Undercover Economist

A brilliant (and doomed) template for healthcare reform

As the debate on healthcare drones on in the US, I have been struck by a heretical thought: the differences between the British National Health Service and the US healthcare system are not nearly as important as their shared weaknesses.

The difference between the two systems has been exaggerated of late. The uninsured in America are not barred from emergency rooms by security guards. The NHS has not assembled a death panel to do away with Stephen Hawking.

I’ve had experience of both systems. My wife’s life has been saved once by American doctors and once by British ones. One of my daughters was born in Washington, DC, the other in London. And I’ll admit that the systems feel very different. The outcomes are different, the bureaucracy works in a different way, the waiting times are different and the rules of access are different.

Yet in one vital way, the systems are exactly the same: at no point during my interactions with either system did I ever have to wonder about whether a procedure was worth the price. Large sums were spent on me and my family, but I never had to ask myself whether my doctors and I were treading the path of cost-effectiveness, straying off into wasteful indulgence, or indulging in dangerous penny-pinching. Someone else always picked up the bill.

There is an obvious alternative. We could pay for our medical treatment the same way that we pay for our cars or our food or a roof over our heads: out of our own pockets. Before rejecting the idea out of hand, at least acknowledge that it would encourage us to ask a very different set of questions, including: “is there a cheaper way that would work?”, “can I get better value treatment elsewhere?”, and even “would I save money if I drank less and exercised more?” The effect on cost and quality would be bracing.

Think about medical technology. Why does its price keep rising while the price of other technology keeps falling? Perhaps it is just bad luck, but I doubt it. As long as patients have no way to demand better value instead of simply better quality, cost inflation seems inescapable.

The obvious objections to this modest proposal are that some medical procedures are very expensive and need to be paid for by the state or an insurance company; that some people are poor and can’t afford as much treatment; and that patients would find it hard to make sensible choices.

The first two objections are valid, but they can be overcome without the necessity of insurance for everything. It is perfectly possible to design a system where redistribution, forced saving and “real” insurance – that is, against unexpected and very costly events – address these concerns without whisking away every bill before the patient sees it. Singapore has such a system. David Gratzer (a libertarian Canadian psychiatrist) has proposed a US version in his superb book, The Cure.

As for the third objection, it is true that patients do not today have the information they need to make sensible decisions about buying their own healthcare. But then, why would they, given the current systems? I recall the local press in the US being full of articles along the lines of “the city’s 50 best dermatologists”. Value for money was never mentioned, but ask patients to buy their own treatment and you can be sure that such articles would soon be supplemented by the medical equivalent of “cheap eats” reviews.

I understand that the whole idea is a political non-starter. But it’s a shame. Not only is it colossally wasteful to outsource medical decisions to bureaucrats, public or private, it is also infantilising for us as independent human beings. We can do better.

Also published at ft.com.