By Angus Deaton
National Bureau of Economic Research, March 2018

Abstract

I respond to Atkinson’s plea to revive welfare economics, and to considering alternative ethical frameworks when making policy recommendations. I examine a measure of self-reported evaluative wellbeing, the Cantril Ladder (a tool for self-assessment of wellbeing with ladder steps numbered 0 to 10), and use data from Gallup to examine wellbeing over the life-cycle. I assess the validity of the measure, and show that it is hard to reconcile with familiar theories of intertemporal choice. I find a worldwide optimism about the future; in spite of repeated evidence to the contrary, people consistently but irrationally predict they will be better off five years from now. The gap between future and current wellbeing diminishes with age, and in rich countries, is negative among the elderly. I also use the measure to think about income transfers by age and sex. Policies that give priority those with low incomes favor the young and the old, while utilitarian policies favor the middle aged, and men over women.

Conclusions

This paper takes up Atkinson’s challenge to bring back welfare into economics, and to do so in a way that does not have to deny the findings of modern behavioral economics. It also thinks about how policy varies with different ethical assumptions. It uses Gallup’s data on the Cantril Ladder measure of life evaluation as a measure of (period) utility, and examines the implications for welfare variations by age. I find a midlife dip in wellbeing in rich countries, but less or no evidence of it elsewhere.

Overall, only some features of the ladder are consistent with life cycle theory if it is interpreted as a period, or age-specific wellbeing measure; it is much harder to interpret it as a lifetime measure. People’s expectations of the ladder five years ahead are grossly inconsistent with those reports being the mathematical expectations of future period utility; throughout the world, people are generally over-optimistic about the future, except for the elderly in rich countries, who are generally over-pessimistic about the future. These findings are of considerable interest, but cast doubt on the idea that people arrange their consumption and labor supply to maximize the expected integral of age-specific utilities, at least if utilities are well measured by the Cantril Ladder as recorded in Gallup’s surveys. This does not, by itself, invalidate the ladder itself as a measure of period age-specific wellbeing.

Finally, I illustrate what the ladder measure would imply for distributing income by age, and how the choice of the ladder versus income interacts with different ethical frameworks. In the United States, income prioritarians will tend to favor redistribution towards elderly or young adults, whose incomes or per capita incomes are lowest. By contrast, utilitarians will favor those for whom marginal utility is highest, which turns out to be those in midlife, and especially men over women, a prescription that would be enhanced by giving additional priority to those whose wellbeing is lowest, also those in midlife. Both approaches would favor men over women. I make no prescriptions here, but am concerned only to show the possibilities that arise from having a direct measure of wellbeing. I also am responding to Atkinson’s challenge by emphasizing and illustrating that policy prescriptions depend, not just on measurement, but on ethics, a point that is not always given the weight that it should be when economists discuss policy.

As in the happiness literature in general, my findings are mixed; the Cantril Ladder is clearly useful, is not obviously inconsistent with standard notions of period utility, and allows us to say things about welfare and distribution that we could not say using standard revealed preference methods. It does not assume that people do not make mistakes. Reported expectations of future wellbeing are consistent with the widespread finding of optimism bias in psychology, but inconsistent with the rational expectations formulation that is standard in much of economics. Whether this is an advantage or a disadvantage will surely differ according to preference and disciplinary background.

http://www.nber.org…

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Comment:

By Don McCanne, M.D.

Although this NBER working paper by Nobel laureate Angus Deaton is quite wonkish it is an interesting analysis of self-assessment of current and anticipated future well-being under variables of age, sex, wealth, and nationality. For a blog on single payer reform, this paper does have some application since perception of well-being might be an important attribute related to a nation’s health care system.

But that is not why this paper was selected for a Quote of the Day, rather one sentence extracted from the paper expresses a truth that is too often neglected in the policy community:

“I also am responding to Atkinson’s challenge by emphasizing and illustrating that policy prescriptions depend, not just on measurement, but on ethics, a point that is not always given the weight that it should be when economists discuss policy.”

We hear a lot of policy recommendations, but all too often it is difficult if not impossible to identify the ethical imperative. In contrast, the ethical imperative permeates the single payer model of reform.

