In 1990, a genial project was announced by James Watson, the co-discoverer of DNA and head of the National Centre for Human Genome Research at the National Institutes of Health (NIH) in the United States. The purpose would be, over a period of 15 years, to extract the complete genome of human beings.
It was a big project and received support and funding from big governments. As with all such projects, it would be difficult to measure exactly how rapidly such a project could be run and at what cost. Pitched as being equivalent to landing a man on the moon, 15 years and a budget of $3 billion seemed completely appropriate.
In 1998 a gauntlet was thrown down which had the impact of an earthquake in a glassworks. Craig Venter, and his firm Celera Genomics, declared that they would produce the genome in a fraction of the time of the public effort, and for only $300 million.
In 2002, the genome was completed, ahead of time and under budget.
How much does any good cost? What happens if the good concerned is expensive and important? Back in 1990, governments felt justified in financing the Human Genome Project because, it was felt, private companies would see no value in the results and could not carry the cost.
Craig Venter and his investors thought differently. That Celera Genomics lost a fortune on the endeavour is unimportant (except for the investors). By competing with the state, the company saved taxpayers a fortune.
And there’s the problem for single-payer entities; without competition it is frequently impossible to calculate what something should cost. The original, publically-funded, approach to sequencing used “heierarchical shotgun” sequencing, in which small chunks of DNA are sequenced and then reassembled. It is slow and methodical.
Venter’s team used “whole genome shotgun sequencing”. It was the innovation that allowed sequencing to proceed faster and cheaper.
Costs aren’t static. Competition drives not just cost-saving through streamlining of processes, but also innovation in the processes themselves.
Healthcare is considered no less a public good than the human genome. There are numerous ways in which governments attempt to finance this good. The effects are difficult to measure, given the scale and lack of symmetry in implementation.
The most heated discussion is that in the US.
The Economist has an in-depth analysis which I won’t go into, but I will summarise. The US system costs 16% of US GDP, and leaves some 15% of the population uncovered by healthcare. The UK system of national health covers everyone, and costs 8.4% of GDP. Life expectancy in the US (a crude measure of the benefits from healthcare) is 77.8 years, while in the UK it is 79.1.
However, in the US five-year mortality rates for cancer are dramatically better than in the UK.
Healthcare in the US is both rapid and effective; however, it is not available for everyone. This lack of comprehensive care turns up in the life-expectancy rates. In the UK more people have care, but it is of a slightly lower quality.
The debate in the US has become crippling and ugly. People with care, no matter what it costs, are scared of seeing that care rationed or downgraded.
Of course, capitalist systems already ration scarce things through high prices. So the argument of rationing (whether by the state, or through high fees) is moot.
The structure of paying for healthcare is critical to the debate. Whether governments, insurance companies or individuals pay for care, the money is ultimately derived from company profits and individual salaries. The problem isn’t about who pays, but how payment is made.
If there is a single-payer (whether public or private) then competition is stifled and innovation stops.
The sad truth is that the rest of the world free rides on the expense and innovation of the US system. Healthcare companies generally use the US as the place to introduce their new products, test them out, build scale and then take them to the rest of the world once the costs have been covered.
If the US moves to a single-payer as well, then innovation will plunge.
What is needed is a system that encourages sufficient competition to promote both innovation and cost-containment, without making the competition so extreme that it excludes so many from care.