Government shouldn’t be the sole provider of healthcare


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The UK has nothing to fear from adopting market based reforms in healthcare
Universal and equitable access to healthcare would not be at risk if the government’s role was limited to purely guaranteeing access to health provision. Offering patients the freedom to choose between public or private providers, as well as building upon the market reforms of the mid-2000s, would not only be compatible with public opinion but would substantially improve health outcomes in the UK.

Analysis of the population’s attitudes suggests that people are open to a variety of providers when it comes to personal treatment, with nearly half the population indicating no preference when asked if they’d rather be treated by an NHS provider, an independent non-profit or a for-profit provider. Indeed, almost one fifth of individuals expressed an active desire for their care to be delivered privately.

In a new report, Dr Kristian Niemietz argues that supporters of moving the NHS to a competitive system that incorporates a combination of public and private providers, should capitalise on the growing appetite for reform amongst the general public. Going ‘the whole hog’ would not require a revolution.

Examples of successful pluralistic models of healthcare can be found worldwide, with countries such as France, Australia, Germany and the Netherlands boasting some of the best health outcomes in the world. Under these systems patients enjoy choice among a range of providers, including a large private sector.

Pragmatic reforms to healthcare commissioning:

Abolish catchment areas – Giving patients the ability to sign-up to the Clinical Commissioning Group (CCG) of their choosing, as opposed to registering with a specific GP, would give them greater freedom to select between health providers. This would result in care being based on a patient’s preferences rather than their place of residence.

Make CCGs more like social health insurers – Allowing CCGs to merge and de-merge as well as create their own distinctive brands would prompt a competitive market to emerge, where CCGs would compete for patients by offering a variety of choice in terms of health providers and care plans.

Reviving Payment by Results (PbR) – Expanding PbR to cover a larger proportion of a provider’s fixed costs would see them become less dependent on the Department of Health for their main source of funding. Assigning funding on an activity-based basis would incentivise providers to attract patients while discouraging overtreatment. Introducing a no-bailout clause would also see underperforming providers being replaced with successful ones, regardless of whether they were NHS-controlled or privately run.

Pragmatic reforms to healthcare provision:

Encouraging pre-funded healthcare – Moving to a pre-funded system would, in the long run, reduce the financial burden on the working-age population, who currently foot the bill for the increasing healthcare costs of the older generation. Successful prefunded systems already exist, where individuals become net healthcare savers for the vast majority of their lives, thereby reducing dependency on the younger population to fund their care later in life.

Greater choice over coverage plans – The UK is an international outlier in the sense that patients are expected to make little or no contribution to the cost of their care. Offering rebates to those patients who voluntarily choose to pay more towards their healthcare would incentivise greater financial responsibility in terms of managing individual care and would alleviate national funding pressures.

Commenting on the report, Mark Littlewood, Director General at the Institute of Economic Affairs, said:

“The UK has nothing to fear from adopting market based reforms in healthcare. Far from requiring a complete overhaul of the current system as we know it, we simply need to build on pre-existing reforms and the desire for greater choice so that the NHS can re-establish itself as one of the world’s leading healthcare systems.”

“The experience of some of our European counterparts illustrates that a combination of public and private providers is not at odds with the provision of high quality, universal care. Rather than shying away from the debate over healthcare reform, practical steps should be taken to bring about a gradual transition to a more pluralistic system.” 

Notes to editors:

To arrange an interview about the report please contact Camilla Goodwin, Communications Officer: [email protected] or 07821 971 443.

The full report, A Patient Approach: Putting the Consumer at the Heart of UK Healthcare, by Kristian Niemietz, can be downloaded here.

Over the past year the IEA has produced two papers on the subject of healthcare reform. To read Health Check: The NHS and Market Reforms, click here. To read What Are We Afraid Of? Universal Healthcare in Market-Orientated Health Systems, from 2015, click here.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.