Building a national Health System: Learning From Other Countries' Mistakes

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 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. Theories which argue that economic theory does not apply to health care- the argument that doctors induce unnecessary demand for their hold up. In terms of broad policy conclusions, the international empirical evidence suggests that shifting doctors from free-for-service to capitation reduces their productivity and that preventive care, while good for patients, cannot be counted on to reduce costs. 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.