TCS Daily

Wait Wait, Don't Help Me

By Tim Worstall - January 25, 2007 12:00 AM

Now that the great upchuck against compassionate conservatism has put compassionate liberalism back in charge of both Houses of Congress we will have several attempts to introduce some form of health care reform. Bleeding heart classical liberals like myself will be left muttering on the sidelines, Cassandra-like, no one listening to our warnings that there is no system so bad that activist government can't make it worse. But while we wait to find out in which particular manner the nation's wealth is going to be poured down the plughole, I'd just like to ask what will appear to be a silly question.

Are alternatives to the US model as inexpensive as they appear? The US health care system sucks up 16% or so of GDP, with European systems costing 10% or so for not vastly different life spans. However, as Mark J. Perry pointed out, looking only at what is spent doesn't tell us the whole story. We must also look at the opportunity costs of the respective systems. As this in Health Care News says, in Canada the waits for treatment can be substantial:

Patients referred to a neurosurgeon waited an average of 21 weeks just to see a specialist. Getting treatment required an additional 10.7 weeks.

Patients waited an average of 16.2 weeks to see an orthopedic surgeon, and another 24.2 weeks for treatment to be performed after the initial visit.

That's between half a year and three quarters of one to get treatment: there is no way that a proper accounting for costs can ignore that.

So I'd like to try and see if I can make an estimate of what those hidden costs are using the health care system I know the best, Britain's National Health Service. This is a single payer (everything comes from the tax money), single provider (the Government owns and runs it as well) system with about 10% of the provision on top of that coming from the private sector.

(Before getting started, I must point out that about the only true thing I can tell you about the accuracy of these figures is that they aren't. Accurate, that is. They are wildly wrong in fact, for I'm making a number of assumptions, some fair others not, using statistics from a number of different years and generally mixing and matching to try and get a rough idea. I most certainly would not want anyone to think that this was the last word on the matter: in fact, I rather hope that someone else more skilled might like to refine them.)

The first thing to remember is there are indeed substantial waiting times for treatment in the NHS. In fact, you can look them up here. Using my UK address, my local hospital quotes 23 to 54 days for cardiac surgery. You might not think that too bad but please, realize that this is not the time you will wait for treatment. This is the time between your doctor saying "You know, you really ought to see a doctor about that" and your seeing said specialist. Looking at inpatient appointments, it can be up to 148 days: very useful don't you think if you've got a dodgy heart and need surgery rather than toppling over in the street? Again, that isn't the wait for your operation: that's the one to have a bed in hospital overnight if you need a series of intrusive tests.

Now you can play around with that as much as you like and if you've got any friends or relatives in the US system get them to do so also. Get their reactions to how long people have to wait.

But how do we add all of this waiting up to try and get a total figure? The easiest way is to go elsewhere. This is the declared aspiration of the government:

Research shows that a top priority for patients is shorter waiting times. In response, the Planning and Priorities Framework (PPF) - mapping out the priorities for reform for the next three years - promises concrete progress on reducing waits across the service:

by the end of 2005, patients will wait a maximum of six months for inpatient admission and no more than 13 weeks for an outpatient appointment.

In order to meet those targets there's been a very large amount of fiddling around with numbers, as there always is with instructions coming down from central planning. But let's take that six month figure shall we? Inpatient admission, remember, does not mean being treated, it means being looked at. But fine, we'll take six months as our figure for the average wait (unfair, I know, but it is true that some wait substantially longer). How many people are waiting that length of time?

The total number of people waiting for treatment fell below one million for the first time in a decade at the end of March 2003.

Now, I'm being unfair but I'll call that 6 million man months of waiting to be treated. We now need to try and work out what that all costs. Not directly, but in losses to either the economy or the people doing the waiting. We could use average wages (£447 a week currently) and we'd get to £11.6 billion. That would be too unfair even for me to use as not all of the people waiting will be of working age and not all of those who are will be unable to work while they wait. So why don't we use a number calculated by the Health Service itself?

The National Institute for Health and Clinical Excellence (NICE) uses a number when deciding whether to pay for a new treatment. A QALY (quality adjusted life year: also known as being healthy for a year) is valued at £30,000. So six months sick while waiting, whether you're working or not, gives us a value of £15 billion (this all adds up to real money quite quickly, doesn't it?) in hidden costs. Unfortunately, NICE doesn't actually use the correct figure for QALY, for another branch of the very same government uses £63,000, which is the figure that was actually calculated originally. Using this for our figure of the costs caused by the queuing we get £31.5 billion.

We're finally getting to where we can start to put these numbers together now. Health care spending in the UK next year will be 9.4 % of GDP and GDP itself last year was £ 1,224 billion (I said I would be mixing and matching years). Add our costs of £31.5 billion for the queues (2.6% of GDP) and we get to 12% of GDP.

Now, my figures are so rough and ready that they are almost laughable, even if the basic concept is correct. But I do think I've shown that the UK system is not as cheap to run as many seem to think.

I'll leave you with one last reason the NHS might be so much cheaper than the US system. As Donald Hoover, Professor of Statistics at Rutgers University, told a Senate hearing:

About 1/4th of Medicare expenditures and 1/5th of all health care expenditures for the elderly went to those in their last year of life.

As The Times reports, we in the UK have a more financially effective, if slightly ruthless, solution to this problem of end of life medical costs:

Olive Nockels, 91, a former school matron, died after surviving for nearly a month on a subcutaneous drip that delivered only a quarter of the calorie intake specified by the World Health Organisation (WHO) as a short-term starvation diet.

We starve them to death. Truly, single payer, single provider health care might not be as cheap as you think.

Tim Worstall is a TCS contributing writer living in Europe. Find more of his writing here.


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