Compromise and Conceit

Infernal adventuring…

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An Australian statistician and role-player living in Japan, interested in the theory and practice of role-playing…

  • What Meaning the Rise of China?

    Heading for a fall?

    China’s rapid economic rise has been the topic of much debate over the past few years, and I think that this rise has some implications for western political economic theorists that are quite fun to explore. The orthodox view of China’s rise seems to be that it is going to continue to grow rapidly for a while to come, and that this growth is a serious threat to world stability. Of course a lot of the kind of thinking you read on China is just bog-standard journalistic stupidity, not worthy of much time and heavily influenced by that strange blend of insecurity and arrogance that seems to characterize cheap western journalists’ approach to Asia. A lot of it also looks like a very close copy of what was said about Japan both before World War 2 and again during Japan’s meteoric rise of the 70s and 80s. However, generally, no matter how poor the quality of journalism on Japan, foreign policy seems to have been much more level-headed, and China has been allowed to do its thing largely in peace since the 1970s. In response, China has changed radically over that time: it’s adopted many elements of the free market, turned its back on much of the Maoist principles that led to disasters like the Cultural Revolution, and has even come close to admitting and apologizing for Tienanmen Square (though it hasn’t). Also, most of the UN’s millenium goals have not been met, but those that have been met are largely due to China: it has made huge inroads into health and social problems that other developing economies have failed to dent, so something is going right in China. On the other hand, some people think that China is heading for a crash, and that this crash is going to be bad, based on bad fundamentals; this goes very much against the orthodoxy and is almost a heretical claim, but it is out there. Certainly China’s GDP growth is hard to believe from the perspective of most developed economies.

    I think these changes, and the way the world is beginning to reorient economically and politically around Asia, raise interesting questions for political economists in the West. I think that a lot of people are ignoring the possible theoretical challenges that China’s rise may pose for a variety of Western disciplines, and I want to consider them here. Let us suppose that China continues to liberalize politically without becoming democratic, and let us assume also that China follows the trajectory many people seem to believe it is capable of, and continues to develop without an economic crash – that is, it maintains an economy that has, essentially, the characteristics of a bubble without collapsing – suppose instead that it makes a soft landing, with the party putting the brakes on growth where necessary and slowing things down at the right time – this seems to be what many people believe will happen. I think this raises some challenging questions for market neo-liberals, marxists and possibly also Keynesians, that I’d like to consider here.

    1. Is market capitalism the best model?

    Modern Western political economics seems to have pretty much given up on any kind of economic system except market capitalism, but most economic theorists seem resigned to the existence of boom-and-bust cycles in capitalism: the challenge is not in getting rid of them, but in managing them. But every bust is a tragedy for a minority of the population, and creates (minor) political upheaval. Eliminating boom-and-bust would be a boon for capitalism, but despite the Gordon Brown’s infamous claim to the contrary, it doesn’t seem possible. So if China can develop over the next 10 years without experiencing such a catastrophe, then the Chinese may be able to claim to have developed a capitalist model free of busts; but their model, for all its capitalist points, is not market capitalism. Is managed capitalism a better capitalist model than market capitalism, and can it be achieved in a democracy? Of course, other Asian nations have shown similar economic models – Japan and Thailand spring to mind – but they eventually faced busts as they liberalized. If China avoids the bust (and there’s no guarantee it will) while maintaining greater than 5% annual growth over 2 decades, what does this tell us about the relative merits of managed vs. market capitalism? I think this possibility raises challenging questions for liberal economists and Keynesians alike.

    2. Are economic freedoms and political freedoms really intertwined?

    A common mantra of neo-liberal economists and market liberals generally is that economic and political freedoms are intricately intertwined; that you cannot genuinely have one without the other. In its most extreme form any form of government interference in markets must necessarily reduce political freedom too; in more reasonable forms, it’s not possible to advance to a proper level of political and social freedom if large portions of the population don’t have economic freedom. But this doesn’t happen in China: a society without fundamental political freedoms is developing a strong market economy, which (although I have no proof) I think is much more economically free than the classical liberal model would expect given the lack of political freedoms. Is the market liberalist model of the essential interconnection of these two freedoms fundamentally wrong? If so, under what conditions? I can think of a model of economic and political freedom in Australia which depends on strong, prescriptive social institutions (union membership and compulsory voting) that are quite unique in the developed world – and Australia also has a remarkable economic history over the past 30 years. Is some restriction on political freedom essential for achieving economic freedom?

    3. Was historical materialism completely wrong?

    As I understand it, historical materialism describes stages of economic development that societies pass through, and argues that transition to a new stage occurs through social and political upheaval. Typically, marxists believed that the communist revolution could only occur once society had developed through some “objective” standards, to the point of industrialization, and that the social and political upheaval that heralded the coming of the communist utopia would generally only be achieved when society contained a sufficient critical mass of politically conscious industrial workers. Generally, therefore, marxists preferred to be active in industrialized societies with strong unions and social democratic parties – places like the UK and (famously) Germany. But the most successful communist societies – Cuba and China – were underdeveloped relative to the historical materialist model, and their revolutions occurred through military action amongst peasants by a vanguard of (often foreign-educated) members of the elite, not the industrial working class. Communist China has existed since 1949, so in 2021 it will become the longest-lived communist nation on Earth (supplanting the USSR, 1917-1989); sooner if you factor in the period of instability in the USSR that followed the revolution (the equivalent period having occurred before 1949 in China). So unless something drastic happens in the next 10 years, it appears that historical materialism’s predictions were, are and will be thoroughly and utterly wrong. Not only that; while the USSR and the Eastern European communist states, founded in a strong industrial working class, were inflexible and oppressive, China and Cuba have shown themselves to be much better able to adapt to the flows of history, and have shown themselves capable of survival through pursuing political, economic and foreign policy reforms that were unthinkable to the founding nations of the communist ideal. Of course, it could just be that there are cultural influences at work – Cuba is far from the only South American country to have tried communism, and the rest (like Nicaragua) were very flexible in their interpretation of the tenets of Marxism; and Vietnam is another example of an Asian communist country that gave classical Marxism the flick very quickly. But historical materialism presents itself as some kind of fundamental theory. Whichever way you slice it, unless China really goes under in the next 5-10 years, I think Marxists need to accept that their view of history is completely stupid and wrong. And when they do, I’d like an apology to my Grandfather for the despicable actions of the USSR in the Spanish civil war – actions that were based in an application of historical materialism to a country that was very close to the Latin American and Asian exemplars of a society ready for a communist revolution.

    4. Is parliamentary democracy the only model of consultative government?

    I think that the Chinese one-party state is actually quite a consultative political system – through cadres and local party structures I think it gathers information on the needs and opinions of ordinary Chinese and adapts its policies accordingly. People don’t get to vote for their leaders, but I think there are ways in which the leadership is influenced by ordinary opinion. I think this is a crucial part of the process by which the country has been able to engage in near-continuous reform since 1970, without many significant internal upheavals. I also think that this is an important difference between China and the USSR, whose leaders acted like new Tzars. Furthermore, it is clear that the Chinese leadership listen and react to foreign opinion, though never (obviously) against their own interests. So I wonder if they have created a kind of consultative government that responds to public pressure without elections. If it were possible to quantify differences in political responsiveness, would the Chinese leadership be found to be significantly different in accountability to, say, Obama, Bush or Sarkozy? Especially on foreign policy issues, China has avoided some quagmires that the entire world was very clearly telling Bush and Blair they should avoid; but it has also implemented significant reforms in economic and social policy that one would not expect of a communist leadership. Is this a sign of careful listening? And if so, does this mean that consultative government can be achieved without elections – is it possible it could be more desirable? If not desirable as a whole, does it offer any lessons in public accountability and responsiveness that western democracies can learn from? Was, e.g., the Australian Labor Party a more responsive and consultative government under Hawke not because of his leadership but because of its strong system of local branches and union representation? Is the problem with modern political parties that they are poll-driven spin-monsters, or that they lack the grassroots membership necessary to maintain a level of consultative interaction with the community? And if so, are they still genuinely democratic, even though they maintain the semblance of democracy through elections? If democracy is reduced to just a shell-game of voting and polling, is it any better than a politically restrictive but socially consultative dictatorship? Is the only difference one of sustainability, in that a dictatorship can go pear-shaped after a change of leader, while a democracy can’t? And if so, how do we explain the continued smooth transitions of leadership in Chinese communism?

