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Health for all or wealth for some? : conflicting goals in health care reform Evans, Robert G., 1942- Oct 31, 1998

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HEALTH FOR ALL OR WEALTH FOR SOME?CONFLICTING GOALS IN HEALT H CARE REFORMRobert G. EvansIIPRU 98: I2D October, 1998HEALTH FOR ALL OR WEALTH FOR SOME?CONFLICTING GOALS IN HEALTH CARE REFORMRobert G. EvansHPRU98:12D October, 1998Health Policy Research UnitCentre for Health Services and Policy Research429 - 2194 Health Sciences MallUniversity of British ColumbiaVancouver, BCV6T 123The Centre for Health Services and Policy Research was established by the Board ofGovernors of the University of British Columbia in December 1990. It was officiallyopened in July 1991. The Centre's primary objective is to co-ordinate, facilitate, andundertake multidisciplinary research in the areas of health policy, health services research,population health, and health human resources. It brings together researchers in a varietyof disciplines who are committed to a multidisciplinary approach to research, and topromoting wide dissemination and discussion of research results , in these areas. TheCentre aims to contribute to the improvement of population health by being responsive tothe research needs of those responsible for health policy. To this end, it provides aresearch resource for graduate students ; develops and facilitates access to health andhealth care databases; sponsors seminars , workshops, conferences and policyconsultations; and distributes Discussion Papers, Research Reports and publicationreprints resulting from the research programs of Centre faculty.The Centre 's Health Policy Research Unit Discussion Paper series provides a vehicle forthe circulation of (pre-publication) work of Centre faculty, staff and associates. It isintended to promote discussion and to elicit comments and suggestions that might beincorporated within revised versions of these papers . The analyses and interpretations, andany errors in the papers, are those of the listed authors. The Centre does not review oredit the papers before they are released.A complete list of available Health Policy Research Unit Discussion Papers and Reprints,along with an address to which requests for copies should be sent, appears at the back ofeach paper.Health for All or Wealth for Some?Conflicting Goals in Health Care ReformRobert G. EvansDepartment of Economics andCentre for Health Services and Policy ResearchUniversity of British Columbia, andManulife/Syd Jackson Fellow,Program in Population HealthCanadian Institute for Advanced ResearchAugust, 1998This is a revised version of a paper presented at the Forum on Public Health, London Schoolof Hygiene and Tropical Medicine, April 1998, and forthcoming in the Forum proceedings. Itdraws on my own and others' work supported by the Program in Population Health, CanadianInstitute for Advanced Research.Death of a Steersman: The Myth of Shared GoalsAll proponents of health reform seek to improve the health of the populations served.Or so they say. Yet the policies and strategies offered are extraordinarily diverse, and to aconsiderable degree inconsistent or in direct conflict with each other. And they arise fromradically different visions of the "good" -- i.e. healthy -- society. The health promoters' fit ,well fed, socially well adjusted and depressingly well-behaved citizenry are worlds apart fromthe compliant pill-poppers implicit in the approach of NERA and the PPBHC;1 theprofessionally guided, scientifically-tuned health care of the Cochrane Collaboration is not onthe same planet as the consumers' paradise of Friedman-esque fantasy.' If all share a commongoal, some at least are holding the map upside down.A popular reconciliation is offered by the "steersman" metaphor. We are all in thesame boat, trying to reach the same destination, but navigation is complex and difficult. Wetherefore debate how best to advise the steersman in choosing a route - disagreeing overmeans, not ends. In particular the determinants of health are far from well understood, andthere is room for considerable difference of opinion over how "we" should proceed. On thisinterpretation progress in understanding should lead to convergence of policyrecommendations. More research is needed.This picture, while containing elements of truth, is fundamentally in error. Two featuresof the current reform debate are of particular significance. First, it is striking that indiscussions of reform, so small a role is played by the growing literature on, and understandingof, the determinants of health itself. That dog rarely barks. There is in particular a growinginterest in the sources and significance of "inequalities in health" within populations, and inpossible policy responses. But these discussions are carried on largely in isolation from thoseabout the reform of the health care system. Indeed some of the more radical proposals forJ The PPBHC (pharmaceutical Partners for Better Health Care) supported the NERA study (Hoffmeyer andMcCarthy, 1994) which purported to show that the underfunding of health care is universal and large - outsideSwitzerland! - and that the only remedy is more private financing (Towse, 1995).1system change would appear on current understanding to pose a significant threat topopulation health.'Secondly, although they may be re-phrased in a new and often rather impenetrablelanguage imported from the worlds of insurance and management consulting, most of the ideasare in fact quite old. We are watching re-runs of the debates that took place at the origins ofour public funding systems, and before. Old ideas have found their way back onto the agenda,at least for discussion, in complete disregard not only of the evolving evidence on thedeterminants of health, but of the working experience of health care systems over the last fiftyyears. That history, and accompanying progress in research, have provided a number ofimportant lessons on the implications and consequences of different ways of organizing andfunding care. A number of "reformers" appear, however, to have missed those classes (ordropped the course entirely).These observations cannot be reconciled with the presumption of a population united inthe goal of improving health, and disagreeing only over the best means to achieve it. In factthe most persistent and intractable conflicts over the proper direction for health care reformarise from disagreements over ends, not means. These in tum are rooted in fundamentalconflicts of economic interest in every society. "More research" can certainly clarify, but cannever resolve, these conflicts. In this context the steersman metaphor serves only to divertattention (sometimes deliberately) from the real forces at work."A Wedge for Understanding": Recognizing Heterogeneity in PopulationsA more enlightening perspective arises from the observation and interpretation of"heterogeneity," through a process that has been basic to understanding the determinants ofhealth of populations. Populations can be partitioned into sub-groups on a variety of different2 Friedman (1962) offered a vision of a health care system organized entirely through private competitivemarkets. He asked: "Why are there not [private] department stores of medicine?" but has been unable to hearthe answers.3 A particularly retrograde "reform" argument is that governments should concern themselves with improvingthe broader social and environmental determinants of health .. ....and get out of the business of funding andregulating health care! The second half of the recommendation appears to be the real objective.2measures - age, sex, occupation, income, education, region of residence .... If one findsunambiguous and systematic differences in health status across such partitions, then theypresumably contain information about the determinants of health. The direction of causalitymay not be clear - indeed each may be correlated with some other unobserved variable(s) -­but there is some systematic relationship between the partitioning variable and the healthmeasure.Particular attention has been given to the universally observed relationship betweenmeasures of social class -- income, education, occupational status -- and various measures ofhealth outcome, particularly mortality. The exploration of such "inequalities", however, easilybecomes politically polarized, for obvious reasons. The more general observation is that suchheterogeneities, whatever their normative significance, represent a "wedge for greaterunderstanding" of the determinants of health."The "Representative Agent" - Representing Whose Interests?Most economic theory, by contrast, rests on the assumption (normally implicit) thatpopulations consist of identical individuals. Of course "people are different"; and for somepurposes - the analysis of insurance markets, for example - these differences become critical.But they can be captured in a probability distribution (of health outcomes, for example) that isidentical across individuals. People are different, but in a random way; there will be nosystematic differences among sub-populations. (Empirical studies must, of course, takeaccount of some, at least, of the characteristics of their individual observations.)One can then represent the behaviour of an entire population by that of a single,"representative agent" - typically rational, informed, and self-interested. That agent'sbehaviour is predicated upon a particular structure of objectives and constraints, and itsresponses to changes in that structure become theoretically predictable. The behaviour of theentire population is then predicted by scaling up that of the representative agent. In this4 •.