Removing GPs' shackles just a start

National's release of their rather timid discussion document on health has been taken over by "revelations" that National intends to remove the cap on GPs' fees, and Helen Clark's lurid accusations of "a secret agenda." As I've always said when such accusations are levelled, "I wish!"

The system under which we live is neither socialism or capitalism, but something economist Ludwig von Mises calls a hampered market, a sort of mongrel mixture of capitalism and socialism -- and no market is more hampered or has more socialism (or more waiting lists) in it than NZ's health industry. An agenda to remove the shackles and some of the socialism would be fantastic if some party were to offer it, but uncharacteristically bold for Key's mob. And it's nothing like what's on offer.

What is proposed is remarkably amorphous, but seems a very limited freeing up, if at all. Talk of "partnerships," "smarter use" of facilities, lots of words like "adaptive, innovative and forward looking," but few details about how those delightful buzzwords might be applied in the area of actually delivering health services.

With so little to get excited about, wo wonder attention focussed instead on National's so-called secret plans to remove the cap on GPs' fees, a necessary but insufficient lifting of a restriction that should never have been imposed in the first place. We don't need caps on the price of clothing, hamburgers, beer, computers or newspapers; in each case the moderately free market sets rates, and keeps them down by the competition of the market. With low (or capped) prices, new entrants to the market are discouraged and supply goes down (just as we've seen in the market for GPs, especially in areas where costs are high); set your prices too high, however, and you invite new entrants to increase their market share at your expense.

The market is the great leveller, when (that is) it's allowed to work unhampered.

That said, the market for GPs is very far from unhampered. In fact the whole market for primary health care is seriously hampered -- to the extent almost of being in chains.

The level of National's timidity in proposing to unhamper that market (presuming that's the intent of the buzzwords) can be measured by a recent thinkpiece from 'The Economist' magazine titled: 'A spoonful of medicine helps the medicine go down,' which points out that

One of the many sources of high medical costs in the United States is the de facto monopoly of the American Medical Association in the distribution of licences to practice medicine.

The article explains that the American Medical Association has been "in a bit of snit lately by the emergence of medical clinics in drug stores staffed by nurse practitioners -- nurses with advanced degrees -- vested with limited powers of prescription," and in the same manner as one competitor will frequently seek out government force to close down his competitor, the American Medical Association has been trying to have these new medical clinics closed down.

Too much competition for them, you see. Prices being lowered by the market, you see. Not something the American doctors' trade union is happy with, you see. But to see 'The Economist' coming out in favour of removing this monopoly should be a lesson for many in how restrictions lessen service. (As one commenter says at the 'Economist' site: "It's interesting that in many industries without true monopolies (drugs, oil, etc.), the public blames the non-existent monopoly power for the problems there. But when there is an actual, honest-to-goodness monopoly like this one, there seems to be no mention of it at all.")

There's no need for the sacrifices, waiting lists, and shackled providers endemic under every hampered and socialist system, you see, sacrifices seen in abundance right across die-while-you-wait health systems such as ours. Anything to begin getting the socialism out of health would be a great thing. Tax credits for spending on health insurance for example. Or giving keys and the shares in local hospitals to communities to administer as they choose. Or removing the protectionism from the monopolies that are all-too endemic in all forms of disease prevention, health treatment and physical therapy.

Removing the cap on GPs' fees would be a very, very small start in that direction, if that is there are restrictions removed from new entrants into the market for primary health care to help keep GPs' pricing feet to the fire.

UPDATE: Naturally, David Farrar has more details of the discussion paper [and a link to all 51 pages]. Says Dave of the proposal to remove caps on GPs' prices:

Labour’s [imposition of] price controls on GPs has been part a 20 year battle by Helen Clark (she tried in the 1980s) to effectively nationalise GPs and make them de facto state employees. We’d be like the UK National Health Service and I suggest anyone who trumpets that service should be forced to go and use it.
The reality is we have a huge GP shortage, especially in rural areas. The thought of GPs making themselves filthy rich because they are the only GP in say Haast is a joke. We have real problems getting GPs into rural areas, even with the massive influx of foreign trained GPs.