The stupid, part IINovember 11, 2011 Tim WorstallHealth Care22 Comments @clarercgp Clare Gerada @HarryDumpRich @RichardJMurphy @Gabby_L_M Health care does not behave as other commodities . There is no true health market in health care Health care isn\’t a commodity you dingbat. It\’s a service. Jeebus….. previousThe stupid, it hurtsnextWeekend reading 22 thoughts on “The stupid, part II” Tim Almond November 11, 2011 at 12:33 pm There’s a rich seam there… Why not concentrate on making savings that make sense – e..g national procurement of equipment: improve information systems etc Because we tried throwing some billions at it, and it was a disaster? Glenn Haldane November 11, 2011 at 12:43 pm Er, yes, but I suggest ‘commodity’ is a useful term to use when discussing services. I have certainly used it of insurance when bargaining with insurance brokers. Tim Newman November 11, 2011 at 12:45 pm I have certainly used it of insurance when bargaining with insurance brokers. I’m sure they took that as a signal. Ralph Musgrave November 11, 2011 at 1:24 pm I agree with Glen Haldane. The word commodity is occasionally used to include the notion “service”. My Penguin dictionary of economics (1978 edition) defines a commodity, amongst other things as “a good or service with specified characteristics”. But possibly usage has changed since 1978. SadButMadLad November 11, 2011 at 1:25 pm No market in health care? Didn’t Labour (the party Murphy and his lot love) create the NHS Choices system whereby patients could choose their hospital based on whatever criteria they liked. Isn’t that a market? In the health care system. Arthur Dent November 11, 2011 at 1:35 pm No it’s only a “market” when the Tories do it, please keep up! Dennis the Peasant November 11, 2011 at 2:08 pm “Health care isn’t a commodity you dingbat. It’s a service.” There you go again, Tim, getting all technical and talking over everyone’s head… Ian B November 11, 2011 at 2:29 pm Is labour a commodity? Come to that, is anything really a commodity? The definition appears to be fungibility- one man’s corn is another man’s corn (thank you, David Ricardo, now shut up), one man’s copper is another man’s copper, one man’s fish fingers is another man’s fish fingers. But since in reality, different farmers have corn that is more or less expensive to produce, or of more or less quality, is corn itself really a commodity at all? PaulB November 11, 2011 at 2:34 pm The Cato institute thinks healthcare is a commodity: http://www.usnews.com/opinion/articles/2009/08/10/healthcare-is-a-precious-commodity-that-must-be-used-wisely And there is “no true market in healthcare” in the sense that it is or could be paid for by consumers using their own money to buy things the quality of which they can determine for themselves. Ian B November 11, 2011 at 2:35 pm “in the sense that it is or could be paid for by consumers using their own money to buy things the quality of which they can determine for themselves.” Paul, are you saying that it could not be paid for by consumers, or they could not determine the quality for themselves, or both (or neither)? bloke in spain November 11, 2011 at 2:36 pm Woman’s in discourse with the interweb’s NUMBER ONE ECONOMIC BLOGGER!!!!(Shame you can’t do fonts here. That should be in 128 point, bold, underlined) Least she can do is get the terms right. She might confuse him. Richard November 11, 2011 at 2:37 pm PaulB, there could be just as much a market in healthcare as there is in cars. I’ve no idea from looking at cars which is better than the other, but I can read reviews and so take a reasonably rational decision. The same with hospitals. Ian B November 11, 2011 at 2:45 pm It’s worth bearing in mind that in order for a market to function, participants making choices only need to do better on average than random, even just marginally. Roger Thornhill November 11, 2011 at 2:59 pm There isn’t a true market in healthcare when you have a de facto, pre-paid, state-enforced monopoly on the block… So, A&E is not a market, but then again that is not the entire service, now, is it. To say there is no market possible is to say there is no market in food or housing. Both are far more immediately essential hour-by-hour for everyone than healthcare. Is there no market for water? Well, water SHOULD have a variety of suppliers but delivery systems kinda makes it into a natural monopoly, rendering it quite impossible to have each house delivered with water from the producer of their choice independent of their neighbours. Water is not like gas or electricity which is fungible. Healthcare, like education, will benefit from oversupply to enable