A&E crisis highlights need for a more subsidiary healthcare system


Tax and Fiscal Policy
In the early 2000s, long waiting times at Accident and Emergency departments were commonplace. About one in five patients was stuck in the waiting room for longer than four hours before being seen. The introduction of a binding waiting time target, combined with increases in funding, then led to rapid improvements. There was gaming of the system, and central targets did sometimes collide with local priorities, but on balance, some external pressure to speed things up was probably in order. Taken as a whole, the health service has met the A&E waiting time target, or come within a percentage point’s distance of meeting it, ever since. But in recent years, the proportion of patients waiting for longer than four hours has gone up again, and in the last quarter of 2014, the target – which had itself been watered down in the meantime – was clearly missed.

Unsurprisingly, the opposition blames spending cuts and reorganisations, while the coalition points out that the situation in Labour-governed Wales is worse still. Be that as it may, it should not distract from the fact that overcrowded A&E departments are really just one manifestation of a more general long-term failure: a failure to organise healthcare in a more subsidiary manner. The health service lacks reliable mechanisms to direct patients to more cost-effective, low-cost tiers of provision. Too often, people are treated in hospital when an outpatient setting would be more appropriate, see a doctor when they should see a nurse, visit a surgery when they should visit a walk-in clinic, receive treatment when they should self-medicate, and so on.

This is both a supply-side and a demand-side problem. On the demand side, even where low-cost options exist, Clinical Commissioning Groups (CCGs) have no effective tools to redirect patients towards them. Rebates and differential tariffs could go a long way towards sorting that out. In this respect, a good example to learn from is the Swiss healthcare system. Switzerland operates a social insurance system, coupled with demand-side subsidies for low-earners to ensure universal coverage. People can choose a standard health insurance policy, but they can also opt for various sorts of saver tariffs, waiving certain entitlements in return for premium rebates. One of those is the ‘Telmed’ tariff, under which policyholders commit to having a telephone consultation first before they can book an appointment with a doctor. Phone consultations serve two functions. For routine cases, remote diagnosis can be a cheaper and quicker solution. And for cases that cannot be diagnosed from afar, a phone consultation can at least direct patients to the most appropriate provider, reducing the need for multiple appointments. Such solutions free up space in surgeries, which is especially relevant when people use A&E as a substitute for a GP appointment. The NHS 111 line is a small step in that direction, and GPs in the UK offer telephone consultations as well. But unlike in the Swiss system, there is no financial incentive for patients to use these options first.

In the Swiss system, people can also choose a deductible, again in return for a rebate, and pay for the full cost of medical care up to that level. People who choose that option are still protected from serious health-related financial risks (the highest deductible permitted is CHF 2,500), but as long as they only need run-of-the-mill treatments, they have every incentive to economise and search for low-cost options. Seeing a doctor with a routine ailment is probably not one of them.

Saver tariffs, coupled with tax rebates, could be introduced in the NHS as well. But to be effective, they would have to be coupled with changes on the supply side. The concept of the ‘prescription drug’ should be abolished. All drugs should be available on an over-the-counter basis, and prescriptions should only serve for reimbursement purposes. This would lead to an increase in self-medication, again taking pressure off surgeries and making it easier to get timely appointments.

The whole system of tying patients to surgeries should also be abolished. Doctors should be free to see patients who are not registered with their surgery, or to discard with the very concept of ‘registering’ altogether. That would allow demand to flow where the spare capacity is.

Finally, this is also an issue of market power. The UK has a lower density of physicians than most comparable countries, but British GPs are among the best-paid in the world, a strong hint at a guild-style system that aims to keep numbers low and prices high. Easing entry restrictions while localising pay negotiations would be a way to expand capacity, again reducing the need to use A&E departments as a substitute for the kind of medical attention that should be provided in clinics and surgeries.

During the current arms race of who professes greater ‘love’ for the NHS, such solutions are not to be expected. But there will come a point when the old mantra that the NHS is a wonderful service which is just ‘underfunded’ will lose its credibility. Supporters of fundamental reform should ensure that when that point arrives, the public is aware that there are indeed alternatives.

Kristian Niemietz is the author of the IEA Discussion Paper ‘Health check: The NHS and market reforms

Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

5 thoughts on “A&E crisis highlights need for a more subsidiary healthcare system”

  1. Posted 08/01/2015 at 15:07 | Permalink

    The Swiss health policies sound good, but don’t the Swiss spend much more on healthcare than the UK does? $5,643 vs $3,405 per person, or $2200 dollars more each. Left-wingers would suggest a marketised system inherently means more costs, which may or may not be true, but if the UK ever moves to a insurance-based system, not letting costs reach Swiss levels should be important.

  2. Posted 09/01/2015 at 08:30 | Permalink

    The difference, of course, is that the Swiss number includes all that private cash people are paying in. I suspect the ‘cost borne by government’ is similar or lower.

  3. Posted 09/01/2015 at 13:47 | Permalink

    Why do even IEA commentators never mention the #1 cause of the various crises in the NHS, the relentless feminisation of he workforce? Dr Vernon Coleman was warning about the inevitable consequences of this policy direction in his books 30+ years ago. The ‘average’ female doctor will work only half the hours as her male counterparts over a career, she’ll be disinclined to work unsocial hours, or to work in the more demanding lines e.g. A&E, she’ll retire earlier… Its a subject we cover in our election manifesto, most notably in the section on employment (pp 18-23) and particularly p20.

    The feminisation of the state education system has also had predictable adverse effects, hidden by such cynical manipulations as continuous assessment and grade inflation.

    It’s known that increasing the proportion of women on corporate boards leads to declines in corporate financial performance yet the government is planning to go from its current bullying of FTSE100 companies to have 25 female representation on their boards, to bullying FTSE350 companies into having gender parity on their boards. This will require a tenfold preferencing of women over men. It’s about time the IEA held a conference about the consequences of the feminisation of workforces.

    Mike Buchanan

    (and the women who love them)

  4. Posted 09/01/2015 at 14:33 | Permalink

    MK, David: Public healthcare spending in Switzerland is indeed a bit lower than here. Total spending is higher, partly because topping-up privately is a lot easier:

  5. Posted 11/01/2015 at 19:17 | Permalink

    Maybe it is just impossible to have a hybrid market/nationalised ‘system’? The one always corrupts the other. My prefence is to denationalise the whole thing and move to 100% private with charity picking up the unfortunate/feckless. Whenever you add in a taxpayer funded state safety net it always gets expolited by various rent seekers. (And FWIW I speak as someone with a chronic condition that is uninsureable).

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