The ideal of medical care is that it would be undertaken without regards to economics. Unfortunately, the real world demands that the costs of goods and services be taken into account. To argue that economics does not play a role in health care is naïve and betrays a sense of entitlement to other people’s hard efforts and hard gained intellectual and tangible resources. Treatments themselves are expensive. They are expensive to develop and often they are expensive to produce. Delivery is expensive too, because of the length of physician, nursing staff, and other healthcare workers educations. Furthermore the healthcare practice has an overhead that needs to be accounted for including secretaries and rent.
In this reality it is impossible to argue that economics does not apply to health care. The question is really how can we spend money more wisely as far as healthcare is concerned. The United States spends the highest amount per capita on healthcare in the world (Khan, 2013). Healthcare eats up a full 16% of the Gross Domestic Product of America. A very large portion of this cost is made up by expensive, and complicated long-term treatments such as dialysis and chemotherapy. Approximately 20% of the population utilizes 80% of healthcare spending. The government already pays for approximately 50% of all healthcare and related research in America (Krugman & Wells, 2006).
Many countries have universal health care. These deliver healthcare with varying degrees of success. Despite the fact that the United States spends the largest proportion of GDP, many people remain uninsured and the United States ranks 33rd in average life expectancy (WHO, 2013). Given the expenditure this statistic is disheartening and must some how be rectified. Efforts at insuring the entire population are admirable, as the best defense against expensive late term treatment would be consistent follow-up with physicians and early intervention when management and cure are easiest. If the glucose intolerant person can be convinced to exercise to better control their blood sugar levels, that may save the system a fortune in terms of the costs of repairing potential late complications of the disease as well as improves the quality of life of the patient.
Economics plays a huge role in the delivery of healthcare. The richer developed nations have access to state of the art laboratory and therapeutic instrumentation. While the profession and governments bemoan an impending physician shortage, western countries maintain staffed healthcare systems that save lives and improve the quality of lives of their citizenry. In the case of emergencies the code of ethics in western countries demands that the patient be treated immediately without concern for payment. In reality, payment becomes due, and we often have our lives intact thanks to hard, expensive work. The uninsured can quickly accumulate hundreds of thousands of dollars in debt. This is true throughout most of the western world. National Insurance usually entitles someone to be viewed in hospital by a physician in training and medical students. If there is a preference for a particular provider, that provider may charge a fee far beyond what the insurance scheme will reimburse. Furthermore, there are many drugs, procedures, and treatments that are not paid for.
Poor nations have poor healthcare. It is logical that they don’t have proper and new equipment in order to treat illness. Furthermore medical staff in these countries is in chronic shortage. Trained medical staffs, from physicians, to nurses, are highly sought in developed nations and the flight from poor countries is astounding. One cannot fault the practitioners for wanting to lead safer and more affluent lives elsewhere. Without money to afford treatments, to support medical staff, and encourage research into medical problems, healthcare becomes a disastrous minefield. The least trained practitioners remain, and the most primitive treatments are all that is available. Average life spans quickly decrease from the late 70s/early 80s in the wealthier nations to early 50s in developing nations in sub-Saharan Africa (WHO, 2013). The death of what should be able-bodied individuals at the prime of their working life having gained much hard earned wisdom through experience, is catastrophic to national development and the prospect of raising the standards of living in the poorer nations.
Cost-benefit analysis is used in order to determine if an investment decision will bring the desired benefits. It is a method used in healthcare to attempt to obtain the highest medical benefit for the population at the best cost. The principle involves picking apart the components of healthcare delivery and weighting them unequally in proportion to their impact or potential impact on health. Obviously, the goal is to obtain the highest benefits for the lowest costs (Boldureanu, 2004).
It is clear that certain diseases and interventions have greater long-term consequences on the health trajectory of an individual. National health insurance schemes require a workers contribution from salary in exchange for a minimal level of care. A government body decides what treatments are appropriate to receive, and which treatments are beyond the means of the healthcare system for whatever reason. In practice this works with varying success. The NHS in the United Kingdom has terrible delivery of certain cancer treatments to its population. On the other hand in France, access to the latest pharmacological therapies for cancer are available. In practice cost-benefit analysis requires a degree of rationing of healthcare, and the rationing will occur on the level of ‘demonstrable medical benefit.’
Rationing has spurred on a fear of ‘death panels’ where bureaucrats would decide what treatments we receive or not. In reality, the insurance system in America already operates on this level. Neither the politician, lobbyist, nor insurance salesman actually has the appropriate skill levels or education to determine medical treatments or necessity. However, since they are in charge of the purse strings, they dictate the terms of payment. Cost-benefit analysis would take into account the expected benefits to the lives of the treated. Treatments that are more likely to return an individual to a healthy productive life are more certainly beneficial. Treatments that are experimental, expensive, and ultimately unable to return an individual to a productive tax-paying member of society are unlikely to be covered.
Cost benefit analysis is a key component of economic efficiency. The analysis weighs the positive and negative impacts of treatments and non-treatments. If one is to be done properly in healthcare, the costs and impacts to non-users must also be considered. Obviously it is of inestimable value for society to treat the tubercolotic patient in our midst. It will prevent the spread of the disease throughout the population, and prevent the time spent away from productive labor.
Economic efficiency is at the heart of cost-benefit analysis. Tangible and intangible benefits are taken into account in the calculation of whether or not paying for a certain intervention is acceptable. Certain interventions are cheap and have clear benefits like childhood vaccinations. Childhood vaccinations prevent the incidence and prevalence of potentially catastrophic illness, which can render a person unable to perform productively throughout their lives. Similarly, prenatal care of pregnant women has excellent benefits in regards to preventing congenital grave illness.
Just as there are treatments that have clear value, certain treatments will remain of ambiguous value. It is debatable whether or not spending hundreds of thousands of dollars on a 90-year-old patient is truly a good use of resources. The older the patient, the less likely the procedure or treatment will restore the patient to a healthy, productive member of society. The vast majority of health care spending is on futile attempts at heroic life saving measures of individuals who will not have a quality of life to speak of, nor feel independent and able to be productive.
Economic efficiency demands the allocation of resources where society will derive the most benefit from it. Unfortunately, this means that certain treatments will prove too costly and the beneficiaries too few to implement. If this is the case, it is possible for an individual to buy the treatment option out of pocket. Inevitably, this will create stratification where the wealthy are able to afford supplemental medical care, but hopefully this will enable the vast majority to obtain basic access to modern medical care.
Works Cited:
Boldureanu, D. (2004). Statistical Methods in Health Economics. The Journal of Preventive
Medicine, 12(1-2). 62-65. Retreived from: http://www.jmpiasi.ro/2004/12(1-2)/9.pdf
Khan, A. (July. 10, 2013). U.S. Health Care Spending Not Producing Results, Study
Says. Everday Health. Retrieved from: http://www.everydayhealth.com/healthy-living/us-health-care-spending-not-producing-results-study-says.aspx
Krugman, P., Wells, R. (Mar. 23, 2006). The Health Care Crisis and What to Do About
It. The New York Review of Books. Retrieved from: http://www.nybooks.com/articles/archives/2006/mar/23/the-health-care-crisis-and-what-to-do-about-it/?pagination=false
WHO (2013). World Health Statistics. Retrieved from:
http://www.who.int/gho/publications/world_health_statistics/EN_WHS2013_Full.pdf
