John В. Davis
A Social Economics of Health Care begins with recognition of the central role that a diverse array of social values play in determining the delivery and distribution of health care resources in contempory economies. Current health care economics, in contrast, generally restricts its attention to the values of efficiency and individual preference satisfaction, and moreover assumes that the market and an exchange-based organization of health care will resolve complex social issues regarding who shall have what health care. Since Amartya Sen's critique of the dominant approach in economics as 'welfarist,' however, economists have begun to question the narrowness of their normative framework. These doubts are particularly unsettling for health economics, since the subject of health concerns individuals' well-being in an especially personal and fundamental manner. Thus, unlike many other subjects economists investigate, the subject of delivery and distribution of health care immediately raises questions regarding equity, fairness, need, rights, trust, caring, and dignity alongside economists' usual concerns with welfare and good consequences. To complicate matters further, these additional social values concerns are not easily explained within the framework of the market as an impersonal exchange between atomistic individuals. Indeed, relationships between health care providers and patients can be highly personalized, and the institutions that modern societies have created to provide health care often depend upon people sharing a very real sense of community with one another.
Thus emphasis on social values in a Social Economics of Health Care implies fundamental changes in the way health economics is pursued. The eleven chapters in this volume make valuable contributions to this alternative orientation. In different ways, they each exhibit the complexities involved in providing economic understanding of subjects that contain significant social and ethical components. The volume as a whole is divided into four parts. The chapers in the first part, 'Alternatives to the market view of health care and health economics,' examine contemporary health economics and its market-based view of health care. The chapters in the second part, 'Resistance to market-based reform of health care systems,' examine the health care systems of the United Kingdom and Canada, where in recent years delivery and distribution of health care based on principles of social insurance have been challenged by the introduction of market concepts. The chapters in the third part, 'Issues surrounding health care and aging,' address one of the most important social structural changes in developed economies: aging populations and increased longevity. Finally, the single chapter making up the last part of the volume examines social issues associated with one of the most important technological changes in the domain of health care.
Alternatives to the market view of health care and health economics
Thomas Rice, in 'Should consumer choice be encouraged in health care?' argues that three central ideas permeate most applications of economic theory to the health care field: the focus on the individual, the emphasis on efficiency over equity, and the superiority of relying on consumer choice to allocate goods and services in health care. This chapter examines the standard case for the last of these ideas, then turns to a number of instances in which consumer choice may be disadvantageous both to individual consumers and to society at large, applies all this to health care, and finally uses this analysis to consider implications for health care policymaking across countries according to differences in the degree of choice given to consumers. Although a number of countries have experimented with 'internal markets' in health care, none have gone as far as the United States in relying upon markets and consumer choice for the delivery and distribution of health care. Limitations on consumer choice, however, may enhance not only equity but efficiency as well, and Rice recommends that health care economisrs give more attention to different conceptions of choice.
Gavin Mooney, in 'Communitarianism in health economics,' takes as his starting point Rice's critique of the market in health care, and calls for rethinking the role of the market and the value base it represents to produce a new paradigm for health care economics alternative to the neoclassical one. He notes that there are a number of ways in which this work has already been begun, including applying Sen's ideas on functionings and capabilities, A.J. Culyer's work on extra-welfarism, and the idea of health care systems possessing constitutional frameworks. This paper adds to these points of entry the idea of there being defensible communitarian claims regarding allocating society's scarce health care resources, where these claims imply duties which communities owe to their members—duties, moreover, which are good in themselves. Mooney combines these ideas with Elizabeth Anderson's expressive theory of action, elements from constitutional economics, and reflections upon individualism and community. Addressing Rice's concerns about the nature of individual preference, Mooney emphasizes the role a constitutional paradigm plays in establishing community and individual preferences.
