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How (not) to fix the NHS, part 1

There have been a handful of articles recently querying the model of healthcare that the NHS uses, and suggesting that we should pursue a continental model instead. Most commentators know enough at least not to suggest overtly that we go down the American route. But I am not sure that commentators always know enough about continental options to understand the differences between the NHS and, say, France or Germany – and more importantly, which differences are the ones that matter. France and Germany could have differences that lead to worse results than the NHS alongside differences (such as spending more) that are better as well as a context (a higher skilled jobs market, or a more equal country, or cleaner air) that is also better for health. So the overall result could be a population with better health and a healthcare system that obtains better outcomes, yet the differences that commentators point to could be ones that would make the UK’s system worse. We need to be very careful, therefore, when we call for change that we are calling for something that has widespread evidence of a strong effect, not something that happens to be present in a place where something else is causing the positive effect.


In this post I am going to briefly comment on a paragraph available for free from the Telegraph, as I don’t pay for the Telegraph so can’t read the whole article. In the next post I’m going to comment at more length on a post from the Daily Sceptic, as that is freely available.


The nationalised NHS model

The subject of this post is an article from the Telegraph by Vernon Bogdanor. The headline is “The nationalised NHS model was doomed from the very start”. The subtitle (?) says “If a National Food Service had been established in 1948 we would now too have to queue for low quality, rationed and monotonous produce.” In the first paragraph, Bogdanor references two principles: funding from taxation; and nationalised hospitals. According to Bogdanor, “The first principle limits the money available, while the second institutionalises a culture of complaint.”


As that is all that I can read, it seems that Bogdanor’s complaint is that there isn’t enough money going into the NHS and that there can’t be when the funding is from government rather than individuals; a nationalised service is necessarily low quality, limited in amount and limited in variety; and a nationalised service necessarily encourages complaint. Perhaps the rest of the article cites evidence to support these arguments. I am not sure, however, that Bogdanor is not indulging in post-hoc justification of an attitude he has already decided upon, because I’m certainly not aware of any evidence supporting his arguments.


It is reasonably argued that the constraint on healthcare is simply the number of healthcare practitioners, hospital beds, medicines, supporting staff and so on in the country at a given moment in time. A government can’t employ more doctors than there are available; to attempt to do so would see a competition for doctors that drives up their wages and therefore contributes to inflation, but would not create new doctors. If a government wants to employ more doctors, it must either train them up (which the Conservatives have had 12 years to fail to do); poach them from abroad (this should not be acceptable); or increase taxes on private healthcare so that these providers reduce their own demand for doctors, thus leaving more doctors available for the government at the prevailing wages. The same process applies to all other resources that a government might want to purchase in any part of the economy.


Far from being a limit on the amount of money available, government funding is seen worldwide as the way to reduce the limits on the amount of money available. The majority of healthcare is spent on poor, elderly and chronically sick people. These people simply cannot afford the cost of their healthcare, whether acute (the many poor people) or chronic (elderly and chronically sick). Even rich people cannot afford their own healthcare unless they are obscenely rich. Surgery, cancer treatment, dementia care – these are horrendously high costs that the extremely large majority of people can simply never afford. Far from creating a bigger supply of funding for healthcare, returning healthcare costs to the individual would result in a return to the situation where healthcare provision is limited by the fact that most people can’t afford to buy it, however much they need it.


The insurance model is the only sensible and fair way to fund healthcare. In order for poor people, who cannot afford insurance, to be covered there must be a single pool to which everyone compulsorily contributes according to their ability to pay. Otherwise, insurers will pick the healthier and richer people, which they may not do overtly (such as by refusing people with incomes below a certain level), but can easily do if they decide to cater to certain professions or certain areas. In the UK, we have a somewhat bizarre situation in that the contributions fall off from 12% (employee rate) to 2% for income above £50,268 a year (the employer pays a consistent 13.8%). This is a political choice which has nothing to do with whether some people have to top-up their healthcare, or whether we use a single-payer or multi-payer insurance model. One could make a political argument that we cut National Insurance above £50k precisely because we ask richer, healthier people to pay for their prescriptions, dental care and opticians. However, for this argument to work the requirement to pay for these things would have to be limited to those who have reached the reduced NI threshold, and it’s not.


