An alternative history: Britain without the NHS (Part 3)
21 December 2016
SUGGESTED
Housing and Planning
Labour Market
22 December 2016
Tax and Fiscal Policy
19 November 2024
Continued from Part 2
After an attempt to nationalise the health sector failed miserably in 1946-48, Britain seemingly returned to the old mutual insurance system. But behind the scenes, there was an important realignment of incentives. What appeared to be minor technical tweaks would soon tilt the balance much more in favour of the poor and the sick.
For most people, however, the period from 1948 onwards was mainly a return to normal. The 1950s and 1960s were characterised by a remarkable degree of continuity. From the 1970s onwards, the system was shaken up by various waves of modernisation. A staid system, built around social and occupational identities, became much more dynamic and competitive. Market entries and exits became more common, as did mergers and acquisitions. Foreign healthcare companies made their mark. The variety of insurance plans, business models and organisational forms increased, to the point where it is no longer really possible to speak of ‘the health system’ as such. There is no single ‘health system’, no more than there is a ‘leisure system’.
More recently, social and demographic changes have also left their mark on the health sector. In the larger towns and cities, healthcare groups catering to immigrant communities have sprung up. Patient associations, representing people with specific conditions, have taken on a more proactive role in negotiating group contracts and commissioning healthcare services for their target populations.
In short, the system has gone through its fair share of changes since the post-war days. Each change has triggered a tendency to romanticise the old ways in retrospect. Public appreciation of the system has had its ups and downs, and there have always been periodic outbreaks of popular healthcare-industry-bashing. Is the discontent we currently witness just one of those?
We can draw an analogy with another sector that suffers from a notoriously bad press: air travel. If you judged that sector by the way it is represented in popular culture (e.g. comedy), or in ‘watercooler conversations’, you would think that there has never been a worse time to get on an airplane. Delayed flights, cancelled flights, hidden extra fees, unreasonable excess baggage charges, lost luggage, poor or non-existent customer service, inconveniently located airports, terrible food, annoying advertisement on board – you get the drift. But at the same time, fares have been falling steeply in real terms, while the number of destinations has multiplied, and the sector has been expanding at phenomenal rates. A former luxury good has become a mass market product. What’s not to like?
What happens is that an intuitive aversion against markets and profits is hardwired into our brains. We therefore focus unduly on motives rather than outcomes, we are quick to suspect bad faith when something goes wrong, and we easily jump to the conclusion that everything would be better if only somebody representing ‘the people’ were in charge.
However, our healthcare system’s international reputation is infinitely better than its domestic one. Countless health reforms abroad have been modelled on the British example, including Switzerland’s acclaimed Krankenversicherungsgesetz from 1996, and the successful Dutch Zorgverzekeringswet from 2006. In 1990, instead of simply adopting the West German system as part of a reunification ‘package deal’, East Germany deliberately went for something much closer to the British system. Together with higher education, healthcare continues to be one of our major exports, with foreign patients bringing in almost as much revenue as foreign students. And while other countries struggle with the financial pressures associated with falling birth rates and increased longevity, our prefunded system has accumulated huge old-age reserve funds.
If Bevan were alive today, would he find much to like in our healthcare system? Probably not. But even he would, grudgingly, have to concede that his central goals have been achieved, even if not in the way he intended.
The above description of events after the spring of 1946 is entirely fictional – and yet, it is not as absurd as it will probably seem to the reader. The popular folk memory of how the NHS was founded has been heavily mythologised in retrospect. The conventional wisdom is that the NHS was created in response to pressure from below – a victory of ordinary people getting together, organising collectively, and fighting for their rights. The NHS, in this version of events, is one of the finest expressions of ‘People Power’. This is the story told by, for example, RAF veteran Harry Leslie Smith, who, in 2014, became a minor political celebrity for retelling it. It is all over Ken Loach’s genre classic ‘The Spirit of ‘45’, and there were traces of it in the opening ceremony of the London Olympics as well.
It is a powerful story that continues to arouse strong feelings. But it is not a true story. The creation of the NHS was not a change that ordinary people had fought for. The NHS was a brainchild of social elites, to which the general public just passively acquiesced. The idea that the organised working classes were demanding a government takeover of healthcare is a post-hoc rationalisation, which projects the fondness for the NHS, which the public subsequently developed, back into the period of its creation.
In a paper in the English Historical Review, Nick Hayes analyses a wide range of healthcare-related opinion surveys from the 1930s and 1940s. He concludes:
“[T]he evidence before us seems to indicate a fairly large amount of resistance to State interference in the field of medicine […] roughly half the population was opposed to any major change on the health front, a quarter disinterested and a quarter in favour of State intervention.”
Similarly, in a paper analysing the political factors which drove the creation of publicly funded healthcare programmes in the UK and North America, Hacker finds:
“[F]ew of the scholars who have addressed this period have attempted to show that the passage of compulsory health insurance […] was a response to widespread popular pressure. In fact, this would be difficult to do, since the overwhelming evidence is that these early programs were promulgated by government elites well in advance of public demands.”
While speculative, this alternative history is not entirely plucked out of thin air. It contains some allusions to how healthcare really did evolve in countries that chose to secure universal access within a broadly market-based settlement, such as the Netherlands, Switzerland, Germany, Belgium and Israel. It even contains some (more indirect) allusions to how healthcare in the UK itself has changed since the quasi-market reforms of the 2000s.
My IEA monograph Universal healthcare without the NHS draws upon both international evidence from relatively market-oriented health systems, and domestic evidence from market-oriented reforms in the UK. It seeks to weave them together to develop proposals for an alternative health system, as well as a roadmap to get us there. Admittedly, though, the chances of finding a portal to the above-described parallel dimension are better than the chances of seeing my proposals implemented anytime soon.