Paul Anand, in 'Social choice as the synthesis of incommensurable claims: the case of health care rationing,' looks at health care rationing within an expanded social choice framework with the intention of providing a practical application of Amartya Sen's critique of welfare economics. Sen's rights-based critique is argued to be relevant to the main social choice problem in health care rationing, but that may also be usefully developed by being viewed in terms of the integration of competing claim types in contrast to the standard approach in the social choice literature of aggregating conflicting preferences. In health, these claim types are consequences, agent relativities (rights and duties), social contracts, and process norms. Distinguishing between the QALY as a measure and as a decision rule, Anand suggests that the former can be used to indicate when some of these claims have not been met. The chapter develops a non-linear programming model to show that non-consequential claims can be incorporated in the setting of health care priorities, and provides survey evidence that UK voters have preferences consistent with the social choice as integration model proposed.
Joshua Cohen and Peter Ubel, in 'Accounting for fairness and efficiency in health economics,' begin by noting that as economics has become increasingly quantitative so has health economics. But this development appears harmful for health economics, since it makes it more difficult for health economists to focus attention on less quantifiable ethical values such as fairness, and easier to give great weight to more quantifiable ethical values such as efficiency. One implication of this is that the economics tradeoff between fairness and efficiency may be misunderstood. Cohen and Ubel consequently recommend that health economics distinguishes rights and dollar domains in society, and argue that policymakers face two types of tradeoffs: within the dollar domain and between the dollar and rights domains. They then use their revised view of the fairness—efficiency tradeoff to evaluate a case of explicit health care rationing in the 1991 Oregon health care initiative. They find that the Oregon initiative sets both rights and dollars targets, and does not require that fairness and efficiency simply be traded off against one another.
Resistance to market-based reform of health care systems
Robert McMaster, in 'The National Health Service, the `internal market` and trust,' focuses on trust as a socially embedded quality that manifests itself in expectations of others' behavior, their competences, and their motivations. Trust is influenced by shared values and loyalty, and organizations, institutions, and societies demonstrate considerable variation in entrustment patterns. This chapter examines the importance of trust and the impact of institutional change on trust in connection with changes in the UK National Health Service (NHS): the 1990 'internal market' reform and 1997 reform amending previous legislation. It argues that the 1997 reform was not a return to status quo ante, and that key aspects of the 1990 legislation were retained. These organizational changes superimposed market-oriented reforms on previously existing routines, and may have corroded some forms of trust within the NHS. The 1990 reforms may thus have introduced rather than resolved agency problems, thereby leading to continued institutional rigidities in service provision. McMaster sees little evidence of any awareness of the need to address trust corrosion in the NHS.
Michael Keaney, in 'Proletarianizing the professionals: the populist assault on discretionary autonomy,' focuses on that part of the reform process in the NHS that has sought to implement a new regime of 'clinical governance.' Ostensibly meant to assure best practice and regulate the decision making behavior of health professionals in response to fiscal pressures, it involves the circumscription of clinical judgment by rules based on statistical inference and the elevation of'business values' of efficiency and effectiveness. The climate of opinion in which clinical governance has been instituted is one of increasing public distrust of medical professionals. However, the promotion of an alternative consumerist model of health care does not enhance patient participation in health care decision making any more than did the traditionally authoritarian status enjoyed by consultant doctors. Using John Dewey's emphasis on a symbiosis of means and ends, Keaney argues that what is needed is a partnership model promoting transparency and trust via patients' active participation in and common ownership of the process of health care.
Terry Sullivan and Cameron Mustard, in 'Canada: more state, more market?' provide a short history of health insurance in Canada, and then explore how current institutional arrangements meet the policy objectives of providing a comprehensive range of insured services for citizens, providing an efficient delivery system, and generaring social arrangements which produce health. This facilitates a review of such current issues as rapid evolution of regional authorities in Canada, passive cost shifting of pharmaceutical and home care spending onto families, waiting list management, legal challenges to public administration provisions of the Canada Health Act, and the distributive consequences of health care spending in Canada. The last topic draws on recent Canadian work highlighting considerable differences in how social arrangements influence health in Canada compared to the United States. Canada is the international outlier in administratively inhibiting private insurance to 'jump the line' in health care. Canada has also taken to heart (albeit rhetorically) research on the social determinants of health. The chapter concludes by considering how market forces will compete with the policy aspirations regarding the social determinants of health.
