The NHS is facing an unprecedented financial challenge and needs to consider alternative ways to raise funds. Charging for health services is an untapped resource and one that we should make more use of
All health systems are strapped for cash as ageing populations and growing patient expectations push budgets to the limit. The outlook for the NHS is no different, with the funding gap predicted to reach £30bn by the end of the decade.
While there is considerable scope for greater efficiency in the system, the NHS is not on track to close the gap through productivity gains alone. Some have argued that raising more from tax is the only efficient way to generate the money needed. But other countries have found an alternative: ask patients to make personal contributions to the cost of the services they use.
Charging for health services may be controversial in the UK, but it’s part of everyday life for the majority of people in the developed world. Of 31 OECD countries surveyed by Reform’s latest research, all countries charge for prescriptions, two-thirds charge for GP services and half charge for elements of hospital care. In everywhere but the UK, charges are a tried and tested way of raising valuable revenue.
When it comes to prescriptions, nearly all developed countries charge for a range of drugs and ask a broad section of the population to pay. Some countries such as Spain and Denmark, for example, have stripped pensioners of their exemptions in the last decade.
France has gone even further, charging a fee of just €0.50, but with very few people exempt. Alongside charges for prescriptions a range of countries charge for GP visits, from just €1 in France to over €20 in Sweden. A growing number also demand contributions for parts of hospital care, with German patients, for example, charged €10 a night in ‘hotel costs’.
By contrast, the Department of Health has committed that ‘the NHS should be free at the point of use, with access based on need’. Yet, in reality, charging in the NHS is nearly as old as the health service itself, with patients paying for services such as prescriptions and dentistry as far back as 1951.
Private payment is therefore nothing new, but when compared to other countries it’s an untapped resource. In France and Germany private spending forms a quarter of total healthcare funding; in the UK it is only a sixth. Reform’s latest report suggests how new charges could expand the role of the private pillar in healthcare.
The simplest way to expand charging in the NHS would be to look again at charges for prescriptions. Patients have contributed to the cost of their drugs for decades and yet the generosity of exemptions means that few do in practice, with nine in every 10 prescriptions dispensed for free. Simply raising the fee from £7.85 to £10 would raise an additional £130m each year.
The real opportunity for raising greater revenue and improving equity between young and old would be to reform exemptions for pensioners. Currently responsible for 60% of all drugs dispensed, removing exemptions for pensioners except for those on low incomes could raise an additional £860m for the NHS each year.
Charges for other services, such as GP visits, typically raise concerns around equity for those on low incomes and the potential to deter patients from preventative care. Income-based exemptions would therefore be key to ensure that essential services are always within the means of those who need them.
The administrative cost of processing fees has also been raised as a disadvantage of charges, though advances in wireless payment collection in recent years will minimise these expenses in the future. These concerns however should be weighed against the improvements in service that charges could deliver. A £10 charge for GP consultations, for example, could raise £1.2bn each year that could help fund better services for patients, such as extended hours and weekend consultations.
For years politicians of all three parties have ruled out these kinds of charges as incompatible with the founding principles of the NHS. Yet, while ministers continue on as before, the situation around them has changed. The NHS is facing an historic financial challenge that the evidence suggests it is not on track to meet.
Few will want to debate higher charges, but the challenge of maintaining an affordable and high quality health service in the long term will make tough decisions unavoidable. Now is the time for politicians to have a frank discussion with the public about what this means for the NHS.
Cathy Corrie is a researcher at the independent think tank Reform and co-author of The cost of our health: the role of charging in healthcare
