Friday, February 20, 2009

The moral hazard problem of socialized healthcare

Ezra Klein quotes approvingly a section of Michael Pollans In Defense Of Food on the high level of diabetes in those eating a Western-style diet. In response, he almost seems to be suggesting that there's a moral hazard problem of socialized healthcare:
A diagnosis of diabetes subtract roughly twelve years from one's life and living with the condition incurs medical costs of $13,000 a year (compared with $2,500 for someone without diabetes).

This is a global pandemic in the making, but a most unusual one, because it involves no virus or bacteria, no microbe of any kind - just a way of eating. It remains to be seen whether we'll respond by changing our diet or our culture and economy. Although an estimated 80 percent of cases of type 2 diabetes could be prevented by a change of diet and exercise, it looks like the smart money is instead on the creation of a vast new diabetes industry.

I'd just add a question: How many discrete interest groups would save money from a sweeping policy initiative aimed at reducing chronic disease through nutrition, exercise, and other low-cost lifestyle changes? How many discrete interest groups would make money from a sweeping policy initiative aimed at increasing the number of insured Americans able to purchase cutting edge medical care in response to the onset of chronic disease?

The questions asked are quite instructive, and thus I wonder if he is being facetious here.

Undoubtedly Americans would be best served by changing our diets and behavioral patterns to more "sustainable" options. As a libertarian, of course, I favor doing this through the freedom rather than bans of bad foods or mandates of exercise - and certainly support anyone wealthy enough to pay for the medical treatment being willing to abuse their body as much as their bank account can pay for the damage. I'm sure Ezra's "policy initiative" is probably a mix of advertisement, tax policy, and the other sort of "libertarian paternalism" ideas championed by Cass Sunstein.

But what will happen if we do go for a "sweeping policy initiative" aimed at increasing the number of insured Americans able to purchase cutting-edge diabetes treatments? When we offer such "health bailouts", does this not result in a moral hazard where individuals can make bad, risky decisions knowing that they won't feel the full effect? This is no different from the corporate world, where CEO's can embark upon ultra-risky business strategies knowing that the cost of failure will be blunted by federal bailout. Note also that this is a feature of all third-party payment system where the individual care-user is not even charged premiums based upon their risk-profile - it doesn't matter if it's an individual mandate plus a huge push towards company-paid insurance (the Massachusetts model) or a fully socialized system (the British model). The end result will be skyrocketing costs as the individual is not strongly incentivized to avoid poor health.

America, when it comes to "healthcare systems", would be far better off breaking the employer-payment link and moving to a more free system. In this sort of a system, premiums would be somewhat tied to a risk profile (as makes sense for an insurance product), paid individually (so the individual has an incentive to adopt healthy practices), and [probably] would be more tailored to protection from high-cost services rather than pay for day-to-day health care needs. This is post-1930 America, so undoubtedly there'd be a safety net, but I'd rather see the government pay for healthcare for the indigent than for everyone - especially since the system will work better.

In fact, a free market would help bring about Ezra's goal (healthier people who eat better and exercise) while avoiding his worry (a giveaway to the big healthcare corporations subsidizing bad decisions). Maybe someone should tell him that there's an answer outside of government on this one.


NHS hospitals fail to do routine checks on suspiciously injured children

Two thirds of hospitals fail to conduct routine checks on injured children despite warnings after the death of Baby P, The Times has learnt. A poll of NHS trusts conducted by the Conservative Party suggests that staff at many accident and emergency departments are not able to check whether children are in contact with social services or subject to a child protection plan, even when they have suspicious injuries.

Doctors' failure to detect evidence of non-accidental harm and poor links between health and social services were identified last year as key failings contributing to the death of Baby P in Haringey, North London, in 2007. But few hospitals can check databases of children at risk, while one in ten clinical staff has not had child protection training, the survey suggests.

The Conservatives, who received responses from 120 out of 171 hospital trusts under the Freedom of Information Act, said that problems identified by the independent report into Baby P's death appeared to be systemic. Only one in seven hospitals claimed to be able to make any sort of online check on whether social services were involved in the care of an injured child, the Tories said. Some trusts said that it was not permitted for staff routinely to check whether children were subject to child protection plans.

Last month the Government announced the setting up of a database of 11 million juveniles in England for professionals working with children. The Tories have attacked the œ224 million ContactPoint as "another expensive data disaster waiting to happen". "A far better solution would be to make sure basic checks are maintained in A&E and that other hospitals learn from those that are doing well so that children who are really at risk are identified before it's too late," Andrew Lansley, the Shadow Health Secretary, said. "The NHS is doing its best, but many hospitals are getting incoherent messages about what to do to prevent tragedies like the Baby P case from happening again."

John Heyworth, president of the College of Emergency Medicine, said that although A&E departments could be overwhelmed because of staff shortages or a need to see patients within a government four-hour target, trusts had a "major responsibility to find out whether the child is on a protection plan or in a family that is in contact with social services". "Access to and use of databases varies widely across the country," he said. "In some areas links between A&E and social services are sub-optimal while in other areas there are next to no links at all."

Ben Bradshaw, the Health Minister, said that rules on child protection applied to all trusts, including arrangements for checking if a child was subject to a child-protection plan, and staff training. "The Conservatives are confusing the requirement to check if a child is subject to a child protection plan with accessing details of the plan itself," he added. "That is not a requirement and not something we would expect NHS staff to do."

Rosalyn Proops, child protection officer for the Royal College of Paediatrics, said that all A&E professionals should have an awareness of child protection and be able to check quickly with social services if they had concerns. However, there was a danger that routine checks on child-protection status could override clinical judgment about whether injuries were suspicious. "There has never been a system of routine checks on children coming to A&E and any such system would be at best unhelpful and at worst dangerous to the child," she said. "If children were formally screened, it could provide a false sense of security." The Healthcare Commission, the NHS watchdog, is expected to publish a review of the matter shortly.


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