A Hayekian take on telemedicine

In recent years, doctors have increasingly replaced face-to-face medical consultations with telephone or virtual ones. 3 in 10 consultations are now done in this way, which is more than twice the pre-pandemic share.

Is that a good thing or a bad thing?

Critics see it as a downgrading of medical services; supporters see it as a clever way to use modern technology to deliver healthcare more efficiently. As with everything these days, opinions tend to run along pre-established political diving lines. The Guardian and The i have been broadly supportive; the Daily Mail and the Telegraph have been critical.

I suspect this is because the political Right associates remote-working with wimpishness, and the political Left supports whatever doctors support (because doctors represent the NHS, and the NHS can do no wrong.)

As with most political constellations these days, this sorting is entirely arbitrary. There is, of course, nothing “left-wing” about phone consultations, and there is nothing “right-wing” about face-to-face consultations. You could very easily imagine a political role-reversal. How about a Left-coded “Tory cuts are forcing doctors to resort to online consultations, risking patient safety” vs a Right-coded “Lazy bureaucrats are wasting millions on renting expensive premises, because they cannot be bothered to take up new technologies”? Or a Left-coded “The Tories are pushing online consultations to sever our personal ties with the NHS, so that they can sell it off to Donald Trump more easily” vs a Right-coded “GP surgeries have become woke indoctrination centres – of course they want you to attend in person!”

For me as a Hayekian, political arguments of this kind are often frustrating, because people expect you to pick a side, whereas Hayekians are more concerned with the process than with the outcome. We realise how little we actually know, and that insight guides our economic thinking. Rather than asking “Are remote consultations good or bad?”, we ask: “What would be a good process to learn about the pros and cons of remote consultations, in different situations, and for different people?”

The issue of remote healthcare is, of course, not specific to Britain. Healthcare professionals and healthcare financing agencies around the world have to grapple with that issue. It is just that, in more market-based systems, the question poses itself in a very different way.

Take the private health insurance system of Switzerland. In Switzerland, most health insurers offer an insurance option under which remote consultations are the first port of call for non-emergency healthcare, and face-to-face appointments require a referral. Why would people sign up for such an option? Because this arrangement leads to cost savings, which insurers share with their clients, in the form of insurance premium rebates. This so-called “Telmed Model” (short for “telemedicine”) is, on average, 14% cheaper than a standard health plan.

Crucially, Telmed is strictly voluntary. Nobody has to choose it, and the people who have chosen it do not have to continue with that plan if they are not happy with it. At present, about 16% of the population choose the Telmed tariff, a slight increase over recent years, which may or may not indicate a trend.

So unlike us, the Swiss do not need to have a “debate” about whether telemedicine is good or bad. In that system, if you think it’s good, you sign up for it, if you think it’s bad – you don’t.

If the cost differential between remote and face-to-face healthcare grows over time, so will the premium discount for Telmed, and other things equal, more people will choose it. If, on the other hand, it turns out that those cost savings cannot be sustained, the premium discount will shrink, and other things equal, more people will switch back to a standard contract.

If our aversion to virtual appointments is mostly cultural, because it’s new, Telmed may become more normalised over time, and more people will choose it. If, on the other hand, it turns out that telemedicine is overrated, fewer people will choose it. Or maybe a consensus will emerge that virtual appointments are great for some things, but bad for others, in which case insurers may come up with mixed models.

The point is that unlike here in the UK, in Switzerland, the growth of telemedicine is consumer-driven. It will continue to grow if consumers want it to, and it will stagnate or shrink if they don’t. I don’t have a view on whether it should grow, shrink, or stay the same. For me, it’s about the process that leads to that outcome. And their process strikes me as a lot more sensible than ours.

Head of Political Economy

Dr Kristian Niemietz is the IEA's Editorial Director, and Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

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