It’s January, so the NHS is in crisis again. Waiting times in accident and emergency departments are ‘soaring’, elective surgery is frequently postponed, and there has been talk of medical students being ‘drafted in’ to help. Some commentators point to ‘Australian flu’ as a novel pressure, but the number of hospital admissions with the virus is so far only around 500, and this moderate increase in demand does not explain why the NHS has lurched from crisis to crisis for decades. The traditional response for many on the Left is to point to underfunding or ‘creeping privatisation’ as the root cause of the problem – an inevitable consequence of the electorate’s failure to respond to the warning, repeated at every election, that there are just X hours/weeks/months to ‘save the NHS’ by voting Labour. The belief that a substantial increase in funding and banishment of private sector providers will solve the problems of the NHS is a seductive one, but with each cycle of crisis/funding increase/new crisis, the old mantra becomes less tenable, and those with an interest in comparative health policy analysis begin to think the previously unthinkable thought: that the problem lies not in underfunding, but in a nostalgic commitment to a model of health care introduced in 1948 which, despite attempts at reform, remains fundamentally unchanged.
One of the reasons for this nostalgia is the deeply engrained belief that access to health care should not be constrained by inability to pay. The number of people who can recall health care before the NHS is rapidly shrinking, but the United States continues to provide a contemporary example of what can happen when universal coverage and collectivised risk are not provided. The US health care system serves the same purpose for the NHS as the Soviet economy served for American capitalism during the Cold War: providing a stark example of what can go wrong if we fail to defend at all costs the established model. The potency of this apparent dichotomy as a brake on reform cannot be underestimated. For many, any attempt to reform the NHS is seen as an existential threat to the values that underpinned its creation, and grounds for ‘circling the wagons’ in their defence. The fervour with which this belief is held to is almost religious in character. Deciding health care policy has become a moral crusade, replete with ‘angels’ and ‘daemons’, and the belief that any amount of suffering must be endured to preserve the faith and avoid damnation. In the past evidence based policymaking has failed to dent the belief that there is no alternative to the ‘true religion’ of the NHS. Only now, when people’s lived experience of the failings of the NHS is a daily occurrence, and the traditional solution of ever-greater increases in funding seems unachievable, has the policy window begun to creak open and allow different approaches to be considered.
Puncturing the myths
Before examining alternative models of health care provision it is worth considering the evidence behind some of the claims that are routinely made about the NHS. Again, comparisons with the US, which spends a great deal on health care, but achieves relatively poor outcomes have tended to dominate public discussion. The UK spends considerably less than the US, but if we look at all OECD countries, then the picture is rather different. The US spends a staggering 17.2% of GDP on healthcare, but the second highest, Switzerland, spends just 12.4% – and the average for the OECD is 9%. The UK spends 9.7% of GDP on healthcare, considerably above the OECD average and not far behind higher spenders with the exception of the US (OECD, 2017).
The amount that should be spent on health care is a moot point, but most would agree that whatever the amount, it is essential that the resources are used efficiently to achieve the best quality of care and optimal outcomes for the money spent. A second myth about the NHS is that it is the envy of the world in terms of achieving good health outcomes, but it is on this question of efficiency that the case against the NHS is strongest. Assessing efficiency is a complex task, not least in deciding what to measure. Health outcomes can be influenced by factors other than health care provision, which has led some analysts to focus on process measures, such as whether care is ‘patient-centered’, or the adoption of information technology. The much-publicised Commonwealth Fund study (Davis et al, 2014) claimed that on process measures of this kind the NHS is the greatest health care system in the developed world. Unfortunately, as Dr Kristian Niemietz, Head of Health and Welfare at the Institute of Economic Affairs, has pointed out, the Commonwealth Fund report only looked at one health care outcome: ‘mortality amenable to medical care’, that is how good the health care system is at keeping people alive. On this key indicator the UK came 10th out of the 11 countries analysed (Niemietz, 2016). The poor performance of the NHS on hard measures of health outcomes, like cancer survival rates, is often below the OECD average, often ranking alongside countries that spend far less on health care such as Estonia or the Czech Republic (OECD 2017).
Why is it, then, that despite spending above the OECD average on health care provision, the UK underperforms so badly in terms of health outcomes? For some, this is an inevitable result of ‘creeping privatisation’, as an increasing number of private providers put profits before patient care. Again, the suggestion is that the NHS is being undermined by private involvement and that this must result in US-style inefficiency and poor performance. Analysis by the King’s Fund (2015) suggests that the NHS is far from being privatised. Only 10% of NHS spending goes to non-NHS providers and this includes local government, not-for-profit organisations and the voluntary sector as well as for-profit organisations. With 90% of NHS care delivered by NHS providers, it seems unlikely that the recurrent crises are a consequence of privatisation. Other universal health care systems with better health outcomes than the UK, such as those found in France and Scandinavian countries, have a significantly higher rate of private provision.