After an attempt to nationalise the health sector failed miserably in 1946-48, Britain seemingly returned to the old mutual insurance system. But behind the scenes, there was an important realignment of incentives. What appeared to be minor technical tweaks would soon tilt the balance much more in favour of the poor and the sick.
For most people, however, the period from 1948 onwards was mainly a return to normal. The 1950s and 1960s were characterised by a remarkable degree of continuity. From the 1970s onwards, the system was shaken up by various waves of modernisation. A staid system, built around social and occupational identities, became much more dynamic and competitive. Market entries and exits became more common, as did mergers and acquisitions. Foreign healthcare companies made their mark. The variety of insurance plans, business models and organisational forms increased, to the point where it is no longer really possible to speak of ‘the health system’ as such. There is no single ‘health system’, no more than there is a ‘leisure system’.
More recently, social and demographic changes have also left their mark on the health sector. In the larger towns and cities, healthcare groups catering to immigrant communities have sprung up. Patient associations, representing people with specific conditions, have taken on a more proactive role in negotiating group contracts and commissioning healthcare services for their target populations.
In short, the system has gone through its fair share of changes since the post-war days. Each change has triggered a tendency to romanticise the old ways in retrospect. Public appreciation of the system has had its ups and downs, and there have always been periodic outbreaks of popular healthcare-industry-bashing. Is the discontent we currently witness just one of those?
We can draw an analogy with another sector that suffers from a notoriously bad press: air travel. If you judged that sector by the way it is represented in popular culture (e.g. comedy), or in ‘watercooler conversations’, you would think that there has never been a worse time to get on an airplane. Delayed flights, cancelled flights, hidden extra fees, unreasonable excess baggage charges, lost luggage, poor or non-existent customer service, inconveniently located airports, terrible food, annoying advertisement on board – you get the drift. But at the same time, fares have been falling steeply in real terms, while the number of destinations has multiplied, and the sector has been expanding at phenomenal rates. A former luxury good has become a mass market product. What’s not to like?
What happens is that an intuitive aversion against markets and profits is hardwired into our brains. We therefore focus unduly on motives rather than outcomes, we are quick to suspect bad faith when something goes wrong, and we easily jump to the conclusion that everything would be better if only somebody representing ‘the people’ were in charge.
However, our healthcare system’s international reputation is infinitely better than its domestic one. Countless health reforms abroad have been modelled on the British example, including Switzerland’s acclaimed Krankenversicherungsgesetz from 1996, and the successful Dutch Zorgverzekeringswet from 2006. In 1990, instead of simply adopting the West German system as part of a reunification ‘package deal’, East Germany deliberately went for something much closer to the British system. Together with higher education, healthcare continues to be one of our major exports, with foreign patients bringing in almost as much revenue as foreign students. And while other countries struggle with the financial pressures associated with falling birth rates and increased longevity, our prefunded system has accumulated huge old-age reserve funds.
If Bevan were alive today, would he find much to like in our healthcare system? Probably not. But even he would, grudgingly, have to concede that his central goals have been achieved, even if not in the way he intended.
The above description of events after the spring of 1946 is entirely fictional – and yet, it is not as absurd as it will probably seem to the reader. The popular folk memory of how the NHS was founded has been heavily mythologised in retrospect. The conventional wisdom is that the NHS was created in response to pressure from below – a victory of ordinary people getting together, organising collectively, and fighting for their rights. The NHS, in this version of events, is one of the finest expressions of ‘People Power’. This is the story told by, for example, RAF veteran Harry Leslie Smith, who, in 2014, became a minor political celebrity for retelling it. It is all over Ken Loach’s genre classic ‘The Spirit of ‘45’, and there were traces of it in the opening ceremony of the London Olympics as well.
It is a powerful story that continues to arouse strong feelings. But it is not a true story. The creation of the NHS was not a change that ordinary people had fought for. The NHS was a brainchild of social elites, to which the general public just passively acquiesced. The idea that the organised working classes were demanding a government takeover of healthcare is a post-hoc rationalisation, which projects the fondness for the NHS, which the public subsequently developed, back into the period of its creation.
In a paper in the English Historical Review, Nick Hayes analyses a wide range of healthcare-related opinion surveys from the 1930s and 1940s. He concludes:
“[T]he evidence before us seems to indicate a fairly large amount of resistance to State interference in the field of medicine […] roughly half the population was opposed to any major change on the health front, a quarter disinterested and a quarter in favour of State intervention.”
Similarly, in a paper analysing the political factors which drove the creation of publicly funded healthcare programmes in the UK and North America, Hacker finds:
“[F]ew of the scholars who have addressed this period have attempted to show that the passage of compulsory health insurance […] was a response to widespread popular pressure. In fact, this would be difficult to do, since the overwhelming evidence is that these early programs were promulgated by government elites well in advance of public demands.”
While speculative, this alternative history is not entirely plucked out of thin air. It contains some allusions to how healthcare really did evolve in countries that chose to secure universal access within a broadly market-based settlement, such as the Netherlands, Switzerland, Germany, Belgium and Israel. It even contains some (more indirect) allusions to how healthcare in the UK itself has changed since the quasi-market reforms of the 2000s.
My IEA monograph Universal healthcare without the NHS draws upon both international evidence from relatively market-oriented health systems, and domestic evidence from market-oriented reforms in the UK. It seeks to weave them together to develop proposals for an alternative health system, as well as a roadmap to get us there. Admittedly, though, the chances of finding a portal to the above-described parallel dimension are better than the chances of seeing my proposals implemented anytime soon.
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