• [T]here is a tremendous potential to exploit heterogeneity in populations as a wedge for greaterunderstanding.' (Sapolsky, 1993).3conceptual framework, conflicts of interest are not merely impossible, but inconceivable. Howcan identical individuals - much less a single representative individual- have differingobjectives?To the extent that discussions of health care reform are carried on by economists, ormore generally in terms of economic concepts and modes of thinking, the representative agentsneaks in with the intellectual baggage. It provides a natural basis for the steersman metaphor-- how do we identify and carry out those reforms that are best for all of us? - and"distributional problems are ignored't." But distributional problems do not disappear justbecause the analyst ignores them. Important in themselves, they also have significant effectson the economist's chosen concern of resource allocation.A focus on heterogeneities, by contrast, leads one to look for ways of partitioning thepopulation. Can we identify sub-groups with differing economic interests, for whomalternative reform strategies are likely to lead to very different distributions of both economicand health burdens and benefits? Is there a systematic relationship between the "reforms"advocated by different groups, and their differing economic interests? Such an approachpermits one to express the pretty obvious notion that people - not just individuals but ratherwell-defined and more or less self-aware sub-groups within the population - are pursuing verydifferent objectives in any reform process. The persistence of ancient debates in new language,and the extraordinary resistance to evidence of some of the traditional positions, reflect thesepersisting conflicts of interest.Such an observation would be rather banal and obvious in an elementary course inpolitics or public policy. Conventional economic modes of thinking, however, with the"representative agent" solidly embedded in the foundations, can make the obvious unthinkable.The reality of conflicting goals cannot be grasped by "models" of a society as a single big(rational, informed) individual. (Translating such models into less accessible mathematicallanguage, however, can make the inadequacy less transparent.)5 Arrow (1976) p. 3; see also Reinhardt (1992) and esp. (1998).4The clash of competing interests, however, does not take place in a "zero-sum" world.How a health system is organized and financed has an important influence on the distributionof burdens and benefits in the society it serves; but some systems do "work" better than others,in terms meaningful to an external observer. Some are overall and on average more efficient,effective, humane, and acceptable to their publics, and others less so. It is possible to evaluatereform proposals in terms of their probability of improving the overall functioning of a healthcare system (so long as one does not insist on too much precision). Some reforms, on theother hand, clearly offer "partial gain for general pain", and their proponents go to somelengths to hide that fact.More fundamentally, our advancing understanding of the determinants of health ofpopulations suggests that different choices in health care reform may have effects on thosedeterminants, above and beyond their influence on the nature, quantity and distribution ofhealth services themselves. The scale of health care systems in modem economies, as well astheir significance at critical and vulnerable points in the lives of individuals, give them anespecial salience. Health care reforms may be helpful or hazardous to health, in ways separatefrom and additional to their effects on the use of health care per se.Expenditures, Incomes, and Revenues: The Fundamental Accounting Identity in All HealthCare SystemsPartitioning a population into relevant categories is an accounting rather than aneconomic exercise, though the categories are motivated by economic considerations. In anypopulation (society , economy) there are three distinct roles that an individual may play withrespect to the health care system. S/he may use health care goods or services; s/he mayprovide resources for their production (including administration and management); and s/hemay contribute to the revenues that finance them. In a modem health care system everyone5contributes to some degree, most will in the course of a year use some services, but only aminority (though more than is usually realized) will provide resources for their production."Each of these activities can be represented by a financial flow. Individuals contributerevenues, primarily through various forms of taxation and to a lesser extent through directpayments for services or premiums to private insurers. These revenues then become theexpenditures on health care that are received by the various forms of provider organizations ­hospitals, clinics, professional practices, pharmacies. (Payments may be made as prices or feesper unit of service, or be implicit in budgetary allocations.)But all the receipts of these provider organizations - the "firms" of economic theory ­are then attributable to the various individuals that supply resources to them - those who workthere, or own or manage them, or invest capital in them, or sell them various forms ofsupporting goods and services.' All the funds that come from individuals, thus return toindividuals. This circular flow is depicted in Figure r.8Summing over all the individuals in the society, the total value ofthe resources supplied- labour, effort and skills, capital, raw materials - must equal the total value of the servicesproduced, and that in tum must equal the total amount of revenue raised for theirreimbursement. There is a fundamental accounting identity (a sub-component of the generalnational income identity) linking total expenditure on health goods and services, total revenuesraised to pay for those services, and total incomes earned from the provision of services.6 There is an inherently arbitrary element (and some interested controversy) in decisions on where to place theboundaries of a health care system, though the central activities that engage most of the people and account formost of the funding are readily identified. Clearly health care cannot include all activities that have aninfluence upon health. The three-part identity begins from a list of types of commodities that have, by whateverprocess, been agreed to be "health care" (the elements of the Q vector). Their prices can then be observed orestimated, and one can (in principle) identify all the different resources that were used up in producing these­and only these - and the payments made for those resources. These total costs can then be partitionedexhaustively among the three sources of revenue.7 Provider organizations will typically buy goods and services from other firms - the pharmacist, for examplebuys drugs from a wholesaler, who buys from a manufacturer. But all of these payments in tum flow throughto individuals working or investing in those firms. Revenues remaining in a particular firm can all beattributed either to the firm's creditors. or to its owners - "no land without a lord ."6Wa: Wen en« a: a: Q)0 «W E0 0 0I oI- c~ ..... >-10«S« «a: ....,W WC- 0I I .....a: «S:::J0 en rrLL a: Q)o W enZ a: W Q):::> ~- a: en :::J~ en « W :!::...... Z 1J~ 0 01-0 C- en c::3 - IOJ)LL a: I I a: w Q)u::0 W ~ ! ::J ~ a.I xI I 0 0 Wen..... « CJ) 0~ W I0 I w Z «SI ....,I a: 0S I.....,W«S> :::J- cr~ ........, (J) a>Z I ~ ena: ~ a>CJ) :::> :::JW W « - c~ ~ W ~ a>w >« I a: a>..... a: C- a:..... 0 «SW LL +JZ 0t-8 A number of simplifications have been imposed for the sake of clarity, without loss of generality.More detail is provided in Evans et al. (l994b).7TOTAL REVENUE == TOTAL EXPENDITURE == TOTAL INCOMEThis identity, however, is a relation among financial magnitudes, and money per seproduces neither health care nor health. At best it provides access to the things that do. So weexpand the relationship:T+C+R==PxQ==WxZRevenues are raised via taxation (T), direct charges (C), and private insurancepremiums (R). Total expenditure can be factored into the unit prices of the various health carecommodities, and the quantities of each. P and Q are thus vectors whose elements list all thedifferent types of commodities provided/used. These in tum are produced by combiningvarious inputs or resources, Z, that are paid at a rate per unit, W. An element of the vector Wmight be a wage rate, for example; the corresponding element of Z would be a type of labourinput measured in hours.This framework makes obvious the distinction between the levels of health expenditurein a system, P x Q, and the levels and types of services actually provided - Q. It is the latterthat contribute to health. Their production requires not money but the use of real resources Z.An increase (decrease) in W, the rate of remuneration of resource suppliers, will pass throughin higher (lower) prices and require the assembly of greater (lesser) financial contributionsthrough T , C, and/or R. But it will have no necessary direct effect on service provision or onhealth."Gainers and Losers: Who Sits (and Stands) Where in the Flow of Funds?Such a change will, however, very definitely re-distribute incomes among the differentindividuals in the society. An increase in nurses' wages W, for example, paid from governmentrevenues, will (if the elements of Z and Q do not change) shift money from the pockets of9 It may affect the willingness of resource owners to offer them for the production of health care, e.g. the supplyof workers, but that is another story.8taxpayers to those of nurses. P, the implicit price of hospital care, and T, the amount of taxrevenue needed to pay for it, both increase. to Alternatively an increase in drug prices P, fundedby an increase in user charges C, flows into higher rates of return on capital invested in drugcompanies (a component of Z). W rises, and money is transferred from patients toshareholders.Although the three-part identity above holds for the entire society, it does not hold foreach individual, and probably not for any.'