Diagnosis: Overrated – An analysis of the structural flaws in the NHS


Government and Institutions

All government spending should come under the microscope


How healthy living is costing us more in the long term

Political short-termism trumping best practice in the NHS Diagnosis Overrated.pdf

  • The NHS is part of the UK’s national story – a founding myth of post-war Britain. But like most founding myths, the popular NHS story is only very loosely based on actual events. The belief that the foundation of the NHS was a manifestation of ‘people power’ is completely untrue. Contemporary sources from the 1930s and 1940s show no evidence of popular demand for a government takeover of healthcare.

  • The NHS’s status as a sacrosanct institution promotes ‘groupthink’ and undermines the ability to detect and correct instances of failure, and to adapt to changing circumstances. This was most immediately evident after the Mid-Staffs scandal.

  • Despite some catching-up, the NHS still lags behind the health systems of most comparable countries in terms of health outcomes, healthcare quality measures, waiting times and efficiency indicators.

  • A number of systems similar to the NHS suffer from the same shortcomings. The systems with the best outcomes tend to be pluralistic, competitive systems based on consumer sovereignty and freedom of choice.

  • The NHS is a nationalised monopoly which, despite the ‘quasi-market’ reforms in the 2000s, offers relatively little in the way of genuine patient choice and competition.

  • The idea that ‘we’, the public, run the NHS ‘collectively’ is a popular illusion. Democratic accountability in the system is so vague and roundabout that it is almost meaningless in practice. There is almost zero overlap between the health policies proposed in general election campaigns and those enacted afterwards. The insistence that ‘the people’ are really in charge is empty rhetoric. The health service is run by the political class, senior bureaucrats and the medical establishment.

  • Since healthcare in the UK is provided free at the point of use, there is little pressure for harnessing technological innovations for cost-cutting, which is why cost-inflating innovations dominate and one reason why the productivity and efficiency performance in healthcare is so poor generally.

  • The fact that the NHS is a tax-funded system leads to a significant lack of transparency, since it is almost impossible for a taxpayer to work out how much they actually pay for healthcare. It also means funding decisions tend to be more politicised than in other systems. Raising funds through taxation also brings significant deadweight costs.

  • The NHS is in an almost constant state of reorganisation, and these – often rather pointless – reorganisations seem to be primarily motivated by a political desire to ‘leave a mark’.

  • Since 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 is a very unstable financing method, which is highly vulnerable to demographic changes.

  • A national, centralised health system is also less likely to be able to deal with the transition in how care is delivered given an ageing population. Too often in the NHS, patients, especially the elderly, are treated as homogenous units going through the system, rather than individual patients with their own wants and needs. This prevents innovation in care and healthcare structures, and the use of new technologies.

The paper was featured in CityAM

Read the press release here.

2015, Discussion Paper No. 66

In August 2015, the IEA produced A Patient Approach: Putting the consumer at the heart of UK healthcareby Dr Kristian Niemietz.

In April 2015, the IEA produced What Are We Afraid Of? Universal Healthcare in Market-Orientated Health Systems, by Dr Kristian Niemietz.

In October 2014, the IEA produced Health Check: The NHS and Market Reforms, also by Dr Kristian Niemietz.

This paper is part of the IEA’s Paragon Initiative.

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Head of Political Economy

Dr Kristian Niemietz is the IEA's Editorial Director, and 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).