Monday, July 16, 2007

On Health Care - Why The State Wins

A couple of things in the last few days have motivated me to post these musings. The first is that last Tuesday a slight eye infection forced me to visit a GP for the first time in about 6 years, the second is that there seems to be a lot of flap in the States at present over the release of Michael Moore's new film, SiCKO, all about the health care system in the US.

First off I'll admit I'm totally biased, I don't know how any civilized industrial nation thinks they can get by without universal state sponsored health care, the fact that only one such country does so probably indicates that most of the rest of the western world agrees with me here. My perception is also coloured by the fact that whenever I, or anyone I have known has needed the NHS it has been very efficient, this clearly isn't always the case, but its good when as happened to me I walked in off the street and had seen a Doctor within 30mins, no appointment, no problem. It was also reassuring to know that the most I would have to pay would be about £6.90 for any drugs, were they to cost £10 or £10,000.

Now the NHS clearly isn't perfect, it clearly isn't even the best health care system around, but I think it is considerably better than a system which is run for profit. Whats more I would argue that if run efficiently any public health care system is clearly better than any private one. For one simple reason, economics, in a public system you remove several layers which are required to add a profit margin to everything they do. For example, in a system like in the US where health care is paid for by purchasing insurance, you have system where if you are ill, you visit the doctor, he does his job, then marks up the cost by ~20% or more to cover the profit margin of his medical group, he then calls your insurer who may or may not decide to pay for any treatment, in any case your premium includes a ~20% markup to cover their profit margin, you then get moved along to a hospital if you require surgery, they also add their own ~20% markup, so you have three layers where you end up paying more for private health care, just so a bunch of rich shareholders get to get richer.

Now people argue that a private health care system is more efficient so you don't notice these markups, because overall the service costs less than the supposedly inefficient state system. This can easily be shown to be nonsense, the US spends %15 of GDP on health care, to provide them a ranking of #37 in the world for health care, France spends %11 of GDP to be #1. Hmm how is that extra efficiency working out for you. It looks even worse when you realise everyone in France gets anything they need, whereas in the States an appreciable fraction of the population has no insurance, so get little or no treatment. So to take the stats at face value, the private health care systems costs you more to provide a worse service, good job. If your a stat fan, in the UK we currently spend around 8% of GDP, to be placed #18. Which anyway you slice it means that the NHS is both more efficient and provides a better service on average to boot. Its important to note that this is of course on average, I'm sure if you have the money in the States you get a good service, the problem is that most people either don't have the money, or are very close to losing their coverage.

There is of course one other major area that nationalised systems can outperform the private sector, in collective bargaining, it always strikes me as amazing that people that support the idea of capitilism (like me) seem happy to allow large companies, Walmart or Tesco for example, to drive down prices by buying in bulk (like me), however when in the States the idea of a similar approach to buying drugs is mooted you hear howls of disapproval (not like me). Apparently cheaper toilet paper is fine, but more affordable life saving drugs, oh no, you have to pay whatever the drug company feels like. If one buying system exists, as does here in the UK, it is much easier for them to say to the pharmaceutical companies, we are going to pay this much, and we'll take 10 million doses. When you have a series of medical groups all competing and serving (comparitively) small numbers of customers, its much more difficult to drive a hard bargain, the drug companies would rather not sell to you then have to cut the prices across the board.

Anyway musings over for the week. Back to work.


Pete said...

Hi Mark,

you mention the US being way down the health care rankings. Here is an insight into the methodology of how those rankings are calculated:

As with many indices of very complicated things, it depends on what you "measure"!


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