! The total amount of money paid out byindividuals, returns to individuals, as noted above, but the amount each receives will not beequal to the amount slhe contributed, and the discrepancies may be very large. We canpartition the population on the basis of the relationship between their contributions to, use of,and income from the health care system.The first partition isolates those individuals for whom W x Z, their total income fromsupplying resources, exceeds either the amount they contribute, or the total cost of the servicesthey use. (This will typically be true of doctors , nurses, and others who are clearly health careworkers, but will also include suppliers of specialized supporting goods and services - drug orequipment sellers, but also health insurers and benefits managers.) For this group, healthexpenditures are (primarily) income, and their perspectives on proposals for reform are shapedaccordingly.The rest of us are primarily users of, and payers for, health care services (though wemay also, for example, belong to a pension plan that invests in a mutual fund that holds sharesin a drug company or private laboratory). But we can be further partitioned according to10 Governments could, of course, borrow or cut other spending instead of raising taxes . But borrowing impliesa cost to future taxpayers, while cuts in other spending still constitute an increase in T, the amount of taxrevenue spent on health . The losers will be, not taxpayers in general, but those who would have received thatother spending as income.11 In order to "ignore distributional considerations" Arrow (ibid., pA) did assume that the identity holds forevery individual, with the addition of an expectations operator on C and Q. This is empirical nonsense,however convenient theoretically.9whether our contributions to the system, T+C+R, exceed or fall short of the expendituresgenerated on our behalf, P x Q.Such a partition could not be made in a health care system that was fully funded by out­of-pocket payments. User charges C would equal P x Q, in total and for each mdlvidual.' ?But no such system exists . In all developed societies, revenues for health care are primarilyraised from (various forms of) taxation. Since these are more or less proportionate to income,and use of care is more or less proportionate to illness, the relatively healthy and/or wealthycontribute more than they spend, and the unhealthy and/or unwealthy contribute less. Publicfinancing for health care transfers income from the former to the latter. Any reform that affectsthe proportion of revenues flowing through the different channels will redistribute incomebetween (and of course within) these groups.The differing economic interests of these three sets of individuals - providers, thehealthy and wealthy payers, and the unhealthy and unwealthy users - go far to explain thepattern of intellectual debate and political conflict over health care reform. They distort, andsometimes crowd out entirely, what one might naively hope would be a collective search for"the best" - or at least better -- ways of organizing, providing and funding care.Disagreements over how to advise the steersman are not randomly distributed acrossthe population, a result of incomplete information and imperfect reasoning power. Rather theyare rooted in clear conflicts of economic interest, in which those who disagree may, and oftendo, have very similar (albeit unacknowledged) understandings of the likely impacts of differentpolicies. It is the goals that are in dispute.Reform Proposals and Their Implications: Tracing the Links to Health and WealthInterested advocates of particular "reforms" may of course make claims of generalhealth benefits (among others) as part of their attempt to recruit wider public support. The12 Assuming also that the unit prices of all services equalled their costs, so that no buyer/user was subsidized byany other.10actual impact of any change in policy may be more difficult to predict, and is likely to beconditional on a number of particular factors - God and the devil are both in the details .Nonetheless the rapidly accumulating understanding of the determinants of health, and theconsiderable international experience with the behaviour of health care systems, should makepossible at least a rough assessment of the probable impacts of particular policies. 13Changes to health care systems may influence the health of populations throughthree broad channels. They may affect:1. The level, mix, and allocation of the services provided by that system: Who gets how muchof what kind of care?2. The balance of resources between health care and other public or private goods: Howmuch does the production of health care draw away from other economic activities, withpotential effects on health? and3. The distribution of income among the members of society: What (relative) incomes doproviders earn, and how is the bill for their services divided up?The probable impact of any given proposal can then be assessed under each of these heads.To impose some order on a "zoo" of reform proposals, note that the three-part identityoffers a classification. Some focus primarily on the levels and patterns of expenditure, the P xQ, others on the use and payment of resources, or the incomes generated by the health caresystem. Still others would change the sources of revenue for health care - the endless "public­private" wrangles , for example. But as the identity reminds us, all will have effects across thewhole equation. And all will have (more or less) identifiable patterns of winners and losers.Evidence-Based Medicine: Toward Effectiveness and Efficiency in Health Care?Consider first the movement for evidence-based medicine, which seeks to influencedirectly the mix and volume of services provided. It is hard to disagree in principle with13 It must be recognized however that any such attempt, if it receives wider attention, will itself become part ofthe advocacy process.11proposals to reform health care by generating more reliable evidence on "what works - forwhom - and what does not", and then using this evidence to modify patterns of service. Theclassic description in the Book of Common Prayer still holds good today , and it is clear that bychanging the values of the elements of the vector Q, stopping things that do more harm thangood (or do nothing in particular, whether or not they do it very well) and doing more of therest, we could either save money, or be healthier, or both.It is not so much the totally useless services that are at issue - though those exist -- butthe services that are ineffective or harmful for some or most of the patients to whom, or in theamounts that, they are currently provided. No one questions the value of antibiotics. But ifone third of all antibiotic prescriptions written in the United States, or 50 million scrips a year,are unnecessary, this is both an economic absurdity and a major public health hazard (Levy,1998 pp. 46-53). Nor are the Americans unique.So is the Cochrane Collaboration a clear contributor to improved population health?Probably, but there are several sources of potential slippage. All are traceable to the linkbetween service provision and incomes - P x Q == W x Z. Users of services may have anunambiguous interest in more effective health care, but providers do not.The determination that a particular product or service has no value, either at all or in asignificant proportion of its current uses, is a direct threat to the incomes of those who supply(and are paid for) it. If an element of Q falls, the associated Z falls toO.14 "Money is saved"because the owners of certain resources are now paid less - perhaps not at all . Conversely thefinding that an intervention is of value in a wider range of applications is in effect a call toincrease its use - and associated incomes.14 If payment continues to be made for idle resources, there is an implicit increase in W. More likely, resourceowners (typically professional workers) will attempt to introduce or expand some other element of Q- "to meetnew needs" - and so keep themselves employed and paid. If they are successful, expenditures do not fall.12Recall also that the Z represent not only the services of clinicians and others "at thecoal face." They include (owners of and workers in) commercial firms supplying products andservices to be used under their direction, or directly to the public -- drug and equipmentmanufacturers, for example. Their advertising - a normal commercial practice - produces acontinual barrage of combined information and "dis-information"-- partial