1Robert McMaster is Professor of Political Economy in the Adam Smith Business School at the University of Glasgow. He is interested in institutional and social economics and has attempted to use the insights from those fields in analyzing issues of the governance of health and medical care, and public ownership. Since 2005 he has been a co-editor of the Review of Social Economy. With John Davis he is currently working on a book – Health Care Economics.
2Revue de la régulation: You are one of the most important researchers in heterodox health economics. What are the main characteristics of your approach and could you describe the way you got engaged into this topic?
3Robert McMaster: First, I am extremely flattered to be invited to contribute to the Regulation Review in this way. Second, I would take issue with your elevation of me as an “important researcher in heterodox health economics”. There are other far more eminent scholars than me who have advanced the development of alternatives to mainstream health economics. Economists such as, John Davis, Evelyn Forget, Geoff Hodgson, Stephen Jan, Joshua Cohen, John Latsis, Philippe Batifoulier, Paul Anand, and Michael Keaney have made substantial contributions to critiquing health economics and to the early stages of developing alternative insights. Other distinguished scholars, such as Allyson Pollock, have made important interventions in policy debates in the provision of health care, especially in the UK. I’d also like to single out the later work of Gavin Mooney, who tragically died a few years ago. Mooney was a very notable pioneer in mainstream health economics. For instance, he was at the forefront of conceptualising the agency relationship in the literature, and authored numerous articles and books in health economics. However, his last major work – Challenging Health Economics (2009), sought to not only articulate an excoriating critique of the state of mainstream economic approach to health, but offer an alternative based on communitarianism. Mooney is inspirational in developing a richer economic approach to health issues.
The approach I adopt in examining issues of health are informed and shaped by various complementary schools of thought. Institutional economists’ (the real original institutionalists in the Veblen-Commons tradition) emphasis on the importance of institutions in socio-economic affairs is an obvious source of insight, particularly given that the provision of health care – in its widest sense – is moulded by institutions as social rule systems.
John Davis’ (2003, 2011) social economics work on the conception of the individual highlights the importance of the notion of the socially embedded individual, which resonates strongly with institutionalist work in this area, and the notion of collective intentionality. Concisely, there is a significant distinction between “I” and “we” language that implies differential obligations and roles on an individual employing such language. This, as John and I have argued in a number of publications, is of particular importance in the context of medical care provision.
The late Fred Lee’s argument that economics is the science of social provisioning is key, I feel, to developing an economic analysis of health and care. Lee (2009, p. 8-9) argued:
[Heterodox economic theory] is concerned with explaining those factors that are part of the process of social provisioning, including the structure and use of resources, the structure and change of social wants, structure of production and the reproduction of the business enterprise, family, state, and other relevant institutions and organizations, and distribution.
4Lee’s invocation of “structure” and “change” emphasises the relationship between economics, power structures, cultural values, and hence ethical frames. In effect, Lee advocated a return to political economy, which I share, as this would afford the opportunity to broaden and deepen the economic analysis of health and care.
An example of this relates to the notion of care. Indeed, this is a further major influence on my approach. The care literature is wide-ranging, drawing from: medicine (including nursing); political philosophy; feminist theories; sociology; education. Beyond feminist economics, there is arguably a notable absence of any coherent references to care in economics, including heterodox approaches. It appears that economists frequently conflate care with altruism. This, I believe, does not fully appreciate the complexities of care and caring. Modern conceptions of care recognise its instinctive and socially constructed properties. Our ability to care is partially predicated on our social roles and the values embedded within those roles. Critically this is influenced by the configuration of institutions within a society. Thus, physicians’ inclinations and ability to care is shaped by their institutional settings. The political philosopher, Joan Tronto (2013, p. 19) offers an expansive definition of care, attempting to develop an overarching conceptualization, and emphasizing the nested nature of caring activities within a broader caring framework:
On the most general level, we suggest that caring be viewed as a species activity that includes everything that we do to maintain, continue, and repair our ‘world’ so that we can live in it as well as possible. That world includes our bodies, ourselves, and our environment, all of which we seek to interweave in a complex life-sustaining web. (original emphasis)
- 1 Veblen’s approach was based on a multi-tiered conception of the mind: instincts; habits, and consci (...)
