An alternative history: Britain without the NHS (Part 1)
15 December 2016
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14 December 2016
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16 December 2016
Economic Theory
11 November 2024
In a universe not far from our own:
The announcement by the ‘Big Eight’, the UK’s major health insurance groups, to raise premiums by more than the rate of inflation for the sixth year in a row has sparked angry responses from across the political spectrum. The Secretary of State for Health called the decision “a disgrace”, and “an affront to hard-working families up and down the country”. The Prime Minister concurred, and renewed her pledge to tackle the issue of rising healthcare costs during this parliament.
Several measures are already in preparation. The Department of Health is reviewing plans to give the healthcare regulator, OfHealth, greater powers to shape the tariff structure and the pricing policy of healthcare companies. The Prime Minister also wants to subject all foreign takeovers to a ‘public interest test’. Surveys show that a majority of the public demand more punitive measures, such as mandatory premium freezes and a ban on bonus payments.
Industry representatives have dismissed public anger over industry profits as ‘obsessive’ and ‘misguided’. They claim that profit margins in the industry rarely exceed 4%, and are thus no higher than in comparable industries. That may be so – but that is also true in the railway and the energy industry, and yet the narrative of ‘greedy’ corporations ripping off the British public has nonetheless become conventional wisdom.
Perhaps strangely, then, the opposition leader‘s plans to nationalise most of the healthcare industry do not find much public resonance. Healthcare is an outlier in this respect. In other sectors, calls for industry nationalisations are usually popular. But the public do not seem to trust politicians with their health.
“Health systems are characterised by an extremely high degree of status quo bias and inertia’, explains Prof Henry Brubaker of the Institute for Studies. ‘Once you have a health system in place, you are basically stuck with it, whatever that system is. Outside of extreme events, like wars and revolutions, there are hardly any examples of countries abolishing a health system and replacing it with another.”
If the UK had, through some historical accident, ended up with state-run healthcare, would that system now be equally entrenched? It is at least a possibility, and while it is not widely remembered, it is worth pointing out that between 1946 and 1948, there actually was a genuine attempt at a government takeover of the health sector. This was essentially a one-man project, namely that of the then health minister Aneurin Bevan:
“[Bevan] struck out in an entirely fresh direction, which placed the emphasis on the scarcely considered alternative of nationalisation. Perhaps within a couple of weeks of his appointment, he was already considering a scheme for bringing all hospitals under a single public authority controlled by the minister” (pp. 14-15).
Once those plans were out in the open, opposition began to form. It was led by a coalition of Friendly Societies – the working-class mutual insurance associations which had historically provided health insurance for the vast majority of people on modest incomes – and independent hospitals. They realised that the new system would mean the end of working-class mutualism and self-governance, and they had no inclination to become administrators in a state bureaucracy.
The general public had never been enthusiastic about Bevan’s nationalisation plans anyway. Opinion surveys from the 1930s and 1940s show little enthusiasm for nationalised healthcare. In the autumn of 1946, that passive reluctance began to translate into active hostility.
Although Bevan saw his opponents as ‘duped’, their case against nationalisation was at least as deeply rooted in the labour movement as the Bevanites’ case for it. It was a conflict between two very different conceptions of ‘collectivism’. For one camp, which we might label the ‘grassroots collectivists’, collectivism simply meant joining forces with others in similar circumstances, and solving problems together, as a group, rather than individually. Crucially, their version of collectivism had nothing to do with the state. ‘The collective’ was not the nation as a whole. It was a voluntary, self-organised and self-directed community, usually formed on the basis of shared economic interests and/or a shared social identity. For the other camp, which we might label the ‘national collectivists’, the collective was indeed the nation as a whole, and collective provision was synonymous with state provision.
Grassroots collectivism had been the traditional model of health provision in the UK, especially for working-class people. From the early nineteenth century onwards, workers had begun to organise in Friendly Societies and comparable mutual aid/insurance associations, often built around a workplace or an industry. Health insurance and healthcare commissioning were among their main functions.