truths, deceptiveimplications, and outright mis-representations - with the sole purpose (as with any commercialadvertising) of expanding sales. Such advertising includes but goes far beyond the use of thetraditional media, to include very sophisticated approaches to clinicians disguised as variousforms of "scientific" communications (Mintzes , 1998).This leads to an obvious bias in the uptake of evidence. Clinicians have always beenmuch more reluctant to give up an activity than to take on a new one. They appear to operateon the principle of "When in doubt, do", requiring a higher standard of proof before acceptingthat something should not be done (e.g. Banta et al., 1981; Wennberg, 1990). Ifthe evidenceis clear that a procedure is unambiguously harmful, it is pretty certain to be stopped. But if, asis more common, there is no evidence of harm, only lack of clear evidence of benefit, clinicalpractice will change much more slowly if at all.Commercial advertisers powerfully strengthen this bias. Findings of effectiveness, realor apparent, become part of marketing campaigns. Findings of lack of effect, or of risk, aregiven much less prominence, distorted, or simply ignored." Nor could it be otherwise, giventhe incredibly powerful economic incentives bearing on the commercial sector-there is justtoo much money at stake. Regulatory agencies try to offset this inevitable bias, but are alwaysoverloaded, under-resourced, and out-gunned.In this context the generation of better evidence alone may simply provide morearguments for system expansion. Indeed, since research resources are scarce, clinicalepidemiologists who want their work to have impact might be well advised preferentially to15 In a few notorious cases, (unsuccessful) attempts have been made to suppress negative findings. Theincidence of successful suppression is, of course, unknown.13investigate those interventions they suspect will tum out to be of (possibly wider) benefit.Who needs the hassle?In what way, however, would this be a bad thing? Such a selection bias woulddisappoint those who hope that better evidence will, by reducing ineffective care, lead to lowercost (Wennberg, 1990). But if the effectiveness of the health services is on average improving,even though their cost is rising, then surely this is a contribution to the health of the population.It would be even better if one could phase out ineffective (and particularly harmful) care withequal speed. But even if this were possible, it is not obvious a priori that a system thatprovided all and only effective health care would be less expensive, even in the United States.16And that, of course, is the problem. It may well be that there is a virtually infinitesupply of services with very low but non-zero benefit. To the extent that better evidenceidentifies these services more precisely, it provides support for expanding the scope of care.Explicit rationing is tougher than implicit. But resources, as economists repeat by rote, arescarce and have opportunity costs. If any service with a positive health pay-off -- no matterhow small -- is to be provided, this must eventually divert resources from other activities ,public or private, that also have positive effects on health. "Partial strength produces generalweakness." (Sir Robert Seppings, quoted in Gordon, 1978:69). It is possible to have too muchof a good thing (Lavis and Stoddart, 1994); too much (low-value) health care can be hazardousto population health .Reforms that improve the evidence base underlying health care practice seemunambiguously to advance population health through channel one above. But they carry a riskthrough channel two, hypertrophy of the health care system itself. Moreover the considerablemethodological advances that have supported the evidence-based care movement impart theirown biases to the choice of routes to health. It is quite simple - in principle anyway - toconduct a randomized controlled trial (ReT) of a drug or well-defined clinical manoeuvre.l6 There is certainly some expert opinion that it would be, at least in the United States , but no one really knows.14Many of the other factors that appear to contribute to health cannot be tested in this way.How does one conduct an RCT of more versus less egalitarian income distributions?That is not an argument for "justification by faith alone", as one might infer from someof the more woolly-minded (or economically motivated) proponents of "alternative medicine".But if the RCT is treated not only as a "gold standard" - which for some purposes (not all) itclearly is - but as the only mode of evaluation with any validity, all evaluations will be rigged inadvance. Only health care interventions (and those paid for providing them) will bedemonstrably effecti ve. Other supposed contributors to health, however plausible, will not besupported by "valid scientific evidence" .17Finally, the evidence-based approach to reform can be diverted into quite differentchannels by the advocates of "core services" or "basic benefits." Implicit in the efforts toevaluate effectiveness is the understanding that ineffective (and afortiori harmful) servicesshould not be provided at all. And certainly no one should pay for them. But if no one pays ,then no one is paid. An obvious alternative for suppliers of such services, if they are removedfrom public payment programs, is to sell them in the private marketplace.By shifting attention from what is done (and why) to who pays, the core services"reformers" blunt the threat to jobs and incomes, to W x Z. Any cost containment potentialcan be converted into cost shifting -lowering T while raising C and possibly R. Indeed totalincomes can actually be raised, not merely maintained. Once a health service has been movedinto the private sector the absence of public controls permits higher prices, while theopportunities for advertising (overt and covert) and more liberal case selection lead to highervolumes as well." (This of course requires an appropriate match of service and clientele; noone wants to offer expensive services for low-income people in a private market.)17 This is a slight over-statement; there are well-known RCTs of non-medical interventions. But they tend to bevery expensive, very long term, and very few.18 The pharmaceutical industry's growing interest in and commitment to "Direct To Consumer Advertising"(DTCA) reflects their understanding of the profit potential in private markets with weaker restrictions oncommunications strategies.15This particular application appears to be far from the intent of the advocates ofevidence-based medicine. But steady improvement in the science base underlying medicalpractice could lead to the identification of an ever-increasing range of low-benefit, high-costservices that no universal public system ever could, let alone should, cover. If so, this is certainto feed into arguments for private markets in health care, and may thus influence populationhealth through channel three (see below). The advocates of "reform" will be those who hopeto sell these services, unencumbered by evidence of minimal effect.Who Pays, and How Much? Rearranging the Sources of RevenueThey will, moreover, have allies. Shifting attention to the sources of revenue for healthcare, from the level and mix of the Q to the balance among the T, C, and R, opens up anotherwhole class of reform proposals, and their associated interests. Here the focus is not on whatis done, but on who pays. "Reform" is primarily about getting someone else to pay.Imposing (or raising) direct charges on users of care, with or without supplementaryprivate insurance, lowers the proportion of revenue from taxes. There are many variants on thistheme. Traditional approaches charge each user so much per visit, hospital day, orprescription, or a proportion of total expenditures, or for all expenditures up to some fixedamount per time period. More complex schemes involve integration of patient liability withthe income tax: a currently fashionable version, medical savings accounts, adds a longitudinaldimension. Introducing or expanding a "private tier" of care alongside a public system hassimilar effects. 19The Sheriff of Nottingham Rides AgainSuch proposals link financial liability more closely with health care use, and less withability to pay. More complex forms may make the linkage less transparent; but all, at the end19 A private tier of care for the better-off may appear to link financial liability with ability to pay. But thosewho pay for care privately would also have to pay a higher proportion of the taxes necessary to support such astandard of care for themselves - and everyone else . What is lost on the roundabouts is made up on the swings.16of the day, raise C and lower T. They may also raise R; increased user charges providesomething for private insurance to cover. Since, as noted above , tax funding transfers incomefrom the healthy and wealthy to the unhealthy and unwealthy, all these policies shift it backagain.i" They are regressive income transfers , in Lomas ' words the policies not of RobinHood but of the Sheriff of Nottingham (Lomas and Contandriopoulos, 1994). The moreheavily a national system relies on private financing, the larger the proportion of overall healthcare costs that will be borne by those with lower incomes. The international evidence is mostcomprehensively assembled and analysed by van Doorslaer et al. (1993).21 But the centralpoint emerges most strikingly from the United States data in Figure II, drawn from Rasell et al.