5On this, care is a set of ethically framed activities that are frequently other-directed. As Veblen recognized, care is instinctive, but it is also a learned disposition associated with social positions1. In other words, altruism is neither a necessary nor sufficient condition for care and caring. I feel this is an important insight that can inform the analysis of health care institutions.
A further influence on my thinking in this area comes from the sociology of medicine, which arguably has a longer history than health economics as a sub-discipline. The emphasis of the social and cultural impacts of the medical professions, how they produce knowledge and influence practice as investigated in medical sociology has considerable resonance with institutionalist and social economics approaches.
My interest in the economic approach to health was stimulated while an undergraduate student – I selected an optional course in Health Economics – and I continued with this, from a more policy perspective in my PhD thesis.
6RR: There has been large discussions among economists about what should – and what shouldn’t – be considered as a specificity of health care. What is your opinion?
7Robert McMaster: My view is informed by the highly insightful, but much neglected Kenneth Boulding (1966) article: The Concept of Need for Health Services. In this paper, Boulding makes a number of very telling arguments, two of which I emphasise here: there are profound differences between needs and wants, and the notion of ‘health’ is partly socially constructed.
For Boulding, demand represents individual choice and autonomy, whereas need refers to the choices of others made on one’s behalf, and hence the absence of autonomy. In the case of medical care, demand is for expertise and knowledge. This demand is derived from what Boulding terms as a “homeostatic need”, and the perception or knowledge of this. Homeostatic need is described as what is required to maintain the functionality of a given system. In outlining this, Boulding draws a comparison between cars and humans – both need fuel of various types, produce waste, are subject to physical deterioration, and both involve professionals to address these needs; especially the effects of physical deterioration. Boulding notes that basing need on homeostasis is never successful, as no matter the nature and combination of inputs, “virtually all known organisms and organizations exhibit the phenomenon of aging … Aging introduces a very tricky problem into the concept of need for maintenance” (Boulding, 1966, p. 206-207): when is it appropriate to cease maintaining something? Boulding argues that this is problematic enough with a machine, where present value calculations can be used, but one of “excruciating delicacy” in the case of a human being.
Boulding’s rejection of rejects the Cartesian mind-body dichotomy (frequently considered to inform the roots of Western medicine) is important. The Cartesian dual posits that an individual is a compound of two distinct entities – res cognitas (the mind) and res extensa (the body). The duality is complete; the two are ontologically separate as the mind has no corporeal properties, and the body has no cognitive properties: the soul and the body are entirely different substances, with the body imprisoning the soul. This is manifest in Grossman’s (1972) model of the demand for health. Grossman depicts the body as a stock of capital, which the ‘mind’ of the individual can choose to invest in on the basis of a cost-benefit analysis. Instead, Boulding suggests that the mind and body are inseparable; they constitute what it is to be a person, and hence are intrinsic to our humanity. Therefore, the body cannot be an instrument in the same way as a machine, or stock of capital. This then reveals the importance of dignity as a moral factor in the provision of medical care in a way that is not immediately the case with the Cartesian, or (Grossman) health economics’ interpretation of the body.
Boulding (1966, p. 213) explicitly alludes to the social construction of illness and health, especially mental health, stating, “health is a matter of social definition”. He refers to Samuel Butler’s (1872) satirical and fictional Erewhon, a society where crime is treated by medical doctors and illness by the police. Boulding’s point is that power relations in society shape what is healthy and moral, and what is illness and immoral. In doing so, he recognizes profound conflicts in medicine. Medical provision focuses on the individual; even public health centres on environmental factors that may have some effect on an individual’s health. Yet, for Boulding there is little attention given to “societal health”, which he describes as the factors that influence the health of the whole of a society. Boulding inquires whether the concept of illness can be applied to moral and political ideas that adversely affect the health of society, noting that individuals may be healthy while society is sick.
