The NHS is falling well below its potential. Even the current unsatisfactory standard of healthcare is not financially sustainable, yet policymakers are often unwilling to challenge what has become a sacrosanct institution.

In a new paper for the Institute of Economic Affairs, Dr Kristian Niemietz gives a systematic overview of the NHS’s failures, inadequacies and structural problems. Through the paper he charts problems including a lack of patient choice and transparency in spending, the absence of reserves to pay for our ageing population, a failure to harness innovative technologies and the dominance of political short-termism.

The debate around healthcare needs to move beyond platitudes about the future of the NHS. Too often poor cancer survival rates and other quality measures are ignored, whilst the experiences of countries with much better outcomes, such as those with social insurance systems on continental Europe, are dismissed.

Structural flaws in the NHS:

The demographic timebomb

• The NHS is financed on a pure pay-as-you-go basis; all current expenditure is paid out of current revenue, without any old-age reserves. Against the backdrop of an ageing population, this leaves British healthcare highly vulnerable to demographic changes.


• If NHS productivity remains the same – as it has been for two decades – spending will have to rise by nearly 15% of GDP by 2063, and future generations will face huge tax hikes.

Funding structure

• Free at the point of use provision has stymied pressure to harness technological innovations for cost-cutting. This is why cost-inflating innovations dominate and why productivity and efficiency are so low. Centralisation means patients are often treated homogenously, rather than as individuals with varying wants and needs. This prevents innovation and the use of new technologies.


• The NHS is a tax-funded system, which leads to a lack of transparency. It is virtually impossible for taxpayers to work out how much they pay for healthcare.

Politics dominates

• Political desires to ‘leave a mark’ have led to the NHS being in a constant state of reorganisation. The idea that the British people run the NHS collectively is a myth. Accountability is vague, and there is almost no overlap between the health policies proposed in general election campaigns and those enacted afterwards.


• The incredibly political climate of debate means the UK fails to learn from other countries with better outcomes. International evidence on outcomes is ignored entirely, with the only comparisons used to highlight the deficiencies of the American system, and to show we spend less on healthcare as a proportion of GDP.

Poor health outcomes

• The NHS tends to be judged by its intentions and ideals rather than its outcomes. Our system lags behind the health systems of most comparable countries in terms of health outcomes, quality measures, waiting times and efficiency.


• For cancer survival rates the UK never comes close to the top 12, with survival chances several percentage points below those of the best performers. On accessibility of healthcare, England is rated ‘red’ for GPs, Accident and Emergency, specialist care and CT scans. The NHS is also in the bottom third of efficiency rankings.

Lack of patient choice

• The NHS is a nationalised monopoly, offering little in the way of patient choice and competition. Supporting competition in healthcare does not necessarily mean supporting privatisation. Despite some market reforms – NHS providers compete for patients and funding – the UK ranks in the bottom third for patient choice according to the OECD.

Founding myth

• The founding story of the NHS leads to asymmetries in how positive and negative stories are dealt with. It is widely asserted that the poor had little or no access to healthcare prior to the NHS, and that its foundation was a manifestation of popular pressure in the aftermath of war. Despite being untrue, this founding myth about the NHS has made it so sacrosanct that it promotes groupthink, undermining the ability to detect and correct failures and adapt to changing circumstances.


• When the Commonwealth Fund ranked the UK first for healthcare among developed countries last year, our socialised medical system was widely praised. Yet last month, when an OECD report concluded that the NHS was ‘one of the worst healthcare systems in the developed world’, it served as a hook to blame the Conservative Party for destroying the best healthcare system in the world.

Commenting on the report, its author Dr Kristian Niemietz, said:

“If one views the NHS primarily as a team-building exercise, it would be seen as a phenomenal success, but as a health system its outcomes are sobering. It lags behind most comparable countries in terms of health outcomes, quality and efficiency measures, and is financially unsustainable in the face of an ageing population. Patient choice is underdeveloped, incentives to innovate are low, and political short-termism continues to trump best practice. It’s time for these significant shortcomings to come under the microscope, otherwise the health of the nation will suffer.”

 Notes to editors:

To arrange an interview about the report please contact Stephanie Lis, Director of Communications: slis@iea.org.uk or 07766 221 268.

The full report, by Kristian Niemietz, Diagnosis: Overrated – An analysis of the structural flaws in the NHS, can be downloaded here.

Over the past year the IEA has produced three papers on the subject of healthcare reform. To download Health Check: The NHS and Market Reforms, click here. To download What Are We Afraid Of? Universal Healthcare in Market-Orientated Health Systems, click here.  To download A Patient Approach: Putting the consumer at the heart of UK healthcare, click here.

This briefing is part of the Paragon Initiative – the most comprehensive project ever undertaken by the IEA. This five year programme will provide a fundamental reassessment of what government should – and shouldn’t – do. It will put every area of government activity under the microscope and analyse the failure of current policies. Drawing on best practice from around the world, it will put forward clear and considered solutions to the UK’s problems. And it will identify the areas of government activity that can be put back in the hands of individuals, families, civil society, local government, charities and the markets.  Through a comprehensive and compelling series of books, papers, films, events and more, the Paragon Initiative will provide a clear vision of a new relationship between the state and society.

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.