(1993 , 1994).Family expenditure data were analysed to identify how much was spent on health care ,by families in each income decile, through each of taxation, private insurance premiums, andout-of-pocket payments. Higher income families spent more, on average, in each category.But they spent a much lower proportion of their incomes, on either direct charges or privateinsurance. Only taxation was (mildly) progressively distributed. Moreover, this was true offamilies with aged heads, even though the United States has a universal public insuranceprogram for the elderly. But that program requires its beneficiaries to pay large user fees;those that can afford it have private "Medigap" insurance.This point seems to be well enough understood by the advocates of private payment.Such proposals have a long history of support from the wealthy and healthy. More recentlythese have been seeking to broaden their constituency to include the healthy and unwealthy -20 But suppose the state itself collects user fees and places them in general revenue, with no direct flow throughto providers of care? These then represent, quite literally, "taxes on the sick." T, C, and R are unchanged inthe accounting identity but the tax base has become more regressive, linking liability more closely with illness,and less closely with ability to pay.2 1 " .. . [O]ut-of-pocket payments tend to be a highly regressive means of financing health care ..." (van Doorslaeret al., 1993:42) but the impact of private insurance is more nuanced (Ibid., p.44). Private insurancesupplementary to a more or less universal public system is a "luxury" primarily bought by people with higherincomes. But if private insurance is purchased by a large proportion of the population because public coverageis restricted or non-existent, the distribution of its costs is highly regressive. In general the larger the usercharges and the more people who must pay them, the more regressive are the costs of private insurance to coverthem.17Figure ITShare of Income Spent on Health CareFamily Income Decile and Payment Form0.350.3' , ~ - - - - - - - - - -Q) 0.25Eoo..... .5 o.00 .....o..c:Q) 0.15oJ..af 0.10.05 .~ - - --- -- - - -o Ie'10 9 8 7 6 5 4 3 2 1b 1aFamily Income Decile (Aged & Non-Aged)• Out of Pocket 1'tr'¥'1Total Premiums. PublicSectoryounger people - by focusing attention on a supposed "inter-generational conflict". Thestrategy is fundamentally deceptive, because most of the currently young will get old but fewwill get rich. They may, however, get old too soon and smart too late."The traditional arguments for such reforms do not, of course, emphasize redistributiveeffects. Rather they allege benefits in improved efficiency and effectiveness in health care - andimplicitly in population health. Faced with direct charges, patients will be more selective intheir use of care, and less likely to use ineffective or harmful services. The level and mix of Qwill change, and on average the effectiveness of care will improve .Moreover, informed consumers faced with prices will shop more carefully for services,forcing suppliers to be more competitive. Prices will fall, and more efficient suppliers willcapture a larger share of the market. "More efficient" means using fewer resource inputs perunit of output, a lower ratio of Z to Q, thus permitting lower P for given W. Totalexpenditures may rise or fall. But since they will (by hypothesis) reflect the preferences ofinformed consumers expressed through competitive markets, whatever level they attain mustbe right.All this is simply elementary economic theory, describing the market for "widgets"."In fact experiment and common observation both show that, faced with direct charges, patientsare not able to discriminate between effective and ineffective services. (The whole history ofquackery should have told us that.) Reforms that increase the costs to users do deter the useof care that, in the judgement of experts anyway, is appropriate. Not surprisingly, thesedeterrent effects are strongest among those with lowest incomes."22 Why, after all, should they be different from their predecessors?23 Rice (1998) provides an extended and up-to-date critique of efforts to apply "off-the-shelf' economic theoryto health care systems.24 A number of papers on this point emerged from the RAND Health Insurance Experiment: Brook et al.(1983); Lohr et al. (1986); Siu et al. (1986); Shapiro et al. (1986); Lurie et al. (1989). But the basic point wasdemonstrated earlier by Enterline et al. (1973a, 1973b), and the differential impact by income class was shownby Beck and Horne (1980).19Moreover, whatever the behaviour of providers might be in the hypothetical world ofthe economics textbooks, in reality they are quite capable of suppressing "perfect competition"so as to protect their incomes. Professional organizations, in particular, have been the mostpersistent advocates of private funding over the decades (Barer et al., 1994) because theyanticipate that their income opportunities are greater in a mixed funding environment.International experience bears out this expectation.Indeed, professional spokesmen often explicitly advocate increased user charges toincrease total costs -- raising C and/or R while holding T constant - arguing that this willsupport health-enhancing increases in Q. It will also, however, support income-enhancingincreases in P, and in any case must inevitably increase W x Z.25Reforms focusing on the sources of revenue appear therefore to have two potentialchannels of effect on population health. By increasing (or decreasing) financial barriers theyredistribute access to and use of care services within the population. But they also redistributeamong individuals the burden of paying for whatever care is provided, as well as influencingthe overall size of that burden.The effect on population health of redistributing access and use of care is prettyobvious, though the magnitude may be questioned in particular cases. Financial deterrents donot differentially discourage inappropriate or "unnecessary" care-seeking, and do have agreater impact on use by people with lower incomes. So they re-allocate care away from lowerincome people -- who tend to be less healthy - and towards those with greater ability to pay."25 As noted above, private markets tend to be less resistant to price increases than are public payers. They alsoprovide more opportunities for expanding sales volumes - Q-- through various forms of promotion, because nocountervailing agency has a direct incentive to restrain them. The health benefits of such promotion are at bestopen to question.26 In a supply-constrained environment, user charges can push lower-income people out of the market ,improving the access of those with higher incomes such that their use actually increases. This is an importantaspect of the appeal of private funding to the wealthy and unhealthy - they can be more sure of getting the carethat they (think they) need.20The healthy and wealthy get more, the unhealthy and unwealthy get less. Insofar as care iseffective, this presumably reduces population health."But changes in health care financing also affect the distribution of income both amongindividuals and across income classes . The less users respond to prices (and empiricalestimates suggest that the price elasticity of demand is quite low), the closer user chargesapproach to pure income transfers. Substituting private for public finance raises disposableincomes at the upper end of the income scale (after taxes, transfers, and direct payments forhealth care), and lower them at the lower end .Inequality and Ill-Health: A Pathogenic Reform Agenda?There is a strong relationship, within every population studied, between incomedistribution and health status. Income is associated with health, and greater inequality ofincome with greater inequality of health. There is increasing evidence that greater incomeinequality is also associated with lower average health status." From a populationperspective, therefore, "Sheriff of Nottingham" reforms pose threats to health quiteindependent of their influence on the levels and patterns of health care use.The potential significance of this channel increases if we consider the pathways throughwhich income inequality might have an effect on health. Those pathways, in high (average)income populations, go far beyond sheer material deprivation and biological insufficiency. Ahealth gradient is observed across the entire income distribution. In general, hierarchicalposition is associated with the availability of internal or external resources (e.g. education,income, social support) to cope with external threats - "stress" in the broadest sense (e.g.Evans et al., 1994a) . Conversely vulnerability - inability to cope with challenges - appears to27 Gorey et at. (1997), for example, compared cancer survival rates in Toronto with those in Detroit. Theyfound that survival rates are significantly correlated with socio-economic status in Detroit, where access to caredepends upon income, but not in Toronto, where it does not. But upper income Torontonians fared no worse;the overall results favoured Canada.28 Wilkinson has been a particular champion of the latter view, though he has not been alone - see his (1995)exchange with Judge (1995) . More recent evidence has come from U.S. research (Kaplan et al., 1996; Kennedyet al., 1996; Davey Smith 1996).21be in itself a source of illness. Animal studies offer powerful