Socialized Healthcare 3: Free Market and Better Health

Free market means free individuals. Markets are composed of individuals – sellers and buyers, producers and consumers, rich and poor, young and old, foreigners and locals. When individuals are free to produce and/or sell something with the minimum or zero institutional restrictions like high government taxes and bureaucracies, they become more productive and soon, they become wealthier.

When people have more economic resources, they can buy more food, more healthcare, more spacious house, more and better education. The end result is healthier people in general.

This is the main message of the paper, “Free Trade for Better Health” by Philip Stevens. The paper is one of the 11 chapters in a book, Towards a Healthy Future? Indian and Global Experiences published last year by Bookwell and Liberty Institute, both based in New Delhi, India.

Philip’s article discussed the following: (a) the role of economic growth in improving health outcomes of the people, (b) the role of free trade in economic growth, and (c) the role of international trade in health promotion across countries and continents. One graph that was shown is about life expectancy and income: the higher the income, the longer the life expectancy.

Philip is 3rd from the left in this picture. To his left were Dr. Epictetus Patalinghug, Prof. at the Univ. of the Philippines, College of Business Administration (UP CBA) and Prof. Bibek Debroy from Delhi, India. This was taken in September 2007 during the IPN-MG "Symposium on Intellectual Property, Innovation and Health" held at Manila Hotel. Bibek and Philip were the speakers and Dr. Patalinghug was the forum moderator.

There is one table that summarizes the Modes of trade and the corresponding Health services.

1. Cross border trade --> telemedicine service.
2. Consumption abroad --> medical tourism, or patients seeking treatment abroad.
3. Commercial presence --> foreign commercial presence in the hospital or insurance sectors, and
4. Presence of natural persons --> movement of health professionals to provide services abroad, like the Filipino nurses and doctors who work abroad.

Telemedicine is a fantastic development. Decreasing costs of communication allow doctors to examine x-rays or even perform telesurgery on a patient in an entirely different country. Health professionals in rural areas can consult specialists in urban centers, reducing the need for costly referrals.

Medical tourism is another fascinating development. The Philippines can retain its highly skilled physicians, nurses, therapists and other health professionals, create allied jobs through modern hospitals and clinics that attract thousands of patients from abroad seeking special medical treatment and/or cosmetic surgery.

Commercial presence is allowing foreign hospitals, clinics, health insurance companies, to bring in capital, new medical technologies and processes, into another country. The Philippines is slow or not adopting this yet due to certain constitutional restrictions on foreign investments and the practice of health professions by foreigners in the country.

Movement of Filipino health professionals abroad to render their services there is often seen as “negative” because of the perceived brain drain problem. This is a wrong attitude for at least two reasons.

One, there is limited economic and professional development in the country due to certain restrictions made by the Constitution, certain laws and government bureaucracies. And two, many doctors and nurses who work abroad come home after several years, not as doctors and nurses, but as health entrepreneurs who put up new clinics or stockholders in some hospitals or health insurance firms. The savings they made and the new medical technologies and processes they learned abroad they can bring it here.

Forcing health “equality” via numerous government restrictions and taxation in global trade and global movement of people tend to boomerang in the form of slower economic growth and poorer health. Freeing markets, freeing individual initiatives and entrepreneurship, will create inequality but better economic and health outcomes for the people.
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I wrote this last January 23, 2010

Healthcare, Rights and Responsibilities

The best form of healthcare is preventive, not curative. Among the preventive measures: people should not over-drink, over-smoke, over-eat, over-fight, over-sit in sedentary lifestyle. People should also clean their houses and surroundings and not live in dirty places. Taking vaccines is also one form of preventive healthcare.

Curative healthcare becomes important in cases of old age, accidents, pediatric diseases, not taking care of one’s body, and so on. The best way to do it is through more choices for the public: more private health insurance, more private clinics and hospitals, more pharmaceutical companies, more drugstores, more physicians and health professions – in a competitive environment that compel all of them to improve their services and products continuously. In short, the best way to curative healthcare is through the market. Government role in healthcare should be limited to a few functions like in cases of disease outbreak, and patients with special health needs like those with physical and mental incapacity.

