Worstall @ the Weekend A few weeks back I pointed out that the US has the second largest social welfare system in the world. This produced a certain amount of pushback (journalistic speak for me whining to El Ed that you commentards are shouting at me) over the fact that a good part of that is the woeful healthcare system in said US.

So, as the New Year hangovers finally, gently, fade away, why don't we consider what it is that we really do want in a healthcare system. And even, well, who manages to do this quite well?

Do not fear, we are not about to find that the answer is the US. That really is God's Own Clusterfuck of a system. All the problems of a market system and almost none of the benefits. Quite how any nation can manage that is beyond belief.

To start with, we should probably note that nobody really actually sat down and planned their healthcare systems. When economists discuss this sort of thing they peer over their glasses, mutter “path dependence” and then move on to simpler subjects.

The point they're trying to make is that sometimes shit just happens and which turd depends upon what has been eaten beforehand. With healthcare systems the general view is that they didn't actually do very much before about 1940. They might provide bed rest and hydration (hey, don't knock it, still the basic treatment for both flu and Ebola), and quarantine of certain infectious diseases, but not hugely more.

It was really only with the introduction of broad spectrum antibiotics that what we now regard as a proper healthcare system began to be possible. There had been huge increases in levels of public health in the preceding century but this was mainly attributable to better diets, sewage, clean water, changes of clothes to beat lice, and so on.

By nationalising all extant healthcare facilities and calling them "the NHS", the NHS performed healthcare in extant facilities

The path dependence bit here is that various countries cobbled together their systems from the ideas that they had to hand as that technological change came through. Over in the US, FDR had imposed (and managed by JK Galbraith) price and incomes controls to deter inflation during WWII. However, perks were not considered incomes to be controlled.

Thus American companies competed for labour by offering (tax free!) healthcare insurance. Thus when a proper healthcare system really became technologically possible, that's the system they went with: employer provided and tax free healthcare insurance. Over here in Blighty we had an almost Stalinist mindset about these things.

For example, George Orwell had TB and there was a new American drug (another of the new antibiotics) which was having some success in treating TB. He got some, was treated, was allergic to it (his fingernails fell out), stopped the treatment and died.

However, how he got the drug is informative. He had some US dollars, in the US, royalties from the US sales of one of his books (1984 I think? Or maybe Animal Farm, either is darkly humorous when connected to this story). Yes, sure, the UK was broke after WWII, foreign currency was at a significant premium but it was his money after all.

Yet when he applied for permission (Oh Yes! Permission to spend your own money in a foreign land was required) he was refused. So he asked again, having the odd contact, and a deal was agreed in which he could only spend his own money on his own drugs if he also bought more to treat other patients. Which he did – some were cured and he wasn't.

Maybe that's a fair enough reaction from the government and maybe it isn't but in a time when that was considered normal behaviour there's nothing really odd about the government of the day deciding to create the NHS as a centralised and monolithic state entity.

By nationalising all extant healthcare facilities and calling them 'the NHS' (please do note, they didn't “build” the NHS, the first NHS-built hospital didn't open until 1963), the NHS simply performed healthcare in extant facilities).

Other countries similarly built their healthcare systems with what was to hand in the form of resources and extant ideas. That's the theory at least and it explains some of the variance we've got over the different countries.