Category Archives: Health care reform

Healthcare and Life Sciences implications of Brexit

This is a summary of some emerging and salient issues related to the UK departure from the EU.


It is estimated that the UK recruits 7000 nurses and 2000 doctors annually from the EU. The UK is currently unable to meet its workforce requirements for the NHS from its domestic higher education system. To do this it will need to create around 5 medical schools and a dozen nursing schools, not to mention the unmet needs for other health professionals such as pharmacists, physiotherapists, and so on.

The UK will be unable to widen recruitment from outside the EU without drawing people from countries which really need their own domestic supply; as well, non-EU migrants need to meet a points-based system, which also includes an income test, and many healthcare workers in nursing homes, for instance, earn less that this amount — EU recruits are exempt from this test.

The UK will likely need to repudiate the mutual recognition of qualifications if it also repudiates free movement of labour. Individuals acquiring new qualifications from the various Royal Colleges, for instance, will not be certain that those qualifications will be recognised should they return to the EU at some point.


We’re hearing a lot about research as the UK is a major participant in EU research funding rounds. Academics in the UK will become third country researchers after Brexit and there is no guarantee that they will be able to lead major projects, but only be participants.  The loss annually is about one billion euros or so in R&D funding. While the UK is an attractive place to do research, the gradual erosion of this pre-eminent position is likely if UK researchers lead fewer major research programmes and the universities are unable to recruit from the EU — again, mutual recognition of qualifications may also be a consideration.


Drugs and Devices

The European Medicines Agency will need to relocate to within the EU. While this is perhaps 800-900 jobs at EMA, there is a large regulatory eco-system around EMA that will also need to move. Perhaps less noticed, though, is that the UK will need to duplicate EMA’s regulatory functions meaning that all pharma and device companies will need to file applications to the UK quite separately to the EU. Pharmacovigilance is one area that will need to be duplicated as EMA requires the competent authority to be inside the EU.

Drug and device prices themselves should rise as the UK exits the single market. That the UK is already a difficult market for market access, might lead to fewer drugs being launched in the UK.  While these factors are hard to quantify, but in the absence of alternatives, the NHS drug budget might go up by 10% (the tariff rate), while new products might be delayed; that they are launched in the EU would not provide market access to the UK under the free movement rules. The UK might become a low priority country for new products.


All these considerations will have an impact on patients who will lose access to portability of healthcare benefits provided by the EHIC (European Health Insurance Card) system. As well, the A1/S1 arrangements will disappear. This has some important implications for both the UK and EU states and their citizens.

France and Spain have a large number of Brits living there, while tournists travel all over. For instance, Malta receives about 1.5 million tourists a year, 500,000 of which are from the UK and access Malta’s healthcare system through the EHIC with the UK paying the bills to Malta. By losing the post-retirement S1 arrangements, individuals will need private health insurance, while tourists will need to buy medical travel insurance. Medical travel insurance is a very poor substitute for EHIC as it excludes pre-existing conditions and is not a substitute for statutory cover. Business travellers will also need to carry private travel insurance. [Note: see my FT comment describing this type of insurance as a money pump, following Tim Harford.]

EU citizens travelling to the UK will need to have travel insurance covering third countries or take out private insurance while in the UK. The UK’s private medical insurance industry offers very poor value products and importantly does not offer an equivalent substitute for NHS or social insurance cover, because of their failure to cover pre-existing conditions; with their additional limitations, access to care would be very difficult if individuals relied on a UK insurance product.


Health Policy Responses to the Financial Crisis: update

A recently released report from the European Observatory on Health Systems and Policies has produced a retrospective on what over 40 European countries did in


Financial policy trumps health policy (Photo credit: Tax Credits)

response to the financial crisis, triggered in 2007. The report “Health policy responses to the financial crisis in Europe” (by Mladovsky, Srivastava, Cylus, Karanikolos, Evetovits, Thomson, McKee) is here.

