Healthcare

NHS Crisis: How can we improve Britain’s health service?


On 2 October, the IEA organised a panel discussion entitled “NHS Crisis: How can we improve Britain’s health service?”, as part of the ThinkTent ’23 fringe event series at the Conservative Party Conference, Manchester. The IEA’s Head of Political Economy, Dr Kristian Niemietz, was one of the panellists. The article below is based on his opening remarks.

 

My take is that the NHS cannot be fixed.

The NHS has been reorganised more times than anyone can count. It has been in an almost constant state of reorganisation for most of its history. If there was a way to fix it, I think we would have found it by now.

But at the same time, there are good examples nearby of health systems which consistently outperform the NHS. On outcomes. On waiting times. On resilience.

Imagine you have a car which is constantly causing you trouble. It breaks down frequently, it needs repair all the time, it gets overwhelmed easily; it doesn’t work in winter, but it can’t cope with heatwaves either. And at the same time, several of your neighbours use a car model which they are broadly happy with. You rarely hear them complain about their cars, in the way that you complain about yours. When you tell them about your issues, they can’t relate, because they don’t have those issues.

Up to a point, you may say: maybe the problem isn’t the car model as such. Maybe I just need to take better care of it. Maybe I need to give it a good overhaul, or maybe I need to adopt a different driving style.

But once you’ve tried several things, and the performance gap persists, surely, at some point, you would say: I’ll get the car model that my neighbours use, or one that is more like to that. If it works for them – why shouldn’t it work for you?

That’s how I would approach healthcare. One model that I have written about in the past is the system of the Netherlands. That is a universal private insurance system. In the Netherlands, everyone has private health insurance. But it is a particular kind of private insurance, where insurers are not allowed to discriminate against people on the basis of their health status. They can’t charge you extra for being a high-risk patient, they can’t turn you down, and they can’t refuse coverage for preexisting conditions. That’s what is meant by “social health insurance”.

There is also a system of generous premium support for people who otherwise couldn’t afford their health insurance premium.

This means that it has all the features that people like about the NHS: it doesn’t exclude anyone, and poor people don’t get worse healthcare than rich people. But it also contains a lot of the features that those of us who like the market economy are fond of: consumer sovereignty, competition, private initiative. Healthcare provision is almost exclusively private.

Their outcomes are among the best in the world, or certainly far better than ours. Their waiting times are between half and a third of ours. Healthcare spending, as a percentage of GDP, is about the same as here. Even the Commonwealth Fund study, which is ludicrously biased in favour of the NHS, rates it very highly.

Now, some defenders of the current system, for example the Nuffield Trust, admit that that kind of system is pretty good. They are not saying that it would be terrible if Britain had a system like that. But their argument is that, even if such a system might be desirable in theory, the transition to it would be so messy and disruptive that it would outweigh any possible future gains.

I don’t buy that.

There are, admittedly, no good precedents here. But there are examples of countries abandoning state-run health services in favour of insurance-based systems. That has been done before.

The Czech Republic and Slovakia did precisely that in the 1990s. They jointly inherited an NHS-type system from the old Czechoslovak Socialist Republic, and in different ways, they switched from that to a multi-payer system. It took about a decade, but then, they also had other things going on at the same time. Minor things, like splitting up the country, introducing new currencies, replacing a socialist economy with a market-based economy, and a one-party state with multi-party democracies.

East Germany did the same thing around the time of Reunification. They also inherited a state-run health system form the old GDR, and they replaced that with the West German system, which is a cousin of the Dutch one. In their case, that took, depending on how you count it, between two and five years. And they had to deal with far more basic stuff, such as how to deal with medical accreditation and drug approval from a state which no longer existed.

So it can be done, and it has been done. There’s no reason why that should not also be possible here.

 

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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).


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