The recent collapse of the Carillion Group, which among a broad portfolio of government contracts also provides services to the NHS, will doubtless be held up as an example of the instability of private providers and the need to bring such contracts ‘in house’ – but there are other factors to consider. If Carillion’s difficulties are a result of poor management, is it not preferable that the company should fold, and that its contracts and employees should be taken on by a more competent provider? State provision is rarely exposed to such ‘creative destruction’ and while this may avoid the costs and disruption of closure, it also means that badly managed services are allowed to continue unchecked. There are other lessons to be learned about how the private sector can be successfully deployed in providing public services. Not only is it important to have a plurality of different providers to compete for contracts, it is also important to ensure a plurality of commissioners. The NHS has a monopoly over the commissioning of public health care in the UK, which enables it to drive a very hard bargain with private providers like Carillion – thus reducing profitability to unsustainable levels and discouraging other providers from entering the market. Systems that have a pluralistic mix of social and private health insurance schemes avoid monopoly in provision and commissioning, thus enabling the market mechanism to work efficiently and equitably.
Towards the unthinkable
Comparative health care policy analysis shows us that other countries are able to achieve better health outcomes than the UK, often by spending a similar or lower proportion of GDP on health care. Many face similar pressures in terms of an ageing and increasing population and the rapidly escalating costs of high-tech medicine. There are several reasons why other countries are able to achieve this, but they have one thing in common: none have adopted the NHS model – a monolithic state provided system, funded from general taxation – even though most (with the exception of the US) are able to offer universal access to health care. A key to this success is the ability to embrace pluralism, by combining state oversight and moderate regulation with the dynamism of private provision. Compulsory social or private health insurance, with state provision to fill in the gaps, provides the basis for many health care systems that consistently achieve better outcomes than the NHS and avoid the recurrent crises to which the NHS is prone. Rather than a supplicant, waiting for an appointment or hoping for a referral, the patient becomes a customer able to shop around among different insurers for a form of service that is appropriate for them. Some might opt for a policy that reduces their annual premium by making a small charge for, say, attending a general practitioner, while others will choose free appointments but a higher premium. Similarly, some will choose plans that are expensive but provide better ‘hotel’ services, while others will choose to minimise costs.
The extent to which government chooses to regulate such arrangements is a matter for political discussion, and again there are varying degrees of regulation in different national systems. Ensuring free access to health care for those who are unable to pay is entirely compatible with the adoption of a pluralistic insurance-based health care system that allows genuine choice to the majority of patients, drives up standards through competition, and encourages providers to be more responsive to needs and preferences.
How do we get there?
The main lesson of NHS reform is that it is not possible; at least in terms of the top-down model of radical organisational change driven by bureaucratic imperatives. The system is simply too monolithic and the vested interests too powerful for this approach to succeed. Instead of another major re-organisation or five-year plan, what the UK health care system requires is a gradual process of incremental changes over time, which allows for bottom-up innovation and gives different parties time to adjust to change. The term ‘creeping privatisation’ is often used disparagingly, perhaps because it implies changes introduced by stealth – but as a model for change it has advantages over top-down planning. Rather than the radical privatisations of, for example, state owned utilities, it offers a more incremental approach. Opening up NHS provision to any competent provider is an important component, enabling commissioners to gain competence in commissioning and allowing the number of potential providers to grow over time. These small incremental changes at the margins, if properly managed, allow mistakes (such as incompetent providers) to be identified and dealt with while they remain small and peripheral. A similar approach should be taken to the development of social and private health insurance schemes. Rather than attempting to monopolise health insurance, government should limit itself to monitoring and regulation and creating a legislative framework that facilitates a gradual transition from the current tax-based system to a more pluralistic mixed economy of private and social insurance. Tax relief for people who choose to transition to an insurance-based system would be an example of such enabling. Existing NHS facilities should be allowed to gain greater independence from state ownership and, where appropriate, make the transition to the private sector.
This gradual process of health care reform, based on evidence of what works best in other countries, would not solve the problems of the NHS overnight or bring about an immediate end to the recurrent NHS crises. Inevitably, there would still be political battles to be fought and strong opposition from vested interests. There is, though, no feasible alternative. A radical shift towards an insurance-based system would be electorally unpopular and would almost certainly fail. But maintaining the status quo, propping up the NHS with above-inflation spending while relative performance deteriorates, is equally untenable.