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By Karen Pollitz, Michelle Long, Ashley Semanskee, and Rabah Kamal
Kaiser Family Foundation, April 23, 2018

Late last year, Congress repealed the Affordable Care Act’s individual mandate penalty, the requirement that individuals have minimum essential health coverage or face a tax penalty.  Starting in 2019, the tax penalty will be reduced to $0.  It is possible this change could lead more consumers to consider purchasing short-term policies.  In addition, late last year, President Trump issued an executive order directing the Secretary of Health and Human Services to take steps to expand the availability of short-term health insurance policies, and a proposed regulation to increase the maximum coverage term under such policies was published in February.  This brief provides background information on short-term policies and how they differ from ACA-compliant health plans.

Background

As the name suggests, short-term health insurance policies are not renewable.  Whereas federal law since 1996 has required all other individual health insurance to be guaranteed renewable at the policyholder’s option, coverage under a short-term policy terminates at the end of the contract term.  To continue coverage beyond that date requires applying for a new policy.  As a result, an individual who buys a short-term policy and then becomes seriously ill will not be able to renew coverage when the policy ends.

The Affordable Care Act (ACA) exempted short-term policies from market rules that apply to most major medical health insurance policies sold to individuals in the non-group market: rules that prohibit medical underwriting, pre-existing condition exclusions, and lifetime and annual limits, and that require minimum coverage standards.  By contrast, short-term policies:

* are often medically underwritten – applicants with health conditions can be turned down or charged higher premiums, without limit, based on health status, gender, age, and other factors;

* exclude coverage for pre-existing conditions – policyholders who get sick may be investigated by the insurer to determine whether the newly-diagnosed condition could be considered pre-existing and so excluded from coverage;

* do not have to cover essential health benefits – typical short-term policies do not cover maternity care, prescription drugs, mental health care, preventive care, and other essential benefits, and may limit coverage in other ways;

* can impose lifetime and annual limits –  for example, many policies cap covered benefits at $2 million or less;

* are not subject to cost sharing limits – some short term policies, for example, may require cost sharing in excess of $20,000 per person per policy period, compared to the ACA-required annual cap on cost sharing of $7,350 in 2018; and

* are not subject to other ACA market requirements – such as rate review or minimum medical loss ratios; for example, while ACA-compliant non-group policies are required to pay out at least 80% of premium revenue for claims and related expenses, the average loss ratio for individual market short-term medical policies in 2016 was 67%; while for the top two insurers, who together sold 80% of all short-term policies in this market, the average loss ratio was 50%.

From the Discussion

Short-term health insurance policies offer lower monthly premiums compared to ACA-compliant plans because short-term policies offer less insurance protection.  Medically underwritten policies can only be purchased by people when they are healthy.  Individuals who buy short-term policies and then develop health conditions will lose coverage when the contract ends.  Short-term policies typically do not cover essential benefits, such as prescription drugs, and often apply dollar caps and higher deductibles on coverage that are no longer allowed under ACA-compliant individual market and group health plans.  As a result, people who buy short-term policies today in order to reduce their monthly premiums take a risk that, if they do need medical care, they could be left with uncovered bills and/or find themselves “uninsurable” under such plans in the future (though they would be able to buy ACA-compliant policies at the next open enrollment period).

To the extent that healthy individuals opt for cheaper short-term policies instead of ACA-compliant plans, such adverse selection contributes to instability in the reformed non-group market and raises the cost of coverage for people who have health conditions.  Income-related premium subsidies in the non-group market offset the cost differential, and so help correct for adverse selection to a significant extent.  Lower-income people would be protected by the premium subsidies, but middle-income people not eligible for subsidies who buy ACA-compliant plans would likely see premium increases.  So far, the individual mandate penalty also has helped offset the cost differential between short-term plans and ACA-compliant plans, though this will disappear starting in 2019.  The combined effect of repealing the individual mandate penalty and the administration’s efforts to promote the sale of short-term plans could result in fewer people signing up for ACA-compliant plans and higher premiums in the ACA-compliant individual market, potentially adversely affecting the stability of the ACA-compliant individual market.

https://www.kff.org…

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Comment:

By Don McCanne, M.D.

President Trump has issued an executive order directing that steps be taken to expand the availability of short-term health insurance plans. Although there is a general recognition that these short-term plans are more limited than plans regulated by the Affordable Care Act, this policy brief from Kaiser Family Foundation explains just how severe the deficiencies in coverage are and the negative impact that they will likely have on more comprehensive plans that are compliant with the Affordable Care Act.