    5. Are democracies less militaristic than dictatorships?

    In my previous post on China’s military budget, I noted that China is actually a pretty good international citizen, with low levels of military spending and very few imperialist projects. In short, China doesn’t go to war easily. In the past 20 years it hasn’t gone to war at all, while the USA has gone to war at least four times – on one occasion “accidentally” lobbing a missile into a Chinese consulate, an act that China chose not to respond aggressively too. How is it that a one party state that is, let’s face it, militarily pretty impregnable even when it isn’t spending much, is so uninterested in military adventures? One idea that occurred to me with the anniversary of the Falklands War is that China doesn’t have any domestic democratic pressure to go to war. China manipulates militaristic sentiment domestically, some would argue quite cynically, but is perfectly capable of putting a lid on demands for war. On the other hand, democratic leaders can benefit significantly from military intervention, whether they seek it out (as Bush did in Gulf War 2) or it comes to them (as in the Falklands). They have a lot of incentives to manipulate jingoistic sentiment,  and I think recent events show that they are quite happy to do so when it suits them. Before world war 2, wars of colonial conquest were a given in Western political theory – the idea that you don’t invade some tinpot country when it suits you would have been quite alien to the way of thinking of most democrats in London or Washington or Paris. Perhaps for dictators war is much less likely to be a net positive politically than it is for democrats? But this idea doesn’t stand up by itself – dictators have a long history of stupid wars, and the worst wars of the last century only occurred after democracies slid into dictatorship. So what is the particular property of China’s one-party state that makes it so averse to wars of choice? Some cultural thing? Something about its particular political constitution? If so, is there a class of dictatorships – like China – that are much less likely to go to war than a modern democracy? Are the properties of this class fragile and easily changeable (so that, e.g., China could just suddenly flip into a military expansionist mode tomorrow), or does it have something to do with the aforementioned consultative style? Is it simply a function of China’s stage of development? Is there something about the sheer size and diversity of China that means the political class have to tread very carefully to avoid tearing the country apart?

    I don’t claim to have a view one way or the other on any of these questions, but I think they pose interesting challenges to the mainstream of western political economics as I perceive it through my (layman’s) perspective. If China successfully negotiates its development phase, and especially if it can resolve the Taiwan issue peacefully, then I think political economists are going to have to accept that their theories are challenged by the new models (and some of the older ones) springing up in Asia. I doubt we’ll see much change, but that doesn’t mean we can’t consider the possible ramifications of a peaceful, stable, economically and environmentally sustainable China, if such a beast emerges over the next 10-20 years. How will Western democratic and economic ideologies change in the Asian century?

  • British Health and Safety Horror

    Gamers from Britain of a certain age may recall the educational videos released by the government about various saftety topics – stranger danger, farm safety, getting crushed by trains, what happens if you slip on a rug, etc. I remember being terrified by the farm safety video when I was at school, and having to write some stupid essay about making too much noise in the changing room and having a kid fall over and hit his head on a radiator and die[1]. Well, the Guardian has an article about these videos and how terrifying they were, including links to the worst of them. They are genuinely creepy and nasty. The article mentions that they seem to have quite a resemblance to the style of horror at the time, and I do wonder which inspired which.

    If you look them up on youtube you’ll find some genuinely disturbing entries in the genre, including the horrific Beware the Rapist (they told it like it was in ’70s America – who could ever trust a door to door christmas card salesman after watching that?) and the hilarious one about the pram. One can also look up the Protect and Survive nuclear war survival videos, which make Duck and Cover sound like a fairground game. I would have thought that as soon as those kinds of videos are being aired, in all seriousness, by your own government, it’s time to say “fuck this for a game of soldiers!” and overthrow the entire system – it’s beyond madness that people were seriously contemplating this kind of situation. Younger generations are, I think, genuinely lucky that the threat of nuclear war has faded, if for no other reason than that they don’t have to put up with these horrendous videos.

    Some of the comments under the article contain links to and/or descriptions of other videos, and some of them also contain some pretty funny comments on how society has changed. This one, sadly unlinked, about safety videos in India:

    A dad is driving to work, imagining all the horrific things his toddler might be dying of back home because of his lack of safety precautions there. He successively imagines, in graphic detail, it dying by putting its finger in an electric socket, being boiled alive by a pot of boiling water he forgot to take off the stove, slashing its throat on the razor he forgot to put away, falling off the fourth-floor veranda that he forgot to screen in, and so on. In the end he decides to rush home to make sure his kid is safe. When he sees it is unharmed, he is so happy, he picks it up, joyfully throws it in the air, where it promptly gets mangled in the ceiling fan

    Haha! Disasters are funny! But funnier still, this style of video seems to have spanned the globe. Were the Soviets doing it too? Japan? Of course we don’t see these videos at all anymore (at least not that I can tell), maybe partly because Health and Safety education has moved beyond the belief that accidents are the fault of individual choices, to ways of designing them away – many of the “accidents” in these videos that the audience are warned about could be avoided by, for example, redesigning electrical plugs or putting proper fences around slurry pits. But maybe people realized that it’s better to die young in a slurry pit than to spend your youth watching horrible B-grade horror stories about slurry pits. Or maybe because, as another commenter observes, society was harder back then:

    It was great in those days, so many ways to die, no chance of getting fat as even if your father was still around he was on a three day week and so spent all the money in the pub, drink driving wasn’t even recognised as a crime, and child abuse was a national sport. All men died three weeks after they claimed their pension, probably because of the 100 fags they had smoked every day since they were 8 years old.

    Or maybe it’s because the government realized that this kind of movie is counter-productive if it’s going to lead to adults who write comments like this:

    This is what is wrong with society and why kids have no respect, today they get CBBC and Mr Tumble, but in the good old days you were fully informed from an early age that you were almost certainly going to be dead tomorrow unless we listened to a paternalistic State. Now we have a State that is actively encouraging us to fill our baths with petrol.

    Anyway, it’s interesting to watch these videos and see how things were in the 1970s – grindingly poor and very dangerous, and if you didn’t die in a slurry pit you’d die of shame at the clothes you were wearing. Thank the gods of commerce for progress, and ask yourself what terrors could lie in even the best made horror movie, when every time you went to school you would be exposed to videos like this. Child abuse or public safety campaign? You be the judge!

     

    —

    fn1: This was in detention, because we were all given detention for being noisy. The reason we were being noisy is because some odious little kid was running around the physical education changing rooms waving his newly-erect willy about for all to admire, but when the teacher came in of course we all shut up and he put it away. So when I wrote my essay about a kid slipping over and falling because he didn’t hear someone yelling a warning to him about the puddle of water, I guess I was working out my post-erectile trauma.

  • NHS Reform Idea 2: Minimalist Privatization

    Continuing my series of ideas to reform the NHS, for this post I will consider a minimalist reform that aims to increase private investment and spending in the health sector without significantly disrupting the current form of the NHS. Mindful of the problems of central planning for resource allocation in health, this reform idea will introduce some mechanisms to allow increased flexibility in the public sector. It’s worth noting though that the last two governments (Labour and Conservative) have attempted to introduce flexibility into the public system through fictional markets, competitive budgets and the like, but these methods haven’t worked. Part of the reason for this is simple institutional inertia – the NHS is huge and has a 60 year history and its own culture, that won’t change quickly – but part of it is also due to the political sensitivity of the health sector, and the inability of the NHS to separate simple, practical decisions on how best to run the system from the political sensitivities of its political masters.

    The reform plan I’m describing here doesn’t necessarily depend on a shift to fee-for-service payments, but it is considerably easier to manage if this does happen, so I’m going to wave my magic bloggers wand and assume that this happened. I’m also going to leave out all discussion of minimal privatization within the public system (of things like pathology services) because they’re irrelevant to the central model, but they could certainly be included. We also won’t look at the primary care sector, which is a desperate pit of trouble that deserves its own post, though in this one we’ll set up some institutions that might serve as competition to the current moribund GP model.

    Introduction

    This minimal reform model aims to achieve three key goals:

    • Increase private funding of the hospital sector without damaging the ability of the public sector to provide free, accessible care for all
    • Widen the range of service providers in the hospital sector (both public and private) to enable the sector as a whole to respond to health problems more flexibly than it does now
    • Make the public sector less vulnerable to political interference and more flexible

    We will do this through allowing the establishment of private hospitals that provide care on a fee-for-service basis, having the government and private providers set up new, flexible specialist surgical centres and turning all hospitals into “Foundation Trusts” partially independent of the government, funded on a fixed and legislated basis (so free of political interference) and capable of responding flexibly to changes in the overall health market. The easiest way to do this is to introduce a fee-for-service funding system, but a system of contractual funding agreements wouldn’t necessarily hinder these reforms.

    Increasing public hospital flexibility

    One of Labour’s better ideas in this regard, transforming better performing hospitals into “Foundation Trusts” that were partially independent of the NHS with more financial flexibility, was a good one, though probably of limited effectiveness. I think now the Tories are extending this to all hospitals, so that on paper at least the hospitals are semi-independent of government and have more flexibility over their decisions. This model is supposed to enable the hospitals to make financial and governance decisions independently of political interference, potentially including contracting out some services to the private sector and reorganizing clinical services to be more efficient. I think they can be re-nationalized by the government if they fail to meet certain financial and healthcare standards, primarily to prevent market failure. The unfortunate side-effect of this re-nationalizability  is that the government can intervene where hospital decisions are politically inconvenient, but obviously this intervention is a significant political decision and carries its own political risks, so should reduce the inclination of governments to interfere in all but the very largest of decisions. The Tories have already introduced a system to Foundation Trusts to set up private wings, aimed initially at health tourism, as a way of making more money – a policy I said previously won’t work in isolation to solve the NHS’s problems. But if these hospitals are given this flexibility in conjunction with some additional government investment in new types of facilities, and the entrance of fully competitive private hospitals in a fee-for-service competition with public hospitals for extra money, then significant additional investment and structural reform can begin to take place.

