Health (reform in the US) or ‘Decisions and Trade-offs related to Health 1001’

See the full blog here.

One of the wonderful things about a blog, is that you can write down thoughts which may or may not be interesting but without claiming to have done in-depth research or have in-depth knowledge – you are just ‘putting it out there’. So in that spirit of ignorance and lack of thought I’ve given to reforms in the US, here are my thoughts on healthcare:

· There is potentially unlimited demand for ‘free’ healthcare. That is, people will demand anything that already exists, and research into potential new treatments (‘why should my [blank] die just because they won’t support research into [blank]?’

· However, as individuals, we really do strike a balance between health and other things in life – even if voicing that aloud makes us uncomfortable. I’ve had this argument with my mother on many occasions. She has worked in the NHS in all sorts of roles for most of her life. She likes to claim that there is nothing she puts ahead of her (or her children’s health). At some point though, I noticed she didn’t have the most comprehensive private health insurance available. Instead, she chooses to use that money for other things – not all of them healthy. She has therefore made some kind of trade-off, which is presumably utility maximizing. Roughly, she has chosen between one of two (for simplicity) bundles:

Bundle 1: 100% health insurance + lots of other nice things

Bundle 2: 90% health insurance + fewer other nice things

She has chosen bundle 2, and so is guaranteed lots of other nice things, but she has taken a risk of having an uninsured health shock.

· A national health system is basically a form of insurance. Since each individual cannot decide exactly how s/he wants to divide their resources between health and other nice things, some democratic process needs to be used and a social compromise reached.

· The bigger the share of national resources dedicated to health, the lower the risk of having a (socially) uninsured sickness is, but the fewer other nice things there are to go around. (Every additional medical technician trained is one fewer SUV maker or every additional medical lab is one fewer ‘fancy mobile phone’ research lab. Alternatively, for public funds, have one fewer school, or a few miles less road, or whatever. You get the idea.)

· Of course, despite my example, you cannot actually have 100% health insurance, but you could, in theory, dedicate all national resources except those needed for basic survival towards provision of existing care and research into new medication.

· How much should the state provide? Well, I don’t know. Anything on a continuum from zero to all public spending. It seems perfectly reasonable to me that different societies (countries) can choose different trade-offs between the amount of health risk and the amount of consumption of other nice things.

· My own preference would be for more public health care in the US, if I were American. But I am not, so I see no reason why, through their democratic / pluralistic system, Americans shouldn’t decide, and, as a group, decide differently to me.

· This is one reason why some of these crazy attacks on the British NHS have angered so many people in the UK (rarely have I seen such a united front by all political parties!) including a Twitter feed called welovetheNHS. The attacks are based on a lot of erroneous statistics. We know our system isn’t perfect, but we have decided through our own system our own set of preferences and trade-offs. That is our legitimate choice. The US is welcome to its own choice (and Europe tends to be more risk averse in its policy choices than the US).

· Other issues that might come into the debate:

o Are the people who are not covered by the US healthcare system disenfranchised? (making the democratic process to decide invalid???). Well, I don’t know. But I think not. I am a great believer in voting and see no reason why you should be listened to if you can’t even be bothered to repay the privilege of living in a democratic place by voting. I put my money where my mouth is too: I have even destroyed my ballot paper when I didn’t want to vote for the candidates I was offered. It’s my way of saying – hey, I can be bothered to get my arse down to the polling station, so my vote is there if you want it.

o Pharmaceutical companies might push up prices either for insurance companies or for Governments making the purchase. It is an empirical question as to which one keeps the prices lowest. It seems almost certain that European healthcare systems keep costs lowest and best value-for-money.

o Does that mean that US insurance premiums are subsidizing the profits and research of big pharmaceutical companies and European governments (and therefore people) benefit from prices that are lower than they otherwise would be and more medical research too? Maybe….. God bless the current American healthcare system! J

· Here is an interesting comparison of health expenditure and health indicators from around the world. Notice how successful Singapore is with spending so little money. Basically, the Government pays into individual health accounts. The individual then chooses when and on what to spend the money. People then feel that the money belongs to them and use if more wisely than if they felt it belonged to the state. The Government picks up the tab for very big expenditures. Singapore is ranked sixth in the world and top in Asia for healthcare. See Healthcare-Economist for a more detailed description of the system.