People will buy these plans because the premiums will be less, but most will suffer significant financial hardship should they be faced with severe acute or chronic conditions.

Why are President Trump, HHS Secretary Azar and CMS Administrator Verma not only supporting but actually encouraging these plans? Is there a rational reason, or do they share some form of psychopathology? Whatever it is, we need to fix the problem by enacting and implementing a single payer national health program – an improved Medicare for all – and do it as soon as possible.

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Consumers for Quality Care, Ipsos Survey, March 13-25, 2018

From the executive summary

* Americans are acutely worried about paying for health care – even more than they worry about costs associated with retirement, college, housing, or child care.

* What people pay is the main pain point: Americans are more concerned about premiums, deductibles, and co-pays than they are about access to care or quality of care.

* When asked who is responsible for their out-of-pocket costs, Americans mostly blame insurance companies, pharmaceutical companies, and the federal government.

Q20: I am going to read you a series of statements. For each one, please tell me if it makes you more or less likely to support a candidate for Congress.

Would vote for candidates who support…

Health care companies disclosing costs
84% – Democrats
84% – Republicans
83% – Independents

Lowering out-of-pocket costs for Rx drugs
83% – Democrats
85% – Republicans
80% – Independents

Passing pharma discounts to customers
80% – Democrats
83% – Republicans
84% – Independents

Improving and funding Obamacare
77% – Democrats
15% – Republicans
52% – Independents

Repealing Obamacare
28% – Democrats
68% – Republicans
48% – Independents

Single-payer health care
59% – Democrats
44% – Republicans
53% – Independents

https://consumers4qualitycare.org…

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Comment:

By Don McCanne, M.D.

This Ipsos survey confirms that Americans are still very much concerned about health care costs. What is perhaps of more interest here is what people think we should do about it.

There is still a sharp political divide on Obamacare with Republicans favoring repeal, Democrats favoring improving it, and Independents evenly divided. The divide seems to be based more on politics rather than policy.

The support for single payer seems to be about the same as other surveys have reported, though usually more Democrats than the 59% reported here are in support. Of note is that 44% of Republicans support single payer indicating that the single payer message should be targeted more broadly than just to progressives since there also is some significant support amongst conservatives for the concept.

What deserves special attention in this survey is the very strong support across the political spectrum for health care companies disclosing costs, lowering out-of-pocket costs for prescription drugs, and passing drug discounts on to patients. Although some might suggest that this indicates that Americans prefer incremental change, it more likely reflects the fact that it is easier to express support for one single beneficial policy issue at a time.

The nation needs to hear repeatedly just a couple of the specific policy issues that make single payer the moral imperative. We should work on that message, especially regarding affordability. For those whose attention we gain, we can elaborate on the full package.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Direct Primary Care Coalition

Direct Primary Care (DPC) is an innovative alternative payment model improving access to high functioning healthcare with a simple, flat, affordable membership fee. No fee-for-service payments. No third party billing. The defining element of DPC is an enduring and trusting relationship between a patient and his or her primary care provider.

https://www.dpcare.org

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Feedback on New Direction Request for Information (RFI) Released, CMS Innovation Center’s Market-Driven Reforms to Focus on Patient-Centered Care

CMS.gov, April 23, 2018

Today, the Centers for Medicare & Medicaid Services (CMS) announced that it has released the comments submitted by patients, clinicians, innovators, and others in response to the CMS Innovation Center’s New Direction Request for Information (RFI). Last fall, CMS released the RFI to collect ideas on a new direction for the agency’s Innovation Center to promote patient-centered care and test market driven reforms that: empower beneficiaries as consumers, provide price transparency, increase choices and competition to drive quality, reduce costs, and improve outcomes. The Innovation Center is a central focus of the Administration’s efforts to accelerate the move from a healthcare system that pays for volume to one that pays for value and encourages provider innovation.

CMS is sharing the feedback received to promote transparency and facilitate further discussion of how to move the Innovation Center in a new direction.

