The case for ditching the NHS



If the taxpayer-funded model is not politically workable, Britain should adopt a social insurance system

THE NHS is in a mess. Many studies suggest that it is worse than its European counterparts. Britain spends less on its health than do neighbouring countries with healthier populations. Even the one study regularly cited by the NHS’s defenders, that by the Commonwealth Fund last year, conceded that its main relative weakness was “its poor record of keeping people alive”. Some would argue that this specific particular matters quite a lot.

And things are getting worse. The government has kept spending on the health service flat as costs have spiralled upwards and spent less on related services like social care. As a result, £22 billion ($34 billion) of “efficiencies” (ie, savings) must be made just as the great Baby Boomer bulge of older, fatter Britons is beginning to get elderly and creaky in large numbers. One symptom of this, as I argue in my column this week, is Jeremy Hunt’s battle with junior doctors over their new contract: both sides make some decent points, but their deadlock means the NHS is on track for a doctors’ strike in December or January, when a winter crisis is already expected.

These problems are often couched in clinical or structural terms. And it is true that the NHS could become yet more efficient (it is already among the rich world’s leaner health systems). But ultimately the matter comes down to politics. Britain is supposed to love its NHS. But it does not spend enough on it. And though polling on the matter is somewhat mixed, it generally suggests that few Britons are willing to pay more in taxes for their health service. The Conservatives certainly seem to think that is the case: they are increasing NHS spending relatively little compared with the rise in demand. They could easily find the money to plug they gap if they felt that the existing underfunding of the NHS were politically untenable.

All of which begs the question: does Britain really love its NHS? I suspect that the reality is complicated: the various crises convulsing the health system with increasing regularity evince a deep shift in outlook among the British population. In the post-war years people felt united, common and responsible for each others’ well-being. Now that is much less the case. One can mourn the passing of that common feeling—as I do—but still acknowledge it as a fact. Instead politicians ignore it. Were they to face up to this reality, they would see that there are three main possible futures for the NHS.

The first one, the course on which the system is currently set, would see it gradually diminish: services deteriorating, waiting lists growing, wealthier patients bleeding off into the private sector and thus losing their interest in good, well-funded NHS services. This process could be slowed by structural reforms—shifting resources from cure to prevention, for example—but it would eventually occur nonetheless. Ultimately it would leave the NHS as a safety-net service used only by those who could not afford better.

The second one would see ministers confront voters with the harsh truth: the NHS needs more money if standards are not to fall. This might come in the form of a dedicated health tax, which polls suggest voters would prefer over a rise in other, generic taxes. It might come in the form of less-popular co-payments: charges for prescriptions, GP visits and so forth. These would, it is fair, curb unnecessary visits to hospitals and surgeries from people with nothing better to do. Yet doctors rightly fear that co-payments, or even measures to make users aware of the value of their treatment (they are already told how much their missed appointments cost the taxpayer), could dissuade those who most need to seek early medical attention—the old and frail—from doing so.

The third one would be to move to a system that better reflects what Britons are willing to pay for and what they are not: the social insurance model used in Germany, the Netherlands, Austria and other countries close, in outlook and geography, to Britain. Under this system a private market of health care providers would operate under strict government regulation, each citizen obliged to buy health insurance and the state covering that of those unable to do so. Unlike in America, no-one would go without health care for lack of funds. Unlike in Britain, users would choose between providers, take more responsibility for their own coverage and see a direct connection between what they paid in and the security that they got out. The downside of this model would be that it is probably less efficient than the NHS one: consider the transaction costs of all the claims, reimbursements, risk-premium calculations and so forth. The upside would be that it responds to the reality of how people like to acquire services. On that basis sensible politicians like David Laws, the former Liberal Democrat minister, have already advocated such a shift. Ireland is currently moving from a British-style system to a Dutch-style one.

I am as fond as anyone of the NHS. As a child I had a life-saving operation on it. Two of my closest relatives work for it. When living in New York I was disgusted by the cost (to my insurers, luckily for me) of my treatment for a fractured ankle. But like most Britons, I want the health service to work as well as possible for those who need it. And there are big questions about whether the model under which the NHS currently operates—and, perhaps more importantly, the political and cultural climate in which it operates—makes that outcome more likely than the alternatives. Britain should never give up the principle of universal health care. But it should recognise that it is not the same as the tax-funded NHS.



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