The report finds that a range of policy responses characterised what European countries did, ranging from doing nothing, spending more to spending less, from increasing benefits to cutting them, from cutting salaries, increasing co-payments, and curtailing capital spending. In many cases, plans to expand were put on hold, while in others, plans in place to drive efficiencies were accelerated. The price of medicines went up, down, reimbursements dropped, co-payments went up, retail prices were capped, prices to the pharmaceutical industry went down, or were modified. The response to crisis in some countries was hampered by powerful stakeholder groups (mainly clinical vested interest groups, e.g. pharmacists, doctors) resisting changes and governments backing down.

The authors note that, in the end, “…little has been done to enhance value through policies to improve public health…” We agree that this was a missed opportunity, though the continuing financial difficulties suggest the crisis is hardly over. My guess is that this will be a generational crisis, as the policy responses still need to feed through the system and lead to either increased ill-health, postponed treatment, or in some cases, simply delaying the inevitable future financial crunch.

Unfortunately, the report is a descriptive study; their assessment of the different policy choices made is based on research conclusions in the literature. What that means is that we don’t know whether the choices made were effective, appropriate, or mere compromise. The appendices provide useful summaries of individual country policy actions. I just wish the authors had assessed these actions.

I would also have liked to have known how individual governments made the policy responses they did; clearly some were unpopular, but that does not preclude making evidence-informed choices and sticking to them. What is evident is that political will in many cases is lacking, and the ability to leverage various policy instruments is seriously hampered by powerful vested interests. Clearly, the financial crisis and the need for austerity in indebted sovereign states, has not hampered the effectiveness of lobbying, only demonstrated that these groups are sufficiently powerful to resist reform even when it is most needed — what hope is there when change is optional?

On pages 28 and 29 the authors useful summarise policy tools that either promote or undermine health system goals, assuming of course that countries have in place strategies for their health systems that correlate with these instruments — it is not unusual for a country to require complex strategies simply to deal with the mis-behaviour of existing instruments — an example is where a country permits balance or extra billing, then needs public funds to cover the costs of underinsured individuals, then needs to have resource shifting policies simply because the co-payment/reimbursement system incentivises inappropriate prescribing or treatment, leading to serious regional variations in outcomes. Situations like this  (there are a number of countries in Europe with this specific problem) illustrate the failure to take a whole system approach to the use of health policy instrument selection. This report does not help either by failing to put the individual country policy responses into the context of the country’s system objectives. That might have produced a more useful report for policy-makers.

In the end, we are left undernourished and want to know whether any of these are likely to have perverse consequences (unintended consequences, perverse incentives, including increase in medical fraud and pharmaceutical crime).

Healthcare and the Euro-zone crisis, part 2

Euractiv has reported on Commissioner Dalli’s comments that the Euro-zone crisis should not turn into a public health crisis. He added: “difficult times can indeed

Johnny C Fiddle

Policy options may look good, but do they actually play decent music? (Photo credit: Cindy Funk)

provide an incentive to think creatively and push forward in-depth reforms and contain costs, while building modern, responsive, and sustainable health systems fit for the future.”

I agree, yet despair.

Countries have healthcare systems for good reasons and allocate resources because they believe the system in place is the best solution. What we are now seeing is that these systems are very costly, perhaps with weak GDP, almost unaffordable in terms of medical inflation and the impact of demographic factors on services, which outstrip society’s ability to afford more, given other competing demands.  The ability to affect needed healthcare reform is further complicated by governments with limited policy instruments or imaginations. Some may have been literally captured from a policy perspective by powerful vested interests.

My hope is that the current austerity will be a spur to reform; however, in this case, my thinking is that governments need to see themselves as encouraging innovation, and not protecting the status quo.  We can no longer afford to continue to put taxpayers’ money into unreformed governmental and healthcare systems.

As I have written elsewhere, governments fear the creative destruction of public institutions, yet these are frequently the ones most likely to be the barriers to system reform.

