell with those who want to insist upon more such nannying.

Economic freedom makes you fat

A fascinating little finding from the WHO: economic freedom makes you fat:

In line with previous research, our study shows that countries adopting what are considered market-liberal policies experience faster increases in both fast food consumption and mean BMI. These results are in accord with previous research showing that more stringent trade restrictions – including better protection of agricultural producers – the frequency of price controls and stricter government regulations46 are negatively correlated with obesity.

And what are we supposed to make of this? No, it's not because they've included poverty stricken hell holes like Cuba or North Korea. It's OECD countries only they've studied.

Well, what I make of it is that clearly people desire to consume fast food and are happy enough to end up a bit porky as a result. And as that's what people desire to do what damn business is it of anyone else to prevent their doing so?

For look at what it actually is that they're saying. In those places where people are free to open up fast food joints the citizenry appear to like, enjoy even, consuming the produce of those joints. Assume that all of their calculations are indeed correct and that both this is true and also that this leads to lardbucketry. Excellent, since the aim of this whole economics thing is to maximise the possibly utility of the populace then we seem to have found a method of doing so. That is, maximise economic freedom and then let people do as they please.

Which is, of course, what is being done. That people use this freedom in a manner that certain prodnoses don't approve of makes no matter. For the utility we're trying to maximise is that of the populace not the prodnoses.

If a regular hamburger or two makes you happier, despite or because of that extra 20 lbs you carry as a result, great, you're happier and that's the whole point of this economic freedom thing. And as revealed preferences tell us, if people didn't enjoy these sorts of things then their greater economic freedom would not lead to their doing them.

So, all in all we should thank the WHO for revealing this truth to us. In precisely those places where people are able to consume as much fast food as they would like to they do so. Those attempting to stop people exercising their own choices and desires in such a manner are therefore, by definition, illiberals.

On why the US should have a market for kidney transplants

The second installment of my finding my extant prejudices supported by Gary Becker. This time it's his excellent article about the reasons why the US should have a paid market for kidney transplants. This is something I've written about here (and elsewhere) in our own UK experience so it's nice to see the work being done all over again for the US.

My very much back of the envelope numbers for the UK were that offering perhaps £20,000 as compensation to a live donor would reduce deaths from kidney disease and at the same time save the NHS a fortune. Beckers's (obviously, more accurate, for he is an economist and I am not) estimate is that the same results could be achieved in the US with a fee of perhaps $15,000:

We have estimated how much individuals would need to be paid for kidneys to be willing to sell them for transplants. These estimates take account of the slight risk to donors from transplant surgery, the number of weeks of work lost during the surgery and recovery periods, and the small risk of reduction in the quality of life. Our conclusion is that a very large number of both live and cadaveric kidney donations would be available by paying about $15,000 for each kidney. That estimate isn't exact, and the true cost could be as high as $25,000 or as low as $5,000—but even the high estimate wouldn't increase the total cost of kidney transplants by a large percentage.

They've also started exactly where I did: with the observation that Iran is the only place in the world without a queue for such trasnplants and Iran is the only place in the world with a paid donation program. It is possible to think that there might be a connection between these two things.

Paying for organs would lead to more transplants—and thereby, perhaps, to a large increase in the overall medical costs of transplantation. But it would save the cost of dialysis for people waiting for kidney transplants and other costs to individuals waiting for other organs.

More important, it would prevent thousands of deaths and improve the quality of life among those who now must wait years before getting the organs they need. Initially, a market in the purchase and sale of organs would seem strange, and many might continue to consider that market "repugnant." Over time, however, the sale of organs would grow to be accepted, just as the voluntary military now has widespread support.

Eventually, the advantages of allowing payment for organs would become obvious. At that point, people will wonder why it took so long to adopt such an obvious and sensible solution to the shortage of organs for transplant.

Or as I have been putting it for some years now, there are some problems that are simply too important not to use markets to solve them.

Why not US healthcare? Because we want something much more free market than that

It's a standard part of the debate about reform of the NHS: as soon as it's mentioned everyone hares off down the road of insisting that we don't want to have anything like American health care. And the strange thing is that they're right, we don't: we want something much more free market than that. As John Cochrane puts in the WSJ:

The U.S. health-care market is dysfunctional. Obscure prices and $500 Band-Aids are legendary. The reason is simple: Health care and health insurance are strongly protected from competition. There are explicit barriers to entry, for example the laws in many states that require a "certificate of need" before one can build a new hospital. Regulatory compliance costs, approvals, nonprofit status, restrictions on foreign doctors and nurses, limits on medical residencies, and many more barriers keep prices up and competitors out. Hospitals whose main clients are uncompetitive insurers and the government cannot innovate and provide efficient cash service.

We can go further too: it's not even legal to purchase health care insurance from a company in another state. The end result is a system where no one is really exposed to true market prices or true market forces. And that's just not the way to run anything at all.

What would be a better system, both for us and for the Americans, would be something like the Singapore system: where absolutely everyone is indeed exposed to market prices and market forces. However, the government  steps in to make sure that those who genuinely cannot afford treatment get it. They also happen to run many of the hospitals: but those hospitals are indeed exposed both to competition and pricing. In essence Singapore has medical savings accounts for routine expenses. If you don't spend the money then it gets added to your pension. For catastrophic care there is a proper insurance scheme. There is no haggling over the price at which someone will be scraped up off the road and treated: none of us would particularly like there to be so either. But there is such competition and haggling about the price of drugs, of routine treatments. Everyone is exposed to market pricing and market forces.

That could be, although obviously mere correlation is not causation, why the Singapore medical system is as good or better than either the UK or US one but costs only 4% or so of GDP. That is, something like a third of the UK system and one quarter of the US one.

On the glorious plans of policy wonks

The roll out of ObamaCare (aka, ACA) has been gloriously incompetent. Websites that don't work, near zero testing of said websites after spending $600 million on just one of them and so on. I'm even told that they haven't even started writing the payments system yet. But there's yet one more story that has me shrieking with laughter:

While the Affordable Care Act requires health insurers in the territories to accept all shoppers no matter how sick, it does not mandate that all territorial residents buy plans nor does it provide subsidies to make coverage more affordable--as it does in the 50 states and the District of Columbia.

To explain a little here. The ACA says that anyone can buy an insurance policy, even to cover a disease that everyone knows they already have. It also says that the insurer can't vary the price of that policy based upon what is known: they can only charge something around and about what everyone else is paying. This, on its own, would kill any insurance market stone dead because the very sick would be charged the same amount as everyone else, meaning that only the very sick would insure themselves as the price would be so vast. So, to solve this there is the mandate: you must buy insurance or pay a fine. This is meant to make sure that younger and healthier people buy insurance and so all policies are cheaper.

Hmm, OK, it's a bit Heath Robinson but that's the way they designed it. Except, unbelievably, the policy wonks who toiled away on this vast bill made a very simple error. That mandate rule applies only to the 50 States and DC. And not to the other, non-state, territories of the US. Various Pacific islands, Puerto Rico and so on. Where, inevitably, the insurance systems are going rapidly bust.

This is the thing about Adam Smith's man of plan. The world is more complex than a plan allows it to be: which is how we get all those very bright people in Washington DC devising a plan that has such a glorious and gaping hole in it.

Oopsie. Next time someone proposes that the government step in to fix something, remember how badly they got this wrong.

Quite. As with the military maxim that plans never survive first contact with the enemy. So it is that complex plans about governance never survive first contact with reality.