1、The Beveridge PlanUK:National Health Services Bill of 1946Based on a plan by economist William Beveridge focused on shared sacrifice and national solidarityBeveridge Model has three defining featuresUniversal,single-payer insurancePublic health care provisionFree care The three defining featuresUniv
2、ersal,single payer insurance:All citizens receive insurance from government,financed by taxes and not premiumsPublic health care provision:Hospital and clinics run by the governmentFree careCare provided for free at government hospitalsFree at the point of care Some exceptions for prescriptions drug
3、s,eye care,and dentistry Aim of the Beveridge modelHealth care is a good provided by the government and paid for with tax revenueLike public schools,libraries,and parks Allocation of health care based on need and not ability to payEliminates price rationingPromotes equityCountries with the Beveridge
4、 modelBeveridge blueprint adopted in Commonwealth and Scandinavian countriesUK Canada Australia etc.Sweden Norway etc.Variations in implementationCanadian hospitals nominally private but effectively government runSome cost-sharing in SwedenAustralia also has a private hospital sector among othersRat
5、ioning health care without pricesEvery health care system faces two fundamental questions:how much health care should be produced?who should get it?Private markets use prices to answer these questions Scarce resources go to those willing and able to pay the most for them(price rationing)With price r
6、ationing,poor are disadvantagedIf not price rationing,then what?Health care is free in Beveridge systems so must be another way of rationing careSome strategies include:QueuingGatekeepingLimiting coverage through health technology assessmentQueues and gatekeepersWhy do queues arise?Because Beveridge
7、 governments mandate free(or very-low cost)careDemand can be highIn private markets,physician and nurse salaries increase so that supply matches demandIn Beveridge systems,salaries set by government so market cannot equilibrate High demand and low supply results in queuesCost of queuesAs a result of
8、 long queues,1990:median wait times for English patients was 5 monthsMore than 50%of patients had to wait longer than a year!There could be patients desperately needing quick care but not receiving itLong wait times a very politically sensitive issueMany reforms since then focused on reducing long w
9、ait times Benefits of queuesQueues may limit moral hazardE.g.long wait times deter people who do not actually need the costly procedureIn a 1980s mail survey of patients waiting for orthopedic surgery at one UK hospital,only 48%of the 757 people still wanted the surgeryUnlike price rationing,queues
10、treat the rich and poor equallyPromotes the equity goal of Beveridge systems A model of queuesSuppose there are two types of patients:U-patients:those for whom the surgery would be very usefulW-patients:those for whom the surgery would only be marginally usefulLet Up represent poor patients for whom
11、 surgery would be usefulA model of queuesBecause of first-come first-serve,low-benefit W-patients receive treatment before high-benefit U-patientsInefficiency arises because care is free for everyoneW-patients do not internalize costs of care so join queue anyway Price rationingSuppose instead that
12、patients had to pay an out-of-pocket fee for treatmentThis reduces the queuing problem because W-patients would never sign up for treatmentBut price rationing also removes Up-patients ones who need treatment but cannot afford itGatekeepingNeed an alternative to price rationing to separate W and U pa
13、tientsIn most Beveridge systems,all patients must first visit a general practitioner(GP)before they can see a specialistGPs act as gatekeepers:Only patients they deem as needing care may then visit a specialistEstimating the welfare loss from queuesIf gatekeepers are effective,then queues look like:
14、If so,long queues mean lots of people needing care do not receive it quicklyPotentially huge welfare loss from long queuesWant to estimate how large the welfare loss is Estimating the welfare loss from queuesThree strategies:#1:Hypothetical questions about how much patients would be willing to pay t
15、o receive care now#2:Calculate welfare loss from patient willingness to pay extra for private care#3:Calculate welfare loss from patient willingness to travel to farther hospitals to receive quicker careAll three methods find for non-urgent procedures,a month reduction in waiting time is only worth
16、around$200This low estimate remains a puzzle compared to the attention long waiting times receive!Queue reduction policiesIncreased used of gatekeepersStricter eligibility thresholds for carePrioritizing patients so not just first-come first-serveHire more doctors and build more hospitalsHigher sala
17、ries for medical staffOutsource care to private providersDecrease demandIncrease supplyTo reduce queuing,either decrease demand or increase supplyQueue reduction policiesEach reduction strategy involves some tradeoff between equity,health,and wealth Governments typically adopt a combination of these