The period from the mid-nineteenth century to 1911, when the National Insurance Act was passed, can be seen as the golden age of grassroots collectivism. Between 1908 and 1911, the government developed plans to turn the system into a statutory one. Participation was meant to become mandatory, and the state was to set the basic parameters. We could see this as a first step from grassroots collectivism to state collectivism, and as the first clash between the two conceptions. The Oddfellows Magazine commented at the time:
“Working men are awakening to the fact that this is a subtle attempt to take from the class to which they belong the administration of the great voluntary organizations which they have built up for themselves, and to hand over the future control to the paid servants of the governing class. […] This is not liberty; this is not development of self-government, but a new form of autocracy and tyranny” (quoted on p. 111).
Another author in the same magazine argued:
“To say, as the Bill now says, to the working class of the United Kingdom […] ‘you are unfit to be entrusted with the administration of your own money; […] we will administer the money for you through committees […] [is] a flagrant insult to every working man and woman in the land. Why should working men and women be degraded to an inferior position?” (quoted on p. 112).
But the Friendly Societies ultimately accepted the Act, and it turned out that their worst fears did not come to pass. They did lose some autonomy, and they also lost bargaining power vis-à-vis the medical professions. But the Friendly Societies found a place in the National Health Insurance (NHI) system, and self-governance remained a guiding principle of healthcare in the UK.
In 1946, however, members of the Friendly Societies, the trade unions and the voluntary hospitals realised that this time would be different. They realised that there was no hope of retaining autonomy under a fully nationalised system. And so they began to organise protests, town hall meetings and signature campaigns up and down the country, publicising their case via radio interviews, TV appearances and guest contribution sin the media. MPs were bombarded with letters urging them to vote against the bill.
As Bevan realised that his bill was under threat, his behaviour in public became increasingly erratic. The government’s popularity ratings sank, and his party began to see Bevan, their erstwhile rising star, as a burden. The plotting and backstabbing began. Bevan, already under external pressure, now came under internal pressure from within his own government and his own party as well.
When Bevan finally resigned in 1948, the idea of a state-run ‘National Health Service’ was dead in the water. No British politician ever touched it again. But with Bevan’s resignation, the hard work had only begun. Striking down a proposal was one thing, but the real challenge now was to come up with a better alternative.
Continue to Part 2…
Dr Kristian Niemietz is the author of the IEA monograph ‘Universal healthcare without the NHS‘.
The announcement by the ‘Big Eight’, the UK’s major health insurance groups, to raise premiums by more than the rate of inflation for the sixth year in a row has sparked angry responses from across the political spectrum. The Secretary of State for Health called the decision “a disgrace”, and “an affront to hard-working families up and down the country”. The Prime Minister concurred, and renewed her pledge to tackle the issue of rising healthcare costs during this parliament.
Several measures are already in preparation. The Department of Health is reviewing plans to give the healthcare regulator, OfHealth, greater powers to shape the tariff structure and the pricing policy of healthcare companies. The Prime Minister also wants to subject all foreign takeovers to a ‘public interest test’. Surveys show that a majority of the public demand more punitive measures, such as mandatory premium freezes and a ban on bonus payments.
Industry representatives have dismissed public anger over industry profits as ‘obsessive’ and ‘misguided’. They claim that profit margins in the industry rarely exceed 4%, and are thus no higher than in comparable industries. That may be so – but that is also true in the railway and the energy industry, and yet the narrative of ‘greedy’ corporations ripping off the British public has nonetheless become conventional wisdom.
Perhaps strangely, then, the opposition leader‘s plans to nationalise most of the healthcare industry do not find much public resonance. Healthcare is an outlier in this respect. In other sectors, calls for industry nationalisations are usually popular. But the public do not seem to trust politicians with their health.
“Health systems are characterised by an extremely high degree of status quo bias and inertia’, explains Prof Henry Brubaker of the Institute for Studies. ‘Once you have a health system in place, you are basically stuck with it, whatever that system is. Outside of extreme events, like wars and revolutions, there are hardly any examples of countries abolishing a health system and replacing it with another.”
If the UK had, through some historical accident, ended up with state-run healthcare, would that system now be equally entrenched? It is at least a possibility, and while it is not widely remembered, it is worth pointing out that between 1946 and 1948, there actually was a genuine attempt at a government takeover of the health sector. This was essentially a one-man project, namely that of the then health minister Aneurin Bevan:
“[Bevan] struck out in an entirely fresh direction, which placed the emphasis on the scarcely considered alternative of nationalisation. Perhaps within a couple of weeks of his appointment, he was already considering a scheme for bringing all hospitals under a single public authority controlled by the minister” (pp. 14-15).