The Euractiv article gave some illustrations of the responses by government, none of which involved in-depth reforms. Let’s take a look at some of the examples in the Euractiv article and deconstruct them a bit: (the Euractiv’s text is italicised, my deconstruction follows).  The following comments are not intended to be comprehensive, and I have not addressed in detail whether in some cases there was fundamental logic in the actions. I am looking at these actions in the context of IF you’re thinking like this, THEN you are NOT thinking of more sustainable strategies. You are only, as they say, kicking the can down the road for others to deal with in a few years.

  1. Many countries in Europe have cut public health budgets drastically since the beginning of the global financial crisis in 2008. Regretfully, this is usually the simplest and easiest thing for governments to do. I accept that healthcare system reform is not easy, particularly because of the perceived influence and power of healthcare professionals, and the public’s deep lack of knowledge of how healthcare funding can be mis-spent. That expenditure might be too high for the delivered value of the expenditure actually buys is of course the real issue, not whether budgets can be cut per se.
  2. In France, the government expects to reduce spending by €2.4 billion on the health insurance side. Some 40% of these reductions will be made through a shift to generic medications and savings on medical devices, while measures in favour of greater efficacy in hospitals are expected to lower cost by €1.5 billion. France has failed to balance its public accounts since the 1970s — why should now be any different? The centrality of government in France makes it hard to use local or regional drivers of change as there is the bureaucratic overhang of the centre — what is surprising in France is that despite this overhang, and the central ministry of health employing over 15,000 people (what do all these do all day??) regional outcome differences exist.  Despite some regional level reforms (the ARS), hospital cost structures and payment to doctors (in France doctors can extra-bill!) are the real cost drivers. Shifting to generic medicines is a typical knee-jerk approach. But medicines spending often suffers from poor, even irrational, prescribing practices, weak medicines use management, and weak patient adherence programmes — perhaps 30% is misused, unused or disposed of so much of this expenditure may be suspect.  France has a weak record in biotechnology (despite what they say) and its research has worried the Ministry of Health as it lacks global visibility across a broad spectrum. But investment in life sciences R&D is, for most countries now, seen as a critical driver of economic growth (despite the fact that few countries actually have the research, development, university or commercial infrastructure to do just that). So as generics replace branded medicines, so investment in life sciences research will leave to more congenial countries (other macroeconomic policies may encourage this). The same can be said of trying to save money on medical devices; though devices are not priced like medicines and do not behave like medicines — there are no generic devices in that sense. So it is hard to image what might be meant by savings here. As for hospitals, the great sink hole of healthcare expenditure in any country, what tools are available to drive ‘greater efficiency’?  Country after country is grappling with this. However, €1.5 billion is not a lot of money in the French system which accounts for 11.8% of French GDP (3rd highest in the OECD), which translates into €3872 per person, of which €1639 per person is spent on hospitals. I would be looking for significant analysis of hospital cost structures, skill and service mix, utilisation, etc. to know how efficiency gains will be realised through resource releasing strategies.
  3. In Estonia since July 2009, the sickness benefit rate has been reduced from 80% to 70% of the insured person’s income. The sickness benefit rate in the case of caring for a child under 12 was reduced from 100% to 80%. Cost-shifting to the patient is a regretfully increasing tendency; it also affects lower incomes more than higher incomes. The likely ability to alter patient behaviour and use of healthcare is not completely clear, though the research does show that increasing or even the existence of co-payments reduces the likelihood individuals will seek healthcare and hence lead to increased burden of ill-health, particularly amongst those most price-sensitive. Better to have targetted the underlying costs, first; however, with a shift to a larger co-payment, there is the potential to increase public awareness of healthcare costs and use consumer behaviour to drive faster and more thorough-going reform than simply through government diktat.
  4. The Greek government this year decreased its mental health services by 50%, and the budget was further reduced to cover only 45% of the psychosocial rehabilitation services. In the end, I suspect that this will have a longer term negative impact on mental health status, the problems from which Greece will not be able to export to other EU member states, under the cross-border health rules. Reductions in budgets alone, though, do not tell the whole story as embedded in these services may be higher overheads and administrative burden, inefficient work patterns, and poor use of available expertise (perhaps low case loads); these comments do not say Greek therapists may not be up to the challenge, but the system they work in may constrain their ability to deliver better care through infrastructural and systemic inefficiences. This is where I would look. My view is that as these are broadly predictable costs within known demographic factors, decoupling this debt component from the total would be sensible as it can in the end by better managed than through short-term quick fixes.
  5. In Latvia, nurses’ salaries have fallen 20-40% since 2009. Between 2006 and 2010, the number of hospitals in Latvia have decreased to 39 from 106 and the number of hospital beds decreased to 493 from 761. Reducing the number of hospitals, in and of itself, is not a problem, nor is the reduction in numbers of beds. Bed utilisation is what matters and the intensity with which beds are used, such as length of stay and whether people are hospitalised inappropriately, or held in hospital because of poor discharge facilities (e.g. step-down units, community care) all of which can be provided at substantially lower costs (owing partly to different skill mix, and partly to lower capital costs). Cutting nurses’ salaries (and presumably doctors, physiotherapists, pharmacists, etc., too, though I doubt it) may be counterproductive as it will simply create a reason for people to leave; there is a global shortage of nurses. Better, is to focus on work processes. We know that up to 30% or more of a nurse’s time can be unproductive in terms of patient care. By simply reducing this waste of time through systematic reform of work practices, staffing can increase the equivalent of 15% or so; equally, nursing is a highly stressful job, and nurses tend to have very high absenteeism rates; perhaps 10% of the nurse complement exists simply to respond to absenteeism.