18、 tactics and apply them to different degrees Differing levels of success in reducing waiting times across countriesEx:UK successful in reaching its waiting time targets but waiting times have grown substantially in every province in Canada between 1993 and 2010 Health technology assessmentHealth tec
19、hnology assessment(HTA)HTA more a central issue in Beveridge countries because:Government pays for health care,so HTA plays a large role in cost containmentGovernment delivers health care,so HTA determines which services are available and which services are notPatients may have to go abroad to acces
20、s services denied coverage by HTAHTA decisions can be very controversial because they can determine who gets treatment and who does not Rise of centralized HTACentralized HTA arose for two primary reasonsCost containment Previously,HTA done regionally which led to disparate menus within the same cou
21、ntryHTA only became formalized on a national scale across the Beveridge world in the 1980s and 1990sEx:In 1999 NICE was established in the United Kingdom.As of 2005,its guidance became binding for all providers in England and Wales Similar systems in place across Beveridge nations;in some cases cent
22、ral HTAs recommendations non-bindingProvider competition in Beveridge systemsAppeal of competitionMany of the problems faced by Beveridge systems(long queues,centralized HTA)not found in countries with private systemsHence,many Beveridge systems have tried to experiment with elements of competition
23、while simultaneously preserving solidarityUneasiness with private marketsWhy dont Beveridge countries wanting competition maintain both private and public hospital sectors?True for some countries like Australia but not mostFear that parallel system will undermine solidarityPotential for two-tier sys
24、tem where rich patients go to private system and poorer stuck in public systemIf private sector pays better,better doctors leave public sector,further undermining solidarityHospital budgets(pre-1991)Before 1991,UK hospitals received annual budgets from governmentEach years budget determined from las
25、t years cost adjusted for growth and inflationSo no incentive for individual hospitals to operate more efficientlyNo financial incentive to reduce costs or to reduce waiting times1991 UK Internal Market ReformsReforms aimed at giving public hospitals some incentive to reduce costs and lower waiting
26、timesInstead of annual budgets,hospitals had to vie against other regional hospitals for contracts from a government buyerBuyers gave contracts to hospitals on basis of costs,service,and waiting timesEmpirical question whether reforms succeeded1991 UK Internal Market ReformsSome evidence that waitin
27、g times decreased after reformsHowever,Propper et al.(2008)notice that hospital data on mortality and outcomes not widely availableBuyers could not judge hospitals on services rendered,only costs and waiting timesIncentive for hospitals to skimp on quality in order to lower costs“race to the bottom”
28、UK 2002-08 ReformsFrom 2002 to 2008,three large reforms injecting competition:1.Move hospitals away from global budgets to a“payment by results”(PbR)system2.Allow patients freedom to choose between providers3.Give hospital administrators greater autonomy in managing hospitals.Unlike previous reforms
29、,these reforms set uniform prices for all hospitals Hospitals can compete only on quality,not price 1.Moving away from global budgets“Payment by Results”(PbR)system compensates hospitals based on#of procedures conducted rather than fixed annual budgetCompensation according to Health Resource Groups(
30、HRGs)HRGs are related services and procedures Government sets reimbursement for each procedure depending on its HRG designation and patient age PbR system may backfire if reimbursement rates are set improperly 2.Opening up patient choicePreviously,patients assigned to hospital by residential locatio
31、n,so no way for hospitals to“compete”for patientsIn 2006,GPs required to offer patients choice of multiple hospitals in UKIn 2008,patients free to choose any hospital nationwide3.Increasing managerial autonomyPreviously,much of hospital administrator control constrained by governmentThe 2002-2007 re
32、forms relaxed these constraintsThis gave hospital managers the agency to adapt to local market conditions to attract more patients High-performing hospitals to apply to become a new type of entity,known as a Foundation TrustFoundation Trusts granted even greater autonomy from NHS Results of the refo
33、rmsCooper et al.(2011)find that reforms both reduced mortality rates and lowered waiting timesOn the other hand,findings that one Foundation Trust(Mid Staffordshire hospital)grossly abused managerial autonomyCut corners in patient quality in order to costsThis story suggest that quality monitoring r
34、emains important to prevent another“race to the bottom”ConclusionRecall three elements of the health policy trilemmaHealth,Wealth,EquityBeveridge model focuses on the equity piecePrioritizing solidarity distinguishes Beveridge model from the Bismarck and American onesProblems like queues and poor hospital incentives have motivated Beveridge nations to experiment with non-Beveridge elements such as provider competition and HRGs
