Choice at a price: A response to Civitas’ ‘NHS Contribute Extra’ proposal

Among the more reasonable supporters of the single-payer model of healthcare, a common argument is that while the NHS may not literally be the ‘envy of the world’, at least it is better than many other systems at keeping a lid on spending. It is a fair argument: In single-payer models, governments have greater control over healthcare spending than in insurance-based systems. But that is also a double-edged sword. What if there are a lot of people who want to spend more on healthcare? What if some are prepared to pay more for services that enhance their wellbeing, even if they are not, strictly speaking, clinically necessary? Relatively low spending would then not automatically be a good thing, even if it leads to good efficiency scores from the Commonwealth Fund. Can this problem be addressed at all in the context of a state-funded healthcare system?

In their recent Civitas report NHS Contribute Extra, Christoph Lees and Edmund Stubbs have outlined a potential solution to this dilemma. They propose the introduction of a voluntary, income-related healthcare contribution of 0.5% of gross income. Those who pay that contribution would be entitled to a number of goodies, namely:

  • free choice of secondary/tertiary care provider

  • the monetary value of their entitlement to NHS treatment would become fungible and transferable. This means that rather than having to accept the treatment they are offered, they would be able to demand an alternative. If the alternative cost more than the standard NHS treatment, they could pay the difference out of pocket. Contributors would also have the right to buy services associated with greater comfort, especially with regard to hospital accommodation, and pay for them out of pocket.

  • access to health monitoring services and discounts for healthy activities like gym membership.

What is commendable about this proposal is that it would represent a departure from one-size-fits-all healthcare, and a recognition of the fact that even if it is unpopular to say so, in some ways, healthcare is a good like any other. Its value is subjective, and subject to trade-offs. Is greater choice of treatments and providers worth 0.5% of income? Or is that money better spent on other things? The answer, of course, depends entirely on individual preferences and individual circumstances, hence the case for giving people much greater choice over such matters.

And yet, as much as I endorse the general theme, I have some problems with this particular specification. It makes perfect sense to charge people more for consuming additional services, or costlier ones. But almost all of the options that the Civitas report describes are cost-neutral for the NHS, so why should people have to pay extra for them? These are options that should be available anyway.

Suppose you are entitled to a particular treatment at hospital A, but for some reason, you would rather have that treatment at hospital B. The cost to the NHS is the same, as hospitals are paid according to a national tariff scale, so there is no reason why you should not be given free choice in any case. In principle, this is already the case: Free choice of provider, at the point of referral, was introduced in 2008. What happens on the ground is another matter, as a lot of GPs have simply ignored these changes, and continued to refer patients as they saw fit. With regard to provider choice, Civitas should have argued for a proper implementation of reforms that have already been passed – not for charging people extra for an option that should already be available to them.

Or take the topping-up option. Suppose you have been prescribed Drug A, which costs £100, but you would rather replace it with Drug B, which costs £125, and you are prepared to pay the excess £25 out of pocket. This substitution is cost-neutral for the NHS, so there is no good reason why you should not already be allowed to do so. Civitas should have made a general case for allowing people to top up NHS care. There is no reason why this possibility should only be available to those who pay a higher contribution.

Or let’s put it this way: Food stalls often offer optional top-ups (“Add guacamole sauce for £0.75”). Now imagine a food stall where, before you were allowed to pay for the guacamole, you would have to purchase the right to request such a top-up in the first place. That’s the Civitas proposal.

There is still a lot to be said for the idea of a voluntary extra contribution. It would make the NHS a little bit more like an insurance system, offering choice between different coverage packages. But free provider choice and the right to top up are just not the right areas for this, because those options should be available to everybody anyway. Here’s an example of how the proposal would have made more sense: How about giving those who pay an extra contribution the right to skip the gatekeeping process, i.e. giving them direct access to specialists without the need for a referral? And the contribution rate should not be some arbitrary number thought up by a think tank, but the rate that is required to cover the resulting extra cost to the health service.

What the Civitas report does well, though, is apply the logic of choice and consumer sovereignty to healthcare. It aptly challenges NHS orthodoxy, and that is always a worthwhile cause.

Dr Kristian Niemietz is the author of Health Check: The NHS and Market Reform.

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).