Medical Debts and the Euro-zone Crisis

The financial markets have broadly spoken and find the leaders of the Euro-zone patently unable to implement the solutions to the crisis.  Knowing what the problem

Confused Man Reading a Bill or Bank Statement

Where did it all go wrong? I thought there was enough money.... (Photo credit: s_falkow)


really is is very important and it now appears that the core structural reforms necessary seem too hard for doctrinaire European thinking. If you keep trying to implement the same solutions and keep getting the same results — namely a sovereign bailout — that is a rational clue that you are doing the wrong thing.

Medical indebtedness is a big part of the problem, as much of the debt arises from state controlled or funded health systems, and therefore the payment from public funds to pharmacists, doctors, hospitals, etc. adds to the debt load. Indeed, going forward, the debt rating of Euro-zone countries may be in part determined by their ability to handle these types of debts. So far, though, the prognosis is not good.

A summary: figures arising in the period February 2012 to date [Sources: Financial Times, Reuters]

  1. overall, pharmaceutical companies are owed €12 billion in unpaid bills for medicines (debts more than 30 days unpaid).
  2. about €6 billion of that is apparently in Spain; overdue bills in Spain are approaching 800 days unpaid; recently, though, the Spanish central government found €17 billion euros to pay suppliers of the autonomous communities — 73% of this amount was for unpaid medical bills
  3. medical device makers are owed about €4 billion
  4. one device company recently took back about €4 million in unpaid inventory
  5. an insulin supplier shifted to cash on delivery for Greece and has threatened to withhold new drugs from the market
  6. many pharmaceutical companies are reprofiling their product portfolio in high risk payment countries, with a focus on medicines where there is no alternative source of supply or where there is higher clinical need
  7. there is in some cases a broad strategic shift away from customers who don’t pay their bills (e.g. hospitals) to the patients, thereby avoiding high risk local or regional government payers
  8. many health industry intermediaries are diversifying their business away from this sector
  9. some companies have written down their debt selling sovereign bonds; amounts in the tens of millions of Euros are involved.
  10. some of Greek national debt arose from hospital capital expenditure and the failure to properly account for these in national accounts, despite the fact that their hospitals are in poor physical condition; there is a comparable risk associated with capital expenditures across the Euro-zone as it generally involves public bodies and public debt
  11. and so on….

What does this mean?