    Allowing hospitals to be flexible means allowing them to be able to close some services and expand others. Consider two hospitals, A and B, located relatively close to each other in a city like Manchester. Hospital A has a large hand surgery specialty clinic, incorporating a large number of surgeons, grand rounds, a research facility, extensive links with academia and a teaching role; Hospital B has a small orthopaedic clinic that occasionally attends to hand surgery in amongst its other functions. Almost certainly, Hospital A will have better surgical outcomes (less cock-ups) and much lower rates of readmission and corrective surgery; it’s also likely to have much better rehabilitation services and post-surgical management. It likely also provides each surgical service at a lower cost than Hospital B, due to economies of scale and efficiencies from its more experienced staff. So the logical decision is for Hospital B to close its hand surgery operations altogether, and simply send them all to Hospital A. If both hospitals are being paid the same fee for every surgical service, it’s likely that B is making a loss on these services while A is making a profit – potentially a large enough profit to pay the transport fees to the patients and/or a finder’s fee to Hospital B. In this case it’s rational to close them, unless there is some strong reason why patients can’t make it to A if they live near B (unlikely in the modern world, and especially unlikely if the local hospitals have the flexibility to arrange patient transport networks). Currently these kinds of closures and rationalizations are hard to achieve, because as soon as the local newspaper gets wind of the closure of a clinic (let alone a whole struggling hospital or wing!) they run a vocal campaign against the local member, and often get their way. But by converting all hospitals into robustly independent Foundation Trusts these decisions are removed from government interference to at least some extent.

    Government investment in new types of facility

    One type of simple reform that was introduced to me by a hospital performance director in the UK was of shared specialty rooms. The performance director told me that his hospital and a few neighbouring hospitals were all facing a problem getting in a certain type of specialist (cardiology, I think). For these specialists to be employed by a hospital, they typically need to have a mixture of surgical and consulting work – so they want to have a full-time work load structured around a mixture of non-surgical and surgical work. But my interlocutor’s hospital didn’t have sufficient demand to justify such a clinic full time, so their specialist was under-worked and overpaid – or they had to make a decision not to employ one. The neighbouring hospitals had the same problem, and they had a vision of setting up a shared specialist facility, funded by all the hospitals but set up either in one of them or central to all of them, in a new building. Unfortunately they didn’t have any ability to do this – as public hospitals they couldn’t invest in such a facility, and with no private entrants in the market they couldn’t do it. Thus they had to either go without a specialist, or waste money on a specialist, in this one discipline. Foundation Trusts with suitable powers would be able to get around this problem by consolidation, closure and mergers; there’s no reason why they couldn’t cooperate with each other for maximum benefit, since they aren’t actually competing per se. But another option for these trusts is to invest in a new facility, or to petition the government to fund the establishment of such a facility.

    So, another part of the solution to the NHS’s current problems is the establishment of new types of facility, specialist centres serving multiple hospitals on specific disciplines. Another type of facility the NHS has been trialling is a type of private provider that takes up excess demand in high volume, low-risk surgery like cataract surgery. The government could fund the establishment of such centres to serve the needs of busy and overburdened Foundation Trusts, who could then close their own wards and theatres devoted to these specialties and focus on their core service areas. These smaller, clinical facilities would be somewhere between an outpatient centre, an inpatient facility, and a GP clinic, and would be quite easy to target at areas of need. For example in areas with a high burden of diabetes-related illness the government could set up a diabetes specialist clinic that provided GP services trained in diabetes specialties; minor surgical procedures related to diabetes; community nursing aimed at improving testing and dietary changes; and surgical facilities for handling common complaints related to diabetes (such as eye problems and possibly even some kinds of serious internal surgery). Then nearby hospitals would be free to give up some of these procedures, or handle only the most serious ones as part of their specialist services, referring all the minor stuff directly to the local facility.

    In essence this means the government spending more money on the NHS, but doing so through investment in new facilities specifically aimed at enabling existing facilities to rationalize and become more efficient – this is a combination of capacity expansion and efficiency gains in a fairly easily identifiable package. Governments often talk about “efficiency gains” in the NHS as a magical cure for all the problems facing it, but these efficiency gains almost never materialize because they’re built around making existing staff work harder. In a system as resource-constrained as the NHS, putting your finger on a bulge in one part will just produce a lump somewhere else. A better idea is to invest in new facilities that will enable existing hospitals to cast off the things they don’t do well and focus on what they do do well.

    These facilities could, however, be even more flexible – as could the Foundation Trusts themselves – if they were able to incorporate a private element of their funding. This is the third arm of the reform – to allow additional flexibility by allowing some private services on top of the existing structure of the NHS, either competing with it or topping it up.

    Allowing private investment

    There are two types of private investment that could be allowed into the NHS without significantly changing its remit. The first is to allow private hospitals to enter the market to compete with public hospitals on certain services, especially high-volume, low-risk services with long waiting times. The second is to allow full-fee-paying hospitals to take patients from the NHS and charge them directly. Both types of facility introduce private investment into the NHS, but for very different purposes.

    The first of these exist now, and are used by the NHS to handle their waiting list problems. For some simple surgery (like cataract surgery) when someone’s waiting time for the surgery goes beyond 3 months, the NHS pays for them to be treated at a specially established private facility. These clinics typically handle things like cataract surgery that are in very high demand and easily handled. These clinics exist now, and could easily be allowed to expand and compete directly with NHS hospitals for all patients on a fee-for-service basis. If they can provide a better service than neighbouring hospitals, then those hospitals might be able to close their cataract surgery wards and focus on something else that they do better – or contract them out to the private facility, thus gaining income they can spend on other things. Foundation Trusts might even want to invest in setting up such facilities themselves, pooling the cost with neighbouring hospitals so that they can cast off their own high-demand services to a single specialist clinic. In such a case they might need to petition the government for support, but they could probably also just get investment from a private provider of some kind – not in a flawed private finance initiative, but in a straight out for-profit business plan. Because the Foundation Trusts are not for-profit services, any profit they make from this new service will be ploughed back into their own investment programs.

    The second type of facility is more controversial, because it means splitting the NHS into a private-for-profit and a public section. The NHS could allow private health providers to establish new hospitals or facilities, that provide a range of services at a cost above the NHS tariff. Patients can choose to enter these hospitals instead of the NHS hospitals, but the NHS will only pay for the standard tariff portion of their service. The rest comes from their own pocket or from a health insurance program. Essentially, this allows private investment in the NHS, but prevents the private costs from blowing out so much that no one can afford the care. The advantage of this is that it relieves the physical pressure on the existing hospitals that leads to waiting times, enabling wealthier people to essentially jump the queue through private health insurance, but by allowing the NHS to pay some basic part of the service it extends this queue-jumping option beyond the realms of the super-rich, the only class of people who can currently afford private insurance covering full hospital care in the UK. Because people are already paying through their taxes for public care they won’t also pay for private insurance unless it is very cheap – and the best way to make it cheap is to make the costs it covers a top-up on the basic tariff, rather than the whole cost of hospital attendance. Of course the NHS could refuse to pay the whole tariff to private providers – so a private hospital patient receives, say, 80% of the NHS tariff and pays the rest plus the hospital’s additional private fee out of their own pocket.

    It’s possible that Foundation Trusts would be the first organizations to establish such private facilities, so that they could take advantage of excess demand for certain common procedures and turn the money back into their own services. But it would also be possible for private companies to build these facilities. I imagine that this would take a long time and build up from very humble beginnings – a cataract surgery here, a hand clinic there – but over the long-term it would bring much needed funding into the system, as well as a small amount of private spending. Essentially it would enable the NHS to increase the volume of services it provides without a concomitant cost to the government. This partially tariff-subsidized model of private care is essentially what the Australian primary care system works on, and it seems to work well to both keep down costs and expand capacity – exactly what the NHS needs.

    Effects on Inequality

    The system described here wouldn’t fundamentally change the patient experience in any way, except to increase hospital choice, but it would lead to some mild increases in government costs – short term investment in small facilities and long term increases in services paid for. But it would lead to increased private funding and expenditure, and potentially the competition over services would enable the government to reduce the unit-cost of those services, leading to overall efficiency gains and long-term cost reductions. I think it would also have potential benefits in reducing inequality. For example, the diabetes clinic example would likely be implemented in areas of highest demand for diabetes services. In the UK, this demand is in primarily poor areas with large South Asian or black Caribbean minority populations, which suffer an unnecessarily high burden of diabetes illness. By establishing both government run and private facilities in these areas, and allowing neighbouring hospitals to consolidate and refocus services, it is likely that a significant health inequality problem in the UK could begin to be tackled, without necessarily incurring large cost burdens. By the same token, hospitals in poor areas suffering large waiting lists and underinvestment could close facilities that aren’t in demand but are being kept open for political reasons, or simply move services between hospitals so that they are run more efficiently, reducing waiting times and improving outcomes in these areas. The system remains largely publicy funded but more flexible, potentially enabling inequality to be reduced without introducing new inequalities through avoidable market failure.