Issues surrounding health care and aging
William A. Jackson, in 'Age, health and medical expenditure,' provides a comprehensive discussion of the relationships between age and medical expenditure to introduce a subject of increasing importance for health care and health care economics. Population aging is a trend common to most developed societies, yet is only beginning to be addressed. Moreover, difficult ethical issues arise in connection with the topic of age discrimination. The basic argument of the chapter is that the age—medical expenditure link should not be seen as being simple, mechanical, and biologically based, but rather as being complex, variable, and contingent on numerous social and ethical factors. This means that public policy regarding health care and aging does not merely respond to an exogenous, biologically-driven aging process, but also helps mould social perceptions of aging, and thus acts as a causal influence on aging. Topics in the chapter include the nature of the age—medical expenditure relation, the biological, social, and ethical factors that influence this relation, and policy implications of an aging population for health care and medical expenditure.
Diane Dewar, in 'The societal costs and implications of using high cost critical care resources for the elderly,' focuses on critical care services for the elderly that utilize nearly a third of hospital resources in the US. In light of the intensity of resources used for mechanical ventilation in critical care units, a social economic evaluation of managed care and other payers who have mechanical ventilation and tracheostomy is used to illustrate the problem of allocating resources for the elderly in health care. Predicted payments per survivor are compared to the value of extending life, with and without age and quality of life adjustments, to determine when net benefits are maximized. This example illustrates that improved efficiency for high-risk critical care services may be gained by combining clinical excellence and fiscal consciousness. Quality of life measures need to be incorporated to determine the appropriateness of lower cost venues of care or the withdrawal of aggressive treatment for the chronically ill or very old. The chapter also examines the concepts of medical futility and mortality in health care not as 'bad outcomes,' but as outcomes in which patient, family, and provider participate in end-of-life decisions.
Rose Rubin and Shelley White-Means turn to US reform strategies for health care for the elderly, in 'Medicare HMOs: the promise and the reality.' Medicare, the US health care system for the elderly, is now bigger than General Motors and is the largest US business-type organization. Spending over $5,000 per beneficiary, Medicare accounts for 2.5 percent of total US production. Medicare is now testing new formats that may lead to broader structural change from almost exclusive reliance on traditional and fee-for-service providers to a broader array of beneficiary choices. One of the most widely recognized and much debated actions for breaking the continuing
Medicare cost spiral is a more widespread utilization of managed care. This chapter presents an overview and evaluation of this evolutionary shift occurring in Medicare. Rubin and White-Means find that much of the promise of Medicare managed care has yet to be realized, though the foundations of enrollment growth and beneficiary acceptance are well under way. Expanded use of managed care for Medicare beneficiaries is expected to enhance both equity and efficiency.
The challenge of technology
Robert Rizzo addresses one of the most difficult issues facing a social economics of health care created by the advance in medical technologies, in 'Safeguarding genetic information: privacy, confidentiality and security?' Though genetic testing and therapy have the potential to create significant advances in health care, they also raise serious issues for a health care system rooted in the marketplace and fueled by the profit motive. In the context of health care development in the US, genetic advances marketed as commodities might mostly stress economical health care, and fail to meet ethical and legal standards that protect autonomy, privacy, confidentiality, and equity. Many individuals might find themselves excluded from the benefits of genetic testing and therapy. Individuals might be vulnerable to employment and insurance discrimination. This chapter surveys the range of issues associated with genetic testing and information, and provides a detailed account of the developing legal frameworks in the US surrounding the use of genetic information. It closes with a commentary on the dilemmas that will need to be faced to balance the needs of individuals and the demands of the marketplace.