Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.
As things stand, the NHS is seen as a relative disaster. Free goods have unlimited demand. The NHS thus swallows up increases in funding without showing any material gain for patients. Waiting lists only seem to ever get longer. Our system also makes us a ready target for overseas individuals making their way to the UK for free treatment. Waiting times in A & E units have been unnecessarily excessive. GPs, who used to be readily accessible by their patients, now require those same patients to wait for a telephone call for up to a day.
There have been two main attempts to reform the NHS. One was in the 1990’s, and the other was the quasi market reforms of the 2000’s and later. The first was largely a failure and the second a qualified success. The main problem is that the majority of the population is reluctant to support NHS reforms. Largely as the result of problems in implementing previous NHS reforms, it remains an international slow coach. In international comparisons of health system performance, the NHS invariably ranks in the bottom third. It is interesting to note that NHS structure arrangements have never been copied outside the UK.
Of all the reforms of the 2000’s PFI (Private Finance Initiative) was the most controversial. It is presented by its critics as an intrusive scheme by which private corporations drain valuable resources from the NHS. Most of this is deliberate nonsense. PFI is not a State versus Market matter; it is an issue of outsourcing versus inhouse provision.
What the NHS puts out to tender is still relatively minor, but GPs are mostly private sector providers who contract with the NHS, similar to BUPA. Fortunately for them, GPs sorted out their NHS contracting arrangements seventy years ago. Thus, non-State provision of healthcare is not alien to the UK.
The NHS knows that it has to change. Cancer survival rates are several percent below EU averages – a telling indictment of the system’s record of failure. The first basic question is how NHS funding is raised – publicly or privately and how that money is best spent to buy improvements in health.
A second attempt to introduce market mechanisms in the 2000’s was a qualified success. But healthcare reform failed to look at other country’s systems. The NHS needs to be benchmarked against Social Health (SHI) Insurance systems – the model of healthcare adopted by Switzerland, Belgium, the Netherlands, Germany and Israel. SHI achieves universal access to Health care via a combination of means tested insurance premium subsidies, community rating, and risk structure compensation. There is no uninsured population. Even homeless individuals have healthcare insurance.
In terms of outcomes, quality, and efficiency, social health insurance systems are consistently ahead of the NHS on almost all counts. They combine the universality of a public system with the consumer sovereignty, pluralism, competitiveness, and innovation of a market system. The Dutch system is successful. It needs no State-owned hospitals, no State hospital planning and no hospital subsidies. The Swiss system shows that even substantial levels of out-of-pocket patient charges need not be excessive and that individuals can be trusted to choose sensibly from a variety of health insurance plans. The PKV pillar of the German system shows that a healthcare system can be fully funded like a pension scheme.
Also, the NHS is badly organised to deal with the financial challenges of an aging society. It is financed on a pay as you go basis where healthcare costs rise systematically with age. This is an arrangement which produces an effective transfer of assets from the working age generation to the retired generation. The combination of increased longevity and low birth rates represent a combined attack which over time threatens the systems’ financial viability.
The creation of the internal market in the 1990’s was the first attempt to introduce market mechanisms into the NHS. The model of GP fundholding where GPs could become Healthcare Commissioners led to shorter hospital waiting times in the areas where the model is applied. It also led to a more efficient use of resources. The greater independence which came with the conversion of NHS hospitals, which used to be part of the wider health bureaucracy in standalone Trusts, led to a small improvement in efficiency.
The Daily Mail has identified over 675 NHS Staff who are paid over £150,000 pa, costing in aggregate some £120 million pa. Below this grade there are hundreds of managers earning over £100,000 pa. It would be interesting to know how much of NHS costs are represented by pay. It is also implicit that NHS staff numbers and pay are significantly too high. This is another example of the statist nature of the NHS seeing money spent in the wrong areas, and not on patients.
In the past, reforms to the NHS have been tried. But much still needs to be done. Hopefully our new Prime Minister will apply the same radicalism to this task as she seems to be doing to our economic policy.