    The benefits of simplicity

    The other major benefit of this reform idea is that it is achievable through gradual change, builds on existing structures, and can be done with minimal political risk. Whatever party introduces these reforms (and I think it is more likely Labour than the Tories that would do this) will be able to argue that it is building new hospitals and increasing investment, but that this comes with the cost of reorganizing existing clinical arrangements. This may be a risky sales task, but it’s a lot easier than “you’ll be better off once we’ve flogged the lot!” And the gradualism enables the government to experiment with the changes and adjust them as it sees problems arising. Nonetheless, many of the changes – especially ward closures and moving specialties – will be controversial, and until a government gets a strong majority and acts decisively, even change as minimal as this is unlikely to happen. Especially after the Tories stuff up their current plans and make anything with even the vaguest aroma of privatization off-limits for a generation. But I think this approach is the most likely to be successful in the UK, and is both achievable and capable of significantly improving the NHS.

  • New Monster: Hanako in the Toilet

    Apparently, every toilet in every elementary school in Japan has a ghost. In the girls toilet is Hanako, and in the boys toilet is Taro.

    If you spin around three times and say their name, you can invoke them. Then, when you sit on the toilet, the ghost reaches out of the drain and pulls  your soul out of your arse.

  • NHS Reform Idea 1: Radical Privatization Surgery

    The first suggested reform idea in my series of ideas to reform the NHS will start with this, the most radical. This reform plan presents a way to raise a large amount of money to pay down government debt, expand private and public investment in the health system, make the health system more flexible and accessible, and directly tie hospital funding to health outcomes, without changing the annual cost structure of the NHS at all. It sounds too good to be true, and so it probably is.

    As I observed in my post on the current Conservative privatization drive, lack of private providers in the UK health market and central planning of all services are significant problems with the system: they affect the quantity of investment available, the efficiency of investment, independence of investment from political goals, and flexibility of response to changes in health care demand. The simplest approach to this is to allow new private entrants into the market and to fund them just as if they were public hospitals. This is very hard to do under the current system, because current block funding methods don’t work well for contracts with the private sector, and it will take a long time for new hospitals to be approved and built. A faster, simpler approach is to shift all the hospitals in the UK to a fee-for-service payment system (like Medicare in the USA) and then privatize them.

    Shifting to a fee-for-service system

    Fee for service systems have disadvantages that are well understood, but one significant advantage they offer is flexibility in response to demand. They also make the insurer paying for service able to purchase services from any provider, rather than having to be locked into contracts with specific providers – this potentially allows prices to be at least partially set by market forces. The main disadvantage in a stable health system is that they encourage over-provision of services, which leads to rapid cost growth for the payment provider (in this case, the government) and excessive healthcare attendances for patients – something that is potentially fatal in the case of e.g. prostate cancer. However, despite their disadvantages some systems – such as Japan – that use them have still managed to get good healthcare outcomes with low cost, so they aren’t the end of the world. Shifting a system like the NHS to such a payment process shouldn’t be impossible – in fact they’re already starting to do this in some ways using Healthcare Resource Groups. So let’s assume that this can be done, and all public hospitals can be switched to receiving payment on the basis of a fee-for-service system. Prices are set by the government, and hospitals paid for providing services. In theory there is no service the government won’t fund at a specified rate (we’ll return to this below), so everyone will get treatment. Some hospitals will provide some services at a cost below the price set by the government, so will profit from these; other services they provide at costs above the rate will either be subsidized by the more efficient ones (if the hospital is a not-for-profit) or closed (if the hospital is a private company). We’ll see the latter risk is one of the big problems with a fee-for-service system, but we’ll cross that bridge when we’ve burnt it.

    So the essence of this scheme is to shift to a fee-for-service system and then sell off all 200 hospitals in the UK.

    Privatizing all the hospitals in the NHS

    We want a rapid influx of investment in the NHS, and we want to free up the NHS itself from investing in hospitals, and shift it to being purely a purchaser of services. The fastest and simplest way to do this is to simply flog off all the hospitals. This would potentially raise an enormous amount of money for the NHS very rapidly. The total cost of hospital care every year is about 20billion pounds, I think, spread over about 200 hospitals; that’s 100 million pounds per hospital on average. I think a private company that could be guaranteed an approximate 100 million pound income stream with, say, 10 million pounds a year profit would be willing to invest probably 100 million pounds in a hospital, so flogging off all 200 hospitals would raise about 20 billion pounds. This would be enough money to pay down about 10% of government debt and have 10 billion left over, which I propose be put into a health future fund. This future fund contributes to healthcare research and funding of new investments through its profits, and uses the principal to provide investment loans to the private and public organizations involved in the healthcare market (so that, e.g., if a union decided to buy a hospital for 100 million pounds it would be able to get a loan from the healthcare future fund to do this). This fund would thus support continuing investment in healthcare, and provide grants for research into new treatments as well as emergency funding to save struggling hospitals in the immediate aftermath of the privatization[1].

    These privatized hospitals are then paid for their services from the existing NHS budget, which is about 20 billion pounds a year. But where previously this 20 billion pounds a year was split between hospital services and capital investment, now it is devoted only to services. I think this is the equivalent of increasing the hospital services budget by probably 5 or 10% (the amount of the existing budget that was being diverted by the hospitals to investment). Additionally, we have a huge short-term private investment of as much as 10 billion (the maximum value of the loans from the future fund) and then any other investment that the private owners want to put in. Having purchased a 100 million pound a year operation for, say, 100 million pounds, they might be willing to invest a bit more in improvements, I’m guessing.

    Even if my numbers of hospitals and total hospital sector budget are incorrect, it should be clear that the privatization would raise a lot of money that, if disbursed between debt repayment and setting up a healthcare future fund, would be of significant benefit to the UK economy and health economy.

    Allowing new entrants into the system

    Of course subsequent to this privatization the government could also allow new entrants to the system, that would probably set up specialist services in areas where specific services were lacking. These entrants would be able to get start up funding from the future fund, of course, and would be entirely private investment. Thus over time the size of total investment in the health system would grow, and important consideration in improving levels of care in the UK.

    A further, more radical entrant into the system could also be allowed: hospitals that charge an upfront payment. These hospitals would be additional to the current complement of hospitals, but would be able to charge fees to their admitted patients in addition to the standard service. They would, essentially, be luxury care centres. Unlike the current system, though, which does not allow the NHS to fund these kinds of providers, the hospitals would be allowed to charge the basic service to the NHS, and then charge only the top-up payment to the patient. Patients could pay out of pocket or cover the co-payment from a private insurance fund. This would allow private insurers to begin covering healthcare in the UK market, expanding the amount of per-service funding (and thus the proportion of GDP devoted to healthcare financing), but without requiring the private fund to cover the whole cost of hospitalization. Funds that have to cover the whole cost of privatization – as happens in America – have to be prohibitively expensive, and will not be able to compete in the British market.

    These private entrants would have to be additional to the current complement of hospitals, and clearly labeled as private hospitals. They would need permission from the government to be established, and would only be allowable in areas that have already got a decent supply of healthcare. This is necessary in order to ensure that people don’t have to travel too far to get free care (a fundamental constraint on the NHS). As a result they would be unlikely to ever form a major component of the UK hospital system.

    Consolidation and closure of existing services

    After privatization, I expect many hospital owners would look at the cost structure and efficiency of their new purchases and decide to shut down some services because they can’t provide them competitively. For example, if a hospital in East London is providing cardiac services it is unlikely to be able to compete with Bethnal Green, and would probably close or restructure those services in order to remain profitable. Over time this would lead to a reallocation and consolidation of specialist services into better, more efficient hospitals, leading to efficiency gains and cost minimization, as well as improved health outcomes. This is very hard to do in the NHS as it is constructed now due to political influence. There is a risk that in the short term at least – until new hospitals are built or capacity is otherwise expanded – that this would lead to a loss of overall service levels, so it would be necessary to require hospital owners to seek permission for closures in the first, say, 5 years of their ownership. It might be necessary for the government to fast-track establishment of new hospitals in order to overcome this problem, which leads us to the possibility that some hospitals would remain in public ownership.

    Partial privatization and gradual change

    It’s probably best if the biggest and most important teaching hospitals remain in public ownership, so that the government retains some direct power to intervene in the provision of health services and also in the teaching and research capacity of the hospital system. This could include using the proceeds of privatization to build new hospitals, probably specialist, providing specific services in some areas of the country. These hospitals would be funded under the same arrangements as the privatized hospitals, though obviously they would also need some form of block grants in order to support investment and to maintain loss-making specialties that the government believes they need to run for research or market-failure reasons. They wouldn’t be precluded from opening private wings (in fact, their reputation for excellence might make them the best option for starting this process), but they would probably also be held to stricter rules on service provision (for reasons of access and equality) than the private providers.

