They Say It’s All Your Fault


<>Spending on health care is rising rapidly – but there’s one thing we could do.

<> 

<>Listener: 26 September, 2009.

<> 

<>Keywords: Health;

<> 

<>We are told that the health-care sector is a drag on the economy. It is growing faster than the economy as a whole and is chewing up a fifth of core Crown spending. A couple of decades out it may be taking as much as 40% of a larger public budget.

<> 

<>The trouble is that you (yes, I mean you, dear reader) want the health care. The evidence suggests you do not benefit much from rising material standards of living. Instead you want to live longer and more healthily. And that’s what’s been happening. Life expectancy for newborns has been rising – it now averages over 80 years – and my impression is that today’s unwell experience a better quality of life.

<> 

<>That spending on health care is rising faster than total spending may seem a perfectly sensible development to ordinary people. If the demand for chocolate chippies doubled over 20 years because people wanted to consume them, we would have no qualms. But we have two reports – from the Ministerial Health Review Group and a private consultancy – that blame the difficulties the health system faces on your increasing desire for health care. Shame on you!

<> 

<>The failure might better be attributed to the inability of the market – or any system – to deliver good health care efficiently and fairly. It is the largest single industry in the US, the world’s greatest capitalist economy. Yet America’s health care is extremely expensive and inefficiently delivered. Despite having some of the most impressive medical centres in the world, the average American gets a much poorer deal than people in all other rich countries with which comparisons are usually made.

<> 

<>There is no ideal system. Every country has its own institutional quirks, which make reform very difficult. You are not to blame for the mess. Our desires to have more spending on health at the cost of less other material consumption seem quite reasonable. It’s just that no one can work out how to effectively deliver the reasonable demands.

<> 

<>There’s not a lot of difference between a public funding system and a comprehensive private insurance one. I would caution against insurance or health-care provider systems based on competition between suppliers. It is easy to promote their strengths or identify their weaknesses, but providing a balanced account of both aspects is messy. In the rhetoric of vigorous political debate, who wants to acknowledge a mess?

<> 

<>The ministerial review, Meeting the Challenge, is a great disappointment. You can’t have 170 recommendations that are all bad, but few seem to tackle the real issues. Some seem to have a hidden agenda, especially the one about resurrecting the health funding agency of the 1990s, with its funder-provider split. The 1990s reforms promised 20-30% productivity improvements, but there were none. This time the promised gains – if any – are not quantified.

<> 

<>On the other hand, the review does not have the 1990s’ passion for “competition”, which works – if at all – in only very narrow parts of the health system. The focus seems to be more on co-%ordination.

<> 

<>The review’s top-down approach is a major limitation. How can we tackle any real health problem unless the clinicians own it? The bureaucrats want a rationalisation of their safety committees. Far more important than having committees hidden in the bowels of hospital bureaucracies, or in Wellington, is that those who deal directly with patients work in and promote a safe environment.

<> 

<>I trust our clinicians to supply good health care far more than I trust bureaucrats and managers. Some humility from the latter would be welcome. But clinicians are not particularly sensitive to cost-effectiveness. Obviously we have to restrain what can be offered. Leaving non-clinicians to do that doesn’t work. Our clinicians have to own the restraint, too. At the moment they don’t do that very well.

<> 

<>As for you, dear reader, if you expect better health care without higher taxes and/or increasing insurance payments, then it really is your fault.