Why does our society provide health services collectively rather than privately? Why don’t we all simply, as individuals, buy what we need (medicines, consultations, treatments, operations, etc) as and when we need them, rather than funding it all through the tax system?
What makes buying healthcare so different from buying groceries or flights abroad? We don’t have a national supermarket service, or a national holiday service. So why do we have a national health service? Why not let the market work its magic, balancing supply and demand, sending price signals, driving efficiencies and forcing up quality?
Unless you’re a market fundamentalist or a libertarian ideologue, the answers to these questions probably seem obvious. Yet they are nevertheless worth asking as the NHS turns 70 this week, since the answers can help us to appreciate the reasons for its foundation, to grasp the ways in which it falls short and also to see what we need to do to put the health service on a stable footing for the future.
First the economics. Health costs can be large and are often random. We don’t know when we might get sick and how much we might need to pay for treatment. Those features make the overwhelming case for some kind of insurance system, where such financial risks are socially pooled.
This doesn’t need to be done through a fully taxpayer-funded, publicly-owned, centralised system like the NHS. Several European countries have social insurance systems, where employees and employees make contributions and a diverse array of specialist independent health companies and hospitals supply the care in return for funds from the communal pot.
But if you want everyone to have access to healthcare, regardless of ability to pay, there does need to be a large element of taxpayer subsidy and a compulsion to participate in an insurance scheme. Leave it to “the market” and the market will fail, as the American experience shows. The US has a vast private health insurance infrastructure, but those features of compulsion and redistribution are lacking or incomplete, with the result that some 30 million working age Americans go without the health coverage they need.
It was to end this kind of grotesque inequality in access to healthcare that the NHS was founded by Labour in 1948. There are very good reasons for pride in that historic achievement. Seventy years ago it was not outlandish to suggest that the NHS was, in the words of its founder Nye Bevan, the “envy of the world”.
But is that true today? A report from various UK think tanks, including the King’s Fund and the Institute for Fiscal Studies, last week highlighted evidence that the NHS is lagging behind other systems on a number of health outcome indicators, ranging from cancer survival rates, to managing those with pulmonary disease to post-heart attack mortality.
A major cross-country study last year of amenable mortality – measuring the rate at which people die of conditions that could feasibly have been treated – showed the UK performing poorly relative to several other developed countries. Critics are probably right to say that paeans from politicians to the glories of the NHS unhelpfully distract us from this sobering reality. The important question is whether more money for the health service will improve outcomes, or whether there’s some kind of structural impediment.
We do spend less on health as a proportion of GDP than the likes of Germany, France, Japan and Sweden – countries that have tend to have better outcomes. It’s not unreasonable to hypothesise that we could get better results if we spent more, particularly on equipment such as scanners. The last eight years of gross underfunding for the health service relative to the demands being placed on it by an ageing population certainly provides powerful evidence that if we don’t significantly increase its resources, outcomes will deteriorate further.
It’s often asserted by right-wing newspapers and libertarian pressure groups that social insurance systems are much more efficient than the centralised “bureaucratic” NHS, with the implication that we can wring out better results without spending more if we would only commission more private providers, or impose radical structural reforms.
Yet, as last week’s think tank report also crisply spelled out, the NHS is actually very efficient relative to other systems, including those that have adopted the social insurance model. Despite the perennial complaints about managers, the NHS spends less on administration than comparable systems. It also prescribes more generic medicines, keeping the overall drugs bill down.
There is certainly scope for the NHS to learn from other successful health systems around the world. It would be the height of arrogance to argue otherwise – and would fly in the face of the evidence.
Incremental structural reform proposals deserve a hearing. Yet, at the same time, a wonderful birthday present for the NHS would be if we (finally) buried the beguiling and ideologically-inspired myth that we can have a health service fit for the 21 century, without collectively paying more in tax to fund it.
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