The founding principles of the NHS were wonderful at the time, but the world has moved on and they need amending if the health service is to survive. Radical reform is required including greater use of charging, health insurance and preventative measures
For several years now, I have been arguing that the NHS, as currently configured, is financially unsustainable. See my posts on the PF Blog, here, here and here, and on Click on Wales here and here.
This issue really became clear to me some ten years ago with the publication of the first report from Sir Derek Wanless. This effectively indicated that the only way the NHS, as currently configured, could become financially sustainable in the longer term was through the achievement of a series of objectives that most informed people regarded as unachievable. The Wanless report was effectively a political document designed to support Gordon Brown’s views about leaving the NHS alone as opposed to Tony Blair’s view that this was unsustainable.
Fast forward eight years and we hit the era of the Great Recession and financial austerity. Although the NHS was ‘protected’ from the pressures of austerity, it was left with a tiny amount of growth in resources each year. I will not enter the complex debate as to how big or small that tiny amount actually is, but let us just recall that it was light years away from the substantial levels of growth the NHS has achieved throughout its history and even further away from the growth it received in the Brown/Blair years.
As a consequence of financial austerity, the NHS was given a target of making £20bn of efficiency savings over a four-year period, which would release resources that could be ploughed back into new services, particularly those related to the needs of an ageing population. Many of us argued, at the time, that this target was also unachievable and was a challenge that no health system in the world had ever achieved.
Despite valiant efforts from NHS managers and staff, it is becoming quite clear now that these efficiency savings will not be delivered to the required level and that the NHS is running into serious financial trouble pretty fast. Indeed, the financial problems facing the NHS have taken longer to materialise than I expected four years ago when austerity commenced. This must be due to the sterling efforts of NHS managers and staff in making some progress on the cost savings front.
Not surprisingly, the clarion calls are now starting to come out of the various London think tanks that the NHS needs another round of ‘reform’ as a consequence of these financial problems. As someone who can remember, and was personally involved, in the NHS ‘reforms’ that took place in 1974, 1982, 1984, 1991, 1997 and 2013, perhaps I can be excused a little weariness and cynicism about reforms that involve such things as: structural changes, reform to the commissioning process and changes to the internal market.
I think we are well past that point and the types of changes needed to the NHS are far more radical than has been the case in the past.
I would suggest that some of the key founding principles of the NHS, in 1948, were:
- Comprehensive – the NHS was charged with delivering a comprehensive range of health services provision at the local level, which, to a large extent, it still does.
- Free – NHS services were to be provided free at the point of consumption. Although charges have subsequently been introduced, over the years, for some purpose, the services provided are still largely free.
- National – the NHS was to be a national service. At the time of its inception, Aneurin Bevan emphasised the importance of having a national system with uniformity of standards and not a series of local systems with variations in standards. In practice, and in spite of being subject to endless centralised control, the NHS has become a system with significant variations in standards across the country. Although attempts have been made to decentralise the NHS, these always seem to fail. Indeed, as King’s Fund chief executive Chris Ham noted recently on the PF Blog, the government’s NHS reforms, which were meant to devolve power away from Whitehall, have not done this and the NHS still remains one of the most centralised health systems in the world.
- Tax funded – the NHS is financed almost entirely from the proceeds of taxes levied by central government with relatively small amounts from other sources. It must be emphasised that the NHS is financed from the general pool of taxes collected by government so that individuals see no link between the taxes they pay and the amount spent on the NHS. In the past, polls have suggest that people do not want to pay more in general taxation (the tax burden is constantly raising) but are more open to a tax levied specifically to fund the NHS.
What I am about to suggest will probably cause apoplexy in some quarters but it has to be said. The originating principles of the NHS were wonderful principles at the time (nearly 70 years ago) but the world has changed radically and these principles now need amending if the NHS is to survive. The NHS as currently configured is broken and needs to be fixed. I say this as someone brought up in a strong Labour Party family and born not ten miles from where Aneurin Bevan lived.
There are five things I would emphasise regarding the sorts of changes needed:
- Funding – the NHS needs more money and always will. It is not going to generate the level of savings needed and we should stop pretending that it will. People don’t want to pay more in general taxes and so we must look elsewhere. There are two obvious candidates. Firstly, charges need to become a much greater source of income. I know this breaches the ‘free at the point of consumption’ principle, but it is something that many developed countries operate without the sky falling in. Moreover, any charges levied must be able to raise a substantial amount of money. We don’t want something like (English) prescription charges where you exempt a huge proportion of the population such that the volume of funds raised is limited. Secondly, we have to at least consider the merits of introducing some form of health insurance or earmarked taxation model for funding health services where people pay according to what they earn and they know the money raised goes towards the NHS. At the point when health insurance is mentioned, many people default to the view that ‘we don’t want to end up like the Americans’. In my experience, most Americans don’t want to end up like the Americans but they don’t know the way out of the mess. The reality is that there are several countries who operate health insurance models (private and/or public) that work well and deliver better health services than in the UK. We must at least consider them. Whether we want the health insurance model to also incorporate some sort of premium penalty for those undertaking risky health behaviours is also a point of debate. It must be remembered that a basic principle of ‘insurance’ is that premiums reflect risk.
- Prevention – it is well known that a huge proportion of NHS expenditure is spent on treating medical conditions that can be prevented by changes to an individual’s behaviour and lifestyles (such as smoking, obesity and alcohol consumption). Changing such behaviours in millions of people appears a herculean task of public policy. In my inaugural professorial lecture in 2009, I speculated that one aspect of public policy under austerity was that government would probably need to become more authoritarian in its attitude towards certain of its citizens. To some extent this has already happened in areas of public policy such as ‘troubled families’ and social welfare benefits. In relation to health, such an approach might involve a greater element of sanctions for pursuing unhealthy behaviours rather than incentives to adopt healthy lifestyles. One example would be higher premiums under a social health insurance model.
- Diversity – the NHS has often been described as the last great public sector monopoly in the UK. Through policies of contestability there have been changes in the involvement of private providers in NHS services but the proportion is still pretty small. In many other countries we find a much greater diversity of provision involving: government, religious orders, not-for-profit organisations and for-profit organisations. Maybe further diversity of provision needs to be encouraged.
- Decentralisation – I have already noted the extreme centralisation of the NHS as a health system and the failure to achieve decentralisation. To be honest, I have no idea how this could be achieved other than significant constitutional change in the UK.
- Political consensus – Nigel Lawson once observed that the NHS is the ‘closest thing the English have to a religion’ with an unchallengeable theology. My observations of the last 40 years are that when any political party is in government it tries to achieve some reforms to the NHS. However, when in opposition, political parties of all colours fall back on policies that, by and large, comprise the following: spend more public money on the NHS, employ more doctors and nurses, reduce the number of NHS managers and administrators, not close any hospitals (however decrepit, unsafe and ineffective they may be) and not change anything. Unsurprisingly, these policies are almost universally supported by health professional representatives and trade unions. Coupled with strong publicity from the media, this makes it incredibly difficult to achieve the level of change actually needed in the NHS. Moreover, this sort of mentality often blocks reforms that are needed to improve health care. Unless we can achieve some sort of political consensus on health (as we have in some policy areas), we face an endless cycle of political parties in opposition promising things that go down well with the electorate (even though the electorate is wrong) and when in government trying to reform the NHS but being opposed by other political parties, the media and the health professions. A recipe for stagnation.
Although we live in an era of austerity I suspect that the worse the NHS finances get and the closer we move towards the election then the more likely it is that the chancellor will find some additional funding from somewhere to tide the NHS past election day. However, post-election the NHS will return to the existing unsustainable position facing the same choices.
