Monday, 24 August 2009

Responsibility and costs for healthcare

There is much in the news about healthcare due to the current political tinkerings in the US. I have my ideas about structuring a health system, somewhat based on my experience and what I have learnt about the Singaporean system.

There are probably several reasons why costs are so high in the US (and elsewhere). One significant reason is litigation. Until the legislators are willing to cap "compensation" payable then things are unlikely to get cheaper. The argument that someone is entitled to such extreme amounts of money because he suffered harm neglects that these costs will be recovered from future patients. Indemnity insurance in Western, non-US health is significantly less. Consider perhaps $NZ 1000–2000 per annum in New Zealand to > $US 100,000 in the United States.

This aside, if one is to judge healthcare proposals there are several issues around health and economics that need consideration.

Who pays?

I care little if you wish to spend your money on Kopi Luwak? I am content with the brew at the local cafe, or even instant coffee. But I care a lot if you spend my money on such. It doesn't matter if nationalising health is cost neutral. If that cost is now paid by government and not individuals, then the government obtains that money from individuals via tax. Thus I am forced to cover your health costs, even if I made health choices intended to save me money long term. But the government payment of costs is even more complicated. There is no fixed amount of money. Individual payments to healthcare have different effects on the economy to government payments. Government removal of money from the economy decreases productivity; thus even a cost neutral program will leave the economy poorer in production, thus individuals worse off.

Who gets sick?

It is said that 75% of health expenditure is spent in the last 5 years of people's lives. Now that is not every person, but it is a lot of them. We don't know when we are going to die, and the increased medicalisation of our lives means that much is spent as we age and become increasingly infirm and near the end of our life.

This may be money well spent. It may maintain people's independence. And if it is your own money then do as you will. But as one becomes increasingly unwell he should be assessing his life and making plans for when he dies. And increasing medical possibilities potentially means increased costs. Yes you can spend the last 15 days of your life half conscious hooked up to a respirator in the Intensive Therapy Unit (ITU) with metastatic cancer that has failed 3 previous therapies, but I am not certain this is a gain over symptom control at home or in a hospice. Don't get me wrong, these things can be hard to predict, and ITU is often appropriate, even if ultimately unsuccessful. And these are decisions for individuals, and we all weigh different options differently. But people need to think about their own mortality.

How many people have high costs?

Following on from costs occurring at the end of life, it needs to be remembered that this is a cost that a high proportion of people will face. Rare expensive events can be covered by spreading the risk, that is how insurance works. But if events become common then every person has to cover their own cost. If we are spending $400,000 over the final years of life for say every second person (the other dying in their sleep after a long healthy life incurring minimal costs), that means we need to collect ~$200,000 per person to cover end of life expenses. People in countries with socialised medicine talk of how they have paid their taxes all their life, and this is true (though some goes to education and roading, and some is frivolously wasted), but I think they are unaware of how quickly the tax that they have paid is used up.

Personal responsibility

Our own health should be something we take responsibility for. It is true that many things happen that we have no control over: accidents, infections, diseases, poor genetics. But much is known about healthy lifestyle. Debates around increased risks of the order of 10–100% are difficult to confirm. But it is clear, for example, that smoking tobacco, morbid obesity, and base jumping do not usually improve one's health. Healthcare provision should take into account personal responsibility. (Though I think this intrinsically, I am aware that it can become politicised with claims that "politically incorrect behaviour" is "unhealthy").

The problem with this is people often don't take responsibility. And when they subsequently get unwell it seems unkind to leave them to suffer the consequences of their decision. Mercy is toward the undeserving.

Isn't health provision caring for those who are suffering?

Yes, and no. It is true that we should think of caring for those who suffer, at least from a Christian perspective. But previously this has been about providing food and shelter, giving clothes, comforting people in pain. This is something that most individuals can give to another. But modern health care is more extensive. We can diagnose and treat many illnesses, often at significant monetary cost. It is not something that most individuals can do, and it is hard for many individuals to cover the cost of doing so for others. I applaud hospital and charity work in the third world. I think these are excellent endeavours, frequently they do much good for minimal cost. But I am cautious when people say that everyone is entitled to healthcare irrespective of cost. Someone does have to pay and there are competing claims to money. The statement that no cost is too great for good health is just not true.

Health insurance?

People need to rethink this. Healthcare costs are somewhat foreseeable. We can budget for routine doctor visits, prescription costs, spectacles, regular dental care. It should be possible to assess approximately how often people and families need to attend to their health, and budget for this, with a moderate margin. Insurance is not about these costs.

You don't get insurance to cover the cost of your mortgage each month. If you did, the company would pay your mortgage, and your premiums would cover that plus an overhead. It would be more expensive. Health insurance should be insurance. It is to cover that which you do not expect to use it for. Insurance should have a high excess (save up the excess in discounted premiums and keep it in a bank account) and cover rare (and expensive) events that do not happen to most people. That way you have cheap insurance as an insurance, and you don't pay overheads for costs that you know are going to be regular.

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