Until yesterday I had never read anything by Mr Levitt, and heartily wish that I hadn’t bothered to read this article on his blog because its stupidity has been bugging me ever since.
In the article he suggests that the UK government reforms healthcare by opening it up to the market and giving everyone a handout of £1,000/year which they choose to spend on the first £2,000 of healthcare that they buy.
You can read the full text here: A Freakonomics Proposal To Help The British National Health Service
At first I thought the proposal was a joke but as I read to the end of the article I realised that the man was perfectly serious, so I left this comment for him:
I’m astonished. Your website tells me that you’re a professor of economics. I find it really hard to believe that someone of your education has written this article.
In any market where the customer is ignorant and desperate all of the power lies with the supplier. Medical care is a classic example of this. In profit driven healthcare systems whoever foots the bill (patient or government) is held to ransom by the provider of the service.
From the sick person’s perspective the idea of choice in healthcare is ludicrous. Even when we’re in the full bloom of health with plenty of time on our hands we don’t have any way of assessing the competence of our doctors or the value of the treatment that they give us. When we’re sick we need help here and now. Universal excellence is the appropriate target for a healthcare system. Consumer choice is a big fat canard.
Giving healthy people £1,000/year for healthcare is grossly inefficient. If they hold onto the money, hoarding it up year after year against the day that they might need it, the money is lost from the whole economy. If they spend it on beer and skittles on the 2nd of January the money is lost from the healthcare economy. So the amount of money that you have to allocate for healthcare will have to increase in order to account for all of this lost money.
And finally, your proposal doesn’t take into account the establishment and maintenance of the healthcare infrastructure. It assumes that surgeries and hospitals are like coffee shops that can be set up, supplied, and staffed at short notice – coming and going as demand for healthcare fluctuates. They can’t. A good healthcare system is a community that has a shared culture of care and excellence. These take time to build and committment to maintain.
The NHS is far from perfect but it is light years ahead of any private system in terms of reach, effectiveness, and, I’m told, cost.
Steven Levitt appears to be a prime example of the very worst of the economics profession – someone whose appetite for self-promotion far exceeds his capacity for intelligent thought. Please don’t encourage the idiot by buying any more of his books, and whatever you do don’t send your children to study economics at the University of Chicago.