17 April 2016

Health is not an accountancy issue

Reading about psychiatry and obesity, and health generally, you can easily get the impresion that the incentives in play conflict with the stated goals of the professionals.

Psychiatry first: Dr Peter Breggin writes copiously and broadcasts about the over-prescription of psychiatric drugs to adults and children, in the US. Often these drugs have little in the way of robust scientific research to justify their use. Research can be shoddy or misrepresented. The organizations that encourage misdiagnosis and overtreatment are captured by powerful interests in, for example, the pharmaceutical industry.

Or obesity: there is an entire weight loss industry dedicated to selling diet books, supplements or food substitutes. There are television shows and exercise programmes, all supposedly aimed at reducing obesity. Yet the long-term results of almost all these interventions are almost invariably small and often negative.

Even in the less cash-driven, more socialized health services of, for instance, the UK, doctors come under pressure to over-prescribe, and defensive medicine - medical care performed primarily to reduce the risk of litigation - is significant.

Let's say that there are arguments on both sides: that some overdiagnosis and overtreatment is going on, but we're not sure how much, or how deleterious are their effects on health. I have no idea how close we are to optimal levels of treatment. Perhaps Dr Breggin and the other sites to which I link above are mistaken, but the important point is that nobody has incentives to find out. Instead, largely by default or historical accident, the major determinants of what interventions get prescribed to whom and how often, are the short-term interests of companies that have goods or other interventions to sell. Their incentives are to overprescribe. It is the narrow, short-term goals of corporations or professional organizations, or government bodies, that largely dictate how we shall tackle our health goals.

So if, say, the best interventions, from the point of view of the unwell person, won't benefit, in cash terms, powerful interest group, it seems likely that they will be under prescribed. (A similar argument applies too to 'negative defensive medicine', where the fear of a cash loss motivates practitioners not to treat patients.) Dr Jason Fung, for instance, recommends fasting as a cure for Type 2 diabetes and obesity.

Again, the point is that there are too few incentives in place that encourage people to look for low- or no-cost ways of treating people that are better, from the patient's point of view, than high-cost ways.

This is where the Social Policy Bond principle can play a part. Health Bonds would target the broad, long-term, general health of an entire population. Bondholders would be rewarded if health outcomes improve, however that occurs. Bondholders would have incentives to research, investigate and exploit only the most efficient ways of improving people's health outcomes. If non-treatment or low-cost treatment is the best way of improving a person's health, then that is what bondholders will be motivated to supply. The important point is that, under a Health Bond regime, it is the ordinary citizen's long-term general health that is the priority for bondholders and not, as in the current system, the accountancy goals of existing organizations, be they public- or private-sector.

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