I think Boulding provocatively conveys the argument that the definition and description of health is complex and nuanced. It is partly a reflection of power relations in society – as Ian Kennedy (1981) and Ivan Illich (1976) famously analysed. Therefore, the health of the individual cannot be disentangled from underlying social issues. Indeed, Amartya Sen (2002) presented an argument that health was embedded in wider issues of social justice. Others, such as Gavin Mooney (2009) chastise mainstream health economists for their focus on narrow conceptions of health without sufficient emphasis on the social influences of health. In my view, Mooney’s criticism is well-founded and part of a broader concern over the medicalization of social ills.
Nonetheless, there are health economists who do, or who have considered such matters. For instance, Michael Grossman’s (1972) analysis distinguishes between a demand for health and health care. Health care is defined in functional and instrumental terms as a derived demand for improved health. It encompasses those goods, services and activities where the principal purpose is either to prevent deteriorations in, or improve health. As Grossman observes, such an activity, or range of activities is the not sole preserve of medical practitioners, and can be usefully associated with the individual and the household as well as other institutions. Therefore, a broad interpretation of health care permits a distinction between it and medical care. Similarly, Jeremiah Hurley (2000) makes the same distinction, noting that health care can relate a host of activities and regulations – ranging from the construction of motorway crash barriers to the provision of vaccinations – that are intended to prevent harm and thereby enhance health, and medical care is a distinct aspect of wider health care. Grossman and Hurley essentially acknowledge the importance of public health; yet health economics almost entirely concentrates on medical care. As Len Doyal and Ian Gough (1991) note, public health initiatives have been far more influential in enhancing health than advances in medical care. Accordingly, health economics isn’t really about ‘health’ in its widest sense.
Given the foregoing, I feel that it is important to recognize that medical care is nested in broader health care. As a bye-line, there is an interesting juxtaposition: the nomenclature ‘health economics’ over-claims its parameters of interest, by contrast, ‘medical sociology’ is far more accurate in its.
8RR: According to Mark Blaug (1998, p. S65) “health economics would seem to be a perfect topic for heterodox dissent … health economics is a ﬁeld which must make the average neoclassical economist squirm because it challenges his or her standard assumptions at every turn”. What do you think of such a view?
- 2 Hume’s analysis has been adopted by economists, most prominently advocated by the likes of Lionel R (...)
9Robert McMaster: I couldn’t agree more! I also feel that, as some health economists readily acknowledge, that medicine represents a profound challenge to the standard economic stance invoking the Humean dichotomy2. Medicine and health are profoundly normative issues, and providing an economic analysis of health and medicine cannot be insulated from this.
More specifically, standard health economics, at least as I understand it, is an applied field of neoclassical economics. Three central characteristics can be highlighted: First, health economics’ analytical entry point is to conceive of health (medical) care in terms of market exchange: medical care, and in some cases health, is a commodity. Health economists typically discuss departures from what are considered to be standard market conditions in the provision of health care as ‘market failures’. Second, health economics assumes homo economicus with constraints – usually in the form of information asymmetries, which may be captured in adapted forms of the standard agent-principal approach. Third, primarily through the construction of a Quality Adjusted Life Years (QALYs) scale, and other similar instruments, health economics attempts to generate cardinal utility measures that can be employed as a means of assessing the value of alternative treatment interventions and thereby inform decisions on allocating resources. Much of health economic activity centres on developing such economic evaluations.
The foregoing presents a number of ethical and methodological issues, to which, of course, Mark Blaug referred. Here I want to focus on two: the role of the patient and the consequentialism of health economics.
