Healthcare

Healthcare is an emotional issue because it can determine whether people live or die. That’s all the more reason to think about it with reason, and try to work out the best means to provide fair provision for all.
A common fear surrounding private health coverage regards the incentives facing insurance firms. It can be stated as “the more healthcare they can deny us, the more money they make”, since “getting the government out of healthcare ... is to place it in the hands of people with a dollar incentive to deny people healthcare.”

I once worked for a health insurance company, and find it hard to accept the implication that my colleagues and friends tried to deny people coverage. Whilst some of them were unfriendly to other staff (!), they were all professional with customers: you couldn’t meet a nicer woman than Roz, who was in charge of paying out life cover. She had no intention at all to hoard money for the plc, rather ensure that the policy hadn’t been abused. Of course she knew that if she denied a pay out, that would leave the company with more money than it otherwise would have. But that money would be used to lower premiums of other clients, all of who were keen that we clamped down on fraud. She also knew that if she made a mistake, and turned down a fair claim, the policy holders’ family would have the full weight of the law behind them to take us to court. No bereaved family would enjoy legal action, but for that reason the publicity generated would be huge. I can assure you that if the company were unsure whether a claim was genuine, the value of their reputation would err on the side of caution.

Most of the employees worked in the call centre, directly involved with clients. I was surprised when I first arrived, since I expected to see targets and pressure to pull in money for the company. But the incentives weren’t for increasing profits, but improving service. Their performance was judged in handling queries, responding to claims quickly, setting up new accounts without error... why might this be? Well it’s perfectly true that a health insurers profits come from the different between what customers pay, and what they give out as benefits. In the short term, they do have an incentive to break faith. But this phenomenon isn’t just confined to health care! In the car market, Honda earns profit from the difference between the price of a new car, and the amount it cost them to build. But they don’t make the engine out of chocolate, or use cardboard steering wheels. If it did, aside from having the legal right to demand a refund, we can simply stop buying from Honda in the confidence that a rival such as Toyota would be willing to serve us better. The principle that aligns a company’s quest for profit, with serving their customers as well as possible, is competition.If different insurance companies compete for customers, they need to take into account the consequences of their actions – that denying fair coverage will make them bankrupt (either through losing customers, or in legal fees). They must therefore protect their reputation   new clients with promises that they keep.

In spite of these features, a private insurance system is not perfect. But let’s compare it to government provision – do they have an incentive of depriving service? Perhaps not directly, since anyone spending other people’s money will be lavish. But the bureaucrats do not have unlimited resources, and any spending on healthcare must reduce the funds available for education. Also, there is a more important, indirect consequence of central markets: the loss of innovation. Since it is unseen, it’s easy to neglect, but the competitive pressure for customers tends to spur innovation, and reduce costs. A casual comparison between private and state-run hospitals underlines this point, since a vast gulf in quality care exists. Not only that, but increasing numbers of people are finding private care affordable, and this trend willcontinue.

Even if the government subsidised those that can’t afford the care they require, the best possible health care system needs to be one that encourages innovation, reduces prices, and provides quality care for more and more people. And the profit seeking behaviour of private firms, constrained by the law, by their reputation, and by their rivals, is the best means to do so.

Comments

[Matthew Whitfield]

'the profit seeking behaviour of private firms, constrained by the law, by their reputation, and by their rivals, is the best means to do so'

It is certainly one way to provide healthcare, and it is obvious that commercial pressures make private providers up their game and provide the best possible care. My concern (yes, you won't be surprised to hear I have one) is that the limited human resources of doctors, nurses and other health specialists are simply canibalised when two systems - public and private - exist in tandem. A case study: my father recently needed medical tests for which the potential NHS waiting time was 2 weeks. If he made use of his mutual society health insurance he could have the test done the very next day - with the same doctor who would carry out the procedure on the NHS. So, because there was only one specialist doctor qualified to carry out this test in a particular geographical area, he took on private as well as NHS patients and, naturally, the waiting time for his NHS patients was longer than it would have been if he wasn't showing preference for his private work. As it turned out, the NHS waiting time was short enough not to make the effort to use the insurance, but the case stands.

You've demonstrated the advantages of both systems, but I say that the NHS is more equitable for everyone, it is the existing system, and should not be further compromised by incursions from the private sector. I can't see how an equalibrium between public and private can ever be reached without the NHS being eventually weakened to the point of virtual extinction.

[AJE]

Ah, the old "equity" line...

Better that we all have poor service, then some have "good" and some have "excellent".

My Grandfather recently required a pretty serious operation, one that would have taken several weeks to wait for an NHS appointment. Seeing an advert in the Daily Telegraph he paid a few thousand pounds to visit a private clinic just outside London. Even though a humble pensioner, it was affordable, and meant he didn't have to deal with the lack of dignity a hospital often requires (sleeping in a ward, rather than having your own room in a Travel Tavern...)

My response was good on him. I guess yours would be that it was a shame the NHS was being undermined.
But if pensioners would rather fork out for private care, deeming it a better quality, then please tell me just who would benefit from you desire to force pensioners into the NHS.

