AFRO-NETS> Third MIM Pan-African Malaria Conference (3)

[Edward Mensah <dehasnem@UIC.EDU>]

Third MIM Pan-African Malaria Conference (3)
--------------------------------------------

Peter Burgess:

You are right to say that economics has not been given the prominent 
role it deserves in health care decision making. In market based 
economies most resource allocation decisions are based, partly, on 
economic considerations, mainly because all other sectors with the 
exception of health care, are dominated by the private sector. Health 
care is still dominated by public sector in all economies, advanced 
and developing. In most Western Europe, they have national health 
systems in one form or another; and health care resource allocation 
decisions are made on the basis of global budgeting. In USA we have 
medicare and medicaid systems which are entitlement programs for the 
elderly and medically indigent citizens who qualify. Most hospitals 
are non-private with mandates to serve both the poor and the rich. 

The problem is that when you start using neo-classical economic the-
ory ( the dominant economic model in market-based economies) to allo-
cate resources and influence health policy you end up sometimes, but 
not always, with perverse policy implications -- like rationing of 
health insurance according to the Oregon plan. Lots of people, both 
liberals and conservatives, get very mad at such decisions. Most of 
the fundamental assumptions underlying market competition, and the 
theories of demand and supply, do not apply to health care as a 'com-
modity' because of the externality and publicness issues. Individuals 
do not have enough information to make optimal health care decisions. 
Asymmetric information, cognitive dissonance, and uncertainty about 
the relationships between health care consumption and health status 
are major problems. Health policy decisions influenced by Pareto Op-
timality could lead to resource allocations whereby one group of peo-
ple have very good care and the rest have very poor or no care at 
all. Such inequity is not tolerated by society, hence our current de-
bates about improving access to the poor or 45 million Americans 
without insurance. We do not have this debate when it comes to bread 
and butter.

Remember what happened to Dan Rostenkowski in 1987 in Chicago when he 
recommended that better-off elderly pay some percentage of prescrip-
tion drugs prices? He was almost lynched by little old ladies in Chi-
cago. That great idea was abandoned by all politicians who did not 
want to annoy an important voting community -- the elderly.

Health care, unlike all other goods, is partly a public and private 
good. People are appalled if other members of society are denied 
health care. They want all members to have access to quality health 
care. A hospital cannot deny access, theoretically, to individuals 
based on ability to pay. I say theoretically because we all see cases 
of dumping of patients by some hospitals on the county and public 
hospitals. You see, all you need is one adverse event published in a 
national medium and health policy legislation will be influenced. 
HMOs were designed to minimize cost, based on economic models of ef-
ficiency. Well, they did a great job in the first 10 years, and 
squeezed lots of waste from the system Then when we started hearing 
about cases of new mothers being sent out of the hospitals after just 
a couple of days -- which may be appropriate in some instances -- we 
coined the term "drive by birthing" facilities. Legislators then made 
laws mandating the number of days that new mothers should spend in 
hospitals before discharge. They do not make such laws when you buy 
the wrong shoes (purely private good) or faulty cars (these can be 
recalled, but you cannot recall babies once they are dead). In the 
eighties a prominent economist who is now the president of a major 
university was said to have written a paper or given a talk justify-
ing the location of nuclear waste (which has adverse health implica-
tions) in developing countries because it is more cost-effective. 
This argument makes perfect economic sense based purely on earnings 
and 'value' of life arguments. But it is not good public or social 
policy. Man, he got lynched and the poor man is still defending him-
self. 

Society is still struggling with how to handle health care. Is it a 
private good or public good? Who shall die, to quote the eminent 
health economist Prof Victor Fuchs. As a professional health econo-
mist I will not advocate a policy of wide-spread use of economics in 
health and medical decision making. I have trained a few MDs in the 
methodologies of health economics and cost-effectiveness. My students 
do appreciate the role of economics in making resource allocation de-
cisions. But I also warn them not to rely entirely on economic theo-
ries in medical decision making. One could sound outright heartless, 
cold, or stupid under such circumstances because society refuses to 
consider access to health care as a private matter. You are right to 
point out that, due to limited resources, we need to use economic ar-
guments in health resource allocation. I am not sure how many people 
are listening. 

Thanks,

Edward Mensah, PhD
Associate Professor of Health Economics and Information Management
Health Policy and Administration Division
School of Public Health
University of Illinois at Chicago, USA
Tel: +1-312-996-3001
mailto:dehasnem@uic.edu

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