One of the things that came out of the US healthcare débâcle was the curious false dichotomy that the only two possible approaches to healthcare were the NHS or the current American system. Now, the American healthcare system has many things going for it:

America has the highest quality treatment of any country in the world, and leads the world in medical innovation

But (and this is a very big but!):

the cost is simply too high

We know that their healthcare is good, even the Canadians concede it. And the Canadians are widely held up as an example of a society that has got it right, especially compared to the Americans. But healthcare in the States is horrendously expensive. I know that people who have long-standing health conditions can’t even get divorced because moving off their spouse’s health insurance will make it impossible for them to get their own – the insurers won’t touch you if have an existing condition, or they won’t cover any existing condition. That is surely a cruel and perverse incentive.

So, why is American healthcare so expensive?

The answer to that is actually straightforward, but those on the economic left simply don’t want to admit it. It is, in fact, the same problem we have with healthcare in our country: People don’t pay for their own care.

Yes, you read that right; the problem at the heart of the increasing costs of healthcare is the same on both sides of the Atlantic, despite us having superficially very different systems. In Britain, it is obvious to people using the NHS that the government picks up the tab. In America the cost is borne either by the government, by the patient’s insurance company, or by their employer. In both systems, it is ultimately the patient who pays; through taxes, insurance premiums or lost job opportunities because of the costs imposed on employers. However, the cost is never made apparent to people in the same way it is when shopping for other goods.

If you’re not aware of what something costs you, why would you behave any differently than an MP with a trough-sized expense account? The market mechanism needs price information to work. If the prices are argued out between people who are not actually using the service and the transaction occurs away from the people using the service, then the people using the service don’t really have any incentive to shop around to make the best balance of price versus “performance”. This not only leads to healthcare becoming more expensive and not becoming cheaper, but it also leads to less innovation in the actual health care.

Your health is not a “right” or something that must be maintained at any cost. If your health was that important, no-one would be overweight, no-one would eat sweets or chocolate or drink anything but water, no-one would smoke, everyone would eat only raw vegetables and exercise regularly, etc. Since nobody actually lives like that, everyone is making the implicit decision to balance their health with their enjoyment of life. And if you’ve made that decision, then the cost/benefit analysis of the level of healthcare you want is just another aspect of that balance.

By all means, have health insurance to help you manage the costs and the unforeseen. But let people get the market information to help them make more informed decisions.

1
SadButMadLad March 12, 2010 at 10:07

The other problem with the American system is their reliance on technology. This is partly driven by the insurers happily paying the hospitals their increased bills for the new high tech, but also by the natural desire to have the latest and greatest which then can trumpet about in their advertising. Figures have shown that American hospitals are also using more and more MRI scans and other high tech methods even when they are not necessary. Again partly because they know that the insurers will happily pay for such unnecessary procedures. This is not because the insurers like to spend money, but because the insurers’ medical staff who approve these things benefit personally in various ways.

2
bbqbob March 12, 2010 at 10:33

Some very good points.

But the HUGE profits that are made by the insurers. They rape and pillage the payers.

3
Because We’re Young March 12, 2010 at 10:47

Bang on Anna.

Living in Switzerland, I pay a fortune for healthcare each month, which makes sense to me because my wife is pregnant, I have a small son, and we get unbelievably good coverage (private room in top clinic for the birth with 5-day stay after etc.). Once we stop having children, and the vaccine cycle is more or less over, I might downgrade a bit, on the basis that I don’t need such high coverage.

The beauty is, I effectively manage my own healthcare. If I downgrade and pay less, no-one else suffers. Everyone here has healthcare coverage, if you do not the State imposes it on you after 3 months. So there is no central pot. The poorest are covered by the state, but there is no universal right of healthcare other than of course emergencies, and no NHS to speak of.

Healthcare here is uniformly awesome, not just for the rich. The best bit is, for those who cannot pay, the state can genuinely afford it, as they are not sticking money in my pocket for no reason every month via a monstrous central organisation.

4
ivan March 12, 2010 at 11:15

Those of us of more advanced years remember being told that we would all pay a small sum from our wages to cover us should we need health care – it was our insurance, paid by all so all could benefit, it was also there to cover us in our old age. This great scheme – National Insurance.

Unfortunately successive governments saw it as general revenue instead of what it was supposed to be, a pot of money there, gathering interest, to pay for the NHS and basic pensions.

Although the NHS was a good idea, later labour governments have seen to it that it became a way to pay their hangers on. It would be a lot better if the top 5 levels of management were removed for the benefit of the patients and the public purse. Those top levels do nothing but remove money from the system.

5
PT March 12, 2010 at 11:36

A parallel is pet insurance. A few years ago, a cat we took from a rescue centre sustained a very nastily broken leg soon after we got him. The vet’s first question – “Are you insured?” No, we were not. During the subsequent 4 months, first with a very intricate operation and then with numerous night-time and weekend callouts, the cat was very well treated and remains a quadruped. Total cost to us was just over £400. I am absolutely positive that had we been insured, that cost would have inflated considerably. The same effect probably inflates the cost of human healthcare.

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Thaddeus J. Wilson March 12, 2010 at 12:53

bbqbob, I’m sure they do, it’s another obvious consequence of people not having any control over or awareness of the transaction costs of their healthcare.