Today, CMS is also taking a next step to develop a potential model in the area of direct provider contracting, informed in part by the RFI. A direct provider contract model would allow providers to take further accountability for the cost and quality of a designated population in order to drive better beneficiary outcomes. Such a model would have the potential to enhance the doctor-patient relationship by eliminating administrative burden for clinicians and providing increased flexibility to provide the high-quality care that is most appropriate for their patients, thus improving quality while reducing expenditures.

As part of its process to gain further insight from the public in this area and ask more focused questions, CMS is issuing a follow up RFI. The information being requested is detailed in nature and is intended to provide CMS the data needed to potentially design and release a model in this area. CMS is excited to continue to evaluate the concept of direct provider contracting and is also focusing its attention on other areas guided by input and feedback from the New Direction RFI as well as the public.

https://www.cms.gov…

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Direct Provider Contracting Models – Request for Information

CMS.gov

The Centers for Medicare & Medicaid Services (CMS) is seeking broad input on direct provider contracting (DPC) between payers and primary care or multi-specialty groups to inform potential testing of a DPC model within the Medicare fee-for-service (FFS) program (Medicare Parts A and B), Medicare Advantage program (Medicare Part C), and Medicaid.

A DPC model would aim to enhance the beneficiary-physician relationship by providing a platform for physician group practices to provide flexible, accessible, and high quality care to beneficiaries that have actively chosen this type of care model.

The public is encouraged to provide feedback on their experiences with, and perspectives on, DPC and how CMS can use DPC models to reduce expenditures and preserve or enhance the quality of care for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) beneficiaries.

Please submit your comments to the CMS Innovation Center at DPC@cms.hhs.gov through 11:59pm EDT May 25, 2018.

https://innovation.cms.gov…

Request for Information on Direct Provider Contracting Models (9 pages):
https://innovation.cms.gov…

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Comment:

By Don McCanne, M.D.

This CMS notice is important. CMS is requesting public input on factors that should be considered in including a direct primary care model (DPC) in traditional FFS Medicare, Medicare Advantage, Medicaid, and CHIP.

DPC is a model in which a retainer (membership fee) is paid by a patient to a primary care provider to cover all included primary care services. No insurer or third party payer is involved although it is usually recommended that the patient obtain catastrophic (high deductible) insurance for expensive, specialized care beyond what would be provided in a primary care practice.

From the physician’s perspective, DPC eliminates controls on fees, whether by a government program or commercial insurance. The physician does not contract with an insurer, does not bill an insurer, and does not accept any limitations demanded by an insurer. From the patient’s perspective, direct access to the primary care professional is supposedly much more readily available.

Keep in mind that today’s high deductible health plans are quite expensive; the premium added to a significant retainer fee would not be affordable for the majority. The RFI will be important for the government to design its portion of a retainer fee plus costs of catastrophic insurance that it will pay for with Medicare or with the other government programs.

Also note that the retainer is a form of capitation rather than fee-for-service. For individual physicians or small groups, capitation poses a risk should the practice attract a larger percentage of patients with chronic diseases.

In the request for information (RFI) on DPC, CMS states that the goal of DPC would be to reduce expenditures (presumably for the government) while maintaining quality. Since government programs already pay less than commercial insurance, the prospect of further reductions in payments (inadequate retainer fee) should raise alarms for health care professionals.

But what should be even more alarming is that CMS states that DPC incorporated into the public programs would eliminate the administrative burden and provide increased flexibility in the provision of care. Their RFI suggests that, under this model, a retainer could be provided in which the primary care professional will bear all upside and downside risk in an environment with greatly reduced regulatory oversight. In a program designed to reduce spending, you can be sure that patients with greater health care needs – downside risk – would be avoided, shifting those patients to what is left of the traditional, taxpayer-funded Medicare program. And reduced oversight? The temptation would be very great to market a comfy, patient-friendly practice environment while remaining silent on more costly primary care services that are not being provided.

This obviously represents an attempt of the administration to decrease the role of the government as a payer and a regulator. This program, driven by conservative ideology, poses a great hazard to our traditional government health programs, especially Medicare.

Everyone who cares should look at the nine page RFI (last link above) and consider submitting a response, or, even better, have your various professional or advocacy organizations submit a formal response. Deadline is May 28, 2018.

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By Dan Diamond
POLITICO Pulse, April 20, 2018

On Monday, the HHS secretary was discharged from the hospital with a common intestinal infection known as diverticulitis. By Wednesday, he was back — the most high-profile hospital readmission in some time.

