A national public health care system – how would you do it, if you had it to do all over again?

In 2008, Brian Ferguson, AIMS Fellow in Health Care Economics, was given just such an assignment. Asked to deliver the prestigious 2008 Annual Lecture of the Cyprus Economic Society and the Bank of Cyprus, Ferguson picked bits and pieces from existing systems. 

He explained that any country designing a national health system today has the advantage that virtually every structure which it might be considering has been tried, to some degree or another, by some other country.

Looking at evidence from those experiments in Building a National Health System, Ferguson says yields a number of broad conclusions. Most importantly, standard economic analysis applies in health care, as in other areas, in the sense that demand curves slope down and supply curves slope up.

He says theories which argue that economic theory doesn’t apply to health care – the argument that doctors induce unnecessary demand for their services in order to boost their incomes, for example – are generally found, on careful analysis, not to hold up.

In terms of broad policy conclusions, Ferguson writes that the international empirical evidence suggests that shifting doctors from fee-for-service to a fee cap reduces their productivity and that preventive care, while good for patients, cannot be counted on to reduce costs.

He says that while suppliers of health care do respond to incentives in the same general manner as do suppliers of any other products, the private sector should not be seen as the enemy of a national health system. Private insurance and private supply can function as part of an efficient, universal national health care system.

To read the complete Commentary, click here.