support for this view (e.g.Sapolsky, 1993; Evans et al., 1994a, ch. 6; Evans, 1996).The relationship between the health status of individuals and their level of "copingresources" (including income) has been shown in population-based studies (Mustard et al.,1997). But equally important, as discussed by Lynch and Kaplan (1997) in a recent survey, arethe effects on individual health of characteristics of the social environment - and in particularthe degree of inequality of income - that have no meaning as individual-level measures. Theyalso note that the relevant measure of inequality should be based on the distribution of income(ideally wealth) after the redistributive activities of governments - taxes, transfers, and "incomein kind" such as publicly provided health care or education.Reforms to health care funding that transfer costs from public to private budgets clearlyincrease inequality of income on this measure, and will therefore - at least on these findings ­increase the dispersion and probably lower the overall level of health in the population. Themagnitude of the effect may be open to question, but the direction seems pretty clear."More specifically, however, illness and injury are themselves a major source of stress:they present threats and challenges on a number of levels. The sense of vulnerability of theindividual is linked with perceptions of both the probability and severity of such threats, and theavailability of resources to cope with them - access to and effectiveness of health care.Matters of health are thus always news, and health care is never far from the top of the politicalagenda. And the tighter (looser) the link between personal resources and access to high­quality health care, the greater (less) the sense of vulnerability associated with lower income.29 But by shifting financial responsibility for health care, might not governments release public funds to addressbroader determinants of health? This would require that the level of public revenues be maintained after healthcosts and responsibilities were shifted . The advocates of privatization also tend to be the advocates ofgovernment downsizing, "rolling back the frontiers of the state." Health care funding is in most countries oneof the most popular of public programs, legitimizing the role of the state more generally. It seems unlikely thatin transferring this activity, governments could find support for expanding their roles in other areas.22In short, if the answer to the question "Can I get care when I need it?" is, "Only if youhave the money" then lower income means greater vulnerability. And vulnerability, in humansand other animals, predisposes to illness.Provider Organization and Payment: The Many Modes of "Managed Care"But an alternative answer, "No, because the care you need is not available (or notapproved in your case)" is hardly more comforting." The third and most complex area ofhealth care reform involves changing the ways in which providing organizations are structuredand paid, with the intent of changing both the types and amounts of services offered topatients, and the processes of their production. The focus here is on the W x Z, in the hope ofincreasing efficiency (Q/Z) or effectiveness ("better" mix of Q). Possibilities range fromAmerican visions of private, for-profit "integrated delivery systems" in hot competition forprofitable "portfolios of insured lives"; through variants on the theme of capitated groups ofproviders, budget-holding or commissioned; to the more mundane and very crude "macro­management" that is implicit in the process of negotiating fee schedules, budgets, or global costcaps."These reform efforts have their origins in cost control pure and simple. Public andprivate payers focused initially on P and W, trying to hold down fees and wage rates. But itwas quite quickly discovered that "demand" can be driven by income aspirations and theavailability of capacity - people and facilities. If fees are held down, service volumes rise; ifwages are held down, services are withdrawn in various ways. Payers were thus forced tobroaden their range of targets.30 It is an interesting question as to whether the latter response might be more or less stressful than the former.Is the knowledge that others are getting what they need (through money or connections), more troubling than asense of solidarity and shared sacrifice? The answer may turn on perceptions of the reasons for shortage(external catastrophe vs. administrative stupidity and waste) or of the relative deservingness of others (theyneedlearned/inheritedlstole their preferred status).31 "Managed care" as defined by Rosenbaum and Richards (1996) includes universal public systems of healthinsurance, at least to the extent that they "manage the health care practices of participating providers."23Direct controls on capacity and budgets, on Z and P x Q, have had significant effects oncost escalation, but these are always politically vulnerable to variations on the charge of"under-funding". Providers claim that the overall level of care provided is simply inadequate tomeet patients' needs , putting their health at risk ("people are dying"), and can produce "waitinglists" (and sometimes deaths) to prove it. Questions as to the effectiveness and efficiency of thesystem itself, the appropriateness of the level and mix of Q and the ratio of Q to Z, are side­stepped - unless payers raise them directly.To do so could imply a much-expanded role for payers in the management of the careservices. The difficulty of direct management has led, however, to widespread interest in moreindirect approaches -- in changing the information, organization and particularly the modes ofpayment of providers so that they will manage themselves differently. With differentincentives, they might be more willing to take up information on effectiveness, and to seekways of lowering costs. This is the attraction of the broad range of reforms under the generalheading of "managed care".This approach leads into variants of capitation - paying people or organizations a fixedsum to provide "all necessary care" (perhaps of a specific type) to a defined population. Toencourage effective care, however, one might also want to "reimburse by results" linking thecapitation payment at least in part to the health outcomes achieved. But then, why restrictsuch organizations to providing only health care? It is but a step to the truly intriguing idea ofcontracting for health itself, not merely health care. Provider organizations might then attemptto influence the whole spectrum of health determinants, being paid according to their success(Kindig, 1997). One can imagine this creating powerful commercial incentives not only toextend our understanding of the determinants of health, but also to apply that knowledge asbroadly as possible.Paradox in Private Markets: Can You Get Here from There?This is leading edge stuff, attempting to harness the forces of the competitivemarketplace to the promotion of health. But there are a couple (at least) of fundamental24paradoxes in this program. One is perhaps the central problem in managed care; the other is aquiet embarrassment for health promoters. Neither is approaching resolution.The most powerful incentives to overcome barriers to efficiency and effectiveness, andto address determinants of health that lie beyond health care, are generated by profit-drivencompetition among private commercial organizations. But such an environment also creates themost powerful incentives for patient selection -- managing the care of people who are not sick,or not sick in complex and ambiguous ways -- and for under-serving those who are. (Death,after all, is very cost-effective.)If managed care organizations are to be rewarded or penalized for the long termconsequences of their interventions, or lack thereof, this will require not only an extraordinarydata base to identify such consequences, but also long term (possibly lifetime) enrolmentcontracts. These may be acceptable neither to managers nor to managed. But spot markettrading of "insured lives" yields maximum returns to the clever selector of the healthy and thehard-nosed with-holder of care, not the expert producer of health."The second paradox is implicit in the expression: "empowering people to make healthychoices." But empowered people do not always make the choices you believe they should."That you ignore my good advice is bad enough, but if my firm is going to lose money whenyou are unhealthy then I will try to control your behaviour, through financial penalties or the"health police". There will be endless wrangles about who is responsible for bad outcomes.Nor does management come free. Some forms of "managed care" introduce largenumbers of new managers, marketers, and other income claimants - increasing the Z term inthe basic identity. This translates into higher prices, as each clinical service must now includein its (explicit or implicit) price an increased burden of administrative overhead (Woolhandler32 Of course efforts would be made to regulate such behaviour, but one should not be optimistic about theoutcome.33 As Luther found out after translating the Bible. Anabaptists have been persecuted ever since.25and Himmelstein, 1991; Himmelstein et al., 1996). P goes up - unless the incomes of clinicalpersonnel can be pushed down."Managed care", though supposedly focused on efficiency and effectiveness, can alsoslide into another form of "Sheriff of Nottingham" policy. Suppose