Unleash the private sector - a little!

As seemingly in all the industrialized countries, in the UK health care is in crisis. For reasons of ideology it does not charge at point of use. Inevitably, demand is unsatisfied. One response – see this post by NHS Blog Doctor – is to ration by bureaucracy. Integrate inefficiency into the system so inextricably that patients either die, or pay for private sector treatment. Another approach is to ration according to the more-or-less random factor of media appeal: the British national health care system’s terminal-care budget seems to be allocated on that basis: 95 per cent of it is allocated to the 25 per cent of the UK’s population who die from cancer, and just 5 per cent to the 75 per cent who die from all other causes. (See Alternative endings, [UK] Radio Times, 13 July 2002. This was the subject of a [UK tv] Channel 4 documentary Death: you’re better off with cancer broadcast on 16 July 2002.)

These are not necessarily consciously inhumane processes, but they do raise the genuine question as to the role that government should play in health care.

I have long argued in favour of government targeting broad, basic, health outcomes. Instead of micro-managing particular bureaucratic processes, or rationing on the basis of mind-space or celebrity affliction, government could set up well-thought out, meaningful indicators of health, such as quality-adjusted life expectancies at different ages, infant mortality, and ideally some reliable measures of mental health. At basic levels there will be a strong correlation between the numerical value of well-chosen indicators and social welfare. Included in such indicators could be the universal availability of insurance against catastrophic health costs.

Once chosen, government could contract out improvements in these indicators to the private sector, via a Social Policy Bond regime. Bonds could target any or all of the chosen health indicators. A fruitful division of labour would be the result: government would define its chosen health care outcomes. And precisely because it targets such outcomes, rather than bureaucratic processes or meaningless micro-targets, it will attract greater public buy in – extremely helpful for a universal scheme. Government would also be the ultimate source of finance for achieving these outcomes. It could perform both these functions – defining targets and raising funds to achieve them – very efficiently and with maximum public support. But under a bond regime the actual achievement of these outcomes will be done by the private sector, which will maximise its profits only by maximising the efficiency with which it achieves society’s health goals, as defined by government.