Thursday, 10 January 2008

21st Century Health (1)

Johann Hari's column in today's Independent excoriates private health insurance and proclaims that the status quo constitues "the health funding mechanism...[that] is the smartest choice for 2048". Is he right?

The argument centres upon the continual development of predictive technologies, making the selling of medical insurance a much safer bet for the insurers, who can predict with ever-greater accuracy who will get ill with what, and price policies (or refuse cover altogether) accordingly. This can take a variety of forms, including mathematical modelling, medical data mining*, and genetic testing. Already, as Hari points out, Americans are finding themselves unable to get affordable insurance because of their medical history or inheritance.

From one perspective, this development helps to ameliorate the information asymmetry between insurers and patients. This is something that was described by economist George Akerlof as representing a cause of market failure in the US system (Link).

"If, I suspect myself to be a lemon, I’d be advised to buy all the medical insurance I can. If, on the other hand, you feel fine and all your ancestors lived to be a hundred, then you may only buy medical insurance if it is cheap. After all, you hardly expect to need it." - George Akerlof, from 'The Undercover Economist'
This might at first seem to represent a refutation of Hari's argument - i.e. such technological advances making the private insurance model more workable, not less. Unfortunately, although it is great news for the business, it does not represent an improvement for the patient. All that it means is that, like the natural disaster insurance company in Silicone Valley(!) that Hari discusses, only the healthiest (who the insurers can be confident of profiting from) or richest will be insured.

Worse still, unlike many other forms of insurance, there is no relationship between need and ability to pay**. While it is true that some illnesses can be prevented or at least delayed by following health advice, it is equally not the case for others. And in the former case, the coercive measures taken by health insurers to make you a safer bet can equate with those we experience from Government as things stand (Link, sweary). The example of Pru Health is, I suspect, just the start:
"Health insurers have begun slashing premiums for customers who lead healthier lives by offering discounts of 75 per cent for those who allow their diet and exercise regimes to be monitored." - Telegraph (04/01/2008)
Of course, in a situation like this - as in the US examples given by Hari, if you have enough spare cash you can opt for the more expensive policies. If you have a little (and aren't too unhealthy), you can access insurance but must submit to the kinds of coercion and invasion of privacy described in the Telegraph article. If you have none, you're stuck with Medicaid or an equivalent. In such a system, personal liberty and privacy are not rights, but commodities!

Incidentally, it is completely true to say that the NHS is not free, but rather taxpayer-funded (Link, sweary). However, the US Government actually spends a greater proportion of GDP on healthcare than does the UK (Link, PDF). Much of this expense constitutes the cost of administering the labyrinthine system (New York Times).

From both an ethical and a financial*** point of view, the US system is a disaster - hence the emphasis of candidates in the current US primary campaigns on 'universal healthcare'. But does that necessarily mean that the NHS healthcare funding model really is "the smartest choice for 2048"? In part 2 of this post I will look to continental Europe...

* Another reason to be wary of current New Labour efforts to computerise and centralise medical data - See this post.
** In fact if anything there is an inverse correlation - Some disabilities/chronic conditions make it difficult to work and frequently require expensive medical care, e.g. osteoporosis.
*** Apart from the finances of the insurance companies and related businesses, of course.

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