Opinion

Edward Hadas

A holistic economics of healthcare

Edward Hadas
Sep 10, 2014 15:18 UTC

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Every country in the world seems to have a healthcare crisis. The problems are particularly severe in rich and ageing countries, including the United States and the United Kingdom, where expectations are especially high and the systems were designed for a different reality. A new report from The King’s Fund, a British charity, suggests a better approach.

The policies proposed by the independent Commission on the Future of Health and Social Care in England, chaired by economist Kate Barker, are designed for the UK. However, the basic idea is universal. Barker says that the two largely separate arms of the welfare state – healthcare provision and direct financial support for individuals in need – should be merged.

The two used to be quite distinct. Healthcare dealt with illnesses and the largely short-term treatments provided required doctors, nurses and, more rarely, hospitals. Welfare programmes assisted the ill, but their chief objective was to counter economic and social problems such as unemployment or dysfunctional families.

Now, as the Barker Commission points out, a fairly high proportion of the population is in need of constant attention that is simultaneously social, economic and medical. Older people, say, with serious handicaps such as dementia need help. But not just medical help. An increasing number of younger people have complex conditions, such as those associated with drug addiction, in which the physical problems both cause and are amplified by social difficulties.

Market failure can be sign of fatigue

Edward Hadas
Jun 11, 2014 14:17 UTC

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Modern economies work to meet consumers’ needs. So if needs are not met, that must be an economic failure, right? Healthcare suggests otherwise. Sometimes, unhelpful ideologies get in the way of economics delivering the goods.

Chronic fatigue syndrome (CFS) – also known as myalgic encephalopathy (ME) – is a case in point. The economic benefit of treating this difficult condition should be material for patients, drugmakers and society. Yet the treatment is poor.

AOL, solidarity and health insurance

Edward Hadas
Feb 19, 2014 15:59 UTC

The head of the American internet company AOL managed to say something really stupid a few weeks ago, and to sound callous at the same time. It’s a shame Tim Armstrong came off so badly, because he was trying to deal with a serious topic.

Armstrong was trying to justify the company’s decision, since reversed, to trim its employees’ retirement benefits. He started out at a disadvantage, because the chosen cutback was sneaky. A change that sounds innocuous, moving from monthly to annual employer payments into employee pension savings accounts, is actually a way to eliminate payments to employees who leave before the end of the year. It’s hard to look honest and upfront when explaining that.

But the former Google bigwig turned a disadvantage into a public relations disaster by bringing up the high costs of caring for two employees’ premature babies. The implied complaint about these million-dollar infants sounded heartless and invasive. In more humane hands, though, the Armstrong discussion could have been a fruitful one. The challenges that AOL faces are built into the way Americans arrange their employee welfare programs.

How not to do healthcare

Edward Hadas
Dec 11, 2013 16:26 UTC

Almost every healthcare system in the world is a lesson in how not to do it. The pricing-based model fails miserably in the United States. The rationing model works almost as badly in the UK. Both fail in the core task of ensuring that the right healthcare goes to the right people.

Price systems should provide clear information to consumers and producers, helping both make sounder decisions. They can help make hard decision about what care is worth giving, but only if the prices accurately reflect the costs. But that doesn’t happen in American healthcare.

Every service and each drug has many prices, depending on who is providing and who is paying. Almost none of the prices bear any clear relation to costs. The New York Times reported earlier this month that the price of a dose of codeine ranges from $1 to $20 in San Francisco. Hospitals routinely send much higher bills to uninsured patients than to people with insurance. The uninsured have less ability to pay, but they have no clout pre-treatment and less clout than insurance companies in the inevitable post-bill negotiations.

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