competitive privateintegrated delivery systems (or a National Health Service) offer a basic level of care. But a"point of service" option (or a private tier) is also made available, whereby those who canafford it can buy more convenient (or better quality?) services when they feel the need.Advocates describe this alternative as "taking the pressure off the public system" whichtranslates as taking the pressure off taxpayers to fund the same level of care for all. Those withhigher incomes can assure themselves (what they believe to be) a higher standard withouthaving to contribute to the same for others. Meanwhile providers can feed those perceptions,to increase their own marketing opportunities and prices. "Managed care", if it takes the formof competition among delivery systems, may well lead down this road . Since a two-track("deux vitesses") system is both more accessible and less costly for upper-income people, therewill always be a market.Better Information for Better Management: "PSPB" Data SystemsSo "managed care has its problems and risks. Yet health care is always "managed" bysomeone, and all decisions are based on some sort of information. "Managed care" reformsaddress: "Who manages, under what incentives, and with what information available?" Theproblems indicated above arise from the particular and very powerful incentives generated byprofit-driven competition in a commercial marketplace. They are not inherent in managementper se. Changing the location of managerial decisions, increasing the accountability of thosemaking them, and particularly extending the information on which they are based, can lead to"better management" without the two-edged spur of commercial competition.Perhaps the clearest link between health care management and the determinants ofpopulation health is provided by the newly developing "person-specific, population-based" data26systems (Wolfson, 1994; Roos and Shapiro, 1995). Administrative data from universal,comprehensive programs of health care reimbursement permit the construction of person­specific trajectories of care. These show, in the words of the old limerick, "who did what andwith which and to whom," not merely for certain individuals or classes of patients but forwhole populations."These "PSPB" data systems are beginning to generate more detailed and openinformation on patterns of care. Linked with other sources of information on health status,they point forwards to much more powerful methods of identifying patterns of practice andassessing outcomes; linked with information on personal and community characteristics theypoint backwards to the underlying determinants of health itself. The longitudinal structure is ofparticular importance, because these determinants appear to include certain factors that operateover the whole of the life cycle, becoming embedded at a very young age.Creatively used, such databases permit both more precise analysis of the socialcorrelates of morbidity and mortality (e.g. Mustard et ai., 1997) and better targeting ofpossible interventions. Wider dissemination of their contents could also raise general publicunderstanding and mobilize support. Improved health care management can thus support themore broadly based promotion of health.The trick now is to develop the organizations - regional boards, commissioning groups,integrated delivery systems? - that will be capable of, and accountable for, translating thatinformation into more efficient and effective patterns of intervention, in and out of the healthcare system. Some of the tools developed in the American competitive environment may tumout to be useful for this purpose, even if that environment itself looks like another blind alley.34 Large linked (or more accurately, linkable) data systems containing sensitive personal information aboutindividuals raise obvious issues of privacy and confidentiality. These issues, however, can be and are beingdealt with, apparently effectively, by establishing clear criteria and lines of accountability for data access.Much of the agitation over privacy issues appears to come not from individual citizens, but from those whofear, quite correctly, that better data systems might make their own activities more transparent, andaccountable.27Most importantly, the juxtaposition of data on population health with that on care usecan be a way of informing the general public, as well as those responsible for health policy,about the significance of determinants of health beyond the health care system (BritishColumbia, 1997). If strategies for promoting health are to be developed and to find support asalternatives to health system expansion, they will probably have to be based on information atan equivalent level of specificity - not "How can we all be healthier?' but "What to do aboutcondition X?,,35Keeping the Hyaena on a DietMore generally, if health care delivery is not to crowd out policies to address thebroader determinants of health, its global scope and costs must be contained. "It's hard toadvance while there's a hyaena chewing on your foot." Wildavsky (1977) summarized thefundamental growth dynamic of modem health care systems in his Law ofMedical Money:"Costs will increase to the level of available funds ... that level must be limited to keep costsdown." Failure to limit the demands of health care will make it difficult to find (public orprivate) resources to improve other aspects of the social and physical environment thatcontribute to health." Better management of health care may be essential to populationhealth. 37The forces arrayed against cost containment are formidable, all driven by thefundamental fact that expenditures equal incomes. Efforts to limit expenditure elicit a standardcry from providers to the public:"The system is underfunded and your health is at risk! Make the politicians give usmore money, or protect yourself privately!"35 Again a paradox emerges if care managers are in profit-driven competition. This environment createspowerful incentives to generate information on both the health status of different populations and the relativeeffectiveness of various interventions. But the information so generated is inevitably proprietary. If it isexposed to external evaluation, it can be copied by competitors. Just because the idea of patenting careprotocols or health promotion strategies is absurd, does not mean that it could not happen.36 It is also likely to lead to more private financing , with effects such as those described above.37 Attention should not be wasted on an idle dream that improvements in population health could be "self­financing" by lowering the need for and hence the cost of health care. Apart from the extreme disjunction oftime scales, such a hope would be based on a complete mis-reading of the determinants of health care use andcost.28The containment of health care systems will fail unless it is -- and is seen to be - consistentwith preserving access to effective high-quality health care, at need. Is this possible?This is really a double question. First, is it technically feasible to maintain and improvethe effectiveness of modem health care systems while containing and perhaps even reducingcurrent expenditures? The answer appears to be very clearly yes - in principle. Health caresystems throughout the developed world continue to provide inappropriate and ineffectiveservices, in ways that are unnecessarily costly." Wide variations exist, within and betweenregions, in patterns of care for apparently similar populations and problems. These variationsare linked to the availability and aspirations of providers, not the needs of the populationsserved. The cheerleaders of technology, for whom no (amount of) expenditure is withoutbenefit, draw their inspiration from the marketing department.The second question, however, is more difficult, being primarily one of administrativeand ultimately political feasibility. Can knowledge about effectiveness and efficiency betranslated into changed behaviour? Restraining costs, whether by brute budget or persuasiveprotocol, always comes back to restraining incomes. Health care is managed within a"capacity" environment set by public and private investment policies that determine the long­run path of the Z - in a sense the demand for incomes." Investments in training of highly"human capital intensive" people such as physicians are especially critical. Once trained, theywill expect one way or another to make a living. That means they will have to be paid - bysomeone. And training places are politically much easier to open than to close.Similarly, when more generous patent privileges are conferred on drug manufacturers,their prices and profits, P and W, are raised. These privileges both encourage and support38 For example, in-patient hospital use has been falling dramatically in a number of countries. But a pair ofrecent studies in British Columbia has found that, although acute care use (per capita) has fallen roughly 70%since 1969 (McGrail et al., 1998), it would still be possible to halve current use by medical patients if adequatealternative facilitie s (mostly outpatient) were available (Wright et al., 1997). On the other hand , reductions inin-patient use do not necessarily save costs. Costs and incomes may simply be transferred to other venues andearners (Reinhardt, 1997). More generally, there is a huge literature on both the appropriateness of currentcare patterns, and the possibilities for resource substitution.39 