More than a few PULSE readers noted the irony: HHS is actively working to curb readmissions, even as the agency’s leader needed one himself.

The Affordable Care Act created a program to penalize hospitals with high readmission rates, which Obama officials argued would boost quality and cut costs.

And readmission rates have fallen — but there’s evidence that it’s partly because hospitals changed how they document patients, not necessarily improved care quality.

“I’ve always found the focus on readmissions to miss the bigger point,” says Harvard’s Ashish Jha, arguing that the real issue is how the U.S. health care system encourages hospitals to quickly send patients home. That approach has positives (many patients would prefer to recover at home) and drawbacks (some patients’ illnesses inevitable get worse).

Diverticulitis is also a common condition with a relatively straightforward course of care, notes Jha, a practicing internist. When a patient gets readmitted, “it’s almost never a failure of care coordination or fragmentation,” he adds.

https://www.politico.com…

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Comment:

By Don McCanne, M.D.

People who have conditions that require hospitalization frequently develop related problems after they are discharged from the hospital and then require readmission. Most of these readmissions are unavoidable.

Occasionally readmission is avoidable if lapses in followup occur such as ensuring that patients receive medications that are required to control their medical conditions. But even in those instances it often is not the fault of the hospital. The patient can have many reasons for being non-compliant, and the hospital can do only so much to improve that compliance. Of course, some hospitals, especially those serving as safety nets, have a greater population of patients who are less likely to be compliant regardless.

Yet hospitals are being penalized when their 30 day rates of readmissions are above a modest threshold. Many of these penalties are unfair since they are based on mere chance of falling on the wrong side of the bell curve.

Patients who return may not be formally readmitted, often to avoid the risk of a penalty, even though they may be treated as if they were. This has potential financial consequences for the patient since coverage is based on outpatient rather than inpatient payment rules. It may also disqualify a patient for convalescent facility care should it be required.

Why don’t we just pay fair prices for care that patients need? That is what a well designed single payer system should do. HHS Secretary Alex Azar should contemplate whether or not it was fair to potentially penalize his hospital simply because his physician thought that he should be readmitted.

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By Sachin H. Jain
Forbes, April 17, 2018

For decades, many have been dreaming of a revolution in healthcare based on the premise that making patients more accountable for healthcare costs—making them “consumers”—will result in higher quality and lower costs. It’s a brilliant vision. And smart people believe it makes sense. Except for one little detail: For many patients, it’s not a dream, it’s a nightmare.

Misplaced Conventional Wisdom

There is a conventional wisdom about patients that is inconsistent with the reality that many patients live. It starts with the premise that patients want to shop for healthcare like they shop for other goods and services. We assume patients want to go on-line and manage their health and make all of their own healthcare decisions. We assume they want to use rating ranking sites to make decisions about where to get their primary care and medicines. We assume they want to shop like it’s Black Friday.

The conventional wisdom continues with assumptions about the literacy, engagement, capability, and wealth. For many healthcare entrepreneurs, the median patient is assumed to be an MBA graduate with significant disposable income. The imagined patient has a “Type A” personality and wants to be obsessively engaged in every aspect of their health or healthcare.

And, on a related note, the conventional wisdom assumes high levels of digital literacy. The average patient has a sophisticated smartphone and multiple paired Bluetooth devices and knows how to use them. And would be able to improve their health if they just had the right tools to do so.

The implementation of this view is the proliferation of point solutions that aim to solve problems that we assume that patients prioritize: transparency of lab data, access to on-line medical records and easy access to appointment scheduling. While these are wonderful convenience features that we should undoubtedly adopt, they do very little to fundamentally change the healthcare cost or quality for consumers.

And they’re oddly implemented as an endless maze of disconnected portals, tools, and apps—few of which speak to each other and few of which delivers anything close to the value that we believe that they will. Either because patients don’t use them as intended, or they fail to capture the complexity of the broader ecosystem in which our patients live.

Masked Incrementalism

And there are many companies and startups that excite the people that are built on this vision of consumerism with clever tag lines that mask the incrementalism that underlies them. These are healthcare solutions that are really good for the 80% of patients who account for 20% of our healthcare costs. But the question is whether this perspective on the empowered consumer works for the 20% of patients who account for 80% of the costs.

