Who Should Pay for Healthcare

A recent twitter on my part to an article by Health Imaging titled: “Americans want healthcare reform, but divided on how to pay for it” raised some comments that are worth exploring. The simplistic 4 word response I got back from one individual:

The Government should pay

Simply passes the responsibility from individuals to a group who receive power, authority and most importantly money from the same individuals . They are then charged with the responsibility of sharing out the limited resources “fairly”. As history has vividly demonstrated the challenge with fairness and charging a smaller group with equal distribution and fairness is problematic. George Orwell’s allegorical novel Animal Farm detailed some of these challenges.

Healthcare remains a central challenge to countries worldwide. Those with more resources do spend more of them on healthcare for their population. But there is no bottomless pit of money to pay for healthcare and unfortunately as the population gains increasing access to better healthcare their reaction is not satiation to the higher levels and increased life expectancy but wanting more. Countries approach this challenge in different ways – the UK healthcare system rationed healthcare with waiting lists and limited availability. In recent years they have attempted to define the rationing standards for healthcare under the banner of the “National Institute for Health and Clinical Excellence (NICE)“. A recent ruling on drug therapy

… it ruled that four drugs for advanced kidney cancer were too expensive for NHS use. The four treatments, NICE acknowledged, ‘have the potential to extend  progression-free survival by five to six months, but at a cost of £20,000 to £35,000 per patient per year’.

Their methodology assesses value against “Quality Life Adjusted Years” (QALY’s) that attempt a cost benefit analysis on treatments relative to potential outcome and quality of life. This is a difficult calculation even in the best of circumstances because the assessment of benefit changes dramatically from the perspective of the individual who in most cases assesses the value even if limited in time or effect.  In the case of the drugs for kidney cancer drugs NICE’s QALY assessment was”

Translated into QALYs—quality adjusted life years—that works out at between £71 000 and £171 000 a year; well above the rough threshold of £30 000 a year that NICE broadly applies other than in exceptional circumstances.

I commented on the NICE measure before where an individual wanted to pay for the drugs himself but in doing so fell out of the group coverage and was refused access.

There is no such thing as “free healthcare” – free at the point of service removes personal responsibility and encourages abuse. A simple case in point is the nuisance charge or co-payment. The United Kingdom has provided free home visits and free access to their General Practitioner for years.  But you only have to spend a night with an on call General Practitioner, especially round any holiday to experience the abuse. Calls at 3am for a headache. And not a new onset headache but one the patient has been suffering from in some cases days, weeks and even months. The introduction of a payment for all visits would discourage some of this and those opposed would suggest that it might discourage patients that should make the call. It might but the underlying issue of value would be solved – if the service is “free” then the value is perceived to be the same.

Providing healthcare to as many people as possible is right but in all cases a line must be drawn that is entirely dependent on the resources available. One can imagine that the availability of healthcare is much diminished in Zimbabwe. There the provision of midwifery delivery services to a preganant mother would require the patient to personally provide $20 Billion  Zimbabwean dollars (nearly US $40). But the resources available make this a bridge to far. And so to in all other countries – where we continue to consume every available healthcare resource made available. There is no instance where a country so much makes healthcare available that there is resources left unused, clinics and doctors desperate for patients because they are underutilized.

So what is the answer – personal responsibility and a full understanding of the cost and benefit of healthcare resources available. Attaching value to those resources helps comprehension. Patients can make informed choices in the same way that consumers do – why pay more for the iPod when a Micosoft Zune or SanDisk Sansa does the same job at a lower cost. Some do make the choice for iPod, others do not but they do so based on the available data and a cost benefit analysis. But if all the MP3 player’s were free or the same “cost” to us then the selection is harder and less informed. Free healthcare is a misnomer – everything has a value and attaching a value to healthcare but making it accessible to as many as possible is better strategy than just making it free.

Featured in the March issue of the British Journal of Healthcare Management – Stimulus and Effect: Rationing (full pdf subscription required)