    As a general rule, rapid privatization is a dangerous prospect so the model proposed here might require a long time to complete, perhaps starting with smaller hospitals and building on their experience. Reform of the general practice system to allow private companies to enter their too would probably also be necessary, in order to prevent the primary care system putting a brake on the development of the tertiary system. Gradual privatization would mean that when the really big services were privatized there was less risk of mistake; it would probably also increase the amount of money gained, since flogging off all the hospitals at once would probably require selling them at bargain basement prices. This would also allow the system to be expanded as the privatization happened, convincing the public of the benefits of the process as they see new services open and waiting times drop.

    Risks and disadvantages

    The worst risk in this system is that immediately after privatization the new owners will close unprofitable specialties without opening new ones, leading to a general reduction in services provided across the NHS. This would indicate either that the NHS was over-stretched and incapable of providing many of the services it was providing, because the prices set on privatization would have been based partially on pre-privatization activity, and may have been set too low if the NHS had been operating massively under-budget for years. There’s also the associated risk that with prices set too low, the new owners struggle to make a profit, go into administration and then have to be re-nationalized. That would be a political disaster of monumental proportions, as well as costing the government a huge amount.

    Another possibility is that the closure and reallocation of services will see a massive loss of service provision in poor areas, where profits will be lower. This will increase the inequalities already inherent in the British system and is one of the main concerns of the advocates of retaining central planning in the NHS. Careful choice of which hospitals to privatize will help with this, as will the simple expedient of providing additional funding in some form (block grants, contractual rewards, or special loans) to companies that retain services in these areas. If this risk does eventuate, the government may find itself having to increase the total healthcare budget to support its goals of reducing inequality – but this is likely to be the case in any healthcare system in the UK that is serious about reducing inequality, and although politically unpalatable in the UK it’s essential if the UK ever wants to reduce inequality. Sadly, this is never going to happen (and if it does the money will be misspent anyway).

    The final disadvantage of this plan is that it requires the government of the UK – which couldn’t organize a root in a brothel – to manage the biggest privatization of services since the collapse of the USSR, to set a realistic and practical pricing structure for healthcare that is affordable but sufficient to enable private sector organizations to make a profit, to not to squander the result of privatization, to be willing to commit to a 5, 10 or even 15-year long period of massive health system reform (this would require bipartisan support, which is almost impossible in the toxic political environment of the UK) and to be able to sell the whole thing across multiple elections. So to actually implement this program in the UK would be inviting disaster.

    The Final Picture

    If successful, the final health system that emerged from this reform would very much resemble that of Japan, with an entirely public purchaser of services (the NHS) purchasing services from a largely private market place of hospitals and clinics. Prices would be set by the government at first but could potentially be set purely by market forces in the long term as capacity increased. Because the UK system is more centralized in larger hospitals than Japan, and because our remit requires all patients to be able to get any service free at the point of care, the system would probably have more publicly run providers (primarily large teaching hospitals) than in Japan, and would probably still be slightly more shambolic (due to the lack of private payments). The healthcare future fund would be unique to the UK, and there would probably be a large number of direct grants and subsidies (at least in the short term) to maintain the system and prevent growth of inequality. The final outcome of this process is not unrecognizable in the current range of healthcare systems, though, so it’s not impossible to imagine that a well-run privatization and reform program could get the NHS to this point. And if it worked broadly similarly to the Japanese system, it would be a vast improvement on what the UK has now.

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    fn1: I think this would be necessary because even a mind as great as mine would be likely to make mistakes in pricing services or estimating long term service levels

  • Alternative Ideas to Reform the NHS

    Having criticized the approach the UK government is taking to reforming the NHS, it seems only fair that I should make a few suggestions of my own. Unburdened as I am by the responsibility to be serious or to come up with a proposal that actually works, I’m going to write up a few perhaps crazy suggestions this week and next. For my reform ideas, I’ve decided to set the following arbitrary constraints:

    • The basic remit of the NHS must not change: that is, any reform plan must preserve the ability of the NHS to provide quality care accessible to all and free at the point of delivery
    • The patient experience must not be changed, so that if a reform plan were enacted wholesale today, a patient attempting to use the health system tomorrow would not notice any practical effect on their lives or patient experience[1]
    • As much as possible, red tape and administrative barriers to healthcare access should be reduced at the level of the patient, so e.g. we should try to abolish lists and restrictions on hospital attendance
    • The system should allow cost containment
    • Where possible, the system should reduce inequality, or at least not make the current system worse

    I will of course add extra rules wherever possible.

    The four ideas I have so far are:

    • Radical privatization, which looks too good to be true and probably is (this is essentially a radical shift to a Japanese-style marketplace but with no private up-front payments)
    • Minimal privatization, in which minor changes are made to the hospital system to allow new entrants and private investment (essentially the Australian model hospital system tacked onto the British GP system)
    • A license system, with trade in licenses slowly opened up to allow increased privatization and resource reallocation (this is completely new but probably just a mechanism to achieve a mixture of the other three ideas)
    • Reform of the GP market only, to significantly improve the function of the primary care system while leaving the tertiary care system unchanged (essentially, the Australian model)

    I hope these ideas will show that it’s possible to radically change the structure of the NHS without changing its essential relationship between patient and system, its fundamental funding arrangements or its main outcomes. I don’t claim that any of my ideas will work, of course, nor do they have to since I’m writing on a blog. But I suspect that even the most minimalist of them would be politically unpalatable in the UK now (and even more so when the Tories stuff up their current round of reforms).

    Any other ideas in comments would be appreciated, and I’ll try and write them up too!

     

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    fn1: This rules out care budgets and vouchers and some of the crazier ideas floating around in the UK and USA, that require patients to become active participants in health service planning

  • Has China’s Military Budget Really Grown?

    The Guardian is doing a series on China this week, some of which is quite interesting – the article on Gansu’s solar revolution is quite fascinating to someone (i.e. me) who visited that province 10 years ago and saw nothing but Yak herders, for example. However, in amongst the interesting cultural discussion there is the usual western panic at the prospect of China’s military growth, with an article on its foreign policy declaring breathlessly

    China’s military still lags far behind the US, but its official military budget has risen from $14.6bn to $106bn in 12 years – and many believe the true level of spending is far higher.

    This kind of statement isn’t limited to the Guardian – newspapers all over Australia, the US and the UK like to point to this 7-fold increase in the military budget and talk about what it signifies. I think it signifies nothing. In fact, the same day this article was written the Guardian put up one of their bravely-named “datablogs” about Chinese GDP, and showed us that 12 years ago it was 390 billion US$, while now it is 6,990 billion US$. So military spending has dropped from 3.7% of GDP to 1.5% of GDP. Cause to worry?

    China’s inflation in the early 1990s was running at up to 20% per year, and it’s easy to see that $14.6bn was going to devalue rapidly. In fact, applying the cpi inflation figures to China’s 1990 spending, we see that just to keep up with inflation military spending today would need to be 37 billion US$. So the true increase in spending is not 7-fold at all, but a maximum of 3-fold. In terms of absolute growth it’s a bit scary, but in terms of proportion of GDP China has been de-militarizing rapidly. And a lot of the spending has been catch up anyway.

    So let’s compare China’s geo-strategic situation with the USA, which according to wikipedia had a 2011 budget of 1 trillion US$ – 10 times that of China, and 7.7% of its GDP. The USA shares land borders with two democratic, stable states, one of which has some instability on its border. It has no immediate regional rivals bar Cuba, and its nearest geopolitical rivals are an ocean away. There are no hostile military occupations by geopolitical rivals in nations that share a land border with it or its neighbours. By contrast, China:

    • Shares a border with Russia (enough said!)
    • Shares a border with Kyrgyzstan, which hosts a military base with one of its geopolitical rivals (the USA)
    • Shares a (sliver of) border with Afghanistan, a failed state currently occupied by a geopolitical rival
    • Shares a border with India, which (I think) has territorial claims on parts of China
    • Shares borders with Myanmar and North Korea, both failed or failing autocratic states
    • Is separated by a narrow sea lane from its nearest regional rival, Japan, which has a large and dangerous military and a history of aggressive war against China
    • Depends for trade on a series of sea-ways (e.g. the straits of Malacca) that are known to be subject to piracy
    • Has territorial claims on a nation that its main geopolitical rival is pledged to protect

    Plus of course that geo-political rival maintains a significant military force in the Pacific and in neighbouring nations (e.g. Japan and Korea). Yet, China’s defense spending has declined as a percentage of GDP and has increased in absolute terms only three-fold over the past 12 years.

    This makes China seem very far from a belligerent power, and if anything the very model of restraint and good neighbourliness. If the USA, France or Britain were subject to the kind of geopolitical situation China faces, would they be funding their military at these rates, or gearing up for a massive expansion? So why do newspapers bother with this simplistic pap about China?

