The Political Economy of Health Care PDF
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THE POLITICAL ECONOMY OF HEALTH CARE Also by David Reisman ADAM SMITH'S SOCIOLOGICAL ECONOMICS ALFRED MARSHALL: Progress and Politics ALFRED MARSHALL'S MISSION THE ECONOMICS OF ALFRED MARSHALL GALBRAITH AND MARKET CAPITALISM MARKET AND HEALTH THE POLITICAL ECONOMY OF JAMES BUCHANAN RICHARD TITMUSS: Welfare and Society STATE AND WELFARE: Tawney, Galbraith and Adam Smith THEORIES OF COLLECTIVE ACTION: Downs, Olson and Hirsch The Political Economy of Health Care David Reisman 150th YEAR M_ St. Martin's Press ©David Reisman 1993 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published in Great Britain 1993 by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 0-333-58579-8 Printed in Great Britain by Ipswich Book Co Ltd Ipswich, Suffolk First published in the United States of America 1993 by Scholarly and Reference Division, ST. MARTIN'S PRESS, INC., 175 Fifth Avenue, New York, N.Y. 10010 ISBN 0-312-09986-X Library of Congress Cataloging-in-Publication Data Reisman, David A. The political economy of health care / David Reisman. p. cm. Includes bibliographical references and index. ISBN 0-312-09986-X 1. Medical economics. 2. Medical policy. I. Title. RA410.5.R45 1993 362.1—-dc20 93-10466 CIP Contents 1. Introduction 1 PARTI EQUITY 2. Equality and Health 5 3. Health Status and Social Life 29 4. Society, Health and Policy 57 5. Geographical Location 87 PART II ECONOMY 6. The Cost of Care 107 7. Charges and Fees 119 8. Purchasers and Providers 141 9. State Regulation 161 PART III EFFICACY 10. Effectiveness 187 11. Efficiency 222 Notes and References 251 Index 260 v 1 Introduction Adam Smith showed the way. His great book, The Wealth of Nations, was the first scholarly synthesis of market and State, exchange and authority. Left behind by the intellectual division of labour that since 1776 has broken up the multi-disciplinary whole into the uni-disciplinary parts, the unified perspective is nonetheless of the greatest importance for the analy sis of the mixed economy. Every modern economy being a mixed economy, the way that Adam Smith showed is the way that ought now to be followed. Nowhere more so than in the area of health status and health policy which is the subject of this book. Adam Smith was in no doubt as to the primacy of market exchange: 'It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner', he wrote, 'but from their regard to their own inter est. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.'1 Each is motivated by base egotism to further our welfare, and not by generous altruism; but serve us they undeniably do. Each is in that sense ied by an invisible hand to promote an end which was no part of his intention'2: 'The study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to the society.'3 Resources being scarce and alternatives infinite, such a transformation of private vices into public virtues had a strong appeal to Adam Smith which was in no way diminished by the consideration that market exchange relied exclusively on self-love and not at all on beneficence of intent. Market exchange to Smith was primary, but still State authority had in his view a positive contribution to make. Thus it was, going beyond the protective minimum of law, order and national defence, that Smith assigned to the State 'the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain.'4 Where the market satisfies the consensus, Smith believed, the rule should be laissez-faire - but where the market fails the community, Smith was no less convinced, there it was the responsibility of the government to get involved. The examples of intervention which Smith cites with approba tion include roads and canals. He does not single out the doctors and the nurses, health insurance and health education, the manufacturers of medical equipment and the celebrated pharmaceutical multinationals. Other commentators might wish to do so. Stranded as we are on the 1 2 Introduction middle ground, we have no choice but to examine all the arguments with tolerance and with detachment. The old macroscopes of Left and Right having conspicuously failed to supply the necessary guidance, we have no choice but to follow Adam Smith's great synthesis down the slow lane to eclecticism that proceeds by way of discussion and debate. The route is not perfect but it's all there is. The present book on The Political Economy of Health Care is intended as a contribution to life in the slow lane of listening and learning. Concerned both with the multi-disciplinary synthesis of political economy and with the promotion of well-being through health care, the book is divided into three sections. The first section, Equity, examines the nature of distance, social and geographical, in the access to inputs and the indica tors of outcomes that characterise the differentiated cells of a single national organism. The second section, Economy, considers the rising cost of medical care and the various policy instruments (including reliance on market competition) that might be deployed in an attempt to contain it. The third section, Efficacy, discusses the analytical techniques that are the useful economist's intellectual capital when he seeks to assist his commu nity cost-consciously to advance towards value for money. The book does not say where we should dwell on the middle ground or specify the ideal mix between market and State. What it does, however, is to indicate some of the possibilities open to a society which, gone beyond the over- confidence of eternal verities, still does not want to vanish into the quick sand of ambiguity and doubt that does so little to combat illness or to keep death at bay. Parti Equity
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