Improve healh by spending less on health care

Richard Smith, the former editor of the British Medical Journal gets it:

Another common mistake is to confuse health care and health. Health care accounts for perhaps 10% of health. Income is the main determinant of health. Spending more on health care crowds out spending on things like housing, education, the environment and benefits, which are more important for health. The NHS doesn’t need more money, it needs a radical rethink. Richard Smith, Letters to the editor, the 'Economist', 7 December

Exactly. The best, most efficient way, of achieving our health goals is not necessarily to spend more on healthcare, just as the best way of reducing crime might not be to spend more on policing. In health, as in other policy areas, suffers from its inherently uniform, top-down approach, heavily influenced by large corporations. Government can also be short term in its thinking, reactive rather than proactive, and disdainful of innovation while favouring tried, tested but failed approaches. It has to make its resource allocation decisions on the basis of data that are necessarily incomplete. How can it know in detail the effect that spending on, say, sophisticated ultrasonic diagnostics will have on the overall health of the nation, as compared with nudging us to floss our teeth daily?

Health expenditure is influenced by groups of medical specialists with little incentive or capacity to see improvements in the overall health of a large population as an objective. Funding decisions are also heavily influenced by the public profile of a disease or its victims, rather than on what would best meet the needs of society. As Dr Smith says, health is also a function of housing, income, education and the environment, as well as more factors such as diet, and exercise. Research shows the beneficial effects on health of green spaces in our cities (see here (pdf) for instance). The way government is currently structured, with its discrete funding bodies all being lobbied by the medical industry, makes it unlikely that such difficult-to-quantify benefits will influence funding decisions.

We cannot expect a government nor any single organisation to identify the huge numbers of variables, with all their time lags and interactions, that influence the nation’s health. We can, though, devise a system that rewards people who explore and implement the most cost-effective health solutions, even when circumstances and knowledge are changing continuously. I have tried to do this with my essay on Health Bonds, which would aim to distribute scarce government funds to where they would do most good, as measured by such indicators as Quality Adjusted Life Years.

By issuing Health Bonds, government would reward successful initiatives for improving health regardless of how these initiatives work or who implements them. Government would still articulate society's broad desired health outcomes, and still raise the revenue for their achievement. But it would contract out the achievement to motivated investors in a way that rewards success, and only success. Health Bonds, would stimulate diverse, adaptive ways of achieving goals, in ways that we cannot anticipate, and that could well entail dealing with problems such as those identified by Dr Smith.