  • Watching the Privatization of Britain’s National Health Service

    Yesterday the UK government passed the Health and Social Care Bill, which institutes sweeping changes across the National Health Service (NHS) that some observers claim will see it completely transformed from its present form into a privatized health provider. Depending on who you ask, we are about to witness the dawning of a golden age in health gains for ordinary Britons, or the unravelling of Britain’s healthcare system with terrible consequences. Those of us who don’t currently depend on the NHS for our healthcare get to watch the fascinating spectacle of the world’s largest centralized healthcare system (and I think according to some reports the world’s largest single employer) being dismantled piecewise from the comfortable vantage point of our functioning universal healthcare systems (unless we’re American, of course – you guys just get to be jealous that the UK has a universal health system to dismantle).

    The Health and Social Care Bill contains, in  my view, one of the most appalling pieces of healthcare reform that a human being can conceive of inflicting on an otherwise functioning system, but it also contains at least the seeds of some important reforms that are long overdue for the British system. The former is, of course, the ludicrous idea of “clinical commissioning,” in which about 60 billion pounds of NHS funding is to be taken away from area health services (called “Primary Care Trusts”) and given to family doctors, who are expected to form up into consortiums that will then determine what care gets funded with the money they’ve been given. The latter is the decision to split the health system into providers of care (hospitals and health care services), who offer services that then purchased by the NHS (or the afore-mentioned godforsaken GP commissioners). If it were possible to achive this latter reform successfully, the NHS would have been transformed so that it worked along lines similar to almost every other universal health care system in the world, and would also open the way for significant private investment in healthcare infrastructure in the UK. I’ll give some examples of how simple and profound that could be in this post.

    What’s Wrong with the NHS

    The biggest problem with healthcare in the UK – and the problem that governments on both sides don’t want to talk about – is that it is underfunded. The UK spends just under 10% of its GDP on healthcare, compared to between 11% and 17% for France and the USA[1]; before Labour’s reforms in the early 2000s, it spent closer to 8.5% on healthcare. You can’t expect modern health outcomes with this level of funding, though the NHS has shown that you can still do pretty well. The reason that this funding is so low is that the UK system is a centrally managed, entirely publicly-funded service, from which private providers have been excluded since its inception. With no ability to participate in the NHS, tax rates high, and the NHS goal to provide all services free at the point of care, private providers cannot make money and are left providing boutique services to the very rich. Hence, private investment in health is low. But it’s extremely difficult for the government to make up this shortfall – it’s likely doing so would require the government to increase spending on the NHS by potentially as much as 20% (to take it from the 9.5% of GDP it is now to the 11 or 12% other countries enjoy). Obviously such a funding boost is politically impossible, and so the NHS has languished.

    Funding isn’t the only problem though. A centrally-managed organization of this size is inflexible, conservative and inefficient, and forcing efficiency gains from such a behemoth is extremely difficult. Centralized decision making forces diverse organizations in diverse regions that have individual priorities to commit to goals and priorities set nationally, and leads to the classic inefficiencies and inflexibility of a centrally-managed utopian institution. Other health systems leave much regional flexibility and priority-setting to be determined both at a local level and privately, and force at least some health organizations to respond to patient needs by going out of business if they can’t. Classic examples of this kind of inflexibility abound in the NHS: until recently patients didn’t have a choice of hospital, but had to go to one that was linked to the area in which they lived. You can’t shop around GPs (in theory) but need to “register” with a GP and visit only one – you can’t, e.g. have a different GP for sexual health needs vs. chronic disease management, which is pretty common in other countries. Furthermore, GPs can refuse to accept new patients if their list is full, and many GPs require you to register before you can attend for health care, which is inflexible. There is no incentive for GPs to invest in their own services, since they can refer patients to a hospital for almost every condition, and have a largely captive audience, so the UK has an abundance of one-doctor surgeries with archaic opening times. At least a portion of their renumeration is based on their list size, so there’s no incentive for new GPs to enter the market or to try and increase the amount of services they provide: their ideal business model (financially) is to have a large list of patients and very short working hours, and there’s no incentive for them to merge to form larger GP clinics that might, e.g., provide out of hours services. This all changed slowly under labour since the mid-90s, but GPs – the gatekeepers into the health system in the UK – are very highly paid for a very poor service model.

    The hospital sector in the UK is also under-funded and subject to the kind of rigid service models one expects of a centrally-managed system. The outpatient system is over-burdened from the broken gatekeeper model, and many of the hospital systems are lacking investment and modern infrastructure. This is a throwback to years of underfunding but it’s also a consequence of current funding constraints: both recurrent costs and capital investment need to be funded from the government’s budget, but they can’t contract out e.g. pathology services that would be routinely privatized in other systems, so where much of this investment is done by private companies in Australia, in the UK it’s all part of that 9.5% of GDP. The system is plagued with waiting times and archaic technology and systems, and everyone is overworked.

    Hospitals can’t consolidate or specialize, which is a key method of improving efficiency, quality and safety of care. We know that larger facilities tend to have lower death rates and better success rates, but to achieve such benefits hospitals need to shut down under-performing clinics or specialties and focus on a more limited range of services – and some hospitals need to shut altogether. But in the UK there is a direct relationship between the government and the hospital sector, so every time a hospital plans to close even a single ward you see protests aimed at the local member, followed by political blowback, taken up with gusto by the press (who love an NHS scandal). The government inevitably buckles, and under-performing or inefficient (and sometimes dangerous) smaller facilities can’t relocate or close. In fact, the whole system is vulnerable to political campaigns – on nurses’ or doctors’ pay, on hospital closures, or even on particular treatment methods – in a way that a more mixed model is not.  So it creaks along, unable to consolidate for modern efficiency gains, unable to reform its failing gatekeeper model, and unable to inject the capital required to modernize. Plus, even if it did inject the capital, much of it would be subjet to political debate and delays that would mean it was inefficiently used.

    A Model Example: Privatization of General Practice

    For these reasons, the system needs to be diversified and decoupled from the political pressures that currently constrain its operations, and doing so is inevitably going to mean privatization. There is no reason, for example, that the entire primary health system (that is, GPs) couldn’t be thrown entirely to the whims of the market, with GPs offered payment only on a fee-for-service basis and the market opened up to corporate investors. If the government did this, international health care companies would be in faster than greased lightning, setting up large, efficient and modern clinics with heavy capital investment, bringing in overseas doctors or buying in the local younger doctors, incorporating allied health care services and providing a huge injection of capital to the GP market overnight. Older, settled GPs would hate it because they would be drummed out of the market, but this is exactly what is needed – get rid of these little shoddy one man clinics operating 9-5 and no weekends, and replace them with large, bustling services that provide evening and weekend medical care, physiotherapy, dental care, public health nursing and rehabilitation under one roof. It would immediately take pressure off of hospitals and make healthcare far more easily available for the majority of the working population. These services are the norm in other developed nations but still held back in the UK by the lack of private investment or public vision.

    The Political Mistakes in this Bill

    With these ideas in mind, the government has started outsourcing NHS services, and the Guardian reports on a controversial example from Devon, possibly the first in the UK: privatization of children’s health services. These services will be purchased by the NHS, but provided by either Serco (a private prisons company) or Virgin Healthcare (a branch of Richard Branson’s Virgin empire). This is a classic insurer/provider split: the NHS collects insurance from everyone in the UK and then purchases health services from a private provider. Unfortunately, from what one can tell of the process in the article, it’s going to go down the classic British privatization pathway: give the contract to a single provider without a fee-for-service element and then hope they don’t cock it up. The NHS, with no expertise in contracting from private services, is going to be writing a 100 million pound contract with a famously predatory company like Serco or Virgin. And not just for any services, but for the most controversial possible service they can find: child protection. This isn’t just a political risk but a healthcare risk, because these services are far more complex than say, radiology or pathology services, and there are very few private contractors with any experience in them.

    The linked article on children’s health services makes the people bidding for this contract seem like very reasonable people driven by a genuine desire to provide decent health care and an awareness of what is holding the NHS back. For example, the Serco spokesperson says:

    It has to cut £20bn a year. It can’t invest, but we can invest to improve quality and generate efficiency. We have to bid to deliver at prices that are a lot lower than the NHS to win contracts and that gives the NHS more money to put into the NHS itself.

    This is a good example of why efficiency gains are important. They don’t just benefit the profits of the insurance company doing the purchasing, but also the health of all members of the plan, since they enable the insurance company to fund a greater number of services, and/or to extend its funds to new services. Unfortunately the Conservatives aren’t selling these points, but are instead talking up the need to save money.

