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Archive for April 4th, 2020

Near the beginning of the croronavirus crisis, I observed that “government-run health systems have not done a good job” of dealing with the pandemic.

And I’ve repeatedly noted the failure of government bureaucracies to respond effectively in the United States.

Is there, perhaps, a lesson to be learned about what happens when politicians get more control of the health sector?

Let’s consider the different experiences of two European nations.

Kai Wess of the Austrian Economics Center in Vienna has a column for CapX on the performance of the German system.

…the responses of national governments to the crisis have been starkly different. …Germany’s approach is particularly interesting. …the death rate of Germany has been hovering around 0.2% to 0.5% for the entirety of March, only rising to the current 1.1% in the last days after deaths spiked in the first days of April. And yet, 1.1% is still light years away from Spain’s 8.7% Italy’s 11.7%, Britain’s 7.11%, and France’s 6.8%. …Germany’s lockdown has also been somewhat more lenient than in other European countries. …So why is Germany doing comparatively well? For one thing, mass testing has taken place for weeks… The second key factor is the good condition of Germany’s health sector. The number of critical care beds in Germany previously stood at 29.2 per 100,000 inhabitants – the highest of the countries most affected by Covid-19 other than the US (34.7). …why does Germany have these testing capacities? And why is the health sector so well-equipped? One of the main answers is that, at least relatively speaking, Germany’s health sector is more decentralised and leaves more room for competition… Germany does not have an NHS-style one-size-fits-all approach, but an insurance-based system. Everyone has to have health care and the government bears the cost for poorer patients. …there is competition between different insurance plans and individuals can pick their preferred plan. The health sector’s revenue comes from the premiums paid by patients as well as their employer – not through state funding. …The testing system has also been very decentralised, with a mixture of government agencies, private enterprise, and research organisations working on expanding testing capabilities – indeed, the January test was made possible by a private biotech entrepreneur. …when it comes to testing, Germany does not have a centralised diagnostic system, but a network of local authorities. As Christian Drosten explain, “Germany does not have a public health laboratory that would restrict other labs from doing the tests.”

Now let’s look at the performance of National Health Service in the United Kingdom.

Writing for the Telegraph, Charles Moore opines on its less-than-impressive track record.

The Government’s policy of lockdown is in significant part dictated by the demands not of patients, but of the NHS, and by its lack of adaptability and readiness. …A significant reason for the slow development, arrival and use of the antigen tests (“Have I got it?”) and the antibody tests (“Have I had it?”) seems to be the reluctance of the health service, and of Public Health England, to look outside their own spheres for help. In a culture almost proudly hostile to the private sector and mistrustful of independent academic work, the NHS’s first instinct is to defend bureaucratic territory. …the NHS belatedly admitted within government that it had failed to get enough ventilators. …University College Hospital, Formula I and Mercedes Benz got together to produce the CPAP… Next week, the repurposed Mercedes Benz F1 factory in Brixworth expects to produce 1,000 CPAPs a day. …the amazing 4,000-bed capacity Nightingale field hospital at the ExCeL centre in east London, opened yesterday… For two weeks after it was proposed, NHS top brass opposed it. When they finally admitted they needed it, the Army and the private contractors were the ones who made it happen in nine days. …Ten days ago, government contacts found the only company in Britain with expertise in making reagent for antigen swab tests. The firm was put on to the NHS, but at the time of writing, the health service had still not had a conversation with it. …That system is the problem. …The defects are baked into our system of national bureaucratic command. People have noticed that Germany has been more successful in managing the virus spread through testing. This is not a coincidence. Germany does not have our lumbering central diagnostic system, because it does not have, in our sense, a national health service.

These two columns are very instructive, not only because they show the adverse consequences of too much government, but also because they show that there are big differences in European health systems.

Many people have the (very!) inaccurate belief that the United States has a market-based system. And many of them also share the mistaken belief that all European nations have systems where everything is financed and provided by government.

In reality, there’s a wide divergence of policies across the globe.

Back in 2013, I created a back-of-the-envelope “Freedom Meter” to illustrate how Obamacare was best viewed as in incremental step on a long (and well-traveled) road to a government-dominated health care system.

Simply stated, we already greatly reduced the role of markets thanks to a range of programs and policies (Medicare, Medicaid, the tax code’s healthcare exclusion, etc).

Obamacare simply added another layer of taxes, spending, and regulation.

I actually suspect many nations that supposedly have “government-run healthcare” actually would be closer to the free-market side of the Freedom Meter than the United States.

Sort of like what I’m depicting in this revised, worldwide version.

Though I admit I’m just guessing that Germany and Switzerland might be better than the United States.

What we really need is the healthcare equivalent of what the Tax Foundation does with its State Business Tax Climate Index and its International Tax Competitiveness Index.

Only instead of a fiscal ranking based on factors such as income taxes, business taxes, property taxes, and consumption taxes, we’d have a health ranking based on factors such as third-party payer, degree of centralization, consumer choice, regulatory burden, financing mechanisms, and extent of direct government provision.

If anybody’s aware of anything like this, please share.

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