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Governments around the world spend vast amounts of taxpayer’s money on complex healthcare systems, with varying degrees of success and disturbingly high rates of failure. Often, results achieved remain extremely poor, in relation to the enormous per capita expenditure.
Higher government spending certainly does not guarantee a correspondingly high quality of healthcare provision. Evidence of this disparity can be extracted from various global rankings, which rate the healthcare provision in most countries worldwide.
Cost effectiveness and efficiency clearly exert a significant influence over the outcome of services provided. Monopolies, artificially inflated drug prices, complex mechanisms for the approval of new drugs, and the restricted movement of medical professionals, all contribute to lowering the standards of healthcare.
Comparison of global health systems
The United States normally ranks as one of the nations which spends the most, per capita, on healthcare, but produces very poor health outcomes in relation to this level of expenditure. In the United Kingdom, spending is lower but with better results, despite long waiting lists for treatment, in a system completely funded by taxation and capped by government regulation.
France is usually at the top of the rankings, with the best outcome in relation to expenditure. Basic government provision is provided alongside private medical insurance, in a system that even covers homeopathic medication.
Healthcare expenditure in the U.S currently consists of around 17.5% of GDP and if it continued to rise at its current rate, would reach 48% of GDP by 2050, which would be completely unsustainable. Given the lack of efficiency the system produces, it is vital to look at the reasons why it is underperforming in comparison with so many other developed countries worldwide.
Problems with healthcare systems
Government intervention is at the root of the most serious problems faced by healthcare systems. In the United States, government subsidies towards insurance can cause distortions in healthcare provision. Health insurance can lead to increasing demand for health services, which may not improve outcomes.
Doctors and patients can overconsume in terms of diagnostic tests, since someone else is bearing the cost. If the government is paying, restrictions will start to be enforced in relation to what is approved or not, based on cost-cutting measures rather than medical benefits.
Monopolies in the drug industry are detrimental to the efficiency of any health system, as they tend to produce treatments that will make profits, and the lack of competition leads to inflated prices.
Complex drug approval systems for new drugs can increase the likelihood of monopolies forming and can significantly increase delays in the availability of new drugs, through an over-cautious approach.
The FDA is an example of a system in need of a major overhaul, if not complete abolition. Fear over repercussions for problems with new drugs can encourage the FDA to wait longer than necessary before releasing drugs.
Patents for new drugs stifle competition. Developers in the U.S. get exclusive rights to market their drugs for 20 years after approval. Generic drugs offer much better value, but companies producing them often find it difficult to gain approval, even if they have been in use for many years in other countries.
Governments are also involved in the regulation of hospitals and where they should be built. Once again, excessive regulations can reduce competition and decisions may be taken for financial reasons, rather than health motives.
Strict licensing for doctors, nurses, and other medical staff can be seen as another area of concern. Measures are often put in place to unnecessarily restrict and limit the availability of suitably qualified professionals.
Likewise, immigration policy can also be very restrictive. If a country needs qualified medical professionals and does not have enough local supply, it makes no sense to prevent immigrants from filling these necessary roles.
Improvements possible for healthcare
Essentially, an efficient health system needs to be targeted towards maximizing results in terms of health outcomes, while minimizing costs and sourcing funds in as ethical a manner as possible. Overconsumption of services with little benefit needs to be discouraged through free markets, so as to avoid harsh limitations on the availability of life-saving treatments.
Measures which could help healthcare systems to become more efficient would involve reducing government intervention, which would allow for market solutions and increase competition. Deregulating the drug approval and patent application process would stimulate innovation in research.
A prize based system to compensate pharmaceutical companies for their research and development costs could be helpful in opening up the market for generic drugs and reducing the tendency for monopolies to develop as a result of restrictions on competition in the market.
Private control of drug approval could eventually replace the FDA completely. Well- informed consumers should be free to decide whether to use a particular treatment or not. Bearing some element of healthcare costs personally can help educate consumers towards self-regulation in their consumption of tests and treatment.
Private hospitals should be allowed to operate for those who wish to avail of their services, through private health insurance if required, even if some systems remain in place to allow the poorest members of society to access emergency treatment.
Abolishing government licensing for medical professionals would help to open up the labor market, as would the lifting of immigration restrictions. A private insurance for healthcare practitioners would continue to guarantee consumer safety and choice.
Why healthcare policy matters to SFL
At Students For Liberty, we believe in the importance of sustainable and efficient healthcare policies that help us move towards a freer society. Promoting innovation, deregulation, and competition will bring about greater choice and lower costs. This will ultimately lead to both improved value and better health outcomes for individuals.
