5 thoughts on “Forget NHS romanticism: Market-based healthcare is far better for patients”

  1. Posted 04/04/2015 at 06:58 | Permalink

    As both a patient and an NHS employee I am certainly not romantic about the NHS, grappling with its problems ever day. But I am also rather sceptical of market romanticism. Kristian Niemietz may be right when he says that the Swiss system works well – but he does not say how much extra the Swiss pay. In 2012, the UK paid around 2,600 Euros per head for healthcare. the Swiss paid over 4000 Euros per head. I doubt that this massive difference is accounted for by people “topping up” for better rooms in hospital, or even by the administrative overhead you pay with any insurance-based system. It’s being spent in the health system itself.

    The Swiss pay a lot more more and get a better service – let’s just grow up and accept that, most of the time in life, you get what you pay for.

  2. Posted 06/04/2015 at 21:24 | Permalink

    Well assuming this is a zero sum game, it’s hard to see how a health system can be improved while at the same time making profits for insurance companies. I suspect the missing part of this balance sheet is the extra funding which must surely come from the treasury. Unless we believe that introducing an insurance system magically makes health provision cheaper.

  3. Posted 07/04/2015 at 13:31 | Permalink

    but the point is that a market is not a zero sum game. The purpose of a market is to discover information about what consumers want and how best to provide what they want. That is why transactions within markets create value. There may be particular difficulties with markets in some sectors but, given the right conditions, markets can develop the institutions to overcome these difficulties – and some kind of state funding for healthcare within systems were most providers are private, mutual (still private), charitable (still private, of course) seems to do quite well. One crucial point is that if you are spending 8 per cent of national income on a service we should not assume that we all want the same type of service. I like my car insurance stripped down with a high excess (few complications, less need to make a claim), I might prefer my health insurance to have great hospice and elderly care but maybe not providing access to the best teaching hospitals (or the other way round). Those who are working (especially commuting) may prefer to pay more for weekend and evening access (why have a debate about whether 60 million people should have such access?) whereas pensioners may prefer not to pay for such things. Currently, the NHS does not provide hospice and elderly care (rightly in my view – because it has to provide a kind of average that is okay for everybody) but we can have our preferences met better if we can choose different things. The profit issue is a red herring. Either the government has to borrow to build hospitals (yes, the government can borrow cheaply but only because future taxpayers underwrite the risk) or the government uses some kind of pfi contract. Profit margins for the provision of current services (as opposed to on capital investment) are always tiny.

  4. Posted 10/04/2015 at 08:42 | Permalink

    Keep an eye on the Republic of Ireland. They reformed to a european style social insurance system in 2014 (from an NHS style system). It will be interesting to see how things work out for them. The basic problem of government monopoly healthcare is the inefficiency in allocating resources to where they’re needed. In market based system, they have price and profit (and loss) signals which direct resources appropriately. For example, if the UK privatised cancer treatment, and one firm was making an extortionate amount of profit, new firms would swoop in and direct resources that way. I know this is rather simplistic, but compare it to what we have now – a chronic lack of resources, and the worst cancer survival rates in western Europe, and a central planner without sufficient information to know how to divide up the budget. Market based systems are very good at resolving these types of problems, as is the case in Europe. People say that making profit out of healthcare is unethical. I would agree with this in a corrupt franchise based system, but not in a competition based system where patients have freedom of choice.

  5. Posted 10/04/2015 at 15:07 | Permalink

    Unfortunately competition generates its own inefficiencies and uncertainties – duplication of resources, lack of cooperation, a contract with an unsatisfactory provider you want to terminate even though there are no other suitable providers, providers suddenly leaving the marketplace when they have realised there’s not much money to be made (as has happened with private mental health beds recently). And in a system where cash is very restricted you tend to get a “race to the bottom”, as you have with voluntary sector contracts in supported housing recently, where price clearly dominates over quality. Probably one reason why the Swiss pay so much – and most other western European countries with insurance systems pay more than the UK.

    It will, indeed, be interesting to see how the Irish do – but there, I fear, move to insurance-based health provision is being seen – romantically perhaps – as the solution to the lack of resources generated by their fiscal crisis.

    Unfortunately the notion of competition and patient choice are (to an extent) illusory – there is usually not the information available to make an informed choice in those areas that really matter. You can of course choose sensibly between things like hotel and catering options and but the evidence is so ambiguous in so many areas of health that that customer/choice model just does not work very well.

    Certainly, in the past at least, estimates of survival rates have been confounded by the differing characteristics of the populations served.

    And the issue of cancer rates – my guess is that this may have to as much to do with our particularly unhealthy lifestyles here compared with mainland western Europe. Certainly, although survival rates her are a few percent lower than in France, Germany etc, they have been increasing at a similar rate.

    And in the world’s most well-known insurance-based health economy, the US, competition and choice has done nothing to develop a more rational health system – although they may well be getting somewhere now with Obama care.

    So what is the quality answer? The CqC is only now developing itself as a really rigorous inspectorate – I think that this is a good way to drive up standards in a non-insurance based-system – as long as it doesn’t get abolished and replaced by a different body by the new government …….

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