    Ideally, the privatization program the Tories are running would start with something simple – pathology or radiology services, or a small rural hospital – and be trialled over several years before being introduced nationally, and the most complex and controversial services (large teaching hospitals, prison healthcare, children’s services) would be privatized last or not at all. Lessons learnt in the initial small trials would be incorporated into the bigger privatization program, and where things failed they would be kept in public hands until better privatization methods could be trialled. Also, the system wouldn’t be privatized in a one-contract-per-service method as is shown here, especially not in rural areas where locals can’t easily choose another service not being provided by the sole contractor. Rather, services would be offered competitively to the lowest bidder, thus allowing the NHS itself to compete. The risk with solo contracts such as planned here are that they don’t actually exert a competitive pressure on the provider – they’re only as competitive as the tendering process. Patients as well as commissioners should have the ability to shop around.

    Unfortunately, the Tories seem to have decided to push forward recklessly, implementing clinical commissioning and hospital privatization at the same time. There’s a risk of chaos, poor contract management, and cost overruns or service failures without any significant benefits to patients, at least in the short term.

    The Most Likely Outcomes

    The privatization of children’s services in Devon is a good example of the radicalism underlying the Conservative Party’s agenda on this topic: they don’t want to see a gradual unravelling of the NHS, starting with the easiest services and building up, and instead want to sell off the most complex bits while simultaneously managing the mish-mash of clinical commissioning, and cutting funding to the NHS by something like 20billion pounds over 5 years. The obvious result is going to be a 5 year torrent of bad news stories, and the public perception that health system privatization is both a kooky agenda (tainted by the confusion and chaos that clinical commissioning will bring) and driven only by the need to cut costs, rather than the very real need to improve the NHS. Thus, when the Conservatives finally lose power, the privatization agenda will be inevitably linked with their other policy radicalism and the agenda of “the cuts” (oh how I hate that term), and the chance to reform the NHS so that it actually works will be lost.

    Furthermore, the Tories aren’t actually testing a health system reform that has any pedigree. A single payer insurer offering fixed payments on a fee for service basis to primarily private providers has been tried and tested in the USA (Medicare) and Japan (kokumin hoken). A weird system of ordinary family doctors holding millions of dollars in health system funding and using it to contract services from private providers on a block funding basis – that is unheard of in modern health systems. Why test it?

    Mistaken Ideas About Health Inequality

    Much of the debate about healthcare in the UK still revolves around this issue of central planning versus US-style free market models. In February the shadow (Labour) spokesperson on health, Andy Burnham, penned a piece for the Guardian in which he criticized privatization. There he claimed:

    In the US system, for instance, it is possible to find some of the world’s most advanced and innovative examples of care. But, alongside it, we find very poor or non-existent care. The question we must ask is not which system produces the best individual examples of treatment, but rather which is best for everyone. On this test, the centrally planned NHS wins hands down.

    This is a completely unreasonable comparison. The US has “poor or non-existent care” because it doesn’t have universal health care. The US could do away with this problem tomorrow by nationalizing all the insurance companies, forming one national insurance company funded by taxation, and then funding all medical care on a strictly fee for service basis. The system would be completely unplanned, with no government hospitals involved, but it would be pretty likely to eliminate “non-existent care” overnight, since all Americans would be eligible for care. Burnham also claims the NHS

    provides the precious ability to set standards and entitlements to services at a national level. Market-based health systems do not afford a similar ability to control costs at national level, and allocate resources in a fair and consistent way.

    But this is also not true. The government, providing all funds for purchasing health care services, can decide exactly how much it will pay, and provide it is not stupid or unrealistic, it is likely that the private sector will fall into line (we’re talking about 100 billion pounds a year of essential services here – people will be shoving into line to get a piece of that). Similarly, the USA has the ability to “set standards and entitlements” even now – for example, it’s very hard for a US health insurance company to refuse someone a policy because they’re black. The problem in the US is that the government won’t set those standards well enough, and by refusing to provide a universal health coverage model, has lost the ability to compete financially in this market place or to control it through its own considerable financial muscle. There have been many models proposed that would reform much of the US healthcare market without making it centrally planned, and would improve both its equality and its ability to contain costs – and in fact some private US organizations (especially HMOs) are famous for good cost containment. The tragedy of the US political system is that many of the education proposals coming from moderate republicans – voucher systems and the like – would significantly reduce health inequality if adapted to the health market, yet even relatively rational and minimal reform plans that would otherwise be favourable to their right wing are rejected out of hand because they involve “government intervention in medical care.”

    The problem in the UK is that this debate about access to care has been framed as a debate between the NHS and the US system for so long that even experts and well-intentioned politicians with a strong understanding of the system (like Burnham) have fallen into it. But the reality is that centrally planned systems don’t necessarily reduce inequality. This is because inequality is not purely a function of inability to afford healthcare: it arises from the interaction between individuals and systems, the design of systems, and the inevitability of resource constraints. Wherever resources are restricted one finds that the wealthy, the educated and the powerful are better able to seize more of these resources, or seize them sooner (an important consideration in health systems). For example, in 2010 I showed that poor and older people tend to receive less referrals or take longer to be referred for a wide range of conditions within the NHS – this despite the fact that the NHS is free to all. This is because the referral system is a type of resource management system, and for reasons we don’t entirely understand, the wealthy and the educated are better able to negotiate any such system. So central planning doesn’t solve these problems, though the way the NHS is constructed makes these problems less life threatening than they would be in, say, the USA (where many of the people whose health outcomes I studied would simply not have access to health care at all).

    Another reason that centrally planned systems don’t necessarily reduce inequality better than other systems is that health inequality is caused by factors outside the health system. It is, simply, a function of inequality, and there’s only so much that even the best health systems can do to reduce the effect of problems created in broader society. The UK is a very unequal society, and the NHS has to deal with the human consequences of that. The goal of health planners concerned about inequality is to find the best system to provide good healthcare to everyone that will also reduce inequality. Balancing these two goals in a resource-constrained setting is difficult, and I see no a priori justification for the idea that central planning is always the best way to do this.

    Some Theories About Modern Healthcare Systems

    Once the NHS and the US’s overly private system are done away with the world will essentially be left with a range of mixed-market models, largely based on the idea of a central universal insurance provider and a partially- or completely- privatized marketplace of service providers. Some, like Canada and Australia, will tend to be more heavily publicly run than others, like Japan or Germany. There will be a few unique hold outs, like China, Cuba and Switzerland, but largely the ideal form of health provider will have been settled. This decade the WHO is focusing on universal healthcare as a central policy theme, and the goal will then be to expand models like Japan’s to encompass the developing world – a pressing problem given the resource constraints there. There is no place in health policy for a purely market-based model and, as far as I can see, there is equally no place for a fully centrally managed model. The debate now is about how to extend the most functional mixed-market models to the rest of the world (including China and India) as a development goal, and how to resolve pressing issues of cost containment in the developed world.

    Given this settled state of policy, it seems now to me that there are some central lessons that have been learnt since the expansion of universal care systems across the developed world over the past 100 years:

    • Governments and markets can’t go it alone: models based entirely on one sector running the whole show don’t work, because health systems are enormously complex, requiring market-based flexibility and government intervention to prevent market failure and enforce standards and access
    • Cost containment, universal access, and timely access are hard to balance: Most health systems can’t manage all three of these at once. The USA has managed timely access but not cost containment or universality; the UK has managed two of the three; Japan, Germany and France have probably got all three down but Germany is heading into financial trouble and Japan has inherited a unique set of social factors (a very healthy population and a very equitable society). This trio of goals for modern health systems are going to become harder and harder to balance as populations age and more expensive health care is developed
    • You can’t fix inequality just by throwing money at it: obviously achieving universal care is an important part of reducing inequality, but that’s not the end of it. How your system functions and how people interact with it is important in determining where inequality arises and how well it is reduced. A complex system with non-financial resource constraints (like the NHS) can create or perpetuate inequality even though on paper everyone has access to care
    • Centrally planned systems don’t solve inequality: Central planning can be an attractive way to reduce inequality, but it doesn’t necessarily work that way. In health systems, inefficiencies or inequities in one area inevitably produce problems and workarounds elsewhere, and centrally planned systems may be able to stamp out some inefficiencies or inequities, but they don’t necessarily have the capability to react to (or even notice) the problems their solutions create
    • Muddled political visions produce muddled outcomes: They may claim to be friends of the NHS but the Tory political program in health is not just about improving the NHS. They also want to cut costs (to the government), and they want to reduce government interference. I think they also have an ideological goal of increasing the role of the private sector in healthcare, and I don’t think this view arises purely from a belief that this will make the system better – they have an ideological commitment to reducing the size and role of government. This muddled goal will produce a partially privatized system that doesn’t work because it wasn’t privatized with the goal of improving the system. Similarly, the Labour party may be friends of the NHS but they also had a goal of privatization with the intention of improving services, but they couldn’t separate that practical plan from their commitment to a centrally planned and government run NHS. The result was a series of aborted privatization plans that satisfied no one.