This is not the case in many parts of the world, unfortunately. The dominant thinking which is contained in various public policies, is that “health is a right.” Thus, government should provide this service at a low cost or zero cost, to the public. And such policy should not make any distinction between people who got sick because they are old and weak, or have in-born physical or mental defect, and those who got sick because their internal organs were mutilated by over-smoking and over-drinking, or their heart and blood vessels were choked by heavy fat in their bodies. The government should provide healthcare for all. And since the government has no money of its own, the government should over-tax the public, especially those who take care of their body well, are productive and are earning high.

That is not the only disadvantage of forced collectivized and socialized healthcare, or health socialism for short. The other disadvantage is that such policy can create “moral hazards” problem or complacency. For instance, instead of smoking one pack a day, two packs should be fine, since government will provide subsidized, if not free, treatment for all.

This is the main topic of a newly-released paper, “Health as a human right: the wrong prescription”, http://policynetwork.net/sites/default/files/righttohealth.pdf. The author is Jacob Mchangama, head of legal affairs of a free market think tank in Denmark, CEPOS. Mr. Mchangama wrote,

“The right to health is highly problematic when construed as an enforceable right, with the state legally bound to enforce it in a particular and ideologically skewed manner. It would be better interpreted as a human aspiration whose implementation should be left to the democratic process and be decided upon the basis of the political convictions of the electorate.”

Meanwhile, on January 26-27 next week, there will be a big health forum, the 3rd MeTA Forum, sponsored by the Medicines Transparency Alliance (MeTA) Philippines, http://www.metaphilippines.org.ph/. The theme of the forum is “Medicines Transparency: a basic human rights issue.”

Among the topics to be explored are medicine procurement in the public sector, PhilHealth coverage for essential medicines, the current drug price control policy, and drugs bioequivalence.

I attended the 2nd MeTA Forum last year, and my brief account about the event is here, http://www.thelobbyist.biz/column_detail.php?id_article=1055&id_category=25

On a positive note, there was a good news early this week, “Filipino discovers new vaccine vs. malaria”, http://globalnation.inquirer.net/news/breakingnews/view/20100119-248174/Filipino-discovers-new-vaccine-vs-malaria

The Filipino scientist, Rhoel Dinglasan, is an entomologist and biologist from Johns Hopkins University in the US. Dr. Dinglasan’s invention will prevent mosquitoes from spreading malaria if they bite someone who’s been inoculated with the vaccine.

The next questions after this great vaccine invention, are the following:

1. When will this be available for commercial production and distribution?

2. If this will be finally distributed, will the price be affordable and accessible, especially to the poor in poor countries?

3. If it is not deemed "affordable", will this new vaccine be slapped with government policies to make it "affordable", like compulsory licensing (CL) and price control?

While the vaccine is still undergoing further clinical trials and not available to the public yet, humanity will be stuck with old or existing vaccines and treatment against malaria, some of whom may not be very effective. Or the more effective ones are just waiting for some governments' intervention like CL and price control, which makes the inventors and manufacturers of those more effective drugs and vaccines, wary of bringing and selling those products to countries that are likely to be slapped with such government interventions like the Philippines.

In food, there are no government restaurants, no government carinderia, no government supermarket, but people are eating. Product differentiation and market segmentation, not forced uniformity, allows the market to develop in all socio-economic classes. The same principle should apply in healthcare. Preventive measures, more personal and parental responsibility and choices in healthcare, more than entitlement from the government and distortionary government policies like drug price control, are the better mechanisms to ensure access to proper healthcare for all.

See also:

Socialized Healthcare 1: More Government = Less Health Care, March 29, 2006

Socialized Healthcare 2: Discussions in Facebook, September 04, 2009