Or in Reinhardt's (1987) terms, the allocation of lifestyles to providers.29increased investment in pharmaceutical innovation -- increases in Z -- and these too will haveto be paid for. There may be more effective ways to advance population health than bydeveloping and consuming ever more, and more expensive, drugs. But once the (very large)investments have been made, their owners will fight tooth and nail to get their return - with aprofit.Short-sighted decisions to encourage particular private investments can thus imposevery long run constraints on management choices. They put in place a level and mix ofpersonnel or products that powerfully influence the pattern of services produced and theiroverall cost. If the scale and structure of Z is pre-committed, it is hard to change the mix of Q- or reduce P - whatever the form of management.Efficiency at Whose Expense: Was There Someone In That Bathwater?But managed care may also have implications for population health on another level,that go to the core of the belief that the health care services need "More management, notmore money." Along with the extensive evidence of inappropriate and simply unevaluatedservicing, there is also considerable evidence that (at least in the absence of financial barriers)the sickest people do receive the most care. Since health is correlated with socio-economicstatus (SES), on average people at lower SES are the heavier users. The SES gradient in useis not, however, uniform across all services. It is found in those forms of care for whichoutcomes are less well defined, and the boundaries between medical and social needs less clear- especially in hospital care for patients with medical and psychological diagnoses andrelatively long stays (Roos et al., 1997).Yet in-patient care is precisely where cost containment pressures have had the greatesteffects. Surgical and diagnostic procedures - which display less of an SES gradient - aremigrating out to ambulatory or short-stay facilities. Lengths of stay are down because peopleare simply going home - as many of them wish to, and should. But what happens to those30with real but ill-defined needs, who are in hospital because the hospital is there?" And by thetime they get there, such people are in fact quite sick (Roos et al., 1997). Some of theresources released by "downsizing" might be re-deployed to support them in other ways. Butif not? The SES gradient is at least a warning that "better management" on medical criteriamight have adverse implications for the health of vulnerable sub-populations.Conclusions - And a Few SuggestionsThe relation between health determinants and health care reform is thus a complex one.Reform of health systems to improve effectiveness and efficiency in the provision of care maybe essential if resources are to be made available to address other determinants of health. Youhave to get the hyaena off your foot. On the other hand powerful economic forces tend todistort all reform efforts, trying to blunt or reverse cost containment while inserting regressivecost shifting. Such distortions are most likely to have negative effects on population health.But they will never lack for advocates. There is simply no way around the fact that moreexpenditures equal more incomes for providers, or that tax-financed health care transfersresources from the healthy and wealthy to the unhealthy and unwealthy. The economicinterests are well-defined, and a permanent feature of every national debate on health care."Re-forms" that would substitute private for public funding sources are more or lessovert efforts to re-distribute access and costs. Their effects on population health seemunambiguously negative. Common sense suggests, and empirical evidence confirms, thatlinking access more closely to ability to pay results in more care for those with more resources,and less for those with less, and overall a worse match between care use and needs.But privatizing revenue sources also redistributes access to other goods and services.Paying less (more) in total- taxes plus private charges or premiums -- to support the health40 Hertzman suggests that we have in our societies two types of institutions for people who have simply "givenup" and can no longer cope with their lives - hospitals and prisons.31care system, the healthy and wealthy (unhealthy and unwealthy) have more (less) to spend onother things. Health care finance is part of the general pattern of taxes and transfers in eachsociety that mitigate (more or less) the inequality emerging from the marketplace. Privatizinghealth care funding weakens that mitigating effect, leading to greater economic inequality andprobable negative consequences for health.More private funding would, however, raise total expenditures on health care.Advocates now seem almost unanimous on this point. But these increases are likely to beprimarily in incomes, not in services provided, and afortiori not in the most effective services.And the significance of emerging evidence on the broader determinants of health is preciselythat further expanding the health care system may NOT be the best route to population health."Re-forms" of funding sources deserve particular attention, because these are"degenerate forms" of virtually every other approach to health care reform. When proposals toimprove the functioning of health care systems run into opposition from those whose incomeswould be threatened, sooner or later someone will suggest "more private funding" - costshifting -- as a compromise. But even apart from the distorting effects of economic interest,harnessing health care reform to the improvement of health remains a significant challenge withmuch still unknown.Improving the evidence base for health care interventions seems to be making the mostrapid progress. But that area also shows clearly the need for organizational structures toensure both that new knowledge is used appropriately in health care delivery, and that theprocess of information generation is not itself subject to systematic biases rooted in economicinterest. Changing the organization and management of health care systems may improve theuptake of evaluative information, and ideally may encourage attention to a broader range ofhealth determinants. A good deal of experimentation is going on with different forms of"managed care", but settled results are still scarce.32There seems a widespread interest in "primary care reform" based on some form ofcapitation, and an agreement that fee-for- service, as the predominant mode of reimbursingcare, has outlived its usefulness. Nor do profit-motivated competitive managed care systems inthe United States appear to be overcoming their inherent paradoxes (though Americans havelow expectations and a high ideological commitment to the market). But the ball is still verymuch in play. Whatever the organizational framework, however, controlling the costs of healthcare in the face of intense provider pressure and public anxiety and scepticism seems certain torequire progressively more sophisticated and detailed management, whether by payers or byproviders themselves.The data systems that this will require are, however, now coming into being.Comprehensive population-based data systems assembled from health care utilization recordsare providing a framework on which to assemble a wide range of other forms of information onpersonal and community characteristics. Integration of these different sources of informationpromises to provide support for both better management of health care delivery, and moreeffective approaches to the determinants of health. (The effective use of such information,however, will still depend upon the development of organizations with the capability and theincentive to do so.)It would be ridiculous to conclude by offering a "blueprint" for managing health careservices so as best to promote population health . Certain points do, however, seem to emergefrom the above discussion.First, if we are to take advantage of our growing understanding of the determinants ofhealth, it is essential to contain the enormously powerful growth dynamic in the health caresystem. The hyaena must be kept on a diet.Second, better information on "what works and what does not" in the clinical setting isnecessary but far from sufficient for this purpose. The more difficult challenge is that of33institutional design, of developing the organizations that will do the job instead of doingsomething else.Third, no such reform is likely to have a chance if short-sighted decisions expand thenumbers of long term (public or private) income claimants - vesting future interests in healthcare spending.Fourth, since there are permanent economic interests at stake, any effort to redirecthealth policy will inevitably be a political struggle. Much better - both detailed and reliable -­information on system performance is now needed not only to ensure but also to demonstrateto a concerned public the integrity of the containment process. The competitive clamour of"too little" versus "too much" at a global level is uninformative and distracting.Fifth, the "person-specific, population-based" data that is necessary for the effectivemanagement of a health care system is also a major resource for generating public information.It should be used.Sixth, more detailed information on where, how, and why health differences emerge isrequired if appropriate policy responses are to be introduced. 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