One of the first names that we Spanish health economists encountered when we began our journey through this discipline, back in the 80s, was Victor Fuchs. “Who will live?» His most influential work had been published in 1974 and constituted an essential treatise to begin to understand the enormous scope that this novel and almost unknown application of Economics could have.
Fuchs was above all an analyst, a respected thinker – the “dean” of American health economists, according to the title. New York Times in his obituary -, that he lived a long life (when he died, on September 16, 2023, he was four months short of his 100th birthday) and that he worked well beyond the usual retirement age. In fact, he was elected president of the American Economic Association in 1995, when he was 71 years old and had just retired to become a professor emeritus at Stanford University.
It is relevant to note that when Fuchs wrote “Who will live?” He was already 50 years old. It is, therefore, a work of maturity, a complete, almost philosophical reflection on the males that plagued the American health system and the choices (individual and collective) that determine who lives and who dies. Not in vain, in 1990 Fuchs was elected member of the American Philosophical Society.
To continue contextualizing, let us remember that Fuchs was a contemporary of Kenneth Arrow (they were just over a year apart), and both were New York Jews and colleagues at Stanford. Yes Arrow – recognized among us as the great pioneer of health economics – won the Nobel Prize in 1972 for his contributions to the theory of social choice (see his book ““Social choice and individual values”), the full title of Fuchs’s book is “Who will live? Health, Economy and Social Choice”. The idea that we choose, both individually and socially, is the guiding theme behind the book and all of Fuchs’s subsequent contributions.
The emphasis on collective choice, and the political conflict that this entails, distinguishes him from many other North American authors of the time, who tended to place more emphasis (and responsibility for the state of health) on the individual – an idea taken to its maximum. by Michael Grossman with his thesis that the individual can invest/disinvest in his own health so that he can almost, almost, choose the length of his life. For Fuchs, the most important thing is that society chooses the social order it wants; and from there, economics can help analyze the consequences of this social order for the construction of the health system and the rules that govern access to it.
Its economic perspective is most orthodox: it is about recognizing that resources are finite and that, therefore, we must choose, always constrained by a framework of restrictions. The levels or spheres of choice range from the broadest, the choice between large social objectives such as, for example, growth or health (“Modern Times” is my favorite movie to explain this) to the individual level (lifestyles), going through the various ways of acting on health (medical care being only one of those ways) or the multiple choices that must be made within the scope of health services.
With this basic instrumentation, in “Who will live?” Fuchs accurately analyzed the features that characterized the American health system and highlighted its main problems – many of them shared with other systems. He was one of the first to emphasize that the market is not an efficient solution for the provision of health services, that more health spending does not always lead to better health, that the high average benefit of medical care does not imply that its marginal benefit is equally high. (There Fuchs did not take into account, as he rightly criticizes J. Harris in his book review published in 1976, the important function of caring and learning by doing which has part of the medical care. Although, by the way, we also owe this distinction between “healing” and “caring” to Fuchs). He warned of the power of the “technological imperative” driving medical practice and the persuasiveness of the quasi-monopolistic pharmaceutical industry. And he also put his finger on the issue by pointing out that the US had a position in the international life expectancy ranking below that of other developed countries, despite dedicating a substantial part of GDP to the health sector. The problem, according to him, was the very high costs and waste in the North American health system.
Indeed, Fuchs’ most notable contribution was to point out unequivocally that the centerpiece of the system is the doctor: his behavior and his incentives. Doctors, as suppliers, control and even create demand (remember their nice parable/rant against those who denied the existence of induced demand) and the absence of effective demand is one of the main reasons for the imperfection (one could say cancellation) of the functioning of the market. Given the central role of doctors and the asymmetry of information, this is where action must be taken according to Fuchs. He proposes changing the perverse incentive of payment per act – or retrospective reimbursements to hospitals – and advocates capitation as a form of payment. Furthermore, he criticizes that, since remuneration depends on the sophistication of the inputs used, and not on the results, doctors have a powerful incentive to specialize rather than dedicate themselves to much more efficient primary care. I don’t know if he and Alan Williams met, but possibly they did, and they certainly shared many ideas and diagnoses, such as the myth of clinical freedom or the false conflict between medical ethics and economic logic.
Fuchs was also sensitive to the great inequalities and injustices that characterize the American health system, based on private insurance. But in his recommendations he never became truly radical and questioned the established social order or advocated a profound reform of the health system. He defended a universal insurance system with competition between private insurers offering capitated plans of diverse coverage. But without explicitly addressing in depth the issue of financing and burden sharing. Although he was concerned about inequality, like his contemporary J. Rawls, Fuchs was not an egalitarian. Perhaps because in the dilemma between efficiency and equity, he gave more weight to the efficiency and prosperity that could presumably be better developed under a system of free enterprise. Or perhaps because he was well aware of the difficulties of implementing radical reform following the European model.
What he says in 1994 in a interview with the editor of Western Medical Journal, in the midst of discussing President Bill Clinton’s reform proposal. When asked what the most important objective of the reform is, Fuchs answers that it is to stop the growth rate of health spending. Given the interviewer’s point: “Is universal coverage not important?” Fuchs replies that it is important, but secondary in political importance, because many people are in favor of universal coverage as an abstract concept, but they do not agree with the subsidies and mandatory nature that would be required to achieve it.
In that interview, Fuchs does not go further, but he was well aware that the mayor’s stumbling block to reforming the American healthcare system was politics. this article Delaware news week masterfully portrays the positions of key conflicting interest groups. The powerful American Medical Association (AMA), as well as the hospital industry (which already at that time managed a volume of money greater than that of the Pentagon) were not opposed to the universality proposal (after all, more business for them), but they flatly rejected the new controls and the reform of the payment system that came with it. Specifically, global budgets for hospitals or capitation payments for doctors. Something that, however, Fuchs defended. We all know that the battle was won by the lobbies – including that of the insurance industry.
In its presidential speech To the American Economic Association in 1996, Fuchs lamented that the vast availability of empirical evidence on many of the issues under debate had not been sufficient to approximate partisan positions. To find out why health economics had not been able to exert a greater influence, he had prepared and sent a questionnaire to three groups: health economists, theoretical economists and practicing doctors. The questions were of two types: “positive”, about empirically testable knowledge, and “normative” – incorporating value judgments and opinions. Although there was considerable agreement among health economists about the positive questions, they showed great disagreement regarding the political-normative questions attributable, according to Fuchs, to differences in ideology and values. Perhaps because of this, or because they did not know how to adequately transmit their knowledge, there were also large differences in the other two groups, even regarding the positive questions. It was not surprising that these disagreements were also reflected in the positions of politicians and journalists, key groups in the reform debate.
Following the guidelines of Fuchs’ work, in 2000, Jaume Puig, Vicente Ortún and Silvia Ondategui carried out a similar research, adapting the questions to the Spanish context, and replacing theoretical economists with the group of managers. The degree of consensus among Spanish economists on the positive questions was only slightly higher than the consensus on the values and policies questions. And although the differences between the three groups were smaller than in the US, the conclusion was equally pessimistic about the ability of health economics to contribute to more rigorous, evidence-based health policy.
When Fuchs wrote “Who will live?”, the US spent 8% of GDP on health and the complaint, from him and others, was that despite spending more than any other country, the level of health was not what was desired; Now the US spends more than double that (17%) and the complaint remains the same. Needless to say more.
