August 14, 2009

Health Care: A Letter to Americans

Writing about web page http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/6001372/Sarah-Palin-calls-Barack-Obamas-health-reform-plans-evil.html

Working on both sides of the mid-Atlantic discipline of economics, I find I spend a certain amount of time trying to interpret America to my British friends and colleagues. Less often, I have to do it the other way round. Now seems to be one of those times. Britain needs to explain itself to America.

It seems Britain has become an issue in America: specifically, our national health service. Recently Chuck Grassley, a Republican on the Senate finance committee, was quoted as saying:

I don't know for sure. But I've heard several senators say that Ted Kennedy with a brain tumour, being 77 years old as opposed to being 37 years old, if he were in England, would not be treated for his disease, because end of life – when you get to be 77, your life is considered less valuable under those systems.

Now, I have only limited claims to offer any insight worthy of note. Specifically, I'm not a health professional (or a health economist). But I am a person, so from time to time I get sick. As a parent I had to see my children, now grown up, from birth traumas through the usual illnesses and accidents of childhood and adolescence. Recently I turned 60, so I have started to encounter conditions that go with aging. Within the last 20 years I experienced the deaths of both parents, both of advanced age, one after a long illness and the other after a short one. Along with all that, I sometimes worry about nothing. For all these reasons, I have had plenty of personal experience of health care in the U.K. and consider myself qualified to talk about that. So:

Dear Americans, here are some personal answers to some of the questions that seem to be on your minds.

  • Has the British national health service ever been a bad experience for you?

No. It has looked after me and those I love with unstinting professionalism.

  • Has the British national health service ever denied you or your family treatment on grounds of cost?

No. We have occasionally been faced with delays for testing or treatment that were a little longer than was comfortable. It was more urgent in our eyes than in the eyes of the medics and managers.

  • Do you worry about whether the state will pull the plug on you when you get older?

Absolutely not. I do worry that I will be kept alive beyond the point where I would prefer to slip away. That's another story, not for now.

  • Is that just because you're a national treasure? Do the national health service bureaucrats just give out privileges to famous people?

Hmm, let's think about that. It sounds like the Stephen Hawking argument -- that Hawking survived our health service only because he was famous. I'm fairly sure my NHS doctor doesn't know I'm famous. That's suggested by the fact that last time I saw him he asked me what I did -- and then wrote it down. My wife and children like to think I might be famous but for some reason I'm keeping it from them. In fact, I'm keeping it under wraps so effectively that even I don't know I'm famous. Nope, I think I'll be treated exactly the same way as everyone else. Just like Stephen Hawking, in fact.

  • Doesn't the NHS ration health care?

Sure. The truth is that health care is rationed everywhere. In a society without public provision, it tends to be rationed by price, or by the insurance premium. Those that can't afford it, don't get it. In the national health service, affordability is reckoned at various levels, national and local, but not in terms of the depth of my personal pocket.

  • Is the NHS perfect, then?

No. It has many of the imperfections of government provision. For one thing, it can be squeezed by budgetary limits. As a result, bringing in expensive new hi-tech treatments can be at the cost of basic procedures or attributes such as cleanliness and diet in hospitals. Results are uneven: Britain is not very good at diagnosing and treating some cancers, for example. I could go on. The main thing is that, despite many imperfections, it basically sort of works. Specifically, it has been working for half a century without leading Britain to Nazi eugenics or a communist dictatorship.

You have to notice that David Cameron, who leads the most free-market mainstream political party that we have, is vociferous in defense of the national health service. Why? Because he knows it is very, very popular. It's popular because, despite the imperfections, it works.

  • If you have to be in hospital, wouldn't you rather be in hospital in the United States?

Yes. It's a no-brainer -- American hospitals are the best in the world. At least, that would be my preference, conditional on having full insurance cover. But if you changed the question slightly, my answer would change. If the question was: "Unconditionally, which system would you prefer to live under?" then my answer would be the British one, because then I would not worry about needing treatment for conditions that were not covered by my insurer, or about exhausting the limits of my cover, or about possibly losing my job and my cover with it -- not only mine, but my family's cover too. Here, I am not afraid to be ill or injured. Of course, that's my personal choice; others might choose differently. But it is not an irrational choice.

  • How do you square acceptance of tax-financed health care with free market economics?

The market economy can solve most problems, but not this one. There are three reasons. First, according to market principles, the consumer is sovereign. In the market for medical services, most of us face a huge difficulty in trying to enforce this idea: the doctor knows best! We are too ignorant, and too emotionally involved, to be the best experts in our own care. That's why it makes sense for a powerful intermediary to buy medical services for us. That intermediary can be either the government or a private insurer. This leads to the second reason: private insurers like to cherry-pick their risks. Poor people have consistently worse health outcomes, and so make poor risks. When the only intermediary is private insurers, they will inevitably tend to price poor people out of the market. Only a government scheme can make sure that poor people are included. The third reason is that poor people should be included. This is on several grounds, starting with social justice, including justice for their children, who are not to blame for their parents' life choices, and because otherwise poverty will spread untreated diseases through the community.

Within our national health service I am in favour of the unevennesses that give us individual choices. It's a good thing if all doctors, hospitals, therapies, and procedures are not exactly the same. This lets us compare results and make choices among them. I'm also in favour of the internal markets that let doctors choose between consultants and facilities from which to purchase care for their patients.

In short, the NHS does violate free market principles, but with health care these principles are going to be violated anyway -- even in a free market. Health care raises issues of market power, information, and health spillovers that do not arise in most markets. It is an exception.