Consequences to health systems are unlikely to be short term. The suppliers are bearing the costs of granting credit to governments with increasingly fragile credit ratings. They are going to be more cautious in future, no doubt. But a few consequences can be anticipated based on current actions:

  1. There is an evident shift from state payers to patients, forcing patients to pay full costs and then recover these costs from payers. This can be serious hardship for some patients. To some extent, increasing copayment/full payment increases price awareness amongst patients, and increases their awareness of true costs and medicines or device availability. Where national policies may act to suppress introduction of innovative products, public salience of this will rise. Increased public salience will have the effect of limiting the ability of governments to act to constrain costs and availability. This alone could lead to calls for radical reform of state controls in health systems.
  2. Innovative medicines and devices are unlikely to be supplied to at-risk countries until there are assurances of payment. Indeed, medicine reimbursement policies which seek to drive down medicines prices or encourage generic substitutions are likely to have a perverse consequence as industry has the option of restricting to supply to manifest demand, or delaying the introduction of innovative medicines for fear not only that they won’t get paid, but the price paid may be punitive.
  3. Infrastructure renewal in the healthcare system will come under considerable scrutiny. Do we need to renovate hospitals; should new ones be built or should we be looking at newer ways to deliver healthcare at lower costs (e.g. e-health), and how will the vested interest groups (health professionals) react to far reaching system reform to reduce the capital costs of hospitals?
  4. Reduction in availability of supplies has a variety of consequences: shortages of medical/surgical supplies delay operations; shortages of gloves can increase the risk of spread of hospital infections (which can cost upwards of €100,000 per incident to clean up, a lot more than gloves cost); general cost containment can compromise linen supply and sterilisation, increase the risky use of reusable surgical instruments and encourage staff to take risks with reusing equipment in general; given the scale of infrastructure, staff shortages (not hiring replacements) can lead to increased patient loads for health professionals and thereby shorten time available for patient care. This list can go on and on.

The point is that healthcare is a system, and shocks to that system, whether unpaid medicine bills, staff shortages, hospital infections, whatever, have consequences throughout and many of these consequences are likely to be far more costly than the savings and could lead to widespread risks to public health.

Solutions? In my view, the time is ripe for the at-risk countries, in particular, to reflect on the cost-drivers in their systems and focus on substantial reform of the delivery system, as well as the financing itself. Long-term sustainability is needed, so short-term or ill-thought through reforms will only make things worse. We’ve already seen the consequences of that with current Euro-zone leadership.

Email me your suggestions and let’s start building a list of possible solutions that protects the integrity of the public’s health without bankrupting the country.


Information and Advertising of Prescription Medicines



Image via Wikipedia

Does the proposed amending directive on providing medicines information to the general public (sometimes thought of as advertising) actually enhance patients’ rights? Will it lead to good regulation? The document in question can be found here.

I’ll grant that a lot of people have been involved in this, so there must be some consensus, but is the proposed directive strictly in the patient’s best interests and how are we to truly cost the benefits?

The document itself is cumbersome as if trying very hard to close off any possible loop-hole in case advertising disguised as information might slip into the hands of an unsuspecting patient. To do this, a variety of tests are proposed, a net through which information must pass, presumably though, not advertising, that might meet these tests:

  • objective
  • unbiased
  • evidence based
  • up to date
  • reliable
  • factually correct
  • not misleading
  • understandable
  • meet patients’ needs and expectations

These tests are all good things, and I have no issue with them as such; certainly one would not wish to be in favour of subjectivity, bias, opinions full of errors and likely misleading, despite being incomprehensible — I suppose much like an insurance contract.

If I prioritise the last though, meeting patients’ needs and expectations, information would need to pass these tests for a reason other than internal scientific tests, namely, that it be useful. My fear is this process will produce information that may struggle meeting the test of being understandable. The reason for giving the information itself is to help the patient after all, so starting with their needs seems to me to the test against which I would assess everything else. Of course, little in this world passes these tests anyway, or if it does only for a very short space of time, and even then, facts can be in dispute and there are differences of opinion over how to interpret them. What we are left with in this proposal is a technocratic solution for what in the end is a human need for information.

What are policy makers afraid of in drafting this directive? What do they fear should patients have more information? And have they fully costed this approach?

