Tim Worstall

Timmy Elsewhere

Something at TCS. To calculate the cost of a health care system you not only should use what is actually spent, but what is the opportunity cost of the waiting that people have to do for treatment?

The figures I use are quite obviously wrong, very back of the envelope, but perhaps at least a useful guide to the magnitude of those costs?

I’m entirely aware that this argument can be used to call for more spending on the health care system in the UK. As Jonny Munkhammar pointed out,  given the reluctance of people to pay taxes, it is likely that a tax funded program will in fact have less spent on it than people would be willing to spend if they were doing so directly.

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7 responses

  1. HJHJ Avatar
    HJHJ

    A case for more spending? Less spent by a tax funded system than people would be willing to spend if they were doing so directly?
    Highly debatable. First, there is not a free market supply of medical services. Producer power, backed up by licensure and srong unions is strong and this inflates costs. In a free market we would probably get more for less.
    As for people being willing to pay more if they were paying directly, I doubt it. People tend to consume more when they are not paying for it directly. This is the problem both with the NHS and for the US employer-funded system. I reckon people would be willing to pay much less and would hence pay more attention to looking after their own health if they had to pay directly. If you had to pay £10 per visit, I reckon the number of GP appointments woud go down by half.

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  2. Matthew Avatar
    Matthew

    Your figures are completely screwy. About 3/4 of the waiting list are less than 2 months. If you do a weighted average you get a total of 241,000 months, not £6bn, so even if you make your (incorrect, wildly) assumption that people’s quality of life is zero, that’s an extra cost of £1.5bn, not £31.
    http://www.dh.gov.uk/assetRoot/04/13/45/05/04134505.pdf
    You’ll note, btw, that on your figures the waiting list costs the average person £30,000. If this was really the case all of them would pay to go private. Or fly to America, or whatever it takes.

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  3. Alex Avatar
    Alex

    …if, of course, they had the £30k hanging around. You can’t optimise for opportunity cost beyond your budget constraint.

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  4. Matthew Avatar
    Matthew

    Well the figure of £30k is completely wrong, but even if it weren’t (but again, I must stress, it is) it doesn’t mean the operation costs £30k. It means that’s the benefit the person would get from it. It might only cost £2k.
    Tim adds: Yes, but we’re trying to look at the opportunity cost of them not having the operation. If a year of healthy life is, as NICE calculates, worth £30 k then that’s the opportunity cost of having your treatment delayed for a year.

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  5. Alex Avatar
    Alex

    …if there is a binary divide between healthy=30k and nothealthy=0, that is. Which is simply fucking batshit stupid, as you’re including cancer and manic depression as equivalents to “that pain in the back I have on Monday mornings”.
    Tim adds: Fine, as I say in hte piece, somone wants to come up with a better estimate please do so. I’d love to see it.

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  6. Matthew Avatar
    Matthew

    I did give a better estimate even using your own methodology – it’s 240,000 man months lost, not six million, which works out at £30,000 per year about £1.5bn (in fact a bit less). If you assume it’s not £30k but £10k or £15k then you can half or divide by three that number.

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  7. Cameron Cervantes Avatar
    Cameron Cervantes

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