• Scott Hoen, Outreach

Economics Concerns from William Fletcher

Economics concerns itself with the allocation of limited resources. A basic tenet of economics is that if there is a limited supply of a good and an unlimited demand, a rationing mechanism will appear, and this mechanism will take one of three forms:

Normal price discovery (which constrains Lamborghini ownership, for example).Formation of a queue. The lines that formed in Soviet markets on days when meat was available.A rationing authority. This applies to kidney transplants, for example, and to pretty much everything in Britain during World War II.

And it also applies to healthcare. In healthcare delivery, the same supply/demand imbalance always exists, and one or more of these mechanisms will either be put in place, or it will appear as if by magic. If not legally established, it can also take the form of a black market, like an illegal trade in body parts.

Which takes me to the National Health Service (NHS) in the UK. I have recently been watching the UK House of Commons Prime Minister's Question Time (PMQ) on YouTube: partly because I have been following Britain's attempt to unstick itself from the European Union, and partly because of the verbal performance of Boris Johnson. He studied Classics at Oxford and has a formidable ability to use the English language. If you haven't watched Question Time, I'd recommend it.

A couple of days ago I was watching one PMQ that featured Jeremy Corbyn, who is the Labor Party leader, and has the grey, humorless appearance of the typical European socialists; such a contrast to Boris. Figured prominently in this PMQ, as in most others I have watched, are problems with the NHS.

The NHS seems to exhibit all three rationing mechanisms.

Normal price discovery. I came across this article in the Manchester Guardian. It seems that there are people who can't afford even the government dentistry, which apparently prices some people out of the market.

Formation of a queue. I also discovered some interesting charts published by the UK Parliament and concerning NHS service delivery performance: a frequent subject in the PMQ. For example, the waiting time for hospital treatment.

Rationing Authority. I need more data on this, but it is my understanding that the NHS scores people awaiting treatment based upon some measure of their "value", limits access to cataract treatment and hip and knee replacements and so on.

The basic message of all of this is that the NHS provides insurance for healthcare, but not assurance that you will get it if you need it. There are market realities.

There is a crisis in the supply of doctors. Doctors are dis-incented from working longer by the taxation system, and retiring early, putting more burden on younger doctors who then quit.In Wales, there is a push to cut nurses salaries to help balance the healthcare budget.In the UK there is a shortage of about 43,000 nurses.The Conservatives try and improve delivery by contracting with private service providers and Labor complains they are making rich businessmen richer.

Government-run healthcare does "solve" the healthcare problems, it exchanges one set of problems with a whole new set of problems.