Once those plans were out in the open, opposition began to form. It was led by a coalition of Friendly Societies – the working-class mutual insurance associations which had historically provided health insurance for the vast majority of people on modest incomes – and independent hospitals. They realised that the new system would mean the end of working-class mutualism and self-governance, and they had no inclination to become administrators in a state bureaucracy.
The general public had never been enthusiastic about Bevan’s nationalisation plans anyway. Opinion surveys from the 1930s and 1940s show little enthusiasm for nationalised healthcare. In the autumn of 1946, that passive reluctance began to translate into active hostility.
Although Bevan saw his opponents as ‘duped’, their case against nationalisation was at least as deeply rooted in the labour movement as the Bevanites’ case for it. It was a conflict between two very different conceptions of ‘collectivism’. For one camp, which we might label the ‘grassroots collectivists’, collectivism simply meant joining forces with others in similar circumstances, and solving problems together, as a group, rather than individually. Crucially, their version of collectivism had nothing to do with the state. ‘The collective’ was not the nation as a whole. It was a voluntary, self-organised and self-directed community, usually formed on the basis of shared economic interests and/or a shared social identity. For the other camp, which we might label the ‘national collectivists’, the collective was indeed the nation as a whole, and collective provision was synonymous with state provision.
Grassroots collectivism had been the traditional model of health provision in the UK, especially for working-class people. From the early nineteenth century onwards, workers had begun to organise in Friendly Societies and comparable mutual aid/insurance associations, often built around a workplace or an industry. Health insurance and healthcare commissioning were among their main functions.
The period from the mid-nineteenth century to 1911, when the National Insurance Act was passed, can be seen as the golden age of grassroots collectivism. Between 1908 and 1911, the government developed plans to turn the system into a statutory one. Participation was meant to become mandatory, and the state was to set the basic parameters. We could see this as a first step from grassroots collectivism to state collectivism, and as the first clash between the two conceptions. The Oddfellows Magazine commented at the time:
“Working men are awakening to the fact that this is a subtle attempt to take from the class to which they belong the administration of the great voluntary organizations which they have built up for themselves, and to hand over the future control to the paid servants of the governing class. […] This is not liberty; this is not development of self-government, but a new form of autocracy and tyranny” (quoted on p. 111).
Another author in the same magazine argued:
“To say, as the Bill now says, to the working class of the United Kingdom […] ‘you are unfit to be entrusted with the administration of your own money; […] we will administer the money for you through committees […] [is] a flagrant insult to every working man and woman in the land. Why should working men and women be degraded to an inferior position?” (quoted on p. 112).
But the Friendly Societies ultimately accepted the Act, and it turned out that their worst fears did not come to pass. They did lose some autonomy, and they also lost bargaining power vis-à-vis the medical professions. But the Friendly Societies found a place in the National Health Insurance (NHI) system, and self-governance remained a guiding principle of healthcare in the UK.
In 1946, however, members of the Friendly Societies, the trade unions and the voluntary hospitals realised that this time would be different. They realised that there was no hope of retaining autonomy under a fully nationalised system. And so they began to organise protests, town hall meetings and signature campaigns up and down the country, publicising their case via radio interviews, TV appearances and guest contribution sin the media. MPs were bombarded with letters urging them to vote against the bill.
As Bevan realised that his bill was under threat, his behaviour in public became increasingly erratic. The government’s popularity ratings sank, and his party began to see Bevan, their erstwhile rising star, as a burden. The plotting and backstabbing began. Bevan, already under external pressure, now came under internal pressure from within his own government and his own party as well.
When Bevan finally resigned in 1948, the idea of a state-run ‘National Health Service’ was dead in the water. No British politician ever touched it again. But with Bevan’s resignation, the hard work had only begun. Striking down a proposal was one thing, but the real challenge now was to come up with a better alternative.
Continue to Part 2…
Dr Kristian Niemietz is the author of the IEA monograph ‘Universal healthcare without the NHS‘.
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