Because if you are really trying to change the cost or quality equation in healthcare—you need to imagine a different consumer profile. One where the patient doesn’t want to be engaged in the traditional sense of the term—but where everything just works right for the patient. Where needs are anticipated and addressed before the patient or family can articulate them. One where we push beyond the superficial causes for problems—and dig far deeper into their root causes.

A Different View of Consumerism

CareMore, the company I lead, espouses a very different vision of consumerism. By way of introduction CareMore is a $1.4B Medicare and Medicaid delivery system that focuses on the care of more than 150,000 high-cost, high-need and vulnerable patients in 10 states. Our mission is to make health care more accessible, affordable and simple for the patients we are privileged to serve.

CareMore’s View

CareMore’s view of consumerism is grounded in the following simple ideas: 1) Healthcare should anticipate and deliver on consumers’ needs proactively. 2) Sick people should not have to shop for the care they need. 3) Consumers should not pay out of pocket for the things that they need.

Sick Patients Shouldn’t Have to Shop

Probably most controversial notion is the idea that sick people shouldn’t shop. But think about it. You’ve just been diagnosed with breast cancer. Multiple sclerosis. Diabetes. Do you want to be flipping through directories to find a doctor? Or do you want the appointment to be set up for you urgently with exactly the right specialists for your condition? Do you want the right durable medical equipment needed for your delivery to just show up or do you want to look through a website to pick your equipment? While I recognize there are a number of consumers—who given the opportunity to make these choices, would want to be in the driver seat—I would argue that most would not. They would want, most simply to just be cared for.

There is poverty in thought and intellectual laziness when we simply say consumers want to make these decisions.

https://www.forbes.com…

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Comment:

By Don McCanne, M.D.

In this article, Sachin Jain presents the fallacy of consumer-directed health care, that somehow the patient has the desire to use their own expertise and control of their own funds to shop for the best care available and in doing so will improve the quality and reduce the costs of health care. Jain explains that, instead, patients do not want to shop for their health care but would prefer that beneficial care be offered proactively without financial barriers that impair access to that care.

In other words, patients want the health care they need when they need it without having to shop in a complex health care environment in which they have little or no expertise. This is an argument for supporting a robust and efficient primary care infrastructure. Such a system should provide easy entry to appropriate technological and specialized services for patients with medical needs, not to mention being a source of preventive services.

It should be noted that the conclusion presented by the author, but not included in the excerpts above, is quite biased. Sachin Jain, MD, MBA is President and CEO of CareMore Health, a subsidiary of Anthem that provides Medicare Advantage and Medicaid managed care plans. Rather than framing the solution as primary care, in the rest of the article he essentially is marketing their private Medicare and Medicaid plans.

Although many of us at PNHP support integrating health care through a primary care infrastructure, we remain opposed to private Medicare Advantage and Medicaid managed care plans, especially those offered through a for-profit Wall Street corporation. The primary care professionals collectively, loosely arranged within a community and interacting with the specialized services and facilities available, or a community health center, or an integrated delivery system such as Kaiser Permanente, would be examples of the type of primary care infrastructure that would serve us well.

This comment clearly is not an endorsement of privatized Medicare or Medicaid, but it is a recognition that an individual representing the medical-industrial complex can still have the wisdom to recognize what a con the consumer-directed movement in health care has been. So we should to listen to everyone but reject the bad while implementing the good.

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By Chris Smyth
The Times, April 16, 2018

Hundreds of thousands of people will receive personal allowances of NHS cash to organise their own care as ministers seek to “put power back into the hands of patients”.

Far more people with mental health problems, dementia and physical and learning disabilities will have the right to select and pay for treatments they want. The money will be paid directly to them and can be spent on whatever that they think best helps to manage their condition, as long as a doctor agrees.

Veterans leaving the army and wheelchair users have also been promised the “personal health budgets” after complaints that care provided to these groups by the NHS is not good enough. Some such budgets run to tens of thousands of pounds.

The reforms will allow recipients to employ relatives or neighbours as carers, buy specific pieces of equipment, enrol in exercise classes or hire a personal assistant. The policy has been controversial in the past because such budgets have been spent on holidays, horse-riding lessons and aromatherapy.