It all seems to very old-fashioned and dated. Like trying to put the genie back in the bottle, I think this in time will prove to be the actions which caused more harm than good. Indeed, it may be that the benefits are less than the total system wide costs.

The question, then, to ponder further, is what decisions by patients are enabled through this directive, how does it specifically enhance the rights and needs of patients (keep in mind that most health systems neither respect nor completely understand what these mean). Certainly, taking a decision-based approach, perhaps a ‘decision architecture’ which determines what information in what form is needed to help patients make what sorts of choices, then we might know better what degree of ‘coercion’ is needed, if any — but can you give me an example where it is even ethical to withhold information from a patient?

Of course, such an approach would would be in conflict with this directive which builds on the view that only health professionals know best. Hardly a firm foundation for legislative reform of this magnitude. But we need to think of whole-system regulation and the distribution of costs and benefits on that basis, and not just the information issue itself.

I am not surprised that it has come to this, as there is a sort of ‘consensus’ amongst professional vested interests that an information and advertising free for all would lead to chaos, loss of control of drug budgets, and a flood of advertising on our televisions and newspapers about drugs influencing hapless patients and consumers (as though advertising to doctors didn’t achieve similar effects). But compared to the monastic model we have now, where patients know less about the drugs they take than the amount of fat in a kilo of ground meat, it would serve to open up to greater scrutiny industry claims and counterclaims. This lack of knowledge itself has a cost and serious consequences for the costs of healthcare systems.

Recently, the Economist has noted in an article on red tape in Washington how the various costs of regulation are identified, and how wider public benefits are calculated or missed. The US Congressional Budget Office has speculated that a moratorium on DTC would likely have perverse consequences and be unlikely to lower drug prices, and only shift advertising toward physicians. This of course challenges the narrower focus (not meant pejoratively) of the Directive which clearly fails to take account of wider regulatory costs, which are ignored as they fall outside EU competency. These regulatory costs include but are not limited to:

  • the potential beneficial impact on treatment costs and compliance with medicines regimes arising from wider engagement of patients in their care
  • the potential corresponding (and likely beneficial) challenges to the authority of health professionals (but ignoring that many countries are seeking to encourage patient selfcare which is designed to achieve just this result), who are influenced in other ways in their choice of medicines, with considerable evidence of irrational and inappropriate prescribing, despite efforts to counter this
  • greater awareness by the public of national medicines policies which may actually encourage greater cost efficiencies, such as trade-offs between medicines and inpatient care, as well as greater public scrutiny of how new drugs gain market access (a process which the public has little knowledge of and which has perverse consequences in many cases for patient access to new medicines — something an informed patient may wish to have a view on)
  • greater public awareness of the decisions of health technology assessment agencies, which may raise serious social and ethical issues
  • the possibility that the costs of regulation and claimed benefits to the health system may lead to the loss of research productivity and innovation from a more open environment; indeed the losses here may swamp the regulatory benefits.

I think keeping patients in the dark, as some have written, leads to greater system costs, and perverse consequences and incentives, than full and open disclosure to the public of medicines information, and indeed, even advertising. In an open environment, claims are tested in the real world and can be taken into account in whole-system benefits realisation, not exactly something that is designed to create an additional layer of regulation. In the end, the patient is excluded from playing an informed role in their own healthcare.

Want to know more?

Keeping Patients in the Dark, by Cardy, Edwards and Gay, Civitas, 2000. (Amazon sells it)

Benefits and harms of direct to consumer advertising: a systematic review, Gilbody, Wilson, Watt, Qual Saf Health Care, 2005 Aug;14(4):246-50.

Direct to Consumer Advertising is legal in the US. This is some material from the FDA: Information for Consumers:

US Congressional Budget Office, Potential Effects of a Ban on Direct-to-Consumer Advertising of New Prescrption Drugs, May 2011, Economic and Budget Issue Brief.

Whither the state? Should we await creative destruction in Europe and are there lessons for healthcare?

Map of countries by public debt from CIA 2009 ...