    Health systems planning is where ideologies go to die, and the NHS is the classic example of this. It has long since proven that the centrally planned, socialized system envisaged in 1948 is insufficient to the long term management of a health system, but subsequent interventions to improve it have been hampered by ideology and have inevitably failed when they meet reality. The latest attempt by the Tories, though it has some good qualities and has the potential to take the NHS in a good direction, is highly likely to meet the same fate. If they do fail the rapidity of the changes, their timing and their entanglement with the Tory cost-cutting agenda could permanently damage the idea of introducing a mixed market system to the NHS, setting back much-needed reforms for a whole generation. This will leave the British people very poorly served by their health system, and continuing to fall behind the rest of the OECD in health outcomes. It will be sad indeed if the country that introduced the modern, free health service is overtaken by even the post-Obamacare USA as a model for health service provision.

    —

    fn1: These figures taken roughly from the Commonwealth Fund’s annual report on health care comparisons between the UK, Germany, Netherlands, NZ, Australia and USA.

  • How Many Punks Does It Take to Change a Light Bulb?

    Answer: None, because punk never changed anything. And today, courtesy of the Guardian, we have an amusing interview with an Indonesian punk that confirms the truth of this cute joke:

    The first wave of Indonesian punk stretched from 1990 to 1995, and saw the arrival of groups called Submission, Antiseptic and the elegantly named Dickhead. It was sparked by records by such British punk groups as the Sex Pistols and the Exploited, a Scottish band whose take on punk could charitably be construed as somewhat reductive (older readers may remember their debut album, Punks [sic] Not Dead, and their only performance on Top of the Pops in 1981, much discussed in British schoolyards the following day).

    A second Indonesian phase began in 1996, inspired by a US punk fanzine and record label called Profane Existence, and the British band Crass, who shared an essentially anarchist ideology. This development played into a sea change in Indonesian public opinion, as opposition to the Suharto regime – which fell in 1998 – hardened. With the regime on its last legs, says Karib, punks tended to be left alone. “We continued to play, without much attention from the authorities,” he says. “They were focused on the student movement, not music.”

    Here the interviewee, a punk musician called Fathun Karib, confirms the long-held suspicion that the punk movement is not a serious threat to genuinely repressive regimes: the closer Suharto came to the crunch point in his leadership, the less police attention the punks attracted, because Suharto’s apparatus of state repression was concentrating its efforts on the genuinely dangerous movements in Indonesian society: the students, according to Fathun Karib, though I suspect that unions and general democratic movements (as well as the armed separatists in the territories) were getting a fair amount of attention too. Punk, apparently, wasn’t. Also note that punk didn’t bring any change in political consciousness to the people of Indonesia – it “played into a sea change in Indonesian public opinion.”

    Now don’t get me wrong, I like me the odd bit of punk and as a cultural critique I think it has its merits: Crass‘s Reality Asylum remains a classic of anti-Christian polemic (“He hangs in glib delight upon his cross above my body, lowly me”), and the punk strains of metal bands like Sepultura and Suicidal Tendencies – especially the message of spiritual and personal independence beautifully displayed in songs like You Can’t Bring Me Down – is uplifting and energizing. But punk can also be nihilistic and destructive, and some of its messages can be enormously reactionary: the subtle link between women who shave their bodies, skinhead women, and wartime collaborators in Crass’s Shaved Women is an example of the toxic conservatism of the classic punk strain of feminist theory, basically a piece of slut-shaming via a very very nasty metaphor. Punk also had a strong trait of anti-everything that made it ultimately hard to find a coherent political program amongst its greatest representatives: fuck off and leave me alone may be a good approach to dealing with constraints on one’s personal freedom, but as a political manifesto it’s on about the same level of sophistication as “lower taxes” (and even less practically realizable). At their best, these bands (like Suicidal Tendencies) turn this individualism from nihilism into a code of personal behavior (“Are you feeling suicidal? Are you feeling suicidal!!?”), but this was never a strong achievement of punk itself. So it’s no wonder that it never turned into a solid political threat, given that its movement representatives couldn’t come up with a plan or a goal, and the only coherent political paradigm it connected with – anarchism and anarcho-syndicalism – was hopelessly backward and politically directionless. As cultural critique punk has some interesting things to say, but as political activism it was empty and meaningless.

    Fathun Karib confirms what the British punk movement was too embarrassed to ever admit: that their nihilism and individualism made them incapable of providing a coherent opposition to even relatively middle-of-the-road Thatcherite authoritarianism, let alone the kind of out-and-out state repression that Suharto was willing to bring to bear on his political opponents. You don’t overthrow a man who climbed to power over half a million bodies by spiking your hair up and yelling insults.

    So, thanks to Indonesian punk for telling it how it is!

    As an aside, the article’s casual inclusion of modern Indonesia alongside Burma, Iraq and Russia as a “repressive state” really shits me. Indonesia is a functioning modern democracy and although it has its problems it is not in the same league as those countries, and one rather egregious instance of (by repressive standards, pretty low-key) violence in a semi-autonomous state does not qualify a nation of the size and diversity and dynamism of Indonesia as a “repressive state.” The fact that this happened in a state that the central government has granted semi-autonomy should be a clue as to just how wrong that inclusion is, and I think it’s another example of a British journalist writing on Asia out of complete ignorance of what really goes on in this part of the world. Problems of political repression in modern Indonesia should be treated the same way as they are in Australia, Britain or continental Europe: by talking about problems of police corruption, governance, policy failings and better forms of oversight, rather than equating them with the practices of a regime that the Indonesian people went to great lengths to overthrow. And it’s particularly rich coming from a newspaper writer in Britain, a country that has seen significant problems of repression since 2001: police murder innocent bystanders at demonstrations, murder foreign workers in cold blood in front of multiple witnesses and get away with it, infiltrate political movements and entrap their members while having relationships with the membership, and assist powerful media organizations in spying on at least one serving PM and a future head of state. Given this history of murder and spying, and the obviously corrupt and too-cozy relationships between the current British government, police and powerful media, I’d say an Indonesian journalist would have every right to lump Britain in with Russia – but no one does[1], because we discuss these issues in Britain in terms of the mundane problems of managing a powerful and politically important institution of state violence in a modern democracy. We should extend the same consideration to Indonesia, and not assume that because it has a large Muslim minority and is Asian that it must be a repressive state.

    This particularly shits me about the western attitude towards Indonesia (and especially western leftists’ attitudes) because back when Indonesia was actually a repressive state, its political opposition was largely abandoned by the organized apparatus of western leftism (the unions, social democratic governments and democratic organizers of the western political establishment). When Indonesians decided they’d had enough of their backward state and wanted to move to a modern democracy, they did it themselves, without much help from the west at all, and they did a much, much better job of overthrowing tyranny than most western states have ever achieved (see, e.g., Russia or the USA for examples of how overthrow tyranny with maximum violence, and how to fuck up the ensuing peace while you’re at it). Now that they’re making a genuine and well-thought-out effort to build a modern democracy in a developing nation in Asia, infused with Asian (and yes, Muslim) values but genuinely politically representative, they have one little moment of police corruption against an opposition movement that is admitted to be ineffectual, and they get lumped in with Iraq? This is the thanks that Asia gets for trying to join the elite Western club of successfully functioning democracies – derided as a repressive state and chucked in with Iraq and Russia by a lefty journalist from a country whose police have been behaving like the paramilitary wing of a tin-pot dictatorship for the last, well, since at least the 70s. It’s particularly rich given that there is a clear skidmark of corruption a mile wide in British politics, it’s perfectly obvious from outside, but the Guardian has yet to manage to join the dots because they’re so sure of the political superiority of their own archaic form of democracy.

    Or, to put it more simply, if your society’s best contribution to political struggle in 100 years is Johnny Rotten, you shouldn’t be criticizing a country of 100 million people that successfully overthrew a murderous dictatorship and became a democracy with, well, pretty much zero bloodshed. They probably already have you outsmarted in the political struggle stakes, even though they’re Asian and sometimes Muslim and much poorer than you.

    —

    fn1: Actually, punk activists would. Which tells you all you need to know about the political sophistication of such a tactic.

  • Could You Eat Uterus?

    I went to a Korean restaurant tonight, which was a bit of a disaster because I don’t know much about Korean food. The menu seemed to consist entirely of large bowls of spicy stuff (I got topkip, I think, rice cakes fried with onion and chilli in a chilli sauce, topped with chilli) or grilled meats. The grilled meat menu was extensive, but I didn’t want to go there. It was also a bit like looking at a butcher’s slab – there were Japanese descriptions of all the meats, and Japanese really doesn’t mess around with euphemisms when it comes to eating bits of a cow. They had “number three stomach” and “liver” and “number one stomach” and “small intestine,” so you knew exactly which bit of the inside of the cow you were getting. And there on the board, slap bang in front of me, was shikyu, 子宮, no mistaking it – uterus. Apparently it has a “light” flavour, and goes well with anything. And, unsurprisingly, it’s cheap – half the price of the cheapest bit of actual cow meat.

    Could you eat uterus? Not in the “I was trapped in the amazon so I had to eat raw spiders” sense of “could.” I mean, casually, knowing what it is, on a Thursday evening in the city, when the menu also presents you with perfectly reasonable alternative meat-based options for a couple of dollars more. I vote “no” on the uterus question. How about you?