John Davis and I (2007) have argued that there is a tension within the standard model: rational physicians are assumed to be motivated by self-interest, and their other-regarding behaviour, by virtue of interdependent utility functions, signals trade-offs between their economic and ethical motivations. Yet by the terms of the standard approach, economic motives dominate ethical ones. Thus, the position of the patient is especially precarious under this formulation. Concern for the patient is always subject to being crowded out.
Beyond this, the epistemological approach of standard health economics has more profound implications for the patient. The reductionist nature of physician and patient utility functions are such that patients are subsumed as an argument of physician utility functions; patients therefore effectively lose their independence and identity as distinct individuals. In effect, the distinction between physician and patient is reduced to trade-offs within the physician’s utility function. Indeed, there is no theoretical requirement for the patient in the standard approach – an argument I expand on a little, in Question 4, below.
Health economics is consequentialist in its orientation, especially in its economic evaluation techniques. Following Evelyn Forget’s (2004) excellent historical analysis of health economics, in which she identifies its utilitarian root, this is hardly surprising. Consequentialism, however, has some well-known drawbacks. For instance, there are extensive measurability issues; a focus on outcomes relegates (or disregards) the value of process and actions in themselves; there is a relegation of distribution, and so forth. Perhaps a further concern is that with health economics’ narrow focus there may be a danger of medicalising social problems in the manner alluded to previously. Indeed, there are critics, such as Hildred and Beauvais (1995) who have argued that economic evaluation techniques are highly misleading, since data provides an “aura of scientific precision”, which diverts attention from the social dimensions of preference and choice.
When teaching health economics I endeavour to ensure that students are aware of these concerns about health economic evaluation measures. It’s not just their explicit assumptions, but the underlying philosophy that should be subject to more extensive scrutiny; certainly when such procedures are applied to resource allocation issues in medical care systems.
10RR: In a paper with John Davis, you argue that the individual is “persona non-grata” in mainstream health economics. Could you present the core propositions of your thought?
11Robert McMaster: John Davis and I (2007) argued that mainstream health economics’ conceptualisation of the individual provides a reductionist and restricted account of complex interactions and human psychology. Drawing from Davis’ work on the individual in economics, instead we advocate an alternative conception of the individual as socially embedded rather than autonomous. Individuals seen in this way cannot be explained solely in instrumentally rational terms, because they exercise shared or collective intentions regarding decision-making in social groups. Expressing shared intentions commits individuals to shared obligations that reflect their membership in communities. This is not a matter of a constraint on or argument in individuals’ utility functions, as health economists assume, but is a form of deontological rationality tied to participation in a community.
Health economics does not give the conception of the individual any particular emphasis. Instead, issues of efficiency are at the centre of most discussions. As in neoclassical economics generally, the individual is presumed to be autonomous or atomistic, have exogenous preferences, and be instrumentally rational. We distinguish two broad approaches to the individual in standard health economics: the first embodies all of the foregoing, whereas the latter queries the ability of agents to make informed choices thereby weakening the standard view. For instance, under the conditions of the more dynamic Grossman model of demand, the individual retains sovereignty and remains in some form an unchanging entity, despite changes in his or her combinations of health stocks and preferences. By contrast, in health economics’ principal-agent and extra-welfarist approaches, individual autonomy is diluted through the interdependence of utility functions and a relaxation of individual sovereignty arguments. But this interdependence is subject considerable ambiguity. As noted, the ad hoc nature of the clinician and patient utility functions operates so that patients are subsumed as an argument of clinician utility functions and therefore effectively lose their independence and identity as separate individuals. As John Davis and I argue; the functional divide between clinician and patient is reduced to trade-offs within the physician’s utility function. There is no theoretical requirement for the “patient” in health economics when patient utility is no more than an argument in the clinician utility function.
We believe that this may have some important policy implications in terms of querying the drive for market-oriented reform in medical care systems. The patient becomes “persona non grata” as output measures and efficiency dominate managerial goals. Of course, this is by no means a unique criticism, but we do emphasise that the metric of health economics may have profound implications for the valuation of individual dignity. Indeed, the argument of our paper resembles Susan Himmelweit’s (2007, p. 585) observation of the impact on care from pursuing an efficiency rubric:
Caring because it is the development of a relationship, is manifestly an activity … in which the output is the care itself … This means that it is hard to raise the productivity of caring.