Green is good = lower public debt

Vito Tanzi’s book on the modern state “Government versus Markets” is a mine of fresh perspectives. His subtle challenging of the ability of governments to intervene in market failure is thoughtful — when is market failure simply an excuse for hyperactive civil servants to do something, rather than clear evidence of a problem? And not to speak of motives as we are familiar with the ‘rent-seeking’ behaviour of public bodies/officials which can frustrate efforts to streamline and prioritise public services.

European governments are today the cause of considerable global anxiety with their bloated state bureaucracies, high levels of taxation and disincentivised, but pampered (subsidised) industries. It is instructive to reflect that a large component of state debt arises from their healthcare sectors; that much Greek debt lies in the capital funding of hospital construction, and that rising taxes in France are designed to protect social welfare and health benefits through the regressive social charges (contribution, in French).

Tanzi also challenges the scale of modern governments, as a percentage of the economy.  An article by Neil Reynolds, writing in Toronto’s Globe and Mail started the discussion. (lead article here) A subsequent article in The Globe and Mail listed the following countries as a short list of small state sector countries: (specific reference here):

Hong Kong: Population: 7.1 million. GDP: $302-billion (U.S.). Per-capita GDP: $42,748. Unemployment: 5.3 per cent. Inflation: 0.5 per cent. Five-year compound average growth rate: 3.1 per cent. Percentage of GDP spent by the state: 18.6 per cent.

Singapore: Population: 4.8 million. GDP: $240-billion. Per-capita GDP: $50,523. Unemployment: 3.0 per cent. Inflation: 0.2 per cent. Five-year compound annual growth rate: 4 per cent. Percentage of GDP spent by the state: 17.2 per cent. Singapore requires its citizens to buy their own health and employment insurance – a requirement that has produced an exceptionally high level of savings and one of the richest countries on Earth.

Chile: Population: 17 million. GDP: $243-billion. Per-capita GDP: $14,341. Unemployment: 10.8 per cent. Inflation: 1.7 per cent. Five-year compound annual growth rate: 2.8 per cent. Percentage of GDP spent by the state: 21.1 per cent.

Costa Rica: Population: 4.6 million. GDP: $35-billion. Per-capita GDP: $11,579 (the highest in the country’s Central American neighbourhood). Unemployment: 7.8 per cent. Inflation: 5.8 per cent. Five-year compound annual growth rate: 4.5 per cent. Percentage of GDP spent by the state: 20.9 per cent. (Costa Rica is running a deficit these days – keeping tax revenue as a percentage of GDP to 15 per cent.)

Taiwan: Population: 23.1 million. GDP: $736-billion. Per-capita GDP: $31,834. Unemployment: 5.9 per cent. Inflation: 0.9 per cent. Five-year compound annual growth rate: 2.5 per cent. Percentage of GDP spent by the state: 18.5 per cent.

Now, returning to healthcare, these countries also tend toward healthcare systems that are not social insurance or national taxation based, but are what some authors (see S-Y Lee and C-B Chun, The National Health Insurance system as one type of new typology: the case of South Korea and Taiwan. Health Policy  2008 Jan;85(1):105-13. Epub 2007 Aug 20. Abstract here) are called “national health insurance systems”, characterised by a large government interest through establishing rules and standards, but mainly private delivery, with high co-payments, consideration patient choice, and rising levels of investment. These emerging successful, small state sector economies may also be inventing an affordable and sustainable healthcare system, which could be explored in more detail in European countries as they grapple with public debt. The current financial crisis in Europe, entails the need for root and branch reform of the largest elements of public expenditure — health and social care, university funding, etc. — along with venting the gaseous expansion of the regulatory state.

It will be difficult for European-level policymakers to engage in sensible policies when key drivers of cost are driven at the member state level. An obvious example is Spain, where the debt resides at the regional level, but the policy tools for that debt are owned by the national government. To illustrate, Castille La-Mancha can’t pay the pharmacists for drugs, so pharmacists are asking patients to pay cash. (article here: scroll down to find the specific reference).

Having 19th century sized governments, does not entail having 19th century healthcare.