  • Doesn't government health care create huge bureaucratic overheads?

Well, yes. Interestingly, however, the overheads of government-financed medicine may not be as large as the overheads of insurance-based health care. As far as I understand it, my country commits a much smaller proportion of its GNP to health outlays -- and gets considerable better average outcomes than the United States, measured by life expectancy and many kinds of morbidity. Of course, there are confounding factors that complicate our understanding of the causes. Government purchasers are not necessarily any better than private insurers at holding down underlying costs. But it is not hard to see that taking ability to pay (or insurance status) out of the equation cuts out a lot of bureaucracy.

  • Still, wouldn't you prefer to pay a voluntary insurance premium over compulsory taxes?

I pay both. And I do so very willingly. My taxes go to the national health service, which ensures that I and my loved ones are fully covered both for emergency treatment, and for all other procedures that are available although not necessarily exactly when we want it. My insurance premium then lets me bypass many queues if I need to. Moreover, the two systems mesh smoothly, allowing me to switch back and forth between them -- as I did recently when my NHS doctor recommended some tests that could not be done instantly within the national health service. My insurer paid so that I could have them done privately, and I took the results back to my NHS doctor.

In other words, it's not a question of government versus private provision. You can have both working together -- and in fact, in the United States, you do have both. It's a question of the right balance. The balance we have in the U.K. right now may not be perfect, but it is not a bad balance.

  • Don't you mind that your taxes also pay for the care of needy and feckless people that pay no taxes themselves?

No. In fact, I'm very happy that the lazy scumbags get health care too. This is partly on pragmatic grounds, so that they do not pass their diseases onto others, and so eventually to me. Another reason is moral: poor and needy people have children who themselves can be in need of medical care. And from the moral to the personal: the poor and needy of the future might turn out to be my grandchildren! Or even my children! (I didn't mean to say that, it just popped out.)

  • Does the NHS explain your bad teeth?

No, I obtain my dental care privately under an insurance scheme. My bad teeth are connected not with socialized medicine, but with the fact that I spent my childhood in Britain in the 1950s.

In conclusion, dear Americans, you must make your own minds up. We Brits can understand perfectly well the importance of private versus public, free market versus government, and individual versus collective responsibility. These are big important things that all of us should and will debate freely.

What we don't get is the depth of anxiety with which some of you face the prospect of wider sharing of health care. British experience gives plenty of food for thought. We may not have got it exactly right. But the choices we have made are well within the parameters of a society that is free as well as modestly equitable.

Keep well, Mark


- 5 comments by 0 or more people

  1. Tim Tav

    There is an interesting debate to be had concerning the NHS versus other world leading countries health care systems. The UKs healthcare is beginning to cross over to private or NHS especially if you can afford it. There are fewer NHS Dentist Jobs and this may happen to the rest of the health care system including doctors and the like,

    02 Sep 2009, 16:25

  2. Care home Mike

    “Still, wouldn’t you prefer to pay a voluntary insurance premium over compulsory taxes?” – yes indeed. The NHS is there as a safety net and to ensure a minimum level of heath in society (that’s why it came into being anyhow, even if it doesn’t quite work like that!). For those who want to be seen quicker or have a procedure not on the NHS, there is private medical care.

    It’s not just medical procedures either, the same applies for dentists, care homes etc..

    08 Sep 2009, 14:57

  3. care homes mike

    Add there’s a good chance the the NHS won’t be able to stay around in its current form for either, because of the demographic time bomb (too few people being taxed to pay for it).

    08 Sep 2009, 15:01

  4. Nicola Jameson

    This is an extremely intricate subject and one that is very hard to qualify – it really comes down to your worldview and whether you are a conservative or more left wing thinker. As a conservative, I am much more inclined to leave such things to the free market (the current recession and its roots in the free market notwithstanding) as I feel that excellence resides where there is a will to exceed. Public funded programs simply don’t work as sharply in my opinion. Regarding the NHS, my feeling is that it has real worth to society as a safety net but if you have the resources, most people would go private which tells me alot about how the 2 systems are perceived. This is the same whether it is health insurance premiums, household insurance, tanzanite jewellery insurance or whichever.

    27 Nov 2009, 16:00

  5. Nancy Sanders

    To address Nicola’s comments above; whilst I agree that her points regarding your political leanings are relevant here, I think there is more to the subject than just left versus right. Insurance is a very personal choice and based on a great many factors. When i am insuring my Tanzanite Jewellery for example, I will go for the cheapest, most competitive insurer on the market as the loss of those items, whilst painful will not be life threatening. However, when deciding who gets to look after my health and that of my loved ones, I am not sure the market mechanism can provide the best solution as it is driven by the profit motive alone. More altruistic things like care and providing solutions for rare diseases etc will not be a priority as the market is small and therefore not a profitable use of resources. A public healthcare system can address these things head on. Just look at how the drug companies in the US work and you have your answer.

    27 Nov 2009, 16:25


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I am a professor in the Department of Economics at the University of Warwick. I am also a research associate of Warwick’s Centre on Competitive Advantage in the Global Economy, and of the Centre for Russian, European, and Eurasian Studies at the University of Birmingham. My research is on Russian and international economic history; I am interested in economic aspects of bureaucracy, dictatorship, defence, and warfare. My most recent book is One Day We Will Live Without Fear: Everyday Lives Under the Soviet Police State (Hoover Institution Press, 2016).



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