12RR: The NHS has become more market-oriented in the 1990s. What according to you is the downside of such a trend? Why do you think a market-based strategy is deceptive and inadequate?
13Robert McMaster: I think the situation is a little more nuanced. Since the 1999 devolution of powers in the UK (assemblies were established in Northern Ireland and Wales, and the Scottish parliament was re-established following its suspension in 1707 as part of the Treaty of Union that formed the UK), arguably the trajectory of health policy has diverged across the constituent parts of the UK. In England, there has undoubtedly been a suite of policies that have encouraged either the greater use of market-type metrics and/or employment of the private sector within the National Health Service (NHS). For instance, in the 1990s governments of various hues introduced the private finance initiative (PFI), which in effect compelled health authorities to commission private sector firms to construct and maintain any new capital projects. Crucially in many cases this resulted in the ownership of these assets, including hospitals, residing in the private sector with NHS authorities leasing them. The notable work of Allyson Pollock (2004) is highly critical of the financial arrangements governing such contracts, arguing that they have inflated costs and compromised quality.
A further example of market orientation in the NHS in England is the recent Health and Social Care Act (2012), which relinquishes the duty of central government to ensure the provision of medical care. Instead, this responsibility falls to local authorities and other quasi-autonomous NHS bodies, such as the newly established NHS Commissioning Board, over particular localized areas. The legislation also opens up the possibilities for such bodies to introduce charges for treatments and for privately funded medical provision.
By contrast, in Scotland PFI was abandoned in 2008 with the implementation of a new approach that relied on either state funding or a mix of state and non-profit contributions (the non-profit distributing model) from other bodies or consortia as part of the Scottish Futures Trust (SFT) model of investment. The SFT is an autonomous body, established by the Scottish Government in 2008 with a responsibility for delivering value for money across all public sector infrastructure investment in Scotland. Other examples of a divergence with policy in England, include; the abolition of prescription charges for medicines. This charge is means tested in England (and had been in Scotland). Other user fees have also been either reduced or abolished in Scotland. Examples include; parking charges at NHS hospitals, NHS dental charges, and eye examinations by registered optometrists.
There are a number of criticisms that may be levelled at a market-oriented approach, including; the costs of the additional bureaucracy required to oversee a more contract-based system of provision; the possibility of undermining the ethos of the founding principles of the NHS, and the potential for medical practise to become more focussed on crude performance indicators thereby potentially crowding out those activities that are not readily measurable.
14RR: What are you working on?
15Robert McMaster: With John Davis I am currently working on a book project – Health Care Economics. Our draft statement of aims is to criticize how standard health economics has disregarded care in its analytical approach. We attempt to advance an approach that places care at the centre of an economics of health. Our argument demonstrates that the standard approach in health economics cannot provide an adequate conception of care as it inadequately conceives of the individual. The overarching aim of the work is to contribute to a reconfiguration of the economic approach to health by advocating conceptions of care and the individual that address the shortfalls of mainstream analysis. By doing so, the book argues that the importance of care should be appropriately recognised in policy as a means of enhancing the dignity of the individual.
The work presents and develops an alternative approach to the economics of health care, where care is analytically privileged. We develop an analysis that embraces value issues as opposed to eschewing them. Health and medical care are profoundly normative concerns. By its traditional invocation of the division between the positive and normative domains, economics cannot provide a sufficient analysis of, and therefore valuation of care. Accordingly, economic analysis and policy advice in health care distorts the pattern of health and medical care provision. By providing deeper insights into the nature of care and caring this work seeks to redress the shortcomings of the standard approach and to contribute to the development of a more person-based approach to health and medical care in economics.
16RR: We all look forward to reading this new opus and thank you very much for this interview.