I am not personally in favour of asking richer people to contribute extra to their healthcare. I think that ill-health is already a penalty which should not be made worse by causing a person to have less (post-healthcare) disposable income than their healthy counterpart. I think that richer people have already paid a higher absolute amount of tax and national insurance to the government, and that they should at the very least get in return an equal amount of support when they are suffering from ill-health. I think that richer people shouldn’t have access to a better healthcare than poor people, on any meaningful measure of healthcare, because that is unjust. You should get the healthcare that you need, not what you can afford. Necessarily, if richer people are paying for better healthcare, there is some important and necessary aspect of healthcare that a poor person is not getting, or there would be nothing extra for the rich person to pay for. So my conclusion is that everyone pays in what they can and gets back what they need, free at the point of use, because there is no meaningful ‘extra’ that a rich person could pay for that wasn’t then unjust that the poor person didn’t get it; and rich people certainly should not get less than a poor person when they have already seen a larger absolute amount of their income go on tax and National Insurance.


I therefore fundamentally disagree with Bogdanor that a centrally-funded healthcare system “limits the money available.” It makes much more money available than could be possible through an individually-funded system, and it is the only way to ensure that contributions are according to ability to pay whilst healthcare is according to need – and only according to need. No other factors should be at play. To the extent that the NHS currently does not have enough money available, that is a political choice – an ideology – to not use the government’s spending and market power to purchase enough healthcare. That is not a fault of the system; it is a fault of the politics, and that fault will continue to be a problem (especially for poor people, who can’t seek alternatives) for as long as that brand of politics remains in decision-making power. The UK government sets the percentage of money that is taken from a person’s salary for National Insurance, and France and German governments set the percentage that is taken from their citizens’ and residents’ salaries. If France and Germany chose not to not allocate enough money to cover the cost of the needed healthcare, they would run into problems, just as the UK does when it does not allocate enough money.


Bogdanor also complained that having nationalised hospitals “institutionalises a culture of complaint”. This one I really don’t understand. Firstly, who is complaining – the employee or the patient? If the employee, the evidence seems rather to be that working in the public sector is seen more as a vocation than the private sector is; this would be commensurate with fewer complaints, not more, as there is a higher willingness to contribute excessive hours of work. If the patient, then surely it is people who pay directly for a service who are more likely to complain? If you compare a free service to one that you paid £1000 for, would you not be more likely to complain about a bad service when it had cost you £1000? You want your money’s worth. With a free service, you understand that at least it didn’t cost you anything, and you may even be resigned (if you’re in a deprived area) to getting a substandard service.


Finally, Bogdanor claims that a national service necessarily means that we end up having to queue for low quality, rationed and monotonous produce. He likens a nationalised healthcare service to a nationalised food service. Yet this is to fundamentally misunderstand both food and healthcare, possibly intentionally, to make a conflated point that breaks down at the slightest touch. At the current time, food is readily available, regularly available, and available at low cost. It is a highly predictable cost of life, and everyone needs roughly the same things. Of course, not everyone can afford it, and for these people food is much more low quality, rationed and monotonous. And if we were in a famine or other disaster that sharply constrained the supply of food, then again food would need to be rationed and would likely become monotonous and even low quality. We rationed food during WW2 because the exigencies of the circumstances meant that food was in short supply relative to need. The distribution of food needed to be controlled to ensure that no-one was forced into destitution because of the cost of food and to ensure that everyone got enough instead of the rich getting more than they needed whist the poor starved.


The proper comparison, if there even is one, between food and healthcare is between food during a time of famine and healthcare. But really, healthcare is a very different cost to food. It is not a regular, predictable, repeated need like food. It is a random occurrence and you don’t know which health problem you’re going to get. When you have a specific health problem, there are only a handful of specific solutions, whereas when you are hungry there is a huge range of options not just for calories but also for getting the right macro and micro nutrients. The average adult has more than enough knowledge to choose between the many food options that would meet their needs but have no informed idea what healthcare options would suit them or the relative merits and costs of each. Food is relatively cheap, when not in a time of shortage; healthcare is prohibitively expensive.


The differences between food and healthcare are so vast that I cannot think of a good reason for raising the spectre of ‘nationalised food’ (in the absence of shortages) as an argument against nationalised healthcare.


That was as much as I could read of Bogdanor's article, and as I say maybe further into the text he had some justification for his claims. I understand that he talked about how waiting lists act as a form of rationing, but they are also an indicator of underfunding. The government needs to take seriously its responsibility to ensure that there are enough doctors, ancillary staff and other resources to meet the level of need. Until it does, healthcare will always be inadequate, no matter what model is used.


For other posts on this topic, see

What's so good about multi-payer, anyway?

Crying wolf? The collapse of the NHS

The NHS isn't sacrosanct - but maybe it should be


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