At present 23,000 people have personal budgets in the NHS through a little-known initiative called NHS Continuing Healthcare, designed for those who need both social care and nursing. Now ministers want an “exponential” expansion of the right to have personal health budgets, taking the number up to 350,000.

Giving patients the personal responsibility for their healthcare on such a scale is compared by some to Margaret Thatcher’s decision to allow tenants to buy their council homes. The reform is also significant for combining money from the health and social care budgets, a wider goal for health reformers.

Caroline Dinenage, the care minister, said: “If you have complex needs our current health and social care system can be confusing, so it’s right people should be involved in the important decisions about how their care is delivered. These changes will put the power back into the hands of patients and their families.”

Some on the left fear that personal budgets will lead to privatisation of the NHS, as money is diverted from existing services based on consumer choice. Right-wing critics fear that the money could be spent frivolously.

The budgets have the backing of Jeremy Hunt, the health secretary, and Simon Stevens, the head of the NHS. Mr Hunt is preparing to lay out plans later this year to reform social care.

Ms Dinenage insisted that personal budgets for patients would “not only improve quality of life and the care they receive, they will offer good value for money for the taxpayer and reduce pressure on emergency care by joining up health and social care services at a local level.”

Ministers see the policy as a way to let individuals tailor their own care, circumventing cumbersome attempts to make fragmented health services work more closely together. They point to evidence that people’s health improves if they can spend NHS money on what matters to them, while cutting costs by 17 per cent on average by stopping expenditure on unhelpful treatment.

Supporters have defended purchases of computer equipment or football tickets, saying that such items can be crucial in helping people with complex conditions to thrive, with all spending signed off by doctors. Money for personal assistants and iPads can be justified if doctors think that this will help people to organise treatment or live independently, they say. The budgets cannot be spent on alcohol, tobacco, gambling, debt repayment and illegal activities.

Nigel Edwards, chief executive of the Nuffield Trust think tank, said that for people with suitable long-term conditions that were too complex for existing services there was good evidence that personal budgets worked. “It appears that giving people flexibility and choice over the care they require produces better outcomes for them [and does] produce some relatively modest savings,” he said. He added that concerns about “what happens if I take a personal budget and spend the whole lot on a world cruise” had so far turned out to be groundless. “There’s a danger of being closed-minded and saying ‘that’s not a real health need’ and not taking the wider view,” he said. “There will be examples of football season tickets, which get people upset, but I don’t think it’s systemic. Most of the money goes on direct care and is often justifiable.” Uptake of personal health budgets had been hampered by resistance from doctors, saying: “There is a slight suspicion of handing over control.”

However, Caroline Abrahams, of Age UK, said: “Older people in declining health with social care needs generally tell us they are not very interested in getting involved in organising the services they receive, they just want them to be effective and joined up, and delivered by kind and skilful professionals.”

John O’Connell, chief executive of the TaxPayers’ Alliance, said that “the NHS has been run in the interests of staff, not patients, so it’s very encouraging to see personal health budgets being expanded”, but cautioned: “The government can’t allow patients . . . to spend taxpayers’ money on ineffective treatments.”

https://www.thetimes.co.uk…

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Comment:

By Don McCanne, M.D.

The British National Health Service has established “personal health budgets” – personal allowances of NHS cash to “put power back into the hands of patients.” Their conservative government now intends to greatly expand the use of these accounts. Some fear that this represents an effort to further privatize the NHS – moving cash into the hands of patients while reducing funds for the already underfunded NHS.

These personal budgets have in common with our health savings accounts the concept that somehow patients will be better health care shoppers if they are using cash, but the improvement in the targeting of spending is largely negligible and only at the margin. Patients do not have the ability to judge the best value in most health care purchasing, not because they are not intelligent but because they are relatively uninformed (and, no, price lists do not provide patients the information that they would need).

NHS is a prepaid health care program that does not require payments associated with care received, and thus financial barriers to access are removed. That does mean that the government needs to be sure that adequate funding of the program is maintained and that services are upgraded (or downgraded) as appropriate. Services that are truly appropriate for health care should be funded by the program and not by relatively unrestricted cash accounts that can be diverted to worthless care or to pleasures that stretch the definition of therapeutic, especially when that cash is either a disbursement of government funds or represents a tax expenditure as with our HSAs.

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