Note that I'm not trying to exercise my values here. All i'm saying is that the best system is one that individuals prefer: one that increases choice, and opportunity. If my Grandfather has an alternative to the NHS, and he exercises that, and is glad that he did... then I think it's a 'good' thing.

How the hell can anyone claim it's 'bad', and that we'd be better off with a system where we all suffer equally as much.

Equity my arse.

[Matthew Whitfield]

Firstly, your Grandfather may well be a 'humble pensioner', but he remains able to pay what you describe as a 'few thousand pounds' for his private operation. Indeed, good for him if he can afford it - there are plenty who couldn't, not even able to raise a loan - I'd never criticise any individual who chose to exercise such a right, health is invaluable. I think, though, that you have to accept that the NHS exists for the overwhelming number of people who don't have the means to pay for private care.

Secondly, you're quite right to identify that my argument is about equity. However, where you are fundamentally wrong and rather unimaginative is in extrapolating from my comments that I would like to see a poor level or service for all. Contrary to your statement that you're not exercising your values, I would argue that your blithe assumption that a universally public healthcare system leads inevitably to poor standards is about as clear an expostion of your values as it's possible to have. It appears that you have missed or ignored my original point about resources.

When people in your Grandfather's position are faced with a choice between the NHS and a private facility, is it not obvious that the NHS will never be allowed the advantage of shorter waiting times whilst private hospitals use their financial clout to pay medical staff a premium to work there? You talk of patients making a fair choice in favour of higher quality, but the NHS is not granted the ability to compete in such a marketplace. Indeed, there is no marketplace - there is a public service and there are private firms operating on its fringes by selling the illusion of choice.

As I believe that healthcare should be a public service, well funded by the public to serve the public, it follows that I believe that, by wont of a finite number of medical professionals in the UK, private healthcare undermines this system. You, I think, believe the exact opposite of this. You may imagine that public funding leads to uniformly poor levels of service, but I am certain that your active desire for inequity in healthcare provision would leave those least able to pay (you and I, as low income students, included) in a far worse position.

[AJE]

1) "I think, though, that you have to accept that the NHS exists for the overwhelming number of people who don't have the means to pay for private care."

No. These hoards of destitute pensioners is a myth. Private care is affordable for most pensioners, and would be even more so if a. the promise of unlimited, costless care didn't provide an incentive to not save, and b. council tax wasn't bleeding them dry.

Remember, a private healthcare system would mean that all the money pensioners paid in taxation over their lifetime would be available to spend in private care. Compared to how much he's paid the NHS, £2k is nothing.

In this regard, my Grandfather is unremarkable.

2) "I would argue that your blithe assumption that a universally public healthcare system leads inevitably to poor standards"

Of course I don't think you want poor service for all, you want utopia. Lets not argue about what utopia looks like, lets discuss which means are consistant with achieving it.
My point is that publicly funded and coerced healthcare does lead to poor service. It's not an assumption - the assumptions are that centrally planned bureaucracies are less able to process dispersed information than local networks, that profit is a major impulse for innovation, that people spend their own money with greater care than they spend other peoples.... etc.... the result of those assumptions is that the only way to have an equal service it to have a universally poor one.

In other words, in the USSR everyone had a Datcha. In the UK, some people have Mercedes, some have second hand VW Golfs. But a second hand VW Golf is a better car than a Datcha, and over time the quality of a second hand car improves. I think the unequal system is more equitable, and better, than the equal one. I think healthcare is no different.

3) "but the NHS is not granted the ability to compete in such a marketplace"

Are you kidding? The fact that any private clinic can entice customers away from a behemoth that has a legally protected monopoly position and almost limitless funding is remarkable. Private clinics can only raise money from providing a good service, and so any "financial clout" they have is richly deserved.

4) "your active desire for inequity in healthcare provision would leave those least able to pay (you and I, as low income students, included) in a far worse position."

Lets stop using the term "equity", since we both think our respective system is the fairest. Rather, we disagree on whether the system should be "equal". The idea of an NHS run to fund students is abhorent, though. Taxing the relatively poor in order to subsidise the alcoholism of the soon-to-be-rich? For that's what the NHS does - by picking up the tab of those Saturday nights in A&E.

As students, we are a transient group. We shall soon be reaping the awards of higher education, and are perfectly capable of using financial markets to bring some of those gains forward.

Also, i've raised a new point in a seperate post.

[Matthew Whitfield]

I give up, your points are just too strong. You're right that there aren't really any poor people, it's just that people don't save because they're feckless and rely on the state for everything. You're right that we should compare social democratic policies in the UK to the systemic failures of the vicious, Communist dictatorships of the former USSR. You're right that cars and healthcare are pretty much the same - just products, like any other. You're right that the NHS has an unfair monopoly position that should be undercut - I mean, they're probably making millions in profit and providing shit levels of care when there are independent clinics out there going to the wall. You're right that students are all alcoholics who will one day be rich enough to pay for a drying out clinic before their next bender. You're just so, so right about it all. I've seen the error of my ways. I'm off for a drink now, I'm nowhere near drunk enough.