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Source: Incongruities 61

rather than up. Costs have risen much faster than services—perhaps
three or four times as fast. The demand will continue to rise with the
steady growth in the number of older people in all developed countries
over the next thirty years. And so will the costs, which are closely tied
to the age of the population.
We do not understand the phenomenon.* But successful innova-
tions, simple, targeted and focused on specific objectives, have
emerged in Great Britain and the United States. These innovations are
quite different simply because the two countries have such radically
different systems. But each exploits the specific vulnerability of its
country’s system and converts it into an opportunity.
In Britain, the “radical innovation” is private health insurance, which
has become the fastest-growing and most popular employee benefit. All
it does is to enable policyholders to be seen immediately by a specialist
and to jump to the head of the queue and avoid having to wait should
they need “elective surgery.”† For the British system has attempted to
keep health-care costs down by “triage” which, in effect, reserves
immediate attention and treatment to routine illnesses on the one hand
and to “life-threatening” ailments on the other, but puts everything else,
and especially elective surgery, on hold with waiting periods now run-
ning into years (e.g., for replacing a hip destroyed by arthritis). Health
insurance policyholders, however, are operated on right away.
In contrast to Great Britain, the United States has so far tried to sat-
isfy all demands of health care regardless of cost. As a result, hospital
costs in America have exploded. This created a different innovative
opportunity: to “unbundle,” that is, to move out of the hospital into sep-
arate locations a host of services that do not require such high-cost hos-
pital facilities as a body scanner or cobalt X-Ray to treat cancers, the
highly instrumented and automated medical laboratory, or physical
rehabilitation. Each of these innovative responses is small and specific:
a freestanding maternity center, which basically offers motel facilities
for mother and new baby; a freestanding “ambulatory” surgical center
for surgery that does not require a hospital stay and post-operative care;

*This is brought out clearly in the best discussion of the health-care problem that
has appeared so far, and the only one that looks at health care across national bound-
aries, in all developed countries. It is given in The Economist of April 29, 1984.
† Surgery for complaints that yield to surgery, will not improve without it, but
are not “life-threatening.” Examples are cataracts, hip replacements and orthopedic
surgery generally, or a prolapsed uterus.