Healthcare should never be ‘national’ – still less nationalised

From 4th to 7th October 2015, the IEA co-hosted the Think Tent event series at the Conservative Party conference in Manchester. The IEA’s Philip Booth took part in a panel entitled Should the NHS be safe in the hands of the Conservative Party?. The article below is based on his presentation.

If you google “NHS best in world” you get 51 million hits. Nigel Lawson once said that the NHS is the nearest thing we have to a national religion. But he was wrong – he misunderstood religions. Religious belief is based on reason as well as faith. However, the belief that the NHS is the best in the world is based on faith alone.

Indeed, the vacuity of the case for the NHS is illustrated by the very first of those google hits. It is a Guardian article which has, as its first sentence, the statement that the NHS has been declared the best in the world by an international survey. Later on in that article, the author mentions, without any apparent sense of irony, that the only black mark against the NHS is its poor record in keeping people alive.

And it has a very poor record when it comes to keeping people alive. The UK ranks 20th out of 24 developed countries for cancer survival and 19th out of 23 for mortality amenable to healthcare – that is an overall measure of performance that looks at deaths that could be avoided by better health care. The UK consistently ranks close to the post-communist countries of Central and Eastern Europe rather than to Western European countries.

Until Jeremy Corbyn was elected leader of the Labour Party, it used to be argued that nobody believed in real socialism any more. When it comes to the revered NHS that was never true. The model replicates exactly the very worst features of centrally-planned economies: health care financed and centrally planned by government, more or less entirely. There are no prices to guide resource allocation decisions. The outcome is exactly what we would expect – very poor performance.

Of course, as soon as you mention the fact that the NHS is not the best model through which to provide healthcare, people immediately say that it is obvious that you must want the American model in which, it is alleged, there are people lying on the streets untreated for want of a credit card.

We can debate the alleged failings of the US model another time. However, there are alternatives to both the British and the US healthcare models. Indeed, every developed nation in the world except for former communist countries, Canada and Iceland have a model that is different from – and less statist than – ours.

So, what should we do?

The first stage of reform should be to finance the NHS by a hypothecated tax. National insurance would be a candidate for this purpose.

Secondly, we should allow people to opt out of the NHS and give them a refund of at least some of their national insurance contributions.

Then we should encourage co-payment so that people make can at least some financial contribution at the point of use of health services. We know from other countries that this leads to greater innovation and reduced costs.

Finally, we should encourage methods of paying for healthcare whereby people save throughout their lifetime. Pensions and healthcare costs may well bankrupt EU states over the coming generations and the UK is no exception. Healthcare costs tend to come at the end of life and, as with pensions, it makes sense to pre-fund those costs. Otherwise we might be imposing unbearable obligations on our children.

If the NHS is the best in the world, then let’s put it to the test. Allow people to leave on reasonable financial terms and make alternative provision. We often think that healthcare is a technical service with no differentiation. It is not. There are many ways of providing care. Some people may prefer more access to technology and less to personal care. Others may prefer much more care and monitoring in their own home even if they do not get access to the best treatments; and so on.

We must stop treating the population of this country like children. When it comes to healthcare, we need innovation and competition and we need to allow people to express their own preferences. Healthcare is very personal. Indeed, it is a matter of human dignity that people should be able to make choices in this field. Healthcare should never be ‘national’ – still less nationalised.

Prof Philip Booth is the IEA’s Editorial and Programme Director and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham.

Philip Booth is Senior Academic Fellow at the Institute of Economic Affairs. He is also Director of the Vinson Centre and Professor of Economics at the University of Buckingham and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He also holds the position of (interim) Director of Catholic Mission at St. Mary’s having previously been Director of Research and Public Engagement and Dean of the Faculty of Education, Humanities and Social Sciences. From 2002-2016, Philip was Academic and Research Director (previously, Editorial and Programme Director) at the IEA. From 2002-2015 he was Professor of Insurance and Risk Management at Cass Business School. He is a Senior Research Fellow in the Centre for Federal Studies at the University of Kent and Adjunct Professor in the School of Law, University of Notre Dame, Australia. Previously, Philip Booth worked for the Bank of England as an adviser on financial stability issues and he was also Associate Dean of Cass Business School and held various other academic positions at City University. He has written widely, including a number of books, on investment, finance, social insurance and pensions as well as on the relationship between Catholic social teaching and economics. He is Deputy Editor of Economic Affairs. Philip is a Fellow of the Royal Statistical Society, a Fellow of the Institute of Actuaries and an honorary member of the Society of Actuaries of Poland. He has previously worked in the investment department of Axa Equity and Law and was been involved in a number of projects to help develop actuarial professions and actuarial, finance and investment professional teaching programmes in Central and Eastern Europe. Philip has a BA in Economics from the University of Durham and a PhD from City University.

2 thoughts on “Healthcare should never be ‘national’ – still less nationalised”

  1. Posted 05/11/2015 at 01:11 | Permalink

    Yeah, I consider myself on the hard left (certainly left of Corbyn) but having read several IEA reports on this subject, considered the free marketeer arguments and looked at the healthcare systems of comparable developed nation I have to concede that you are absolutely correct. Our current model is simply not fit for purpose, and a market orientated ‘Social Health Insurance’ system would seem to provided markedly better outcomes for patients.

    The hysteria surround the issue really is remarkable, and some what unprecedented, but I would any leftists who read this to begin a serious investigation of the alternative models of healthcare. The Beveridge model has been proven to fail.

  2. Posted 20/11/2015 at 20:53 | Permalink

    It has been a pleasure to read this article. In my research for an essay on Moral Hazard i came across it. I am a doctor . I have seen the ‘nanny state’ in full power. The effort and time put to keep alive a system that is fundamentally communistic by a developed country is phenomenal. And therefore we all suffer because it is impossible to deliver bespoke services in such a broad base. It is -more to the point- impossible to deliver the health that the nation thinks it deserves with a budget like the one available. The nanny state creates a nation that cannot take responsibility for heir own health and a vast amount of money is pumped into TRYING to prevent what is thought to be bad for them: immunisations, cessation of smoking, alcohol withdrawal, diabetes services, reduction of obesity etc… Eventually for whoever actually needs a high tech or different that average service, the option is not available. Because the system is free at the point of delivery and therefore both disillusioned doctors availing responsibility, and naive patients not being aware what each visit to a primary or secondary care facility costs overuse and abuse it. So if health care is to be (up to a point) national, people contributing to it should be aware of what the buy and what they spend. And the responsibility needs to shift from ‘the government’ to the individual. A private market should be allowed to develop for health care, and exemptions to tax paying should be made available and the individuals should be able to chose a service that fits their needs. I do not think that the current system is fit for purpose or sustainable. We are pumping 115.4 billion a year into a dying system instead of trying to rethink and cut our (huge) losses.

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