21 July 2006
This week's call for means-tested charges for NHS services is wrong-headed. Such a move would raise few funds, deter the wrong people from using health care, and undermine the consensus that backs free care
Free at the point of need – the founding principle of the NHS – is under question from an unexpected source. At a time of financial difficulty for the health service, the Labour-chaired Commons' health select committee this week floated the idea of charges for public health care.
While those who can show that they have low incomes would continue to receive free care, better-off patients might be asked to share the cost of their treatment with the NHS.
'Co-payment' might sound attractive to managers and ministers struggling to balance the books, and means testing might appear to be progressive, since it imposes levies on the rich.
But charging is a blunt tool. It will neither raise enough money to dent the deficit nor reduce misuse of resources. It will also undermine support for a progressive universal health service.
Calls from the Right for more individual payments for health care are nothing new. Now, though, Labour MPs and thinkers from the centre-Left are toying with charges, while offering seemingly progressive arguments about exemptions for poorer patients.
The argument is that means-tested charges could free resources for more expensive treatment, with costs shared between the NHS and the patient, and that it could encourage more responsible use of resources.
It is unlikely that central taxation will be able to fund all rising demand for health care indefinitely. But charging is a non-starter as a serious means of raising money for public health care. Co-payments levied in other countries – including France, Germany and social democratic Sweden – raise only a small proportion of the total costs of health care (about 1% in Stockholm, for example).
In some cases, the cost of collecting charges – forms, bills and accountants – exceeds the revenue collected.
Only a tiny minority of patients could afford to pay a significant share of the £24,000-per-year cost of the cancer drug trastuzumab (Herceptin). We can afford expensive health care only by pooling our risks and resources: the wealthy and healthy need to be in the pool with the poor and ill.
In any case, total spending on UK health care is expected to be 9.2% of gross domestic product by 2008. Finding more sources of income will be less important, and less politically attractive, than improving the efficiency and effectiveness of this level of spending.
The other reason for charging is to dampen demand. There is no point deterring sick people from accessing care, as their condition might deteriorate and eventually cost more to treat. We actually want to increase demand among some groups – lower social classes have less access to preventative medicine and tend to present to health services with more advanced or severe disease.
To target charges at the right people – the worried well – we would need to exclude from charges people with long-term conditions and the frail old. The NHS does this already for prescription drugs.
But the worried well continue to make use of prescriptions despite the charge. Even then, 60% of drugs are not taken properly, questioning the effect of financial costs on behaviour.
This trend of 'non-concordance' is similar in the US, where more drug charges are borne by patients. Since ageing, wages and drug costs are the main causes of health care inflation, charging will do little to suppress demands on the NHS budget.
Means-tested charging would threaten the broad coalition supporting free health care. When we are all in, we are all willing to pay – thus middle England voted for a Labour government that raised contributions for the NHS. The British Social Attitudes Survey found that 75% of people opposed means testing in the NHS and more than half listed health as their top spending priority.
Far fewer, though, supported means-tested benefits such as housing or social security. Social care budgets are tighter partly because the middle classes know that whatever they pay in taxes, they are likely to be charged again when they are old. So when the universal coalition breaks down, the middle classes exit and willingness to fund declines.
There are big, long-term questions about the funding of health care that we should be debating. The health select committee is right to examine NHS charges. Stealth payments have crept in via hospital parking and transport costs that fall disproportionately on vulnerable people; prescription charge exemption criteria are out of date and unfair.
But universal benefits, such as the NHS, state pension or Child Trust Fund, tie societies together across class, income and ethnic boundaries. From political, health or financial perspectives, means-tested charging has little to offer.
The NHS's founding principle is too valuable to lose.
Joe Farrington-Douglas is a research fellow at the Institute for Public Policy Research. The health select committee's report on NHS charges was published on July 18
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