AT LAST, some sense has crept into the debate about National Health Insurance, which the ANC has committed itself to but which is going to be so expensive it would knock our national breath away if implemented.

Health Minister Aaron Motsoaledi is planning to announce today or tomorrow that he is setting up an advisory body to drive consultation on the issue. There are some strong social and health policy people on it but it is also vital that powerful economic thinkers are there too.

Health insurance is not health care. It’s health funding and it’s a business, not a profession.
In the US, Medicare and Medicaid have become so expensive since they were introduced in the fifties and sixties that they now consume (or cost) more in three months than all the company profits American companies are able to produce in a year.

The main issue is moral hazard. Once you remove the cost of, say. going to the doctor about your sore knee, then instead of putting your leg up for a few days you go to the doctor. Once you’re there the doctor is going to prescribe you something and perhaps even order you a quick MRI scan. After all, its good to be sure, isn’t it?

So what might have been cured by a few days free rest end up costing a few thousand rand. But, hey, its the NHI that’s paying!

Not true. It’s the taxpayer that’s paying and in this country, with so few tax payers, national medical aid seems almost impossible.

There is a great piece on the price of American health insurance in the September issue of The Atlantic magazine which I recommend to the new panel. Written by David Goldhill after his father died needlessly after an operation, it chronicles the financial lunacy of American health care.

He deflty points out that in health insurance-driven health care, the costs of machines to scan your body or photograph your insides rise all the time. Yet the cost of a television or a dvd recorder falls over time. Why is that? It’s because the system works to increase prices by completely removing human judgement from medical choices.

“Every time you walk into a doctor’s office,” writes Goldhill, “it’s implicit that someone else will be paying most or all of your bill; for most of us that means we give less attention to prices for medical services than we do to prices for anything else. Most physicians, meanwhile, benefit financially from ordering diagnostic tests, doing procedures and scheduling follow-up appointments. Combine these two features of the system with a third — the informational advantage that extensive training has given physicians over their patients and the authority that advantage confers — and you have a system where physicians can, to some extent, generate demand at will.”

We must be super careful here, I’ve written about this in my printed Monday column before. Goldhill describes Medicaid as a Ponzi scheme and he’s right. The tax contribution for Medicaid rises inexorably in the absence, as Goldhill says, “of forces that discipline and even drive down prices in the rest of our economy”.

It is hard to argue with him when he says the best reform in the US would be to make Americans save for their own health care and to help only those in urgent need. You find out who those people are by paying for two medical check-ups a year for everyone.

Cheers

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