Arnold Kling  

Unchecked and Unbalanced

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Terrence P. Jeffrey writes,

In the July 26, 2008 issue of the British Journal of Medicine (BMJ), Dr. Berwick published an article praising the NHS on its 60th birthday and urging Great Britain to reject free enterprise in health care. In the United States, he argued, competition among rival health-care providers had produced an excess supply of health care.

Keith Hennessey calls Berwick's recess appointment to run the Centers for Medicare and Medicaid Services a "process foul," because the delay in confirming Berwick was due to the Democratic Committee Chairman's failure to hold confirmation hearings.

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COMMENTS (9 to date)
david writes:

More quotes from the Berwick paper:

In America, the best predictor of cost is supply; the more we make, the more we use — hospital beds, consultancy services, procedures, diagnostic tests. Fisher and Wennberg find absolutely no relation between supply and use, on the one hand, and quality and outcomes of care, on the other.

Kling will not like this bit:

In the US, we can hold no one accountable for our problems. Here, in England, accountability for the NHS is ultimately clear: the buck stops in the voting booth. That is why Tony Blair commissioned new investment in the NHS when he became prime minister, why your government repeatedly modifies policies in a search for traction, and why it chartered the report by Lord Darzi.3 This is not mere restlessness; it is accountability at work through the maddening, majestic machinery of politics.

In the US, we fund health care through hundreds of insurance companies, a zoo of payment streams. Administrative costs approach 20% of our total healthcare bill, at least three times as much as in England. In the US, insurance companies have a strong interest in not selling health insurance to people who are likely to need health care. Many insurance companies try to predict who will need care and find ways to exclude them from coverage. You do not.

Or this:

Please don’t put your faith in market forces — It’s a popular idea: that Adam Smith’s invisible hand would do a better job of designing care than leaders with plans can. I find little evidence that market forces relying on consumers’ choosing among an array of products, with competitors’ fighting it out, leads to the healthcare system you want and need. In the US, competition is a major reason for our duplicative, supply driven, fragmented care system.
Aaron writes:

"In the US, competition is a major reason for our duplicative, supply driven, fragmented care system."

What competition?

liberty writes:

On what planet is a large supply of health care, due to competition, a BAD THING???

Excess supply in a market drives down prices...this is bad??

Isn't *shortage* one of the major problems of nationalized health care systems like the NHS evidenced by:

1. The waiting lists (yes, they have plenty! People have to wait several weeks to months, occasionally years, for treatments ranging from cancer treatments to non-emergency heart surgery, and other surgeries, etc)

2. The constant need for more doctors and nurses which give them top priority positions for work visas, etc.

3. The rationing of medicine and other care, such as refusal to pay for certain medications, refusal to extend life by artificial means or treat the morbidly ill, etc.

Now, a public system might have shortage and yet a private system might also have excess supply -- but (a) I think most people would prefer the latter to the former, and (b) where is the evidence that there is more supply than people might actually want? And how does competition create such an oversupply?

If people don't want it, won't that supply drive down prices and drive some firms out of business? Won't the market ultimately find a price that would prevent chronic over-supply? I suppose he imagines a market failure, due to asymmetrical information or something, but again - give me evidence of true over-supply that is worse than the shortages of a nationalized system...

I'm not suggesting that there are no benefits of a government-supported system, or no flaws with a private one, however one of the flaws of a fully-private system is not over-supply!

Dan Weber writes:

On what planet is a large supply of health care, due to competition, a BAD THING???

Isn't that kind of the thesis of Crisis of Abundnace?

There's a lot of evidence that Americans overconsume health care. That is, most individuals choose more even though it makes that particular individual less healthy.

liberty writes:


Note that I said "due to competition." As I recall, it was not competition that Kling pointed to as the cause of over-consumption of health care (note: over-consumption, not over-supply).

ThomasL writes:


"[A]ccountability for the NHS is ultimately clear: the buck stops in the voting booth."

Is MRSA Labour or Conservative? I can never remember.

Robert writes:

This does not bother be because I do not think Republican politicians in the Senate genuinely wanted more information about Dr. Berwick and would have thoughtfully considered his credentials.

HiggsBoson writes:

"There's a lot of evidence that Americans overconsume health care. That is, most individuals choose more even though it makes that particular individual less healthy."

And isn't our over consumption due largely to the fact we are not directly paying for much of this health care we are consuming?

Pedro writes:

I usually hate these stories, because I think people who favour a more free market approach to health care (and I'd count myself in that group) tend to portray a picture of healthcare here in Europe that is simply not true. Yes, there are massive queues for some procedures and not so much for certain others and there's a fair amount of leeway that comes from the system working informally and basic common sense making people fiddle around with the system in order to make it more efficient. A particular case is of someone in my family, who needed emergency eye surgery but was far down in the queue and was in serious risk of losing his sight. All it took was a few phone calls and he was immediately bumped up. Yes, it is unfair, but in this case it was more or less justified medically and you could argue that the informal and discretionary nature of the system makes it easier to solve problems like these.

That said, this was in Portugal. I currently reside in the UK and while I cannot fault the NHS for the standard of service I have been provided with personally, I know of at least three different cases among my acquaintances where there was serious neglect on the part of the NHS, which could have easily resulted in lawsuits, were they not students not interested in a drawn out legal battle in a country where they would be spending little time. In one of these cases, the person in question was forced to her country of origin for serious surgery when the NHS doctors had failed to notice any problem; in another case there is still no diagnosis but the problem has been acknowledged by the doctors and in the third one the individual in question is still suffering from an injury which was not dealt with appropriately by the doctors and has since worsened.

This is not a critique of public healthcare systems per se, but there seems to be a consensus among most of the people I know who have experienced various healthcare systems throughout Europe that the NHS is very likely the worst of the lot, and that is taking into account all of the PIIGS, so perhaps the rationing argument does seem to have a lot of traction for the UK.

(This is not a systematic defence of public healthcare systems in Europe in general, and I'm very sympathetic to the "unseen" consequences and inefficiencies that they are likely to generate. Rather, it is simply relying on anecdotal evidence that perhaps there is more variability in the functioning of healthcare systems across different European nations than perhaps most pundits make an effort to acknowledge.)

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