TCS Daily

Bringing Choice and Variety

By Tim Worstall - January 6, 2005 12:00 AM

Only the most astonishingly hubristic person could think that it is possible to describe a single health system for a continent of 450 million people, so, having outlined my qualifications, I shall proceed to do so.

The most important constraint upon health care in Europe is that the general public views it as something that is rightfully provided by the State. That this might not be the best way to organize matters is, unfortunately, immaterial, for we are not in a position to rid ourselves of the population and start again with a group more amenable to economic reason. This political fact of life trumps all other considerations.


Given the constraints of what will always be, at base, a single payer system, we need to work out how to bring choice and variety to the system, along with the painful associated ideas of profit and loss. The only method possible is that the money should follow the patient, that patient making decisions about what type of treatment, by whom and where, they wish the Government to spend the tax money on. Yes, undoubtedly some will make the wrong decisions but to paraphrase Milton Friedman on how people spend money, who is likely to pay more attention to making such a decision, who is more committed to getting it right, that person who dies by getting it wrong or that bureaucrat who files the paperwork of the outcome? The patient should also be able to choose whether his preferred supplier is part of the public sector or a for profit one, the State money following whichever he chooses (with the proviso that the private sector is paid what it would cost the public sector to provide treatment).


This would mean a change in systems like the UK's National Health System with its command and control structure. The rampant managerialism of this method has led, it is said, to there being 1,600 different targets that must be adhered to. One is that there should be no more than a four hour wait at Accident and Emergency for treatment. This has led to full ambulances waiting outside A&E departments so as not to overload the system, with all the waste of trained paramedics time, the vehicles and so on that this means, along, of course, with the fact that they are not picking up other injured or ill people and similarly making triage impossible. No, central control by fiat is not possible in such complex systems. Local control in response to the demands of patients with their above attached government cheques is the only method possible.


How is the State to raise the tax necessary for such a system? My preference is for it to simply come from general revenue, there being such problems with hypothecation (specific taxes to pay for particular programmes fail because what is an economically efficient amount to raise on a particular activity bears no relationship to what would be similarly efficient to spend on the other). What would be even worse would be a continuation of something like the French system where health insurance is paid as a cost of employment. Of course all taxes are paid by those who actually work but increasing the wedge between what employers pay and workers receive is really not a good idea in its effects on unemployment, productivity and the like.


Any service or product that is free at the point of use is always going to be unable to keep up with demand (especially as most of us will demand an enormous amount of costly treatment before agreeing that it might finally be time to die). There should therefore be a system of co-payments for all treatment. Not huge amounts, just a few euros for a visit to a GP, something to cover hotel costs while in hospital, that sort of thing. Just to bring back to people the fact that all of this costs real money and thus restrain demand a little. It is interesting to note that in the entirety of the UK's NHS there is not one single cash register, not one single place where one can pay one single penny and people seem surprised that how ever much money is poured into it it never seems to improve.


The most iniquitous health care practice that I know of (steering well clear of such issues as abortion and euthanasia) is the Canadian idea that private health care should actually be illegal. Leave aside the illiberalism of preventing people from doing what they damn well want to with their own resources there are two further problems. One, that even our patient's choice single-payer system will be improved by the existence of competition, two, the mind simply boggles that the answer to the question Is it OK if I use my own money and save the taxpayer's? could ever be No. The NHS suffers from a similar problem, that if at any point during the diagnosis or treatment process one has indeed paid for private treatment you cannot drop back into the publicly provided one. It must be possible to move seamlessly from one system to the other. The existence of this parallel, privately paid for system should be encouraged and something like the proposed health insurance accounts of the US would help. Informally such accounts already exist, a number of aunts owning one single decent piece of antique furniture each, commonly referred to as the hip replacement and left for the children if they don't need it.


Health care in Europe? A single payer, the State, financed from general taxation, a variety of decentralized providers, some state owned, some charitable and some for profit, money following the patient, the ability to pay extra if desired and said patient deciding where both his and the State's money gets spent.


No, not perfect, but the best we can achieve given that Europeans think that health care is a right, something to be provided by the State.


This essay received honorable mention in the recent TCS essay contest on fixing European health care. Find more of the authors writings at


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