the obviously bad to be deserted or rapidly reform and bring itself back into favour. You know, like we all have to… PaulB November 11, 2011 at 3:24 pm Ian, my main point was that health care in general is not and could not be paid for by consumers with their own money. Additionally, it is impossible for most patients to determine the quality of the treatment offered. Certainly they can tell how attentive the staff are and how much they like the food and board. What they can’t do is tell how wise the treatment decisions are. Reading patients’ reviews of hospitals is not going to help with that. Ian B November 11, 2011 at 3:50 pm Paul, on your second point, that could be applied to any or all goods and services. Are people fit to choose an electrician? They aren’t themselves experts in electrics, and the fact that after the works the lights and power work doesn’t mean they’ve been competently installed. But like I said, so long as consumers do better than random, a market will still work. On your first point, in fact health care can and was paid for by consumers with their own money. What happens is that that rubs up against an ethical desire on the part of many (most) of the population that healthcare should not be limited by ability to pay, which is a somewhat different thing. Tim Almond November 11, 2011 at 4:38 pm Paul B, Additionally, it is impossible for most patients to determine the quality of the treatment offered. Certainly they can tell how attentive the staff are and how much they like the food and board. What they can’t do is tell how wise the treatment decisions are. Reading patients’ reviews of hospitals is not going to help with that. I don’t know about you, but I know nothing about how to maintain aircraft. Yet we seem to have a well-functioning, safe and competitive market in airlines, don’t we? PaulB November 11, 2011 at 4:45 pm Yes, Tim A. If an aeroplane crashes, there’s a thorough investigation to find out what went wrong. If a patient dies, that just confirms they weren’t immortal. Ian B November 11, 2011 at 4:57 pm You could considerably improve scrutiny of doctors etc by demolishing their mediaeval guild. If in the current cartel situation, it is actually possibly to identify negligent or incompetent doctors and hospitals. But abolishing the guilds would certainly make that a lot easier. bloke in spain November 11, 2011 at 5:23 pm Looking at the posts above & bearing in mind a previous reference to them, cars or rather their service & repair aren’t a bad analogy to what is wanted from the Health Service. At various times a driver has different expectations of a garage. If he’s just looking for some tyres or an exhaust, the brands are available from various outlets so price is the determiner. The comparison could be made with simple routine treatments For more complicated repairs or a major service the owner is not only interested in price but in the reputation of the workshop because the quality of the work is so much more important. For this read more major but non-urgent surgery. In the last case, the driver is piloting a Formula 1 car & needs a 5 second wheel change requiring 20 crew & specialised equipment. Fair analogy for what is needed in A&E. It does seem that many of the arguments in favour of the NHS revolve around keeping an F1 crew on standby to change silencers & wiper blades. Johnathan Pearce November 11, 2011 at 7:29 pm What some people are saying here is that there is an imbalance of expertise between a patient on the one hand, and a doctor, on the other. Same applies of course to lawyers, accountants, architects, car mechanics, you name it. But… Even if the buyer of service A or B has “imperfect” knowledge of the available expertise, the fact that they can still choose doctor A over B, and that the doctor needs to cultivate a reputation for not killing or harming his or her clients, is an example of how the market can raise standards. And in addition, we have things like Which? guides, professional shoppers, etc, which act to spread information about who the best/worst are. Or this should happen in a complete free market. One problem is the libel laws. If, say, a rating agency for doctors (a bit like a credit rating firm) slagged off a doctor as being a “high risk” person, while saying another was a “very safe doctor”, then the libel writes would fly. The medical profession is extremely protective of its members’ presumed interests. IanB kind of makes this point also. Johnathan Pearce November 11, 2011 at 7:30 pm I meant to say “libel writs”. Blame my spelling on Friday evening tiredness. 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