Growing up in Canada, I often heard that profiting from illness was just wrong. Canada’s public health system generally banned private medicine. Whenever anybody pointed to systems like New Zealand’s, which provided better services by combining public and private provision, they would be shouted down.

So private doctors were banned from providing services that were also provided by the public health system. My great-grandmother consequently waited for a very long time for a hip operation. But at least nobody profited by alleviating her needlessly lengthy pain.

This week’s critiques of the government’s social bonds trial in mental health have been disorienting. It feels like I am back in Canada. Investors might profit by helping mental health patients into employment! Never mind that private hospitals profit by providing publicly funded surgery, private pharmacies profit by filling Pharmac scripts, and private medical device manufacturers profit by developing better replacement hips for publicly- and privately-funded operations.

It has also been disappointing to see the policy trial characterised as experimenting on the mentally ill. The government constantly tries new initiatives for helping different groups. If the policies are designed properly, they will be an experiment. But they also present the only real way of finding out what works.

The real experiment here is in the project’s funding: can the government write contracts for private delivery of desired social outcomes so that investors help in choosing the non-governmental organisations which can do the job well?

Done properly, this kind of outcome-based contracting encourages innovation. NGOs working at the coalface often know how to help their clients best, but are constrained by micromanaging ministerial oversight. A focus on outcomes leaves them free to innovate; plus, investor-backing means moves back to micromanagement would earn investor opposition.

There remain a lot of unanswered questions about the outcomes targeted in the contracts and how they will be measured. Jenesa Jeram will discuss some of these in her article in today’s newsletter. These design issues matter enormously, but have not yet been released. It would be really worthwhile if those who worry about outcomes for the mentally ill review the details carefully when they are released. But casting new job-placement programmes as “experimenting on the mentally ill for profit” is at the less helpful end of the spectrum.