Sunday 5 September 2010

Wanted: A New Abacus For The NHS

It's little wonder that the NHS is struggling to balance its books when very few of its layer upon layer of administrators seem capable of accurate mathematical forecasting.

To be precise, for a 'service' which performs umpteen thousand risk assessments every day, they appear to have real trouble with properly assessing the risk of future costs. Perhaps they should invest in some well-qualified actuaries like the pensions industry do.

Smokers and people with weight problems are buying a tailored pension income in greater numbers, according to research.

Enhanced annuities provide bigger pensions for those with serious medical conditions or lifestyle choices that might lower their life expectancy.

[Andy Sanders, senior consultant at Towers Watson, said] "For those lives that do not qualify for an enhancement, average expectations of life are longer and need to be reflected in lower levels of pension income offered."
Yep. They have realised that even in a market which doesn't enforce extra premiums on the 'unhealthy' (such as pigovian/sumptuary taxes), it is the clean-living who will create more of a financial burden on the industry in the future, simply by generally living longer.

Yet, from every area of our nationalised health system, we continually hear tales of how much extra smokers, drinkers and the overweight 'cost' the NHS compared with those who abstain, despite the years of nil cost which the pensions number-crunchers have identified.

They can't both be correct, and maybe it is the pensions sector who are doing things wrong, so let's look at the evidence.

Well, one is an industry which is highly profitable, and lives and dies by the quality of its financial acumen and budgetary restraint, whilst the other has had its budget increased regularly year on year but still can't seem to make ends meet.

Hmmm, whaddya think?


Gordon the Fence Post Tortoise said...

You might want to take a look at this....

Mark Wadsworth said...

I take it that your comment about the state not imposing 'sin taxes' is ironic?

Dick Puddlecote said...

Interesting (and scary) link, Gordon.

MW: No, I was pointing out that the pensions industry doesn't receive sin tax income, yet still finds that healthy people cost more. The NHS says the opposite despite the existence of such taxes.

Gordon the Fence Post Tortoise said...

Dick, On the basis that we ape pretty much everything that happens across the pond. Looks like we're gonna get screwed.... again.

I do wonder if the good doctor is sending us a hint about what to do with NHS administrators in the headline graphic though.

The link in the comments makes one wonder if any insurance /privatisation can work effectively too - a conundrum?

hangemall said...

Parkinson's Second Law states "Expenditure rises to meet income."

If you keep giving them money, they will find more and more stupid things to spend it on.

SimonF said...

I think you're conflating two issues. Of course as smokers your pensions will be cheaper/pay out higher premiums because of reduced life expectancy.

But now go and buy health insurance, that will be more expensive.

Not that I don't agree with the two netting off as far as state provided services are concerned and that you pay more anyway in sin taxes anyway.

Ciaran said...

SimonF - health insurance that covers you in full FROM NOW UNTIL YOU DIE will be more expensive for a smoker/greasy burger eater/other 'unhealthy' pariah? No chance. It will be MUCH cheaper.

You are confusing cost over the next year with cost over a lifetime. Do you work for the NHS?