[ExI] Yet another health care debate

Lee Corbin lcorbin at rawbw.com
Wed Sep 24 00:42:14 UTC 2008


Stathis writes (thanks for the very long report on the Australian situation)

> (Declaring my interest: I am a doctor working in the Australian public
> hospital system).
> 
> Health care in Australia is about 70% Government funded, but much of
> this money is paid to private practitioners. Patients are free to see
> any doctor they want, and the doctor is free to charge them whatever
> they want to charge, but there is a fixed amount that Medicare will
> pay the doctor according to the service offered.

This basic scheme does not sound bad. The doctors are motivated
to find and use cheaper solutions, but not so much as to risk desertion
of their patients.

> Each hospital has a lot of autonomy in how they manage their budget,
> but is required to keep statistics on such things as number of
> admissions, what type of cases are admitted, admission lengths,
> complication rates, waiting lists for elective surgery, waiting times
> for people to be seen in emergency departments, and so on. They are
> ultimately answerable to the central state authority, and if they are
> found wanting in efficiency or effectiveness compared to other similar
> hospitals, public or private, management is liable to be sacked and
> replaced. There has been a trend in recent years to appoint CEO's paid
> at the rates common in a private corporations of a comparable size

Very interesting. This statistic---of Australian CEO pay for hospitals
---should be consulted when we worry (or rather stockholders worry)
about CEO salaries.

Also---that paragraph starts by referring to the necessary bureaucracy
and statistics necessary for socialist improvisation. Of course, I have in
mind a completely free system, and wonder how it would work. Your
paragraph (elided) mentioned the stranglehold that the medical 
establishment has, and much the same is true here, I gather. The AMA
has a self-interest (unlike a free market) of securing the highest possible
salaries for their members, and of course limiting membership.

So I am actually calling for removal of all government licensing (not
overnight, but gradually). We need to learn as advanced industrial
nations how to make good use of certification agencies who back
(or won't back) the reputation of doctors, hospitals, and so on.

> On the other hand, the Australian system results in outcomes comparable
> to those in the US for half the cost, so it can't all be all that inefficient.

Of course, one or two of Fred's axioms do apply to this, namely
that comparisons are difficult, but I wonder just how much analysis
has been done that take those issues into account. Now it may very
well be possible that the more complicated HMO system in the U.S. 
provides *less* of a market mechanism than that in Australian. For,
as I above noted, some incentives are well in place down under,
whereas when the highly regulated insurance companies are soaked
by unconcerned patients and doctors, neither of which have the
slightest interest in reducing costs. (Not that the successful insurance
companies don't retaliate in the cost of coverage.)  The basic
economic relationship between the producer and the consumer
has been disengaged.

Lee
.



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